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: 811-4676
Harbor Funds
(Exact name of Registrant as specified in charter)
111 South Wacker Drive, 34th Floor
Chicago, Illinois 60606-4302
Chicago, Illinois 60606-4302
(Address of principal executive offices) (Zip code)
Charles F. McCain, Esq. HARBOR FUNDS 111 South Wacker Drive, 34th Floor Chicago, Illinois 60606-4302 | Christopher P. Harvey, Esq. DECHERT LLP One International Place – 40th Floor 100 Oliver Street Boston, MA 02110-2605 |
(Name and address of agent for service)
Registrant’s telephone number, including area code: (312) 443-4400
Date of fiscal year end: April 30
Date of reporting period: April 30, 2021
ITEM 1 – REPORTS TO STOCKHOLDERS
The following are copies of reports transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30e-1):
Semi-Annual Report
April 30, 2021
Domestic Equity Funds
Retirement Class | Institutional Class | Administrative Class | Investor Class | |
Harbor Capital Appreciation Fund | HNACX | HACAX | HRCAX | HCAIX |
Harbor Large Cap Value Fund | HNLVX | HAVLX | HRLVX | HILVX |
Harbor Mid Cap Fund | HMCRX | HMCLX | HMCDX | HMCNX |
Harbor Mid Cap Growth Fund | HNMGX | HAMGX | HRMGX | HIMGX |
Harbor Mid Cap Value Fund | HNMVX | HAMVX | HRMVX | HIMVX |
Harbor Small Cap Growth Fund | HNSGX | HASGX | HRSGX | HISGX |
Harbor Small Cap Value Fund | HNVRX | HASCX | HSVRX | HISVX |
Harbor Strategic Growth Fund | HNGSX | MVSGX | HSRGX | HISWX |
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This document must be preceded or accompanied by a Prospectus.
Letter from the Chairman
Charles F. McCain
Chairman
Chairman
Dear Fellow Shareholder:
Looking back on the past two calendar quarters reveals a tale of two markets. After a strong summer market rally, volatility reemerged last fall, due to continuing investor concerns about the pandemic, increasing political rhetoric, and other geopolitical events. However, the resolution of the presidential election, new vaccine approvals/rollouts, along with the passage of two U.S. fiscal stimulus packages, led to improved investor sentiment and appetite for risk that generated an equity market rally that continued through the first quarter of 2021—although at a slower pace than in the fourth quarter of 2020. U.S. and global equity markets produced positive total returns over the six-month period ended April 30, 2021. The S&P 500 added to its strong performance of 12.15% in the fourth quarter, with a return of 6.17% in the first quarter, outperforming the MSCI EAFE (ND) and the MSCI Emerging Markets (ND) Indexes, which returned 3.38% and 2.29%, respectively, for the first quarter.
Beginning late last fall, we saw a pronounced reversal from a growth-driven to a value-driven equity market, and this rotation has persisted through the first quarter. The market rotation occurred globally—in the U.S., developed, and emerging equity markets—by style (cyclical/value outperformed growth), by market cap (small cap outperformed large cap), and by factor (momentum reversed, while beta remained strong).
Prior to the fourth quarter, U.S. growth-oriented stocks were the dominant outperformers by a large margin, with value-oriented names trading at huge discounts. However, by late in the year and moving through the first quarter, value outperformed growth, with the Russell 3000® Value Index beating the Russell 3000® Growth Index by the widest margin since the first quarter of 2001. Cyclical industries (e.g., oil & gas, machinery, construction materials, and metals & mining), along with the Energy and Financials sectors, took center stage. In contrast, the Information Technology, Consumer Staples, and Healthcare sectors retreated. While large caps have been in favor in past years (FAANG stocks etc.) and still remain ahead over trailing three- and five-year periods, the trend reversed over the six-month reporting period, which saw small caps outperforming. The bond markets took a hit, as investors shifted to equities in anticipation of a broader economic recovery, and the yield curve steepened at the long end. The yield on 10-year Treasuries rose from 0.78% after the election to 1.74% in March—one of the most significant moves in decades.
As economies around the world have begun to reopen, and markets have rallied, the focus is shifting from fear to cautious optimism. Growth in the U.S. gross domestic product (GDP) over the past two quarters reflects the long-hoped-for economic recovery now underway, the reopening of businesses, and the massive government response to the COVID-19 pandemic. GDP grew by 4.3% in the fourth quarter and by an estimated 6.4% in the first quarter. The Biden administration passed the $1.9 trillion American Rescue Plan, although without a single Republican vote. Its proposals for still more fiscal stimulus (the American Jobs Plan at $2.3 trillion and the American Families Plan at $1.8 trillion) will have to pass the gauntlet of a divided Congress; the scope, size, and timing of those plans will no doubt undergo protracted negotiations.
Harbor expects that volatility will remain elevated for the foreseeable future. But we also believe there are thoughtful, practical solutions to manage volatility and enable investors to reach their long-term goals. Our subadvisers are active portfolio managers who remain focused on uncovering opportunities and skillfully executing their strategies to deliver shareholder value in a climate of economic and geopolitical uncertainty, unprecedented health challenges, and financial market volatility. We believe that thoughtful, active management and adherence to enduring investment principles such as diversification, discipline, and a long-term view, will stand the test of time.
Over the past year, we have seen massive disruptions and challenges that have taken a severe toll on human lives. But the human spirit has remained resilient through it all. We believe there is now more reason for cautious optimism than fear as we look ahead.
I hope you and your families stay safe through this difficult time. Thank you for your confidence and continued investment in Harbor Funds.
June 22, 2021
Charles F. McCain |
Chairman |
1
Harbor Capital Appreciation Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Jennison Associates LLC
466 Lexington Avenue
New York, NY 10017
New York, NY 10017
Portfolio Managers
Spiros “Sig” Segalas
Since 1990
Since 1990
Kathleen A. McCarragher
Since 2013
Since 2013
Blair A. Boyer
Since 2019
Since 2019
Natasha Kuhlkin, CFA
Since 2019
Since 2019
Jennison has subadvised the Fund since 1990.
Investment Objective
The Fund seeks long-term growth of capital.
Spiros “Sig” Segalas
Kathleen A. McCarragher
Blair A. Boyer
Natasha Kuhlkin, CFA
Management’s Discussion of
Fund Performance
Fund Performance
MARKET REVIEW
U.S. equities rallied during the six-month period amid gradually improving sentiment about the prospects for a U.S. economic reopening in 2021. The approval of several COVID-19 vaccines in the U.S. as well as a number of other vaccines globally was followed by a broadening of gains in areas of the market that had been most debilitated by the pandemic and therefore, likely to benefit from a recovery.
The U.S. presidential election in November paved the way to a $1.9 trillion stimulus package in March, consisting of direct payments to individuals and families, additional unemployment benefits and funding for state and local governments, among other allocations. The U.S. Federal Reserve continued to advocate for extreme policy accommodation, citing the pandemic’s drag on the labor market.
Longer-term bond yields rose, reflecting U.S. monetary and fiscal stimulus and rising inflation expectations. The benchmark 10-year U.S. Treasury yield ended the six-month period at 1.63% compared to 0.85% at the beginning of November.
PERFORMANCE
Harbor Capital Appreciation Fund advanced 22.71% (Retirement Class), 22.67% (Institutional Class), 22.52% (Administrative Class) and 22.44% (Investor Class) in the six-month period ended April 30, 2021, slightly underperforming the Russell 1000® Growth Index, which rose 24.31%. The S&P 500 Index returned 28.85%.
Benchmark index sectors gained across the board. The Fund’s holdings also gained broadly but lagged the index somewhat, particularly in Information Technology and Communication Services.
Tesla was a standout contributor to returns as the stock gained in the high double digits over the six-month period. The company reported strong financial results driven by solid production, increased capacity, and strong execution. We believe Tesla’s technology, scale, and low-cost advantage make it the breakaway leader in the electric-vehicle market but also position it to disrupt the automotive industry.
The prospect that pandemic restrictions may be lifted later in 2021 buoyed a number of the Fund’s holdings across different sectors, notably Industrials holding Uber. In our view, Uber’s ride-sharing platform has the potential to continue to broaden and transform and the company is positioned to achieve better-than-expected profitability post pandemic. Meanwhile, Amazon continued to benefit from economies of scale and its platform-based business model. Its Amazon Web Services (AWS) business has been an additional driver of revenue and profit.
The Fund’s technology-related holdings gained on strong digitization trends that were accentuated by the remote work environment. Its digital payments holdings also did well as a result of the secular growth of e-commerce and expectations of higher spending as economies gradually re-open.
Underperformers included Alibaba, Splunk, and Zoom Video Communications, which declined in a rising market. During the six months, we eliminated these small positions and redeployed the proceeds into more attractive investment opportunities.
2
Harbor Capital Appreciation Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | ||||||
6 Months | 5 Years | 10 Years | ||||||
Harbor Capital Appreciation Fund | ||||||||
Retirement Class1 | 22.71% | 58.47% | 25.08% | 17.82% | ||||
Institutional Class | 22.67 | 58.33 | 24.99 | 17.78 | ||||
Administrative Class | 22.52 | 57.94 | 24.67 | 17.49 | ||||
Investor Class | 22.44 | 57.74 | 24.52 | 17.35 | ||||
Comparative Indices | ||||||||
Russell 1000® Growth | 24.31% | 51.41% | 22.88% | 17.02% | ||||
S&P 500 | 28.85 | 45.98 | 17.42 | 14.17 |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.59% (Net) and 0.64% (Gross) (Retirement Class); 0.67% (Net) and 0.72% (Gross) (Institutional Class); 0.92% (Net) and 0.97% (Gross) (Administrative Class); and 1.03% (Net) and 1.08% (Gross) (Investor Class). The net expense ratios reflect a contractual management fee waiver effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
OUTLOOK & STRATEGY
As fundamental investors, we examine company and industry prospects over the short term and the long term, working to identify the drivers of earnings growth over time. These include high or improving profitability, a strong and defensible competitive position, and growing tangible addressable markets. Investing in companies with long-term growth rates that are well above average and unique, market-leading products and services remains our focus.
Market focus appears to have shifted from fear to optimism and the strength of the coming global recovery. Although interest rates have risen and the demand recovery has raised price pressures we believe inflationary fears will prove transitory as the recovery should normalize once economies around the world reopen in a sustainable manner and as the effects of fiscal and monetary stimulus fade. We further believe the rise in bond yields reflects expectations of more normal levels of growth to come.
We are encouraged by the continued strong financial results of the Fund’s holdings. We remain invested in areas involving the digitization of the enterprise, payments, social media, and e-commerce. The Fund’s focus also includes, in our view, beneficiaries of the recovery in, and broadening of, economic growth.
1 | Retirement Class shares commenced operations on March 1, 2016. The performance attributed to the Retirement Class shares prior to that date is that of the Institutional Class shares. Performance prior to March 1, 2016 has not been adjusted to reflect the lower expenses of Retirement Class shares. During this period, Retirement Class shares would have had returns similar to, but potentially higher than, Institutional Class shares due to the fact that Retirement Class shares represent interests in the same portfolio as Institutional Class shares but are subject to lower expenses. |
This report contains the current opinions of Jennison Associates LLC as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. At times, a growth investing style may be out of favor with investors which could cause growth securities to underperform value or other equity securities. Since the Fund may hold foreign securities, it may be subject to greater risks than funds invested only in the U.S. These risks are more severe for securities of issuers in emerging market regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
3
Harbor Capital Appreciation Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Sector Allocation (% of investments)
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of April 30, 2021, there was no foreign currency denomination that comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—100.0% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—1.0% | |||
2,718,648 | Safran SA (France) | $405,918 | |
AUTOMOBILES—5.6% | |||
3,189,952 | Tesla Inc.* | 2,263,080 | |
CAPITAL MARKETS—1.1% | |||
609,846 | Goldman Sachs Group Inc. | 212,501 | |
577,206 | S&P Global Inc. | 225,335 | |
437,836 | |||
ENTERTAINMENT—4.2% | |||
2,175,630 | Netflix Inc.* | 1,117,121 | |
2,231,419 | Roblox Corp.* | 166,352 | |
1,706,132 | Spotify Technology SA (Sweden)* | 430,150 | |
1,713,623 | |||
FOOD & STAPLES RETAILING—1.3% | |||
1,409,195 | Costco Wholesale Corp. | 524,347 | |
HEALTH CARE EQUIPMENT & SUPPLIES—2.1% | |||
1,750,816 | Danaher Corp. | 444,602 | |
571,753 | Dexcom Inc.* | 220,754 | |
209,165 | Intuitive Surgical Inc.* | 180,928 | |
846,284 | |||
HEALTH CARE PROVIDERS & SERVICES—0.4% | |||
1,046,118 | Guardant Health Inc.* | 166,312 | |
HOTELS, RESTAURANTS & LEISURE—1.2% | |||
190,477 | Airbnb Inc.* | 32,897 | |
313,950 | Chipotle Mexican Grill Inc.* | 468,423 | |
501,320 | |||
INTERACTIVE MEDIA & SERVICES—13.7% | |||
479,130 | Alphabet Inc. Class A* | 1,127,632 | |
477,358 | Alphabet Inc. Class C* | 1,150,490 | |
5,353,726 | Facebook Inc.* | 1,740,389 | |
5,574,584 | Match Group Inc.* | 867,573 | |
10,656,223 | Snap Inc.* | 658,768 | |
5,544,852 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
INTERNET & DIRECT MARKETING RETAIL—8.4% | |||
895,060 | Amazon.com Inc.* | $3,103,549 | |
187,257 | MercadoLibre Inc. (Argentina)* | 294,177 | |
3,397,726 | |||
IT SERVICES—16.8% | |||
328,675 | Adyen NV (Netherlands)*, 2 | 808,900 | |
1,927,398 | Mastercard Inc. | 736,382 | |
3,491,087 | PayPal Holdings Inc.* | 915,677 | |
1,341,624 | Shopify Inc. (Canada)* | 1,586,484 | |
685,447 | Snowflake Inc.* | 158,743 | |
2,756,103 | Square Inc.* | 674,749 | |
2,229,341 | Twilio Inc.* | 819,951 | |
4,626,619 | Visa Inc. | 1,080,593 | |
6,781,479 | |||
LEISURE PRODUCTS—0.4% | |||
1,589,253 | Peloton Interactive Inc.* | 156,303 | |
MULTILINE RETAIL—1.3% | |||
2,471,683 | Target Corp. | 512,281 | |
PERSONAL PRODUCTS—2.0% | |||
2,625,555 | Estée Lauder Companies Inc. | 823,899 | |
PHARMACEUTICALS—0.9% | |||
2,047,527 | Eli Lilly and Co. | 374,227 | |
ROAD & RAIL—3.4% | |||
16,349,616 | Uber Technologies Inc.* | 895,468 | |
2,063,355 | Union Pacific Corp. | 458,251 | |
1,353,719 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—5.5% | |||
2,428,021 | NVIDIA Corp. | 1,457,735 | |
6,401,620 | Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan)1 | 747,325 | |
2,205,060 | |||
SOFTWARE—15.2% | |||
2,390,212 | Adobe Inc.* | 1,215,040 | |
1,393,947 | Atlassian Corp. plc (Australia)* | 331,146 |
4
Harbor Capital Appreciation Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
SOFTWARE—Continued | |||
893,849 | Coupa Software Inc.* | $240,481 | |
2,384,348 | CrowdStrike Holdings Inc.* | 497,160 | |
529,724 | DocuSign Inc.* | 118,097 | |
7,232,972 | Microsoft Corp. | 1,824,011 | |
1,269,198 | RingCentral Inc.* | 404,811 | |
2,935,807 | salesforce.com Inc.* | 676,175 | |
229,310 | ServiceNow Inc.* | 116,116 | |
495,476 | Trade Desk Inc.* | 361,356 | |
1,430,467 | Workday Inc.* | 353,325 | |
6,137,718 | |||
SPECIALTY RETAIL—3.3% | |||
2,114,686 | Carvana Co.* | 603,235 | |
612,698 | Home Depot Inc. | 198,312 | |
7,713,834 | TJX Companies Inc. | 547,682 | |
1,349,229 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—5.6% | |||
17,280,261 | Apple Inc. | 2,271,663 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
TEXTILES, APPAREL & LUXURY GOODS—6.6% | |||
798,564 | Kering SA (France) | $639,898 | |
1,464,962 | Lululemon Athletica Inc. (Canada)* | 491,158 | |
1,144,750 | LVMH Moet Hennessy Louis Vuitton SE (France) | 862,398 | |
5,092,786 | NIKE Inc. | 675,405 | |
2,668,859 | |||
TOTAL COMMON STOCKS | |||
(Cost $21,129,564) | 40,435,735 | ||
TOTAL INVESTMENTS—100.0% | |||
(Cost $21,129,564) | 40,435,735 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0% | 17,211 | ||
TOTAL NET ASSETS—100.0% | $40,452,946 |
FAIR VALUE MEASUREMENTS
At April 30, 2021, the investments in Adyen NV, Kering SA, LVMH Moet Hennessy Louis Vuitton SE, and Safran SA (as disclosed in the preceding Portfolio of Investments) were classified as Level 2 and all other investments were classified as Level 1. There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
* | Non-income producing security |
1 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
2 | Securities purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At April 30, 2021, the aggregate value of these securities was $808,900 or 2% of net assets. |
The accompanying notes are an integral part of the Financial Statements.
5
Harbor Large Cap Value Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Aristotle Capital Management, LLC
11100 Santa
Monica Boulevard
Suite 1700
Los Angeles, CA 90025
Monica Boulevard
Suite 1700
Los Angeles, CA 90025
Portfolio Manager
Howard Gleicher, CFA
Since 2012
Since 2012
Gregory D. Padilla, CFA
Since 2018
Since 2018
Aristotle has subadvised the Fund since 2012.
Investment Objective
The Fund seeks long-term total return.
Howard Gleicher, CFA
Gregory D. Padilla, CFA
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
U.S. equity markets moved higher during the period as improving economic data and positive vaccine developments fueled optimism in both society and markets. During the period, Congress passed multiple rounds of stimulus providing direct payments to millions of individuals, while extending unemployment benefits and providing additional funds for states, small businesses, schools, vaccine distribution and testing. In markets, investors observed a reversal of trend in style factor performance with value-oriented securities outperforming growth-oriented securities over the period. Generally, stocks that benefited most during COVID-19 have been underperforming since November as the COVID-19 “losers” have played catch up. Elsewhere, some investors have become worried that the size of the U.S. stimulus, along with pent up savings, could lead to an increase in inflation, potentially leading the U.S. Federal Reserve (Fed) to tighten policy. However, despite upgrading its growth forecasts for this year and expecting unemployment to decline, the Fed has made it clear that it does not believe inflation will be sustainably above target and has signaled that it does not anticipate raising rates before 2024. Against this backdrop, U.S. equities posted strong gains with the S&P 500 Index and Russell 1000® Value Index generating returns of 28.85% and 36.30%, respectively. On a sector basis, all eleven sectors within the Russell 1000® Value Index ended the period higher, led by Energy and Financials. The weakest performers were defensives Utilities and Consumer Staples.
Performance
Harbor Large Cap Value Fund posted a total return of 32.40% (Retirement Class), 32.29% (Institutional Class), 32.07% (Administrative Class) and 32.08% (Investor Class) underperforming the 36.30% return of the Russell 1000® Value Index.
Overall, security selection detracted from performance relative to the Russell 1000® Value Index while allocation effects contributed. Security selection detracted within the Information Technology, Energy and Health Care sectors during the period. Within each of these sectors, Adobe, Cabot Oil & Gas, and Danaher, respectively, were the main detractors. Additionally, an underweight in Financials also weighed on relative returns. Meanwhile, security selection in Financials, Industrials, and Consumer Staples added the most value. At the company level, Capital One Financial, Parker Hannifin, and Walgreens Boots Alliance were the leading contributors within each respective sector. A lack of exposure to Utilities, the worst performing index sector during the period, also benefitted relative performance.
Digital Media and Digital Experience software provider, Adobe, was a top detractor during the period. Shares of Adobe ended the period in positive territory but trailed peers within the Information Technology sector. Although the stock price underperformed during the period, company fundamentals continued to advance as Adobe delivered another quarter of record revenue while also raising its full year outlook in late March. Overall, revenue grew 26% year-over-year to $3.9 billion led by Digital Media and Digital Experience revenue which grew 32% and 24%, respectively, over the same time period. The Document Cloud segment within Digital Media has been particularly strong highlighted by positive momentum for Adobe Sign while the company’s open-source e-commerce platform, Magento also showed positive momentum, with management commenting that online spending has permanently increased. As a market leader in the three growing categories of creativity, digital documents and customer experience management, we believe Adobe stands well-positioned to continue to capture more of this market opportunity in 2021 and beyond.
Credit card company, Capital One Financial, was a top contributor during the period. Shares rose as the company delivered strong results against an improving backdrop for financial services companies. Financial results announced during the period were driven by continued
6
Harbor Large Cap Value Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | ||||||
6 Months | 5 Years | 10 Years | ||||||
Harbor Large Cap Value Fund | ||||||||
Retirement Class1 | 32.40% | 52.69% | 16.92% | 14.14% | ||||
Institutional Class | 32.29 | 52.51 | 16.81 | 14.10 | ||||
Administrative Class | 32.07 | 52.07 | 16.51 | 13.80 | ||||
Investor Class | 32.08 | 51.97 | 16.39 | 13.67 | ||||
Comparative Index | ||||||||
Russell 1000® Value | 36.30% | 45.92% | 12.15% | 11.13% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.61% (Net) and 0.64% (Gross) (Retirement Class); 0.69% (Net) and 0.72% (Gross) (Institutional Class); 0.94% (Net) and 0.97% (Gross) (Administrative Class); and 1.05% (Net) and 1.08% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
strong credit performance, a loan reserve release, and an improvement in the company’s net interest margin, although results continue to remain below its pre-pandemic level. While the company has benefitted in the short term from an improving macroeconomic environment, we believe that the catalysts we have previously identified are company-specific and include a continued strong presence in credit cards with potential to gain market share, robust profitability profile with improvements as the credit card industry normalizes its share relative to other payment methods, and the deployment of free cash flow for shareholder-beneficial strategies.
In terms of portfolio activity, during the period, we sold our investments in Bank of America, BOK Financial, Oshkosh and Pioneer Natural Resources and made new investments in Cincinnati Financial, Crown Castle International, and Michelin.
Outlook & Strategy
Whether it be the improving vaccination rates in the U.S., the rise in the 10-year Treasury yield or the uncertainty regarding fiscal and monetary policy, there continues to be no shortage of headlines that can create volatility in the markets. Rather than becoming preoccupied with the news of the day, at Aristotle Capital, we remain focused on company fundamentals and the long term. Our investment process is not dependent on the realization of fiscal or monetary policies or the speed of a recovery. We seek to find companies with quality characteristics that we believe can allow them to succeed over full market cycles, regardless of macroeconomic and/or political events. Our goal is to deliver for our clients through a disciplined, research-oriented approach to finding what we believe to be great companies and a consistent, well-executed portfolio management process.
1 | Retirement Class shares commenced operations on March 1, 2016. The performance attributed to the Retirement Class shares prior to that date is that of the Institutional Class shares. Performance prior to March 1, 2016 has not been adjusted to reflect the lower expenses of Retirement Class shares. During this period, Retirement Class shares would have had returns similar to, but potentially higher than, Institutional Class shares due to the fact that Retirement Class shares represent interests in the same portfolio as Institutional Class shares but are subject to lower expenses. |
This report contains the current opinions of Aristotle Capital Management, LLC as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Since the Fund typically invests in a limited number of companies, an adverse event affecting a particular company may hurt the Fund’s performance more than if it had invested in a larger number of companies. Since the Fund may hold foreign securities, it may be subject to greater risks than funds invested only in the U.S. These risks are more severe for securities of issuers in emerging market regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
7
Harbor Large Cap Value Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Sector Allocation (% of investments)
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—98.4% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—1.7% | |||
216,091 | General Dynamics Corp. | $41,107 | |
AUTO COMPONENTS—2.2% | |||
1,815,793 | CIE Generale DES Etablissements Michelin Sca ADR (France)1 | 52,549 | |
BANKS—11.0% | |||
453,190 | Commerce Bancshares Inc. | 35,263 | |
342,157 | Cullen/Frost Bankers Inc. | 41,079 | |
575,224 | East West Bancorp Inc. | 43,803 | |
369,169 | JPMorgan Chase & Co. | 56,782 | |
4,393,397 | Mitsubishi UFJ Financial Group Inc. ADR (Japan)1 | 23,593 | |
317,137 | PNC Financial Services Group Inc. | 59,289 | |
259,809 | |||
BEVERAGES—2.1% | |||
908,389 | Coca-Cola Co. | 49,035 | |
BIOTECHNOLOGY—2.4% | |||
236,606 | Amgen Inc. | 56,700 | |
BUILDING PRODUCTS—4.7% | |||
395,187 | Allegion plc (Ireland) | 53,105 | |
935,413 | Johnson Controls International plc | 58,314 | |
111,419 | |||
CAPITAL MARKETS—2.4% | |||
222,097 | Ameriprise Financial Inc. | 57,390 | |
CHEMICALS—5.2% | |||
1,473,610 | Corteva Inc. | 71,853 | |
546,236 | RPM International Inc. | 51,805 | |
123,658 | |||
CONSTRUCTION MATERIALS—2.5% | |||
169,075 | Martin Marietta Materials Inc. | 59,704 | |
CONSUMER FINANCE—3.1% | |||
494,226 | Capital One Financial Corp. | 73,679 | |
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—4.8% | |||
332,150 | Crown Castle International Corp. | 62,796 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—Continued | |||
355,146 | Equity Lifestyle Properties Inc. | $24,647 | |
151,066 | Sun Communities Inc. | 25,203 | |
112,646 | |||
FOOD & STAPLES RETAILING—1.1% | |||
466,000 | Walgreens Boots Alliance Inc. | 24,745 | |
FOOD PRODUCTS—1.7% | |||
511,249 | Tyson Foods Inc. | 39,596 | |
HEALTH CARE EQUIPMENT & SUPPLIES—8.4% | |||
659,284 | Alcon Inc. (Switzerland) | 49,730 | |
359,159 | Danaher Corp. | 91,205 | |
448,193 | Medtronic plc | 58,677 | |
199,612 | |||
HOUSEHOLD DURABLES—6.1% | |||
692,296 | Lennar Corp. Class A | 71,722 | |
7,126 | Lennar Corp. Class B | 574 | |
705,339 | Sony Corp. ADR (Japan)1 | 70,647 | |
142,943 | |||
HOUSEHOLD PRODUCTS—2.0% | |||
359,646 | Procter & Gamble Co. | 47,984 | |
INSURANCE—3.9% | |||
238,099 | Chubb Ltd. (Switzerland) | 40,855 | |
459,181 | Cincinnati Financial Corp | 51,741 | |
92,596 | |||
INTERACTIVE MEDIA & SERVICES—2.3% | |||
977,500 | Twitter Inc.* | 53,977 | |
IT SERVICES—2.5% | |||
226,098 | PayPal Holdings Inc.* | 59,303 | |
MACHINERY—5.1% | |||
208,092 | Parker-Hannifin Corp. | 65,301 | |
504,225 | Xylem Inc. | 55,793 | |
121,094 |
8
Harbor Large Cap Value Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS—3.1% | |||
2,305,941 | Cabot Oil & Gas Corp. | $38,440 | |
442,180 | Phillips 66 | 35,777 | |
74,217 | |||
PHARMACEUTICALS—3.5% | |||
1,442,596 | Elanco Animal Health Inc.* | 45,745 | |
430,197 | Novartis AG ADR (Switzerland)1 | 36,670 | |
82,415 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—5.6% | |||
449,193 | Microchip Technology Inc. | 67,509 | |
463,200 | QUALCOMM Inc. | 64,292 | |
131,801 | |||
SOFTWARE—11.0% | |||
168,076 | Adobe Inc.* | 85,440 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SOFTWARE—Continued | |||
218,098 | ANSYS Inc.* | $79,750 | |
371,166 | Microsoft Corp. | 93,600 | |
258,790 | |||
TOTAL COMMON STOCKS | |||
(Cost $1,534,440) | 2,326,769 | ||
TOTAL INVESTMENTS—98.4% | |||
(Cost $1,534,440) | 2,326,769 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—1.6% | 38,623 | ||
TOTAL NET ASSETS—100.0% | $2,365,392 |
FAIR VALUE MEASUREMENTS
All investments at April 30, 2021 (as disclosed in the preceding Portfolio of Investments) were classified as Level 1. There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
* | Non-income producing security |
1 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
The accompanying notes are an integral part of the Financial Statements.
9
Harbor Mid Cap Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
EARNEST Partners, LLC
1180 Peachtree St. NE
Suite 2300
Atlanta, GA 30309
Suite 2300
Atlanta, GA 30309
Portfolio Manager
Paul E. Viera
Since 2019
Since 2019
EARNEST Partners, LLC has subadvised the Fund since 2019.
Investment Objective
The Fund seeks long-term total return.
Paul E. Viera
Management’s Discussion of
Fund Performance
Fund Performance
MARKET REVIEW
During the six-month period ended April 30, 2021, the U.S. mid cap market, as represented by the Russell Midcap® Index, gained 35.42%. This period includes the end of 2020, as markets got a boost from stimulus packages and vaccine rollouts. Stimulus measures and the pace of vaccines were two major developments that drove investor sentiment during the period.
Equity markets continued their record-setting march upwards as investors began to look beyond the near-term effects of the COVID-19 pandemic and incorporated the global vaccination rollout, continued government stimulus measures and the adaptability of global businesses into future earnings growth. The decrease in new case numbers, relaxation of business restrictions and a continued low-rate environment buoyed retail sales. Progress continued on the rollout of vaccinations and by the end of the first quarter of 2021, over 15% of the U.S. population had received a COVID-19 inoculation. Many areas of the economy experienced expanded activity as the government’s stimulus measures supported new purchases of durable goods and home prices reached record highs. Following the inauguration of President Joe Biden, the new administration pledged further economic stimulus measures along with proposed changes in corporate and personal tax policies.
Previously, the U.S. Federal Reserve (Fed) enacted an array of stimulative measures that included short-term rate reductions to near-zero and repurchases of Treasuries, mortgages and corporate debt. The Fed stated that it would “maintain an accommodative stance” until its goals of 2% long-term inflation and maximum employment are achieved. In its latest statement, the Fed specified that it will continue to hold rates near zero and provide stimulus by increasing its holdings of Treasury securities by at least $80 billion per month and at least $40 billion per month in Agency Mortgage-Backed Securities. The continued willingness of the Fed to expand its balance sheet gave further confidence to equity and high-yield fixed income investors who understood that the Fed will continue to act as a lender-of-last resort and that stimulus measures would be ongoing. Additionally, the central bank revised up its GDP forecast to growth of 6.5% in 2021 versus its December projection of 4.2%, to be followed by a 3.3% increase in 2022. After hitting a record high of 14.7% in April of last year, unemployment fell to 6.2% in February 2021. The Fed also revised down its unemployment projections to 4.5% at the end of 2021 and is forecasting unemployment to fall below 4% by the end of 2022. Previously, in June 2020, the Fed had projected unemployment at 9.3% at the end of 2020. Last year, Congress approved of a $2 trillion stimulus bill that included small business loans, direct payments to households and expanded unemployment benefits for workers displaced by the pandemic. After lengthy negotiations, Congress approved a second $900 billion stimulus bill in late December that included $325 billion in forgivable small business loans, extended supplemental unemployment benefits through March and provided additional direct payments to households. Congress recently passed a further $1.9 trillion bill which includes another round of direct payments to households, further extensions of unemployment insurance and additional vaccine funding.
Performance
Harbor Mid Cap Fund posted a total return of 32.87% (Retirement Class), 32.80% (Institutional Class) and 32.64% (Investor Class) for the six-month period ended April 30, 2021, underperforming the 35.42% return of the Russell Midcap® Index.
Contributing to performance, Applied Materials (AMAT) provides manufacturing equipment, services and software for semiconductor chips, computer displays, electronics and solar products. Shares outperformed during the period following a strong earnings report driven by acceleration of semiconductor demand and exposure to technology inflections. The consistent trend of electronics becoming more power efficient, and thus requiring smaller transistor sizes, should continue to be a tailwind for AMAT moving forward, in our view. Despite U.S.-China trade
10
Harbor Mid Cap Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | 5 Years | Annualized | |||||
6 Months | Life of Fund | |||||||
Harbor Mid Cap Fund | ||||||||
Retirement Class1 | 32.87% | 58.30% | N/A | 27.29% | ||||
Institutional Class1 | 32.80 | 58.07 | N/A | 27.16 | ||||
Investor Class1 | 32.64 | 57.61 | N/A | 26.76 | ||||
Comparative Index | ||||||||
Russell Midcap®1 | 35.42% | 59.57% | N/A | 24.39% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.80% (Net) and 1.05% (Gross) (Retirement Class); 0.88% (Net) and 1.13% (Gross) (Institutional Class); and 1.24% (Net) and 1.49% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
restrictions, AMAT remains attractive, in our view, as foundry-logic customers’ demand for semi equipment and services continues to rise to support cloud services, 5G cellular phones, electric vehicles, and industrial automation. Additionally, the company’s display business is well positioned for the demand in OLED expanding beyond smartphones into computing and TVs, in our view.
Detracting from performance, Sealed Air Corporation is a global packaging company that serves an array of industries. The company manufactures a host of products ranging from food protection and sustainability, applications for cleaning and hygiene and secure wrapping for pharmaceutical and electronic devices. The stock’s performance was only slightly positive during the period despite reporting strong earnings growth in the period and beating earnings expectations by more than 15% for the most recent fiscal year. With the increase in global demand for food packaging and a structural shift toward e-commerce, we expect the company to see strong top line growth. Looking ahead, we believe that Sealed Air should expand gross margins; resin, as an important input for the company, has decreased price volatility because of stabilized chemical processing facilities. Additionally, the company’s ability to generate earnings and free cash flow in excess of market expectations through sales growth and cost cutting act as positive catalysts on the investment horizon, in our view.
OUTLOOK & STRATEGY
As of April 30, 2021, the Fund was overweight in the Industrials, Information Technology, and Financials sectors and was underweight in Energy, Utilities, Consumer Staples, and Consumer Discretionary. These weightings are an outgrowth of our fundamental, bottom-up stock selection process.
In managing Harbor Mid Cap Fund, we seek companies with share prices that we believe do not fully reflect their earnings growth outlook. Going forward, we will continue to employ our three-step investment methodology: screen the broad universe to identify stocks that are best positioned to outperform; measure and manage downside risk to the benchmark; and perform in-depth, thorough, fundamental research to find what we believe are the best stocks to include in the Fund.
1 | The “Life of Fund” return as shown reflects the period 12/01/2019 through 04/30/2021. |
This report contains the current opinions of EARNEST Partners, LLC as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions.Stocks of mid cap companies pose special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
11
Harbor Mid Cap Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Sector Allocation (% of investments)
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—98.0% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—1.4% | |||
3,681 | General Dynamics Corp. | $700 | |
BANKS—2.0% | |||
47,618 | KeyCorp | 1,036 | |
BUILDING PRODUCTS—1.9% | |||
14,789 | Masco Corp. | 945 | |
CAPITAL MARKETS—7.3% | |||
9,159 | Houlihan Lokey Inc. | 607 | |
10,146 | Intercontinental Exchange Inc. | 1,194 | |
7,451 | Raymond James Financial Inc. | 974 | |
13,739 | Stifel Financial Corp. | 951 | |
3,726 | |||
CHEMICALS—4.7% | |||
5,060 | Albemarle Corp. | 851 | |
5,592 | Eastman Chemical Co. | 645 | |
3,972 | Scotts Miracle-Gro Co. | 918 | |
2,414 | |||
COMMERCIAL SERVICES & SUPPLIES—4.0% | |||
11,019 | Republic Services Inc. | 1,172 | |
11,184 | Stericycle Inc.* | 853 | |
2,025 | |||
CONTAINERS & PACKAGING—2.7% | |||
4,326 | Packaging Corp. of America | 639 | |
15,409 | Sealed Air Corp. | 761 | |
1,400 | |||
ELECTRICAL EQUIPMENT—1.6% | |||
14,258 | Sensata Technologies Holding plc (United Kingdom)* | 823 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—3.9% | |||
7,236 | Arrow Electronics Inc.* | 825 | |
8,248 | Keysight Technologies Inc.* | 1,191 | |
2,016 | |||
ENTERTAINMENT—1.9% | |||
10,880 | Activision Blizzard Inc. | 992 | |
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—4.4% | |||
19,471 | Americold Realty Trust | 787 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—Continued | |||
6,933 | Boston Properties Inc. | $758 | |
2,340 | SBA Communications Corp. | 701 | |
2,246 | |||
FOOD & STAPLES RETAILING—1.5% | |||
8,881 | Sysco Corp. | 753 | |
HEALTH CARE EQUIPMENT & SUPPLIES—1.6% | |||
11,854 | Dentsply Sirona Inc. | 800 | |
HEALTH CARE PROVIDERS & SERVICES—2.5% | |||
4,617 | AmerisourceBergen Corp. | 558 | |
2,656 | Laboratory Corp. of America Holdings* | 706 | |
1,264 | |||
HOTELS, RESTAURANTS & LEISURE—2.5% | |||
8,590 | Darden Restaurants Inc. | 1,260 | |
HOUSEHOLD DURABLES—3.0% | |||
15,789 | D.R. Horton Inc. | 1,552 | |
INSURANCE—5.1% | |||
4,820 | Reinsurance Group of America Inc. | 629 | |
5,605 | Renaissance Holdings Ltd. (Bermuda) | 946 | |
10,083 | The Progressive Corp. | 1,016 | |
2,591 | |||
IT SERVICES—4.8% | |||
4,541 | Akamai Technologies Inc.* | 493 | |
9,412 | Black Knight Inc.* | 682 | |
5,857 | Global Payments Inc. | 1,257 | |
2,432 | |||
LIFE SCIENCES TOOLS & SERVICES—5.6% | |||
7,692 | Agilent Technologies Inc. | 1,028 | |
1,682 | Bio-Rad Laboratories Inc.* | 1,060 | |
8,818 | Syneos Health Inc.* | 748 | |
2,836 | |||
MACHINERY—6.3% | |||
3,200 | Cummins Inc. | 807 | |
4,795 | Dover Corp. | 715 |
12
Harbor Mid Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
MACHINERY—Continued | |||
3,643 | Snap-on Inc. | $866 | |
6,528 | Woodward Inc. | 816 | |
3,204 | |||
MULTILINE RETAIL—2.0% | |||
8,792 | Dollar Tree Inc.* | 1,010 | |
MULTI-UTILITIES—1.4% | |||
7,338 | WEC Energy Group Inc. | 713 | |
OIL, GAS & CONSUMABLE FUELS—2.9% | |||
13,360 | Cimarex Energy Co. | 884 | |
22,532 | Continental Resources Inc. | 614 | |
1,498 | |||
REAL ESTATE MANAGEMENT & DEVELOPMENT—2.5% | |||
15,068 | CBRE Group Inc.* | 1,284 | |
ROAD & RAIL—1.6% | |||
7,995 | CSX Corp. | 806 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—8.3% | |||
7,654 | Applied Materials Inc. | 1,016 | |
4,187 | CMC Materials Inc. | 768 | |
7,957 | Skyworks Solutions Inc. | 1,443 | |
7,919 | Xilinx Inc. | 1,013 | |
4,240 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SOFTWARE—7.3% | |||
3,542 | ANSYS Inc.* | $1,295 | |
18,851 | CDK Global Inc. | 1,010 | |
5,781 | Synopsys Inc.* | 1,429 | |
3,734 | |||
SPECIALTY RETAIL—0.5% | |||
3,634 | TJX Companies Inc. | 258 | |
TRADING COMPANIES & DISTRIBUTORS—2.8% | |||
17,763 | Air Lease Corp. | 829 | |
6,148 | GATX Corp. | 601 | |
1,430 | |||
TOTAL COMMON STOCKS | |||
(Cost $42,381) | 49,988 | ||
TOTAL INVESTMENTS—98.0% | |||
(Cost $42,381) | 49,988 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—2.0% | 1,015 | ||
TOTAL NET ASSETS—100.0% | $51,003 |
FAIR VALUE MEASUREMENTS
All investments at April 30, 2021 (as disclosed in the preceding Portfolio of Investments) were classified as Level 1. There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
* | Non-income producing security |
The accompanying notes are an integral part of the Financial Statements.
13
Harbor Mid Cap Growth Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Wellington Management Company LLP
280 Congress Street
Boston, MA 02210
Boston, MA 02210
Portfolio Managers
Stephen C. Mortimer
Since 2010
Since 2010
Mario E. Abularach, CFA, CMT
Since 2006
Since 2006
Wellington Management has subadvised the Fund since 2005.*
Investment Objective
The Fund seeks long-term growth of capital.
Stephen C. Mortimer
Mario E. Abularach, CFA, CMT
Management’s Discussion of
Fund Performance
Fund Performance
MARKET REVIEW
U.S. equities, as measured by the S&P 500, rallied in late 2020 as markets were bolstered by optimism that vaccines will support a broad reopening of the U.S. economy in 2021. U.S. equities continued to rally for the fourth consecutive quarter in the first quarter of 2021, bolstered by an accelerating vaccine rollout, substantial fiscal and monetary policy tailwinds, and upbeat forecasts for economic growth and earnings. Expectations for a strong rebound in the U.S. economy sparked inflationary fears, contributing to a pro-cyclical rotation, although U.S. Federal Reserve (Fed) Chair Jerome Powell indicated that he does not believe inflation will increase substantially or at a sustained rate. The Fed anticipates that interest rates will remain close to zero through 2023. It also raised its median economic growth projection for 2021 to 6.5%, up from 4.2% in December, due to the accelerating vaccine rollout and fiscal stimulus. The Democrats secured slim majorities in both houses of Congress after winning control of the Senate, bolstering President Biden’s prospects of advancing his legislative agenda. President Biden signed into law a massive $1.9 trillion COVID-19 relief bill and introduced an infrastructure package worth approximately $2.3 trillion, proposing to fund the initiative largely through higher corporate taxes. The plan faces substantial hurdles in Congress amid disagreements among lawmakers about the size and scope of the package and how to pay for it. Corporate earnings remained a bright spot in the U.S. economy, with companies providing upward revisions to their forward earnings estimates along with optimistic commentary and sentiment.
Performance
Harbor Mid Cap Growth Fund returned 24.85% (Retirement Class), 24.80% (Institutional Class), 24.65% (Administrative Class) and 24.62% (Investor Class) for the six-month period ended April 30, 2021, while the Russell Midcap® Growth Index returned 24.84%.
Sector allocation, a residual of the bottom-up stock selection process, was the primary contributor to performance relative to the benchmark. Allocation effect was driven by our overweights to Consumer Discretionary and Communication Services, but partially offset by a lack of exposure to Real Estate and an underweight to Information Technology. Security selection modestly detracted from returns. Weak selection in Information Technology and Health Care detracted, while selection in Consumer Discretionary and Financials contributed.
Churchill Capital, a special-purpose acquisition company, was the Fund’s most significant contributor during the period. The stock rose over the period following a report that Lucid Motors, an electric vehicle company, could go public via Churchill Capital IV Corp. Investors were enthusiastic that Lucid would compete with Tesla. Lucid intends to launch a luxury electric vehicle this spring and broaden its target market by extending its technology to lower-priced vehicles. Churchill Capital was eliminated during the period after shares spiked on speculation of the deal with Lucid. Other notable contributors during the period were recreational vehicle manufacturer Thor Industries, fantasy sports contest and sports betting operator DraftKings, and camera and social media company Snap.
Splunk, a developer of software solutions, was the Fund’s most significant detractor during the period. Shares of Splunk fell after the company reported disappointing third-quarter results. The company’s weakness derived from a sharp drop in its license revenue. Splunk was eliminated during the period as competitive pressures have increased and growth trends were weaker than expected. Other notable detractors during the period were medical device manufacturer Tandem Diabetes Care, pharmaceutical research company Galapagos NV, and not holding benchmark constituent Moderna.
* | The Board of Trustees approved a change in Harbor Mid Cap Growth Fund’s name and principal investment strategy, and certain other related changes. Effective on or about September 1, 2021, the Fund will be renamed Harbor Disruptive Innovation Fund. Additional information related to these changes can be found in the supplement to the Fund’s prospectus as filed with the Securities and Exchange Commission on May 19, 2021. |
14
Harbor Mid Cap Growth Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | ||||||
6 Months | 5 Years | 10 Years | ||||||
Harbor Mid Cap Growth Fund | ||||||||
Retirement Class1 | 24.85% | 75.66% | 26.91% | 15.96% | ||||
Institutional Class | 24.80 | 75.54 | 26.78 | 15.92 | ||||
Administrative Class | 24.65 | 75.15 | 26.48 | 15.62 | ||||
Investor Class | 24.62 | 74.93 | 26.33 | 15.49 | ||||
Comparative Index | ||||||||
Russell Midcap® Growth | 24.84% | 53.97% | 19.70% | 14.33% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.80% (Net) and 0.83% (Gross) (Retirement Class); 0.88% (Net) and 0.91% (Gross) (Institutional Class); 1.13% (Net) and 1.16% (Gross) (Administrative Class); and 1.24% (Net) and 1.27% (Gross) (Investor Class). The Adviser has contractually agreed to reduce the management fee to 0.72% through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
OUTLOOK & STRATEGY
At the end of last year, the team leaned into stocks that we anticipated would benefit from economic recovery given the approval and distribution of vaccines in several countries. We believe that the markets are largely anticipating economic recovery, particularly in the U.S., and thus, we are focusing on investing in those companies where we believe that we have the most differentiated view of the future versus consensus and have identified a higher upside potential relative to the downside.
Looking ahead, we believe that the markets are largely anticipating economic recovery. We believe upside from here will be driven by idiosyncratic reasons rather than sentiment or thematic factors that helped drive markets last year, and we continue to keep a high bar for inclusion in this portfolio.
Our investment philosophy is based on four key underlying premises. We believe that changes in earnings expectations drive security prices and opportunities arise where our expectations differ significantly from consensus. In addition, we believe that human nature has an anchoring bias that can often miss transformational change, and early identification of this change can lead to excess returns. We view being flexible as a key tenet of our philosophy and recognize that growth exists in unexpected places across sectors of the market. Finally, we believe that our valuation discipline helps control portfolio risk by seeking to balance downside risk with potential upside reward.
We employ this philosophy, together with a bottom-up fundamental analysis and opportunistic investment approach, in managing the Fund. We consider a broad universe of available stocks within the mid cap market, typically focusing on companies that we believe have accelerating earnings growth combined with a differentiated view relative to consensus.
At the end of the period, our largest overweight was Consumer Discretionary and Financials. We were most underweight to Information Technology and Industrials.
15
Harbor Mid Cap Growth Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Sector Allocation (% of investments)
(Excludes short-term investments)
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of April 30, 2021, there was no foreign currency denomination that comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—97.6% | |||
Shares | Value | ||
ACQUISITION COMPANIES—1.9% | |||
312,100 | BowX Acquisition Corp.* | $4,135 | |
257,768 | Soaring Eagle Acquisition Corp.* | 2,787 | |
240,607 | Thoma Bravo Advantage* | 2,630 | |
9,552 | |||
AUTOMOBILES—2.2% | |||
77,699 | Thor Industries Inc. | 11,001 | |
BEVERAGES—2.1% | |||
8,884 | Boston Beer Co. Inc.* | 10,807 | |
BIOTECHNOLOGY—3.9% | |||
47,283 | Apellis Pharmaceuticals Inc.* | 2,396 | |
20,949 | Ascendis Pharma AS ADR (Denmark)*,1 | 3,037 | |
56,238 | Exact Sciences Corp.* | 7,413 | |
37,255 | Kodiak Sciences Inc.* | 4,502 | |
9,686 | Novavax Inc.* | 2,295 | |
19,643 | |||
CAPITAL MARKETS—3.4% | |||
105,175 | Ares Management Corp. | 5,524 | |
146,439 | Tradeweb Markets Inc. | 11,902 | |
17,426 | |||
COMMERCIAL SERVICES & SUPPLIES—1.5% | |||
63,288 | Copart Inc.* | 7,880 | |
DIVERSIFIED CONSUMER SERVICES—2.4% | |||
134,962 | Chegg Inc.* | 12,191 | |
ELECTRICAL EQUIPMENT—0.1% | |||
20,944 | Vontier Corp.* | 656 | |
ENTERTAINMENT—2.0% | |||
39,372 | Spotify Technology SA (Sweden)* | 9,927 | |
HEALTH CARE EQUIPMENT & SUPPLIES—10.8% | |||
32,975 | ABIOMED Inc.* | 10,576 | |
36,489 | Align Technology Inc.* | 21,730 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES—Continued | |||
35,511 | Dexcom Inc.* | $13,711 | |
29,066 | Insulet Corp.* | 8,581 | |
54,598 | |||
HEALTH CARE PROVIDERS & SERVICES—3.2% | |||
194,681 | Agilon Health Inc.* | 6,138 | |
160,193 | Oak Street Health Inc.* | 9,873 | |
16,011 | |||
HEALTH CARE TECHNOLOGY—1.1% | |||
142,198 | GoodRx Holdings Inc.* | 5,689 | |
HOTELS, RESTAURANTS & LEISURE—8.6% | |||
11,143 | Chipotle Mexican Grill Inc.* | 16,626 | |
260,096 | DraftKings Inc.* | 14,737 | |
61,636 | Penn National Gaming Inc.* | 5,493 | |
80,859 | Planet Fitness Inc.* | 6,791 | |
43,647 | |||
HOUSEHOLD DURABLES—2.1% | |||
101,442 | Lennar Corp. | 10,509 | |
INTERACTIVE MEDIA & SERVICES—3.6% | |||
87,359 | Match Group Inc.* | 13,596 | |
87,327 | Twitter Inc.* | 4,822 | |
18,418 | |||
IT SERVICES—3.5% | |||
94,891 | Leidos Holdings Inc. | 9,611 | |
27,802 | MongoDB Inc.* | 8,270 | |
17,881 | |||
LEISURE PRODUCTS—1.6% | |||
56,862 | Polaris Industries Inc. | 7,962 | |
LIFE SCIENCES TOOLS & SERVICES—1.1% | |||
43,310 | Agilent Technologies Inc. | 5,788 |
16
Harbor Mid Cap Growth Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
MACHINERY—2.8% | |||
98,661 | Fortive Corp. | $6,987 | |
40,860 | Middleby Corp.* | 7,409 | |
14,396 | |||
PHARMACEUTICALS—1.1% | |||
151,304 | Elanco Animal Health Inc.* | 4,798 | |
9,528 | Reata Pharmaceuticals Inc.* | 966 | |
5,764 | |||
PROFESSIONAL SERVICES—3.2% | |||
19,096 | CoStar Group Inc.* | 16,316 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—5.0% | |||
129,981 | Marvell Technology Inc. | 5,876 | |
32,721 | MKS Instruments Inc. | 5,861 | |
25,214 | SolarEdge Technologies Inc.* | 6,645 | |
30,986 | Universal Display Corp. | 6,931 | |
25,313 | |||
SOFTWARE—17.0% | |||
148,715 | 2U Inc.* | 5,837 | |
28,568 | Fair Isaac Corp.* | 14,896 | |
93,448 | Guidewire Software Inc.* | 9,860 | |
707,450 | MultiPlan Corp.* | 5,256 | |
29,279 | Paycom Software Inc.* | 11,255 | |
45,501 | RingCentral Inc.* | 14,513 | |
163,661 | Snap Inc.* | 10,117 | |
80,082 | Varonis Systems Inc.* | 4,240 | |
40,905 | Workday Inc.* | 10,104 | |
86,078 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SPECIALTY RETAIL—9.3% | |||
62,825 | Five Below Inc.* | $12,645 | |
114,540 | Floor & Decor Holdings Inc.* | 12,705 | |
149,027 | Ollie's Bargain Outlet Holdings Inc.* | 13,751 | |
59,908 | Ross Stores Inc.* | 7,844 | |
46,945 | |||
TEXTILES, APPAREL & LUXURY GOODS—4.1% | |||
61,373 | Lululemon Athletica Inc.* | 20,577 | |
TOTAL COMMON STOCKS | |||
(Cost $385,961) | 494,975 | ||
SHORT-TERM INVESTMENTS—1.8% | |||
(Cost $8,985) | |||
Principal Amount | |||
REPURCHASE AGREEMENTS—1.8% | |||
8,985 | Repurchase agreement with Federal Reserve Bank of Boston dated April 30, 2021 due May 03, 2021 at 0.005% collateralized by U.S. Treasury Notes (value $9,146) | 8,985 | |
TOTAL INVESTMENTS—99.4% | |||
(Cost $394,946) | 503,960 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.6% | 3,028 | ||
TOTAL NET ASSETS—100.0% | $506,988 |
FAIR VALUE MEASUREMENTS
At April 30, 2021, the repurchase agreement (as disclosed in the preceding Portfolio of Investments) was classified as Level 2 and all other investments were classified as Level 1. There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
* | Non-income producing security |
1 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
The accompanying notes are an integral part of the Financial Statements.
17
Harbor Mid Cap Value Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
LSV Asset Management
155 North Wacker Dr.
Suite 4600
Chicago, IL 60606
Suite 4600
Chicago, IL 60606
Portfolio Managers
Josef Lakonishok, Ph.D.
Since 2004
Since 2004
Menno Vermeulen, CFA
Since 2004
Since 2004
Puneet Mansharamani, CFA
Since 2006
Since 2006
Greg Sleight
Since 2014
Since 2014
Guy Lakonishok, CFA
Since 2014
Since 2014
LSV has subadvised the Fund since 2004.
Investment Objective
The Fund seeks long-term total return.
Josef Lakonishok, Ph.D.
Menno Vermeulen, CFA
Puneet Mansharamani, CFA
Greg Sleight
Guy Lakonishok, CFA
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
U.S. equities, as measured by the S&P 500 Index, advanced 28.85% over the six-month period ended April 30, 2021. Global equity markets rallied over the last six months fueled by positive news on vaccines to fight COVID-19 and massive government stimulus in the U.S., with expectation of more to come. Small cap stocks led the way in the period as the Russell 2000® Index returned nearly 50%. Value stocks outperformed growth stocks across all market capitalization ranges. The value advantage among mid cap stocks was nearly 17% as the Russell Midcap® Value Index returned 41.41% while the Russell Midcap® Growth Index advanced 24.84%.
U.S. equity markets surged starting in early November as news that vaccines from Pfizer-BioNTech and Moderna proved effective in fighting COVID-19. The effective rollout over the next six months also bolstered markets. The 2020 calendar year concluded with Congress passing additional stimulus measures, including direct payments and extended unemployment benefits, and followed by additional COVID-19 relief in the form of $1.9 trillion in fiscal stimulus in the first quarter. The COVID-19 relief bill is expected to be succeeded by an additional $2 trillion in infrastructure spending. The increased government spending coupled with the re-opening of the economy led economists to raise forecasts for 2021 GDP growth. While the U.S. Federal Reserve maintained the accommodative policies, it has pursued near zero percent interest rates and ongoing bond purchases and 10-year Treasuries ticked up to 1.75% in early 2021. The yield curve also steepened during the period, as the bond market began to price in higher growth and inflation expectations. Energy and Financials stocks led the way in the period while defensive sectors including Utilities, Health Care and Consumer Staples lagged over the last six months.
Performance
Harbor Mid Cap Value Fund returned 52.29% (Retirement Class), 52.18% (Institutional Class), 52.07% (Administrative Class), and 51.87% (Investor Class) compared to 41.41% for the Russell Midcap® Value Index for the six-month period ended April 30, 2021. At long last, value stocks staged a comeback over the trailing six months as mid cap value stocks outperformed mid cap growth stocks by nearly 17%. The rebound in value-oriented stocks and sectors had a positive impact on relative results given the Fund’s attractive valuation characteristics. Small cap stocks also surged in the period leading the market as the Russell 2000® Index was up nearly 50%. The rally in smaller stocks also helped drive the strong relative results given the Fund’s tilt to smaller companies compared to the benchmark index. Sector allocation had little impact on relative results in the period, although the Fund’s overweight to Financials and underweight to Utilities added some value. Stock selection was positive across several sectors particularly in the Technology, Financials, Consumer Discretionary, Industrials and Real Estate sectors.
Top individual contributors included Seagate Technology and HP Inc. in the Technology sector, Kohl’s Corp, Macy’s and Capri Holdings in the Consumer Discretionary sector, AMC Networks in the Communication Services sector, AGCO in the Industrials sector, Valero Energy and Devon Energy in the Energy sector and Ally Financial, Navient Corp and Zions Bancorporation in the Financials sector.
18
Harbor Mid Cap Value Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | ||||||
6 Months | 5 Years | 10 Years | ||||||
Harbor Mid Cap Value Fund | ||||||||
Retirement Class1 | 52.29% | 74.48% | 9.70% | 10.06% | ||||
Institutional Class | 52.18 | 74.35 | 9.61 | 10.02 | ||||
Administrative Class | 52.07 | 73.88 | 9.34 | 9.75 | ||||
Investor Class | 51.87 | 73.68 | 9.20 | 9.61 | ||||
Comparative Index | ||||||||
Russell Midcap® Value | 41.41% | 60.70% | 12.18% | 11.31% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.77% (Net) and 0.82% (Gross) (Retirement Class); 0.85% (Net) and 0.90% (Gross) (Institutional Class); 1.10% (Net) and 1.15% (Gross) (Administrative Class); and 1.21% (Net) and 1.26% (Gross) (Investor Class). The net expense ratios reflect a contractual management fee waiver effective through 02/28/2022. Additionally, the Adviser has contractually agreed to limit the Fund’s operating expenses, excluding interest expense (if any), to 0.77%, 0.85%, 1.10% and 1.21% for the Retirement Class, Institutional Class, Administrative Class and Investor Class, respectively, through February 28, 2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
The most significant detractors included Vistra Corp and PPL Corp in the Utilities sector, Kroger and Smucker in the Consumer Staples sector, Atlas Air Worldwide, Meritor and Allison Transmission in the Industrials sector, and underweights to Freeport-McMoran in the Materials sector and Occidental Petroleum in the Energy sector.
Outlook & Strategy
Sector positioning is a residual of the Manager’s bottom-up stock selection process, subject to minimum and maximum exposures to sectors and industries. The Fund’s most significant sector exposures on an absolute basis were to the Financials, Industrial and Consumer Discretionary sectors. Relative to the value benchmark, the Fund is overweight the Consumer Discretionary, Consumer Staples and Financials sectors while underweight Industrials, Utilities and Real Estate. Among industries, the Fund is overweight construction machinery & heavy trucks, technology hardware, diversified chemicals, metal & glass containers and broadcasting while underweight multi-utilities, residential REITs, industrial machinery and electric utilities.
Despite the strong absolute and relative performance over the last six months, the portfolio continues to trade at a significant discount to the value benchmark on multiple measures. The portfolio is trading at 12.8x trailing earnings compared to 20.1x for the value benchmark, 1.9x book value compared to 2.7x for the benchmark and 10.4x cash flow compared to 17.9x for the Russell Midcap Value Index.
While value stocks have rebounded and posted strong absolute and relative performance over the last six months, the outlook for value stocks and the Harbor Mid Cap Value Fund continues to be bright, in our view. Coming into 2021, value stocks had suffered their worst year relative to growth stocks since the Technology bubble. During 2020, the valuation spread between growth and value stocks had reached historical highs. While the valuation difference has declined slightly over the last six months, the spreads remain wide. Our analysis indicates that growth stocks in the U.S. are trading at a nearly 50% premium to the market (core stocks) while growth stocks have historically traded at a 20% premium on average over time. Value stocks, which historically trade at a 14% discount, are trading at a 25% discount to core. Value stocks have several potential tailwinds, including higher interest rates and improved economic growth as economies reopen. As vaccines take hold and governments introduce additional fiscal stimulus, the most important potential driver of a continued ‘value recovery’ is the valuation differential between growth and value stocks, in our view.
We are able to find many stocks that we believe to be attractive across multiple sectors, particularly among Financials, Consumer Discretionary and Consumer Staples. In addition, the portfolio is trading at discounts to the value benchmark and overall market, which we have not seen since the Technology bubble. We believe that the combination of attractive valuations and the other tailwinds noted above should bode well for value stocks.
1 | Retirement Class shares commenced operations on March 1, 2016. The performance attributed to the Retirement Class shares prior to that date is that of the Institutional Class shares. Performance prior to March 1, 2016 has not been adjusted to reflect the lower expenses of Retirement Class shares. During this period, Retirement Class shares would have had returns similar to, but potentially higher than, Institutional Class shares due to the fact that Retirement Class shares represent interests in the same portfolio as Institutional Class shares but are subject to lower expenses. |
This report contains the current opinions of LSV Asset Management as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions.The value of securities selected using quantitative analysis can react differently to issuer, political, market, and economic developments than the market as a whole or securities selected using only fundamental analysis. The factors used in quantitative analysis and the weight placed on those factors may not be predictive of a security’s value. In addition, any model may contain flaws or the model may not perform as anticipated. Stocks of mid cap companies pose special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
19
Harbor Mid Cap Value Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Sector Allocation (% of investments)
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—97.4% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—2.3% | |||
9,300 | Huntington Ingalls Industries Inc. | $1,975 | |
14,800 | L3Harris Technologies Inc. | 3,097 | |
91,100 | Textron Inc. | 5,852 | |
10,924 | |||
AIR FREIGHT & LOGISTICS—0.9% | |||
58,200 | Atlas Air Worldwide Holdings Inc.* | 3,952 | |
AIRLINES—1.4% | |||
39,500 | Alaska Air Group Inc.* | 2,731 | |
95,200 | JetBlue Airways Corp.* | 1,938 | |
31,500 | United Airlines Holdings Inc.* | 1,714 | |
6,383 | |||
AUTO COMPONENTS—1.7% | |||
118,200 | American Axle & Manufacturing Holdings Inc.* | 1,097 | |
58,900 | BorgWarner Inc. | 2,861 | |
68,900 | Goodyear Tire & Rubber Co.* | 1,186 | |
15,400 | Lear Corp. | 2,831 | |
7,975 | |||
AUTOMOBILES—0.7% | |||
70,000 | Harley-Davidson Inc. | 3,386 | |
BANKS—5.8% | |||
30,400 | CIT Group Inc. | 1,620 | |
140,200 | Citizens Financial Group Inc. | 6,488 | |
155,200 | Fifth Third Bancorp | 6,292 | |
143,100 | KeyCorp | 3,114 | |
209,000 | Regions Financial Corp. | 4,556 | |
89,800 | Zions Bancorporation | 5,011 | |
27,081 | |||
BEVERAGES—1.3% | |||
110,500 | Molson Coors Brewing Co.* | 6,072 | |
BIOTECHNOLOGY—1.2% | |||
25,600 | Alexion Pharmaceuticals Inc.* | 4,318 | |
132,500 | Ironwood Pharmaceuticals Inc.* | 1,463 | |
5,781 | |||
BUILDING PRODUCTS—1.0% | |||
47,400 | Owens Corning | 4,589 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
CAPITAL MARKETS—1.6% | |||
29,300 | Ameriprise Financial Inc. | $7,571 | |
CHEMICALS—4.4% | |||
45,000 | Cabot Corp. | 2,470 | |
18,100 | Celanese Corp. | 2,835 | |
112,122 | Chemours Co. | 3,386 | |
38,100 | Eastman Chemical Co. | 4,396 | |
114,500 | Huntsman Corp. | 3,283 | |
28,000 | LyondellBasell Industries NV | 2,905 | |
21,500 | Trinseo SA (Luxembourg) | 1,331 | |
20,606 | |||
CONSUMER FINANCE—2.7% | |||
117,500 | Ally Financial Inc. | 6,045 | |
22,700 | Discover Financial Services | 2,588 | |
225,200 | Navient Corp. | 3,790 | |
12,423 | |||
CONTAINERS & PACKAGING—3.6% | |||
35,800 | Berry Global Group Inc.* | 2,278 | |
84,000 | Graphic Packaging Holding Co. | 1,558 | |
61,100 | Greif Inc. | 3,697 | |
158,830 | O-I Glass Inc.* | 2,619 | |
55,200 | Silgan Holdings Inc. | 2,328 | |
72,300 | WestRock Co. | 4,031 | |
16,511 | |||
DIVERSIFIED FINANCIAL SERVICES—0.6% | |||
79,987 | Banco Latinoamericano de Comercio Exterior SA (Panama) | 1,181 | |
24,300 | Voya Financial Inc. | 1,648 | |
2,829 | |||
ELECTRIC UTILITIES—1.3% | |||
24,500 | Edison International | 1,456 | |
155,500 | PPL Corp. | 4,530 | |
5,986 | |||
ELECTRICAL EQUIPMENT—0.5% | |||
31,200 | Atkore Inc.* | 2,442 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—3.4% | |||
33,000 | Arrow Electronics Inc.* | 3,764 |
20
Harbor Mid Cap Value Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—Continued | |||
48,100 | Avnet Inc. | $2,113 | |
61,800 | Methode Electronics Inc. | 2,777 | |
40,600 | Sanmina Corp.* | 1,658 | |
13,988 | SYNNEX Corp. | 1,695 | |
125,800 | TTM Technologies Inc.* | 1,887 | |
69,800 | Vishay Intertechnology Inc. | 1,715 | |
15,609 | |||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—7.1% | |||
170,100 | Brandywine Realty Trust | 2,301 | |
121,600 | Brixmor Property Group Inc. | 2,716 | |
429,000 | Franklin Street Properties Corp. | 2,265 | |
40,900 | Gaming and Leisure Properties Inc. | 1,901 | |
174,291 | Hersha Hospitality Trust* | 2,015 | |
88,234 | Industrial Logistics Properties Trust | 2,188 | |
55,600 | Iron Mountain Inc. | 2,231 | |
52,750 | Office Properties Income Trust | 1,464 | |
46,500 | Omega Healthcare Investors Inc. | 1,767 | |
139,000 | Paramount Group Inc. | 1,475 | |
138,248 | Piedmont Office Realty Trust Inc. | 2,574 | |
32,452 | Retail Value Inc. | 605 | |
138,200 | Sabra Health Care REIT Inc. | 2,511 | |
124,400 | Service Properties Trust | 1,532 | |
95,800 | SITE Centers Corp. | 1,413 | |
23,300 | Summit Hotel Properties Inc.* | 237 | |
82,560 | VEREIT Inc. | 3,950 | |
33,145 | |||
FOOD & STAPLES RETAILING—2.0% | |||
51,800 | Ingles Markets Inc. | 3,175 | |
166,300 | Kroger Co. | 6,076 | |
9,251 | |||
FOOD PRODUCTS—3.3% | |||
71,900 | Conagra Brands Inc. | 2,667 | |
32,200 | Ingredion Inc. | 3,008 | |
32,100 | JM Smucker Co. | 4,205 | |
68,100 | Tyson Foods Inc. | 5,274 | |
15,154 | |||
GAS UTILITIES—0.6% | |||
55,800 | National Fuel Gas Co. | 2,771 | |
HEALTH CARE PROVIDERS & SERVICES—4.6% | |||
59,300 | Cardinal Health Inc. | 3,578 | |
35,100 | DaVita Inc.* | 4,090 | |
18,500 | HCA Healthcare Inc. | 3,720 | |
8,400 | Laboratory Corp. of America Holdings* | 2,233 | |
24,700 | McKesson Corp. | 4,633 | |
22,500 | Universal Health Services Inc. | 3,339 | |
21,593 | |||
HOTELS, RESTAURANTS & LEISURE—0.6% | |||
12,200 | Brinker International Inc.* | 819 | |
30,500 | Travel + Leisure Co. | 1,968 | |
2,787 | |||
HOUSEHOLD DURABLES—4.5% | |||
101,478 | Ethan Allen Interiors Inc. | 2,913 | |
26,100 | Meritage Homes Corp.* | 2,777 | |
68,100 | PulteGroup Inc. | 4,026 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
HOUSEHOLD DURABLES—Continued | |||
72,600 | Toll Brothers Inc. | $4,552 | |
27,300 | Whirlpool Corp. | 6,455 | |
20,723 | |||
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS—1.1% | |||
314,400 | Vistra Energy Corp. | 5,304 | |
INSURANCE—6.6% | |||
48,900 | Allstate Corp. | 6,200 | |
27,500 | American Financial Group Inc. | 3,379 | |
4,500 | Assured Guaranty Ltd. | 229 | |
13,700 | Hanover Insurance Group Inc. | 1,895 | |
85,700 | Hartford Financial Services Group Inc. | 5,653 | |
57,600 | Lincoln National Corp. | 3,694 | |
129,100 | Old Republic International Corp. | 3,178 | |
58,400 | Principal Financial Group Inc. | 3,730 | |
75,200 | Universal Insurance Holdings Inc. | 1,049 | |
64,400 | Unum Group | 1,820 | |
30,827 | |||
INTERNET & DIRECT MARKETING RETAIL—0.9% | |||
77,700 | eBay Inc. | 4,335 | |
IT SERVICES—1.7% | |||
13,988 | Concentrix Corp.* | 2,174 | |
79,600 | DXC Technology Co.* | 2,620 | |
117,600 | Western Union Co. | 3,029 | |
7,823 | |||
LEISURE PRODUCTS—0.5% | |||
23,300 | Brunswick Corp. | 2,496 | |
MACHINERY—7.3% | |||
38,800 | AGCO Corp. | 5,662 | |
100,600 | Allison Transmission Holdings Inc. | 4,172 | |
17,600 | Cummins Inc. | 4,436 | |
135,300 | Meritor Inc.* | 3,657 | |
38,400 | Oshkosh Corp. | 4,778 | |
20,600 | Snap-on Inc. | 4,894 | |
55,500 | Timken Co. | 4,655 | |
89,100 | Wabash National Corp. | 1,569 | |
33,823 | |||
MEDIA—2.4% | |||
82,500 | AMC Networks Inc.* | 4,148 | |
18,100 | Nexstar Media Group Inc. | 2,668 | |
144,100 | TEGNA Inc. | 2,891 | |
32,300 | ViacomCBS Inc. | 1,325 | |
11,032 | |||
METALS & MINING—1.2% | |||
35,800 | Reliance Steel & Aluminum Co. | 5,739 | |
MORTGAGE REAL ESTATE INVESTMENT TRUSTS (REITs)—1.0% | |||
166,600 | Annaly Capital Management Inc. | 1,513 | |
298,300 | MFA Financial Inc. | 1,312 | |
93,400 | PennyMac Mortgage Investment Trust | 1,873 | |
4,698 | |||
MULTILINE RETAIL—1.1% | |||
48,600 | Big Lots Inc. | 3,350 | |
99,500 | Macy's Inc.* | 1,650 | |
5,000 |
21
Harbor Mid Cap Value Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
MULTI-UTILITIES—0.7% | |||
93,150 | MDU Resources Group Inc. | $3,117 | |
OIL, GAS & CONSUMABLE FUELS—2.1% | |||
112,700 | Devon Energy Corp. | 2,635 | |
65,800 | HollyFrontier Corp. | 2,303 | |
34,700 | Marathon Petroleum Corp. | 1,931 | |
39,800 | Valero Energy Corp. | 2,944 | |
9,813 | |||
PHARMACEUTICALS—1.6% | |||
36,100 | Jazz Pharmaceuticals plc (Ireland)* | 5,935 | |
110,150 | Lannett Co. Inc.* | 481 | |
93,493 | Viatris Inc.* | 1,244 | |
7,660 | |||
PROFESSIONAL SERVICES—0.7% | |||
27,500 | ManpowerGroup Inc. | 3,325 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—0.5% | |||
10,000 | Cirrus Logic Inc.* | 744 | |
7,500 | Qorvo Inc.* | 1,411 | |
2,155 | |||
SOFTWARE—0.5% | |||
18,400 | J2 Global Inc.* | 2,226 | |
SPECIALTY RETAIL—4.4% | |||
31,000 | Best Buy Co. Inc. | 3,604 | |
49,200 | Dick's Sporting Goods Inc. | 4,063 | |
81,800 | Foot Locker Inc. | 4,825 | |
18,600 | Group 1 Automotive Inc. | 3,053 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SPECIALTY RETAIL—Continued | |||
36,200 | ODP Corp.* | $1,464 | |
36,800 | Penske Automotive Group Inc. | 3,227 | |
20,236 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—3.8% | |||
242,314 | HP Inc. | 8,265 | |
79,200 | Seagate Technology plc (Ireland) | 7,353 | |
93,900 | Xerox Holdings Corp. | 2,267 | |
17,885 | |||
TEXTILES, APPAREL & LUXURY GOODS—0.4% | |||
35,900 | Capri Holdings Ltd. (Virgin Islands)* | 1,977 | |
THRIFTS & MORTGAGE FINANCE—1.1% | |||
169,600 | MGIC Investment Corp. | 2,585 | |
107,200 | Radian Group Inc. | 2,641 | |
5,226 | |||
TRADING COMPANIES & DISTRIBUTORS—0.7% | |||
65,642 | Triton International Ltd. (Bermuda) | 3,293 | |
TOTAL COMMON STOCKS | |||
(Cost $351,544) | 453,534 | ||
TOTAL INVESTMENTS—97.4% | |||
(Cost $351,544) | 453,534 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—2.6% | 11,901 | ||
TOTAL NET ASSETS—100.0% | $465,435 |
FAIR VALUE MEASUREMENTS
All investments at April 30, 2021 (as disclosed in the preceding Portfolio of Investments) were classified as Level 1. There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
* | Non-income producing security |
The accompanying notes are an integral part of the Financial Statements.
22
Harbor Small Cap Growth Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Westfield Capital Management Company, L.P.
One Financial Center
23rd Floor
Boston, MA 02111
23rd Floor
Boston, MA 02111
Portfolio Managers
William A. Muggia
Lead Portfolio Manager
Since 2000
Lead Portfolio Manager
Since 2000
Richard D. Lee, CFA
Since 2018
Since 2018
Ethan J. Meyers, CFA
Since 2000
Since 2000
John M. Montgomery
Since 2011
Since 2011
Westfield has subadvised the Fund since 2000.
Investment Objective
The Fund seeks long-term growth of capital.
William A. Muggia
Richard D. Lee, CFA
Ethan J. Meyers, CFA
John M. Montgomery
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
Data was released in November confirming that a highly efficacious vaccine had been developed, sending markets surging. Around the same time, citizens across the country voted for the next U.S. President. The clarity provided by the removal of election uncertainty and a viable vaccine candidate shifted focus towards the economic recovery likely in 2021. While this pro-cyclical rotation started, pockets of froth remained in areas like high P/E software, speculative biotech, and alternative energy. A record number of initial public offerings and special purpose acquisition companies, coupled with high retail participation in speculative markets, continued at elevated levels. The retail speculation and low-quality leadership gave way to a robust pro-cyclical rotation. During this period, pandemic recovery names outperformed stay-at-home leaders, and cyclicals outpaced both aggressive growth and defensive pockets of the market. Much of this rotation can be attributed to improving COVID-19 case trends, accelerating vaccine rollouts, and broad-based re-openings beginning across the country. Furthermore, an additional $1.9 trillion of fiscal stimulus was approved by Congress, and the U.S. Federal Reserve signaled a continuation of their supportive monetary policy despite rising concerns about inflation.
Performance
Harbor Small Cap Growth Fund returned 31.10% (Retirement Class), 30.98% (Institutional Class), 30.82% (Administrative Class) and 30.78% (Investor Class) for the six-month period ended April 30, 2021, underperforming its benchmark, the Russell 2000® Growth Index, which returned 37.84%. Relative weakness in Health Care and Consumer Discretionary offset relative strength in Information Technology and Financials.
Health Care was the largest relative detractor during the period, costing the Fund 693 basis points (bps) of relative performance. Global medical technology company, Haemonetics Corporation, was the largest detractor. The company suffered after a large customer announced it would not be renewing their contract. However, we maintain conviction in our thesis as we believe that plasma collection volumes are still poised to bounce back and Haemonetics’s NexSys system is the highest-tech offering, which provides the most value to plasma fractionators, in our opinion. We added to our position on weakness, as we have increasing confidence that the rest of Haemonetics’s order book will agree to the stepped-up pricing on NexSys. Ascendis Pharma, a targeted therapeutics company, also detracted from relative results. With a volatile period in the biotech industry as a backdrop and the absence of material fundamental news flow for the company, sentiment weighed on Ascendis following a venture capital distribution of stock that was disliked by top holders and a sell-side ratings downgrade. Additionally, recent restrictive decisions from the Food and Drug Administration for other comparable platforms were seen as a readthrough for Ascendis, putting additional downward pressure on the stock. Despite the transitory negative sentiment, we continue to favor Ascendis and its catalyst-rich path for the remainder of the year and flawless product development and science, in our opinion.
Consumer Discretionary also detracted from relative results, costing the Fund 109 bps. Casual dining chain, Texas Roadhouse, Inc., was the largest detractor within the sector. We had been trimming on strength and ultimately sold our position in January when it hit our internal price target. We rotated the capital to Cheesecake Factory, which we believe has relatively higher earnings upside from here. Also detracting from relative results was U.S. optical retailor National Vision Holdings. National Vision underperformed following management’s conservative
23
Harbor Small Cap Growth Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | ||||||
6 Months | 5 Years | 10 Years | ||||||
Harbor Small Cap Growth Fund | ||||||||
Retirement Class1 | 31.10% | 68.21% | 21.80% | 13.92% | ||||
Institutional Class | 30.98 | 67.99 | 21.71 | 13.87 | ||||
Administrative Class | 30.82 | 67.58 | 21.32 | 13.57 | ||||
Investor Class | 30.78 | 67.45 | 21.27 | 13.46 | ||||
Comparative Index | ||||||||
Russell 2000® Growth | 37.84% | 69.15% | 18.89% | 12.86% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.81% (Retirement Class); 0.89% (Institutional Class); 1.14% (Administrative Class); and 1.25% (Investor Class). The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
margin guidance for 2021, which was compounded by the rotation of capital into reopening plays. Despite the recent weakness, we maintain conviction in our position as we believe there is still upside to margins and the stock trades at an attractive valuation.
Information Technology was the top source of relative and absolute strength, adding 170 bps to relative returns, with performance driven by strong stock selection. NCR Corporation, a leading provider of ATMs, self-service kiosks, and point-of-sale devices, was the largest source of relative strength. NCR provided a detailed look at its software capabilities and outlined a path to growth and margin expansion. Our post-pandemic optimism remains strong given conviction in demand recovery within NCR’s traditional business offerings. Silicon Motion Technology Corporation, a vendor of Solid State Drives (SSD) controller chips, also added to relative returns after the company announced updated 2023 sales guidance which was significantly higher than investor expectations. We continue to like Silicon Motion given their leading market position in SSD controllers, an area that is currently seeing robust demand. Additionally, with the current chip supply shortage, we believe Silicon Motion should see several quarters of benefit from unmet demand while being able to improve margins through price increases.
Financials was another positive contributor, adding 51 bps of relative performance. First Citizens BancShares, a Carolinas-based regional bank with a national presence, was the largest contributor to relative results. This historically underfollowed stock by Wall Street benefitted from an immediately accretive merger with the under-appreciated CIT Bank and the up-tick in sell-side coverage which followed. Additionally, the rise in interest rates has acted as a tailwind, and we believe investors will continue to acknowledge the compelling value of First Citizens upon increased coverage and further clarity on the post-merger outlook for the joint entity.
Outlook & Strategy
Moving forward, expectations for a robust economic recovery could already be discounted in current valuations. With high expectations, we believe that only those companies best able to execute in the months ahead will be able to retain their premium valuations. There is renewed investor focus on pricing power and durable earnings growth amidst tighter supply chains and the return of inflation, all of which we believe plays to our strengths as active managers focused intently on identifying those attributes in the companies in which we invest. To that end, we remain confident in our positioning in high quality growth companies which trade at reasonable valuations, in our opinion.
1 | Retirement Class shares commenced operations on March 1, 2016. The performance attributed to the Retirement Class shares prior to that date is that of the Institutional Class shares. Performance prior to March 1, 2016 has not been adjusted to reflect the lower expenses of Retirement Class shares. During this period, Retirement Class shares would have had returns similar to, but potentially higher than, Institutional Class shares due to the fact that Retirement Class shares represent interests in the same portfolio as Institutional Class shares but are subject to lower expenses. |
This report contains the current opinions of Westfield Capital Management Company, L.P. as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Stocks of small cap companies pose special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
24
Harbor Small Cap Growth Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Sector Allocation (% of investments)
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—99.4% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—2.0% | |||
442,546 | Hexcel Corp.* | $24,964 | |
BANKS—3.4% | |||
34,488 | First Citizens Bancshares Inc. | 29,917 | |
700,627 | First Horizon Corp. | 12,814 | |
42,731 | |||
BIOTECHNOLOGY—17.2% | |||
193,056 | Acceleron Pharma Inc.* | 24,126 | |
150,630 | Ascendis Pharma AS ADR (Denmark)*,1 | 21,837 | |
267,666 | Blueprint Medicines Corp.* | 25,782 | |
248,800 | Bridgebio Pharma Inc.* | 13,913 | |
163,984 | Fate Therapeutics Inc.* | 14,331 | |
524,065 | Insmed Inc.* | 17,677 | |
458,550 | Invitae Corp.* | 16,003 | |
1,352,239 | Ironwood Pharmaceuticals Inc.* | 14,929 | |
612,996 | Mersana Therapeutics Inc.* | 9,765 | |
257,688 | Nkarta Inc.* | 8,207 | |
26,030 | Novavax Inc.* | 6,167 | |
374,153 | Rocket Pharmaceuticals Inc.* | 17,151 | |
335,208 | Turning Point Therapeutics Inc.* | 25,553 | |
215,441 | |||
BUILDING PRODUCTS—5.2% | |||
332,315 | Advanced Drainage Systems Inc. | 37,106 | |
258,560 | Trex Co. Inc.* | 27,922 | |
65,028 | |||
CAPITAL MARKETS—1.4% | |||
111,932 | LPL Financial Holdings Inc. | 17,540 | |
CHEMICALS—1.2% | |||
292,400 | Avient Corp. | 14,845 | |
COMMERCIAL SERVICES & SUPPLIES—1.0% | |||
74,180 | MSA Safety Inc. | 11,925 | |
CONTAINERS & PACKAGING—2.2% | |||
337,520 | Berry Global Group Inc.* | 21,473 | |
328,840 | Ranpak Holdings Corp.* | 6,324 | |
27,797 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—0.4% | |||
394,264 | Orbcomm Inc.* | 4,518 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
ELECTRICAL EQUIPMENT—2.2% | |||
354,210 | Atkore Inc.* | $27,727 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—0.3% | |||
46,170 | II-VI Inc.* | 3,100 | |
ENTERTAINMENT—2.5% | |||
43,078 | Madison Square Garden Sports Corp* | 7,963 | |
2,205,570 | Zynga Inc.* | 23,864 | |
31,827 | |||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—3.4% | |||
120,600 | PS Business Parks Inc. | 19,582 | |
493,690 | Spirit Realty Capital Inc. | 23,470 | |
43,052 | |||
HEALTH CARE EQUIPMENT & SUPPLIES—3.0% | |||
272,050 | Haemonetics Corp.* | 18,298 | |
209,540 | Tandem Diabetes Care Inc.* | 19,257 | |
37,555 | |||
HEALTH CARE PROVIDERS & SERVICES—2.0% | |||
90,594 | Amedisys Inc.* | 24,447 | |
HOTELS, RESTAURANTS & LEISURE—4.5% | |||
317,560 | Cheesecake Factory Inc.* | 19,876 | |
112,790 | Churchill Downs Inc. | 23,855 | |
1,760,465 | Playa Hotels & Resorts NV (Netherlands)* | 12,957 | |
56,688 | |||
HOUSEHOLD DURABLES—2.8% | |||
157,050 | Topbuild Corp.* | 34,925 | |
INSURANCE—3.5% | |||
447,275 | BRP Group Inc.* | 12,980 | |
154,875 | Palomar Holdings Inc.* | 10,897 | |
126,681 | Primerica Inc. | 20,240 | |
44,117 | |||
IT SERVICES—4.5% | |||
231,660 | Shift4 Payments Inc.* | 22,909 | |
91,322 | WEX Inc.* | 18,740 | |
200,858 | WNS Holdings Ltd. ADR (India)*,1 | 14,548 | |
56,197 |
25
Harbor Small Cap Growth Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
LEISURE PRODUCTS—1.5% | |||
201,733 | BRP Inc. (Canada) | $18,543 | |
LIFE SCIENCES TOOLS & SERVICES—4.3% | |||
37,530 | Bio-Rad Laboratories Inc.* | 23,649 | |
75,304 | ICON plc (Ireland)* | 16,337 | |
452,912 | Pacific Biosciences of California Inc.* | 13,519 | |
53,505 | |||
MACHINERY—5.3% | |||
208,234 | ITT Inc. | 19,639 | |
159,650 | Lincoln Electric Holdings Inc. | 20,443 | |
304,543 | Timken Co. | 25,542 | |
65,624 | |||
PHARMACEUTICALS—3.1% | |||
1,455,210 | Innoviva Inc.* | 16,662 | |
357,830 | Pacira BioSciences Inc.* | 22,608 | |
39,270 | |||
ROAD & RAIL—2.1% | |||
113,230 | Saia Inc.* | 26,552 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—5.7% | |||
121,042 | Advanced Energy Industries Inc. | 13,352 | |
404,327 | Silicon Motion Technology Corp. ADR (Taiwan)1 | 29,039 | |
244,246 | SMART Global Holdings Inc.* | 11,272 | |
130,148 | Synaptics Inc.* | 18,204 | |
71,867 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SOFTWARE—8.3% | |||
232,530 | 2U Inc.* | $9,127 | |
106,290 | Blackline Inc.* | 12,336 | |
315,192 | Bottomline Technologies de Inc.* | 15,306 | |
628,530 | Cognyte Software Ltd. (Israel)* | 16,423 | |
83,730 | Cyberark Software Ltd. (Israel)* | 11,764 | |
366,584 | Mimecast Ltd. (Jersey)* | 15,917 | |
434,990 | Nuance Communications Inc.* | 23,128 | |
104,001 | |||
SPECIALTY RETAIL—3.8% | |||
101,510 | Five Below Inc.* | 20,431 | |
537,075 | National Vision Holdings Inc.* | 27,074 | |
47,505 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—2.6% | |||
474,175 | NCR Corp.* | 21,694 | |
538,383 | Pure Storage Inc.* | 10,886 | |
32,580 | |||
TOTAL COMMON STOCKS | |||
(Cost $874,289) | 1,243,871 | ||
TOTAL INVESTMENTS—99.4% | |||
(Cost $874,289) | 1,243,871 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.6% | 7,061 | ||
TOTAL NET ASSETS—100.0% | $1,250,932 |
FAIR VALUE MEASUREMENTS
All investments at April 30, 2021 (as disclosed in the preceding Portfolio of Investments) were classified as Level 1. There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
* | Non-income producing security |
1 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
The accompanying notes are an integral part of the Financial Statements.
26
Harbor Small Cap Value Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
EARNEST Partners LLC
1180 Peachtree St. NE
Suite 2300
Atlanta, GA 30309
Suite 2300
Atlanta, GA 30309
Portfolio Manager
Paul E. Viera
Since 2001
Since 2001
EARNEST Partners has subadvised the Fund since 2001.
Investment Objective
The Fund seeks long-term total return.
Paul E. Viera
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
During the six-month period ended April 30, 2021, the U.S. small cap value market, as represented by the Russell 2000 Value® Index, gained 59.17%. This period includes the end of 2020, as markets got a boost from stimulus packages and vaccine rollouts. Stimulus measures and the pace of vaccines were two major developments that drove investor sentiment during the period.
Equity markets continued their record-setting march upwards as investors began to look beyond the near-term effects of the COVID-19 pandemic and incorporated the global vaccination rollout, continued government stimulus measures and the adaptability of global businesses into future earnings growth. The decrease in new case numbers, relaxation of business restrictions and a continued low-rate environment buoyed retail sales. Progress continued on the rollout of vaccinations and by the end of the first quarter of 2021, over 15% of the U.S. population had received a COVID-19 inoculation. Many areas of the economy experienced expanded activity as the government’s stimulus measures supported new purchases of durable goods and home prices reached record highs. Following the inauguration of President Joe Biden, the new administration pledged further economic stimulus measures along with proposed changes in corporate and personal tax policies.
Previously, the U.S. Federal Reserve (Fed) enacted an array of stimulative measures that included short-term rate reductions to near-zero and repurchases of Treasuries, mortgages and corporate debt. The Fed stated that it would “maintain an accommodative stance” until its goals of 2% long-term inflation and maximum employment are achieved. In its latest statement, the Fed specified that it will continue to hold rates near zero and provide stimulus by increasing its holdings of Treasury securities by at least $80 billion per month and at least $40 billion per month in Agency Mortgage-Backed Securities. The continued willingness of the Fed to expand its balance sheet gave further confidence to equity and high-yield fixed income investors who understood that the Fed will continue to act as a lender-of-last resort and that stimulus measures would be ongoing. Additionally, the central bank revised up its GDP forecast to growth of 6.5% in 2021 versus its December projection of 4.2%, to be followed by a 3.3% increase in 2022. After hitting a record high of 14.7% in April of last year, unemployment fell to 6.2% in February 2021. The Fed also revised down its unemployment projections to 4.5% at the end of 2021 and is forecasting unemployment to fall below 4% by the end of 2022. Previously, in June 2020, the Fed had projected unemployment at 9.3% at the end of 2020. Last year, Congress approved of a $2 trillion stimulus bill that included small business loans, direct payments to households and expanded unemployment benefits for workers displaced by the pandemic. After lengthy negotiations, Congress approved a second $900 billion stimulus bill in late December that included $325 billion in forgivable small business loans, extended supplemental unemployment benefits through March and provided additional direct payments to households. Congress recently passed a further $1.9 trillion bill which includes another round of direct payments to households, further extensions of unemployment insurance and additional vaccine funding.
Performance
Harbor Small Cap Value Fund posted a total return of 43.48% (Retirement Class), 43.43% (Institutional Class), 43.23% (Administrative Class) and 43.18% (Investor Class) for the six-month period ended April 30, 2021, underperforming the 59.17% return of the Russell 2000® Value Index.
Contributing to performance, Pebblebrook Hotel Trust is a real estate investment trust whose portfolio is comprised primarily of full service hotel and resort properties which are concentrated in California, Florida and the northeast U.S. During the period, Pebblebrook reopened 44 of its 52 hotels and resorts in its portfolio. These 44 properties accounted for 86% of the Company’s 2019 Hotel EBITDA. The Company’s remaining suspended hotels are expected
27
Harbor Small Cap Value Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | ||||||
6 Months | 5 Years | 10 Years | ||||||
Harbor Small Cap Value Fund | ||||||||
Retirement Class1 | 43.48% | 64.52% | 15.52% | 12.03% | ||||
Institutional Class | 43.43 | 64.31 | 15.44 | 11.98 | ||||
Administrative Class | 43.23 | 63.95 | 15.15 | 11.69 | ||||
Investor Class | 43.18 | 63.76 | 15.01 | 11.57 | ||||
Comparative Index | ||||||||
Russell 2000® Value | 59.17% | 78.96% | 13.54% | 10.10% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.80% (Retirement Class); 0.88% (Institutional Class); 1.13% (Administrative Class); and 1.24% (Investor Class). The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
to reopen in the coming weeks and months which we believe should mean continued improvement in its cash burn and an expected return to profitability in 2021. This helped drive the stock up over 90% in the period, outperforming the index. We believe the company is well positioned to benefit from pent up leisure travel demand and an improved supply backdrop. Pebblebrook is differentiated by its skew to independent, boutique hotels which tend to appeal to leisure travelers, and its approach to hotel management.
Detracting from performance, Monolithic Power Systems (MPS) provides small, highly energy efficient, easy-to-use power solutions for systems found in industrial applications, telecom infrastructures, cloud computing, automotive and consumer applications. During the period, MPS reported earnings results that easily exceeded consensus and the upper end of guidance. However, shares underperformed in the period. MPS has announced a number of recent design wins in its computing power and battery management solutions divisions which we believe should provide further support for the top-line and margins through 2021 and beyond. Looking ahead, we believe MPS will continue to benefit from improving fundamentals and an attractive balance sheet. Additionally, with new product launches on the horizon, the company is expanding into adjacent markets for new revenue opportunities, particularly within the automotive space.
Outlook & Strategy
As of April 30, 2021, the Fund was overweight in the Industrials, Health Care and Information Technology and was underweight in Financials, Energy, Utilities, Consumer Staples, and Consumer Discretionary. These weightings are an outgrowth of our fundamental, bottom-up stock selection process.
In managing Harbor Small Cap Value Fund, we seek companies with share prices that we believe do not fully reflect their earnings growth outlook. Going forward, we will continue to employ our three-step investment methodology: screen the broad universe to identify stocks that are best positioned to outperform; measure and manage downside risk to the benchmark; and perform in-depth, thorough, fundamental research to find what we believe are the best stocks to include in the Fund.
1 | Retirement Class shares commenced operations on March 1, 2016. The performance attributed to the Retirement Class shares prior to that date is that of the Institutional Class shares. Performance prior to March 1, 2016 has not been adjusted to reflect the lower expenses of Retirement Class shares. During this period, Retirement Class shares would have had returns similar to, but potentially higher than, Institutional Class shares due to the fact that Retirement Class shares represent interests in the same portfolio as Institutional Class shares but are subject to lower expenses. |
This report contains the current opinions of EARNEST Partners LLC as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Stocks of small cap companies pose special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
28
Harbor Small Cap Value Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Sector Allocation (% of investments)
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—97.8% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—7.1% | |||
852,141 | Hexcel Corp.* | $48,069 | |
299,904 | Moog Inc. | 25,957 | |
899,600 | Parsons Corp.* | 39,879 | |
173,048 | Teledyne Technologies Inc.* | 77,482 | |
191,387 | |||
BANKS—7.5% | |||
835,595 | Enterprise Financial Services Corp. | 41,053 | |
976,929 | First Merchants Corp. | 45,144 | |
513,629 | Heartland Financial USA Inc. | 25,820 | |
400,561 | South State Corp. | 33,775 | |
824,564 | Trustmark Corp. | 26,724 | |
770,098 | United Bankshares Inc. | 30,242 | |
202,758 | |||
BIOTECHNOLOGY—2.7% | |||
416,418 | Emergent BioSolutions Inc.* | 25,393 | |
1,584,645 | Myriad Genetics Inc.* | 47,888 | |
73,281 | |||
CAPITAL MARKETS—5.4% | |||
840,421 | Houlihan Lokey Inc. | 55,695 | |
373,673 | Raymond James Financial Inc. | 48,869 | |
618,423 | Stifel Financial Corp. | 42,788 | |
147,352 | |||
CHEMICALS—4.5% | |||
716,322 | Cabot Corp. | 39,312 | |
357,127 | Scotts Miracle-Gro Co. | 82,553 | |
121,865 | |||
COMMERCIAL SERVICES & SUPPLIES—3.9% | |||
1,077,586 | Casella Waste Systems Inc.* | 72,317 | |
2,484,067 | Steelcase Inc. | 34,280 | |
106,597 | |||
CONSUMER FINANCE—1.6% | |||
608,771 | FirstCash Inc. | 43,850 | |
ELECTRICAL EQUIPMENT—1.8% | |||
530,175 | EnerSys | 48,553 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—5.8% | |||
204,072 | Littelfuse Inc. | $54,128 | |
471,573 | Plexus Corp.* | 43,592 | |
1,460,223 | Sanmina Corp.* | 59,636 | |
157,356 | |||
ENERGY EQUIPMENT & SERVICES—1.3% | |||
395,046 | Core Laboratories NV (Netherlands) | 11,133 | |
457,784 | DMC Global Inc.* | 24,720 | |
35,853 | |||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—4.6% | |||
1,363,012 | Corporate Office Properties Trust | 38,219 | |
1,789,773 | Pebblebrook Hotel Trust | 42,740 | |
1,222,368 | STAG Industrial Inc. | 44,628 | |
125,587 | |||
FOOD PRODUCTS—4.3% | |||
1,695,320 | Darling Ingredients Inc.* | 117,740 | |
HEALTH CARE EQUIPMENT & SUPPLIES—3.4% | |||
481,225 | CONMED Corp. | 67,829 | |
1,271,864 | Meridian Bioscience Inc.* | 24,903 | |
92,732 | |||
HEALTH CARE PROVIDERS & SERVICES—4.5% | |||
2,342,010 | MEDNAX Inc.* | 61,642 | |
237,165 | Molina Healthcare Inc.* | 60,501 | |
122,143 | |||
HOTELS, RESTAURANTS & LEISURE—2.0% | |||
331,618 | Cracker Barrel Old Country Store Inc.* | 55,536 | |
HOUSEHOLD DURABLES—1.7% | |||
437,791 | Meritage Homes Corp.* | 46,577 | |
INSURANCE—2.9% | |||
650,137 | Horace Mann Educators Corp. | 26,070 | |
285,426 | Reinsurance Group of America Inc. | 37,257 | |
546,721 | United Fire Group Inc. | 16,544 | |
79,871 |
29
Harbor Small Cap Value Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
IT SERVICES—4.3% | |||
556,373 | ManTech International Corp. | $47,486 | |
4,530,276 | Sabre Corp.* | 67,864 | |
115,350 | |||
MACHINERY—8.3% | |||
548,100 | Albany International Corp. | 48,913 | |
863,861 | Altra Industrial Motion Corp. | 50,976 | |
801,812 | Franklin Electric Co. Inc. | 65,163 | |
705,981 | Timken Co. | 59,211 | |
224,263 | |||
OIL, GAS & CONSUMABLE FUELS—0.9% | |||
2,539,188 | Archrock Inc. | 23,716 | |
PHARMACEUTICALS—3.5% | |||
845,936 | Catalent Inc.* | 95,142 | |
ROAD & RAIL—1.6% | |||
527,417 | Ryder System Inc. | 42,109 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—10.7% | |||
322,655 | Advanced Energy Industries Inc. | 35,592 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—Continued | |||
414,350 | CMC Materials Inc. | $76,004 | |
581,193 | Entegris Inc. | 65,431 | |
1,766,332 | FormFactor Inc.* | 69,152 | |
126,166 | Monolithic Power Systems Inc. | 45,594 | |
291,773 | |||
TEXTILES, APPAREL & LUXURY GOODS—1.9% | |||
1,225,125 | Wolverine World Wide Inc. | 51,112 | |
TRADING COMPANIES & DISTRIBUTORS—1.6% | |||
447,443 | GATX Corp. | 43,720 | |
TOTAL COMMON STOCKS | |||
(Cost $1,615,356) | 2,656,223 | ||
TOTAL INVESTMENTS—97.8% | |||
(Cost $1,615,356) | 2,656,223 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—2.2% | 60,525 | ||
TOTAL NET ASSETS—100.0% | $2,716,748 |
FAIR VALUE MEASUREMENTS
All investments at April 30, 2021 (as disclosed in the preceding Portfolio of Investments) were classified as Level 1. There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
* | Non-income producing security |
The accompanying notes are an integral part of the Financial Statements.
30
Harbor Strategic Growth Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Mar Vista Investment Partners, LLC
11150 Santa Monica Boulevard, Suite 320
Los Angeles, CA 90025
Los Angeles, CA 90025
Portfolio Managers
Silas A. Myers, CFA
Since 2017
Since 2017
Brian L. Massey, CFA
Since 2017
Since 2017
Joshua J. Honeycutt, CFA
Since 2017
Since 2017
Jeffrey B. Prestine
Since 2017
Since 2017
Mar Vista has subadvised the Fund since 2017.*
Investment Objective
The Fund seeks long-term growth of capital.
Silas A. Myers, CFA
Brian L. Massey, CFA
Joshua J. Honeycutt, CFA
Jeffrey B. Prestine
Management’s Discussion of
Fund Performance
Fund Performance
MARKET REVIEW
For the six-month period ended April 30, 2021, the Russell 1000® Growth Index was up 24.31%. The period began with unprecedented fiscal and monetary support paired with human ingenuity in the form of promising vaccines, elevating equities to all-time highs. The anticipation of accelerating profit growth tied to an inoculation-driven economic recovery prompted a new wave of market exuberance. As we began 2021, stocks appeared to be advancing on positive economics as vaccines began to reopen the global economy. Companies that benefitted most from improving economic activity, such as Energy producers and Financials, steered one of the most powerful market rotations in years during the first quarter of 2021. The U.S. Federal Reserve’s low interest rate policy and the government’s deployment of trillions in financial aid encouraged tremendous amounts of market speculation. Heavily shorted stocks surged, Christie’s auctioned off a non-fungible token (NFT) for $69 million, and investors poured money into unprofitable companies rivaling the dot-com bubble. Volatility picked up late in the first quarter as the alarming rise in interest rates dampened risk appetites for richly valued securities. For years, fiscal spending and accommodative monetary policies have supported equity prices. Now, these two sources of stimulus are fueling inflation concerns. This tug-of-war between stock prices and bond yields will likely continue in the months ahead, in our view.
PERFORMANCE
Harbor Strategic Growth Fund returned 25.84% (Retirement Class), 25.77% (Institutional Class), 25.62% (Administrative Class) and 25.55% (Investor Class) while the Russell 1000® Growth Index returned 24.31% for the six-month period ended April 30, 2021. Stock selection and outperformance in Financials, Health Care and Communication Services were the primary contributors of relative performance, while Consumer Discretionary, Information Technology and Real Estate detracted from results. Positive contributors to performance included Alphabet, First Republic Bank, Microchip Technology, Charles Schwab and Berkshire Hathaway. The largest detractors for the period included Unilever, Salesforce.com, Vontier and Air Products & Chemicals.
During this period, we resized our investment in Apple modestly and we initiated new positions in Air Products & Chemicals and Vontier Corporation.
Our portfolio construction process focuses on bottom-up factors independent of benchmark weights. The resulting portfolio’s sector exposures represent the areas we are finding skewed risk-reward opportunities in serial compounders and are not an expressed opinion on the sectors from a macro level. Throughout the last six months, our relative sector underweights, versus the Russell 1000® Growth Index, remained the same: Information Technology, followed by Consumer Discretionary, Health Care and Communication Services. Our largest sector overweights relative to the Russell 1000® Growth Index remained Financials, Industrials and Materials.
* | On March 6, 2017, the Fund acquired all of the assets and substantially all of the liabilities of the Mar Vista Strategic Growth Fund (the “Predecessor Fund”). For the period November 1, 2011 (inception of the Predecessor Fund) to January 20, 2015, Mar Vista served as the Predecessor Fund’s subadviser and for the period January 20, 2015 to March 6, 2017, Mar Vista served as investment adviser to the Predecessor Fund. |
31
Harbor Strategic Growth Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | ||||||
6 Months | 5 Years | Life of Class | ||||||
Harbor Strategic Growth Fund | ||||||||
Retirement Class1 | 25.84% | 44.05% | N/A | 17.94% | ||||
Institutional Class2 | 25.77 | 43.94 | 17.04 | 15.87 | ||||
Administrative Class1 | 25.62 | 43.61 | N/A | 17.55 | ||||
Investor Class1 | 25.55 | 43.41 | N/A | 17.04 | ||||
Comparative Index | ||||||||
Russell 1000® Growth2 | 24.31% | 51.41% | 22.88% | 18.77% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.63% (Net) and 0.72% (Gross) (Retirement Class); 0.71% (Net) and 0.80% (Gross) (Institutional Class); 0.96% (Net) and 1.05% (Gross) (Administrative Class); and 1.07% (Net) and 1.16% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
OUTLOOK & STRATEGY
With vaccine availability exceeding expectations, the U.S. economy is reopening faster than anticipated. We believe that market enthusiasm tied to accelerating profit growth leaves our portfolio modestly undervalued. In the near-term, rising interest rates may dampen equity valuations, but the outlook for the global economy is promising. We are diligently working to identify investment opportunities that represent what we believe to be adequate discounts to intrinsic value.
Corporate earnings are coming in fast and furious and for the most part are beating expectations. We are on track to see the highest earnings beat rate since 1984. Despite the positive earnings, some stocks’ recent performance has been somewhat muted. Much of the good growth news has already been priced into stocks and the market seems to be looking ahead to the likelihood of increased regulations and corporate taxes, in our view. Another consideration is the impact of people getting vaccinated and returning to normal activities outside their homes, which is being reflected in declining user growth rates and online engagement for some technology platforms.
Our team claims no special skill in predicting the market’s direction but, in the fullness of time, we believe a patient, high-conviction portfolio comprised of competitively advantaged serial compounders with stock prices that represent an appropriate discount to intrinsic value should generate excess risk-adjusted returns. In an environment with growing optimism, we will remain diligent, conservative and patient as we deploy capital within our wide-moat universe.
1 | The “Life of Class” return as shown reflects the period 03/06/2017 through 04/30/2021. |
2 | The “Life of Class” return as shown reflects the period 11/01/2011 through 04/30/2021. |
This report contains the current opinions of Mar Vista Investment Partners, LLC as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. At times, a growth investing style may be out of favor with investors which could cause growth securities to underperform value or other equity securities. Since the Fund typically invests in a limited number of companies, an adverse event affecting a particular company may hurt the Fund’s performance more than if it had invested in a larger number of companies. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
32
Harbor Strategic Growth Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Sector Allocation (% of investments)
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—99.1% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—1.3% | |||
2,622 | TransDigm Group Inc.* | $1,609 | |
BANKS—6.2% | |||
30,111 | First Republic Bank | 5,518 | |
33,958 | U.S. Bancorp. | 2,015 | |
7,533 | |||
BEVERAGES—1.6% | |||
13,550 | PepsiCo Inc. | 1,953 | |
CAPITAL MARKETS—6.1% | |||
53,447 | Charles Schwab Corp. | 3,763 | |
11,101 | Moody's Corp. | 3,627 | |
7,390 | |||
CHEMICALS—6.4% | |||
13,723 | Air Products & Chemicals Inc. | 3,959 | |
7,246 | Ecolab Inc. | 1,624 | |
7,619 | Linde plc (Ireland) | 2,178 | |
7,761 | |||
DIVERSIFIED FINANCIAL SERVICES—4.7% | |||
20,804 | Berkshire Hathaway Inc. Class B* | 5,720 | |
ELECTRICAL EQUIPMENT—2.6% | |||
31,332 | Amphenol Corp. | 2,110 | |
31,858 | Vontier Corp.* | 998 | |
3,108 | |||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—3.2% | |||
15,517 | American Tower Corp. | 3,953 | |
HEALTH CARE EQUIPMENT & SUPPLIES—3.1% | |||
8,848 | Teleflex Inc. | 3,738 | |
HOTELS, RESTAURANTS & LEISURE—1.1% | |||
12,286 | Starbucks Corp. | 1,407 | |
INDUSTRIAL CONGLOMERATES—5.2% | |||
18,017 | Honeywell International Inc. | 4,019 | |
5,040 | Roper Technologies Inc. | 2,250 | |
6,269 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
INSURANCE—3.4% | |||
3,474 | Markel Corp.* | $4,087 | |
INTERACTIVE MEDIA & SERVICES—7.8% | |||
2,599 | Alphabet Inc. Class C* | 6,264 | |
10,017 | Facebook Inc.* | 3,256 | |
9,520 | |||
INTERNET & DIRECT MARKETING RETAIL—4.5% | |||
1,562 | Amazon.com Inc.* | 5,416 | |
IT SERVICES—3.0% | |||
15,485 | Visa Inc. | 3,617 | |
LIFE SCIENCES TOOLS & SERVICES—2.3% | |||
2,159 | Mettler-Toledo International Inc.* | 2,836 | |
MACHINERY—2.0% | |||
34,162 | Fortive Corp. | 2,419 | |
MEDIA—2.0% | |||
42,892 | Comcast Corp. | 2,408 | |
PERSONAL PRODUCTS—1.9% | |||
39,398 | Unilever plc ADR (United Kingdom)1 | 2,313 | |
PHARMACEUTICALS—3.2% | |||
23,646 | Johnson & Johnson | 3,848 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—3.9% | |||
31,241 | Microchip Technology Inc. | 4,695 | |
SOFTWARE—15.3% | |||
8,059 | Adobe Inc.* | 4,097 | |
12,655 | Intuit Inc. | 5,216 | |
16,561 | Microsoft Corp. | 4,176 | |
10,948 | salesforce.com Inc.* | 2,522 | |
17,958 | SAP SE ADR (Germany)1 | 2,513 | |
18,524 | |||
SPECIALTY RETAIL—1.4% | |||
3,066 | O'Reilly Automotive Inc.* | 1,695 | |
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—4.6% | |||
42,315 | Apple Inc. | 5,563 |
33
Harbor Strategic Growth Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
TEXTILES, APPAREL & LUXURY GOODS—2.3% | |||
21,248 | NIKE Inc. | $2,818 | |
TOTAL COMMON STOCKS | |||
(Cost $65,500) | 120,200 | ||
TOTAL INVESTMENTS—99.1% | |||
(Cost $65,500) | 120,200 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.9% | 1,089 | ||
TOTAL NET ASSETS—100.0% | $121,289 |
FAIR VALUE MEASUREMENTS
All investments at April 30, 2021 (as disclosed in the preceding Portfolio of Investments) were classified as Level 1. There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
* | Non-income producing security |
1 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
The accompanying notes are an integral part of the Financial Statements.
34
Harbor Domestic Equity Funds
StatementS of Assets and Liabilities—April 30, 2021 (Unaudited)
StatementS of Assets and Liabilities—April 30, 2021 (Unaudited)
(All amounts in thousands, except per share amounts)
Harbor Capital Appreciation Fund | Harbor Large Cap Value Fund | Harbor Mid Cap Fund | Harbor Mid Cap Growth Fund | Harbor Mid Cap Value Fund | Harbor Small Cap Growth Fund | Harbor Small Cap Value Fund | Harbor Strategic Growth Fund | |||||||||
ASSETS | ||||||||||||||||
Investments, at identified cost | $21,129,564 | $1,534,440 | $42,381 | $394,946* | $351,544 | $874,289 | $1,615,356 | $65,500 | ||||||||
Investments, at value | $40,435,735 | $2,326,769 | $49,988 | $494,975 | $453,534 | $1,243,871 | $2,656,223 | $120,200 | ||||||||
Repurchase agreements | — | — | — | 8,985 | — | — | — | — | ||||||||
Cash | 62,567 | 43,024 | 1,005 | 230 | 11,999 | 4,707 | 60,985 | 1,010 | ||||||||
Receivables for: | ||||||||||||||||
Investments sold | 129,143 | — | — | 3,085 | 50 | 9,596 | — | — | ||||||||
Capital shares sold | 22,953 | 2,102 | — | 460 | 844 | 800 | 2,946 | 72 | ||||||||
Dividends | 1,971 | 1,274 | 15 | 25 | 281 | — | 321 | 27 | ||||||||
Withholding tax | — | 393 | — | 1 | — | — | — | 6 | ||||||||
Prepaid registration fees | 101 | 62 | 24 | 39 | 29 | 28 | 89 | 32 | ||||||||
Prepaid fund insurance | 182 | 9 | — | 2 | 2 | 5 | 9 | 1 | ||||||||
Other assets | 3,745 | 142 | 9 | 76 | 94 | 123 | 167 | 25 | ||||||||
Total Assets | 40,656,397 | 2,373,775 | 51,041 | 507,878 | 466,833 | 1,259,130 | 2,720,740 | 121,373 | ||||||||
LIABILITIES | ||||||||||||||||
Payables for: | ||||||||||||||||
Investments purchased | 26,013 | 6,397 | — | 230 | — | 6,767 | — | — | ||||||||
Capital shares reacquired | 150,733 | 549 | — | 206 | 960 | 410 | 1,820 | 7 | ||||||||
Accrued expenses: | ||||||||||||||||
Management fees | 18,122 | 1,148 | 29 | 298 | 277 | 771 | 1,687 | 59 | ||||||||
12b-1 fees | 389 | 7 | — | 14 | 8 | 2 | 17 | — | ||||||||
Transfer agent fees | 2,530 | 113 | 2 | 38 | 34 | 67 | 180 | 7 | ||||||||
Trustees' fees and expenses | 4,209 | 103 | — | 80 | 92 | 135 | 188 | 7 | ||||||||
Other | 1,455 | 66 | 7 | 24 | 27 | 46 | 100 | 4 | ||||||||
Total Liabilities | 203,451 | 8,383 | 38 | 890 | 1,398 | 8,198 | 3,992 | 84 | ||||||||
NET ASSETS | $40,452,946 | $2,365,392 | $51,003 | $506,988 | $465,435 | $1,250,932 | $2,716,748 | $121,289 | ||||||||
Net Assets Consist of: | ||||||||||||||||
Paid-in capital | $13,962,876 | $1,534,877 | $42,892 | $330,919 | $388,467 | $768,338 | $1,640,882 | $61,756 | ||||||||
Total distributable earnings/(loss) | 26,490,070 | 830,515 | 8,111 | 176,069 | 76,968 | 482,594 | 1,075,866 | 59,533 | ||||||||
$40,452,946 | $2,365,392 | $51,003 | $506,988 | $465,435 | $1,250,932 | $2,716,748 | $121,289 | |||||||||
NET ASSET VALUE PER SHARE BY CLASS | ||||||||||||||||
Retirement Class | ||||||||||||||||
Net assets | $10,568,321 | $1,051,407 | $28,377 | $88,788 | $61,287 | $448,838 | $520,340 | $7,015 | ||||||||
Shares of beneficial interest1 | 97,459 | 47,887 | 2,024 | 6,294 | 2,450 | 23,068 | 11,512 | 234 | ||||||||
Net asset value per share2 | $108.44 | $21.96 | $14.02 | $14.11 | $25.02 | $19.46 | $45.20 | $30.03 | ||||||||
Institutional Class | ||||||||||||||||
Net assets | $27,982,189 | $1,278,842 | $21,834 | $352,214 | $364,816 | $792,837 | $2,113,075 | $113,496 | ||||||||
Shares of beneficial interest1 | 258,170 | 58,249 | 1,558 | 25,107 | 14,580 | 40,964 | 46,777 | 3,783 | ||||||||
Net asset value per share2 | $108.39 | $21.95 | $14.01 | $14.03 | $25.02 | $19.35 | $45.17 | $30.00 | ||||||||
Administrative Class | ||||||||||||||||
Net assets | $440,372 | $3,667 | N/A | $5,847 | $3,990 | $972 | $14,894 | $41 | ||||||||
Shares of beneficial interest1 | 4,186 | 167 | N/A | 455 | 158 | 56 | 332 | 1 | ||||||||
Net asset value per share2 | $105.19 | $21.94 | N/A | $12.84 | $25.33 | $17.39 | $44.88 | $29.95 | ||||||||
Investor Class | ||||||||||||||||
Net assets | $1,462,064 | $31,476 | $792 | $60,139 | $35,342 | $8,285 | $68,439 | $737 | ||||||||
Shares of beneficial interest1 | 14,324 | 1,419 | 57 | 4,955 | 1,412 | 511 | 1,559 | 25 | ||||||||
Net asset value per share2 | $102.07 | $22.18 | $13.98 | $12.14 | $25.03 | $16.22 | $43.91 | $29.45 |
* | Including repurchase agreements |
1 | Par value $0.01 (unlimited authorizations) |
2 | Per share amounts can be recalculated to the amounts disclosed herein when total net assets and shares of beneficial interest are not rounded to thousands. |
The accompanying notes are an integral part of the Financial Statements.
36
Harbor Domestic Equity Funds
StatementS of Operations—Period Ended April 30, 2021 (Unaudited)
StatementS of Operations—Period Ended April 30, 2021 (Unaudited)
(All amounts in thousands)
Harbor Capital Appreciation Fund | Harbor Large Cap Value Fund | Harbor Mid Cap Fund | Harbor Mid Cap Growth Fund | Harbor Mid Cap Value Fund | Harbor Small Cap Growth Fund | Harbor Small Cap Value Fund | Harbor Strategic Growth Fund | |
Investment Income | ||||||||
Dividends | $74,272 | $15,518 | $191 | $427 | $5,092 | $2,495 | $12,407 | $489 |
Interest | 50 | 20 | — | 2 | 2 | 7 | 24 | — |
Foreign taxes (withheld) | (2,250) | (247) | — | — | (4) | (8) | (1) | — |
Total Investment Income | 72,072 | 15,291 | 191 | 429 | 5,090 | 2,494 | 12,430 | 489 |
Operating Expenses | ||||||||
Management fees | 120,984 | 5,885 | 120 | 1,710 | 1,537 | 4,469 | 8,781 | 350 |
12b-1 fees: | ||||||||
Administrative Class | 571 | 8 | N/A | 6 | 6 | 1 | 16 | — |
Investor Class | 1,775 | 34 | 1 | 77 | 39 | 10 | 80 | 1 |
Shareholder communications | 247 | 16 | 3 | 8 | 12 | 10 | 44 | 4 |
Custodian fees | 674 | 27 | 5 | 19 | 11 | 37 | 32 | 6 |
Transfer agent fees: | ||||||||
Retirement Class | 1,059 | 86 | 2 | 8 | 5 | 42 | 45 | 1 |
Institutional Class | 13,931 | 535 | 5 | 156 | 164 | 379 | 910 | 55 |
Administrative Class | 229 | 3 | N/A | 3 | 2 | 1 | 6 | — |
Investor Class | 1,539 | 30 | 1 | 67 | 33 | 9 | 69 | 1 |
Professional fees | 845 | 36 | — | 8 | 8 | 23 | 40 | 10 |
Trustees' fees and expenses | 757 | 32 | — | 7 | 7 | 21 | 36 | 2 |
Registration fees | 143 | 45 | 21 | 31 | 29 | 32 | 60 | 30 |
Miscellaneous | 244 | 14 | 4 | 6 | 6 | 11 | 15 | 4 |
Total expenses | 142,998 | 6,751 | 162 | 2,106 | 1,859 | 5,045 | 10,134 | 464 |
Management fees waived | (11,139) | — | — | (68) | (16) | — | — | — |
Transfer agent fees waived | (1,578) | (78) | (1) | (19) | (16) | (47) | (94) | (5) |
Other expenses reimbursed | — | (190) | (28) | — | (6) | — | — | (46) |
Custodian fees reduction | (1) | — | — | — | — | — | — | — |
Net expenses | 130,280 | 6,483 | 133 | 2,019 | 1,821 | 4,998 | 10,040 | 413 |
Net Investment Income/(Loss) | (58,208) | 8,808 | 58 | (1,590) | 3,269 | (2,504) | 2,390 | 76 |
Realized and Change in Net Unrealized Gain/(Loss) on Investment Transactions | ||||||||
Net realized gain/(loss) on: | ||||||||
Investments | 6,085,693 | 33,343 | 663 | 71,304 | (5,633) | 159,411 | 81,694 | 4,945 |
In-kind Redemption | 1,316,808 | — | — | — | — | — | — | — |
Foreign currency transactions | (478) | — | — | — | — | — | — | — |
Change in net unrealized appreciation/(depreciation) on: | ||||||||
Investments | 796,059 | 483,002 | 6,807 | 21,000 | 167,737 | 149,030 | 679,086 | 21,695 |
Translations of assets and liabilities in foreign currencies | (31) | — | — | — | — | — | — | — |
Net gain/(loss) on investment transactions | 8,198,051 | 516,345 | 7,470 | 92,304 | 162,104 | 308,441 | 760,780 | 26,640 |
Net Increase/(Decrease) in Net Assets Resulting from Operations | $8,139,843 | $525,153 | $7,528 | $90,714 | $165,373 | $305,937 | $763,170 | $26,716 |
The accompanying notes are an integral part of the Financial Statements.
37
Harbor Domestic Equity Funds
Statements of Changes In Net Assets
Statements of Changes In Net Assets
(All amounts in thousands)
Harbor Capital Appreciation Fund | Harbor Large Cap Value Fund | Harbor Mid Cap Fund | ||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | December 1, 2019a through October 31, 2020 | |
INCREASE/(DECREASE) IN NET ASSETS | (Unaudited) | (Unaudited) | (Unaudited) | |||
Operations: | ||||||
Net investment income/(loss) | $(58,208) | $(53,535) | $8,808 | $14,033 | $58 | $45 |
Net realized gain/(loss) on investments | 7,402,023 | 5,943,736 | 33,343 | 56,241 | 663 | (189) |
Change in net unrealized appreciation/(depreciation) of investments | 796,028 | 5,967,186 | 483,002 | 38,926 | 6,807 | 800 |
Net increase/(decrease) in assets resulting from operations | 8,139,843 | 11,857,387 | 525,153 | 109,200 | 7,528 | 656 |
Distributions to Shareholders | ||||||
Retirement Class | (1,223,020) | (618,547) | (23,931) | (5,049) | (55) | (3) |
Institutional Class | (3,192,095) | (1,854,118) | (30,955) | (7,208) | (12) | (3) |
Administrative Class | (54,446) | (30,561) | (387) | (73) | N/A | N/A |
Investor Class | (170,722) | (98,181) | (743) | (132) | — | — |
Total distributions to shareholders | (4,640,283) | (2,601,407) | (56,016) | (12,462) | (67) | (6) |
Net Increase/(Decrease) Derived from Capital Share Transactions | 122,465 | (2,136,709) | 324,909 | 207,621 | 32,528 | 10,364 |
Net increase/(decrease) in net assets | 3,622,025 | 7,119,271 | 794,046 | 304,359 | 39,989 | 11,014 |
Net Assets | ||||||
Beginning of period | 36,830,921 | 29,711,650 | 1,571,346 | 1,266,987 | 11,014 | — |
End of period | $40,452,946 | $36,830,921 | $2,365,392 | $1,571,346 | $51,003 | $11,014 |
a | Inception |
The accompanying notes are an integral part of the Financial Statements.
38
Harbor Mid Cap Growth Fund | Harbor Mid Cap Value Fund | Harbor Small Cap Growth Fund | Harbor Small Cap Value Fund | Harbor Strategic Growth Fund | |||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 |
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||
$(1,590) | $(1,680) | $3,269 | $10,477 | $(2,504) | $(2,717) | $2,390 | $9,385 | $76 | $391 |
71,304 | 69,847 | (5,633) | (23,673) | 159,411 | 95,253 | 81,694 | (45,312) | 4,945 | 4,310 |
21,000 | 39,517 | 167,737 | (90,874) | 149,030 | 119,273 | 679,086 | (36,478) | 21,695 | 8,635 |
90,714 | 107,684 | 165,373 | (104,070) | 305,937 | 211,809 | 763,170 | (72,405) | 26,716 | 13,336 |
(9,924) | (6,194) | (924) | (3,052) | (28,740) | (10,182) | (1,918) | (4,052) | (225) | (98) |
(37,666) | (39,106) | (7,543) | (15,499) | (51,890) | (15,950) | (7,391) | (19,292) | (3,609) | (1,932) |
(618) | (555) | (109) | (490) | (76) | (17) | (29) | (88) | (1) | — |
(8,825) | (4,732) | (617) | (1,653) | (666) | (295) | (86) | (633) | (17) | (6) |
(57,033) | (50,587) | (9,193) | (20,694) | (81,372) | (26,444) | (9,424) | (24,065) | (3,852) | (2,036) |
132,137 | 30,686 | (30,139) | (236,852) | 36,158 | 75,623 | 250,396 | 167,649 | (9,483) | (15,442) |
165,818 | 87,783 | 126,041 | (361,616) | 260,723 | 260,988 | 1,004,142 | 71,179 | 13,381 | (4,142) |
341,170 | 253,387 | 339,394 | 701,010 | 990,209 | 729,221 | 1,712,606 | 1,641,427 | 107,908 | 112,050 |
$506,988 | $341,170 | $465,435 | $339,394 | $1,250,932 | $990,209 | $2,716,748 | $1,712,606 | $121,289 | $107,908 |
39
Harbor Domestic Equity Funds
Statements of Changes in Net Assets—Capital Stock Activity
Statements of Changes in Net Assets—Capital Stock Activity
(All amounts in thousands)
Harbor Capital Appreciation Fund | Harbor Large Cap Value Fund | Harbor Mid Cap Fund | ||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | December 1, 2019a through October 31, 2020 | |
(Unaudited) | (Unaudited) | (Unaudited) | ||||
AMOUNT ($) | ||||||
Retirement Class | ||||||
Net proceeds from sale of shares | $1,287,439 | $2,114,924 | $248,528 | $319,834 | $21,630 | $4,902 |
Reinvested distributions | 1,112,207 | 551,856 | 21,377 | 3,751 | 55 | 3 |
Cost of shares reacquired | (2,303,967) | (2,310,156) | (76,833) | (167,747) | (3,184) | (33) |
Net increase/(decrease) in net assets | $95,679 | $356,624 | $193,072 | $155,838 | $18,501 | $4,872 |
Institutional Class | ||||||
Net proceeds from sale of shares | $2,342,812 | $4,000,724 | $300,802 | $426,035 | $13,866 | $5,116 |
Reinvested distributions | 3,040,583 | 1,758,584 | 22,523 | 5,445 | 12 | 2 |
Cost of shares reacquired | (3,379,546) | (7,160,313) | (183,111) | (366,117) | (10) | (6) |
Cost of shares reacquired through in-kind redemption | (2,024,771) | (948,692) | — | — | — | — |
Net increase/(decrease) in net assets | $(20,922) | $(2,349,697) | $140,214 | $65,363 | $13,868 | $5,112 |
Administrative Class | ||||||
Net proceeds from sale of shares | $95,624 | $87,311 | $412 | $658 | N/A | N/A |
Reinvested distributions | 51,536 | 28,968 | 387 | 73 | N/A | N/A |
Cost of shares reacquired | (166,191) | (149,315) | (10,432) | (2,003) | N/A | N/A |
Net increase/(decrease) in net assets | $(19,031) | $(33,036) | $(9,633) | $(1,272) | N/A | N/A |
Investor Class | ||||||
Net proceeds from sale of shares | $205,899 | $270,132 | $4,687 | $5,661 | $296 | $394 |
Reinvested distributions | 167,710 | 96,628 | 720 | 130 | — | — |
Cost of shares reacquired | (306,870) | (477,360) | (4,151) | (18,099) | (137) | (14) |
Net increase/(decrease) in net assets | $66,739 | $(110,600) | $1,256 | $(12,308) | $159 | $380 |
a | Inception |
The accompanying notes are an integral part of the Financial Statements.
40
Harbor Mid Cap Growth Fund | Harbor Mid Cap Value Fund | Harbor Small Cap Growth Fund | Harbor Small Cap Value Fund | Harbor Strategic Growth Fund | |||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 |
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||
$17,441 | $25,383 | $22,742 | $30,057 | $43,955 | $81,574 | $140,490 | $156,404 | $326 | $2,451 |
9,728 | 6,194 | 923 | 3,047 | 28,102 | 9,807 | 1,312 | 2,583 | 225 | 98 |
(8,880) | (15,585) | (9,499) | (86,865) | (51,584) | (88,256) | (61,233) | (78,104) | (1,353) | (1,739) |
$18,289 | $15,992 | $14,166 | $(53,761) | $20,473 | $3,125 | $80,569 | $80,883 | $(802) | $810 |
$106,144 | $85,884 | $51,919 | $97,779 | $78,834 | $198,667 | $483,828 | $506,813 | $7,314 | $16,227 |
29,565 | 27,492 | 7,300 | 14,723 | 49,341 | 15,322 | 6,427 | 16,697 | 3,446 | 1,836 |
(44,651) | (111,020) | (97,151) | (265,068) | (112,493) | (140,747) | (316,513) | (440,065) | (19,567) | (34,343) |
— | — | — | — | — | — | — | — | — | — |
$91,058 | $2,356 | $(37,932) | $(152,566) | $15,682 | $73,242 | $173,742 | $83,445 | $(8,807) | $(16,280) |
$1,585 | $336 | $1,071 | $2,443 | $42 | $516 | $1,882 | $5,655 | $13 | $2 |
612 | 542 | 89 | 458 | 76 | 17 | 29 | 86 | 1 | — |
(374) | (480) | (4,090) | (13,858) | (192) | (230) | (1,388) | (2,853) | — | — |
$1,823 | $398 | $(2,930) | $(10,957) | $(74) | $303 | $523 | $2,888 | $14 | $2 |
$38,817 | $23,374 | $7,313 | $8,714 | $1,650 | $5,269 | $8,288 | $28,011 | $146 | $168 |
8,628 | 4,641 | 594 | 1,601 | 652 | 294 | 83 | 621 | 17 | 6 |
(26,478) | (16,076) | (11,350) | (29,883) | (2,225) | (6,610) | (12,809) | (28,199) | (51) | (147) |
$20,967 | $11,939 | $(3,443) | $(19,568) | $77 | $(1,047) | $(4,438) | $433 | $112 | $27 |
41
Harbor Domestic Equity Funds
Statements of Changes in Net Assets—Capital Stock Activity—Continued
Statements of Changes in Net Assets—Capital Stock Activity—Continued
(All amounts in thousands)
Harbor Capital Appreciation Fund | Harbor Large Cap Value Fund | Harbor Mid Cap Fund | ||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | December 1, 2019a through October 31, 2020 | |
(Unaudited) | (Unaudited) | (Unaudited) | ||||
SHARES | ||||||
Retirement Class | ||||||
Shares sold | 12,127 | 24,367 | 12,294 | 20,337 | 1,771 | 491 |
Shares issued due to reinvestment of distributions | 10,669 | 7,403 | 1,123 | 228 | 4 | — |
Shares reacquired | (21,611) | (27,474) | (3,851) | (10,280) | (238) | (4) |
Net increase/(decrease) in shares outstanding | 1,185 | 4,296 | 9,566 | 10,285 | 1,537 | 487 |
Institutional Class | ||||||
Shares sold | 22,065 | 48,185 | 14,695 | 27,030 | 1,046 | 513 |
Shares issued due to reinvestment of distributions | 29,172 | 23,573 | 1,184 | 331 | 1 | — |
Shares reacquired | (32,137) | (84,852) | (9,114) | (22,489) | (1) | (1) |
Shares reacquired through in-kind redemption | (18,836) | (10,241) | — | — | — | — |
Net increase/(decrease) in shares outstanding | 264 | (23,335) | 6,765 | 4,872 | 1,046 | 512 |
Administrative Class | ||||||
Shares sold | 939 | 1,067 | 22 | 42 | N/A | N/A |
Shares issued due to reinvestment of distributions | 508 | 397 | 20 | 4 | N/A | N/A |
Shares reacquired | (1,609) | (1,777) | (548) | (121) | N/A | N/A |
Net increase/(decrease) in shares outstanding | (162) | (313) | (506) | (75) | N/A | N/A |
Investor Class | ||||||
Shares sold | 2,061 | 3,290 | 226 | 349 | 24 | 44 |
Shares issued due to reinvestment of distributions | 1,706 | 1,359 | 37 | 8 | — | — |
Shares reacquired | (3,058) | (5,989) | (206) | (1,157) | (10) | (1) |
Net increase/(decrease) in shares outstanding | 709 | (1,340) | 57 | (800) | 14 | 43 |
a | Inception |
The accompanying notes are an integral part of the Financial Statements.
42
Harbor Mid Cap Growth Fund | Harbor Mid Cap Value Fund | Harbor Small Cap Growth Fund | Harbor Small Cap Value Fund | Harbor Strategic Growth Fund | |||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 |
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||
1,248 | 2,912 | 1,083 | 1,582 | 2,361 | 6,248 | 3,437 | 5,105 | 12 | 104 |
726 | 662 | 46 | 144 | 1,557 | 714 | 33 | 75 | 8 | 4 |
(650) | (1,469) | (455) | (4,893) | (2,781) | (6,395) | (1,450) | (2,569) | (49) | (76) |
1,324 | 2,105 | 674 | (3,167) | 1,137 | 567 | 2,020 | 2,611 | (29) | 32 |
7,714 | 8,232 | 2,343 | 6,148 | 4,259 | 15,544 | 11,555 | 17,130 | 266 | 714 |
2,218 | 2,950 | 366 | 696 | 2,749 | 1,120 | 164 | 482 | 128 | 80 |
(3,233) | (11,021) | (4,633) | (15,347) | (6,035) | (10,218) | (7,645) | (15,058) | (706) | (1,477) |
— | — | — | — | — | — | — | — | — | — |
6,699 | 161 | (1,924) | (8,503) | 973 | 6,446 | 4,074 | 2,554 | (312) | (683) |
128 | 33 | 50 | 137 | 3 | 44 | 44 | 218 | — | — |
50 | 63 | 4 | 21 | 5 | 1 | 1 | 3 | — | — |
(30) | (51) | (187) | (749) | (12) | (18) | (34) | (96) | — | — |
148 | 45 | (133) | (591) | (4) | 27 | 11 | 125 | — | — |
3,224 | 2,272 | 329 | 490 | 107 | 487 | 205 | 909 | 5 | 8 |
747 | 562 | 30 | 75 | 43 | 25 | 2 | 18 | 1 | 1 |
(2,217) | (1,746) | (542) | (1,807) | (145) | (598) | (321) | (1,033) | (2) | (7) |
1,754 | 1,088 | (183) | (1,242) | 5 | (86) | (114) | (106) | 4 | 2 |
43
Harbor Domestic Equity Funds Financial Highlights
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR CAPITAL APPRECIATION FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016f | ||
(Unaudited) | ||||||
Net asset value beginning of period | 99.19$ | $75.79 | $73.98 | $75.34 | $60.37 | $55.79 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | (0.11) | (0.08) | 0.13 | 0.23 | 0.16 | 0.05 |
Net realized and unrealized gain/(loss) on investments | 22.12 | 30.27 | 8.54 | 6.50 | 18.40 | 4.53 |
Total from investment operations | 22.01 | 30.19 | 8.67 | 6.73 | 18.56 | 4.58 |
Less Distributions | ||||||
Dividends from net investment income | — | (0.12) | (0.21) | (0.17) | (0.10) | — |
Distributions from net realized capital gains | (12.76) | (6.67) | (6.65) | (7.92) | (3.49) | — |
Total distributions | (12.76) | (6.79) | (6.86) | (8.09) | (3.59) | — |
Net asset value end of period | 108.44 | 99.19 | 75.79 | 73.98 | 75.34 | 60.37 |
Net assets end of period (000s) | 10,568,321$ | $9,549,061 | $6,970,617 | $5,393,675 | $2,892,484 | $1,022,839 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c22.71% | 42.79% | 13.73% | 9.50% | 32.62% | 8.21%c |
Ratio of total expenses to average net assets^ | d0.63 | 0.64 | 0.63 | 0.62 | 0.63 | 0.65d |
Ratio of net expenses to average net assetsa | d0.57 | 0.58 | 0.58 | 0.57 | 0.59 | 0.59d |
Ratio of net investment income/(loss) to average net assetsa | d(0.21) | (0.09) | 0.18 | 0.30 | 0.23 | 0.13d |
Portfolio turnover | c31 | 51 | 40 | 40 | 52 | 34c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | 96.68$ | $74.15 | $72.54 | $74.08 | $59.50 | $64.51 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | (0.28) | (0.34) | (0.09) | (0.01) | (0.04) | (0.06) |
Net realized and unrealized gain/(loss) on investments | 21.55 | 29.54 | 8.35 | 6.39 | 18.11 | (0.84) |
Total from investment operations | 21.27 | 29.20 | 8.26 | 6.38 | 18.07 | (0.90) |
Less Distributions | ||||||
Dividends from net investment income | — | — | — | — | — | — |
Distributions from net realized capital gains | (12.76) | (6.67) | (6.65) | (7.92) | (3.49) | (4.11) |
Total distributions | (12.76) | (6.67) | (6.65) | (7.92) | (3.49) | (4.11) |
Net asset value end of period | 105.19 | 96.68 | 74.15 | 72.54 | 74.08 | 59.50 |
Net assets end of period (000s) | 440,372$ | $420,324 | $345,550 | $448,241 | $493,860 | $555,665 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c22.52% | 42.32% | 13.35% | 9.16% | 32.20% | (1.48)% |
Ratio of total expenses to average net assets^ | d0.96 | 0.97 | 0.96 | 0.95 | 0.96 | 0.94 |
Ratio of net expenses to average net assetsa | d0.90 | 0.91 | 0.91 | 0.90 | 0.90 | 0.89 |
Ratio of net investment income/(loss) to average net assetsa | d(0.54) | (0.41) | (0.13) | (0.01) | (0.06) | (0.11) |
Portfolio turnover | c31 | 51 | 40 | 40 | 52 | 34 |
See page 60 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
44
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
99.18$ | $75.78 | $73.97 | $75.32 | $60.36 | $65.27 |
(0.16) | (0.14) | 0.08 | 0.18 | 0.13 | 0.09 |
22.13 | 30.26 | 8.53 | 6.50 | 18.38 | (0.84) |
21.97 | 30.12 | 8.61 | 6.68 | 18.51 | (0.75) |
— | (0.05) | (0.15) | (0.11) | (0.06) | (0.05) |
(12.76) | (6.67) | (6.65) | (7.92) | (3.49) | (4.11) |
(12.76) | (6.72) | (6.80) | (8.03) | (3.55) | (4.16) |
108.39 | 99.18 | 75.78 | 73.97 | 75.32 | 60.36 |
27,982,189$ | $25,579,181 | $21,311,587 | $22,366,214 | $23,896,840 | $21,608,221 |
c22.67% | 42.68% | 13.63% | 9.44% | 32.52% | (1.23)% |
d0.71 | 0.72 | 0.71 | 0.70 | 0.71 | 0.69 |
d0.65 | 0.66 | 0.66 | 0.65 | 0.65 | 0.64 |
d(0.29) | (0.16) | 0.11 | 0.23 | 0.20 | 0.15 |
c31 | 51 | 40 | 40 | 52 | 34 |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
94.19$ | $72.48 | $71.15 | $72.88 | $58.66 | $63.73 |
(0.33) | (0.43) | (0.17) | (0.10) | (0.11) | (0.13) |
20.97 | 28.81 | 8.15 | 6.29 | 17.82 | (0.83) |
20.64 | 28.38 | 7.98 | 6.19 | 17.71 | (0.96) |
— | — | — | — | — | — |
(12.76) | (6.67) | (6.65) | (7.92) | (3.49) | (4.11) |
(12.76) | (6.67) | (6.65) | (7.92) | (3.49) | (4.11) |
102.07 | 94.19 | 72.48 | 71.15 | 72.88 | 58.66 |
1,462,064$ | $1,282,355 | $1,083,896 | $1,327,790 | $1,531,809 | $1,540,557 |
c22.44% | 42.15% | 13.21% | 9.03% | 32.04% | (1.60)% |
d1.08 | 1.09 | 1.08 | 1.07 | 1.08 | 1.06 |
d1.02 | 1.03 | 1.03 | 1.02 | 1.02 | 1.01 |
d(0.66) | (0.53) | (0.25) | (0.13) | (0.17) | (0.22) |
c31 | 51 | 40 | 40 | 52 | 34 |
45
Harbor Domestic Equity Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR LARGE CAP VALUE FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016f | ||
(Unaudited) | ||||||
Net asset value beginning of period | 17.11$ | $16.33 | $14.37 | $14.87 | $12.32 | $10.94 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.09 | 0.18 | 0.18 | 0.17 | 0.12 | 0.12 |
Net realized and unrealized gain/(loss) on investments | 5.36 | 0.76 | 2.17 | (0.13) | 3.00 | 1.33 |
Total from investment operations | 5.45 | 0.94 | 2.35 | 0.04 | 3.12 | 1.45 |
Less Distributions | ||||||
Dividends from net investment income | (0.08) | (0.16) | (0.16) | (0.13) | (0.14) | (0.07) |
Distributions from net realized capital gains | (0.52) | — | (0.23) | (0.41) | (0.43) | — |
Total distributions | (0.60) | (0.16) | (0.39) | (0.54) | (0.57) | (0.07) |
Net asset value end of period | 21.96 | 17.11 | 16.33 | 14.37 | 14.87 | 12.32 |
Net assets end of period (000s) | 1,051,407$ | $655,562 | $457,908 | $313,721 | $143,966 | $3,822 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c32.40% | 5.80% | 16.92% | 0.18% | 26.08% | 13.24%c |
Ratio of total expenses to average net assets^ | d0.64 | 0.64 | 0.65 | 0.64 | 0.64 | 0.67d |
Ratio of net expenses to average net assetsa | d0.61 | 0.61 | 0.61 | 0.60 | 0.60 | 0.63d |
Ratio of net investment income/(loss) to average net assetsa | d0.95 | 1.08 | 1.19 | 1.12 | 0.83 | 1.46d |
Portfolio turnover | c7 | 26 | 11 | 15 | 16 | 34c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | 17.11$ | $16.33 | $14.36 | $14.84 | $12.30 | $12.15 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.07 | 0.13 | 0.14 | 0.13 | 0.10 | 0.13 |
Net realized and unrealized gain/(loss) on investments | 5.33 | 0.75 | 2.17 | (0.15) | 2.99 | 0.63 |
Total from investment operations | 5.40 | 0.88 | 2.31 | (0.02) | 3.09 | 0.76 |
Less Distributions | ||||||
Dividends from net investment income | (0.05) | (0.10) | (0.11) | (0.05) | (0.12) | (0.10) |
Distributions from net realized capital gains | (0.52) | — | (0.23) | (0.41) | (0.43) | (0.51) |
Total distributions | (0.57) | (0.10) | (0.34) | (0.46) | (0.55) | (0.61) |
Net asset value end of period | 21.94 | 17.11 | 16.33 | 14.36 | 14.84 | 12.30 |
Net assets end of period (000s) | 3,667$ | $11,502 | $12,195 | $15,460 | $53,006 | $9,361 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c32.07% | 5.42% | 16.60%��� | (0.23)% | 25.77% | 6.77% |
Ratio of total expenses to average net assets^ | d0.97 | 0.97 | 0.98 | 0.97 | 0.97 | 0.96 |
Ratio of net expenses to average net assetsa | d0.94 | 0.94 | 0.94 | 0.93 | 0.93 | 0.93 |
Ratio of net investment income/(loss) to average net assetsa | d0.69 | 0.78 | 0.91 | 0.84 | 0.70 | 1.09 |
Portfolio turnover | c7 | 26 | 11 | 15 | 16 | 34 |
See page 60 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
46
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
17.11$ | $16.33 | $14.37 | $14.87 | $12.32 | $12.16 |
0.09 | 0.17 | 0.17 | 0.16 | 0.15 | 0.16 |
5.34 | 0.76 | 2.17 | (0.13) | 2.97 | 0.64 |
5.43 | 0.93 | 2.34 | 0.03 | 3.12 | 0.80 |
(0.07) | (0.15) | (0.15) | (0.12) | (0.14) | (0.13) |
(0.52) | — | (0.23) | (0.41) | (0.43) | (0.51) |
(0.59) | (0.15) | (0.38) | (0.53) | (0.57) | (0.64) |
21.95 | 17.11 | 16.33 | 14.37 | 14.87 | 12.32 |
1,278,842$ | $880,755 | $761,262 | $605,040 | $498,360 | $310,127 |
c32.29% | 5.72% | 16.83% | 0.11% | 26.00% | 7.14% |
d0.72 | 0.72 | 0.73 | 0.72 | 0.72 | 0.72 |
d0.69 | 0.69 | 0.69 | 0.68 | 0.68 | 0.68 |
d0.87 | 1.02 | 1.12 | 1.05 | 1.10 | 1.32 |
c7 | 26 | 11 | 15 | 16 | 34 |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
17.28$ | $16.48 | $14.49 | $14.99 | $12.42 | $12.25 |
0.05 | 0.11 | 0.12 | 0.11 | 0.10 | 0.11 |
5.41 | 0.76 | 2.19 | (0.14) | 2.99 | 0.66 |
5.46 | 0.87 | 2.31 | (0.03) | 3.09 | 0.77 |
(0.04) | (0.07) | (0.09) | (0.06) | (0.09) | (0.09) |
(0.52) | — | (0.23) | (0.41) | (0.43) | (0.51) |
(0.56) | (0.07) | (0.32) | (0.47) | (0.52) | (0.60) |
22.18 | 17.28 | 16.48 | 14.49 | 14.99 | 12.42 |
31,476$ | $23,527 | $35,622 | $45,548 | $71,374 | $57,716 |
c32.08% | 5.32% | 16.39% | (0.27)% | 25.52% | 6.80% |
d1.08 | 1.09 | 1.10 | 1.09 | 1.09 | 1.09 |
d1.06 | 1.06 | 1.06 | 1.05 | 1.05 | 1.05 |
d0.51 | 0.67 | 0.79 | 0.70 | 0.75 | 0.94 |
c7 | 26 | 11 | 15 | 16 | 34 |
47
Harbor Domestic Equity Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR MID CAP FUND | ||||||
Retirement Class | Institutional Class | Investor Class | ||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | 6-Month Period Ended April 30, 2021 | Year Ended October 31, | 6-Month Period Ended April 30, 2021 | Year Ended October 31, | |
2020j | 2020j | 2020j | ||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||
Net asset value beginning of period | 10.57$ | $— | 10.56$ | $— | 10.54$ | $— |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.03 | 0.05 | 0.01 | 0.04 | *— | 0.01 |
Net realized and unrealized gain/(loss) on investments | 3.45 | 10.53 | 3.46 | 10.53 | 3.44 | 10.53 |
Total from investment operations | 3.48 | 10.58 | 3.47 | 10.57 | 3.44 | 10.54 |
Less Distributions | ||||||
Dividends from net investment income | (0.03) | (0.01) | (0.02) | (0.01) | — | —* |
Distributions from net realized capital gains | — | — | — | — | — | — |
Total distributions | (0.03) | (0.01) | (0.02) | (0.01) | — | —* |
Net asset value end of period | 14.02 | 10.57 | 14.01 | 10.56 | 13.98 | 10.54 |
Net assets end of period (000s) | 28,377$ | $5,148 | 21,834$ | $5,411 | 792$ | $455 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c32.87% | 5.86%c | c32.80% | 5.75%c | c32.64% | 5.42%c |
Ratio of total expenses to average net assets^ | d0.98 | 2.29d | d1.06 | 2.37d | d1.43 | 2.74d |
Ratio of net expenses to average net assetsa | d0.80 | 0.80d | d0.88 | 0.88d | d1.25 | 1.25d |
Ratio of net investment income/(loss) to average net assetsa | d0.43 | 0.54d | d0.23 | 0.46d | d(0.04) | 0.07d |
Portfolio turnover | c7 | 9c | c7 | 9c | c7 | 9c |
See page 60 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
48
Harbor Domestic Equity Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR MID CAP GROWTH FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016f | ||
(Unaudited) | ||||||
Net asset value beginning of period | 12.93$ | $10.91 | $10.88 | $11.25 | $8.58 | $7.76 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | (0.04) | (0.06) | (0.04) | (0.03) | 0.01 | (0.03) |
Net realized and unrealized gain/(loss) on investments | 3.15 | 4.25 | 1.85 | 0.88 | 2.66 | 0.85 |
Total from investment operations | 3.11 | 4.19 | 1.81 | 0.85 | 2.67 | 0.82 |
Less Distributions | ||||||
Dividends from net investment income | — | — | — | — | — | — |
Distributions from net realized capital gains | (1.93) | (2.17) | (1.78) | (1.22) | — | — |
Total distributions | (1.93) | (2.17) | (1.78) | (1.22) | — | — |
Net asset value end of period | 14.11 | 12.93 | 10.91 | 10.88 | 11.25 | 8.58 |
Net assets end of period (000s) | 88,788$ | $64,242 | $31,265 | $144,137 | $127,446 | $2,718 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c24.85% | 46.03% | 21.38% | 8.02% | 31.12% | (10.57)%c |
Ratio of total expenses to average net assets^ | d0.81 | 0.83 | 0.82 | 0.80 | 0.81 | 0.81d |
Ratio of net expenses to average net assetsa | d0.77 | 0.79 | 0.81 | 0.80 | 0.81 | 0.80d |
Ratio of net investment income/(loss) to average net assetsa | d(0.58) | (0.53) | (0.37) | (0.28) | 0.07 | (0.45)d |
Portfolio turnover | c49 | 113 | 70 | 85 | 87 | 84c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | 11.93$ | $10.26 | $10.37 | $10.81 | $8.27 | $9.45 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | (0.06) | (0.08) | (0.06) | (0.06) | (0.04) | (0.05) |
Net realized and unrealized gain/(loss) on investments | 2.90 | 3.92 | 1.73 | 0.84 | 2.58 | (0.03) |
Total from investment operations | 2.84 | 3.84 | 1.67 | 0.78 | 2.54 | (0.08) |
Less Distributions | ||||||
Dividends from net investment income | — | — | — | — | — | (0.04) |
Distributions from net realized capital gains | (1.93) | (2.17) | (1.78) | (1.22) | — | (1.06) |
Total distributions | (1.93) | (2.17) | (1.78) | (1.22) | — | (1.10) |
Net asset value end of period | 12.84 | 11.93 | 10.26 | 10.37 | 10.81 | 8.27 |
Net assets end of period (000s) | 5,847$ | $3,666 | $2,687 | $26,936 | $110,114 | $175,211 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c24.65% | 45.42% | 21.04% | 7.68% | 30.71% | (0.91)% |
Ratio of total expenses to average net assets^ | d1.14 | 1.16 | 1.15 | 1.13 | 1.13 | 1.10 |
Ratio of net expenses to average net assetsa | d1.10 | 1.12 | 1.14 | 1.12 | 1.12 | 1.10 |
Ratio of net investment income/(loss) to average net assetsa | d(0.91) | (0.84) | (0.66) | (0.55) | (0.45) | (0.57) |
Portfolio turnover | c49 | 113 | 70 | 85 | 87 | 84 |
See page 60 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
50
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
12.87$ | $10.88 | $10.86 | $11.24 | $8.58 | $9.76 |
(0.05) | (0.06) | (0.05) | (0.04) | (0.01) | (0.03) |
3.14 | 4.22 | 1.85 | 0.88 | 2.67 | (0.03) |
3.09 | 4.16 | 1.80 | 0.84 | 2.66 | (0.06) |
— | — | — | — | — | (0.06) |
(1.93) | (2.17) | (1.78) | (1.22) | — | (1.06) |
(1.93) | (2.17) | (1.78) | (1.22) | — | (1.12) |
14.03 | 12.87 | 10.88 | 10.86 | 11.24 | 8.58 |
352,214$ | $236,863 | $198,544 | $158,680 | $145,914 | $303,802 |
c24.80% | 45.84% | 21.32% | 7.94% | 31.00% | (0.60)% |
d0.89 | 0.91 | 0.90 | 0.88 | 0.88 | 0.86 |
d0.85 | 0.87 | 0.89 | 0.87 | 0.87 | 0.85 |
d(0.66) | (0.58) | (0.48) | (0.36) | (0.14) | (0.31) |
c49 | 113 | 70 | 85 | 87 | 84 |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
11.37$ | $9.88 | $10.07 | $10.54 | $8.07 | $9.24 |
(0.06) | (0.09) | (0.08) | (0.08) | (0.04) | (0.05) |
2.76 | 3.75 | 1.67 | 0.83 | 2.51 | (0.04) |
2.70 | 3.66 | 1.59 | 0.75 | 2.47 | (0.09) |
— | — | — | — | — | (0.02) |
(1.93) | (2.17) | (1.78) | (1.22) | — | (1.06) |
(1.93) | (2.17) | (1.78) | (1.22) | — | (1.08) |
12.14 | 11.37 | 9.88 | 10.07 | 10.54 | 8.07 |
60,139$ | $36,399 | $20,891 | $16,929 | $20,121 | $17,167 |
c24.62% | 45.32% | 20.83% | 7.57% | 30.61% | (1.05)% |
d1.25 | 1.28 | 1.27 | 1.25 | 1.25 | 1.22 |
d1.21 | 1.24 | 1.26 | 1.24 | 1.24 | 1.22 |
d(1.02) | (0.96) | (0.85) | (0.72) | (0.48) | (0.68) |
c49 | 113 | 70 | 85 | 87 | 84 |
51
Harbor Domestic Equity Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR MID CAP VALUE FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016f | ||
(Unaudited) | ||||||
Net asset value beginning of period | 16.83$ | $20.82 | $21.39 | $23.33 | $20.17 | $18.36 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.18 | 0.43 | 0.48 | 0.50 | 0.40 | 0.28 |
Net realized and unrealized gain/(loss) on investments | 8.50 | (3.73) | 0.47 | (1.52) | 3.43 | 1.53 |
Total from investment operations | 8.68 | (3.30) | 0.95 | (1.02) | 3.83 | 1.81 |
Less Distributions | ||||||
Dividends from net investment income | (0.49) | (0.54) | (0.37) | (0.33) | (0.36) | — |
Distributions from net realized capital gains | — | (0.15) | (1.15) | (0.59) | (0.31) | — |
Total distributions | (0.49) | (0.69) | (1.52) | (0.92) | (0.67) | — |
Net asset value end of period | 25.02 | 16.83 | 20.82 | 21.39 | 23.33 | 20.17 |
Net assets end of period (000s) | 61,287$ | $29,897 | $102,945 | $103,552 | $89,942 | $14,999 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c52.29% | (16.55)% | 5.53% | (4.75)% | 19.22% | 9.86%c |
Ratio of total expenses to average net assets^ | d0.81 | 0.82 | 0.80 | 0.79 | 0.80 | 0.82d |
Ratio of net expenses to average net assetsa | d0.79 | 0.80 | 0.77 | 0.76 | 0.77 | 0.79d |
Ratio of net investment income/(loss) to average net assetsa | d1.64 | 2.39 | 2.39 | 2.15 | 1.79 | 2.11d |
Portfolio turnover | c7 | 4 | 11 | 24 | 22 | 18c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | 16.98$ | $20.98 | $21.52 | $23.47 | $20.30 | $20.40 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.15 | 0.36 | 0.42 | 0.43 | 0.34 | 0.40 |
Net realized and unrealized gain/(loss) on investments | 8.59 | (3.77) | 0.48 | (1.54) | 3.45 | 0.07 |
Total from investment operations | 8.74 | (3.41) | 0.90 | (1.11) | 3.79 | 0.47 |
Less Distributions | ||||||
Dividends from net investment income | (0.39) | (0.44) | (0.29) | (0.25) | (0.31) | (0.22) |
Distributions from net realized capital gains | — | (0.15) | (1.15) | (0.59) | (0.31) | (0.35) |
Total distributions | (0.39) | (0.59) | (1.44) | (0.84) | (0.62) | (0.57) |
Net asset value end of period | 25.33 | 16.98 | 20.98 | 21.52 | 23.47 | 20.30 |
Net assets end of period (000s) | 3,990$ | $4,945 | $18,508 | $42,557 | $48,809 | $40,992 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c52.07% | (16.85)% | 5.19% | (5.06)% | 18.84% | 2.54% |
Ratio of total expenses to average net assets^ | d1.14 | 1.15 | 1.13 | 1.12 | 1.12 | 1.11 |
Ratio of net expenses to average net assetsa | d1.12 | 1.13 | 1.10 | 1.08 | 1.09 | 1.09 |
Ratio of net investment income/(loss) to average net assetsa | d1.40 | 1.98 | 2.08 | 1.83 | 1.51 | 2.03 |
Portfolio turnover | c7 | 4 | 11 | 24 | 22 | 18 |
See page 60 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
52
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
16.83$ | $20.82 | $21.38 | $23.33 | $20.17 | $20.27 |
0.17 | 0.40 | 0.47 | 0.49 | 0.39 | 0.44 |
8.49 | (3.73) | 0.47 | (1.54) | 3.43 | 0.08 |
8.66 | (3.33) | 0.94 | (1.05) | 3.82 | 0.52 |
(0.47) | (0.51) | (0.35) | (0.31) | (0.35) | (0.27) |
— | (0.15) | (1.15) | (0.59) | (0.31) | (0.35) |
(0.47) | (0.66) | (1.50) | (0.90) | (0.66) | (0.62) |
25.02 | 16.83 | 20.82 | 21.38 | 23.33 | 20.17 |
364,816$ | $277,767 | $520,629 | $714,309 | $739,122 | $600,800 |
c52.18% | (16.64)% | 5.48% | (4.85)% | 19.16% | 2.81% |
d0.89 | 0.90 | 0.88 | 0.87 | 0.87 | 0.86 |
d0.87 | 0.88 | 0.85 | 0.83 | 0.84 | 0.84 |
d1.62 | 2.25 | 2.33 | 2.09 | 1.76 | 2.28 |
c7 | 4 | 11 | 24 | 22 | 18 |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
16.80$ | $20.78 | $21.31 | $23.23 | $20.09 | $20.19 |
0.13 | 0.34 | 0.39 | 0.40 | 0.31 | 0.37 |
8.49 | (3.74) | 0.48 | (1.53) | 3.41 | 0.08 |
8.62 | (3.40) | 0.87 | (1.13) | 3.72 | 0.45 |
(0.39) | (0.43) | (0.25) | (0.20) | (0.27) | (0.20) |
— | (0.15) | (1.15) | (0.59) | (0.31) | (0.35) |
(0.39) | (0.58) | (1.40) | (0.79) | (0.58) | (0.55) |
25.03 | 16.80 | 20.78 | 21.31 | 23.23 | 20.09 |
35,342$ | $26,785 | $58,928 | $82,539 | $110,094 | $152,358 |
c51.87% | (16.94)% | 5.08% | (5.20)% | 18.71% | 2.45% |
d1.25 | 1.27 | 1.25 | 1.24 | 1.24 | 1.23 |
d1.23 | 1.25 | 1.22 | 1.20 | 1.21 | 1.21 |
d1.26 | 1.89 | 1.95 | 1.71 | 1.40 | 1.92 |
c7 | 4 | 11 | 24 | 22 | 18 |
53
Harbor Domestic Equity Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR SMALL CAP GROWTH FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016f | ||
(Unaudited) | ||||||
Net asset value beginning of period | 15.91$ | $13.18 | $14.39 | $15.08 | $11.95 | $10.72 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | (0.03) | (0.04) | (0.01) | (0.05) | (0.04) | (0.02) |
Net realized and unrealized gain/(loss) on investments | 4.88 | 3.25 | 1.56 | 0.82 | 3.23 | 1.25 |
Total from investment operations | 4.85 | 3.21 | 1.55 | 0.77 | 3.19 | 1.23 |
Less Distributions | ||||||
Dividends from net investment income | — | — | — | — | — | — |
Distributions from net realized capital gains | (1.30) | (0.48) | (2.76) | (1.46) | (0.06) | — |
Total distributions | (1.30) | (0.48) | (2.76) | (1.46) | (0.06) | — |
Net asset value end of period | 19.46 | 15.91 | 13.18 | 14.39 | 15.08 | 11.95 |
Net assets end of period (000s) | 448,838$ | $348,997 | $281,603 | $306,026 | $189,516 | $54,634 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c31.10% | 24.93% | 16.23% | 5.11% | 26.78% | 11.47%c |
Ratio of total expenses to average net assets^ | d0.79 | 0.81 | 0.80 | 0.79 | 0.79 | 0.81d |
Ratio of net expenses to average net assetsa | d0.78 | 0.80 | 0.80 | 0.79 | 0.79 | 0.80d |
Ratio of net investment income/(loss) to average net assetsa | d(0.37) | (0.27) | (0.12) | (0.33) | (0.26) | (0.27)d |
Portfolio turnover | c41 | 95 | 74 | 99 | 83 | 89c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | 14.36$ | $11.98 | $13.39 | $14.17 | $11.30 | $13.04 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | (0.06) | (0.08) | (0.05) | (0.09) | (0.07) | (0.05) |
Net realized and unrealized gain/(loss) on investments | 4.39 | 2.94 | 1.40 | 0.77 | 3.00 | (0.11) |
Total from investment operations | 4.33 | 2.86 | 1.35 | 0.68 | 2.93 | (0.16) |
Less Distributions | ||||||
Dividends from net investment income | — | — | — | — | — | — |
Distributions from net realized capital gains | (1.30) | (0.48) | (2.76) | (1.46) | (0.06) | (1.58) |
Total distributions | (1.30) | (0.48) | (2.76) | (1.46) | (0.06) | (1.58) |
Net asset value end of period | 17.39 | 14.36 | 11.98 | 13.39 | 14.17 | 11.30 |
Net assets end of period (000s) | 972$ | $866 | $395 | $769 | $719 | $686 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c30.82% | 24.49% | 15.87% | 4.76% | 26.02% | (1.29)% |
Ratio of total expenses to average net assets^ | d1.12 | 1.14 | 1.13 | 1.12 | 1.11 | 1.10 |
Ratio of net expenses to average net assetsa | d1.11 | 1.13 | 1.12 | 1.11 | 1.10 | 1.10 |
Ratio of net investment income/(loss) to average net assetsa | d(0.69) | (0.62) | (0.44) | (0.65) | (0.56) | (0.46) |
Portfolio turnover | c41 | 95 | 74 | 99 | 83 | 89 |
See page 60 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
54
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
15.84$ | $13.13 | $14.35 | $15.06 | $11.94 | $13.65 |
(0.04) | (0.05) | (0.03) | (0.06) | (0.04) | (0.02) |
4.85 | 3.24 | 1.57 | 0.81 | 3.22 | (0.11) |
4.81 | 3.19 | 1.54 | 0.75 | 3.18 | (0.13) |
— | — | — | — | — | — |
(1.30) | (0.48) | (2.76) | (1.46) | (0.06) | (1.58) |
(1.30) | (0.48) | (2.76) | (1.46) | (0.06) | (1.58) |
19.35 | 15.84 | 13.13 | 14.35 | 15.06 | 11.94 |
792,837$ | $633,535 | $440,553 | $400,389 | $509,889 | $523,888 |
c30.98% | 24.87% | 16.18% | 4.97% | 26.72% | (0.99)% |
d0.87 | 0.89 | 0.88 | 0.87 | 0.86 | 0.85 |
d0.86 | 0.88 | 0.87 | 0.86 | 0.85 | 0.85 |
d(0.45) | (0.35) | (0.20) | (0.40) | (0.30) | (0.21) |
c41 | 95 | 74 | 99 | 83 | 89 |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
13.47$ | $11.28 | $12.79 | $13.62 | $10.84 | $12.59 |
(0.06) | (0.08) | (0.06) | (0.11) | (0.08) | (0.06) |
4.11 | 2.75 | 1.31 | 0.74 | 2.92 | (0.11) |
4.05 | 2.67 | 1.25 | 0.63 | 2.84 | (0.17) |
— | — | — | — | — | — |
(1.30) | (0.48) | (2.76) | (1.46) | (0.06) | (1.58) |
(1.30) | (0.48) | (2.76) | (1.46) | (0.06) | (1.58) |
16.22 | 13.47 | 11.28 | 12.79 | 13.62 | 10.84 |
8,285$ | $6,811 | $6,670 | $7,076 | $7,913 | $8,401 |
c30.78% | 24.32% | 15.81% | 4.58% | 26.29% | (1.44)% |
d1.24 | 1.26 | 1.25 | 1.24 | 1.23 | 1.22 |
d1.23 | 1.25 | 1.24 | 1.23 | 1.22 | 1.22 |
d(0.81) | (0.71) | (0.57) | (0.77) | (0.67) | (0.58) |
c41 | 95 | 74 | 99 | 83 | 89 |
55
Harbor Domestic Equity Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR SMALL CAP VALUE FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016f | ||
(Unaudited) | ||||||
Net asset value beginning of period | 31.65$ | $33.55 | $33.60 | $36.16 | $27.29 | $23.91 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.06 | 0.21 | 0.21 | 0.17 | 0.06 | 0.05 |
Net realized and unrealized gain/(loss) on investments | 13.69 | (1.59) | 2.84 | (1.98) | 8.94 | 3.33 |
Total from investment operations | 13.75 | (1.38) | 3.05 | (1.81) | 9.00 | 3.38 |
Less Distributions | ||||||
Dividends from net investment income | (0.20) | (0.20) | (0.15) | (0.06) | (0.13) | — |
Distributions from net realized capital gains | — | (0.32) | (2.95) | (0.69) | — | — |
Total distributions | (0.20) | (0.52) | (3.10) | (0.75) | (0.13) | — |
Net asset value end of period | 45.20 | 31.65 | 33.55 | 33.60 | 36.16 | 27.29 |
Net assets end of period (000s) | 520,340$ | $300,473 | $230,861 | $155,036 | $57,196 | $2,529 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c43.48% | (4.22)% | 10.98% | (5.18)% | 33.06% | 14.14%c |
Ratio of total expenses to average net assets^ | d0.79 | 0.80 | 0.80 | 0.79 | 0.81 | 0.82d |
Ratio of net expenses to average net assetsa | d0.78 | 0.80 | 0.80 | 0.79 | 0.81 | 0.81d |
Ratio of net investment income/(loss) to average net assetsa | d0.27 | 0.67 | 0.67 | 0.45 | 0.17 | 0.27d |
Portfolio turnover | c10 | 17 | 27 | 22 | 8 | 10c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | 31.41$ | $33.30 | $33.36 | $35.97 | $27.16 | $26.07 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | (0.01) | 0.10 | 0.11 | 0.06 | (0.02) | 0.05 |
Net realized and unrealized gain/(loss) on investments | 13.57 | (1.57) | 2.82 | (1.98) | 8.88 | 1.93 |
Total from investment operations | 13.56 | (1.47) | 2.93 | (1.92) | 8.86 | 1.98 |
Less Distributions | ||||||
Dividends from net investment income | (0.09) | (0.10) | (0.04) | — | (0.05) | — |
Distributions from net realized capital gains | — | (0.32) | (2.95) | (0.69) | — | (0.89) |
Total distributions | (0.09) | (0.42) | (2.99) | (0.69) | (0.05) | (0.89) |
Net asset value end of period | 44.88 | 31.41 | 33.30 | 33.36 | 35.97 | 27.16 |
Net assets end of period (000s) | 14,894$ | $10,082 | $6,537 | $7,253 | $4,462 | $1,360 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c43.23% | (4.54)% | 10.59% | (5.50)% | 32.67% | 7.93% |
Ratio of total expenses to average net assets^ | d1.12 | 1.13 | 1.13 | 1.12 | 1.13 | 1.11 |
Ratio of net expenses to average net assetsa | d1.11 | 1.13 | 1.12 | 1.11 | 1.12 | 1.11 |
Ratio of net investment income/(loss) to average net assetsa | d(0.05) | 0.32 | 0.35 | 0.16 | (0.05) | 0.21 |
Portfolio turnover | c10 | 17 | 27 | 22 | 8 | 10 |
See page 60 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
56
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
31.63$ | $33.53 | $33.57 | $36.14 | $27.27 | $26.21 |
0.04 | 0.18 | 0.19 | 0.15 | 0.08 | 0.12 |
13.67 | (1.58) | 2.84 | (2.00) | 8.90 | 1.92 |
13.71 | (1.40) | 3.03 | (1.85) | 8.98 | 2.04 |
(0.17) | (0.18) | (0.12) | (0.03) | (0.11) | (0.09) |
— | (0.32) | (2.95) | (0.69) | — | (0.89) |
(0.17) | (0.50) | (3.07) | (0.72) | (0.11) | (0.98) |
45.17 | 31.63 | 33.53 | 33.57 | 36.14 | 27.27 |
2,113,075$ | $1,350,681 | $1,346,098 | $1,149,857 | $1,081,412 | $738,705 |
c43.43% | (4.33)% | 10.91% | (5.28)% | 33.00% | 8.18% |
d0.87 | 0.88 | 0.88 | 0.87 | 0.88 | 0.86 |
d0.86 | 0.88 | 0.87 | 0.86 | 0.87 | 0.86 |
d0.20 | 0.59 | 0.60 | 0.40 | 0.24 | 0.48 |
c10 | 17 | 27 | 22 | 8 | 10 |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
30.71$ | $32.56 | $32.68 | $35.29 | $26.65 | $25.63 |
(0.03) | 0.07 | 0.08 | 0.01 | (0.05) | 0.03 |
13.28 | (1.55) | 2.75 | (1.93) | 8.71 | 1.88 |
13.25 | (1.48) | 2.83 | (1.92) | 8.66 | 1.91 |
(0.05) | (0.05) | — | — | (0.02) | — |
— | (0.32) | (2.95) | (0.69) | — | (0.89) |
(0.05) | (0.37) | (2.95) | (0.69) | (0.02) | (0.89) |
43.91 | 30.71 | 32.56 | 32.68 | 35.29 | 26.65 |
68,439$ | $51,370 | $57,931 | $70,819 | $37,548 | $17,775 |
c43.18% | (4.67)% | 10.48% | (5.60)% | 32.49% | 7.79% |
d1.24 | 1.25 | 1.25 | 1.24 | 1.25 | 1.23 |
d1.23 | 1.25 | 1.24 | 1.23 | 1.24 | 1.23 |
d(0.15) | 0.23 | 0.24 | 0.03 | (0.16) | 0.10 |
c10 | 17 | 27 | 22 | 8 | 10 |
57
Harbor Domestic Equity Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR STRATEGIC GROWTH FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | Year Ended June 30, | ||||
2020 | 2019 | 2018 | 2017h | 2017g | ||
(Unaudited) | ||||||
Net asset value beginning of period | 24.67$ | $22.31 | $19.65 | $18.86 | $17.67 | $16.76 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.03 | 0.09 | 0.12 | 0.07 | 0.05 | 0.03 |
Net realized and unrealized gain/(loss) on investments | 6.24 | 2.69 | 3.10 | 1.11 | 1.14 | 0.88 |
Total from investment operations | 6.27 | 2.78 | 3.22 | 1.18 | 1.19 | 0.91 |
Less Distributions | ||||||
Dividends from net investment income | (0.12) | (0.11) | (0.08) | (0.04) | — | — |
Distributions from net realized capital gains | (0.79) | (0.31) | (0.48) | (0.35) | — | — |
Total distributions | (0.91) | (0.42) | (0.56) | (0.39) | — | — |
Proceeds from redemption fees | N/A | N/A | N/A | N/A | N/A | N/A |
Net asset value end of period | 30.03 | 24.67 | 22.31 | 19.65 | 18.86 | 17.67 |
Net assets end of period (000s) | 7,015$ | $6,488 | $5,152 | $3,584 | $435 | $316 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c25.84% | 12.60% | 17.04% | 6.34% | 6.73%c | 5.43%c |
Ratio of total expenses to average net assets^ | d0.72 | 0.72 | 0.71 | 0.76 | 1.10d | 1.52d |
Ratio of net expenses to average net assetsa | d0.63 | 0.63 | 0.63 | 0.62 | 0.62d | 0.62d |
Ratio of net investment income/(loss) to average net assetsa | d0.21 | 0.40 | 0.60 | 0.33 | 0.42d | 0.58d |
Portfolio turnover | c5 | 22 | 26 | 15 | 9c | 21c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | Year Ended June 30, | ||||
2020 | 2019 | 2018 | 2017h | 2017g | ||
(Unaudited) | ||||||
Net asset value beginning of period | 24.58$ | $22.24 | $19.58 | $18.82 | $17.65 | $16.76 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | (0.02) | 0.02 | 0.05 | 0.01 | 0.01 | 0.01 |
Net realized and unrealized gain/(loss) on investments | 6.23 | 2.67 | 3.10 | 1.10 | 1.16 | 0.88 |
Total from investment operations | 6.21 | 2.69 | 3.15 | 1.11 | 1.17 | 0.89 |
Less Distributions | ||||||
Dividends from net investment income | (0.05) | (0.04) | (0.01) | — | — | — |
Distributions from net realized capital gains | (0.79) | (0.31) | (0.48) | (0.35) | — | — |
Total distributions | (0.84) | (0.35) | (0.49) | (0.35) | — | — |
Net asset value end of period | 29.95 | 24.58 | 22.24 | 19.58 | 18.82 | 17.65 |
Net assets end of period (000s) | 41$ | $22 | $18 | $16 | $12 | $11 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | c25.62% | 12.21% | 16.70% | 5.96% | 6.63%c | 5.31%c |
Ratio of total expenses to average net assets^ | d1.05 | 1.05 | 1.04 | 1.09 | 1.43d | 1.93d |
Ratio of net expenses to average net assetsa | d0.96 | 0.96 | 0.96 | 0.95 | 0.95d | 0.95d |
Ratio of net investment income/(loss) to average net assetsa | d(0.14) | 0.08 | 0.26 | 0.03 | 0.10d | 0.19d |
Portfolio turnover | c5 | 22 | 26 | 15 | 9c | 21c |
See page 60 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
58
Institutional Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | Year Ended June 30, | ||||
2020 | 2019 | 2018 | 2017h | 2017 | 2016 | |
(Unaudited) | ||||||
24.64$ | $22.28 | $19.63 | $18.85 | $17.66 | $15.54 | $15.39 |
0.02 | 0.08 | 0.11 | 0.06 | 0.03 | 0.12 | 0.03 |
6.23 | 2.68 | 3.08 | 1.11 | 1.16 | 2.22 | 0.63 |
6.25 | 2.76 | 3.19 | 1.17 | 1.19 | 2.34 | 0.66 |
(0.10) | (0.09) | (0.06) | (0.04) | — | (0.11) | (0.01) |
(0.79) | (0.31) | (0.48) | (0.35) | — | (0.11) | (0.50) |
(0.89) | (0.40) | (0.54) | (0.39) | — | (0.22) | (0.51) |
N/A | N/A | N/A | N/A | N/A | —* | —* |
30.00 | 24.64 | 22.28 | 19.63 | 18.85 | 17.66 | 15.54 |
113,496$ | $100,895 | $106,463 | $66,197 | $56,026 | $31,866 | $25,388 |
c25.77% | 12.54% | 16.91% | 6.26% | 6.74%c | 15.21% | 4.44% |
d0.80 | 0.80 | 0.79 | 0.84 | 1.18d | 1.48 | 1.74 |
d0.71 | 0.71 | 0.71 | 0.70 | 0.70d | 0.83 | 0.90 |
d0.13 | 0.35 | 0.51 | 0.28 | 0.29d | 0.71 | 0.19 |
c5 | 22 | 26 | 15 | 9c | 21 | 40 |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | Year Ended June 30, | |||
2020 | 2019 | 2018 | 2017h | 2017g | |
(Unaudited) | |||||
24.17$ | $21.87 | $19.54 | $18.81 | $17.64 | $16.76 |
(0.03) | (0.01) | 0.03 | (0.02) | 0.02 | 0.01 |
6.12 | 2.63 | 2.79 | 1.10 | 1.15 | 0.87 |
6.09 | 2.62 | 2.82 | 1.08 | 1.17 | 0.88 |
(0.02) | (0.01) | (0.01) | — | — | — |
(0.79) | (0.31) | (0.48) | (0.35) | — | — |
(0.81) | (0.32) | (0.49) | (0.35) | — | — |
29.45 | 24.17 | 21.87 | 19.54 | 18.81 | 17.64 |
737$ | $503 | $417 | $322 | $75 | $22 |
c25.55% | 12.12% | 14.99% | 5.80% | 6.63%c | 5.25%c |
d1.16 | 1.17 | 1.16 | 1.21 | 1.55d | 2.03d |
d1.08 | 1.08 | 1.08 | 1.07 | 1.07d | 1.07d |
d(0.24) | (0.04) | 0.14 | (0.11) | 0.05d | 0.13d |
c5 | 22 | 26 | 15 | 9c | 21c |
59
Harbor Domestic Equity Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
* | Less than $0.01 |
^ | Percentage does not reflect reduction for credit balance arrangements (see the “Custodian” section Note 2 of the accompanying Notes to Financial Statements) |
a | Reflects the Adviser’s waiver, if any, of its management fees and/or other operating expenses |
b | The total returns would have been lower had certain expenses not been waived during the periods shown. |
c | Unannualized |
d | Annualized |
e | Amounts are based on daily average shares outstanding during the period |
f | For the period March 1, 2016 (inception) through October 31, 2016 |
g | For the period March 6, 2017 (commencement of operations) through June 30, 2017 |
h | For the period July 1, 2017 through October 31, 2017 |
i | For the period December 1, 2019 (inception) through October 31, 2020 |
The accompanying notes are an integral part of the Financial Statements.
60
Harbor Domestic Equity Funds
Notes to Financial Statements—April 30, 2021 (Unaudited)
Notes to Financial Statements—April 30, 2021 (Unaudited)
Note 1—Organizational Matters
Harbor Funds (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as an open-end management investment company. As of April 30, 2021, the Trust consists of 36 separate portfolios. The portfolios covered by this report are: Harbor Capital Appreciation Fund, Harbor Large Cap Value Fund, Harbor Mid Cap Fund, Harbor Mid Cap Growth Fund, Harbor Mid Cap Value Fund, Harbor Small Cap Growth Fund, Harbor Small Cap Value Fund, and Harbor Strategic Growth Fund (individually or collectively referred to as a “Fund” or the “Funds," respectively). Harbor Capital Advisors, Inc. (the “Adviser” or “Harbor Capital”) is the investment adviser for the Funds.
The Funds currently offer four classes of shares, designated as Retirement Class, Institutional Class, Administrative Class and Investor Class. The shares of each class represent an interest in the same portfolio of investments of the Funds and have equal rights with respect to voting, redemptions, dividends, and liquidations, except that: (i) certain expenses, subject to the approval of the Trust’s Board of Trustees (the “Board of Trustees”), may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission (“SEC”) and the Internal Revenue Service; and (ii) shareholders of a class that bears distribution and service expenses under terms of a distribution plan have exclusive voting rights as to that distribution plan.
Reorganization
Harbor Small Cap Growth Opportunities Fund (the “Target Fund”), a series of the Trust, was reorganized with and into Harbor Small Cap Growth Fund the (“the Acquiring Fund”), also a series of the Trust (the “Reorganization”) effective May 15, 2020 (the “Reorganization Date”). The Reorganization was accomplished by the transfer of the assets and the liabilities of the Target Fund to the Acquiring Fund in exchange for shares of the Acquiring Fund, the pro-rata distribution of such shares to the shareholders of the Target Fund, and liquidation and termination of the Target Fund on the Reorganization Date.
The following table shows by each share class the number of shares and value of the Acquiring Fund that was exchanged for shares of the Target Fund outstanding as of the Reorganization Date. The Acquiring Fund Shares Exchanged and related Value noted below are included in the Net proceeds from sale of shares and Shares sold in the Acquiring Fund’s Statement of Changes in Net Assets.
Share Class | Acquiring Fund Shares Exchanged (000s) | Acquiring Fund Exchanged Shares Value (000s) | Target Fund Outstanding Shares (000s) |
Retirement Class | 2,471 | $31,052 | 3,746 |
Institutional Class | 8,331 | 104,255 | 12,622 |
Administrative Class | 16 | 184 | 23 |
Investor Class | 24 | 255 | 32 |
Note 2—Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. Each Fund follows the investment company reporting requirements under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), which includes the accounting and reporting guidelines under Accounting Standards Codification (“ASC”) Topic 946, Financial Services-Investment Companies. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.
Security Valuation
The Trust’s valuation procedures permit the Funds to use a variety of valuation methodologies, consider a number of subjective factors, analyze applicable facts and circumstances and, in general, exercise judgment, when valuing Fund investments. The methodology used for a specific type of investment may vary based on the circumstances and relevant considerations, including available market data.
Equity securities (including common stock, preferred stock, and convertible preferred stock), exchange-traded funds and financial derivative instruments (such as futures contracts, options contracts, including rights and warrants and centrally cleared swap agreements) that are traded or cleared on a national securities exchange or system (except securities listed on the National Association of Securities Dealers Automated Quotation (“NASDAQ”) system and United Kingdom securities) are valued at
61
Harbor Domestic Equity Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
the last sale price on a national exchange or system on which they are principally traded or cleared as of the valuation date. Securities listed on the NASDAQ system or a United Kingdom exchange are valued at the official closing price of those securities. In the case of securities for which there are no sales on the valuation day, (i) securities traded principally on a U.S. exchange, including NASDAQ, are valued at the mean between the closing bid and ask price; and (ii) securities traded principally on a foreign exchange, including United Kingdom securities, are valued at the official bid price determined as of the close of the primary exchange. Securities of open-end registered investment companies that are held by a Fund are valued at net asset value. To the extent these securities are actively traded and fair valuation adjustments are not applied, they are normally categorized as Level 1 in the fair value hierarchy. Equity securities traded on inactive markets or valued by reference to similar instruments are normally categorized as Level 2 in the fair value hierarchy. For more information on the fair value hierarchy, please refer to the Fair Value Measurements and Disclosures section.
Short-term securities with a remaining maturity of less than 60 days at the time of acquisition that are held by a Fund are valued at amortized cost to the extent amortized cost represents fair value. Such securities are normally categorized as Level 2 in the fair value hierarchy.
Over-the-counter financial derivative instruments, such as forward currency contracts, options contracts, and swap agreements, derive their value from underlying asset prices, indices, reference rates and other inputs, or a combination of these factors. These instruments are valued using evaluated prices furnished by a pricing vendor selected by the Board of Trustees. In certain cases, when a valuation is not readily available from a pricing vendor, the Fund’s subadviser provides a valuation, typically using its own proprietary models. Depending on the instrument and the terms of the transaction, the value of the derivative instrument can be determined by a pricing vendor or subadviser using a series of techniques, including simulation pricing models. The pricing models use inputs, such as issuer details, indices, spreads, interest rates, yield curves, dividends and exchange rates, that are observed from actively quoted markets. Derivative instruments that use valuation techniques and inputs similar to those described above are normally categorized as Level 2 in the fair value hierarchy.
A Fund may also use fair value pricing if the value of some or all of the Fund’s securities have been materially affected by events occurring before the Fund’s pricing time but after the close of the primary markets or exchanges on which the security is traded. This most commonly occurs with foreign securities, but may occur with other securities as well. In such cases, the Fund may apply a fair value factor supplied by the pricing vendor to a foreign security’s market close value to reflect changes in value that may have occurred between the close of the primary market or exchange on which the security is traded and the Fund’s pricing time. That factor may be derived using observable inputs such as a comparison of the trading patterns of a foreign security to intraday trading in the U.S. markets that are highly correlated to the foreign security or other information that becomes available after the close of the foreign market on which the security principally traded. When fair value pricing is employed, the prices of securities used by a Fund to calculate its net asset value may differ from market quotations, official closing prices or evaluated prices for the same securities, which means that the Fund may value those securities higher or lower than another given fund that uses market quotations, official closing prices or evaluated prices supplied by a pricing vendor in its calculation of net asset value. Securities valued using observable inputs, such as those described above, are normally categorized as Level 2 of the fair value hierarchy.
When reliable market quotations or evaluated prices supplied by a pricing vendor are not readily available or are not believed to accurately reflect fair value, securities are priced at their fair value as determined by the Trust’s Valuation Committee (the “Valuation Committee”) pursuant to procedures adopted, and subject to oversight, by the Board of Trustees. The Valuation Committee is comprised of a trustee and officers of the Trust and employees of Harbor Capital with relevant experience or responsibilities. Each security for which the Valuation Committee determines a fair value, including the basis for the fair value decision, is reviewed by the Board of Trustees at its regularly scheduled board meetings. Securities valued using fair valuation methods that incorporate significant unobservable inputs are normally categorized as Level 3 in the fair value hierarchy.
62
Harbor Domestic Equity Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
Fair Value Measurements and Disclosures
Various inputs may be used to determine the value of each Fund’s investments, which are summarized in three broad categories defined as Level 1, Level 2, and Level 3. The inputs or methodologies used for valuing securities are not necessarily indicative of the risk associated with investing in those securities. The assignment of an investment to Levels 1, 2, or 3 is based on the lowest level of significant inputs used to determine its fair value.
Level 1– | Quoted prices in active markets for identical securities. |
Level 2– | Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). |
Level 3– | Significant unobservable inputs are used in situations where quoted prices or other observable inputs are not available or are deemed unreliable. Significant unobservable inputs may include each Fund’s own assumptions. |
The categorization of investments into Levels 1, 2, or 3, and a summary of significant unobservable inputs used for Level 3 investments, when applicable, can be found at the end of each Fund’s Portfolio of Investments schedule. For fair valuations using significant unobservable inputs, if any, a reconciliation of the beginning to ending balances for reported fair values is provided at the end of each Fund’s Portfolio of Investments schedule that presents changes attributable to realized and unrealized gains and losses and purchases, sales, and transfers in/out of the Level 3 category during the period.
Each Fund used observable inputs in its valuation methodologies whenever they were available and deemed reliable.
Investment Income
Dividends declared on portfolio securities are accrued on the ex-dividend date. For foreign securities, certain dividends are recorded after the ex-dividend date, but as soon as the respective Fund is notified of such dividends. Interest income is accrued daily as earned. Discounts and premiums on fixed income securities are amortized over the life of the respective securities (except for premiums on certain callable debt securities that are amortized to the earliest call date) using the effective yield method. Distributions from real estate investment trust securities are recorded as dividend income, and may be reclassified as capital gains and/or return of capital, based on the information reported by the issuer, when available.
Expenses
Expenses are charged directly to the Fund that incurred such expense whenever possible. With respect to expenses incurred by any two or more Harbor funds where amounts cannot be identified on a fund by fund basis, such expenses are generally allocated in proportion to the average net assets or the number of shareholders of each Fund.
Class Allocations
Income, common expenses and realized and unrealized gains/(losses) are determined at the Fund level and allocated daily to each class of shares based on the applicable net assets of the respective classes. Distribution and service fees, if any, and transfer agent fees are calculated daily at the class level based on the applicable net assets of each class and the expense rate(s) applicable to each class.
Securities Transactions
Securities transactions are accounted for on the trade date (the date the order to buy or sell is executed). Realized gains or losses on security transactions are determined on the basis of identified cost.
Distribution to Shareholders
Distributions on Fund shares are recorded on the ex-dividend date.
63
Harbor Domestic Equity Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
Taxes
Each Fund is treated as a separate entity for U.S. federal tax purposes. Each Fund’s policy is to meet the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) applicable to regulated investment companies and to distribute to its shareholders all of its taxable income within the prescribed time. It is also the intention of each Fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code. Therefore, no provision has been made for U.S. federal taxes on income, capital gains or unrealized appreciation of securities held or excise taxes on income and capital gains.
Each Fund may be subject to taxes imposed by foreign countries in which they invest. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and unrealized appreciation as such income and/or gains are earned.
Management has analyzed each Fund’s tax positions for all open tax years (in particular, U.S. federal income tax returns for the tax years ended October 31, 2017–2019), including all positions expected to be taken upon filing the 2020 tax return (if applicable), in all material jurisdictions where each Fund operates, and has concluded that no provision for income tax is required in the Funds’ financial statements. Each Fund will recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations.
Custodian
Each Fund has credit balance arrangements with its custodian whereby positive balances in demand deposit accounts used by the transfer and shareholder servicing agent for clearing shareholder transactions in the Fund generate credits that are applied against gross custody expenses. Such custodial expense reductions, if any, are reflected on the respective Fund’s accompanying Statement of Operations.
Foreign Currency Contracts
A foreign currency spot contract is an agreement between two parties to buy and sell currencies at the current market rate for settlement within two business days. A forward currency contract is an agreement between two parties to buy and sell currencies at a set price on a future date.
Foreign currency contracts are marked-to-market daily and any change in fair value is recorded as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value on the open and close date. Risk of losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contract’s terms. The maximum potential loss from such contracts is the aggregate face value in U.S. dollars at the time the contract was opened.
During the period, Harbor Capital Appreciation Fund, Harbor Mid Cap Growth Fund, and Harbor Small Cap Growth Fund used foreign currency spot contracts to facilitate transactions in foreign securities or to convert foreign currency receipts into U.S. dollars.
Foreign Currency Translations
Purchases and sales of securities are translated into U.S. dollars at the current exchange rate on the respective dates of the transactions. Income and withholding taxes are translated at the prevailing exchange rate when accrued or incurred. The accounting records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency, when applicable, are translated into U.S. dollars based on the current exchange rates at period end.
Reported net realized gains and losses on foreign currency transactions, when applicable, represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income accrued and tax reclaims receivable and the U.S. dollar amount actually received. The effects of changes in foreign currency exchange rates on investments in securities, when applicable, are included in the net realized and unrealized gain or loss on investments in the Statements of Operations.
64
Harbor Domestic Equity Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
Proceeds from Litigation
Each Fund may receive proceeds from shareholder litigation settlements involving current and/or previously held portfolio holdings. Any proceeds received from litigation involving portfolio holdings are reflected in the Statements of Operations in realized gain/(loss) if the security has been disposed of by a Fund, or in unrealized gain/(loss) if the security is still held by a Fund.
Repurchase Agreements
In a repurchase agreement, a Fund buys a security at one price and simultaneously agrees to sell it back at a higher price. Such agreements must be adequately collateralized to cover the counterparty’s obligation to a Fund to close out the repurchase agreement. Each repurchase agreement counterparty must meet the minimum credit quality requirements applicable to the respective Fund and any other appropriate counterparty criteria as determined by a Fund’s subadviser. The minimum credit quality requirements are those applicable to a Fund’s purchase of securities such that if a Fund is permitted to only purchase securities that are rated investment-grade (or the equivalent if unrated), a Fund could only enter into repurchase agreements with counterparties that have debt outstanding that is rated investment-grade (or the equivalent if unrated). The securities are regularly monitored to ensure that the collateral is adequate. A Fund seeks to further mitigate its counterparty risk by entering into master repurchase agreements with its counterparties. The master repurchase agreements provide that, in the event of a counterparty’s default, including bankruptcy, a Fund may terminate any repurchase agreements with that counterparty, determine the net amount owned, and sell or retain the collateral up to the net amount owed to a Fund. A counterparty’s default may cause a Fund to suffer losses, including loss of interest on or principal of the securities and costs associated with delay and enforcement of the terms of the master repurchase agreement.
During the period, Harbor Mid Cap Growth Fund entered into repurchase agreements with domestic or foreign banks or with a member firm of the Financial Industry Regulatory Authority, Inc., or an affiliate of a member firm that is a primary dealer in U.S. government securities.
Note 3—Investment Portfolio Transactions
Investment Portfolio Transactions
Purchases and sales of investments, other than short-term securities, for each Fund for the period ended April 30, 2021 are as follows:
Purchases (000s) | Sales (000s) | |
Harbor Capital Appreciation Fund | $12,440,860 | $14,122,712* |
Harbor Large Cap Value Fund | 442,089 | 139,171 |
Harbor Mid Cap Fund | 33,759 | 1,995 |
Harbor Mid Cap Growth Fund | 288,057 | 212,434 |
Harbor Mid Cap Value Fund | 29,522 | 73,614 |
Harbor Small Cap Growth Fund | 476,336 | 513,054 |
Harbor Small Cap Value Fund | 472,072 | 213,620 |
Harbor Strategic Growth Fund | 6,203 | 15,947 |
* | Sales for this Fund include $2,016,142 in connection with in-kind redemptions of the Fund’s capital shares. |
In-Kind Redemption Transactions
In accordance with the Trust’s prospectus, the Funds may distribute portfolio securities rather than cash as payment for a redemption of Fund shares. For financial reporting purposes, a Fund recognizes a gain or loss on the securities distributed related to the in-kind redemption. Such Fund-level gains and losses on in-kind redemptions are not taxable to shareholders. For the period ended April 30, 2021, and the year ended October 31, 2020, Harbor Capital Appreciation Fund realized gains of $1,316,808,000 and $654,292,000, respectively, upon the disposition of portfolio securities in connection with in-kind redemptions of the Fund’s shares.
65
Harbor Domestic Equity Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 4—FEES AND OTHER Transactions with Affiliates
Investment Adviser
Harbor Capital is a wholly owned subsidiary of ORIX Corporation. Harbor Capital is the Funds’ investment adviser and is also responsible for administrative and other services.
Each Fund has a separate advisory agreement with Harbor Capital. The agreements provide for management fees based on an annual percentage rate of average daily net assets as follows:
Contractual Rate | Actual Rate | |
Harbor Capital Appreciation Fund | 0.60%a | 0.54% |
Harbor Large Cap Value Fund | 0.60b | 0.60 |
Harbor Mid Cap Fund | 0.75 | 0.75 |
Harbor Mid Cap Growth Fund | 0.75c | 0.72 |
Harbor Mid Cap Value Fund | 0.75d | 0.74 |
Harbor Small Cap Growth Fund | 0.75 | 0.75 |
Harbor Small Cap Value Fund | 0.75 | 0.75 |
Harbor Strategic Growth Fund | 0.60 | 0.60 |
a | The Adviser has contractually agreed to reduce the management fee to 0.56% on assets between $5 billion and $10 billion, 0.54% on assets between $10 billion and $20 billion and 0.53% on assets over $20 billion through February 28, 2022. |
b | The management fee rate is 0.60% on assets up to $4 billion and 0.55% on assets over $4 billion. |
c | The Adviser has contractually agreed to reduce the management fee to 0.72% through February 28, 2022. |
d | The Adviser has contractually agreed to reduce the management fee to 0.70% on assets between $350 million and $1 billion and 0.65% on assets over $1 billion through February 28, 2022. |
Harbor Capital has from time to time voluntarily or contractually agreed not to impose a portion of its management fees and/or to bear a portion of the expenses incurred in the operation of certain Funds in order to limit Fund expenses. Such waivers, if any, are reflected on the accompanying Statements of Operations. Interest expense, if any, is excluded from contractual limitations. During the period, the following expense limitation agreements were in effect:
Retirement Class | Institutional Class | Administrative Class | Investor Class | Expense Limitation Agreement Expiration Date | |
Harbor Large Cap Value Fund2 | 0.61% | 0.69% | 0.94% | 1.05% | 02/28/2022 |
Harbor Mid Cap Fund2 | 0.80 | 0.88 | 1.13 | 1.24 | 02/28/2022 |
Harbor Mid Cap Value Fund1 | 0.77 | 0.85 | 1.10 | 1.21 | 02/28/2022 |
Harbor Strategic Growth Fund2 | 0.63 | 0.71 | 0.96 | 1.07 | 02/28/2022 |
1 | The operating expense limitation for the Fund was effective March 1, 2021. |
2 | For the period November 1, 2020 through February 28, 2021, the operating expense limitation for the Investor Class for Harbor Large Cap Value Fund, Harbor Mid Cap Fund and Harbor Strategic Growth Fund were 1.06%, 1.25% and 1.08%, respectively. |
All expense limitation agreements include the transfer agent fee waiver discussed in the Transfer Agent note.
Distributor
Harbor Funds Distributors, Inc. (the “Distributor”), a wholly-owned subsidiary of Harbor Capital, is the distributor for Harbor Funds’ shares. Under the Trust’s current distribution plan pursuant to Rule 12b-1 under the Investment Company Act with respect to each Fund’s Administrative and Investor Class shares (each, a “12b-1 Plan”) as applicable, each Fund pays the Distributor compensation at the annual rate of 0.25% of the average daily net assets of its Administrative and Investor Class shares. Pursuant to each 12b-1 Plan, the Distributor is compensated for financing any activity that is primarily intended to result in the sale of Administrative and Investor Class shares of each Fund or for recordkeeping services or the servicing of shareholder accounts in a Administrative and Investor Class shares of each Fund. Such activities include, but are not limited to: printing of prospectuses and statements of additional information and reports for prospective shareholders (i.e., other than
66
Harbor Domestic Equity Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 4—FEES AND OTHER Transactions with Affiliates—Continued
existing shareholders); preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers or other institutions such as asset-based sales charges, payments of recordkeeping fees under recordkeeping arrangements, or payments of service fees under shareholder service arrangements; and costs of administering each 12b-1 Plan.
Amounts payable by a Fund under each 12b-1 Plan need not be directly related to the expenses actually incurred by the Distributor on behalf of each Fund. Each 12b-1 Plan does not obligate each Fund to reimburse the Distributor for the actual expenses the Distributor may incur in fulfilling its obligations under each 12b-1 Plan. Thus, even if the Distributor’s actual expenses exceed the fee payable to the Distributor at any given time, each Fund will not be obligated to pay more than that fee. If the Distributor’s expenses are less than the fee it receives, the Distributor will retain the difference.
The fees attributable to each Fund’s respective class are shown on the accompanying Statements of Operations.
Transfer Agent
Harbor Services Group, Inc. (“Harbor Services Group”), a wholly-owned subsidiary of Harbor Capital, is the transfer and shareholder servicing agent for the Funds. The transfer agency and service agreement is reviewed and approved annually by the Board of Trustees and provides currently for compensation up to the following amounts per class of each Fund:
Transfer Agent Fees | |
Retirement Class | 0.02% of the average daily net assets of all Retirement Class shares |
Institutional Class | 0.10% of the average daily net assets of all Institutional Class shares |
Administrative Class | 0.10% of the average daily net assets of all Administrative Class shares |
Investor Class1 | 0.21% of the average daily net assets of all Investor Class shares |
1 | For the period November 1, 2020 through February 28, 2021, Harbor Services Group received compensation up to 0.22% for the Investor Class. |
Harbor Services Group voluntarily waived a portion of its transfer agent fees during the period ended April 30, 2021. Fees incurred for these transfer agent services are shown on each Fund’s Statement of Operations. The voluntary waiver may be discontinued at any time.
Affiliated Transactions
The Investment Company Act permits purchase and sale transactions among affiliated investment companies subject to an exemptive rule. Harbor Funds has adopted policies and procedures pursuant to such rule. During the period, the Funds did not enter into any transactions with any other Harbor fund.
Shareholders
As of April 30, 2021, Harbor Capital and its wholly owned subsidiaries collectively held the following shares of beneficial interest in each of the following Funds:
Number of Shares Owned by Harbor Capital and Subsidiaries | Percentage of Outstanding Shares | |||||
Retirement Class | Institutional Class | Administrative Class | Investor Class | Total | ||
Harbor Capital Appreciation Fund | 35,505 | — | — | — | 35,505 | 0.0% |
Harbor Large Cap Value Fund | 82,824 | — | — | — | 82,824 | 0.1 |
Harbor Mid Cap Fund | 483,245 | 474,659 | N/A | 3,001 | 960,905 | 26.4 |
Harbor Mid Cap Growth Fund | 163,800 | — | — | — | 163,800 | 0.4 |
Harbor Mid Cap Value Fund | 76,118 | — | — | — | 76,118 | 0.4 |
Harbor Small Cap Growth Fund | 87,565 | — | — | — | 87,565 | 0.1 |
Harbor Small Cap Value Fund | 35,308 | — | — | — | 35,308 | 0.1 |
Harbor Strategic Growth Fund | 35,977 | 318,449 | 660 | — | 355,086 | 8.8 |
67
Harbor Domestic Equity Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 4—FEES AND OTHER Transactions with Affiliates—Continued
Independent Trustees
The fees and expenses of the Independent Trustees are included in “Trustees’ fees and expenses” on each Fund’s Statement of Operations.
The Board of Trustees has adopted a Deferred Compensation Plan for Independent Trustees (the “Plan”), which enables Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Trust. For purposes of determining the amount owed to a Trustee under the Plan, deferred amounts are treated as though they had been invested in shares of the Fund(s) selected by the Trustee. While not required to do so, each Fund makes an investment equal to the Trustee’s investment election. The deferred compensation liability and the offsetting deferred compensation investment asset are included as a component of “Accrued expenses – Trustees’ fees and expenses” and “Other assets”, respectively, in the Statements of Assets and Liabilities. Such amounts fluctuate with changes in the value of the selected Fund(s). The deferred compensation and related mark-to-market impact liability and an offsetting investment asset will remain on each Fund’s Statement of Assets and Liabilities until distributed in accordance with the Plan.
Indemnification
Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, in the normal course of business the Trust enters into contracts that provide general indemnities to other parties. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.
NOTE 5—TAX INFORMATION
The identified cost for federal income tax purposes of investments owned by each Fund and its respective gross unrealized appreciation and depreciation as of April 30, 2021 are as follows:
Identified Cost (000s) | Gross Unrealized | Net Unrealized Appreciation/ (Depreciation) (000s) | ||
Appreciation (000s) | (Depreciation) (000s) | |||
Harbor Capital Appreciation Fund | $21,129,564 | $19,427,607 | $(121,436) | $19,306,171 |
Harbor Large Cap Value Fund* | 1,534,440 | 794,340 | (2,011) | 792,329 |
Harbor Mid Cap Fund | 42,381 | 7,692 | (85) | 7,607 |
Harbor Mid Cap Growth Fund | 394,946 | 114,946 | (5,932) | 109,014 |
Harbor Mid Cap Value Fund* | 351,544 | 140,965 | (38,975) | 101,990 |
Harbor Small Cap Growth Fund* | 874,289 | 391,847 | (22,539) | 369,308 |
Harbor Small Cap Value Fund* | 1,615,356 | 1,067,628 | (26,761) | 1,040,867 |
Harbor Strategic Growth Fund | 65,500 | 54,700 | — | 54,700 |
* | Capital loss carryforwards are available, which may reduce taxable income from future net realized gain on investments. |
Note 6—Legal Proceedings
Tribune Company
Harbor Mid Cap Value Fund has been named as a defendant and/or as a putative member of a proposed defendant class in Kirschner v. FitzSimons (In re Tribune Co.), No. 12-2652 (S.D.N.Y.) (the “FitzSimons action”); Deutsche Bank v. Ohlson Enterprises, No. 12-0064 (S.D.N.Y.) (the “Deutsche Bank action”); and Niese v. ABN AMRO Clearing Chicago LLC, No. 12-0555 (S.D.N.Y.) (the “Niese action”), as a result of its ownership of shares in the Tribune Company (“Tribune”) in 2007, when Tribune effected a leveraged buyout transaction (“LBO”) by which Tribune converted to a privately-held company. The plaintiffs in these lawsuits have asserted claims for fraudulent conveyance against Harbor Mid Cap Value Fund and other former Tribune shareholders.
68
Harbor Domestic Equity Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 6—Legal Proceedings—Continued
All three lawsuits have been consolidated with the majority of the other Tribune-related lawsuits in the multidistrict litigation proceeding In re Tribune Co. Fraudulent Conveyance Litig., No. 11-2296 (S.D.N.Y.) (the “MDL Proceeding”).
On September 23, 2013, the District Court granted the defendants’ omnibus motion to dismiss the Deutsche Bank and Niese actions, on the basis that the plaintiffs lacked standing. The plaintiffs appealed. On March 29, 2016, the U.S. Court of Appeals for the Second Circuit issued its opinion on the appeal, affirming the district court’s dismissal of those lawsuits. The appeals court held that while the plaintiffs have standing under the U.S. Bankruptcy Code, as amended (the “Bankruptcy Code”), their claims were preempted by Section 546(e) of the Bankruptcy Code—the statutory safe harbor for settlement payments. Plaintiffs sought rehearing en banc, which the Second Circuit denied. On September 9, 2016, the plaintiffs filed a petition for writ of certiorari in the U.S. Supreme Court challenging the Second Circuit’s decision, which the shareholder defendants opposed. On April 3, 2018, Justice Kennedy and Justice Thomas issued a “Statement” related to the petition for certiorari suggesting that the Second Circuit and/or District Court may want to take steps to reexamine the application of the Section 546(e) safe harbor to the previously dismissed state law constructive fraudulent transfer claims based on the Supreme Court’s decision in Merit Management Group LP v. FTI Consulting, Inc. On April 10, 2018, plaintiffs filed in the Second Circuit a motion for that court to recall its mandate, vacate its prior decision, and remand to the district court for further proceedings consistent with Merit Management. On April 20, 2018, the shareholder defendants filed a response to plaintiffs’ motion to recall the mandate. On May 15, 2018, the Second Circuit issued an order recalling the mandate “in anticipation of further panel review.” On December 19, 2019, the court issued an amended opinion that again affirmed the district court’s ruling on the basis that plaintiffs’ claims were preempted by Section 546(e) of the Bankruptcy Code. Plaintiffs filed a motion for rehearing and rehearing en banc on January 2, 2020. The motion was denied on February 6, 2020. On July 6, 2020, plaintiffs filed a new petition for a writ of certiorari in the U.S. Supreme Court. In that petition, plaintiffs stated that “[t]o make it more likely that there will be a quorum for this petition,” they have “abandon[ed] the case and let the judgment below stand” with respect to certain defendants. That list did not include the Harbor Mid Cap Value Fund. Defendants filed an opposition to the certiorari petition on August 26, 2020, and Plaintiffs filed a reply in support of the petition for certiorari on September 8, 2020. On March 12, 2021, the Solicitor General filed an amicus brief recommending that certiorari be denied. Plaintiffs filed a supplemental brief in response to the Solicitor General’s amicus brief on March 31, 2021, and Defendants filed a supplemental brief on April 1, 2021. The Supreme Court denied the petition for certiorari on April 19, 2021.
On May 23, 2014, the defendants filed motions to dismiss the FitzSimons action, including a global motion to dismiss Count I, which is the claim brought against former Tribune shareholders for intentional fraudulent conveyance under U.S. federal law. On January 6, 2017, the United States District Court for the Southern District of New York granted the shareholder defendants’ motion to dismiss and denied plaintiff’s request to amend the complaint. The Court’s order was not immediately appealable. On July 18, 2017, the plaintiff submitted a letter to the District Court seeking leave to amend its complaint to add a constructive fraudulent transfer claim. The Court denied the plaintiff’s request without prejudice to renewal of the request in the event of an intervening change in the law. On March 8, 2018, plaintiff renewed his request for leave to file a motion to amend the complaint to assert a constructive fraudulent transfer claim based on the Supreme Court’s ruling in Merit Management. The shareholder defendants opposed that request. On June 18, 2018, the District Court ordered that the request would be stayed pending further action by the Second Circuit in the still pending appeal, discussed above. On December 18, 2018, plaintiff filed a letter with the District Court requesting that the stay be dissolved in order to permit briefing on the motion to amend the complaint and indicating plaintiff’s intention to file another motion to amend the complaint to reinstate claims for intentional fraudulent transfer. The shareholder defendants opposed that request. On January 14, 2019, the court held a case management conference, during which the court stated that it would allow the plaintiff to file a motion to amend to try to reinstate its intentional fraudulent transfer claim. On January 23, 2019, the court ordered the parties still facing pending claims to participate in a mediation within the following two months. On April 9, 2019, the plaintiff filed a motion to amend the complaint to add constructive fraudulent conveyance claims under federal law against certain shareholder defendants. The court denied the motion to amend on April 23, 2019. On June 13, 2019, the court entered judgment pursuant to Federal Rule of Civil Procedure 54(b). On July 12, 2019, Plaintiff filed a notice of appeal with respect to the dismissal of his intentional fraudulent conveyance claim and the District Court’s denial of his motion for leave to amend. Plaintiff filed an opening brief on January 7, 2020. The shareholder defendants’ brief was filed on April 27, 2020. Plaintiff’s reply brief was filed on May 18, 2020. The Court held oral argument on August 24, 2020.
69
Harbor Domestic Equity Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 6—Legal Proceedings—Continued
None of these lawsuits alleges any wrongdoing on the part of Harbor Mid Cap Value Fund. Harbor Mid Cap Value Fund held shares of Tribune and tendered these shares as part of Tribune’s LBO. The value of the proceeds received by Harbor Mid Cap Value Fund was approximately $299,000. Harbor Mid Cap Value Fund’s cost basis in the shares of Tribune was approximately $262,000. At this stage of the proceedings, Harbor Mid Cap Value Fund is not able to make a reliable prediction as to the outcome of these lawsuits or the effect, if any, on the Fund’s net asset value.
Note 7—Subsequent Events
At the meeting of the Board of Trustees held on May 17, 2021, the Board of Trustees approved a change in Harbor Mid Cap Growth Fund’s name and principal investment strategy, together with certain related changes. Effective on or about September 1, 2021, the Fund will be renamed Harbor Disruptive Innovation Fund. Additional information related to these changes can be found in the supplement to the Fund’s prospectus filed with the SEC on May 19, 2021.
Through the date the financial statements were issued, there were no other subsequent events or transactions that would have materially impacted the financial statements or related disclosures as presented herein.
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Harbor Domestic Equity Funds
Fees and Expenses Example (Unaudited)
Fees and Expenses Example (Unaudited)
Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees (if any) and (2) ongoing costs, including management fees, distribution and service (12b-1) fees (if any), and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period November 1, 2020 through April 30, 2021.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses for each share class. You may use the information in the respective class 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 of the respective class 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 of the table for each share class below provides information about hypothetical account values and hypothetical expenses based on the respective Fund/Class’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the respective Fund/Class’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 a Fund to 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 and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value November 1, 2020 | Ending Account Value April 30, 2021 | |||||
Harbor Capital Appreciation Fund | ||||||||
Retirement Class | 0.57% | |||||||
Actual | $3.15 | $1,000 | $1,227.10 | |||||
Hypothetical (5% return) | 2.86 | 1,000 | 1,021.90 | |||||
Institutional Class | 0.65% | |||||||
Actual | $3.58 | $1,000 | $1,226.70 | |||||
Hypothetical (5% return) | 3.26 | 1,000 | 1,021.49 | |||||
Administrative Class | 0.90% | |||||||
Actual | $4.96 | $1,000 | $1,225.20 | |||||
Hypothetical (5% return) | 4.51 | 1,000 | 1,020.22 | |||||
Investor Class | 1.02% | |||||||
Actual | $5.63 | $1,000 | $1,224.40 | |||||
Hypothetical (5% return) | 5.11 | 1,000 | 1,019.61 |
71
Harbor Domestic Equity Funds
Fees and Expenses Example—Continued
Fees and Expenses Example—Continued
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value November 1, 2020 | Ending Account Value April 30, 2021 | |||||
Harbor Large Cap Value Fund | ||||||||
Retirement Class | 0.61% | |||||||
Actual | $3.51 | $1,000 | $1,324.00 | |||||
Hypothetical (5% return) | 3.06 | 1,000 | 1,021.69 | |||||
Institutional Class | 0.69% | |||||||
Actual | $3.97 | $1,000 | $1,322.90 | |||||
Hypothetical (5% return) | 3.46 | 1,000 | 1,021.29 | |||||
Administrative Class | 0.94% | |||||||
Actual | $5.41 | $1,000 | $1,320.70 | |||||
Hypothetical (5% return) | 4.71 | 1,000 | 1,020.02 | |||||
Investor Class | 1.06% | |||||||
Actual | $6.10 | $1,000 | $1,320.80 | |||||
Hypothetical (5% return) | 5.31 | 1,000 | 1,019.41 | |||||
Harbor Mid Cap Fund | ||||||||
Retirement Class | 0.80% | |||||||
Actual | $4.62 | $1,000 | $1,328.70 | |||||
Hypothetical (5% return) | 4.01 | 1,000 | 1,020.73 | |||||
Institutional Class | 0.88% | |||||||
Actual | $5.08 | $1,000 | $1,328.00 | |||||
Hypothetical (5% return) | 4.41 | 1,000 | 1,020.32 | |||||
Investor Class | 1.25% | |||||||
Actual | $7.21 | $1,000 | $1,326.40 | |||||
Hypothetical (5% return) | 6.26 | 1,000 | 1,018.44 | |||||
Harbor Mid Cap Growth Fund | ||||||||
Retirement Class | 0.77% | |||||||
Actual | $4.29 | $1,000 | $1,248.50 | |||||
Hypothetical (5% return) | 3.86 | 1,000 | 1,020.88 | |||||
Institutional Class | 0.85% | |||||||
Actual | $4.74 | $1,000 | $1,248.00 | |||||
Hypothetical (5% return) | 4.26 | 1,000 | 1,020.47 | |||||
Administrative Class | 1.10% | |||||||
Actual | $6.12 | $1,000 | $1,246.50 | |||||
Hypothetical (5% return) | 5.51 | 1,000 | 1,019.20 | |||||
Investor Class | 1.21% | |||||||
Actual | $6.74 | $1,000 | $1,246.20 | |||||
Hypothetical (5% return) | 6.06 | 1,000 | 1,018.65 | |||||
Harbor Mid Cap Value Fund | ||||||||
Retirement Class | 0.79% | |||||||
Actual | $4.94 | $1,000 | $1,522.90 | |||||
Hypothetical (5% return) | 3.96 | 1,000 | 1,020.78 | |||||
Institutional Class | 0.87% | |||||||
Actual | $5.43 | $1,000 | $1,521.80 | |||||
Hypothetical (5% return) | 4.36 | 1,000 | 1,020.37 | |||||
Administrative Class | 1.12% | |||||||
Actual | $6.99 | $1,000 | $1,520.70 | |||||
Hypothetical (5% return) | 5.61 | 1,000 | 1,019.10 | |||||
Investor Class | 1.23% | |||||||
Actual | $7.68 | $1,000 | $1,518.70 | |||||
Hypothetical (5% return) | 6.16 | 1,000 | 1,018.54 |
72
Harbor Domestic Equity Funds
Fees and Expenses Example—Continued
Fees and Expenses Example—Continued
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value November 1, 2020 | Ending Account Value April 30, 2021 | |||||
Harbor Small Cap Growth Fund | ||||||||
Retirement Class | 0.78% | |||||||
Actual | $4.47 | $1,000 | $1,311.00 | |||||
Hypothetical (5% return) | 3.91 | 1,000 | 1,020.83 | |||||
Institutional Class | 0.86% | |||||||
Actual | $4.92 | $1,000 | $1,309.80 | |||||
Hypothetical (5% return) | 4.31 | 1,000 | 1,020.42 | |||||
Administrative Class | 1.11% | |||||||
Actual | $6.35 | $1,000 | $1,308.20 | |||||
Hypothetical (5% return) | 5.56 | 1,000 | 1,019.15 | |||||
Investor Class | 1.23% | |||||||
Actual | $7.04 | $1,000 | $1,307.80 | |||||
Hypothetical (5% return) | 6.16 | 1,000 | 1,018.54 | |||||
Harbor Small Cap Value Fund | ||||||||
Retirement Class | 0.78% | |||||||
Actual | $4.71 | $1,000 | $1,434.80 | |||||
Hypothetical (5% return) | 3.91 | 1,000 | 1,020.83 | |||||
Institutional Class | 0.86% | |||||||
Actual | $5.19 | $1,000 | $1,434.30 | |||||
Hypothetical (5% return) | 4.31 | 1,000 | 1,020.42 | |||||
Administrative Class | 1.11% | |||||||
Actual | $6.69 | $1,000 | $1,432.30 | |||||
Hypothetical (5% return) | 5.56 | 1,000 | 1,019.15 | |||||
Investor Class | 1.23% | |||||||
Actual | $7.42 | $1,000 | $1,431.80 | |||||
Hypothetical (5% return) | 6.16 | 1,000 | 1,018.54 | |||||
Harbor Strategic Growth Fund | ||||||||
Retirement Class | 0.63% | |||||||
Actual | $3.52 | $1,000 | $1,258.40 | |||||
Hypothetical (5% return) | 3.16 | 1,000 | 1,021.59 | |||||
Institutional Class | 0.71% | |||||||
Actual | $3.97 | $1,000 | $1,257.70 | |||||
Hypothetical (5% return) | 3.56 | 1,000 | 1,021.19 | |||||
Administrative Class | 0.96% | |||||||
Actual | $5.37 | $1,000 | $1,256.20 | |||||
Hypothetical (5% return) | 4.81 | 1,000 | 1,019.92 | |||||
Investor Class | 1.08% | |||||||
Actual | $6.04 | $1,000 | $1,255.50 | |||||
Hypothetical (5% return) | 5.41 | 1,000 | 1,019.31 |
* | Reflective of all fee waivers and expense reimbursements |
** | Expenses are equal to the Fund’s annualized net expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
73
Harbor Domestic Equity Funds
Additional Information (Unaudited)
Additional Information (Unaudited)
Proxy Voting
Harbor Funds has adopted Proxy Voting Policies and Procedures under which proxies relating to securities held by the Harbor funds are voted. In addition, Harbor Funds files Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. A description of Harbor Funds’ Proxy Voting Policies and Procedures and the proxy voting records (Form N-PX) are available (i) without charge, upon request, by calling Harbor Funds toll-free at 800-422-1050; (ii) on Harbor Funds’ website at harborfunds.com; and (iii) on the SEC’s website at sec.gov.
Householding
Harbor Funds has adopted a policy that allows it to send only one copy of a Fund’s prospectus, proxy materials, annual report and semi-annual report to certain shareholders residing at the same household. This reduces Fund expenses, which benefits you and other shareholders. If you need additional copies or do not want your mailings to be “householded,” please call the Shareholder Servicing Agent at 800-422-1050. Individual copies will be sent within thirty (30) days after the Shareholder Servicing Agent receives your instructions. Your consent to householding is considered valid until revoked.
Quarterly Portfolio Disclosures
The Funds file a complete portfolio of investments for their first and third fiscal quarters with the SEC as an exhibit to Form N-PORT. The Funds’ Form N-PORT exhibit is available (i) without charge, upon request, by calling Harbor Funds toll-free at 800-422-1050, (ii) on Harbor Funds’ website at harborfunds.com, and (iii) on the SEC’s website at sec.gov.
ADVISORY AGREEMENT APPROVALS
FACTORS CONSIDERED BY THE TRUSTEES IN APPROVING THE INVESTMENT ADVISORY AGREEMENTS AND SUBADVISORY AGREEMENTS OF THE DOMESTIC EQUITY FUNDS
The Investment Company Act requires that the Investment Advisory and Subadvisory Agreement of each Fund be approved initially, and following an initial two-year term, at least annually, by the Trust’s Board of Trustees (the “Board” or the “Trustees”), including a majority of the Independent Trustees voting separately.
At a meeting of the Board held on February 19 and 20, 2021 (the “Meeting”), the Board, including the Independent Trustees voting separately, considered and approved the continuation of each Investment Advisory Agreement with Harbor Capital, the adviser to each Fund, and each Subadvisory Agreement with each Fund’s subadviser (each, a “Subadviser”) with respect to Harbor Capital Appreciation Fund, Harbor Large Cap Value Fund, Harbor Mid Cap Fund, Harbor Mid Cap Growth Fund, Harbor Mid Cap Value Fund, Harbor Small Cap Growth Fund, Harbor Small Cap Value Fund and Harbor Strategic Growth Fund (each a “Fund” and, collectively, the “Funds”).
In evaluating each Investment Advisory Agreement and each Subadvisory Agreement, the Trustees reviewed materials furnished by Harbor Capital and each Subadviser, including information about their respective affiliates, personnel, and operations, and also relied upon their knowledge of Harbor Capital and the Subadvisers resulting from their quarterly meetings, periodic telephonic meetings and other prior communications. In connection with the Meeting, which had been called for the purpose of considering the continuation of the Investment Advisory Agreements and Subadvisory Agreements, and at prior meetings, the Trustees, including the Independent Trustees, requested and received materials and presentations relating to Fund performance and the services rendered by Harbor Capital and each Subadviser. These materials included a comprehensive written response from Harbor Capital to a 15(c) request letter prepared by legal counsel to the Independent Trustees in consultation with the Independent Trustees. The Trustees also discussed with representatives of Harbor Capital, at the Meeting and at prior meetings, Harbor Funds’ operations and Harbor Capital’s ability, consistent with the “manager-of-managers” structure of Harbor Funds, to (i) identify and recommend to the Trustees a subadviser for each Fund, (ii) monitor and oversee the performance and investment capabilities of each subadviser, and (iii) recommend the replacement of a subadviser where appropriate. The Trustees specifically considered Harbor Capital’s history as a manager-of-managers, including its history of replacing subadvisers for particular Funds in circumstances in which the Board and Harbor Capital had determined that a change in subadviser was in the best interests of a Fund and its shareholders, whether as a result of (i) long-term underperformance not explained by market conditions or market cycles relative to the subadviser’s investment style, (ii) prolonged style inconsistency, (iii) material adverse changes in management or personnel, or (iv) other factors, such as if Harbor Capital were to identify another subadviser believed to better serve the shareholders than the existing subadviser.
74
Harbor Domestic Equity Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
At the Meeting, the Trustees, including all of the Independent Trustees voting separately, determined, in the exercise of their business judgment, that the terms of each Investment Advisory Agreement and each Subadvisory Agreement were fair and reasonable and approved the continuation for a one-year period of each such Investment Advisory Agreement and Subadvisory Agreement as being in the best interests of each Fund and its shareholders.
In their deliberations, the Independent Trustees had the opportunity to meet privately without representatives of Harbor Capital or any Subadviser present and were represented throughout the process by legal counsel to the Independent Trustees and the Funds.
In considering the approval of each Fund’s Investment Advisory Agreement and Subadvisory Agreement, the Board, including the Independent Trustees, evaluated a number of factors it considered relevant to its determination. The Board did not identify any single factor as all-important or controlling, and individual Trustees did not necessarily attribute the same weight or importance to each factor.
Among the factors considered by the Trustees in approving the Investment Advisory Agreements and Subadvisory Agreements were the following:
•
The nature, extent, and quality of the services provided by Harbor Capital and each Subadviser, including the background, education, expertise and experience of the investment professionals of Harbor Capital and each Subadviser providing services to the Funds;
•
The favorable history, reputation, qualifications and background of Harbor Capital and each Subadviser, as well as the qualifications of their respective personnel;
•
The profitability of Harbor Capital with respect to each Fund, including the effect of revenues of Harbor Services Group, Inc. (“Harbor Services Group”), the Funds’ transfer agent, and Harbor Funds Distributors, Inc. (“Harbor Funds Distributors”), the Funds’ principal underwriter, on such profitability;
•
The fees charged by Harbor Capital and Subadvisers for investment advisory and subadvisory services, respectively, including, in each case, the portion of the fee to be retained by Harbor Capital, after payment of the Subadviser’s fee, for the investment advisory and related services, including investment, business, legal, compliance, financial and administrative services, that Harbor Capital provides;
•
The extent to which economies of scale might be realized as each Fund grows, and the extent to which each Fund’s advisory fee level reflects any economies of scale for the benefit of Fund investors;
•
The fees and expense ratios of each Fund relative to the quality of services provided and the fees and expense ratios of similar investment companies;
•
The short- and long-term investment performance of each Fund in comparison to peer groups and certain relevant benchmark indices and Harbor Capital’s efforts to address circumstances of underperformance where applicable;
•
The compensation received by Harbor Services Group and Harbor Funds Distributors in consideration of the services each provides to the Funds;
•
Any “fall out” benefits that might inure to Harbor Capital and its affiliates as a result of their relationship with the Funds;
•
Information received at regular meetings throughout the year related to Fund performance and services rendered by Harbor Capital, as well as each of the Subadvisers, and research arrangements with brokers who execute transactions on behalf of each Subadviser;
•
Information contained in materials provided by Harbor Capital and compiled by Broadridge as to the investment returns, advisory fees and total expense ratios of the Institutional Class of each Fund (and, in certain cases, total expense ratios of the Investor Class) relative to those of other investment companies with similar objectives and strategies managed by other investment advisers, consisting both of a peer group of funds as well as a broader universe of funds compiled by Broadridge; and
•
Information contained in materials compiled by Morningstar as to the investment returns of the Institutional Class of each Fund relative to those of other investment companies with similar objectives and strategies managed by other investment advisers.
75
Harbor Domestic Equity Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
Nature, Extent, and Quality of Services
The Trustees separately considered the nature, extent, and quality of the services provided by Harbor Capital and each Subadviser. In their deliberations as to the approval of each Fund’s Investment Advisory Agreement and Subadvisory Agreement, the Trustees were mindful of the fact that, by choosing to invest in a Fund, the shareholders had entrusted Harbor Capital with the responsibility, subject to the approval of the Trustees, for selecting each Fund’s Subadviser, overseeing and monitoring that Subadviser’s performance and replacing the Subadviser if necessary. The Trustees also considered as relevant to their determination the favorable history, reputation, qualifications and background of Harbor Capital and each Subadviser, as well as the qualifications of their respective personnel.
The Adviser’s Services. The Board evaluated the nature, extent, and quality of Harbor Capital’s services in light of the Board’s experience with Harbor Capital, as well as materials provided by Harbor Capital concerning the financial and other resources devoted by Harbor Capital to Harbor Funds, including the breadth and depth of experience and expertise of the investment, accounting, administrative, legal and compliance professionals dedicated to Harbor Funds’ operations. The Trustees determined that Harbor Capital has the expertise and resources to identify, select, oversee and monitor each Subadviser and to operate effectively as the “manager-of-managers” for the Funds.
The Subadvisers’ Services. The Trustees’ consideration of the services provided by the Subadvisers included a review of each Subadviser’s portfolio managers, investment philosophy, style and processes and record of consistency therewith, the volatility of its results, its approach to controlling risk, and the quality and extent of its investment capabilities and resources, including the nature and extent of research it receives from broker-dealers (to the extent applicable) and other sources. In their deliberations with respect to each Fund, the Trustees considered the history of Harbor Funds’ relationship with each Subadviser and Harbor Funds’ experience with each Subadviser in this capacity.
The Trustees also considered each Subadviser’s breadth and depth of experience and investment results in managing other accounts similar to the respective Fund. The Trustees had received presentations by investment professionals from the Subadvisers for Harbor Capital Appreciation Fund, Harbor Large Cap Value Fund, Harbor Mid Cap Value Fund and Harbor Strategic Growth Fund at meetings of the Board held in 2020. The Trustees reviewed information concerning each Subadviser’s historical investment results in managing accounts and/or funds, as applicable, in a manner substantially similar to the relevant Fund.
Investment Performance, Advisory Fees and Expense Ratios
In considering each Fund’s performance, advisory fees and expense ratio, the Trustees requested and received from Harbor Capital data compiled by Broadridge and Morningstar. The Trustees also received information explaining the methodology for compilation of certain of this information and what it was intended to demonstrate. The Trustees analyzed the Institutional Class performance of each Fund, the advisory fees of each Fund, and the Institutional Class expenses of each Fund (after giving effect to waivers and/or reimbursements, if applicable, that reduced the fees or expenses of the Fund or its peer funds) and made certain observations and findings as to each Fund as noted below. The Trustees also reviewed certain Investor Class comparative fee and expense information they considered relevant to their deliberations. In evaluating performance, the Trustees recognized that the performance data reflects a snapshot of a period as of a particular date and that selecting a different performance period could produce significantly different results.
Harbor Capital Appreciation Fund. The Trustees considered Harbor Capital Appreciation Fund (inception date December 29, 1987) and its Institutional Class performance in relation to its Broadridge universe, noting that according to the Broadridge data, the Fund had outperformed its group and universe medians for the one-, three- and five-year periods ended December 31, 2020. The Fund’s one-, three- and five-year rolling returns as of December 31, 2020 each ranked in the first quartile, according to Morningstar. The Trustees also considered that the Fund had outperformed its primary benchmark, the Russell 1000® Growth Index, for the one-, three- and five-year periods ended December 31, 2020.
The Trustees considered the expertise of Jennison Associates LLC (“Jennison”) in managing assets generally and specifically with respect to the Fund’s asset class, noting that Jennison managed approximately $83.5 billion in assets in this asset class, out of a firm-wide total of approximately $224.3 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class, noting that one was a founding member of Jennison.
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $36.88 billion, showed that the Fund’s contractual management fee was above the group median for the Institutional Class. The actual total expense ratio for the Institutional Class of the Fund, however, was below both the group and universe medians. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
76
Harbor Domestic Equity Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
Harbor Large Cap Value Fund. The Trustees considered Harbor Large Cap Value Fund (inception date December 29, 1987), noting the Fund’s Institutional Class outperformance relative to both its group and universe medians for the one-, three- and five-year periods ended December 31, 2020, according to Broadridge data. The Morningstar data presented showed that the Fund’s one-, three- and five-year rolling returns each ranked in the first quartile for the periods ended December 31, 2020. The Trustees also noted that the Fund had outperformed its benchmark, the Russell 1000® Value Index, for the one-, three- and five-year periods ended December 31, 2020.
The Trustees considered the expertise of Aristotle Capital Management, LLC (“Aristotle”) in managing assets generally and in the large cap value asset class specifically, noting that Aristotle managed approximately $37.2 billion in assets in the value equity strategy used by the Fund, out of a firm-wide total of approximately $40.0 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
The Trustees noted that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $1.58 billion, showed the Fund’s management fee was below the group median for the Institutional Class, and the actual total expense ratio for the Fund’s Institutional Class was below its group median and above its universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that the Adviser’s profitability in managing the Fund was not excessive.
Harbor Mid Cap Fund. The Trustees considered Harbor Mid Cap Fund (inception date December 1, 2019), noting the Fund’s outperformance relative to its Broadridge group and universe medians for the one-year and since inception periods ended December 31, 2020. According to the Morningstar data presented, the Fund’s one -year and since inception rolling returns each ranked in the first quartile for the period ended December 31, 2020. The Trustees also considered the fact that the Fund outperformed its benchmark, the Russell Midcap® Index, for the one-year and since inception periods ended December 31, 2020. The Trustees noted that the short time period since the Fund’s inception did not support making any significant conclusions about the Fund’s performance.
The Trustees considered the expertise of EARNEST Partners LLC (“EARNEST”) in managing assets generally and in the mid cap asset class specifically, noting that EARNEST managed approximately $1.4 billion in assets in this asset class, out of a firm-wide total of approximately $25.9 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio manager in this asset class, noting that he is the founder of EARNEST.
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $25 million, showed the Fund’s management fee was below the group median for the Institutional Class. The actual total expense ratio for the Fund’s Institutional Class was below the group median and above the universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
Harbor Mid Cap Growth Fund. The Trustees considered Harbor Mid Cap Growth Fund (inception date November 1, 2000), noting that, according to the Broadridge report, the Fund’s Institutional Class had outperformed its Broadridge group and universe medians for the one-, three- and five-year periods ended December 31, 2020. The Trustees considered the fact that, in comparison to its universe of other mid cap growth funds, as identified by Morningstar, the Fund’s one-, three- and five-year rolling returns each ranked in the first quartile as of December 31, 2020. The Trustees also considered that the Fund had outperformed its benchmark, the Russell Midcap® Growth Index, for the one-, three- and five-year periods ended December 31, 2020.
The Trustees considered the expertise of Wellington Management Company LLP (“Wellington”) in managing assets generally and in the mid cap growth asset class specifically, noting that Wellington managed approximately $3.1 billion in assets in this asset class (as of September 30, 2020), out of a firm-wide total of approximately $1.3 trillion in assets under management. The Trustees noted the experience of the Fund’s portfolio managers in this asset class.
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $350 million, showed that the Fund’s contractual management fee was below the group median for the Institutional Class. The Broadridge data also showed that the actual total expense ratio for the Fund’s Institutional Class was below the group median and above the universe median. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in managing the Fund was not excessive.
77
Harbor Domestic Equity Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
Harbor Mid Cap Value Fund. The Trustees considered Harbor Mid Cap Value Fund (inception date March 1, 2002), noting the Fund’s Institutional Class performance was below its Broadridge group and universe medians for the one-, three- and five-year periods ended December 31, 2020. The Morningstar data presented showed that the Fund’s one-, three- and five-year rolling returns each ranked in the fourth quartile for the periods ended December 31, 2020. The Trustees considered the fact that the Fund had underperformed its benchmark, the Russell Midcap® Value Index, for the one-, three- and five-year periods ended December 31, 2020.
The Trustees considered the expertise of LSV Asset Management (“LSV”) in managing assets generally and in the mid cap value asset class specifically, noting that LSV managed approximately $2.2 billion in assets in this asset class, out of a firm-wide total of approximately $104.3 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class, noting that one of the portfolio managers was a founding partner of LSV.
The Trustees noted that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $350 million, showed the Fund’s management fee was below the group median for the Institutional Class. The Broadridge data also showed that the actual total expense ratio for the Fund’s Institutional Class was above the group and universe medians. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver arrangement and to an additional expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that the Adviser’s profitability in managing the Fund was not excessive.
Harbor Small Cap Growth Fund. The Trustees considered Harbor Small Cap Growth Fund (inception date November 1, 2000), noting that according to the Broadridge report, the Fund’s Institutional Class outperformed its group and universe medians for the one-, three- and five-year periods ended December 31, 2020. The Morningstar data presented ranked each of the Fund’s one-, three- and five-year rolling returns as of December 31, 20120 in the second quartile. The Trustees also considered the fact that Harbor Small Cap Growth Fund had outperformed its benchmark, the Russell 2000® Growth Index, for the one-, three- and five-year periods ended December 31, 2020.
The Trustees considered the expertise of Westfield Capital Management Company, L.P. (“Westfield”) in managing assets generally and in the small cap growth asset class specifically, noting that Westfield managed approximately $2.5 billion in assets in this asset class, out of a firm-wide total of approximately $17.1 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $1.0 billion, showed the Fund’s contractual management fee was below the group median for the Institutional Class. The Trustees also noted that the Fund’s actual total expense ratio for the Institutional Class was below the Broadridge group and universe median expense ratios. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
Harbor Small Cap Value Fund. The Trustees considered Harbor Small Cap Value Fund (inception date December 14, 2001), noting the Fund’s outperformance relative to its Broadridge group and universe medians for the one-, three- and five-year periods ended December 31, 2020. According to the Morningstar data presented, the Fund’s one-, three- and five-year rolling returns each ranked in the first quartile for the periods ended December 31, 2020. The Trustees also considered the fact that the Fund outperformed its benchmark, the Russell 2000® Value Index, for the one-, three- and five-year periods ended December 31, 2020.
The Trustees considered the expertise of EARNEST Partners LLC (“EARNEST”) in managing assets generally and in the small cap value asset class specifically, noting that EARNEST managed approximately $5.9 billion in assets in this asset class, out of a firm-wide total of approximately $25.9 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio manager in this asset class, noting that he is the founder of EARNEST.
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $1.73 billion, showed the Fund’s management fee was below the group median for the Institutional Class. The actual total expense ratio for the Fund’s Institutional Class was below the group and universe median expense ratios. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
Harbor Strategic Growth Fund. The Trustees considered Harbor Strategic Growth Fund (inception date March 1, 2017) and its Institutional Class performance (including predecessor fund performance) in relation to its Broadridge universe and group for the one-, three- and five-year periods ended December 31, 2020, noting that Harbor Strategic Growth Fund had underperformed its group and universe medians for those periods. The Fund’s one-, three- and five-year rolling returns as of December 31, 2020 each ranked in the fourth quartile, according to Morningstar. The Trustees also considered that the Fund had underperformed its benchmark, the Russell 1000® Growth Index, for the one-, three- and five-year periods ended December 31, 2020.
78
Harbor Domestic Equity Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
The Trustees considered the expertise of Mar Vista Investment Partners, LLC (“Mar Vista”) in managing assets generally and specifically with respect to the Fund’s asset class, noting that Mar Vista had approximately $4.9 billion in assets under advisement in this asset class, out of a firm-wide total of approximately $5.7 billion in assets under advisement. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class, noting that Mar Vista had also managed the predecessor fund since 2011, prior to its reorganization into Harbor Strategic Growth Fund.
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $125 million, showed that the Fund’s contractual management fee was below the group median for the Institutional Class. The actual total expense ratio for the Institutional Class of the Fund was below the group median and equal to the universe median. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
The Trustees also separately considered the allocation between Harbor Capital and each Subadviser of the relevant Fund’s investment advisory fee (i.e., the amount of the advisory fee retained by Harbor Capital relative to that paid to the relevant Subadviser as a subadvisory fee). They determined in each case that the allocation was reasonable and the product of arm’s length negotiation between Harbor Capital and the Subadviser.
Profitability
The Trustees also considered Harbor Capital’s profitability in operating each of the Funds (as well as on a fund complex-wide basis) as presented by Harbor Capital, and the allocation methodology used by Harbor Capital to compute such profitability. The Trustees concluded that the methodology was reasonable and that a reasonable level of profitability was important to provide suitable incentives for Harbor Capital to continue to attract and maintain high-quality personnel and to invest in infrastructure and other resources to support and enhance the Funds’ operations. In considering Harbor Capital’s profitability generally, the Trustees also reviewed the compensation received by Harbor Services Group and Harbor Funds Distributors in consideration of the transfer agency and distribution services, respectively, that are provided to Harbor Funds and any other benefits enjoyed by Harbor Capital and its affiliates as a result of their relationship with Harbor Funds.
The Trustees also considered that profitability calculations with respect to advisory, transfer agency and distribution operations vary significantly depending on whether revenues on which the calculation is based are taken gross or net of amounts paid to third parties, such as subadvisory fee expenses and certain transfer agency expenses, and noted that subadvisory fee expenses are a direct expense of Harbor Capital. The Trustees also noted that Harbor Capital was, in certain cases, waiving a portion of its advisory fee and/or paying or reimbursing a portion of Fund expenses. The Trustees determined that Harbor Capital’s profitability in operating each Fund was not excessive.
Economies of Scale
The Trustees also considered the extent to which economies of scale might be realized as each Fund grows, and the extent to which each Fund’s advisory fee level reflects these economies of scale for the benefit of Fund investors. The Trustees specifically considered whether any advisory fee reduction “breakpoints” should be added to the advisory fee payable by any Fund. As noted above, the Trustees concluded that Harbor Capital’s profitability in each case was not excessive. They concluded that the Funds’ fee structures reflected economies of scale to date and that breakpoints in these fee structures were not required at the present time. The Trustees noted they intend to monitor each Fund’s asset growth in connection with future reviews of each Fund’s Investment Advisory Agreement to determine whether breakpoints may be appropriate at such time.
Review of Liqudity Risk Management Program
The Trust has adopted pursuant to Rule 22e-4 under the Investment Company Act (“Rule 22e-4”) a Liquidity Risk Management Program (the “Program”) for the Funds. The Board has designated a committee of Harbor Capital employees as the Program Administrator.
The Program is designed to assess and manage each Fund’s liquidity risk. For purposes of Rule 22e-4, “liquidity risk” is defined as the risk that a Fund is unable to satisfy redemption requests without significantly diluting remaining investors’ interests in the Fund. Components of the Program include: (i) periodic assessment of each Fund’s liquidity risk based on certain factors; (ii) classification of each Fund’s holdings into one of four liquidity categories (Highly Liquid, Moderately Liquid, Less Liquid and Illiquid) that reflect an estimate of liquidity under current market conditions; (iii) to the extent a Fund does not invest
79
Harbor Domestic Equity Funds
Additional Information—Continued
Additional Information—Continued
Review of Liqudity Risk Management Program—Continued
primarily in Highly Liquid investments, establishment of an appropriate Highly Liquid Investment Minimum (“HLIM”) (as defined in Rule 22e-4) for such Fund and ongoing monitoring of the Fund’s net assets to assess compliance with the Fund’s HLIM; (iv) a limit on the ability of a Fund to acquire illiquid investments in excess of 15% of the Fund’s net assets; and (v) periodic reporting to the Board.
At a meeting held on November 10, 2020, the Board of Trustees reviewed the operation and effectiveness of the Program for the period beginning October 1, 2019 and ending September 30, 2020 (the “period”). At the November 10, 2020 meeting, the Board reviewed a report prepared by, and received a presentation from, the Program Administrator regarding the operation of the Program, its adequacy, and the effectiveness of its implementation during the period. The Program Administrator’s report included, among other things, a review of: (i) the operation of the Program overall during the period, which included a period of increased market volatility related to the COVID-19 pandemic in the first half of 2020; (ii) the activities conducted by the Program Administrator with respect to the Program; (iii) the level of portfolio investments classified into each of the four liquidity categories and the services provided by the third-party vendor engaged by the Trust to facilitate such classification with respect to certain of the Funds; and (iv) the most recent liquidity risk assessment for the Funds conducted by the Program Administrator in accordance with Rule 22e-4. Based upon its review, the Program Administrator determined that the Program was adequate and effective in facilitating the Funds’ compliance with Rule 22e-4 during the period.
80
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82
111 South Wacker Drive, 34th Floor | Chicago, IL 60606-4302 | 800-422-1050 | harborfunds.com |
Trustees & Officers
Charles F. McCain
Chairman, President & Trustee
Chairman, President & Trustee
Scott M. Amero
Trustee
Trustee
Donna J. Dean
Trustee
Trustee
Randall A. Hack
Trustee
Trustee
Robert Kasdin
Trustee
Trustee
Kathryn L. Quirk
Trustee
Trustee
Douglas J. Skinner
Trustee
Trustee
Ann M. Spruill
Trustee
Trustee
Erik D. Ojala
Chief Compliance Officer
Chief Compliance Officer
Anmarie S. Kolinski
Treasurer
Treasurer
Kristof M. Gleich
Vice President
Vice President
Gregg M. Boland
Vice President
Vice President
Diana R. Podgorny
Secretary
Secretary
Jodie L. Crotteau
Assistant Secretary
Assistant Secretary
Lana M. Lewandowski
AML Compliance Officer
& Assistant Secretary
AML Compliance Officer
& Assistant Secretary
Lora A. Kmieciak
Assistant Treasurer
Assistant Treasurer
John M. Paral
Assistant Treasurer
Assistant Treasurer
Investment Adviser
Harbor Capital Advisors, Inc.
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4400
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4400
Distributor
Harbor Funds Distributors, Inc.
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4600
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4600
Shareholder Services
Harbor Services Group, Inc.
P.O. Box 804660
Chicago, IL 60680-4108
800-422-1050
P.O. Box 804660
Chicago, IL 60680-4108
800-422-1050
FD.SAR.DE.0421
Semi-Annual Report
April 30, 2021
Harbor Robeco Funds
Retirement Class | Institutional Class | Administrative Class | Investor Class | |
CONSERVATIVE EQUITY | ||||
Harbor Robeco Emerging Markets Conservative Equities Fund | HRERX | HRETX | HREAX | HRENX |
Harbor Robeco Global Conservative Equities Fund | HRGTX | HRGIX | HRGDX | HRGNX |
Harbor Robeco International Conservative Equities Fund | HRIRX | HRIEX | HRIMX | HRIVX |
Harbor Robeco US Conservative Equities Fund | HRURX | HRUNX | HRUAX | HRUVX |
CORE EQUITY | ||||
Harbor Robeco Emerging Markets Active Equities Fund | HRMEX | HRMTX | HRMNX | HRMOX |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Funds’ annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website (harborfunds.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you invest directly with Harbor Funds, by calling 800-422-1050.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary (such as a broker-dealer or bank), you can contact your financial intermediary to request that you continue to receive paper copies of the Funds’ shareholder reports. If you invest directly, you can call 800-422-1050 to request that you continue to receive paper copies of the Funds’ shareholder reports. Your election to receive reports in paper will apply to all Harbor Funds held in your account.
Table of Contents
This document must be preceded or accompanied by a Prospectus.
Letter from the Chairman
Charles F. McCain Chairman |
Dear Fellow Shareholder:
Looking back on the past two calendar quarters reveals a tale of two markets. After a strong summer market rally, volatility reemerged last fall, due to continuing investor concerns about the pandemic, increasing political rhetoric, and other geopolitical events. However, the resolution of the presidential election, new vaccine approvals/rollouts, along with the passage of two U.S. fiscal stimulus packages, led to improved investor sentiment and appetite for risk that generated an equity market rally that continued through the first quarter of 2021—although at a slower pace than in the fourth quarter of 2020. U.S. and global equity markets produced positive total returns over the six-month period ended April 30, 2021. The S&P 500 added to its strong performance of 12.15% in the fourth quarter, with a return of 6.17% in the first quarter, outperforming the MSCI EAFE (ND) and the MSCI Emerging Markets (ND) Indexes, which returned 3.38% and 2.29%, respectively, for the first quarter.
Beginning late last fall, we saw a pronounced reversal from a growth-driven to a value-driven equity market, and this rotation has persisted through the first quarter. The market rotation occurred globally—in the U.S., developed, and emerging equity markets—by style (cyclical/value outperformed growth), by market cap (small cap outperformed large cap), and by factor (momentum reversed, while beta remained strong).
Prior to the fourth quarter, U.S. growth-oriented stocks were the dominant outperformers by a large margin, with value-oriented names trading at huge discounts. However, by late in the year and moving through the first quarter, value outperformed growth, with the Russell 3000® Value Index beating the Russell 3000® Growth Index by the widest margin since the first quarter of 2001. Cyclical industries (e.g., oil & gas, machinery, construction materials, and metals & mining), along with the Energy and Financials sectors, took center stage. In contrast, the Information Technology, Consumer Staples, and Healthcare sectors retreated. While large caps have been in favor in past years (FAANG stocks etc.) and still remain ahead over trailing three- and five-year periods, the trend reversed over the six-month reporting period, which saw small caps outperforming. The bond markets took a hit, as investors shifted to equities in anticipation of a broader economic recovery, and the yield curve steepened at the long end. The yield on 10-year Treasuries rose from 0.78% after the election to 1.74% in March—one of the most significant moves in decades.
As economies around the world have begun to reopen, and markets have rallied, the focus is shifting from fear to cautious optimism. Growth in the U.S. gross domestic product (GDP) over the past two quarters reflects the long-hoped-for economic recovery now underway, the reopening of businesses, and the massive government response to the COVID-19 pandemic. GDP grew by 4.3% in the fourth quarter and by an estimated 6.4% in the first quarter. The Biden administration passed the $1.9 trillion American Rescue Plan, although without a single Republican vote. Its proposals for still more fiscal stimulus (the American Jobs Plan at $2.3 trillion and the American Families Plan at $1.8 trillion) will have to pass the gauntlet of a divided Congress; the scope, size, and timing of those plans will no doubt undergo protracted negotiations.
Harbor expects that volatility will remain elevated for the foreseeable future. But we also believe there are thoughtful, practical solutions to manage volatility and enable investors to reach their long-term goals. Our subadvisers are active portfolio managers who remain focused on uncovering opportunities and skillfully executing their strategies to deliver shareholder value in a climate of economic and geopolitical uncertainty, unprecedented health challenges, and financial market volatility. We believe that thoughtful, active management and adherence to enduring investment principles such as diversification, discipline, and a long-term view, will stand the test of time.
Over the past year, we have seen massive disruptions and challenges that have taken a severe toll on human lives. But the human spirit has remained resilient through it all. We believe there is now more reason for cautious optimism than fear as we look ahead.
At a meeting of the Board of Trustees held on May 12, 2021, the Board of Trustees voted to liquidate and dissolve the Harbor Robeco Emerging Markets Conservative Equities Fund, Harbor Robeco Global Conservative Equities Fund, Harbor Robeco International Conservative Equities Fund, Harbor Robeco US Conservative Equities Fund, and Harbor Robeco Emerging Markets Active Equities Fund. The liquidation of the Funds occurred on June 15, 2021.
I hope you and your families stay safe through this difficult time. Thank you for your confidence and continued investment in Harbor Funds.
June 22, 2021
Charles F. McCain |
Chairman |
1
Harbor Robeco Conservative Equity Funds
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Robeco Institutional Asset Management US Inc.
230 Park Avenue
Suite 3330
Suite 3330
New York, NY 10169
Portfolio Managers
Pim van Vliet, PhD
Since 2019
Since 2019
Arlette van Ditshuizen
Since 2019
Since 2019
Maarten Polfliet, CEFA
Since 2019
Since 2019
Jan Sytze Mosselaar, CFA
Since 2019
Arnoud Klep
Since 2019
Since 2019
Yaowei Xu*
Since 2019
Since 2019
Robeco Institutional Asset Management US Inc. has subadvised the Fund since 2019.
Investment Objective
The Funds seek long-term growth of capital.
Pim van Vliet, PhD
Arlette van Ditshuizen
Maarten Polfliet, CEFA
Jan Sytze Mosselaar, CFA
Arnoud Klep
Yaowei Xu
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
Global equities posted strong returns in the last quarter of 2020. The main driver behind this year-end rally was the Pfizer vaccine announcement on November 9, which also sparked a style rotation with cyclical, beaten-down value stocks such as banks, oil companies and travel industry stocks showing a sharp recovery, especially in Europe. In this way, the Financials and Energy sectors recovered some of their previous steep losses due to the effects of the pandemic, which resulted in lower oil prices and lower interest rates in the first half of 2020. Defensive sectors such as Consumer Staples, Real Estate and Utilities lagged in this bullish end to a remarkable year. As a result of these sector patterns, small cap and value strategies made a strong comeback. Because of the cyclical value rally that started in November and the cyclical growth rally in October and December, the low-risk factor lagged significantly in the fourth quarter of 2020.
In the first quarter of 2021, “reflation trade” was the name of the game, with investors banking on a path to normalization, helped by the global vaccination programs, the new Biden $1.9 trillion stimulus and the proposed $2 trillion infrastructure plan. A renewed optimism sparked large inflows into equity funds and very active trading behavior from retail investors. Yields went up significantly, also impacted by rising inflation expectations, which illustrates how the market has been focused on a reopening of the global economy. Within developed equity markets, cyclicals outperformed defensive stocks. Especially cyclical value stocks such as banks and oil companies continued to rise, reinforcing the value recovery which started in November. In contrast, defensive sectors such as Utilities, Health Care and Consumer Staples lagged, leading to a weak performance of the low-risk factor.
As for the Emerging Markets, in the first quarter of 2021, the rally of the large Taiwanese tech stocks continued as earnings were revised upwards, but investors fell out of love with Chinese online platform stocks such as JD.com, Pinduoduo, Meituan, Tal Education and New Oriental Education (the latter sold off on potential new online regulation). The South African market rebounded as chemicals giant Sasol recovered some of its previous heavy losses, while other large commodity stocks such as Lukoil and Vale profited from the reflation theme. The Brazilian market remains under pressure, as COVID-19 continues to hit the country hard. Moreover, Petrobras lost significant market value as the company clashed with the government on fuel price policies. From a factor perspective, the weakest Q1 2020 factors made the biggest rebound in Q1 2021. Small caps, high-yielding and value stocks profited from the broader reflation trade with investors banking on the path to normalization. The momentum factor ended the quarter negatively as it is heavy on the Chinese platform stocks.
April will not be remembered as an eventful month for equities, as investors are awaiting more earnings results and the looming reopening of the world economy. The MSCI World (ND) Index and the S&P 500 Index did not experience a single day with a loss higher than 1%, while the MSCI Emerging Markets (ND) Index had just one, on the last business day of the month. The faltering value rally, as the rise in oil and interest rates halted, and the stellar earnings figures for Big Tech caused a mild factor rotation. Momentum and quality stocks were stronger than value and high dividend stocks. Amazon, Facebook, Alphabet,
* | Yaowei Xu Co-Manages the Harbor Robeco Emerging Markets Conservative Equities Fund only |
2
Harbor Robeco Conservative Equity Funds
Manager’s Commentary—Continued
Manager’s Commentary—Continued
Visa and NVIDIA showed double-digit returns, while Intel fell 10% after its earnings release. Japan was the weakest large country index as index heavyweights Toyota and Sony both fell. Emerging Markets equities underperformed Developed Markets equities as several large index stocks such as Samsung, Taiwan Semi, Hon Hai Precision Industries, Alibaba and JD.com showed unexciting to negative returns.
Performance
Emerging Markets Conservative Equities
Harbor Robeco Emerging Conservative Equities Fund returned 22.49% (Retirement Class), 22.29% (Institutional Class) and 22.08% (Investor Class) while the MSCI Emerging Markets (ND) Index returned 22.95% for the six-month period ended April 30, 2021. Therefore, the Fund underperformed its reference index over this period. The main reason for underperformance was the negative returns of the low-risk factor, which is the primary performance driver of the strategy. Momentum and valuation factors had a muted impact on returns.
Sector attribution during the period was highlighted by positive allocation effects and negative selection effects. The largest positive allocation effects came from an underweight in Consumer Discretionary stocks. Selection within this sector was also the largest positive contributor. On the other hand, selection within Materials and Health Care sectors contributed most negatively, while in terms of countries selection within Taiwan and Brazil were the largest negative contributors.
Global Conservative Equities
Harbor Robeco Global Conservative Equities Fund returned 17.05% (Retirement Class), 16.95% (Institutional Class) and 16.71% (Investor Class) while the MSCI World (ND) Index returned 29.10% for the six-month period ended April 30, 2021. Regrettably, the Fund underperformed over this period. The main reason for underperformance was the negative returns of the low-risk factor, which is the primary performance driver of the strategy. Momentum and valuation factors had a muted impact on returns.
Positive contributions came from holding several consumer and tech stocks that showed decent earnings growth but are trading at less demanding valuation levels than Big Tech and high-flying internet stocks. In terms of sectors, both allocation and selection contributed negatively, although weak selection was the primary reason for the underperformance. The largest negative contributions came from selection within the Consumer, Financial and Communication Services sectors, whereas the strategy did relatively well within Information Technology and Materials. In terms of countries, allocation effects had a muted impact, while selection was particularly weak in the United States and the United Kingdom.
International Conservative Equities
Harbor Robeco International Conservative Equities Fund returned 17.47% (Retirement Class), 17.51% (Institutional Class) and 17.34% (Investor Class) while the MSCI EAFE (ND) Index returned 28.84% for the six-month period ended April 30, 2021. Regrettably, the Fund underperformed over this period. The main reason for underperformance was the negative returns of the low-risk factor, which is the primary performance driver of the strategy. The valuation factors had a positive impact on returns, but this was almost perfectly offset by a weak performance of the momentum factor in international markets.
In terms of sectors, both allocation and selection contributed negatively, although weak selection was the primary reason for the underperformance. The largest negative contributions came from selection within Consumer and Financial sectors, whereas the strategy did relatively well within Utilities. In terms of countries, allocation effects had a relatively small negative impact, while selection was particularly weak in Japan and the United Kingdom.
US Conservative Equities
Harbor Robeco US Conservative Equities Fund returned 21.21% (Retirement Class), 21.26%% (Institutional Class) and 21.05% (Investor Class) while the S&P 500 Index returned 28.85% for the six-month period ended April 30, 2021. Regrettably, the Fund underperformed over this period. The main reason for underperformance was the negative returns of the low-risk factor, which is the primary performance driver of the strategy. The valuation and momentum factors had positive impacts on returns, but were not enough to offset the negative contribution of the low-risk factor.
The weak relative performance can be attributed to both poor allocation and selection within sectors. In terms of allocations, the largest negative impact came from an overweight in Consumer Staples and from having no exposure to the Energy sector which did well over this period. Selection within all sectors in which the Fund was invested was negative, and the largest impact came from Industrials.
3
Harbor Robeco Conservative Equity Funds
Manager’s Commentary—Continued
Manager’s Commentary—Continued
Outlook
We are cautious when it comes to factor timing, especially on a short-term basis. However, after the cyclical growth rally that benefitted the fastest-growing internet and tech stocks, and the subsequent cyclical value rally at the end of 2020, defensive stocks are currently trading at a historically high valuation discount. Defensive stocks with decent earnings growth rates, healthy balance sheets and typically stable dividends are trading at a historical high margin of safety versus the market. We therefore think it might be time for defensive stocks to take center stage again, especially in more volatile periods.
Historically, an attractive valuation combined with weak recent performance has often been a good departure point in terms of future return prospects. This re-rating of conservative stocks could very well happen again in the near term, leading defensive equities to outperform cyclical stocks. We acknowledge that valuation has been a poor short-term return predictor during the past years, however, we find that high valuation levels are usually followed by periods with increased downside risk. We believe that a conservative approach is effective at preserving equity capital in such scenarios. The search for income is centuries old and one of the most important investment goals. We expect this search for yield to be a market theme going forward. Especially with many bonds being risky but “return-free,” there is upside potential for stocks that offer stable and growing income.
This report contains the current opinions of Robeco Institutional Asset Management US Inc. as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Investing in international and emerging markets poses special risks, including potentially greater price volatility due to social, political and economic factors, as well as currency exchange rate fluctuations. These risks are more severe for securities of issuers in emerging market regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
The Funds focuses on defensive-oriented (conservative) stocks, which typically lag the stock market during strong market rallies. In addition, such stocks may underperform the market during periods of rising interest rates. There is no guarantee that the investment process will be successful in lowering volatility of a Fund’s returns or protecting a Fund from market declines.
4
Harbor Robeco Emerging Markets Conservative Equities Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
REGION BREAKDOWN (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | 5 Years | Annualized | |||||||
6 Months | Life of Fund | ||||||||||
Harbor Robeco Emerging Markets Conservative Equities Fund | |||||||||||
Retirement Class1 | 22.49% | 33.04% | N/A | 10.09% | |||||||
Institutional Class1 | 22.29 | 32.83 | N/A | 9.96 | |||||||
Investor Class1 | 22.08 | 32.32 | N/A | 9.55 | |||||||
Comparative Index | |||||||||||
MSCI Emerging Markets (ND)1 | 22.95% | 48.71% | N/A | 22.53% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.75% (Net) and 4.08% (Gross) Retirement Class; 0.83% (Net) and 4.16% (Gross) Institutional Class; and 1.19% (Net) and 4.52% (Gross) Investor Class. The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
1 | The “Life of Fund” return as shown reflects the period 12/01/2019 through 04/30/2021. |
5
Harbor Robeco Emerging Markets Conservative Equities Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—97.7% | |||
Shares | Value | ||
AUTO COMPONENTS—1.5% | |||
4,275 | Shandong Linglong Tyre Co. Ltd. (China) | $ 37 | |
5,400 | Weifu High Technology Group Ltd. (China) | 20 | |
57 | |||
AUTOMOBILES—2.2% | |||
766 | KIA Motors Corp. (South Korea) | 53 | |
7,759 | Tofas Turk Otomobil Fabrikasi AS (Turkey) | 28 | |
81 | |||
BANKS—18.1% | |||
73,000 | Agricultural Bank of China Ltd. (China) | 28 | |
3,728 | Al Rajhi Bank (Saudi Arabia) | 98 | |
18,700 | Bank of Beijing Co. Ltd. (China) | 14 | |
193,000 | Bank of China Ltd. (China) | 77 | |
40,000 | Bank of Communications Co. Ltd. (China) | 26 | |
14,120 | Chang Hwa Commercial Bank Ltd. (Taiwan) | 9 | |
74,000 | China Construction Bank Corp. (China) | 59 | |
29,000 | China Everbright Bank Co. Ltd. (China) | 12 | |
55,500 | China Minsheng Banking Corp Ltd. (China) | 29 | |
36,000 | CTBC Financial Holding Co. Ltd. (Taiwan) | 29 | |
30,900 | First Financial Holding Co. Ltd. (Taiwan) | 25 | |
500 | Hana Financial Group Inc. (South Korea) | 21 | |
29,568 | Hua Nan Financial Holdings Co Ltd. (Taiwan) | 20 | |
18,000 | Huaxia Bank Co. Ltd. (China) | 17 | |
734 | KB Financial Group Inc. (South Korea) | 36 | |
9,800 | Kiatnakin Bank PCL NVDR (Thailand)1 | 18 | |
6,410 | Malayan Banking BHD (Malaysia) | 13 | |
28,951 | Masraf Al Rayan Q.S.C (Qatar) | 36 | |
49,000 | Postal Savings Bank of China (China)2 | 32 | |
484 | Shinhan Financial Group Co. Ltd. (South Korea) | 17 | |
32,000 | SinoPac Financial Holdings Co. Ltd. (Taiwan) | 15 | |
26,601 | Taishin Financial Holding Co. Ltd. (Taiwan) | 13 | |
27,810 | Taiwan Cooperative Financial Holding Co. Ltd. (Taiwan) | 21 | |
665 | |||
BEVERAGES—0.4% | |||
3,000 | Arca Continental SAB de CV (Mexico) | 16 | |
CHEMICALS—0.5% | |||
479 | PhosAgro PJSC GDR (Russia)1 | 9 | |
4,000 | Taiwan Fertilizer Co. Ltd. (Taiwan) | 9 | |
18 | |||
COMMERCIAL SERVICES & SUPPLIES—0.8% | |||
3,000 | Country Garden Services Holdings Co. Ltd. (China) | 31 | |
CONSTRUCTION & ENGINEERING—1.5% | |||
9,500 | China Conch Venture Holdings Ltd. (China) | 45 | |
13,300 | Shanghai Tunnel Engineering Co. Ltd. (China) | 11 | |
56 | |||
CONSTRUCTION MATERIALS—3.2% | |||
4,500 | Anhui Conch Cement Co. Ltd. (China) | 27 | |
12,000 | Asia Cement Corp. (Taiwan) | 21 | |
22,000 | China Resources Cement Holdings Ltd. (China) | 24 | |
1,782 | Ssangyong C&E Co. Ltd. (South Korea) | 13 | |
17,850 | Taiwan Cement Corp (Taiwan) | 33 | |
118 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—4.1% | |||
11,000 | Chunghwa Telecom Co. Ltd. (Taiwan) | 45 | |
1,715 | Hellenic Telecommunications Organization SA (Greece) | 29 | |
2,097 | KT Corp. ADR (South Korea)1 | 26 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
DIVERSIFIED TELECOMMUNICATION SERVICES—Continued | |||
3,186 | Telefonica Brasil SA ADR (Brazil)1 | $ 25 | |
48,200 | Telekomunikasi Indonesia Persero TBK PT (Indonesia) | 11 | |
20,330 | Turk Telekomunikasyon AS (Turkey) | 16 | |
152 | |||
ELECTRIC UTILITIES—1.7% | |||
3,334 | Cia Paranaense de Energia ADR (Brazil)*,1 | 18 | |
5,700 | Transmissora Alianca de Energia Eletrica SA (Brazil) | 44 | |
62 | |||
ELECTRICAL EQUIPMENT—1.3% | |||
7,400 | WEG SA (Brazil) | 48 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—1.5% | |||
4,000 | Foxconn Technology Co. Ltd. (Taiwan) | 10 | |
7,000 | Hon Hai Precision Industry Co. Ltd. (Taiwan) | 28 | |
9,000 | Synnex Technology International Corp. (Taiwan) | 18 | |
56 | |||
FOOD & STAPLES RETAILING—2.0% | |||
2,925 | Bim Birlesik Magazalar AS (Turkey) | 23 | |
15,400 | Wal-Mart de Mexico SAB de CV (Mexico) | 50 | |
73 | |||
FOOD PRODUCTS—2.4% | |||
2,200 | Gruma SAB de CV (Mexico) | 24 | |
1,800 | Henan Shuanghui Investment & Development Co Ltd. (China) | 10 | |
77 | NongShim Co. Ltd. (South Korea) | 20 | |
46,000 | Want Want China Holdings Ltd. (China) | 33 | |
87 | |||
GAS UTILITIES—0.4% | |||
900 | Enn Energy Holdings Ltd. (China) | 15 | |
HEALTH CARE PROVIDERS & SERVICES—1.6% | |||
3,250 | Al Hammadi Co. For Development And Investment (Saudi Arabia) | 30 | |
4,300 | Jointown Pharmaceutical Group Co. Ltd. (China)* | 11 | |
355 | Mouwasat Medical Services Co. (Saudi Arabia) | 17 | |
58 | |||
HOTELS, RESTAURANTS & LEISURE—2.3% | |||
1,175 | Saudi Airlines Catering Co. (Saudi Arabia)* | 24 | |
940 | Yum China Holdings Inc. (China) | 59 | |
83 | |||
HOUSEHOLD DURABLES—1.3% | |||
327 | LG Electronics Inc. (South Korea) | 46 | |
HOUSEHOLD PRODUCTS—0.4% | |||
8,000 | Kimberly-Clark de Mexico SAB de CV (Mexico) | 14 | |
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS—1.0% | |||
5,100 | AES Brasil Energia SA (Brazil)* | 13 | |
7,100 | China Yangtze Power Co. Ltd. (China) | 22 | |
35 | |||
INDUSTRIAL CONGLOMERATES—0.7% | |||
73,845 | Dogan Sirketler Grubu Holding AS (Turkey) | 26 | |
INSURANCE—1.9% | |||
3,300 | BB Seguridade Participacoes SA (Brazil) | 13 |
6
Harbor Robeco Emerging Markets Conservative Equities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
INSURANCE—Continued | |||
9,000 | Cathay Financial Holding Co. Ltd. (Taiwan) | $ 17 | |
17,000 | Fubon Financial Holding Co. Ltd. (Taiwan) | 39 | |
69 | |||
INTERACTIVE MEDIA & SERVICES—3.1% | |||
500 | Kakao Corp. (South Korea) | 51 | |
800 | Tencent Holdings Ltd. (China) | 64 | |
115 | |||
INTERNET & DIRECT MARKETING RETAIL—1.5% | |||
243 | Alibaba Group Holding Ltd. ADR (China)*,1 | 56 | |
IT SERVICES—2.9% | |||
5,856 | Infosys Ltd. ADR (India)1 | 106 | |
MARINE—0.3% | |||
7,000 | MISC BHD (Malaysia) | 12 | |
MEDIA—0.4% | |||
9,600 | China South Publishing & Media Group Co. Ltd. (China) | 15 | |
METALS & MINING—3.4% | |||
17,800 | Baoshan Iron + Steel Co. (China) | 24 | |
674 | Kumba Iron Ore Ltd. (South Africa) | 31 | |
361 | MMC Norilsk Nickel PJSC ADR (Russia)*,1 | 12 | |
410 | Polyus PJSC GDR (Russia)1 | 38 | |
907 | Severstal PJSC GDR (Russia)1 | 21 | |
126 | |||
OIL, GAS & CONSUMABLE FUELS—7.6% | |||
24,772 | Abu Dhabi National Oil Co. For Distribution PJSC (United Arab Emirates) | 31 | |
100,000 | China Petroleum & Chemical Corp. (China) | 49 | |
4,000 | China Resources Gas Group Ltd. (China) | 22 | |
20,500 | China Shenhua Energy Co. Ltd. (China) | 43 | |
5,792 | Gazprom PJSC ADR (Russia)1 | 35 | |
680 | Lukoil PJSC ADR (Russia)1 | 52 | |
168 | Novatek PJSC GDR (Russia)1 | 30 | |
18,126 | Qatar Gas Transport Co. Ltd. (Qatar) | 16 | |
278 | |||
PHARMACEUTICALS—0.4% | |||
4,400 | Shandong Buchang Pharmaceuticals Co. Ltd. (China) | 16 | |
REAL ESTATE MANAGEMENT & DEVELOPMENT—1.8% | |||
30,483 | Aldar Properties PJSC (United Arab Emirates) | 29 | |
8,800 | Highwealth Construction Corp (Taiwan)* | 14 | |
33,300 | Supalai PCL NVDR (Thailand)1 | 22 | |
65 | |||
ROAD & RAIL—0.5% | |||
17,800 | Daqin Railway Co. Ltd. (China) | 19 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—5.3% | |||
4,000 | Radiant Opto-Electronics Corp (Taiwan) | 18 | |
5,000 | Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan) | 105 | |
36,000 | United Microelectronics Corp. (Taiwan) | 72 | |
195 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SPECIALTY RETAIL—1.0% | |||
659 | Jarir Marketing Co. (Saudi Arabia) | $ 35 | |
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—9.5% | |||
5,000 | Asustek Computer Inc. (Taiwan) | 67 | |
4,000 | Chicony Electronics Co. Ltd. (Taiwan) | 12 | |
32,000 | Compal Electronics Inc. (Taiwan) | 28 | |
65,500 | Digital Telecommunications Infrastructure Fund (Thailand) | 25 | |
18,000 | Lenovo Group Ltd. (China) | 25 | |
17,000 | Lite-On Technology Corp. (Taiwan) | 39 | |
15,000 | Pegatron Corp (Taiwan) | 39 | |
11,000 | Quanta Computer Inc. (Taiwan) | 38 | |
778 | Samsung Electronics Co Ltd. (South Korea) | 57 | |
17,000 | Wistron Corp. (Taiwan) | 20 | |
350 | |||
TOBACCO—1.3% | |||
667 | KT&G Corp. (South Korea) | 49 | |
TRANSPORTATION INFRASTRUCTURE—1.3% | |||
10,000 | China Merchants Port Holdings Co. Ltd. (China) | 16 | |
8,000 | Jiangsu Expressway Co Ltd. (China) | 9 | |
13,099 | Shenzhen International Holdings Ltd. (China) | 22 | |
47 | |||
WATER UTILITIES—0.8% | |||
20,000 | Guangdong Investment Ltd. (China) | 31 | |
WIRELESS TELECOMMUNICATION SERVICES—5.8% | |||
5,800 | Advanced Info Service PCL NVDR (Thailand)1 | 32 | |
7,000 | Far EasTone Telecommunications Co Ltd. (Taiwan)* | 16 | |
2,456 | Mobile TeleSystems OJSC ADR (Russia)1 | 21 | |
1,732 | SK Telecom Co. Ltd. ADR (South Korea)1 | 52 | |
6,000 | Taiwan Mobile Co. Ltd. (Taiwan)* | 21 | |
16,486 | Turkcell Iletisim Hizmetleri AS (Turkey) | 30 | |
4,741 | Vodacom Group Ltd. (South Africa) | 41 | |
213 | |||
TOTAL COMMON STOCKS | |||
(Cost $3,048) | 3,594 | ||
PREFERRED STOCKS—0.5% | |||
(Cost $32) | |||
BANKS—0.5% | |||
10,000 | Itausa - Investimentos Itau SA (Brazil) | 19 | |
TOTAL INVESTMENTS—98.2% | |||
(Cost $3,080) | 3,613 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—1.8% | 66 | ||
TOTAL NET ASSETS—100.0% | $3,679 |
7
Harbor Robeco Emerging Markets Conservative Equities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of April 30, 2021 based on the inputs used to value them.
Asset Category | Quoted Prices Level 1 (000s) | Other Significant Observable Inputs Level 2 (000s) | Significant Unobservable Inputs Level 3 (000s) | Total (000s) | ||||
Common Stocks | ||||||||
Africa | $ — | $ 72 | $— | $ 72 | ||||
Europe | 218 | 152 | — | 370 | ||||
Latin America | 265 | — | — | 265 | ||||
Middle East/Central Asia | 106 | 316 | — | 422 | ||||
North America | 59 | — | — | 59 | ||||
Pacific Basin | 162 | 2,244 | — | 2,406 | ||||
Preferred Stocks | ||||||||
Latin America | 19 | — | — | 19 | ||||
Total Investments in Securities | $829 | $2,784 | $— | $3,613 |
There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
* | Non-income producing security |
1 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
2 | Securities purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At April 30, 2021, the aggregate value of these securities was $32 or 1% of net assets. |
The accompanying notes are an integral part of the Financial Statements.
8
Harbor Robeco Global Conservative Equities Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
REGION BREAKDOWN (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | 5 Years | Annualized | |||||||
6 Months | Life of Fund | ||||||||||
Harbor Robeco Global Conservative Equities Fund | |||||||||||
Retirement Class1 | 17.05% | 24.19% | N/A | 4.18% | |||||||
Institutional Class1 | 16.95 | 24.24 | N/A | 4.11 | |||||||
Investor Class1 | 16.71 | 23.71 | N/A | 3.69 | |||||||
Comparative Index | |||||||||||
MSCI World (ND) Index1 | 29.10% | 45.33% | N/A | 21.10% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.40% (Net) and 1.00% (Gross) Retirement Class; 0.48% (Net) and 1.08% (Gross) Institutional Class; and 0.84% (Net) and 1.44% (Gross) Investor Class. The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
1 | The “Life of Fund” return as shown reflects the period 12/01/2019 through 04/30/2021. |
9
Harbor Robeco Global Conservative Equities Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—99.0% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—0.2% | |||
110 | Lockheed Martin Corp. (United States) | $ 42 | |
AIR FREIGHT & LOGISTICS—3.1% | |||
1,165 | Expeditors International of Washington Inc. (United States) | 128 | |
18,391 | PostNL NV (Netherlands) | 96 | |
1,718 | United Parcel Service Inc. (United States) | 350 | |
574 | |||
AUTOMOBILES—0.1% | |||
200 | Toyota Motor Corp. (Japan) | 15 | |
BANKS—3.5% | |||
2,691 | Bank of Montreal (Canada) | 254 | |
1,652 | Canadian Imperial Bank of Commerce (Canada) | 172 | |
1,575 | Investors Bancorp Inc. (United States) | 23 | |
588 | JPMorgan Chase & Co. (United States) | 90 | |
668 | National Bank of Canada (Canada) | 48 | |
144 | PNC Financial Services Group Inc. (United States) | 27 | |
561 | Sydbank AS (Denmark) | 17 | |
631 | |||
BEVERAGES—0.2% | |||
229 | PepsiCo Inc. (United States) | 33 | |
BIOTECHNOLOGY—2.3% | |||
1,275 | Amgen Inc. (United States) | 305 | |
608 | Gilead Sciences Inc. (United States) | 39 | |
411 | United Therapeutics Corp. (United States)* | 83 | |
427 | |||
BUILDING PRODUCTS—0.8% | |||
210 | Geberit AG (Switzerland) | 138 | |
CAPITAL MARKETS—2.1% | |||
580 | Artisan Partners Asset Management Inc. (United States) | 29 | |
340 | ASX Ltd. (Australia) | 19 | |
1,165 | CI Financial Corp. (Canada) | 19 | |
481 | Flow Traders (Netherlands)1 | 20 | |
5,624 | IG Group Holdings plc (United Kingdom) | 71 | |
1,221 | IGM Financial Inc. (Canada) | 44 | |
4,500 | Nomura Holdings Inc. (Japan) | 24 | |
11,200 | Singapore Exchange Ltd. (Singapore) | 88 | |
268 | T Rowe Price Group Inc. (United States) | 48 | |
749 | Virtu Financial Inc. (United States) | 22 | |
384 | |||
CHEMICALS—0.6% | |||
1,096 | Croda International plc (United Kingdom) | 102 | |
COMMERCIAL SERVICES & SUPPLIES—1.3% | |||
9,930 | Brambles Ltd. (Australia) | 80 | |
1,377 | Waste Connections Inc. (Canada) | 164 | |
244 | |||
COMMUNICATIONS EQUIPMENT—1.9% | |||
6,998 | Cisco Systems Inc. (United States) | 356 | |
CONSTRUCTION & ENGINEERING—0.1% | |||
620 | Skanska AB Class B (Sweden) | 17 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
CONTAINERS & PACKAGING—0.5% | |||
470 | Aptargroup Inc. (United States) | $ 71 | |
655 | Silgan Holdings Inc. (United States) | 27 | |
98 | |||
DIVERSIFIED FINANCIAL SERVICES—1.8% | |||
1,000 | Berkshire Hathaway Inc. Class B (United States)* | 275 | |
2,986 | Plus500 Ltd. (United Kingdom) | 58 | |
333 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—4.9% | |||
983 | AT&T Inc. (United States) | 31 | |
1,307 | Deutsche Telekom AG (Germany) | 25 | |
49,000 | HKT Trust & HKT Ltd Stapled Security (Hong Kong) | 71 | |
3,554 | Proximus SADP (Belgium) | 76 | |
66,300 | Singapore Telecommunications Ltd. (Singapore) | 124 | |
6,295 | Spark New Zealand Ltd. (New Zealand) | 20 | |
39 | Swisscom AG (Switzerland) | 21 | |
5,765 | Telenor ASA (Norway) | 103 | |
21,986 | Telia Co. AB (Sweden) | 91 | |
5,871 | Verizon Communications Inc. (United States) | 339 | |
901 | |||
ELECTRIC UTILITIES—1.4% | |||
40,639 | AusNet Services (Australia) | 60 | |
685 | Endesa SA (Spain) | 18 | |
3,504 | Hydro One Ltd. (Canada)1 | 84 | |
2,380 | Iberdrola SA (Spain) | 32 | |
307 | Southern Co. (United States) | 20 | |
1,790 | SSE PLC (United Kingdom) | 36 | |
250 | |||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—0.9% | |||
937 | Arrow Electronics Inc. (United States)* | 107 | |
3,300 | Venture Corp. Ltd. (Singapore) | 50 | |
157 | |||
ENTERTAINMENT—2.3% | |||
2,000 | Capcom Co. Ltd. (Japan) | 65 | |
1,364 | Electronic Arts Inc. (United States) | 194 | |
4,457 | Vivendi SA (France) | 155 | |
414 | |||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—0.3% | |||
992 | Easterly Government Properties Inc. (United States) | 21 | |
6,700 | Mapletree Industrial Trust (Singapore)* | 14 | |
7 | Nippon ProLogis REIT Inc. (Japan) | 23 | |
58 | |||
FOOD & STAPLES RETAILING—5.6% | |||
2,418 | Axfood AB (Sweden) | 61 | |
1,102 | Colruyt SA (Belgium) | 65 | |
383 | Costco Wholesale Corp. (United States) | 143 | |
5,369 | Koninklijke Ahold Delhaize NV (Netherlands) | 145 | |
4,163 | Kroger Co. (United States) | 152 | |
428 | Metro Inc. (Canada) | 20 | |
839 | Sprouts Farmers Market Inc. (United States)* | 21 | |
800 | Sugi Holdings Co. Ltd. (Japan) | 61 | |
1,700 | Sundrug Co. Ltd. (Japan) | 58 | |
1,966 | Walmart Inc. (United States) | 275 | |
759 | Woolworths Group Ltd. (Australia) | 23 | |
1,024 |
10
Harbor Robeco Global Conservative Equities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
FOOD PRODUCTS—2.3% | |||
811 | Flowers Foods Inc. (United States) | $ 19 | |
2,809 | General Mills Inc. (United States) | 171 | |
404 | Hormel Foods Corp. (United States) | 19 | |
936 | JM Smucker Co. (United States) | 122 | |
800 | Nissin Foods Holdings Co. Ltd. (Japan) | 57 | |
3,989 | Orkla ASA (Norway) | 41 | |
429 | |||
GAS UTILITIES—0.1% | |||
3,797 | Snam SpA (Italy) | 21 | |
HEALTH CARE EQUIPMENT & SUPPLIES—2.6% | |||
1,694 | Ansell Ltd. (Australia) | 55 | |
1,196 | Danaher Corp. (United States) | 304 | |
2,300 | H.U. Group Holdings Inc. (Japan) | 75 | |
139 | West Pharmaceutical Services Inc. (United States) | 46 | |
480 | |||
HEALTH CARE PROVIDERS & SERVICES—0.2% | |||
288 | DaVita Inc. (United States)* | 34 | |
HOTELS, RESTAURANTS & LEISURE—0.3% | |||
197 | McDonald's Corp. (United States) | 47 | |
HOUSEHOLD DURABLES—1.6% | |||
1,500 | De'Longhi SpA (Italy) | 66 | |
193 | Garmin Ltd. (United States) | 27 | |
500 | Rinnai Corp. (Japan) | 50 | |
1,700 | Sekisui House Ltd. (Japan) | 34 | |
478 | Whirlpool Corp. (United States) | 113 | |
290 | |||
HOUSEHOLD PRODUCTS—4.6% | |||
105 | Clorox Co. (United States) | 19 | |
3,211 | Colgate-Palmolive Co. (United States) | 259 | |
2,690 | Procter & Gamble Co. (United States) | 359 | |
2,225 | Reckitt Benckiser Group plc (United Kingdom) | 198 | |
835 | |||
INDUSTRIAL CONGLOMERATES—1.8% | |||
1,696 | 3M Co. (United States) | 334 | |
INSURANCE—4.2% | |||
2,094 | Admiral Group plc (United Kingdom) | 91 | |
312 | Ageas (Belgium) | 19 | |
104 | Allianz SE (Germany) | 27 | |
327 | Allstate Corp. (United States) | 42 | |
200 | AMERISAFE Inc. (United States) | 12 | |
19,927 | Direct Line Insurance Group plc (United Kingdom) | 78 | |
290 | Erie Indemnity Co. Class A (United States) | 62 | |
1,665 | Gjensidige Forsikring ASA (Norway) | 38 | |
774 | Great-West Lifeco Inc. (Canada) | 22 | |
114 | Intact Financial Corp. (Canada) | 15 | |
1,170 | Mercury General Corp. (United States) | 73 | |
437 | Sun Life Financial Inc. (Canada) | 24 | |
2,416 | The Progressive Corp. (United States) | 243 | |
56 | Zurich Insurance Group AG (Switzerland) | 23 | |
769 | |||
INTERNET & DIRECT MARKETING RETAIL—0.3% | |||
853 | eBay Inc. (United States) | 48 | |
IT SERVICES—1.7% | |||
503 | Amdocs Ltd. (United States) | 39 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
IT SERVICES—Continued | |||
134 | CACI International Inc. (United States)* | $ 34 | |
300 | Fujitsu Ltd. (Japan) | 48 | |
174 | Jack Henry + Associates Inc. (United States) | 28 | |
228 | ManTech International Corp. (United States) | 19 | |
816 | Maximus Inc. (United States) | 75 | |
900 | Nomura Research Institute Ltd. (Japan) | 28 | |
1,457 | Western Union Co. (United States) | 37 | |
308 | |||
LEISURE PRODUCTS—0.6% | |||
500 | Sankyo Co. Ltd. (Japan) | 13 | |
287 | Sturm Ruger & Co. Inc. (United States) | 19 | |
1,610 | Thule Group AB (Sweden)1 | 73 | |
105 | |||
LIFE SCIENCES TOOLS & SERVICES—2.3% | |||
162 | Bio-Rad Laboratories Inc. (United States)* | 102 | |
118 | Tecan Group AG (Switzerland) | 57 | |
571 | Thermo Fisher Scientific Inc. (United States) | 269 | |
428 | |||
MACHINERY—2.1% | |||
702 | Cummins Inc. (United States) | 177 | |
886 | Graco Inc. (United States) | 68 | |
1,738 | Kone OYJ Class B (Finland) | 136 | |
381 | |||
MARINE—0.7% | |||
441 | Kuehne + Nagel International AG (Switzerland) | 132 | |
MEDIA—0.7% | |||
4,100 | Nippon Television Holdings Inc. (Japan) | 54 | |
2,920 | Quebecor Inc. (Canada) | 78 | |
132 | |||
METALS & MINING—2.4% | |||
9,799 | Fortescue Metals Group Ltd. (Australia) | 170 | |
2,983 | Rio Tinto Ltd. (Australia) | 277 | |
447 | |||
MULTILINE RETAIL—5.7% | |||
336 | Canadian Tire Corp. (Canada) | 54 | |
1,046 | Dollar General Corp. (United States) | 225 | |
2,429 | Dollarama Inc. (Canada) | 113 | |
17,332 | Harvey Norman Holdings Ltd. (Australia) | 70 | |
1,791 | Target Corp. (United States) | 371 | |
5,194 | Wesfarmers Ltd. (Australia) | 216 | |
1,049 | |||
MULTI-UTILITIES—0.2% | |||
1,346 | AGL Energy Ltd. (Australia) | 9 | |
4,113 | Hera SpA (Italy) | 17 | |
938 | National Grid plc (United Kingdom) | 12 | |
38 | |||
PAPER & FOREST PRODUCTS—0.7% | |||
1,463 | Holmen AB Class B (Sweden) | 69 | |
1,378 | Stella-Jones Inc. (Canada) | 58 | |
127 | |||
PERSONAL PRODUCTS—1.3% | |||
4,199 | Unilever plc (United Kingdom) | 245 |
11
Harbor Robeco Global Conservative Equities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
PHARMACEUTICALS—7.4% | |||
182 | Eli Lilly and Co. (United States) | $ 33 | |
1,229 | GlaxoSmithKline plc (United Kingdom) | 23 | |
2,027 | Johnson & Johnson (United States) | 330 | |
4,430 | Merck & Co. Inc. (United States) | 330 | |
3,443 | Novartis AG (Switzerland) | 294 | |
7,753 | Pfizer Inc. (United States) | 300 | |
154 | Roche Holding AG (Switzerland) | 50 | |
1,360 | |||
PROFESSIONAL SERVICES—0.6% | |||
1,220 | Thomson Reuters Corp. (Canada) | 113 | |
REAL ESTATE MANAGEMENT & DEVELOPMENT—0.1% | |||
174 | Swiss Prime Site AG (Switzerland) | 17 | |
ROAD & RAIL—2.2% | |||
4,694 | Aurizon Holdings Ltd. (Australia) | 14 | |
597 | Canadian Pacific Railway Ltd. (Canada) | 223 | |
871 | CSX Corp. (United States) | 88 | |
438 | Landstar System Inc. (United States) | 75 | |
400 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—2.1% | |||
614 | Intel Corp. (United States) | 35 | |
1,905 | Texas Instruments Inc. (United States) | 344 | |
379 | |||
SOFTWARE—6.0% | |||
831 | Check Point Software Technologies Ltd. (Israel)* | 97 | |
849 | Citrix Systems Inc. (United States) | 105 | |
2,039 | Microsoft Corp. (United States) | 514 | |
4,941 | Oracle Corp. (United States) | 375 | |
1,091 | |||
SPECIALTY RETAIL—3.1% | |||
23 | AutoZone Inc. (United States)* | 34 | |
1,488 | Best Buy Co. Inc. (United States) | 173 | |
711 | JB Hi-Fi Ltd. (Australia) | 25 | |
21,026 | Kingfisher plc (United Kingdom) | 104 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SPECIALTY RETAIL—Continued | |||
4,300 | K's Holdings Corp (Japan) | $ 59 | |
171 | Murphy USA Inc. (United States) | 24 | |
500 | Nitori Holdings Co. Ltd. (Japan) | 89 | |
600 | Shimamura Co. Ltd. (Japan) | 59 | |
567 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—3.0% | |||
720 | Apple Inc. (United States) | 95 | |
2,300 | FUJIFILM Holdings Corp. (Japan) | 149 | |
6,757 | HP Inc. (United States) | 230 | |
718 | Seagate Technology plc (United States) | 67 | |
541 | |||
THRIFTS & MORTGAGE FINANCE—0.8% | |||
5,262 | New York Community Bancorp Inc. (United States) | 63 | |
2,430 | Washington Federal Inc. (United States) | 79 | |
142 | |||
TRADING COMPANIES & DISTRIBUTORS—2.5% | |||
6,500 | ITOCHU Corp. (Japan) | 203 | |
6,600 | Mitsubishi Corp. (Japan) | 183 | |
240 | Watsco Inc. (United States) | 70 | |
456 | |||
WIRELESS TELECOMMUNICATION SERVICES—0.9% | |||
1,300 | KDDI Corp. (Japan) | 39 | |
2,460 | Rogers Communications Inc. (Canada) | 121 | |
160 | |||
TOTAL COMMON STOCKS | |||
(Cost $16,331) | 18,103 | ||
TOTAL INVESTMENTS—99.0% | |||
(Cost $16,331) | 18,103 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—1.0% | 177 | ||
TOTAL NET ASSETS—100.0% | $18,280 |
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of April 30, 2021 based on the inputs used to value them.
Asset Category | Quoted Prices Level 1 (000s) | Other Significant Observable Inputs Level 2 (000s) | Significant Unobservable Inputs Level 3 (000s) | Total (000s) | ||||
Common Stocks | ||||||||
Europe | $ 67 | $3,178 | $— | $ 3,245 | ||||
Middle East/Central Asia | 97 | — | — | 97 | ||||
North America | 11,990 | — | — | 11,990 | ||||
Pacific Basin | — | 2,771 | — | 2,771 | ||||
Total Investments in Securities | $12,154 | $5,949 | $— | $18,103 |
There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
12
Harbor Robeco Global Conservative Equities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
* | Non-income producing security |
1 | Securities purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At April 30, 2021, the aggregate value of these securities was $177 or 1% of net assets. |
The accompanying notes are an integral part of the Financial Statements.
13
Harbor Robeco International Conservative Equities Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
REGION BREAKDOWN (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | 5 Years | Annualized | |||||||
6 Months | Life of Fund | ||||||||||
Harbor Robeco International Conservative Equities Fund | |||||||||||
Retirement Class1 | 17.47% | 28.33% | N/A | 5.77% | |||||||
Institutional Class1 | 17.51 | 28.24 | N/A | 5.71 | |||||||
Investor Class1 | 17.34 | 27.79 | N/A | 5.34 | |||||||
Comparative Index | |||||||||||
MSCI EAFE (ND)1 | 28.84% | 39.88% | N/A | 12.86% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.45% (Net) and 3.67% (Gross) Retirement Class; 0.53% (Net) and 3.75% (Gross) Institutional Class; and 0.89% (Net) and 4.11% (Gross) Investor Class. The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
1 | The “Life of Fund” return as shown reflects the period 12/01/2019 through 04/30/2021. |
14
Harbor Robeco International Conservative Equities Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—97.7% | |||
Shares | Value | ||
AIR FREIGHT & LOGISTICS—3.7% | |||
1,384 | Bpost SA (Belgium)* | $ 15 | |
1,300 | Cia de Distribucion Integral Logista Holdings SA (Spain) | 27 | |
3,475 | CTT-Correios de Portugal SA (Portugal) | 16 | |
400 | Duskin Co. Ltd. (Japan) | 9 | |
6,499 | PostNL NV (Netherlands) | 34 | |
3,356 | Royal Mail plc (United Kingdom) | 23 | |
124 | |||
AUTOMOBILES—1.6% | |||
700 | Toyota Motor Corp. (Japan) | 52 | |
BANKS—1.2% | |||
1,670 | Mizuho Financial Group Inc. (Japan) | 23 | |
563 | Sydbank AS (Denmark) | 17 | |
40 | |||
BEVERAGES—0.8% | |||
147 | Carlsberg AS (Denmark) | 26 | |
BUILDING PRODUCTS—0.8% | |||
41 | Geberit AG (Switzerland) | 27 | |
CAPITAL MARKETS—5.1% | |||
368 | ASX Ltd. (Australia) | 21 | |
1,154 | CI Financial Corp. (Canada) | 19 | |
630 | Flow Traders (Netherlands)1 | 26 | |
2,285 | IG Group Holdings plc (United Kingdom) | 29 | |
628 | IGM Financial Inc. (Canada) | 22 | |
11,697 | Man Group plc (Jersey) | 27 | |
3,000 | Singapore Exchange Ltd. (Singapore) | 23 | |
167 | |||
CHEMICALS—1.3% | |||
8 | Givaudan SA (Switzerland) | 34 | |
554 | Kemira OYJ (Finland) | 9 | |
43 | |||
COMMERCIAL SERVICES & SUPPLIES—1.7% | |||
3,999 | Brambles Ltd. (Australia) | 32 | |
300 | Secom Co. Ltd. (Japan) | 25 | |
57 | |||
CONSTRUCTION & ENGINEERING—0.8% | |||
1,500 | Kandenko Co. Ltd. (Japan) | 13 | |
800 | Kinden Corp. (Japan) | 14 | |
27 | |||
DISTRIBUTORS—0.4% | |||
131 | D'ieteren SA (Belgium) | 14 | |
DIVERSIFIED FINANCIAL SERVICES—1.7% | |||
1,312 | Plus500 Ltd. (United Kingdom) | 26 | |
83 | Sofina SA (Belgium) | 31 | |
57 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—6.6% | |||
1,776 | Deutsche Telekom AG (Germany) | 34 | |
21,000 | HKT Trust & HKT Ltd Stapled Security (Hong Kong) | 30 | |
31,706 | PCCW Ltd. (Hong Kong) | 18 | |
1,345 | Proximus SADP (Belgium) | 29 | |
6,575 | Spark New Zealand Ltd. (New Zealand) | 21 | |
40 | Swisscom AG (Switzerland) | 22 | |
6,163 | Telefonica Deutschland Holding AG (Germany) | 18 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
DIVERSIFIED TELECOMMUNICATION SERVICES—Continued | |||
1,448 | Telenor ASA (Norway) | $ 26 | |
4,713 | Telia Co. AB (Sweden) | 19 | |
217 | |||
ELECTRIC UTILITIES—3.3% | |||
10,309 | AusNet Services (Australia) | 15 | |
732 | Endesa SA (Spain) | 19 | |
962 | Hydro One Ltd. (Canada)1 | 23 | |
3,279 | Iberdrola SA (Spain) | 45 | |
1,000 | Power Assets Holdings Ltd. (Hong Kong) | 6 | |
108 | |||
ELECTRICAL EQUIPMENT—1.0% | |||
567 | Signify NV (Netherlands)1 | 32 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—0.8% | |||
500 | Canon Marketing Japan Inc. (Japan) | 12 | |
100 | Hirose Electric Co. Ltd. (Japan) | 16 | |
28 | |||
ENTERTAINMENT—1.6% | |||
1,550 | Vivendi SA (France) | 54 | |
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—2.2% | |||
3,888 | BWP Trust (Australia) | 12 | |
9,400 | Mapletree Industrial Trust (Singapore)* | 20 | |
10 | Mori Trust Sogo Inc. (Japan) | 14 | |
6,666 | Supermarket Income REIT plc (United Kingdom) | 11 | |
444 | Warehouses de Pauw CVA (Belgium) | 16 | |
73 | |||
FOOD & STAPLES RETAILING—9.5% | |||
722 | Axfood AB (Sweden) | 18 | |
2,118 | Coles Group Ltd. (Australia) | 27 | |
350 | Colruyt SA (Belgium) | 21 | |
453 | ICA Gruppen AB (Sweden) | 21 | |
1,064 | Kesko OYJ Class B (Finland) | 32 | |
1,853 | Koninklijke Ahold Delhaize NV (Netherlands) | 50 | |
300 | Lawson Inc. (Japan) | 13 | |
371 | Loblaw Cos. Ltd. (Canada) | 21 | |
412 | Metro Inc. (Canada) | 19 | |
300 | Sugi Holdings Co. Ltd. (Japan) | 23 | |
500 | Sundrug Co. Ltd. (Japan) | 17 | |
1,716 | Woolworths Group Ltd. (Australia) | 52 | |
314 | |||
FOOD PRODUCTS—4.3% | |||
1,700 | Ajinomoto Co. Inc. (Japan) | 34 | |
3 | Chocoladefabriken Lindt & Spruengli AG (Switzerland)* | 28 | |
300 | Nissin Foods Holdings Co. Ltd. (Japan) | 21 | |
3,893 | Orkla ASA (Norway) | 40 | |
500 | Toyo Suisan Kaisha Ltd. (Japan) | 20 | |
143 | |||
GAS UTILITIES—1.0% | |||
500 | Osaka Gas Co. Ltd. (Japan) | 10 | |
4,095 | Snam SpA (Italy) | 23 | |
33 | |||
HEALTH CARE EQUIPMENT & SUPPLIES—1.2% | |||
1,009 | Fisher & Paykel Healthcare Corp. Ltd. (New Zealand) | 26 | |
400 | H.U. Group Holdings Inc. (Japan) | 13 | |
39 |
15
Harbor Robeco International Conservative Equities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
HEALTH CARE PROVIDERS & SERVICES—1.3% | |||
222 | Galenica AG (Switzerland)1 | $ 15 | |
977 | Sonic Healthcare Ltd. (Australia) | 27 | |
42 | |||
HOUSEHOLD DURABLES—2.5% | |||
639 | De'Longhi SpA (Italy) | 28 | |
200 | Rinnai Corp. (Japan) | 20 | |
1,700 | Sekisui House Ltd. (Japan) | 35 | |
83 | |||
HOUSEHOLD PRODUCTS—1.7% | |||
620 | Reckitt Benckiser Group plc (United Kingdom) | 55 | |
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS—0.8% | |||
1,602 | TransAlta Renewables Inc. (Canada) | 25 | |
INSURANCE—8.4% | |||
675 | Admiral Group plc (United Kingdom) | 29 | |
338 | Ageas (Belgium) | 20 | |
164 | Allianz SE (Germany) | 43 | |
5,018 | Direct Line Insurance Group plc (United Kingdom) | 20 | |
1,586 | Gjensidige Forsikring ASA (Norway) | 36 | |
14,755 | Medibank Pvt Ltd. (Australia) | 35 | |
78 | Muenchener Rueckversicherungs-Gesellschaft AG (Germany) | 23 | |
398 | Sun Life Financial Inc. (Canada) | 21 | |
6,200 | Unipolsai Assicurazioni SpA (Italy) | 19 | |
77 | Zurich Insurance Group AG (Switzerland) | 32 | |
278 | |||
IT SERVICES—0.8% | |||
900 | Nomura Research Institute Ltd. (Japan) | 28 | |
LEISURE PRODUCTS—0.7% | |||
900 | Sankyo Co. Ltd. (Japan) | 23 | |
MACHINERY—1.5% | |||
625 | Kone OYJ Class B (Finland) | 49 | |
MEDIA—0.4% | |||
2,800 | Sky Perfect Jsat Holdings Inc. (Japan) | 12 | |
METALS & MINING—4.3% | |||
3,784 | Fortescue Metals Group Ltd. (Australia) | 66 | |
821 | Rio Tinto Ltd. (Australia) | 76 | |
142 | |||
MULTILINE RETAIL—2.2% | |||
1,761 | Wesfarmers Ltd. (Australia) | 73 | |
MULTI-UTILITIES—1.6% | |||
1,442 | AGL Energy Ltd. (Australia) | 10 | |
4,129 | Hera SpA (Italy) | 17 | |
2,099 | National Grid plc (United Kingdom) | 26 | |
53 | |||
PAPER & FOREST PRODUCTS—0.4% | |||
280 | Holmen AB Class B (Sweden) | 13 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
PHARMACEUTICALS—5.4% | |||
1,682 | GlaxoSmithKline plc (United Kingdom) | $ 31 | |
496 | Novartis AG (Switzerland) | 42 | |
232 | Novo Nordisk AS (Denmark) | 17 | |
1,100 | Ono Pharmaceutical Co. Ltd. (Japan) | 28 | |
139 | Roche Holding AG (Switzerland) | 45 | |
149 | Sanofi SA (France) | 16 | |
179 | |||
REAL ESTATE MANAGEMENT & DEVELOPMENT—1.3% | |||
600 | Goldcrest Co. Ltd. (Japan) | 9 | |
139 | PSP Swiss Property AG (Switzerland) | 17 | |
186 | Swiss Prime Site AG (Switzerland) | 18 | |
44 | |||
ROAD & RAIL—0.4% | |||
4,989 | Aurizon Holdings Ltd. (Australia) | 14 | |
SOFTWARE—1.1% | |||
296 | Check Point Software Technologies Ltd. (Israel)* | 35 | |
SPECIALTY RETAIL—5.9% | |||
1,124 | Bilia AB Class A (Sweden) | 20 | |
1,400 | EDION Corp. (Japan) | 15 | |
142 | Fielmann AG (Germany) | 11 | |
714 | JB Hi-Fi Ltd. (Australia) | 25 | |
8,263 | Kingfisher plc (United Kingdom) | 41 | |
300 | Kohnan Shoji Co. Ltd. (Japan) | 8 | |
1,500 | K's Holdings Corp. (Japan) | 20 | |
200 | Nitori Holdings Co. Ltd. (Japan) | 36 | |
200 | Shimamura Co. Ltd. (Japan) | 20 | |
196 | |||
TOBACCO—1.3% | |||
2,300 | Japan Tobacco Inc. (Japan) | 43 | |
TRADING COMPANIES & DISTRIBUTORS—2.4% | |||
2,100 | ITOCHU Corp. (Japan) | 65 | |
700 | Mitsui & Co. Ltd. (Japan) | 15 | |
80 | |||
WIRELESS TELECOMMUNICATION SERVICES—2.7% | |||
775 | Freenet AG (Germany) | 19 | |
1,700 | KDDI Corp. (Japan) | 52 | |
9,652 | Vodafone Group plc (United Kingdom) | 18 | |
89 | |||
TOTAL COMMON STOCKS | |||
(Cost $2,926) | 3,231 | ||
TOTAL INVESTMENTS—97.7% | |||
(Cost $2,926) | 3,231 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—2.3% | 75 | ||
TOTAL NET ASSETS—100.0% | $3,306 |
16
Harbor Robeco International Conservative Equities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of April 30, 2021 based on the inputs used to value them.
Asset Category | Quoted Prices Level 1 (000s) | Other Significant Observable Inputs Level 2 (000s) | Significant Unobservable Inputs Level 3 (000s) | Total (000s) | ||||
Common Stocks | ||||||||
Europe | $ — | $1,659 | $— | $1,659 | ||||
Middle East/Central Asia | 35 | — | — | 35 | ||||
North America | 150 | — | — | 150 | ||||
Pacific Basin | — | 1,387 | — | 1,387 | ||||
Total Investments in Securities | $185 | $3,046 | $— | $3,231 |
There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
* | Non-income producing security |
1 | Securities purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At April 30, 2021, the aggregate value of these securities was $96 or 3% of net assets. |
The accompanying notes are an integral part of the Financial Statements.
17
Harbor Robeco US Conservative Equities Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
Sector Allocation (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | 5 Years | Annualized | |||||||
6 Months | Life of Fund | ||||||||||
Harbor Robeco US Conservative Equities Fund | |||||||||||
Retirement Class1 | 21.21% | 26.47% | N/A | 5.67% | |||||||
Institutional Class1 | 21.26 | 26.38 | N/A | 5.61 | |||||||
Investor Class1 | 21.05 | 26.02 | N/A | 5.29 | |||||||
Comparative Index | |||||||||||
S&P 5001 | 28.85% | 45.98% | N/A | 24.57% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.35% (Net) and 2.57% (Gross) Retirement Class; 0.43% (Net) and 2.65% (Gross) Institutional Class; and 0.79% (Net) and 3.01% (Gross) Investor Class. The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
1 | The “Life of Fund” return as shown reflects the period 12/01/2019 through 04/30/2021. |
18
Harbor Robeco US Conservative Equities Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—98.8% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—0.9% | |||
86 | Lockheed Martin Corp. | $ 33 | |
AIR FREIGHT & LOGISTICS—1.0% | |||
314 | CH Robinson Worldwide Inc. | 30 | |
50 | Expeditors International of Washington Inc. | 6 | |
36 | |||
BANKS—3.4% | |||
1,658 | Investors Bancorp Inc. | 24 | |
455 | JPMorgan Chase & Co. | 70 | |
539 | U.S. Bancorp. | 32 | |
126 | |||
BEVERAGES—1.3% | |||
326 | PepsiCo Inc. | 47 | |
BIOTECHNOLOGY—3.8% | |||
165 | Amgen Inc. | 40 | |
1,001 | Gilead Sciences Inc. | 63 | |
15 | Regeneron Pharmaceuticals Inc.* | 7 | |
148 | United Therapeutics Corp.* | 30 | |
140 | |||
BUILDING PRODUCTS—1.5% | |||
616 | Johnson Controls International plc | 38 | |
137 | Simpson Manufacturing Co. Inc. | 16 | |
54 | |||
CAPITAL MARKETS—1.4% | |||
207 | Moelis & Co. | 11 | |
1,402 | Virtu Financial Inc. | 42 | |
53 | |||
CHEMICALS—0.6% | |||
64 | Newmarket Corp. | 22 | |
COMMERCIAL SERVICES & SUPPLIES—1.3% | |||
790 | Rollins Inc. | 30 | |
148 | Waste Management Inc. | 20 | |
50 | |||
COMMUNICATIONS EQUIPMENT—1.3% | |||
924 | Cisco Systems Inc. | 47 | |
CONTAINERS & PACKAGING—0.7% | |||
178 | Aptargroup Inc. | 27 | |
DIVERSIFIED FINANCIAL SERVICES—1.6% | |||
213 | Berkshire Hathaway Inc. Class B* | 59 | |
DIVERSIFIED TELECOMMUNICATION SERVICES—5.7% | |||
1,952 | AT&T Inc. | 61 | |
1,662 | Liberty Global plc Class C* | 45 | |
1,833 | Verizon Communications Inc. | 106 | |
212 | |||
ELECTRIC UTILITIES—2.0% | |||
316 | Avangrid Inc. | 16 | |
608 | NextEra Energy Inc. | 47 | |
152 | Southern Co. | 10 | |
73 | |||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—0.6% | |||
255 | Plexus Corp.* | 24 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
ENTERTAINMENT—1.2% | |||
323 | Electronic Arts Inc. | $ 46 | |
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—4.1% | |||
1,350 | Easterly Government Properties Inc. | 29 | |
88 | EastGroup Properties Inc. | 14 | |
1,023 | Equity Commonwealth* | 29 | |
2,030 | Lexington Realty Trust | 25 | |
307 | Life Storage Inc. | 30 | |
390 | Terreno Realty Corp. | 25 | |
152 | |||
FOOD & STAPLES RETAILING—3.6% | |||
39 | Casey's General Stores Inc. | 9 | |
1,255 | Kroger Co. | 46 | |
1,117 | Sprouts Farmers Market Inc.* | 28 | |
352 | Walmart Inc. | 49 | |
132 | |||
FOOD PRODUCTS—4.5% | |||
594 | Campbell Soup Co. | 28 | |
931 | Flowers Foods Inc. | 22 | |
166 | General Mills Inc. | 10 | |
169 | Hershey Co. | 28 | |
670 | Hormel Foods Corp. | 31 | |
302 | JM Smucker Co. | 40 | |
113 | John B Sanfilippo & Son Inc. | 10 | |
169 | |||
HEALTH CARE EQUIPMENT & SUPPLIES—1.5% | |||
113 | Baxter International Inc. | 10 | |
356 | Medtronic plc | 46 | |
56 | |||
HEALTH CARE PROVIDERS & SERVICES—1.7% | |||
52 | Chemed Corp. | 25 | |
348 | DaVita Inc.* | 40 | |
65 | |||
HOUSEHOLD DURABLES—2.3% | |||
247 | Garmin Ltd. | 34 | |
160 | Helen of Troy Ltd.* | 34 | |
82 | Whirlpool Corp. | 19 | |
87 | |||
HOUSEHOLD PRODUCTS—5.0% | |||
164 | Church & Dwight Co. Inc. | 14 | |
478 | Colgate-Palmolive Co. | 39 | |
204 | Kimberly-Clark Corp. | 27 | |
783 | Procter & Gamble Co. | 104 | |
184 | |||
INSURANCE—4.4% | |||
495 | Aflac Inc. | 27 | |
358 | Allstate Corp. | 45 | |
86 | Erie Indemnity Co. Class A | 18 | |
165 | Hanover Insurance Group Inc. | 23 | |
106 | Marsh & McLennan Companies | 14 | |
542 | MetLife Inc. | 35 | |
162 | |||
INTERNET & DIRECT MARKETING RETAIL—0.7% | |||
494 | eBay Inc. | 28 |
19
Harbor Robeco US Conservative Equities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
IT SERVICES—5.9% | |||
277 | Akamai Technologies Inc.* | $ 30 | |
510 | Amdocs Ltd. | 39 | |
94 | CACI International Inc.* | 24 | |
315 | Genpact Ltd. | 15 | |
404 | ManTech International Corp. | 34 | |
119 | Maximus Inc. | 11 | |
200 | Paychex Inc. | 20 | |
1,877 | Western Union Co. | 48 | |
221 | |||
LIFE SCIENCES TOOLS & SERVICES—0.6% | |||
164 | Agilent Technologies Inc. | 22 | |
MACHINERY—0.2% | |||
36 | Cummins Inc. | 9 | |
MEDIA—2.1% | |||
448 | Comcast Corp. | 25 | |
646 | Omnicom Group Inc. | 53 | |
78 | |||
METALS & MINING—0.8% | |||
191 | Reliance Steel & Aluminum Co. | 31 | |
MULTILINE RETAIL—3.7% | |||
293 | Dollar General Corp. | 63 | |
362 | Target Corp. | 75 | |
138 | |||
MULTI-UTILITIES—1.0% | |||
119 | Dominion Energy Inc. | 9 | |
437 | Public Service Enterprise Group Inc. | 28 | |
37 | |||
PHARMACEUTICALS—7.8% | |||
634 | Johnson & Johnson | 103 | |
1,184 | Merck & Co. Inc. | 88 | |
2,535 | Pfizer Inc. | 98 | |
289 | |||
PROFESSIONAL SERVICES—0.6% | |||
120 | Verisk Analytics Inc. | 23 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
ROAD & RAIL—2.6% | |||
159 | Kansas City Southern | $ 47 | |
192 | Landstar System Inc. | 33 | |
638 | Schneider National Inc. Class B | 15 | |
95 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—3.0% | |||
42 | Broadcom Inc. | 19 | |
896 | Intel Corp. | 52 | |
220 | Texas Instruments Inc. | 40 | |
111 | |||
SOFTWARE—6.3% | |||
396 | Microsoft Corp. | 100 | |
939 | Nortonlifelock Inc. | 20 | |
1,490 | Oracle Corp. | 113 | |
233 | |||
SPECIALTY RETAIL—3.8% | |||
475 | Best Buy Co. Inc. | 55 | |
602 | Buckle Inc. | 25 | |
191 | Murphy USA Inc. | 27 | |
60 | O'Reilly Automotive Inc.* | 33 | |
140 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—4.0% | |||
1,012 | Apple Inc. | 133 | |
393 | HP Inc. | 14 | |
147 | |||
THRIFTS & MORTGAGE FINANCE—0.3% | |||
788 | Northwest Bancshares Inc. | 11 | |
TOTAL COMMON STOCKS | |||
(Cost $3,190) | 3,669 | ||
TOTAL INVESTMENTS—98.8% | |||
(Cost $3,190) | 3,669 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—1.2% | 43 | ||
TOTAL NET ASSETS—100.0% | $3,712 |
FAIR VALUE MEASUREMENTS
All investments at April 30, 2021 (as disclosed in the preceding Portfolio of Investments) were classified as Level 1. There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
* | Non-income producing security |
The accompanying notes are an integral part of the Financial Statements.
20
Harbor Robeco Core Equity Funds
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Robeco Institutional Asset Management US Inc.
230 Park Avenue
Suite 3330
Suite 3330
New York, NY 10169
Portfolio Managers
Wilma de Groot, PhD, CFA
Since 2019
Tim Dröge
Since 2019
Since 2019
Machiel Zwanenburg
Since 2019
Since 2019
Jan de Koning, CFA, CAIA
Since 2019
Han van der Boon
Since 2019
Since 2019
Thijs van der Valk
Since 2019
Since 2019
Yaowei Xu
Since 2019
Since 2019
Robeco Institutional Asset Management US Inc. (“RIAM US”) has subadvised the Fund since 2019.
Investment Objective
The Fund seeks long-term growth of capital.
Wilma de Groot, PhD,
CFA
CFA
Tim Dröge
Machiel Zwanenburg
Jan de Koning, CFA,
CAIA
CAIA
Han van der Boon
Thijs van der Valk
Yaowei Xu
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
Emerging equity markets experienced a strong end to 2020. A difference with previous quarters was the average performance of the Chinese market, which outperformed strongly in the first three quarters of 2020. The main reason for the average performance in the fourth quarter was the 20% decline in Alibaba’s market value as Chinese authorities increased pressures on the internet giant, which neutralized the stellar performance of other Chinese growth stocks such as Pinduoduo and electric vehicle producer NIO. Highest country returns were posted by South Korea and Brazil. The Korean market rally was driven a 40% return for index heavyweights Samsung and SK Hynix, while the beaten-down Brazilian market recovered some of its previous losses with 50%+ returns for banks such as Itau Unibanco and Banco Bradesco and for commodity stocks such as Vale and Petrobras, helped by the positive vaccine news, which sparked a worldwide rally for banking and energy stocks. Moreover, cyclical sectors such as IT, Materials and Industrials clearly showed higher returns than more defensive sectors.
In the first quarter of 2021, the rally of the large Taiwanese tech stocks continued as earnings were revised upwards, but investors fell out of love with Chinese online platform stocks such as JD.com, Pinduoduo, Meituan, Tal Education and New Oriental Education (the latter sold off on potential new online regulation). The South African market rebounded as chemicals giant Sasol recovered some of its previous heavy losses, while other large commodity stocks such as Lukoil and Vale profited from the reflation theme. The Brazilian market remains under pressure, as COVID-19 continues to hit the country hard. Moreover, Petrobras lost significant market value as the company clashed with the government on fuel price policies. From a factor perspective, the weakest Q1 2020 factors made the biggest rebound in Q1 2021. Small caps, high-yielding and value stocks profited from the broader reflation trade with investors banking on the path to normalization. The momentum factor ended the quarter negatively as it is heavy on the Chinese platform stocks.
April will not be remembered as an eventful month for equities, as investors are awaiting more earnings results and the looming reopening of the world economy. The MSCI World (ND) Index and the S&P 500 Index did not experience a single day with a loss higher than 1%, while the MSCI Emerging Markets (ND) Index had just one, on the last business day of the month. Emerging Markets equities underperformed Developed Markets equities as several large index stocks such as Samsung, Taiwan Semi, Hon Hai Precision Industries, Alibaba and JD.com showed unexciting to negative returns. The MSCI Emerging Markets (ND) Index rose 1.5% in local terms, and 2.5% in USD terms, due to the weaker USD after several strong months for the currency. Downward pressures came from Russian oil giant Tatneft (after announcing lower dividends), Korean health care company Celltrion, and Mexican copper producer Grupo Mexico. By contrast, South African chemicals producer Sasol and Brazilian mining company Vale continued their positive momentum.
Performance
Harbor Robeco Emerging Markets Active Equities Fund returned 26.85% (Retirement Class), 26.76% (Institutional Class) and 26.47% (Investor Class) while the MSCI Emerging Markets (ND) Index returned 22.95% for the six-month period ended April 30, 2021. Therefore, the Fund
21
Harbor Robeco Core Equity Funds
Manager’s Commentary—Continued
Manager’s Commentary—Continued
outperformed its benchmark over this period. The Fund’s exposure to the value factor contributed the most to the outperformance, the momentum and analyst revisions factors also had a positive impact, while the quality factor had a negative contribution. The short-term indicator that the strategy uses to time trades also had a positive impact on returns.
Given the small country and sector deviations, and our bottom-up stock selection process, selection effects within these segments typically dominate allocation effects, in this period the strategy achieved positive selection within most sectors. Selection within Industrials, Consumer Discretionary and Information Technology added the most to the relative returns. Sector allocation effects were also positive, with the exception of our underweight in Materials which detracted. In terms of countries, both selection and allocation effects added to the relative returns. Selection within China and Taiwan had the largest positive impact, and most country allocations were additive. On the negative side, selection within Malayesia was a detractor.
In terms of individual securities in the portfolio, the highest positive contributions came from overweights in Evergreen Marine Corp. and Yang Ming Marine Transport Corp, and the highest negative contributions came from an overweight in Hartalega Holdings Bhd. and an overweight in Pinduoduo, Inc.
Outlook
2020 was a volatile year for equity markets and factor strategies. Our Emerging Markets Active Equities strategy underperformed its benchmark primarily due to a negative contribution of the value and quality factors and a lack of sufficient offsetting positive performance contribution of the momentum factors. The first quarter of 2021 has seen a strong rotation in factor performance, which benefited our strategy. The markets are currently trading at historically high valuations while interest rates and inflation expectations are trending higher. A continuation of this trend may set the stage for a further outperformance of the value factor. We are cautious when it comes to factor timing, as it has proven to be challenging in the short-term. However, irrespective of the macro conditions of 2021, we believe an allocation towards value makes sense from a valuation perspective and expect good days ahead for our integrated multi-factor strategy.
This report contains the current opinions of Robeco Institutional Asset Management US Inc. as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Investing in international and emerging markets poses special risks, including potentially greater price volatility due to social, political and economic factors, as well as currency exchange rate fluctuations. These risks are more severe for securities of issuers in emerging market regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
Equity securities, such as common stocks, are affected by company specific events and by movements in the overall stock markets in which those securities principally trade, among other factors. An adverse company specific event, or downturn in those stock markets, can depress the value of a particular company’s equity securities. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
22
Harbor Robeco Emerging Markets Active Equities Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
REGION BREAKDOWN (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | 5 Years | Annualized | |||||||
6 Months | Life of Fund | ||||||||||
Harbor Robeco Emerging Markets Active Equities Fund | |||||||||||
Retirement Class1 | 26.85% | 49.68% | N/A | 20.52% | |||||||
Institutional Class1 | 26.76 | 49.75 | N/A | 20.45 | |||||||
Investor Class1 | 26.47 | 49.13 | N/A | 19.98 | |||||||
Comparative Index | |||||||||||
MSCI Emerging Markets (ND)1 | 22.95% | 48.71% | N/A | 22.53% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.79% (Net) and 5.23% (Gross) Retirement Class; 0.87% (Net) and 5.31% (Gross) Institutional Class; and 1.23% (Net) and 5.67% (Gross) Investor Class. The net expense ratios reflect an expense limitation agreement (excluding interest expense and acquired fund fees and expenses, if any) effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
1 | The “Life of Fund” return as shown reflects the period 12/01/2019 through 04/30/2021. |
23
Harbor Robeco Emerging Markets Active Equities Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—95.1% | |||
Shares | Value | ||
AIR FREIGHT & LOGISTICS—0.2% | |||
19,000 | Sinotrans Ltd. (China) | $ 9 | |
AUTO COMPONENTS—1.9% | |||
16,000 | Dongfeng Motor Group Co. Ltd. (China)* | 14 | |
800 | Fuyao Glass Industry Group Co. Ltd. (China)1 | 5 | |
457 | Hankook Tire & Technology Co. Ltd. (South Korea) | 20 | |
53 | Hyundai Mobis Co. Ltd. (South Korea) | 13 | |
369 | Shandong Linglong Tyre Co. Ltd. (China) | 3 | |
11,900 | Sri Trang Agro-Industry PCL NVDR (Thailand)*,2 | 18 | |
4,000 | Tianneng Power International Ltd. (China) | 7 | |
80 | |||
AUTOMOBILES—2.5% | |||
11,000 | BAIC Motor Corp. Ltd. (China)1 | 4 | |
7,000 | Great Wall Motor Co. Ltd. Class H (China)* | 17 | |
369 | KIA Motors Corp. (South Korea) | 26 | |
1,315 | Mahindra & Mahindra Ltd. GDR (India)2 | 13 | |
1,448 | Tata Motors Ltd. ADR (India)*,2 | 28 | |
861 | Tofas Turk Otomobil Fabrikasi AS (Turkey) | 3 | |
6,000 | Yadea Group Holdings Ltd. (China)1 | 13 | |
104 | |||
BANKS—14.0% | |||
2,152 | Abu Dhabi Islamic Bank PJSC (United Arab Emirates) | 3 | |
68,000 | Agricultural Bank of China Ltd. (China) | 26 | |
591 | Al Rajhi Bank (Saudi Arabia) | 16 | |
4,100 | Banco Do Brasil SA (Brazil)* | 22 | |
2,738 | Banco Santander Brasil SA ADR (Brazil)2 | 20 | |
2,100 | Bangkok Bank PCL (Thailand) | 8 | |
2,007 | Bank Albilad (Saudi Arabia)* | 20 | |
16,900 | Bank Mandiri Persero TBK PT (Indonesia) | 7 | |
8,900 | Bank of Chengdu Co. Ltd. (China) | 16 | |
80,000 | Bank of China Ltd. (China) | 32 | |
26,000 | Bank of Communications Co. Ltd. (China) | 17 | |
3,850 | Bank of Jiangsu Co. Ltd. (China) | 4 | |
3,200 | Bank of Shanghai Co. Ltd. (China) | 4 | |
3,060 | BNK Financial Group Inc. (South Korea) | 21 | |
36,000 | China Citic Bank Corp. Ltd. (China) | 19 | |
53,000 | China Construction Bank Corp. (China) | 42 | |
15,000 | China Everbright Bank Co. Ltd. (China) | 6 | |
31,500 | China Minsheng Banking Corp Ltd. (China) | 16 | |
25,000 | Chongqing Rural Commercial Bank Co. Ltd. (China) | 11 | |
9,000 | CTBC Financial Holding Co. Ltd. (Taiwan) | 7 | |
1,382 | DGB Financial Group Inc. (South Korea) | 11 | |
653 | Hana Financial Group Inc. (South Korea) | 27 | |
500 | ICICI Bank Ltd. ADR (India)*,2 | 8 | |
30,000 | Industrial & Commercial Bank of China Ltd. (China) | 19 | |
1,149,587 | Itau Corpbanca Chile SA (Chile)* | 4 | |
1,385 | JB Financial Group Co. Ltd. (South Korea) | 9 | |
1,100 | Kasikornbank PCL (Thailand) | 5 | |
564 | KB Financial Group Inc. (South Korea) | 28 | |
9,300 | Kiatnakin Bank PCL NVDR (Thailand)2 | 17 | |
10,889 | Masraf Al Rayan Q.S.C (Qatar) | 13 | |
945 | Moneta Money Bank AS (Czech Republic)*,1 | 3 | |
22,000 | Postal Savings Bank of China (China)1 | 14 | |
6,700 | RHB Bank BHD (Malaysia) | 9 | |
3,167 | Riyad Bank (Saudi Arabia) | 22 | |
947 | Saudi National Bank (Saudi Arabia) | 14 | |
1,180 | Sberbank of Russia PJSC ADR (Russia)2 | 19 | |
320 | Shinhan Financial Group Co. Ltd. (South Korea) | 11 | |
1,400 | Siam Commercial Bank PCL NVDR (Thailand)2 | 5 | |
16,000 | SinoPac Financial Holdings Co. Ltd. (Taiwan) | 8 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
BANKS—Continued | |||
120 | State Bank of India GDR (India)*,2 | $ 6 | |
13,700 | Thanachart Capital PCL NVDR (Thailand)2 | 16 | |
585 | |||
BEVERAGES—0.7% | |||
1,787 | Anadolu EFES Biracilik VE Malt Sanayii AS (Turkey) | 5 | |
400 | Shanxi Xinghuacun Fen Wine Factory Co. Ltd. (China) | 25 | |
30 | |||
BUILDING PRODUCTS—0.2% | |||
94 | LG Hausys Ltd. (South Korea) | 8 | |
CAPITAL MARKETS—1.5% | |||
15,000 | Capital Securities Corp. (Taiwan) | 10 | |
29,500 | China Galaxy Securities Co. Ltd. (China) | 17 | |
5,000 | CSC Financial Co. Ltd. (China)1 | 6 | |
2,800 | GF Securities Co. Ltd. (China) | 4 | |
2,553 | Investec Ltd. (South Africa) | 10 | |
6,500 | Legend Holdings Corp. (China)1 | 11 | |
4,000 | Orient Securities Co. Ltd. (China)1 | 3 | |
61 | |||
CHEMICALS—1.6% | |||
46 | Korea Petrochemical Industries Co. Ltd. (South Korea) | 13 | |
100 | Kumho Petrochemical Co. Ltd. (South Korea) | 23 | |
65 | LOTTE Fine Chemical Co. Ltd. (South Korea) | 4 | |
7,700 | Orbia Advance Corp. SAB de CV (Mexico) | 21 | |
3,000 | Xinjiang Zhongtai Chemical Co. Ltd. (China) | 5 | |
66 | |||
CONSTRUCTION & ENGINEERING—1.0% | |||
24,000 | China Railway Group Ltd. (China) | 12 | |
364 | HDC Hyundai Development Co-Engineering & Construction (South Korea) | 9 | |
400 | Larsen & Toubro Ltd. GDR (India)*,2 | 7 | |
39,000 | Metallurgical Corp of China Ltd. (China) | 9 | |
7,500 | Sinopec Engineering Group Co. Ltd. (China) | 5 | |
42 | |||
CONSTRUCTION MATERIALS—0.9% | |||
1,000 | Anhui Conch Cement Co. Ltd. (China) | 6 | |
10,000 | China National Building Material Co. Ltd. (China) | 14 | |
267 | City Cement Co. (Saudi Arabia) | 2 | |
14,900 | Tipco Asphalt PCL NVDR (Thailand)2 | 10 | |
42,000 | West China Cement Ltd. (China) | 8 | |
40 | |||
CONSUMER FINANCE—0.2% | |||
500 | AEON Thana Sinsap Thailand PCL NVDR (Thailand)2 | 4 | |
169 | Samsung Card Co. Ltd. (South Korea) | 5 | |
9 | |||
DIVERSIFIED CONSUMER SERVICES—0.2% | |||
1,600 | Hang Zhou Great Star Industrial Co. Ltd. (China)* | 9 | |
DIVERSIFIED FINANCIAL SERVICES—0.2% | |||
1,200 | Krungthai Card PCL NVDR (Thailand)2 | 3 | |
7,000 | Yuanta Financial Holding Co. Ltd. (Taiwan) | 6 | |
9 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—1.9% | |||
1,019 | Hellenic Telecommunications Organization SA (Greece) | 17 | |
1,442 | KT Corp. ADR (South Korea)2 | 18 |
24
Harbor Robeco Emerging Markets Active Equities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
DIVERSIFIED TELECOMMUNICATION SERVICES—Continued | |||
1,900 | Megacable Holdings SAB de CV (Mexico) | $ 7 | |
4,781 | Ooredoo QPSC (Qatar) | 9 | |
6,200 | Telekom Malaysia BHD (Malaysia)* | 9 | |
3,115 | Telkom SA SOC Ltd. (South Africa) | 8 | |
12,462 | Turk Telekomunikasyon AS (Turkey) | 10 | |
78 | |||
ELECTRIC UTILITIES—0.6% | |||
2,606 | Cia Paranaense de Energia ADR (Brazil)*,2 | 14 | |
1,400 | Transmissora Alianca de Energia Eletrica SA (Brazil) | 11 | |
25 | |||
ELECTRICAL EQUIPMENT—0.3% | |||
3,000 | China High Speed Transmission Equipment Group Co. Ltd. (China)* | 2 | |
8,000 | Shanghai Electric Group Co. Ltd. (China) | 3 | |
5,000 | TECO Electric and Machinery Co. Ltd. (Taiwan) | 6 | |
11 | |||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—3.1% | |||
200 | Delta Electronics Thailand PCL NVDR (Thailand)2 | 2 | |
1,500 | Hana Microelectronics PCL NVDR (Thailand)2 | 3 | |
10,000 | Hon Hai Precision Industry Co. Ltd. (Taiwan) | 41 | |
28,000 | Innolux Corp. (Taiwan)* | 30 | |
3,500 | Kingboard Holdings Ltd. (China) | 21 | |
14 | LG Innotek Co. Ltd. (South Korea) | 2 | |
4,000 | PAX Global Technology Ltd. (China) | 4 | |
3,000 | Tripod Technology Corp (Taiwan) | 15 | |
405 | United Electronics Co. (Saudi Arabia) | 13 | |
131 | |||
ENTERTAINMENT—0.4% | |||
1,000 | Soft World International Corp. (Taiwan) | 4 | |
397 | Webzen Inc. (South Korea)* | 12 | |
16 | |||
FOOD & STAPLES RETAILING—1.2% | |||
9,112 | Cencosud SA (Chile) | 19 | |
105 | E-Mart Inc. (South Korea) | 16 | |
1,063 | ShopRite Holdings Ltd. (South Africa) | 10 | |
800 | Yixintang Pharmaceutical Group Co. Ltd. (China) | 5 | |
50 | |||
FOOD PRODUCTS—2.2% | |||
12,700 | Charoen Pokphand Foods NVDR PCL (Thailand)2 | 12 | |
6,000 | China Modern Dairy Holdings Ltd. (China)* | 2 | |
1,310 | Gruma SAB de CV (Mexico) | 14 | |
5,400 | Grupo Bimbo SAB de CV (Mexico) | 11 | |
261 | Halwani Brothers Co. (Saudi Arabia) | 7 | |
2,200 | JBS SA (Brazil) | 12 | |
5,000 | Marfrig Global Foods SA (Brazil)* | 18 | |
2,200 | Mega Lifesciences PCL NVDR (Thailand)2 | 2 | |
54,500 | Perusahaan Perkebunan London Sumatra Indonesia TBK PT (Indonesia) | 5 | |
6,800 | Thai Vegetable Oil PCL NVDR (Thailand)2 | 8 | |
91 | |||
GAS UTILITIES—0.1% | |||
65,400 | Perusahaan Gas Negara TBK PT (Indonesia) | 5 | |
HEALTH CARE EQUIPMENT & SUPPLIES—1.0% | |||
3,000 | Hartalega Holdings BHD (Malaysia) | 8 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES—Continued | |||
14,533 | Supermax Corp. BHD (Malaysia)* | $ 21 | |
8,600 | Top Glove Corp. BHD (Malaysia) | 12 | |
41 | |||
HEALTH CARE PROVIDERS & SERVICES—1.0% | |||
3,700 | Jointown Pharmaceutical Group Co. Ltd. (China)* | 10 | |
2,300 | Qualicorp Consultoria e Corretora de Seguros SA (Brazil)* | 12 | |
8,100 | Shanghai Pharmaceuticals Holding Co. Ltd. (China) | 18 | |
40 | |||
HOUSEHOLD DURABLES—2.1% | |||
3,950 | Arcelik AS (Turkey) | 16 | |
1,700 | Construtora Tenda SA (Brazil)* | 8 | |
3,000 | Even Construtora e Incorporadora SA (Brazil)* | 5 | |
2,500 | Hangzhou Robam Appliances Co. Ltd. (China) | 15 | |
161 | LG Electronics Inc. (South Korea) | 23 | |
11,527 | Skyworth Group Ltd. (China)* | 4 | |
2,700 | Suofeiya Home Collection Co. Ltd. (China) | 12 | |
5,000 | TCL Electronics Holdings Ltd. (China) | 4 | |
87 | |||
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS—0.4% | |||
2,000 | China Longyuan Power Group Corp. Ltd. (China) | 3 | |
34,592 | Colbun SA (Chile) | 6 | |
9,323 | Tauron Polska Energia SA (Poland)* | 8 | |
17 | |||
INDUSTRIAL CONGLOMERATES—0.2% | |||
7,000 | CITIC Ltd. (China) | 7 | |
1,000 | Shanghai Industrial Holdings Ltd. (Hong Kong) | 2 | |
9 | |||
INSURANCE—2.8% | |||
3,600 | BB Seguridade Participacoes SA (Brazil) | 15 | |
32,000 | China Reinsurance Group Corp. (China) | 3 | |
13,000 | Fubon Financial Holding Co. Ltd. (Taiwan) | 30 | |
1,767 | Korean Reinsurance Co. (South Korea) | 15 | |
3,200 | New China Life Insurance Co Ltd. (China) | 12 | |
18,299 | Old Mutual Ltd. (South Africa) | 16 | |
9,000 | People's Insurance Co Group of China Ltd. (China) | 3 | |
8,000 | PICC Property & Casualty Co. Ltd. (China) | 8 | |
500 | Ping An Insurance Group Co. of China Ltd. (China) | 5 | |
1,600 | Qualitas Controladora SAB de CV (Mexico) | 9 | |
116 | |||
INTERACTIVE MEDIA & SERVICES—6.2% | |||
193 | Baidu Inc. ADR (China)*,2 | 41 | |
58 | Naver Corp. (South Korea) | 19 | |
2,500 | Tencent Holdings Ltd. (China) | 199 | |
259 | |||
INTERNET & DIRECT MARKETING RETAIL—7.5% | |||
805 | Alibaba Group Holding Ltd. ADR (China)*,2 | 186 | |
34 | GS Home Shopping Inc. (South Korea) | 5 | |
56 | Hyundai Home Shopping Network Corp. (South Korea) | 4 | |
30 | JD.com Inc. ADR (China)*,2 | 2 | |
1,000 | Meituan Dianping Class B (China)*,1 | 38 | |
221 | Naspers Ltd. (South Africa) | 50 | |
929 | Vipshop Holdings Ltd. ADR (China)*,2 | 29 | |
314 |
25
Harbor Robeco Emerging Markets Active Equities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
IT SERVICES—2.3% | |||
3,079 | Infosys Ltd. ADR (India)2 | $ 56 | |
3,343 | Wipro Ltd. ADR (India)2 | 24 | |
250 | WNS Holdings Ltd. ADR (India)*,2 | 18 | |
98 | |||
MACHINERY—1.0% | |||
17,000 | Lonking Holdings Ltd. (China) | 7 | |
4,000 | Sinotruk Hong Kong Ltd. (Hong Kong) | 10 | |
234 | Turk Traktor VE Ziraat Makineleri AS (Turkey) | 6 | |
12,800 | Zoomlion Heavy Industry Science And Technology Co. Ltd. (China)* | 18 | |
41 | |||
MARINE—2.8% | |||
13,000 | China Shipping Container Lines Co. Ltd. (China) | 3 | |
14,500 | COSCO SHIPPING Holdings Co. Ltd. (China)* | 26 | |
1,623 | Costamare Inc. (Greece) | 17 | |
10,000 | Evergreen Marine Corp. Taiwan Ltd. (Taiwan)* | 28 | |
4,000 | SITC International Holdings Co. Ltd. (Hong Kong) | 15 | |
10,000 | Yang Ming Marine Transport Corp. (Taiwan)* | 28 | |
117 | |||
MEDIA—0.8% | |||
10,400 | China South Publishing & Media Group Co Ltd. (China) | 17 | |
11,000 | Focus Media Information Technology Co. Ltd. (China) | 18 | |
35 | |||
METALS & MINING—4.6% | |||
553 | African Rainbow Minerals Ltd. (South Africa) | 10 | |
10,000 | Angang Steel Co. Ltd. (China) | 7 | |
8,700 | Baoshan Iron + Steel Co. (China) | 12 | |
929 | CAP SA (Chile)* | 17 | |
10,000 | Jiangxi Copper Co. Ltd. (China) | 24 | |
210 | KGHM Polska Miedz SA (Poland)* | 11 | |
451 | Kumba Iron Ore Ltd. (South Africa) | 20 | |
65 | Novolipetsk Steel PJSC GDR (Russia)2 | 2 | |
288 | POSCO ADR (South Korea)2 | 23 | |
251 | Royal Bafokeng Platinum Ltd. (South Africa)* | 2 | |
5,990 | Shougang Fushan Resources Group Ltd. (Hong Kong) | 2 | |
2,000 | Tata Steel Ltd. GDR (India)*,2 | 28 | |
1,801 | Vale SA ADR (Brazil)*,2 | 36 | |
194 | |||
OIL, GAS & CONSUMABLE FUELS—4.7% | |||
87,600 | Adaro Energy TBK PT (Indonesia) | 8 | |
9,500 | AKR Corporindo TBK PT (Indonesia) | 2 | |
20,000 | China Coal Energy Co. Ltd. (China) | 11 | |
24,000 | China Petroleum & Chemical Corp. (China) | 12 | |
11,000 | China Shenhua Energy Co. Ltd. (China) | 23 | |
18,000 | COSCO SHIPPING Energy Transportation Co. Ltd. (China) | 8 | |
1,400 | Enauta Participacoes SA (Brazil) | 4 | |
260 | GS Holdings Corp. (South Korea) | 10 | |
3,300 | Indo Tambangraya Megah TBK PT (Indonesia) | 3 | |
188 | Lukoil PJSC ADR (Russia)2 | 15 | |
754 | Petroleo Brasileiro SA ADR (Brazil)2 | 6 | |
5,600 | PTT Exploration & Production PCL NVDR (Thailand)2 | 21 | |
763 | Reliance Industries Ltd. GDR (India)1,2 | 41 | |
15,530 | Shanxi Xishan Coal & Electricity Power Co. Ltd. (China) | 13 | |
16,000 | Yanzhou Coal Mining Co. Ltd. (China) | 19 | |
196 | |||
PAPER & FOREST PRODUCTS—0.4% | |||
12,000 | Nine Dragons Paper Holdings Ltd. (Bermuda) | 16 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
PERSONAL PRODUCTS—0.3% | |||
2,200 | By-Health Co. Ltd. (China) | $ 11 | |
PHARMACEUTICALS—1.3% | |||
400 | Dr. Reddy's Laboratories Ltd. ADR (India)2 | 28 | |
1,600 | Livzon Pharmaceutical Group Inc. (China) | 7 | |
5,000 | Shandong Buchang Pharmaceuticals Co. Ltd. (China) | 18 | |
53 | |||
PROFESSIONAL SERVICES—0.2% | |||
488 | Maharah Human Resources Co. (Saudi Arabia)* | 9 | |
REAL ESTATE MANAGEMENT & DEVELOPMENT—1.0% | |||
10,000 | Agile Group Holdings Ltd. (China) | 16 | |
11,000 | China Overseas Grand Oceans Group Ltd. (China) | 7 | |
36,000 | Gemdale Corp. (China) | 5 | |
4,000 | Greenland Hong Kong Holdings Ltd. (China) | 1 | |
16,000 | Shenzhen Investment Ltd. (Hong Kong) | 6 | |
36,000 | Yuexiu Property Co. Ltd. (Hong Kong) | 8 | |
43 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—8.8% | |||
130 | DB Hitek Co. Ltd. (South Korea) | 6 | |
2,000 | Flat Glass Group Co. Ltd. (China) | 6 | |
2,000 | Kinsus Interconnect Technology Corp. (Taiwan) | 7 | |
1,000 | Realtek Semiconductor Corp. (Taiwan)* | 19 | |
115 | Silicon Works Co. Ltd. (South Korea) | 10 | |
269 | SK Hynix Inc. (South Korea) | 31 | |
12,000 | Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan) | 253 | |
1,000 | Topco Scientific Co. Ltd. (Taiwan) | 5 | |
15,000 | United Microelectronics Corp. (Taiwan) | 30 | |
367 | |||
SPECIALTY RETAIL—1.4% | |||
400 | China International Travel Service Corp. Ltd. (China) | 19 | |
5,500 | China Yongda Automobiles Services Holdings Ltd. (China) | 10 | |
1,000 | EEKA Fashion Holdings Ltd. (China) | 1 | |
5,000 | HLA Corp. Ltd. (China) | 6 | |
215 | Jarir Marketing Co. (Saudi Arabia) | 11 | |
1,698 | Motus Holdings Ltd. (South Africa) | 11 | |
58 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—7.2% | |||
5,000 | Chicony Electronics Co. Ltd. (Taiwan) | 15 | |
23,000 | Compal Electronics Inc. (Taiwan) | 21 | |
8,000 | Getac Technology Corp. (Taiwan) | 16 | |
18,000 | Lenovo Group Ltd. (China) | 25 | |
9,000 | Lite-On Technology Corp. (Taiwan) | 20 | |
4,000 | Quanta Computer Inc. (Taiwan) | 14 | |
2,352 | Samsung Electronics Co Ltd. (South Korea) | 171 | |
15,000 | Wistron Corp. (Taiwan) | 18 | |
300 | |||
TEXTILES, APPAREL & LUXURY GOODS—1.1% | |||
40,000 | Bosideng International Holdings (China) | 20 | |
74 | Handsome Co. Ltd. (South Korea) | 3 | |
�� 17 | Hyosung TNC Corp. (South Korea) | 11 | |
7,500 | Zhejiang Semir Garment Co. Ltd. (China) | 14 | |
48 | |||
TRADING COMPANIES & DISTRIBUTORS—0.1% | |||
872 | Barloworld Ltd. (South Africa)* | 6 |
26
Harbor Robeco Emerging Markets Active Equities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
TRANSPORTATION INFRASTRUCTURE—0.4% | |||
8,000 | COSCO SHIPPING Ports Ltd. (China) | $ 7 | |
14,000 | Zhejiang Expressway Co. Class H (China) | 12 | |
19 | |||
WATER UTILITIES—0.3% | |||
4,000 | China Water Affairs Group Ltd. (China) | 3 | |
3,400 | Cia de Saneamento de Minas Gerais-Copasa (Brazil)* | 11 | |
14 | |||
WIRELESS TELECOMMUNICATION SERVICES—0.3% | |||
152 | PLDT Inc. ADR (Philippines)2 | 4 | |
4,627 | Veon Ltd. ADR (Netherlands)*,2 | 8 | |
12 | |||
TOTAL COMMON STOCKS | |||
(Cost $3,161) | 3,979 | ||
EXCHANGE-TRADED FUNDS—1.5% | |||
(Cost $54) | |||
Shares | |||
CAPITAL MARKETS—1.5% | |||
1,573 | iShares MSCI India ETF (India) | 65 | |
PREFERRED STOCKS—2.3% | |||
BANKS—0.2% | |||
2,100 | Banco Estado Rio Grande do Sul SA (Brazil)* | 5 | |
1,100 | Itausa - Investimentos Itau SA (Brazil) | 2 | |
7 |
PREFERRED STOCKS—Continued | |||
Shares | Value | ||
ELECTRIC UTILITIES—0.9% | |||
2,700 | Cia de Transmissao de Energia Eletrica Paulista (Brazil)* | $ 14 | |
9,500 | Cia Energetica de Minas Gerais (Brazil) | 24 | |
38 | |||
METALS & MINING—0.1% | |||
800 | Usinas Siderurgicas de Minas Gerais SA Usiminas (Brazil) | 3 | |
OIL, GAS & CONSUMABLE FUELS—0.4% | |||
2,144 | Petroleo Brasileiro SA ADR (Brazil)*,2 | 18 | |
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—0.6% | |||
415 | Samsung Electronics Co Ltd. (South Korea) | 27 | |
WATER UTILITIES—0.1% | |||
2,400 | Cia de Saneamento do Parana (Brazil)* | 2 | |
TOTAL PREFERRED STOCKS | |||
(Cost $95) | 95 | ||
TOTAL INVESTMENTS—98.9% | |||
(Cost $3,310) | 4,139 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—1.1% | 44 | ||
TOTAL NET ASSETS—100.0% | $4,183 |
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of April 30, 2021 based on the inputs used to value them.
Asset Category | Quoted Prices Level 1 (000s) | Other Significant Observable Inputs Level 2 (000s) | Significant Unobservable Inputs Level 3 (000s) | Total (000s) | ||||
Common Stocks | ||||||||
Africa | $ — | $ 143 | $— | $ 143 | ||||
Europe | 61 | 95 | — | 156 | ||||
Latin America | 302 | — | — | 302 | ||||
Middle East/Central Asia | 257 | 139 | — | 396 | ||||
Pacific Basin | 314 | 2,668 | — | 2,982 | ||||
Exchange-Traded Funds | ||||||||
Middle East/Central Asia | 65 | — | — | 65 | ||||
Preferred Stocks | ||||||||
Latin America | 68 | — | — | 68 | ||||
Pacific Basin | — | 27 | — | 27 | ||||
Total Investments in Securities | $1,067 | $3,072 | $— | $4,139 |
There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
27
Harbor Robeco Emerging Markets Active Equities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
* | Non-income producing security |
1 | Securities purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At April 30, 2021, the aggregate value of these securities was $138 or 3% of net assets. |
2 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
The accompanying notes are an integral part of the Financial Statements.
28
Harbor Robeco Funds
StatementS of Assets and Liabilities—April 30, 2021 (Unaudited)
StatementS of Assets and Liabilities—April 30, 2021 (Unaudited)
(All amounts in thousands, except per share amounts)
Harbor Robeco Emerging Markets Conservative Equities Fund | Harbor Robeco Global Conservative Equities Fund | Harbor Robeco International Conservative Equities Fund | Harbor Robeco US Conservative Equities Fund | Harbor Robeco Emerging Markets Active Equities Fund | ||||||
ASSETS | ||||||||||
Investments, at identified cost | $3,080 | $16,331 | $2,926 | $3,190 | $3,310 | |||||
Investments, at value | $3,613 | $18,103 | $3,231 | $3,669 | $4,139 | |||||
Cash | 34 | 89 | 1 | 16 | 13 | |||||
Foreign currency, at value (cost: $9, $20, $32, $0 and $3) | 9 | 20 | 32 | — | 3 | |||||
Receivables for: | ||||||||||
Dividends | 10 | 47 | 15 | 4 | 13 | |||||
Withholding tax | — | 5 | 3 | — | — | |||||
Prepaid registration fees | 22 | 22 | 22 | 22 | 22 | |||||
Other assets | 18 | 14 | 16 | 9 | 24 | |||||
Total Assets | 3,706 | 18,300 | 3,320 | 3,720 | 4,214 | |||||
LIABILITIES | ||||||||||
Accrued expenses: | ||||||||||
Management fees | 2 | 5 | 1 | 1 | 3 | |||||
Transfer agent fees | 1 | — | — | — | — | |||||
Other | 24 | 15 | 13 | 7 | 28 | |||||
Total Liabilities | 27 | 20 | 14 | 8 | 31 | |||||
NET ASSETS | $3,679 | $18,280 | $3,306 | $3,712 | $4,183 | |||||
Net Assets Consist of: | ||||||||||
Paid-in capital | $3,328 | $16,769 | $3,181 | $3,460 | $3,363 | |||||
Total distributable earnings | 351 | 1,511 | 125 | 252 | 820 | |||||
$3,679 | $18,280 | $3,306 | $3,712 | $4,183 | ||||||
NET ASSET VALUE PER SHARE BY CLASS | ||||||||||
Retirement Class | ||||||||||
Net assets | $1,835 | $16,358 | $1,614 | $1,737 | $2,079 | |||||
Shares of beneficial interest1 | 166 | 1,558 | 154 | 165 | 165 | |||||
Net asset value per share2 | $11.07 | $ 10.50 | $10.47 | $10.56 | $12.61 | |||||
Institutional Class | ||||||||||
Net assets | $1,806 | $ 1,888 | $1,660 | $1,929 | $2,062 | |||||
Shares of beneficial interest1 | 163 | 180 | 159 | 183 | 164 | |||||
Net asset value per share2 | $11.06 | $ 10.50 | $10.47 | $10.56 | $12.61 | |||||
Investor Class | ||||||||||
Net assets | $ 38 | $ 34 | $ 32 | $ 46 | $ 42 | |||||
Shares of beneficial interest1 | 3 | 3 | 3 | 4 | 3 | |||||
Net asset value per share2 | $11.04 | $ 10.48 | $10.45 | $10.57 | $12.58 |
1 | Par value $0.01 (unlimited authorizations) |
2 | Per share amounts can be recalculated to the amounts disclosed herein when total net assets and shares of beneficial interest are not rounded to thousands. |
The accompanying notes are an integral part of the Financial Statements.
30
Harbor Robeco Funds
StatementS of Operations—Period Ended April 30, 2021 (Unaudited)
StatementS of Operations—Period Ended April 30, 2021 (Unaudited)
(All amounts in thousands)
Harbor Robeco Emerging Markets Conservative Equities Fund | Harbor Robeco Global Conservative Equities Fund | Harbor Robeco International Conservative Equities Fund | Harbor Robeco US Conservative Equities Fund | Harbor Robeco Emerging Markets Active Equities Fund | |
Investment Income | |||||
Dividends | $ 43 | $ 230 | $ 64 | $ 41 | $ 46 |
Foreign taxes withheld | (5) | (14) | (7) | — | (5) |
Total Investment Income | 38 | 216 | 57 | 41 | 41 |
Operating Expenses | |||||
Management fees | 12 | 28 | 6 | 5 | 14 |
12b-1 fees: | |||||
Investor Class | — | — | — | — | — |
Shareholder communications | 3 | 4 | 3 | 4 | 4 |
Custodian fees | 18 | 14 | 17 | 4 | 32 |
Transfer agent fees: | — | — | — | — | — |
Retirement Class | — | 1 | — | — | — |
Institutional Class | 1 | 1 | 1 | 1 | 1 |
Investor Class | — | — | — | — | — |
Professional fees | 3 | 3 | 4 | — | 6 |
Registration fees | 21 | 21 | 21 | 21 | 21 |
Miscellaneous | 4 | 4 | 4 | 4 | 4 |
Total expenses | 62 | 76 | 56 | 39 | 82 |
Transfer agent fees waived | — | — | — | — | — |
Other expenses reimbursed | (49) | (43) | (48) | (32) | (66) |
Net expenses | 13 | 33 | 8 | 7 | 16 |
Net Investment Income/(Loss) | 25 | 183 | 49 | 34 | 25 |
Realized and Change in Net Unrealized Gain/(Loss) on Investment Transactions | |||||
Net realized gain/(loss) on: | |||||
Investments | 17 | 66 | 70 | 53 | 112 |
Foreign currency transactions | — | 20 | — | — | (1) |
Change in net unrealized appreciation/(depreciation) on: | |||||
Investments | 617 | 1,880 | 373 | 560 | 712 |
Net gain/(loss) on investment transactions | 634 | 1,966 | 443 | 613 | 823 |
Net Increase/(Decrease) in Net Assets Resulting from Operations | $659 | $2,149 | $492 | $647 | $848 |
The accompanying notes are an integral part of the Financial Statements.
31
Harbor Robeco Funds
Statements of Changes In Net Assets
Statements of Changes In Net Assets
(All amounts in thousands)
Harbor Robeco Emerging Markets Conservative Equities Fund | Harbor Robeco Global Conservative Equities Fund | ||||
November 1, 2020 through April 30, 2021 | December 1, 2019a through October 31, 2020 | November 1, 2020 through April 30, 2021 | December 1, 2019a through October 31, 2020 | ||
INCREASE/(DECREASE) IN NET ASSETS | (Unaudited) | (Unaudited) | |||
Operations: | |||||
Net investment income/(loss) | $ 25 | $ 91 | $ 183 | $ 83 | |
Net realized gain/(loss) on investments | 17 | (205) | 86 | (496) | |
Change in net unrealized appreciation/(depreciation) of investments | 617 | (84) | 1,880 | (108) | |
Net increase/(decrease) in assets resulting from operations | 659 | (198) | 2,149 | (521) | |
Distributions to Shareholders | |||||
Retirement Class | (52) | (4) | (101) | (2) | |
Institutional Class | (49) | (4) | (12) | (2) | |
Investor Class | (1) | — | — | — | |
Total distributions to shareholders | (102) | (8) | (113) | (4) | |
Net Increase/(Decrease) Derived from Capital Share Transactions | 197 | 3,131 | 12,844 | 3,925 | |
Net increase/(decrease) in net assets | 754 | 2,925 | 14,880 | 3,400 | |
Net Assets | |||||
Beginning of period | 2,925 | — | 3,400 | — | |
End of period | $3,679 | $2,925 | $18,280 | $3,400 |
a | Inception |
The accompanying notes are an integral part of the Financial Statements.
32
Harbor Robeco International Conservative Equities Fund | Harbor Robeco US Conservative Equities Fund | Harbor Robeco Emerging Markets Active Equities Fund | |||||
November 1, 2020 through April 30, 2021 | December 1, 2019a through October 31, 2020 | November 1, 2020 through April 30, 2021 | December 1, 2019a through October 31, 2020 | November 1, 2020 through April 30, 2021 | December 1, 2019a through October 31, 2020 | ||
(Unaudited) | (Unaudited) | (Unaudited) | |||||
$ 49 | $ 73 | $ 34 | $ 61 | $ 25 | $ 67 | ||
70 | (270) | 53 | (300) | 111 | (102) | ||
373 | (68) | 560 | (81) | 712 | 117 | ||
492 | (265) | 647 | (320) | 848 | 82 | ||
(50) | (1) | (33) | (3) | (49) | (5) | ||
(49) | (1) | (35) | (3) | (50) | (5) | ||
(1) | — | (1) | — | (1) | — | ||
(100) | (2) | (69) | (6) | (100) | (10) | ||
103 | 3,078 | 105 | 3,355 | 276 | 3,087 | ||
495 | 2,811 | 683 | 3,029 | 1,024 | 3,159 | ||
2,811 | — | 3,029 | — | 3,159 | — | ||
$3,306 | $2,811 | $3,712 | $3,029 | $4,183 | $3,159 |
33
Harbor Robeco Funds
Statements of Changes in Net Assets—Capital Stock Activity
Statements of Changes in Net Assets—Capital Stock Activity
(All amounts in thousands)
Harbor Robeco Emerging Markets Conservative Equities Fund | Harbor Robeco Global Conservative Equities Fund | ||||
November 1, 2020 through April 30, 2021 | December 1, 2019a through October 31, 2020 | November 1, 2020 through April 30, 2021 | December 1, 2019a through October 31, 2020 | ||
(Unaudited) | (Unaudited) | ||||
AMOUNT ($) | |||||
Retirement Class | |||||
Net proceeds from sale of shares | $ 43 | $1,558 | $12,727 | $2,728 | |
Reinvested distributions | 52 | 4 | 101 | 2 | |
Cost of shares reacquired | — | — | — | (615) | |
Net increase/(decrease) in net assets | $ 95 | $1,562 | $12,828 | $2,115 | |
Institutional Class | |||||
Net proceeds from sale of shares | $ 70 | $1,543 | $ 2 | $1,829 | |
Reinvested distributions | 48 | 4 | 12 | 2 | |
Cost of shares reacquired | — | (28) | — | (51) | |
Net increase/(decrease) in net assets | $118 | $1,519 | $ 14 | $1,780 | |
Investor Class | |||||
Net proceeds from sale of shares | $ 4 | $ 50 | $ 2 | $ 30 | |
Reinvested distributions | 1 | — | — | — | |
Cost of shares reacquired | (21) | — | — | — | |
Net increase/(decrease) in net assets | $ (16) | $ 50 | $ 2 | $ 30 | |
SHARES | |||||
Retirement Class | |||||
Shares sold | 4 | 156 | 1,353 | 271 | |
Shares issued due to reinvestment of distributions | 5 | 1 | 10 | — | |
Shares reacquired | — | — | — | (76) | |
Net increase/(decrease) in shares outstanding | 9 | 157 | 1,363 | 195 | |
Institutional Class | |||||
Shares sold | 6 | 155 | 1 | 184 | |
Shares issued due to reinvestment of distributions | 5 | — | 1 | — | |
Shares reacquired | — | (3) | — | (6) | |
Net increase/(decrease) in shares outstanding | 11 | 152 | 2 | 178 | |
Investor Class | |||||
Shares sold | — | 5 | — | 3 | |
Shares issued due to reinvestment of distributions | — | — | — | — | |
Shares reacquired | (2) | — | — | — | |
Net increase/(decrease) in shares outstanding | (2) | 5 | — | 3 |
a | Inception |
The accompanying notes are an integral part of the Financial Statements.
34
Harbor Robeco International Conservative Equities Fund | Harbor Robeco US Conservative Equities Fund | Harbor Robeco Emerging Markets Active Equities Fund | |||||
November 1, 2020 through April 30, 2021 | December 1, 2019a through October 31, 2020 | November 1, 2020 through April 30, 2021 | December 1, 2019a through October 31, 2020 | November 1, 2020 through April 30, 2021 | December 1, 2019a through October 31, 2020 | ||
(Unaudited) | (Unaudited) | (Unaudited) | |||||
$ 3 | $1,624 | $ 3 | $1,588 | $139 | $1,500 | ||
50 | 1 | 33 | 3 | 49 | 5 | ||
— | (111) | — | (5) | (10) | — | ||
$ 53 | $1,514 | $ 36 | $1,586 | $178 | $1,505 | ||
$ 12 | $1,523 | $ 31 | $1,764 | $ 44 | $1,577 | ||
49 | 1 | 35 | 3 | 50 | 5 | ||
— | — | — | (38) | — | (30) | ||
$ 61 | $1,524 | $ 66 | $1,729 | $ 94 | $1,552 | ||
$ — | $ 40 | $ 2 | $ 108 | $ 3 | $ 30 | ||
1 | — | 1 | — | 1 | — | ||
(12) | — | — | (68) | — | — | ||
$(11) | $ 40 | $ 3 | $ 40 | $ 4 | $ 30 | ||
— | 162 | — | 161 | 11 | 151 | ||
5 | — | 4 | — | 4 | — | ||
— | (13) | — | — | (1) | — | ||
5 | 149 | 4 | 161 | 14 | 151 | ||
1 | 153 | 3 | 180 | 4 | 158 | ||
5 | — | 4 | — | 5 | — | ||
— | — | — | (4) | — | (3) | ||
6 | 153 | 7 | 176 | 9 | 155 | ||
— | 4 | — | 12 | — | 3 | ||
— | — | — | — | — | — | ||
(1) | — | — | (8) | — | — | ||
(1) | 4 | — | 4 | — | 3 |
35
Harbor Robeco Funds Financial Highlights
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR ROBECO EMERGING MARKETS CONSERVATIVE EQUITIES FUND | ||||||||
Retirement Class | Institutional Class | Investor Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | 6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | 6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | |||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||
Net asset value beginning of period | $ 9.33 | $10.00 | $ 9.33 | $10.00 | $ 9.30 | $10.00 | ||
Income from Investment Operations | ||||||||
Net investment income/(loss)a,e | 0.08 | 0.30 | 0.07 | 0.29 | 0.05 | 0.27 | ||
Net realized and unrealized gain/(loss) on investments | 1.99 | (0.95) | 1.98 | (0.94) | 1.98 | (0.95) | ||
Total from investment operations | 2.07 | (0.65) | 2.05 | (0.65) | 2.03 | (0.68) | ||
Less Distributions | ||||||||
Dividends from net investment income | (0.33) | (0.02) | (0.32) | (0.02) | (0.29) | (0.02) | ||
Distributions from net realized capital gains | — | — | — | — | — | — | ||
Total distributions | (0.33) | (0.02) | (0.32) | (0.02) | (0.29) | (0.02) | ||
Net asset value end of period | 11.07 | 9.33 | 11.06 | 9.33 | 11.04 | 9.30 | ||
Net assets end of period (000s) | $ 1,835 | $1,462 | $1,806 | $1,417 | $ 38 | $ 46 | ||
Ratios and Supplemental Data (%) | ||||||||
Total returnb | 22.49% c | (6.48)% c | 22.29% c | (6.48)% c | 22.08% c | (6.81)% c | ||
Ratio of total expenses to average net assets^ | 3.63 d | 6.08 d | 3.71 d | 6.16 d | 4.07 d | 6.53 d | ||
Ratio of net expenses to average net assetsa | 0.75 d | 0.75 d | 0.83 d | 0.83 d | 1.20 d | 1.20 d | ||
Ratio of net investment income to average net assetsa | 1.49 d | 3.45 d | 1.42 d | 3.35 d | 0.89 d | 3.16 d | ||
Portfolio turnover | 16 c | 28 c | 16 c | 28 c | 16 c | 28 c |
HARBOR ROBECO GLOBAL CONSERVATIVE EQUITIES FUND | ||||||||
Retirement Class | Institutional Class | Investor Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | 6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | 6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | |||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||
Net asset value beginning of period | $ 9.04 | $10.00 | $ 9.04 | $10.00 | $ 9.01 | $10.00 | ||
Income from Investment Operations | ||||||||
Net investment income/(loss)a,e | 0.11 | 0.23 | 0.11 | 0.22 | 0.09 | 0.19 | ||
Net realized and unrealized gain/(loss) on investments | 1.43 | (1.18) | 1.42 | (1.17) | 1.41 | (1.17) | ||
Total from investment operations | 1.54 | (0.95) | 1.53 | (0.95) | 1.50 | (0.98) | ||
Less Distributions | ||||||||
Dividends from net investment income | (0.08) | (0.01) | (0.07) | (0.01) | (0.03) | (0.01) | ||
Distributions from net realized capital gains | — | — | — | — | — | — | ||
Total distributions | (0.08) | (0.01) | (0.07) | (0.01) | (0.03) | (0.01) | ||
Net asset value end of period | 10.50 | 9.04 | 10.50 | 9.04 | 10.48 | 9.01 | ||
Net assets end of period (000s) | $16,358 | $1,762 | $1,888 | $1,611 | $ 34 | $ 27 | ||
Ratios and Supplemental Data (%) | ||||||||
Total returnb | 17.05% c | (9.48)% c | 16.95% c | (9.48)% c | 16.71% c | (9.81)% c | ||
Ratio of total expenses to average net assets^ | 0.96 d | 4.36 d | 1.04 d | 4.44 d | 1.40 d | 4.81 d | ||
Ratio of net expenses to average net assetsa | 0.40 d | 0.40 d | 0.48 d | 0.48 d | 0.85 d | 0.85 d | ||
Ratio of net investment income to average net assetsa | 2.33 d | 2.74 d | 2.23 d | 2.64 d | 1.89 d | 2.24 d | ||
Portfolio turnover | 6 c | 43 c | 6 c | 43 c | 6 c | 43 c |
See page 40 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
36
Harbor Robeco Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR ROBECO INTERNATIONAL CONSERVATIVE EQUITIES FUND | ||||||||
Retirement Class | Institutional Class | Investor Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | 6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | 6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | |||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||
Net asset value beginning of period | $ 9.21 | $10.00 | $ 9.20 | $10.00 | $ 9.17 | $10.00 | ||
Income from Investment Operations | ||||||||
Net investment income/(loss)a,e | 0.16 | 0.24 | 0.16 | 0.24 | 0.13 | 0.21 | ||
Net realized and unrealized gain/(loss) on investments | 1.43 | (1.02) | 1.44 | (1.03) | 1.45 | (1.04) | ||
Total from investment operations | 1.59 | (0.78) | 1.60 | (0.79) | 1.58 | (0.83) | ||
Less Distributions | ||||||||
Dividends from net investment income | (0.33) | (0.01) | (0.33) | (0.01) | (0.30) | — * | ||
Distributions from net realized capital gains | — | — | — | — | — | — | ||
Total distributions | (0.33) | (0.01) | (0.33) | (0.01) | (0.30) | — * | ||
Net asset value end of period | 10.47 | 9.21 | 10.47 | 9.20 | 10.45 | 9.17 | ||
Net assets end of period (000s) | $1,614 | $1,371 | $1,660 | $1,402 | $ 32 | $ 38 | ||
Ratios and Supplemental Data (%) | ||||||||
Total returnb | 17.47% c | (7.84)% c | 17.51% c | (7.94)% c | 17.34% c | (8.27)% c | ||
Ratio of total expenses to average net assets^ | 3.50 d | 5.38 d | 3.58 d | 5.46 d | 3.95 d | 5.83 d | ||
Ratio of net expenses to average net assetsa | 0.45 d | 0.45 d | 0.53 d | 0.53 d | 0.90 d | 0.90 d | ||
Ratio of net investment income to average net assetsa | 3.18 d | 2.83 d | 3.10 d | 2.76 d | 2.64 d | 2.42 d | ||
Portfolio turnover | 19 c | 32 c | 19 c | 32 c | 19 c | 32 c |
HARBOR ROBECO US CONSERVATIVE EQUITIES FUND | ||||||||
Retirement Class | Institutional Class | Investor Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | 6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | 6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | |||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||
Net asset value beginning of period | $ 8.89 | $ 10.00 | $ 8.89 | $ 10.00 | $ 8.87 | $ 10.00 | ||
Income from Investment Operations | -128 | |||||||
Net investment income/(loss)a,e | 0.10 | 0.19 | 0.10 | 0.18 | 0.08 | 0.15 | ||
Net realized and unrealized gain/(loss) on investments | 1.78 | (1.28) | 1.77 | (1.27) | 1.77 | (1.26) | ||
Total from investment operations | 1.88 | (1.09) | 1.87 | (1.09) | 1.85 | (1.11) | ||
Less Distributions | ||||||||
Dividends from net investment income | (0.21) | (0.02) | (0.20) | (0.02) | (0.15) | (0.02) | ||
Distributions from net realized capital gains | — | — | — | — | — | — | ||
Total distributions | (0.21) | (0.02) | (0.20) | (0.02) | (0.15) | (0.02) | ||
Net asset value end of period | 10.56 | 8.89 | 10.56 | 8.89 | 10.57 | 8.87 | ||
Net assets end of period (000s) | $1,737 | $ 1,429 | $1,929 | $ 1,564 | $ 46 | $ 36 | ||
Ratios and Supplemental Data (%) | ||||||||
Total returnb | 21.21% c | (10.82)% c | 21.26% c | (10.92)% c | 21.05% c | (11.15)% c | ||
Ratio of total expenses to average net assets^ | 2.24 d | 4.01 d | 2.32 d | 4.09 d | 2.69 d | 4.46 d | ||
Ratio of net expenses to average net assetsa | 0.35 d | 0.35 d | 0.43 d | 0.43 d | 0.80 d | 0.80 d | ||
Ratio of net investment income to average net assetsa | 2.06 d | 2.24 d | 1.98 d | 2.16 d | 1.61 d | 1.87 d | ||
Portfolio turnover | 10 c | 38 c | 10 c | 38 c | 10 c | 38 c |
See page 40 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
38
Harbor Robeco Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR ROBECO EMERGING MARKETS ACTIVE EQUITIES FUND | ||||||||
Retirement Class | Institutional Class | Investor Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | 6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | 6-Month Period Ended April 30, 2021 | Year Ended October 31, 2020f | |||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||
Net asset value beginning of period | $10.23 | $10.00 | $10.23 | $10.00 | $10.20 | $10.00 | ||
Income from Investment Operations | ||||||||
Net investment income/(loss)a,e | 0.08 | 0.22 | 0.07 | 0.22 | 0.05 | 0.18 | ||
Net realized and unrealized gain/(loss) on investments | 2.63 | 0.04 | 2.63 | 0.04 | 2.61 | 0.05 | ||
Total from investment operations | 2.71 | 0.26 | 2.70 | 0.26 | 2.66 | 0.23 | ||
Less Distributions | ||||||||
Dividends from net investment income | (0.33) | (0.03) | (0.32) | (0.03) | (0.28) | (0.03) | ||
Distributions from net realized capital gains | — | — | — | — | — | — | ||
Total distributions | (0.33) | (0.03) | (0.32) | (0.03) | (0.28) | (0.03) | ||
Net asset value end of period | 12.61 | 10.23 | 12.61 | 10.23 | 12.58 | 10.20 | ||
Net assets end of period (000s) | $2,079 | $1,540 | $2,062 | $1,589 | $ 42 | $ 30 | ||
Ratios and Supplemental Data (%) | ||||||||
Total returnb | 26.85% c | 2.63% c | 26.76% c | 2.63% c | 26.47% c | 2.30% c | ||
Ratio of total expenses to average net assets^ | 4.26 d | 6.94 d | 4.34 d | 7.02 d | 4.71 d | 7.39 d | ||
Ratio of net expenses to average net assetsa | 0.79 d | 0.79 d | 0.87 d | 0.87 d | 1.24 d | 1.24 d | ||
Ratio of net investment income to average net assetsa | 1.35 d | 2.50 d | 1.25 d | 2.43 d | 0.89 d | 2.05 d | ||
Portfolio turnover | 31 c | 47 c | 31 c | 47 c | 31 c | 47 c |
* | Less than $0.01 |
^ | Percentage does not reflect reduction for credit balance arrangements (see the “Custodian” section in Note 2 of the accompanying Notes to Financial Statements) |
a | Reflects the Adviser’s waiver, if any, of its management fees and/or other operating expenses |
b | The total returns would have been lower had certain expenses not been waived during the periods shown. |
c | Unannualized |
d | Annualized |
e | Amounts are based on average daily shares outstanding during the period. |
f | For the period December 1, 2019 (inception) through October 31, 2020 |
The accompanying notes are an integral part of the Financial Statements.
40
Harbor Robeco Funds
Notes to Financial Statements—April 30, 2021 (Unaudited)
Notes to Financial Statements—April 30, 2021 (Unaudited)
Note 1—Organizational Matters
Harbor Funds (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as an open-end management investment company. As of April 30, 2021, the Trust consists of 36 separate portfolios. The portfolios covered by this report are Harbor Robeco Emerging Markets Conservative Equities Fund, Harbor Robeco Global Conservative Equities Fund, Harbor Robeco International Conservative Equities Fund, Harbor Robeco US Conservative Equities Fund, and Harbor Robeco Emerging Markets Active Equities Fund (individually or collectively referred to as a “Fund” or the “Funds," respectively). Harbor Capital Advisors, Inc. (the “Adviser” or “Harbor Capital”) is the investment adviser for the Funds.
The Funds currently offer four classes of shares, designated as Retirement Class, Institutional Class, Administrative Class and Investor Class. There is no current investment in the Administrative Class. The shares of each class represent an interest in the same portfolio of investments of the Funds and have equal rights with respect to voting, redemptions, dividends, and liquidations, except that: (i) certain expenses, subject to the approval of the Trust’s Board of Trustees (the “Board of Trustees”), may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission (“SEC”) and the Internal Revenue Service; and (ii) shareholders of a class that bears distribution and service expenses under terms of a distribution plan have exclusive voting rights as to that distribution plan.
Note 2—Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. Each Fund follows the investment company reporting requirements under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), which includes the accounting and reporting guidelines under Accounting Standards Codification (“ASC”) Topic 946, Financial Services-Investment Companies. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.
Security Valuation
The Trust’s valuation procedures permit the Funds to use a variety of valuation methodologies, consider a number of subjective factors, analyze applicable facts and circumstances and, in general, exercise judgment, when valuing Fund investments. The methodology used for a specific type of investment may vary based on the circumstances and relevant considerations, including available market data.
Equity securities (including common stock, preferred stock, and convertible preferred stock), exchange-traded funds and financial derivative instruments (such as futures contracts, options contracts, including rights and warrants and centrally cleared swap agreements) that are traded or cleared on a national securities exchange or system (except securities listed on the National Association of Securities Dealers Automated Quotation (“NASDAQ”) system and United Kingdom securities) are valued at the last sale price on a national exchange or system on which they are principally traded or cleared as of the valuation date. Securities listed on the NASDAQ system or a United Kingdom exchange are valued at the official closing price of those securities. In the case of securities for which there are no sales on the valuation day, (i) securities traded principally on a U.S. exchange, including NASDAQ, are valued at the mean between the closing bid and ask price; and (ii) securities traded principally on a foreign exchange, including United Kingdom securities, are valued at the official bid price determined as of the close of the primary exchange. Securities of open-end registered investment companies that are held by a Fund are valued at net asset value. To the extent these securities are actively traded and fair valuation adjustments are not applied, they are normally categorized as Level 1 in the fair value hierarchy. Equity securities traded on inactive markets or valued by reference to similar instruments are normally categorized as Level 2 in the fair value hierarchy. For more information on the fair value hierarchy, please refer to the Fair Value Measurements and Disclosures section.
Short-term securities with a remaining maturity of less than 60 days at the time of acquisition that are held by a Fund are valued at amortized cost to the extent amortized cost represents fair value. Such securities are normally categorized as Level 2 in the fair value hierarchy.
Over-the-counter financial derivative instruments, such as forward currency contracts, options contracts, and swap agreements, derive their value from underlying asset prices, indices, reference rates and other inputs, or a combination of these factors. These instruments are valued using evaluated prices furnished by a pricing vendor selected by the Board of Trustees. In certain cases, when a valuation is not readily available from a pricing vendor, the Fund’s subadviser provides a valuation, typically
42
Harbor Robeco Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
using its own proprietary models. Depending on the instrument and the terms of the transaction, the value of the derivative instrument can be determined by a pricing vendor or subadviser using a series of techniques, including simulation pricing models. The pricing models use inputs, such as issuer details, indices, spreads, interest rates, yield curves, dividends and exchange rates, that are observed from actively quoted markets. Derivative instruments that use valuation techniques and inputs similar to those described above are normally categorized as Level 2 in the fair value hierarchy.
A Fund may also use fair value pricing if the value of some or all of the Fund’s securities have been materially affected by events occurring before the Fund’s pricing time but after the close of the primary markets or exchanges on which the security is traded. This most commonly occurs with foreign securities, but may occur with other securities as well. In such cases, the Fund may apply a fair value factor supplied by the pricing vendor to a foreign security’s market close value to reflect changes in value that may have occurred between the close of the primary market or exchange on which the security is traded and the Fund’s pricing time. That factor may be derived using observable inputs such as a comparison of the trading patterns of a foreign security to intraday trading in the U.S. markets that are highly correlated to the foreign security or other information that becomes available after the close of the foreign market on which the security principally traded. When fair value pricing is employed, the prices of securities used by a Fund to calculate its net asset value may differ from market quotations, official closing prices or evaluated prices for the same securities, which means that the Fund may value those securities higher or lower than another given fund that uses market quotations, official closing prices or evaluated prices supplied by a pricing vendor in its calculation of net asset value. Securities valued using observable inputs, such as those described above, are normally categorized as Level 2 of the fair value hierarchy.
When reliable market quotations or evaluated prices supplied by a pricing vendor are not readily available or are not believed to accurately reflect fair value, securities are priced at their fair value as determined by the Trust’s Valuation Committee (the “Valuation Committee”) pursuant to procedures adopted, and subject to oversight, by the Board of Trustees. The Valuation Committee is comprised of a trustee and officers of the Trust and employees of Harbor Capital with relevant experience or responsibilities. Each security for which the Valuation Committee determines a fair value, including the basis for the fair value decision, is reviewed by the Board of Trustees at its regularly scheduled board meetings. Securities valued using fair valuation methods that incorporate significant unobservable inputs are normally categorized as Level 3 in the fair value hierarchy.
Fair Value Measurements and Disclosures
Various inputs may be used to determine the value of each Fund’s investments, which are summarized in three broad categories defined as Level 1, Level 2, and Level 3. The inputs or methodologies used for valuing securities are not necessarily indicative of the risk associated with investing in those securities. The assignment of an investment to Levels 1, 2, or 3 is based on the lowest level of significant inputs used to determine its fair value.
Level 1– | Quoted prices in active markets for identical securities. |
Level 2– | Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). |
Level 3– | Significant unobservable inputs are used in situations where quoted prices or other observable inputs are not available or are deemed unreliable. Significant unobservable inputs may include each Fund’s own assumptions. |
The categorization of investments into Levels 1, 2, or 3, and a summary of significant unobservable inputs used for Level 3 investments, when applicable, can be found at the end of each Fund’s Portfolio of Investments schedule. For fair valuations using significant unobservable inputs, if any, a reconciliation of the beginning to ending balances for reported fair values is provided at the end of each Fund’s Portfolio of Investments schedule that presents changes attributable to realized and unrealized gains and losses and purchases, sales, and transfers in/out of the Level 3 category during the period.
Each Fund used observable inputs in its valuation methodologies whenever they were available and deemed reliable.
Investment Income
Dividends declared on portfolio securities are accrued on the ex-dividend date. For foreign securities, certain dividends are recorded after the ex-dividend date, but as soon as the respective Fund is notified of such dividends. Interest income is accrued daily as earned. Discounts and premiums on fixed income securities are amortized over the life of the respective securities
43
Harbor Robeco Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
(except for premiums on certain callable debt securities that are amortized to the earliest call date) using the effective yield method. Distributions from real estate investment trust securities are recorded as dividend income, and may be reclassified as capital gains and/or return of capital, based on the information reported by the issuer, when available.
Expenses
Expenses are charged directly to the Fund that incurred such expense whenever possible. With respect to expenses incurred by any two or more Harbor funds where amounts cannot be identified on a fund by fund basis, such expenses are generally allocated in proportion to the average net assets or the number of shareholders of each Fund.
Class Allocations
Income, common expenses and realized and unrealized gains/(losses) are determined at the Fund level and allocated daily to each class of shares based on the applicable net assets of the respective classes. Distribution and service fees, if any, and transfer agent fees are calculated daily at the class level based on the applicable net assets of each class and the expense rate(s) applicable to each class.
Securities Transactions
Securities transactions are accounted for on the trade date (the date the order to buy or sell is executed). Realized gains or losses on security transactions are determined on the basis of identified cost.
Distribution to Shareholders
Distributions on Fund shares are recorded on the ex-dividend date.
Taxes
Each Fund is treated as a separate entity for U.S. federal tax purposes. Each Fund’s policy is to meet the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) applicable to regulated investment companies and to distribute to its shareholders all of its taxable income within the prescribed time. It is also the intention of each Fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code. Therefore, no provision has been made for U.S. federal taxes on income, capital gains or unrealized appreciation of securities held or excise taxes on income and capital gains.
Each Fund may be subject to taxes imposed by foreign countries in which they invest. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and unrealized appreciation as such income and/or gains are earned.
Management has analyzed each Fund’s tax positions expected to be taken upon filing the 2020 tax return, in all material jurisdictions where each Fund operates, and has concluded that no provision for income tax is required in the Funds’ financial statements. Each Fund will recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations.
Custodian
Each Fund has credit balance arrangements with its custodian whereby positive balances in demand deposit accounts used by the transfer and shareholder servicing agent for clearing shareholder transactions in the Fund generate credits that are applied against gross custody expenses. Such custodial expense reductions, if any, are reflected on the respective Fund’s accompanying Statement of Operations.
44
Harbor Robeco Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
Foreign Currency Contracts
A foreign currency spot contract is an agreement between two parties to buy and sell currencies at the current market rate for settlement within two business days. A forward currency contract is an agreement between two parties to buy and sell currencies at a set price on a future date.
Foreign currency contracts are marked-to-market daily and any change in fair value is recorded as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value on the open and close date. Risk of losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contract’s terms. The maximum potential loss from such contracts is the aggregate face value in U.S. dollars at the time the contract was opened.
During the period, Harbor Robeco Emerging Markets Conservative Equities Fund, Harbor Robeco Global Conservative Equities Fund, Harbor Robeco International Conservative Equities Fund, and Harbor Robeco Emerging Markets Active Equities Fund used foreign currency spot contracts to facilitate transactions in foreign securities or to convert foreign currency receipts into U.S. dollars.
Foreign Currency Translations
Purchases and sales of securities are translated into U.S. dollars at the current exchange rate on the respective dates of the transactions. Income and withholding taxes are translated at the prevailing exchange rate when accrued or incurred. The accounting records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency, when applicable, are translated into U.S. dollars based on the current exchange rates at period end.
Reported net realized gains and losses on foreign currency transactions, when applicable, represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income accrued and tax reclaims receivable and the U.S. dollar amount actually received. The effects of changes in foreign currency exchange rates on investments in securities, when applicable, are included in the net realized and unrealized gain or loss on investments in the Statements of Operations.
Proceeds from Litigation
Each Fund may receive proceeds from shareholder litigation settlements involving current and/or previously held portfolio holdings. Any proceeds received from litigation involving portfolio holdings are reflected in the Statements of Operations in realized gain/(loss) if the security has been disposed of by a Fund, or in unrealized gain/(loss) if the security is still held by a Fund.
Rights and Warrants
Rights represent a privilege offered to holders of record of issued securities to subscribe (usually on a pro rata basis) for additional securities of the same class, of a different class or of a different issuer. Warrants are contracts that generally give the holder the right, but not the obligation, to buy a stated number of shares of common stock at a specified price at any time during the life of the warrant. Rights and warrants are typically written by the issuer of the security underlying the right or warrant. Although some rights and warrants may be non-transferable, others may be traded over-the-counter or on an exchange.
A Fund may acquire rights or warrants in order to gain exposure to the underlying security without owning the security, including, for example, cases where the Fund hopes to lock in the price today of a security it may wish to purchase in the future. In order for a warrant to be profitable, the market price of the underlying security must rise sufficiently above the exercise price to cover any premium and transaction costs. The value of a right or warrant may not necessarily change with the value of the underlying securities. When a Fund acquires rights or warrants, it runs the risk that it will lose its entire investment in the rights or warrants, unless the Fund exercises the right or warrant, acquires the underlying securities, or enters into a closing transaction before expiration. Rights and warrants cease to have value if they are not exercised prior to their expiration date. If the price of the underlying security does not rise to an extent sufficient to cover any premium and transaction costs, the
45
Harbor Robeco Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
Fund will lose part or all of its investment. Any premiums or purchase price paid for rights or other warrants that expire are treated as realized losses. If a Fund enters into a closing sale transaction, it realizes a gain or loss, depending on whether the proceeds from the sale are greater or less than the cost of the rights or warrants.
Rights or warrants outstanding at the end of the period, if any, are disclosed at the end of each applicable Fund’s Portfolio of Investments and are included in “Purchased options” in the Statements of Assets and Liabilities. Realized gain/(loss) and unrealized appreciation/(depreciation) recognized during the period are included in “Purchased options” in the Statements of Operations.
During the period, Harbor Robeco Emerging Markets Conservative Equities Fund, Harbor Robeco International Conservative Equities Fund, Harbor Robeco Global Conservative Equities Fund, and Harbor Robeco Emerging Markets Active Equities Fund held rights/warrants as a result of their investments in underlying securities.
Note 3—Investment Portfolio Transactions
Investment Portfolio Transactions
Purchases and sales of investments, other than short-term securities, for each Fund for the period ended April 30, 2021 are as follows:
Purchases (000s) | Sales (000s) | ||
CONSERVATIVE EQUITY | |||
Harbor Robeco Emerging Markets Conservative Equities Fund | $ 624 | $ 534 | |
Harbor Robeco Global Conservative Equities Fund | 13,740 | 927 | |
Harbor Robeco International Conservative Equities Fund | 580 | 569 | |
Harbor Robeco US Conservative Equities Fund | 370 | 323 | |
CORE EQUITY | |||
Harbor Robeco Emerging Markets Active Equities Fund | $ 1,318 | $1,137 |
Securities Lending
Each Fund may engage in securities lending, whereby a Fund lends its securities to financial institutions in order to increase its income. The Trust has engaged State Street Bank and Trust Company to act as its agent (the “Lending Agent”) with respect to the lending of portfolio securities of the Funds, pursuant to the terms and conditions of a Securities Lending Authorization Agreement (the “SLA Agreement”). Securities loans are required to be secured at all times during the term of the loan by collateral that is at least equal to the value of the loaned securities determined at the close of each business day. Collateral may consist of cash and/or securities issued by the U.S. Treasury. Any additional collateral that may be required to secure a loan is delivered to the Fund on the next business day. Cash collateral is recognized as the gross liability for securities loaned in the Statements of Assets and Liabilities. Non-cash collateral is not disclosed in the Funds' Statements of Assets and Liabilities as it is held by the Lending Agent on behalf of the Funds, and the Funds do not have the ability to rehypothecate those securities. Cash collateral is invested in the State Street Navigator Securities Lending Government Money Market Portfolio (the “Navigator Portfolio”), a money market mutual fund that seeks to provide income while maintaining a stable net asset value of $1.00. There is no assurance that the Navigator Portfolio will maintain a stable net asset value and the Funds are subject to the risk of loss on the cash collateral invested. A portion of the earnings generated by the investment of the cash collateral is rebated to the borrower for the use of the cash collateral and these earnings (less any rebate) are then divided between the Fund and the Lending Agent, as a fee for its services, according to agreed-upon rates. The Lending Agent and a Fund will share in any shortfall in the rebate due to the borrower, according to agreed-upon rates.
In addition to receiving a fee from the borrower based on the demand for securities loaned and earning income on the investment of the cash collateral, a Fund receives substitute interest, dividends, or other amounts on the loaned securities, during the term of a loan. Net securities lending income is disclosed as such in the Statements of Operations and represents the income earned from the non-cash collateral and the investment of cash collateral, net of fee rebates paid to the borrower and net of fees paid to the Lending Agent.
46
Harbor Robeco Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 3—Investment Portfolio Transactions—Continued
Loans may be terminated at the option of the borrower or the Funds. Upon termination of the loan, the borrower will return to the Fund securities that are identical to the loaned securities. The Funds bear the risk of delay in recovery of, or loss of rights in, the securities loaned and the risk that the value of the collateral falls below the value of the securities on loan. Each Fund seeks to mitigate this risk through the SLA Agreement, which provides that in the event of default, the Lending Agent may apply the proceeds of the cash collateral from the loaned securities toward the purchase of replacement securities. If such proceeds are insufficient or the collateral is unavailable, the Lending Agent will purchase replacement securities at its sole expense, or if unable to do so, the Lending Agent may credit to the Fund’s account an amount equal to the fair value of the unreturned loaned securities. As the securities loaned are subject to termination by the Fund or the borrower at any time, the remaining contractual maturities of each securities lending transaction is considered to be overnight and continuous.
During the period, Harbor Robeco Global Conservative Equities Fund engaged in securities lending. As of April 30, 2021, the Fund had no securities on loan.
Note 4—FEES AND OTHER Transactions with Affiliates
Investment Adviser
Harbor Capital is a wholly owned subsidiary of ORIX Corporation(“ORIX”). Harbor Capital is the Funds’ investment adviser and is also responsible for administrative and other services.
Each Fund has a separate advisory agreement with Harbor Capital. The agreements provide for management fees based on an annual percentage rate of average daily net assets as follows:
Contractual Rate | Actual Rate | ||
CONSERVATIVE EQUITY | |||
Harbor Robeco Emerging Markets Conservative Equities Fund | 0.68% | 0.68% | |
Harbor Robeco Global Conservative Equities Fund | 0.35 | 0.35 | |
Harbor Robeco International Conservative Equities Fund | 0.40 | 0.40 | |
Harbor Robeco US Conservative Equities Fund | 0.30 | 0.30 | |
CORE EQUITY | |||
Harbor Robeco Emerging Markets Active Equities Fund | 0.72% | 0.72% |
Harbor Capital has from time to time voluntarily or contractually agreed not to impose a portion of its management fees and/or to bear a portion of the expenses incurred in the operation of certain Funds in order to limit Fund expenses. Such waivers, if any, are reflected on the accompanying Statements of Operations. Interest expense, if any, is excluded from contractual limitations. During the period, the following expense limitation agreements were in effect:
Retirement Class | Institutional Class | Administrative Class | Investor Class1 | Expense Limitation Agreement Expiration Date | |||||
CONSERVATIVE EQUITY | |||||||||
Harbor Robeco Emerging Markets Conservative Equities Fund | 0.75% | 0.83% | 1.08% | 1.19% | 02/28/2022 | ||||
Harbor Robeco Global Conservative Equities Fund | 0.40 | 0.48 | 0.73 | 0.84 | 02/28/2022 | ||||
Harbor Robeco International Conservative Equities Fund | 0.45 | 0.53 | 0.78 | 0.89 | 02/28/2022 | ||||
Harbor Robeco US Conservative Equities Fund | 0.35 | 0.43 | 0.68 | 0.79 | 02/28/2022 | ||||
CORE EQUITY | |||||||||
Harbor Robeco Emerging Markets Active Equities Fund | 0.79% | 0.87% | 1.12% | 1.23% | 02/28/2022 |
1 | For the period November 1, 2020 through February 28, 2021, the operating expense limitation for the Investor Class for Harbor Robeco Emerging Markets Conservative Equities Fund, Harbor Robeco Global Conservative Equities Fund, Harbor Robeco International Conservative Equities Fund, Harbor Robeco US Conservative Equities Fund, and Harbor Robeco Emerging Markets Active Equities Fund were 1.20%, 0.85%, 0.90%, 0.80% and 1.24%, respectively. |
All expense limitation agreements include the transfer agent fee waiver discussed in the Transfer Agent note.
47
Harbor Robeco Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 4—FEES AND OTHER Transactions with Affiliates—Continued
Subadviser
Robeco Institutional Asset Management US Inc. (“RIAM US”) serves as Subadviser to each of the Harbor Robeco Funds. RIAM US is a wholly-owned subsidiary of ORIX and an affiliate of Harbor Capital. There were no affiliated transactions between the Funds and the subadviser during the period. The subadvisory fees are paid by Harbor Capital to RIAM US.
Distributor
Harbor Funds Distributors, Inc. (the “Distributor”), a wholly-owned subsidiary of Harbor Capital, is the distributor for Harbor Funds’ shares. Under the Trust’s current distribution plan pursuant to Rule 12b-1 under the Investment Company Act with respect to each Fund’s Administrative and Investor Class shares (each, a “12b-1 Plan”) as applicable, each Fund pays the Distributor compensation at the annual rate of 0.25% of the average daily net assets of its Administrative and Investor Class shares. Pursuant to each 12b-1 Plan, the Distributor is compensated for financing any activity that is primarily intended to result in the sale of Administrative and Investor Class shares of each Fund or for recordkeeping services or the servicing of shareholder accounts in a Administrative and Investor Class shares of each Fund. Such activities include, but are not limited to: printing of prospectuses and statements of additional information and reports for prospective shareholders (i.e., other than existing shareholders); preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers or other institutions such as asset-based sales charges, payments of recordkeeping fees under recordkeeping arrangements, or payments of service fees under shareholder service arrangements; and costs of administering each 12b-1 Plan.
Amounts payable by a Fund under each 12b-1 Plan need not be directly related to the expenses actually incurred by the Distributor on behalf of each Fund. Each 12b-1 Plan does not obligate each Fund to reimburse the Distributor for the actual expenses the Distributor may incur in fulfilling its obligations under each 12b-1 Plan. Thus, even if the Distributor’s actual expenses exceed the fee payable to the Distributor at any given time, each Fund will not be obligated to pay more than that fee. If the Distributor’s expenses are less than the fee it receives, the Distributor will retain the difference.
The fees attributable to each Fund’s respective class are shown on the accompanying Statements of Operations.
Transfer Agent
Harbor Services Group, Inc. (“Harbor Services Group”), a wholly-owned subsidiary of Harbor Capital, is the transfer and shareholder servicing agent for the Funds. The transfer agency and service agreement is reviewed and approved annually by the Board of Trustees and provides currently for compensation up to the following amounts per class of each Fund:
Transfer Agent Fees | |
Retirement Class | 0.02% of the average daily net assets of all Retirement Class shares |
Institutional Class | 0.10% of the average daily net assets of all Institutional Class shares |
Administrative Class | 0.10% of the average daily net assets of all Administrative Class shares |
Investor Class1 | 0.21% of the average daily net assets of all Investor Class shares |
1 | For the period November 1, 2020 through February 28, 2021, Harbor Services Group received compensation up to 0.22% for the Investor Class. |
Harbor Services Group voluntarily waived a portion of its transfer agent fees during the period ended April 30, 2021. Fees incurred for these transfer agent services are shown on each Fund’s Statement of Operations. The voluntary waiver may be discontinued at any time.
Affiliated Transactions
The Investment Company Act permits purchase and sale transactions among affiliated investment companies subject to an exemptive rule. Harbor Funds has adopted policies and procedures pursuant to such rule. During the period, the Funds did not enter into any transactions with any other Harbor fund.
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Harbor Robeco Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 4—FEES AND OTHER Transactions with Affiliates—Continued
Shareholders
As of April 30, 2021, Harbor Capital and its wholly owned subsidiaries collectively held the following shares of beneficial interest in each of the following Funds:
Number of Shares Owned by Harbor Capital and Subsidiaries | Percentage of Outstanding Shares | ||||||||
Retirement Class | Institutional Class | Investor Class | Total | ||||||
CONSERVATIVE EQUITY | |||||||||
Harbor Robeco Emerging Markets Conservative Equities Fund | 157,052 | 153,557 | 3,091 | 313,700 | 94.3% | ||||
Harbor Robeco Global Conservative Equities Fund | 188,944 | 149,718 | 3,013 | 341,675 | 19.6 | ||||
Harbor Robeco International Conservative Equities Fund | 153,584 | 153,425 | 3,090 | 310,099 | 98.2 | ||||
Harbor Robeco US Conservative Equities Fund | 155,140 | 151,900 | 3,053 | 310,093 | 88.2 | ||||
CORE EQUITY | |||||||||
Harbor Robeco Emerging Markets Active Equities Fund | 153,318 | 153,205 | 3,085 | 309,608 | 93.3% |
Independent Trustees
The fees and expenses of the Independent Trustees are included in “Trustees’ fees and expenses” on each Fund’s Statement of Operations.
The Board of Trustees has adopted a Deferred Compensation Plan for Independent Trustees (the “Plan”), which enables Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Trust. For purposes of determining the amount owed to a Trustee under the Plan, deferred amounts are treated as though they had been invested in shares of the Fund(s) selected by the Trustee. While not required to do so, each Fund makes an investment equal to the Trustee’s investment election. The deferred compensation liability and the offsetting deferred compensation investment asset are included as a component of “Accrued expenses – Trustees’ fees and expenses” and “Other assets”, respectively, in the Statements of Assets and Liabilities. Such amounts fluctuate with changes in the value of the selected Fund(s). The deferred compensation and related mark-to-market impact liability and an offsetting investment asset will remain on each Fund’s Statement of Assets and Liabilities until distributed in accordance with the Plan.
Indemnification
Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, in the normal course of business the Trust enters into contracts that provide general indemnities to other parties. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.
49
Harbor Robeco Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
NOTE 5—TAX INFORMATION
The identified cost for federal income tax purposes of investments owned by each Fund and its respective gross unrealized appreciation and depreciation as of April 30, 2021 are as follows:
Identified Cost (000s) | Gross Unrealized | Net Unrealized Appreciation/ (Depreciation) (000s) | |||||
Appreciation (000s) | (Depreciation) (000s) | ||||||
CONSERVATIVE EQUITY | |||||||
Harbor Robeco Emerging Markets Conservative Equities Fund* | $ 3,089 | $ 700 | $(167) | $ 533 | |||
Harbor Robeco Global Conservative Equities Fund* | 16,351 | 1,991 | (219) | 1,772 | |||
Harbor Robeco International Conservative Equities Fund* | 2,958 | 406 | (101) | 305 | |||
Harbor Robeco US Conservative Equities Fund* | 3,190 | 543 | (64) | 479 | |||
CORE EQUITY | |||||||
Harbor Robeco Emerging Markets Active Equities Fund* | $ 3,313 | $ 959 | $(130) | $ 829 |
* | Capital loss carryforwards are available, which may reduce taxable income from future net realized gain on investments. |
Note 6—Subsequent Events
At a meeting of the Board of Trustees held on May 12, 2021, the Board of Trustees voted to liquidate and dissolve the Harbor Robeco Emerging Markets Conservative Equities Fund, Harbor Robeco Global Conservative Equities Fund, Harbor Robeco International Conservative Equities Fund, Harbor Robeco US Conservative Equities Fund, and Harbor Robeco Emerging Markets Active Equities Fund. The liquidation of the Funds occurred on June 15, 2021. Additional information related to the liquidation can be found in the supplements to the Funds' prospectus as filed with the SEC on May 13, 2021.
Through the date the financial statements were issued, there were no other subsequent events or transactions that would have materially impacted the financial statements or related disclosures as presented herein.
50
Harbor Robeco Funds
Fees and Expenses Example (Unaudited)
Fees and Expenses Example (Unaudited)
Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees (if any) and (2) ongoing costs, including management fees, distribution and service (12b-1) fees (if any), and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period November 1, 2020 through April 30, 2021.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses for each share class. You may use the information in the respective class 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 of the respective class 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 of the table for each share class below provides information about hypothetical account values and hypothetical expenses based on the respective Fund/Class’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the respective Fund/Class’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 a Fund to 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 and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value November 1, 2020 | Ending Account Value April 30, 2021 | |||||
Harbor Robeco Emerging Markets Conservative Equities Fund | ||||||||
Retirement Class | 0.75% | |||||||
Actual | $4.14 | $1,000 | $1,224.90 | |||||
Hypothetical (5% return) | 3.76 | 1,000 | 1,020.98 | |||||
Institutional Class | 0.83% | |||||||
Actual | $4.58 | $1,000 | $1,222.90 | |||||
Hypothetical (5% return) | 4.16 | 1,000 | 1,020.58 | |||||
Investor Class | 1.20% | |||||||
Actual | $6.61 | $1,000 | $1,220.80 | |||||
Hypothetical (5% return) | 6.01 | 1,000 | 1,018.70 | |||||
Harbor Robeco Global Conservative Equities Fund | ||||||||
Retirement Class | 0.40% | |||||||
Actual | $2.15 | $1,000 | $1,170.50 | |||||
Hypothetical (5% return) | 2.01 | 1,000 | 1,022.76 | |||||
Institutional Class | 0.48% | |||||||
Actual | $2.58 | $1,000 | $1,169.50 | |||||
Hypothetical (5% return) | 2.41 | 1,000 | 1,022.36 | |||||
Investor Class | 0.85% | |||||||
Actual | $4.57 | $1,000 | $1,167.10 | |||||
Hypothetical (5% return) | 4.26 | 1,000 | 1,020.47 |
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Harbor Robeco Funds
Fees and Expenses Example—Continued
Fees and Expenses Example—Continued
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value November 1, 2020 | Ending Account Value April 30, 2021 | |||||
Harbor Robeco International Conservative Equities Fund | ||||||||
Retirement Class | 0.45% | |||||||
Actual | $2.42 | $1,000 | $1,174.70 | |||||
Hypothetical (5% return) | 2.26 | 1,000 | 1,022.51 | |||||
Institutional Class | 0.53% | |||||||
Actual | $2.86 | $1,000 | $1,175.10 | |||||
Hypothetical (5% return) | 2.66 | 1,000 | 1,022.10 | |||||
Investor Class | 0.90% | |||||||
Actual | $4.85 | $1,000 | $1,173.40 | |||||
Hypothetical (5% return) | 4.51 | 1,000 | 1,020.22 | |||||
Harbor Robeco US Conservative Equities Fund | ||||||||
Retirement Class | 0.35% | |||||||
Actual | $1.92 | $1,000 | $1,212.10 | |||||
Hypothetical (5% return) | 1.76 | 1,000 | 1,023.02 | |||||
Institutional Class | 0.43% | |||||||
Actual | $2.36 | $1,000 | $1,212.60 | |||||
Hypothetical (5% return) | 2.16 | 1,000 | 1,022.61 | |||||
Investor Class | 0.80% | |||||||
Actual | $4.39 | $1,000 | $1,210.50 | |||||
Hypothetical (5% return) | 4.01 | 1,000 | 1,020.73 | |||||
Harbor Robeco Emerging Markets Active Equities Fund | ||||||||
Retirement Class | 0.79% | |||||||
Actual | $4.45 | $1,000 | $1,268.50 | |||||
Hypothetical (5% return) | 3.96 | 1,000 | 1,020.78 | |||||
Institutional Class | 0.87% | |||||||
Actual | $4.89 | $1,000 | $1,267.60 | |||||
Hypothetical (5% return) | 4.36 | 1,000 | 1,020.37 | |||||
Investor Class | 1.24% | |||||||
Actual | $6.96 | $1,000 | $1,264.70 | |||||
Hypothetical (5% return) | 6.21 | 1,000 | 1,018.49 |
* | Reflective of all fee waivers and expense reimbursements |
** | Expenses are equal to the Fund’s annualized net expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
52
Harbor Robeco Funds
Additional Information (Unaudited)
Additional Information (Unaudited)
Proxy Voting
Harbor Funds has adopted Proxy Voting Policies and Procedures under which proxies relating to securities held by the Harbor funds are voted. In addition, Harbor Funds files Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. A description of Harbor Funds’ Proxy Voting Policies and Procedures and the proxy voting records (Form N-PX) are available (i) without charge, upon request, by calling Harbor Funds toll-free at 800-422-1050; (ii) on Harbor Funds’ website at harborfunds.com; and (iii) on the SEC’s website at sec.gov.
Householding
Harbor Funds has adopted a policy that allows it to send only one copy of a Fund’s prospectus, proxy materials, annual report and semi-annual report to certain shareholders residing at the same household. This reduces Fund expenses, which benefits you and other shareholders. If you need additional copies or do not want your mailings to be “householded,” please call the Shareholder Servicing Agent at 800-422-1050. Individual copies will be sent within thirty (30) days after the Shareholder Servicing Agent receives your instructions. Your consent to householding is considered valid until revoked.
Quarterly Portfolio Disclosures
The Funds file a complete portfolio of investments for their first and third fiscal quarters with the SEC as an exhibit to Form N-PORT. The Funds’ Form N-PORT exhibit is available (i) without charge, upon request, by calling Harbor Funds toll-free at 800-422-1050, (ii) on Harbor Funds’ website at harborfunds.com, and (iii) on the SEC’s website at sec.gov.
ADVISORY AGREEMENT APPROVALS
FACTORS CONSIDERED BY THE TRUSTEES IN APPROVING THE INVESTMENT ADVISORY AGREEMENTS AND SUBADVISORY AGREEMENTS OF THE Harbor Robeco FUNDS
The Investment Company Act requires that the Investment Advisory and Subadvisory Agreement of each Fund be approved initially, and following an initial two-year term, at least annually, by the Trust’s Board of Trustees (the “Board” or the “Trustees”), including a majority of the Independent Trustees voting separately.
At a meeting of the Board held on February 19 and 20, 2021 (the “Meeting”), the Board, including the Independent Trustees voting separately, considered and approved the continuation of the Investment Advisory Agreement with Harbor Capital, the adviser to each Fund, and the Subadvisory Agreement with Robeco Institutional Asset Management US Inc. (“RIAM US” or the “Subadviser”), an affiliate of Harbor Capital, with respect to Harbor Robeco Emerging Markets Conservative Equities Fund, Harbor Robeco Global Conservative Equities Fund, Harbor Robeco International Conservative Equities Fund, Harbor Robeco US Conservative Equities Fund and Harbor Robeco Emerging Markets Active Equities Fund (each a “Fund” and, collectively, the “Funds”).
In evaluating the Investment Advisory Agreement and the Subadvisory Agreement, the Trustees reviewed materials furnished by Harbor Capital and the Subadviser, including information about their respective affiliates, personnel, and operations, and also relied upon their knowledge of Harbor Capital and the Subadviser resulting from their quarterly meetings, periodic telephonic meetings and other prior communications. In connection with the Meeting, which had been called for the purpose of considering the continuation of the Investment Advisory Agreement and Subadvisory Agreement, and at prior meetings, the Trustees, including the Independent Trustees, requested and received materials and presentations relating to Fund performance and the services rendered by Harbor Capital and the Subadviser. These materials included a comprehensive written response from Harbor Capital to a 15(c) request letter prepared by legal counsel to the Independent Trustees in consultation with the Independent Trustees. The Trustees also discussed with representatives of Harbor Capital, at the Meeting and at prior meetings, Harbor Funds’ operations and Harbor Capital’s ability, consistent with the “manager-of-managers” structure of Harbor Funds, to (i) identify and recommend to the Trustees a subadviser for each Fund, (ii) monitor and oversee the performance and investment capabilities of each subadviser, and (iii) recommend the replacement of a subadviser where appropriate. The Trustees specifically considered Harbor Capital’s history as a manager-of-managers, including its history of replacing subadvisers for particular Funds in circumstances in which the Board and Harbor Capital had determined that a change in subadviser was in the best interests of a Fund and
53
Harbor Robeco Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
its shareholders, whether as a result of (i) long-term underperformance not explained by market conditions or market cycles relative to the subadviser’s investment style, (ii) prolonged style inconsistency, (iii) material adverse changes in management or personnel, or (iv) other factors, such as if Harbor Capital were to identify another subadviser believed to better serve the shareholders than the existing subadviser.
At the Meeting, the Trustees, including all of the Independent Trustees voting separately, determined, in the exercise of their business judgment, that the terms of the Investment Advisory Agreement and the Subadvisory Agreement with respect to each Fund were fair and reasonable and approved the continuation for a one-year period of the Investment Advisory Agreement and Subadvisory Agreement as being in the best interests of each Fund and its shareholders.
In their deliberations, the Independent Trustees had the opportunity to meet privately without representatives of Harbor Capital or the Subadviser present and were represented throughout the process by legal counsel to the Independent Trustees and the Funds.
In considering the approval of each Fund’s Investment Advisory Agreement and Subadvisory Agreement, the Board, including the Independent Trustees, evaluated a number of factors it considered relevant to its determination. The Board did not identify any single factor as all-important or controlling, and individual Trustees did not necessarily attribute the same weight or importance to each factor.
Among the factors considered by the Trustees in approving the Investment Advisory Agreement and Subadvisory Agreement were the following:
• | The nature, extent, and quality of the services provided by Harbor Capital and RIAM US, including the background, education, expertise and experience of the investment professionals of Harbor Capital and RIAM US providing services to each Fund; |
• | The favorable history, reputation, qualifications and background of Harbor Capital and RIAM US, as well as the qualifications of their respective personnel; |
• | The profitability of Harbor Capital and RIAM US, both separately and in the aggregate, with respect to each Fund, including the effect of revenues of Harbor Services Group, Inc. (“Harbor Services Group”), the Funds’ transfer agent, and Harbor Funds Distributors, Inc. (“Harbor Funds Distributors”), the Funds’ principal underwriter, on Harbor Capital’s profitability; |
• | The fees charged by Harbor Capital and RIAM US for investment advisory and subadvisory services, respectively, including, in each case, the portion of the fee to be retained by Harbor Capital, after payment of RIAM US’s fee, for the investment advisory and related services, including investment, business, legal, compliance, financial and administrative services, that Harbor Capital provides; |
• | The extent to which economies of scale might be realized as each Fund grows, and the extent to which each Fund’s advisory fee level reflects any economies of scale for the benefit of Fund investors; |
• | The fees and expense ratios of each Fund relative to the quality of services provided and the fees and expense ratios of similar investment companies; |
• | The short- and long-term investment performance of each Fund in comparison to peer groups and certain relevant benchmark indices and Harbor Capital’s efforts to address circumstances of underperformance where applicable; |
• | The compensation received by Harbor Services Group and Harbor Funds Distributors in consideration of the services each provides to the Funds; |
• | Any “fall out” benefits that might inure to Harbor Capital, RIAM US and their affiliates as a result of their relationship with the Funds; |
• | Information received at regular meetings throughout the year related to Fund performance and services rendered by Harbor Capital, as well as RIAM US, and research arrangements with brokers who execute transactions on behalf of RIAM US; |
• | Information contained in materials provided by Harbor Capital and compiled by Broadridge as to the investment returns, advisory fees and total expense ratios of the Institutional Class of each Fund (and, in certain cases, total expense ratios of the Investor Class) relative to those of other investment companies with similar objectives and strategies managed by other investment advisers, consisting both of a peer group of funds as well as a broader universe of funds compiled by Broadridge; and |
54
Harbor Robeco Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
• | Information contained in materials compiled by Morningstar as to the investment returns of the Institutional Class of each Fund relative to those of other investment companies with similar objectives and strategies managed by other investment advisers. |
Nature, Extent, and Quality of Services
The Trustees separately considered the nature, extent, and quality of the services provided by Harbor Capital and RIAM US. In their deliberations as to the approval of each Fund’s Investment Advisory Agreement and Subadvisory Agreement, the Trustees were mindful of the fact that, by choosing to invest in a Fund, the shareholders had entrusted Harbor Capital with the responsibility, subject to the approval of the Trustees, for selecting each Fund’s Subadviser, overseeing and monitoring that Subadviser’s performance and replacing the Subadviser if necessary. The Trustees also considered as relevant to their determination the favorable history, reputation, qualifications and background of Harbor Capital and RIAM US, as well as the qualifications of their respective personnel.
The Adviser’s Services. The Board evaluated the nature, extent, and quality of Harbor Capital’s services in light of the Board’s experience with Harbor Capital, as well as materials provided by Harbor Capital concerning the financial and other resources devoted by Harbor Capital to Harbor Funds, including the breadth and depth of experience and expertise of the investment, accounting, administrative, legal and compliance professionals dedicated to Harbor Funds’ operations. The Trustees determined that Harbor Capital has the expertise and resources to identify, select, oversee and monitor each Subadviser and to operate effectively as the “manager-of-managers” for the Funds.
The Subadviser’s Services. The Trustees’ consideration of the services provided by RIAM US included a review of each Fund’s portfolio managers, investment philosophy, style and processes and record of consistency therewith, the volatility of its results, its approach to controlling risk, and the quality and extent of its investment capabilities and resources, including the nature and extent of research it receives from broker-dealers (to the extent applicable) and other sources. In their deliberations with respect to each Fund, the Trustees considered the history of Harbor Funds’ relationship with RIAM US and Harbor Funds’ experience with RIAM US in this capacity.
The Trustees also considered RIAM US’s breadth and depth of experience and investment results in managing other accounts similar to the respective Fund. The Trustees had received a presentation by investment professionals from RIAM US at a meeting of the Board held in 2020. The Trustees reviewed information concerning RIAM US’s historical investment results in managing accounts and/or funds, as applicable, in a manner substantially similar to the relevant Fund.
Investment Performance, Advisory Fees and Expense Ratios
In considering each Fund’s performance, advisory fees and expense ratio, the Trustees requested and received from Harbor Capital data compiled by Broadridge and Morningstar. The Trustees also received information explaining the methodology for compilation of certain of this information and what it was intended to demonstrate. The Trustees analyzed the Institutional Class performance of each Fund, the advisory fees of each Fund, and the Institutional Class expenses of each Fund (after giving effect to waivers and/or reimbursements, if applicable, that reduced the fees or expenses of the Fund or its peer funds) and made certain observations and findings as to each Fund as noted below. The Trustees also reviewed certain Investor Class comparative fee and expense information they considered relevant to their deliberations. In evaluating performance, the Trustees recognized that the performance data reflects a snapshot of a period as of a particular date and that selecting a different performance period could produce significantly different results.
Harbor Robeco US Conservative Equities Fund. The Trustees considered Harbor Robeco US Conservative Equities Fund (inception date December 1, 2019), noting that its Institutional Class performance was below its Broadridge group and universe medians for the one-year and since inception periods ended December 31, 2020. The Morningstar data presented showed that the Fund’s one-year and since inception rolling returns as of December 31, 2020 each ranked in the fourth quartile. The Trustees noted that the Fund had underperformed its benchmark, the S&P 500 Index, for the one-year and since inception periods ended December 31, 2020. The Trustees noted that the short time period since the Fund’s inception did not support making any significant conclusions about the Fund’s performance.
The Trustees considered the expertise of RIAM US in managing assets generally and in the strategy used with respect to the Fund specifically, noting that RIAM US and its participating affiliates managed approximately $229.2 million in assets in this strategy, out of a total of approximately $185.6 billion in assets under management as of September 30, 2020. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
55
Harbor Robeco Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
The Trustees noted that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $25 million, showed the Fund’s management fee was below the group median for the Institutional Class. The actual total expense ratio for the Fund’s Institutional Class was below the group and universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
Harbor Robeco Global Conservative Equities Fund. The Trustees considered Harbor Robeco Global Conservative Equities Fund (inception date December 1, 2019), noting that its Institutional Class performance was below its Broadridge group and universe medians for the one-year and since inception periods ended December 31, 2020. The Morningstar data presented showed that the Fund’s one-year and since inception rolling returns as of December 31, 2020 each ranked in the fourth quartile. The Trustees noted that the Fund had underperformed its benchmark, the MSCI World (ND) Index, for the one-year and since inception periods ended December 31, 2020. The Trustees noted that the short time period since the Fund’s inception did not support making any significant conclusions about the Fund’s performance.
The Trustees considered the expertise of RIAM US in managing assets generally and in the strategy used with respect to the Fund specifically, noting that RIAM US and its participating affiliates managed approximately $9.9 billion in assets in this strategy, out of a total of approximately $185.6 billion in assets under management as of September 30, 2020. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
The Trustees noted that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $25 million, showed the Fund’s management fee was below the group median for the Institutional Class. The actual total expense ratio for the Fund’s Institutional Class was below the group and universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
Harbor Robeco International Conservative Equities Fund. The Trustees considered Harbor Robeco International Conservative Equities Fund (inception date December 1, 2019), noting that its Institutional Class performance was below its Broadridge group and universe medians for the one-year and since inception periods ended December 31, 2020. The Morningstar data presented showed that the Fund’s one-year and since inception rolling returns as of December 31, 2020 ranked in the second and third quartiles, respectively. The Trustees noted that the Fund had underperformed its benchmark, the MSCI EAFE (ND) Index, for the one -year and since inception periods ended December 31, 2020. The Trustees noted that the short time period since the Fund’s inception did not support making any significant conclusions about the Fund’s performance.
The Trustees considered the expertise of RIAM US in managing assets generally and in the strategy used with respect to the Fund specifically, noting that RIAM US and its participating affiliates managed approximately $77.1 million in assets in this strategy, out of a total of approximately $185.6 billion in assets under management as of September 30, 2020. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
The Trustees noted that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $25 million, showed the Fund’s management fee was below the group median for the Institutional Class. The actual total expense ratio for the Fund’s Institutional Class was below the group and universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
Harbor Robeco Emerging Markets Conservative Equities Fund. The Trustees considered Harbor Robeco Emerging Markets Conservative Equities Fund (inception date December 1, 2019), noting that its Institutional Class performance was below its Broadridge group and universe medians for the one-year and since inception periods ended December 31, 2020. The Morningstar data presented showed that the Fund’s one-year and since inception rolling returns as of December 31, 2020 each ranked in the fourth quartile. The Trustees noted that the Fund had underperformed its benchmark, the MSCI Emerging Markets (ND) Index, for the one-year and since inception periods ended December 31, 2020. The Trustees noted that the short time period since the Fund’s inception did not support making any significant conclusions about the Fund’s performance.
The Trustees considered the expertise of RIAM US in managing assets generally and in the strategy used with respect to the Fund specifically, noting that RIAM US and its participating affiliates managed approximately $3.9 billion in assets in this strategy, out of a total of approximately $185.6 billion in assets under management as of September 30, 2020. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
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Harbor Robeco Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
The Trustees noted that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $25 million, showed the Fund’s management fee was below the group median for the Institutional Class. The actual total expense ratio for the Fund’s Institutional Class was below the group and universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
Harbor Robeco Emerging Markets Active Equities Fund. The Trustees considered Harbor Robeco Emerging Markets Active Equities Fund (inception date December 1, 2019), noting that its Institutional Class performance was below its Broadridge group and universe medians for the one-year and since inception periods ended December 31, 2020. The Morningstar data presented showed that the Fund’s one-year and since inception rolling returns as of December 31, 2020 ranked in the fourth quartile. The Trustees noted that the Fund had underperformed its benchmark, the MSCI Emerging Markets (ND) Index, for the one-year and since inception periods ended December 31, 2020. The Trustees noted that the short time period since the Fund’s inception did not support making any significant conclusions about the Fund’s performance.
The Trustees considered the expertise of RIAM US in managing assets generally and in the strategy used with respect to the Fund specifically, noting that RIAM US and its participating affiliates managed approximately $2.6 billion in assets in this strategy, out of a total of approximately $185.6 billion in assets under management as of September 30, 2020. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
The Trustees noted that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $25 million, showed the Fund’s management fee was below the group median for the Institutional Class. The actual total expense ratio for the Fund’s Institutional Class was below the group and universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
The Trustees also separately considered the allocation between Harbor Capital and RIAM US of the relevant Fund’s investment advisory fee (i.e., the amount of the advisory fee retained by Harbor Capital relative to that paid to the RIAM US as a subadvisory fee). They determined in each case that the allocation was reasonable and the product of arm’s length negotiation between Harbor Capital and RIAM US.
Profitability
The Trustees also considered Harbor Capital’s and RIAM US’s profitability, both separately and in the aggregate, in operating each of the Funds (as well as Harbor Capital’s profitability on a fund complex-wide basis) as presented by Harbor Capital, and the allocation methodology used to compute such profitability. The Trustees concluded that the methodology was reasonable and that a reasonable level of profitability was important to provide suitable incentives for Harbor Capital and RIAM US to continue to attract and maintain high-quality personnel and to invest in infrastructure and other resources to support and enhance the Funds’ operations. In considering Harbor Capital’s profitability generally, the Trustees also reviewed the compensation received by Harbor Services Group and Harbor Funds Distributors in consideration of the transfer agency and distribution services, respectively, that are provided to Harbor Funds and any other benefits enjoyed by Harbor Capital and its affiliates as a result of their relationship with Harbor Funds.
The Trustees also considered that profitability calculations with respect to advisory, transfer agency and distribution operations vary significantly depending on whether revenues on which the calculation is based are taken gross or net of amounts paid to third parties, such as subadvisory fee expenses and certain transfer agency expenses, and noted that subadvisory fee expenses are a direct expense of Harbor Capital. The Trustees also noted that Harbor Capital was, in all cases, waiving a portion of its advisory fee and/or paying or reimbursing a portion of Fund expenses. The Trustees determined that Harbor Capital’s profitability in operating each Fund was not excessive.
Economies of Scale
The Trustees also considered the extent to which economies of scale might be realized as each Fund grows, and the extent to which each Fund’s advisory fee level reflects these economies of scale for the benefit of Fund investors. The Trustees specifically considered whether any advisory fee reduction “breakpoints” should be added to the advisory fee payable by any Fund. As noted above, the Trustees concluded that Harbor Capital’s profitability in each case was not excessive. They concluded that the Funds’ fee structures reflected economies of scale to date and that breakpoints in these fee structures were not required at the present time. The Trustees noted they intend to monitor each Fund’s asset growth in connection with future reviews of each Fund’s Investment Advisory Agreement to determine whether breakpoints may be appropriate at such time.
57
Harbor Robeco Funds
Additional Information—Continued
Additional Information—Continued
Review of Liqudity Risk Management Program
The Trust has adopted pursuant to Rule 22e-4 under the Investment Company Act (“Rule 22e-4”) a Liquidity Risk Management Program (the “Program”) for the Funds. The Board has designated a committee of Harbor Capital employees as the Program Administrator.
The Program is designed to assess and manage each Fund’s liquidity risk. For purposes of Rule 22e-4, “liquidity risk” is defined as the risk that a Fund is unable to satisfy redemption requests without significantly diluting remaining investors’ interests in the Fund. Components of the Program include: (i) periodic assessment of each Fund’s liquidity risk based on certain factors; (ii) classification of each Fund’s holdings into one of four liquidity categories (Highly Liquid, Moderately Liquid, Less Liquid and Illiquid) that reflect an estimate of liquidity under current market conditions; (iii) to the extent a Fund does not invest primarily in Highly Liquid investments, establishment of an appropriate Highly Liquid Investment Minimum (“HLIM”) (as defined in Rule 22e-4) for such Fund and ongoing monitoring of the Fund’s net assets to assess compliance with the Fund’s HLIM; (iv) a limit on the ability of a Fund to acquire illiquid investments in excess of 15% of the Fund’s net assets; and (v) periodic reporting to the Board.
At a meeting held on November 10, 2020, the Board of Trustees reviewed the operation and effectiveness of the Program for the period beginning October 1, 2019 and ending September 30, 2020 (the “period”). At the November 10, 2020 meeting, the Board reviewed a report prepared by, and received a presentation from, the Program Administrator regarding the operation of the Program, its adequacy, and the effectiveness of its implementation during the period. The Program Administrator’s report included, among other things, a review of: (i) the operation of the Program overall during the period, which included a period of increased market volatility related to the COVID-19 pandemic in the first half of 2020; (ii) the activities conducted by the Program Administrator with respect to the Program; (iii) the level of portfolio investments classified into each of the four liquidity categories and the services provided by the third-party vendor engaged by the Trust to facilitate such classification with respect to certain of the Funds; and (iv) the most recent liquidity risk assessment for the Funds conducted by the Program Administrator in accordance with Rule 22e-4. Based upon its review, the Program Administrator determined that the Program was adequate and effective in facilitating the Funds’ compliance with Rule 22e-4 during the period.
58
111 South Wacker Drive, 34th Floor | Chicago, IL 60606-4302 | 800-422-1050 | harborfunds.com |
Trustees & Officers
Charles F. McCain
Chairman, President & Trustee
Chairman, President & Trustee
Scott M. Amero
Trustee
Trustee
Donna J. Dean
Trustee
Trustee
Randall A. Hack
Trustee
Trustee
Robert Kasdin
Trustee
Trustee
Kathryn L. Quirk
Trustee
Trustee
Douglas J. Skinner
Trustee
Trustee
Ann M. Spruill
Trustee
Trustee
Erik D. Ojala
Chief Compliance Officer
Chief Compliance Officer
Anmarie S. Kolinski
Treasurer
Treasurer
Kristof M. Gleich
Vice President
Vice President
Gregg M. Boland
Vice President
Vice President
Diana R. Podgorny
Secretary
Secretary
Jodie L. Crotteau
Assistant Secretary
Assistant Secretary
Lana M. Lewandowski
AML Compliance Officer
& Assistant Secretary
AML Compliance Officer
& Assistant Secretary
Lora A. Kmieciak
Assistant Treasurer
Assistant Treasurer
John M. Paral
Assistant Treasurer
Assistant Treasurer
Investment Adviser
Harbor Capital Advisors, Inc.
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4400
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4400
Distributor
Harbor Funds Distributors, Inc.
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4600
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4600
Shareholder Services
Harbor Services Group, Inc.
P.O. Box 804660
Chicago, IL 60680-4108
800-422-1050
P.O. Box 804660
Chicago, IL 60680-4108
800-422-1050
FD.SAR.HR.0421
Semi-Annual Report
April 30, 2021
International & Global Funds
Retirement Class | Institutional Class | Administrative Class | Investor Class | |
Harbor Diversified International All Cap Fund | HNIDX | HAIDX | HRIDX | HIIDX |
Harbor Emerging Markets Equity Fund | HNEMX | HAEMX | HREMX | HIEEX |
Harbor Focused International Fund | HNFRX | HNFSX | HNFDX | HNFIX |
Harbor Global Leaders Fund | HNGIX | HGGAX | HRGAX | HGGIX |
Harbor International Fund | HNINX | HAINX | HRINX | HIINX |
Harbor International Growth Fund | HNGFX | HAIGX | HRIGX | HIIGX |
Harbor International Small Cap Fund | HNISX | HAISX | HRISX | HIISX |
Harbor Overseas Fund | HAORX | HAOSX | HAOAX | HAONX |
Table of Contents
This document must be preceded or accompanied by a Prospectus.
Letter from the Chairman
Charles F. McCain Chairman |
Dear Fellow Shareholder:
Looking back on the past two calendar quarters reveals a tale of two markets. After a strong summer market rally, volatility reemerged last fall, due to continuing investor concerns about the pandemic, increasing political rhetoric, and other geopolitical events. However, the resolution of the presidential election, new vaccine approvals/rollouts, along with the passage of two U.S. fiscal stimulus packages, led to improved investor sentiment and appetite for risk that generated an equity market rally that continued through the first quarter of 2021—although at a slower pace than in the fourth quarter of 2020. U.S. and global equity markets produced positive total returns over the six-month period ended April 30, 2021. The S&P 500 added to its strong performance of 12.15% in the fourth quarter, with a return of 6.17% in the first quarter, outperforming the MSCI EAFE (ND) and the MSCI Emerging Markets (ND) Indexes, which returned 3.38% and 2.29%, respectively, for the first quarter.
Beginning late last fall, we saw a pronounced reversal from a growth-driven to a value-driven equity market, and this rotation has persisted through the first quarter. The market rotation occurred globally—in the U.S., developed, and emerging equity markets—by style (cyclical/value outperformed growth), by market cap (small cap outperformed large cap), and by factor (momentum reversed, while beta remained strong).
Prior to the fourth quarter, U.S. growth-oriented stocks were the dominant outperformers by a large margin, with value-oriented names trading at huge discounts. However, by late in the year and moving through the first quarter, value outperformed growth, with the Russell 3000® Value Index beating the Russell 3000® Growth Index by the widest margin since the first quarter of 2001. Cyclical industries (e.g., oil & gas, machinery, construction materials, and metals & mining), along with the Energy and Financials sectors, took center stage. In contrast, the Information Technology, Consumer Staples, and Healthcare sectors retreated. While large caps have been in favor in past years (FAANG stocks etc.) and still remain ahead over trailing three- and five-year periods, the trend reversed over the six-month reporting period, which saw small caps outperforming. The bond markets took a hit, as investors shifted to equities in anticipation of a broader economic recovery, and the yield curve steepened at the long end. The yield on 10-year Treasuries rose from 0.78% after the election to 1.74% in March—one of the most significant moves in decades.
As economies around the world have begun to reopen, and markets have rallied, the focus is shifting from fear to cautious optimism. Growth in the U.S. gross domestic product (GDP) over the past two quarters reflects the long-hoped-for economic recovery now underway, the reopening of businesses, and the massive government response to the COVID-19 pandemic. GDP grew by 4.3% in the fourth quarter and by an estimated 6.4% in the first quarter. The Biden administration passed the $1.9 trillion American Rescue Plan, although without a single Republican vote. Its proposals for still more fiscal stimulus (the American Jobs Plan at $2.3 trillion and the American Families Plan at $1.8 trillion) will have to pass the gauntlet of a divided Congress; the scope, size, and timing of those plans will no doubt undergo protracted negotiations.
Harbor expects that volatility will remain elevated for the foreseeable future. But we also believe there are thoughtful, practical solutions to manage volatility and enable investors to reach their long-term goals. Our subadvisers are active portfolio managers who remain focused on uncovering opportunities and skillfully executing their strategies to deliver shareholder value in a climate of economic and geopolitical uncertainty, unprecedented health challenges, and financial market volatility. We believe that thoughtful, active management and adherence to enduring investment principles such as diversification, discipline, and a long-term view, will stand the test of time.
Over the past year, we have seen massive disruptions and challenges that have taken a severe toll on human lives. But the human spirit has remained resilient through it all. We believe there is now more reason for cautious optimism than fear as we look ahead.
I hope you and your families stay safe through this difficult time. Thank you for your confidence and continued investment in Harbor Funds.
June 22, 2021
Charles F. McCain |
Chairman |
1
Harbor Diversified International All Cap Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Marathon Asset Management LLP
Orion House
5 Upper St. Martin’s Lane
London, WC2H 9EA
England
London, WC2H 9EA
England
Portfolio Managers
Neil M. Ostrer
Since 2015
Since 2015
Charles Carter
Since 2015
Since 2015
Nick Longhurst
Since 2015
Since 2015
William J. Arah
Since 2015
Since 2015
Simon Somerville
Since 2016
Since 2016
Michael Nickson, CFA
Since 2018
Since 2018
Michael Godfrey, CFA
Since 2015
Since 2015
David Cull, CFA
Since 2015
Since 2015
Robert Anstey, CFA
Since 2015
Since 2015
Justin Hill
Since 2021
Marathon Asset Management LLP (operating as Marathon-London in the U.S.) has subadvised the Fund since 2015.
Investment Objective
The Fund seeks long-term growth of capital.
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
The six-month period ended April 30, 2021 displayed strong market performance. There was a notable change in style leadership in equity markets that took place around November 9, 2020 with the announcement of an effective vaccine. For years, the market has been led mainly by mega-cap companies which are either ‘growth’ businesses or reliable income generators (“bond proxies”). This began to change in November, initially in Europe and subsequently spreading to all other major markets. The ‘value’ area of the market and smaller capitalization companies (and particularly those businesses which are both) began to outperform. Although this new trend has now been in place for around six months, the disparity in valuations between the ‘growth’ and ‘value’ segments of the market remains high from a historical perspective, reflecting the extremes that had been reached.
Cyclical sectors, such as Financials, Energy, Materials and Information Technology have been the key beneficiaries over the period, with more defensive sectors, including Health Care, Consumer Staples and Utilities, performing relatively weakly. Given the depth of the COVID-19 crash earlier in the year, this might be expected; cyclicals in general fell faster and further than their more defensive peers and so had further to recover as the outlook improved.
The MSCI All Country World Ex. U.S. (ND) Index performed well and returned 27.40% over the six-month period ended April 30, 2021. On a regional basis, Canada, which averaged 6.48% of the Index, led the way returning 34.83%, closely followed by European markets which returned 33.32% and averaged 38.93% of the MSCI All Country World Ex. U.S. (ND) Index over the period. Developed Asian ex-Japan markets (Australia, Hong Kong, Singapore and New Zealand), which constituted 7.34% of the Index on average over the period, were also strong performers during the six-month period, returning 31.65%. Emerging Markets and Japanese performance within the MSCI ACWI ex-U.S. Index was not so strong in absolute terms, returning 22.60% (with an average weight of 30.21% of the Index) and 17.16% (with an average weight of 15.75% of the Index) respectively.
Performance
Harbor Diversified International All Cap Fund returned 34.05% (Retirement Class), 34.05% (Institutional Class), 33.78% (Administrative Class) and 33.68% (Investor Class), while the MSCI All Country World Ex. U.S. (ND) Index returned 27.40% during the six-month period ended April 30, 2021. Returns were driven by stock selection, particularly in emerging markets, Europe and Canada. Chinese positioning in the emerging markets allocation was particularly beneficial to performance. A significant underweight to a poorly performing market, strong stock selection and currency effects were all value additive. Within Europe, the overweight to the strengthening British Pound and stock specific exposure within the market were strongly beneficial. The underweight position to the Swiss market and currency also buoyed returns. Conversely, the Fund’s holdings in the Pacific ex-Japan region lagged.
Stock selection within sectors, was positive overall, though sector allocation was a small negative. Currency effects also had a positive impact. The Fund’s aggregate underweight exposure to the Health Care and Utilities sectors (which underperformed relative to the MSCI All County World Ex. U.S. (ND) Index) contributed positively. However, its underweight position in the Financials and Energy sectors (which outperformed the overall MSCI All County World Ex. U.S. (ND) Index return over the period) weighed on relative returns. Stock selection was notably strong in the Consumer Discretionary and Financials sectors, and contributed positively to outperformance in all other sectors except Utilities and Real Estate.
At the stock level, Alibaba, the Chinese internet retailer, which the Fund avoided, has contributed most strongly to recent outperformance, with the stock falling by more than 20% on news of an antitrust investigation by the Chinese authorities shortly after the start of the period. Tencent was a similar story. Shares in BlackBerry, the Canada-listed technology company
2
Harbor Diversified International All Cap Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | |||||||||
6 Months | 5 Years | Life of Fund | |||||||||
Harbor Diversified International All Cap Fund | |||||||||||
Retirement Class1,2 | 34.05% | 51.49% | 9.66% | 8.17% | |||||||
Institutional Class1 | 34.05 | 51.33 | 9.58 | 8.11 | |||||||
Administrative Class1 | 33.78 | 50.91 | 9.30 | 7.83 | |||||||
Investor Class1 | 33.68 | 50.72 | 9.19 | 7.71 | |||||||
Comparative Index | |||||||||||
MSCI All Country World Ex. U.S. (ND)1 | 27.40% | 42.98% | 9.83% | 8.56% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.72% (Net) and 0.85% (Gross) (Retirement Class); 0.80% (Net) and 0.93% (Gross) (Institutional Class); 1.05% (Net) and 1.18% (Gross) (Administrative Class); 1.16% (Net) and 1.29% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2022. The management fee rate is 0.75% on assets up to $12 billion and 0.65% on assets in excess of $12 billion. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
once famed for its handsets, soared in late January. Amateur online investors, informally known as ‘Reddit traders’, placed ‘bets’ against short sellers of BlackBerry stock via a ‘short squeeze’ trading strategy, along with the likes of GameStop, resulting in the share price dramatically rising. This resulted in the valuation substantially exceeding the Subadviser’s target, or anything reasonably supported by fundamental analysis, in our view, so the position was sold. At the other end of the performance table, the underweight to Dutch lithography business ASML weighed on performance when the company, which is the only producer of the extreme ultraviolet lithography machines used in certain types of semi-conductor manufacturing, signed a large multi-year order, which we believe will boost earnings and helped to propel its shares higher as a result. Similarly, not owning French luxury goods provider, LVMH, hurt performance, when sales rebounded unexpectedly strongly from the initial COVID-19 related downturn, and financial results beat expectations. Danish medical device maker, Coloplast performed comparatively poorly over the period. While profits have been resilient, Coloplast has seen some impact from a decline in elective procedures, and, though shares have increased in value, they have not matched the pace of the benchmark index.
Outlook & Strategy
We remain committed to the implementation of our bottom-up analytical efforts within the capital cycle investment framework and, therefore, are seeking to invest in companies that, in our view, exhibit favorable supply side dynamics with management teams that have a track record of allocating capital efficiently. Developments over the last year should highlight the shortfalls of spending too much energy on forecasted outlooks; we are not looking to react to market volatility, rather placing emphasis on trusting the longstanding investment process that we have been committed to over the our 30 plus year history with low levels of investment turnover. It remains to be seen whether the rotation in the prevailing trend from growth and large cap to value and smaller cap names represents an ongoing change or a short-term interruption; however, history suggests that valuation differentials, which remain historically high, tend to revert to the mean (then overshoot) given time, in our view.
1 | The “Life of Fund” return as shown reflects the period 11/02/2015 through 04/30/2021. |
2 | Retirement Class shares commenced operations on March 1, 2016. The performance attributed to the Retirement Class shares prior to that date is that of the Institutional Class shares. Performance prior to March 1, 2016 has not been adjusted to reflect the lower expenses of Retirement Class shares. During this period, Retirement Class shares would have had returns similar to, but potentially higher than, Institutional Class shares due to the fact that Retirement Class shares represent interests in the same portfolio as Institutional Class shares but are subject to lower expenses. |
This report contains the current opinions of Marathon Asset Management LLP as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Investing in international and emerging markets poses special risks, including potentially greater price volatility due to social, political and economic factors, as well as currency exchange rate fluctuations. These risks are more severe for securities of issuers in emerging market regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
3
Harbor Diversified International All Cap Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
REGION BREAKDOWN (% of investments)
(Excludes derivatives and short-term investments)
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of April 30, 2021, there was no foreign currency denomination that comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—98.3% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—1.0% | |||
29,878 | Airbus SE (France)* | $ 3,593 | |
342,086 | BAE Systems plc (United Kingdom) | 2,390 | |
502,693 | Embraer SA (Brazil)* | 1,425 | |
1,501,329 | Rolls-Royce Holdings plc (United Kingdom)* | 2,173 | |
13,192 | Thales SA (France) | 1,345 | |
10,926 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
AIR FREIGHT & LOGISTICS—0.2% | |||
126,920 | Grupo Aeroportuario del Pacifico SAB de CV (Mexico)* | $ 1,306 | |
26,292 | Oesterreichische Post AG (Austria) | 1,166 | |
2,472 | |||
AIRLINES—0.5% | |||
169,309 | Air Canada (Canada)* | 3,412 |
4
Harbor Diversified International All Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
AIRLINES—Continued | |||
145,857 | EasyJet plc (United Kingdom)* | $ 2,085 | |
148,369 | Qantas Airways Ltd. (Australia)* | 563 | |
6,060 | |||
AUTO COMPONENTS—1.2% | |||
55,600 | Bridgestone Corp. (Japan) | 2,228 | |
262,550 | Gestamp Automocion SA (Spain)*,1 | 1,356 | |
264,477 | GUD Holdings Ltd. (Australia) | 2,719 | |
29,245 | Hankook Tire & Technology Co. Ltd. (South Korea) | 1,262 | |
75,500 | Johnson Electric Holdings Ltd. (Hong Kong) | 201 | |
16,500 | Koito Manufacturing Co. Ltd. (Japan) | 1,029 | |
34,498 | Magna International Inc. (Canada) | 3,258 | |
1,191,009 | Nemak SAB de CV (Mexico)*,1 | 349 | |
42,400 | Sumitomo Electric Industries Ltd. (Japan) | 631 | |
12,600 | Toyota Industries Corp. (Japan) | 1,012 | |
14,045 | |||
AUTOMOBILES—1.2% | |||
1,514,431 | BAIC Motor Corp. Ltd. (China)1 | 547 | |
30,356 | Bayerische Motoren Werke AG (Germany) | 3,042 | |
7,719 | Hyundai Motor Co. (South Korea) | 1,468 | |
229,150 | Mahindra & Mahindra Ltd. (India) | 2,323 | |
89,500 | Toyota Motor Corp. (Japan) | 6,697 | |
14,077 | |||
BANKS—8.4% | |||
80,266 | Australia & New Zealand Banking Group Ltd. (Australia) | 1,771 | |
716,307 | Axis Bank Ltd. (India)* | 6,854 | |
70,639 | Bancolombia SA ADR (Colombia)2 | 2,114 | |
3,792,900 | Bank Mandiri Persero TBK PT (Indonesia) | 1,615 | |
664,457 | Bank of Ireland Group plc (Ireland)* | 3,894 | |
50,827 | Bank of Nova Scotia (Canada) | 3,237 | |
809,240 | Bank of The Philippine Islands (Philippines) | 1,391 | |
3,340,889 | Barclays plc (United Kingdom) | 8,088 | |
104,428 | BNP Paribas SA (France) | 6,696 | |
941,331 | Cairo Mezz plc (Greece)* | 138 | |
677,685 | Caixabank SA (Spain) | 2,168 | |
39,966 | Close Brothers Group plc (United Kingdom) | 877 | |
23,246 | Danske Bank AS (Denmark) | 442 | |
87,779 | DBS Group Holdings Ltd. (Singapore) | 1,967 | |
94,356 | DNB ASA (Norway) | 2,024 | |
11,271,699 | Eurobank Ergasias SA (Greece)* | 10,639 | |
30,800 | Fukuoka Financial Group Inc. (Japan) | 525 | |
8,377,636 | Grupo Financiero Inbursa SAB de CV (Mexico)* | 7,816 | |
47,184 | Hana Financial Group Inc. (South Korea) | 1,934 | |
132,762 | HSBC Holdings plc (Hong Kong) | 830 | |
281,543 | Intesa Sanpaolo SpA (Italy) | 785 | |
993,300 | Kasikornbank PCL (Thailand) | 4,204 | |
53,146 | Komercni Banka AS (Czech Republic)* | 1,609 | |
9,783,687 | Lloyds Banking Group plc (United Kingdom) | 6,135 | |
976,900 | Resona Holdings Inc. (Japan) | 4,021 | |
274,933 | Standard Chartered plc (United Kingdom) | 1,972 | |
73,100 | Sumitomo Mitsui Financial Group Inc. (Japan) | 2,568 | |
26,600 | Sumitomo Mitsui Trust Holdings Inc. (Japan) | 907 | |
308,951 | Svenska Handelsbanken AB (Sweden) | 3,578 | |
291,948 | UniCredit SpA (Italy) | 2,999 | |
114,982 | United Overseas Bank Ltd. (Singapore) | 2,292 | |
96,090 | |||
BEVERAGES—3.5% | |||
1,425,398 | AmBev SA (Brazil) | 3,920 | |
37,861 | Anheuser-Busch InBev SA (Belgium) | 2,682 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
BEVERAGES—Continued | |||
13,500 | Asahi Group Holdings Ltd. (Japan) | $ 565 | |
17,355 | Carlsberg AS (Denmark) | 3,045 | |
35,899 | Coca-Cola European Partners plc (United States) | 2,040 | |
137,464 | Davide Campari-Milano NV (Netherlands) | 1,622 | |
109,607 | Diageo plc (United Kingdom) | 4,920 | |
1,097,834 | East African Breweries Ltd. (Kenya)* | 1,712 | |
85,748 | Fomento Economico Mexicano SAB de CV ADR (Mexico)2 | 6,646 | |
44,484 | Heineken NV (Netherlands) | 5,160 | |
263,400 | Kirin Holdings Co. Ltd. (Japan) | 4,947 | |
4,182 | Pernod Ricard SA (France) | 859 | |
21,400 | Suntory Beverage & Food Ltd. (Japan) | 722 | |
1,179,800 | Thai Beverage PCL (Thailand) | 633 | |
84,000 | Tsingtao Brewery Co. Ltd. (China) | 761 | |
40,234 | |||
BUILDING PRODUCTS—1.4% | |||
246,588 | Assa Abloy AB Class B (Sweden) | 7,030 | |
9,084 | Geberit AG (Switzerland) | 5,977 | |
239,873 | GWA Group Ltd. (Australia) | 552 | |
93,900 | LIXIL Group Corp. (Japan) | 2,544 | |
16,103 | |||
CAPITAL MARKETS—2.6% | |||
335,655 | 3i Group plc (United Kingdom) | 5,945 | |
214,133 | Brookfield Asset Management Inc. (Canada) | 9,761 | |
104,700 | Daiwa Securities Group Inc. (Japan) | 559 | |
56,146 | Georgia Capital plc (United Kingdom)* | 437 | |
170,035 | IG Group Holdings plc (United Kingdom) | 2,151 | |
22,500 | JAFCO Co. Ltd. (Japan) | 1,620 | |
16,700 | Japan Exchange Group Inc. (Japan) | 392 | |
439,990 | Jupiter Fund Management plc (United Kingdom) | 1,570 | |
430,300 | Nomura Holdings Inc. (Japan) | 2,313 | |
262,514 | PSG Group Ltd. (South Africa) | 1,355 | |
18,047 | Rathbone Brothers plc (United Kingdom) | 422 | |
139,687 | St. James's Place plc (United Kingdom) | 2,627 | |
33,561 | UBS Group AG (Switzerland) | 512 | |
29,664 | |||
CHEMICALS—1.3% | |||
85,000 | Air Water Inc. (Japan) | 1,406 | |
60,456 | BASF SE (Germany) | 4,872 | |
54,990 | Enaex SA (Chile) | 689 | |
6,200 | Nippon Shokubai Co. Ltd. (Japan) | 326 | |
30,200 | Nissan Chemical Corp. (Japan) | 1,553 | |
6,600 | Nitto Denko Corp. (Japan) | 546 | |
277,335 | Orica Ltd. (Australia) | 2,887 | |
7,400 | Shin-Etsu Chemical Co. Ltd. (Japan) | 1,249 | |
13,000 | Sumitomo Bakelite Co. Ltd. (Japan) | 526 | |
16,200 | Tokyo Ohka Kogyo Co. Ltd. (Japan) | 1,074 | |
15,128 | |||
COMMERCIAL SERVICES & SUPPLIES—2.2% | |||
10,700 | AEON Delight Co. Ltd. (Japan)* | 326 | |
380,505 | Brambles Ltd. (Australia) | 3,048 | |
2,042,582 | Cleanaway Waste Management Ltd. (Australia) | 4,478 | |
46,032 | Elis SA (France)* | 824 | |
343,933 | HomeServe plc (United Kingdom) | 5,198 | |
80,685 | Ritchie Bros Auctioneers Inc. (Canada) | 5,133 | |
21,868 | S-1 Corp. (South Korea) | 1,601 | |
15,700 | Secom Co. Ltd. (Japan) | 1,308 |
5
Harbor Diversified International All Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES—Continued | |||
1,233,305 | Serco Group plc (United Kingdom) | $ 2,388 | |
19,200 | Sohgo Security Services Co. Ltd. (Japan) | 842 | |
25,146 | |||
CONSTRUCTION & ENGINEERING—0.9% | |||
50,653 | Boskalis Westminster NV (Netherlands) | 1,617 | |
22,027 | Ferrovial SA (Spain) | 625 | |
130,800 | Maeda Corp. (Japan) | 1,118 | |
327,700 | Obayashi Corp. (Japan) | 2,998 | |
203,700 | Penta-Ocean Construction Co. Ltd. (Japan) | 1,588 | |
1,230,171 | Raubex Group Ltd. (South Africa) | 2,239 | |
10,185 | |||
CONSTRUCTION MATERIALS—1.0% | |||
17,132 | CRH plc (Ireland) | 811 | |
221,398 | Fletcher Building Ltd. (New Zealand) | 1,151 | |
6,078 | Imerys SA (France) | 316 | |
20,312 | James Hardie Industries PLC CDI (Australia)*,2 | 669 | |
24,124 | LafargeHolcim Ltd. (Switzerland)* | 1,489 | |
112,900 | Taiheiyo Cement Corp. (Japan) | 2,835 | |
9,431 | Vicat SA (France) | 474 | |
84,435 | Wienerberger AG (Austria) | 3,310 | |
11,055 | |||
CONSUMER FINANCE—1.0% | |||
6,637,221 | Gentera SAB de CV (Mexico)* | 3,355 | |
346,488 | International Personal Finance plc (United Kingdom)* | 610 | |
329,768 | Non-Standard Finance plc (United Kingdom)*,1 | 29 | |
251,034 | Provident Financial plc (United Kingdom)* | 849 | |
336,035 | Shriram Transport Finance Co. Ltd. (India) | 6,064 | |
10,907 | |||
CONTAINERS & PACKAGING—0.4% | |||
518,892 | DS Smith plc (United Kingdom) | 3,016 | |
109,900 | Toyo Seikan Group Holdings Ltd. (Japan) | 1,288 | |
4,304 | |||
DISTRIBUTORS—0.5% | |||
261,665 | Inchcape plc (United Kingdom) | 2,824 | |
143,300 | Jardine Cycle & Carriage Ltd. (Singapore) | 2,495 | |
5,319 | |||
DIVERSIFIED FINANCIAL SERVICES—0.6% | |||
674,840 | AMP Ltd. (Australia) | 579 | |
72,188 | Challenger Ltd. (Australia) | 283 | |
846,000 | First Pacific Co. Ltd. (Hong Kong) | 290 | |
156,768 | JSE Ltd. (South Africa) | 1,267 | |
8,434 | Macquarie Group Ltd. (Australia) | 1,040 | |
476,368 | Remgro Ltd. (South Africa) | 3,615 | |
7,074 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—1.6% | |||
47,477 | BCE Inc. (Canada) | 2,244 | |
121,645 | Deutsche Telekom AG (Germany) | 2,341 | |
732,873 | Koninklijke KPN NV (Netherlands) | 2,528 | |
199,515 | KT Corp. ADR (South Korea)2 | 2,514 | |
201,200 | Nippon Telegraph & Telephone Corp. (Japan) | 5,073 | |
298,900 | Singapore Telecommunications Ltd. (Singapore) | 561 | |
646,837 | Telkom SA SOC Ltd. (South Africa) | 1,751 | |
291,946 | Telstra Corp. Ltd. (Australia) | 763 | |
17,775 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
ELECTRIC UTILITIES—0.3% | |||
26,691 | Orsted AS (Denmark)1 | $ 3,880 | |
ELECTRICAL EQUIPMENT—2.5% | |||
113,868 | ABB Ltd. (Switzerland) | 3,699 | |
58,542 | Legrand SA (France) | 5,698 | |
8,600 | Mabuchi Motor Co. Ltd. (Japan) | 344 | |
31,136 | Schneider Electric SE (France) | 4,968 | |
1,972,850 | TECO Electric and Machinery Co. Ltd. (Taiwan) | 2,457 | |
275,125 | Vestas Wind Systems AS (Denmark) | 11,347 | |
28,513 | |||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—2.1% | |||
7,000 | Azbil Corp. (Japan) | 282 | |
425,000 | Chroma ATE Inc. (Taiwan) | 2,937 | |
487,315 | Delta Electronics Inc. (Taiwan) | 5,220 | |
215,500 | Hitachi Ltd. (Japan) | 10,667 | |
30,500 | Kyocera Corp. (Japan) | 1,852 | |
8,700 | Omron Corp. (Japan) | 659 | |
9,300 | Shimadzu Corp. (Japan) | 326 | |
11,200 | TDK Corp. (Japan) | 1,519 | |
23,462 | |||
ENERGY EQUIPMENT & SERVICES—0.3% | |||
301,468 | John Wood Group plc (United Kingdom)* | 1,172 | |
47,850 | Petrofac Ltd. (United Kingdom)* | 87 | |
974,877 | Saipem SpA (Italy)* | 2,248 | |
6,091 | Technip Energies NV (France)* | 87 | |
30,651 | TechnipFMC plc (France)* | 228 | |
3,822 | |||
ENTERTAINMENT—0.8% | |||
26,305 | CTS Eventim AG & Co. KGaA (Germany)* | 1,816 | |
9,500 | Konami Holdings Corp. (Japan) | 567 | |
4,888,900 | Major Cineplex Group PCL (Thailand)* | 3,011 | |
59,530 | Modern Times Group MTG AB Class B (Sweden)* | 908 | |
16,600 | Nexon Co. Ltd. (Japan) | 549 | |
1,400 | Nintendo Co. Ltd. (Japan) | 803 | |
24,100 | Toho Co. Ltd. (Japan) | 960 | |
8,614 | |||
FOOD & STAPLES RETAILING—1.8% | |||
129,809 | Alimentation Couche-Tard Inc. (Canada) | 4,399 | |
107,860 | Koninklijke Ahold Delhaize NV (Netherlands) | 2,903 | |
77,261 | Loblaw Cos. Ltd. (Canada) | 4,290 | |
16,500 | Matsumotokiyoshi Holdings Co. Ltd. (Japan) | 663 | |
155,398 | Metcash Ltd. (Australia) | 426 | |
25,413 | PriceSmart Inc. (United States) | 2,136 | |
63,900 | Seven & I Holdings Co. Ltd. (Japan) | 2,759 | |
22,500 | Sundrug Co. Ltd. (Japan) | 767 | |
554,744 | Tesco plc (United Kingdom) | 1,693 | |
20,036 | |||
FOOD PRODUCTS—3.1% | |||
13,600 | Calbee Inc. (Japan) | 326 | |
246,000 | China Mengniu Dairy Co. Ltd. (China)* | 1,317 | |
3,677,800 | Delfi Ltd. (Singapore) | 2,417 | |
215,490 | Devro plc (United Kingdom) | 610 | |
28,000 | Fuji Oil Holdings Inc. (Japan) | 722 | |
2,897,222 | Grupo Lala SAB de CV (Mexico)* | 2,125 | |
584,343 | Industrias Bachoco SAB de CV (Mexico) | 2,164 | |
46,300 | Megmilk Snow Brand Co. Ltd. (Japan) | 929 | |
10,500 | Meiji Holdings Co. Ltd. (Japan) | 652 | |
13,600 | NH Foods Ltd. (Japan) | 607 |
6
Harbor Diversified International All Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
FOOD PRODUCTS—Continued | |||
98,900 | Nippon Suisan Kaisha Ltd. (Japan) | $ 464 | |
518,477 | Tiger Brands Ltd. (South Africa) | 6,966 | |
2,596,255 | Tingyi Cayman Islands Holding Corp. (China) | 4,665 | |
54,000 | Toyo Suisan Kaisha Ltd. (Japan) | 2,202 | |
372,120 | Ulker Biskuvi Sanayi AS (Turkey) | 991 | |
1,040,000 | Uni-President China Holdings Ltd. (China) | 1,263 | |
30,412 | Viscofan SA (Spain) | 2,078 | |
4,840,000 | Want Want China Holdings Ltd. (China) | 3,498 | |
20,300 | Yakult Honsha Co. Ltd. (Japan) | 988 | |
34,984 | |||
GAS UTILITIES—0.0% | |||
25,800 | Tokyo Gas Co. Ltd. (Japan) | 524 | |
HEALTH CARE EQUIPMENT & SUPPLIES—3.0% | |||
48,167 | Coloplast AS Class B (Denmark) | 7,978 | |
1,243,465 | ConvaTec Group plc (United Kingdom)1 | 3,747 | |
95,599 | Demant AS (Denmark)* | 4,786 | |
64,921 | Getinge AB Class B (Sweden) | 2,196 | |
71,054 | GN Store Nord AS (Denmark) | 6,408 | |
6,400 | Hoya Corp. (Japan) | 728 | |
41,700 | Japan Lifeline Co. Ltd. (Japan) | 588 | |
66,525 | Koninklijke Philips NV (Netherlands) | 3,762 | |
33,000 | Olympus Corp. (Japan)* | 679 | |
36,937 | Smith & Nephew plc (United Kingdom) | 799 | |
8,044 | Sonova Holding AG (Switzerland)* | 2,382 | |
34,053 | |||
HEALTH CARE PROVIDERS & SERVICES—0.8% | |||
64,600 | Alfresa Holdings Corp. (Japan) | 1,158 | |
26,514 | Amplifon SpA (Italy) | 1,119 | |
54,178 | Fresenius Medical Care AG & Co. KGaA (Germany) | 4,314 | |
74,800 | MediPAL Holdings Corp. (Japan) | 1,376 | |
24,300 | Ship Healthcare Holdings Inc. (Japan) | 637 | |
8,604 | |||
HOTELS, RESTAURANTS & LEISURE—3.7% | |||
1,674,000 | Ajisen China Holdings Ltd. (China) | 292 | |
14,084 | Aristocrat Leisure Ltd. (Australia) | 402 | |
44,433 | Carnival plc (United Kingdom)* | 1,039 | |
326,481 | Compass Group plc (United Kingdom)* | 7,102 | |
43,795 | Flutter Entertainment plc (United Kingdom)* | 8,974 | |
107,000 | Galaxy Entertainment Group Ltd. (Hong Kong)* | 939 | |
2,898,700 | Genting Singapore Ltd. (Singapore) | 1,880 | |
265,844 | GVC Holdings plc (United Kingdom)* | 6,215 | |
7,594 | InterContinental Hotels Group PLC (United Kingdom)* | 540 | |
22,923 | Playtech plc (United Kingdom)* | 147 | |
1,224,097 | SSP Group plc (United Kingdom)* | 5,416 | |
531,914 | Tsogo Sun Gaming Ltd. (South Africa)* | 238 | |
532,134 | TUI AG (Germany)* | 3,170 | |
85,276 | Yum China Holdings Inc. (China) | 5,366 | |
41,720 | |||
HOUSEHOLD DURABLES—0.8% | |||
93,350 | Barratt Developments plc (United Kingdom) | 995 | |
56,400 | Casio Computer Co. Ltd. (Japan) | 999 | |
746,000 | MRV Engenharia e Participacoes SA (Brazil) | 2,383 | |
7,000 | Rinnai Corp. (Japan) | 703 | |
47,300 | Sekisui Chemical Co. Ltd. (Japan) | 825 | |
22,000 | Sony Corp. (Japan) | 2,199 | |
568,036 | Taylor Wimpey plc (United Kingdom) | 1,409 | |
9,513 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
HOUSEHOLD PRODUCTS—0.8% | |||
1,730,483 | Kimberly-Clark de Mexico SAB de CV (Mexico) | $ 2,999 | |
21,900 | Lion Corp. (Japan) | 411 | |
60,338 | Reckitt Benckiser Group plc (United Kingdom) | 5,373 | |
8,783 | |||
INDUSTRIAL CONGLOMERATES—2.1% | |||
4,307,100 | ALFA SAB de CV (Mexico) | 3,002 | |
67,000 | CK Hutchison Holdings Ltd. (Hong Kong) | 548 | |
34,220 | DCC plc (United Kingdom) | 2,969 | |
106,100 | GT Capital Holdings Inc. (Philippines) | 1,155 | |
85,000 | Jardine Matheson Holdings Ltd. (Hong Kong) | 5,708 | |
50,829 | LG Corp. (South Korea) | 5,749 x | |
1,900,166 | Quinenco SA (Chile) | 3,930 | |
1,794,700 | Sime Darby Berhad (Malaysia) | 990 | |
24,051 | |||
INSURANCE—5.2% | |||
73,943 | Admiral Group plc (United Kingdom) | 3,195 | |
138,200 | AIA Group Ltd. (Hong Kong) | 1,754 | |
162,000 | AXA SA (France)3 | 4,576 | |
251,500 | Dai-ichi Life Holdings Inc. (Japan) | 4,541 | |
18,957 | Fairfax Financial Holdings Ltd. (Canada) | 8,661 | |
94,300 | Great Eastern Holdings Ltd. (Singapore) | 1,626 | |
6,039 | Hannover Rueck SE (Germany) | 1,115 | |
5,353 | Helvetia Holding AG (Switzerland) | 644 | |
53,516 | Hiscox Ltd. (United Kingdom)* | 599 | |
929,949 | Insurance Australia Group Ltd. (Australia) | 3,504 | |
296,900 | Japan Post Holdings Co. Ltd. (Japan)* | 2,495 | |
28,700 | MS&AD Insurance Group Holdings Inc. (Japan) | 814 | |
834,889 | Porto Seguro SA (Brazil)* | 7,588 | |
40,789 | Prudential plc (United Kingdom) | 864 | |
166,032 | QBE Insurance Group Ltd. (Australia) | 1,256 | |
148,008 | Qualitas Controladora SAB de CV (Mexico) | 805 | |
111,457 | Sampo OYJ (Finland) | 5,287 | |
23,979 | Samsung Fire & Marine Insurance Co. Ltd. (South Korea) | 4,260 | |
58,500 | Sompo Holdings Inc. (Japan) | 2,174 | |
62,400 | T&D Holdings Inc. (Japan) | 766 | |
52,900 | Tokio Marine Holdings Inc. (Japan) | 2,537 | |
59,061 | |||
INTERACTIVE MEDIA & SERVICES—2.0% | |||
263,454 | Auto Trader Group plc (United Kingdom)*,1 | 2,074 | |
50,256 | Baidu Inc. ADR (China)*,2 | 10,570 | |
176,894 | Carsales.com Ltd. (Australia) | 2,702 | |
134,829 | Domain Holdings Australia Ltd. (Australia)* | 526 | |
790,174 | Rightmove plc (United Kingdom) | 6,699 | |
22,571 | |||
INTERNET & DIRECT MARKETING RETAIL—1.4% | |||
7,002 | GS Home Shopping Inc. (South Korea) | 934 | |
96,840 | HelloFresh SE (Germany)* | 8,026 | |
25,906 | Just Eat Takeaway.com NV (Netherlands)*,1 | 2,677 | |
697,520 | PChome Online Inc. (Taiwan) | 2,102 | |
30,613 | Trip.com Group Ltd. ADR (China)*,2 | 1,196 | |
2,959 | Zooplus AG (Germany)* | 935 | |
17,900 | ZOZO Inc. (Japan) | 602 | |
16,472 | |||
IT SERVICES—2.1% | |||
15,709 | Alten SA (France) | 1,967 | |
2,346,635 | Capita plc (United Kingdom)* | 1,417 | |
74,815 | Edenred (France) | 4,241 |
7
Harbor Diversified International All Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
IT SERVICES—Continued | |||
100,933 | Genpact Ltd. (United States) | $ 4,797 | |
39,000 | NEC Corp. (Japan) | 2,267 | |
39,700 | NET One Systems Co. Ltd. (Japan) | 1,300 | |
11,600 | Nomura Research Institute Ltd. (Japan) | 356 | |
28,800 | NS Solutions Corp. (Japan) | 871 | |
218,500 | NTT Data Corp. (Japan) | 3,402 | |
10,100 | Otsuka Corp. (Japan) | 508 | |
6,341 | Reply SpA (Italy) | 862 | |
34,000 | SCSK Corp. (Japan) | 1,973 | |
23,961 | |||
LEISURE PRODUCTS—1.9% | |||
27,700 | Bandai Namco Holdings Inc. (Japan) | 2,032 | |
654,386 | Giant Manufacturing Co. Ltd. (Taiwan) | 8,310 | |
486,611 | Merida Industry Co. Ltd. (Taiwan) | 5,789 | |
109,300 | Sega Sammy Holdings Inc. (Japan) | 1,569 | |
115,644 | Spin Master Corp. (Canada)*,1 | 3,918 | |
21,618 | |||
LIFE SCIENCES TOOLS & SERVICES—0.5% | |||
44,383 | Eurofins Scientific SE (France) | 4,396 | |
7,786 | Gerresheimer AG (Germany) | 837 | |
5,233 | |||
MACHINERY—1.9% | |||
16,053 | Andritz AG (Austria) | 872 | |
397,042 | CNH Industrial NV (Italy) | 5,894 | |
9,300 | Daifuku Co. Ltd. (Japan) | 919 | |
94,028 | Fluidra SA (Spain) | 3,265 | |
15,593 | GEA Group AG (Germany) | 685 | |
8,800 | Hoshizaki Corp. (Japan) | 782 | |
10,200 | Makita Corp. (Japan) | 459 | |
44,400 | NSK Ltd. (Japan) | 410 | |
139,030 | Rotork plc (United Kingdom) | 661 | |
152,070 | Sandvik AB (Sweden) | 3,761 | |
30,232 | Stabilus SA (Germany) | 2,361 | |
23,500 | Techtronic Industries Co. Ltd. (Hong Kong) | 426 | |
104,867 | Wartsila OYJ ABP (Finland) | 1,353 | |
21,848 | |||
MARINE—0.4% | |||
60,995,939 | Cia Sud Americana de Vapores SA (Chile)* | 3,690 | |
214,472 | Irish Continental Group plc (Ireland)* | 1,173 | |
4,863 | |||
MEDIA—2.2% | |||
49,873 | Daily Mail & General Trust plc (United Kingdom) | 619 | |
44,503 | Euromoney Institutional Investor plc (United Kingdom) | 611 | |
158,500 | Fuji Media Holdings Inc. (Japan) | 1,929 | |
195,742 | Grupo Televisa SAB ADR (Mexico)*,2 | 2,423 | |
35,700 | Hakuhodo Dy Holdings Inc. (Japan) | 604 | |
79,108 | Informa plc (United Kingdom)* | 615 | |
2,340,666 | ITV plc (United Kingdom)* | 3,912 | |
88,521 | JCDecaux SA (France)* | 2,254 | |
26,382,721 | Media Nusantara Citra TBK PT (Indonesia)* | 1,788 | |
45,476 | MediaSet Espana Comunicacion SA (Spain)* | 289 | |
223,882 | Nine Entertainment Co. Holdings Ltd. (Australia) | 493 | |
149,320 | Nippon Television Holdings Inc. (Japan) | 1,966 | |
43,831 | Nordic Entertainment Group AB (Sweden)* | 2,033 | |
25,578 | Schibsted ASA Class A (Norway) | 1,285 | |
21,750 | Schibsted ASA Class B (Norway) | 950 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
MEDIA—Continued | |||
2,376,354 | Sky Network Television Ltd. (New Zealand)* | $ 289 | |
233,588 | WPP plc (United Kingdom) | 3,149 | |
25,209 | |||
METALS & MINING—4.3% | |||
112,748 | Acerinox SA (Spain)* | 1,563 | |
1,642,086 | Alrosa PJSC (Russia) | 2,376 | |
24,615 | Anglo American Platinum Ltd. (South Africa) | 3,361 | |
54,201 | Anglo American plc (South Africa) | 2,307 | |
76,697 | AngloGold Ashanti Ltd. (South Africa) | 1,582 | |
146,976 | ArcelorMittal SA (France) | 4,273 | |
338,729 | Barrick Gold Corp. (Canada) | 7,217 | |
65,934 | BHP Group Ltd. (Australia) | 2,400 | |
159,408 | BlueScope Steel Ltd. (Australia) | 2,635 | |
212,843 | Evolution Mining Ltd. (Australia) | 754 | |
29,852 | Franco-Nevada Corp. (Canada) | 4,159 | |
59,897 | Freeport-McMoRan Inc. (United States) | 2,259 | |
1,163,939 | Glencore plc (United Kingdom)* | 4,741 | |
64,095 | Newcrest Mining Ltd. (Australia) | 1,310 | |
112,400 | Nippon Steel Corp. (Japan) | 1,964 | |
68,525 | Rio Tinto plc (United Kingdom) | 5,739 | |
13,200 | Sumitomo Metal Mining Co. Ltd. (Japan) | 559 | |
49,199 | |||
MULTILINE RETAIL—0.1% | |||
42,100 | Marui Group Co. Ltd. (Japan) | 791 | |
OIL, GAS & CONSUMABLE FUELS—2.9% | |||
48,666 | Ampol Ltd. (Australia) | 959 | |
406,872 | Beach Energy Ltd. (Australia) | 394 | |
2,666,929 | BP plc (United Kingdom) | 11,165 | |
181,499 | Canadian Natural Resources Ltd. (Canada) | 5,509 | |
245,061 | Equinor ASA (Norway) | 4,949 | |
190,709 | Inter Pipeline Ltd. (Canada)3 | 2,781 | |
16,975 | Lukoil PJSC ADR (Russia)2 | 1,311 | |
219,166 | Oil Search Ltd. (Australia) | 633 | |
263,183 | PrairieSky Royalty Ltd. (Canada)3 | 2,822 | |
640,440 | United Tractors TBK PT (Indonesia) | 937 | |
75,655 | Washington H Soul Pattinson & Co. Ltd. (Australia) | 1,762 | |
33,222 | |||
PAPER & FOREST PRODUCTS—0.2% | |||
306,300 | Oji Holdings Corp. (Japan) | 1,932 | |
PERSONAL PRODUCTS—1.8% | |||
52,069 | AMOREPACIFIC Group (South Korea) | 3,435 | |
821,729 | Asaleo Care Ltd. (Australia) | 892 | |
24,800 | Kao Corp. (Japan) | 1,594 | |
2,800 | Kose Corp. (Japan) | 422 | |
321,709 | L'Occitane International SA (Hong Kong) | 924 | |
15,800 | Mandom Corp. (Japan) | 296 | |
549,061 | Natura & Co Holding SA (Brazil)* | 4,927 | |
85,336 | Unilever plc (United Kingdom) | 4,999 | |
1,298,000 | Uni-President Enterprises Corp. (Taiwan) | 3,477 | |
20,966 | |||
PHARMACEUTICALS—2.8% | |||
56,200 | Astellas Pharma Inc. (Japan) | 846 | |
5,382,542 | Genomma Lab Internacional SAB de CV (Mexico)* | 5,418 | |
114,907 | Haw Par Corp. Ltd. (Singapore) | 1,139 | |
120,213 | Novo Nordisk AS (Denmark) | 8,868 | |
20,800 | Otsuka Holdings Co. Ltd. (Japan) | 797 | |
34,580 | Roche Holding AG (Switzerland) | 11,278 |
8
Harbor Diversified International All Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
PHARMACEUTICALS—Continued | |||
11,400 | Rohto Pharmaceutical Co. Ltd. (Japan) | $ 292 | |
7,000 | Sawai Group Holdings Co. Ltd. (Japan) | 337 | |
30,800 | Takeda Pharmaceutical Co. Ltd. (Japan) | 1,029 | |
53,300 | Tsumura & Co. (Japan) | 1,775 | |
31,779 | |||
PROFESSIONAL SERVICES—3.0% | |||
60,654 | Adecco Group AG (Switzerland) | 4,111 | |
388,889 | ALS Ltd. (Australia) | 3,149 | |
86,462 | Experian plc (United Kingdom) | 3,333 | |
1,651,436 | Hays plc (United Kingdom)* | 3,728 | |
99,582 | Intertek Group plc (United Kingdom) | 8,441 | |
105,489 | IPH Ltd. (Australia) | 576 | |
56,300 | Nomura Co. Ltd. (Japan) | 410 | |
131,737 | PageGroup plc (United Kingdom)* | 1,019 | |
30,400 | Persol Holdings Co. Ltd. (Japan) | 560 | |
11,454 | Randstad NV (Netherlands) | 826 | |
167,602 | RELX plc (United Kingdom) | 4,348 | |
76,679 | RWS Holdings plc (United Kingdom) | 727 | |
5,600 | TechnoPro Holdings Inc. (Japan) | 412 | |
5,287 | Teleperformance (France) | 2,042 | |
33,682 | |||
REAL ESTATE MANAGEMENT & DEVELOPMENT—0.5% | |||
4,600 | Daito Trust Construction Co. Ltd. (Japan) | 489 | |
51,700 | Daiwa House Industry Co. Ltd. (Japan) | 1,533 | |
273,189 | LOG Commercial Properties e Participacoes SA (Brazil) | 1,484 | |
232,912 | LPS Brasil Consultoria de Imoveis SA (Brazil)* | 169 | |
40,900 | Mitsubishi Estate Co. Ltd. (Japan) | 673 | |
80,500 | Swire Pacific Ltd. (Hong Kong) | 649 | |
81,076 | United Industrial Corp. Ltd. (Singapore) | 171 | |
5,168 | |||
ROAD & RAIL—1.1% | |||
476,102 | Aurizon Holdings Ltd. (Australia) | 1,370 | |
17,347 | Canadian Pacific Railway Ltd. (Canada) | 6,474 | |
32,100 | East Japan Railway Co. (Japan) | 2,198 | |
137,940 | Globaltrans Investment plc GDR (Russia)2 | 858 | |
171,808 | National Express Group plc (United Kingdom)* | 710 | |
54,000 | Senko Group Holdings Co. Ltd. (Japan) | 497 | |
12,107 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—3.2% | |||
35,300 | ASM Pacific Technology Ltd. (Hong Kong) | 533 | |
4,678 | ASML Holding NV (Netherlands) | 3,036 | |
112,800 | Renesas Electronics Corp. (Japan)* | 1,314 | |
24,100 | ROHM Co. Ltd. (Japan) | 2,379 | |
41,801 | SK Hynix Inc. (South Korea) | 4,769 | |
1,139,000 | Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan) | 23,987 | |
36,018 | |||
SOFTWARE—0.6% | |||
4,411 | Constellation Software Inc. (Canada) | 6,474 | |
1,700 | Oracle Corp. Japan (Japan) | 159 | |
6,633 | |||
SPECIALTY RETAIL—1.2% | |||
14,000 | ABC-Mart Inc. (Japan) | 750 | |
4,230,900 | Esprit Holdings Ltd. (Hong Kong)* | 419 | |
392,152 | Fourlis Holdings SA (Greece)* | 2,171 | |
276,463 | JUMBO SA (Greece) | 5,165 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SPECIALTY RETAIL—Continued | |||
243,712 | Pets at Home Group plc (United Kingdom) | $ 1,495 | |
37,300 | USS Co. Ltd. (Japan) | 677 | |
118,051 | WH Smith plc (United Kingdom)* | 2,950 | |
13,627 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—2.3% | |||
242,133 | King Slide Works Co. Ltd. (Taiwan) | 3,114 | |
26,197 | Logitech International SA (Switzerland) | 2,916 | |
20,454 | Quadient SAS (France) | 559 | |
271,574 | Samsung Electronics Co Ltd. (South Korea) | 19,794 | |
26,383 | |||
TEXTILES, APPAREL & LUXURY GOODS—1.9% | |||
14,279 | Adidas AG (Germany) | 4,410 | |
77,100 | ASICS Corp. (Japan) | 1,225 | |
43,169 | Cie Financiere Richemont SA (South Africa) | 4,430 | |
165,490 | Cie Financiere Richemont SA ADR (South Africa)2 | 1,709 | |
31,972 | EssilorLuxottica SA (France) | 5,321 | |
60,580 | Gildan Activewear Inc. (Canada)* | 2,103 | |
93,600 | Onward Holdings Co. Ltd. (Japan) | 257 | |
135,900 | Samsonite International SA (Hong Kong)*,1 | 252 | |
1,980,746 | Stella International Holdings Ltd. (Hong Kong)* | 2,441 | |
22,148 | |||
THRIFTS & MORTGAGE FINANCE—0.3% | |||
110,867 | Housing Development Finance Corp. Ltd. (India) | 3,630 | |
TOBACCO—0.3% | |||
15,148 | British American Tobacco plc (United Kingdom) | 562 | |
30,000 | Japan Tobacco Inc. (Japan) | 563 | |
25,707 | Swedish Match AB (Sweden) | 2,104 | |
3,229 | |||
TRADING COMPANIES & DISTRIBUTORS—1.1% | |||
52,457 | Brenntag AG (Germany) | 4,709 | |
119,507 | Bunzl plc (United Kingdom) | 3,843 | |
112,789 | Finning International Inc. (Canada) | 2,935 | |
40,300 | ITOCHU Corp. (Japan) | 1,258 | |
12,745 | |||
TRANSPORTATION INFRASTRUCTURE—0.5% | |||
99,444 | Getlink SE (France) | 1,582 | |
452,246 | Global Ports Investments plc GDR (Russia)*,2 | 1,637 | |
3,405,365 | Grindrod Ltd. (South Africa)* | 1,108 | |
35,400 | Mitsubishi Logistics Corp. (Japan) | 1,053 | |
5,380 | |||
WIRELESS TELECOMMUNICATION SERVICES—1.0% | |||
960,850 | Bharti Airtel Ltd. (India) | 6,933 | |
91,800 | KDDI Corp. (Japan) | 2,775 | |
38,803 | Rogers Communications Inc. (Canada) | 1,911 | |
11,619 | |||
TOTAL COMMON STOCKS | |||
(Cost $876,984) | 1,118,217 | ||
PREFERRED STOCKS—0.6% | |||
AUTOMOBILES—0.3% | |||
15,004 | Volkswagen AG (Germany) | 3,906 |
9
Harbor Diversified International All Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
PREFERRED STOCKS—Continued | |||
Shares | Value | ||
BANKS—0.3% | |||
344,710 | Banco Bradesco SA (Brazil)* | $ 1,513 | |
2,890,199 | Grupo Aval Acciones y Valores SA (Colombia) | 851 | |
395,242 | Itausa - Investimentos Itau SA (Brazil) | 732 | |
3,096 | |||
PERSONAL PRODUCTS—0.0% | |||
3,261 | AMOREPACIFIC Group (South Korea) | 132 | |
TOTAL PREFERRED STOCKS | |||
(Cost $6,117) | 7,134 | ||
SHORT-TERM INVESTMENTS—0.4% | |||
(Cost $4,419) | |||
Shares | Value | ||
INVESTMENT COMPANY-SECURITIES LENDING INVESTMENT FUND—0.4% | |||
4,419,130 | State Street Navigator Securities Lending Government Money Market Portfolio (1-day yield of 0.020%)4 | $ 4,419 | |
TOTAL INVESTMENTS—99.3% | |||
(Cost $887,520) | 1,129,771 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.7% | 7,707 | ||
TOTAL NET ASSETS—100.0% | $1,137,478 |
RIGHTS/WARRANTS
Description | No. of Contracts | Strike Price | Expiration Date | Cost (000s) | Value (000s) | |||||
Cie Financiere Richemont SA | 377,958 | ZAR 0.47 | 09/12/2023 | $ — | $17 |
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of April 30, 2021 based on the inputs used to value them.
Asset Category | Quoted Prices Level 1 (000s) | Other Significant Observable Inputs Level 2 (000s) | Significant Unobservable Inputs Level 3 (000s) | Total (000s) | ||||
Common Stocks | ||||||||
Africa | $ — | $ 29,210 | $ — | $ 29,210 | ||||
Europe | 6,410 | 491,566 | — | 497,976 | ||||
Latin America | 70,727 | — | — | 70,727 | ||||
Middle East/Central Asia | — | 25,804 | — | 25,804 | ||||
North America | 101,930 | — | — | 101,930 | ||||
Pacific Basin | 27,198 | 359,624 | 5,749 | 392,571 | ||||
Preferred Stocks | ||||||||
Europe | — | 3,907 | — | 3,907 | ||||
Latin America | 3,095 | — | — | 3,095 | ||||
Pacific Basin | — | 132 | — | 132 | ||||
Short-Term Investments | ||||||||
Investment Company-Securities Lending Investment Fund | 4,419 | — | — | 4,419 | ||||
Total Investments in Securities | $213,779 | $910,243 | $5,749 | $1,129,771 | ||||
Financial Derivatives Instruments - Assets | ||||||||
Rights/Warrants | $ 17 | $ — | $ — | $ 17 | ||||
Total Investments | $213,796 | $910,243 | $5,749 | $1,129,788 |
For more information on valuation inputs and their aggregation into the levels used in the table above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
10
Harbor Diversified International All Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
FAIR VALUE MEASUREMENTS—Continued
The following is a rollforward of the Fund’s Level 3 investments during the period ended April 30, 2021. Transfers into or out of Level 3 are recognized as of the last day in the fiscal quarter of the period in which the event or change in circumstances that caused the reclassification occured.
Valuation Description | Beginning Balance as of 11/01/2020 (000s) | Purchases (000s) | Sales (000s) | Discount/ (Premium) (000s) | Total Realized Gain/(Loss) (000s) | Change in Unrealized Appreciation/ (Depreciation) (000s) | Transfers Into Level 3h (000s) | Transfers Out of Level 3 (000s) | Ending Balance as of 04/30/2021 (000s) | Unrealized Gain/ Loss as of 04/30/2021 (000s) | ||||||||||
Common Stocks | $— | $— | $— | $— | $— | $— | $5,749 | $— | $5,749 | $2,482 |
The following is a summary of significant unobservable inputs used in the fair valuations of assets and liabilities categorized within Level 3 of the fair value hierarchy.
Valuation Descriptions | Balance as of 04/30/2021 (000s) | Valuation Technique | Unobservable Input(s) | Input Value(s) | ||||
Investments in Securities | ||||||||
Common Stocks | ||||||||
LG Corp. (South Korea) | $ 5,749 | Market Approach | Last Traded Price | KRW 125,817.15 |
* | Non-income producing security |
x | Fair valued in accordance with Harbor Funds' Valuation Procedures. |
1 | Securities purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At April 30, 2021, the aggregate value of these securities was $18,829 or 2% of net assets. |
2 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
3 | All or a portion of this security was out on loan as of April 30, 2021. |
4 | Represents the investment of collateral received from securities lending activities |
h | Transferred from Level 2 to Level 3 due to the unavailability of observable market data for pricing |
KRW | South Korean Won |
ZAR | South African Rand |
The accompanying notes are an integral part of the Financial Statements.
11
Harbor Emerging Markets Equity Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Marathon Asset Management LLP
Orion House
5 Upper St. Martin’s Lane
London, WC2H 9EA
England
London, WC2H 9EA
England
Portfolio Managers
Michael Godfrey, CFA
Since 2020
Since 2020
David Cull, CFA
Since 2020
Since 2020
Marathon Asset Management LLP (operating as Marathon-London in the U.S.) has subadvised the Fund since 2020.
Investment Objective
The Fund seeks long-term growth of capital.
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
The six-month period ended April 30, 2021 has seen strong performance by emerging markets. There was a notable change in style leadership in equity markets that took place around November 9, 2020 with the announcement of an effective vaccine. For years, the market has been led mainly by mega-cap companies which are either ‘growth’ businesses or reliable income generators (“bond proxies”). This began to change in November when the ‘value’ area of the market and smaller capitalization companies (and particularly those businesses which are both) began to outperform, though the trend has vacillated back and forth in emerging markets over that time, which has not occurred in the developed markets. This appears to be due to a number of specific factors in some of the larger index countries over the period; notably increasing regulation in China and a resurgence of the virus, initially in South America and more latterly in India, resulting in the (re)imposition of measures to restrict the spread. However, the disparity in valuations between the ‘growth’ and ‘value’ segments of the market remains high from a historical perspective.
The trend in relation to cyclical sectors versus more defensive sectors has been less obvious in emerging markets than in their developed peers. Generally, cyclical sectors such as Materials, Information Technology, Industrials, Financials and Energy have been the major beneficiaries over the period, with more defensive sectors, including Real Estate and Consumer Staples performing relatively weakly. Given the depth of the COVID-19 crash earlier in the year, when cyclicals in general fell faster and further than their more defensive peers and so had further to recover as the outlook improved, much of this might be expected. However, counterintuitively, the worst performing sector across emerging markets over the period was cyclical Consumer Discretionary. This was driven primarily by one idiosyncratic factor, a Chinese antitrust investigation into their giant internet retailers which form a large part of the sector. Investors have been wary of several of these stocks as a result, depressing sector returns.
Performance
Harbor Emerging Markets Equity Fund returned 39.53% (Retirement Class), 39.37% (Institutional Class), 39.09% (Administrative Class) and 39.08% (Investor Class) outperforming the MSCI Emerging Markets (ND) Index, which returned 22.95% during the six-month period ended April 30, 2021. Returns were driven by stock selection over the period, particularly in Asia where the Fund’s large underweight to a poorly performing China (the largest country in the Index) also helped. Stock selection in Emerging EMEA, particularly in Greece and South Africa, was also value additive. South America proved a more difficult market over the period, as stock selection lagged in Brazil amid a resurgence of the virus; however, an underweight position to the country, and its weakening currency partially offset this negative, and positioning elsewhere in the region, particularly the overweight position in Mexico, led to strong returns overall.
Stock selection within sectors drove returns, with relative positioning having little effect overall. Currency effects also had a positive impact. The Fund’s aggregate underweight exposure to the Consumer Discretionary and Communication Service sectors (which underperformed relative to the MSCI Emerging Markets (ND) Index) contributed positively. However, its underweight position in Materials and an overweight position in Consumer Staples were negatives, though in both cases outweighed by stock selection within the sectors. Stock selection was notably strong in the Financials and Consumer Discretionary sectors and contributed positively to outperformance in all other sectors except Health Care and Real Estate.
At the stock level, Alibaba, the Chinese internet retailer, which the Fund avoided, has contributed most strongly to recent outperformance, with the stock falling by more than 20% on news of an antitrust investigation by the Chinese authorities shortly after the start of the period. Tencent was a similar story, though their peer Baidu, in which the Fund does have a substantial
12
Harbor Emerging Markets Equity Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | |||||||||
6 Months | 5 Years | Life of Fund | |||||||||
Harbor Emerging Markets Equity Fund | |||||||||||
Retirement Class1,2 | 39.53% | 66.43% | 15.71% | 6.62% | |||||||
Institutional Class1 | 39.37 | 66.24 | 15.62 | 6.57 | |||||||
Administrative Class1 | 39.09 | 65.68 | 15.63 | 6.48 | |||||||
Investor Class1 | 39.08 | 65.46 | 15.17 | 6.17 | |||||||
Comparative Index | |||||||||||
MSCI Emerging Markets (ND)1 | 22.95% | 48.71% | 12.50% | 6.00% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.88% (Net) and 1.84% (Gross) (Retirement Class); 0.96% (Net) and 1.92% (Gross) (Institutional Class); 1.21% (Net) and 2.17% (Gross) (Administrative Class); and 1.32% (Net) and 2.28% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
holding, bucked this trend, and performed strongly, at least until mid-February when shares suffered in the fall out from the ‘fire sale’ of assets held by collapsed hedge fund Archegos Capital, where it was a major holding. Banking groups across the global emerging universe were a strong driver of return, particularly Eurobank in Greece but also including portfolio holdings in the likes of Axis Bank in India, Bancolombia and Kasikornbank in Thailand. At the other end of the performance table, not holding Brazil’s resources giant Vale hit performance as the capital cycle for metal miners finally turned. Years of poor returns have depressed investment, exploration and the opening of new mines, and global government stimulus over the course of the pandemic has stoked demand, resulting in higher prices for commodity producers. However, while Vale outperformed the index, other resource companies performed better, including several held by the Fund, such as Anglo American Platinum and Freeport-McMoRan, and we believe that the best value in the sector can currently be found amongst the smaller players. Other laggards over the period include a number of Latin American names, such as Alpargatas and Natura of Brazil and Minas Buenaventura of Peru, all of which have been hit both by the ongoing regional struggle with COVID-19 and the impact of the virus on earnings over the past year.
Outlook & Strategy
We remain committed to the implementation of our bottom-up analytical efforts within the capital cycle investment framework and, therefore, are seeking to invest in companies that, in our view, exhibit favorable supply side dynamics with management teams that have a track record of allocating capital efficiently. Developments over the last year should highlight the shortfalls of spending too much energy on forecasted outlooks; we are not looking to react to market volatility, rather placing emphasis on trusting the longstanding investment process that we have been committed to over the our 30 plus year history with low levels of investment turnover. It remains to be seen whether the rotation in the prevailing trend from growth and large cap to value and smaller cap names represents an ongoing change or a short-term interruption; however, history suggests that valuation differentials, which remain historically high, tend to revert to the mean (then overshoot) given time, in our view.
1 | The “Life of Fund” return as shown reflects the period 11/01/2013 through 04/30/2021. |
2 | Retirement Class shares commenced operations on March 1, 2016. The performance attributed to the Retirement Class shares prior to that date is that of the Institutional Class shares. Performance prior to March 1, 2016 has not been adjusted to reflect the lower expenses of Retirement Class shares. During this period, Retirement Class shares would have had returns similar to, but potentially higher than, Institutional Class shares due to the fact that Retirement Class shares represent interests in the same portfolio as Institutional Class shares but are subject to lower expenses. |
This report contains the current opinions of Marathon Asset Management LLP as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Investing in international and emerging markets poses special risks, including potentially greater price volatility due to social, political and economic factors, as well as currency exchange rate fluctuations. These risks are more severe for securities of issuers in emerging market regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
13
Harbor Emerging Markets Equity Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
REGION BREAKDOWN (% of investments)
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of April 30, 2021, there was no foreign currency denomination that comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—95.8% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—0.4% | |||
73,078 | Embraer SA (Brazil)* | $ 207 | |
AIR FREIGHT & LOGISTICS—0.4% | |||
18,295 | Grupo Aeroportuario del Pacifico SAB de CV (Mexico)* | 188 | |
AUTO COMPONENTS—0.5% | |||
4,280 | Hankook Tire & Technology Co. Ltd. (South Korea) | 184 | |
176,284 | Nemak SAB de CV (Mexico)*,1 | 52 | |
236 | |||
AUTOMOBILES—1.3% | |||
221,500 | BAIC Motor Corp. Ltd. (China)1 | 80 | |
1,147 | Hyundai Motor Co. (South Korea) | 218 | |
32,961 | Mahindra & Mahindra Ltd. (India) | 334 | |
632 | |||
BANKS—11.5% | |||
103,874 | Axis Bank Ltd. (India)* | 994 | |
10,264 | Bancolombia SA ADR (Colombia)2 | 307 | |
559,300 | Bank Mandiri Persero TBK PT (Indonesia) | 238 | |
118,060 | Bank of The Philippine Islands (Philippines) | 203 | |
129,949 | Cairo Mezz plc (Greece)* | 19 | |
1,632,072 | Eurobank Ergasias SA (Greece)* | 1,541 | |
1,212,741 | Grupo Financiero Inbursa SAB de CV (Mexico)* | 1,132 | |
6,933 | Hana Financial Group Inc. (South Korea) | 284 | |
145,400 | Kasikornbank PCL (Thailand) | 615 | |
7,649 | Komercni Banka AS (Czech Republic)* | 232 | |
5,565 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
BEVERAGES—4.7% | |||
209,949 | AmBev SA (Brazil) | $ 577 | |
158,900 | East African Breweries Ltd. (Kenya)* | 248 | |
12,891 | Fomento Economico Mexicano SAB de CV ADR (Mexico)2 | 999 | |
594,600 | Thai Beverage PCL (Thailand) | 319 | |
14,000 | Tsingtao Brewery Co. Ltd. (China) | 127 | |
2,270 | |||
CAPITAL MARKETS—0.5% | |||
8,147 | Georgia Capital plc (United Kingdom)* | 64 | |
37,607 | PSG Group Ltd. (South Africa) | 194 | |
258 | |||
CHEMICALS—0.0% | |||
2,684,000 | Tianhe Chemicals Group Ltd. (Hong Kong)* | — x | |
COMMERCIAL SERVICES & SUPPLIES—0.5% | |||
3,138 | S-1 Corp. (South Korea) | 230 | |
CONSTRUCTION & ENGINEERING—0.7% | |||
179,663 | Raubex Group Ltd. (South Africa) | 327 | |
CONSUMER FINANCE—2.8% | |||
959,108 | Gentera SAB de CV (Mexico)* | 485 | |
48,548 | Shriram Transport Finance Co. Ltd. (India) | 876 | |
1,361 | |||
DISTRIBUTORS—0.8% | |||
21,000 | Jardine Cycle & Carriage Ltd. (Singapore) | 366 |
14
Harbor Emerging Markets Equity Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
DIVERSIFIED FINANCIAL SERVICES—1.5% | |||
24,529 | JSE Ltd. (South Africa) | $ 198 | |
70,824 | Remgro Ltd. (South Africa) | 538 | |
736 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—1.3% | |||
14,719 | KT Corp. (South Korea) | 375 | |
93,793 | Telkom SA SOC Ltd. (South Africa) | 254 | |
629 | |||
ELECTRICAL EQUIPMENT—0.8% | |||
319,000 | TECO Electric and Machinery Co. Ltd. (Taiwan) | 397 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—2.3% | |||
61,000 | Chroma ATE Inc. (Taiwan) | 421 | |
70,000 | Delta Electronics Inc. (Taiwan) | 750 | |
1,171 | |||
ENTERTAINMENT—0.9% | |||
702,400 | Major Cineplex Group PCL (Thailand)* | 433 | |
FOOD & STAPLES RETAILING—0.6% | |||
3,636 | PriceSmart Inc. (United States) | 306 | |
FOOD PRODUCTS—7.8% | |||
36,000 | China Mengniu Dairy Co. Ltd. (China)* | 193 | |
539,100 | Delfi Ltd. (Singapore) | 354 | |
507,337 | Grupo Lala SAB de CV (Mexico)* | 372 | |
85,472 | Industrias Bachoco SAB de CV (Mexico) | 317 | |
75,310 | Tiger Brands Ltd. (South Africa) | 1,012 | |
382,000 | Tingyi Cayman Islands Holding Corp. (China) | 686 | |
53,509 | Ulker Biskuvi Sanayi AS (Turkey) | 143 | |
150,000 | Uni-President China Holdings Ltd. (China) | 182 | |
703,000 | Want Want China Holdings Ltd. (China) | 508 | |
3,767 | |||
HOTELS, RESTAURANTS & LEISURE—1.8% | |||
248,000 | Ajisen China Holdings Ltd. (China) | 43 | |
80,127 | Tsogo Sun Gaming Ltd. (South Africa)* | 36 | |
12,413 | Yum China Holdings Inc. (China) | 781 | |
860 | |||
HOUSEHOLD DURABLES—0.7% | |||
108,300 | MRV Engenharia e Participacoes SA (Brazil) | 346 | |
HOUSEHOLD PRODUCTS—1.2% | |||
341,647 | Kimberly-Clark de Mexico SAB de CV (Mexico) | 592 | |
INDUSTRIAL CONGLOMERATES—4.5% | |||
628,300 | ALFA SAB de CV (Mexico) | 438 | |
15,540 | GT Capital Holdings Inc. (Philippines) | 169 | |
7,455 | LG Corp. (South Korea) | 843 x | |
278,791 | Quinenco SA (Chile) | 577 | |
265,000 | Sime Darby Berhad (Malaysia) | 146 | |
2,173 | |||
INSURANCE—3.8% | |||
124,299 | Porto Seguro SA (Brazil)* | 1,130 | |
21,233 | Qualitas Controladora SAB de CV (Mexico) | 115 | |
3,483 | Samsung Fire & Marine Insurance Co. Ltd. (South Korea) | 619 | |
1,864 | |||
INTERACTIVE MEDIA & SERVICES—3.2% | |||
7,300 | Baidu Inc. ADR (China)*,2 | 1,535 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
INTERNET & DIRECT MARKETING RETAIL—1.3% | |||
1,011 | GS Home Shopping Inc. (South Korea) | $ 135 | |
103,000 | PChome Online Inc. (Taiwan) | 310 | |
4,473 | Trip.com Group Ltd. ADR (China)*,2 | 175 | |
620 | |||
IT SERVICES—1.4% | |||
14,502 | Genpact Ltd. (United States) | 689 | |
LEISURE PRODUCTS—4.1% | |||
93,628 | Giant Manufacturing Co. Ltd. (Taiwan) | 1,189 | |
69,000 | Merida Industry Co. Ltd. (Taiwan) | 821 | |
2,010 | |||
MARINE—1.1% | |||
8,945,025 | Cia Sud Americana de Vapores SA (Chile)* | 541 | |
MEDIA—1.3% | |||
28,797 | Grupo Televisa SAB ADR (Mexico)*,2 | 357 | |
3,872,900 | Media Nusantara Citra TBK PT (Indonesia)* | 262 | |
619 | |||
METALS & MINING—3.6% | |||
239,885 | Alrosa PJSC (Russia) | 347 | |
3,576 | Anglo American Platinum Ltd. (South Africa) | 488 | |
7,958 | Anglo American plc (South Africa) | 339 | |
11,398 | AngloGold Ashanti Ltd. (South Africa) | 235 | |
8,901 | Freeport-McMoRan Inc. (United States) | 336 | |
1,745 | |||
OIL, GAS & CONSUMABLE FUELS—0.7% | |||
2,476 | Lukoil PJSC ADR (Russia)2 | 189 | |
94,100 | United Tractors TBK PT (Indonesia) | 138 | |
327 | |||
PERSONAL PRODUCTS—3.5% | |||
7,623 | AMOREPACIFIC Group (South Korea) | 503 | |
79,500 | Natura & Co Holding SA (Brazil)* | 714 | |
186,000 | Uni-President Enterprises Corp. (Taiwan) | 498 | |
1,715 | |||
PHARMACEUTICALS—1.6% | |||
783,016 | Genomma Lab Internacional SAB de CV (Mexico)* | 788 | |
REAL ESTATE MANAGEMENT & DEVELOPMENT—0.5% | |||
39,439 | LOG Commercial Properties e Participacoes SA (Brazil) | 214 | |
32,900 | LPS Brasil Consultoria de Imoveis SA (Brazil)* | 24 | |
238 | |||
ROAD & RAIL—0.2% | |||
19,737 | Globaltrans Investment plc GDR (Russia)2 | 123 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—8.6% | |||
6,128 | SK Hynix Inc. (South Korea) | 699 | |
166,000 | Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan) | 3,496 | |
4,195 | |||
SPECIALTY RETAIL—2.2% | |||
56,456 | Fourlis Holdings SA (Greece)* | 313 | |
39,737 | JUMBO SA (Greece) | 742 | |
1,055 |
15
Harbor Emerging Markets Equity Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—6.8% | |||
35,000 | King Slide Works Co. Ltd. (Taiwan) | $ 450 | |
39,351 | Samsung Electronics Co Ltd. (South Korea) | 2,868 | |
3,318 | |||
TEXTILES, APPAREL & LUXURY GOODS—0.9% | |||
24,593 | Cie Financiere Richemont SA ADR (South Africa)2 | 254 | |
162,500 | Stella International Holdings Ltd. (Hong Kong)* | 200 | |
454 | |||
THRIFTS & MORTGAGE FINANCE—1.1% | |||
15,967 | Housing Development Finance Corp. Ltd. (India) | 523 | |
TRANSPORTATION INFRASTRUCTURE—0.3% | |||
495,626 | Grindrod Ltd. (South Africa)* | 161 | |
WIRELESS TELECOMMUNICATION SERVICES—2.1% | |||
138,155 | Bharti Airtel Ltd. (India) | 997 | |
TOTAL COMMON STOCKS | |||
(Cost $34,507) | 46,567 | ||
PREFERRED STOCKS—1.0% | |||
Shares | Value | ||
BANKS—0.9% | |||
49,660 | Banco Bradesco SA (Brazil)* | $ 218 | |
412,740 | Grupo Aval Acciones y Valores SA (Colombia) | 121 | |
58,900 | Itausa - Investimentos Itau SA (Brazil) | 109 | |
448 | |||
PERSONAL PRODUCTS—0.1% | |||
438 | AMOREPACIFIC Group (South Korea) | 18 | |
TOTAL PREFERRED STOCKS | |||
(Cost $376) | 466 | ||
TOTAL INVESTMENTS—96.8% | |||
(Cost $34,883) | 47,033 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—3.2% | 1,537 | ||
TOTAL NET ASSETS—100.0% | $48,570 |
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of April 30, 2021 based on the inputs used to value them.
Asset Category | Quoted Prices Level 1 (000s) | Other Significant Observable Inputs Level 2 (000s) | Significant Unobservable Inputs Level 3 (000s) | Total (000s) | ||||
Common Stocks | ||||||||
Africa | $ — | $ 4,284 | $ — | $ 4,284 | ||||
Europe | 496 | 3,217 | — | 3,713 | ||||
Latin America | 10,472 | — | — | 10,472 | ||||
Middle East/Central Asia | — | 3,724 | — | 3,724 | ||||
North America | 2,112 | — | — | 2,112 | ||||
Pacific Basin | 2,758 | 18,661 | 843 | 22,262 | ||||
Preferred Stocks | ||||||||
Latin America | 448 | — | — | 448 | ||||
Pacific Basin | — | 18 | — | 18 | ||||
Total Investments in Securities | $16,286 | $29,904 | $843 | $47,033 |
For more information on valuation inputs and their aggregation into the levels used in the table above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
16
Harbor Emerging Markets Equity Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
FAIR VALUE MEASUREMENTS—Continued
The following is a rollforward of the Fund’s Level 3 investments during the period ended April 30, 2021. Transfers into or out of Level 3 are recognized as of the last day in the fiscal quarter of the period in which the event or change in circumstances that caused the reclassification occured.
Valuation Description | Beginning Balance as of 11/01/2020 (000s) | Purchases (000s) | Sales (000s) | Discount/ (Premium) (000s) | Total Realized Gain/(Loss) (000s) | Change in Unrealized Appreciation/ (Depreciation) (000s) | Transfers Into Level 3h (000s) | Transfers Out of Level 3 (000s) | Ending Balance as of 04/30/2021 (000s) | Unrealized Gain/ Loss as of 04/30/2021 (000s) | ||||||||||
Common Stocks | $— | $— | $— | $— | $— | $— | $843 | $— | $843 | $373 |
The following is a summary of significant unobservable inputs used in the fair valuations of assets and liabilities categorized within Level 3 of the fair value hierarchy.
Valuation Descriptions | Balance as of 04/30/2021 (000s) | Valuation Technique | Unobservable Input(s) | Input Value(s) | ||||
Investments in Securities | ||||||||
Common Stocks | ||||||||
LG Corp. (South Korea) | $ 843 | Market Approach | Last Traded Price | KRW 125,817.15 | ||||
Tianhe Chemicals Group Ltd. (Hong Kong)* | — | Market Approach | Estimated Recovery Value | HKD 0.00 | ||||
$ 843 |
* | Non-income producing security |
x | Fair valued in accordance with Harbor Funds' Valuation Procedures. |
1 | Securities purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At April 30, 2021, the aggregate value of these securities was $132 or less than 1% of net assets% of net assets. |
2 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
h | Transferred from Level 2 to Level 3 due to the unavailability of observable market data for pricing |
HKD | Hong Kong Dollar |
KRW | South Korean Won |
The accompanying notes are an integral part of the Financial Statements.
17
Harbor Focused International Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Comgest Asset Management International Limited
46 St. Stephen’s Green
Dublin 2
Ireland
Dublin 2
Ireland
Portfolio Managers
Laure Négiar, CFA
Since 2019
Since 2019
Zak Smerczak, CFA
Since 2019
Since 2019
Alexandre Narboni
Since 2019
Since 2019
Richard Mercado, CFA
Since 2019
Since 2019
Comgest Asset Management International Limited has subadvised the Fund since 2019.
Investment Objective
The Fund seeks long-term growth of capital.
Laure Négiar, CFA
Zak Smerczak, CFA
Alexandre Narboni
Richard Mercado, CFA
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
The six-month period ended April 30, 2021 followed the bottoming of equity markets post the onset of the COVID-19 crisis globally. While social distancing and lockdowns persisted throughout the period, optimism around an eventual reopening and the unleashing of pent-up demand fueled a strong rally in more cyclically-oriented areas of the market. This long-awaited rebound in value equities began essentially at the onset of the period under review and remained fairly consistent throughout.
The prospects of a strong economic rebound after multiple quarters of social distancing, combined with continued support from central banks and governments (notably President Biden’s extensive stimulus plans in the United States), have been a central theme in investors’ minds during this period. A rally in commodities, cyclicals and distressed companies, along with a meaningful rebound in U.S. Treasury yields and inflation expectations, have negatively impacted the valuations of growth companies. As can be common in a euphoric market such as this, we believe the long-term fundamental strength of quality companies is often overlooked in favor of areas of the market primed for a shorter-term rebound. In this context, we are pleased with the absolute return of the Fund, while it lagged from a relative perspective.
Performance
Harbor Focused International Fund returned 14.61% (Retirement Class), 14.55% (Institutional Class) and 14.34% (Investor Class), while the MSCI All Country World Ex. U.S. (ND) Index returned 27.40% during the six-month period ended April 30, 2021. The Fund continued to reflect our assessment of the highest quality and growth companies positioned for continued execution over the long term. As we only invest in what we believe are quality growth companies, it is no surprise that the Fund had little participation in the strongest sectors of the market, Energy, Materials and Financials. The market rotation out of quality and growth companies was a global phenomenon. However, this trend was particularly evident in Japan where the share prices of select portfolio holdings corrected by double-digit percentages, despite no meaningful revisions to their profit outlook. As such, some of the largest detractors to Fund performance came from our Japanese stock picks, which have continued to execute well despite the backdrop. This implies the correction was primarily market driven.
The Fund remains a concentrated portfolio, built from the bottom up. The underperformance during the period under review appears to be less tied to any specific stocks and more tied to being on the opposite side of a long-awaited style rotation in favor of value. TSMC, the leading chip manufacturer, posted solid quarterly results and raised its annual sales growth guidance from 10% to 15% for the next few years. The company’s plan for capital expenditures is a sign of strong expectations for the next five years, in our view. HDFC, the leading mortgage provider in India, continued to benefit from strong secular growth trends and expanding mortgage penetration. As a result, both companies were the Fund’s top contributors to performance during the period under review.
In our opinion, the period encompasses the peak of the uncertainty around potential revenue sanctions and potential regulations in China for leading internet companies. Alibaba was impacted by this uncertainty and was a top detractor from results. Our conviction in the company’s long term growth prospects remains, as its faster growth segments, such as cloud, new retail and logistics, are displaying improving profiles and stronger growth, becoming nice complements to its core commerce business, in our view. Hikari Tsushin, a leading corporate services company in Japan, was weak given the previously mentioned style rotation in Japan, despite solid operational execution.
18
Harbor Focused International Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | 5 Years | Annualized | ||||||||
6 Months | Life of Fund | ||||||||||
Harbor Focused International Fund | |||||||||||
Retirement Class1 | 14.61% | 34.83% | N/A | 18.19% | |||||||
Institutional Class1 | 14.55 | 34.75 | N/A | 18.12 | |||||||
Investor Class1 | 14.34 | 34.21 | N/A | 17.69 | |||||||
Comparative Index | |||||||||||
MSCI All Country World Ex. U.S. (ND)1 | 27.40% | 42.98% | N/A | 16.37% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.77% (Net) and 1.01% (Gross) (Retirement Class); 0.85% (Net) and 1.09% (Gross) (Institutional Class); 1.21% (Net) and 1.45% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
The Fund’s largest sector overweights are in Consumer Staples and Consumer Discretionary. Its largest sector underweights remain Financials, Materials, and Energy. Our views on the relative attractiveness, or lack thereof, in these sectors remain unchanged. We continue to find excellent earnings compounders in our consumer-oriented holdings and believe the durability of their earnings remains undervalued. We remain underweight the Financials sector, focusing our exposure primarily on life insurance companies in the emerging markets, while remaining skeptical of the banking industry. We hold zero exposure to the Energy sector and limited exposure to the Materials sector, as we continue to lack conviction in the specific business models offered there.
Outlook & Strategy
We do not know how long the rebound in commodities and more cyclical companies will last. It depends primarily on the shape of the economic rebound and the pace of economic activity after the “rebound phase”. We are pleased by the earnings resilience of our portfolio companies and believe their long term growth profile will be above average over the long-term. Most of our holdings exited the crisis stronger than their competitors and benefit from structural rather than cyclical growth drivers. This fuels our confidence that the Fund remains favorably exposed to future earnings growth strength, as evidenced by the early results from the ongoing earning’s season. We believe that our disciplined quality growth approach has proven itself over time, and while periods of underperformance have been experienced before, the earnings growth of our companies has fueled an eventual performance recovery in the past. Our conviction in the Fund’s current holdings and positioning reinforces our belief that a return to alpha generation is on the horizon.
1 | The “Life of Fund” return as shown reflects the period 06/01/2019 through 04/30/2021. |
This report contains the current opinions of Comgest Asset Management International Limited as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Investing in international and emerging markets poses special risks, including potentially greater price volatility due to social, political and economic factors, as well as currency exchange rate fluctuations. These risks are more severe for securities of issuers in emerging market regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
19
Harbor Focused International Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
REGION BREAKDOWN (% of investments)
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of April 30, 2021, there was no foreign currency denomination that comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—98.1% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—1.8% | |||
3,263 | MTU Aero Engines AG (Germany) | $ 823 | |
BEVERAGES—5.0% | |||
1,836 | Kweichow Moutai Co. Ltd. Class A (China) | 567 | |
8,604 | Pernod Ricard SA (France) | 1,767 | |
2,334 | |||
BUILDING PRODUCTS—2.7% | |||
6,200 | Daikin Industries Ltd. (Japan) | 1,251 | |
CHEMICALS—3.8% | |||
10,600 | Shin-Etsu Chemical Co. Ltd. (Japan) | 1,789 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—3.6% | |||
12,100 | Hamamatsu Photonics KK (Japan) | 702 | |
2,100 | Keyence Corp. (Japan) | 1,008 | |
1,710 | |||
ENTERTAINMENT—4.4% | |||
93,505 | NetEase Inc. (China) | 2,090 | |
FOOD PRODUCTS—4.8% | |||
358,338 | Inner Mongolia Yili Industrial Group Co. Ltd. Class A (China) | 2,259 | |
HEALTH CARE EQUIPMENT & SUPPLIES—7.3% | |||
16,800 | Hoya Corp. (Japan) | 1,909 | |
1,057 | Straumann Holding AG (Switzerland) | 1,511 | |
3,420 | |||
HOUSEHOLD DURABLES—2.3% | |||
10,600 | Sony Corp. (Japan) | 1,060 | |
INSURANCE—5.8% | |||
151,745 | AIA Group Ltd. (Hong Kong) | 1,926 | |
74,766 | Ping An Insurance Group Co. of China Ltd. (China) | 815 | |
2,741 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
INTERACTIVE MEDIA & SERVICES—7.3% | |||
16,307 | Autohome Inc. ADR Class A (China)*,1 | $ 1,512 | |
24,208 | Tencent Holdings Ltd. (China) | 1,931 | |
3,443 | |||
INTERNET & DIRECT MARKETING RETAIL—4.4% | |||
70,928 | Alibaba Group Holding Ltd. (China)* | 2,050 | |
IT SERVICES—2.7% | |||
18,468 | Amadeus IT Group SA Class A (Spain)* | 1,258 | |
LEISURE PRODUCTS—1.8% | |||
3,700 | Shimano Inc. (Japan) | 846 | |
MULTILINE RETAIL—2.1% | |||
46,600 | Pan Pacific International Holdings Corp. (Japan) | 1,005 | |
PERSONAL PRODUCTS—5.6% | |||
4,177 | L'Oreal SA (France) | 1,710 | |
16,029 | Unilever plc (United Kingdom) | 939 | |
2,649 | |||
PHARMACEUTICALS—6.9% | |||
24,095 | Novo Nordisk AS (Denmark) | 1,778 | |
4,545 | Roche Holding AG (Switzerland) | 1,482 | |
3,260 | |||
PROFESSIONAL SERVICES—3.9% | |||
47,927 | Experian plc (United Kingdom) | 1,848 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—5.7% | |||
23,001 | Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan)1 | 2,685 | |
SOFTWARE—2.1% | |||
6,965 | SAP SE (Germany) | 975 |
20
Harbor Focused International Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
SPECIALTY RETAIL—4.4% | |||
1,500 | Fast Retailing Co. Ltd. (Japan) | $ 1,230 | |
4,100 | Hikari Tsushin Inc. (Japan) | 825 | |
2,055 | |||
TEXTILES, APPAREL & LUXURY GOODS—5.4% | |||
8,820 | EssilorLuxottica SA (France) | 1,468 | |
1,444 | LVMH Moet Hennessy Louis Vuitton SE (France) | 1,088 | |
2,556 | |||
THRIFTS & MORTGAGE FINANCE—4.3% | |||
61,682 | Housing Development Finance Corp. Ltd. (India) | 2,020 | |
TOTAL COMMON STOCKS | |||
(Cost $36,416) | 46,127 | ||
TOTAL INVESTMENTS—98.1% | |||
(Cost $36,416) | 46,127 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—1.9% | 879 | ||
TOTAL NET ASSETS—100.0% | $47,006 |
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of April 30, 2021 based on the inputs used to value them.
Asset Category | Quoted Prices Level 1 (000s) | Other Significant Observable Inputs Level 2 (000s) | Significant Unobservable Inputs Level 3 (000s) | Total (000s) | ||||
Common Stocks | ||||||||
Europe | $ — | $16,647 | $— | $16,647 | ||||
Middle East/Central Asia | — | 2,020 | — | 2,020 | ||||
Pacific Basin | 4,197 | 23,263 | — | 27,460 | ||||
Total Investments in Securities | $4,197 | $41,930 | $— | $46,127 |
There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels used in the table above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
* | Non-income producing security |
1 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
The accompanying notes are an integral part of the Financial Statements.
21
Harbor Global Leaders Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Sands Capital Management, LLC
1000 Wilson Boulevard
Suite 3000
Suite 3000
Arlington, VA 22209
Portfolio Managers
Sunil H. Thakor, CFA
Since 2017
Since 2017
Michael F. Raab, CFA
Since 2019
Since 2019
Sands Capital has subadvised the Fund since 2017.
Investment Objective
The Fund seeks long-term growth of capital.
Sunil H. Thakor, CFA
Michael F. Raab, CFA
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
Global equities (as measured by the MSCI All Country World (ND) Index) posted gains for the six-month period ended April 30, 2021. Despite the headline results, this period also saw significant style volatility, as it was one of the worst rolling six-month periods for global growth relative to global value equities since 2001. Several issues posed headwinds for growth equities—while benefiting value equites—including sharply higher long-term rates, economic reopening, and the ramp up in U.S. fiscal spending. These issues compounded fears about high near-term valuations as well as difficult comps following the strong fundamental results seen by many growth-oriented businesses in 2020. Stocks exhibiting strong exposure to the momentum factor were hit especially hard, with several statistically rare (i.e. three standard deviation) selloffs occurring during the period.
Performance
Harbor Global Leaders Fund returned 19.24% (Retirement Class), 19.20% (Institutional Class), 19.05% (Administrative Class), and 18.98% (Investor Class) versus the 28.29% return for the MSCI All Country World (ND) Index during the six-month period ended April 30, 2021. The Fund’s underperformance was primarily driven by security selection, but allocation and currency effects also weighed on relative results. The market environment led investors to avoid businesses with earnings far in the future, in favor of those with more predictable near-term earnings. The Fund’s positive exposure to the momentum factor, which over the past year became highly correlated with the growth factor weighed significantly on results, as well as its negative exposure to certain value-oriented factors.
Emerging Asia was the sole regional contributor to relative results, and the U.S./Canada was the top regional detractor. From a sector perspective, Communication Services and Utilities (a zero percent weight) contributed most to relative results, while Industrials and Financials were the top relative detractors.
On an absolute basis, the largest individual contributors to the Fund’s investment results were Sea, IQVIA, Chegg, Taiwan Semiconductor, and Aptiv.
Sea continues to track our investment case. The business reported another set of strong results for the fourth quarter of 2020, with revenue doubling year-over-year to $1.6 billion, driven by 72 percent growth in gaming and 178 percent growth in ecommerce. The flagship game Free Fire continues to deliver robust growth and engagement, and in 2020 it was again the most downloaded mobile game globally. Ecommerce platform Shoppe delivered $12 billion gross merchandise volume in the quarter (113 percent year-over-year growth) and was the third most downloaded shopping app globally in 2020. Revenue guidance for 2021 was well ahead of our expectations, and management continues to invest for future growth and to bolster its competitive advantages. Beyond gaming and ecommerce, SeaMoney (digital financial services) processed nearly $3 billion in total payment volume, reaching 23 million paying users for its mobile wallet. Our research suggests that SeaMoney is beginning to monetize Shopee’s on-platform transactions via payments, installments, and seller loans. We believese the service could be a significant growth driver for Sea over the long term.
The largest absolute individual detractors from investment results were Zur Rose, MonotaRO, Cloudflare, Bright Horizons, and Coupa Software.
Zur Rose shares traded lower following the Fund’s February 2021 initiation, due to the broader selloff in growth equities and to concerns about the business’s Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margin trajectory. As long-term owners, we are not concerned about macro-induced volatility, and disagrees with the profitability concerns. We believe a focus on EBITDA growth now is premature, as the business should instead
22
Harbor Global Leaders Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | |||||||||
6 Months | 5 Years | 10 Years | |||||||||
Harbor Global Leaders Fund | |||||||||||
Retirement Class1 | 19.24% | 42.39% | 18.80% | 12.85% | |||||||
Institutional Class | 19.20 | 42.30 | 18.71 | 12.81 | |||||||
Administrative Class | 19.05 | 41.90 | 18.41 | 12.52 | |||||||
Investor Class | 18.98 | 41.78 | 18.27 | 12.39 | |||||||
Comparative Index | |||||||||||
MSCI All Country World (ND) | 28.29% | 45.75% | 13.85% | 9.17% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.78% (Net) and 0.90% (Gross) (Retirement Class); 0.86% (Net) and 0.98% (Institutional Class); 1.11% (Net) and 1.23% (Gross) (Administrative Class); and 1.22% (Net) and 1.34% (Gross) (Investor Class). The Adviser has contractually agreed to waive 0.05% of its management fee and to limit the Total Annual Fund Operating Expenses, excluding interest expense (if any), effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
invest heavily in the digital ecosystem its pioneering. Zur Rose made progress on the front during the fourth quarter of 2020, with the launch of its DocMorris+ app, announced partnership with Novo Nordisk to tackle obesity, and on-boarding of 20 additional pharmacies. We expect the rollout of universal epharmacy in Germany in early 2022 to grow the country’s adoption to 15 percent by 2025 from less than one percent today. This secular tailwind could underpin a fourfold expansion in Zur Rose’s revenues as the industry’s market-share leader, in our view. We expect the business to achieve break-even EBITDA by 2022 and accelerate from there, due to growing ecommerce volumes and operational efficiencies generated via its warehouse automation, which accounts for approximately 70 percent of volume handling.
Outlook & Strategy
The Subadviser acknowledges that its approach is not going to work in all market environments, and that it expected a reversal of its strong 2020 investment results as vaccines were broadly distributed, the global economy cyclically recovered, and as fiscal stimulus increased.
History shows the Subadviser two things: prices tend to track compounded earnings growth over the long term, and most value creation accrues to a select group of companies. Therefore, the Subadviser will continue to focus its efforts on finding the select few companies that it believes can generate above-average earnings growth over the next five years.
1 | Retirement Class shares commenced operations on March 1, 2016. The performance attributed to the Retirement Class shares prior to that date is that of the Institutional Class shares. Performance prior to March 1, 2016 has not been adjusted to reflect the lower expenses of Retirement Class shares. During this period, Retirement Class shares would have had returns similar to, but potentially higher than, Institutional Class shares due to the fact that Retirement Class shares represent interests in the same portfolio as Institutional Class shares but are subject to lower expenses. |
This report contains the current opinions of Sands Capital Management, LLC as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Investing in international and emerging markets poses special risks, including potentially greater price volatility due to social, political and economic factors, as well as currency exchange rate fluctuations. These risks are more severe for securities of issuers in emerging market regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
23
Harbor Global Leaders Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
REGION BREAKDOWN (% of investments)
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of April 30, 2021, there was no foreign currency denomination that comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—98.5% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—5.5% | |||
27,491 | Safran SA (France) | $ 4,105 | |
5,350 | TransDigm Group Inc. (United States)* | 3,283 | |
7,388 | |||
AUTO COMPONENTS—2.4% | |||
22,125 | Aptiv plc (United States)* | 3,183 | |
BANKS—2.6% | |||
49,969 | HDFC Bank Ltd. ADR (India)*,1 | 3,512 | |
BIOTECHNOLOGY—2.3% | |||
14,482 | CSL Ltd. (Australia) | 3,025 | |
CAPITAL MARKETS—4.5% | |||
163,832 | Allfunds Group plc (United Kingdom)* | 2,754 | |
28,018 | Intercontinental Exchange Inc. (United States) | 3,298 | |
6,052 | |||
COMMERCIAL SERVICES & SUPPLIES—2.6% | |||
511,721 | Rentokil Initial plc (United Kingdom) | 3,537 | |
DIVERSIFIED CONSUMER SERVICES—5.9% | |||
16,830 | Bright Horizons Family Solutions Inc. (United States)* | 2,438 | |
61,421 | Chegg Inc. (United States)* | 5,548 | |
7,986 | |||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—3.6% | |||
10,160 | Keyence Corp. (Japan) | 4,877 | |
ENTERTAINMENT—3.7% | |||
19,930 | Sea Ltd. ADR (Singapore)*,1 | 5,033 | |
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—1.9% | |||
3,446 | Equinix Inc. (United States) | 2,484 | |
FOOD & STAPLES RETAILING—6.3% | |||
161,903 | Alimentation Couche-Tard Inc. (Canada) | 5,486 | |
8,821 | Zur Rose Group AG (Switzerland)* | 2,936 | |
8,422 | |||
HEALTH CARE PROVIDERS & SERVICES—2.4% | |||
7,958 | UnitedHealth Group Inc. (United States) | 3,174 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
INDUSTRIAL CONGLOMERATES—4.5% | |||
13,560 | Roper Technologies Inc. (United States) | $ 6,054 | |
INSURANCE—3.6% | |||
379,100 | AIA Group Ltd. (Hong Kong) | 4,812 | |
INTERACTIVE MEDIA & SERVICES—2.8% | |||
11,640 | Naver Corp. (South Korea) | 3,748 | |
IT SERVICES—3.8% | |||
21,805 | Visa Inc. (United States) | 5,093 | |
LIFE SCIENCES TOOLS & SERVICES—6.8% | |||
3,524 | Bio-Techne Corp. (United States) | 1,506 | |
19,344 | IQVIA Holdings Inc. (United States)* | 4,540 | |
4,918 | Lonza Group AG (Switzerland) | 3,126 | |
9,172 | |||
MEDIA—3.7% | |||
7,413 | Charter Communications Inc. (United States)* | 4,992 | |
MULTILINE RETAIL—3.0% | |||
11,322 | Dollar General Corp. (United States) | 2,431 | |
76,300 | Pan Pacific International Holdings Corp. (Japan) | 1,645 | |
4,076 | |||
PHARMACEUTICALS—2.3% | |||
17,970 | Zoetis Inc. (United States) | 3,109 | |
PROFESSIONAL SERVICES—5.7% | |||
5,275 | CoStar Group Inc. (United States)* | 4,507 | |
69,350 | Recruit Holdings Co. Ltd. (Japan) | 3,127 | |
7,634 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—6.9% | |||
43,418 | Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan)1 | 5,069 | |
23,469 | Texas Instruments Inc. (United States) | 4,236 | |
9,305 | |||
SOFTWARE—9.5% | |||
37,171 | Cloudflare Inc. (United States)* | 3,150 | |
4,757 | Coupa Software Inc. (United States)* | 1,280 |
24
Harbor Global Leaders Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
SOFTWARE—Continued | |||
9,863 | Intuit Inc. (United States) | $ 4,065 | |
16,894 | Microsoft Corp. (United States) | 4,260 | |
12,755 | |||
TRADING COMPANIES & DISTRIBUTORS—2.2% | |||
116,800 | Monotaro Co. Ltd. (Japan) | 2,966 | |
TOTAL COMMON STOCKS | |||
(Cost $92,080) | 132,389 | ||
TOTAL INVESTMENTS—98.5% | |||
(Cost $92,080) | 132,389 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—1.5% | 2,069 | ||
TOTAL NET ASSETS—100.0% | $134,458 |
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of April 30, 2021 based on the inputs used to value them.
Asset Category | Quoted Prices Level 1 (000s) | Other Significant Observable Inputs Level 2 (000s) | Significant Unobservable Inputs Level 3 (000s) | Total (000s) | ||||
Common Stocks | ||||||||
Europe | $ 2,755 | $13,703 | $— | $ 16,458 | ||||
Middle East/Central Asia | 3,512 | — | — | 3,512 | ||||
North America | 78,117 | — | — | 78,117 | ||||
Pacific Basin | 10,102 | 24,200 | — | 34,302 | ||||
Total Investments in Securities | $94,486 | $37,903 | $— | $132,389 |
There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels used in table above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
* | Non-income producing security |
1 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
The accompanying notes are an integral part of the Financial Statements.
25
Harbor International Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Marathon Asset Management LLP
Orion House
5 Upper St. Martin’s Lane
London, WC2H 9EA
England
London, WC2H 9EA
England
Portfolio Managers
Neil M. Ostrer
Since 2018
Since 2018
Charles Carter
Since 2018
Since 2018
Nick Longhurst
Since 2018
Since 2018
William J. Arah
Since 2018
Since 2018
Simon Somerville
Since 2018
Since 2018
Michael Nickson, CFA
Since 2018
Since 2018
David Cull, CFA
Since 2018
Since 2018
Justin Hill
Since 2021
Marathon Asset Management LLP (operating as Marathon-London in the U.S.) has subadvised the Fund since 2018.
Investment Objective
The Fund seeks long-term total return, principally from growth of capital.
Management’s Discussion of
Fund Performance
Fund Performance
MARKET REVIEW
The six-month period ended April 30, 2021 displayed strong market performance. There was a notable change in style leadership in equity markets that took place around November 9, 2020 with the announcement of an effective vaccine. For years, the market has been led mainly by mega-cap companies which are either ‘growth’ businesses or reliable income generators (“bond proxies”). This began to change in November, initially in Europe and subsequently spreading to all other major markets. The ‘value’ area of the market and smaller capitalization companies (and particularly those businesses which are both) began to outperform. Although this new trend has now been in place for around six months, the disparity in valuations between the ‘growth’ and ‘value’ segments of the market remains high from a historical perspective reflecting the extremes that had been reached.
Cyclical industries, such as Financials, Energy, Materials and Consumer Discretionary have been the key beneficiaries over the period, with more defensive sectors, including Health Care, Consumer Staples and Utilities, performing relatively weakly. Given the depth of the COVID-19 crash earlier in the year, this might be expected; cyclicals in general fell faster and further than their more defensive peers and so had further to recover as the outlook improved.
The MSCI EAFE (ND) Index performed well and returned 28.84% over the six-month period ended April 30, 2021. On a regional basis, European markets led the way returning 33.32% and averaging 62.39% of the MSCI EAFE (ND) Index. Developed Asian ex-Japan markets (Australia, Hong Kong, Singapore and New Zealand), which constituted 11.77% of the Index on average over the period, were also strong performers during the six-month period returning 31.65%. Japanese market performance within the MSCI EAFE (ND) Index was not so strong in absolute terms, returning 17.16% and averaging 25.24% of the MSCI EAFE (ND) Index over the period.
PERFORMANCE
Harbor International Fund returned 31.18% (Retirement Class), 31.17% (Institutional Class), 30.98% (Administrative Class) and 30.90% (Investor Class) outperforming the MSCI EAFE (ND) Index, which returned 28.84% during the six-month period ended April 30, 2021. Returns were driven by stock selection over the period, particularly in Europe (especially in the U.K.) and Japan. Within Europe, the overweight to the strengthening British Pound and stock specific exposure within the market were strongly beneficial. The underweight position to the Swiss market and currency also buoyed returns. Stock selection within the limited out of benchmark Asian emerging markets exposure (averaging 6.31% over the period) was also strongly positive, more than offsetting the negative allocation impact of the holding. Conversely, the Fund’s holdings in the Pacific ex-Japan region lagged slightly.
Both sector allocations and stock selection within sectors were positive overall. The Fund’s aggregate underweight exposure to the Health Care and Utilities sectors (which underperformed relative to the MSCI EAFE (ND) Index) contributed positively. However, its underweight position in the Financials sector (which outperformed the overall MSCI EAFE (ND) Index return over the period) weighed on relative returns. Stock selection was notably strong in the Health Care and Materials sectors, but once again the stocks in the Financials sector lagged.
At the stock level, a cluster of travel and leisure related stocks including travel food retailer SSP, cruise operator Carnival, aerospace engine maker Rolls-Royce, and package tour operator TUI were directly impacted by the COVID-19 crisis. These stocks strongly rebounded with the announcement of effective vaccines, and the holdings have proved value additive for the Fund over the period under review. Not owning mega-cap defensive names such as Nestlé, the Swiss food producer, and Swiss pharmaceutical company Novartis also assisted outperformance during the period, as these stocks lagged the market and the Swiss Franc (in which the shares are denominated) fell against the U.S. Dollar. Italian industrial equipment manufacturer, CNH Industrial, also performed well after reporting net sales up 4%, substantially exceeding expectations. Elsewhere in the Fund’s portfolio, the underweight to Dutch lithography
26
Harbor International Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | |||||||||
6 Months | 5 Years | 10 Years | |||||||||
Harbor International Fund | |||||||||||
Retirement Class1 | 31.18% | 49.57% | 7.76% | 4.18% | |||||||
Institutional Class | 31.17 | 49.49 | 7.68 | 4.14 | |||||||
Administrative Class | 30.98 | 49.10 | 7.41 | 3.88 | |||||||
Investor Class | 30.90 | 48.91 | 7.28 | 3.75 | |||||||
Comparative Index | |||||||||||
MSCI EAFE (ND) | 28.84% | 39.88% | 8.87% | 5.22% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.69% (Net) and 0.81% (Gross) (Retirement Class); 0.77% (Net) and 0.89% (Gross) (Institutional Class); 1.02% (Net) and 1.14% (Gross) (Administrative Class); and 1.13% (Net) and 1.25% (Gross) (Investor Class). The management fee rate is 0.75% on assets up to $12 billion and 0.65% on assets in excess of $12 billion. In addition, the Adviser has contractually agreed to limit the Fund’s operating expenses, excluding interest expense (if any), to 0.69%, 0.77%, 1.02%, and 1.13% for the Retirement Class, Institutional Class, Administrative Class, and Investor Class, respectfully. The net expense ratios reflect a contractual management fee waiver effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
business ASML weighed on performance when the company, which is the only producer of the extreme ultraviolet lithography machines used in certain types of semi-conductor manufacturing, signed a very large multi-year order, which we believe will boost earnings and helped to propel its shares higher as a result. Similarly, not owning French luxury goods provider, LVMH, hurt performance, when sales rebounded unexpectedly strongly from the initial COVID-19 related downturn, and financial results beat expectations. Danish medical device maker, Coloplast performed comparatively poorly over the period. While profits have been resilient, Coloplast has seen some impact from a decline in elective procedures, and, though shares have increased in value, they have not matched the pace of the benchmark index.
OUTLOOK & STRATEGY
We remain committed to the implementation of our bottom-up analytical efforts within the capital cycle investment framework and, therefore, are seeking to invest in companies that, in our view, exhibit favorable supply side dynamics with management teams that have a track record of allocating capital efficiently. Developments over the last year should highlight the shortfalls of spending too much energy on forecasted outlooks; we are not looking to react to market volatility, rather placing emphasis on trusting the longstanding investment process that we have been committed to over the our 30 plus year history with low levels of investment turnover. It remains to be seen whether the rotation in the prevailing trend from growth and large cap to value and smaller cap names represents an ongoing change or a short-term interruption; however, history suggests that valuation differentials, which remain historically high, tend to revert to the mean (then overshoot) given time, in our view.
1 | Retirement Class shares commenced operations on March 1, 2016. The performance attributed to the Retirement Class shares prior to that date is that of the Institutional Class shares. Performance prior to March 1, 2016 has not been adjusted to reflect the lower expenses of Retirement Class shares. During this period, Retirement Class shares would have had returns similar to, but potentially higher than, Institutional Class shares due to the fact that Retirement Class shares represent interests in the same portfolio as Institutional Class shares but are subject to lower expenses. |
This report contains the current opinions of Marathon Asset Management LLP as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Investing in international and emerging markets poses special risks, including potentially greater price volatility due to social, political and economic factors, as well as currency exchange rate fluctuations. These risks are more severe for securities of issuers in emerging market regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
27
Harbor International Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
REGION BREAKDOWN (% of investments)
(Excludes derivatives and short-term investments)
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of April 30, 2021, 26% of the Fund’s investments were denominated in British Pound. No other foreign currency denomination comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—99.1% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—1.3% | |||
199,648 | Airbus SE (France)* | $ 24,010 | |
2,255,138 | BAE Systems plc (United Kingdom) | 15,753 | |
9,850,146 | Rolls-Royce Holdings plc (United Kingdom)* | 14,255 | |
85,578 | Thales SA (France) | 8,724 | |
62,742 | |||
AIR FREIGHT & LOGISTICS—0.2% | |||
170,248 | Oesterreichische Post AG (Austria)1 | 7,547 | |
AIRLINES—0.3% | |||
944,311 | EasyJet plc (United Kingdom)* | 13,501 | |
832,416 | Qantas Airways Ltd. (Australia)* | 3,157 | |
16,658 | |||
AUTO COMPONENTS—1.1% | |||
360,600 | Bridgestone Corp. (Japan) | 14,452 | |
1,727,276 | Gestamp Automocion SA (Spain)*,2 | 8,919 | |
732,574 | GUD Holdings Ltd. (Australia) | 7,532 | |
66,937 | Hankook Tire & Technology Co. Ltd. (South Korea) | 2,888 | |
430,500 | Johnson Electric Holdings Ltd. (Hong Kong) | 1,144 | |
106,400 | Koito Manufacturing Co. Ltd. (Japan) | 6,637 | |
273,500 | Sumitomo Electric Industries Ltd. (Japan) | 4,070 | |
81,300 | Toyota Industries Corp. (Japan) | 6,528 | |
52,170 | |||
AUTOMOBILES—1.5% | |||
199,555 | Bayerische Motoren Werke AG (Germany) | 19,997 | |
14,476 | Hyundai Motor Co. (South Korea) | 2,753 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
AUTOMOBILES—Continued | |||
514,295 | Mahindra & Mahindra Ltd. (India) | $ 5,214 | |
575,800 | Toyota Motor Corp. (Japan) | 43,084 | |
71,048 | |||
BANKS—7.8% | |||
582,775 | Australia & New Zealand Banking Group Ltd. (Australia) | 12,859 | |
981,892 | Axis Bank Ltd. (India)* | 9,396 | |
688,900 | Bangkok Bank PCL (Thailand) | 2,684 | |
4,371,914 | Bank of Ireland Group plc (Ireland)* | 25,619 | |
22,047,910 | Barclays plc (United Kingdom) | 53,377 | |
688,343 | BNP Paribas SA (France) | 44,135 | |
4,567,545 | Caixabank SA (Spain) | 14,611 | |
257,655 | Close Brothers Group plc (United Kingdom) | 5,652 | |
149,860 | Danske Bank AS (Denmark) | 2,848 | |
613,300 | DBS Group Holdings Ltd. (Singapore) | 13,745 | |
622,262 | DNB ASA (Norway) | 13,345 | |
198,200 | Fukuoka Financial Group Inc. (Japan) | 3,380 | |
130,615 | Hana Financial Group Inc. (South Korea) | 5,354 | |
743,169 | HSBC Holdings plc (Hong Kong) | 4,644 | |
1,815,067 | Intesa Sanpaolo SpA (Italy) | 5,060 | |
633,000 | Kasikornbank PCL (Thailand) | 2,679 | |
64,632,385 | Lloyds Banking Group plc (United Kingdom) | 40,530 | |
6,223,000 | Resona Holdings Inc. (Japan) | 25,618 | |
186,346 | Shinhan Financial Group Co. Ltd. (South Korea) | 6,696 | |
952,798 | Standard Chartered plc (United Kingdom) | 6,835 | |
471,500 | Sumitomo Mitsui Financial Group Inc. (Japan) | 16,563 | |
171,400 | Sumitomo Mitsui Trust Holdings Inc. (Japan) | 5,842 | |
2,039,691 | Svenska Handelsbanken AB (Sweden) | 23,620 |
28
Harbor International Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
BANKS—Continued | |||
1,932,038 | UniCredit SpA (Italy) | $ 19,846 | |
310,100 | United Overseas Bank Ltd. (Singapore) | 6,181 | |
371,119 | |||
BEVERAGES—3.8% | |||
249,605 | Anheuser-Busch InBev SA (Belgium) | 17,680 | |
87,500 | Asahi Group Holdings Ltd. (Japan) | 3,659 | |
112,380 | Carlsberg AS (Denmark) | 19,716 | |
237,285 | Coca-Cola European Partners plc (United Kingdom) | 13,483 | |
886,208 | Davide Campari-Milano NV (Netherlands) | 10,458 | |
722,680 | Diageo plc (United Kingdom) | 32,442 | |
292,045 | Heineken NV (Netherlands) | 33,877 | |
1,693,400 | Kirin Holdings Co. Ltd. (Japan) | 31,801 | |
26,959 | Pernod Ricard SA (France) | 5,536 | |
138,500 | Suntory Beverage & Food Ltd. (Japan) | 4,675 | |
9,293,900 | Thai Beverage PCL (Thailand) | 4,989 | |
218,000 | Tsingtao Brewery Co. Ltd. (China) | 1,974 | |
180,290 | |||
BUILDING PRODUCTS—2.2% | |||
1,621,534 | Assa Abloy AB Class B (Sweden) | 46,229 | |
59,829 | Geberit AG (Switzerland) | 39,368 | |
854,180 | GWA Group Ltd. (Australia) | 1,967 | |
598,200 | LIXIL Group Corp. (Japan) | 16,203 | |
103,767 | |||
CAPITAL MARKETS—2.5% | |||
2,191,734 | 3i Group plc (United Kingdom) | 38,819 | |
674,500 | Daiwa Securities Group Inc. (Japan) | 3,599 | |
1,136,203 | IG Group Holdings plc (United Kingdom) | 14,374 | |
143,400 | JAFCO Co. Ltd. (Japan) | 10,323 | |
108,200 | Japan Exchange Group Inc. (Japan) | 2,538 | |
2,550,230 | Jupiter Fund Management plc (United Kingdom) | 9,103 | |
2,741,700 | Nomura Holdings Inc. (Japan) | 14,737 | |
116,349 | Rathbone Brothers plc (United Kingdom) | 2,720 | |
933,405 | St. James's Place plc (United Kingdom) | 17,556 | |
216,365 | UBS Group AG (Switzerland) | 3,304 | |
117,073 | |||
CHEMICALS—1.8% | |||
539,900 | Air Water Inc. (Japan) | 8,930 | |
400,093 | BASF SE (Germany) | 32,244 | |
39,400 | Nippon Shokubai Co. Ltd. (Japan) | 2,071 | |
195,000 | Nissan Chemical Corp. (Japan) | 10,025 | |
43,300 | Nitto Denko Corp. (Japan) | 3,583 | |
921,953 | Orica Ltd. (Australia) | 9,599 | |
48,000 | Shin-Etsu Chemical Co. Ltd. (Japan) | 8,103 | |
82,800 | Sumitomo Bakelite Co. Ltd. (Japan) | 3,353 | |
102,700 | Tokyo Ohka Kogyo Co. Ltd. (Japan) | 6,806 | |
84,714 | |||
COMMERCIAL SERVICES & SUPPLIES—2.1% | |||
69,300 | AEON Delight Co. Ltd. (Japan)* | 2,114 | |
1,441,979 | Brambles Ltd. (Australia) | 11,551 | |
7,562,175 | Cleanaway Waste Management Ltd. (Australia) | 16,579 | |
301,276 | Elis SA (France)* | 5,392 | |
2,248,970 | HomeServe plc (United Kingdom) | 33,988 | |
39,493 | S-1 Corp. (South Korea) | 2,892 | |
101,700 | Secom Co. Ltd. (Japan) | 8,475 | |
8,120,409 | Serco Group plc (United Kingdom) | 15,721 | |
124,500 | Sohgo Security Services Co. Ltd. (Japan) | 5,458 | |
102,170 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
CONSTRUCTION & ENGINEERING—1.1% | |||
332,877 | Boskalis Westminster NV (Netherlands) | $ 10,624 | |
142,000 | Ferrovial SA (Spain) | 4,032 | |
817,600 | Maeda Corp. (Japan) | 6,986 | |
2,102,200 | Obayashi Corp. (Japan) | 19,234 | |
1,298,400 | Penta-Ocean Construction Co. Ltd. (Japan) | 10,123 | |
50,999 | |||
CONSTRUCTION MATERIALS—1.4% | |||
111,860 | CRH plc (Ireland) | 5,278 | |
1,070,893 | Fletcher Building Ltd. (New Zealand) | 5,567 | |
39,185 | Imerys SA (France) | 2,037 | |
121,715 | James Hardie Industries PLC CDI (Australia)*,2 | 4,011 | |
159,505 | LafargeHolcim Ltd. (Switzerland)* | 9,843 | |
714,200 | Taiheiyo Cement Corp. (Japan) | 17,931 | |
61,178 | Vicat SA (France) | 3,075 | |
546,759 | Wienerberger AG (Austria) | 21,435 | |
69,177 | |||
CONSUMER FINANCE—0.3% | |||
2,272,074 | International Personal Finance plc (United Kingdom)* | 4,002 | |
2,290,775 | Non-Standard Finance plc (United Kingdom)*,2 | 198 | |
1,653,921 | Provident Financial plc (United Kingdom)* | 5,593 | |
294,931 | Shriram Transport Finance Co. Ltd. (India) | 5,322 | |
15,115 | |||
CONTAINERS & PACKAGING—0.6% | |||
3,424,245 | DS Smith plc (United Kingdom) | 19,904 | |
700,900 | Toyo Seikan Group Holdings Ltd. (Japan) | 8,215 | |
28,119 | |||
DISTRIBUTORS—0.4% | |||
1,734,092 | Inchcape plc (United Kingdom) | 18,717 | |
DIVERSIFIED FINANCIAL SERVICES—0.3% | |||
3,786,151 | AMP Ltd. (Australia) | 3,251 | |
376,537 | Challenger Ltd. (Australia) | 1,478 | |
4,708,000 | First Pacific Co. Ltd. (Hong Kong) | 1,614 | |
51,533 | Macquarie Group Ltd. (Australia) | 6,352 | |
12,695 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—1.5% | |||
812,844 | Deutsche Telekom AG (Germany) | 15,643 | |
4,807,421 | Koninklijke KPN NV (Netherlands) | 16,584 | |
1,289,400 | Nippon Telegraph & Telephone Corp. (Japan) | 32,509 | |
1,677,100 | Singapore Telecommunications Ltd. (Singapore) | 3,147 | |
1,631,401 | Telstra Corp. Ltd. (Australia) | 4,262 | |
72,145 | |||
ELECTRIC UTILITIES—0.5% | |||
176,536 | Orsted AS (Denmark)2 | 25,662 | |
ELECTRICAL EQUIPMENT—3.7% | |||
747,347 | ABB Ltd. (Switzerland) | 24,275 | |
386,579 | Legrand SA (France) | 37,629 | |
56,000 | Mabuchi Motor Co. Ltd. (Japan) | 2,243 | |
205,394 | Schneider Electric SE (France) | 32,772 | |
4,115,000 | TECO Electric and Machinery Co. Ltd. (Taiwan) | 5,125 | |
1,803,030 | Vestas Wind Systems AS (Denmark) | 74,360 | |
176,404 | |||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—2.5% | |||
44,800 | Azbil Corp. (Japan) | 1,809 | |
1,612,000 | Chroma ATE Inc. (Taiwan) | 11,139 |
29
Harbor International Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—Continued | |||
1,016,000 | Delta Electronics Inc. (Taiwan) | $ 10,884 | |
1,380,600 | Hitachi Ltd. (Japan) | 68,337 | |
197,000 | Kyocera Corp. (Japan) | 11,960 | |
56,500 | Omron Corp. (Japan) | 4,279 | |
60,800 | Shimadzu Corp. (Japan) | 2,131 | |
72,000 | TDK Corp. (Japan) | 9,764 | |
120,303 | |||
ENERGY EQUIPMENT & SERVICES—0.5% | |||
1,955,620 | John Wood Group plc (United Kingdom)* | 7,603 | |
311,631 | Petrofac Ltd. (United Kingdom)* | 566 | |
6,421,683 | Saipem SpA (Italy)* | 14,806 | |
39,671 | Technip Energies NV (France)* | 565 | |
195,857 | TechnipFMC plc (France)* | 1,459 | |
24,999 | |||
ENTERTAINMENT—0.8% | |||
175,772 | CTS Eventim AG & Co. KGaA (Germany)* | 12,132 | |
62,900 | Konami Holdings Corp. (Japan) | 3,752 | |
4,650,000 | Major Cineplex Group PCL (Thailand)* | 2,864 | |
387,277 | Modern Times Group MTG AB Class B (Sweden)* | 5,908 | |
107,400 | Nexon Co. Ltd. (Japan) | 3,553 | |
9,100 | Nintendo Co. Ltd. (Japan) | 5,220 | |
154,200 | Toho Co. Ltd. (Japan) | 6,145 | |
39,574 | |||
FOOD & STAPLES RETAILING—1.2% | |||
707,571 | Koninklijke Ahold Delhaize NV (Netherlands) | 19,042 | |
105,700 | Matsumotokiyoshi Holdings Co. Ltd. (Japan) | 4,251 | |
928,968 | Metcash Ltd. (Australia) | 2,545 | |
410,700 | Seven & I Holdings Co. Ltd. (Japan) | 17,732 | |
145,800 | Sundrug Co. Ltd. (Japan) | 4,969 | |
3,662,525 | Tesco plc (United Kingdom) | 11,180 | |
59,719 | |||
FOOD PRODUCTS—1.6% | |||
88,200 | Calbee Inc. (Japan) | 2,115 | |
904,000 | China Mengniu Dairy Co. Ltd. (China)* | 4,838 | |
1,425,851 | Devro plc (United Kingdom) | 4,037 | |
177,900 | Fuji Oil Holdings Inc. (Japan) | 4,584 | |
295,500 | Megmilk Snow Brand Co. Ltd. (Japan) | 5,929 | |
68,000 | Meiji Holdings Co. Ltd. (Japan) | 4,220 | |
86,900 | NH Foods Ltd. (Japan) | 3,881 | |
630,600 | Nippon Suisan Kaisha Ltd. (Japan) | 2,955 | |
3,998,000 | Tingyi Cayman Islands Holding Corp. (China) | 7,184 | |
345,800 | Toyo Suisan Kaisha Ltd. (Japan) | 14,100 | |
200,845 | Viscofan SA (Spain) | 13,726 | |
6,789,000 | Want Want China Holdings Ltd. (China) | 4,907 | |
129,900 | Yakult Honsha Co. Ltd. (Japan) | 6,323 | |
78,799 | |||
GAS UTILITIES—0.1% | |||
165,900 | Tokyo Gas Co. Ltd. (Japan) | 3,367 | |
HEALTH CARE EQUIPMENT & SUPPLIES—4.7% | |||
315,935 | Coloplast AS Class B (Denmark) | 52,331 | |
7,940,049 | ConvaTec Group plc (United Kingdom)2 | 23,927 | |
630,606 | Demant AS (Denmark)* | 31,569 | |
433,814 | Getinge AB Class B (Sweden) | 14,672 | |
466,060 | GN Store Nord AS (Denmark) | 42,033 | |
42,000 | Hoya Corp. (Japan) | 4,774 | |
270,300 | Japan Lifeline Co. Ltd. (Japan) | 3,809 | |
444,530 | Koninklijke Philips NV (Netherlands) | 25,135 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES—Continued | |||
214,200 | Olympus Corp. (Japan)* | $ 4,409 | |
238,127 | Smith & Nephew plc (United Kingdom) | 5,154 | |
53,752 | Sonova Holding AG (Switzerland)* | 15,916 | |
223,729 | |||
HEALTH CARE PROVIDERS & SERVICES—1.2% | |||
415,900 | Alfresa Holdings Corp. (Japan) | 7,455 | |
177,170 | Amplifon SpA (Italy) | 7,478 | |
356,335 | Fresenius Medical Care AG & Co. KGaA (Germany) | 28,374 | |
472,800 | MediPAL Holdings Corp. (Japan) | 8,700 | |
157,600 | Ship Healthcare Holdings Inc. (Japan) | 4,130 | |
56,137 | |||
HOTELS, RESTAURANTS & LEISURE—5.1% | |||
3,238,000 | Ajisen China Holdings Ltd. (China) | 565 | |
79,652 | Aristocrat Leisure Ltd. (Australia) | 2,272 | |
291,650 | Carnival plc (United Kingdom)* | 6,818 | |
2,148,484 | Compass Group plc (United Kingdom)* | 46,739 | |
290,464 | Flutter Entertainment plc (United Kingdom)* | 59,522 | |
640,000 | Galaxy Entertainment Group Ltd. (Hong Kong)* | 5,618 | |
7,823,700 | Genting Singapore Ltd. (Singapore) | 5,074 | |
1,744,287 | GVC Holdings plc (United Kingdom)* | 40,775 | |
48,959 | InterContinental Hotels Group PLC (United Kingdom)* | 3,479 | |
147,408 | Playtech plc (United Kingdom)* | 947 | |
8,024,289 | SSP Group plc (United Kingdom)* | 35,505 | |
3,509,123 | TUI AG (Germany)* | 20,903 | |
222,153 | Yum China Holdings Inc. (China) | 13,978 | |
242,195 | |||
HOUSEHOLD DURABLES—1.0% | |||
601,812 | Barratt Developments plc (United Kingdom) | 6,417 | |
364,500 | Casio Computer Co. Ltd. (Japan) | 6,454 | |
45,700 | Rinnai Corp. (Japan) | 4,589 | |
305,100 | Sekisui Chemical Co. Ltd. (Japan) | 5,319 | |
142,800 | Sony Corp. (Japan) | 14,277 | |
3,795,701 | Taylor Wimpey plc (United Kingdom) | 9,416 | |
46,472 | |||
HOUSEHOLD PRODUCTS—0.8% | |||
142,200 | Lion Corp. (Japan) | 2,668 | |
396,608 | Reckitt Benckiser Group plc (United Kingdom) | 35,313 | |
37,981 | |||
INDUSTRIAL CONGLOMERATES—1.1% | |||
390,000 | CK Hutchison Holdings Ltd. (Hong Kong) | 3,187 | |
221,562 | DCC plc (United Kingdom) | 19,225 | |
347,200 | Jardine Matheson Holdings Ltd. (Hong Kong) | 23,314 | |
45,707 | LG Corp. (South Korea) | 5,170 x | |
4,189,900 | Sime Darby Berhad (Malaysia) | 2,311 | |
53,207 | |||
INSURANCE—4.9% | |||
487,747 | Admiral Group plc (United Kingdom) | 21,075 | |
793,200 | AIA Group Ltd. (Hong Kong) | 10,068 | |
1,071,593 | AXA SA (France)1 | 30,267 | |
1,605,800 | Dai-ichi Life Holdings Inc. (Japan) | 28,996 | |
285,600 | Great Eastern Holdings Ltd. (Singapore) | 4,924 | |
38,933 | Hannover Rueck SE (Germany) | 7,189 | |
34,512 | Helvetia Holding AG (Switzerland) | 4,149 | |
336,051 | Hiscox Ltd. (United Kingdom)* | 3,762 | |
2,501,894 | Insurance Australia Group Ltd. (Australia) | 9,427 | |
1,897,500 | Japan Post Holdings Co. Ltd. (Japan)* | 15,946 | |
186,200 | MS&AD Insurance Group Holdings Inc. (Japan) | 5,283 |
30
Harbor International Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
INSURANCE—Continued | |||
627,000 | Ping An Insurance Group Co. of China Ltd. (China) | $ 6,836 | |
262,961 | Prudential plc (United Kingdom) | 5,568 | |
870,139 | QBE Insurance Group Ltd. (Australia) | 6,582 | |
733,667 | Sampo OYJ (Finland) | 34,801 | |
23,072 | Samsung Fire & Marine Insurance Co. Ltd. (South Korea) | 4,099 | |
375,600 | Sompo Holdings Inc. (Japan) | 13,959 | |
405,700 | T&D Holdings Inc. (Japan) | 4,979 | |
342,400 | Tokio Marine Holdings Inc. (Japan) | 16,420 | |
234,330 | |||
INTERACTIVE MEDIA & SERVICES—1.8% | |||
1,709,026 | Auto Trader Group plc (United Kingdom)*,2 | 13,454 | |
64,040 | Baidu Inc. ADR (China)*,3 | 13,469 | |
764,619 | Carsales.com Ltd. (Australia) | 11,681 | |
728,983 | Domain Holdings Australia Ltd. (Australia)* | 2,845 | |
5,196,986 | Rightmove plc (United Kingdom) | 44,056 | |
85,505 | |||
INTERNET & DIRECT MARKETING RETAIL—1.8% | |||
13,345 | GS Home Shopping Inc. (South Korea) | 1,779 | |
634,699 | HelloFresh SE (Germany)* | 52,603 | |
167,724 | Just Eat Takeaway.com NV (Netherlands)*,2 | 17,330 | |
58,228 | Trip.com Group Ltd. ADR (China)*,3 | 2,276 | |
19,071 | Zooplus AG (Germany)* | 6,030 | |
116,000 | ZOZO Inc. (Japan) | 3,902 | |
83,920 | |||
IT SERVICES—2.7% | |||
103,656 | Alten SA (France) | 12,977 | |
15,499,079 | Capita plc (United Kingdom)* | 9,355 | |
484,175 | Edenred (France) | 27,448 | |
123,690 | Genpact Ltd. (United States) | 5,879 | |
249,000 | NEC Corp. (Japan) | 14,476 | |
253,900 | NET One Systems Co. Ltd. (Japan) | 8,311 | |
74,900 | Nomura Research Institute Ltd. (Japan) | 2,299 | |
183,900 | NS Solutions Corp. (Japan) | 5,562 | |
1,397,000 | NTT Data Corp. (Japan) | 21,753 | |
65,700 | Otsuka Corp. (Japan) | 3,305 | |
42,377 | Reply SpA (Italy) | 5,761 | |
219,700 | SCSK Corp. (Japan) | 12,750 | |
129,876 | |||
LEISURE PRODUCTS—0.8% | |||
177,300 | Bandai Namco Holdings Inc. (Japan) | 13,010 | |
1,123,000 | Giant Manufacturing Co. Ltd. (Taiwan) | 14,261 | |
59,000 | Merida Industry Co. Ltd. (Taiwan) | 702 | |
696,700 | Sega Sammy Holdings Inc. (Japan) | 10,000 | |
37,973 | |||
LIFE SCIENCES TOOLS & SERVICES—0.7% | |||
287,915 | Eurofins Scientific SE (France) | 28,516 | |
50,192 | Gerresheimer AG (Germany) | 5,398 | |
33,914 | |||
MACHINERY—3.0% | |||
103,490 | Andritz AG (Austria) | 5,624 | |
2,606,019 | CNH Industrial NV (Italy) | 38,685 | |
60,200 | Daifuku Co. Ltd. (Japan) | 5,950 | |
617,922 | Fluidra SA (Spain) | 21,458 | |
100,527 | GEA Group AG (Germany) | 4,415 | |
56,300 | Hoshizaki Corp. (Japan) | 5,002 | |
66,000 | Makita Corp. (Japan) | 2,972 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
MACHINERY—Continued | |||
286,200 | NSK Ltd. (Japan) | $ 2,639 | |
896,302 | Rotork plc (United Kingdom) | 4,260 | |
1,002,593 | Sandvik AB (Sweden)1 | 24,794 | |
199,462 | Stabilus SA (Luxembourg) | 15,574 | |
132,500 | Techtronic Industries Co. Ltd. (Hong Kong) | 2,404 | |
680,271 | Wartsila OYJ ABP (Finland) | 8,779 | |
142,556 | |||
MARINE—0.2% | |||
1,387,106 | Irish Continental Group plc (Ireland)* | 7,586 | |
MEDIA—2.8% | |||
323,529 | Daily Mail & General Trust plc (United Kingdom) | 4,017 | |
288,688 | Euromoney Institutional Investor plc (United Kingdom) | 3,963 | |
1,013,200 | Fuji Media Holdings Inc. (Japan) | 12,329 | |
227,700 | Hakuhodo Dy Holdings Inc. (Japan) | 3,854 | |
509,997 | Informa plc (United Kingdom)* | 3,964 | |
15,456,239 | ITV plc (United Kingdom)* | 25,833 | |
584,559 | JCDecaux SA (France)* | 14,882 | |
4,404,000 | Media Nusantara Citra TBK PT (Indonesia)* | 299 | |
609,864 | Nine Entertainment Co. Holdings Ltd. (Australia) | 1,342 | |
957,300 | Nippon Television Holdings Inc. (Japan) | 12,603 | |
283,806 | Nordic Entertainment Group AB (Sweden)* | 13,165 | |
170,913 | Schibsted ASA Class A (Norway) | 8,589 | |
145,340 | Schibsted ASA Class B (Norway) | 6,348 | |
5,869,066 | Sky Network Television Ltd. (New Zealand)* | 713 | |
1,552,803 | WPP plc (United Kingdom) | 20,935 | |
132,836 | |||
METALS & MINING—3.4% | |||
749,244 | Acerinox SA (Spain)* | 10,389 | |
966,702 | ArcelorMittal SA (France) | 28,103 | |
475,788 | BHP Group Ltd. (Australia) | 17,317 | |
625,240 | BlueScope Steel Ltd. (Australia) | 10,336 | |
1,201,666 | Evolution Mining Ltd. (Australia) | 4,255 | |
7,674,447 | Glencore plc (United Kingdom)* | 31,261 | |
358,777 | Newcrest Mining Ltd. (Australia) | 7,333 | |
717,300 | Nippon Steel Corp. (Japan) | 12,535 | |
454,871 | Rio Tinto plc (United Kingdom) | 38,099 | |
84,400 | Sumitomo Metal Mining Co. Ltd. (Japan) | 3,573 | |
163,201 | |||
MULTILINE RETAIL—0.1% | |||
271,600 | Marui Group Co. Ltd. (Japan) | 5,104 | |
OIL, GAS & CONSUMABLE FUELS—2.5% | |||
130,784 | Ampol Ltd. (Australia) | 2,578 | |
2,587,944 | Beach Energy Ltd. (Australia) | 2,509 | |
17,587,979 | BP plc (United Kingdom) | 73,629 | |
1,618,507 | Equinor ASA (Norway) | 32,682 | |
1,224,209 | Oil Search Ltd. (Australia) | 3,536 | |
205,683 | Washington H Soul Pattinson & Co. Ltd. (Australia) | 4,791 | |
119,725 | |||
PAPER & FOREST PRODUCTS—0.3% | |||
1,953,700 | Oji Holdings Corp. (Japan) | 12,324 | |
PERSONAL PRODUCTS—1.4% | |||
47,429 | AMOREPACIFIC Group (South Korea) | 3,129 | |
3,387,114 | Asaleo Care Ltd. (Australia) | 3,677 | |
159,200 | Kao Corp. (Japan) | 10,236 | |
17,800 | Kose Corp. (Japan) | 2,680 | |
1,333,750 | L'Occitane International SA (Hong Kong) | 3,832 |
31
Harbor International Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
PERSONAL PRODUCTS—Continued | |||
102,500 | Mandom Corp. (Japan) | $ 1,921 | |
563,164 | Unilever plc (United Kingdom) | 32,988 | |
2,317,000 | Uni-President Enterprises Corp. (Taiwan) | 6,206 | |
64,669 | |||
PHARMACEUTICALS—3.5% | |||
364,500 | Astellas Pharma Inc. (Japan) | 5,486 | |
295,900 | Haw Par Corp. Ltd. (Singapore) | 2,933 | |
788,428 | Novo Nordisk AS (Denmark) | 58,160 | |
134,800 | Otsuka Holdings Co. Ltd. (Japan) | 5,166 | |
227,899 | Roche Holding AG (Switzerland) | 74,331 | |
74,000 | Rohto Pharmaceutical Co. Ltd. (Japan) | 1,898 | |
44,900 | Sawai Group Holdings Co. Ltd. (Japan) | 2,161 | |
198,100 | Takeda Pharmaceutical Co. Ltd. (Japan) | 6,617 | |
339,700 | Tsumura & Co. (Japan) | 11,313 | |
168,065 | |||
PROFESSIONAL SERVICES—4.5% | |||
401,860 | Adecco Group AG (Switzerland) | 27,238 | |
1,204,870 | ALS Ltd. (Australia) | 9,757 | |
36,788 | DKSH Holding AG (Switzerland) | 2,960 | |
577,756 | Experian plc (United Kingdom) | 22,273 | |
10,967,790 | Hays plc (United Kingdom)* | 24,756 | |
654,762 | Intertek Group plc (United Kingdom) | 55,504 | |
404,404 | IPH Ltd. (Australia) | 2,206 | |
362,800 | Nomura Co. Ltd. (Japan) | 2,639 | |
849,291 | PageGroup plc (United Kingdom)* | 6,571 | |
196,000 | Persol Holdings Co. Ltd. (Japan) | 3,610 | |
73,840 | Randstad NV (Netherlands) | 5,328 | |
1,106,996 | RELX plc (United Kingdom) | 28,722 | |
512,385 | RWS Holdings plc (United Kingdom) | 4,860 | |
36,500 | TechnoPro Holdings Inc. (Japan) | 2,684 | |
35,325 | Teleperformance (France) | 13,641 | |
212,749 | |||
REAL ESTATE MANAGEMENT & DEVELOPMENT—0.4% | |||
29,600 | Daito Trust Construction Co. Ltd. (Japan) | 3,148 | |
333,800 | Daiwa House Industry Co. Ltd. (Japan) | 9,898 | |
261,100 | Mitsubishi Estate Co. Ltd. (Japan) | 4,297 | |
502,000 | Swire Pacific Ltd. (Hong Kong) | 4,044 | |
21,387 | |||
ROAD & RAIL—0.5% | |||
1,285,068 | Aurizon Holdings Ltd. (Australia) | 3,697 | |
205,700 | East Japan Railway Co. (Japan) | 14,088 | |
1,107,620 | National Express Group plc (United Kingdom)* | 4,576 | |
344,600 | Senko Group Holdings Co. Ltd. (Japan) | 3,173 | |
25,534 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—1.7% | |||
198,000 | ASM Pacific Technology Ltd. (Hong Kong) | 2,991 | |
30,160 | ASML Holding NV (Netherlands) | 19,578 | |
719,200 | Renesas Electronics Corp. (Japan)* | 8,377 | |
153,300 | ROHM Co. Ltd. (Japan) | 15,133 | |
36,390 | SK Hynix Inc. (South Korea) | 4,151 | |
1,505,000 | Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan) | 31,695 | |
81,925 | |||
SOFTWARE—0.0% | |||
11,000 | Oracle Corp. Japan (Japan) | 1,031 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SPECIALTY RETAIL—0.8% | |||
91,000 | ABC-Mart Inc. (Japan) | $ 4,876 | |
14,387,300 | Esprit Holdings Ltd. (Hong Kong)* | 1,424 | |
1,614,922 | Pets at Home Group plc (United Kingdom) | 9,910 | |
241,800 | USS Co. Ltd. (Japan) | 4,388 | |
781,296 | WH Smith plc (United Kingdom)* | 19,521 | |
40,119 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—1.1% | |||
310,000 | King Slide Works Co. Ltd. (Taiwan) | 3,987 | |
175,053 | Logitech International SA (Switzerland) | 19,484 | |
136,673 | Quadient SAS (France) | 3,735 | |
327,316 | Samsung Electronics Co Ltd. (South Korea) | 23,857 | |
51,063 | |||
TEXTILES, APPAREL & LUXURY GOODS—2.4% | |||
93,731 | Adidas AG (Germany) | 28,950 | |
491,500 | ASICS Corp. (Japan) | 7,810 | |
283,791 | Cie Financiere Richemont SA (South Africa) | 29,124 | |
368,094 | Cie Financiere Richemont SA ADR (South Africa)3 | 3,801 | |
210,837 | EssilorLuxottica SA (France) | 35,092 | |
600,000 | Onward Holdings Co. Ltd. (Japan) | 1,651 | |
697,800 | Samsonite International SA (Hong Kong)*,2 | 1,291 | |
208,018 | Shenzhou International Group Holdings Ltd. (China) | 4,576 | |
1,986,000 | Stella International Holdings Ltd. (Hong Kong)* | 2,447 | |
114,742 | |||
THRIFTS & MORTGAGE FINANCE—0.1% | |||
189,387 | Housing Development Finance Corp. Ltd. (India) | 6,201 | |
TOBACCO—0.4% | |||
97,659 | British American Tobacco plc (United Kingdom) | 3,624 | |
194,700 | Japan Tobacco Inc. (Japan) | 3,652 | |
166,756 | Swedish Match AB (Sweden) | 13,651 | |
20,927 | |||
TRADING COMPANIES & DISTRIBUTORS—1.3% | |||
344,446 | Brenntag AG (Germany) | 30,923 | |
789,099 | Bunzl plc (United Kingdom) | 25,372 | |
257,100 | ITOCHU Corp. (Japan) | 8,026 | |
64,321 | |||
TRANSPORTATION INFRASTRUCTURE—0.4% | |||
664,505 | Getlink SE (France) | 10,571 | |
225,400 | Mitsubishi Logistics Corp. (Japan) | 6,702 | |
17,273 | |||
WIRELESS TELECOMMUNICATION SERVICES—0.6% | |||
1,812,846 | Bharti Airtel Ltd. (India) | 13,080 | |
594,700 | KDDI Corp. (Japan) | 17,978 | |
31,058 | |||
TOTAL COMMON STOCKS | |||
(Cost $3,771,401) | 4,734,727 | ||
PREFERRED STOCKS—0.6% | |||
AUTOMOBILES—0.6% | |||
98,908 | Volkswagen AG (Germany) | 25,752 |
32
Harbor International Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
PREFERRED STOCKS—Continued | |||
Shares | Value | ||
PERSONAL PRODUCTS—0.0% | |||
10,760 | AMOREPACIFIC Group (South Korea) | $ 434 | |
TOTAL PREFERRED STOCKS | |||
(Cost $16,512) | 26,186 | ||
SHORT-TERM INVESTMENTS—0.3% | |||
(Cost $16,476) | |||
INVESTMENT COMPANY-SECURITIES LENDING INVESTMENT FUND—0.3% | |||
16,475,878 | State Street Navigator Securities Lending Government Money Market Portfolio (1-day yield of 0.020%)4 | 16,476 | |
TOTAL INVESTMENTS—100.0% | |||
(Cost $3,804,389) | 4,777,389 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0% | (612) | ||
TOTAL NET ASSETS—100.0% | $4,776,777 |
RIGHTS/WARRANTS
Description | No. of Contracts | Strike Price | Expiration Date | Cost (000s) | Value (000s) | |||||
Cie Financiere Richemont SA | 805,198 | ZAR 0.47 | 09/12/2023 | $ — | $36 |
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of April 30, 2021 based on the inputs used to value them.
Asset Category | Quoted Prices Level 1 (000s) | Other Significant Observable Inputs Level 2 (000s) | Significant Unobservable Inputs Level 3 (000s) | Total (000s) | ||||
Common Stocks | ||||||||
Africa | $ — | $ 3,801 | $ — | $ 3,801 | ||||
Europe | 14,048 | 3,088,697 | — | 3,102,745 | ||||
Middle East/Central Asia | — | 39,213 | — | 39,213 | ||||
North America | 5,879 | — | — | 5,879 | ||||
Pacific Basin | 40,110 | 1,537,809 | 5,170 | 1,583,089 | ||||
Preferred Stocks | ||||||||
Europe | — | 25,752 | — | 25,752 | ||||
Pacific Basin | — | 434 | — | 434 | ||||
Short-Term Investments | ||||||||
Investment Company-Securities Lending Investment Fund | 16,476 | — | — | 16,476 | ||||
Total Investments in Securities | $76,513 | $4,695,706 | $5,170 | $4,777,389 | ||||
Financial Derivatives Instruments - Assets | ||||||||
Rights/Warrants | $ 36 | $ — | $ — | $ 36 | ||||
Total Investments | $76,549 | $4,695,706 | $5,170 | $4,777,425 |
For more information on valuation inputs and their aggregation into the levels used in the table above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
33
Harbor International Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
FAIR VALUE MEASUREMENTS—Continued
The following is a rollforward of the Fund’s Level 3 investments during the period ended April 30, 2021. Transfers into or out of Level 3 are recognized as of the last day in the fiscal quarter of the period in which the event or change in circumstances that caused the reclassification occured.
Valuation Description | Beginning Balance as of 11/01/2020 (000s) | Purchases (000s) | Sales (000s) | Discount/ (Premium) (000s) | Total Realized Gain/(Loss) (000s) | Change in Unrealized Appreciation/ (Depreciation) (000s) | Transfers Into Level 3h (000s) | Transfers Out of Level 3 (000s) | Ending Balance as of 04/30/2021 (000s) | Unrealized Gain/ Loss as of 04/30/2021 (000s) | ||||||||||
Common Stocks | $— | $— | $— | $— | $— | $— | $5,170 | $— | $5,170 | $2,369 |
The following is a summary of significant unobservable inputs used in the fair valuations of assets and liabilities categorized within Level 3 of the fair value hierarchy.
Valuation Descriptions | Balance as of 04/30/2021 (000s) | Valuation Technique | Unobservable Input(s) | Input Value(s) | ||||
Investments in Securities | ||||||||
Common Stocks | ||||||||
LG Corp. (South Korea) | $ 5,170 | Market Approach | Last Traded Price | KRW 125,817.15 |
* | Non-income producing security |
x | Fair valued in accordance with Harbor Funds' Valuation Procedures. |
1 | All or a portion of this security was out on loan as of April 30, 2021. |
2 | Securities purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At April 30, 2021, the aggregate value of these securities was $90,781 or 2% of net assets. |
3 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
4 | Represents the investment of collateral received from securities lending activities |
h | Transferred from Level 2 to Level 3 due to the unavailability of observable market data for pricing |
KRW | South Korean Won |
ZAR | South African Rand |
The accompanying notes are an integral part of the Financial Statements.
34
Harbor International Growth Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Baillie Gifford Overseas Limited
Calton Square
1 Greenside Row
Edinburgh, Scotland
United Kingdom
EH1 3AN
United Kingdom
EH1 3AN
Portfolio Managers
Gerard Callahan
Since 2013
Since 2013
Iain Campbell
Since 2013
Since 2013
Joe Faraday, CFA
Since 2013
Since 2013
Moritz Sitte, CFA
Since 2014
Since 2014
Sophie Earnshaw, CFA
Since 2014
Since 2014
Baillie Gifford Overseas Limited has subadvised the Fund since 2013.
Investment Objective
The Fund seeks long-term growth of capital.
Gerard Callahan
Iain Campbell
Joe Faraday, CFA
Moritz Sitte, CFA
Sophie Earnshaw, CFA
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
The COVID-19 pandemic has remained a prominent feature of the investment background during the last six months, although the focus of attention has increasingly turned to the vaccine programs being rolled out in different parts of the world, and the resulting ability of global economies to recover from a prolonged period of suppressed demand.
The recent quarter was the first since the U.K. reached agreement with the E.U. regarding the terms of its withdrawal. There have been trade frictions between the two parties in some areas, and the implementation of their respective coronavirus vaccine programs has given rise to tensions. Tentative discussions have begun in relation to financial services, an important area that was not addressed in detail by the trade agreement in December 2020. In the U.S., the installation of a new administration has set the scene for a new phase in U.S.-China relations and a renewed focus globally on environmental issues.
Performance
Harbor International Growth Fund returned 21.21% (Retirement Class), 21.12% (Institutional Class), 20.95% (Administrative Class) and 20.87% (Investor Class) for the six-month period ended April 30, 2021, underperforming the 27.40% return of the MSCI All Country World Ex. U.S. (ND) Index.
We employ a fundamental long-term investment strategy, focused on bottom-up stock selection. Our approach to investing means that we are not distracted by short-term market movements and wider economic issues. Instead, our focus is on finding what we believe to be good quality stocks that have the potential to have the potential to outperform over the long term. The Fund’s performance over the period was primarily driven by stock selection.
At the regional level, all regions detracted from the performance of the Fund relative to its benchmark; Europe and Developed Asia were the largest regional detractors. Our approach resulted in the Fund having overweight positions relative to the benchmark in Developed Asia, the U.K., and Europe. The Fund was underweight in the emerging markets and Canada.
Where sectors are concerned, the main contributors were Health Care and Utilities. Stock selection was the main factor in the case of Health Care, while the Fund has no holdings in Utilities. The largest detracting sectors were Financials, Industrials, and Materials. The main overweight positions, again because of our bottom-up approach, were in Consumer Discretionary and Information Technology. The Fund was most underweight in Financials and Materials sectors.
Our regional and sectoral positions are outputs of its bottom-up investment process. Given this fundamental approach, it is particularly appropriate to look at the individual companies which impacted performance. The largest individual contributors to performance included ASML, Li Ning, and Nibe. The main stock detractors during the period included Kingspan, Alibaba, and Rightmove.
ASML, listed in The Netherlands, is a global leader in the manufacturer of semiconductor production equipment. It is the largest producer of high-end lithography equipment. We continue to be impressed by the company’s management, which is willing to invest in R&D, to lead industry innovation, and to work collaboratively with the company’s suppliers and customers.
35
Harbor International Growth Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | |||||||||
6 Months | 5 Years | 10 Years | |||||||||
Harbor International Growth Fund | |||||||||||
Retirement Class1 | 21.21% | 56.32% | 14.40% | 7.52% | |||||||
Institutional Class | 21.12 | 56.15 | 14.29 | 7.47 | |||||||
Administrative Class | 20.95 | 55.79 | 14.02 | 7.20 | |||||||
Investor Class | 20.87 | 55.54 | 13.88 | 7.07 | |||||||
Comparative Index | |||||||||||
MSCI All Country World Ex. U.S. (ND) | 27.40% | 42.98% | 9.83% | 4.73% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.77% (Net) and 0.83% (Gross) (Retirement Class); 0.85% (Net) and 0.91% (Gross) (Institutional Class); 1.10% (Net) and 1.16% (Gross) (Administrative Class); and 1.21% (Net) and 1.27% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
Operational results have also been encouraging. Li Ning, a relatively new purchase for the Fund, is a Chinese manufacturer of sportswear. We believe that the growth of the middle class in China will be a driver of the company’s growth, along with an increasing desire among younger Chinese consumers for national brands. Nibe of Sweden is an engineering company which focuses on the production of devices for heating, cooling and ventilation. We believe that the company will benefit from a growth tailwind resulting from the attractions of heat pumps for domestic and commercial applications, and its operational performance has continued to be robust.
Kingspan, which was sold during the period, became embroiled in a controversy related to a tragic fire in a London high rise building in 2017. The company had no role in the design or planning of the cladding system used, and its products accounted for only a small fraction of those used on the building, but the subsequent inquiry into the event has revealed serious shortcomings in its approach to product-safety testing and the marketing of some of its building insulation materials. Bearing in mind the potential future reputational consequences and given concerns about the company’s culture, we subsequently decided to dispose of the holding. Alibaba, the Chinese online retailing platform, continues to perform well operationally but its share price has pulled back after the strong gains seen during 2020. Rightmove, a U.K.-listed real estate platform, has similarly experienced a period of reduced strength although its operational results continue to be impressive, in our view.
Outlook & Strategy
Although the pandemic has continued to provide a challenging background for international markets, we continue to focus on the long term. We consider macro- and microeconomic factors at a company level, selecting stocks based on their individual fundamental attractions, rather than investing based on a top-down view. Baillie Gifford does not believe that it has an edge in analysing short-term market movements and believes that a long-term perspective is essential. We have endured various crises over its history since 1908 and continues to undertake thorough fundamental company research. The robustness of the holdings in the Fund continues to be monitored carefully. We believe that overall, the Fund invests in well-funded, high quality, businesses with competitive advantages that are well positioned to grow their earnings over the long term, in our view.
1 | Retirement Class shares commenced operations on March 1, 2016. The performance attributed to the Retirement Class shares prior to that date is that of the Institutional Class shares. Performance prior to March 1, 2016 has not been adjusted to reflect the lower expenses of Retirement Class shares. During this period, Retirement Class shares would have had returns similar to, but potentially higher than, Institutional Class shares due to the fact that Retirement Class shares represent interests in the same portfolio as Institutional Class shares but are subject to lower expenses. |
This report contains the current opinions of Baillie Gifford Overseas Limited as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Investing in international and emerging markets poses special risks, including potentially greater price volatility due to social, political and economic factors, as well as currency exchange rate fluctuations. These risks are more severe for securities of issuers in emerging market regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
36
Harbor International Growth Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
REGION BREAKDOWN (% of investments)
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of April 30, 2021, there was no foreign currency denomination that comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—95.2% | |||
Shares | Value | ||
AUTO COMPONENTS—0.7% | |||
95,140 | Denso Corp. (Japan) | $ 6,151 | |
AUTOMOBILES—0.7% | |||
155,760 | Suzuki Motor Corp. (Japan) | 5,911 | |
BANKS—1.2% | |||
500,007 | United Overseas Bank Ltd. (Singapore) | 9,966 | |
BEVERAGES—3.5% | |||
59,384 | Remy Cointreau SA (France)* | 11,865 | |
5,233,740 | Thai Beverage PCL (Thailand) | 2,810 | |
1,246,000 | Tsingtao Brewery Co. Ltd. (China) | 11,284 | |
434,926 | United Spirits Ltd. (India)* | 3,036 | |
28,995 | |||
BIOTECHNOLOGY—1.4% | |||
19,775 | BeiGene Ltd. ADR (China)*,1 | 6,793 | |
165,704 | Burning Rock Biotech Ltd. ADR (China)*,1 | 5,054 | |
11,847 | |||
BUILDING PRODUCTS—1.7% | |||
393,612 | Nibe Industrier AB (Sweden) | 14,375 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
CAPITAL MARKETS—1.5% | |||
517,848 | Hargreaves Lansdown plc (United Kingdom) | $ 12,295 | |
CHEMICALS—2.5% | |||
415,272 | Asian Paints Ltd. (India)* | 14,158 | |
154,250 | Johnson Matthey plc (United Kingdom) | 6,922 | |
21,080 | |||
COMMERCIAL SERVICES & SUPPLIES—0.6% | |||
345,202 | HomeServe plc (United Kingdom) | 5,217 | |
DIVERSIFIED FINANCIAL SERVICES—1.1% | |||
108,590 | Investor AB Class B (Sweden) | 9,218 | |
ELECTRICAL EQUIPMENT—2.4% | |||
99,156 | Contemporary Amperex Technology Co. Ltd. (China) | 5,959 | |
124,080 | Nidec Corp. (Japan) | 14,327 | |
20,286 | |||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—2.6% | |||
19,040 | Keyence Corp. (Japan) | 9,140 | |
156,460 | Murata Manufacturing Co. Ltd. (Japan) | 12,440 | |
21,580 |
37
Harbor International Growth Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
ENERGY EQUIPMENT & SERVICES—0.3% | |||
559,006 | John Wood Group plc (United Kingdom)* | $ 2,173 | |
ENTERTAINMENT—2.1% | |||
42,683 | Spotify Technology SA (Sweden)* | 10,761 | |
89,214 | Ubisoft Entertainment SA (France)* | 6,695 | |
17,456 | |||
FOOD & STAPLES RETAILING—2.8% | |||
410,708 | Jeronimo Martins SGPS SA (Portugal) | 7,499 | |
1,659,880 | Raia Drogasil SA (Brazil)* | 8,037 | |
53,420 | Sugi Holdings Co. Ltd. (Japan) | 4,103 | |
1,155,089 | Wal-Mart de Mexico SAB de CV (Mexico) | 3,788 | |
23,427 | |||
HEALTH CARE EQUIPMENT & SUPPLIES—4.5% | |||
72,503 | Cochlear Ltd. (Australia) | 12,411 | |
630,980 | Olympus Corp. (Japan)* | 12,987 | |
128,040 | Sysmex Corp. (Japan) | 12,789 | |
38,187 | |||
HOUSEHOLD PRODUCTS—0.5% | |||
128,640 | Pigeon Corp. (Japan) | 4,366 | |
INSURANCE—3.5% | |||
1,100,960 | AIA Group Ltd. (Hong Kong) | 13,974 | |
10,856 | Fairfax Financial Holdings Ltd. (Canada) | 4,960 | |
211,083 | ICICI Lombard General Insurance Co Ltd. (India)2 | 4,033 | |
615,600 | Ping An Insurance Group Co. of China Ltd. (China) | 6,712 | |
29,679 | |||
INTERACTIVE MEDIA & SERVICES—6.6% | |||
1,393,907 | Auto Trader Group plc (United Kingdom)*,2 | 10,973 | |
36,836 | Baidu Inc. ADR (China)*,1 | 7,748 | |
228,040 | Kakaku.com Inc. (Japan) | 6,191 | |
24,743 | Naver Corp. (South Korea) | 7,968 | |
1,551,244 | Rightmove plc (United Kingdom) | 13,150 | |
391,979 | SEEK Ltd. (Australia)* | 9,342 | |
55,372 | |||
INTERNET & DIRECT MARKETING RETAIL—14.4% | |||
79,825 | Alibaba Group Holding Ltd. ADR (China)*,1 | 18,436 | |
87,515 | ASOS plc (United Kingdom)* | 6,309 | |
75,240 | AUTO1 Group SE (Germany)*,2 | 4,251 | |
80,146 | Coupang Inc. (South Korea)* | 3,358 | |
20,194 | Games Workshop Group plc (United Kingdom) | 3,026 | |
100,258 | MakeMyTrip Ltd. (India)* | 2,749 | |
384,340 | Meituan Dianping Class B (China)*,2 | 14,710 | |
8,018 | MercadoLibre Inc. (Brazil)* | 12,596 | |
61,257 | Naspers Ltd. (South Africa) | 13,941 | |
59,038 | Prosus NV (Netherlands)* | 6,407 | |
1,297,447 | Trainline plc (United Kingdom)*,2 | 8,173 | |
134,536 | Trip.com Group Ltd. ADR (China)*,1 | 5,258 | |
206,510 | Zalando SE (Germany)*,2 | 21,477 | |
120,691 | |||
IT SERVICES—4.7% | |||
78,709 | Bechtle AG (Germany) | 16,027 | |
20,016 | Shopify Inc. (Canada)* | 23,669 | |
39,696 | |||
LEISURE PRODUCTS—1.2% | |||
42,880 | Shimano Inc. (Japan) | 9,805 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
LIFE SCIENCES TOOLS & SERVICES—2.0% | |||
12,595 | Mettler-Toledo International Inc. (Switzerland)* | $ 16,541 | |
MACHINERY—8.8% | |||
186,835 | Atlas Copco AB Class A (Sweden) | 11,330 | |
94,144 | Atlas Copco AB Class B (Sweden) | 4,885 | |
456,365 | Epiroc AB Class B (Sweden) | 8,935 | |
121,481 | Kone OYJ Class B (Finland) | 9,541 | |
8,374 | Rational AG (Germany) | 6,966 | |
21,680 | SMC Corp. (Japan) | 12,598 | |
797,300 | Techtronic Industries Co. Ltd. (Hong Kong) | 14,467 | |
189,846 | Weir Group plc (United Kingdom)* | 5,025 | |
73,747 | |||
PERSONAL PRODUCTS—2.0% | |||
77,740 | Kao Corp. (Japan) | 4,998 | |
162,120 | Shiseido Co. Ltd. (Japan) | 11,798 | |
16,796 | |||
PROFESSIONAL SERVICES—1.9% | |||
99,319 | Intertek Group plc (United Kingdom) | 8,419 | |
170,900 | Recruit Holdings Co. Ltd. (Japan) | 7,706 | |
16,125 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—6.7% | |||
40,391 | ASML Holding NV (Netherlands) | 26,219 | |
259,722 | Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan)1 | 30,320 | |
56,539 | |||
SOFTWARE—2.3% | |||
75,746 | Nemetschek SE (Germany) | 5,646 | |
122,353 | Xero Ltd. (New Zealand)* | 13,329 | |
18,975 | |||
SPECIALTY RETAIL—1.3% | |||
318,423 | Industria de Diseno Textil SA (Spain) | 11,330 | |
TEXTILES, APPAREL & LUXURY GOODS—7.1% | |||
30,057 | Adidas AG (Germany) | 9,283 | |
215,953 | Burberry Group plc (United Kingdom)* | 6,147 | |
114,969 | Cie Financiere Richemont SA (South Africa) | 11,799 | |
11,388 | Kering SA (France) | 9,125 | |
1,549,400 | Li Ning Co. Ltd. (China) | 12,575 | |
13,666 | LVMH Moet Hennessy Louis Vuitton SE (France) | 10,295 | |
59,224 | |||
THRIFTS & MORTGAGE FINANCE—1.4% | |||
348,984 | Housing Development Finance Corp. Ltd. (India) | 11,426 | |
WIRELESS TELECOMMUNICATION SERVICES—1.2% | |||
115,280 | SoftBank Group Corp. (Japan) | 10,388 | |
TOTAL COMMON STOCKS | |||
(Cost $496,271) | 798,864 | ||
38
Harbor International Growth Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
PREFERRED STOCKS—2.3% | |||
(Cost $4,890) | |||
Shares | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES—2.3% | |||
34,106 | Sartorius AG (Germany) | $ 19,243 | |
TOTAL INVESTMENTS—97.5% | |||
(Cost $501,161) | 818,107 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—2.5% | 21,288 | ||
TOTAL NET ASSETS—100.0% | $839,395 |
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of April 30, 2021 based on the inputs used to value them.
Asset Category | Quoted Prices Level 1 (000s) | Other Significant Observable Inputs Level 2 (000s) | Significant Unobservable Inputs Level 3 (000s) | Total (000s) | ||||
Common Stocks | ||||||||
Africa | $ — | $ 13,941 | $— | $ 13,941 | ||||
Europe | 31,553 | 306,746 | — | 338,299 | ||||
Latin America | 24,421 | — | — | 24,421 | ||||
Middle East/Central Asia | 2,749 | 32,653 | — | 35,402 | ||||
North America | 31,987 | — | — | 31,987 | ||||
Pacific Basin | 73,609 | 281,205 | — | 354,814 | ||||
Preferred Stocks | ||||||||
Europe | — | 19,243 | — | 19,243 | ||||
Total Investments in Securities | $164,319 | $653,788 | $— | $818,107 |
For more information on valuation inputs and their aggregation into the levels used in the table above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
The following is a rollforward of the Fund’s Level 3 investments during the period ended April 30, 2021. Transfers into or out of Level 3 are recognized as of the last day in the fiscal quarter of the period in which the event or change in circumstances that caused the reclassification occured.
Valuation Description | Beginning Balance as of 11/01/2020 (000s) | Purchases (000s) | Sales (000s) | Discount/ (Premium) (000s) | Total Realized Gain/(Loss) (000s) | Change in Unrealized Appreciation/ (Depreciation) (000s) | Transfers Into Level 3 (000s) | Transfers Out of Level 3h (000s) | Ending Balance as of 04/30/2021 (000s) | Unrealized Gain/ Loss as of 04/30/2021 (000s) | ||||||||||
Common Stocks | $6,629 | $438 | $(1,713) | $— | $548 | $3,440 | $— | $(9,342) | $— | $— |
* | Non-income producing security |
1 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
2 | Securities purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At April 30, 2021, the aggregate value of these securities was $63,617 or 8% of net assets. |
h | Transferred from Level 3 to Level 2 due to the availability of observable market data for pricing |
The accompanying notes are an integral part of the Financial Statements.
39
Harbor International Small Cap Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Cedar Street Asset Management LLC
455 North Cityfront Plaza Drive
Suite 1710
Suite 1710
Chicago, IL 60611
Portfolio Managers
Jonathan P. Brodsky
Since 2019
Since 2019
Waldemar A. Mozes
Since 2019
Since 2019
Cedar Street has subadvised the Fund since 2019.
Investment Objective
The Fund seeks long-term growth of capital.
Jonathan P. Brodsky
Waldemar A. Mozes
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
One of the most notable developments during the period was the relative outperformance of value-oriented equities on a global basis. The MSCI World Value (ND) Index generated a 35% return for the period well ahead of the 24% return generated by the MSCI World Growth (ND) Index. We note that despite the relative outperformance of value-style equities over the period under review, the overall performance spread of global growth-style equities relative to value-style equities is still more than two standard deviations from the long-term mean, indicating further scope for value-style outperformance, in our view.
From a factor attribution perspective, value factors also outperformed. Note, for all of calendar year 2020, momentum factors generated a 51% performance spread relative to value, but as of the end of the period, value factors are now ahead of momentum factors by 25% YTD, on a global basis.
Meanwhile, sectors that are generally viewed as having a high degree of exposure to value, significantly outperformed sectors viewed as closely tied to growth and momentum. Hence, the MSCI World Energy and Financials sectors generated returns of 64% and 50%, respectively during the semi-annual period, while the MSCI World Technology sector only generated a 27% return.
Recall, for most of 2020, growth experienced significant outperformance during the COVID-19 pandemic as Technology and other high-growth sectors were believed to have favorable secular trends. In addition, monetary and fiscal stimulus provided the macroeconomic springboard to propel valuation multiples higher. But everything changed on November 9, 2020, as Pfizer announced the first COVID-19 vaccines. Immediately thereafter, there was plausible evidence suggesting that the global pandemic would soon come to an end. Since that day, we believe financial markets have favored value relative to growth in equity markets as indicated above.
Performance
Harbor International Small Cap Fund returned 42.75% (Retirement Class), 42.67% (Institutional Class), 42.50% (Administrative Class) and 42.40% (Investor Class) compared to the MSCI EAFE Small Cap (ND) Index, which returned 32.08%.
The vast majority of outperformance over the period came from strong security selection, particularly in the Consumer Staples and IT sectors. Selection was also strong when viewed from a country perspective; stock picking in the UK, Japan, and France were particularly additive to results.
We believe we are at the beginning of a longer-term mean reversion dynamic for value-style investing, with several compelling data points that support our view. First, interest rates on major developed-market long-term government bonds have seen a fairly dramatic rise since the November 9, 2020 vaccine announcement, despite the continuation of ultra-accommodative monetary policy. Rising rates are widely believed to support value styles.
Second, despite the significant relative outperformance of value recently, stocks that make up the value segment of major indexes still maintain a more favorable risk-reward balance between valuation and fundamentals, in our view. The MSCI EAFE Small Cap Value (ND) Index is estimated to see earnings growth of 20% in 2021 and trades at 14x estimated 2021 earnings, just under 1x book value, and offers a 2.90% dividend yield, in our view. Meanwhile, the MSCI EAFE Small Cap Growth (ND) Index is expected to see similar earnings growth of around 19% in 2021, but trades at a steeper 24x estimated 2021 earnings, 2.9x book value, and offers a 1.4% dividend yield, in our view.
40
Harbor International Small Cap Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | |||||||||
6 Months | 5 Years | Life of Fund | |||||||||
Harbor International Small Cap Fund | |||||||||||
Retirement Class1 | 42.75% | 60.22% | 11.20% | 11.71% | |||||||
Institutional Class1 | 42.67 | 60.13 | 11.12 | 11.63 | |||||||
Administrative Class1 | 42.50 | 59.84 | 10.83 | 11.35 | |||||||
Investor Class1 | 42.40 | 59.57 | 10.71 | 11.22 | |||||||
Comparative Index | |||||||||||
MSCI EAFE Small Cap (ND)1 | 32.08% | 52.63% | 10.87% | 12.43% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.88% (Net) and 1.37% (Gross) (Retirement Class); 0.96% (Net) and 1.45% (Gross) (Institutional Class); 1.21% (Net) and 1.70% (Gross) (Administrative Class); and 1.32% (Net) and 1.81% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
Another notable development during the semi-annual period was the outperformance of smaller capitalization companies relative to larger capitalization companies. The MSCI EAFE Large Cap (ND) Index generated a 29% return during the period but fell short of the 32% return for the MSCI EAFE Small Cap (ND) Index.
Similar to the value-growth dynamic discussed above, there is a compelling Newtonian logic to small cap stocks outperforming since the announcement of the Pfizer vaccine. Smaller cap companies were disproportionally impacted by government lockdowns. With the end of the pandemic now on the horizon and consumers and businesses flush with cash, small caps are expected to see more vigorous growth once economies fully open up.
That is not to say that all small cap companies succeed. Broad small cap outperformance tends to incorporate significant survivorship bias, in our view. This is why we believe successful small cap investing requires: (1) an in-depth understanding of balance sheets and a preference for those that can withstand difficult operating environments and rising interest rates; (2) an ability to spot valuation disparities relative to business models that can generate solid returns on capital in almost any competitive environment; and (3) a nuanced understanding of which local geographies and sectors offer better growth prospects relative to valuations. It is our belief that our active portfolio construction activities during the most recent semi-annual period reflect our ability to effectively balance these dynamics within the Fund.
Finally, with high volatility in macroeconomic indicators during the semi-annual period, we would be remiss in not highlighting a few. The most dramatic and impactful of these was the rise in yield of the 10-year U.S. Treasury from 0.87% at the beginning of the period to a high of 1.74% on March 31, 2021 – an increase of more than 80 basis points. While the absolute number may not seem large, both the decline in 2020 and the rebound in 2021 represent the most volatile change in yield in the history of this bond.
The other recent eye-popping macro data points include:
• | Growth – China reported GDP growth of 18.30% in Q1, the highest rate ever published by its national statistics bureau since it began reporting GDP statistics in 1993. Meanwhile, the Eurozone’s most recent Manufacturing PMI of 62.5 (any number over 50 is positive) is the highest level ever going back to the 2008 inception of the data set. |
• | Cash – The U.S. posted the highest level of money supply growth ever, while on a global basis, world central bank liquidity has never been higher. |
• | Commodity prices – Lumber prices reached $1,500 on April 30, 2021, a new all-time high going back to 1985. Copper and Steel also reached new all-time highs, exceeding the China commodity boom in 2010. Agricultural commodities, represented by the CRB FOOD Index, are also within 10% of their all-time high set in 2012. |
Outlook & Strategy
While base effects may point to a benign interpretation of these extremes, our view is that some markets are in a desperate search for an equilibrium that reflects a post-COVID-19 economic environment that is very different from the recent past. We continue to favor diversification and valuation discipline as the keys to surviving extreme price movements.
1 | The “Life of Fund” return as shown reflects the period 02/01/2016 through 04/30/2021. |
41
Harbor International Small Cap Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
This report contains the current opinions of Cedar Street Asset Management LLC as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Investing in international and emerging markets poses special risks, including potentially greater price volatility due to social, political and economic factors, as well as currency exchange rate fluctuations. These risks are more severe for securities of issuers in emerging market regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Stocks of small cap companies pose special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
42
Harbor International Small Cap Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
REGION BREAKDOWN (% of investments)
(Excludes short-term investments)
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of April 30, 2021, 29% of the Fund’s investments were denominated in Euro. No other foreign currency denomination comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—95.4% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—3.8% | |||
54,786 | Hensoldt AG (Germany)* | $ 947 | |
95,106 | Indra Sistemas SA (Spain)* | 990 | |
1,937 | |||
AUTO COMPONENTS—1.5% | |||
281,500 | Johnson Electric Holdings Ltd. (Hong Kong) | 748 | |
BANKS—2.0% | |||
360,139 | Virgin Money UK plc (United Kingdom)* | 995 | |
BEVERAGES—1.4% | |||
173,398 | C&C Group plc (Ireland)* | 710 | |
CAPITAL MARKETS—2.1% | |||
14,954 | JAFCO Co. Ltd. (Japan) | 1,076 | |
CHEMICALS—4.9% | |||
29,500 | KH Neochem Co. Ltd. (Japan) | 702 | |
57,476 | Neo Performance Materials Inc. (Canada) | 934 | |
26,171 | Victrex plc (United Kingdom) | 849 | |
2,485 | |||
COMMERCIAL SERVICES & SUPPLIES—4.6% | |||
43,038 | ISS AS (Denmark)* | 816 | |
33,813 | Loomis AB (Sweden) | 1,107 | |
157,793 | Mears Group PLC (United Kingdom)* | 425 | |
2,348 | |||
CONSTRUCTION & ENGINEERING—6.3% | |||
20,407 | Arcadis NV (Netherlands) | 859 | |
301,067 | Maire Tecnimont SpA (Italy) | 963 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
CONSTRUCTION & ENGINEERING—Continued | |||
47,153 | Raito Kogyo Co. Ltd. (Japan) | $ 758 | |
784,911 | Service Stream Ltd. (Australia) | 620 | |
3,200 | |||
CONSUMER FINANCE—1.6% | |||
156,073 | Resurs Holding AB (Sweden)1 | 807 | |
CONTAINERS & PACKAGING—3.4% | |||
39,600 | BillerudKorsnas AB (Sweden)2 | 809 | |
381,101 | Orora Ltd. (Australia) | 932 | |
1,741 | |||
DISTRIBUTORS—5.0% | |||
9,003 | DKSH Holding AG (Switzerland) | 725 | |
77,740 | Inchcape plc (United Kingdom) | 839 | |
56,638 | Takkt AG (Germany) | 958 | |
2,522 | |||
DIVERSIFIED FINANCIAL SERVICES—5.5% | |||
418,435 | Equiniti Group plc (United Kingdom)*,1 | 1,011 | |
34,196 | Kanamoto Co. Ltd. (Japan) | 839 | |
182,840 | Redde Northgate plc (United Kingdom) | 920 | |
2,770 | |||
ELECTRICAL EQUIPMENT—1.3% | |||
19,192 | Mersen SA (France) | 666 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—7.5% | |||
42,326 | Amano Corp. (Japan) | 1,150 | |
51,820 | Daiwabo Holdings Co. Ltd. (Japan) | 810 | |
11,637 | Landis+Gyr Group AG (Switzerland)* | 807 |
43
Harbor International Small Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—Continued | |||
30,000 | Nohmi Bosai Ltd. (Japan) | $ 567 | |
30,377 | Optex Group Co. Ltd. (Japan) | 462 | |
3,796 | |||
FOOD & STAPLES RETAILING—1.3% | |||
53,368 | Qol Holdings Co. Ltd. (Japan) | 670 | |
FOOD PRODUCTS—6.0% | |||
697,540 | Aryzta AG (Switzerland)* | 787 | |
73,002 | Elders Ltd. (Australia) | 684 | |
55,215 | Glanbia plc (Ireland) | 812 | |
1,104,100 | Japfa Ltd. (Singapore) | 758 | |
3,041 | |||
HEALTH CARE PROVIDERS & SERVICES—3.1% | |||
20,963 | BML Inc. (Japan) | 725 | |
263,707 | Healius Ltd. (Australia) | 839 | |
1,564 | |||
HOTELS, RESTAURANTS & LEISURE—2.7% | |||
39,414 | Resorttrust Inc. (Japan) | 628 | |
68,460 | Round One Corp. (Japan) | 758 | |
1,386 | |||
INSURANCE—6.5% | |||
22,426 | ASR Nederland NV (Netherlands) | 980 | |
73,277 | Coface SA (France) | 893 | |
109,620 | Direct Line Insurance Group plc (United Kingdom) | 431 | |
464,181 | Mapfre SA (Spain) | 997 | |
3,301 | |||
IT SERVICES—1.8% | |||
26,891 | Tietoevry OYJ (Finland) | 931 | |
LEISURE PRODUCTS—2.1% | |||
32,156 | Spin Master Corp. (Canada)*,1 | 1,089 | |
MACHINERY—3.2% | |||
9,679 | Krones AG (Germany) | 843 | |
47,498 | OSG Corp. (Japan) | 792 | |
1,635 | |||
MARINE—1.7% | |||
20,938 | Clarkson plc (United Kingdom) | 878 | |
MEDIA—3.6% | |||
25,543 | Criteo SA ADR (France)*,3 | 1,015 | |
13,693 | RTL Group SA (Luxembourg) | 805 | |
1,820 | |||
METALS & MINING—0.7% | |||
8,058 | DOWA Holdings Co. Ltd. (Japan) | 337 | |
OIL, GAS & CONSUMABLE FUELS—1.2% | |||
620,250 | Beach Energy Ltd. (Australia) | 601 | |
PAPER & FOREST PRODUCTS—1.6% | |||
235,267 | Navigator Co. SA (Portugal) | 793 | |
PERSONAL PRODUCTS—1.3% | |||
50,940 | Ontex Group NV (Belgium)* | 664 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—2.9% | |||
26,108 | Tower Semiconductor Ltd. (Israel)* | $ 739 | |
76,334 | X-Fab Silicon Foundries SE (Belgium)*,1 | 740 | |
1,479 | |||
SOFTWARE—1.5% | |||
84,905 | TomTom NV (Netherlands)* | 745 | |
SPECIALTY RETAIL—1.7% | |||
56,676 | Matas AS (Denmark)* | 838 | |
TEXTILES, APPAREL & LUXURY GOODS—1.6% | |||
1,014,765 | Coats Group plc (United Kingdom) | 818 | |
TOTAL COMMON STOCKS | |||
(Cost $39,702) | 48,391 | ||
SHORT-TERM INVESTMENTS—1.7% | |||
(Cost $846) | |||
INVESTMENT COMPANY-SECURITIES LENDING INVESTMENT FUND—1.7% | |||
845,500 | State Street Navigator Securities Lending Government Money Market Portfolio (1-day yield of 0.020%)4 | 846 | |
TOTAL INVESTMENTS—97.1% | |||
(Cost $40,548) | 49,237 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—2.9% | 1,485 | ||
TOTAL NET ASSETS—100.0% | $50,722 |
44
Harbor International Small Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of April 30, 2021 based on the inputs used to value them.
Asset Category | Quoted Prices Level 1 (000s) | Other Significant Observable Inputs Level 2 (000s) | Significant Unobservable Inputs Level 3 (000s) | Total (000s) | ||||
Common Stocks | ||||||||
Europe | $1,015 | $29,158 | $— | $30,173 | ||||
Middle East/Central Asia | 739 | — | — | 739 | ||||
North America | 2,023 | — | — | 2,023 | ||||
Pacific Basin | — | 15,456 | — | 15,456 | ||||
Short-Term Investments | ||||||||
Investment Company-Securities Lending Investment Fund | 846 | — | — | 846 | ||||
Total Investments in Securities | $3,777 | $45,460 | $— | $49,237 |
There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels used in the table above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
* | Non-income producing security |
1 | Securities purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At April 30, 2021, the aggregate value of these securities was $3,647 or 7% of net assets. |
2 | All or a portion of this security was out on loan as of April 30, 2021. |
3 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
4 | Represents the investment of collateral received from securities lending activities |
The accompanying notes are an integral part of the Financial Statements.
45
Harbor Overseas Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Acadian Asset Management LLC
260 Franklin Street
Boston, MA 02110
Boston, MA 02110
Portfolio Managers
Brendan O. Bradley, Ph.D.
Since 2019
Ryan D. Taliaferro, Ph.D.
Since 2019
Harry Gakidis, Ph.D.
Since 2019
Since 2019
Acadian has subadvised the Fund since 2019.
Investment Objective
The Fund seeks long-term growth of capital.
Brendan O. Bradley, Ph.D.
Ryan D. Taliaferro, Ph.D.
Harry Gakidis, Ph.D.
Management’s Discussion of
Fund Performance
Fund Performance
MARKET REVIEW
Global equity markets advanced as successful vaccine rollouts in many parts of the world, most markedly within the U.S. and U.K., renewed hopes of a sustained reopening of economies. At times, optimism was tempered by the arrival of more virulent variants of COVID-19, which dampened expectations of a full and durable recovery. Commodity prices continued to rise, boosted by accelerating economic momentum and improved global growth prospects. Yield curves steepened after central banks signaled that they would allow inflation to overshoot targets, raising concerns about inflationary pressures worldwide. The effects of spiking yields, rising inflation, and surging commodity prices rippled through markets and investors struggled to price in the cross-asset ramifications. Additionally, impressive growth impetus and speculations of a near-term influx of pent-up demand further incited inflationary fears, leaving policy makers to discern the degree to which such pressures are transitory. Global trade dynamics remained in flux, further disrupted by China’s efforts to disentangle itself from global supply chains. Positive developments included the eleventh-hour Brexit deal, U.S. election results, and accommodative policy support across most major economies.
Emerging markets gained over the period even as efforts to vaccinate emerging market countries slowed, widening an already huge vaccination gap between developed market and emerging market countries. In addition to the uneven vaccine rollout, headwinds included more expensive dollar-denominated debt, unrelenting supply-chain constraints, and elevated inflation. Inflation, in particular food price inflation, which caused food prices to climb amongst the world’s poorest nations, has increased the likelihood of rate hikes from many central banks, which would further hamper the economic revival.
PERFORMANCE
Harbor Overseas Fund returned 33.40% (Retirement Class), 33.44% (Institutional Class), and 33.16% (Investor Class) compared to the MSCI EAFE (ND) Index return of 28.84% during the six-month period ended April 30, 2021. Performance relative to the benchmark was driven by both favorable stock selection and allocation effects during the period.
Acadian’s investment philosophy is centered in the belief that markets are inefficient and that these inefficiencies are driven in part by behavioral biases that result in mispricing opportunities. Acadian applies fundamental insights in a systematic manner to exploit security mispricings and identify attractive investment opportunities. Further, we believe that a successful investment approach must be multi-faceted and adaptive in nature, acknowledging that risk/reward relationships evolve over time and that markets may reward different characteristics during specific periods of a market cycle. These observations suggest that adding value in a consistent fashion can be best achieved by assessing the value of information at different points in time and applying these insights in an objective, quantitative manner across a broad opportunity set, in our view. To realize these insights, Acadian employs a dynamic investment strategy which seeks to adapt to the current market environment and utilizes a disciplined, systematic approach to stock selection.
From a stock selection perspective, the Fund benefitted from an opportunistic exposure to LG Electronics. Share prices rose on strong demand for LG home appliances and home entertainment products as consumers worldwide spent more time at home during the coronavirus pandemic. In April, the company published its first-quarter 2021 results, which included the highest quarterly revenue and operating profit in the company’s history. Harvia Oyj, a Finland-based sauna and spa company, similarly added to returns as share prices advanced on incremental growth spurred by a global wellness trend. Stock positions in Australian materials
46
Harbor Overseas Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | 5 Years | Annualized | ||||||||
6 Months | Life of Fund | ||||||||||
Harbor Overseas Fund | |||||||||||
Retirement Class1 | 33.40% | 47.54% | N/A | 16.19% | |||||||
Institutional Class1 | 33.44 | 47.44 | N/A | 16.11 | |||||||
Investor Class1 | 33.16 | 46.86 | N/A | 15.67 | |||||||
Comparative Index | |||||||||||
MSCI EAFE (ND)1 | 28.84% | 39.88% | N/A | 12.19% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.77% (Net) and 1.35% (Gross) (Retirement Class); 0.85% (Net) and 1.43% (Gross) (Institutional Class); and 1.21% (Net) and 1.79% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
and German consumer discretionary companies also delivered positive results over the period, consistent with their overweight positions. Conversely, an investment in Nitori Holdings, a Japan-based furniture and home accessories company, proved costly as investors began rotating out of pandemic winners, such as home furnishings, on optimism about a durable economic recovery.
From an allocation perspective, the Fund saw positive results from opportunistic exposures to consumer discretionary stocks in Finland and South Korea. Meanwhile, an overweight to Swiss Healthcare and an underweight to U.K. Energy detracted from returns.
OUTLOOK & STRATEGY
Economic prospects in many parts of the globe have markedly improved largely due to vaccine-powered optimism. Increasing evidence of vaccine efficacy in conjunction with additional policy support in a few major economies–most notably in the U.S., Japan, and Europe–are expected to lift economic activity globally. In March, the OECD raised 2021 real gross domestic product growth projections to 5.6%, up 1.4% from its December projections. Under the baseline forecast, global output is anticipated to exceed pre-pandemic levels by mid-2021. Similarly, the International Monetary Fund followed suit and announced it would further raise its 2021 global economic growth projections on tailwinds from the launch of substantial fiscal firepower in the U.S. and the accelerated vaccine rollout, in our view. The economic revival has been quicker than anticipated, sparked by multiple vaccine approvals, ramped-up production, and rapid rollout.
Still, despite substantial gains, the recovery is expected to be uneven and incomplete. The burden of the crisis has fallen disproportionately across sectors and economies, and the divergence will likely persist until the vaccines can deliver society-wide protection. The speed and strength of recovery is expected to vary across economies, contingent upon vaccine accessibility, sectoral dependencies, pre-existing vulnerabilities, effectiveness of policy support, and the extent of new waves of contagion and containment measures.
We believe that the Fund is currently well positioned in both the near term and long term to add value for our clients. We also understand that markets are constantly evolving. As such, we are always looking for ways to enhance our investment process across all phases, including model enhancement, risk controls, and implementation, to help us continue to be successful in the long term.
1 | The “Life of Fund” return as shown reflects the period 03/01/2019 through 04/30/2021. |
This report contains the current opinions of Acadian Asset Management LLC as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Investing in international and emerging markets poses special risks, including potentially greater price volatility due to social, political and economic factors, as well as currency exchange rate fluctuations. These risks are more severe for securities of issuers in emerging market regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
47
Harbor Overseas Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
REGION BREAKDOWN (% of investments)
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of April 30, 2021, 32% of the Fund’s investments were denominated in Euro. No other foreign currency denomination comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—95.2% | |||
Shares | Value | ||
AIR FREIGHT & LOGISTICS—1.6% | |||
4,763 | CTT-Correios de Portugal SA (Portugal) | $ 22 | |
12,589 | Deutsche Post AG (Germany) | 741 | |
763 | |||
AUTO COMPONENTS—1.8% | |||
1,692 | DTR Automotive Corp. (South Korea) | 49 | |
13,800 | Inoue Rubber Thailand PCL NVDR (Thailand)1 | 8 | |
28,000 | Johnson Electric Holdings Ltd. (Hong Kong) | 74 | |
802 | Kendrion NV (Netherlands) | 22 | |
400 | Linamar Corp. (Canada) | 24 | |
2,300 | Magna International Inc. (Canada) | 217 | |
3,100 | Mahle-Metal Leve SA (Brazil) | 15 | |
7,500 | Sumitomo Rubber Industries Ltd. (Japan) | 93 | |
18,800 | Yokohama Rubber Co. Ltd. (Japan) | 350 | |
852 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
AUTOMOBILES—2.9% | |||
6,154 | Bayerische Motoren Werke AG (Germany) | $ 617 | |
8,030 | Daimler AG (Germany) | 715 | |
1,266 | Tofas Turk Otomobil Fabrikasi AS (Turkey) | 4 | |
1,336 | |||
BANKS—3.4% | |||
78,725 | Bank Leumi Le-Israel (Israel)* | 552 | |
7,842 | BNK Financial Group Inc. (South Korea) | 54 | |
556 | BNP Paribas SA (France) | 36 | |
44,468 | Faisal Islamic Bank of Egypt (Egypt)* | 32 | |
31,200 | HSBC Holdings plc (Hong Kong) | 195 | |
34,200 | Japan Post Bank Co. Ltd. (Japan) | 313 | |
3,600 | Royal Bank of Canada (Canada) | 343 | |
633 | Shinhan Financial Group Co. Ltd. (South Korea) | 23 |
48
Harbor Overseas Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
BANKS—Continued | |||
6,010 | SpareBank 1 BV (Norway) | $ 34 | |
593 | Sparebanken Sor (Norway) | 9 | |
1,591 | |||
BEVERAGES—0.1% | |||
16,198 | Ginebra San Miguel Inc. (Philippines) | 20 | |
1,605 | Kofola Ceskoslovensko As (Czech Republic) | 21 | |
41 | |||
BIOTECHNOLOGY—0.1% | |||
1,076 | Vitrolife AB (Sweden) | 40 | |
BUILDING PRODUCTS—0.4% | |||
1,376 | FM Mattsson Mora Group AB (Sweden) | 31 | |
1,880 | Inwido AB (Sweden) | 33 | |
5,400 | Maezawa Kasei Industries Co. Ltd. (Japan) | 55 | |
5,888 | Norcros plc (United Kingdom)* | 24 | |
715 | Systemair AB (Sweden)* | 22 | |
465 | Zehnder Group AG (Switzerland) | 37 | |
202 | |||
CAPITAL MARKETS—3.3% | |||
87,100 | Asia Plus Group Holdings PCL NVDR (Thailand)1 | 10 | |
8,452 | Banca Generali SpA (Italy) | 323 | |
565 | Bellevue Group AG (Switzerland) | 24 | |
309 | Cie Financiere Tradition SA (Switzerland) | 40 | |
26,142 | Deutsche Bank AG (Germany)* | 364 | |
1,451 | Equita Group SpA (Italy) | 5 | |
2,082 | Fiducian Group Ltd. (Australia) | 11 | |
28,000 | Nomura Holdings Inc. (Japan) | 151 | |
7,776 | Nordnet AB Publ (Sweden)* | 146 | |
10,912 | Numis Corp. plc (United Kingdom) | 57 | |
3,909 | Titanium OYJ (Finland) | 67 | |
21,766 | UBS Group AG (Switzerland) | 332 | |
1,530 | |||
CHEMICALS—1.7% | |||
289 | BASF SE (Germany) | 23 | |
574 | KPX Chemical Co. Ltd. (South Korea) | 37 | |
1,500 | Nitto Denko Corp. (Japan) | 124 | |
886 | Noroo Holdings Co. Ltd. (South Korea) | 12 | |
4,687 | Palram Industries 1990 Ltd. (Israel) | 45 | |
29,700 | Teijin Ltd. (Japan) | 489 | |
8,119 | Thrace Plastics Holding And Co. (Greece) | 48 | |
778 | |||
COMMERCIAL SERVICES & SUPPLIES—1.2% | |||
1,476 | Elanders AB Class B (Sweden) | 30 | |
319 | Fursys Inc. (South Korea) | 13 | |
10,000 | Kokuyo Co. Ltd. (Japan) | 155 | |
55 | Orell Fuessli Holding AG (Switzerland) | 7 | |
20,300 | Seiko Epson Corp. (Japan) | 346 | |
551 | |||
COMMUNICATIONS EQUIPMENT—1.5% | |||
5,931 | ADVA Optical Networking SE (Germany)* | 75 | |
16,839 | Ericsson (LM) Telephone SP ADR (Sweden)1 | 232 | |
2,500 | EXFO Inc. (Canada)* | 9 | |
28,763 | Telefonaktiebolaget LM Ericsson (Sweden) | 395 | |
711 | |||
CONSTRUCTION & ENGINEERING—0.6% | |||
58,000 | Analogue Holdings Ltd. (Hong Kong) | 11 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
CONSTRUCTION & ENGINEERING—Continued | |||
24,388 | Boustead Singapore Ltd. (Singapore) | $ 19 | |
305 | Burkhalter Holding AG (Switzerland) | 24 | |
577 | Dom Development SA (Poland) | 23 | |
2,516 | Hwasung Industrial Co. Ltd. (South Korea) | 30 | |
312,900 | Naim Holdings BHD (Malaysia)* | 61 | |
3,722 | Orascom Construction plc (United Arab Emirates) | 20 | |
172 | Poenina Holding AG (Switzerland)* | 10 | |
10,200 | Severfield plc (United Kingdom) | 11 | |
29,705 | Wagners Holding Co. Ltd. (Australia)* | 54 | |
263 | |||
CONSTRUCTION MATERIALS—1.4% | |||
12,656 | Fletcher Building Ltd. (New Zealand) | 66 | |
17,117 | James Hardie Industries PLC CDI (Australia)*,1 | 564 | |
4,282 | Michelmersh Brick Holdings plc (United Kingdom)* | 9 | |
19,932 | Steppe Cement Ltd. (Malaysia) | 12 | |
651 | |||
CONSUMER FINANCE—0.4% | |||
14,100 | AEON Financial Service Co. Ltd. (Japan) | 160 | |
4,289 | H&T Group plc (United Kingdom) | 18 | |
178 | |||
CONTAINERS & PACKAGING—0.3% | |||
1,530 | Groupe Guillin (France) | 46 | |
64,100 | Hanwell Holdings Ltd. (Singapore) | 24 | |
20,429 | Mpact Ltd. (South Africa)* | 31 | |
11,718 | Orora Ltd. (Australia) | 29 | |
130 | |||
DIVERSIFIED CONSUMER SERVICES—0.1% | |||
3,877 | Dignity plc (United Kingdom)* | 38 | |
7,627 | Shine Corporate Ltd. (Australia) | 6 | |
44 | |||
DIVERSIFIED FINANCIAL SERVICES—0.4% | |||
1,068 | Groupe Bruxelles Lambert SA (Belgium) | 117 | |
16,843 | M&G plc (United Kingdom) | 51 | |
17,600 | UOB-Kay Hian Holdings Ltd. (Singapore) | 23 | |
191 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—1.4% | |||
162,257 | Bredband2 I Skandinavien AB (Sweden) | 39 | |
1,800 | KT Corp. (South Korea) | 46 | |
604 | Magyar Telekom Telecommunications plc ADR (Hungary)1 | 4 | |
21,600 | Nippon Telegraph & Telephone Corp. (Japan) | 545 | |
113 | Telefonica SA (Spain) | — | |
634 | |||
ELECTRIC UTILITIES—0.0% | |||
23,923 | OPG Power Ventures plc (United Kingdom)* | 6 | |
ELECTRICAL EQUIPMENT—1.8% | |||
42,900 | Mitsubishi Electric Corp. (Japan) | 661 | |
562 | Somfy SA (France) | 99 | |
5,546 | Zumtobel Group AG (Austria) | 56 | |
816 | |||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—1.3% | |||
77,905 | Datatec Ltd. (South Africa)* | 153 | |
10,065 | Eroad Ltd. (New Zealand)* | 41 | |
13,314 | Hon Hai Precision Industry Co. Ltd. GDR (Taiwan)1 | 108 |
49
Harbor Overseas Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—Continued | |||
11,840 | LG Display Co. Ltd. (South Korea) | $ 257 | |
530 | Nedap NV (Netherlands) | 35 | |
800 | Nihon Denkei Co. Ltd. (Japan) | 10 | |
39 | Schaffner Holding AG (Switzerland) | 11 | |
615 | |||
ENERGY EQUIPMENT & SERVICES—0.1% | |||
149,000 | Hilong Holding Ltd. (Hong Kong)* | 5 | |
9,918 | Hunting plc (United Kingdom) | 34 | |
9,000 | PHX Energy Services Corp. (Canada) | 26 | |
65 | |||
ENTERTAINMENT—1.7% | |||
10,000 | IGG Inc. (Singapore) | 17 | |
1,282 | Nintendo Co. Ltd. (Japan) | 735 | |
541 | Ubisoft Entertainment SA (France)* | 41 | |
793 | |||
FOOD & STAPLES RETAILING—0.5% | |||
1,144 | Amsterdam Commodities NV (Netherlands) | 28 | |
336 | Hawesko Holding AG (Germany) | 20 | |
6,185 | Koninklijke Ahold Delhaize NV (Netherlands) | 167 | |
215 | |||
FOOD PRODUCTS—1.1% | |||
18,055 | Finsbury Food Group plc (United Kingdom)* | 22 | |
2,757 | Industrial Milk Co. (Luxembourg) | 17 | |
56,600 | JBS SA (Brazil) | 314 | |
900 | Maeil Holdings Co. Ltd. (South Korea) | 8 | |
663 | Nestlé SA (Switzerland) | 79 | |
119 | Neto ME Holdings Ltd. (Israel)* | 5 | |
806 | Nomad Foods Ltd. (Virgin Islands)* | 24 | |
6,869 | PGG Wrightson Ltd. (New Zealand) | 16 | |
68 | Ter Beke SA (Belgium) | 9 | |
494 | |||
HEALTH CARE EQUIPMENT & SUPPLIES—4.1% | |||
886 | BioMerieux (France) | 105 | |
56 | Diasorin SpA (Italy) | 10 | |
13,243 | EKF Diagnostics Holdings plc (United Kingdom)* | 14 | |
11,016 | Fisher & Paykel Healthcare Corp. Ltd. (New Zealand) | 284 | |
1,100 | Fukuda Denshi Co. Ltd. (Japan) | 87 | |
12,359 | Getinge AB Class B (Sweden) | 418 | |
1,735 | GN Store Nord AS (Denmark) | 156 | |
500 | Hoshi Iryo-Sanki Co. Ltd. (Japan) | 17 | |
13,699 | Koninklijke Philips NV (Netherlands) | 775 | |
36 | Paul Hartmann AG (Germany) | 17 | |
22 | Sonova Holding AG (Switzerland)* | 7 | |
1,890 | |||
HEALTH CARE PROVIDERS & SERVICES—0.3% | |||
6,834 | GHP Specialty Care AB (Sweden) | 24 | |
6,266 | Humana AB (Sweden)* | 57 | |
6,322 | Oriola Corp. Class A (Finland) | 16 | |
25,000 | Oriola OYJ (Finland) | 57 | |
154 | |||
HEALTH CARE TECHNOLOGY—0.2% | |||
610 | Cegedim SA (France)* | 20 | |
1,114 | Nexus AG (Germany) | 77 | |
97 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
HOTELS, RESTAURANTS & LEISURE—0.5% | |||
1,328 | Bet-At-Home.com AG (Germany) | $ 72 | |
410 | Evolution Gaming Group AB ADR (Sweden)1 | 81 | |
338 | Groupe Partouche SA (France)* | 10 | |
83,100 | Jaya Bersama Indo TBK PT (Indonesia)* | 1 | |
900 | Ohsho Food Service Corp. (Japan) | 46 | |
600 | Pollard Banknote Ltd. (Canada) | 29 | |
239 | |||
HOUSEHOLD DURABLES—1.2% | |||
477 | Amica SA (Poland) | 19 | |
2,800 | Dorel Industries Inc. (Canada)* | 28 | |
12,947 | Emak SpA (Italy) | 21 | |
265 | HEXAOM (France) | 13 | |
29,500 | Nikon Corp. (Japan) | 278 | |
1,000 | Panasonic Manufacturing Malaysia BHD (Malaysia) | 8 | |
100 | Rinnai Corp. (Japan) | 10 | |
501 | Sabaf SpA (Italy) | 13 | |
1,056 | Surteco Group SE (Germany) | 35 | |
12,780 | Toya SA (Poland) | 27 | |
700 | V-ZUG Holding AG (Switzerland)* | 97 | |
549 | |||
HOUSEHOLD PRODUCTS—0.2% | |||
29,635 | McBride plc (United Kingdom)* | 39 | |
4,127 | Suominen OYJ (Finland) | 29 | |
68 | |||
INDUSTRIAL CONGLOMERATES—2.0% | |||
2,415 | KOC Holding AS (Turkey) | 5 | |
5,614 | Siemens AG (Germany) | 937 | |
942 | |||
INSURANCE—1.9% | |||
11,400 | Allianz Malaysia BHD (Malaysia) | 37 | |
1,629 | Aviva plc (United Kingdom) | 9 | |
4,223 | European Reliance General Insurance Co. SA (Greece) | 27 | |
5,600 | Great Eastern Holdings Ltd. (Singapore) | 97 | |
33,600 | Japan Post Holdings Co. Ltd. (Japan)* | 282 | |
156 | NN Group NV (Netherlands) | 8 | |
19,800 | T&D Holdings Inc. (Japan) | 243 | |
55,499 | Unipolsai Assicurazioni SpA (Italy) | 172 | |
875 | |||
INTERNET & DIRECT MARKETING RETAIL—0.2% | |||
15,600 | Hai-O Enterprise BHD (Malaysia) | 8 | |
7,591 | Verkkokauppa.com OYJ (Finland) | 78 | |
86 | |||
IT SERVICES—1.8% | |||
819 | Comarch SA (Poland) | 50 | |
1,861 | Digia OYJ (Finland) | 18 | |
2,754 | Eagle Eye Solutions Group plc (United Kingdom)* | 21 | |
6,844 | Eckoh plc (United Kingdom)* | 8 | |
4,200 | Fujitsu Ltd. (Japan) | 667 | |
479 | Gofore OYJ (Finland) | 11 | |
105 | Infotel SA (France) | 6 | |
945 | Neurones (France) | 31 | |
812 | |||
LEISURE PRODUCTS—1.2% | |||
9,402 | Harvia OYJ (Finland) | 492 |
50
Harbor Overseas Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
LEISURE PRODUCTS—Continued | |||
1,500 | Sankyo Co. Ltd. (Japan) | $ 39 | |
1,250 | Sanlorenzo SpA/Ameglia (Italy)* | 34 | |
565 | |||
LIFE SCIENCES TOOLS & SERVICES—3.8% | |||
4,402 | Ergomed plc (United Kingdom)* | 87 | |
5,905 | Eurofins Scientific SE (France) | 585 | |
2,238 | ICON plc (Ireland)* | 486 | |
1,305 | Sartorius Stedim Biotech (France) | 599 | |
1,757 | |||
MACHINERY—6.8% | |||
3,623 | Andritz AG (Austria) | 197 | |
9,082 | CNH Industrial NV (Italy) | 135 | |
7,300 | Daihatsu Diesel Manufacturing Co Ltd. (Japan) | 33 | |
28,407 | Epiroc AB Class A (Sweden) | 615 | |
105 | Exel Industries (France)* | 10 | |
69,237 | Famur SA (Poland)* | 45 | |
54 | Groupe Gorge SA (France) | 1 | |
8,961 | Kone OYJ Class B (Finland) | 704 | |
1,224 | Nilfisk Holding AS (Denmark)* | 36 | |
371 | Palfinger AG (Austria) | 17 | |
885 | Prima Industrie SpA (Italy)* | 22 | |
600 | Rix Corp. (Japan) | 8 | |
22,761 | Sandvik AB (Sweden) | 563 | |
464 | Schindler Holding AG (Switzerland) | 132 | |
16,897 | Skellerup Holdings Ltd. (New Zealand) | 56 | |
24,304 | Volvo AB (Sweden) | 593 | |
3,167 | |||
MARINE—2.3% | |||
183 | AP Moller - Maersk AS (Denmark) | 455 | |
549,200 | Jasa Armada Indonesia TBK PT (Indonesia)* | 11 | |
2,035 | Kuehne + Nagel International AG (Switzerland) | 609 | |
1,075 | |||
MEDIA—2.3% | |||
247 | 4imprint Group plc (United Kingdom)* | 8 | |
4,842 | Bloomsbury Publishing plc (United Kingdom) | 20 | |
578 | Cogeco Inc. (Canada) | 45 | |
4,472 | Corus Entertainment Inc. (Canada) | 22 | |
1,900 | FAN Communications Inc. (Japan) | 7 | |
85 | GTN Ltd. (Australia)* | — | |
2,451 | HighCo SA (France) | 16 | |
10,318 | North Media AS (Denmark) | 200 | |
34,282 | NZME Ltd. (New Zealand)* | 19 | |
8,968 | Publicis Groupe SA (France) | 580 | |
1,198 | RTL Group SA (Luxembourg) | 71 | |
6,768 | WPP plc (United Kingdom) | 91 | |
1,079 | |||
METALS & MINING—8.6% | |||
1,215 | Alumetal SA (Poland) | 19 | |
11,578 | Anglo American plc (United Kingdom) | 491 | |
22,947 | Base Resources Ltd. (Australia)* | 5 | |
1,840 | BHP Group plc (United Kingdom) | 55 | |
17,444 | Boryszew SA (Poland)* | 15 | |
27,813 | Evraz plc (United Kingdom) | 247 | |
31,049 | Fortescue Metals Group Ltd. (Australia) | 537 | |
17,744 | Gem Diamonds Ltd. (United Kingdom)* | 17 | |
26,518 | Maca Ltd. (Australia) | 19 | |
10,334 | Mineral Resources Ltd. (Australia) | 377 | |
4,313 | Norsk Hydro ASA (Norway) | 27 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
METALS & MINING—Continued | |||
426 | POSCO (South Korea) | $ 139 | |
4,701 | Rio Tinto Ltd. (Australia) | 437 | |
3,438 | Rio Tinto plc (United Kingdom) | 288 | |
4,108 | Rio Tinto plc Sponsored ADR (United Kingdom)1 | 349 | |
205,299 | South32 Ltd. (Australia) | 452 | |
140 | Stalprodukt SA (Poland) | 13 | |
11,399 | Voestalpine AG (Austria) | 495 | |
143,000 | Xiwang Special Steel Co. Ltd. (Hong Kong)* | 8 | |
3,990 | |||
MULTI-UTILITIES—0.0% | |||
1,697 | Hera SpA (Italy) | 7 | |
OIL, GAS & CONSUMABLE FUELS—2.0% | |||
13,600 | CES Energy Solutions Corp. (Canada)* | 18 | |
6,820 | Lubelski Wegiel Bogdanka SA (Poland)* | 41 | |
95,664 | Pharos Energy plc (United Kingdom)* | 35 | |
44,003 | Royal Dutch Shell plc (Netherlands) | 838 | |
932 | |||
PAPER & FOREST PRODUCTS—0.9% | |||
23,800 | Cascades Inc. (Canada) | 279 | |
1,311 | Midway Ltd. (Australia)* | 1 | |
2,100 | Stella-Jones Inc. (Canada) | 88 | |
25,869 | Western Forest Products Inc. (Canada) | 45 | |
413 | |||
PERSONAL PRODUCTS—0.0% | |||
5,300 | Apollo Healthcare Corp. (Canada)* | 17 | |
PHARMACEUTICALS—9.0% | |||
171 | AstraZeneca plc ADR (United Kingdom)1 | 9 | |
558 | GlaxoSmithKline plc (United Kingdom) | 10 | |
9,335 | GlaxoSmithKline plc ADR (United Kingdom)1 | 349 | |
1,436 | Ipsen SA (France) | 139 | |
1,615 | Merck KGaA (Germany) | 284 | |
13,771 | Novartis AG (Switzerland) | 1,175 | |
10,678 | Novo Nordisk AS (Denmark) | 788 | |
284 | Orion OYJ Class A (Finland) | 13 | |
4,123 | Roche Holding AG (Switzerland) | 1,345 | |
11,245 | Vectura Group plc (United Kingdom)* | 17 | |
562 | Vetoquinol SA (France) | 71 | |
4,200 | |||
PROFESSIONAL SERVICES—2.4% | |||
5,491 | Adecco Group AG (Switzerland) | 372 | |
1,745 | Impellam Group plc (United Kingdom)* | 7 | |
8,292 | Wolters Kluwer NV (Netherlands) | 750 | |
1,129 | |||
REAL ESTATE MANAGEMENT & DEVELOPMENT—0.2% | |||
116,681 | Ever Reach Group Holdings Co. Ltd. (Hong Kong)* | 21 | |
998 | K Wah International Holdings Ltd. (Hong Kong) | — | |
100 | Mainstreet Equity Corp. (Canada)* | 7 | |
2,077 | Melcor Developments Ltd. (Canada) | 22 | |
28,100 | MKH BHD (Malaysia) | 9 | |
20,963 | Modern Land China Co. Ltd. (Hong Kong) | 2 | |
9,213 | Real Estate Investors PLC (United Kingdom) | 5 | |
66 | |||
ROAD & RAIL—0.0% | |||
10,328 | FNM SpA (Italy) | 8 |
51
Harbor Overseas Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—6.4% | |||
47,140 | ASE Technology Holding ADR (Taiwan)1 | $ 392 | |
1,869 | ASML Holding NV (Netherlands) | 1,213 | |
1,400 | Disco Corp. (Japan) | 452 | |
3,300 | ROHM Co. Ltd. (Japan) | 326 | |
588 | Suess Microtec SE (Germany)* | 19 | |
1,300 | Tokyo Electron Ltd. (Japan) | 590 | |
2,992 | |||
SOFTWARE—1.0% | |||
1,266 | Atlassian Corp. plc (Australia)* | 301 | |
500 | Check Point Software Technologies Ltd. (Israel)* | 58 | |
4,783 | F-Secure OYJ (Finland) | 23 | |
45,284 | Intega Group Ltd. (Australia)* | 18 | |
637 | IVU Traffic Technologies AG (Germany) | 14 | |
205 | Linedata Services (France) | 9 | |
144 | MiX Telematics Ltd. ADR (South Africa)1 | 2 | |
628 | Sage Group plc (United Kingdom) | 5 | |
1,801 | Telcoware Co. Ltd. (South Korea) | 20 | |
620 | USU Software AG (Germany) | 21 | |
471 | |||
SPECIALTY RETAIL—2.1% | |||
1,100 | BMTC Group Inc. (Canada) | 13 | |
848 | Gear4music Holdings plc (United Kingdom)* | 11 | |
289 | Hornbach Holding AG & Co. KGaA (Germany) | 27 | |
49,365 | Kingfisher plc (United Kingdom) | 244 | |
12,900 | K's Holdings Corp (Japan) | 176 | |
6,300 | Maruzen CHI Holdings Co. Ltd. (Japan) | 22 | |
167,500 | Maxi-Cash Financial Services Corp. Ltd. (Singapore) | 23 | |
1,800 | Nitori Holdings Co. Ltd. (Japan) | 322 | |
20 | Samse SA (France) | 5 | |
3,598 | Turners Automotive Group Ltd. (New Zealand) | 10 | |
25,100 | Yamada Denki Co. Ltd. (Japan) | 125 | |
978 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—3.0% | |||
19,900 | Canon Inc. (Japan) | 473 | |
5,130 | Doro AB (Sweden)* | 36 | |
4,336 | Logitech International SA (Switzerland) | 483 | |
5,589 | Samsung Electronics Co Ltd. (South Korea) | 407 | |
1,399 | |||
TEXTILES, APPAREL & LUXURY GOODS—0.3% | |||
467 | Marimekko OYJ (Finland) | 28 | |
6,810 | New Wave Group AB (Sweden)* | 73 | |
1,472 | Ratti SpA (Italy)* | 7 | |
600 | Rhythm Watch Co. Ltd. (Japan) | 5 | |
113 | |||
TOBACCO—0.5% | |||
3,050 | Swedish Match AB (Sweden) | 250 | |
TRADING COMPANIES & DISTRIBUTORS—0.7% | |||
1,081 | Bunzl plc (United Kingdom) | 35 | |
1,777 | Cervus Equipment Corp. (Canada) | 24 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
TRADING COMPANIES & DISTRIBUTORS—Continued | |||
1,013 | Ferguson plc (Jersey) | $ 128 | |
38,601 | Ferreycorp SAA (Peru) | 19 | |
1,626 | Ferronordic AB (Sweden) | 39 | |
1,116 | Jacquet Metals SA (France) | 27 | |
2,400 | Parker Corp (Japan) | 11 | |
479 | Rexel SA (France) | 9 | |
1,165 | Sanistal AS (Denmark)* | 14 | |
4,007 | TIM SA (Poland) | 30 | |
336 | |||
TRANSPORTATION INFRASTRUCTURE—0.0% | |||
35,000 | Qilu Expressway Co. Ltd. (China) | 11 | |
6,580 | Stalexport Autostrady SA (Poland) | 6 | |
17 | |||
WIRELESS TELECOMMUNICATION SERVICES—0.2% | |||
3,400 | KDDI Corp. (Japan) | 103 | |
500 | Trilogy International Partners Inc. (Canada)* | — | |
103 | |||
TOTAL COMMON STOCKS | |||
(Cost $36,834) | 44,266 | ||
PREFERRED STOCKS—3.4% | |||
AUTOMOBILES—1.2% | |||
6,114 | Schaeffler AG (Germany) | 55 | |
1,892 | Volkswagen AG (Germany) | 493 | |
548 | |||
HOUSEHOLD DURABLES—1.2% | |||
495 | Einhell Germany AG (Germany)* | 75 | |
7,084 | LG Electronics Inc. (South Korea) | 468 | |
9,700 | Whirlpool SA (Brazil)* | 15 | |
558 | |||
HOUSEHOLD PRODUCTS—0.8% | |||
3,430 | Henkel AG & Co. KGaA (Germany) | 394 | |
MACHINERY—0.2% | |||
220 | Jungheinrich AG (Germany) | 11 | |
173 | KSB SE & Co KGaA (Germany) | 67 | |
78 | |||
TOTAL PREFERRED STOCKS | |||
(Cost $1,146) | 1,578 | ||
TOTAL INVESTMENTS—98.6% | |||
(Cost $37,980) | 45,844 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—1.4% | 662 | ||
TOTAL NET ASSETS—100.0% | $46,506 |
52
Harbor Overseas Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
FORWARD CURRENCY CONTRACTS
Counterparty | Amount to be Delivered (000s) | Amount to be Received (000s) | Settlement Date | Unrealized Appreciation/ (Depreciation) (000s) | ||||
State Street Bank and Trust Co. | $ 5 | JPY 552 | 05/06/2021 | $— |
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of April 30, 2021 based on the inputs used to value them.
Asset Category | Quoted Prices Level 1 (000s) | Other Significant Observable Inputs Level 2 (000s) | Significant Unobservable Inputs Level 3 (000s) | Total (000s) | ||||
Investments in Securities | ||||||||
Common Stocks | ||||||||
Africa | $ 2 | $ 216 | $— | $ 218 | ||||
Europe | 1,510 | 26,108 | — | 27,618 | ||||
Latin America | 372 | — | — | 372 | ||||
Middle East/Central Asia | 58 | 622 | — | 680 | ||||
North America | 1,256 | — | — | 1,256 | ||||
Pacific Basin | 693 | 13,429 | — | 14,122 | ||||
Preferred Stocks | ||||||||
Europe | — | 1,095 | — | 1,095 | ||||
Latin America | 15 | — | — | 15 | ||||
Pacific Basin | — | 468 | — | 468 | ||||
Total Investments in Securities | $3,906 | $41,938 | $— | $45,844 |
For more information on valuation inputs and their aggregation into the levels used in the table above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
The following is a rollforward of the Fund’s Level 3 investments during the period ended April 30, 2021.
Valuation Description | Beginning Balance as of 11/01/2020 (000s) | Purchases (000s) | Sales (000s) | Discount/ (Premium) (000s) | Total Realized Gain/(Loss) (000s) | Change in Unrealized Appreciation/ (Depreciation) (000s) | Transfers Into Level 3 (000s) | Transfers Out of Level 3 (000s) | Ending Balance as of 4/30/2021 (000s) | Unrealized Gain/ Loss as of 04/30/2021 (000s) | ||||||||||
Preferred Stocks | $— | $— | $— | $— | $— | $— | $— | $— | $— | $— |
* | Non-income producing security |
1 | Depositary receipts such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and other country specific depositary receipts are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depositary banks and generally trade on an established market in the U.S. or elsewhere. |
The accompanying notes are an integral part of the Financial Statements.
53
Harbor International & Global Funds
StatementS of Assets and Liabilities—April 30, 2021 (Unaudited)
StatementS of Assets and Liabilities—April 30, 2021 (Unaudited)
(All amounts in thousands, except per share amounts)
Harbor Diversified International All Cap Fund | Harbor Emerging Markets Equity Fund | Harbor Focused International Fund | Harbor Global Leaders Fund | Harbor International Fund | Harbor International Growth Fund | Harbor International Small Cap Fund | Harbor Overseas Fund | |
ASSETS | ||||||||
Investments, at identified cost | $ 887,520 | $34,883 | $36,416 | $ 92,080 | $3,804,389 | $501,161 | $40,548 | $37,980 |
Investments, at value (Including securities loaned of $5,850, $0, $0, $0, $36,604, $0, $777 and $0) | $1,129,771 | $47,033 | $46,127 | $132,389 | $4,777,389 | $818,107 | $49,237 | $45,844 |
Cash | 14,526 | 1,304 | 2,077 | 2,432 | 25,211 | 22,245 | 1,948 | 412 |
Foreign currency, at value (cost: $2,573, $5, $19, $0, $18,147, $2, $158 and $0) | 2,558 | 5 | 19 | — | 18,106 | 2 | 158 | — |
Receivables for: | ||||||||
Investments sold | 1,310 | — | 907 | — | 5,550 | — | 126 | 320 |
Capital shares sold | 586 | 415 | — | 134 | 2,246 | 614 | 46 | 22 |
Dividends | 4,053 | 78 | 60 | 82 | 22,514 | 1,076 | 229 | 181 |
Securities lending income | — | — | — | — | 15 | — | — | — |
Purchase options, at value (cost: $0, $0, $0, $0, $0, $0, $0 and $0) | 17 | — | — | — | 36 | — | — | — |
Withholding tax | 754 | — | 28 | 4 | 4,206 | 324 | 52 | 65 |
Prepaid registration fees | 29 | 28 | 22 | 29 | 20 | 20 | 26 | 24 |
Prepaid fund insurance | 5 | — | — | 1 | 22 | 5 | — | — |
Other assets | 241 | 62 | 16 | 14 | 5,291 | 141 | 21 | 26 |
Total Assets | 1,153,850 | 48,925 | 49,256 | 135,085 | 4,860,606 | 842,534 | 51,843 | 46,894 |
LIABILITIES | ||||||||
Payables for: | ||||||||
Due to custodian | — | — | — | — | — | — | — | 283 |
Investments purchased | 2,973 | — | 2,115 | 406 | 13,299 | 1,014 | 192 | 31 |
Foreign currency spot contracts | 8 | — | 3 | — | 13 | 1 | — | — |
Capital shares reacquired | 7,015 | 59 | — | 95 | 4,265 | 69 | — | — |
Collateral for securities loaned | 4,419 | — | — | — | 16,476 | — | 846 | — |
Accrued expenses: | ||||||||
Tax compliance fee payable (see Note 2) | — | — | — | — | 39,400 | — | — | — |
Management fees | 694 | 34 | 29 | 77 | 2,960 | 521 | 35 | 28 |
12b-1 fees | 4 | 1 | — | 5 | 84 | 3 | — | — |
Transfer agent fees | 35 | 3 | 2 | 10 | 336 | 55 | 2 | 3 |
Trustees' fees and expenses | 54 | 7 | 1 | 9 | 4,488 | 101 | 4 | 1 |
Other | 1,170 | 251 | 100 | 25 | 2,508 | 1,375 | 42 | 42 |
Total Liabilities | 16,372 | 355 | 2,250 | 627 | 83,829 | 3,139 | 1,121 | 388 |
NET ASSETS | $1,137,478 | $48,570 | $47,006 | $134,458 | $4,776,777 | $839,395 | $50,722 | $46,506 |
Net Assets Consist of: | ||||||||
Paid-in capital | $ 913,330 | $31,457 | $36,484 | $ 85,038 | $4,363,880 | $480,496 | $41,199 | $37,214 |
Total distributable earnings/(loss) | 224,148 | 17,113 | 10,522 | 49,420 | 412,897 | 358,899 | 9,523 | 9,292 |
$1,137,478 | $48,570 | $47,006 | $134,458 | $4,776,777 | $839,395 | $50,722 | $46,506 | |
The accompanying notes are an integral part of the Financial Statements.
54
Harbor Diversified International All Cap Fund | Harbor Emerging Markets Equity Fund | Harbor Focused International Fund | Harbor Global Leaders Fund | Harbor International Fund | Harbor International Growth Fund | Harbor International Small Cap Fund | Harbor Overseas Fund | |||||||||
NET ASSET VALUE PER SHARE BY CLASS | ||||||||||||||||
Retirement Class | ||||||||||||||||
Net assets | $803,837 | $24,265 | $22,900 | $25,778 | $1,013,339 | $154,208 | $ 9,953 | $18,338 | ||||||||
Shares of beneficial interest1 | 59,095 | 2,116 | 1,696 | 688 | 21,391 | 6,706 | 621 | 1,377 | ||||||||
Net asset value per share2 | $ 13.60 | $ 11.47 | $ 13.50 | $ 37.45 | $ 47.37 | $ 23.00 | $ 16.03 | $ 13.31 | ||||||||
Institutional Class | ||||||||||||||||
Net assets | $315,818 | $18,504 | $24,033 | $82,555 | $3,359,912 | $670,123 | $39,248 | $28,094 | ||||||||
Shares of beneficial interest1 | 23,210 | 1,610 | 1,781 | 2,211 | 70,651 | 29,170 | 2,448 | 2,111 | ||||||||
Net asset value per share2 | $ 13.61 | $ 11.49 | $ 13.50 | $ 37.34 | $ 47.56 | $ 22.97 | $ 16.03 | $ 13.31 | ||||||||
Administrative Class | ||||||||||||||||
Net assets | $ 8,514 | $ 21 | N/A | $ 2,056 | $ 16,640 | $ 720 | $ 502 | N/A | ||||||||
Shares of beneficial interest1 | 627 | 2 | N/A | 57 | 347 | 31 | 31 | N/A | ||||||||
Net asset value per share2 | $ 13.57 | $ 11.81 | N/A | $ 36.45 | $ 47.92 | $ 22.93 | $ 16.00 | N/A | ||||||||
Investor Class | ||||||||||||||||
Net assets | $ 9,309 | $ 5,780 | $ 73 | $24,069 | $ 386,886 | $ 14,344 | $ 1,019 | $ 74 | ||||||||
Shares of beneficial interest1 | 689 | 505 | 5 | 672 | 8,216 | 629 | 64 | 6 | ||||||||
Net asset value per share2 | $ 13.51 | $ 11.43 | $ 13.45 | $ 35.82 | $ 47.09 | $ 22.82 | $ 16.00 | $ 13.28 |
1 | Par value $0.01 (unlimited authorizations) |
2 | Per share amounts can be recalculated to the amounts disclosed herein when total net assets and shares of beneficial interest are not rounded to thousands. |
55
Harbor International & Global Funds
StatementS of Operations—Period Ended April 30, 2021 (Unaudited)
StatementS of Operations—Period Ended April 30, 2021 (Unaudited)
(All amounts in thousands)
Harbor Diversified International All Cap Fund | Harbor Emerging Markets Equity Fund | Harbor Focused International Fund | Harbor Global Leaders Fund | Harbor International Fund | Harbor International Growth Fund | Harbor International Small Cap Fund | Harbor Overseas Fund | |
Investment Income | ||||||||
Dividends | $ 12,262 | $ 490 | $ 263 | $ 342 | $ 55,389 | $ 3,137 | $ 566 | $ 638 |
Interest | 2 | — | 1 | 1 | 375 | 5 | — | — |
Net securities lending income | 12 | — | — | — | 111 | — | — | — |
Foreign taxes withheld | (1,129) | (61) | (38) | (14) | (4,757) | (381) | (46) | (69) |
Total Investment Income | 11,147 | 429 | 226 | 329 | 51,118 | 2,761 | 520 | 569 |
Operating Expenses | ||||||||
Management fees | 3,860 | 197 | 172 | 511 | 17,301 | 3,300 | 180 | 131 |
12b-1 fees: | ||||||||
Administrative Class | 10 | — | N/A | 3 | 22 | 1 | — | N/A |
Investor Class | 11 | 6 | — | 29 | 470 | 36 | 1 | — |
Shareholder communications | 7 | 17 | 3 | 5 | 111 | 10 | 3 | 5 |
Custodian fees | 285 | 98 | 17 | 18 | 449 | 106 | 24 | 40 |
Transfer agent fees: | ||||||||
Retirement Class | 71 | 2 | 2 | 2 | 100 | 16 | 1 | 2 |
Institutional Class | 152 | 9 | 12 | 44 | 1,609 | 344 | 17 | 9 |
Administrative Class | 4 | — | N/A | 1 | 9 | — | — | N/A |
Investor Class | 9 | 5 | — | 26 | 407 | 32 | 1 | — |
Professional fees | 44 | 13 | 3 | 7 | 138 | 25 | 6 | 11 |
Trustees' fees and expenses | 17 | 1 | 1 | 3 | 80 | 15 | 1 | 1 |
Registration fees | 31 | 28 | 21 | 30 | 59 | 35 | 29 | 22 |
Miscellaneous | 10 | 5 | 5 | 5 | 30 | 9 | 4 | 4 |
Total expenses | 4,511 | 381 | 236 | 684 | 20,785 | 3,929 | 267 | 225 |
Management fees waived | (91) | — | — | (34) | — | — | — | — |
Transfer agent fees waived | (41) | (2) | (2) | (6) | (183) | (34) | (2) | (1) |
Other expenses reimbursed | (610) | (157) | (47) | (21) | (2,529) | (166) | (63) | (82) |
Net expenses | 3,769 | 222 | 187 | 623 | 18,073 | 3,729 | 202 | 142 |
Net Investment Income/(Loss) | 7,378 | 207 | 39 | (294) | 33,045 | (968) | 318 | 427 |
Realized and Change in Net Unrealized Gain/(Loss) on Investment Transactions | ||||||||
Net realized gain/(loss) on: | ||||||||
Investments(net of foreign capital gains tax: $0, $100, $0, $0, $0, $227, $0 and $0) | 29,880 | 5,210 | 886 | 10,024 | 126,526 | 56,862 | 2,800 | 1,875 |
Foreign currency transactions | (133) | (12) | (10) | 6 | 1,173 | (189) | 4 | 410 |
Purchased options | 28 | — | — | — | 201 | — | — | — |
Change in net unrealized appreciation/(depreciation) on: | ||||||||
Investments(net of foreign capital gains tax accrual: $666, $188, $81, $0, $0, $1,175, $0 and $0) | 238,420 | 10,465 | 4,766 | 12,916 | 1,032,462 | 117,353 | 10,800 | 6,800 |
Purchased options | 1,283 | — | — | — | 11,673 | — | — | — |
Forwards currency contracts | — | — | — | 1 | — | — | — | — |
Translations of assets and liabilities in foreign currencies | (6) | 5 | (2) | — | (836) | 21 | 10 | (1) |
Net gain/(loss) on investment transactions | 269,472 | 15,668 | 5,640 | 22,947 | 1,171,199 | 174,047 | 13,614 | 9,084 |
Net Increase/(Decrease) in Net Assets Resulting from Operations | $276,850 | $15,875 | $5,679 | $22,653 | $1,204,244 | $173,079 | $13,932 | $9,511 |
The accompanying notes are an integral part of the Financial Statements.
56
Harbor International & Global Funds
Statements of Changes In Net Assets
Statements of Changes In Net Assets
(All amounts in thousands)
Harbor Diversified International All Cap Fund | Harbor Emerging Markets Equity Fund | Harbor Focused International Fund | ||||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | |||
INCREASE/(DECREASE) IN NET ASSETS | (Unaudited) | (Unaudited) | (Unaudited) | |||||
Operations: | ||||||||
Net investment income/(loss) | $ 7,378 | $ 10,169 | $ 207 | $ 978 | $ 39 | $ 144 | ||
Net realized gain/(loss) on investments | 29,775 | (27,922) | 5,198 | 13,644 | 876 | 461 | ||
Change in net unrealized appreciation/(depreciation) of investments | 239,697 | (20,746) | 10,470 | (8,081) | 4,764 | 3,063 | ||
Net increase/(decrease) in assets resulting from operations | 276,850 | (38,499) | 15,875 | 6,541 | 5,679 | 3,668 | ||
Distributions to Shareholders | ||||||||
Retirement Class | (6,946) | (11,421) | (5,910) | (746) | (307) | (88) | ||
Institutional Class | (2,843) | (5,596) | (4,057) | (710) | (307) | (83) | ||
Administrative Class | (61) | (134) | (6) | — | N/A | N/A | ||
Investor Class | (54) | (171) | (1,342) | (6) | — | — | ||
Total distributions to shareholders | (9,904) | (17,322) | (11,315) | (1,462) | (614) | (171) | ||
Net Increase/(Decrease) Derived from Capital Share Transactions | 76,519 | 76,764 | (5,516) | (55,020) | 3,934 | 6,947 | ||
Net increase/(decrease) in net assets | 343,465 | 20,943 | (956) | (49,941) | 8,999 | 10,444 | ||
Net Assets | ||||||||
Beginning of period | 794,013 | 773,070 | 49,526 | 99,467 | 38,007 | 27,563 | ||
End of period | $1,137,478 | $794,013 | $ 48,570 | $ 49,526 | $47,006 | $38,007 |
The accompanying notes are an integral part of the Financial Statements.
58
Harbor Global Leaders Fund | Harbor International Fund | Harbor International Growth Fund | Harbor International Small Cap Fund | Harbor Overseas Fund | |||||||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | ||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||
$ (294) | $ (66) | $ 33,045 | $ 115,585 | $ (968) | $ 781 | $ 318 | $ 258 | $ 427 | $ 447 | ||||
10,030 | 13,905 | 127,900 | (79,825) | 56,673 | 5,287 | 2,804 | (1,227) | 2,285 | (438) | ||||
12,917 | 7,804 | 1,043,299 | (238,021) | 117,374 | 118,503 | 10,810 | (2,237) | 6,799 | 104 | ||||
22,653 | 21,643 | 1,204,244 | (202,261) | 173,079 | 124,571 | 13,932 | (3,206) | 9,511 | 113 | ||||
(1,703) | (750) | (11,372) | (41,892) | (1,144) | (2,810) | (83) | (453) | (229) | (345) | ||||
(6,506) | (4,438) | (33,787) | (117,395) | (4,239) | (7,466) | (375) | (724) | (209) | (333) | ||||
(169) | (108) | (98) | (1,880) | (4) | (7) | (4) | (9) | N/A | N/A | ||||
(1,826) | (1,182) | (2,615) | (13,236) | (96) | (524) | (5) | (11) | (1) | (1) | ||||
(10,204) | (6,478) | (47,872) | (174,403) | (5,483) | (10,807) | (467) | (1,197) | (439) | (679) | ||||
3,254 | (2,882) | (341,673) | (1,356,901) | (124,907) | 90,510 | 5,285 | (9,575) | 10,383 | 1,365 | ||||
15,703 | 12,283 | 814,699 | (1,733,565) | 42,689 | 204,274 | 18,750 | (13,978) | 19,455 | 799 | ||||
118,755 | 106,472 | 3,962,078 | 5,695,643 | 796,706 | 592,432 | 31,972 | 45,950 | 27,051 | 26,252 | ||||
$134,458 | $118,755 | $4,776,777 | $ 3,962,078 | $ 839,395 | $796,706 | $50,722 | $ 31,972 | $46,506 | $27,051 |
59
Harbor International & Global Funds
Statements of Changes in Net Assets—Capital Stock Activity
Statements of Changes in Net Assets—Capital Stock Activity
(All amounts in thousands)
Harbor Diversified International All Cap Fund | Harbor Emerging Markets Equity Fund | Harbor Focused International Fund | ||||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | |||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||
AMOUNT ($) | ||||||||
Retirement Class | ||||||||
Net proceeds from sale of shares | $ 190,974 | $ 166,286 | $ 672 | $ 4,762 | $2,278 | $2,612 | ||
Reinvested distributions | 6,749 | 11,169 | 5,910 | 746 | 306 | 89 | ||
Cost of shares reacquired | (106,774) | (108,051) | (13,937) | (26,083) | (36) | (109) | ||
Net increase/(decrease) in net assets | $ 90,949 | $ 69,404 | $ (7,355) | $(20,575) | $2,548 | $2,592 | ||
Institutional Class | ||||||||
Net proceeds from sale of shares | $ 107,629 | $ 58,607 | $ 5,244 | $ 22,713 | $1,232 | $4,606 | ||
Reinvested distributions | 2,530 | 5,290 | 4,057 | 703 | 261 | 83 | ||
Cost of shares reacquired | (124,476) | (55,658) | (8,376) | (62,021) | (137) | (337) | ||
Cost of shares reacquired through in-kind redemption | — | — | — | — | — | — | ||
Net increase/(decrease) in net assets | $ (14,317) | $ 8,239 | $ 925 | $(38,605) | $1,356 | $4,352 | ||
Administrative Class | ||||||||
Net proceeds from sale of shares | $ 329 | $ 1,450 | $ 2 | $ 17 | N/A | N/A | ||
Reinvested distributions | 61 | 134 | 6 | — | N/A | N/A | ||
Cost of shares reacquired | (450) | (1,447) | (11) | (1) | N/A | N/A | ||
Net increase/(decrease) in net assets | $ (60) | $ 137 | $ (3) | $ 16 | N/A | N/A | ||
Investor Class | ||||||||
Net proceeds from sale of shares | $ 343 | $ 1,427 | $ 1,743 | $ 5,465 | $ 30 | $ 14 | ||
Reinvested distributions | 54 | 171 | 1,342 | 6 | — | — | ||
Cost of shares reacquired | (450) | (2,614) | (2,168) | (1,327) | — | (11) | ||
Net increase/(decrease) in net assets | $ (53) | $ (1,016) | $ 917 | $ 4,144 | $ 30 | $ 3 |
The accompanying notes are an integral part of the Financial Statements.
60
Harbor Global Leaders Fund | Harbor International Fund | Harbor International Growth Fund | Harbor International Small Cap Fund | Harbor Overseas Fund | |||||||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | ||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||
$ 6,054 | $ 5,614 | $ 45,177 | $ 135,529 | $ 5,890 | $ 11,059 | $2,840 | $ 4,323 | $ 35 | $ 799 | ||||
1,611 | 750 | 11,027 | 40,800 | 1,057 | 2,567 | 40 | 453 | 229 | 345 | ||||
(1,625) | (2,238) | (166,455) | (508,810) | (47,912) | (19,502) | (844) | (16,747) | (98) | (143) | ||||
$ 6,040 | $ 4,126 | $(110,251) | $ (332,481) | $ (40,965) | $ (5,876) | $2,036 | $(11,971) | $ 166 | $1,001 | ||||
$ 15,572 | $ 55,015 | $ 156,906 | $ 549,667 | $ 81,802 | $ 244,495 | $2,650 | $ 2,135 | $10,040 | $ 229 | ||||
6,354 | 4,295 | 31,191 | 108,612 | 3,097 | 6,488 | 335 | 639 | 209 | 333 | ||||
(25,568) | (65,489) | (383,796) | (1,217,444) | (142,986) | (147,966) | (190) | (404) | (58) | (203) | ||||
— | — | — | (257,053) | — | — | — | — | — | — | ||||
$ (3,642) | $ (6,179) | $(195,699) | $ (816,218) | $ (58,087) | $ 103,017 | $2,795 | $ 2,370 | $10,191 | $ 359 | ||||
$ 149 | $ 1,519 | $ 883 | $ 3,498 | $ 306 | $ 170 | $ 23 | $ — | N/A | N/A | ||||
169 | 108 | 96 | 1,870 | 4 | 6 | 4 | 10 | N/A | N/A | ||||
(538) | (2,774) | (4,778) | (59,746) | (210) | (128) | — | — | N/A | N/A | ||||
$ (220) | $ (1,147) | $ (3,799) | $ (54,378) | $ 100 | $ 48 | $ 27 | $ 10 | N/A | N/A | ||||
$ 2,244 | $ 7,868 | $ 13,820 | $ 20,346 | $ 2,805 | $ 3,835 | $ 474 | $ 55 | $ 27 | $ 10 | ||||
1,826 | 1,182 | 2,583 | 13,114 | 96 | 523 | 5 | 11 | 1 | 1 | ||||
(2,994) | (8,732) | (48,327) | (187,283) | (28,856) | (11,037) | (52) | (50) | (2) | (6) | ||||
$ 1,076 | $ 318 | $ (31,924) | $ (153,823) | $ (25,955) | $ (6,679) | $ 427 | $ 16 | $ 26 | $ 5 |
61
Harbor International & Global Funds
Statements of Changes in Net Assets—Capital Stock Activity—Continued
Statements of Changes in Net Assets—Capital Stock Activity—Continued
(All amounts in thousands)
Harbor Diversified International All Cap Fund | Harbor Emerging Markets Equity Fund | Harbor Focused International Fund | ||||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | |||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||
SHARES | ||||||||
Retirement Class | ||||||||
Shares sold | 14,876 | 17,039 | 59 | 481 | 174 | 234 | ||
Shares issued due to reinvestment of distributions | 544 | 966 | 565 | 65 | 23 | 8 | ||
Shares reacquired | (8,347) | (10,692) | (1,164) | (2,346) | (3) | (11) | ||
Net increase/(decrease) in shares outstanding | 7,073 | 7,313 | (540) | (1,800) | 194 | 231 | ||
Institutional Class | ||||||||
Shares sold | 8,353 | 6,153 | 470 | 2,555 | 92 | 419 | ||
Shares issued due to reinvestment of distributions | 204 | 457 | 387 | 62 | 20 | 7 | ||
Shares reacquired | (9,461) | (5,585) | (717) | (5,680) | (10) | (31) | ||
Shares reacquired through in-kind redemption | — | — | — | — | — | — | ||
Net increase/(decrease) in shares outstanding | (904) | 1,025 | 140 | (3,063) | 102 | 395 | ||
Administrative Class | ||||||||
Shares sold | 26 | 156 | — | — | N/A | N/A | ||
Shares issued due to reinvestment of distributions | 5 | 11 | 1 | — | N/A | N/A | ||
Shares reacquired | (35) | (147) | (1) | — | N/A | N/A | ||
Net increase/(decrease) in shares outstanding | (4) | 20 | — | — | N/A | N/A | ||
Investor Class | ||||||||
Shares sold | 27 | 150 | 155 | 494 | 2 | 1 | ||
Shares issued due to reinvestment of distributions | 4 | 15 | 128 | — | — | — | ||
Shares reacquired | (34) | (296) | (198) | (121) | — | (1) | ||
Net increase/(decrease) in shares outstanding | (3) | (131) | 85 | 373 | 2 | — |
The accompanying notes are an integral part of the Financial Statements.
62
Harbor Global Leaders Fund | Harbor International Fund | Harbor International Growth Fund | Harbor International Small Cap Fund | Harbor Overseas Fund | |||||||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | ||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||
165 | 174 | 1,006 | 4,230 | 265 | 663 | 189 | 359 | 3 | 75 | ||||
45 | 24 | 252 | 1,021 | 48 | 151 | 3 | 35 | 19 | 33 | ||||
(44) | (73) | (3,739) | (14,706) | (2,151) | (1,146) | (57) | (1,462) | (8) | (14) | ||||
166 | 125 | (2,481) | (9,455) | (1,838) | (332) | 135 | (1,068) | 14 | 94 | ||||
425 | 1,894 | 3,512 | 15,423 | 3,616 | 14,511 | 176 | 183 | 789 | 22 | ||||
178 | 140 | 711 | 2,706 | 140 | 383 | 24 | 49 | 18 | 31 | ||||
(703) | (2,079) | (8,643) | (33,390) | (6,042) | (9,143) | (13) | (34) | (4) | (19) | ||||
— | — | — | (7,166) | — | — | — | — | — | — | ||||
(100) | (45) | (4,420) | (22,427) | (2,286) | 5,751 | 187 | 198 | 803 | 34 | ||||
4 | 49 | 20 | 95 | 14 | 10 | 2 | — | N/A | N/A | ||||
5 | 3 | 2 | 46 | — | — | — | 1 | N/A | N/A | ||||
(15) | (91) | (105) | (1,519) | (9) | (8) | — | — | N/A | N/A | ||||
(6) | (39) | (83) | (1,378) | 5 | 2 | 2 | 1 | N/A | N/A | ||||
64 | 268 | 311 | 573 | 131 | 238 | 32 | 5 | 2 | 1 | ||||
53 | 40 | 59 | 329 | 4 | 31 | — | 1 | — | — | ||||
(85) | (298) | (1,091) | (5,167) | (1,237) | (678) | (3) | (5) | — | — | ||||
32 | 10 | (721) | (4,265) | (1,102) | (409) | 29 | 1 | 2 | 1 |
63
Harbor International & Global Funds Financial Highlights
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR DIVERSIFIED INTERNATIONAL ALL CAP FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 f | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 10.25 | $ 11.17 | $ 10.41 | $ 11.79 | $ 9.77 | $ 9.21 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.09 | 0.14 | 0.26 | 0.21 | 0.14 | 0.06 |
Net realized and unrealized gain/(loss) on investments | 3.39 | (0.81) | 0.92 | (1.19) | 2.01 | 0.50 |
Total from investment operations | 3.48 | (0.67) | 1.18 | (0.98) | 2.15 | 0.56 |
Less Distributions | ||||||
Dividends from net investment income | (0.13) | (0.25) | (0.13) | (0.12) | (0.13) | — |
Distributions from net realized capital gains | — | — | (0.29) | (0.28) | — | — |
Total distributions | (0.13) | (0.25) | (0.42) | (0.40) | (0.13) | — |
Net asset value end of period | 13.60 | 10.25 | 11.17 | 10.41 | 11.79 | 9.77 |
Net assets end of period (000s) | $803,837 | $533,318 | $499,288 | $420,056 | $92,442 | $1,786 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 34.05% c | (6.25)% | 11.99% | (8.55)% | 22.35% | 6.08% c |
Ratio of total expenses to average net assets^ | 0.85 d | 0.85 | 0.87 | 0.90 | 0.99 | 1.17 d |
Ratio of net expenses to average net assetsa | 0.70 d | 0.70 | 0.68 | 0.74 | 0.77 | 0.80 d |
Ratio of net investment income/(loss) to average net assetsa | 1.48 d | 1.32 | 2.42 | 1.87 | 1.27 | 0.97 d |
Portfolio turnover | 16 c | 25 | 22 | 42 | 46 | 68 c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 g | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 10.22 | $ 11.14 | $ 10.39 | $ 11.76 | $ 9.75 | $10.00 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.07 | 0.10 | 0.22 | 0.22 | 0.14 | 0.13 |
Net realized and unrealized gain/(loss) on investments | 3.37 | (0.80) | 0.92 | (1.22) | 1.97 | (0.38) |
Total from investment operations | 3.44 | (0.70) | 1.14 | (1.00) | 2.11 | (0.25) |
Less Distributions | ||||||
Dividends from net investment income | (0.09) | (0.22) | (0.10) | (0.09) | (0.10) | — * |
Distributions from net realized capital gains | — | — | (0.29) | (0.28) | — | — |
Total distributions | (0.09) | (0.22) | (0.39) | (0.37) | (0.10) | — * |
Net asset value end of period | 13.57 | 10.22 | 11.14 | 10.39 | 11.76 | 9.75 |
Net assets end of period (000s) | $ 8,514 | $ 6,446 | $ 6,800 | $ 5,734 | $ 310 | $ 246 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 33.78% c | (6.54)% | 11.58% | (8.76)% | 21.91% | (2.49)% c |
Ratio of total expenses to average net assets^ | 1.18 d | 1.18 | 1.20 | 1.23 | 1.32 | 1.46 d |
Ratio of net expenses to average net assetsa | 1.03 d | 1.03 | 1.01 | 1.06 | 1.10 | 1.10 d |
Ratio of net investment income/(loss) to average net assetsa | 1.09 d | 0.99 | 2.06 | 1.96 | 1.29 | 1.39 d |
Portfolio turnover | 16 c | 25 | 22 | 42 | 46 | 68 c |
See page 78 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
64
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 g | |
(Unaudited) | |||||
$ 10.25 | $ 11.17 | $ 10.41 | $ 11.79 | $ 9.77 | $ 10.00 |
0.08 | 0.13 | 0.25 | 0.20 | 0.17 | 0.20 |
3.40 | (0.81) | 0.92 | (1.18) | 1.98 | (0.42) |
3.48 | (0.68) | 1.17 | (0.98) | 2.15 | (0.22) |
(0.12) | (0.24) | (0.12) | (0.12) | (0.13) | (0.01) |
— | — | (0.29) | (0.28) | — | — |
(0.12) | (0.24) | (0.41) | (0.40) | (0.13) | (0.01) |
13.61 | 10.25 | 11.17 | 10.41 | 11.79 | 9.77 |
$315,818 | $247,212 | $257,860 | $238,470 | $225,473 | $150,263 |
34.05% c | (6.33)% | 11.90% | (8.62)% | 22.29% | (2.25)% c |
0.93 d | 0.93 | 0.95 | 0.98 | 1.07 | 1.22 d |
0.78 d | 0.78 | 0.76 | 0.82 | 0.85 | 0.85 d |
1.35 d | 1.25 | 2.34 | 1.72 | 1.59 | 2.13 d |
16 c | 25 | 22 | 42 | 46 | 68 c |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 g | |
(Unaudited) | |||||
$ 10.17 | $ 11.08 | $ 10.33 | $ 11.71 | $ 9.74 | $ 10.00 |
0.06 | 0.09 | 0.21 | 0.15 | 0.14 | 0.12 |
3.36 | (0.80) | 0.91 | (1.17) | 1.96 | (0.38) |
3.42 | (0.71) | 1.12 | (1.02) | 2.10 | (0.26) |
(0.08) | (0.20) | (0.08) | (0.08) | (0.13) | — |
— | — | (0.29) | (0.28) | — | — |
(0.08) | (0.20) | (0.37) | (0.36) | (0.13) | — |
13.51 | 10.17 | 11.08 | 10.33 | 11.71 | 9.74 |
$ 9,309 | $ 7,037 | $ 9,122 | $ 5,456 | $ 5,195 | $ 329 |
33.68% c | (6.58)% | 11.43% | (8.93)% | 21.82% | (2.60)% c |
1.29 d | 1.30 | 1.32 | 1.35 | 1.44 | 1.59 d |
1.15 d | 1.15 | 1.13 | 1.19 | 1.22 | 1.22 d |
0.99 d | 0.86 | 1.99 | 1.34 | 1.31 | 1.28 d |
16 c | 25 | 22 | 42 | 46 | 68 c |
65
Harbor International & Global Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR EMERGING MARKETS EQUITY FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 n | 2019 | 2018 | 2017 | 2016 f | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 10.89 | $ 11.01 | $ 9.57 | $ 10.83 | $ 8.59 | $ 6.90 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.03 | 0.07 | 0.21 | 0.12 | 0.13 | 0.05 |
Net realized and unrealized gain/(loss) on investments | 3.95 | (0.02) | 1.32 | (1.27) | 2.21 | 1.64 |
Total from investment operations | 3.98 | 0.05 | 1.53 | (1.15) | 2.34 | 1.69 |
Less Distributions | ||||||
Dividends from net investment income | (0.13) | (0.17) | (0.09) | (0.11) | (0.10) | — |
Distributions from net realized capital gains | (3.27) | — | — | — | — | — |
Total distributions | (3.40) | (0.17) | (0.09) | (0.11) | (0.10) | — |
Net asset value end of period | 11.47 | 10.89 | 11.01 | 9.57 | 10.83 | 8.59 |
Net assets end of period (000s) | $24,265 | $28,935 | $49,052 | $12,146 | $4,232 | $1,335 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 39.53% c | 0.36% | 16.21% | (10.71)% | 27.62% | 24.49% c |
Ratio of total expenses to average net assets^ | 1.57 d | 1.25 | 1.22 | 1.26 | 1.35 | 1.45 d |
Ratio of net expenses to average net assetsa | 0.88 d | 0.93 | 1.02 | 1.07 | 1.08 | 1.10 d |
Ratio of net investment income/(loss) to average net assetsa | 0.51 d | 0.63 | 2.05 | 1.16 | 1.32 | 0.95 d |
Portfolio turnover | 22 c | 122 | 53 | 56 | 59 | 49 c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 n | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 11.15 | $ 11.14 | $ 9.55 | $ 10.80 | $ 8.58 | $ 7.87 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.02 | (0.01) | 0.02 | 0.08 | 0.08 | 0.05 |
Net realized and unrealized gain/(loss) on investments | 4.02 | 0.02 | 1.62 | (1.25) | 2.22 | 0.71 |
Total from investment operations | 4.04 | 0.01 | 1.64 | (1.17) | 2.30 | 0.76 |
Less Distributions | ||||||
Dividends from net investment income | (0.11) | — | (0.05) | (0.08) | (0.08) | (0.05) |
Distributions from net realized capital gains | (3.27) | — | — | — | — | — |
Total distributions | (3.38) | — | (0.05) | (0.08) | (0.08) | (0.05) |
Net asset value end of period | 11.81 | 11.15 | 11.14 | 9.55 | 10.80 | 8.58 |
Net assets end of period (000s) | $ 21 | $ 21 | $ 5 | $ 249 | $ 275 | $ 217 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 39.09% c | 0.09% | 17.30% | (10.91)% | 27.04% | 9.81% |
Ratio of total expenses to average net assets^ | 1.90 d | 1.56 | 1.54 | 1.59 | 1.68 | 1.74 |
Ratio of net expenses to average net assetsa | 1.21 d | 1.25 | 1.40 | 1.40 | 1.40 | 1.40 |
Ratio of net investment income/(loss) to average net assetsa | 0.28 d | (0.12) | 0.16 | 0.77 | 0.85 | 0.69 |
Portfolio turnover | 22 c | 122 | 53 | 56 | 59 | 49 |
See page 78 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
66
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 n | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
$ 10.89 | $ 11.01 | $ 9.57 | $ 10.83 | $ 8.59 | $ 7.89 |
0.03 | 0.08 | 0.12 | 0.14 | 0.11 | 0.07 |
3.93 | (0.04) | 1.41 | (1.30) | 2.22 | 0.71 |
3.96 | 0.04 | 1.53 | (1.16) | 2.33 | 0.78 |
(0.09) | (0.16) | (0.09) | (0.10) | (0.09) | (0.08) |
(3.27) | — | — | — | — | — |
(3.36) | (0.16) | (0.09) | (0.10) | (0.09) | (0.08) |
11.49 | 10.89 | 11.01 | 9.57 | 10.83 | 8.59 |
$18,504 | $16,009 | $49,891 | $58,271 | $51,849 | $36,390 |
39.37% c | 0.28% | 16.13% | (10.77)% | 27.54% | 9.99% |
1.65 d | 1.33 | 1.30 | 1.34 | 1.43 | 1.49 |
0.96 d | 1.01 | 1.12 | 1.15 | 1.15 | 1.15 |
0.51 d | 0.74 | 1.13 | 1.28 | 1.13 | 0.93 |
22 c | 122 | 53 | 56 | 59 | 49 |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 n | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
$ 10.85 | $ 10.96 | $ 9.53 | $ 10.78 | $ 8.56 | $ 7.85 |
— * | 0.01 | 0.09 | 0.09 | 0.07 | 0.05 |
3.93 | — * | 1.39 | (1.27) | 2.22 | 0.70 |
3.93 | 0.01 | 1.48 | (1.18) | 2.29 | 0.75 |
(0.08) | (0.12) | (0.05) | (0.07) | (0.07) | (0.04) |
(3.27) | — | — | — | — | — |
(3.35) | (0.12) | (0.05) | (0.07) | (0.07) | (0.04) |
11.43 | 10.85 | 10.96 | 9.53 | 10.78 | 8.56 |
$ 5,780 | $ 4,561 | $ 519 | $ 614 | $ 700 | $ 482 |
39.08% c | 0.00% | 15.56% | (11.03)% | 27.00% | 9.69% |
2.01 d | 1.69 | 1.67 | 1.71 | 1.80 | 1.86 |
1.33 d | 1.37 | 1.49 | 1.52 | 1.52 | 1.52 |
0.05 d | 0.14 | 0.87 | 0.82 | 0.75 | 0.69 |
22 c | 122 | 53 | 56 | 59 | 49 |
67
Harbor International & Global Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR FOCUSED INTERNATIONAL FUND | |||||||||
Retirement Class | Institutional Class | ||||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | 6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||||
2020 | 2019 j | 2020 | 2019 j | ||||||
(Unaudited) | (Unaudited) | ||||||||
Net asset value beginning of period | $ 11.94 | $ 10.78 | $ 10.00 | $ 11.93 | $ 10.78 | $ 10.00 | |||
Income from Investment Operations | |||||||||
Net investment income/(loss)a,e | 0.01 | 0.06 | 0.03 | 0.01 | 0.05 | 0.02 | |||
Net realized and unrealized gain/(loss) on investments | 1.73 | 1.17 | 0.75 | 1.73 | 1.16 | 0.76 | |||
Total from investment operations | 1.74 | 1.23 | 0.78 | 1.74 | 1.21 | 0.78 | |||
Less Distributions | |||||||||
Dividends from net investment income | (0.04) | (0.02) | — | (0.03) | (0.01) | — | |||
Distributions from net realized capital gains | (0.14) | (0.05) | — | (0.14) | (0.05) | — | |||
Total distributions | (0.18) | (0.07) | — | (0.17) | (0.06) | — | |||
Net asset value end of period | 13.50 | 11.94 | 10.78 | 13.50 | 11.93 | 10.78 | |||
Net assets end of period (000s) | $22,900 | $17,928 | $13,696 | $24,033 | $20,040 | $13,833 | |||
Ratios and Supplemental Data (%) | |||||||||
Total returnb | 14.61% c | 11.46% | 7.80% c | 14.55% c | 11.40% | 7.80% c | |||
Ratio of total expenses to average net assets^ | 0.98 d | 1.01 | 2.15 d | 1.06 d | 1.09 | 2.23 d | |||
Ratio of net expenses to average net assetsa | 0.77 d | 0.77 | 0.77 d | 0.85 d | 0.85 | 0.85 d | |||
Ratio of net investment income/(loss) to average net assetsa | 0.21 d | 0.50 | 0.60 d | 0.13 d | 0.41 | 0.52 d | |||
Portfolio turnover | 21 c | 33 | 37 c | 21 c | 33 | 37 c |
See page 78 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
68
Investor Class | ||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |
2020 | 2019 j | |
(Unaudited) | ||
$11.89 | $10.76 | $10.00 |
(0.01) | 0.01 | 0.01 |
1.71 | 1.17 | 0.75 |
1.70 | 1.18 | 0.76 |
— | — | — |
(0.14) | (0.05) | — |
(0.14) | (0.05) | — |
13.45 | 11.89 | 10.76 |
$ 73 | $ 39 | $ 34 |
14.34% c | 11.03% | 7.60% c |
1.43 d | 1.46 | 2.60 d |
1.22 d | 1.22 | 1.22 d |
(0.15) d | 0.08 | 0.15 d |
21 c | 33 | 37 c |
69
Harbor International & Global Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR GLOBAL LEADERS FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 k | 2016 f | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 33.89 | $ 30.81 | $ 25.52 | $25.33 | $20.29 | $19.79 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | (0.05) | 0.02 | 0.13 | 0.02 | 0.08 | (0.03) |
Net realized and unrealized gain/(loss) on investments | 6.44 | 4.89 | 5.76 | 2.40 | 4.96 | 0.53 |
Total from investment operations | 6.39 | 4.91 | 5.89 | 2.42 | 5.04 | 0.50 |
Less Distributions | ||||||
Dividends from net investment income | — | (0.09) | — | (0.03) | — | — |
Distributions from net realized capital gains | (2.83) | (1.74) | (0.60) | (2.20) | — | — |
Total distributions | (2.83) | (1.83) | (0.60) | (2.23) | — | — |
Net asset value end of period | 37.45 | 33.89 | 30.81 | 25.52 | 25.33 | 20.29 |
Net assets end of period (000s) | $25,778 | $17,703 | $12,245 | $6,846 | $4,376 | $1,713 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 19.24% c | 16.56% | 23.72% | 10.01% | 24.84% | 2.53% c |
Ratio of total expenses to average net assets^ | 0.87 d | 0.90 | 0.92 | 0.96 | 1.13 | 1.00 d |
Ratio of net expenses to average net assetsa | 0.78 d | 0.78 | 0.80 | 0.82 | 0.83 | 0.85 d |
Ratio of net investment income/(loss) to average net assetsa | (0.28) d | 0.07 | 0.46 | 0.09 | 0.32 | (0.18) d |
Portfolio turnover | 22 c | 55 | 47 | 20 | 123 | 76 c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 k | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 33.10 | $ 30.15 | $ 25.06 | $24.97 | $20.06 | $21.65 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | (0.11) | (0.08) | 0.06 | (0.05) | (0.04) | (0.05) |
Net realized and unrealized gain/(loss) on investments | 6.29 | 4.77 | 5.63 | 2.34 | 4.95 | (0.82) |
Total from investment operations | 6.18 | 4.69 | 5.69 | 2.29 | 4.91 | (0.87) |
Less Distributions | ||||||
Dividends from net investment income | — | — | — | — | — | — |
Distributions from net realized capital gains | (2.83) | (1.74) | (0.60) | (2.20) | — | (0.72) |
Total distributions | (2.83) | (1.74) | (0.60) | (2.20) | — | (0.72) |
Net asset value end of period | 36.45 | 33.10 | 30.15 | 25.06 | 24.97 | 20.06 |
Net assets end of period (000s) | $ 2,056 | $ 2,067 | $ 3,050 | $1,111 | $1,204 | $1,253 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 19.05% c | 16.13% | 23.35% | 9.61% | 24.48% | (4.17)% |
Ratio of total expenses to average net assets^ | 1.20 d | 1.23 | 1.25 | 1.29 | 1.46 | 1.29 |
Ratio of net expenses to average net assetsa | 1.11 d | 1.11 | 1.13 | 1.15 | 1.15 | 1.15 |
Ratio of net investment income/(loss) to average net assetsa | (0.63) d | (0.25) | 0.22 | (0.21) | (0.13) | (0.23) |
Portfolio turnover | 22 c | 55 | 47 | 20 | 123 | 76 |
See page 78 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
70
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 k | 2016 | |
(Unaudited) | |||||
$ 33.80 | $ 30.75 | $ 25.49 | $ 25.31 | $ 20.29 | $ 21.83 |
(0.07) | — * | 0.11 | 0.01 | 0.03 | 0.01 |
6.44 | 4.86 | 5.75 | 2.38 | 4.99 | (0.83) |
6.37 | 4.86 | 5.86 | 2.39 | 5.02 | (0.82) |
— | (0.07) | — | (0.01) | — | — |
(2.83) | (1.74) | (0.60) | (2.20) | — | (0.72) |
(2.83) | (1.81) | (0.60) | (2.21) | — | (0.72) |
37.34 | 33.80 | 30.75 | 25.49 | 25.31 | 20.29 |
$82,555 | $78,120 | $72,429 | $33,574 | $29,034 | $25,471 |
19.20% c | 16.46% | 23.63% | 9.90% | 24.74% | (3.90)% |
0.95 d | 0.98 | 1.00 | 1.04 | 1.21 | 1.04 |
0.86 d | 0.86 | 0.88 | 0.90 | 0.90 | 0.90 |
(0.38) d | 0.01 | 0.37 | 0.03 | 0.14 | 0.04 |
22 c | 55 | 47 | 20 | 123 | 76 |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 k | 2016 | |
(Unaudited) | |||||
$ 32.59 | $ 29.74 | $ 24.76 | $ 24.72 | $ 19.89 | $ 21.49 |
(0.13) | (0.11) | (0.01) | (0.09) | (0.06) | (0.07) |
6.19 | 4.70 | 5.59 | 2.33 | 4.89 | (0.81) |
6.06 | 4.59 | 5.58 | 2.24 | 4.83 | (0.88) |
— | — | — | — | — | — |
(2.83) | (1.74) | (0.60) | (2.20) | — | (0.72) |
(2.83) | (1.74) | (0.60) | (2.20) | — | (0.72) |
35.82 | 32.59 | 29.74 | 24.76 | 24.72 | 19.89 |
$24,069 | $20,865 | $18,748 | $12,416 | $11,364 | $10,659 |
18.98% c | 16.01% | 23.18% | 9.50% | 24.28% | (4.25)% |
1.32 d | 1.35 | 1.37 | 1.41 | 1.58 | 1.41 |
1.23 d | 1.23 | 1.25 | 1.27 | 1.27 | 1.27 |
(0.74) d | (0.35) | (0.03) | (0.35) | (0.25) | (0.35) |
22 c | 55 | 47 | 20 | 123 | 76 |
71
Harbor International & Global Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR INTERNATIONAL FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 i | 2018 | 2017 | 2016 f | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 36.52 | $ 39.00 | $ 58.31 | $ 69.91 | $ 60.32 | $ 57.14 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.33 | 0.91 | 0.91 | 1.21 | 0.94 | 0.68 |
Net realized and unrealized gain/(loss) on investments | 11.02 | (2.10) | 1.62 | (8.51) | 9.85 | 2.50 |
Total from investment operations | 11.35 | (1.19) | 2.53 | (7.30) | 10.79 | 3.18 |
Less Distributions | ||||||
Dividends from net investment income | (0.50) | (1.29) | (0.97) | (1.30) | (1.20) | — |
Distributions from net realized capital gains | — | — | (20.87) | (3.00) | — | — |
Total distributions | (0.50) | (1.29) | (21.84) | (4.30) | (1.20) | — |
Net asset value end of period | 47.37 | 36.52 | 39.00 | 58.31 | 69.91 | 60.32 |
Net assets end of period (000s) | $1,013,339 | $871,743 | $1,299,776 | $2,703,360 | $2,657,442 | $739,842 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 31.18% c | (3.35)% | 10.29% | (11.24)% | 18.30% | 5.57% c |
Ratio of total expenses to average net assets^ | 0.81 d | 1.61 o | 0.80 | 0.74 | 0.74 | 0.74 d |
Ratio of net expenses to average net assetsa | 0.69 d | 1.49 o | 0.67 | 0.64 | 0.73 | 0.72 d |
Ratio of net expenses to average net assets excluding tax compliance feea | 0.69 d | 0.69 | 0.67 | 0.64 | 0.73 | 0.72 d |
Ratio of net investment income/(loss) to average net assetsa | 1.49 d | 2.52 o | 2.33 | 1.80 | 1.42 | 1.68 d |
Portfolio turnover | 11 c | 12 | 12 | 64 | 13 | 14 c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 i | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 36.78 | $ 39.26 | $ 58.08 | $ 69.57 | $ 59.99 | $ 65.32 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.25 | 0.47 | 0.76 | 0.88 | 0.79 | 0.79 |
Net realized and unrealized gain/(loss) on investments | 11.13 | (1.81) | 1.70 | (8.37) | 9.77 | (3.44) |
Total from investment operations | 11.38 | (1.34) | 2.46 | (7.49) | 10.56 | (2.65) |
Less Distributions | ||||||
Dividends from net investment income | (0.24) | (1.14) | (0.41) | (1.00) | (0.98) | (0.91) |
Distributions from net realized capital gains | — | — | (20.87) | (3.00) | — | (1.77) |
Total distributions | (0.24) | (1.14) | (21.28) | (4.00) | (0.98) | (2.68) |
Net asset value end of period | 47.92 | 36.78 | 39.26 | 58.08 | 69.57 | 59.99 |
Net assets end of period (000s) | $ 16,640 | $ 15,825 | $ 70,981 | $ 90,009 | $ 398,584 | $510,575 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 30.98% c | (3.67)% | 9.94% | (11.53)% | 17.93% | (3.97)% |
Ratio of total expenses to average net assets^ | 1.14 d | 1.65 o | 1.13 | 1.07 | 1.06 | 1.04 |
Ratio of net expenses to average net assetsa | 1.02 d | 1.53 o | 1.00 | 0.97 | 1.05 | 1.02 |
Ratio of net expenses to average net assets excluding tax compliance feea | 1.02 d | 1.02 | 1.00 | 0.97 | 1.05 | 1.02 |
Ratio of net investment income/(loss) to average net assetsa | 1.13 d | 1.25 o | 1.94 | 1.30 | 1.22 | 1.33 |
Portfolio turnover | 11 c | 12 | 12 | 64 | 13 | 14 |
See page 78 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
72
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 i | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
$ 36.64 | $ 39.12 | $ 58.31 | $ 69.90 | $ 60.30 | $ 65.67 |
0.32 | 0.92 | 0.84 | 1.04 | 0.97 | 0.99 |
11.06 | (2.15) | 1.67 | (8.39) | 9.79 | (3.51) |
11.38 | (1.23) | 2.51 | (7.35) | 10.76 | (2.52) |
(0.46) | (1.25) | (0.83) | (1.24) | (1.16) | (1.08) |
— | — | (20.87) | (3.00) | — | (1.77) |
(0.46) | (1.25) | (21.70) | (4.24) | (1.16) | (2.85) |
47.56 | 36.64 | 39.12 | 58.31 | 69.90 | 60.30 |
$3,359,912 | $2,750,824 | $3,814,616 | $8,577,147 | $27,401,853 | $33,201,899 |
31.17% c | (3.43)% | 10.18% | (11.31)% | 18.24% | (3.74)% |
0.89 d | 1.76 o | 0.88 | 0.82 | 0.81 | 0.79 |
0.77 d | 1.64 o | 0.75 | 0.72 | 0.80 | 0.77 |
0.77 d | 0.77 | 0.75 | 0.72 | 0.80 | 0.77 |
1.44 d | 2.52 o | 2.11 | 1.53 | 1.51 | 1.66 |
11 c | 12 | 12 | 64 | 13 | 14 |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 i | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
$ 36.22 | $ 38.65 | $ 57.66 | $ 69.14 | $ 59.61 | $ 64.86 |
0.23 | 0.75 | 0.70 | 0.81 | 0.72 | 0.73 |
10.94 | (2.12) | 1.65 | (8.33) | 9.71 | (3.43) |
11.17 | (1.37) | 2.35 | (7.52) | 10.43 | (2.70) |
(0.30) | (1.06) | (0.49) | (0.96) | (0.90) | (0.78) |
— | — | (20.87) | (3.00) | — | (1.77) |
(0.30) | (1.06) | (21.36) | (3.96) | (0.90) | (2.55) |
47.09 | 36.22 | 38.65 | 57.66 | 69.14 | 59.61 |
$ 386,886 | $ 323,686 | $ 510,270 | $ 895,711 | $ 1,798,228 | $ 2,188,360 |
30.90% c | (3.79)% | 9.80% | (11.65)% | 17.79% | (4.09)% |
1.25 d | 2.10 o | 1.25 | 1.19 | 1.18 | 1.16 |
1.14 d | 1.98 o | 1.12 | 1.09 | 1.17 | 1.14 |
1.14 d | 1.14 | 1.12 | 1.09 | 1.17 | 1.14 |
1.06 d | 2.06 o | 1.80 | 1.21 | 1.13 | 1.23 |
11 c | 12 | 12 | 64 | 13 | 14 |
73
Harbor International & Global Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR INTERNATIONAL GROWTH FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 f | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 19.10 | $ 16.14 | $ 13.70 | $ 15.71 | $ 12.90 | $11.76 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | (0.02) | 0.03 | 0.30 | 0.17 | 0.17 | 0.09 |
Net realized and unrealized gain/(loss) on investments | 4.07 | 3.25 | 2.25 | (1.99) | 2.81 | 1.05 |
Total from investment operations | 4.05 | 3.28 | 2.55 | (1.82) | 2.98 | 1.14 |
Less Distributions | ||||||
Dividends from net investment income | (0.15) | (0.32) | (0.11) | (0.19) | (0.17) | — |
Distributions from net realized capital gains | — | — | — | — | — | — |
Total distributions | (0.15) | (0.32) | (0.11) | (0.19) | (0.17) | — |
Net asset value end of period | 23.00 | 19.10 | 16.14 | 13.70 | 15.71 | 12.90 |
Net assets end of period (000s) | $154,208 | $163,202 | $143,276 | $93,815 | $24,872 | $2,360 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 21.21% c | 20.56% | 18.81% | (11.74)% | 23.52% | 9.69% c |
Ratio of total expenses to average net assets^ | 0.82 d | 0.83 | 0.83 | 0.81 | 0.84 | 0.86 d |
Ratio of net expenses to average net assetsa | 0.77 d | 0.77 | 0.77 | 0.77 | 0.77 | 0.80 d |
Ratio of net investment income/(loss) to average net assetsa | (0.19) d | 0.19 | 2.01 | 1.07 | 1.19 | 1.06 d |
Portfolio turnover | 4 c | 24 | 16 | 17 | 13 | 19 c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 19.05 | $ 16.10 | $ 13.66 | $ 15.67 | $ 12.87 | $12.63 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | (0.06) | (0.02) | 0.22 | 0.08 | 0.09 | 0.16 |
Net realized and unrealized gain/(loss) on investments | 4.05 | 3.24 | 2.28 | (1.95) | 2.84 | 0.12 |
Total from investment operations | 3.99 | 3.22 | 2.50 | (1.87) | 2.93 | 0.28 |
Less Distributions | ||||||
Dividends from net investment income | (0.11) | (0.27) | (0.06) | (0.14) | (0.13) | (0.04) |
Distributions from net realized capital gains | — | — | — | — | — | — |
Total distributions | (0.11) | (0.27) | (0.06) | (0.14) | (0.13) | (0.04) |
Net asset value end of period | 22.93 | 19.05 | 16.10 | 13.66 | 15.67 | 12.87 |
Net assets end of period (000s) | $ 720 | $ 507 | $ 390 | $ 330 | $ 466 | $ 333 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 20.95% c | 20.17% | 18.45% | (12.03)% | 23.08% | 2.21% |
Ratio of total expenses to average net assets^ | 1.15 d | 1.16 | 1.16 | 1.14 | 1.16 | 1.15 |
Ratio of net expenses to average net assetsa | 1.10 d | 1.10 | 1.10 | 1.10 | 1.10 | 1.10 |
Ratio of net investment income/(loss) to average net assetsa | (0.52) d | (0.15) | 1.50 | 0.51 | 0.66 | 1.25 |
Portfolio turnover | 4 c | 24 | 16 | 17 | 13 | 19 |
See page 78 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
74
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
$ 19.08 | $ 16.13 | $ 13.69 | $ 15.69 | $ 12.89 | $ 12.71 |
(0.03) | 0.02 | 0.26 | 0.13 | 0.13 | 0.17 |
4.05 | 3.24 | 2.28 | (1.95) | 2.84 | 0.14 |
4.02 | 3.26 | 2.54 | (1.82) | 2.97 | 0.31 |
(0.13) | (0.31) | (0.10) | (0.18) | (0.17) | (0.13) |
— | — | — | — | — | — |
(0.13) | (0.31) | (0.10) | (0.18) | (0.17) | (0.13) |
22.97 | 19.08 | 16.13 | 13.69 | 15.69 | 12.89 |
$670,123 | $600,240 | $414,528 | $399,911 | $362,035 | $277,638 |
21.12% c | 20.42% | 18.73% | (11.75)% | 23.38% | 2.46% |
0.90 d | 0.91 | 0.91 | 0.89 | 0.91 | 0.90 |
0.85 d | 0.85 | 0.85 | 0.85 | 0.85 | 0.85 |
(0.27) d | 0.11 | 1.75 | 0.84 | 0.92 | 1.36 |
4 c | 24 | 16 | 17 | 13 | 19 |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
$ 18.93 | $ 16.00 | $ 13.58 | $ 15.57 | $ 12.79 | $ 12.60 |
(0.08) | (0.04) | 0.21 | 0.11 | 0.07 | 0.12 |
4.03 | 3.22 | 2.26 | (1.98) | 2.82 | 0.15 |
3.95 | 3.18 | 2.47 | (1.87) | 2.89 | 0.27 |
(0.06) | (0.25) | (0.05) | (0.12) | (0.11) | (0.08) |
— | — | — | — | — | — |
(0.06) | (0.25) | (0.05) | (0.12) | (0.11) | (0.08) |
22.82 | 18.93 | 16.00 | 13.58 | 15.57 | 12.79 |
$ 14,344 | $ 32,757 | $ 34,238 | $ 32,225 | $ 14,913 | $ 13,466 |
20.87% c | 20.06% | 18.29% | (12.12)% | 22.89% | 2.15% |
1.26 d | 1.28 | 1.28 | 1.26 | 1.28 | 1.27 |
1.22 d | 1.22 | 1.22 | 1.22 | 1.22 | 1.22 |
(0.73) d | (0.27) | 1.40 | 0.69 | 0.54 | 0.99 |
4 c | 24 | 16 | 17 | 13 | 19 |
75
Harbor International & Global Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR INTERNATIONAL SMALL CAP FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 m | 2018 | 2017 | 2016 h | ||
(Unaudited) | ||||||
Net asset value beginning of period | $11.37 | $12.49 | $ 12.38 | $13.90 | $10.77 | $10.00 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.12 | 0.07 | 0.24 | 0.17 | 0.08 | 0.06 |
Net realized and unrealized gain/(loss) on investments | 4.71 | (0.82) | 0.35 | (1.50) | 3.18 | 0.71 |
Total from investment operations | 4.83 | (0.75) | 0.59 | (1.33) | 3.26 | 0.77 |
Less Distributions | ||||||
Dividends from net investment income | (0.17) | (0.37) | (0.10) | (0.09) | (0.13) | — |
Distributions from net realized capital gains | — | — | (0.38) | (0.10) | — | — |
Total distributions | (0.17) | (0.37) | (0.48) | (0.19) | (0.13) | — |
Net asset value end of period | 16.03 | 11.37 | 12.49 | 12.38 | 13.90 | 10.77 |
Net assets end of period (000s) | $9,953 | $5,525 | $19,408 | $8,213 | $7,671 | $ 629 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 42.75% c | (6.36)% | 5.23% | (9.71)% | 30.67% | 7.70% c |
Ratio of total expenses to average net assets^ | 1.18 d | 1.37 | 1.24 | 1.07 | 1.35 | 2.50 d |
Ratio of net expenses to average net assetsa | 0.88 d | 0.88 | 0.88 | 0.87 | 0.87 | 0.90 d |
Ratio of net investment income/(loss) to average net assetsa | 1.69 d | 0.64 | 1.98 | 1.19 | 0.60 | 0.73 d |
Portfolio turnover | 22 c | 39 | 178 | 53 | 44 | 35 c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 m | 2018 | 2017 | 2016 h | ||
(Unaudited) | ||||||
Net asset value beginning of period | $11.34 | $12.46 | $ 12.34 | $ 13.87 | $10.75 | $10.00 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.08 | 0.06 | 0.15 | 0.11 | 0.07 | 0.09 |
Net realized and unrealized gain/(loss) on investments | 4.72 | (0.85) | 0.40 | (1.49) | 3.15 | 0.66 |
Total from investment operations | 4.80 | (0.79) | 0.55 | (1.38) | 3.22 | 0.75 |
Less Distributions | ||||||
Dividends from net investment income | (0.14) | (0.33) | (0.05) | (0.05) | (0.10) | — |
Distributions from net realized capital gains | — | — | (0.38) | (0.10) | — | — |
Total distributions | (0.14) | (0.33) | (0.43) | (0.15) | (0.10) | — |
Net asset value end of period | 16.00 | 11.34 | 12.46 | 12.34 | 13.87 | 10.75 |
Net assets end of period (000s) | $ 502 | $ 333 | $ 356 | $ 309 | $ 371 | $ 263 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 42.50% c | (6.65)% | 4.90% | (10.06)% | 30.25% | 7.50% c |
Ratio of total expenses to average net assets^ | 1.51 d | 1.70 | 1.57 | 1.40 | 1.67 | 2.80 d |
Ratio of net expenses to average net assetsa | 1.21 d | 1.21 | 1.21 | 1.20 | 1.20 | 1.20 d |
Ratio of net investment income/(loss) to average net assetsa | 1.17 d | 0.49 | 1.25 | 0.76 | 0.59 | 1.16 d |
Portfolio turnover | 22 c | 39 | 178 | 53 | 44 | 35 c |
See page 78 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
76
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 m | 2018 | 2017 | 2016 h | |
(Unaudited) | |||||
$ 11.37 | $ 12.49 | $ 12.37 | $ 13.90 | $ 10.77 | $ 10.00 |
0.11 | 0.09 | 0.19 | 0.15 | 0.10 | 0.11 |
4.72 | (0.86) | 0.40 | (1.50) | 3.15 | 0.66 |
4.83 | (0.77) | 0.59 | (1.35) | 3.25 | 0.77 |
(0.17) | (0.35) | (0.09) | (0.08) | (0.12) | — |
— | — | (0.38) | (0.10) | — | — |
(0.17) | (0.35) | (0.47) | (0.18) | (0.12) | — |
16.03 | 11.37 | 12.49 | 12.37 | 13.90 | 10.77 |
$39,248 | $25,716 | $25,758 | $50,358 | $38,818 | $17,509 |
42.67% c | (6.48)% | 5.25% | (9.83)% | 30.59% | 7.70% c |
1.26 d | 1.45 | 1.32 | 1.15 | 1.42 | 2.55 d |
0.96 d | 0.96 | 0.96 | 0.95 | 0.95 | 0.95 d |
1.46 d | 0.76 | 1.60 | 1.05 | 0.81 | 1.40 d |
22 c | 39 | 178 | 53 | 44 | 35 c |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 m | 2018 | 2017 | 2016 h | |
(Unaudited) | |||||
$ 11.34 | $ 12.45 | $ 12.34 | $ 13.86 | $ 10.74 | $ 10.00 |
0.09 | 0.04 | 0.13 | 0.10 | 0.06 | 0.10 |
4.70 | (0.84) | 0.40 | (1.48) | 3.14 | 0.64 |
4.79 | (0.80) | 0.53 | (1.38) | 3.20 | 0.74 |
(0.13) | (0.31) | (0.04) | (0.04) | (0.08) | — |
— | — | (0.38) | (0.10) | — | — |
(0.13) | (0.31) | (0.42) | (0.14) | (0.08) | — |
16.00 | 11.34 | 12.45 | 12.34 | 13.86 | 10.74 |
$ 1,019 | $ 398 | $ 428 | $ 619 | $ 540 | $ 287 |
42.40% c | (6.76)% | 4.70% | (10.08)% | 30.10% | 7.40% c |
1.63 d | 1.82 | 1.69 | 1.52 | 1.79 | 2.92 d |
1.33 d | 1.33 | 1.33 | 1.32 | 1.32 | 1.32 d |
1.26 d | 0.36 | 1.10 | 0.73 | 0.53 | 1.33 d |
22 c | 39 | 178 | 53 | 44 | 35 c |
77
Harbor International & Global Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR OVERSEAS FUND | |||||||||
Retirement Class | Institutional Class | ||||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | 6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||||
2020 | 2019 i | 2020 | 2019 i | ||||||
(Unaudited) | (Unaudited) | ||||||||
Net asset value beginning of period | $ 10.12 | $ 10.31 | $ 10.00 | $ 10.11 | $ 10.31 | $ 10.00 | |||
Income from Investment Operations | |||||||||
Net investment income/(loss)a,e | 0.14 | 0.17 | 0.24 | 0.16 | 0.17 | 0.24 | |||
Net realized and unrealized gain/(loss) on investments | 3.22 | (0.09) | 0.07 | 3.20 | (0.11) | 0.07 | |||
Total from investment operations | 3.36 | 0.08 | 0.31 | 3.36 | 0.06 | 0.31 | |||
Less Distributions | |||||||||
Dividends from net investment income | (0.17) | (0.27) | — | (0.16) | (0.26) | — | |||
Distributions from net realized capital gains | — | — | — | — | — | — | |||
Total distributions | (0.17) | (0.27) | — | (0.16) | (0.26) | — | |||
Net asset value end of period | 13.31 | 10.12 | 10.31 | 13.31 | 10.11 | 10.31 | |||
Net assets end of period (000s) | $18,338 | $13,790 | $13,090 | $28,094 | $13,226 | $13,131 | |||
Ratios and Supplemental Data (%) | |||||||||
Total returnb | 33.40% c | 0.64% | 3.10% c | 33.44% c | 0.48% | 3.10% c | |||
Ratio of total expenses to average net assets^ | 1.25 d | 1.35 | 1.79 d | 1.33 d | 1.43 | 1.87 d | |||
Ratio of net expenses to average net assetsa | 0.77 d | 0.77 | 0.77 d | 0.85 d | 0.85 | 0.85 d | |||
Ratio of net investment income/(loss) to average net assetsa | 2.30 d | 1.73 | 3.61 d | 2.59 d | 1.65 | 3.54 d | |||
Portfolio turnover | 48 c | 80 | 73 c | 48 c | 80 | 73 c |
* | Less than $0.01 |
^ | Percentage does not reflect reduction for credit balance arrangements (see the “Custodian” section in Note 2 of the accompanying Notes to Financial Statements) |
a | Reflects the Adviser’s waiver, if any, of its management fees and/or other operating expenses |
b | The total returns would have been lower had certain expenses not been waived during the periods shown. |
c | Unannualized |
d | Annualized |
e | Amounts are based on average daily shares outstanding during the period. |
f | For the period March 1, 2016 (inception) through October 31, 2016 |
g | For the period November 2, 2015 (inception) through October 31, 2016 |
h | For the period February 1, 2016 (inception) through October 31, 2016 |
i | For the period March 1, 2019 (inception) through October 31, 2019 |
j | For the period June 1, 2019 (inception) through October 31, 2019 |
k | Effective March 1, 2017, the Board of Trustees appointed Sands Capital Management, LLC as subadviser to Harbor Global Leaders Fund. |
l | Effective August 22, 2018, the Board of Trustees appointed Marathon Asset Management LLP as subadviser to Harbor International Fund. |
m | Effective May 23, 2019, the Board of Trustees appointed Cedar Street Asset Management LLC as subadviser to Harbor International Small Cap Fund. |
n | Effective September 23, 2020, the Board the Trustees appointed Marathon Asset Management LLP as subadviser to Harbor Emerging Markets Equity Fund. |
o | The net investment income ratio includes dividends and interest income and related tax compliance fee and interest expense, from foreign tax reclaims and interest received by the Fund. The total and net expense ratios include the tax compliance fee and related interest expense due to this receipt of foreign tax reclaims and interest income by the Fund. |
The accompanying notes are an integral part of the Financial Statements.
78
Investor Class | ||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |
2020 | 2019 i | |
(Unaudited) | ||
$10.08 | $10.28 | $10.00 |
0.13 | 0.14 | 0.21 |
3.20 | (0.11) | 0.07 |
3.33 | 0.03 | 0.28 |
(0.13) | (0.23) | — |
— | — | — |
(0.13) | (0.23) | — |
13.28 | 10.08 | 10.28 |
$ 74 | $ 35 | $ 31 |
33.16% c | 0.14% | 2.80% c |
1.69 d | 1.80 | 2.24 d |
1.22 d | 1.22 | 1.22 d |
2.07 d | 1.41 | 3.17 d |
48 c | 80 | 73 c |
79
Harbor International & Global Funds
Notes to Financial Statements—April 30, 2021 (Unaudited)
Notes to Financial Statements—April 30, 2021 (Unaudited)
Note 1—Organizational Matters
Harbor Funds (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as an open-end management investment company. As of April 30, 2021, the Trust consists of 36 separate portfolios. The portfolios covered by this report are: Harbor Diversified International All Cap Fund, Harbor Emerging Markets Equity Fund, Harbor Focused International Fund, Harbor Global Leaders Fund, Harbor International Fund, Harbor International Growth Fund, Harbor International Small Cap Fund, and Harbor Overseas Fund (individually or collectively referred to as a “Fund” or the “Funds," respectively). Harbor Capital Advisors, Inc. (the “Adviser” or “Harbor Capital”) is the investment adviser for the Funds.
The Funds currently offer four classes of shares, designated as Retirement Class, Institutional Class, Administrative Class and Investor Class. The shares of each class represent an interest in the same portfolio of investments of the Funds and have equal rights with respect to voting, redemptions, dividends, and liquidations, except that: (i) certain expenses, subject to the approval of the Trust’s Board of Trustees (the “Board of Trustees”), may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission (“SEC”) and the Internal Revenue Service; and (ii) shareholders of a class that bears distribution and service expenses under terms of a distribution plan have exclusive voting rights as to that distribution plan.
Note 2—Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. Each Fund follows the investment company reporting requirements under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), which includes the accounting and reporting guidelines under Accounting Standards Codification (“ASC”) Topic 946, Financial Services-Investment Companies. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.
Security Valuation
The Trust’s valuation procedures permit the Funds to use a variety of valuation methodologies, consider a number of subjective factors, analyze applicable facts and circumstances and, in general, exercise judgment, when valuing Fund investments. The methodology used for a specific type of investment may vary based on the circumstances and relevant considerations, including available market data.
Equity securities (including common stock, preferred stock, and convertible preferred stock), exchange-traded funds and financial derivative instruments (such as futures contracts, options contracts, including rights and warrants and centrally cleared swap agreements) that are traded or cleared on a national securities exchange or system (except securities listed on the National Association of Securities Dealers Automated Quotation (“NASDAQ”) system and United Kingdom securities) are valued at the last sale price on a national exchange or system on which they are principally traded or cleared as of the valuation date. Securities listed on the NASDAQ system or a United Kingdom exchange are valued at the official closing price of those securities. In the case of securities for which there are no sales on the valuation day, (i) securities traded principally on a U.S. exchange, including NASDAQ, are valued at the mean between the closing bid and ask price; and (ii) securities traded principally on a foreign exchange, including United Kingdom securities, are valued at the official bid price determined as of the close of the primary exchange. Securities of open-end registered investment companies that are held by a Fund are valued at net asset value. To the extent these securities are actively traded and fair valuation adjustments are not applied, they are normally categorized as Level 1 in the fair value hierarchy. Equity securities traded on inactive markets or valued by reference to similar instruments are normally categorized as Level 2 in the fair value hierarchy. For more information on the fair value hierarchy, please refer to the Fair Value Measurements and Disclosures section.
Short-term securities with a remaining maturity of less than 60 days at the time of acquisition that are held by a Fund are valued at amortized cost to the extent amortized cost represents fair value. Such securities are normally categorized as Level 2 in the fair value hierarchy.
Over-the-counter financial derivative instruments, such as forward currency contracts, options contracts, and swap agreements, derive their value from underlying asset prices, indices, reference rates and other inputs, or a combination of these factors. These instruments are valued using evaluated prices furnished by a pricing vendor selected by the Board of Trustees. In certain cases, when a valuation is not readily available from a pricing vendor, the Fund’s subadviser provides a valuation, typically using its own proprietary models. Depending on the instrument and the terms of the transaction, the value of the derivative instrument can be determined by a pricing vendor or subadviser using a series of techniques, including simulation pricing models. The pricing models use inputs, such as issuer details, indices, spreads, interest rates, yield curves, dividends and exchange rates, that are observed from actively quoted markets. Derivative instruments that use valuation techniques and inputs similar to those described above are normally categorized as Level 2 in the fair value hierarchy.
80
Harbor International & Global Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
A Fund may also use fair value pricing if the value of some or all of the Fund’s securities have been materially affected by events occurring before the Fund’s pricing time but after the close of the primary markets or exchanges on which the security is traded. This most commonly occurs with foreign securities, but may occur with other securities as well. In such cases, the Fund may apply a fair value factor supplied by the pricing vendor to a foreign security’s market close value to reflect changes in value that may have occurred between the close of the primary market or exchange on which the security is traded and the Fund’s pricing time. That factor may be derived using observable inputs such as a comparison of the trading patterns of a foreign security to intraday trading in the U.S. markets that are highly correlated to the foreign security or other information that becomes available after the close of the foreign market on which the security principally traded. When fair value pricing is employed, the prices of securities used by a Fund to calculate its net asset value may differ from market quotations, official closing prices or evaluated prices for the same securities, which means that the Fund may value those securities higher or lower than another given fund that uses market quotations, official closing prices or evaluated prices supplied by a pricing vendor in its calculation of net asset value. Securities valued using observable inputs, such as those described above, are normally categorized as Level 2 of the fair value hierarchy.
When reliable market quotations or evaluated prices supplied by a pricing vendor are not readily available or are not believed to accurately reflect fair value, securities are priced at their fair value as determined by the Trust’s Valuation Committee (the “Valuation Committee”) pursuant to procedures adopted, and subject to oversight, by the Board of Trustees. The Valuation Committee is comprised of a trustee and officers of the Trust and employees of Harbor Capital with relevant experience or responsibilities. Each security for which the Valuation Committee determines a fair value, including the basis for the fair value decision, is reviewed by the Board of Trustees at its regularly scheduled board meetings. Securities valued using fair valuation methods that incorporate significant unobservable inputs are normally categorized as Level 3 in the fair value hierarchy.
Fair Value Measurements and Disclosures
Various inputs may be used to determine the value of each Fund’s investments, which are summarized in three broad categories defined as Level 1, Level 2, and Level 3. The inputs or methodologies used for valuing securities are not necessarily indicative of the risk associated with investing in those securities. The assignment of an investment to Levels 1, 2, or 3 is based on the lowest level of significant inputs used to determine its fair value.
Level 1– | Quoted prices in active markets for identical securities. |
Level 2– | Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). |
Level 3– | Significant unobservable inputs are used in situations where quoted prices or other observable inputs are not available or are deemed unreliable. Significant unobservable inputs may include each Fund’s own assumptions. |
The categorization of investments into Levels 1, 2, or 3, and a summary of significant unobservable inputs used for Level 3 investments, when applicable, can be found at the end of each Fund’s Portfolio of Investments schedule. For fair valuations using significant unobservable inputs, if any, a reconciliation of the beginning to ending balances for reported fair values is provided at the end of each Fund’s Portfolio of Investments schedule that presents changes attributable to realized and unrealized gains and losses and purchases, sales, and transfers in/out of the Level 3 category during the period.
Each Fund used observable inputs in its valuation methodologies whenever they were available and deemed reliable.
Investment Income
Dividends declared on portfolio securities are accrued on the ex-dividend date. For foreign securities, certain dividends are recorded after the ex-dividend date, but as soon as the respective Fund is notified of such dividends. Interest income is accrued daily as earned. Discounts and premiums on fixed income securities are amortized over the life of the respective securities (except for premiums on certain callable debt securities that are amortized to the earliest call date) using the effective yield method. Distributions from real estate investment trust securities are recorded as dividend income, and may be reclassified as capital gains and/or return of capital, based on the information reported by the issuer, when available.
Expenses
Expenses are charged directly to the Fund that incurred such expense whenever possible. With respect to expenses incurred by any two or more Harbor funds where amounts cannot be identified on a fund by fund basis, such expenses are generally allocated in proportion to the average net assets or the number of shareholders of each Fund.
81
Harbor International & Global Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
Class Allocations
Income, common expenses and realized and unrealized gains/(losses) are determined at the Fund level and allocated daily to each class of shares based on the applicable net assets of the respective classes. Distribution and service fees, if any, and transfer agent fees are calculated daily at the class level based on the applicable net assets of each class and the expense rate(s) applicable to each class.
Securities Transactions
Securities transactions are accounted for on the trade date (the date the order to buy or sell is executed). Realized gains or losses on security transactions are determined on the basis of identified cost.
Distribution to Shareholders
Distributions on Fund shares are recorded on the ex-dividend date.
Taxes
Each Fund is treated as a separate entity for U.S. federal tax purposes. Each Fund’s policy is to meet the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) applicable to regulated investment companies and to distribute to its shareholders all of its taxable income within the prescribed time. It is also the intention of each Fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code. Therefore, no provision has been made for U.S. federal taxes on income, capital gains or unrealized appreciation of securities held or excise taxes on income and capital gains.
Each Fund may be subject to taxes imposed by foreign countries in which they invest. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and unrealized appreciation as such income and/or gains are earned.
Management has analyzed each Fund’s tax positions for all open tax years (in particular, U.S. federal income tax returns for the tax years ended October 31, 2017–2019), including all positions expected to be taken upon filing the 2020 tax return, in all material jurisdictions where each Fund operates, and has concluded that no provision for income tax is required in the Funds’ financial statements. Each Fund will recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations.
On August 24, 2020, Harbor International Fund received a payment, including interest, from a member country of the European Union based on foreign tax reclaims relating to amounts withheld on dividends received by the Fund during fiscal years October 31, 2009 through 2014. A portion of the foreign tax reclaims and interest received is due to the Internal Revenue Service (“IRS”), in the form of a tax compliance fee and that amount is based on the percentage of foreign tax credits previously passed through to the Fund’s shareholders in the years dividends were received by the Fund. The estimated amount due to the IRS, including interest, is included in tax compliance fee payable in the Fund’s Statement of Asset and Liabilities. The Fund is planning to enter into a closing agreement with the IRS and will remit the tax compliance fee and related interest once the closing agreement is finalized. The actual tax compliance and related interest due to the IRS may differ from the estimates upon the finalization of the closing agreement.
Custodian
Each Fund has credit balance arrangements with its custodian whereby positive balances in demand deposit accounts used by the transfer and shareholder servicing agent for clearing shareholder transactions in the Fund generate credits that are applied against gross custody expenses. Such custodial expense reductions, if any, are reflected on the respective Fund’s accompanying Statement of Operations.
Foreign Currency Contracts
A foreign currency spot contract is an agreement between two parties to buy and sell currencies at the current market rate for settlement within two business days. A forward currency contract is an agreement between two parties to buy and sell currencies at a set price on a future date.
82
Harbor International & Global Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
Foreign currency contracts are marked-to-market daily and any change in fair value is recorded as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value on the open and close date. Risk of losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contract’s terms. The maximum potential loss from such contracts is the aggregate face value in U.S. dollars at the time the contract was opened.
During the period, each Fund used foreign currency spot contracts to facilitate transactions in foreign securities or to convert foreign currency receipts into U.S. dollars. During the period, Harbor Emerging Markets Equity Fund and Harbor Overseas Fund used forward currency contracts to manage their exposure to changes in exchange rates or as a hedge against foreign exchange risk related to specific transactions or portfolio positions.
Foreign Currency Translations
Purchases and sales of securities are translated into U.S. dollars at the current exchange rate on the respective dates of the transactions. Income and withholding taxes are translated at the prevailing exchange rate when accrued or incurred. The accounting records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency, when applicable, are translated into U.S. dollars based on the current exchange rates at period end.
Reported net realized gains and losses on foreign currency transactions, when applicable, represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income accrued and tax reclaims receivable and the U.S. dollar amount actually received. The effects of changes in foreign currency exchange rates on investments in securities, when applicable, are included in the net realized and unrealized gain or loss on investments in the Statements of Operations.
Proceeds from Litigation
Each Fund may receive proceeds from shareholder litigation settlements involving current and/or previously held portfolio holdings. Any proceeds received from litigation involving portfolio holdings are reflected in the Statements of Operations in realized gain/(loss) if the security has been disposed of by a Fund, or in unrealized gain/(loss) if the security is still held by a Fund.
Rights and Warrants
Rights represent a privilege offered to holders of record of issued securities to subscribe (usually on a pro rata basis) for additional securities of the same class, of a different class or of a different issuer. Warrants are contracts that generally give the holder the right, but not the obligation, to buy a stated number of shares of common stock at a specified price at any time during the life of the warrant. Rights and warrants are typically written by the issuer of the security underlying the right or warrant. Although some rights and warrants may be non-transferable, others may be traded over-the-counter or on an exchange.
A Fund may acquire rights or warrants in order to gain exposure to the underlying security without owning the security, including, for example, cases where the Fund hopes to lock in the price today of a security it may wish to purchase in the future. In order for a warrant to be profitable, the market price of the underlying security must rise sufficiently above the exercise price to cover any premium and transaction costs. The value of a right or warrant may not necessarily change with the value of the underlying securities. When a Fund acquires rights or warrants, it runs the risk that it will lose its entire investment in the rights or warrants, unless the Fund exercises the right or warrant, acquires the underlying securities, or enters into a closing transaction before expiration. Rights and warrants cease to have value if they are not exercised prior to their expiration date. If the price of the underlying security does not rise to an extent sufficient to cover any premium and transaction costs, the Fund will lose part or all of its investment. Any premiums or purchase price paid for rights or other warrants that expire are treated as realized losses. If a Fund enters into a closing sale transaction, it realizes a gain or loss, depending on whether the proceeds from the sale are greater or less than the cost of the rights or warrants.
Rights or warrants outstanding at the end of the period, if any, are disclosed at the end of each applicable Fund’s Portfolio of Investments and are included in “Purchased options” in the Statements of Assets and Liabilities. Realized gain/(loss) and unrealized appreciation/(depreciation) recognized during the period are included in “Purchased options” in the Statements of Operations.
During the period, Harbor Diversified International All Cap Fund, Harbor Emerging Markets Equity Fund, Harbor International Fund, Harbor International Small Cap Fund, and Harbor Overseas Fund held rights/warrants as a result of their investments in underlying securities.
83
Harbor International & Global Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 3—Investment Portfolio Transactions
Investment Portfolio Transactions
Purchases and sales of investments, other than short-term securities, for each Fund for the period ended April 30, 2021 are as follows:
Purchases (000s) | Sales (000s) | ||
Harbor Diversified International All Cap Fund | $225,790 | $155,308 | |
Harbor Emerging Markets Equity Fund | 9,885 | 27,961 | |
Harbor Focused International Fund | 13,767 | 9,189 | |
Harbor Global Leaders Fund | 30,117 | 49,715 | |
Harbor International Fund | 477,904 | 861,709 | |
Harbor International Growth Fund | 35,774 | 180,445 | |
Harbor International Small Cap Fund | 14,912 | 8,468 | |
Harbor Overseas Fund | 26,830 | 16,683 |
In-Kind Redemption Transactions
In accordance with the Trust’s prospectus, the Funds may distribute portfolio securities rather than cash as payment for a redemption of Fund shares. For financial reporting purposes, a Fund recognizes a gain or loss on the securities distributed related to the in-kind redemption. Such Fund-level gains and losses on in-kind redemptions are not taxable to shareholders. There were no in-kind redemptions from the Funds for the period ended April 30, 2021. For the year ended October 31, 2020, Harbor International Fund realized gains of $9,616,000 upon the disposition of portfolio securities in connection with in-kind redemptions of the Fund’s shares.
Securities Lending
Each Fund may engage in securities lending, whereby a Fund lends its securities to financial institutions in order to increase its income. The Trust has engaged State Street Bank and Trust Company to act as its agent (the “Lending Agent”) with respect to the lending of portfolio securities of the Funds, pursuant to the terms and conditions of a Securities Lending Authorization Agreement (the “SLA Agreement”). Securities loans are required to be secured at all times during the term of the loan by collateral that is at least equal to the value of the loaned securities determined at the close of each business day. Collateral may consist of cash and/or securities issued by the U.S. Treasury. Any additional collateral that may be required to secure a loan is delivered to the Fund on the next business day. Cash collateral is recognized as the gross liability for securities loaned in the Statements of Assets and Liabilities. Non-cash collateral is not disclosed in the Funds' Statements of Assets and Liabilities as it is held by the Lending Agent on behalf of the Funds, and the Funds do not have the ability to rehypothecate those securities. Cash collateral is invested in the State Street Navigator Securities Lending Government Money Market Portfolio (the “Navigator Portfolio”), a money market mutual fund that seeks to provide income while maintaining a stable net asset value of $1.00. There is no assurance that the Navigator Portfolio will maintain a stable net asset value and the Funds are subject to the risk of loss on the cash collateral invested. A portion of the earnings generated by the investment of the cash collateral is rebated to the borrower for the use of the cash collateral and these earnings (less any rebate) are then divided between the Fund and the Lending Agent, as a fee for its services, according to agreed-upon rates. The Lending Agent and a Fund will share in any shortfall in the rebate due to the borrower, according to agreed-upon rates.
In addition to receiving a fee from the borrower based on the demand for securities loaned and earning income on the investment of the cash collateral, a Fund receives substitute interest, dividends, or other amounts on the loaned securities, during the term of a loan. Net securities lending income is disclosed as such in the Statements of Operations and represents the income earned from the non-cash collateral and the investment of cash collateral, net of fee rebates paid to the borrower and net of fees paid to the Lending Agent.
Loans may be terminated at the option of the borrower or the Funds. Upon termination of the loan, the borrower will return to the Fund securities that are identical to the loaned securities. The Funds bear the risk of delay in recovery of, or loss of rights in, the securities loaned and the risk that the value of the collateral falls below the value of the securities on loan. Each Fund seeks to mitigate this risk through the SLA Agreement, which provides that in the event of default, the Lending Agent may apply the proceeds of the cash collateral from the loaned securities toward the purchase of replacement securities. If such proceeds are insufficient or the collateral is unavailable, the Lending Agent will purchase replacement securities at its sole expense, or if unable to do so, the Lending Agent may credit to the Fund’s account an amount equal to the fair value of the unreturned loaned securities. As the securities loaned are subject to termination by the Fund or the borrower at any time, the remaining contractual maturities of each securities lending transaction is considered to be overnight and continuous.
84
Harbor International & Global Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 3—Investment Portfolio Transactions—Continued
The following table shows the Funds that engaged in securities lending during the period and summarizes the value of equity securities loaned and related cash and non-cash collateral as of April 30, 2021.
Value of Securities on Loan (000s) | Cash Collateral (000s) | Non-Cash Collateral (000s) | |||
Harbor Diversified International All Cap Fund | $ 5,850 | $ 4,419 | $ 1,766 | ||
Harbor International Fund | 36,604 | 16,476 | 22,302 | ||
Harbor International Growth Fund | — | — | — | ||
Harbor International Small Cap Fund | 777 | 846 | — | ||
Harbor Overseas Fund | — | — | — |
Note 4—FEES AND OTHER Transactions with Affiliates
Investment Adviser
Harbor Capital is a wholly owned subsidiary of ORIX Corporation. Harbor Capital is the Funds’ investment adviser and is also responsible for administrative and other services.
Each Fund has a separate advisory agreement with Harbor Capital. The agreements provide for management fees based on an annual percentage rate of average daily net assets as follows:
Contractual Rate | Actual Rate | ||
Harbor Diversified International All Cap Fund | 0.75% a | 0.73% | |
Harbor Emerging Markets Equity Fund | 0.85 | 0.85 | |
Harbor Focused International Fund | 0.75 | 0.75 | |
Harbor Global Leaders Fund | 0.75 b | 0.70 | |
Harbor International Fund | 0.75 c | 0.75 | |
Harbor International Growth Fund | 0.75 | 0.75 | |
Harbor International Small Cap Fund | 0.85 | 0.85 | |
Harbor Overseas Fund | 0.75 | 0.75 |
a | For the period November 1, 2020 through April 30, 2021, the adviser voluntarily waived a portion of its management fee. |
b | The Adviser has contractually agreed to waive 0.05% of its management fee through February 28, 2022. |
c | The management fee rate is 0.75% on assets up to $12 billion and 0.65% on assets in excess of $12 billion. |
Harbor Capital has from time to time voluntarily or contractually agreed not to impose a portion of its management fees and/or to bear a portion of the expenses incurred in the operation of certain Funds in order to limit Fund expenses. Such waivers, if any, are reflected on the accompanying Statements of Operations. Interest expense, if any, is excluded from contractual limitations. During the period, the following expense limitation agreements were in effect:
Retirement Class | Institutional Class | Administrative Class | Investor Class1 | Expense Limitation Agreement Expiration Date | |||||
Harbor Diversified International All Cap Fund | 0.72% | 0.80% | 1.05% | 1.16% | 02/28/2022 | ||||
Harbor Emerging Markets Equity Fund | 0.88 | 0.96 | 1.21 | 1.32 | 02/28/2022 | ||||
Harbor Focused International Fund | 0.77 | 0.85 | 1.10 | 1.21 | 02/28/2022 | ||||
Harbor Global Leaders Fund | 0.78 | 0.86 | 1.11 | 1.22 | 02/28/2022 | ||||
Harbor International Fund | 0.69 | 0.77 | 1.02 | 1.13 | 02/28/2022 | ||||
Harbor International Growth Fund | 0.77 | 0.85 | 1.10 | 1.21 | 02/28/2022 | ||||
Harbor International Small Cap Fund | 0.88 | 0.96 | 1.21 | 1.32 | 02/28/2022 | ||||
Harbor Overseas Fund | 0.77 | 0.85 | 1.10 | 1.21 | 02/28/2022 |
1 | For the period November 1, 2020 through February 28, 2021, the operating expense limitation for the Investor Class for Harbor Diversified International All Cap Fund, Harbor Emerging Markets Equity Fund, Harbor Focused International Fund, Harbor Global Leaders Fund, Harbor International Fund, Harbor International Growth Fund, Harbor International Small Cap Fund, and Harbor Overseas Fund were 1.17%, 1.33%, 1.22%, 1.23%, 1.14%, 1.22%, 1.33% and 1.22%, respectively. |
All expense limitation agreements include the transfer agent fee waiver discussed in the Transfer Agent note.
85
Harbor International & Global Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 4—FEES AND OTHER Transactions with Affiliates—Continued
Distributor
Harbor Funds Distributors, Inc. (the “Distributor”), a wholly-owned subsidiary of Harbor Capital, is the distributor for Harbor Funds’ shares. Under the Trust’s current distribution plan pursuant to Rule 12b-1 under the Investment Company Act with respect to each Fund’s Administrative and Investor Class shares (each, a “12b-1 Plan”) as applicable, each Fund pays the Distributor compensation at the annual rate of 0.25% of the average daily net assets of its Administrative and Investor Class shares. Pursuant to each 12b-1 Plan, the Distributor is compensated for financing any activity that is primarily intended to result in the sale of Administrative and Investor Class shares of each Fund or for recordkeeping services or the servicing of shareholder accounts in a Administrative and Investor Class shares of each Fund. Such activities include, but are not limited to: printing of prospectuses and statements of additional information and reports for prospective shareholders (i.e., other than existing shareholders); preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers or other institutions such as asset-based sales charges, payments of recordkeeping fees under recordkeeping arrangements, or payments of service fees under shareholder service arrangements; and costs of administering each 12b-1 Plan.
Amounts payable by a Fund under each 12b-1 Plan need not be directly related to the expenses actually incurred by the Distributor on behalf of each Fund. Each 12b-1 Plan does not obligate each Fund to reimburse the Distributor for the actual expenses the Distributor may incur in fulfilling its obligations under each 12b-1 Plan. Thus, even if the Distributor’s actual expenses exceed the fee payable to the Distributor at any given time, each Fund will not be obligated to pay more than that fee. If the Distributor’s expenses are less than the fee it receives, the Distributor will retain the difference.
The fees attributable to each Fund’s respective class are shown on the accompanying Statements of Operations.
Transfer Agent
Harbor Services Group, Inc. (“Harbor Services Group”), a wholly-owned subsidiary of Harbor Capital, is the transfer and shareholder servicing agent for the Funds. The transfer agency and service agreement is reviewed and approved annually by the Board of Trustees and provides currently for compensation up to the following amounts per class of each Fund:
Transfer Agent Fees | |
Retirement Class | 0.02% of the average daily net assets of all Retirement Class shares |
Institutional Class | 0.10% of the average daily net assets of all Institutional Class shares |
Administrative Class | 0.10% of the average daily net assets of all Administrative Class shares |
Investor Class1 | 0.21% of the average daily net assets of all Investor Class shares |
1 | For the period November 1, 2020 through February 28, 2021, Harbor Services Group received compensation up to 0.22% for the Investor Class. |
Harbor Services Group voluntarily waived a portion of its transfer agent fees during the period ended April 30, 2021. Fees incurred for these transfer agent services are shown on each Fund’s Statement of Operations. The voluntary waiver may be discontinued at any time.
Affiliated Transactions
The Investment Company Act permits purchase and sale transactions among affiliated investment companies subject to an exemptive rule. Harbor Funds has adopted policies and procedures pursuant to such rule. During the period, the Funds did not enter into any transactions with any other Harbor fund.
86
Harbor International & Global Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 4—FEES AND OTHER Transactions with Affiliates—Continued
Shareholders
As of April 30, 2021, Harbor Capital and its wholly owned subsidiaries collectively held the following shares of beneficial interest in each of the following Funds:
Number of Shares Owned by Harbor Capital and Subsidiaries | Percentage of Outstanding Shares | ||||||||||
Retirement Class | Institutional Class | Administrative Class | Investor Class | Total | |||||||
Harbor Diversified International All Cap Fund | 115,935 | — | — | — | 115,935 | 0.0% | |||||
Harbor Emerging Markets Equity Fund | 77,598 | — | — | — | 77,598 | 1.8 | |||||
Harbor Focused International Fund | 1,287,280 | 1,272,226 | N/A | 3,047 | 2,562,553 | 73.6 | |||||
Harbor Global Leaders Fund | 34,906 | — | — | — | 34,906 | 1.0 | |||||
Harbor International Fund | 18,851 | — | — | — | 18,851 | 0.0 | |||||
Harbor International Growth Fund | 83,193 | — | — | — | 83,193 | 0.2 | |||||
Harbor International Small Cap Fund | 33,880 | 1,610,955 | 26,909 | 26,746 | 1,698,490 | 53.7 | |||||
Harbor Overseas Fund | 1,301,308 | 1,296,603 | N/A | 3,097 | 2,601,008 | 74.5 |
Independent Trustees
The fees and expenses of the Independent Trustees are included in “Trustees’ fees and expenses” on each Fund’s Statement of Operations.
The Board of Trustees has adopted a Deferred Compensation Plan for Independent Trustees (the “Plan”), which enables Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Trust. For purposes of determining the amount owed to a Trustee under the Plan, deferred amounts are treated as though they had been invested in shares of the Fund(s) selected by the Trustee. While not required to do so, each Fund makes an investment equal to the Trustee’s investment election. The deferred compensation liability and the offsetting deferred compensation investment asset are included as a component of “Accrued expenses – Trustees’ fees and expenses” and “Other assets”, respectively, in the Statements of Assets and Liabilities. Such amounts fluctuate with changes in the value of the selected Fund(s). The deferred compensation and related mark-to-market impact liability and an offsetting investment asset will remain on each Fund’s Statement of Assets and Liabilities until distributed in accordance with the Plan.
Indemnification
Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, in the normal course of business the Trust enters into contracts that provide general indemnities to other parties. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.
NOTE 5—TAX INFORMATION
The identified cost for federal income tax purposes of investments owned by each Fund and its respective gross unrealized appreciation and depreciation as of April 30, 2021 are as follows:
Identified Cost (000s) | Gross Unrealized | Net Unrealized Appreciation/ (Depreciation) (000s) | |||||
Appreciation (000s) | (Depreciation) (000s) | ||||||
Harbor Diversified International All Cap Fund* | $ 890,093 | $ 262,725 | $ (21,085) | $241,640 | |||
Harbor Emerging Markets Equity Fund | 34,888 | 12,785 | (832) | 11,953 | |||
Harbor Focused International Fund | 36,435 | 9,910 | (282) | 9,628 | |||
Harbor Global Leaders Fund | 92,080 | 42,283 | (1,973) | 40,310 | |||
Harbor International Fund* | 3,822,536 | 1,153,766 | (180,507) | 973,259 | |||
Harbor International Growth Fund* | 501,163 | 322,769 | (6,981) | 315,788 | |||
Harbor International Small Cap Fund* | 40,706 | 9,613 | (920) | 8,693 | |||
Harbor Overseas Fund* | 37,980 | 8,501 | (636) | 7,865 |
* | Capital loss carryforwards are available, which may reduce taxable income from future net realized gain on investments. |
87
Harbor International & Global Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 6—Derivatives
Each Fund’s derivative holdings do not qualify for hedge accounting treatment and as such are recorded at current fair value. For a discussion of risks related to these investments please refer to the descriptions of each type of derivative instrument in Note 2— Significant Accounting Policies.
Each Fund’s derivative instruments outstanding as of the period ended April 30, 2021, if any, as disclosed in the Portfolio of Investments, and the related amounts of net realized and changes in net unrealized gains and losses on derivative instruments during the period as disclosed in the Statement of Operations, are indicators of the volume of derivative activity for each Fund.
Derivative Instruments
As of April 30, 2021, the fair values of derivatives, by primary risk exposure, were reflected in the Statement of Assets and Liabilities as follows:
HARBOR DIVERSIFIED INTERNATIONAL ALL CAP FUND
Statement of Assets and Liabilities Caption | Equity Contracts (000s) | |
Purchased options (rights/warrants) | $17 |
HARBOR INTERNATIONAL FUND
Statement of Assets and Liabilities Caption | Equity Contracts (000s) | |
Purchased options (rights/warrants) | $36 |
Net realized gain/(loss) and the change in net unrealized appreciation/(depreciation) on derivatives, by primary risk exposure, for the period ended April 30, 2021, were:
HARBOR DIVERSIFIED INTERNATIONAL ALL CAP FUND
Net realized gain/(loss) on derivatives | Equity Contracts (000s) | |
Purchased options (rights/warrants) | $28 |
Change in net unrealized appreciation/(depreciation) on derivatives | Equity Contracts (000s) | |
Purchased options (rights/warrants) | $1,283 |
HARBOR GLOBAL LEADERS FUND
Change in net unrealized appreciation/(depreciation) on derivatives | Foreign Exchange Contracts (000s) | |
Forward currency contracts | $1 |
HARBOR INTERNATIONAL FUND
Net realized gain/(loss) on derivatives | Equity Contracts (000s) | |
Purchased options (rights/warrants) | $201 |
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Harbor International & Global Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 6—Derivatives—Continued
HARBOR INTERNATIONAL FUND—Continued
Change in net unrealized appreciation/(depreciation) on derivatives | Equity Contracts (000s) | |
Purchased options (rights/warrants) | $11,673 |
Note 7—Subsequent Events
Through the date the financial statements were issued, there were no subsequent events or transactions that would have materially impacted the financial statements or related disclosures as presented herein.
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Harbor International & Global Funds
Fees and Expenses Example (Unaudited)
Fees and Expenses Example (Unaudited)
Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees (if any) and (2) ongoing costs, including management fees, distribution and service (12b-1) fees (if any), and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period November 1, 2020 through April 30, 2021.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses for each share class. You may use the information in the respective class 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 of the respective class 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 of the table for each share class below provides information about hypothetical account values and hypothetical expenses based on the respective Fund/Class’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the respective Fund/Class’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 a Fund to 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 and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value November 1, 2020 | Ending Account Value April 30, 2021 | |||||
Harbor Diversified International All Cap Fund | ||||||||
Retirement Class | 0.70% | |||||||
Actual | $4.06 | $1,000 | $1,340.50 | |||||
Hypothetical (5% return) | 3.51 | 1,000 | 1,021.24 | |||||
Institutional Class | 0.78% | |||||||
Actual | $4.53 | $1,000 | $1,340.50 | |||||
Hypothetical (5% return) | 3.91 | 1,000 | 1,020.83 | |||||
Administrative Class | 1.03% | |||||||
Actual | $5.97 | $1,000 | $1,337.80 | |||||
Hypothetical (5% return) | 5.16 | 1,000 | 1,019.56 | |||||
Investor Class | 1.15% | |||||||
Actual | $6.66 | $1,000 | $1,336.80 | |||||
Hypothetical (5% return) | 5.76 | 1,000 | 1,018.95 |
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Harbor International & Global Funds
Fees and Expenses Example—Continued
Fees and Expenses Example—Continued
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value November 1, 2020 | Ending Account Value April 30, 2021 | |||||
Harbor Emerging Markets Equity Fund | ||||||||
Retirement Class | 0.88% | |||||||
Actual | $5.22 | $1,000 | $1,395.30 | |||||
Hypothetical (5% return) | 4.41 | 1,000 | 1,020.32 | |||||
Institutional Class | 0.96% | |||||||
Actual | $5.70 | $1,000 | $1,393.70 | |||||
Hypothetical (5% return) | 4.81 | 1,000 | 1,019.92 | |||||
Administrative Class | 1.21% | |||||||
Actual | $7.17 | $1,000 | $1,390.90 | |||||
Hypothetical (5% return) | 6.06 | 1,000 | 1,018.65 | |||||
Investor Class | 1.33% | |||||||
Actual | $7.89 | $1,000 | $1,390.80 | |||||
Hypothetical (5% return) | 6.65 | 1,000 | 1,018.04 | |||||
Harbor Focused International Fund | ||||||||
Retirement Class | 0.77% | |||||||
Actual | $4.10 | $1,000 | $1,146.10 | |||||
Hypothetical (5% return) | 3.86 | 1,000 | 1,020.88 | |||||
Institutional Class | 0.85% | |||||||
Actual | $4.53 | $1,000 | $1,145.50 | |||||
Hypothetical (5% return) | 4.26 | 1,000 | 1,020.47 | |||||
Investor Class | 1.22% | |||||||
Actual | $6.48 | $1,000 | $1,143.40 | |||||
Hypothetical (5% return) | 6.11 | 1,000 | 1,018.59 | |||||
Harbor Global Leaders Fund | ||||||||
Retirement Class | 0.78% | |||||||
Actual | $4.24 | $1,000 | $1,192.40 | |||||
Hypothetical (5% return) | 3.91 | 1,000 | 1,020.83 | |||||
Institutional Class | 0.86% | |||||||
Actual | $4.67 | $1,000 | $1,192.00 | |||||
Hypothetical (5% return) | 4.31 | 1,000 | 1,020.42 | |||||
Administrative Class | 1.11% | |||||||
Actual | $6.02 | $1,000 | $1,190.50 | |||||
Hypothetical (5% return) | 5.56 | 1,000 | 1,019.15 | |||||
Investor Class | 1.23% | |||||||
Actual | $6.68 | $1,000 | $1,189.80 | |||||
Hypothetical (5% return) | 6.16 | 1,000 | 1,018.54 | |||||
Harbor International Fund | ||||||||
Retirement Class | 0.69% | |||||||
Actual | $3.95 | $1,000 | $1,311.80 | |||||
Hypothetical (5% return) | 3.46 | 1,000 | 1,021.29 | |||||
Institutional Class | 0.77% | |||||||
Actual | $4.42 | $1,000 | $1,311.70 | |||||
Hypothetical (5% return) | 3.86 | 1,000 | 1,020.88 | |||||
Administrative Class | 1.02% | |||||||
Actual | $5.84 | $1,000 | $1,309.80 | |||||
Hypothetical (5% return) | 5.11 | 1,000 | 1,019.61 | |||||
Investor Class | 1.14% | |||||||
Actual | $6.52 | $1,000 | $1,309.00 | |||||
Hypothetical (5% return) | 5.71 | 1,000 | 1,019.00 |
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Fees and Expenses Example—Continued
Fees and Expenses Example—Continued
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value November 1, 2020 | Ending Account Value April 30, 2021 | |||||
Harbor International Growth Fund | ||||||||
Retirement Class | 0.77% | |||||||
Actual | $4.23 | $1,000 | $1,212.10 | |||||
Hypothetical (5% return) | 3.86 | 1,000 | 1,020.88 | |||||
Institutional Class | 0.85% | |||||||
Actual | $4.67 | $1,000 | $1,211.20 | |||||
Hypothetical (5% return) | 4.26 | 1,000 | 1,020.47 | |||||
Administrative Class | 1.10% | |||||||
Actual | $6.02 | $1,000 | $1,209.50 | |||||
Hypothetical (5% return) | 5.51 | 1,000 | 1,019.20 | |||||
Investor Class | 1.22% | |||||||
Actual | $6.68 | $1,000 | $1,208.70 | |||||
Hypothetical (5% return) | 6.11 | 1,000 | 1,018.59 | |||||
Harbor International Small Cap Fund | ||||||||
Retirement Class | 0.88% | |||||||
Actual | $5.29 | $1,000 | $1,427.50 | |||||
Hypothetical (5% return) | 4.41 | 1,000 | 1,020.32 | |||||
Institutional Class | 0.96% | |||||||
Actual | $5.78 | $1,000 | $1,426.70 | |||||
Hypothetical (5% return) | 4.81 | 1,000 | 1,019.92 | |||||
Administrative Class | 1.21% | |||||||
Actual | $7.28 | $1,000 | $1,425.00 | |||||
Hypothetical (5% return) | 6.06 | 1,000 | 1,018.65 | |||||
Investor Class | 1.33% | |||||||
Actual | $8.00 | $1,000 | $1,424.00 | |||||
Hypothetical (5% return) | 6.65 | 1,000 | 1,018.04 | |||||
Harbor Overseas Fund | ||||||||
Retirement Class | 0.77% | |||||||
Actual | $4.46 | $1,000 | $1,334.00 | |||||
Hypothetical (5% return) | 3.86 | 1,000 | 1,020.88 | |||||
Institutional Class | 0.85% | |||||||
Actual | $4.93 | $1,000 | $1,334.40 | |||||
Hypothetical (5% return) | 4.26 | 1,000 | 1,020.47 | |||||
Investor Class | 1.22% | |||||||
Actual | $7.05 | $1,000 | $1,331.60 | |||||
Hypothetical (5% return) | 6.11 | 1,000 | 1,018.59 |
* | Reflective of all fee waivers and expense reimbursements |
** | Expenses are equal to the Fund’s annualized net expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
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Harbor International & Global Funds
Additional Information (Unaudited)
Additional Information (Unaudited)
Proxy Voting
Harbor Funds has adopted Proxy Voting Policies and Procedures under which proxies relating to securities held by the Harbor funds are voted. In addition, Harbor Funds files Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. A description of Harbor Funds’ Proxy Voting Policies and Procedures and the proxy voting records (Form N-PX) are available (i) without charge, upon request, by calling Harbor Funds toll-free at 800-422-1050; (ii) on Harbor Funds’ website at harborfunds.com; and (iii) on the SEC’s website at sec.gov.
Householding
Harbor Funds has adopted a policy that allows it to send only one copy of a Fund’s prospectus, proxy materials, annual report and semi-annual report to certain shareholders residing at the same household. This reduces Fund expenses, which benefits you and other shareholders. If you need additional copies or do not want your mailings to be “householded,” please call the Shareholder Servicing Agent at 800-422-1050. Individual copies will be sent within thirty (30) days after the Shareholder Servicing Agent receives your instructions. Your consent to householding is considered valid until revoked.
Quarterly Portfolio Disclosures
The Funds file a complete portfolio of investments for their first and third fiscal quarters with the SEC as an exhibit to Form N-PORT. The Funds’ Form N-PORT exhibit is available (i) without charge, upon request, by calling Harbor Funds toll-free at 800-422-1050, (ii) on Harbor Funds’ website at harborfunds.com, and (iii) on the SEC’s website at sec.gov.
ADVISORY AGREEMENT APPROVALS
FACTORS CONSIDERED BY THE TRUSTEES IN APPROVING THE INVESTMENT ADVISORY AGREEMENT AND SUBADVISORY AGREEMENT OF the international and global funds
The Investment Company Act requires that the Investment Advisory and Subadvisory Agreement of each Fund be approved initially, and following an initial two-year term, at least annually, by the Trust’s Board of Trustees (the “Board” or the “Trustees”), including a majority of the Independent Trustees voting separately.
At a meeting of the Board held on February 19 and 20, 2021 (the “Meeting”), the Board, including the Independent Trustees voting separately, considered and approved the continuation of each Investment Advisory Agreement with Harbor Capital, the adviser to each Fund, and each Subadvisory Agreement with each Fund’s subadviser (each, a “Subadviser”) with respect to Harbor Diversified International All Cap Fund, Harbor Emerging Markets Equity Fund (Investment Advisory Agreement only), Harbor Focused International Fund, Harbor Global Leaders Fund, Harbor International Fund, Harbor International Growth Fund, Harbor International Small Cap Fund and Harbor Overseas Fund (each a “Fund” and, collectively, the “Funds”). The Trustees noted that the Subadvisory Agreement with Marathon Asset Management LLP (“Marathon-London”) with respect to Harbor Emerging Markets Equity Fund was approved for an initial two-year term by the Trustees at a meeting held on August 9-11, 2020.
In evaluating each Investment Advisory Agreement and each Subadvisory Agreement, the Trustees reviewed materials furnished by Harbor Capital and each Subadviser, including information about their respective affiliates, personnel, and operations, and also relied upon their knowledge of Harbor Capital and the Subadvisers resulting from their quarterly meetings, periodic telephonic meetings and other prior communications. In connection with the Meeting, which had been called for the purpose of considering the continuation of the Investment Advisory Agreements and Subadvisory Agreements, and at prior meetings, the Trustees, including the Independent Trustees, requested and received materials and presentations relating to Fund performance and the services rendered by Harbor Capital and each Subadviser. These materials included a comprehensive written response from Harbor Capital to a 15(c) request letter prepared by legal counsel to the Independent Trustees in consultation with the Independent Trustees. The Trustees also discussed with representatives of Harbor Capital, at the Meeting and at prior meetings, Harbor Funds’ operations and Harbor Capital’s ability, consistent with the “manager-of-managers” structure of Harbor Funds, to (i) identify and recommend to the Trustees a subadviser for each Fund, (ii) monitor and oversee the performance and investment capabilities of each subadviser, and (iii) recommend the replacement of a subadviser where appropriate. The Trustees specifically considered Harbor Capital’s history as a manager-of-managers, including its history of replacing subadvisers for particular Funds in circumstances in which the Board and Harbor Capital had determined that a change in subadviser was in the best
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Harbor International & Global Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
interests of a Fund and its shareholders, whether as a result of (i) long-term underperformance not explained by market conditions or market cycles relative to the subadviser’s investment style, (ii) prolonged style inconsistency, (iii) material adverse changes in management or personnel, or (iv) other factors, such as if Harbor Capital were to identify another subadviser believed to better serve the shareholders than the existing subadviser.
At the Meeting, the Trustees, including all of the Independent Trustees voting separately, determined, in the exercise of their business judgment, that the terms of each Investment Advisory Agreement and each Subadvisory Agreement were fair and reasonable and approved the continuation for a one-year period of each such Investment Advisory Agreement and Subadvisory Agreement as being in the best interests of each Fund and its shareholders.
In their deliberations, the Independent Trustees had the opportunity to meet privately without representatives of Harbor Capital or any Subadviser present and were represented throughout the process by legal counsel to the Independent Trustees and the Funds.
In considering the approval of each Fund’s Investment Advisory Agreement and Subadvisory Agreement, the Board, including the Independent Trustees, evaluated a number of factors it considered relevant to its determination. The Board did not identify any single factor as all-important or controlling, and individual Trustees did not necessarily attribute the same weight or importance to each factor.
Among the factors considered by the Trustees in approving the Investment Advisory Agreements and, as applicable, Subadvisory Agreements were the following:
• | The nature, extent, and quality of the services provided by Harbor Capital and each Subadviser, including the background, education, expertise and experience of the investment professionals of Harbor Capital and each Subadviser providing services to the Funds; |
• | The favorable history, reputation, qualifications and background of Harbor Capital and each Subadviser, as well as the qualifications of their respective personnel; |
• | The profitability of Harbor Capital with respect to each Fund, including the effect of revenues of Harbor Services Group, Inc. (“Harbor Services Group”), the Funds’ transfer agent, and Harbor Funds Distributors, Inc. (“Harbor Funds Distributors”), the Funds’ principal underwriter, on such profitability; |
• | The fees charged by Harbor Capital and Subadvisers for investment advisory and subadvisory services, respectively, including, in each case, the portion of the fee to be retained by Harbor Capital, after payment of the Subadviser’s fee, for the investment advisory and related services, including investment, business, legal, compliance, financial and administrative services, that Harbor Capital provides; |
• | The extent to which economies of scale might be realized as each Fund grows, and the extent to which each Fund’s advisory fee level reflects any economies of scale for the benefit of Fund investors; |
• | The fees and expense ratios of each Fund relative to the quality of services provided and the fees and expense ratios of similar investment companies; |
• | The short- and long-term investment performance of each Fund in comparison to peer groups and certain relevant benchmark indices and Harbor Capital’s efforts to address circumstances of underperformance where applicable; |
• | The compensation received by Harbor Services Group and Harbor Funds Distributors in consideration of the services each provides to the Funds; |
• | Any “fall out” benefits that might inure to Harbor Capital and its affiliates as a result of their relationship with the Funds; |
• | Information received at regular meetings throughout the year related to Fund performance and services rendered by Harbor Capital, as well as each of the Subadvisers, and research arrangements with brokers who execute transactions on behalf of each Subadviser; |
• | Information contained in materials provided by Harbor Capital and compiled by Broadridge as to the investment returns, advisory fees and total expense ratios of the Institutional Class of each Fund (and, in certain cases, total expense ratios of the Investor Class) relative to those of other investment companies with similar objectives and strategies managed by other investment advisers, consisting both of a peer group of funds as well as a broader universe of funds compiled by Broadridge; and |
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Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
• | Information contained in materials compiled by Morningstar as to the investment returns of the Institutional Class of each Fund relative to those of other investment companies with similar objectives and strategies managed by other investment advisers. |
Nature, Extent, and Quality of Services
The Trustees separately considered the nature, extent, and quality of the services provided by Harbor Capital and each Subadviser. In their deliberations as to the approval of each Fund’s Investment Advisory Agreement and Subadvisory Agreement, the Trustees were mindful of the fact that, by choosing to invest in a Fund, the shareholders had entrusted Harbor Capital with the responsibility, subject to the approval of the Trustees, for selecting each Fund’s Subadviser, overseeing and monitoring that Subadviser’s performance and replacing the Subadviser if necessary. The Trustees also considered as relevant to their determination the favorable history, reputation, qualifications and background of Harbor Capital and each Subadviser, as well as the qualifications of their respective personnel.
The Adviser’s Services. The Board evaluated the nature, extent, and quality of Harbor Capital’s services in light of the Board’s experience with Harbor Capital, as well as materials provided by Harbor Capital concerning the financial and other resources devoted by Harbor Capital to Harbor Funds, including the breadth and depth of experience and expertise of the investment, accounting, administrative, legal and compliance professionals dedicated to Harbor Funds’ operations. The Trustees determined that Harbor Capital has the expertise and resources to identify, select, oversee and monitor each Subadviser and to operate effectively as the “manager-of-managers” for the Funds.
The Subadvisers’ Services. The Trustees’ consideration of the services provided by the Subadvisers included a review of each Subadviser’s portfolio managers, investment philosophy, style and processes and record of consistency therewith, the volatility of its results, its approach to controlling risk, and the quality and extent of its investment capabilities and resources, including the nature and extent of research it receives from broker-dealers (to the extent applicable) and other sources. In their deliberations with respect to each Fund, the Trustees considered the history of Harbor Funds’ relationship with each Subadviser and Harbor Funds’ experience with each Subadviser in this capacity.
The Trustees also considered each Subadviser’s breadth and depth of experience and investment results in managing other accounts similar to the respective Fund. The Trustees had received presentations by investment professionals from the Subadvisers for each Fund at meetings of the Board held in 2020. The Trustees reviewed information concerning each Subadviser’s historical investment results in managing accounts and/or funds, as applicable, in a manner substantially similar to the relevant Fund.
At the Meeting, the Board also considered and approved a novation agreement with respect to the Subadvisory Agreements for Harbor Diversified International All Cap Fund, Harbor Emerging Markets Equity Fund, and Harbor International Fund to transfer the responsibilities and obligations under the agreements to a new entity in connection with a corporate restructuring by Marathon-London. The Trustees noted that Marathon-London had indicated that the restructuring would not result in a change of ownership or control or in any change to the services that Marathon-London currently provides or the personnel responsible for the provision of such services with respect to the Funds.
Investment Performance, Advisory Fees and Expense Ratios
In considering each Fund’s performance, advisory fees and expense ratio, the Trustees requested and received from Harbor Capital data compiled by Broadridge and Morningstar. The Trustees also received information explaining the methodology for compilation of certain of this information and what it was intended to demonstrate. The Trustees analyzed the Institutional Class performance of each Fund, the advisory fees of each Fund, and the Institutional Class expenses of each Fund (after giving effect to waivers and/or reimbursements, if applicable, that reduced the fees or expenses of the Fund or its peer funds) and made certain observations and findings as to each Fund as noted below. The Trustees also reviewed certain Investor Class comparative fee and expense information they considered relevant to their deliberations. In evaluating performance, the Trustees recognized that the performance data reflects a snapshot of a period as of a particular date and that selecting a different performance period could produce significantly different results.
Harbor Diversified International All Cap Fund. The Trustees considered Harbor Diversified International All Cap Fund (inception date November 2, 2015), noting that its Institutional Class performance was above its Broadridge group and universe medians for the one-, three and five-year periods ended December 31, 2020. The Morningstar data presented showed that the Fund’s one-, three- and five-year rolling returns as of December 31, 2020 ranked in the third, second and third quartiles, respectively. The Trustees noted that the Fund had underperformed its benchmark, the MSCI ACWI ex. U.S. (ND) Index, for the one- and five-year periods and outperformed its benchmark index for the three-year period ended December 31, 2020.
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Harbor International & Global Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
The Trustees considered the expertise of Marathon-London in managing assets generally and in the strategy used with respect to the Fund specifically, noting that Marathon-London managed approximately $5.5 billion in assets in this strategy, out of a firm-wide total of approximately $55.9 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class and recent changes to the portfolio management team.
The Trustees noted that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $800 million, showed the Fund’s management fee was below the group median for the Institutional Class. The actual total expense ratio for the Fund’s Institutional Class was below the group and universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
Harbor Emerging Markets Equity Fund. The Trustees considered Harbor Emerging Markets Equity Fund (inception date November 1, 2013), noting that according to the Broadridge report, the Fund’s Institutional Class performance was above the group median for the three- and five-year periods and above the universe median for the one-, three- and five-year periods ended December 31, 2020. The Fund’s Institutional Class performance was below the group median for the one-year period ended December 31, 2020, according to the Broadridge report. The Morningstar data presented ranked the Fund’s one-, three- and five-year rolling returns as of December 31, 2020 in the second, first and first quartiles, respectively. The Trustees also considered the fact that the Fund had outperformed its benchmark, the MSCI Emerging Markets (ND) Index, for the one-, three- and five-year periods ended December 31, 2020. The Trustees noted the fact that Marathon-London had recently been appointed as the Fund’s subadviser and that the current subadvisory agreement for the Fund was considered and approved for an initial two-year term by the Trustees at a meeting held on August 9-11, 2020.
The Trustees considered the expertise of Marathon-London in managing assets generally and in the strategy used with respect to the Fund specifically, noting that Marathon-London managed approximately $599.0 million in assets in this strategy, out of a firm-wide total of approximately $55.9 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $50 million, showed the Fund’s contractual management fee was below the group median for the Institutional Class. The Trustees also noted that the Fund’s actual total expense ratio for the Institutional Class was below the Broadridge group and universe median expense ratios. The Trustees considered that the Fund’s management fee was reduced in connection with the appointment of Marathon-London as subadviser to the Fund. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was negative.
Harbor Focused International Fund. The Trustees considered Harbor Focused International Fund (inception date June 1, 2019), noting that according to the Broadridge report, the Fund’s Institutional Class performance was above the group and universe medians for the one-year and since inception periods ended December 31, 2020. The Morningstar data presented ranked the Fund’s one-year and since inception rolling returns as of December 31, 2020 in the second and third quartiles, respectively. The Trustees also considered the fact that the Fund had outperformed its benchmark, the MSCI All Country World ex U.S. (ND) Index, for the one-year and since inception periods ended December 31, 2020. The Trustees noted that the short time period since the Fund’s inception did not support making any significant conclusions about the Fund’s performance.
The Trustees considered the expertise of Comgest Asset Management International Limited (“CAMIL”) in managing assets generally and in the strategy used with respect to the Fund specifically, noting that CAMIL managed approximately $98.0 million in assets in this strategy, out of a firm-wide total of approximately $47.4 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $50 million, showed the Fund’s contractual management fee was below the group median for the Institutional Class. The Trustees also noted that the Fund’s actual total expense ratio for the Institutional Class was below the Broadridge group and universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was negative.
Harbor Global Leaders Fund. The Trustees considered Harbor Global Leaders Fund (inception date March 1, 2009) and observed that its Institutional Class performance was above its Broadridge group median for the three- and five-year periods and above the universe median for the one-, three- and five-year periods ended December 31, 2020. The Fund’s Institutional Class performance was equal to its Broadridge group median for the one-year period ended December 31, 2020. The Morningstar
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Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
data presented showed that the Fund’s one-, three- and five-year rolling returns each ranked in the first quartile for the periods ended December 31, 2020. The Trustees noted that the Fund had outperformed its benchmark, the MSCI ACWI (ND) Index, for the one-, three- and five-year periods ended December 31, 2020.
The Trustees considered the expertise of Sands Capital Management, LLC (“Sands Capital”) in managing assets generally and in the international equity asset class specifically, noting that Sands Capital managed approximately $2.7 billion in assets in this asset class, out of a firm-wide total of approximately $68.6 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
The Trustees noted that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $150 million, showed the Fund’s management fee was below the group median for the Institutional Class. The actual total expense ratio for the Fund’s Institutional Class was also below the group and universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. They noted that the Adviser’s profitability in managing the Fund was not excessive.
Harbor International Fund. The Trustees considered Harbor International Fund (inception date December 29, 1987), noting the outperformance of its Institutional Class relative to its Broadridge group median for the one- and three-year periods and its universe median for the one-year period ended December 31, 2020. The Trustees further noted that the Fund’s Institutional Class underperformed relative to its Broadridge group median for the five-year period and its universe median for the three- and five-year periods as of December 31, 2020. The Morningstar data presented showed that the Fund’s one-, three- and five-year rolling returns as of December 31, 2020 ranked in the second, third and fourth quartiles, respectively. The Trustees also considered that the Fund had outperformed its benchmark, the MSCI EAFE® (ND) Index, for the one-year period and underperformed its benchmark index for the three- and five-year periods ended December 31, 2020. The Trustees noted the fact that Marathon-London had been appointed as the Fund’s subadviser effective August 22, 2018 and that performance prior to that date is not attributable to Marathon-London.
The Trustees considered the expertise of Marathon-London in managing assets generally and in the strategy used with respect to the Fund specifically, noting that Marathon-London managed approximately $31.9 billion in this asset class, out of a firm-wide total of approximately $55.9 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
The Trustees noted that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $4.0 billion, showed the Fund’s management fee was equal to the group median for the Institutional Class. The actual total expense ratio for the Institutional Class was below the group and universe median expense ratios. The Trustees observed that the advisory fee schedule included a contractual breakpoint reducing the fee rate from 75 basis points to 65 basis points on assets over $12 billion. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
Harbor International Growth Fund. The Trustees considered Harbor International Growth Fund (inception date November 1, 1993), and observed that its Institutional Class performance exceeded its Broadridge group and universe medians for the one-, three- and five-year periods ended December 31, 2020. The Morningstar data presented showed that the Fund’s one-, three- and five-year rolling returns as of December 31, 2020 each ranked in the first quartile. The Trustees noted that the Fund had outperformed its benchmark, the MSCI ACWI ex. U.S. (ND) Index, for the one-, three- and five-year periods ended December 31, 2020.
The Trustees considered the expertise of Baillie Gifford Overseas Limited (“Baillie Gifford”) in managing assets generally and in the ACWI ex-US Focus strategy specifically, noting that Baillie Gifford managed approximately $16.9 billion in assets in this strategy, out of a firm-wide total of approximately $445.3 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
The Trustees noted that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $800 million, showed the Fund’s management fee was above the group median for the Institutional Class. The actual total expense ratio for the Fund’s Institutional Class was below the group median and above the universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that the Adviser’s profitability in managing the Fund was not excessive.
97
Harbor International & Global Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
Harbor International Small Cap Fund. The Trustees considered Harbor International Small Cap Fund (inception date February 1, 2016), and observed that its Institutional Class performance was below its Broadridge group and universe medians for the one-, three- and five-year periods ended December 31, 2020. The Morningstar data presented ranked the Fund’s one- and three-year and since inception rolling returns as of December 31, 2020 in the second, first and first quartiles, respectively. The Trustees noted that the Fund had underperformed its benchmark, the MSCI EAFE Small Cap (ND) Index, for the one-, three-year and since inception periods ended December 31, 2020. The Trustees noted the fact that Cedar Street Asset Management LLC (“Cedar Street”) had been appointed as the Fund’s subadviser effective May 23, 2019 and that performance prior to that date is not attributable to Cedar Street.
The Trustees considered the expertise of Cedar Street in managing assets generally and in the international small cap asset class specifically, noting that Cedar Street managed approximately $37.6 million in assets in this strategy out of a firm-wide total of approximately $234.4 million in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
The Trustees noted that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $50 million, showed the Fund’s management fee was below the group median for the Institutional Class. The actual total expense ratio for the Fund’s Institutional Class was also below the group and universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was negative.
Harbor Overseas Fund. The Trustees considered Harbor Overseas Fund (inception date March 1, 2019) and observed that its Institutional Class performance was above its Broadridge group and universe medians for the one-year and since inception periods ended December 31, 2020. The Morningstar data presented ranked the Fund’s one-year and since inception rolling returns as of December 31, 2020 in the first and second quartiles, respectively. The Trustees noted that the Fund had outperformed its benchmark, the MSCI EAFE (ND) Index, for the one-year and since inception periods ended December 31, 2020. The Trustees noted that the short time period since the Fund’s inception did not support making any significant conclusions about the Fund’s performance.
The Trustees considered the expertise of Acadian Asset Management LLC (“Acadian”) in managing assets generally and in the international small cap asset class specifically, noting that Acadian managed approximately $8.4 billion in assets in this strategy out of a firm-wide total of approximately $108.1 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
The Trustees noted that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $50 million, showed the Fund’s management fee was below the group median for the Institutional Class. The actual total expense ratio for the Fund’s Institutional Class was also below the group median and equal to the universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was negative.
The Trustees also separately considered the allocation between Harbor Capital and each Subadviser of the relevant Fund’s investment advisory fee (i.e., the amount of the advisory fee retained by Harbor Capital relative to that paid to the relevant Subadviser as a subadvisory fee). They determined in each case that the allocation was reasonable and the product of arm’s length negotiation between Harbor Capital and the Subadviser.
Profitability
The Trustees also considered Harbor Capital’s profitability in operating each of the Funds (as well as on a fund complex-wide basis) as presented by Harbor Capital, and the allocation methodology used by Harbor Capital to compute such profitability. The Trustees concluded that the methodology was reasonable and that a reasonable level of profitability was important to provide suitable incentives for Harbor Capital to continue to attract and maintain high-quality personnel and to invest in infrastructure and other resources to support and enhance the Funds’ operations. In considering Harbor Capital’s profitability generally, the Trustees also reviewed the compensation received by Harbor Services Group and Harbor Funds Distributors in consideration of the transfer agency and distribution services, respectively, that are provided to Harbor Funds and any other benefits enjoyed by Harbor Capital and its affiliates as a result of their relationship with Harbor Funds.
98
Harbor International & Global Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
The Trustees also considered that profitability calculations with respect to advisory, transfer agency and distribution operations vary significantly depending on whether revenues on which the calculation is based are taken gross or net of amounts paid to third parties, such as subadvisory fee expenses and certain transfer agency expenses, and noted that subadvisory fee expenses are a direct expense of Harbor Capital. The Trustees also noted that Harbor Capital was, in all cases, waiving a portion of its advisory fee and/or paying or reimbursing a portion of Fund expenses. The Trustees determined that Harbor Capital’s profitability in operating each Fund was not excessive.
Economies of Scale
The Trustees also considered the extent to which economies of scale might be realized as each Fund grows, and the extent to which each Fund’s advisory fee level reflects these economies of scale for the benefit of Fund investors. The Trustees specifically considered whether any advisory fee reduction “breakpoints” should be added to the advisory fee payable by any Fund. As noted above, the Trustees concluded that Harbor Capital’s profitability in each case was not excessive. They concluded that the Funds��� fee structures reflected economies of scale to date and that breakpoints in these fee structures were not required at the present time. The Trustees noted they intend to monitor each Fund’s asset growth in connection with future reviews of each Fund’s Investment Advisory Agreement to determine whether breakpoints may be appropriate at such time.
Review of Liqudity Risk Management Program
The Trust has adopted pursuant to Rule 22e-4 under the Investment Company Act (“Rule 22e-4”) a Liquidity Risk Management Program (the “Program”) for the Funds. The Board has designated a committee of Harbor Capital employees as the Program Administrator.
The Program is designed to assess and manage each Fund’s liquidity risk. For purposes of Rule 22e-4, “liquidity risk” is defined as the risk that a Fund is unable to satisfy redemption requests without significantly diluting remaining investors’ interests in the Fund. Components of the Program include: (i) periodic assessment of each Fund’s liquidity risk based on certain factors; (ii) classification of each Fund’s holdings into one of four liquidity categories (Highly Liquid, Moderately Liquid, Less Liquid and Illiquid) that reflect an estimate of liquidity under current market conditions; (iii) to the extent a Fund does not invest primarily in Highly Liquid investments, establishment of an appropriate Highly Liquid Investment Minimum (“HLIM”) (as defined in Rule 22e-4) for such Fund and ongoing monitoring of the Fund’s net assets to assess compliance with the Fund’s HLIM; (iv) a limit on the ability of a Fund to acquire illiquid investments in excess of 15% of the Fund’s net assets; and (v) periodic reporting to the Board.
At a meeting held on November 10, 2020, the Board of Trustees reviewed the operation and effectiveness of the Program for the period beginning October 1, 2019 and ending September 30, 2020 (the “period”). At the November 10, 2020 meeting, the Board reviewed a report prepared by, and received a presentation from, the Program Administrator regarding the operation of the Program, its adequacy, and the effectiveness of its implementation during the period. The Program Administrator’s report included, among other things, a review of: (i) the operation of the Program overall during the period, which included a period of increased market volatility related to the COVID-19 pandemic in the first half of 2020; (ii) the activities conducted by the Program Administrator with respect to the Program; (iii) the level of portfolio investments classified into each of the four liquidity categories and the services provided by the third-party vendor engaged by the Trust to facilitate such classification with respect to certain of the Funds; and (iv) the most recent liquidity risk assessment for the Funds conducted by the Program Administrator in accordance with Rule 22e-4. Based upon its review, the Program Administrator determined that the Program was adequate and effective in facilitating the Funds’ compliance with Rule 22e-4 during the period.
99
111 South Wacker Drive, 34th Floor | Chicago, IL 60606-4302 | 800-422-1050 | harborfunds.com |
Trustees & Officers
Charles F. McCain
Chairman, President & Trustee
Chairman, President & Trustee
Scott M. Amero
Trustee
Trustee
Donna J. Dean
Trustee
Trustee
Randall A. Hack
Trustee
Trustee
Robert Kasdin
Trustee
Trustee
Kathryn L. Quirk
Trustee
Trustee
Douglas J. Skinner
Trustee
Trustee
Ann M. Spruill
Trustee
Trustee
Erik D. Ojala
Chief Compliance Officer
Chief Compliance Officer
Anmarie S. Kolinski
Treasurer
Treasurer
Kristof M. Gleich
Vice President
Vice President
Gregg M. Boland
Vice President
Vice President
Diana R. Podgorny
Secretary
Secretary
Jodie L. Crotteau
Assistant Secretary
Assistant Secretary
Lana M. Lewandowski
AML Compliance Officer
& Assistant Secretary
AML Compliance Officer
& Assistant Secretary
Lora A. Kmieciak
Assistant Treasurer
Assistant Treasurer
John M. Paral
Assistant Treasurer
Assistant Treasurer
Investment Adviser
Harbor Capital Advisors, Inc.
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4400
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4400
Distributor
Harbor Funds Distributors, Inc.
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4600
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4600
Shareholder Services
Harbor Services Group, Inc.
P.O. Box 804660
Chicago, IL 60680-4108
800-422-1050
P.O. Box 804660
Chicago, IL 60680-4108
800-422-1050
FD.SAR.IG.0421
Semi-Annual Report
April 30, 2021
Fixed Income Funds
Retirement Class | Institutional Class | Administrative Class | Investor Class | |
Harbor Bond Fund | HBFRX | HABDX | HRBDX | – |
Harbor Convertible Securities Fund | HNCVX | HACSX | HRCSX | HICSX |
Harbor Core Bond Fund | HCBRX | HACBX | – | – |
Harbor High-Yield Bond Fund | HNHYX | HYFAX | HYFRX | HYFIX |
Harbor Money Market Fund | – | HARXX | HRMXX | – |
Table of Contents
This document must be preceded or accompanied by a Prospectus.
Letter from the Chairman
Charles F. McCain Chairman |
Dear Fellow Shareholder:
Looking back on the past two calendar quarters reveals a tale of two markets. After a strong summer market rally, volatility reemerged last fall, due to continuing investor concerns about the pandemic, increasing political rhetoric, and other geopolitical events. However, the resolution of the presidential election, new vaccine approvals/rollouts, along with the passage of two U.S. fiscal stimulus packages, led to improved investor sentiment and appetite for risk that generated an equity market rally that continued through the first quarter of 2021—although at a slower pace than in the fourth quarter of 2020. U.S. and global equity markets produced positive total returns over the six-month period ended April 30, 2021. The S&P 500 added to its strong performance of 12.15% in the fourth quarter, with a return of 6.17% in the first quarter, outperforming the MSCI EAFE (ND) and the MSCI Emerging Markets (ND) Indexes, which returned 3.38% and 2.29%, respectively, for the first quarter.
Beginning late last fall, we saw a pronounced reversal from a growth-driven to a value-driven equity market, and this rotation has persisted through the first quarter. The market rotation occurred globally—in the U.S., developed, and emerging equity markets—by style (cyclical/value outperformed growth), by market cap (small cap outperformed large cap), and by factor (momentum reversed, while beta remained strong).
Prior to the fourth quarter, U.S. growth-oriented stocks were the dominant outperformers by a large margin, with value-oriented names trading at huge discounts. However, by late in the year and moving through the first quarter, value outperformed growth, with the Russell 3000® Value Index beating the Russell 3000® Growth Index by the widest margin since the first quarter of 2001. Cyclical industries (e.g., oil & gas, machinery, construction materials, and metals & mining), along with the Energy and Financials sectors, took center stage. In contrast, the Information Technology, Consumer Staples, and Healthcare sectors retreated. While large caps have been in favor in past years (FAANG stocks etc.) and still remain ahead over trailing three- and five-year periods, the trend reversed over the six-month reporting period, which saw small caps outperforming. The bond markets took a hit, as investors shifted to equities in anticipation of a broader economic recovery, and the yield curve steepened at the long end. The yield on 10-year Treasuries rose from 0.78% after the election to 1.74% in March—one of the most significant moves in decades.
As economies around the world have begun to reopen, and markets have rallied, the focus is shifting from fear to cautious optimism. Growth in the U.S. gross domestic product (GDP) over the past two quarters reflects the long-hoped-for economic recovery now underway, the reopening of businesses, and the massive government response to the COVID-19 pandemic. GDP grew by 4.3% in the fourth quarter and by an estimated 6.4% in the first quarter. The Biden administration passed the $1.9 trillion American Rescue Plan, although without a single Republican vote. Its proposals for still more fiscal stimulus (the American Jobs Plan at $2.3 trillion and the American Families Plan at $1.8 trillion) will have to pass the gauntlet of a divided Congress; the scope, size, and timing of those plans will no doubt undergo protracted negotiations.
Harbor expects that volatility will remain elevated for the foreseeable future. But we also believe there are thoughtful, practical solutions to manage volatility and enable investors to reach their long-term goals. Our subadvisers are active portfolio managers who remain focused on uncovering opportunities and skillfully executing their strategies to deliver shareholder value in a climate of economic and geopolitical uncertainty, unprecedented health challenges, and financial market volatility. We believe that thoughtful, active management and adherence to enduring investment principles such as diversification, discipline, and a long-term view, will stand the test of time.
Over the past year, we have seen massive disruptions and challenges that have taken a severe toll on human lives. But the human spirit has remained resilient through it all. We believe there is now more reason for cautious optimism than fear as we look ahead.
I hope you and your families stay safe through this difficult time. Thank you for your confidence and continued investment in Harbor Funds.
June 22, 2021
Charles F. McCain |
Chairman |
1
Harbor Bond Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Pacific Investment Management Company LLC (PIMCO)
650 Newport Center Dr.
Newport Beach, CA
92660
Newport Beach, CA
92660
Portfolio Managers
Scott A. Mather
Since 2014
Since 2014
Mark R. Kiesel
Since 2014
Since 2014
Mohit Mittal
Since 2019
Since 2019
PIMCO has subadvised the Fund since 1987.
Investment Objective
The Fund seeks total return.
Scott A. Mather
Mark R. Kiesel
Mohit Mittal
Management’s Discussion of
Fund Performance
Fund Performance
MARKET REVIEW
The last two months of 2020 featured vaccine approvals, more policy stimulus, and clarity on the U.S. election outcome, the joint impact of which bolstered market optimism and capped off a year of unprecedented volatility. Despite mixed trends in infection rates across regions, optimism for a global recovery continued to build in the first few months of 2021 against a backdrop of generally improving economic data, increasing vaccinations, and sustained fiscal and monetary support.
Global economic data continued to improve in most regions, with the U.S. a notable standout as consumer sentiment rose, the labor market improved, and manufacturing rebounded strongly – driven by an uptick in demand and a pickup in hiring. However, supply chain disruptions remained an issue for U.S. manufacturers. President Biden’s $1.9 trillion stimulus package and the potential for a large infrastructure bill in the near-term also bolstered the strong growth outlook for the U.S. economy.
On the virus front, while vaccination programs continued to ramp up across the world, rising infections and new COVID variants in a host of countries—including some European countries, Brazil, and India—raised fears and led some governments to reintroduce lockdowns and restrictions. However, there were some bright spots with several countries—the U.S., the U.K., and Israel notably—succeeding in inoculating a significant portion of their citizens.
A slew of other geopolitical topics also made headlines during the period. Former Vice President Biden was sworn in as the 46th President of the United States. Tensions between the U.S. and China remained elevated with a high profile spat between officials occurring at talks in Alaska.
PERFORMANCE
Harbor Bond Fund outperformed the Bloomberg Barclays U.S. Aggregate Bond Index for the six-month period ended April 30, 2021. The Fund returned -0.45% (Retirement Class), -0.50% (Institutional Class) and -0.62% (Administrative Class), compared with the benchmark’s return of -1.52%.
The following strategies helped returns for the six months ended April 30, 2021:
• | Security selection within the securitized credit sector including select Agency and non-Agency Mortgage-Backed Securities holdings. |
• | An allocation to high-yield corporate credit as the sector outperformed like-duration Treasuries. |
• | Non-U.S. developed market interest rate strategies including short exposure to U.K. rates as these rates rose over the period. |
The following strategies were negative or neutral for returns for the six-month period ended April 30, 2021:
• | An underweight to investment grade credit as this sector outperformed like-duration Treasuries. |
• | Country selection in the Eurozone. |
2
Harbor Bond Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | |||||||||
6 Months | 5 Years | 10 Years | |||||||||
Harbor Bond Fund | |||||||||||
Retirement Class1 | -0.45% | 2.66% | 4.08% | 3.63% | |||||||
Institutional Class | -0.50 | 2.74 | 4.04 | 3.61 | |||||||
Administrative Class | -0.62 | 2.48 | 3.78 | 3.35 | |||||||
Comparative Index | |||||||||||
Bloomberg Barclays U.S. Aggregate Bond | -1.52% | -0.27% | 3.19% | 3.39% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.43% (Net) and 0.65% (Gross) (Retirement Class); 0.51% (Net) and 0.73% (Gross) (Institutional Class); and 0.76% (Net) and 0.98% (Gross) (Administrative Class). The net expense ratios reflect a contractual management fee waiver and an expense limitation agreement (excluding interest expense) effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
OUTLOOK & STRATEGY
We forecast a stronger global recovery in 2021 than we previously anticipated amid significant fiscal support, accommodative monetary policy, diminishing lockdowns, and accelerating vaccinations. We now expect world GDP growth in excess of 6% in 2021, up from 5% previously. Meanwhile, we believe that inflation will remain below central bank targets over the next one to two years, notwithstanding a temporary spike over the next several months (which could cause a “head fake” in markets). However, it seems likely that financial markets will remain focused on upside inflation risks in the near term, thus contributing to elevated volatility.
In this environment, with the potential for ongoing volatility, we seek to maintain flexibility in our portfolio positioning to be able to respond to events as they unfold. This includes careful scaling of positions, careful liquidity management, and—in some cases—staying close to benchmark weights for now as we look to be better able to take advantage of compelling opportunities later. Given current valuations, we see little cost in going “up in liquidity," and a patient approach now should, in our view, allow us to be aggressive in seizing the good opportunities that are likely to arise in a more volatile environment.
We see opportunities in COVID-19 recovery sectors, including housing, industrial/aerospace, and select banks and financials. We favor non-Agency U.S. mortgages and select other global structured products.
With respect to portfolio strategy:
• | We are modestly underweight duration, favoring U.S. rate exposure relative to other developed regions, including the U.K. and Japan. |
• | We still favor a curve-steepening bias, though have moderated the positioning recently given market moves and steepening since the third quarter of 2020. |
• | We remain underweight investment-grade credit overall – mindful of the less attractive risk/reward dynamics – though continue to have a bias toward shorter-maturity and high-quality names while de-emphasizing generic corporate credit exposure. |
• | We currently have low exposure to currencies, mainly a basket of emerging market currencies (in modest sizing). We will remain tactical overall and will continue to seek opportunities from overshoots and undershoots that provide attractive risk-reward profiles and the ability to diversify sources of return. |
1 | Retirement Class shares commenced operations on June 1, 2018. The performance attributed to the Retirement Class shares prior to that date is that of the Institutional Class shares. Performance prior to June 1, 2018 has not been adjusted to reflect the lower expenses of Retirement Class shares. During this period, Retirement Class shares would have had returns similar to, but potentially higher than, Institutional Class shares due to the fact that Retirement Class shares represent interests in the same portfolio as Institutional Class shares but are subject to lower expenses. |
This report contains the current opinions of Pacific Investment Management Company LLC (PIMCO) as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Fixed income investments are affected by interest rate changes and the creditworthiness of the issues held by the Fund. As interest rates rise, the values of fixed income securities held by the Fund are likely to decrease and reduce the value of the Fund’s portfolio. The use of derivative instruments may add additional risk. There may be a greater risk that the Fund could lose money due to prepayment and extension risks because the Fund invests heavily at times in mortgage-related and/or asset backed securities. The Fund may engage in active and frequent trading to achieve its principal investment strategies. Investing in international and emerging markets poses special risks, including potentially greater price volatility due to social, political and economic factors, as well as currency exchange rate fluctuations. These risks are more severe for securities of issuers in emerging market regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
3
Harbor Bond Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Investment Allocation (% of investments)
(Excludes short-term investments and derivative positions)
The Fund’s Portfolio of Investments and derivative schedules include investments denominated in foreign currencies. As of April 30, 2021, there was no foreign currency denomination that comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
ASSET-BACKED SECURITIES—10.5% | |||
Principal Amount | Value | ||
Air Canada Pass-Through Trust | |||
Series 2017-1AA Cl. PTT | |||
$ | 3,662 | 3.300%—07/15/20311 | $ 3,698 |
Aircastle Ltd. | |||
6,200 | 2.850%—01/26/20281 | 6,089 | |
Alaska Airlines Pass-Through Trust | |||
Series 2020-TR Cl. EETC | |||
3,459 | 4.800%—02/15/20291 | 3,827 | |
American Airlines Pass-Through Trust | |||
Series 15-2 Cl. AA | |||
1,594 | 3.600%—03/22/2029 | 1,628 | |
Anchorage Capital CLO Ltd.2 | |||
Series 2020-16A Cl. A | |||
4,100 | 1.588% (3 Month USD Libor + 1.400) 10/20/20311,3 | 4,113 | |
Argent Securities Inc. | |||
Series 2006-W4 Cl. A2C | |||
6,006 | 0.426% (1 Month USD Libor + 0.160) 05/25/20363 | 2,246 | |
Series 2004-W11 Cl. M3 | |||
939 | 1.231% (1 Month USD Libor + 0.750) 11/25/20343 | 945 | |
3,191 | |||
Asset Backed Securities Corp. Home Equity Loan Trust | |||
Series 2003-HE4 Cl. M1 | |||
4,249 | 1.360% (1 Month USD Libor + 0.830) 08/15/20333 | 4,293 | |
CBAM CLO Management2 | |||
Series 2017-2A Cl. A | |||
6,100 | 1.430% (3 Month USD Libor + 1.240) 10/17/20291,3 | 6,106 | |
Countrywide Asset-Backed Certificates | |||
Series 2006-21 Cl. 2A3 | |||
336 | 0.256% (1 Month USD Libor + 0.150) 05/25/20373 | 336 | |
Series 2006-ABC1 Cl. A3 | |||
4,335 | 0.586% (1 Month USD Libor + 0.240) 05/25/20363 | 3,794 |
ASSET-BACKED SECURITIES—Continued | |||
Principal Amount | Value | ||
Series 2006-2 Cl. M1 | |||
$ | 1,055 | 0.706% (1 Month USD Libor + 0.400) 06/25/20363 | $ 1,047 |
5,177 | |||
DAE Funding LLC | |||
5,200 | 1.625%—02/15/20241 | 5,375 | |
Dryden XXV Senior Loan Fund | |||
Series 2012-25A Cl. ARR | |||
4,043 | 1.084% (3 Month USD Libor + 0.900) 10/15/20271,3 | 4,042 | |
Evergreen Credit Card Trust | |||
Series 2019-2 Cl. A | |||
6,000 | 1.900%—09/16/20241 | 6,135 | |
Exantas Capital Corp. | |||
Series 2020-RSO9 Cl. A | |||
2,584 | 2.616% (1 Month USD Libor + 2.500) 04/17/20371,3 | 2,602 | |
First Franklin Mortgage Loan Trust | |||
Series 2006-FF14 Cl. A6 | |||
8,000 | 0.416% (1 Month USD Libor + 0.310) 10/25/20363 | 6,883 | |
Galaxy CLO Ltd.2 | |||
Series 2013-15A Cl. AR | |||
6,100 | 1.384% (3 Month USD Libor + 1.200) 10/15/20301,3 | ��� 6,106 | |
GSAA Home Equity Trust | |||
Series 2006-20 Cl. 1A2 | |||
3,797 | 0.466% (1 Month USD Libor + 0.180) 12/25/20463 | 1,637 | |
Series 2007-9 Cl. A1A | |||
624 | 6.000%—08/25/2047 | 615 | |
2,252 | |||
GSAMP Trust | |||
Series 2007-FM1 Cl. 2A2 | |||
102 | 0.176% (1 Month USD Libor + 0.070) 12/25/20363 | 63 |
4
Harbor Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
ASSET-BACKED SECURITIES—Continued | |||
Principal Amount | Value | ||
HSI Asset Securitization Corp. Trust | |||
Series 2006-HE2 Cl. 2A3 | |||
$ | 4,746 | 0.446% (1 Month USD Libor + 0.170) 12/25/20363 | $ 1,876 |
IXIS Real Estate Capital Trust | |||
Series 2005-HE1 Cl. M4 | |||
1,609 | 1.156% (1 Month USD Libor + 1.050) 06/25/20353 | 1,588 | |
JPMorgan Mortgage Acquisition Corp. | |||
Series 2006-ACC1 Cl. M1 | |||
364 | 0.376% (1 Month USD Libor + 0.270) 05/25/20363 | 364 | |
Series 2006-HE1 Cl. A4 | |||
1,177 | 0.686% (1 Month USD Libor + 0.290) 01/25/20363 | 1,173 | |
Series 2007-HE1 Cl. AF3 | |||
788 | 4.214%—05/25/20354 | 630 | |
2,167 | |||
LoanCore Ltd. | |||
Series 2018-CRE1 Cl. A | |||
1,800 | 1.245% (1 Month USD Libor + 1.130) 05/15/20281,3 | 1,801 | |
MASTR Asset Backed Securities Trust | |||
Series 2006-HE2 Cl. A4 | |||
4,850 | 0.586% (1 Month USD Libor + 0.240) 06/25/20363 | 2,798 | |
MF1 Multi Family Housing Mortgage Trust | |||
Series 2020-FL4 Cl. A | |||
5,100 | 1.815% (1 Month USD Libor + 1.700) 11/15/20351,3 | 5,148 | |
Mid-State Capital Corp Trust | |||
Series 2004-1 Cl. A | |||
645 | 6.005%—08/15/2037 | 685 | |
Morgan Stanley Capital Inc. | |||
Series 2007-HE1 Cl. A2C | |||
1,860 | 0.256% (1 Month USD Libor + 0.150) 11/25/20363 | 1,373 | |
Series 2007-HE6 Cl. A3 | |||
3,982 | 0.286% (1 Month USD Libor + 0.180) 05/25/20373 | 3,654 | |
5,027 | |||
Mountain View CLO Ltd.2 | |||
Series 2014-1A Cl. ARR | |||
476 | 0.984% (3 Month USD Libor + 0.800) 10/15/20261,3 | 475 | |
Nassau Ltd. | |||
Series 2020-1A Cl. A1 | |||
3,000 | 2.338% (3 Month USD Libor + 2.150) 07/20/20291,3 | 3,010 | |
Oak Hill Credit Partners | |||
Series 2019-3A Cl. A1 | |||
5,900 | 1.508% (3 Month USD Libor + 1.320) 07/20/20321,3 | 5,916 | |
OneMain Financial Issuance Trust | |||
Series 2017-1A Cl. A1 | |||
284 | 2.370%—09/14/20321 | 284 | |
Option One Mortgage Loan Trust | |||
Series 2007-6 Cl. 2A4 | |||
3,914 | 0.356% (1 Month USD Libor + 0.250) 07/25/20373 | 3,194 | |
Palmer Square Loan Funding Ltd. | |||
Series 2020-3A Cl. A1 | |||
3,613 | 1.888% (3 Month USD Libor + 1.700) 07/20/20281,3 | 3,623 |
ASSET-BACKED SECURITIES—Continued | |||
Principal Amount | Value | ||
Park Place Securities Inc. | |||
Series 2005-WCW3 Cl. M1 | |||
$ | 2,612 | 0.826% (1 Month USD Libor + 0.480) 08/25/20353 | $ 2,620 |
People's Financial Realty Mortgage Securities Trust | |||
Series 2006-1 Cl. 1A2 | |||
4,536 | 0.236% (1 Month USD Libor + 0.130) 09/25/20363 | 1,357 | |
RAMP Trust | |||
Series 2004-RS8 Cl. MII1 | |||
164 | 1.006% (1 Month USD Libor + 0.600) 08/25/20343 | 164 | |
Santander Drive Auto Receivables Trust | |||
Series 2020-2 Cl. A2A | |||
587 | 0.620%—05/15/2023 | 587 | |
Series 2020-2 Cl. A3 | |||
1,000 | 0.670%—04/15/2024 | 1,002 | |
1,589 | |||
Santander Retail Auto Lease Trust | |||
Series 2019-B Cl. A2A | |||
649 | 2.290%—04/20/20221 | 650 | |
Saxon Asset Securities Trust | |||
Series 2006-3 Cl. A3 | |||
3,646 | 0.276% (1 Month USD Libor + 0.170) 10/25/20463 | 3,567 | |
Securitized Asset Backed Receivables LLC Trust | |||
Series 2005-FR5 Cl. M1 | |||
6,306 | 0.766% (1 Month USD Libor + 0.440) 08/25/20353 | 5,160 | |
Small Business Administration Participation Certificates | |||
Series 2003-20I Cl. 1 | |||
16 | 5.130%—09/01/2023 | 17 | |
Series 2009-20A Cl. 1 | |||
1,122 | 5.720%—01/01/2029 | 1,241 | |
Series 2008-20H Cl. 1 | |||
2,309 | 6.020%—08/01/2028 | 2,568 | |
3,826 | |||
Sound Point CLO XII Ltd.2 | |||
Series 2016-2A Cl. AR2 | |||
5,813 | 1.238% (3 Month USD Libor + 1.050) 10/20/20281,3 | 5,821 | |
Specialty Underwriting & Residential Finance Trust | |||
Series 2006-BC4 Cl. A2B | |||
2,679 | 0.329% (1 Month USD Libor + 0.110) 09/25/20373 | 1,370 | |
Structured Asset Securities Co. | |||
Series 2007-MN1A Cl. A1 | |||
19,057 | 0.336% (1 Month USD Libor + 0.230) 01/25/20371,3 | 13,773 | |
Telos CLO Ltd.2 | |||
Series 2014 Cl. 6A | |||
761 | 1.460% (3 Month USD Libor + 1.270) 01/17/20271,3 | 762 | |
TPG Real Estate Finance Trust | |||
Series 2019-Fl3 Cl. A | |||
5,000 | 1.266% (1 Month USD Libor + 1.150) 10/15/20341,3 | 5,000 | |
Tralee CLO V Ltd.2 | |||
Series 2018-5A Cl. A1 | |||
5,814 | 1.298% (3 Month USD Libor + 1.110) 10/20/20281,3 | 5,815 |
5
Harbor Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
ASSET-BACKED SECURITIES—Continued | |||
Principal Amount | Value | ||
Venture XVI CLO Ltd.2 | |||
Series 2014-16A Cl. ARR | |||
$ | 2,910 | 1.034% (3 Month USD Libor + 0.850) 01/15/20281,3 | $ 2,903 |
Venture XXVI CLO Ltd.2 | |||
Series 2017-26A Cl. AR | |||
6,200 | 1.288% (3 Month USD Libor + 1.100) 01/20/20291,3 | 6,205 | |
TOTAL ASSET-BACKED SECURITIES | |||
(Cost $166,146) | 169,754 | ||
COLLATERALIZED MORTGAGE OBLIGATIONS—12.8% | |||
Adjustable Rate Mortgage Trust | |||
Series 2006-3 Cl. 4A2 | |||
2,433 | 0.346% (1 Month USD Libor + 0.120) 08/25/20363 | 1,207 | |
Alba plc | |||
Series 2007-1 Cl. A3 | |||
GBP | 2,200 | 0.251% (3 Month GBP Libor + 0.170) 03/17/20393 | 2,933 |
Arbor Multifamily Mortgage Trust | |||
Series 2020-MF1 Cl. A5 | |||
$ | 2,900 | 2.756%—05/15/20531 | 3,048 |
Banc of America Alternative Loan Trust | |||
Series 2006 -7 Cl. A3 | |||
7,800 | 5.913%—10/25/20363 | 3,556 | |
Banc of America Funding Corp. | |||
Series 2007-C Cl. 7A5 | |||
630 | 0.716% (1 Month USD Libor + 0.300) 05/20/20473 | 635 | |
BCAP LLC Trust | |||
Series 2007-AA2 Cl. 12A1 | |||
4,530 | 0.316% (1 Month USD Libor + 0.210) 05/25/20473 | 4,350 | |
Series 2011-RR5 Cl. 12A1 | |||
319 | 4.853%—03/26/20371,4 | 322 | |
Series 2011-RR4 Cl. 8A1 | |||
1,480 | 5.250%—02/26/20361,3 | 942 | |
5,614 | |||
Bear Stearns Adjustable Rate Mortgage Trust | |||
Series 2004-1 Cl. 12A5 | |||
209 | 2.740%—04/25/20343 | 208 | |
Series 2000-2 Cl. A1 | |||
14 | 2.780%—11/25/20303 | 14 | |
Series 2004-10 Cl. 12A3 | |||
18 | 2.911%—01/25/20353 | 19 | |
Series 2006-4 Cl. 1A1 | |||
150 | 3.068%—10/25/20363 | 148 | |
389 | |||
Benchmark Mortgage Trust | |||
Series 2019-B9 Cl. A5 | |||
5,200 | 4.016%—03/15/2052 | 5,933 | |
Chase Mortgage Finance Corp Trust | |||
Series 2006-A1 Cl. 4A1 | |||
1,047 | 3.215%—09/25/20363 | 956 | |
Citigroup Commercial Mortgage Trust | |||
Series 2015-GC33 Cl. A4 | |||
4,900 | 3.778%—09/10/2058 | 5,411 | |
Citigroup Mortgage Loan Trust | |||
Series 2007-10 Cl.2A | |||
3,079 | 3.316%—09/25/20373 | 3,004 |
COLLATERALIZED MORTGAGE OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
Comm Mortgage Trust | |||
Series 2016-787S Cl. A | |||
$ | 5,400 | 3.545%—02/10/20361 | $ 5,865 |
Countrywide Alternative Loan Trust | |||
Series 2006-6BC Cl. 1A2 | |||
2,333 | 0.506% (1 Month USD Libor + 0.400) 05/25/20363 | 1,928 | |
Series 2005-84 Cl. 1A1 | |||
1,425 | 2.338%—02/25/20363 | 1,300 | |
Series 2005-20CB Cl. 2A5 | |||
1,640 | 5.500%—07/25/2035 | 1,413 | |
Series 2006-36T2 Cl. 1A4 | |||
1,071 | 5.750%—12/25/2036 | 693 | |
Series 2006-1R Cl.2A3 | |||
3,324 | 6.000%—08/25/2037 | 2,410 | |
7,744 | |||
Countrywide Home Loan Mortgage Pass Through Trust | |||
Series 2007-HY5 Cl. 1A1 | |||
581 | 3.497%—09/25/20473 | 548 | |
Credit Suisse First Boston Mortgage Securities Corp. | |||
Series 2006-C2 Cl. A3 | |||
273 | 6.000%—11/25/2035 | 224 | |
DC Office Trust | |||
Series 2019-MTC Cl. A | |||
4,900 | 2.965%—09/15/20451 | 5,183 | |
Deutsche Alt-A Securities Inc. Mortgage Loan Trust | |||
Series 2007-AR2 Cl. A1 | |||
3,677 | 0.256% (1 Month USD Libor + 0.150) 03/25/20373 | 3,668 | |
DSLA Mortgage Loan Trust | |||
Series 2006-AR1 Cl. 1A1A | |||
1,360 | 1.062% (Fed 12 Month Treasury Average Constant Maturity Treasury + 0.920) 3/19/20463 | 1,224 | |
Eurohome UK Mortgages plc | |||
Series 2007-1 Cl. A | |||
GBP | 1,711 | 0.230% (3 Month GBP Libor + 0.150) 06/15/20443 | 2,316 |
First Horizon Asset Securities Inc. | |||
Series 2005-AR6 Cl. 4A1 | |||
$ | 425 | 2.677%—02/25/20363 | 399 |
First Nationwide Trust | |||
Series 2001-3 Cl. 1A1 | |||
— | 6.750%—08/21/2031 | — | |
GSMPS Mortgage Loan Trust | |||
Series 2006-RP2 Cl. 1AF1 | |||
4,066 | 0.506% (1 Month USD Libor + 0.400) 04/25/20361,3 | 3,497 | |
GSR Mortgage Loan Trust | |||
Series 2005-AR7 Cl. 6A1 | |||
165 | 2.865%—11/25/20353 | 165 | |
Series 2005-AR3 Cl. 3A1 | |||
276 | 2.973%—05/25/20353 | 232 | |
397 | |||
HarborView Mortgage Loan Trust | |||
Series 2004-8 Cl. 2A3 | |||
463 | 0.935% (1 Month USD Libor + 0.410) 11/19/20343 | 420 | |
Hawksmoor Mortgages | |||
Series 2019-1A Cl. A | |||
GBP | 20,505 | 1.099% (3 Month Sonia + 1.050) 05/25/20531,3 | 28,456 |
6
Harbor Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
COLLATERALIZED MORTGAGE OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
HomeBanc Mortgage Trust | |||
Series 2006-H2 Cl. A2 | |||
$ | 1,452 | 0.466% (1 Month USD Libor + 0.180) 12/25/20363 | $ 1,446 |
IndyMac ARM Trust | |||
Series 2001-H2 Cl. A2 | |||
2 | 1.762%—01/25/20323 | 2 | |
IndyMac IMSC Mortgage Loan Trust | |||
Series 2007-F2 Cl. 2A1 | |||
2,901 | 6.500%—07/25/2037 | 1,510 | |
IndyMac INDX Mortgage Loan Trust | |||
Series 2007-AR13 Cl. 4A1 | |||
11,806 | 3.024%—07/25/20373 | 9,638 | |
Series 2005-AR31 Cl. 1A1 | |||
863 | 3.025%—01/25/20363 | 855 | |
10,493 | |||
JP Morgan Mortgage Trust | |||
Series 2006-A6 Cl. 1A4L | |||
1,351 | 3.360%—10/25/20363 | 1,190 | |
Series 2006-S1 Cl. 3A1 | |||
252 | 5.500%—04/25/2036 | 258 | |
1,448 | |||
JPMDB Commercial Mortgage Securities Trust | |||
Series 2016-C2 Cl. A4 | |||
4,225 | 3.144%—06/15/2049 | 4,552 | |
Manhattan West | |||
Series 2020-1MW Cl. A | |||
4,900 | 2.130%—09/10/20391 | 4,982 | |
Mansard Mortgages plc | |||
Series 2007-2X Cl. A1 | |||
GBP | 837 | 0.730% (3 Month GBP Libor + 0.650) 12/15/20493 | 1,148 |
Merrill Lynch Alternative Note Asset Trust | |||
Series 2007-F1 Cl. 2A6 | |||
$ | 482 | 6.000%—03/25/2037 | 280 |
MetLife Securitization Trust | |||
Series 2018-1A Cl. A | |||
3,550 | 3.750%—03/25/20571,3 | 3,716 | |
Morgan Stanley Bank of America Merrill Lynch Trust | |||
Series 2015-C22 Cl. ASB | |||
4,901 | 3.040%—04/15/2048 | 5,117 | |
Onslow Bay Financial LLC | |||
Series 2018-1 Cl. A2 | |||
4,200 | 0.756% (1 Month USD Libor + 0.700) 06/25/20571,3 | 4,214 | |
Ready Capital Mortgage Financing LLC | |||
Series 2020-FL4 Cl. A | |||
5,800 | 2.256% (1 Month USD Libor + 2.150) 02/25/20351,3 | 5,822 | |
Residential Accredit Loans Inc. | |||
Series 2007-QS4 Cl. 3A9 | |||
2,541 | 6.000%—03/25/2037 | 2,452 | |
Residential Asset Securitization Trust | |||
Series 2007-A8 Cl. 2A1 | |||
17,942 | 6.250%—08/25/2037 | 6,792 | |
Residential Funding Mortgage Securities I | |||
Series 2007-SA1 Cl. 2A2 | |||
194 | 3.819%—02/25/20373 | 157 | |
Series 2006-SA1 Cl. 2A1 | |||
163 | 4.662%—02/25/20363 | 146 | |
303 |
COLLATERALIZED MORTGAGE OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
Ripon Mortgages plc | |||
Series 1A Cl. A1 | |||
GBP | 5,885 | 0.860% (3 Month GBP Libor + 0.800) 08/20/20561,3 | $ 8,140 |
RMAC Securities plc | |||
Series 2006-NS4X Cl. A3A | |||
1,465 | 0.250% (3 Month GBP Libor + 0.170) 06/12/20443 | 1,957 | |
Structured Adjustable Rate Mortgage Loan Trust | |||
Series 2007-1 Cl. 1A1 | |||
$ | 1,323 | 0.406% (1 Month USD Libor + 0.150) 02/25/20373 | 1,319 |
Series 2005-21A Cl. 3A1 | |||
325 | 2.753%—04/25/20353 | 331 | |
1,650 | |||
Structured Asset Mortgage Investments Inc. | |||
Series 2005-AR5 Cl. A2 | |||
253 | 0.615% (1 Month USD Libor + 0.250) 07/19/20353 | 245 | |
Suntrust Adjustable Rate Mortgage Loan Trust | |||
Series 2007-S1 Cl. 1A | |||
322 | 2.919%—01/25/20373 | 285 | |
Towd Point Mortgage Funding plc | |||
Series 2019-A13A Cl. A1 | |||
GBP | 14,925 | 0.949% (3 Month Sonia + 0.900) 07/20/20451,3 | 20,676 |
Series 2020-14X Cl.A | |||
5,219 | 0.949% (3 Month Sonia + 0.900) 05/20/2045 | 7,221 | |
Series 2019-GR4A Cl. A1 | |||
4,847 | 1.111% (3 Month GBP Libor + 1.025) 10/20/20511,3 | 6,734 | |
34,631 | |||
Washington Mutual Mortgage Pass Through Certificates Trust | |||
Series 2005-AR6 Cl. 2A1A | |||
$ | 250 | 0.566% (1 Month USD Libor + 0.230) 04/25/20453 | 247 |
Series 2005-AR13 Cl. A1A1 | |||
124 | 0.686% (1 Month USD Libor + 0.290) 10/25/20453 | 124 | |
Series 2006-AR11 Cl. 3A1A | |||
1,388 | 1.062% (Fed 12 Month Treasury Average Constant Maturity Treasury + 0.920) 09/25/20463 | 1,369 | |
Series 2006-AR8 Cl. 1A4 | |||
2,015 | 3.103%—08/25/20463 | 2,007 | |
3,747 | |||
Wells Fargo Commercial Mortgage Trust | |||
Series 2018-C48 | |||
7,117 | 4.302%—01/15/2052 | 8,201 | |
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS | |||
(Cost $195,475) | 205,760 | ||
CORPORATE BONDS & NOTES—34.6% | |||
AEROSPACE & DEFENSE—0.4% | |||
Boeing Co. | |||
6,100 | 1.950%—02/01/2024 | 6,274 | |
AIRLINES—0.3% | |||
Jetblue Airways Corp. | |||
4,500 | 4.000%—05/15/2034 | 4,898 |
7
Harbor Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
AUTOMOBILES—2.3% | |||
Ford Motor Credit Co. LLC | |||
$ | 2,100 | 4.375%—08/06/2023 | $ 2,221 |
Ford Motor Credit Co. LLC MTN5 | |||
EUR | 5,700 | 1.744%—07/19/2024 | 6,932 |
Hyundai Capital America MTN5 | |||
$ | 5,200 | 0.800%—01/08/20241 | 5,169 |
Nissan Motor Acceptance Corp. | |||
1,900 | 3.875%—09/21/20231 | 2,028 | |
Nissan Motor Co. Ltd. | |||
2,700 | 3.522%—09/17/20251 | 2,889 | |
3,900 | 4.810%—09/17/20301 | 4,335 | |
7,224 | |||
Volkswagen Group of America Finance LLC | |||
4,700 | 3.350%—05/13/20251 | 5,091 | |
4,800 | 4.750%—11/13/20281 | 5,626 | |
10,717 | |||
Volkswagen International Finance NV | |||
EUR | 1,800 | 1.003% (3 Month EUR Libor + 1.550) 11/16/20243 | 2,249 |
36,540 | |||
BANKS—6.9% | |||
Banco Bilbao Vizcaya Argentaria SA | |||
$ | 1,600 | 0.875%—09/18/2023 | 1,606 |
1,500 | 1.125%—09/18/2025 | 1,483 | |
3,089 | |||
Banco Espirito Santo SA MTN5 | |||
EUR | 3,500 | 0.000%—01/15/2049* | 673 |
Banco Santander SA | |||
700 | 6.750%—12/31/20996,7 | 883 | |
Bank of America Corp. MTN5 | |||
$ | 4,800 | 0.981%—09/25/20257 | 4,798 |
Banque Federative du Credit Mutuel SA | |||
6,300 | 3.750%—07/20/20231 | 6,751 | |
Barclays plc | |||
4,200 | 3.684%—01/10/2023 | 4,289 | |
3,700 | 4.610%—02/15/20237 | 3,816 | |
2,700 | 7.875%—12/29/20496,7 | 2,841 | |
10,946 | |||
Barclays plc MTN5 | |||
GBP | 4,000 | 3.250%—02/12/2027 | 5,994 |
BBVA USA | |||
$ | 2,900 | 2.500%—08/27/2024 | 3,055 |
Citigroup Inc. | |||
4,700 | 2.572%—06/03/20317 | 4,721 | |
Deutsche Bank AG/New York | |||
1,500 | 3.300%—11/16/2022 | 1,557 | |
4,500 | 3.961%—11/26/20257 | 4,878 | |
6,435 | |||
Deutsche Bank AG/New York MTN5 | |||
EUR | 3,200 | 1.750%—01/17/2028 | 4,055 |
Intesa Sanpaolo SpA | |||
$ | 2,800 | 4.000%—09/23/20291 | 3,047 |
Lloyds Banking Group plc | |||
6,000 | 2.858%—03/17/20237 | 6,124 | |
Lloyds Banking Group plc MTN5 | |||
EUR | 1,500 | 3.500%—04/01/20267 | 2,036 |
Mitsubishi UFJ Financial Group Inc. | |||
$ | 5,800 | 1.412%—07/17/2025 | 5,841 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
BANKS—Continued | |||
Mizuho Financial Group Inc. | |||
$ | 5,100 | 0.849%—09/08/20247 | $ 5,116 |
4,900 | 2.555%—09/13/20257 | 5,132 | |
10,248 | |||
NatWest Group PLC | |||
700 | 1.664% (3 Month USD Libor + 1.470) 05/15/20233 | 708 | |
200 | 4.519%—06/25/20247 | 216 | |
200 | 4.892%—05/18/20297 | 230 | |
4,300 | 8.625%—12/29/20496,7 | 4,394 | |
5,548 | |||
NatWest Group PLC MTN5 | |||
EUR | 600 | 2.000%—03/04/20257 | 761 |
Nordea Bank Abp | |||
$ | 2,500 | 3.750%—08/30/20231 | 2,684 |
Oversea-Chinese Banking Corp. Ltd. | |||
3,700 | 0.648% (3 Month USD Libor + 0.450) 05/17/20211,3 | 3,701 | |
Societe Generale SA MTN5 | |||
4,100 | 4.250%—09/14/20231 | 4,431 | |
Sumitomo Mitsui Financial Group Inc. | |||
5,000 | 1.474%—07/08/2025 | 5,041 | |
UniCredit SpA MTN5 | |||
5,600 | 7.830%—12/04/20231 | 6,519 | |
Wells Fargo & Co. MTN5 | |||
EUR | 3,300 | 1.741%—05/04/20307 | 4,279 |
111,660 | |||
BEVERAGES—0.9% | |||
Anheuser-Busch InBev Worldwide Inc. | |||
$ | 5,100 | 4.500%—06/01/2050 | 5,857 |
Bacardi Ltd. | |||
4,700 | 4.450%—05/15/20251 | 5,250 | |
Constellation Brands Inc. | |||
2,600 | 3.700%—12/06/2026 | 2,881 | |
13,988 | |||
BUILDING PRODUCTS—0.8% | |||
CRH America Finance Inc. | |||
3,200 | 3.950%—04/04/20281 | 3,606 | |
3,200 | 4.500%—04/04/20481 | 3,798 | |
7,404 | |||
Fortune Brands Home & Security Inc. | |||
4,700 | 3.250%—09/15/2029 | 4,989 | |
Owens Corning | |||
300 | 4.200%—12/01/2024 | 331 | |
12,724 | |||
CAPITAL MARKETS—2.0% | |||
BGC Partners Inc. | |||
6,300 | 5.375%—07/24/2023 | 6,835 | |
Block Financial LLC Co. | |||
3,600 | 3.875%—08/15/2030 | 3,831 | |
Credit Agricole SA MTN5 | |||
4,900 | 3.750%—04/24/20231 | 5,218 | |
Credit Suisse Group AG | |||
5,100 | 2.997%—12/14/20231,7 | 5,280 | |
4,900 | 3.750%—03/26/2025 | 5,315 | |
10,595 |
8
Harbor Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
CAPITAL MARKETS—Continued | |||
Platin 1426 GmbH | |||
EUR | 2,700 | 6.875%—06/15/20231 | $ 3,292 |
UBS Group AG | |||
$ | 2,200 | 2.859%—08/15/20231,3 | 2,264 |
32,035 | |||
CHEMICALS—0.2% | |||
International Flavors & Fragrances Inc. | |||
3,700 | 3.200%—05/01/2023 | 3,868 | |
CONSUMER FINANCE—0.5% | |||
Daimler Finance North America LLC | |||
5,300 | 3.700%—05/04/20231 | 5,615 | |
Springleaf Finance Corp. | |||
2,800 | 6.875%—03/15/2025 | 3,185 | |
8,800 | |||
DIVERSIFIED CONSUMER SERVICES—0.1% | |||
Mitsubishi UFJ Lease & Finance Co. Ltd. MTN5 | |||
1,500 | 2.250%—09/07/2021 | 1,509 | |
DIVERSIFIED FINANCIAL SERVICES—1.5% | |||
Cantor Fitzgerald LP | |||
5,400 | 6.500%—06/17/20221 | 5,738 | |
Imperial Brands Finance plc | |||
2,100 | 3.500%—02/11/20231 | 2,180 | |
5,600 | 3.875%—07/26/20291 | 5,980 | |
8,160 | |||
Intercontinental Exchange | |||
3,600 | 1.850%—09/15/2032 | 3,334 | |
Rio Oil Finance Trust | |||
1,094 | 9.250%—07/06/20241 | 1,220 | |
4,979 | 9.750%—01/06/20271 | 5,876 | |
7,096 | |||
24,328 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—1.1% | |||
Altice France SA | |||
440 | 7.375%—05/01/20261 | 457 | |
AT&T Inc. | |||
4,900 | 1.650%—02/01/2028 | 4,777 | |
British Telecommunications plc | |||
1,300 | 4.500%—12/04/2023 | 1,422 | |
T-Mobile USA Inc. | |||
3,500 | 2.050%—02/15/20281 | 3,478 | |
Verizon Communications Inc. | |||
6,695 | 3.376%—02/15/2025 | 7,308 | |
17,442 | |||
ELECTRIC UTILITIES—2.2% | |||
Exelon Corp. | |||
3,100 | 4.050%—04/15/2030 | 3,489 | |
FirstEnergy Corp. | |||
1,100 | 3.350%—07/15/2022 | 1,123 | |
Greenko Solar Mauritius Ltd. | |||
4,900 | 5.550%—01/29/20251 | 5,059 | |
Jersey Central Power & Light Co. | |||
900 | 4.300%—01/15/20261 | 996 | |
1,600 | 4.700%—04/01/20241 | 1,742 | |
2,738 | |||
Nextera Energy Capital Holdings Inc. | |||
6,000 | 2.250%—06/01/2030 | 5,939 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
ELECTRIC UTILITIES—Continued | |||
Pacific Gas & Electric Co. | |||
$ | 5,100 | 1.573% (3 Month USD Libor + 1.375) 11/15/20213 | $ 5,117 |
2,900 | 3.150%—01/01/2026 | 3,024 | |
300 | 3.300%—12/01/2027 | 310 | |
1,700 | 3.400%—08/15/2024 | 1,812 | |
2,000 | 3.450%—07/01/2025 | 2,123 | |
1,800 | 3.500%—06/15/2025 | 1,911 | |
1,500 | 4.250%—08/01/2023 | 1,602 | |
600 | 4.550%—07/01/2030 | 645 | |
16,544 | |||
34,892 | |||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—0.1% | |||
Arrow Electronics Inc. | |||
2,100 | 3.500%—04/01/2022 | 2,149 | |
ENTERTAINMENT—0.2% | |||
Walt Disney Co. | |||
3,900 | 2.650%—01/13/2031 | 4,016 | |
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—4.1% | |||
Agree LP Co. | |||
1,400 | 2.900%—10/01/2030 | 1,437 | |
Alexandria Real Estate Equities Inc. | |||
2,100 | 2.750%—12/15/2029 | 2,164 | |
American Tower Corp. | |||
5,000 | 2.750%—01/15/2027 | 5,253 | |
Boston Properties LP | |||
4,905 | 2.750%—10/01/2026 | 5,218 | |
Brandywine Operating Partnership LP | |||
5,000 | 4.100%—10/01/2024 | 5,419 | |
CBL & Associates LP | |||
1,940 | 0.000%—10/15/2024* | 1,123 | |
4,500 | 0.000%—12/15/2026* | 2,602 | |
3,725 | |||
Crown Castle International Corp. | |||
4,000 | 3.700%—06/15/2026 | 4,400 | |
Digital Realty Trust LP | |||
5,500 | 4.450%—07/15/2028 | 6,317 | |
EPR Properties | |||
1,900 | 4.500%—06/01/2027 | 1,958 | |
600 | 4.950%—04/15/2028 | 628 | |
2,586 | |||
Equinix Inc. | |||
5,000 | 1.000%—09/15/2025 | 4,936 | |
GLP Capital LP / GLP Financing II Inc. | |||
4,500 | 4.000%—01/15/2030 | 4,769 | |
Highwoods Realty LP | |||
2,500 | 2.600%—02/01/2031 | 2,465 | |
OMEGA Healthcare Investors Inc. | |||
309 | 4.375%—08/01/2023 | 332 | |
Physicians Realty LP | |||
1,400 | 3.950%—01/15/2028 | 1,507 | |
Scentre Group Trust | |||
5,700 | 4.375%—05/28/20301 | 6,464 | |
Service Properties Trust | |||
4,800 | 4.350%—10/01/2024 | 4,782 | |
Spirit Realty LP | |||
4,700 | 3.400%—01/15/2030 | 4,933 | |
66,707 |
9
Harbor Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
FOOD & STAPLES RETAILING—0.3% | |||
7-Eleven Inc. | |||
$ | 5,200 | 1.800%—02/10/20311 | $ 4,924 |
CVS Pass-Through Trust | |||
465 | 6.943%—01/10/2030 | 566 | |
5,490 | |||
HEALTH CARE EQUIPMENT & SUPPLIES—0.4% | |||
Boston Scientific Corp. | |||
5,700 | 2.650%—06/01/2030 | 5,782 | |
HEALTH CARE PROVIDERS & SERVICES—0.6% | |||
CVS Health Corp. | |||
3,900 | 4.125%—04/01/2040 | 4,319 | |
HCA Inc. | |||
4,000 | 5.375%—09/01/2026 | 4,547 | |
100 | 5.875%—02/01/2029 | 118 | |
4,665 | |||
8,984 | |||
HOTELS, RESTAURANTS & LEISURE—0.8% | |||
Expedia Group Inc. | |||
1,450 | 6.250%—05/01/20251 | 1,687 | |
Marriott International Inc. | |||
5,000 | 3.500%—10/15/2032 | 5,227 | |
Wynn Las Vegas LLC / Wynn Las Vegas Capital Corp. | |||
5,200 | 4.250%—05/30/20231 | 5,346 | |
12,260 | |||
INDUSTRIAL CONGLOMERATES—0.2% | |||
Textron Inc. | |||
3,800 | 2.450%—03/15/2031 | 3,762 | |
INSURANCE—1.1% | |||
AIA Group Ltd. | |||
5,900 | 0.707% (3 Month USD Libor + 0.520) 09/20/20211,3 | 5,903 | |
2,700 | 3.375%—04/07/20301 | 2,910 | |
8,813 | |||
Allstate Corp. | |||
4,300 | 1.450%—12/15/2030 | 4,025 | |
Ambac LSNI LLC | |||
755 | 6.000% (3 Month USD Libor + 5.000) 02/12/20231,3 | 756 | |
American International Group | |||
3,800 | 2.500%—06/30/2025 | 4,008 | |
17,602 | |||
IT SERVICES—0.5% | |||
Amdocs Ltd. | |||
3,600 | 2.538%—06/15/2030 | 3,542 | |
Paypal Holdings Inc. | |||
5,000 | 2.850%—10/01/2029 | 5,287 | |
8,829 | |||
MACHINERY—0.0% | |||
CNH Industrial Capital LLC | |||
500 | 3.875%—10/15/2021 | 507 | |
MEDIA—0.3% | |||
Charter Communications Operating LLC | |||
4,800 | 4.464%—07/23/2022 | 4,995 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
MORTGAGE REAL ESTATE INVESTMENT TRUSTS (REITs)—0.1% | |||
ERP Operating LP | |||
$ | 2,100 | 3.375%—06/01/2025 | $ 2,281 |
OIL, GAS & CONSUMABLE FUELS—1.6% | |||
EQM Midstream Partners LP | |||
522 | 4.750%—07/15/2023 | 548 | |
Equinor ASA | |||
200 | 3.125%—04/06/2030 | 214 | |
MPLX LP | |||
3,300 | 4.900%—04/15/2058 | 3,691 | |
Occidental Petroleum Corp. | |||
3,900 | 2.900%—08/15/2024 | 3,895 | |
Odebrecht Drilling Norbe VIII/IX Ltd. | |||
185 | 6.350%—12/01/2021 | 184 | |
3,537 | 7.350%—12/01/2026 | 1,432 | |
9 | 7.350%—12/01/20261 | 4 | |
1,620 | |||
Odebrecht Offshore Drilling Finance Ltd. | |||
419 | 6.720%—12/01/2022 | 416 | |
3,716 | 7.720%—12/01/2026 | 747 | |
1,163 | |||
Odebrecht Oil & Gas Finance Ltd. | |||
2,183 | 0.000%—09/12/20991,6,8 | 32 | |
Rio Oil Finance Trust | |||
1,665 | 9.250%—07/06/2024 | 1,857 | |
Sabine Pass Liquefaction LLC | |||
900 | 4.200%—03/15/2028 | 997 | |
5,100 | 4.500%—05/15/2030 | 5,750 | |
6,747 | |||
Shell International Finance BV | |||
5,200 | 2.750%—04/06/2030 | 5,414 | |
25,181 | |||
PHARMACEUTICALS—1.7% | |||
Abbvie Inc. | |||
4,900 | 2.600%—11/21/2024 | 5,191 | |
1,000 | 3.200%—11/06/2022 | 1,037 | |
6,228 | |||
Bayer US Finance II LLC | |||
6,300 | 3.875%—12/15/20231 | 6,779 | |
2,800 | 4.250%—12/15/20251 | 3,128 | |
9,907 | |||
Mylan NV | |||
EUR | 5,100 | 2.250%—11/22/2024 | 6,553 |
Takeda Pharmaceutical Co. Ltd. | |||
$ | 1,500 | 2.050%—03/31/2030 | 1,453 |
Teva Pharmaceutical Finance Netherlands III BV | |||
3,000 | 6.750%—03/01/20289 | 3,274 | |
27,415 | |||
REAL ESTATE MANAGEMENT & DEVELOPMENT—0.3% | |||
Tesco Property Finance 5 plc | |||
GBP | 2,248 | 5.661%—10/13/2041 | 4,105 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—1.0% | |||
Broadcom Corp. / Broadcom Cayman Finance Ltd. | |||
$ | 1,797 | 3.875%—01/15/2027 | 1,970 |
10
Harbor Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—Continued | |||
Broadcom Inc. | |||
$ | 5,107 | 3.459%—09/15/2026 | $ 5,546 |
4,003 | 3.469%—04/15/20341 | 4,051 | |
9,597 | |||
NXP BV / NXP Funding LLC / NXP USA Inc. | |||
4,600 | 3.875%—06/18/20261 | 5,097 | |
16,664 | |||
SOFTWARE—0.5% | |||
Oracle Corp. | |||
400 | 2.950%—04/01/2030 | 414 | |
3,500 | 3.600%—04/01/2040 | 3,588 | |
4,002 | |||
VMware Inc. | |||
3,600 | 4.650%—05/15/2027 | 4,121 | |
8,123 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—0.7% | |||
Dell International LLC / EMC Corp. | |||
4,000 | 5.450%—06/15/20231 | 4,366 | |
800 | 5.850%—07/15/20251 | 939 | |
3,300 | 6.020%—06/15/20261 | 3,939 | |
9,244 | |||
NetApp Inc. | |||
1,500 | 1.875%—06/22/2025 | 1,541 | |
10,785 | |||
TRADING COMPANIES & DISTRIBUTORS—0.4% | |||
AerCap Ireland Capital DAC / AerCap Global Aviation Trust | |||
403 | 3.500%—05/26/2022 | 413 | |
Aviation Capital Group LLC | |||
5,300 | 4.125%—08/01/20251 | 5,671 | |
6,084 | |||
TRANSPORTATION INFRASTRUCTURE—0.1% | |||
Central Nippon Expressway Co. Ltd. | |||
1,150 | 2.849%—03/03/2022 | 1,172 | |
WATER UTILITIES—0.3% | |||
Essential Utilities Inc. | |||
4,100 | 2.400%—05/01/2031 | 4,071 | |
WIRELESS TELECOMMUNICATION SERVICES—0.1% | |||
Sprint Communications Inc. | |||
800 | 6.000%—11/15/2022 | 855 | |
Sprint Corp. | |||
1,390 | 7.250%—09/15/2021 | 1,421 | |
2,276 | |||
TOTAL CORPORATE BONDS & NOTES | |||
(Cost $537,816) | 558,198 | ||
FOREIGN GOVERNMENT OBLIGATIONS—6.8% | |||
Abu Dhabi Government International Bond5 | |||
3,600 | 3.125%—04/16/20301 | 3,892 | |
Bank of Israel Bill - Makam | |||
ILS | 13,500 | 0.000%—04/06/20228 | 4,176 |
Brazil Letras Do Tesouro Nacional | |||
BRL | 212,400 | 0.000%—10/01/20218 | 38,424 |
FOREIGN GOVERNMENT OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
Chile Government International Bond | |||
EUR | 3,500 | 1.250%—01/22/2051 | $ 3,711 |
Israel Government International Bond | |||
$ | 4,800 | 2.750%—07/03/2030 | 5,067 |
4,600 | 3.875%—07/03/2050 | 5,134 | |
10,201 | |||
Japan International Cooperation Agency | |||
6,900 | 2.750%—04/27/2027 | 7,451 | |
Peruvian Government International Bond | |||
5,600 | 2.783%—01/23/2031 | 5,622 | |
PER | 8,600 | 5.940%—02/12/2029 | 2,471 |
15,000 | 6.350%—08/12/2028 | 4,421 | |
5,600 | 8.200%—08/12/2026 | 1,874 | |
14,388 | |||
Province of Ontario Canada | |||
CAD | 5,600 | 3.150%—06/02/2022 | 4,698 |
Province of Quebec Canada | |||
3,800 | 3.500%—12/01/2022 | 3,248 | |
13,900 | 4.250%—12/01/2021 | 11,574 | |
14,822 | |||
Provincia de Buenos Aires | |||
ARS | 310 | 37.854% (Argentina Deposit Rates Badlar Private Banks ARS 30 to 35 Days + 3.750) 04/12/20251,3 | 3 |
Qatar Government International Bond | |||
$ | 5,500 | 3.375%—03/14/2024 | 5,924 |
2,000 | 4.500%—01/20/2022 | 2,061 | |
7,985 | |||
Republic of Argentina Bills | |||
ARS | 33 | 0.000%—06/30/20218 | — |
5,765 | 0.000%—09/13/20218,10 | 63 | |
63 | |||
TOTAL FOREIGN GOVERNMENT OBLIGATIONS | |||
(Cost $113,650) | 109,814 | ||
MORTGAGE PASS-THROUGH—25.7% | |||
Federal Home Loan Mortgage Corp. | |||
$ | 1 | 2.388% (U.S. Treasury Yield Curve Rate T Note 1 Year Constant Maturity Treasury + 2.209) 06/01/20243 | 1 |
16 | 2.504% (U.S. Treasury Yield Curve Rate T Note 1 Year Constant Maturity Treasury + 2.250) 08/01/20353 | 17 | |
5,900 | 2.700%—08/01/2023 | 5,976 | |
551 | 3.500%—01/01/2026-02/01/2035 | 589 | |
1,646 | 4.000%—03/01/2025-04/01/2048 | 1,773 | |
209 | 4.500%—12/01/2040-09/01/2041 | 235 | |
625 | 5.500%—02/01/2038-07/01/2038 | 730 | |
2,214 | 6.000%—01/01/2029-05/01/2040 | 2,621 | |
11,942 | |||
Federal Home Loan Mortgage Corp. Multifamily Structured Pass Through Certificates | |||
17,404 | 1.340%—08/25/20223 | 233 | |
Federal Home Loan Mortgage Corp. REMIC11 | |||
4,579 | 0.465% (1 Month USD Libor + 0.350) 08/15/2040-10/15/20403 | 4,599 |
11
Harbor Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
MORTGAGE PASS-THROUGH—Continued | |||
Principal Amount | Value | ||
$ | 13 | 0.565% (1 Month USD Libor + 0.450) 11/15/20303 | $ 13 |
10 | 8.000%—08/15/2022 | 10 | |
4,622 | |||
Federal Home Loan Mortgage Corp. Structured Pass Through Certificates | |||
Series T-63 Cl. 1A1 | |||
65 | 1.579% (Fed 12 Month Treasury Average Constant Maturity Treasury + 1.200) 02/25/20453 | 66 | |
Series E3 Cl. A | |||
16 | 3.855%—08/15/20323 | 16 | |
82 | |||
Federal National Mortgage Association | |||
134 | 1.548% (Fed 12 Month Treasury Average Constant Maturity Treasury + 1.400) 10/01/20403 | 136 | |
5,123 | 2.310%—08/01/2022 | 5,200 | |
384 | 2.647% (12 Month USD Libor + 1.693) 08/01/20353 | 389 | |
397 | 2.661% (12 Month USD Libor + 1.715) 06/01/20353 | 420 | |
21 | 2.695% (12 Month USD Libor + 1.674) 05/01/20353 | 21 | |
33 | 3.000%—06/01/2021-11/01/2025 | 35 | |
6,262 | 3.500%—10/01/2021-05/01/2035 | 6,697 | |
6,134 | 4.000%—09/01/2023-02/01/2048 | 6,597 | |
4,576 | 4.500%—11/01/2022-10/01/2042 | 4,955 | |
1,702 | 5.000%—10/01/2031-06/01/2044 | 1,921 | |
16,671 | 5.500%—01/01/2025-09/01/2041 | 19,362 | |
5,409 | 6.000%—07/01/2023-06/01/2040 | 6,339 | |
52,072 | |||
Federal National Mortgage Association REMIC11 | |||
Series 2015-38 Cl. DF | |||
2,803 | 0.425% (1 Month USD Libor + 0.310) 06/25/20553 | 2,795 | |
Series 2006-5 Cl. 3A2 | |||
36 | 2.119%—05/25/20353 | 37 | |
Series 2020-M1 Cl. A2 | |||
4,400 | 2.444%—10/25/2029 | 4,671 | |
Series 2011-98 Cl. ZL | |||
53,560 | 3.500%—10/25/2041 | 56,605 | |
Series 2003-25 Cl. KP | |||
328 | 5.000%—04/25/2033 | 373 | |
Series 2003-W1 Cl. 1A1 | |||
129 | 5.226%—12/25/20423 | 141 | |
64,622 | |||
Federal National Mortgage Association TBA12 | |||
204,300 | 2.000%—06/17/2036-06/14/2051 | 206,645 | |
20,400 | 2.500%—07/14/2050 | 21,068 | |
12,900 | 3.500%—06/13/2048 | 13,715 | |
241,428 | |||
Government National Mortgage Association | |||
1,149 | 3.000%—11/15/2049 | 1,201 | |
2,253 | 5.000%—08/15/2033-06/15/2041 | 2,601 | |
3,802 | |||
Government National Mortgage Association II | |||
169 | 2.000% (U.S. Treasury Yield Curve Rate T Note 1 Year Constant Maturity Treasury + 1.500) 01/20/2025-02/20/20323 | 176 |
MORTGAGE PASS-THROUGH—Continued | |||
Principal Amount | Value | ||
$ | 57 | 2.125% (U.S. Treasury Yield Curve Rate T Note 1 Year Constant Maturity Treasury + 1.500) 10/20/2025-11/20/20293 | $ 59 |
53 | 2.250% (U.S. Treasury Yield Curve Rate T Note 1 Year Constant Maturity Treasury + 1.500) 08/20/2022-07/20/20273 | 55 | |
14 | 2.875% (U.S. Treasury Yield Curve Rate T Note 1 Year Constant Maturity Treasury + 1.500) 05/20/20243 | 14 | |
3,224 | 4.500%—02/20/2049 | 3,497 | |
143 | 5.000%—01/20/2049 | 157 | |
3,958 | |||
Government National Mortgage Association TBA12 | |||
5,000 | 4.000%—06/21/2046 | 5,357 | |
23,500 | 5.000%—06/18/2045 | 26,566 | |
31,923 | |||
TOTAL MORTGAGE PASS-THROUGH | |||
(Cost $404,970) | 414,684 | ||
MUNICIPAL BONDS—0.6% | |||
Chicago Transit Authority | |||
75 | 6.300%—12/01/2021 | 77 | |
City of Chicago, IL | |||
816 | 7.750%—01/01/2042 | 914 | |
New Jersey Transportation Trust Fund Authority | |||
1,400 | 2.551%—06/15/2023 | 1,447 | |
New York State Urban Development Corp. | |||
3,900 | 1.496%—03/15/2027 | 3,909 | |
University of California | |||
3,600 | 1.316%—05/15/2027 | 3,586 | |
TOTAL MUNICIPAL BONDS | |||
(Cost $9,774) | 9,933 | ||
PREFERRED STOCKS—1.3% | |||
Shares | |||
PREFERRED STOCKS—1.3% | |||
656,033 | AT&T Mobility II LLC | 17,256 x | |
3,000,000 | Depository Trust & Clearing Corp.1 | 2,963 | |
TOTAL PREFERRED STOCKS | |||
(Cost $20,730) | 20,219 | ||
U.S. GOVERNMENT OBLIGATIONS—19.4% | |||
Principal Amount | |||
U.S. Treasury Bonds | |||
$ | 54,700 | 1.375%—11/15/2040-08/15/2050 | 44,646 |
2,500 | 1.625%—11/15/2050 | 2,139 | |
10,600 | 1.875%—02/15/2041 | 10,087 | |
32,500 | 2.500%—02/15/2045 | 33,935 | |
7,300 | 2.875%—05/15/2043-08/15/2045 | 8,145 | |
5,700 | 3.000%—02/15/2048 | 6,530 | |
70,000 | 3.125%—08/15/2044 | 81,337 |
12
Harbor Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
U.S. GOVERNMENT OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
$ | 13,400 | 3.375%—05/15/2044 | $ 16,188 |
4,200 | 4.250%—05/15/2039 | 5,605 | |
208,612 | |||
U.S. Treasury Notes | |||
13,100 | 1.875%—07/31/20229 | 13,394 | |
41,000 | 2.000%—08/31/2021 | 41,262 | |
49,500 | 2.000%—10/31/2021-12/31/20219 | 50,116 | |
104,772 | |||
TOTAL U.S. GOVERNMENT OBLIGATIONS | |||
(Cost $317,438) | 313,384 | ||
SHORT-TERM INVESTMENTS—3.3% | |||
REPURCHASE AGREEMENTS—2.7% | |||
$ | 43,200 | Repurchase Agreement with RBC Capital Markets LLC dated April 30, 2021 due May 03, 2021 at 0.010% collateralized by U.S. Treasury Notes (value $43,845) | 43,200 |
SHORT-TERM INVESTMENTS—Continued | |||
Principal Amount | Value | ||
U.S. GOVERNMENT OBLIGATIONS—0.6% | |||
Federal Home Loan Bank Discount Notes | |||
$ | 10,800 | 0.020%—06/16/2021† | $ 10,800 |
TOTAL SHORT-TERM INVESTMENTS | |||
(Cost $54,000) | 54,000 | ||
TOTAL INVESTMENTS—115.0% | |||
(Cost $1,819,999) | 1,855,746 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—(15.0)% | (242,543) | ||
TOTAL NET ASSETS—100.0% | $1,613,203 |
FORWARD CURRENCY CONTRACTS
Counterparty | Amount to be Delivered (000s) | Amount to be Received (000s) | Settlement Date | Unrealized Appreciation/ (Depreciation) (000s) | ||||
Citibank NA | $ 11,566 | BRL 62,496 | 05/04/2021 | $ (64) | ||||
Citibank NA | $ 11,371 | BRL 62,496 | 06/02/2021 | 99 | ||||
Deutsche Bank AG | $ 11,273 | BRL 62,496 | 05/04/2021 | 228 | ||||
Citibank NA | BRL 62,496 | $ 11,394 | 05/04/2021 | (107) | ||||
Deutsche Bank AG | BRL 62,496 | $ 11,566 | 05/04/2021 | 64 | ||||
JP Morgan Chase Bank NA | BRL 109,000 | $ 37,551 | 10/04/2021 | (954) | ||||
Citibank NA | $ 1,080 | GBP 771 | 05/17/2021 | (15) | ||||
HSBC Bank USA | $ 1,411 | GBP 1,905 | 05/17/2021 | (42) | ||||
Citibank NA | GBP 67,987 | $ 94,498 | 05/17/2021 | 601 | ||||
JP Morgan Chase Bank NA | GBP 1,414 | $ 1,970 | 05/17/2021 | 18 | ||||
BNP Paribas SA | $ 16,046 | CAD 19,740 | 05/04/2021 | 14 | ||||
HSBC Bank USA | $ 3,824 | CAD 4,742 | 05/04/2021 | 35 | ||||
BNP Paribas SA | CAD 7,124 | $ 5,649 | 05/04/2021 | (147) | ||||
BNP Paribas SA | CAD 19,740 | $ 16,047 | 06/02/2021 | (14) | ||||
Citibank NA | CAD 17,358 | $ 13,783 | 05/04/2021 | (339) | ||||
HSBC Bank USA | CAD 4,742 | $ 3,824 | 06/02/2021 | (35) | ||||
HSBC Bank USA | $ 96 | CLP 68,954 | 05/17/2021 | 1 | ||||
HSBC Bank USA | $ 6,799 | CLP 4,937,937 | 06/18/2021 | 147 | ||||
HSBC Bank USA | EUR 31,648 | $ 38,249 | 05/17/2021 | 187 | ||||
BNP Paribas SA | $ 135 | INR 10,029 | 06/16/2021 | (1) | ||||
Société Générale | JPY 156,600 | $ 1,480 | 05/17/2021 | 47 | ||||
HSBC Bank USA | $ 7,138 | MXN 150,107 | 09/03/2021 | 166 | ||||
Citibank NA | ILS 13,500 | $ 4,120 | 04/06/2022 | (61) | ||||
BNP Paribas SA | PER 1,804 | $ 1,143 | 08/04/2021 | 28 | ||||
Citibank NA | PER 4,467 | $ 1,215 | 06/08/2021 | 34 | ||||
Citibank NA | PER 2,803 | $ 758 | 06/14/2021 | 17 | ||||
Citibank NA | PER 5,056 | $ 1,380 | 06/23/2021 | 43 | ||||
Citibank NA | PER 10,072 | $ 2,775 | 07/08/2021 | 112 | ||||
Citibank NA | PER 6,963 | $ 1,900 | 08/18/2021 | 60 | ||||
Citibank NA | PER 1,810 | $ 488 | 09/20/2021 | 10 | ||||
Total Forward Currency Contracts | $ 132 |
13
Harbor Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
FUTURES CONTRACTS
Description | Number of Contracts | Expiration Date | Current Notional Value (000s) | Unrealized Appreciation/ (Depreciation) (000s) | ||||
Euro-Bund Futures (Short) | 10 | 06/08/2021 | EUR 1,700 | $ 18 | ||||
Euro-Buxl Futures (Short) | 35 | 06/08/2021 | 7,066 | 98 | ||||
Long Gilt Futures (Short) | 20 | 06/28/2021 | GBP 2,553 | 31 | ||||
U.S. Treasury Bond Futures 30 year (Short) | 106 | 06/21/2021 | $ 16,669 | 357 | ||||
U.S. Treasury Note Futures 5 year (Short) | 436 | 06/30/2021 | 54,037 | 452 | ||||
U.S. Treasury Note Futures 10 year (Long) | 1,152 | 06/21/2021 | 152,100 | (2,163) | ||||
Total Futures Contracts | $(1,207) |
PURCHASED OPTIONS
PURCHASED SWAP OPTIONS NOT SETTLED THROUGH VARIATION MARGIN
Description | Counterparty | Floating Rate Index | Pay/Receive Floating Rate | Strike Rate | Expiration Date | Number of Contracts/ Notional | Premiums Paid (000s) | Value (000s) | ||||||||
Interest Rate Swap Option (Put) | Goldman Sachs Bank USA | SONIA Overnight Deposit Rates Swap | Receive | 0.900% | 03/15/2022 | 5,000,000 | $528 | $519 |
WRITTEN OPTIONS
WRITTEN OPTIONS NOT SETTLED THROUGH VARIATION MARGIN
Description | Counterparty | Strike Price | Expiration Date | Number of Contracts/ Notional | Premiums Received (000s) | Value (000s) | ||||||
Federal National Mortgage Association Future Option 30 year (Call) | Goldman Sachs & Co. LLC | $ 101.23 | 07/07/2021 | 5,000,000 | $ 25 | $(25) | ||||||
Federal National Mortgage Association Future Option 30 year (Put) | Goldman Sachs & Co. LLC | 98.98 | 06/07/2021 | 4,000,000 | 21 | (6) | ||||||
Federal National Mortgage Association Future Option 30 year (Put) | Goldman Sachs & Co. LLC | 101.17 | 06/07/2021 | 5,000,000 | 30 | (3) | ||||||
Federal National Mortgage Association Future Option 30 year (Put) | Goldman Sachs & Co. LLC | 102.12 | 05/06/2021 | 5,000,000 | 22 | — | ||||||
Federal National Mortgage Association Future Option 30 year (Call) | JP Morgan Chase Bank NA | 100.53 | 06/07/2021 | 4,000,000 | 21 | (31) | ||||||
Federal National Mortgage Association Future Option 30 year (Put) | JP Morgan Chase Bank NA | 98.53 | 06/07/2021 | 4,000,000 | 25 | (5) | ||||||
Federal National Mortgage Association Future Option 30 year (Put) | JP Morgan Chase Bank NA | 100.75 | 05/06/2021 | 7,000,000 | 49 | (10) | ||||||
Total Written Options Not Settled Through Variation Margin | $193 | $(80) |
WRITTEN SWAP OPTIONS NOT SETTLED THROUGH VARIATION MARGIN
Description | Counterparty | Floating Rate Index | Pay/Receive Floating Rate | Strike Rate | Expiration Date | Number of Contracts/ Notional | Premiums Received (000s) | Value (000s) | ||||||||
Interest Rate Swap Option (Put) | Goldman Sachs Bank USA | SONIA Overnight Deposit Rates Swap | Pay | 0.800% | 03/15/2022 | 13,500,000 | $513 | $(544) | ||||||||
Total Written Options | $706 | $(624) |
INTEREST RATE SWAP AGREEMENTS
CENTRALLY CLEARED SWAP AGREEMENTS
INTEREST RATE SWAPS
Counterparty | Floating Rate Index | Pay/ Receive Floating Rate | Fixed Rate | Payment Frequency | Expiration Date | Notional Amount (000s) | Value (000s) | Upfront Premiums (Received)/ Paid (000s) | Unrealized Appreciation/ (Depreciation) (000s) | |||||||||
CME Group | Brazil CETIP Interbank Deposit | Receive | 2.850% | At maturity | 01/03/2022 | BRL 74,900 | $ 127 | $ (1) | $ 128 | |||||||||
CME Group | Brazil CETIP Interbank Deposit | Receive | 2.859 | At maturity | 01/03/2022 | 51,000 | 84 | — | 84 | |||||||||
CME Group | Brazil CETIP Interbank Deposit | Receive | 2.860 | At maturity | 01/03/2022 | 59,300 | 101 | (1) | 102 | |||||||||
CME Group | Brazil CETIP Interbank Deposit | Receive | 2.870 | At maturity | 01/03/2022 | 16,900 | 28 | — | 28 | |||||||||
CME Group | Brazil CETIP Interbank Deposit | Receive | 2.871 | At maturity | 01/03/2022 | 27,000 | 45 | — | 45 | |||||||||
CME Group | Brazil CETIP Interbank Deposit | Receive | 2.883 | At maturity | 01/03/2022 | 17,000 | 27 | — | 27 | |||||||||
CME Group | Brazil CETIP Interbank Deposit | Pay | 3.345 | At maturity | 01/03/2022 | 7,800 | (8) | — | (8) | |||||||||
CME Group | Brazil CETIP Interbank Deposit | Pay | 3.350 | At maturity | 01/03/2022 | 153,200 | (149) | (6) | (143) | |||||||||
CME Group | Brazil CETIP Interbank Deposit | Pay | 3.360 | At maturity | 01/03/2022 | 945,100 | (212) | 276 | (488) | |||||||||
CME Group | Brazil CETIP Interbank Deposit | Pay | 3.700 | At maturity | 01/03/2022 | 124,000 | (87) | (73) | (14) |
14
Harbor Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
INTEREST RATE SWAP AGREEMENTS—Continued
CENTRALLY CLEARED SWAP AGREEMENTS—Continued
INTEREST RATE SWAPS—Continued
Counterparty | Floating Rate Index | Pay/ Receive Floating Rate | Fixed Rate | Payment Frequency | Expiration Date | Notional Amount (000s) | Value (000s) | Upfront Premiums (Received)/ Paid (000s) | Unrealized Appreciation/ (Depreciation) (000s) | |||||||||
LCH Group | SONIA Overnight Deposit Rates Swap | Receive | 0.500% | Annual | 06/16/2051 | GBP 24,300 | $4,049 | $(1,838) | $ 5,887 | |||||||||
CME Group | British Bankers' Association LIBOR JPY 6-Month | Receive | 0.300 | Semi-annual | 03/18/2026 | JPY 1,230,000 | (169) | (51) | (118) | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Pay | (0.064) | Semi-annual | 09/19/2026 | 225,000 | (8) | — | (8) | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Receive | 0.300 | Semi-annual | 09/20/2027 | 2,180,000 | (347) | (114) | (233) | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Receive | 0.300 | Semi-annual | 03/20/2028 | 1,020,000 | (168) | 73 | (241) | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Pay | 0.380 | Semi-annual | 06/18/2028 | 5,480,000 | 1,249 | 209 | 1,040 | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Receive | 0.399 | Semi-annual | 06/18/2028 | 770,000 | (187) | (1) | (186) | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Receive | 0.450 | Semi-annual | 03/20/2029 | 660,000 | (184) | (48) | (136) | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Receive | 0.750 | Semi-annual | 03/20/2038 | 104,000 | (67) | 6 | (73) | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Receive | 0.800 | Semi-annual | 10/22/2038 | 220,000 | (158) | — | (158) | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Receive | 0.750 | Semi-annual | 12/20/2038 | 27,800 | (20) | 2 | (22) | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Pay | 0.103 | Semi-annual | 08/28/2039 | 10,000 | (4) | — | (4) | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Pay | 1.000 | Semi-annual | 03/21/2048 | 230,000 | 267 | 561 | (294) | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Receive | 0.538 | Semi-annual | 03/15/2051 | 765,000 | 9 | (5) | 14 | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Receive | 0.520 | Semi-annual | 03/16/2051 | 206,000 | 12 | — | 12 | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Receive | 0.350 | Semi-annual | 03/17/2051 | 184,000 | 93 | 102 | (9) | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Receive | 0.557 | Semi-annual | 03/17/2051 | 695,000 | (26) | — | (26) | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Receive | 0.570 | Semi-annual | 03/19/2051 | 176,000 | (13) | — | (13) | |||||||||
LCH Group | British Bankers' Association LIBOR JPY 6-Month | Receive | 0.572 | Semi-annual | 04/07/2051 | 78,000 | (6) | — | (6) | |||||||||
CME Group | British Bankers' Association LIBOR USD 3-Month | Pay | 2.800 | Semi-annual | 08/22/2023 | $ 86,000 | 5,350 | (1,932) | 7,282 | |||||||||
Centrally Cleared Interest Rate Swaps | $12,469 | |||||||||||||||||
Interest Rate Swaps | $12,469 |
CREDIT DEFAULT SWAP AGREEMENTS
CENTRALLY CLEARED SWAP AGREEMENTS
CREDIT DEFAULT SWAPS
Counterparty | Reference Entity | Buy/ Sella,b | Pay/Receive Fixed Rate | Expiration Date | Implied Credit Spreadc | Payment Frequency | Notional Amountd (000s) | Value e (000s) | Upfront Premiums (Received)/Paid (000s) | Unrealized Appreciation/ (Depreciation) (000s) | ||||||||||
ICE Group | Rolls-Royce PLC 2.125% due 06/18/2021 | Sell | 1.000% | 06/20/2025 | 2.472% | Quarterly | EUR 5,000 | $(342) | $(892) | $550 | ||||||||||
ICE Group | Tesco PLC 6.000% due 12/14/2029 | Sell | 1.000 | 06/20/2022 | 0.182 | Quarterly | 2,300 | 29 | (113) | 142 | ||||||||||
ICE Group | Markit CDX North America High Yield Index Series 36 0.001% | Buy | 5.000 | 06/20/2026 | 2.865 | Quarterly | $ 6,300 | (657) | (601) | (56) |
15
Harbor Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
CREDIT DEFAULT SWAP AGREEMENTS—Continued
CENTRALLY CLEARED SWAP AGREEMENTS—Continued
CREDIT DEFAULT SWAPS—Continued
Counterparty | Reference Entity | Buy/ Sella,b | Pay/Receive Fixed Rate | Expiration Date | Implied Credit Spreadc | Payment Frequency | Notional Amountd (000s) | Value e (000s) | Upfront Premiums (Received)/Paid (000s) | Unrealized Appreciation/ (Depreciation) (000s) | ||||||||||
ICE Group | General Electric Company 2.700% due 10/09/2022 | Sell | 1.000% | 12/20/2023 | 0.416% | Quarterly | $ 2,700 | $ 45 | $(119) | $ 164 | ||||||||||
ICE Group | General Electric Company 2.700% due 10/09/2022 | Sell | 1.000 | 06/20/2024 | 0.456 | Quarterly | 1,200 | 22 | (3) | 25 | ||||||||||
ICE Group | General Electric Company 2.700% due 10/09/2022 | Sell | 1.000 | 12/20/2024 | 0.543 | Quarterly | 2,600 | 46 | (37) | 83 | ||||||||||
ICE Group | General Electric Company 2.700% due 10/09/2022 | Sell | 1.000 | 06/20/2026 | 0.772 | Quarterly | 4,000 | 50 | 33 | 17 | ||||||||||
ICE Group | Markit CDX North America High Yield Index Series 35 0.001% | Buy | 5.000 | 12/20/2025 | 2.664 | Quarterly | 3,300 | (346) | (238) | (108) | ||||||||||
ICE Group | The Boeing Company 8.750% due 08/15/2021 | Sell | 1.000 | 12/20/2022 | 0.669 | Quarterly | 5,200 | 34 | 1 | 33 | ||||||||||
Centrally Cleared Credit Default Swaps | $ 850 |
OVER-THE-COUNTER (OTC) SWAP AGREEMENTS
CREDIT DEFAULT SWAPS
Counterparty | Reference Entity | Buy/ Sella,b | Pay/Receive Fixed Rate | Expiration Date | Implied Credit Spreadc | Payment Frequency | Notional Amountd (000s) | Value e (000s) | Upfront Premiums (Received)/Paid (000s) | Unrealized Appreciation/ (Depreciation) (000s) | ||||||||||
Citibank NA | Equitable Holdings Inc. 3.900% due 04/20/2023 | Sell | 1.000% | 06/20/2023 | 0.277% | Quarterly | $ 4,200 | $70 | $(115) | $ 185 | ||||||||||
Credit Default Swaps | $ 1,035 | |||||||||||||||||||
Total Swaps | $13,504 |
FIXED INCOME INVESTMENTS SOLD SHORT — (2.3)%
Principal Amount (000s) | Security | Proceeds (000s) | Value (000s) | |||
$ 23,000 | Federal National Mortgage Association TBA12 4.000%—05/13/2051 | $ 24,686 | $ (24,712) | |||
13,000 | Federal National Mortgage Association TBA12 2.000%—05/13/2051 | 12,995 | (13,130) | |||
Total Fixed Income Investments Sold Short | $ 37,681 | $ (37,842) |
REVERSE REPURCHASE AGREEMENTS— (0.2)%
Counterparty | Borrowing Rate | Borrowing Date | Maturity Date | Proceeds (000s) | Payable for Reverse Repurchase Agreements (000s) | |||||
Barclays Bank PLC | (0.450)% | 03/16/2021 | 03/17/2023 | $3,347 | $(3,347) |
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of April 30, 2021 based on the inputs used to value them.
Asset Category | Quoted Prices Level 1 (000s) | Other Significant Observable Inputs Level 2 (000s) | Significant Unobservable Inputs Level 3 (000s) | Total (000s) | ||||
Investments in Securities | ||||||||
Asset-Backed Securities | $— | $169,754 | $— | $169,754 | ||||
Collateralized Mortgage Obligations | — | 205,760 | — | 205,760 | ||||
Corporate Bonds & Notes | — | 558,198 | — | 558,198 | ||||
Foreign Government Obligations | — | 109,814 | — | 109,814 |
16
Harbor Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
FAIR VALUE MEASUREMENTS—Continued
Asset Category | Quoted Prices Level 1 (000s) | Other Significant Observable Inputs Level 2 (000s) | Significant Unobservable Inputs Level 3 (000s) | Total (000s) | ||||
Mortgage Pass-Through | $ — | $ 414,684 | $ — | $ 414,684 | ||||
Municipal Bonds | — | 9,933 | — | 9,933 | ||||
Preferred Stocks | — | 2,963 | 17,256 | 20,219 | ||||
U.S. Government Obligations | — | 313,384 | — | 313,384 | ||||
Short-Term Investments | ||||||||
Repurchase Agreements | — | 43,200 | — | 43,200 | ||||
U.S. Government Obligations | — | 10,800 | — | 10,800 | ||||
Total Investments in Securities | $ — | $1,838,490 | $17,256 | $1,855,746 | ||||
Financial Derivative Instruments - Assets | ||||||||
Forward Currency Contracts | $ — | $ 1,911 | $ — | $ 1,911 | ||||
Futures Contracts | 956 | — | — | 956 | ||||
Purchased Options | — | 519 | — | 519 | ||||
Swap Agreements | — | 15,848 | — | 15,848 | ||||
Total Financial Derivative Instruments - Assets | $ 956 | $ 18,278 | $ — | $ 19,234 | ||||
Liability Category | ||||||||
Fixed Income Investments Sold Short | $ — | $ (37,842) | $ — | $ (37,842) | ||||
Financial Derivative Instruments - Liabilities | ||||||||
Forward Currency Contracts | $ — | $ (1,779) | $ — | $ (1,779) | ||||
Futures Contracts | (2,163) | — | — | (2,163) | ||||
Swap Agreements | — | (2,344) | — | (2,344) | ||||
Written Options | — | (624) | — | (624) | ||||
Total Financial Derivative Instruments - Liabilities | $(2,163) | $ (4,747) | $ — | $ (6,910) | ||||
Total Investments | $(1,207) | $1,814,179 | $17,256 | $1,830,228 |
For more information on valuation inputs and their aggregation into the levels used in the table above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
The following is a rollforward of the Fund’s Level 3 investments during the period ended April 30, 2021. Transfers into or out of Level 3 are recognized as of the last day in the fiscal quarter of the period in which the event or change in circumstances that caused the reclassification occured.
Valuation Description | Beginning Balance as of 11/01/2020 (000s) | Purchases (000s) | Sales (000s) | Discount/ (Premium) (000s) | Total Realized Gain/(Loss) (000s) | Change in Unrealized Appreciation/ (Depreciation) (000s) | Transfers Into Level 3 (000s) | Transfers Out of Level 3h (000s) | Ending Balance as of 04/30/2021 (000s) | Unrealized Gain/ Loss as of 04/30/2021 (000s) | ||||||||||
Asset-Backed Securities | $ 5,099 | $— | $— | $— | $ — | $ 49 | $— | $5,148 | $ — | $ — | ||||||||||
Escrow | — | — | — | — | (12) | 12 | — | — | — | — | ||||||||||
Preferred Stocks | 17,513 | — | — | — | — | (257) | — | — | 17,256 | (488) | ||||||||||
$22,612 | $— | $— | $— | $(12) | $(196) | $— | $5,148 | $17,256 | $(488) |
The following is a summary of significant unobservable inputs used in the fair valuations of assets and liabilities categorized within Level 3 of the fair value hierarchy.
Valuation Descriptions | Balance as of 04/30/2021 (000s) | Valuation Technique | Unobservable Input(s) | Input Value(s) | ||||
Investments in Securities | ||||||||
Preferred Stocks | ||||||||
AT&T Mobility II LLC | $ 17,256 | Market Approach | Trade Price | $ 27.05 |
REMAINING CONTRACTUAL MATURITY OF TRANSFERS ACCOUNTED FOR AS SECURED BORROWINGS
The following is a summary of the remaining contractual maturities of transfers accounted for as secured borrowings, by collateral type, as of April 30, 2021.
Overnight and Continuous (000s) | Up to 30 Days (000s) | 31-90 Days (000s) | Greater Than 90 Days (000s) | Total (000s) | |||||
Reverse Repurchase Agreements | |||||||||
U.S. Treasury Obligations | $— | $— | $— | $3,347 | $3,347 |
17
Harbor Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
* | Security in Default |
† | Coupon represents yield to maturity |
x | Fair valued in accordance with Harbor Funds' Valuation Procedures. |
1 | Securities purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At April 30, 2021, the aggregate value of these securities was $399,050 or 25% of net assets. |
2 | CLO after the name of a security stands for Collateralized Loan Obligation. |
3 | Variable or floating rate security; the stated rate represents the rate in effect at April 30, 2021. The variable rate for such securities may be based on the indicated reference rate and spread or on an underlying asset or pool of assets rather than a reference rate and may be determined by current interest rates, prepayments or other financial indicators. |
4 | Step coupon security; the stated rate represents the rate in effect at April 30, 2021. |
5 | MTN after the name of a security stands for Medium Term Note. |
6 | Perpetuity bond; the maturity date represents the next callable date. |
7 | Rate changes from fixed to variable rate at a specified date prior to its final maturity. Stated rate is fixed rate currently in effect and stated date is the final maturity date, except for perpetuity bonds. |
8 | Zero coupon bond |
9 | At April 30, 2021, a portion of securities held by the Fund were pledged as collateral for exchange traded and centrally cleared derivatives, over-the-counter (OTC) derivatives, forward commitments, or secured borrowings (see Note 2 of the accompanying Notes to Financial Statements). The securities pledged had an aggregate value of $18,340 or 1% of net assets. |
10 | Inflation-protected securities (“IPS”) are securities in which the principal amount is adjusted for inflation and interest payments are applied to the inflation-adjusted principal. |
11 | REMICs are collateralized mortgage obligations which can hold mortgages secured by any type of real property and issue multiple-class securities backed by those mortgages. |
12 | TBAs are mortgage-backed securities traded under delayed delivery commitments, settling after April 30, 2021. Although the unit price for the trades has been established, the principal value has not been finalized. However, the amount of the commitments will not fluctuate more than 2% from the principal amount. Income on TBAs is not earned until settlement date (see Note 2 of the accompanying Notes to Financial Statements). |
a | If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or underlying securities comprising the referenced index or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index. |
b | If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index. |
c | Implied credit spreads, represented in absolute terms, utilized in determining the value of credit default swap agreements on corporate issues or sovereign issues of an emerging country as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as “Defaulted” indicates a credit event has occurred for the referenced entity or obligation. |
d | The maximum potential amount the Fund could be required to make as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement. |
e | The quoted market prices and resulting values for credit default swap agreements on asset-backed securities and credit indices serve as an indicator of the current status of the payment/performance risk and represent the likelihood of an expected liability (or profit) for the credit derivative should the notional amount of the swap agreement be closed/sold as of the period end. Increasing values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. |
h | Transferred from Level 3 to Level 2 due to the availability of observable market data for pricing |
ARS | Argentine Peso |
BRL | Brazilian Real |
CAD | Canadian Dollar |
CLP | Chilean Peso |
EUR | Euro |
GBP | British Pound Sterling |
ILS | Israeli New Shekel |
INR | Indian Rupee |
JPY | Japanese Yen |
MXN | Mexican Peso |
PER | Peruvian Nuevo Sol |
The accompanying notes are an integral part of the Financial Statements.
18
Harbor Convertible Securities Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Shenkman Capital Management, Inc.
461 Fifth Avenue
22nd Floor
22nd Floor
New York, NY 10017
Portfolio Managers
Mark R. Shenkman
Since 2011
Since 2011
Justin W. Slatky
Since 2017
Since 2017
Jordan N. Barrow, CFA
Since 2016
Since 2016
Thomas Whitley, CFA
Since 2019
Since 2019
Shenkman Capital has subadvised the Fund since 2011.
Investment Objective
The Fund seeks to maximize total returns (i.e., current income and capital appreciation).
Mark R. Shenkman
Justin W. Slatky
Jordan N. Barrow, CFA
Thomas Whitley, CFA
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
The six-month period ended April 30, 2021 was a bullish but increasingly volatile time period for U.S. equities. While the S&P 500 and the Dow Jones Industrial Average both closed the period within 1% of their highs, the NASDAQ Composite and Russell 2000® indices were a bit more volatile. This is evidenced by their realized volatility of 38% and 23% higher than the S&P 500’s, respectively. October through January saw continued strength in sectors that have been less impacted from COVID-19, such as Information Technology, while the more traditionally cyclical sectors of Financials and Industrials led much of the gains in the S&P 500 during the second half of the period. 2021 has seen an increased focus on the timing and magnitude of the pandemic reopening from market traders.
The ICE BofA U.S. Convertible Mandatory Index (“V0A0” or the “Index”) returned 29.00% for the six-month period ended April 30, 2021. The largest contributing sectors were generally the largest weights in the Index: Information Technology, Consumer Discretionary, Communications Services, and Healthcare. New issue activity remained robust during the period and accelerated into 2021. $60 billion of primary issuance priced off of U.S. desks during the period. The market continues to see a healthy mix of new and repeat issuers in growth industries, as well as new issuers from traditionally value-oriented areas.
Performance
Harbor Convertible Securities Fund returned 18.10% (Retirement Class), 18.07% (Institutional Class), 17.85% (Administrative Class) and 17.83% (Investor Class) for the six-month period ended April 30, 2021, compared with the 29.00% return of the Index during the same period. The Fund was negatively impacted relative to the benchmark due to an underweight allocation in the most equity like portion of the market (those securities with a 100% investment premium or more), which the Fund stylistically tends to underweight/sell due to excess equity sensitivity.
From an industry contribution point of view, the best performing industries in the Fund were Software, Entertainment, and Semiconductors. The Fund’s Software holdings returned 14.42% during the period. Initially helped by increased enterprise spending relating to work-from-home employees and potential cybersecurity attacks, the industry gave up some of its earlier gains as higher-multiple equities sold off during the February to March time frame. Entertainment was aided by a mix of internet-related companies, such as Bilibili, as well as traditional entertainment providers, such as Live Nation. The Semiconductor industry has continued to benefit from increased spending on more efficient hardware, as well as better pricing in the wake of recent microchip shortages.
Negatively contributing industries were mostly lacking during the period, but losses were focused around the Consumer Finance, Electrical Equipment, and Leisure Products industries. Within Consumer Finance, LendingTree was a detractor. The company connects borrowers and lenders online for various consumer products, and the equity has recently been volatile due to fears of weakening mortgage demand in the wake of higher interest rates. In Electrical Equipment, Sunrun was the only security held in the Fund. A provider of solar-roof equipment and services, the solar energy market has been volatile around fluctuating traditional energy prices and uncertainty on government subsidies. In Leisure Products, Peloton was again the Fund’s only holding in that industry. Despite strong growth and earnings, the company has been under pressure over potential safety concerns around its new treadmill line of products.
19
Harbor Convertible Securities Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | |||||||||
6 Months | 5 Years | 10 Years | |||||||||
Harbor Convertible Securities Fund | |||||||||||
Retirement Class1 | 18.10% | 42.47% | 12.86% | 8.26% | |||||||
Institutional Class | 18.07 | 42.27 | 12.76 | 8.21 | |||||||
Administrative Class | 17.85 | 41.88 | 12.40 | 7.91 | |||||||
Investor Class | 17.83 | 41.78 | 12.33 | 7.81 | |||||||
Comparative Index | |||||||||||
ICE BofA U.S. Convertible Ex Mandatory | 29.00% | 65.10% | 20.92% | 13.35% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.69% (Net) and 0.74% (Gross) (Retirement Class), 0.77% (Net) and 0.82% (Gross) (Institutional Class), 1.02% (Net) and 1.07% (Gross) (Administrative Class), and 1.13% (Net) and 1.18% (Gross) (Investor Class). The net expense ratios reflect a contractual management fee waiver effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050. The Fund charges a redemption fee of 1% on redemption of Fund shares that are held for less than 90 days.
Outlook & Strategy
Volatility has remained high during the market bounce back and subsequent bull run of the last year. This has led to increased opportunities in active rebalancing, both through taking advantage of fluctuations in the secondary market, as well as primary purchases of new companies who are issuing convertibles for the first time.
Looking forward, given recent market upheaval and sustained volatility in equity markets, we believe long term prospects remain constructive for convertible securities. The prospects include: balanced posture of the convertible market with an emphasis on credit; an issuer base with long term growth characteristics; a new issue conduit for backed up High Yield and/or Equity issuers; and potential upside combination of underlying equity improvement and credit spread tightening.
1 | Retirement Class shares commenced operations on March 1, 2016. The performance attributed to the Retirement Class shares prior to that date is that of the Institutional Class shares. Performance prior to March 1, 2016 has not been adjusted to reflect the lower expenses of Retirement Class shares. During this period, Retirement Class shares would have had returns similar to, but potentially higher than, Institutional Class shares due to the fact that Retirement Class shares represent interests in the same portfolio as Institutional Class shares but are subject to lower expenses. |
This report contains the current opinions of Shenkman Capital Management, Inc. as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Convertible securities tend to be of lower credit quality, and the value of a convertible security generally increases and decreases with the value of the underlying common stock, but may also be sensitive to changes in interest rates. As interest rates rise, the values of convertible securities held by the Fund are likely to decrease and reduce the value of the Fund’s portfolio. Credit risk is higher for the Fund because it invests primarily in convertible securities of companies with debt rated below investment grade. High yield investing poses additional credit risk related to lower-rated bonds. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
20
Harbor Convertible Securities Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Sector Allocation (% of investments)
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
COMMON STOCKS—0.8% | |||
(Cost $1,257) | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—0.8% | |||
34,020 | Marvell Technology Inc. | $ 1,538 | |
CONVERTIBLE BONDS—97.1% | |||
Principal Amount | |||
AEROSPACE & DEFENSE—0.5% | |||
Parsons Corp. | |||
$ | 840 | 0.250%—08/15/20251 | 964 |
AIRLINES—2.1% | |||
Jetblue Airways Corp. | |||
1,637 | 0.500%—04/01/20261 | 1,797 | |
Southwest Airlines Co. | |||
602 | 1.250%—05/01/2025 | 1,048 | |
Spirit Airlines Inc. | |||
999 | 1.000%—05/15/2026 | 1,030 | |
3,875 | |||
AUTO COMPONENTS—0.4% | |||
CIE Generale des Etablissements Michelin SCA | |||
800 | 0.000%—01/10/20222 | 829 | |
AUTOMOBILES—1.7% | |||
Ford Motor Co. | |||
1,590 | 0.000%—03/15/20261,2 | 1,578 | |
Winnebago Industries Inc. | |||
1,079 | 1.500%—04/01/2025 | 1,543 | |
3,121 | |||
BANKS—0.4% | |||
BofA Finance LLC MTN3 | |||
643 | 0.250%—05/01/2023 | 729 | |
BIOTECHNOLOGY—4.5% | |||
BioMarin Pharmaceutical Inc. | |||
2,515 | 0.599%—08/01/2024 | 2,565 | |
Coherus Biosciences Inc. | |||
586 | 1.500%—04/15/2026 | 626 |
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
BIOTECHNOLOGY—Continued | |||
Exact Sciences Corp. | |||
$ | 756 | 0.375%—03/15/2027 | $ 1,033 |
44 | 1.000%—01/15/2025 | 83 | |
1,116 | |||
Halozyme Therapeutics Inc. | |||
820 | 0.250%—03/01/20271 | 793 | |
Ionis Pharmaceuticals Inc. | |||
560 | 0.125%—12/15/2024 | 521 | |
Ironwood Pharmaceuticals Inc. | |||
460 | 0.750%—06/15/2024 | 506 | |
451 | 1.500%—06/15/2026 | 506 | |
1,012 | |||
Neurocrine Biosciences Inc. | |||
414 | 2.250%—05/15/2024 | 548 | |
Qiagen NV | |||
1,200 | 0.000%—12/17/20272 | 1,199 | |
8,380 | |||
CAPITAL MARKETS—0.8% | |||
Ares Capital Corp. | |||
1,191 | 3.750%—02/01/2022 | 1,235 | |
233 | 4.625%—03/01/2024 | 254 | |
1,489 | |||
COMMUNICATIONS EQUIPMENT—0.7% | |||
Lumentum Holdings Inc. | |||
1,237 | 0.500%—12/15/2026 | 1,372 | |
CONSTRUCTION & ENGINEERING—0.9% | |||
Vinci SA | |||
1,400 | 0.375%—02/16/2022 | 1,649 | |
CONSUMER FINANCE—0.6% | |||
LendingTree Inc. | |||
1,254 | 0.500%—07/15/20251 | 1,114 | |
DIVERSIFIED CONSUMER SERVICES—1.5% | |||
Chegg Inc. | |||
1,755 | 0.000%—09/01/20261,2 | 1,937 | |
K12 Inc. | |||
1,047 | 1.125%—09/01/20271 | 942 | |
2,879 |
21
Harbor Convertible Securities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
DIVERSIFIED TELECOMMUNICATION SERVICES—2.0% | |||
Cable One Inc. | |||
$ | 944 | 0.000%—03/15/20261,2 | $ 922 |
Liberty Broadband Corp. | |||
514 | 1.250%—09/30/20501 | 512 | |
1,124 | 2.750%—09/30/20501 | 1,159 | |
1,671 | |||
Liberty Latin America Ltd. | |||
647 | 2.000%—07/15/2024 | 661 | |
Vonage Holdings Corp. | |||
410 | 1.750%—06/01/2024 | 449 | |
3,703 | |||
ELECTRICAL EQUIPMENT—0.3% | |||
Sunrun Inc. | |||
607 | 0.000%—02/01/20261,2 | 502 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—1.9% | |||
II-VI Inc. | |||
459 | 0.250%—09/01/2022 | 686 | |
Insight Enterprises Inc. | |||
1,217 | 0.750%—02/15/2025 | 1,872 | |
Itron Inc. | |||
975 | 0.000%—03/15/20261,2 | 973 | |
3,531 | |||
ENTERTAINMENT—3.2% | |||
iQIYI Inc. | |||
868 | 2.000%—04/01/2025 | 803 | |
Live Nation Entertainment Inc. | |||
1,499 | 2.000%—02/15/2025 | 1,653 | |
1,387 | 2.500%—03/15/2023 | 1,871 | |
3,524 | |||
Zynga Inc. | |||
643 | 0.000%—12/15/20261,2 | 698 | |
687 | 0.250%—06/01/2024 | 967 | |
1,665 | |||
5,992 | |||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—0.6% | |||
IH Merger Sub LLC | |||
729 | 3.500%—01/15/2022 | 1,128 | |
FOOD & STAPLES RETAILING—0.7% | |||
Shake Shack Inc. | |||
1,367 | 0.000%—03/01/20281,2 | 1,300 | |
FOOD PRODUCTS—1.0% | |||
Beyond Meat Inc. | |||
1,927 | 0.000%—03/15/20271,2 | 1,835 | |
HEALTH CARE EQUIPMENT & SUPPLIES—4.7% | |||
CONMED Corp. | |||
975 | 2.625%—02/01/2024 | 1,614 | |
Dexcom Inc. | |||
1,690 | 0.250%—11/15/20251 | 1,699 | |
Haemonetics Corp. | |||
831 | 0.000%—03/01/20261,2 | 691 | |
Insulet Corp. | |||
993 | 0.375%—09/01/2026 | 1,428 | |
Integra Lifesciences Holdings Corp. | |||
773 | 0.500%—08/15/2025 | 894 |
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES—Continued | |||
Nuvasive Inc. | |||
$ | 1,686 | 1.000%—06/01/20231 | $ 1,829 |
Tandem Diabetes Care Inc. | |||
556 | 1.500%—05/01/20251 | 615 | |
8,770 | |||
HEALTH CARE PROVIDERS & SERVICES—0.5% | |||
Guardant Health Inc. | |||
747 | 0.000%—11/15/20271,2 | 983 | |
HEALTH CARE TECHNOLOGY—2.1% | |||
Allscripts Healthcare Solutions Inc. | |||
1,209 | 0.875%—01/01/2027 | 1,626 | |
Novocure Ltd. | |||
626 | 0.000%—11/01/20251,2 | 893 | |
Teladoc Health Inc. | |||
1,185 | 1.250%—06/01/20271 | 1,331 | |
3,850 | |||
HOTELS, RESTAURANTS & LEISURE—6.8% | |||
DraftKings Inc. | |||
2,368 | 0.000%—03/15/20281,2 | 2,272 | |
Huazhu Group Ltd. | |||
1,145 | 3.000%—05/01/20261 | 1,791 | |
IMAX Corp. | |||
1,472 | 0.500%—04/01/20261 | 1,533 | |
Marriott Vacations Worldwide Corp. | |||
1,259 | 0.000%—01/15/20261,2 | 1,495 | |
763 | 1.500%—09/15/2022 | 1,004 | |
2,499 | |||
NCL Corp. Ltd. | |||
678 | 5.375%—08/01/20251 | 1,287 | |
Royal Caribbean Cruises Ltd. | |||
693 | 2.875%—11/15/20231 | 900 | |
Vail Resorts Inc. | |||
2,219 | 0.000%—01/01/20261,2 | 2,365 | |
12,647 | |||
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS—0.7% | |||
Nextera Energy Partners LP | |||
1,132 | 0.000%—11/15/20251,2 | 1,211 | |
INTERACTIVE MEDIA & SERVICES—5.9% | |||
Airbnb Inc. | |||
765 | 0.000%—03/15/20261,2 | 761 | |
Expedia Group Inc. | |||
1,355 | 0.000%—02/15/20261,2 | 1,476 | |
IAC FinanceCo 3 Inc. | |||
378 | 2.000%—01/15/20301 | 744 | |
Liberty Tripadvisor Holdings Inc. | |||
1,170 | 0.500%—06/30/20511 | 1,119 | |
Snap Inc. | |||
1,486 | 0.000%—05/01/20271,2 | 1,528 | |
Spotify USA Inc. | |||
1,361 | 0.000%—03/15/20261,2 | 1,258 | |
Square Inc. | |||
949 | 0.250%—11/01/20271 | 1,120 | |
Tripadvisor Inc. | |||
939 | 0.250%—04/01/20261 | 928 |
22
Harbor Convertible Securities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
INTERACTIVE MEDIA & SERVICES—Continued | |||
Twitter Inc. | |||
$ | 1,683 | 0.000%—03/15/20261,2 | $ 1,539 |
345 | 0.250%—06/15/2024 | 423 | |
1,962 | |||
10,896 | |||
INTERNET & DIRECT MARKETING RETAIL—2.6% | |||
Booking Holdings Inc. | |||
938 | 0.750%—05/01/20251 | 1,423 | |
Etsy Inc. | |||
682 | 0.125%—09/01/20271 | 885 | |
Fiverr International Ltd. | |||
808 | 0.000%—11/01/20251,2 | 982 | |
Wayfair Inc. | |||
1,438 | 0.625%—10/01/20251 | 1,498 | |
4,788 | |||
IT SERVICES—5.9% | |||
Akamai Technologies Inc. | |||
693 | 0.125%—05/01/2025 | 874 | |
1,625 | 0.375%—09/01/2027 | 1,825 | |
2,699 | |||
Euronet Worldwide Inc. | |||
1,858 | 0.750%—03/15/2049 | 2,126 | |
KBR Inc. | |||
632 | 2.500%—11/01/2023 | 1,023 | |
Okta Inc. | |||
1,338 | 0.375%—06/15/20261 | 1,762 | |
Shift4 Payments Inc. | |||
499 | 0.000%—12/15/20251,2 | 703 | |
Shopify Inc. | |||
723 | 0.125%—11/01/2025 | 851 | |
Wix.com Ltd. | |||
1,638 | 0.000%—08/15/20251,2 | 1,808 | |
10,972 | |||
LEISURE PRODUCTS—0.7% | |||
Peloton Interactive Inc. | |||
1,416 | 0.000%—02/15/20261,2 | 1,289 | |
LIFE SCIENCES TOOLS & SERVICES—1.0% | |||
Illumina Inc. | |||
1,154 | 0.000%—08/15/20232 | 1,389 | |
Repligen Corp. | |||
269 | 0.375%—07/15/2024 | 508 | |
1,897 | |||
MACHINERY—1.4% | |||
Greenbrier Cos. Inc. | |||
1,735 | 2.875%—04/15/20281 | 1,891 | |
Meritor Inc. | |||
673 | 3.250%—10/15/2037 | 754 | |
2,645 | |||
MEDIA—4.3% | |||
Dish Network Corp. | |||
792 | 0.000%—12/15/20251,2 | 972 | |
3,061 | 3.375%—08/15/2026 | 3,229 | |
4,201 | |||
Liberty Media Corp. | |||
702 | 1.000%—01/30/2023 | 942 |
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
MEDIA—Continued | |||
$ | 251 | 1.375%—10/15/2023 | $ 328 |
2,042 | 2.125%—03/31/20481 | 2,117 | |
3,387 | |||
Pandora Media LLC | |||
269 | 1.750%—12/01/2023 | 312 | |
7,900 | |||
MORTGAGE REAL ESTATE INVESTMENT TRUSTS (REITs)—0.7% | |||
Blackstone Mortgage Trust Inc. | |||
1,286 | 4.750%—03/15/2023 | 1,336 | |
OIL, GAS & CONSUMABLE FUELS—2.2% | |||
Equities Corp. | |||
773 | 1.750%—05/01/20261 | 1,149 | |
Pioneer Natural Resource Co. | |||
717 | 0.250%—05/15/20251 | 1,091 | |
Total SA MTN3 | |||
1,800 | 0.500%—12/02/2022 | 1,866 | |
4,106 | |||
PERSONAL PRODUCTS—0.2% | |||
Herbalife Nutrition Ltd. | |||
316 | 2.625%—03/15/2024 | 330 | |
PHARMACEUTICALS—1.1% | |||
Jazz Investments I Ltd. | |||
200 | 1.500%—08/15/2024 | 217 | |
1,059 | 2.000%—06/15/20261 | 1,360 | |
1,577 | |||
Supernus Pharmaceuticals Inc. | |||
448 | 0.625%—04/01/2023 | 442 | |
2,019 | |||
PROFESSIONAL SERVICES—0.5% | |||
FTI Consulting Inc. | |||
660 | 2.000%—08/15/2023 | 956 | |
REAL ESTATE MANAGEMENT & DEVELOPMENT—0.7% | |||
Redfin Corp. | |||
827 | 0.000%—10/15/20251,2 | 1,000 | |
242 | 0.500%—04/01/20271 | 252 | |
1,252 | |||
ROAD & RAIL—0.5% | |||
Uber Technologies Inc. | |||
843 | 0.000%—12/15/20251,2 | 889 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—5.4% | |||
Enphase Energy Inc. | |||
2,186 | 0.000%—03/01/2026-03/01/20281,2 | 1,960 | |
MACOM Technology Solutions Holdings Inc. | |||
810 | 0.250%—03/15/20261 | 811 | |
Microchip Technology Inc. | |||
1,280 | 0.125%—11/15/2024 | 1,458 | |
ON Semiconductor Corp. | |||
475 | 1.625%—10/15/2023 | 928 | |
Silicon Laboratories Inc. | |||
1,568 | 0.625%—06/15/20251 | 2,056 | |
SolarEdge Technologies Inc. | |||
956 | 0.000%—09/15/20251,2 | 1,160 |
23
Harbor Convertible Securities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—Continued | |||
STMicroelectronics NV | |||
$ | 1,400 | 0.000%—08/04/20252 | $ 1,695 |
10,068 | |||
SOFTWARE—22.4% | |||
Alarm.com Holdings Inc. | |||
1,392 | 0.000%—01/15/20261,2 | 1,305 | |
Altair Engineering Inc. | |||
298 | 0.250%—06/01/2024 | 441 | |
Alteryx Inc. | |||
773 | 0.500%—08/01/2024 | 723 | |
326 | 1.000%—08/01/2026 | 293 | |
1,016 | |||
Bentley Systems Inc. | |||
918 | 0.125%—01/15/20261 | 976 | |
Blackline Inc. | |||
1,797 | 0.000%—03/15/20261,2 | 1,780 | |
Box Inc. | |||
1,577 | 0.000%—01/15/20261,2 | 1,725 | |
Ceridian HCM Holding Inc. | |||
851 | 0.250%—03/15/20261 | 851 | |
Coupa Software Inc. | |||
944 | 0.375%—06/15/20261 | 1,093 | |
Cyberark Software Ltd. | |||
1,599 | 0.000%—11/15/20242 | 1,801 | |
Datadog Inc. | |||
759 | 0.125%—06/15/20251 | 909 | |
DocuSign Inc. | |||
1,464 | 0.000%—01/15/20241,2 | 1,443 | |
Dropbox Inc. | |||
1,612 | 0.000%—03/01/2026-03/01/20281,2 | 1,604 | |
Envestnet Inc. | |||
1,382 | 0.750%—08/15/20251 | 1,381 | |
FireEye Inc. | |||
653 | 0.875%—06/01/2024 | 742 | |
Five9 Inc. | |||
268 | 0.500%—06/01/20251 | 408 | |
InterDigital Inc. | |||
612 | 2.000%—06/01/2024 | 668 | |
J2 Global Inc. | |||
1,801 | 1.750%—11/01/20261 | 2,116 | |
Medallia Inc. | |||
716 | 0.125%—09/15/20251 | 746 | |
New Relic Inc. | |||
160 | 0.500%—05/01/2023 | 156 | |
NICE Ltd. | |||
1,472 | 0.000%—09/15/20251,2 | 1,563 | |
NortonLifeLock Inc. | |||
1,455 | 2.000%—08/15/20221 | 1,704 | |
Palo Alto Networks Inc. | |||
1,341 | 0.750%—07/01/2023 | 1,891 | |
Pegasystems Inc. | |||
1,410 | 0.750%—03/01/2025 | 1,628 |
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
SOFTWARE—Continued | |||
Proofpoint Inc. | |||
$ | 1,111 | 0.250%—08/15/2024 | $ 1,387 |
Q2 Holdings Inc. | |||
675 | 0.125%—11/15/20251 | 685 | |
4 | 0.750%—06/01/2026 | 5 | |
690 | |||
Rapid7 Inc. | |||
1,153 | 0.250%—03/15/20271 | 1,194 | |
317 | 2.250%—05/01/20251 | 474 | |
1,668 | |||
RingCentral Inc. | |||
1,873 | 0.000%—03/01/20252 | 2,130 | |
611 | 0.000%—03/15/20261,2 | 637 | |
2,767 | |||
Splunk Inc. | |||
204 | 0.500%—09/15/2023 | 227 | |
3,316 | 1.125%—06/15/20271 | 3,073 | |
3,300 | |||
Verint Systems Inc. | |||
576 | 0.250%—04/15/20261 | 584 | |
Workiva Inc. | |||
652 | 1.125%—08/15/2026 | 885 | |
Zendesk Inc. | |||
1,046 | 0.625%—06/15/20251 | 1,540 | |
Zscaler Inc. | |||
516 | 0.125%—07/01/20251 | 730 | |
41,498 | |||
SPECIALTY RETAIL—2.2% | |||
American Eagle Outfitter Inc. | |||
261 | 3.750%—04/15/20251 | 1,052 | |
Burlington Stores Inc. | |||
1,191 | 2.250%—04/15/20251 | 1,906 | |
National Vision Holdings | |||
611 | 2.500%—05/15/20251 | 1,061 | |
4,019 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—0.8% | |||
Pure Storage Inc. | |||
1,357 | 0.125%—04/15/2023 | 1,447 | |
TOTAL CONVERTIBLE BONDS | |||
(Cost $163,534) | 180,160 | ||
TOTAL INVESTMENTS—97.9% | |||
(Cost $164,791) | 181,698 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—2.1% | 3,807 | ||
TOTAL NET ASSETS—100.0% | $185,505 |
FAIR VALUE MEASUREMENTS
At April 30, 2021, the investment in Marvell Technology Inc. (as disclosed in the preceding Portfolio of Investments) was classified as Level 1 and all other investments were classified as Level 2. There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
24
Harbor Convertible Securities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
1 | Securities purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At April 30, 2021, the aggregate value of these securities was $107,992 or 58% of net assets. |
2 | Zero coupon bond |
3 | MTN after the name of a security stands for Medium Term Note. |
The accompanying notes are an integral part of the Financial Statements.
25
Harbor Core Bond Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Income Research + Management
100 Federal Street
30th Floor
30th Floor
Boston, MA 02110
Portfolio Managers
William A. O’Malley, CFA
Since 2018
James E. Gubitosi, CFA
Since 2018
Since 2018
Bill O’Neill, CFA
Since 2021
Since 2021
Jake Remley, CFA
Since 2021
Since 2021
Matt Walker, CFA
Since 2021
Since 2021
Rachel Campbell
Since 2021
Since 2021
Kara Maloy, CFA
Since 2021
Since 2021
IR+M has subadvised the Fund since 2018.
Investment Objective
The Fund seeks total return.
William A. O’Malley, CFA
James E. Gubitosi, CFA
Bill O’Neill, CFA
Jake Remley, CFA
Matt Walker, CFA
Rachel Campbell
Kara Maloy, CFA
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
Economic results were varied in late 2020, with the encouraging news of the vaccine rollout and increased federal stimulus somewhat diminished by the surge in COVID-19 cases. GDP, which was released for the third quarter, had increased by 33.4%, and reflecting efforts to reopen businesses and resume pre-pandemic activities. Continued strong housing and PMI data, along with the election of former Vice President Joe Biden, pushed equity markets to all-time highs. The U.S. Federal Reserve (Fed) confirmed its commitment to maintaining low interest rates through the end of 2023 and continuing their asset purchase program. The Treasury announced the conclusion of the CARES Act emergency lending programs and return of all unused funds. As the quarter progressed, concerns over an economic rebound mounted, as infections increased across the globe and a new variant of COVID-19 was discovered in the U.K., bringing fresh lockdowns and renewed travel restrictions. Congress passed a long-awaited stimulus bill, extending relief to households, small businesses, and airlines. However, initial jobless claims crept higher, finishing the year near 800,000. Retail sales dropped into negative territory for the first time since April 2020. Despite these uncertainties, the S&P 500 index rallied to end the year up 16.3%, and U.S. Treasury yields pushed higher following positive vaccine news. The 2-year, 10-year, and 30-year yields closed the year at 0.12%, 0.92%, and 1.65%, respectively.
The beginning of 2021 brought a mix of highs and lows. A new administration settled into the White House, supported by a Democratic majority in Congress, and quickly acted to support the economic recovery. President Biden signed the American Rescue Plan Act of 2021, a $1.9 trillion stimulus package that offered additional aid to working families, states and local governments, and vaccine distribution. Equity markets rose to new highs on hopes of a return to normalcy. Though 2020 GDP fell 3.5%, the Fed expects GDP to grow by 6.5% this year, an approximately 55% increase from their projections in December. Fed Chair Jerome Powell pledged to keep interest rates low and maintain the central bank’s purchases of Treasuries and Mortgage-Backed Securities. Investors feared that an overly accommodative Fed could spark inflation, and the 10-year breakeven inflation rate increased to 2.44% as of April 2021. Treasury rates rose, with the 10- and 30-year yield increasing to 1.63% and 2.30%, respectively. The spread between the 2- and 10-year Treasury rate steepened to 147 basis points (bps) by the end of the period. Investment-grade corporate issuance totaled $110 billion during April, in line with expectations; issuance was driven by the banking sector as the largest U.S. banks priced almost $50 billion, far surpassing previous years. Corporate spreads were largely flat over the month, tightening 3 bps from 91 bps to 88 bps as demand remained robust. High-yield issuers continued to flood the market as April saw $49 billion in new issuance; year-to-date supply of nearly $198 billion is on track to become the busiest first-half year of issuance on record. Yield-seeking investors pushed spreads 19 bps tighter from 310 bps to 291 bps; spreads hit a 14-year low of 290 bps at the beginning of April.
26
Harbor Core Bond Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | 5 Years | Annualized | ||||||||
6 Months | Life of Fund | ||||||||||
Harbor Core Bond Fund | |||||||||||
Retirement Class1 | -0.93% | 1.79% | N/A | 5.71% | |||||||
Institutional Class1 | -0.98 | 1.70 | N/A | 5.63 | |||||||
Comparative Index | |||||||||||
Bloomberg Barclays U.S. Aggregate Bond1 | -1.52% | -0.27% | N/A | 5.09% |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.37% (Net) and 0.43% (Gross) (Retirement Class) and 0.45% (Net) and 0.51% (Gross) (Institutional Class). The net expense ratios reflect an expense limitation agreement effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on estimates for the current fiscal year.
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
Performance
Harbor Core Bond Fund (the Fund) returned -0.93% (Retirement Class) and -0.98% (Institutional Class) for the six-month period ended April 30, 2021, compared with the -1.52% return of the Bloomberg Barclays U.S. Aggregate Bond Index during the same period.
Rising rates were the primary driver of absolute negative returns during the reporting period. A continued strong credit market helped to offset the interest rate impact, as corporate option-adjusted spread tightened in roughly 40 bps for the 6-month time period. The Fund’s exposure to Industrials, Financials, and Agency Residential Mortgage-Backed Securities (RMBS) positively contributed most to absolute performance. The Fund’s allocation to taxable munis was also a strong absolute performer, as the sector benefited from the stimulus package being rolled out earlier this year. Strong performance from Credit and Securitized sectors helped to offset the interest rate impact. Detractors from relative performance included the Fund’s overweight to Asset-Backed Securities, non-Agency RMBS, and security selection within Commercial-Backed Securities and Financials. Overall, strong asset allocation helped to partially offset the detraction from security selection. The positive contributors to relative performance included the Fund’s underweight to Treasuries, overweight to Financials and security selection within Agency RMBS. Holdings that drove positive performance in the Fund included KKR, OXY, AAL, while detractors included PORTRN, FLSGEN, T.
Our defensive risk posture coming into the end of 2020 helped minimize the impacts of spread product volatility towards the end of the first quarter in 2021. Having liquidity and cash reserves in the Fund also allowed us to take advantage of new issues that came with attractive concessions, as well as adding some risk in the secondary market, by way of some of our favorite issuers at cheap levels.
Compared to the Bloomberg Barclays U.S. Aggregate Bond Index, the Fund holds a ~15% underweight to Treasuries, a ~9% Credit overweight and a ~15% Securitized overweight at the end of the reporting period.
Over the course of the period we increased our Treasury and Securitized allocation and took the opportunity to bring down our Credit exposure.
1 | The “Life of Fund” return as shown reflects the period 06/01/2018 through 04/30/2021. |
27
Harbor Core Bond Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
Outlook & Strategy
Going forward, we believe investors will be focused on whether the economy can sustain its momentum. Estimates for first quarter earnings growth were revised upward to 23.3%. Despite increasing yields and elevated corporate leverage relative to historic levels, M&A activity has returned, and corporate spreads grind tighter. Questions remain on whether President Biden can find support for his $2.3 trillion infrastructure package, which would be paid for by an increase in the corporate tax rate to 28%.
At IR+M, we remain dedicated to our surgical bottom-up security process and finding attractive relative value. We continue to opportunistically improve the liquidity of our broad strategies and believe that we remain well positioned to take advantage of any opportunities that the market gives us.
Most optimistic:
• | Corporate Fundamentals: Our portfolio construction process is focused on creating portfolios that provide attractive returns, reasonable risk exposure, and necessary liquidity in any market environment. We aim to build portfolios that encompass our best ideas by purchasing attractive, inefficiently priced bonds within our risk and liquidity parameters. Going into the current environment, our strategy had been relatively conservatively positioned given corporates’ elevated leverage and rich valuations. This conservative risk posture helped our performance and allowed us to take advantage of recent spread widening and market volatility to add names we like at attractive prices |
• | COVID-19: With the rollout of the vaccines we feel optimistic above the recovery of the global economy |
Most concerned:
• | Rising rates: Rates have moved to their highest levels in over year. The increase in rates impacts the portfolio’s absolute returns. |
• | Fed involvement: Fed Chair Jerome Powell pledged to keep interest rates low and maintain the central bank’s purchases of Treasuries and Mortgage-Backed Securities. The Fed’s involvement could spark inflation. |
This report contains the current opinions of Income Research + Management as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Fixed income investments are affected by interest rate changes and the creditworthiness of the issues held by the Fund. As interest rates rise, the values of fixed income securities held by the Fund are likely to decrease and reduce the value of the Fund’s portfolio.The use of derivative instruments may add additional risk. There may be a greater risk that the Fund could lose money due to prepayment and extension risks because the Fund invests heavily at times in mortgage-related and/or asset backed securities. The Fund may engage in active and frequent trading to achieve its principal investment strategies. Investing in international and emerging markets poses special risks, including potentially greater price volatility due to social, political and economic factors, as well as currency exchange rate fluctuations. These risks are more severe for securities of issuers in emerging market regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
28
Harbor Core Bond Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Investment Allocation (% of investments)
Portfolio of Investments
Value, Cost and Principal Amounts in Thousands
ASSET-BACKED SECURITIES—11.7% | |||
Principal Amount | Value | ||
Air Canada Pass-Through Trust | |||
Series 2015-1 Cl. A | |||
$ | 297 | 3.600%—03/15/20271 | $ 301 |
AMSR Trust | |||
Series 2020-SFR4 Cl. A | |||
479 | 1.355%—11/17/20371 | 477 | |
CF Hippolyta Issuer LLC | |||
Series 2021-1A Cl. A1 | |||
531 | 1.530%—03/15/20611 | 532 | |
Series 2020-1 Cl. A1 | |||
324 | 1.690%—07/15/20601 | 328 | |
860 | |||
CNH Equipment Trust | |||
Series 2018-A Cl. A3 | |||
138 | 3.120%—07/17/2023 | 140 | |
Series 2018-B Cl. A3 | |||
139 | 3.190%—11/15/2023 | 141 | |
281 | |||
CVS Pass-Through Trust | |||
259 | 5.773%—01/10/20331 | 307 | |
113 | 5.880%—01/10/2028 | 130 | |
Series 2009 Cl. CE | |||
486 | 8.353%—07/10/20311 | 637 | |
1,074 | |||
DB Master Finance LLC | |||
Series 2017-1A Cl. A2I | |||
243 | 3.629%—11/20/20471 | 248 | |
343 | 3.787%—05/20/20491 | 350 | |
598 | |||
Delta Air Lines Pass-Through Trust | |||
Series 2015-1 Cl. AA | |||
274 | 3.625%—07/30/2027 | 295 | |
Domino's Pizza Master Issuer LLC | |||
Series 2021-1A Cl. A2I | |||
398 | 2.662%—04/25/20511 | 404 | |
Series 2019-1A Cl. A2 | |||
59 | 3.668%—10/25/20491 | 63 | |
467 | |||
FirstKey Homes Trust | |||
Series 2020-SFR2 Cl. A | |||
363 | 1.266%—10/19/20371 | 362 |
ASSET-BACKED SECURITIES—Continued | |||
Principal Amount | Value | ||
Series 2020-SFR1 Cl. A | |||
$ | 280 | 1.339%—09/17/20251 | $ 280 |
642 | |||
Ford Credit Auto Owner Trust | |||
Series 2020-1 Cl. A | |||
500 | 2.040%—08/15/20311 | 520 | |
Home Partners of America Trust | |||
Series 2020-2 Cl. A | |||
339 | 1.532%—01/17/20411 | 336 | |
MMAF Equipment Finance LLC | |||
Series 2021 Cl. A | |||
584 | 0.560%—06/13/20281 | 582 | |
Series 2019-A Cl. A3 | |||
325 | 2.840%—11/13/20231 | 331 | |
913 | |||
Navient Private Education Loan Trust | |||
Series 2021-A Cl. A | |||
279 | 0.840%—05/15/20691 | 279 | |
Nextgear Floorplan Master Owner Trust | |||
Series 2019-2A Cl.A2 | |||
880 | 2.070%—10/15/20241 | 901 | |
Oak Street Investment Grade NET Lease Fund | |||
Series 2020-1A Cl. A1 | |||
346 | 1.850%—11/20/20501 | 351 | |
Palmer Square CLO Ltd.2 | |||
Series 2013 Cl. 2A | |||
447 | 2.500% (3 Month USD Libor) 10/17/20311,3 | 447 x | |
Progress Residential Trust | |||
Series 2021-SFR1 Cl. A | |||
385 | 1.052%—04/17/20381 | 377 | |
Series 2021-SFR3 Cl. A | |||
350 | 1.637%—05/17/20261 | 351 | |
Series 2019-SFR3 Cl. A | |||
443 | 2.271%—09/17/20361 | 451 | |
1,179 | |||
Sabey Data Center Issuer LLC | |||
Series 2020-1 Cl. A2 | |||
202 | 3.812%—04/20/20451 | 213 | |
Stack Infrastructure Issuer LLC | |||
Series 2021-1A Cl. A2 | |||
613 | 1.877%—03/26/20461 | 610 | |
Series 2019-2A Cl. A2 | |||
185 | 3.080%—10/25/20441 | 191 |
29
Harbor Core Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost and Principal Amounts in Thousands
ASSET-BACKED SECURITIES—Continued | |||
Principal Amount | Value | ||
Series 2019-1A Cl. A2 | |||
$ | 224 | 4.540%—02/25/20441 | $ 239 |
1,040 | |||
Store Master Funding I-VII | |||
Series 2019-1 Cl. A1 | |||
167 | 2.820%—11/20/20491 | 173 | |
Series 2018-1A Cl. A1 | |||
197 | 3.960%—10/20/20481 | 207 | |
�� 380 | |||
United Airlines Pass-Through Trust | |||
Series 2016-1 Cl. AA | |||
176 | 3.100%—07/07/2028 | 183 | |
Series 2014-1 Cl. A | |||
726 | 4.000%—04/11/2026 | 763 | |
946 | |||
Vantage Data Centers LLC | |||
Series 2020-1A Cl. A2 | |||
567 | 1.645%—09/15/20451 | 566 | |
Verizon Owner Trust | |||
Series 2019-B Cl. A1A | |||
374 | 2.330%—12/20/2023 | 379 | |
Series 2018-A Cl. A1A | |||
214 | 3.230%—04/20/2023 | 217 | |
596 | |||
Wendy's Funding LLC | |||
Series 2019-1A Cl. A2I | |||
170 | 3.783%—06/15/20491 | 182 | |
World Omni Auto Receivables Trust | |||
Series 2020-A Cl. A3 | |||
1,012 | 1.700%—01/17/2023 | 1,030 | |
Series 2017-B Cl. A3 | |||
93 | 1.950%—02/15/2023 | 93 | |
Series 2019-A Cl. A3 | |||
186 | 3.040%—05/15/2024 | 189 | |
Series 2018-D Cl. A3 | |||
473 | 3.330%—04/15/2024 | 481 | |
1,793 | |||
TOTAL ASSET-BACKED SECURITIES | |||
(Cost $15,302) | 15,637 | ||
COLLATERALIZED MORTGAGE OBLIGATIONS—11.4% | |||
BANK 2019-BNK16 | |||
Series 2019-BN16 Cl. ASB | |||
651 | 3.898%—02/15/2052 | 732 | |
Barclays Commerical Mortgage Securities LLC | |||
Series 2012-C2 Cl. A4 | |||
517 | 3.525%—05/10/2063 | 529 | |
BBCMS Mortgage Trust | |||
Series 2020-C6 Cl. A2 | |||
380 | 2.690%—02/15/2053 | 397 | |
Benchmark Mortgage Trust | |||
Series 2019-B15 Cl. A5 | |||
212 | 2.928%—12/15/2072 | 226 | |
BX Commercial Mortgage Trust | |||
Series 2019-XL Cl. A | |||
526 | 1.035% (1 Month USD Libor + 0.816) 10/15/20361,3 | 527 | |
CIM Trust Corp. | |||
Series 2020-INV1 Cl. A2 | |||
172 | 2.500%—04/25/20501,3 | 174 |
COLLATERALIZED MORTGAGE OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
Citigroup Commercial Mortgage Trust | |||
Series 2015-GC27 Cl. AAB | |||
$ | 338 | 2.944%—02/10/2048 | $ 351 |
Commercial Mortgage Pass-Through Certificates | |||
Series 2014-CR14 Cl. A2 | |||
206 | 3.147%—02/10/2047 | 206 | |
Series 2014-CR21 Cl. A3 | |||
239 | 3.528%—12/10/2047 | 256 | |
Series 2014-UBS3 Cl.A3 | |||
443 | 3.546%—06/10/2047 | 473 | |
Series 2013-CR8 Cl.A5 | |||
502 | 3.612%—06/10/2046 | 530 | |
1,465 | |||
Freddie Mac Seasoned Credit Risk Transfer Trust | |||
Series 2020-2 Cl. MA | |||
242 | 2.000%—11/25/2059 | 248 | |
Series 2020-3 Cl. MA | |||
278 | 2.000%—05/25/2060 | 286 | |
Series 2021-1 Cl. MA | |||
377 | 2.000%—09/25/2060 | 387 | |
Series 2020-1 Cl. MA | |||
266 | 2.500%—08/25/2059 | 277 | |
Series 2018-1 Cl. MA | |||
189 | 3.000%—05/25/2057 | 200 | |
Series 2018-4 Cl. MA | |||
567 | 3.500%—03/25/2058 | 610 | |
Series 2019-2 Cl. MA | |||
283 | 3.500%—08/25/2058 | 305 | |
2,313 | |||
FRESB Mortgage Trust | |||
Series 2019-SB63 Cl. A5H | |||
312 | 2.550% (1 Month USD Libor + 0.601) 02/25/20393 | 323 | |
GS Mortgage Backed Securities Trust | |||
Series 2021-PJ2 Cl. A2 | |||
406 | 2.500%—07/25/20511,3 | 416 | |
Series 2020-INV1 Cl. A14 | |||
314 | 3.000%—10/25/20501,3 | 321 | |
Series 2020-PJ4 Cl. A2 | |||
216 | 3.000%—01/25/20511,3 | 221 | |
Series 2020-PJ1 Cl. A6 | |||
80 | 3.500%—05/25/20501,3 | 80 | |
1,038 | |||
GS Mortgage Securities Trust | |||
Series 2012-GCJ7 Cl. A4 | |||
251 | 3.377%—05/10/2045 | 253 | |
Series 2012-GC6 Cl. A3 | |||
367 | 3.482%—01/10/2045 | 369 | |
622 | |||
Invitation Homes Trust | |||
Series 2018-SFR1 Cl. A | |||
106 | 0.815%—03/17/20371,4 | 107 | |
JPMBB Commercial Mortgage Securities Trust | |||
Series 2015-C32 Cl. A2 | |||
221 | 2.816%—11/15/2048 | 221 | |
JPMorgan Chase Commercial Mortgage Securities Trust | |||
Series 2019-COR5 Cl. A2 | |||
635 | 3.150%—06/13/2052 | 666 | |
Series 2012-CBX Cl. A4 | |||
236 | 3.483%—06/15/2045 | 239 | |
905 |
30
Harbor Core Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost and Principal Amounts in Thousands
COLLATERALIZED MORTGAGE OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
JPMorgan Mortgage Trust | |||
Series 2021-1 Cl. A3 | |||
$ | 334 | 2.500%—06/25/20511,3 | $ 342 |
Series 2021-3 Cl. A3 | |||
554 | 2.500%—07/01/20511,3 | 566 | |
Series 2016-4 Cl. A5 | |||
7 | 3.500%—10/25/20461,3 | 7 | |
Series 2018-4 Cl. A5 | |||
14 | 3.500%—10/25/20481,3 | 14 | |
929 | |||
MetLife Securitization Trust | |||
Series 2020-INV1 Cl. A2A | |||
286 | 2.500%—05/25/20501,3 | 292 | |
Morgan Stanley Bank of America Merrill Lynch Trust | |||
Series 2015-C22 Cl. A4 | |||
532 | 3.306%—04/15/2048 | 572 | |
Series 2013-C11 Cl. A4 | |||
284 | 4.297%—08/15/20463 | 301 | |
873 | |||
Morgan Stanley Capital I Trust | |||
Series 2012-C4 Cl. A4 | |||
317 | 3.244%—03/15/2045 | 321 | |
Series 2015-UBS8 Cl. A4 | |||
438 | 3.809%—12/15/2048 | 483 | |
804 | |||
Progress Residential Trust | |||
Series 2018-SFR3 Cl. A | |||
432 | 3.880%—10/17/20351 | 438 | |
PSMC Trust | |||
Series 2020-2 Cl. A2 | |||
201 | 3.000%—05/25/20501,3 | 203 | |
Series 2019-2 Cl. A3 | |||
2 | 3.500%—10/25/20491,3 | 2 | |
205 | |||
Sequoia Mortgage Trust | |||
Series 2021-1 Cl. A1 | |||
436 | 2.500%—03/25/20511,3 | 445 | |
Tricon American Homes Trust | |||
Series 2020-SFR1 Cl. A | |||
335 | 1.499%—07/17/20381 | 334 | |
Wells Fargo Commercial Mortgage Trust | |||
Series 2021-C59 Cl. A5 | |||
639 | 2.626%—04/15/2054 | 658 | |
WF RBS Commercial Mortgage Trust | |||
Series 2012-C10 Cl. A3 | |||
244 | 2.875%—12/15/2045 | 251 | |
Series 2011-C4 Cl. A4 | |||
89 | 4.902%—06/15/20441,3 | 89 | |
340 | |||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS | |||
(Cost $15,170) | 15,248 | ||
CORPORATE BONDS & NOTES—30.6% | |||
AEROSPACE & DEFENSE—1.5% | |||
BAE Systems Holdings Inc. | |||
400 | 3.400%—04/15/20301 | 428 | |
489 | 3.800%—10/07/20241 | 535 | |
963 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
AEROSPACE & DEFENSE—Continued | |||
General Dynamics Corp. | |||
$ | 59 | 4.250%—04/01/2050 | $ 72 |
Lockheed Martin Corp. | |||
198 | 2.800%—06/15/2050 | 189 | |
225 | 4.700%—05/15/2046 | 288 | |
477 | |||
Northrop Grumman Corp. | |||
107 | 5.250%—05/01/2050 | 143 | |
Textron Inc. | |||
370 | 3.000%—06/01/2030 | ��385 | |
2,040 | |||
AIR FREIGHT & LOGISTICS—0.3% | |||
FedEx Corp. | |||
270 | 4.050%—02/15/2048 | 294 | |
United Parcel Service Inc. | |||
73 | 5.300%—04/01/2050 | 102 | |
396 | |||
AUTOMOBILES—1.5% | |||
General Motors Co. | |||
248 | 5.400%—10/02/2023 | 274 | |
Hyundai Capital America Co. | |||
468 | 5.750%—04/06/20231 | 512 | |
Toyota Motor Credit Corp. MTN5 | |||
572 | 3.000%—04/01/2025 | 617 | |
197 | 3.375%—04/01/2030 | 217 | |
834 | |||
Volkswagen Group of America Finance LLC | |||
413 | 2.900%—05/13/20221 | 424 | |
2,044 | |||
BANKS—3.4% | |||
Bank of America Corp. MTN5 | |||
500 | 3.500%—04/19/2026 | 552 | |
206 | 4.330%—03/15/20504 | 239 | |
791 | |||
Bank of Nova Scotia | |||
349 | 1.625%—05/01/2023 | 357 | |
Barclays Bank PLC | |||
293 | 1.700%—05/12/2022 | 297 | |
Citigroup Inc. | |||
421 | 3.400%—05/01/2026 | 461 | |
169 | 3.520%—10/27/20284 | 184 | |
279 | 4.412%—03/31/20314 | 320 | |
965 | |||
JPMorgan Chase & Co. | |||
476 | 4.203%—07/23/20294 | 543 | |
330 | 4.493%—03/24/20314 | 383 | |
926 | |||
Lloyds Banking Group plc | |||
300 | 2.438% (U.S. Treasury 1 Year Constant Maturity Yield + 0.724) 02/05/20263 | 313 | |
PNC Bank NA | |||
250 | 3.500%—06/08/2023 | 266 | |
Toronto Dominion Bank MTN5 | |||
600 | 0.750%—09/11/2025 | 593 | |
4,508 |
31
Harbor Core Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
BEVERAGES—0.6% | |||
Anheuser-Busch Cos. LLC / Anheuser-Busch InBev Worldwide Inc. | |||
$ | 358 | 4.900%—02/01/2046 | $ 428 |
Coca-Cola Co. | |||
270 | 3.000%—03/05/2051 | 264 | |
PepsiCo Inc. | |||
145 | 3.625%—03/19/2050 | 161 | |
853 | |||
BIOTECHNOLOGY—0.3% | |||
Abbvie Inc. | |||
300 | 4.500%—05/14/2035 | 352 | |
CAPITAL MARKETS—4.1% | |||
Apollo Management Holdings LP | |||
250 | 4.000%—05/30/20241 | 275 | |
Blackstone Holdings Finance Co. LLC | |||
223 | 2.800%—09/30/20501 | 208 | |
205 | 3.150%—10/02/20271 | 224 | |
286 | 3.500%—09/10/20491 | 300 | |
732 | |||
Credit Suisse Group AG | |||
291 | 1.305%—02/02/20271,3 | 283 | |
Goldman Sachs Group Inc. | |||
291 | 3.800%—03/15/2030 | 323 | |
420 | 5.750%—01/24/2022 | 437 | |
760 | |||
KKR Group Finance Co. II LLC | |||
289 | 5.500%—02/01/20431 | 375 | |
KKR Group Finance Co. III LLC | |||
140 | 5.125%—06/01/20441 | 175 | |
Macquarie Group Ltd. | |||
363 | 1.340%—01/12/20271,3 | 358 | |
165 | 3.189%—11/28/20231,4 | 172 | |
530 | |||
Macquarie Group Ltd. MTN5 | |||
250 | 4.150%—03/27/20241,4 | 266 | |
Moody's Corp. | |||
248 | 2.550%—08/18/2060 | 204 | |
Morgan Stanley MTN5 | |||
645 | 3.125%—07/27/2026 | 700 | |
285 | 3.622%—04/01/20314 | 312 | |
252 | 3.875%—01/27/2026 | 281 | |
1,293 | |||
State Street Corp. | |||
110 | 2.901%—03/30/20264 | 118 | |
95 | 3.152%—03/30/20314 | 102 | |
220 | |||
UBS Group AG | |||
300 | 4.125%—04/15/20261 | 336 | |
5,449 | |||
COMMUNICATIONS EQUIPMENT—0.3% | |||
Juniper Networks Inc. | |||
365 | 1.200%—12/10/2025 | 362 | |
CONSUMER FINANCE—0.9% | |||
American Express Co. | |||
150 | 3.400%—02/27/2023 | 158 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
CONSUMER FINANCE—Continued | |||
Capital One Financial Corp. | |||
$ | 450 | 3.300%—10/30/2024 | $ 487 |
General Motors Financial Co. Inc. | |||
444 | 4.150%—06/19/2023 | 475 | |
Mastercard Inc. | |||
71 | 3.850%—03/26/2050 | 81 | |
1,201 | |||
DIVERSIFIED FINANCIAL SERVICES—0.6% | |||
Cooperatieve Rabobank U.A. | |||
400 | 3.875%—09/26/20231 | 432 | |
Ferguson Finance plc | |||
310 | 3.250%—06/02/20301 | 330 | |
762 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—1.1% | |||
AT&T Inc. | |||
664 | 1.364% (3 Month USD Libor + 0.615) 06/12/20243 | 678 | |
306 | 3.500%—06/01/2041 | 302 | |
980 | |||
Verizon Communications Inc. | |||
162 | 4.500%—08/10/2033 | 191 | |
247 | 4.522%—09/15/2048 | 293 | |
484 | |||
1,464 | |||
ELECTRIC UTILITIES—2.6% | |||
Berkshire Hathaway Energy Co. | |||
195 | 4.050%—04/15/2025 | 217 | |
525 | 6.125%—04/01/2036 | 721 | |
938 | |||
Duke Energy Carolinas, LLC | |||
111 | 3.950%—03/15/2048 | 127 | |
Eversource Energy | |||
260 | 2.750%—03/15/2022 | 265 | |
200 | 2.900%—10/01/2024 | 213 | |
478 | |||
Exelon Corp. | |||
82 | 4.700%—04/15/2050 | 100 | |
368 | 5.100%—06/15/2045 | 465 | |
565 | |||
Southern Co. | |||
430 | 3.250%—07/01/2026 | 464 | |
298 | 4.250%—07/01/2036 | 341 | |
805 | |||
Virginia Electric & Power Co. | |||
305 | 3.150%—01/15/2026 | 331 | |
Xcel Energy Inc. | |||
220 | 3.400%—06/01/2030 | 237 | |
3,481 | |||
ENTERTAINMENT—0.2% | |||
Walt Disney Co. | |||
164 | 4.700%—03/23/2050 | 208 | |
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—1.2% | |||
Boston Properties LP | |||
468 | 4.500%—12/01/2028 | 539 |
32
Harbor Core Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—Continued | |||
Digital Realty Trust LP | |||
$ | 491 | 3.700%—08/15/2027 | $ 544 |
Federal Realty Investment Trust | |||
582 | 1.250%—02/15/2026 | 581 | |
1,664 | |||
FOOD & STAPLES RETAILING—0.1% | |||
Walmart Inc. | |||
166 | 3.950%—06/28/2038 | 194 | |
HEALTH CARE PROVIDERS & SERVICES—1.2% | |||
Cigna Corp. | |||
495 | 3.400%—03/01/2027 | 541 | |
CommonSpirit Health | |||
225 | 3.910%—10/01/2050 | 236 | |
232 | 4.187%—10/01/2049 | 252 | |
488 | |||
PeaceHealth Obligated Group | |||
580 | 1.375%—11/15/2025 | 584 | |
1,613 | |||
HOTELS, RESTAURANTS & LEISURE—0.2% | |||
McDonald's Corp. MTN5 | |||
225 | 3.500%—07/01/2027 | 249 | |
INSURANCE—1.7% | |||
American International Group Inc. | |||
465 | 4.125%—02/15/2024 | 509 | |
Equitable Financial Life Global Funding | |||
425 | 1.400%—07/07/20251 | 427 | |
Five Corners Funding Trust | |||
250 | 4.419%—11/15/20231 | 274 | |
Liberty Mutual Group Inc. | |||
400 | 4.569%—02/01/20291 | 464 | |
Lincoln National Corp. | |||
266 | 3.400%—01/15/2031 | 287 | |
173 | 3.625%—12/12/2026 | 191 | |
478 | |||
Mass Mutual Life Insurance Co. | |||
170 | 3.375%—04/15/20501 | 171 | |
2,323 | |||
MEDIA—2.0% | |||
Charter Communications Operating LLC / Charter Communications Operating Capital | |||
478 | 6.384%—10/23/2035 | 624 | |
Comcast Corp. | |||
470 | 3.000%—02/01/2024 | 502 | |
146 | 3.300%—04/01/2027 | 161 | |
392 | 3.400%—04/01/2030 | 427 | |
1,090 | |||
COX Communications Inc. | |||
390 | 1.800%—10/01/20301 | 368 | |
300 | 2.950%—06/30/20231 | 314 | |
200 | 3.250%—12/15/20221 | 209 | |
891 | |||
2,605 | |||
MULTI-UTILITIES—0.3% | |||
WEC Energy Group Inc. | |||
348 | 1.375%—10/15/2027 | 339 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
OIL, GAS & CONSUMABLE FUELS—2.1% | |||
BP Capital Markets America Inc. | |||
$ | 112 | 2.937%—04/06/2023 | $ 117 |
Chevron Corp. | |||
179 | 1.995%—05/11/2027 | 185 | |
Dominion Energy Gas Holdings LLC | |||
170 | 2.500%—11/15/2024 | 179 | |
Exxon Mobil Corp. | |||
291 | 2.992%—03/19/2025 | 313 | |
Occidental Petroleum Corp. | |||
1,313 | 0.000%—10/10/20366 | 670 | |
Phillips 66 Partners LP | |||
197 | 3.605%—02/15/2025 | 212 | |
Schlumberger Holdings Corp. | |||
252 | 3.900%—05/17/20281 | 277 | |
Shell International Finance BV | |||
267 | 2.375%—04/06/2025 | 282 | |
Southern Co. Gas Capital Corp. | |||
220 | 1.750%—01/15/2031 | 206 | |
Sunoco Logistics Partners Operations LP | |||
375 | 3.900%—07/15/2026 | 407 | |
2,848 | |||
PHARMACEUTICALS—0.2% | |||
Pfizer Inc. | |||
297 | 2.550%—05/28/2040 | 286 | |
PROFESSIONAL SERVICES—0.5% | |||
Verisk Analytics Inc. | |||
610 | 3.625%—05/15/2050 | 623 | |
ROAD & RAIL—1.3% | |||
Canadian National Railway Co. | |||
172 | 3.650%—02/03/2048 | 186 | |
Canadian Pacific Railway Co. | |||
190 | 6.125%—09/15/2115 | 286 | |
Norfolk Southern Corp. | |||
310 | 4.837%—10/01/2041 | 383 | |
Penske Truck Leasing Co. LP / PTL Finance Corp. | |||
500 | 3.900%—02/01/20241 | 539 | |
Ryder System Inc. MTN5 | |||
307 | 3.650%—03/18/2024 | 331 | |
1,725 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—0.7% | |||
Broadcom Inc. | |||
272 | 4.110%—09/15/2028 | 301 | |
LAM Research Corp. | |||
110 | 2.875%—06/15/2050 | 106 | |
NXP BV / NXP Funding LLC | |||
251 | 4.625%—06/01/20231 | 271 | |
NXP BV / NXP Funding LLC / NXP USA Inc | |||
255 | 2.700%—05/01/20251 | 270 | |
948 | |||
SOFTWARE—0.4% | |||
Oracle Corp. | |||
443 | 2.500%—04/01/2025 | 466 | |
SPECIALTY RETAIL—0.3% | |||
Home Depot Inc. | |||
220 | 3.300%—04/15/2040 | 234 |
33
Harbor Core Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
SPECIALTY RETAIL—Continued | |||
Lowe's Cos. Inc. | |||
$ | 107 | 3.700%—04/15/2046 | $ 113 |
59 | 5.000%—04/15/2040 | 74 | |
187 | |||
421 | |||
TRADING COMPANIES & DISTRIBUTORS—0.7% | |||
AerCap Ireland Capital DAC / AerCap Global Aviation Trust | |||
272 | 4.125%—07/03/2023 | 289 | |
Air Lease Corp. | |||
374 | 3.875%—07/03/2023 | 399 | |
Ferguson Finance plc | |||
236 | 4.500%—10/24/20281 | 273 | |
961 | |||
WATER UTILITIES—0.2% | |||
Aquarion Co. | |||
238 | 4.000%—08/15/20241 | 261 | |
WIRELESS TELECOMMUNICATION SERVICES—0.1% | |||
T-Mobile USA Inc. | |||
132 | 3.500%—04/15/20251 | 143 | |
TOTAL CORPORATE BONDS & NOTES | |||
(Cost $38,273) | 40,789 | ||
MORTGAGE PASS-THROUGH—23.1% | |||
Federal Home Loan Mortgage Corp. | |||
579 | 2.000%—06/01/2050-08/01/2050 | 589 | |
347 | 2.125%—06/01/20473 | 361 | |
3,997 | 2.500%—08/01/2030-02/01/2051 | 4,164 | |
373 | 2.766%—01/01/20493 | 390 | |
4,331 | 3.000%—06/01/2034-09/01/2050 | 4,618 | |
2,292 | 3.500%—01/01/2048-05/01/2050 | 2,453 | |
790 | 4.000%—02/01/2046-05/01/2049 | 859 | |
316 | 4.500%—03/01/2049 | 346 | |
13,780 | |||
Federal National Mortgage Association | |||
2,053 | 2.000%—08/01/2050-03/01/2051 | 2,081 | |
1,349 | 2.500%—08/01/2035-10/01/2050 | 1,411 | |
421 | 2.677%—04/01/20473 | 441 | |
3,299 | 3.000%—11/01/2034-08/01/2050 | 3,503 | |
1,696 | 3.500%—10/01/2037-01/01/2050 | 1,851 | |
1,478 | 4.000%—04/01/2045-04/01/2050 | 1,607 | |
1,580 | 4.500%—05/01/2046-11/01/2047 | 1,756 | |
674 | 5.000%—08/01/2049 | 750 | |
13,400 | |||
Government National Mortgage Association | |||
1,178 | 2.500%—01/20/2051 | 1,243 | |
593 | 4.000%—09/20/2041-09/15/2046 | 659 | |
1,485 | 4.500%—01/15/2042-08/20/2047 | 1,659 | |
3,561 | |||
TOTAL MORTGAGE PASS-THROUGH | |||
(Cost $30,232) | 30,741 | ||
MUNICIPAL BONDS—2.2% | |||
Principal Amount | Value | ||
City & County of Denver Co. Airport System | |||
$ | 375 | 1.722%—11/15/2027 | $ 378 |
Florida State Board of Administration Finance Corp. | |||
448 | 1.258%—07/01/2025 | 452 | |
Metropolitan Transportation Authority | |||
195 | 5.871%—11/15/2039 | 247 | |
Metropolitan Water Reclamation District of Greater Chicago | |||
145 | 5.720%—12/01/2038 | 200 | |
New York State Urban Development Corp. | |||
555 | 5.770%—03/15/2039 | 683 | |
Port Authority of New York and New Jersey | |||
555 | 1.086%—07/01/2023 | 564 | |
State of California | |||
300 | 7.500%—04/01/2034 | 468 | |
TOTAL MUNICIPAL BONDS | |||
(Cost $2,830) | 2,992 | ||
U.S. GOVERNMENT OBLIGATIONS—19.6% | |||
U.S. Small Business Administration | |||
Series 2012-20C Cl. 1 | |||
132 | 2.510%—03/01/2032 | 139 | |
Series 2017-20H Cl. 1 | |||
146 | 2.750%—08/01/2037 | 154 | |
Series 2014-20K Cl. 1 | |||
296 | 2.800%—11/01/2034 | 311 | |
Series 2016-20L Cl. 1 | |||
1,025 | 2.810%—12/01/2036 | 1,080 | |
Series 2015-20H Cl. 1 | |||
304 | 2.820%—08/01/2035 | 319 | |
Series 2017-20J Cl. 1 | |||
220 | 2.850%—10/01/2037 | 229 | |
Series 2018-20B Cl. 1 | |||
279 | 3.220%—02/01/2038 | 299 | |
Series 2018-20G Cl. 1 | |||
418 | 3.540%—07/01/2038 | 453 | |
Series 2018-20F Cl. 1 | |||
625 | 3.600%—06/01/2038 | 680 | |
3,664 | |||
U.S. Treasury Bonds | |||
478 | 0.625%—08/15/2030 | 438 | |
3,786 | 1.125%—08/15/2040 | 3,157 | |
1,744 | 1.375%—08/15/2050 | 1,399 | |
1,705 | 1.875%—02/15/2041-02/15/2051 | 1,580 | |
1,934 | 3.000%—02/15/2048-08/15/2048 | 2,218 | |
8,792 | |||
U.S. Treasury Inflation Index Notes7 | |||
472 | 0.125%—01/15/2030 | 518 | |
131 | 1.000%—02/15/2049 | 167 | |
685 | |||
U.S. Treasury Notes | |||
191 | 0.250%—10/31/2025 | 187 | |
7,302 | 0.375%—01/31/2026 | 7,158 |
34
Harbor Core Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost and Principal Amounts in Thousands
U.S. GOVERNMENT OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
$ | 5,580 | 1.125%—02/15/2031-05/15/2040 | $ 5,044 |
691 | 1.250%—05/15/2050 | 536 | |
12,925 | |||
TOTAL U.S. GOVERNMENT OBLIGATIONS | |||
(Cost $26,621) | 26,066 | ||
TOTAL INVESTMENTS—98.6% | |||
(Cost $128,428) | 131,473 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—1.4% | 1,897 | ||
TOTAL NET ASSETS—100.0% | $133,370 |
FAIR VALUE MEASUREMENTS
At April 30, 2021, the investment in Palmer Square CLO Ltd. (as disclosed in the preceding Portfolio of Investments) was classified as Level 3 and all other investments were classified as Level 2.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
The following is a rollforward of the Fund’s Level 3 investments during the period ended April 30, 2021. Transfers into or out of Level 3 are recognized as of the last day in the fiscal quarter of the period in which the event or change in circumstances that caused the reclassification occured.
Valuation Description | Beginning Balance as of 11/01/2020 (000s) | Purchases (000s) | Sales (000s) | Discount/ (Premium) (000s) | Total Realized Gain/(Loss) (000s) | Change in Unrealized Appreciation/ (Depreciation) (000s) | Transfers Into Level 3 (000s) | Transfers Out of Level 3h (000s) | Ending Balance as of 04/30/2021 (000s) | Unrealized Gain/ Loss as of 04/30/2021 (000s) | ||||||||||
Asset-Backed Securities | $349 | $447 | $— | $(10) | $— | $(3) | $— | $336 | $447 | $— | ||||||||||
Collateralized Mortgage Obligations | 327 | — | — | (38) | — | (3) | — | 286 | — | — | ||||||||||
$676 | $447 | $— | $(48) | $— | $(6) | $— | $622 | $447 | $— |
The following is a summary of significant unobservable inputs used in the fair valuations of assets and liabilities categorized within Level 3 of the fair value hierarchy.
Valuation Descriptions | Balance as of 04/30/2021 (000s) | Valuation Technique | Unobservable Input(s) | Input Value(s) | ||||
Investments in Securities | ||||||||
Asset-Backed Securities | ||||||||
Palmer Square CLO Ltd.1 Series 2013 Cl. 2A | $ 447 | Market Approach | Trade Price | $ 100.00 |
35
Harbor Core Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
x | Fair valued in accordance with Harbor Funds' Valuation Procedures. |
1 | Securities purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At April 30, 2021, the aggregate value of these securities was $26,068 or 19% of net assets. |
2 | CLO after the name of a security stands for Collateralized Loan Obligation. |
3 | Variable or floating rate security; the stated rate represents the rate in effect at April 30, 2021. The variable rate for such securities may be based on the indicated reference rate and spread or on an underlying asset or pool of assets rather than a reference rate and may be determined by current interest rates, prepayments or other financial indicators. |
4 | Rate changes from fixed to variable rate at a specified date prior to its final maturity. Stated rate is fixed rate currently in effect and stated date is the final maturity date. |
5 | MTN after the name of a security stands for Medium Term Note. |
6 | Zero coupon bond |
7 | Inflation-protected securities (“IPS”) are securities in which the principal amount is adjusted for inflation and interest payments are applied to the inflation-adjusted principal. |
h | Transferred from Level 3 to Level 2 due to the availability of observable market data pricing |
The accompanying notes are an integral part of the Financial Statements.
36
Harbor High-Yield Bond Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Shenkman Capital Management, Inc.
461 Fifth Avenue
22nd Floor
22nd Floor
New York, NY 10017
Portfolio Managers
Mark R. Shenkman
Since 2002
Since 2002
Justin W. Slatky
Since 2012
Since 2012
Eric Dobbin
Since 2012
Since 2012
Robert S. Kricheff
Since 2015
Since 2015
Neil Wechsler, CFA
Since 2017
Since 2017
Jordan N. Barrow, CFA
Since 2020
Since 2020
Shenkman Capital has subadvised the Fund since 2002.
Investment Objective
The Fund seeks total returns (i.e., current income and capital appreciation).
Mark R. Shenkman
Justin W. Slatky
Eric Dobbin
Robert S. Kricheff
Neil Wechsler, CFA
Jordan N. Barrow, CFA
Management’s Discussion of
Fund Performance
Fund Performance
Market review
The last six months ending in April 2021 have brought many changes to the financial markets. The U.S. saw a change in the Administrative and Legislative branches of the government and the beginning of the roll-out of vaccines for the COVID-19 virus. The period was characterized by a focus on the re-opening of the economy along with a series of major government stimulus plans being both proposed and enacted. We believe this has caused the securities markets to focus as much on fiscal spending as actions by the U.S. Federal Reserve for the first time in over a decade.
The events outlined in the prior paragraph triggered a number of reactions. The inflation expectations, as measured by Treasury break-evens, rose dramatically. Inflation concerns coupled with a focus on increases in the deficit spending, appeared to trigger a steepening in the yield curve. The 10-Year U.S. Treasury rate increased by about 86 bps during the period. Additionally, commodity prices rose, most notably oil and copper prices, and stock prices continued their rally.
Within the credit markets, there were several key themes that influenced the markets in this period. New issuance remained very active. Corporations used the capital markets to continue to put more cash on their balance sheets and to push off maturities, which improved the credit profiles of many credits. There also was an extremely active M&A market with the first quarter of 2021 posting a record in global activity according to Goldman Sachs data. This M&A volume has helped support corporate asset values, creating more confidence in an improving credit cycle. With an estimated 39% of recent M&A coming from private equity sponsors, the M&A boom also led to new issuers entering the leveraged debt markets to fund these leveraged buyouts, which is increasing diversification within the market constituents. Given all the available capital, the default rate in the leveraged debt markets declined dramatically, falling below 4% in high yield bonds as of the end of April, according to JP Morgan. Another sign of an improving credit backdrop during the period was that credit agency upgrades continued to materially exceed downgrades. We believe all of these developments increased the confidence in the credit markets.
The ICE BofA U.S. Non-Distressed High Yield Index (“the H0ND” or the “Index”) saw a decline in its option-adjusted spread from 432 bps to 306 bps during the period. The H0ND had particularly strong performance in November (over 3%) and returned 6.44% for the six-month period ending April 30, 2021. By credit rating, the CCC tier of the market was the most dramatic performer with a return of 8.9%, which we believe was driven by the improving credit outlook as the economy began to reopen in the U.S.
Within the H0ND, despite the move in Treasury rates, the performance by duration bucket did not exhibit a clear pattern. We believe this highlights how within high-yield bonds, credit considerations often outweigh rate moves. By sector, the most notable return was in Energy, which posted a positive return of over 17% and accounted for an estimated 18% of the entire Index’s return. Of note, no sector posted a negative return in this period.
37
Harbor High-Yield Bond Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | |||||||||
6 Months | 5 Years | 10 Years | |||||||||
Harbor High-Yield Bond Fund | |||||||||||
Retirement Class1 | 7.17% | 16.86% | 6.26% | 5.21% | |||||||
Institutional Class | 7.12 | 16.75 | 6.20 | 5.17 | |||||||
Administrative Class | 7.06 | 16.51 | 5.95 | 4.91 | |||||||
Investor Class | 7.08 | 16.39 | 5.81 | 4.78 | |||||||
Comparative Indices | |||||||||||
ICE BofA U.S. Non-Distressed High Yield | 6.44% | 16.18% | 6.97% | 6.36% | |||||||
ICE BofA U.S. High Yield (H0A0) | 8.12 | 20.10 | 7.33 | 6.27 |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratios were 0.57% (Net) and 0.66% (Gross) (Retirement Class); 0.65% (Net) and 0.74% (Gross) (Institutional Class); 0.90% (Net) and 0.99% (Gross) (Administrative Class); and 1.01% (Net) and 1.10% (Gross) (Investor Class). The net expense ratios reflect a contractual management fee waiver effective through 02/28/2022. The expense ratios in the prospectus may differ from the actual expense ratios for the period disclosed within this report. The expense ratios shown in the prospectus are based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050. The Fund charges a redemption fee of 1% on redemption of Fund shares that are held for less than 90 days.
performance
Harbor High-Yield Bond Fund returned 7.17% (Retirement Class), 7.12% (Institutional Class), 7.06% (Administrative Class) and 7.08% (Investor Class) for the six-month period ended April 30, 2021, outpacing the H0ND which returned 6.44%. The ICE BofA U.S. High Yield (H0A0) returned 8.12%. The Fund’s selection and overweight in CCC issues was the most notable contributor to relative performance while exposure to BBB issues was a minor detractor. By duration, credit selection in the duration buckets ranging from 2-8 years all were a contributor while both the weighting and selection in the 0-2-year positions were detractors. The Fund’s selection in Oil & Gas was a significant contributor to relative performance while an overweight and selection in Healthcare was a detractor. Out-of-benchmark positions, including bank loans, BBB rated credits, and convertible bonds, totaled approximately 13% of the Fund and provided a meaningfully positive contribution on a relative basis due to the convertible holdings. The most notable shifts in holdings during the period was an increase in CCC rated issues, a decrease in BBs and an increase in out-of-benchmark positions, primarily an increase in convertible bonds.
Shenkman utilizes a detailed, disciplined, and repeatable credit approval process that we believe is one of the most valuable tools in the preservation of capital – a key tenet in our investment philosophy. We look to maximize risk return over a full cycle by selecting the right investments among these approved credits to construct a portfolio with a balance of interest income generation, duration-risk and principal appreciation potential that we believe is warranted for the markets.
Outlook & Strategy
After a significant move in rates, an increase in equity valuations and a tightening in high yield spreads, particularly in the riskiest tiers, we began May 2021 in what we anticipate will be a phase of re-assessment. We believe this will lead to a reevaluation of how fast and how smooth the economic recovery in the U.S. will be. A concern may be that markets have priced in perfection, but all segments of the economy are not likely to achieve a perfect recovery. We expect markets to begin to increasingly differentiate between potential winners and losers. We also anticipate that inflation and fiscal spending will stay in the forefront of investors’ minds and by extension rising rates will remain a concern. These re-assessments, in our view, will likely cause bouts of volatility and may create attractive entry points. As this increased volatility would occur against a backdrop of an improved environment for credit, we expect leveraged credit markets to perform well on a relative basis to many other asset classes given its relatively high income, short duration and the declining default risk.
1 | Retirement Class shares commenced operations on March 1, 2016. The performance attributed to the Retirement Class shares prior to that date is that of the Institutional Class shares. Performance prior to March 1, 2016 has not been adjusted to reflect the lower expenses of Retirement Class shares. During this period, Retirement Class shares would have had returns similar to, but potentially higher than, Institutional Class shares due to the fact that Retirement Class shares represent interests in the same portfolio as Institutional Class shares but are subject to lower expenses. |
This report contains the current opinions of Shenkman Capital Management, Inc. as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
There is no guarantee that the investment objective of the Fund will be achieved. Fixed income investments are affected by interest rate changes and the creditworthiness of the issues held by the Fund. As interest rates rise, the values of fixed income securities held by the Fund are likely to decrease and reduce the value of the Fund’s portfolio. High-yield investing poses additional credit risk related to lower-rated bonds. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
38
Harbor High-Yield Bond Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Sector Allocation (% of investments)
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
BANK LOAN OBLIGATIONS—6.1% | |||
Principal Amount | Value | ||
CAPITAL MARKETS—0.1% | |||
CCI Buyer Inc. | |||
Term Loan | |||
$ | 425 | 4.008% (LIBOR Floor + 4.000) 12/17/20271 | $ 426 |
CHEMICALS—0.1% | |||
Solenis International LP | |||
Initial First-Lien Term Loan | |||
599 | 4.002% (3 Month USD Libor + 4.000) 06/26/20251 | 598 | |
COMMUNICATIONS EQUIPMENT—0.1% | |||
PQ Group Holdingss Inc. | |||
Term Loan | |||
265 | 1.000%—05/04/20281 | 264 | |
CONTAINERS & PACKAGING—0.7% | |||
Atlas CC Acquisition Corp. | |||
Term Loan B | |||
668 | 4.251% (1 Month USD Libor + 4.250) 04/29/20281 | 661 | |
Mauser Packaging Solutions Holding Co. | |||
Term Loan B | |||
2,029 | 3.252% (3 Month USD Libor + 3.250) 04/03/20241 | 1,963 | |
2,624 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—0.2% | |||
Intrado Corp. | |||
Term Loan B | |||
686 | 4.010% (LIBOR Floor + 4.000) 10/10/20241 | 670 | |
ENTERTAINMENT—0.3% | |||
William Morris Endeavor Entertainment LLC | |||
First-Lien Term Loan B | |||
1,122 | 2.880% (1 Month USD Libor + 2.750) 05/18/20251 | 1,092 | |
HEALTH CARE PROVIDERS & SERVICES—0.7% | |||
ADMI Corp. | |||
Term Loan B2 | |||
769 | 2.755% (LIBOR Floor + 2.750) 12/23/20271 | 765 | |
AHP Health Partners Inc. | |||
Term Loan | |||
1,967 | 3.760% (LIBOR Floor + 3.750) 06/30/20251 | 1,974 | |
2,739 |
BANK LOAN OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
HEALTH CARE TECHNOLOGY—1.2% | |||
AthenaHealth Inc. | |||
Term Loan | |||
$ | 1,981 | 4.252% (3 Month USD Libor + 4.250) 02/11/20261 | $ 1,991 |
Milano Acquisition Corp. | |||
Term Loan B | |||
1,494 | 4.008% (LIBOR Floor + 4.000) 10/01/20271 | 1,496 | |
Skopima Merger Sub Inc. | |||
Term Loan B | |||
800 | 4.001% (1 Month USD Libor + 4.000) 04/30/20281 | 792 | |
Verscend Holding Corp. | |||
Term Loan B | |||
267 | 4.001% (1 Month USD Libor + 4.000) 08/27/20251 | 268 | |
4,547 | |||
HOTELS, RESTAURANTS & LEISURE—0.2% | |||
IRB Holding Corp. | |||
Incremental Term Loan | |||
1,045 | 3.260% (LIBOR Floor + 3.250) 12/15/20271 | 1,043 | |
MACHINERY—0.5% | |||
Navistar Inc. | |||
Term Loan B | |||
1,417 | 3.501% (1 Month USD Libor + 3.500) 11/06/20241 | 1,419 | |
Surgery Center Holdings Inc. | |||
Term Loan | |||
443 | 3.751% (1 Month USD Libor + 3.750) 08/31/20261 | 442 | |
1,861 | |||
MEDIA—0.2% | |||
Triton Water Holdings Inc. | |||
Term Loan | |||
595 | 3.505% (LIBOR Floor + 3.500) 03/31/20281 | 594 | |
Univision Communications Inc. | |||
Term Loan | |||
203 | 2.760% (LIBOR Floor + 2.750) 03/15/20241 | 202 | |
796 | |||
PROFESSIONAL SERVICES—0.1% | |||
Indy US Bidco LLC | |||
Term Loan B | |||
470 | 4.001% (1 Month USD Libor + 4.000) 03/05/20281 | 470 |
39
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
BANK LOAN OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
SOFTWARE—1.3% | |||
Finastra USA Inc. | |||
Term Loan B | |||
$ | 1,370 | 3.510% (LIBOR Floor + 3.500) 06/13/20241 | $ 1,349 |
Term Loan | |||
553 | 7.260% (LIBOR Floor + 7.250) 06/13/20251 | 560 | |
1,909 | |||
Informatica LLC | |||
Second-Lien Term Loan | |||
290 | 7.125%—02/25/2025 | 297 | |
Kenan Advantage Group Inc. | |||
Term Loan B1 | |||
527 | 3.758% (LIBOR Floor + 3.750) 03/24/20261 | 525 | |
Project Alpha Intermediate Holding Inc. | |||
Term Loan B | |||
227 | 4.001% (1 Month USD Libor + 4.000) 04/26/20241 | 227 | |
RealPage Inc. | |||
First-Lien Term Loan | |||
540 | 3.255% (LIBOR Floor + 3.250) 04/22/20281 | 538 | |
TIBCO Software Inc. | |||
Term Loan B | |||
547 | 3.751% (1 Month USD Libor + 3.750) 07/03/20261 | 546 | |
Second-Lien Term Loan | |||
894 | 7.251% (1 Month USD Libor + 7.250) 03/04/20281 | 907 | |
1,453 | |||
4,949 | |||
SPECIALTY RETAIL—0.4% | |||
Mavis Tire Express Services Corp. | |||
Bridge Term Loan | |||
770 | 1.000%—03/21/2022 | 770 x | |
Term Loan B | |||
800 | 4.001% (1 Month USD Libor + 4.000) 04/30/20281 | 796 | |
1,566 | |||
TOTAL BANK LOAN OBLIGATIONS | |||
(Cost $23,514) | 23,645 | ||
CONVERTIBLE BONDS—5.8% | |||
AEROSPACE & DEFENSE—0.1% | |||
Parsons Corp. | |||
470 | 0.250%—08/15/20252 | 539 | |
AIRLINES—0.1% | |||
Spirit Airlines Inc. | |||
580 | 1.000%—05/15/2026 | 598 | |
AUTOMOBILES—0.3% | |||
Ford Motor Co. | |||
1,035 | 0.000%—03/15/20262,3 | 1,027 | |
BIOTECHNOLOGY—0.3% | |||
BioMarin Pharmaceutical Inc. | |||
1,200 | 1.250%—05/15/20272 | 1,188 | |
CONSUMER FINANCE—0.4% | |||
LendingTree Inc. | |||
1,649 | 0.500%—07/15/20252 | 1,466 | |
DIVERSIFIED CONSUMER SERVICES—0.3% | |||
Chegg Inc. | |||
175 | 0.000%—09/01/20262,3 | 193 |
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
DIVERSIFIED CONSUMER SERVICES—Continued | |||
K12 Inc. | |||
$ | 1,055 | 1.125%—09/01/20272 | $ 950 |
1,143 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—0.1% | |||
Vonage Holdings Corp. | |||
450 | 1.750%—06/01/2024 | 493 | |
HEALTH CARE EQUIPMENT & SUPPLIES—0.5% | |||
Dexcom Inc. | |||
680 | 0.250%—11/15/20252 | 684 | |
Integra Lifesciences Holdings Corp. | |||
440 | 0.500%—08/15/2025 | 509 | |
Nuvasive Inc. | |||
675 | 1.000%—06/01/20232 | 732 | |
1,925 | |||
HOTELS, RESTAURANTS & LEISURE—0.4% | |||
DraftKings Inc. | |||
600 | 0.000%—03/15/20282,3 | 576 | |
Vail Resorts Inc. | |||
1,040 | 0.000%—01/01/20262,3 | 1,108 | |
1,684 | |||
INTERACTIVE MEDIA & SERVICES—0.5% | |||
Liberty Tripadvisor Holdings Inc. | |||
722 | 0.500%—06/30/20512 | 690 | |
Spotify USA Inc. | |||
405 | 0.000%—03/15/20262,3 | 375 | |
Tripadvisor Inc. | |||
783 | 0.250%—04/01/20262 | 774 | |
1,839 | |||
INTERNET & DIRECT MARKETING RETAIL—0.2% | |||
Wayfair Inc. | |||
660 | 0.625%—10/01/20252 | 688 | |
IT SERVICES—0.3% | |||
Euronet Worldwide Inc. | |||
360 | 0.750%—03/15/2049 | 412 | |
Wix.com Ltd. | |||
660 | 0.000%—08/15/20252,3 | 728 | |
1,140 | |||
MACHINERY—0.1% | |||
Fortive Corp. | |||
430 | 0.875%—02/15/2022 | 435 | |
MEDIA—0.3% | |||
Dish Network Corp. | |||
1,130 | 3.375%—08/15/2026 | 1,192 | |
PHARMACEUTICALS—0.3% | |||
Jazz Investments I Ltd. | |||
1,035 | 1.875%—08/15/2021 | 1,061 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—0.2% | |||
Enphase Energy Inc. | |||
850 | 0.000%—03/01/2026-03/01/20282,3 | 762 | |
SOFTWARE—1.0% | |||
Bentley Systems Inc. | |||
375 | 0.125%—01/15/20262 | 399 |
40
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
SOFTWARE—Continued | |||
Box Inc. | |||
$ | 400 | 0.000%—01/15/20262,3 | $ 438 |
CyberArk Software Ltd. | |||
165 | 0.000%—11/15/20243 | 186 | |
Envestnet Inc. | |||
650 | 0.750%—08/15/20252 | 649 | |
J2 Global Inc. | |||
355 | 1.750%—11/01/20262 | 417 | |
Proofpoint Inc. | |||
675 | 0.250%—08/15/2024 | 842 | |
RingCentral Inc. | |||
180 | 0.000%—03/15/20262,3 | 188 | |
Splunk Inc. | |||
630 | 1.125%—06/15/20272 | 584 | |
3,703 | |||
SPECIALTY RETAIL—0.3% | |||
Liberty Interactive LLC | |||
1,675 | 3.750%—02/15/2030 | 1,288 | |
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—0.1% | |||
Pure Storage Inc. | |||
215 | 0.125%—04/15/2023 | 229 | |
TOTAL CONVERTIBLE BONDS | |||
(Cost $21,710) | 22,400 | ||
CORPORATE BONDS & NOTES—86.1% | |||
AEROSPACE & DEFENSE—1.8% | |||
Howmet Aerospace Inc. | |||
217 | 5.900%—02/01/2027 | 251 | |
341 | 5.950%—02/01/2037 | 410 | |
219 | 6.875%—05/01/2025 | 254 | |
915 | |||
TransDigm Inc. | |||
336 | 4.625%—01/15/20292 | 332 | |
2,284 | 6.250%—03/15/20262 | 2,421 | |
907 | 8.000%—12/15/20252 | 986 | |
3,739 | |||
TransDigm UK Holdings plc | |||
1,245 | 6.875%—05/15/2026 | 1,313 | |
Triumph Group Inc. | |||
220 | 7.750%—08/15/2025 | 218 | |
865 | 8.875%—06/01/20242 | 963 | |
1,181 | |||
7,148 | |||
AIR FREIGHT & LOGISTICS—1.0% | |||
XPO Logistics Inc. | |||
796 | 6.125%—09/01/20232 | 808 | |
1,720 | 6.250%—05/01/20252 | 1,845 | |
1,287 | 6.750%—08/15/20242 | 1,346 | |
3,999 | |||
AIRLINES—0.9% | |||
American Airlines Inc./Aadvantage Loyalty IP Ltd. | |||
431 | 5.500%—04/20/20262 | 453 | |
1,740 | 5.750%—04/20/20292 | 1,867 | |
2,320 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
AIRLINES—Continued | |||
Western Global Airlines LLC | |||
$ | 1,157 | 10.375%—08/15/20252 | $ 1,315 |
3,635 | |||
AUTO COMPONENTS—1.5% | |||
Adient US LLC | |||
2 | 7.000%—05/15/20262 | 2 | |
536 | 9.000%—04/15/20252 | 595 | |
597 | |||
Allison Transmission Inc. | |||
339 | 3.750%—01/30/20312 | 328 | |
American Axle & Manufacturing Inc. | |||
331 | 6.250%—04/01/2025 | 343 | |
Dana Financing Luxembourg Sarl | |||
615 | 5.750%—04/15/20252 | 636 | |
Goodyear Tire & Rubber Co. | |||
523 | 5.000%—05/31/2026 | 538 | |
596 | 5.250%—04/30/2031 | 601 | |
619 | 5.625%—04/30/2033 | 621 | |
1,115 | 9.500%—05/31/2025 | 1,259 | |
3,019 | |||
Panther BF Aggregator 2 LP / Panther Finance Co. Inc. | |||
162 | 6.250%—05/15/20262 | 172 | |
Tenneco Inc. | |||
688 | 5.125%—04/15/20292 | 684 | |
5,779 | |||
AUTOMOBILES—2.7% | |||
Ford Motor Co. | |||
607 | 4.750%—01/15/2043 | 613 | |
376 | 5.291%—12/08/2046 | 397 | |
571 | 8.500%—04/21/2023 | 640 | |
597 | 9.000%—04/22/2025 | 730 | |
83 | 9.625%—04/22/2030 | 116 | |
2,496 | |||
Ford Motor Credit Co. LLC | |||
200 | 3.664%—09/08/2024 | 209 | |
589 | 3.810%—01/09/2024 | 612 | |
1,188 | 4.000%—11/13/2030 | 1,215 | |
1,402 | 4.063%—11/01/2024 | 1,478 | |
962 | 4.125%—08/17/2027 | 1,006 | |
418 | 5.125%—06/16/2025 | 457 | |
4,977 | |||
Jaguar Land Rover Automotive plc | |||
676 | 5.875%—01/15/20282 | 687 | |
916 | 7.750%—10/15/20252 | 995 | |
1,682 | |||
Tesla Inc. | |||
797 | 5.300%—08/15/20252 | 827 | |
Winnebago Industries Inc. | |||
390 | 6.250%—07/15/20282 | 423 | |
10,405 | |||
BEVERAGES—0.5% | |||
Triton Water Holdings Inc. | |||
1,869 | 6.250%—04/01/20292 | 1,895 | |
BUILDING PRODUCTS—0.4% | |||
Forterra Finance LLC / FRTA Finance Corp. | |||
713 | 6.500%—07/15/20252 | 771 |
41
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
BUILDING PRODUCTS—Continued | |||
Standard Industries Inc. | |||
$ | 866 | 3.375%—01/15/20312 | $ 813 |
1,584 | |||
CAPITAL MARKETS—0.7% | |||
GrafTech Finance Inc. | |||
954 | 4.625%—12/15/20282 | 983 | |
Metis Merger Sub LLC | |||
938 | 6.500%—05/15/20292 | 938 | |
MSCI Inc. | |||
520 | 3.625%—11/01/20312 | 520 | |
RP Escrow Issuer LLC | |||
248 | 5.250%—12/15/20252 | 258 | |
2,699 | |||
CHEMICALS—2.5% | |||
Blue Cube Spinco LLC | |||
67 | 10.000%—10/15/2025 | 70 | |
Herens Holdco Sarl | |||
374 | 4.750%—05/15/20282 | 374 | |
Illuminate Buyer LLC / Illuminate Holdings IV Inc. | |||
695 | 9.000%—07/01/20282 | 779 | |
Ineos Quattro Finance 2 plc | |||
549 | 3.375%—01/15/20262 | 549 | |
Methanex Corp. | |||
1,153 | 5.125%—10/15/2027 | 1,219 | |
309 | 5.250%—12/15/2029 | 327 | |
1,546 | |||
NOVA Chemicals Corp. | |||
117 | 4.875%—06/01/20242 | 124 | |
481 | 5.250%—08/01/20232 | 487 | |
611 | |||
Olin Corp. | |||
332 | 9.500%—06/01/20252 | 417 | |
PolyOne Corp. | |||
456 | 5.750%—05/15/20252 | 482 | |
Scih Salt Holdings Inc. | |||
883 | 4.875%—05/01/20282 | 882 | |
796 | 6.625%—05/01/20292 | 784 | |
1,666 | |||
Trinseo LLC | |||
705 | 5.375%—09/01/20252 | 721 | |
Trinseo Materials Operating SCA / Trinseo Materials Finance Inc. | |||
422 | 5.125%—04/01/20292 | 429 | |
Tronox Inc. | |||
948 | 4.625%—03/15/20292 | 969 | |
387 | 6.500%—05/01/20252 | 414 | |
1,383 | |||
WR Grace & Co. | |||
478 | 4.875%—06/15/20272 | 499 | |
9,526 | |||
COMMERCIAL SERVICES & SUPPLIES—2.9% | |||
Allied Universal Holdco LLC | |||
1,349 | 6.625%—07/15/20262 | 1,428 | |
1,133 | 9.750%—07/15/20272 | 1,246 | |
2,674 | |||
Covanta Holding Corp. | |||
438 | 5.875%—07/01/2025 | 458 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
COMMERCIAL SERVICES & SUPPLIES—Continued | |||
CP Atlas Buyer Inc. | |||
$ | 757 | 7.000%—12/01/20282 | $ 786 |
GFL Environmental Inc. | |||
663 | 3.500%—09/01/20282 | 640 | |
581 | 8.500%—05/01/20272 | 637 | |
1,277 | |||
KAR Auction Services Inc. | |||
1,437 | 5.125%—06/01/20252 | 1,459 | |
LABL Escrow Issuer LLC | |||
1,181 | 6.750%—07/15/20262 | 1,275 | |
1,207 | 10.500%—07/15/20272 | 1,333 | |
2,608 | |||
SRS Distribution Inc. | |||
1,554 | 8.250%—07/01/20262 | 1,630 | |
Stericycle Inc. | |||
465 | 5.375%—07/15/20242 | 483 | |
11,375 | |||
COMMUNICATIONS EQUIPMENT—0.3% | |||
CommScope Inc. | |||
535 | 6.000%—03/01/20262 | 565 | |
CommScope Technologies LLC | |||
357 | 5.000%—03/15/20272 | 354 | |
263 | 6.000%—06/15/20252 | 268 | |
622 | |||
1,187 | |||
CONSTRUCTION & ENGINEERING—0.9% | |||
AECOM | |||
478 | 5.125%—03/15/2027 | 532 | |
Picasso Finance Sub Inc. | |||
809 | 6.125%—06/15/20252 | 862 | |
VM Consolidated Inc. | |||
1,687 | 5.500%—04/15/20292 | 1,718 | |
Weekley Homes LLC / Weekley Finance Corp. | |||
215 | 4.875%—09/15/20282 | 222 | |
3,334 | |||
CONSTRUCTION MATERIALS—0.1% | |||
Summit Materials LLC / Summit Materials Finance Corp. | |||
239 | 6.500%—03/15/20272 | 253 | |
CONSUMER FINANCE—1.3% | |||
Ally Financial Inc. | |||
491 | 5.750%—11/20/2025 | 563 | |
860 | 8.000%—11/01/2031 | 1,211 | |
1,774 | |||
Goeasy Ltd. | |||
434 | 4.375%—05/01/20262 | 440 | |
Navient Corp. | |||
305 | 4.875%—03/15/2028 | 299 | |
182 | 5.875%—10/25/2024 | 192 | |
636 | 6.500%—06/15/2022 | 668 | |
523 | 7.250%—09/25/2023 | 569 | |
1,728 | |||
Navient Corp. MTN4 | |||
201 | 5.500%—01/25/2023 | 210 |
42
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
CONSUMER FINANCE—Continued | |||
$ | 840 | 5.625%—08/01/2033 | $ 788 |
105 | 7.250%—01/25/2022 | 109 | |
1,107 | |||
5,049 | |||
CONTAINERS & PACKAGING—0.9% | |||
Ardagh Packaging Finance plc | |||
770 | 5.250%—04/30/20252 | 809 | |
200 | 6.000%—02/15/20252 | 207 | |
1,016 | |||
Cascades Inc. | |||
522 | 5.125%—01/15/20262 | 555 | |
Flex Acquisition Co. Inc. | |||
1,068 | 6.875%—01/15/20252 | 1,088 | |
615 | 7.875%—07/15/20262 | 645 | |
1,733 | |||
3,304 | |||
DIVERSIFIED CONSUMER SERVICES—0.4% | |||
Avis Budget Car Rental LLC / Avis Budget Finance Inc. | |||
562 | 5.375%—03/01/20292 | 586 | |
Frontdoor Inc. | |||
889 | 6.750%—08/15/20262 | 945 | |
1,531 | |||
DIVERSIFIED FINANCIAL SERVICES—0.2% | |||
Compass Group Diversified Holdings LLC | |||
734 | 5.250%—04/15/20292 | 775 | |
DIVERSIFIED TELECOMMUNICATION SERVICES—2.6% | |||
Altice Financing SA | |||
2,410 | 7.500%—05/15/20262 | 2,507 | |
CenturyLink Inc. | |||
184 | 5.125%—12/15/20262 | 193 | |
1,048 | 6.750%—12/01/2023 | 1,159 | |
437 | 6.875%—01/15/2028 | 493 | |
1,845 | |||
Cogent Communications Group Inc. | |||
508 | 5.375%—03/01/20222 | 523 | |
Connect Finco Sarl / Connect US Finco LLC | |||
1,983 | 6.750%—10/01/20262 | 2,074 | |
Consolidated Communications Inc. | |||
287 | 5.000%—10/01/20282 | 292 | |
561 | 6.500%—10/01/20282 | 605 | |
897 | |||
Northwest Fiber LLC / Northwest Fiber Finance Sub Inc. | |||
839 | 6.000%—02/15/20282 | 840 | |
Telecom Italia Capital SA | |||
967 | 6.000%—09/30/2034 | 1,090 | |
145 | 6.375%—11/15/2033 | 171 | |
172 | 7.721%—06/04/2038 | 226 | |
1,487 | |||
10,173 | |||
ELECTRIC UTILITIES—0.9% | |||
NRG Energy Inc. | |||
1,069 | 5.250%—06/15/20292 | 1,147 | |
1,602 | 7.250%—05/15/2026 | 1,661 | |
2,808 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
ELECTRIC UTILITIES—Continued | |||
Vistra Operations Co. LLC | |||
$ | 315 | 5.500%—09/01/20262 | $ 326 |
166 | 5.625%—02/15/20272 | 173 | |
499 | |||
3,307 | |||
ELECTRICAL EQUIPMENT—0.2% | |||
Clarios Global LP | |||
261 | 6.750%—05/15/20252 | 281 | |
Sensata Technologies BV | |||
436 | 4.000%—04/15/20292 | 439 | |
Sensata Technologies Inc. | |||
247 | 4.375%—02/15/20302 | 259 | |
979 | |||
ENERGY EQUIPMENT & SERVICES—0.8% | |||
Archrock Partners LP / Archrock Partners Finance Corp. | |||
796 | 6.250%—04/01/20282 | 833 | |
Indigo Natural Resources LLC | |||
1,094 | 5.375%—02/01/20292 | 1,087 | |
Transocean Phoenix 2 Ltd. | |||
183 | 7.750%—10/15/20242 | 182 | |
Transocean Poseidon Ltd. | |||
579 | 6.875%—02/01/20272 | 551 | |
Transocean Sentry Ltd. | |||
259 | 5.375%—05/15/20232 | 247 | |
USA Compression Partners LP / USA Compression Finance Corp. | |||
336 | 6.875%—09/01/2027 | 354 | |
3,254 | |||
ENTERTAINMENT—1.1% | |||
Lions Gate Capital Holdings LLC | |||
1,513 | 5.500%—04/15/20292 | 1,519 | |
Live Nation Entertainment Inc. | |||
749 | 4.750%—10/15/20272 | 757 | |
297 | 5.625%—03/15/20262 | 309 | |
1,066 | |||
Netflix Inc. | |||
349 | 5.875%—11/15/2028 | 425 | |
860 | 6.375%—05/15/2029 | 1,081 | |
1,506 | |||
4,091 | |||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—2.4% | |||
Diversified Healthcare Trust | |||
515 | 4.375%—03/01/2031 | 498 | |
1,004 | 9.750%—06/15/2025 | 1,126 | |
1,624 | |||
Iron Mountain Inc. | |||
47 | 4.500%—02/15/20312 | 47 | |
48 | 5.250%—07/15/20302 | 50 | |
1,740 | 5.625%—07/15/20322 | 1,839 | |
1,936 | |||
MPT Operating Partnership LP / MPT Finance Corp. | |||
384 | 5.250%—08/01/2026 | 397 | |
RHP Hotel Properties LP / RHP Finance Corp. | |||
682 | 4.500%—02/15/20292 | 677 |
43
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—Continued | |||
Sabra Health Care LP | |||
$ | 820 | 5.125%—08/15/2026 | $ 923 |
Service Properties Trust | |||
204 | 4.350%—10/01/2024 | 203 | |
188 | 4.500%—06/15/2023-03/15/2025 | 190 | |
58 | 4.650%—03/15/2024 | 59 | |
546 | 4.950%—02/15/2027 | 537 | |
176 | 5.000%—08/15/2022 | 179 | |
341 | 5.500%—12/15/2027 | 359 | |
521 | 7.500%—09/15/2025 | 591 | |
2,118 | |||
Uniti Group LP / Uniti Fiber Holdings Inc. / CSL Capital LLC | |||
670 | 7.875%—02/15/20252 | 723 | |
Uniti Group LP / Uniti Group Finance Inc. / CSL Capital LLC | |||
796 | 4.750%—04/15/20282 | 794 | |
9,192 | |||
FOOD & STAPLES RETAILING—1.0% | |||
Albertsons Companies LLC | |||
552 | 4.625%—01/15/20272 | 575 | |
1,179 | 4.875%—02/15/20302 | 1,229 | |
324 | 5.750%—03/15/2025 | 335 | |
315 | 5.875%—02/15/20282 | 336 | |
1,389 | 7.500%—03/15/20262 | 1,530 | |
4,005 | |||
FOOD PRODUCTS—1.2% | |||
B&G Foods Inc. | |||
497 | 5.250%—04/01/2025 | 512 | |
Kraft Heinz Foods Co. | |||
571 | 4.375%—06/01/2046 | 613 | |
178 | 4.875%—10/01/2049 | 205 | |
751 | 5.000%—07/15/2035 | 878 | |
1,242 | 5.200%—07/15/2045 | 1,472 | |
579 | 5.500%—06/01/2050 | 721 | |
3,889 | |||
Lamb Weston Holdings Inc. | |||
363 | 4.875%—05/15/20282 | 401 | |
4,802 | |||
GAS UTILITIES—0.3% | |||
AmeriGas Partners LP | |||
837 | 5.750%—05/20/2027 | 939 | |
77 | 5.875%—08/20/2026 | 86 | |
1,025 | |||
HEALTH CARE EQUIPMENT & SUPPLIES—0.1% | |||
Teleflex Inc. | |||
319 | 4.250%—06/01/20282 | 330 | |
HEALTH CARE PROVIDERS & SERVICES—6.2% | |||
AHP Health Partners Inc. | |||
1,379 | 9.750%—07/15/20262 | 1,496 | |
Centene Corp. | |||
828 | 2.500%—03/01/2031 | 793 | |
1,923 | 3.000%—10/15/2030 | 1,911 | |
371 | 4.625%—12/15/2029 | 402 | |
2,454 | 5.375%—06/01/20262 | 2,560 | |
5,666 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
HEALTH CARE PROVIDERS & SERVICES—Continued | |||
DaVita Inc. | |||
$ | 352 | 3.750%—02/15/20312 | $ 335 |
193 | 4.625%—06/01/20302 | 195 | |
530 | |||
Global Medical Response Inc. | |||
850 | 6.500%—10/01/20252 | 871 | |
HCA Inc. | |||
234 | 5.375%—02/01/2025 | 261 | |
478 | 5.625%—09/01/2028 | 558 | |
964 | 5.875%—02/15/2026-02/01/2029 | 1,118 | |
1,424 | 7.690%—06/15/2025 | 1,703 | |
714 | 8.360%—04/15/2024 | 839 | |
4,479 | |||
HCA Inc. MTN4 | |||
988 | 7.580%—09/15/2025 | 1,181 | |
LifePoint Health Inc. | |||
449 | 5.375%—01/15/20292 | 450 | |
848 | 6.750%—04/15/20252 | 903 | |
1,353 | |||
Molina Healthcare Inc. | |||
940 | 3.875%—11/15/20302 | 969 | |
572 | 4.375%—06/15/20282 | 588 | |
1,196 | 5.375%—11/15/2022 | 1,257 | |
2,814 | |||
Regionalcare Hospital Partners Holdings Inc. / LifePoint Health Inc. | |||
1,675 | 9.750%—12/01/20262 | 1,811 | |
Surgery Center Holdings Inc. | |||
1,177 | 10.000%—04/15/20272 | 1,293 | |
Tenet Healthcare Corp. | |||
861 | 6.250%—02/01/20272 | 904 | |
622 | 6.750%—06/15/2023 | 680 | |
911 | 7.500%—04/01/20252 | 983 | |
2,567 | |||
24,061 | |||
HEALTH CARE TECHNOLOGY—1.7% | |||
Change Healthcare Holdings LLC | |||
2,664 | 5.750%—03/01/20252 | 2,711 | |
Verscend Escrow Corp. | |||
3,700 | 9.750%—08/15/20262 | 3,945 | |
6,656 | |||
HOTELS, RESTAURANTS & LEISURE—6.0% | |||
Aramark Services Inc. | |||
1,362 | 6.375%—05/01/20252 | 1,451 | |
Boyd Gaming Corp. | |||
671 | 6.375%—04/01/2026 | 694 | |
271 | 8.625%—06/01/20252 | 300 | |
994 | |||
CEC Entertainment LLC | |||
401 | 6.750%—05/01/20262 | 398 | |
Colt Merger Sub Inc. | |||
2,118 | 6.250%—07/01/20252 | 2,254 | |
1,276 | 8.125%—07/01/20272 | 1,420 | |
3,674 |
44
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
HOTELS, RESTAURANTS & LEISURE—Continued | |||
Expedia Group Inc. | |||
$ | 179 | 4.625%—08/01/20272 | $ 201 |
316 | 6.250%—05/01/20252 | 368 | |
569 | |||
International Game Technology plc | |||
407 | 4.125%—04/15/20262 | 420 | |
IRB Holding Corp. | |||
670 | 7.000%—06/15/20252 | 722 | |
Marriott Ownership Resorts Inc. | |||
638 | 6.125%—09/15/20252 | 678 | |
Marriott Ownership Resorts Inc. / ILG LLC | |||
932 | 6.500%—09/15/2026 | 976 | |
MGM Resorts International | |||
536 | 4.750%—10/15/2028 | 566 | |
568 | 5.500%—04/15/2027 | 621 | |
411 | 6.000%—03/15/2023 | 440 | |
1,664 | 7.750%—03/15/2022 | 1,752 | |
3,379 | |||
NCL Corp. Ltd. | |||
304 | 3.625%—12/15/20242 | 292 | |
355 | 5.875%—03/15/20262 | 372 | |
705 | 10.250%—02/01/20262 | 831 | |
1,495 | |||
NCL Finance Ltd. | |||
419 | 6.125%—03/15/20282 | 442 | |
Royal Caribbean Cruises Ltd. | |||
865 | 5.500%—04/01/20282 | 908 | |
861 | 10.875%—06/01/20232 | 990 | |
1,898 | |||
Scientific Games International Inc. | |||
296 | 7.250%—11/15/20292 | 326 | |
795 | 8.250%—03/15/20262 | 858 | |
791 | 8.625%—07/01/20252 | 866 | |
2,050 | |||
Vail Resorts Inc. | |||
393 | 6.250%—05/15/20252 | 418 | |
Viking Ocean Cruises Ship VII Ltd. | |||
504 | 5.625%—02/15/20292 | 514 | |
VOC Escrow Ltd. | |||
776 | 5.000%—02/15/20282 | 792 | |
Wyndham Destinations Inc. | |||
275 | 3.900%—03/01/2023 | 284 | |
351 | 5.650%—04/01/2024 | 383 | |
513 | 6.625%—07/31/20262 | 589 | |
1,256 | |||
Yum! Brands Inc. | |||
356 | 5.350%—11/01/2043 | 370 | |
637 | 7.750%—04/01/20252 | 697 | |
1,067 | |||
23,193 | |||
HOUSEHOLD DURABLES—0.7% | |||
Lennar Corp. | |||
795 | 4.875%—12/15/2023 | 871 | |
M/I Homes Inc. | |||
360 | 5.625%—08/01/2025 | 373 | |
Meritage Homes Corp. | |||
107 | 3.875%—04/15/20292 | 110 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
HOUSEHOLD DURABLES—Continued | |||
Newell Brands Inc. | |||
$ | 447 | 4.875%—06/01/2025 | $ 495 |
Shea Homes LP / Shea Homes Funding Corp. | |||
463 | 4.750%—02/15/2028-04/01/20292 | 470 | |
Taylor Morrison Communities Inc. | |||
342 | 5.125%—08/01/20302 | 377 | |
Toll Brothers Finance Corp. | |||
131 | 4.350%—02/15/2028 | 144 | |
2,840 | |||
HOUSEHOLD PRODUCTS—0.6% | |||
Kronos Acquisition Holdings Inc. / KIK Custom Products Inc. | |||
357 | 7.000%—12/31/20272 | 347 | |
PetSmart Inc. / PetSmart Finance Corp. | |||
1,040 | 4.750%—02/15/20282 | 1,074 | |
840 | 7.750%—02/15/20292 | 911 | |
1,985 | |||
2,332 | |||
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS—0.6% | |||
Calpine Corp. | |||
639 | 3.750%—03/01/20312 | 612 | |
Nextera Energy Operating Partners LP | |||
568 | 4.250%—07/15/20242 | 603 | |
NRG Energy Inc. | |||
360 | 6.625%—01/15/2027 | 376 | |
Talen Energy Supply LLC | |||
238 | 7.250%—05/15/20272 | 245 | |
585 | 7.625%—06/01/20282 | 607 | |
852 | |||
2,443 | |||
INSURANCE—1.3% | |||
Acrisure Finance Inc. | |||
744 | 7.000%—11/15/20252 | 766 | |
Broadstreet Partners Inc. | |||
623 | 5.875%—04/15/20292 | 633 | |
GTCR AP Finance Inc. | |||
649 | 8.000%—05/15/20272 | 693 | |
Hub International Ltd. | |||
1,528 | 7.000%—05/01/20262 | 1,585 | |
NFP Corp. | |||
1,319 | 6.875%—08/15/20282 | 1,386 | |
5,063 | |||
INTERACTIVE MEDIA & SERVICES—0.7% | |||
Go Daddy Operating Co. LLC / GD Finance Co. Inc. | |||
274 | 3.500%—03/01/20292 | 267 | |
Rackspace Technology Global Inc. | |||
537 | 3.500%—02/15/20282 | 522 | |
Tripadvisor Inc. | |||
921 | 7.000%—07/15/20252 | 996 | |
Twitter Inc. | |||
1,008 | 3.875%—12/15/20272 | 1,062 | |
2,847 | |||
INTERNET & DIRECT MARKETING RETAIL—0.7% | |||
QVC Inc. | |||
843 | 4.375%—03/15/2023 | 892 |
45
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
INTERNET & DIRECT MARKETING RETAIL—Continued | |||
$ | 1,590 | 5.450%—08/15/2034 | $ 1,639 |
256 | 5.950%—03/15/2043 | 255 | |
2,786 | |||
IT SERVICES—0.3% | |||
Cardtronics Inc. | |||
360 | 5.500%—05/01/20252 | 371 | |
Sabre GLBL Inc. | |||
326 | 9.250%—04/15/20252 | 390 | |
Twilio Inc. | |||
333 | 3.875%—03/15/2031 | 342 | |
1,103 | |||
LIFE SCIENCES TOOLS & SERVICES—1.0% | |||
Arches Buyer Inc. | |||
726 | 6.125%—12/01/20282 | 745 | |
Avantor Funding Inc. | |||
1,194 | 4.625%—07/15/20282 | 1,252 | |
IQVIA Inc. | |||
701 | 5.000%—05/15/20272 | 734 | |
Jaguar Holding Co II / PPD Development LP | |||
768 | 5.000%—06/15/20282 | 839 | |
Syneos Health Inc. | |||
139 | 3.625%—01/15/20292 | 136 | |
3,706 | |||
MACHINERY—0.9% | |||
Colfax Corp. | |||
197 | 6.375%—02/15/20262 | 209 | |
EnPro Industries Inc. | |||
585 | 5.750%—10/15/2026 | 621 | |
Hillenbrand Inc. | |||
591 | 3.750%—03/01/2031 | 587 | |
Meritor Inc. | |||
334 | 6.250%—06/01/20252 | 358 | |
Navistar International Corp. | |||
604 | 6.625%—11/01/20252 | 626 | |
185 | 9.500%—05/01/20252 | 201 | |
827 | |||
Vertical U.S. Newco Inc. | |||
771 | 5.250%—07/15/20272 | 808 | |
3,410 | |||
MEDIA—9.0% | |||
Altice France SA | |||
1,002 | 5.125%—07/15/20292 | 1,005 | |
688 | 7.375%—05/01/20262 | 714 | |
3,847 | 8.125%—02/01/20272 | 4,222 | |
5,941 | |||
AMC Networks Inc. | |||
827 | 4.250%—02/15/2029 | 818 | |
374 | 5.000%—04/01/2024 | 379 | |
1,197 | |||
Block Communications Inc. | |||
52 | 4.875%—03/01/20282 | 53 | |
Cable One Inc. | |||
893 | 4.000%—11/15/20302 | 881 | |
CCO Holdings LLC / CCO Holdings Capital Corp. | |||
760 | 4.250%—02/01/20312 | 761 | |
16 | 4.500%—05/01/20322 | 16 | |
752 | 5.375%—06/01/20292 | 818 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
MEDIA—Continued | |||
$ | 984 | 5.500%—05/01/20262 | $ 1,017 |
393 | 5.750%—02/15/20262 | 407 | |
3,019 | |||
CSC Holdings LLC | |||
585 | 3.375%—02/15/20312 | 550 | |
1,127 | 6.500%—02/01/20292 | 1,247 | |
1,797 | |||
Cumulus Media New Holdings Inc. | |||
357 | 6.750%—07/01/20262 | 366 | |
Diamond Sports Group LLC / Diamond Sports Finance Co. | |||
1,071 | 5.375%—08/15/20262 | 783 | |
DISH DBS Corp. | |||
2,390 | 7.750%—07/01/2026 | 2,757 | |
Entercom Media Corp. | |||
447 | 6.750%—03/31/20292 | 462 | |
Hughes Satellite Systems Corp. | |||
335 | 5.250%—08/01/2026 | 370 | |
886 | 6.625%—08/01/2026 | 982 | |
2,382 | 7.625%—06/15/2021 | 2,401 | |
3,753 | |||
Meredith Corp. | |||
562 | 6.500%—07/01/20252 | 602 | |
617 | 6.875%—02/01/2026 | 634 | |
1,236 | |||
Outfront Media Capital LLC / Outfront Media Capital Corp. | |||
107 | 4.250%—01/15/20292 | 106 | |
Playtika Holding Corp. | |||
1,008 | 4.250%—03/15/20292 | 1,003 | |
Quebecor Media Inc. | |||
539 | 5.750%—01/15/2023 | 577 | |
Radiate Holdco LLC / Radiate Finance Inc. | |||
784 | 4.500%—09/15/20262 | 799 | |
555 | 6.500%—09/15/20282 | 579 | |
1,378 | |||
SSL Robotics LLC | |||
846 | 9.750%—12/31/20232 | 945 | |
Tegna Inc. | |||
485 | 4.750%—03/15/20262 | 516 | |
Telesat Canada / Telesat LLC | |||
299 | 4.875%—06/01/20272 | 292 | |
540 | 5.625%—12/06/20262 | 544 | |
1,847 | 6.500%—10/15/20272 | 1,817 | |
2,653 | |||
UPC Broadband Finco BV | |||
1,418 | 4.875%—07/15/20312 | 1,415 | |
Viasat Inc. | |||
1,870 | 5.625%—09/15/20252 | 1,915 | |
1,064 | 6.500%—07/15/20282 | 1,124 | |
3,039 | |||
Virgin Media Finance plc | |||
232 | 5.000%—07/15/20302 | 232 | |
Virgin Media Secured Finance plc | |||
470 | 5.500%—08/15/20262 | 488 | |
Virgin Media Vendor Financing Notes IV DAC | |||
180 | 5.000%—07/15/20282 | 183 | |
34,780 |
46
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
METALS & MINING—1.5% | |||
FMG Resources August 2006 Pty Ltd. | |||
$ | 2,825 | 4.375%—04/01/20312 | $ 2,938 |
Freeport-McMoRan Inc. | |||
247 | 5.400%—11/14/2034 | 298 | |
862 | 5.450%—03/15/2043 | 1,054 | |
1,352 | |||
Grinding Media Inc. | |||
1,508 | 7.375%—12/15/20232 | 1,538 | |
5,828 | |||
OIL, GAS & CONSUMABLE FUELS—10.0% | |||
Aethon United BR LP / Aethon United Finance Corp. | |||
1,239 | 8.250%—02/15/20262 | 1,319 | |
Antero Midstream Partners LP / Antero Midstream Finance Corp. | |||
843 | 5.750%—03/01/2027-01/15/20282 | 856 | |
664 | 7.875%—05/15/20262 | 725 | |
1,581 | |||
Apache Corp. | |||
252 | 4.250%—01/15/2044 | 235 | |
194 | 4.625%—11/15/2025 | 205 | |
487 | 4.750%—04/15/2043 | 484 | |
119 | 5.250%—02/01/2042 | 124 | |
1,048 | |||
Buckeye Partners LP | |||
550 | 3.950%—12/01/2026 | 551 | |
855 | 4.500%—03/01/20282 | 857 | |
134 | 5.850%—11/15/2043 | 132 | |
1,540 | |||
Chesapeake Energy Corp. | |||
142 | 5.500%—02/01/20262 | 150 | |
85 | 5.875%—02/01/20292 | 92 | |
242 | |||
CNX Midstream Partners LP | |||
478 | 6.500%—03/15/20262 | 495 | |
CNX Resources Corp. | |||
274 | 6.000%—01/15/20292 | 293 | |
809 | 7.250%—03/14/20272 | 875 | |
1,168 | |||
Colgate Energy Partners III LLC | |||
627 | 7.750%—02/15/20262 | 635 | |
Continental Resources Inc. | |||
349 | 4.900%—06/01/2044 | 367 | |
343 | 5.750%—01/15/20312 | 398 | |
765 | |||
Crownrock LP / Crownrock Finance Inc. | |||
230 | 5.000%—05/01/20292 | 236 | |
Double Eagle Energy Holdings III LLC | |||
576 | 7.750%—12/15/20252 | 654 | |
Encino Acquisition Partners Holdings LLC | |||
884 | 8.500%—05/01/20282 | 867 | |
Endeavor Energy Resources LP / EER Finance Inc. | |||
369 | 5.500%—01/30/20262 | 383 | |
EQM Midstream Partners LP | |||
424 | 4.500%—01/15/20292 | 422 | |
419 | 4.750%—01/15/20312 | 415 | |
247 | 6.000%—07/01/20252 | 270 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
OIL, GAS & CONSUMABLE FUELS—Continued | |||
$ | 242 | 6.500%—07/01/20272 | $ 268 |
811 | 6.500%—07/15/2048 | 824 | |
2,199 | |||
Equities Corp. | |||
836 | 3.900%—10/01/2027 | 872 | |
936 | 5.000%—01/15/2029 | 1,025 | |
1,897 | |||
Ferrellgas LP / Ferrellgas Finance Corp. | |||
1,420 | 5.375%—04/01/20262 | 1,406 | |
507 | 5.875%—04/01/20292 | 502 | |
1,908 | |||
Genesis Energy LP / Genesis Energy Finance Corp. | |||
1,192 | 7.750%—02/01/2028 | 1,206 | |
672 | 8.000%—01/15/2027 | 693 | |
1,899 | |||
Hilcorp Energy I LP / Hilcorp Finance Co. | |||
717 | 6.000%—02/01/20312 | 740 | |
Magnolia Oil & Gas Operating LLC / Magnolia Oil & Gas Finance Corp. | |||
555 | 6.000%—08/01/20262 | 573 | |
Moss Creek Resources Holdings Inc. | |||
380 | 7.500%—01/15/20262 | 338 | |
655 | 10.500%—05/15/20272 | 617 | |
955 | |||
Murphy Oil Corp. | |||
646 | 5.750%—08/15/2025 | 662 | |
1,281 | 6.375%—07/15/2028-12/01/2042 | 1,284 | |
1,946 | |||
NGL Energy Operating LLC / NGL Energy Finance Corp. | |||
1,422 | 7.500%—02/01/20262 | 1,491 | |
NGL Energy Partners LP | |||
398 | 7.500%—11/01/2023 | 389 | |
NuStar Logistics LP | |||
593 | 5.750%—10/01/2025 | 639 | |
Oasis Midstream Partners LP / OMP Finance Corp. | |||
836 | 8.000%—04/01/20292 | 857 | |
Occidental Petroleum Corp. | |||
339 | 4.200%—03/15/2048 | 286 | |
907 | 4.300%—08/15/2039 | 802 | |
1,820 | 4.400%—04/15/2046 | 1,607 | |
350 | 5.500%—12/01/2025 | 377 | |
183 | 5.875%—09/01/2025 | 200 | |
172 | 6.125%—01/01/2031 | 192 | |
676 | 6.200%—03/15/2040 | 720 | |
219 | 6.450%—09/15/2036 | 249 | |
115 | 8.500%—07/15/2027 | 140 | |
1,367 | 8.875%—07/15/2030 | 1,758 | |
6,331 | |||
Parkland Corp. | |||
855 | 4.500%—10/01/20292 | 874 | |
Rattler Midstream LP | |||
382 | 5.625%—07/15/20252 | 403 | |
Sanchez Energy Corp. | |||
3,000 | 0.000%—06/15/2021* | 19 | |
SM Energy Co. | |||
1,175 | 5.000%—01/15/2024 | 1,127 | |
232 | 6.125%—11/15/2022 | 230 |
47
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
OIL, GAS & CONSUMABLE FUELS—Continued | |||
$ | 846 | 6.750%—09/15/2026 | $ 820 |
88 | 10.000%—01/15/20252 | 100 | |
2,277 | |||
Southwestern Energy Co. | |||
454 | 8.375%—09/15/2028 | 499 | |
Tallgrass Energy Partners LP / Tallgrass Energy Finance Corp. | |||
118 | 5.500%—09/15/20242 | 121 | |
631 | 6.000%—12/31/20302 | 633 | |
595 | 7.500%—10/01/20252 | 651 | |
1,405 | |||
Targa Resources Partners LP / Targa Resources Partners Finance Corp. | |||
244 | 5.500%—03/01/2030 | 265 | |
111 | 6.500%—07/15/2027 | 121 | |
386 | |||
38,620 | |||
PAPER & FOREST PRODUCTS—0.2% | |||
Mercer International Inc. | |||
712 | 5.125%—02/01/20292 | 737 | |
PHARMACEUTICALS—2.9% | |||
Bausch Health Americas Company | |||
171 | 9.250%—04/01/20262 | 190 | |
Bausch Health Cos. Inc. | |||
282 | 5.250%—02/15/20312 | 283 | |
332 | 5.500%—11/01/20252 | 343 | |
726 | 5.750%—08/15/20272 | 780 | |
331 | 6.125%—04/15/20252 | 338 | |
1,528 | 6.250%—02/15/20292 | 1,618 | |
1,164 | 7.000%—03/15/2024-01/15/20282 | 1,211 | |
363 | 7.250%—05/30/20292 | 403 | |
2,822 | 9.000%—12/15/20252 | 3,066 | |
8,042 | |||
Catalent Pharma Solutions Inc. | |||
643 | 5.000%—07/15/20272 | 674 | |
Jazz Securities DAC | |||
766 | 4.375%—01/15/20292 | 784 | |
Organon Finance 1 LLC | |||
423 | 5.125%—04/30/20312 | 439 | |
Teva Pharmaceutical Finance Netherlands III BV | |||
634 | 3.150%—10/01/2026 | 596 | |
514 | 6.000%—04/15/2024 | 543 | |
1,139 | |||
11,268 | |||
PROFESSIONAL SERVICES—1.7% | |||
Celestial Saturn Merger Sub Inc. | |||
1,627 | 4.500%—05/01/20282 | 1,627 | |
Nielsen Finance LLC / Nielsen Finance Co. | |||
102 | 5.625%—10/01/20282 | 109 | |
823 | 5.875%—10/01/20302 | 902 | |
1,011 | |||
Tempo Acquisition LLC / Tempo Acquisition Finance Corp. | |||
43 | 5.750%—06/01/20252 | 46 | |
3,646 | 6.750%—06/01/20252 | 3,718 | |
3,764 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
PROFESSIONAL SERVICES—Continued | |||
Trinet Group Inc. | |||
$ | 75 | 3.500%—03/01/20292 | $ 73 |
6,475 | |||
REAL ESTATE MANAGEMENT & DEVELOPMENT—1.8% | |||
Global NET Lease Inc. / Global NET Lease Operating Partnership LP | |||
1,758 | 3.750%—12/15/20272 | 1,742 | |
Kennedy-Wilson Inc. | |||
829 | 5.000%—03/01/2031 | 859 | |
MPT Operating Partnership LP / MPT Finance Corp. | |||
1,740 | 3.500%—03/15/2031 | 1,739 | |
Newmark Group Inc. | |||
451 | 6.125%—11/15/2023 | 492 | |
Realogy Group LLC / Realogy Co. | |||
1,487 | 5.750%—01/15/20292 | 1,545 | |
376 | 7.625%—06/15/20252 | 412 | |
1,957 | |||
6,789 | |||
ROAD & RAIL—0.2% | |||
Uber Technologies Inc. | |||
849 | 7.500%—05/15/20252 | 920 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—0.2% | |||
Microchip Technology Inc. | |||
720 | 4.250%—09/01/20252 | 756 | |
SOFTWARE—1.5% | |||
Banff Merger Sub Inc. | |||
1,677 | 9.750%—09/01/20262 | 1,786 | |
Boxer Parent Co. Inc. | |||
461 | 7.125%—10/02/20252 | 496 | |
BY Crown Parent LLC / BY Bond Finance Inc. | |||
294 | 4.250%—01/31/20262 | 308 | |
J2 Global Inc. | |||
383 | 4.625%—10/15/20302 | 393 | |
Rocket Software Inc. | |||
653 | 6.500%—02/15/20292 | 662 | |
Solera LLC | |||
2,056 | 10.500%—03/01/20242 | 2,122 | |
5,767 | |||
SPECIALTY RETAIL—1.3% | |||
L Brands Inc. | |||
265 | 6.694%—01/15/2027 | 307 | |
823 | 6.875%—11/01/2035 | 999 | |
1,306 | |||
LCM Investments Holdings II LLC | |||
776 | 4.875%—05/01/20292 | 795 | |
Magic Mergeco Inc. | |||
571 | 5.250%—05/01/20282 | 579 | |
975 | 7.875%—05/01/20292 | 1,003 | |
1,582 | |||
Penske Automotive Group Inc. | |||
440 | 3.500%—09/01/2025 | 451 | |
1,007 | 5.500%—05/15/2026 | 1,041 | |
1,492 | |||
5,175 |
48
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value, Cost, and Principal Amounts in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—2.4% | |||
Dell International LLC / EMC Corp. | |||
$ | 389 | 6.100%—07/15/20272 | $ 477 |
28 | 6.200%—07/15/20302 | 35 | |
3,260 | 7.125%—06/15/20242 | 3,353 | |
548 | 8.350%—07/15/20462 | 860 | |
4,725 | |||
Diebold Nixdorf Inc. | |||
1,407 | 9.375%—07/15/20252 | 1,570 | |
NCR Corp. | |||
1,329 | 5.125%—04/15/20292 | 1,369 | |
386 | 6.125%—09/01/20292 | 420 | |
1,789 | |||
Seagate HDD Cayman Co. | |||
895 | 5.750%—12/01/2034 | 1,026 | |
9,110 | |||
TEXTILES, APPAREL & LUXURY GOODS—0.4% | |||
Hanesbrands Inc. | |||
324 | 4.875%—05/15/20262 | 348 | |
PVH Corp. | |||
347 | 4.625%—07/10/2025 | 386 | |
William Carter Co. | |||
807 | 5.500%—05/15/20252 | 855 | |
1,589 | |||
THRIFTS & MORTGAGE FINANCE—0.3% | |||
Nationstar Mortgage Holdings Inc. | |||
215 | 6.000%—01/15/20272 | 225 | |
Quicken Loans LLC / Quicken Loans Co-Issuer Inc. | |||
1,115 | 3.875%—03/01/20312 | 1,086 | |
1,311 | |||
TRADING COMPANIES & DISTRIBUTORS—0.7% | |||
Alta Equipment Group Inc. | |||
927 | 5.625%—04/15/20262 | 944 | |
Ashtead Capital Inc. | |||
700 | 5.250%—08/01/20262 | 735 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
TRADING COMPANIES & DISTRIBUTORS—Continued | |||
BCPE Empire Holdings Inc. | |||
$ | 535 | 7.625%—05/01/20272 | $ 533 |
GYP Holdings III Corp. | |||
447 | 4.625%—05/01/20292 | 448 | |
2,660 | |||
WIRELESS TELECOMMUNICATION SERVICES—1.7% | |||
LCPR Senior Secured Financing DAC | |||
851 | 5.125%—07/15/20292 | 874 | |
412 | 6.750%—10/15/20272 | 443 | |
1,317 | |||
Sprint Capital Corp. | |||
287 | 6.875%—11/15/2028 | 362 | |
1,560 | 8.750%—03/15/2032 | 2,315 | |
2,677 | |||
Sprint Corp. | |||
263 | 7.125%—06/15/2024 | 304 | |
353 | 7.875%—09/15/2023 | 403 | |
707 | |||
T-Mobile USA Inc. | |||
250 | 2.625%—02/15/2029 | 244 | |
478 | 4.000%—04/15/2022 | 490 | |
135 | 5.125%—04/15/2025 | 138 | |
832 | 6.000%—03/01/2023 | 840 | |
1,712 | |||
6,413 | |||
TOTAL CORPORATE BONDS & NOTES | |||
(Cost $323,643) | 333,274 | ||
TOTAL INVESTMENTS—98.0% | |||
(Cost $368,867) | 379,319 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—2.0% | 7,736 | ||
TOTAL NET ASSETS—100.0% | $387,055 |
FAIR VALUE MEASUREMENTS
At April 30, 2021, the investment in Mavis Tire Express Services Corp. (as disclosed in the preceding Portfolio of Investments) was classified as Level 3 and all other investments were classified as Level 2.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
The following is a rollforward of the Fund’s Level 3 investments during the period ended April 30, 2021.
Valuation Description | Beginning Balance as of 11/01/2020 (000s) | Purchases (000s) | Sales (000s) | Discount/ (Premium) (000s) | Total Realized Gain/(Loss) (000s) | Change in Unrealized Appreciation/ (Depreciation) (000s) | Transfers Into Level 3 (000s) | Transfers Out of Level 3 (000s) | Ending Balance as of 04/30/2021 (000s) | Unrealized Gain/ Loss as of 04/30/2021 (000s) | ||||||||||
Bank Loan Obligations | ||||||||||||||||||||
Specialty Retail | $— | $770 | $— | $— | $— | $— | $— | $— | $770 | $— |
49
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
The following is a summary of significant unobservable inputs used in the fair valuations of assets and liabilities categorized within Level 3 of the fair value hierarchy.
Valuation Descriptions | Balance as of 04/30/2021 (000s) | Valuation Technique | Unobservable Input(s) | Input Value(s) | ||||
Investments in Securities | ||||||||
Bank Loan Obligations | ||||||||
Mavis Tire Express Services Corp. Bridge Term Loan | $ 770 | Market Approach | Trade Price | $ 100.00 |
* | Security in Default |
x | Fair valued in accordance with Harbor Funds' Valuation Procedures. |
1 | Variable or floating rate security; the stated rate represents the rate in effect at April 30, 2021. The variable rate for such securities may be based on the indicated reference rate and spread or on an underlying asset or pool of assets rather than a reference rate and may be determined by current interest rates, prepayments or other financial indicators. |
2 | Securities purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At April 30, 2021, the aggregate value of these securities was $244,157 or 63% of net assets. |
3 | Zero coupon bond |
4 | MTN after the name of a security stands for Medium Term Note. |
The accompanying notes are an integral part of the Financial Statements.
50
Harbor Money Market Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
BNP Paribas Asset Management USA, Inc.
200 Park Avenue
New York, NY 10166
Portfolio Manager
Kenneth J. O’Donnell, CFA
Since 2003
Since 2003
BNP has subadvised the Fund since 1987.
Investment Objective
The Fund seeks to provide current income while maintaining liquidity and a stable share price of $1.
Kenneth J. O’Donnell, CFA
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
Elevated levels of uncertainty dominated the start of the fiscal year. The pandemic was intensifying across the Northern Hemisphere with seasonal weather changes driving populations indoors. Late stage trials of several COVID-19 vaccines were promising but logistical distribution challenges were mounting. Polls were narrowing in the weeks before presidential election as Congress debated another wave of fiscal stimulus. Markets appeared to be looking through many of these concerns sending equity markets to new highs.
As the fiscal year progressed, questions were sequentially answered bringing renewed confidence to markets and a general improvement in investor sentiment. The Democratic Party secured the U.S. presidency with an election win by Joe Biden. Congress passed multiple fiscal packages adding stimulus to an economy that was already poised for substantial growth. Several vaccines were approved, and the distribution process ramped up quickly. COVID-19 cases declined after the holiday period and schools reopened with hybrid schedules.
The U.S. Federal Reserve (Fed) maintained a near zero interest rate policy and stable monthly balance sheet purchases in U.S. Treasury and Agency Mortgage-Backed Securities. Chairman Jerome Powell indicated that monetary policy would remain highly accommodative until it was clear the economy had reached full employment and inflation exceeded target. The new average-inflation policy framework, which allows for a periodic overshoot of their 2% inflation target, provides flexibility for the Fed to remain patient before raising interest rates as the economy recovers.
Benchmark Ten-Year U.S. Treasury Note yields climbed by 80 bps during the period to 1.63%. With short-term yields anchored at zero, the yield curve steepened sending a positive message to markets. The interest rate differential between 2-year and 10-year U.S. Treasury yields doubled over the past six months, with the spread nearing 150 bps.
Short-term U.S. Treasury Note yields remained anchored to near zero monetary policy rates during the fiscal year and have remained anchored near the zero-lower boundary since March. Money market yields declined slightly during the period to low single digits in basis point terms. Short-term Treasury bill rates temporarily dipped into negative yield territory during the first quarter in response to a technical dynamic in the market. This may happen again while the Fed addresses the impact of excess demand for short-term bills. The low level of money market yields is a challenge for investors seeking to keep pace with inflation to maintain the purchasing power of their assets. We believe that money market yields will remain at current levels for the rest of the year as Fed policy remains on-hold.
PerformancE
Harbor Money Market Fund returned 0.02% (Institutional Class) and 0.02% (Administrative Classes), while the ICE BofA 3-Month U.S. Treasury Bill Index returned 0.05% during the six-month period ended April 30, 2021. The duration of the portfolio, a measure of its sensitivity to changes in interest rates, was managed strategically longer at approximately 50 days to limit the impact of a further decline in U.S. Treasury Bill yields.
51
Harbor Money Market Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 04/30/2021
Unannualized | 1 Year | Annualized | |||||||||
6 Months | 5 Years | 10 Years | |||||||||
Harbor Money Market Fund | |||||||||||
Institutional Class | 0.02% | 0.05% | 1.00% | 0.55% | |||||||
Administrative Class | 0.02 | 0.05 | 0.91 | 0.50 | |||||||
Comparative Index | |||||||||||
ICE BofA U.S. 3-Month Treasury Bill | 0.05% | 0.11% | 1.18% | 0.63% |
Current 7-day subsidizeda SEC yield for period ended 04/30/2021: | Institutional Class: 0.02% | Administrative Class: 0.02% |
Current 7-day unsubsidizedb SEC yield for period ended 04/30/2021: | Institutional Class: (0.27)% | Administrative Class: (0.52)% |
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050. Voluntary waivers and reimbursements may be discontinued at any time without notice. Current yield excludes gains and losses as defined by the Securities and Exchange Commission. The current yield more closely reflects the current earnings of the Fund than the total return.
Outlook & Strategy
Looking ahead, we do not expect major changes in monetary policy this year. Interest rates are likely to remain at the zero-lower bound throughout 2021 as the Fed assesses the economic recovery. We expect that real, or inflation-adjusted, economic growth in the U.S. will accelerate as the economic challenges of the pandemic subside and businesses reopen. Under this scenario, we would expect the yield curve to steepen further. While it is unlikely that the U.S. economy will, in our view, be able to sustain this elevated growth path, we expect growth in 2021 to exceed the trend rate. We believe the recovery will benefit from a sizable rebound in personal expenditures and business investment. Survey based measures are currently showing significant improvement in the manufacturing and service sectors. This view hinges upon a containment of the COVID-19 virus and subsequent variants in the coming year. While we remain optimistic that vaccine distribution will span the globe, it is concerning that several developing countries have yet to receive adequate supplies.
The Fed is unlikely, in our view, to stray from their current policy stance until strong evidence emerges that the economy is on a sustainable path to recovery. Under a new policy framework, the Fed will allow for realized inflation to exceed their target for a period of time to offset the current undershoot. The next interest rate tightening may occur in 2022 if the pandemic is contained and the global growth trend continues. We do not expect any major changes in the tools used to manage short-term interest rates, i.e. interest paid on banking reserves and the overnight fixed-rate reserve purchase agreement program, or reverse repo facility, though we do expect the Fed to announce an end to balance sheet purchases prior to changes in policy interest rates. The transparency of the Federal Open Market Committee will ultimately provide opportunities to tactically adjust the Fund’s duration profile as conditions evolve.
a | Reflects reimbursement or waivers currently in effect |
b | Does not reflect reimbursements or waivers currently in effect |
This report contains the current opinions of BNP Paribas Asset Management USA, Inc. as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, the Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
You could lose money by investing in Harbor Money Market Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
52
Harbor Money Market Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Investment Allocation (% of investments)
Portfolio of Investments
Value, Cost, and Principal Amounts in Thousands
GOVERNMENT AGENCY DEBT—2.3%† | |||
Principal Amount | Value | ||
Federal Home Loan Bank Discount Notes | |||
$ | 1,413 | 0.015%—06/25/2021 | $ 1,413 |
600 | 0.020%—07/28/2021 | 600 | |
TOTAL GOVERNMENT AGENCY DEBT | |||
(Cost $2,013) | 2,013 | ||
TREASURY DEBT—97.7%† | |||
U.S. Treasury Bills | |||
1,500 | 0.006%—07/29/2021 | 1,500 | |
5,250 | 0.007%—06/10/2021 | 5,250 | |
7,200 | 0.008%—05/04/2021-06/17/2021 | 7,200 | |
13,900 | 0.011%—05/25/2021-06/24/2021 | 13,900 | |
4,000 | 0.012%—07/01/2021-07/08/2021 | 4,000 | |
8,700 | 0.013%—05/20/2021-07/15/2021 | 8,700 |
TREASURY DEBT—Continued | |||
Principal Amount | Value | ||
$ | 12,400 | 0.030%—09/16/2021 | $12,398 |
11,500 | 0.031%—06/03/2021 | 11,499 | |
9,600 | 0.035%—05/13/2021 | 9,600 | |
10,650 | 0.036%—05/27/2021 | 10,650 | |
1,300 | 0.050%—05/06/2021 | 1,300 | |
TOTAL TREASURY DEBT | |||
(Cost $85,997) | 85,997 | ||
TOTAL INVESTMENTS—100.0% | |||
(Cost $88,010) | 88,010 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0% | (15) | ||
TOTAL NET ASSETS—100.0% | $87,995 |
FAIR VALUE MEASUREMENTS
All investments at April 30, 2021 (as disclosed in the preceding Portfolio of Investments) were classified as Level 2. There were no Level 3 investments at April 30, 2021 or October 31, 2020.
For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements and Disclosures in Note 2 of the accompanying Notes to Financial Statements.
† | Coupon represents yield to maturity |
The accompanying notes are an integral part of the Financial Statements.
53
Harbor Fixed Income Funds
StatementS of Assets and Liabilities—April 30, 2021 (Unaudited)
StatementS of Assets and Liabilities—April 30, 2021 (Unaudited)
(All amounts in thousands, except per share amounts)
Harbor Bond Fund | Harbor Convertible Securities Fund | Harbor Core Bond Fund | Harbor High-Yield Bond Fund | Harbor Money Market Fund | |
ASSETS | |||||
Investments, at identified cost | $1,819,999* | $164,791 | $128,428 | $368,867 | $88,010 |
Investments, at value | $ 1,812,546 | $181,698 | $131,473 | $379,319 | $88,010 |
Repurchase agreements | 43,200 | — | — | — | — |
Due from broker | 5,430 | — | — | — | — |
Cash | 14,982 | 4,743 | 4,570 | 7,859 | 150 |
Foreign currency, at value (cost: $4,924, $0, $0, $0 and $0) | 4,936 | — | — | — | — |
Receivables for: | |||||
Investments sold | 435,698 | 212 | 237 | 4,885 | — |
Capital shares sold | 681 | 117 | 936 | 158 | 35 |
Interest | 8,734 | 310 | 607 | 5,083 | — |
Unrealized appreciation on open forward currency contracts | 1,911 | — | — | — | — |
Unrealized appreciation on OTC swap agreements | 185 | — | — | — | — |
Variation margin on options and futures contracts | 1,827 | — | — | — | — |
Variation margin on centrally cleared swap agreements | 3,744 | — | — | — | — |
Purchased options not settled through variation margin, at value (cost: $528, $0, $0, $0 and $0) | 519 | — | — | — | — |
Prepaid registration fees | 18 | 31 | 17 | 32 | 12 |
Prepaid fund insurance | 12 | 1 | 1 | 3 | 1 |
Other assets | 694 | 29 | 12 | 185 | 35 |
Total Assets | 2,335,117 | 187,141 | 137,853 | 397,524 | 88,243 |
LIABILITIES | |||||
Payables for: | |||||
Due to broker | 1,834 | — | — | — | — |
Investments purchased | 673,359 | 1,441 | 4,423 | 9,577 | — |
Capital shares reacquired | 232 | 51 | 5 | 487 | 202 |
Interest on reverse repurchase agreements | 1 | — | — | — | — |
Investments sold short, at value (proceeds: $37,681, $0, $0, $0 and $0) | 37,842 | — | — | — | — |
Written options not settled through variation margin, at value (premiums received: $706, $0, $0, $0 and $0) | 624 | — | — | — | — |
Swap premiums received on OTC swap agreements | 115 | — | — | — | — |
Reverse repurchase agreements | 3,347 | — | — | — | — |
Variation margin on options and futures contracts | 1,352 | — | — | — | — |
Unrealized depreciation on open forward currency contracts | 1,779 | — | — | — | — |
Accrued expenses: | |||||
Management fees | 614 | 92 | 35 | 163 | — |
12b-1 fees | 4 | 1 | — | 4 | — |
Transfer agent fees | 113 | 11 | 7 | 25 | — |
Trustees' fees and expenses | 577 | 31 | 5 | 190 | 21 |
Other | 121 | 9 | 8 | 23 | 25 |
Total Liabilities | 721,914 | 1,636 | 4,483 | 10,469 | 248 |
NET ASSETS | $ 1,613,203 | $185,505 | $133,370 | $387,055 | $87,995 |
Net Assets Consist of: | |||||
Paid-in capital | $ 1,589,495 | $145,329 | $129,875 | $463,789 | $87,961 |
Total distributable earnings/(loss) | 23,708 | 40,176 | 3,495 | (76,734) | 34 |
$ 1,613,203 | $185,505 | $133,370 | $387,055 | $87,995 | |
The accompanying notes are an integral part of the Financial Statements.
54
Harbor Bond Fund | Harbor Convertible Securities Fund | Harbor Core Bond Fund | Harbor High-Yield Bond Fund | Harbor Money Market Fund | ||||||
NET ASSET VALUE PER SHARE BY CLASS | ||||||||||
Retirement Class | ||||||||||
Net assets | $ 171,382 | $ 40,245 | $34,599 | $102,369 | N/A | |||||
Shares of beneficial interest1 | 14,257 | 2,993 | 3,265 | 10,294 | N/A | |||||
Net asset value per share2 | $ 12.02 | $ 13.45 | $ 10.60 | $ 9.94 | N/A | |||||
Institutional Class | ||||||||||
Net assets | $1,424,323 | $142,533 | $98,771 | $263,583 | $84,989 | |||||
Shares of beneficial interest1 | 118,380 | 10,605 | 9,321 | 26,505 | 84,989 | |||||
Net asset value per share2 | $ 12.03 | $ 13.44 | $ 10.60 | $ 9.94 | $ 1.00 | |||||
Administrative Class | ||||||||||
Net assets | $ 17,498 | $ 84 | N/A | $ 755 | $ 3,006 | |||||
Shares of beneficial interest1 | 1,453 | 6 | N/A | 76 | 3,006 | |||||
Net asset value per share2 | $ 12.04 | $ 13.40 | N/A | $ 9.99 | $ 1.00 | |||||
Investor Class | ||||||||||
Net assets | N/A | $ 2,643 | N/A | $ 20,348 | N/A | |||||
Shares of beneficial interest1 | N/A | 197 | N/A | 2,039 | N/A | |||||
Net asset value per share2 | N/A | $ 13.40 | N/A | $ 9.98 | N/A |
* | Including repurchase agreements |
1 | Par value $0.01 (unlimited authorizations) |
2 | Per share amounts can be recalculated to the amounts disclosed herein when total net assets and shares of beneficial interest are not rounded to thousands. |
55
Harbor Fixed Income Funds
StatementS of Operations—Period Ended April 30, 2021 (Unaudited)
StatementS of Operations—Period Ended April 30, 2021 (Unaudited)
(All amounts in thousands)
Harbor Bond Fund | Harbor Convertible Securities Fund | Harbor Core Bond Fund | Harbor High-Yield Bond Fund | Harbor Money Market Fund | |
Investment Income | |||||
Interest | $ 26,993 | $ 770 | $ 1,346 | $10,183 | $ 34 |
Consent fee income | — | 5 | — | 7 | — |
Total Investment Income | 26,993 | 775 | 1,346 | 10,190 | 34 |
Operating Expenses | |||||
Management fees | 4,438 | 567 | 205 | 1,248 | 94 |
12b-1 fees: | |||||
Administrative Class | 22 | — | N/A | 1 | 4 |
Investor Class | N/A | 3 | N/A | 30 | N/A |
Shareholder communications | 43 | 4 | 4 | 10 | 6 |
Custodian fees | 91 | 7 | 9 | 19 | 10 |
Transfer agent fees: | |||||
Retirement Class | 17 | 4 | 3 | 10 | N/A |
Institutional Class | 829 | 66 | 45 | 144 | 45 |
Administrative Class | 9 | — | N/A | — | 2 |
Investor Class | N/A | 3 | N/A | 26 | N/A |
Professional fees | 41 | 3 | 2 | 9 | 2 |
Trustees' fees and expenses | 36 | 3 | 2 | 8 | 3 |
Registration fees | 46 | 31 | 18 | 32 | 17 |
Miscellaneous | 15 | 5 | 3 | 6 | 3 |
Expenses before interest expense | 5,587 | 696 | 291 | 1,543 | 186 |
Interest expense | 5 | — | — | — | — |
Total expenses | 5,592 | 696 | 291 | 1,543 | 186 |
Management fees waived | (215) | (43) | — | (191) | (76) |
12b-1 fees waived | — | — | — | — | (4) |
Transfer agent fees waived | (69) | (7) | (5) | (17) | (47) |
Other expenses reimbursed | (635) | — | (27) | — | (41) |
Net expenses | 4,673 | 646 | 259 | 1,335 | 18 |
Net Investment Income/(Loss) | 22,320 | 129 | 1,087 | 8,855 | 16 |
Realized and Change in Net Unrealized Gain/(Loss) on Investment Transactions | |||||
Net realized gain/(loss) on: | |||||
Investments | 9,150 | 23,647 | 425 | 14,416 | — |
Investments sold short | (2,271) | — | — | — | — |
Foreign currency transactions | (7,775) | — | — | — | — |
Futures contracts | (1,342) | — | — | — | — |
Written options | 403 | — | — | — | — |
Swap agreements | (3,329) | — | — | — | — |
Change in net unrealized appreciation/(depreciation) on: | |||||
Investments | (27,803) | 3,807 | (2,800) | 6,425 | — |
Investments sold short | (382) | — | — | — | — |
Forwards currency contracts | (2,342) | — | — | — | — |
Futures contracts | (1,634) | — | — | — | — |
Purchased options | (10) | — | — | — | — |
Written options | (50) | — | — | — | — |
Swap agreements | 9,760 | — | — | — | — |
Translations of assets and liabilities in foreign currencies | (164) | — | — | — | — |
Net gain/(loss) on investment transactions | (27,789) | 27,454 | (2,375) | 20,841 | — |
Net Increase/(Decrease) in Net Assets Resulting from Operations | $ (5,469) | $27,583 | $(1,288) | $29,696 | $ 16 |
The accompanying notes are an integral part of the Financial Statements.
56
Harbor Fixed Income Funds
Statements of Changes In Net Assets
Statements of Changes In Net Assets
(All amounts in thousands)
Harbor Bond Fund | Harbor Convertible Securities Fund | Harbor Core Bond Fund | ||||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | |||
INCREASE/(DECREASE) IN NET ASSETS | (Unaudited) | (Unaudited) | (Unaudited) | |||||
Operations: | ||||||||
Net investment income/(loss) | $ 22,320 | $ 51,609 | $ 129 | $ 797 | $ 1,087 | $ 2,357 | ||
Net realized gain/(loss) on investments | (5,164) | 54,738 | 23,647 | 16,732 | 425 | 2,883 | ||
Change in net unrealized appreciation/(depreciation) of investments | (22,625) | 20,660 | 3,807 | 8,343 | (2,800) | 1,657 | ||
Net increase/(decrease) in assets resulting from operations | (5,469) | 127,007 | 27,583 | 25,872 | (1,288) | 6,897 | ||
Distributions to Shareholders | ||||||||
Retirement Class | (3,937) | (2,761) | (3,418) | (842) | (1,043) | (440) | ||
Institutional Class | (38,878) | (52,640) | (11,574) | (4,208) | (2,880) | (2,582) | ||
Administrative Class | (376) | (470) | (7) | (2) | N/A | N/A | ||
Investor Class | N/A | N/A | (246) | (68) | N/A | N/A | ||
Total distributions to shareholders | (43,191) | (55,871) | (15,245) | (5,120) | (3,923) | (3,022) | ||
Net Increase/(Decrease) Derived from Capital Share Transactions | (368,140) | (32,033) | 19,101 | (7,638) | 22,980 | 26,970 | ||
Net increase/(decrease) in net assets | (416,800) | 39,103 | 31,439 | 13,114 | 17,769 | 30,845 | ||
Net Assets | ||||||||
Beginning of period | 2,030,003 | 1,990,900 | 154,066 | 140,952 | 115,601 | 84,756 | ||
End of period | $1,613,203 | $2,030,003 | $185,505 | $154,066 | $133,370 | $115,601 |
The accompanying notes are an integral part of the Financial Statements.
58
Harbor High-Yield Bond Fund | Harbor Money Market Fund | |||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | |
(Unaudited) | (Unaudited) | |||
$ 8,855 | $ 20,947 | $ 16 | $ 832 | |
14,416 | (15,626) | — | — | |
6,425 | (232) | — | — | |
29,696 | 5,089 | 16 | 832 | |
(2,893) | (4,327) | N/A | N/A | |
(8,270) | (17,235) | (15) | (815) | |
(20) | (32) | (1) | (17) | |
(599) | (1,053) | N/A | N/A | |
(11,782) | (22,647) | (16) | (832) | |
(58,527) | (46,449) | (10,775) | (22,397) | |
(40,613) | (64,007) | (10,775) | (22,397) | |
427,668 | 491,675 | 98,770 | 121,167 | |
$387,055 | $427,668 | $ 87,995 | $ 98,770 |
59
Harbor Fixed Income Funds
Statements of Changes in Net Assets—Capital Stock Activity
Statements of Changes in Net Assets—Capital Stock Activity
(All amounts in thousands)
Harbor Bond Fund | Harbor Convertible Securities Fund | Harbor Core Bond Fund | ||||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | |||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||
AMOUNT ($) | ||||||||
Retirement Class | ||||||||
Net proceeds from sale of shares | $ 23,539 | $ 179,495 | $ 82 | $ 28,873 | $ 6,869 | $ 23,906 | ||
Net proceeds from redemption fees | — | — | — | — | — | — | ||
Reinvested distributions | 3,892 | 2,761 | 3,417 | 842 | 1,043 | 440 | ||
Cost of shares reacquired | (17,960) | (33,651) | (339) | (24,767) | (1,359) | (831) | ||
Net increase/(decrease) in net assets | $ 9,471 | $ 148,605 | $ 3,160 | $ 4,948 | $ 6,553 | $ 23,515 | ||
Institutional Class | ||||||||
Net proceeds from sale of shares | $ 131,727 | $ 431,694 | $ 23,902 | $ 16,717 | $18,394 | $ 19,108 | ||
Net proceeds from redemption fees | — | — | — | 1 | — | — | ||
Reinvested distributions | 36,785 | 49,880 | 11,376 | 4,157 | 2,880 | 2,581 | ||
Cost of shares reacquired | (545,797) | (660,371) | (19,383) | (33,534) | (4,847) | (18,234) | ||
Net increase/(decrease) in net assets | $(377,285) | $(178,797) | $ 15,895 | $(12,659) | $16,427 | $ 3,455 | ||
Administrative Class | ||||||||
Net proceeds from sale of shares | $ 1,779 | $ 2,092 | $ 1 | $ — | N/A | N/A | ||
Net proceeds from redemption fees | — | — | — | — | N/A | N/A | ||
Reinvested distributions | 375 | 469 | 7 | 2 | N/A | N/A | ||
Cost of shares reacquired | (2,480) | (4,402) | — | — | N/A | N/A | ||
Net increase/(decrease) in net assets | $ (326) | $ (1,841) | $ 8 | $ 2 | N/A | N/A | ||
Investor Class | ||||||||
Net proceeds from sale of shares | N/A | N/A | $ 654 | $ 764 | N/A | N/A | ||
Net proceeds from redemption fees | N/A | N/A | — | — | N/A | N/A | ||
Reinvested distributions | N/A | N/A | 246 | 68 | N/A | N/A | ||
Cost of shares reacquired | N/A | N/A | (862) | (761) | N/A | N/A | ||
Net increase/(decrease) in net assets | N/A | N/A | $ 38 | $ 71 | N/A | N/A |
The accompanying notes are an integral part of the Financial Statements.
60
Harbor High-Yield Bond Fund | Harbor Money Market Fund | |||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | |
(Unaudited) | (Unaudited) | |||
$ 18,373 | $ 72,410 | N/A | N/A | |
1 | 30 | N/A | N/A | |
2,838 | 4,187 | N/A | N/A | |
(37,914) | (34,927) | N/A | N/A | |
$(16,702) | $ 41,700 | N/A | N/A | |
$ 27,637 | $ 92,313 | $ 23,467 | $ 209,776 | |
1 | 96 | — | — | |
8,117 | 16,946 | 15 | 810 | |
(71,288) | (204,679) | (33,652) | (233,459) | |
$(35,533) | $ (95,324) | $(10,170) | $ (22,873) | |
$ 49 | $ 121 | $ 627 | $ 3,992 | |
— | — | — | — | |
19 | 31 | 1 | 17 | |
(9) | (148) | (1,233) | (3,533) | |
$ 59 | $ 4 | $ (605) | $ 476 | |
$ 5,295 | $ 21,719 | N/A | N/A | |
1 | 9 | N/A | N/A | |
593 | 1,043 | N/A | N/A | |
(12,240) | (15,600) | N/A | N/A | |
$ (6,351) | $ 7,171 | N/A | N/A |
61
Harbor Fixed Income Funds
Statements of Changes in Net Assets—Capital Stock Activity—Continued
Statements of Changes in Net Assets—Capital Stock Activity—Continued
(All amounts in thousands)
Harbor Bond Fund | Harbor Convertible Securities Fund | Harbor Core Bond Fund | ||||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | |||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||
SHARES | ||||||||
Retirement Class | ||||||||
Shares sold | 1,915 | 14,981 | 6 | 2,624 | 632 | 2,200 | ||
Shares issued due to reinvestment of distributions | 319 | 226 | 264 | 78 | 96 | 42 | ||
Shares reacquired | (1,478) | (2,782) | (25) | (2,237) | (124) | (78) | ||
Net increase/(decrease) in shares outstanding | 756 | 12,425 | 245 | 465 | 604 | 2,164 | ||
Institutional Class | ||||||||
Shares sold | 10,766 | 35,572 | 1,776 | 1,508 | 1,714 | 1,764 | ||
Shares issued due to reinvestment of distributions | 3,007 | 4,166 | 881 | 386 | 266 | 241 | ||
Shares reacquired | (44,662) | (54,936) | (1,448) | (3,041) | (449) | (1,684) | ||
Net increase/(decrease) in shares outstanding | (30,889) | (15,198) | 1,209 | (1,147) | 1,531 | 321 | ||
Administrative Class | ||||||||
Shares sold | 145 | 172 | — | — | N/A | N/A | ||
Shares issued due to reinvestment of distributions | 31 | 39 | — | — | N/A | N/A | ||
Shares reacquired | (202) | (368) | — | — | N/A | N/A | ||
Net increase/(decrease) in shares outstanding | (26) | (157) | — | — | N/A | N/A | ||
Investor Class | ||||||||
Shares sold | N/A | N/A | 48 | 65 | N/A | N/A | ||
Shares issued due to reinvestment of distributions | N/A | N/A | 19 | 6 | N/A | N/A | ||
Shares reacquired | N/A | N/A | (64) | (68) | N/A | N/A | ||
Net increase/(decrease) in shares outstanding | N/A | N/A | 3 | 3 | N/A | N/A |
The accompanying notes are an integral part of the Financial Statements.
62
Harbor High-Yield Bond Fund | Harbor Money Market Fund | |||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | |
(Unaudited) | (Unaudited) | |||
1,850 | 7,783 | N/A | N/A | |
287 | 447 | N/A | N/A | |
(3,801) | (3,729) | N/A | N/A | |
(1,664) | 4,501 | N/A | N/A | |
2,775 | 9,729 | 23,468 | 209,775 | |
821 | 1,821 | 15 | 810 | |
(7,181) | (21,780) | (33,652) | (233,459) | |
(3,585) | (10,230) | (10,169) | (22,874) | |
5 | 13 | 627 | 3,992 | |
2 | 3 | 1 | 17 | |
(1) | (15) | (1,233) | (3,533) | |
6 | 1 | (605) | 476 | |
530 | 2,344 | N/A | N/A | |
60 | 111 | N/A | N/A | |
(1,226) | (1,697) | N/A | N/A | |
(636) | 758 | N/A | N/A |
63
Harbor Fixed Income Funds Financial Highlights
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR BOND FUND | ||||
Retirement Class | ||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||
2020 | 2019 | 2018 g | ||
(Unaudited) | ||||
Net asset value beginning of period | $ 12.35 | $ 11.90 | $ 11.09 | $11.28 |
Income from Investment Operations | ||||
Net investment income/(loss)a,e | 0.15 | 0.31 | 0.38 | 0.16 |
Net realized and unrealized gain/(loss) on investments | (0.20) | 0.49 | 0.80 | (0.16) |
Total from investment operations | (0.05) | 0.80 | 1.18 | — * |
Less Distributions | ||||
Dividends from net investment income | (0.15) | (0.35) | (0.37) | (0.19) |
Distributions from net realized capital gains | (0.13) | — | — | — |
Total distributions | (0.28) | (0.35) | (0.37) | (0.19) |
Net asset value end of period | 12.02 | 12.35 | 11.90 | 11.09 |
Net assets end of period (000s) | $171,382 | $166,740 | $12,802 | $6,921 |
Ratios and Supplemental Data (%) | ||||
Total returnb | (0.45)% c | 6.82% | 10.84% | 0.01% c |
Ratio of total expenses to average net assets^ | 0.53 d | 0.58 | 1.06 | 1.16 d |
Ratio of net expenses to average net assetsa | 0.43 d | 0.48 | 0.96 | 1.06 d |
Ratio of net expenses excluding interest expense to average net assetsa | 0.43 d | 0.43 | 0.43 | 0.43 d |
Ratio of net investment income to average net assetsa | 2.52 d | 2.56 | 3.30 | 3.44 d |
Portfolio turnover | 223 c | 558 | 644 | 674 c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 12.37 | $ 11.92 | $ 11.11 | $ 11.69 | $ 11.89 | $ 11.93 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.13 | 0.28 | 0.35 | 0.31 | 0.34 | 0.34 |
Net realized and unrealized gain/(loss) on investments | (0.20) | 0.48 | 0.79 | (0.53) | (0.05) | 0.16 |
Total from investment operations | (0.07) | 0.76 | 1.14 | (0.22) | 0.29 | 0.50 |
Less Distributions | ||||||
Dividends from net investment income | (0.13) | (0.31) | (0.33) | (0.36) | (0.32) | (0.45) |
Distributions from net realized capital gains | (0.13) | — | — | — | (0.17) | (0.09) |
Total distributions | (0.26) | (0.31) | (0.33) | (0.36) | (0.49) | (0.54) |
Net asset value end of period | 12.04 | 12.37 | 11.92 | 11.11 | 11.69 | 11.89 |
Net assets end of period (000s) | $17,498 | $18,302 | $19,498 | $31,111 | $30,376 | $37,887 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | (0.62)% c | 6.44% | 10.44% | (1.88)% | 2.56% | 4.42% |
Ratio of total expenses to average net assets^ | 0.86 d | 0.97 | 1.39 | 1.16 | 0.88 | 0.85 |
Ratio of net expenses to average net assetsa | 0.76 d | 0.87 | 1.29 | 1.06 | 0.79 | 0.78 |
Ratio of net expenses excluding interest expense to average net assetsa | 0.76 d | 0.76 | 0.76 | 0.76 | 0.76 | 0.76 |
Ratio of net investment income to average net assetsa | 2.18 d | 2.32 | 3.01 | 2.69 | 2.90 | 2.89 |
Portfolio turnover | 223 c | 558 | 644 | 674 | 654 | 592 |
See page 72 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
64
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
$ 12.36 | $ 11.91 | $ 11.10 | $ 11.68 | $ 11.88 | $ 11.92 |
0.15 | 0.31 | 0.37 | 0.33 | 0.36 | 0.37 |
(0.21) | 0.48 | 0.80 | (0.52) | (0.04) | 0.16 |
(0.06) | 0.79 | 1.17 | (0.19) | 0.32 | 0.53 |
(0.14) | (0.34) | (0.36) | (0.39) | (0.35) | (0.48) |
(0.13) | — | — | — | (0.17) | (0.09) |
(0.27) | (0.34) | (0.36) | (0.39) | (0.52) | (0.57) |
12.03 | 12.36 | 11.91 | 11.10 | 11.68 | 11.88 |
$1,424,323 | $1,844,961 | $1,958,600 | $1,899,680 | $2,159,390 | $2,438,815 |
(0.50)% c | 6.72% | 10.74% | (1.63)% | 2.82% | 4.70% |
0.61 d | 0.73 | 1.14 | 0.90 | 0.63 | 0.60 |
0.51 d | 0.62 | 1.04 | 0.80 | 0.54 | 0.53 |
0.51 d | 0.51 | 0.51 | 0.51 | 0.51 | 0.51 |
2.41 d | 2.58 | 3.23 | 2.93 | 3.15 | 3.16 |
223 c | 558 | 644 | 674 | 654 | 592 |
65
Harbor Fixed Income Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR CONVERTIBLE SECURITIES FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 f | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 12.49 | $ 10.82 | $ 10.47 | $ 11.27 | $ 10.53 | $ 9.78 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.01 | 0.07 | 0.10 | 0.10 | 0.14 | 0.08 |
Net realized and unrealized gain/(loss) on investments | 2.19 | 2.02 | 0.92 | 0.19 | 0.78 | 0.75 |
Total from investment operations | 2.20 | 2.09 | 1.02 | 0.29 | 0.92 | 0.83 |
Less Distributions | ||||||
Dividends from net investment income | (0.08) | (0.09) | (0.18) | (0.09) | (0.18) | (0.08) |
Distributions from net realized capital gains | (1.16) | (0.33) | (0.49) | (1.00) | — | — |
Total distributions | (1.24) | (0.42) | (0.67) | (1.09) | (0.18) | (0.08) |
Proceeds from redemption fees | — * | — * | — * | — * | — * | — |
Net asset value end of period | 13.45 | 12.49 | 10.82 | 10.47 | 11.27 | 10.53 |
Net assets end of period (000s) | $40,245 | $34,307 | $24,697 | $25,412 | $24,585 | $2,215 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 18.10% c | 19.93% | 10.48% | 2.80% | 8.81% | 8.51% c |
Ratio of total expenses to average net assets^ | 0.73 d | 0.74 | 0.74 | 0.74 | 0.72 | 0.73 d |
Ratio of net expenses to average net assetsa | 0.67 d | 0.69 | 0.69 | 0.69 | 0.67 | 0.71 d |
Ratio of net investment income to average net assetsa | 0.22 d | 0.60 | 0.98 | 0.95 | 1.24 | 1.13 d |
Portfolio turnover | 42 c | 101 | 74 | 94 | 102 | 102 c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 12.46 | $ 10.80 | $ 10.44 | $ 11.26 | $ 10.53 | $10.62 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | (0.01) | 0.03 | 0.07 | 0.07 | 0.10 | 0.09 |
Net realized and unrealized gain/(loss) on investments | 2.18 | 2.01 | 0.91 | 0.17 | 0.77 | 0.20 |
Total from investment operations | 2.17 | 2.04 | 0.98 | 0.24 | 0.87 | 0.29 |
Less Distributions | ||||||
Dividends from net investment income | (0.07) | (0.05) | (0.13) | (0.06) | (0.14) | (0.19) |
Distributions from net realized capital gains | (1.16) | (0.33) | (0.49) | (1.00) | — | (0.19) |
Total distributions | (1.23) | (0.38) | (0.62) | (1.06) | (0.14) | (0.38) |
Proceeds from redemption fees | — * | — * | — * | — * | — * | — * |
Net asset value end of period | 13.40 | 12.46 | 10.80 | 10.44 | 11.26 | 10.53 |
Net assets end of period (000s) | $ 84 | $ 70 | $ 59 | $ 53 | $ 395 | $ 392 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 17.85% c | 19.48% | 10.11% | 2.27% | 8.37% | 2.96% |
Ratio of total expenses to average net assets^ | 1.06 d | 1.07 | 1.07 | 1.07 | 1.04 | 1.02 |
Ratio of net expenses to average net assetsa | 1.00 d | 1.02 | 1.02 | 1.01 | 1.00 | 1.01 |
Ratio of net investment income to average net assetsa | (0.11) d | 0.29 | 0.64 | 0.63 | 0.93 | 0.90 |
Portfolio turnover | 42 c | 101 | 74 | 94 | 102 | 102 |
See page 72 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
66
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
$ 12.48 | $ 10.83 | $ 10.48 | $ 11.27 | $ 10.53 | $ 10.63 |
0.01 | 0.06 | 0.09 | 0.09 | 0.13 | 0.12 |
2.19 | 2.00 | 0.92 | 0.20 | 0.78 | 0.19 |
2.20 | 2.06 | 1.01 | 0.29 | 0.91 | 0.31 |
(0.08) | (0.08) | (0.17) | (0.08) | (0.17) | (0.22) |
(1.16) | (0.33) | (0.49) | (1.00) | — | (0.19) |
(1.24) | (0.41) | (0.66) | (1.08) | (0.17) | (0.41) |
— * | — * | — * | — * | — * | — * |
13.44 | 12.48 | 10.83 | 10.48 | 11.27 | 10.53 |
$142,533 | $117,269 | $114,130 | $93,424 | $87,391 | $421,671 |
18.07% c | 19.63% | 10.39% | 2.82% | 8.74% | 3.12% |
0.81 d | 0.82 | 0.82 | 0.82 | 0.79 | 0.77 |
0.75 d | 0.77 | 0.77 | 0.76 | 0.76 | 0.76 |
0.14 d | 0.55 | 0.89 | 0.88 | 1.18 | 1.15 |
42 c | 101 | 74 | 94 | 102 | 102 |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
$ 12.46 | $ 10.80 | $ 10.45 | $ 11.25 | $ 10.52 | $ 10.61 |
(0.02) | 0.02 | 0.05 | 0.05 | 0.09 | 0.08 |
2.19 | 2.00 | 0.92 | 0.19 | 0.77 | 0.20 |
2.17 | 2.02 | 0.97 | 0.24 | 0.86 | 0.28 |
(0.07) | (0.03) | (0.13) | (0.04) | (0.13) | (0.18) |
(1.16) | (0.33) | (0.49) | (1.00) | — | (0.19) |
(1.23) | (0.36) | (0.62) | (1.04) | (0.13) | (0.37) |
— * | — * | — * | — * | — * | — * |
13.40 | 12.46 | 10.80 | 10.45 | 11.25 | 10.52 |
$ 2,643 | $ 2,420 | $ 2,066 | $ 1,861 | $ 2,015 | $ 2,039 |
17.83% c | 19.33% | 9.99% | 2.35% | 8.26% | 2.85% |
1.18 d | 1.19 | 1.19 | 1.19 | 1.16 | 1.14 |
1.12 d | 1.14 | 1.14 | 1.13 | 1.12 | 1.13 |
(0.23) d | 0.17 | 0.52 | 0.51 | 0.81 | 0.77 |
42 c | 101 | 74 | 94 | 102 | 102 |
67
Harbor Fixed Income Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR CORE BOND FUND | ||||
Retirement Class | ||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||
2020 | 2019 | 2018 g | ||
(Unaudited) | ||||
Net asset value beginning of period | $ 11.06 | $ 10.64 | $ 9.84 | $10.00 |
Income from Investment Operations | ||||
Net investment income/(loss)a,e | 0.10 | 0.26 | 0.31 | 0.12 |
Net realized and unrealized gain/(loss) on investments | (0.20) | 0.50 | 0.79 | (0.19) |
Total from investment operations | (0.10) | 0.76 | 1.10 | (0.07) |
Less Distributions | ||||
Dividends from net investment income | (0.14) | (0.27) | (0.30) | (0.09) |
Distributions from net realized capital gains | (0.22) | (0.07) | — | — |
Total distributions | (0.36) | (0.34) | (0.30) | (0.09) |
Net asset value end of period | 10.60 | 11.06 | 10.64 | 9.84 |
Net assets end of period (000s) | $34,599 | $29,428 | $5,298 | $3,061 |
Ratios and Supplemental Data (%) | ||||
Total returnb | (0.93)% c | 7.36% | 11.34% | (0.73)% c |
Ratio of total expenses to average net assets^ | 0.42 d | 0.43 | 0.45 | 0.77 d |
Ratio of net expenses to average net assetsa | 0.37 d | 0.37 | 0.37 | 0.37 d |
Ratio of net investment income to average net assetsa | 1.86 d | 2.35 | 2.98 | 2.98 d |
Portfolio turnover | 18 c | 70 | 61 | 97 c |
See page 72 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
68
Institutional Class | |||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||
2020 | 2019 | 2018 g | |
(Unaudited) | |||
$ 11.06 | $ 10.64 | $ 9.84 | $ 10.00 |
0.10 | 0.26 | 0.30 | 0.12 |
(0.21) | 0.50 | 0.79 | (0.19) |
(0.11) | 0.76 | 1.09 | (0.07) |
(0.13) | (0.27) | (0.29) | (0.09) |
(0.22) | (0.07) | — | — |
(0.35) | (0.34) | (0.29) | (0.09) |
10.60 | 11.06 | 10.64 | 9.84 |
$98,771 | $86,173 | $79,458 | $52,249 |
(0.98)% c | 7.28% | 11.26% | (0.75)% c |
0.50 d | 0.51 | 0.53 | 0.85 d |
0.45 d | 0.45 | 0.45 | 0.45 d |
1.78 d | 2.35 | 2.89 | 2.86 d |
18 c | 70 | 61 | 97 c |
69
Harbor Fixed Income Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR HIGH-YIELD BOND FUND | ||||||
Retirement Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 f | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 9.55 | $ 9.88 | $ 9.69 | $ 10.22 | $ 10.00 | $ 9.40 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.21 | 0.47 | 0.54 | 0.54 | 0.55 | 0.36 |
Net realized and unrealized gain/(loss) on investments | 0.47 | (0.28) | 0.22 | (0.49) | 0.25 | 0.61 |
Total from investment operations | 0.68 | 0.19 | 0.76 | 0.05 | 0.80 | 0.97 |
Less Distributions | ||||||
Dividends from net investment income | (0.29) | (0.52) | (0.57) | (0.58) | (0.58) | (0.37) |
Distributions from net realized capital gains | — | — | — | — | — | — |
Total distributions | (0.29) | (0.52) | (0.57) | (0.58) | (0.58) | (0.37) |
Proceeds from redemption fees | — * | — * | — * | — * | — * | — * |
Net asset value end of period | 9.94 | 9.55 | 9.88 | 9.69 | 10.22 | 10.00 |
Net assets end of period (000s) | $102,369 | $114,145 | $73,676 | $303,627 | $41,975 | $1,828 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 7.17% c | 2.18% | 8.13% | 0.54% | 8.23% | 10.49% c |
Ratio of total expenses to average net assets^ | 0.66 d | 0.66 | 0.65 | 0.61 | 0.65 | 0.66 d |
Ratio of net expenses to average net assetsa | 0.56 d | 0.56 | 0.56 | 0.53 | 0.61 | 0.61 d |
Ratio of net investment income to average net assetsa | 4.34 d | 4.88 | 5.53 | 5.50 | 5.44 | 5.38 d |
Portfolio turnover | 68 c | 128 | 80 | 53 | 56 | 58 c |
Administrative Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 9.59 | $ 9.92 | $ 9.71 | $ 10.25 | $ 10.01 | $10.02 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.20 | 0.44 | 0.50 | 0.52 | 0.53 | 0.51 |
Net realized and unrealized gain/(loss) on investments | 0.47 | (0.28) | 0.25 | (0.51) | 0.25 | (0.02) |
Total from investment operations | 0.67 | 0.16 | 0.75 | 0.01 | 0.78 | 0.49 |
Less Distributions | ||||||
Dividends from net investment income | (0.27) | (0.49) | (0.54) | (0.55) | (0.54) | (0.50) |
Distributions from net realized capital gains | — | — | — | — | — | — |
Total distributions | (0.27) | (0.49) | (0.54) | (0.55) | (0.54) | (0.50) |
Proceeds from redemption fees | — * | — * | — * | — * | — * | — * |
Net asset value end of period | 9.99 | 9.59 | 9.92 | 9.71 | 10.25 | 10.01 |
Net assets end of period (000s) | $ 755 | $ 668 | $ 686 | $ 1,374 | $ 1,753 | $4,631 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 7.06% c | 1.82% | 7.91% | 0.10% | 7.98% | 5.18% |
Ratio of total expenses to average net assets^ | 0.99 d | 0.99 | 0.98 | 0.94 | 0.97 | 0.95 |
Ratio of net expenses to average net assetsa | 0.89 d | 0.90 | 0.89 | 0.86 | 0.92 | 0.91 |
Ratio of net investment income to average net assetsa | 4.00 d | 4.60 | 5.13 | 5.18 | 5.20 | 5.20 |
Portfolio turnover | 68 c | 128 | 80 | 53 | 56 | 58 |
See page 72 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
70
Institutional Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
$ 9.55 | $ 9.88 | $ 9.68 | $ 10.21 | $ 9.99 | $ 10.00 |
0.21 | 0.46 | 0.52 | 0.54 | 0.55 | 0.53 |
0.47 | (0.28) | 0.25 | (0.51) | 0.24 | (0.02) |
0.68 | 0.18 | 0.77 | 0.03 | 0.79 | 0.51 |
(0.29) | (0.51) | (0.57) | (0.57) | (0.57) | (0.52) |
— | — | — | — | — | — |
(0.29) | (0.51) | (0.57) | (0.57) | (0.57) | (0.52) |
— * | — * | — * | 0.01 | — * | — * |
9.94 | 9.55 | 9.88 | 9.68 | 10.21 | 9.99 |
$263,583 | $287,242 | $398,320 | $470,204 | $1,387,213 | $1,817,902 |
7.12% c | 2.09% | 8.16% | 0.45% | 8.16% | 5.46% |
0.74 d | 0.74 | 0.73 | 0.69 | 0.72 | 0.70 |
0.64 d | 0.65 | 0.64 | 0.62 | 0.67 | 0.66 |
4.26 d | 4.86 | 5.35 | 5.40 | 5.43 | 5.43 |
68 c | 128 | 80 | 53 | 56 | 58 |
Investor Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
$ 9.57 | $ 9.91 | $ 9.71 | $ 10.24 | $ 10.01 | $ 10.02 |
0.19 | 0.43 | 0.49 | 0.50 | 0.52 | 0.49 |
0.48 | (0.29) | 0.24 | (0.49) | 0.24 | (0.02) |
0.67 | 0.14 | 0.73 | 0.01 | 0.76 | 0.47 |
(0.26) | (0.48) | (0.53) | (0.54) | (0.53) | (0.48) |
— | — | — | — | — | — |
(0.26) | (0.48) | (0.53) | (0.54) | (0.53) | (0.48) |
— * | — * | — * | — * | — * | — * |
9.98 | 9.57 | 9.91 | 9.71 | 10.24 | 10.01 |
$ 20,348 | $ 25,613 | $ 18,993 | $ 31,549 | $ 42,753 | $ 87,155 |
7.08% c | 1.59% | 7.72% | 0.08% | 7.79% | 5.02% |
1.11 d | 1.11 | 1.10 | 1.06 | 1.09 | 1.07 |
1.01 d | 1.01 | 1.01 | 0.98 | 1.04 | 1.03 |
3.90 d | 4.44 | 5.00 | 5.05 | 5.08 | 5.09 |
68 c | 128 | 80 | 53 | 56 | 58 |
71
Harbor Fixed Income Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR MONEY MARKET FUND | ||||||
Institutional Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | — * | 0.01 | 0.02 | 0.01 | 0.01 | — * |
Net realized and unrealized gain/(loss) on investments | — | — | — | — | — | — |
Total from investment operations | — * | 0.01 | 0.02 | 0.01 | 0.01 | — * |
Less Distributions | ||||||
Dividends from net investment income | — * | (0.01) | (0.02) | (0.01) | (0.01) | — * |
Distributions from net realized capital gains | — | — | — | — | — | — |
Total distributions | — * | (0.01) | (0.02) | (0.01) | (0.01) | — * |
Net asset value end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
Net assets end of period (000s) | $84,989 | $95,159 | $118,032 | $129,826 | $169,637 | $136,986 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | 0.02% c | 0.64% | 2.02% | 1.44% | 0.73% | 0.30% |
Ratio of total expenses to average net assets^ | 0.39 d | 0.39 | 0.35 | 0.35 | 0.35 | 0.36 |
Ratio of net expenses to average net assetsa | 0.04 d | 0.19 | 0.28 | 0.20 | — | — |
Ratio of net investment income to average net assetsa | 0.03 d | 0.72 | 2.01 | 1.42 | 0.72 | 0.27 |
* | Less than $0.01 |
^ | Percentage does not reflect reduction for credit balance arrangements (see the “Custodian” section in Note 2 of the accompanying Notes to Financial Statements) |
a | Reflects the Adviser’s waiver, if any, of its management fees and/or other operating expenses |
b | The total returns would have been lower had certain expenses not been waived during the periods shown. |
c | Unannualized |
d | Annualized |
e | Amounts are based on average daily shares outstanding during the period. |
f | For the period June 1, 2018 (inception) through October 31, 2018 |
g | For the period March 1, 2016 (inception) through October 31, 2016 |
The accompanying notes are an integral part of the Financial Statements.
72
Administrative Class | |||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | ||||
2020 | 2019 | 2018 | 2017 | 2016 | |
(Unaudited) | |||||
$ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
— * | 0.01 | 0.02 | 0.01 | 0.01 | — * |
— | — | — | — | — | — |
— * | 0.01 | 0.02 | 0.01 | 0.01 | — * |
— * | (0.01) | (0.02) | (0.01) | (0.01) | — * |
— | — | — | — | — | — |
— * | (0.01) | (0.02) | (0.01) | (0.01) | — * |
1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
$3,006 | $3,611 | $3,135 | $2,086 | $1,545 | $2,267 |
0.02% c | 0.51% | 1.76% | 1.36% | 0.73% | 0.30% |
0.64 d | 0.64 | 0.60 | 0.60 | 0.60 | 0.61 |
0.04 d | 0.29 | 0.53 | 0.29 | — | — |
0.03 d | 0.49 | 1.79 | 1.36 | 0.70 | 0.28 |
73
Harbor Fixed Income Funds
Notes to Financial Statements—April 30, 2021 (Unaudited)
Notes to Financial Statements—April 30, 2021 (Unaudited)
Note 1—Organizational Matters
Harbor Funds (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as an open-end management investment company. As of April 30, 2021, the Trust consists of 36 separate portfolios. The portfolios covered by this report are: Harbor Bond Fund, Harbor Convertible Securities Fund, Harbor Core Bond Fund, Harbor High-Yield Bond Fund, and Harbor Money Market Fund (individually or collectively referred to as a “Fund” or the “Funds," respectively). Harbor Capital Advisors, Inc. (the “Adviser” or “Harbor Capital”) is the investment adviser for the Funds.
The Funds currently offer up to four classes of shares, designated as Retirement Class, Institutional Class, Administrative Class and Investor Class. The shares of each class represent an interest in the same portfolio of investments of the Funds and have equal rights with respect to voting, redemptions, dividends, and liquidations, except that: (i) certain expenses, subject to the approval of the Trust’s Board of Trustees (the “Board of Trustees”), may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission (“SEC”) and the Internal Revenue Service; and (ii) shareholders of a class that bears distribution and service expenses under terms of a distribution plan have exclusive voting rights as to that distribution plan.
Note 2—Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. Each Fund follows the investment company reporting requirements under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), which includes the accounting and reporting guidelines under Accounting Standards Codification (“ASC”) Topic 946, Financial Services-Investment Companies. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.
Security Valuation
The Trust’s valuation procedures permit the Funds to use a variety of valuation methodologies, consider a number of subjective factors, analyze applicable facts and circumstances and, in general, exercise judgment, when valuing Fund investments. The methodology used for a specific type of investment may vary based on the circumstances and relevant considerations, including available market data.
Equity securities (including common stock, preferred stock, and convertible preferred stock), exchange-traded funds and financial derivative instruments (such as futures contracts, options contracts, including rights and warrants and centrally cleared swap agreements) that are traded or cleared on a national securities exchange or system (except securities listed on the National Association of Securities Dealers Automated Quotation (“NASDAQ”) system and United Kingdom securities) are valued at the last sale price on a national exchange or system on which they are principally traded or cleared as of the valuation date. Securities listed on the NASDAQ system or a United Kingdom exchange are valued at the official closing price of those securities. In the case of securities for which there are no sales on the valuation day, (i) securities traded principally on a U.S. exchange, including NASDAQ, are valued at the mean between the closing bid and ask price; and (ii) securities traded principally on a foreign exchange, including United Kingdom securities, are valued at the official bid price determined as of the close of the primary exchange. Securities of open-end registered investment companies that are held by a Fund are valued at net asset value. To the extent these securities are actively traded and fair valuation adjustments are not applied, they are normally categorized as Level 1 in the fair value hierarchy. Equity securities traded on inactive markets or valued by reference to similar instruments are normally categorized as Level 2 in the fair value hierarchy. For more information on the fair value hierarchy, please refer to the Fair Value Measurements and Disclosures section.
Debt securities (including corporate bonds, municipal bonds and notes, U.S. government agencies, U.S. treasury obligations, mortgage-backed and asset-backed securities, foreign government obligations, bank loans, and convertible securities, other than short-term securities, with a remaining maturity of less than 60 days at the time of acquisition), are valued using evaluated prices furnished by a pricing vendor selected by the Board of Trustees. An evaluated price represents an assessment by the pricing vendor using various market inputs of what the pricing vendor believes is the fair value of a security at a particular point in time. The pricing vendor determines evaluated prices for debt securities that would be transacted at institutional-size quantities using inputs including, but not limited to, (i) recent transaction prices and dealer quotes, (ii) transaction prices for what the pricing vendor believes are securities with similar characteristics, (iii) the pricing vendor’s assessment of the risk inherent in the security taking into account criteria such as credit quality, payment history, liquidity and market conditions,
74
Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
and (iv) various correlations and relationships between security price movements and other factors, such as interest rate changes, which are recognized by institutional traders. In the case of mortgage-backed and asset-backed securities, the inputs used by the pricing vendor may also include information about cash flows, prepayment rates, default rates, delinquency and loss assumption, collateral characteristics, credit enhancements and other specific information about the particular offering. Because many debt securities trade infrequently, the pricing vendor will often not have current transaction price information available as an input in determining an evaluated price for a particular security. When current transaction price information is available, it is one input into the pricing vendor’s evaluation process, which means that the evaluated price supplied by the pricing vendor will frequently differ from that transaction price. Securities held by Harbor Money Market Fund are valued at amortized cost, which the Adviser has determined, pursuant to the Board of Trustees’ authorization, approximates fair value. Under this method, investments purchased at a discount or premium are valued by accreting or amortizing the difference between the original purchase price and the maturity value of the issue over the period to effective maturity. Securities that use similar valuation techniques and inputs as described above are normally categorized as Level 2 in the fair value hierarchy.
Short-term securities with a remaining maturity of less than 60 days at the time of acquisition that are held by a Fund are valued at amortized cost to the extent amortized cost represents fair value. Such securities are normally categorized as Level 2 in the fair value hierarchy.
Over-the-counter financial derivative instruments, such as forward currency contracts, options contracts, and swap agreements, derive their value from underlying asset prices, indices, reference rates and other inputs, or a combination of these factors. These instruments are valued using evaluated prices furnished by a pricing vendor selected by the Board of Trustees. In certain cases, when a valuation is not readily available from a pricing vendor, the Fund’s subadviser provides a valuation, typically using its own proprietary models. Depending on the instrument and the terms of the transaction, the value of the derivative instrument can be determined by a pricing vendor or subadviser using a series of techniques, including simulation pricing models. The pricing models use inputs, such as issuer details, indices, spreads, interest rates, yield curves, dividends and exchange rates, that are observed from actively quoted markets. Derivative instruments that use valuation techniques and inputs similar to those described above are normally categorized as Level 2 in the fair value hierarchy.
A Fund may also use fair value pricing if the value of some or all of the Fund’s securities have been materially affected by events occurring before the Fund’s pricing time but after the close of the primary markets or exchanges on which the security is traded. This most commonly occurs with foreign securities, but may occur with other securities as well. In such cases, the Fund may apply a fair value factor supplied by the pricing vendor to a foreign security’s market close value to reflect changes in value that may have occurred between the close of the primary market or exchange on which the security is traded and the Fund’s pricing time. That factor may be derived using observable inputs such as a comparison of the trading patterns of a foreign security to intraday trading in the U.S. markets that are highly correlated to the foreign security or other information that becomes available after the close of the foreign market on which the security principally traded. When fair value pricing is employed, the prices of securities used by a Fund to calculate its net asset value may differ from market quotations, official closing prices or evaluated prices for the same securities, which means that the Fund may value those securities higher or lower than another given fund that uses market quotations, official closing prices or evaluated prices supplied by a pricing vendor in its calculation of net asset value. Securities valued using observable inputs, such as those described above, are normally categorized as Level 2 of the fair value hierarchy.
When reliable market quotations or evaluated prices supplied by a pricing vendor are not readily available or are not believed to accurately reflect fair value, securities are priced at their fair value as determined by the Trust’s Valuation Committee (the “Valuation Committee”) pursuant to procedures adopted, and subject to oversight, by the Board of Trustees. The Valuation Committee is comprised of a trustee and officers of the Trust and employees of Harbor Capital with relevant experience or responsibilities. Each security for which the Valuation Committee determines a fair value, including the basis for the fair value decision, is reviewed by the Board of Trustees at its regularly scheduled board meetings. Securities valued using fair valuation methods that incorporate significant unobservable inputs are normally categorized as Level 3 in the fair value hierarchy.
75
Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
Fair Value Measurements and Disclosures
Various inputs may be used to determine the value of each Fund’s investments, which are summarized in three broad categories defined as Level 1, Level 2, and Level 3. The inputs or methodologies used for valuing securities are not necessarily indicative of the risk associated with investing in those securities. The assignment of an investment to Levels 1, 2, or 3 is based on the lowest level of significant inputs used to determine its fair value.
Level 1– | Quoted prices in active markets for identical securities. |
Level 2– | Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). |
Level 3– | Significant unobservable inputs are used in situations where quoted prices or other observable inputs are not available or are deemed unreliable. Significant unobservable inputs may include each Fund’s own assumptions. |
The categorization of investments into Levels 1, 2, or 3, and a summary of significant unobservable inputs used for Level 3 investments, when applicable, can be found at the end of each Fund’s Portfolio of Investments schedule. For fair valuations using significant unobservable inputs, if any, a reconciliation of the beginning to ending balances for reported fair values is provided at the end of each Fund’s Portfolio of Investments schedule that presents changes attributable to realized and unrealized gains and losses and purchases, sales, and transfers in/out of the Level 3 category during the period.
Each Fund used observable inputs in its valuation methodologies whenever they were available and deemed reliable.
Investment Income
Dividends declared on portfolio securities are accrued on the ex-dividend date. For foreign securities held, certain dividends are recorded after the ex-dividend date, but as soon as the respective Fund is notified of such dividends. Interest income is accrued daily as earned. Discounts and premiums on fixed income securities purchased are amortized over the life of the respective securities (except for premiums on certain callable debt securities that amortized to the earliest call date) using the effective yield method. Paydown gains and losses on mortgage-backed and asset-backed securities are recognized as a component of interest income. Inflation adjustments to the face amount of inflation-indexed securities are included in interest income. Consent fees relating to corporate actions from investments held are recorded as income upon receipt.
Expenses
Expenses are charged directly to the Fund that incurred such expense whenever possible. With respect to expenses incurred by any two or more Harbor funds where amounts cannot be identified on a fund by fund basis, such expenses are generally allocated in proportion to the average net assets or the number of shareholders of each Fund.
Class Allocations
Income, common expenses and realized and unrealized gains/(losses) are determined at the Fund level and allocated daily to each class of shares based on the applicable net assets of the respective classes. Distribution and service fees, if any, and transfer agent fees are calculated daily at the class level based on the applicable net assets of each class and the expense rate(s) applicable to each class.
Securities Transactions
Securities transactions are accounted for on the trade date (the date the order to buy or sell is executed). Realized gains or losses on security transactions are determined on the basis of identified cost.
Distribution to Shareholders
Distributions on Fund shares are recorded on the ex-dividend date.
76
Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
Taxes
Each Fund is treated as a separate entity for U.S. federal tax purposes. Each Fund’s policy is to meet the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) applicable to regulated investment companies and to distribute to its shareholders all of its taxable income within the prescribed time. It is also the intention of each Fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code. Therefore, no provision has been made for U.S. federal taxes on income, capital gains or unrealized appreciation of securities held or excise taxes on income and capital gains.
Each Fund may be subject to taxes imposed by foreign countries in which they invest. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and unrealized appreciation as such income and/or gains are earned.
Management has analyzed each Fund’s tax positions for all open tax years (in particular, U.S. federal income tax returns for the tax years ended October 31, 2017–2019), including all positions expected to be taken upon filing the 2020 tax return, in all material jurisdictions where each Fund operates, and has concluded that no provision for income tax is required in the Funds’ financial statements. Each Fund will recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations.
Custodian
Each Fund has credit balance arrangements with its custodian whereby positive balances in demand deposit accounts used by the transfer and shareholder servicing agent for clearing shareholder transactions in the Fund generate credits that are applied against gross custody expenses. Such custodial expense reductions, if any, are reflected on the respective Fund’s accompanying Statement of Operations.
Foreign Currency Contracts
A foreign currency spot contract is an agreement between two parties to buy and sell currencies at the current market rate for settlement within two business days. A forward currency contract is an agreement between two parties to buy and sell currencies at a set price on a future date.
Foreign currency contracts are marked-to-market daily and any change in fair value is recorded as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value on the open and close date. Risk of losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contract’s terms. The maximum potential loss from such contracts is the aggregate face value in U.S. dollars at the time the contract was opened.
During the period, Harbor Bond Fund used foreign currency spot contracts to facilitate transactions in foreign securities or to convert foreign currency receipts into U.S. dollars and forward currency contracts to manage its exposure to changes in exchange rates or as a hedge against foreign exchange risk related to specific transactions or portfolio positions. The Fund entered into collateral agreements with certain counterparties to mitigate counterparty risk associated with forward currency contracts.
Foreign Currency Translations
Purchases and sales of securities are translated into U.S. dollars at the current exchange rate on the respective dates of the transactions. Income and withholding taxes are translated at the prevailing exchange rate when accrued or incurred. The accounting records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency, when applicable, are translated into U.S. dollars based on the current exchange rates at period end.
77
Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
Reported net realized gains and losses on foreign currency transactions, when applicable, represent net gains and losses from sales and maturities of foreign currency contracts, disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income accrued and tax reclaims receivable and the U.S. dollar amount actually received. The effects of changes in foreign currency exchange rates on investments in securities, when applicable, are included in the net realized and unrealized gain or loss on investments in the Statements of Operations.
Proceeds from Litigation
Each Fund may receive proceeds from shareholder litigation settlements involving current and/or previously held portfolio holdings. Any proceeds received from litigation involving portfolio holdings are reflected in the Statements of Operations in realized gain/(loss) if the security has been disposed of by a Fund, or in unrealized gain/(loss) if the security is still held by a Fund.
New Accounting Pronouncements
In October 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-08, Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs. This ASU amends FASB ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities, which provides guidance related to the amortization period for certain purchase callable debt securities held at a premium. ASU 2020-08 addresses premium amortization for callable debt securities with multiple call dates, clarifying that an entity should reevaluate whether a callable debt security purchased at a premium is in scope for each reporting period. ASU 2020-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, and should be applied on a prospective basis as of the beginning of the period of adoption for existing or newly purchased debt securities. At this time, management is still evaluating the implications of these changes on the financial statements.
In March 2020, FASB issued ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The main objective of this ASU is to provide optional guidance to ease the potential accounting burden associated with transitioning away from the London Interbank Offered Rate and other reference rates that are expected to be discontinued. The ASU was effective immediately upon release of the update on March 12, 2020, and can generally be applied through December 31, 2022. At this time, management is still evaluating the implications of these changes on the financial statements.
Forward Commitments and When-Issued Securities
Agreements to purchase securities on a when-issued basis or purchase or sell securities on a forward commitment basis involve a commitment by a Fund to purchase or sell securities at a future date (ordinarily one or two months later). The price of the underlying securities (usually expressed in terms of yield) and the date when the securities will be delivered and paid for (the settlement date) are fixed at the time the transaction is negotiated. When-issued purchase and forward commitment transactions are negotiated directly with the other party, and such commitments are not traded on exchanges.
A Fund will purchase securities on a when-issued basis, or purchase or sell securities on a forward commitment basis, only with the intention of completing the transaction and actually purchasing or selling the securities. If deemed advisable as a matter of investment strategy, however, a Fund may dispose of or renegotiate a commitment after it is entered into. A Fund also may sell securities it has committed to purchase before those securities are delivered to a Fund on the settlement date. A Fund may realize a capital gain or loss in connection with these transactions. The value of securities purchased on a when-issued or forward commitment basis and any subsequent fluctuations in their value are reflected in the computation of a Fund’s net asset value starting on the date of the agreement to purchase the securities. A Fund does not earn interest on the securities it has committed to purchase until they are paid for and delivered on the settlement date. When a Fund makes a forward commitment to sell securities it owns, the proceeds to be received upon settlement are included in the Fund’s assets. Fluctuations in the fair value of the underlying securities are not reflected in a Fund’s net asset value as long as the commitment to sell remains in effect. Settlement of when-issued and forward commitment transactions generally takes place within two months after the date of the transaction, but a Fund may agree to a longer settlement period.
78
Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
Purchasing securities on a when-issued or forward commitment basis involves a risk of loss if the value of the security to be purchased declines prior to the settlement date. However, when a Fund purchases securities on a when-issued or forward commitment basis, the Fund will maintain in a segregated account with the Fund’s custodian, or set aside or restrict in the subadviser’s records or systems relating to the Fund, cash or liquid assets having a value (determined daily) at least equal to the amount of the Fund’s purchase commitments. In the case of a forward commitment to sell portfolio securities, portfolio holdings will be held in a segregated account with the Fund’s custodian, or set aside or restricted on the subadviser’s records or systems relating to the Fund, while the commitment is outstanding.
During the period, Harbor Bond Fund purchased and sold securities on a forward commitment basis, including “TBA” (to be announced) purchase and sale commitments.
Inflation-Indexed Bonds
Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted based on the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation-indexed bond, however, interest will be paid based on a principal value that is adjusted for inflation. Any increase or decrease in the principal amount of an inflation-indexed bond will be included as interest income even though investors do not receive the principal until maturity.
During the period, Harbor Bond Fund and Harbor Core Bond Fund invested in inflation-indexed bonds.
Loan Participations and Assignments
Loan participations and loan assignments are direct debt instruments, which are interests in amounts owed by corporate, governmental, or other borrowers to lenders or lending syndicates. A Fund’s investments in loans may be in the form of participation in loans or assignments of all or a portion of loans from third parties. A loan is often administered by a bank or other financial institution (the “agent”) that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. When investing in a loan participation, the Fund has the right to receive payments of principal, interest and any fees to which it is entitled, only from the agent selling the loan agreement and only upon receipt by the agent of payments from the borrower. As a result, the Fund may be subject to the credit risk of both the borrower and the agent that is selling the loan agreement. When the Fund purchases assignments from the agent, it acquires direct rights against the borrower on the loan.
Unfunded loan commitments are contractual obligations for future funding and may include revolving credit facilities, which may obligate a Fund to supply additional cash to the borrower on demand. Unfunded loan commitments represent a future obligation in full, even though a percentage of the notional loan amounts will never be utilized by the borrower. The funded portion of these credit agreements are presented on the Portfolio of Investments. Unfunded loan commitments are marked to market daily and any unrealized appreciation or depreciation is included in the Statement of Assets and Liabilities and the Statement of Operations.
A Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of an unfunded loan commitment. In certain circumstances, a Fund that has entered into an unfunded loan commitment may receive a prepayment penalty fee upon the prepayment of a loan by a borrower. Fees earned are recorded as a component of interest income on the Statement of Operations.
During the period, Harbor High-Yield Bond Fund invested in loan participations and assignments.
As of April 30, 2021, the Funds do not have unfunded loan commitments outstanding.
Mortgage-Related and Other Asset-Backed Securities
Mortgage-backed or asset-backed securities include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, CMO residuals, stripped mortgage-backed securities (“SMBSs”) and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates.
79
Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
Early repayment of principal on some mortgage-related securities may expose a Fund to a lower rate of return upon reinvestment of principal. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.
During the period, Harbor Bond Fund and Harbor Core Bond Fund invested in mortgage-related or other asset-backed securities.
Repurchase Agreements
In a repurchase agreement, a Fund buys a security at one price and simultaneously agrees to sell it back at a higher price. Such agreements must be adequately collateralized to cover the counterparty’s obligation to a Fund to close out the repurchase agreement. Each repurchase agreement counterparty must meet the minimum credit quality requirements applicable to the respective Fund and any other appropriate counterparty criteria as determined by a Fund’s subadviser. The minimum credit quality requirements are those applicable to a Fund’s purchase of securities such that if a Fund is permitted to only purchase securities that are rated investment-grade (or the equivalent if unrated), a Fund could only enter into repurchase agreements with counterparties that have debt outstanding that is rated investment-grade (or the equivalent if unrated). The securities are regularly monitored to ensure that the collateral is adequate. A Fund seeks to further mitigate its counterparty risk by entering into master repurchase agreements with its counterparties. The master repurchase agreements provide that, in the event of a counterparty’s default, including bankruptcy, a Fund may terminate any repurchase agreements with that counterparty, determine the net amount owned, and sell or retain the collateral up to the net amount owed to a Fund. A counterparty’s default may cause a Fund to suffer losses, including loss of interest on or principal of the securities and costs associated with delay and enforcement of the terms of the master repurchase agreement.
During the period, Harbor Bond Fund entered into repurchase agreements with domestic or foreign banks or with a member firm of the Financial Industry Regulatory Authority, Inc., or an affiliate of a member firm that is a primary dealer in U.S. government securities.
Reverse Repurchase Agreements
A reverse repurchase agreement involves the delivery of a portfolio security in exchange for cash by a Fund, coupled with an agreement to repurchase the same or substantially the same security at a specified time and price. Until the security is repurchased, a Fund is obligated to pay interest, based upon market rates of the time of issuance, on the value of the repurchase agreement. While a reverse repurchase agreement is outstanding, a Fund continues to receive principal and interest payments on the underlying security. Cash received in exchange for securities delivered plus accrued interest payments to be made by a Fund to counterparties is reflected as a liability on the Statements of Assets and Liabilities. Interest payments based upon the reverse repurchase agreement term made by a Fund to counterparties are recorded as a component of interest expense on the Statements of Operations. To cover its obligations under reverse repurchase agreements, a Fund will segregate cash or liquid securities, which are marked-to-market daily, with the Fund’s custodian, or set aside or restrict assets in the subadviser’s records or systems relating to a Fund, in an amount not less than the repurchase price, including accrued interest, of the underlying security. Reverse repurchase agreements involve the risk that the fair value of the securities delivered by a Fund may decline below the repurchase price of the securities and, if the proceeds from the reverse repurchase agreement are invested in securities, that the fair value of the securities purchased may decline below the repurchase price of the securities delivered. In periods of increased demand for the security, a Fund may receive a fee for use of the security by the counterparty, which may result in interest income to a Fund.
During the period, Harbor Bond Fund entered into reverse repurchase agreements. The average amount of borrowings outstanding for the Fund was $6,694,000 at a weighted average interest rate of -0.456%. Average borrowing outstanding and average interest rate during the period is calculated based on calendar days. A table that includes the remaining maturity period for outstanding reverse repurchase agreements and the type of investment collateral pledged, if any, can be found subsequent to the Fund’s Portfolio of Investments schedule.
80
Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
Sale-Buybacks
A “sale-buyback” financing transaction consists of a sale of a portfolio security by a Fund to a financial institution (the counterparty) with a simultaneous agreement to repurchase the same or substantially the same security at an agreed-upon price and date. A Fund is not entitled to receive principal and interest payments, if any, made on the security sold to the counterparty during the term of the agreement.
The agreed-upon proceeds for securities to be repurchased by a Fund are reflected as a liability on the Statement of Assets and Liabilities. A Fund will recognize net income represented by the price differential between the price received for the transferred security and the agreed-upon repurchase price. This is commonly referred to as the “price drop.” A price drop consists of two components: (i) the foregone interest and inflationary income adjustments, if any, a Fund would have otherwise received had the security not been sold, and (ii) the negotiated financing terms between a Fund and counterparty. Foregone interest and inflationary income adjustments, if any, are recorded as components of interest income on the Statements of Operations. Interest payments based upon negotiated financing terms made by a Fund to counterparties are recorded as a component of interest expense on the Statements of Operations. To cover its obligations under sale-buyback transactions, a Fund will segregate cash or liquid securities, which are marked-to-market daily, with the Fund’s custodian, or set aside or restrict assets in the subadviser’s records or systems relating to a Fund, in an amount not less than the repurchase price, including accrued interest, of the underlying security. Sale-buyback transactions involve the risk that the fair value of the securities sold by a Fund may decline below the repurchase price of the securities and, if the proceeds from the sale-buyback transactions are invested in securities, that the fair value of the securities purchased may decline below the repurchase price of the securities sold. In periods of increased demand for a security, a Fund may receive a fee for use of the security by the counterparty, which may result in additional interest income to a Fund.
During the period, Harbor Bond Fund entered into sale-buyback transactions. The average amount of borrowings outstanding for the Fund was $603,000 at a weighted average interest rate of 0.029%. Average borrowing outstanding and average interest rate during the period is calculated based on calendar days. A table that includes the remaining maturity period for outstanding sale-buyback transactions and the type of investment collateral pledged, if any, can be found subsequent to the Fund’s Portfolio of Investments schedule.
Short Sales
Short-selling obligates a Fund to replace a borrowed security by purchasing it at the market price at the time of replacement. Until the security is replaced, such Fund is required to pay any accrued interest or dividends to the lender and also may be required to pay a premium. A Fund would realize a gain if the security declines in price between the date of the short sale and the date on which such Fund replaces the borrowed security. A Fund would incur a loss as a result of the short sale if the price of the security increases between those dates. Until a Fund replaces the borrowed security, subject to pre-arranged exposure levels, it will maintain cash or liquid securities sufficient to cover its short position in a segregated account with the Fund’s custodian or set aside or restricted in the subadviser’s records or systems relating to the Fund. Short sales involve the risk of an unlimited increase in the market price of the borrowed security.
During the period, Harbor Bond Fund engaged in short-selling.
Futures Contracts
A futures contract is an agreement between two parties to buy or sell a specified financial instrument at a set price on a future date. Futures contracts tend to increase or decrease a Fund’s exposure to the underlying instrument or can be used to hedge other Fund investments.
Upon entering into a futures contract, a Fund is required to pledge to the broker an amount of cash, U.S. government securities or other liquid securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, a Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract referred to as “variation margin.” Such receipts or payments are recorded by a Fund as unrealized gains or losses. When the contract is closed or expires, a Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. A Fund may suffer losses if it is unable to close out its position because of an illiquid secondary market. There is no assurance that a Fund will be able to close out its position when the Fund considers it appropriate or desirable to do so. In the event of adverse price movements, a Fund may be required to
81
Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
continue making daily cash payments to maintain its required margin. If a Fund has insufficient cash, it may have to sell portfolio securities to meet daily margin requirements at a time when the Fund would not otherwise elect to do so. In addition, a Fund may be required to deliver or take delivery of instruments. The maximum potential loss on a long futures contract is the U.S. dollar value of the notional amount at the time the contract is opened. The potential loss on a short futures contract is unlimited. There is minimal counterparty risk with futures contracts as they are traded on an exchange and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees the futures contracts against default.
During the period, Harbor Bond Fund used futures contracts to gain exposure to the fixed income asset class with greater efficiency and lower cost than was possible through direct investment, to add value when these securities were attractively priced, or to adjust the portfolio’s sensitivity to changes in interest rates or currency exchange rates.
Options
An option, including rights and warrants, is a contract that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price) during a certain period of time or on a specific date (exercise date). Purchased call options tend to increase a Fund’s exposure to the underlying instrument. Purchased put options tend to decrease a Fund’s exposure to the underlying instrument.
When a Fund purchases an option, it pays a premium. If a purchased option expires, a Fund realizes a loss in the amount of the premium. If a Fund enters into a closing sale transaction, it realizes a gain or loss, depending on whether the proceeds from the sale are greater or less than the cost of the option. If a call option is exercised by a Fund, the cost of the securities acquired by exercising the call is increased by the premium paid to buy the call. If a put option is exercised by a Fund, it realizes a gain or loss from the sale of the underlying security and the proceeds from such sale are decreased by the premium originally paid. The risk associated with purchasing options is limited to the premium paid. A Fund’s maximum risk of loss from counterparty credit risk is also limited to the premium paid for the contract.
When a Fund writes an option, it receives a premium. If a written option expires on its stipulated expiration date, or if a Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss, if the cost of a closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written call option is exercised, a Fund realizes a gain or loss from the sale of the underlying security, and the proceeds of the sale are increased by the premium originally received. If a written put option is exercised, the amount of the premium originally received reduces the cost of the security that a Fund purchases upon exercise of the option.
The risk in writing a call option is that a Fund relinquishes the opportunity to profit if the fair value of the underlying security increases and the option is exercised. In writing a put option, a Fund assumes the risk of incurring a loss if the fair value of the underlying security decreases and the option is exercised. In addition, there is a risk that a Fund may not be able to enter into a closing transaction because of an illiquid secondary market or if the counterparty does not perform under the contract’s terms.
Options on exchange-traded futures contracts are an option contract in which the underlying instrument is a single futures contract. A Fund may write or purchase options on exchange-traded futures contracts in which a Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract referred to as “variation margin.” Such receipts or payments are recorded by a Fund as unrealized gains or losses. When the contract is closed or expires, a Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
During the period, Harbor Bond Fund purchased and wrote (sold) option contracts to manage its exposure to the bond markets and to fluctuations in interest rates and currency values.
Swap Agreements
A swap is a contract between two parties to exchange future cash flows at specified intervals (payment dates) based upon a notional principal amount during the agreed-upon life of the contract. Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation or depreciation.
82
Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
Upon entering a swap agreement, any payments received or made at the beginning of the measurement period are reflected as such on the Statements of Assets and Liabilities and represent a reconciling value to compensate for differences between the stated terms of the swap agreement and prevailing market conditions (such as credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses on the Statements of Operations upon termination or maturity of the swap. If a liquidation payment is received or made at the termination of the swap, it is recorded as realized gain or loss on the Statements of Operations. Net periodic payments received or paid by a Fund are included as part of realized gains or losses on the Statements of Operations. A Fund will only enter into swap agreements with counterparties that meet the minimum credit quality requirements applicable to a Fund and any other appropriate counterparty criteria as determined by a Fund’s subadviser. The minimum credit quality requirements are similar to those applicable to a Fund’s purchase of securities, such that if a Fund is permitted to only purchase securities that are rated investment-grade (or the equivalent if unrated), a Fund could only enter into one of the below referenced transactions with counterparties that have debt outstanding that is rated investment-grade (or the equivalent if unrated). Entering into swap agreements involves, to varying degrees, elements of credit risk, market risk and interest rate risk in excess of the amount recognized in the Statements of Assets and Liabilities. Such risks include the possibility that there is not a liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform, or that there may be unfavorable changes in market conditions or interest rates. A Fund’s maximum risk of loss from counterparty credit risk is the discounted value of the net cash flows to be received from the counterparty over the contract’s remaining life or the value of the contract. This risk is typically mitigated by entering into swap agreements with highly-rated counterparties, the existence of a master netting arrangement between a Fund and the counterparty, and the posting of collateral by the counterparty.
Interest Rate Swaps are agreements between counterparties to exchange cash flows or an exchange of commitments to pay or receive interest with respect to the notional amount of principal. Changes in interest rates can have an effect on the value of bond holdings, the amount of interest income earned and the value of the interest rate swaps held.
During the period, Harbor Bond Fund used interest rate swap agreements to manage its exposure to interest rate changes.
Credit Default Swaps are agreements between counterparties to buy or sell protection on a debt security, a basket of securities, or an index of obligations against a defined credit event. Under the terms of a credit default swap, the buyer of protection receives credit protection in exchange for making periodic payments to the seller of protection based on a given percentage applied to a notional principal amount. In return for these payments, the seller acts as the guarantor of the creditworthiness of a reference entity, obligation or index. An issuer may represent either a single issuer, a “basket” of issuers, or a credit index. A credit index is a basket of credit instruments or exposures designed to be representative of some part of the credit market as a whole.
The buyer in a credit default contract is obligated to pay the seller a periodic stream of payments over the term of the contract provided that no credit event occurs. Credit events may include bankruptcy, failure to pay principal, maturity extension, rating downgrade, or write-down. As a seller, if an underlying credit event occurs, a Fund will either pay the buyer an amount equal to the notional amount of the swap and take delivery of the reference obligation (or underlying securities comprising an index), or pay a net settlement amount of cash equal to the notional amount of the swap less the recovery value of the reference obligation (or underlying securities comprising an index). As a buyer, if an underlying credit event occurs, a Fund will either receive from the seller an amount equal to the notional amount of the swap and deliver the reference obligation (or underlying securities comprising an index) or receive a net settlement.
During the period, Harbor Bond Fund used credit default swap agreements as a seller to gain credit exposure to an issuer or to simulate investments in long bond positions that were either unavailable or less attractively priced in the bond market; the Fund used credit default swap agreements as a buyer to provide a measure of protection against defaults of an issuer. As of April 30, 2021, the maximum exposure to loss of the notional value as the seller of credit default swaps outstanding for Harbor Bond Fund was $28,676,000.
83
Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 3—Investment Portfolio Transactions
Investment Portfolio Transactions
Purchases and sales of investments, other than short-term securities, for each Fund for the period ended April 30, 2021 are as follows:
Purchases (000s) | Sales (000s) | ||||||
U.S. Government | Other | U.S. Government | Other | ||||
Harbor Bond Fund | $4,675,702 | $156,465 | $5,180,519 | $434,998 | |||
Harbor Convertible Securities Fund | — | 75,254 | — | 71,015 | |||
Harbor Core Bond Fund | 40,019 | 8,006 | 15,753 | 4,524 | |||
Harbor High-Yield Bond Fund | — | 278,993 | — | 335,511 |
Note 4—FEES AND OTHER Transactions with Affiliates
Investment Adviser
Harbor Capital is a wholly owned subsidiary of ORIX Corporation. Harbor Capital is the Funds’ investment adviser and is also responsible for administrative and other services.
Each Fund has a separate advisory agreement with Harbor Capital. The agreements provide for management fees based on an annual percentage rate of average daily net assets as follows:
Contractual Rate | Actual Rate | ||
Harbor Bond Fund | 0.48% a | 0.46% | |
Harbor Convertible Securities Fund | 0.65 b | 0.60 | |
Harbor Core Bond Fund | 0.34 | 0.34 | |
Harbor High-Yield Bond Fund | 0.60 c | 0.51 | |
Harbor Money Market Fund | 0.20 d | 0.04 | |
a | The Adviser has contractually agreed to reduce the management fee to 0.43% on assets between $1 billion and $3 billion and to 0.405% on assets over $3 billion through February 28, 2022. |
b | The Adviser has contractually agreed to reduce the management fee to 0.60% through February 28, 2022. |
c | The Adviser has contractually agreed to reduce the management fee to 0.508% through February 28, 2022. |
d | The Adviser has contractually agreed to reduce the management fee to 0.18% through February 28, 2022. |
Harbor Capital has from time to time voluntarily or contractually agreed not to impose a portion of its management fees and/or to bear a portion of the expenses incurred in the operation of certain Funds in order to limit Fund expenses. Such waivers, if any, are reflected on the accompanying Statements of Operations. Interest expense, if any, is excluded from contractual limitations. During the period, the following expense limitation agreements were in effect:
Retirement Class | Institutional Class | Administrative Class | Investor Class | Expense Limitation Agreement Expiration Date | |||||
Harbor Bond Fund | 0.43% | 0.51% | 0.76% | N/A | 02/28/2022 | ||||
Harbor Core Bond Fund | 0.37 | 0.45 | N/A | N/A | 02/28/2022 | ||||
Harbor Money Market Fund1 | N/A | 0.28 | 0.53 | N/A | 02/28/2022 | ||||
1 | For the period ended April 30, 2021, Harbor Capital voluntarily waived additional expenses below the limits described in the table above resulting in annualized expense ratios each of 0.04% for the Institutional Class and Administrative Class. |
All expense limitation agreements include the transfer agent fee waiver discussed in the Transfer Agent note.
84
Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 4—FEES AND OTHER Transactions with Affiliates—Continued
Distributor
Harbor Funds Distributors, Inc. (the “Distributor”), a wholly-owned subsidiary of Harbor Capital, is the distributor for Harbor Funds’ shares. Under the Trust’s current distribution plan pursuant to Rule 12b-1 under the Investment Company Act with respect to each Fund’s Administrative and Investor Class shares (each, a “12b-1 Plan”) as applicable, each Fund pays the Distributor compensation at the annual rate of 0.25% of the average daily net assets of its Administrative and Investor Class shares. Pursuant to each 12b-1 Plan, the Distributor is compensated for financing any activity that is primarily intended to result in the sale of Administrative and Investor Class shares of each Fund or for recordkeeping services or the servicing of shareholder accounts in a Administrative and Investor Class shares of each Fund. Such activities include, but are not limited to: printing of prospectuses and statements of additional information and reports for prospective shareholders (i.e., other than existing shareholders); preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers or other institutions such as asset-based sales charges, payments of recordkeeping fees under recordkeeping arrangements, or payments of service fees under shareholder service arrangements; and costs of administering each 12b-1 Plan.
Amounts payable by a Fund under each 12b-1 Plan need not be directly related to the expenses actually incurred by the Distributor on behalf of each Fund. Each 12b-1 Plan does not obligate each Fund to reimburse the Distributor for the actual expenses the Distributor may incur in fulfilling its obligations under each 12b-1 Plan. Thus, even if the Distributor’s actual expenses exceed the fee payable to the Distributor at any given time, each Fund will not be obligated to pay more than that fee. If the Distributor’s expenses are less than the fee it receives, the Distributor will retain the difference.
The fees attributable to each Fund’s respective class are shown on the accompanying Statements of Operations.
Transfer Agent
Harbor Services Group, Inc. (“Harbor Services Group”), a wholly-owned subsidiary of Harbor Capital, is the transfer and shareholder servicing agent for the Funds. The transfer agency and service agreement is reviewed and approved annually by the Board of Trustees and provides currently for compensation up to the following amounts per class of each Fund:
Transfer Agent Fees | |
Retirement Class | 0.02% of the average daily net assets of all Retirement Class shares |
Institutional Class | 0.10% of the average daily net assets of all Institutional Class shares |
Administrative Class | 0.10% of the average daily net assets of all Administrative Class shares |
Investor Class1 | 0.21% of the average daily net assets of all Investor Class shares |
1 | For the period November 1, 2020 through February 28, 2021, Harbor Services Group received compensation up to 0.22% for the Investor Class. |
Harbor Services Group voluntarily waived a portion of its transfer agent fees during the period ended April 30, 2021. Fees incurred for these transfer agent services are shown on each Fund’s Statement of Operations. The voluntary waiver may be discontinued at any time.
Affiliated Transactions
The Investment Company Act permits purchase and sale transactions among affiliated investment companies subject to an exemptive rule. Harbor Funds has adopted policies and procedures pursuant to such rule. During the period, the Funds did not enter into any transactions with any other Harbor fund.
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Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 4—FEES AND OTHER Transactions with Affiliates—Continued
Shareholders
As of April 30, 2021, Harbor Capital and its wholly owned subsidiaries collectively held the following shares of beneficial interest in each of the following Funds:
Number of Shares Owned by Harbor Capital and Subsidiaries | Percentage of Outstanding Shares | ||||||||||
Retirement Class | Institutional Class | Administrative Class | Investor Class | Total | |||||||
Harbor Bond Fund | 64,498 | — | — | N/A | 64,498 | 0.0% | |||||
Harbor Convertible Securities Fund | 51,669 | — | — | — | 51,669 | 0.4 | |||||
Harbor Core Bond Fund | 43,889 | 4,830,807 | N/A | N/A | 4,874,696 | 39.0 | |||||
Harbor High-Yield Bond Fund | 67,862 | — | — | — | 67,862 | 0.2 | |||||
Harbor Money Market Fund | N/A | 6,918,765 | 26,380 | N/A | 6,945,145 | 7.9 |
Independent Trustees
The fees and expenses of the Independent Trustees are included in “Trustees’ fees and expenses” on each Fund’s Statement of Operations.
The Board of Trustees has adopted a Deferred Compensation Plan for Independent Trustees (the “Plan”), which enables Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Trust. For purposes of determining the amount owed to a Trustee under the Plan, deferred amounts are treated as though they had been invested in shares of the Fund(s) selected by the Trustee. While not required to do so, each Fund makes an investment equal to the Trustee’s investment election. The deferred compensation liability and the offsetting deferred compensation investment asset are included as a component of “Accrued expenses – Trustees’ fees and expenses” and “Other assets”, respectively, in the Statements of Assets and Liabilities. Such amounts fluctuate with changes in the value of the selected Fund(s). The deferred compensation and related mark-to-market impact liability and an offsetting investment asset will remain on each Fund’s Statement of Assets and Liabilities until distributed in accordance with the Plan.
Indemnification
Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, in the normal course of business the Trust enters into contracts that provide general indemnities to other parties. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.
Redemption Fee
During the period November 1, 2020 through February 28, 2021, a 1% redemption fee was charged on shares of Harbor Convertible Securities Fund and Harbor High-Yield Bond Fund that were redeemed within 90 days from their date of purchase. All redemption fees are recorded by the Fund as paid-in capital. For such period redemption fee proceeds were as follows:
Amount (000s) | |
Harbor Convertible Securities Fund | $— |
Harbor High-Yield Bond Fund | 3 |
Effective March 1, 2021, the Funds no longer charge redemption fees.
86
Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
NOTE 5—TAX INFORMATION
The identified cost for federal income tax purposes of investments owned by each Fund and its respective gross unrealized appreciation and depreciation as of April 30, 2021 are as follows:
Identified Cost (000s) | Gross Unrealized | Net Unrealized Appreciation/ (Depreciation) (000s) | |||||
Appreciation (000s) | (Depreciation) (000s) | ||||||
Harbor Bond Fund | $1,826,714 | $96,305 | $(48,187) | $48,118 | |||
Harbor Convertible Securities Fund | 164,791 | 19,559 | (2,652) | 16,907 | |||
Harbor Core Bond Fund | 128,428 | 4,609 | (1,564) | 3,045 | |||
Harbor High-Yield Bond Fund* | 368,867 | 14,315 | (3,863) | 10,452 | |||
Harbor Money Market Fund | 88,010 | — | — | — |
* | Capital loss carryforwards are available, which may reduce taxable income from future net realized gain on investments. |
Note 6—Derivatives
Each Fund’s derivative holdings do not qualify for hedge accounting treatment and as such are recorded at current fair value. For a discussion of risks related to these investments please refer to the descriptions of each type of derivative instrument in Note 2— Significant Accounting Policies.
Each Fund’s derivative instruments outstanding as of the period ended April 30, 2021, if any, as disclosed in the Portfolio of Investments, and the related amounts of net realized and changes in net unrealized gains and losses on derivative instruments during the period as disclosed in the Statement of Operations, are indicators of the volume of derivative activity for each Fund.
Derivative Instruments
As of April 30, 2021, the fair values of derivatives, by primary risk exposure, were reflected in the Statement of Assets and Liabilities as follows:
HARBOR BOND FUND
Statement of Assets and Liabilities Caption | Interest Rate Contracts (000s) | Foreign Exchange Contracts (000s) | Credit Contracts (000s) | Total (000s) | ||||||||
Assets | ||||||||||||
Unrealized appreciation on open forward currency contracts | $ — | $ 1,911 | $ — | $ 1,911 | ||||||||
Unrealized appreciation on OTC swap agreementsb | — | — | 185 | 185 | ||||||||
Variation margin on centrally cleared swap agreementsa,b | 14,649 | — | 1,014 | 15,663 | ||||||||
Variation margin on options and futures contracts (futures)a | 956 | — | — | 956 | ||||||||
Purchased options, at value | 519 | — | — | 519 | ||||||||
Liabilities | ||||||||||||
Unrealized depreciation on open forward currency contracts | $ — | $(1,779) | $ — | $ (1,779) | ||||||||
Variation margin on centrally cleared swap agreementsa,b | (2,180) | — | (164) | (2,344) | ||||||||
Variation margin on options and futures contracts (futures)a | (2,163) | — | — | (2,163) | ||||||||
Written options, at value | (544) | — | (80) | (624) |
a | Balance includes cumulative appreciation/depreciation of contracts as reported in the Portfolio of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
b | Net of premiums received and paid of $(4,925) |
87
Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 6—Derivatives—Continued
Net realized gain/(loss) and the change in net unrealized appreciation/(depreciation) on derivatives, by primary risk exposure, for the period ended April 30, 2021, were:
HARBOR BOND FUND
Net realized gain/(loss) on derivatives | Interest Rate Contracts (000s) | Foreign Exchange Contracts (000s) | Credit Contracts (000s) | Total (000s) | ||||
Forward currency contracts | $ — | $(7,156) | $ — | $ (7,156) | ||||
Futures contracts | (1,342) | — | — | (1,342) | ||||
Written options | 403 | — | — | 403 | ||||
Swap agreements | (3,680) | — | 351 | (3,329) | ||||
Net realized gain/(loss) on derivatives | $(4,619) | $(7,156) | $351 | $(11,424) |
Change in net unrealized appreciation/(depreciation) on derivatives | Interest Rate Contracts (000s) | Foreign Exchange Contracts (000s) | Credit Contracts (000s) | Total (000s) | ||||
Forward currency contracts | $ — | $(2,342) | $ — | $(2,342) | ||||
Futures contracts | (1,634) | — | — | (1,634) | ||||
Purchased options | (10) | — | — | (10) | ||||
Written options | (50) | — | — | (50) | ||||
Swap agreements | 9,218 | — | 542 | 9,760 | ||||
Change in net unrealized appreciation/(depreciation) on derivatives | $ 7,524 | $(2,342) | $542 | $ 5,724 |
Note 7—OFFSETTING ASSETS AND LIABILITIES
Master Netting Arrangements
As described in further detail below, each Fund may enter into Master Netting Arrangements that govern the terms of certain transactions. Master Netting Arrangements are designed to reduce the counterparty risk associated with relevant transactions by establishing credit protection mechanisms and providing standardization as a means of improving legal certainty. As Master Netting Arrangements are specific to the unique operations of different asset types, they allow a Fund to close out and net its total exposure to a counterparty in the event of a default with respect to all of the transactions governed under a single agreement with that counterparty. Master Netting Arrangements can also help reduce counterparty risk by specifying collateral posting requirements at pre-arranged exposure levels. Securities and cash pledged as collateral are reflected as assets in the Statements of Assets and Liabilities as either a component of investments at value (securities) or due from broker. Cash collateral received is not typically held in a segregated account and, as such, is reflected as a liability in the Statements of Assets and Liabilities as due to broker. The fair value of any securities received as collateral is not reflected as a component of net asset value.
For the period ended April 30, 2021, the following Master Netting Arrangements have been entered into by one or more of the Funds:
Master Repurchase Agreements and Global Master Repurchase Agreements, which govern repurchase and reverse repurchase transactions between the Fund and select counterparties. As of April 30, 2021, Harbor Bond Fund had investment exposures subject to the terms of these agreements.
Master Securities Forward Transaction Agreements, which govern the considerations and factors surrounding the settlement of certain forward settling transactions, such as delayed-delivery or sale-buyback transactions by and between the Fund and select counterparties. As of April 30, 2021, Harbor Bond Fund had investment exposures subject to the terms of these agreements.
International Swaps and Derivatives Association, Inc. Master Agreements and Credit Support Annexes, which govern over-the-counter market traded financial derivative transactions entered into by the Fund and select counterparties. As of April 30, 2021, Harbor Bond Fund had investment exposures subject to the terms of these agreements.
88
Harbor Fixed Income Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 7—OFFSETTING ASSETS AND LIABILITIES—Continued
The following is a summary by counterparty of the gross value of material Borrowings and Other Financing Transactions and collateral (received)/pledged as of April 30, 2021:
HARBOR BOND FUND
Counterparty | Payable for Reverse Repurchase Agreements (000s) | Payable for Short Sale (000s) | Total Borrowings and Other Financing Transactions (000s) | Collateral (Received)/ Pledged (000s) | Net Exposure (000s) | ||||||||||
Global/Master Repurchase Agreement | |||||||||||||||
Barclays Bank PLC | $(3,347) | $ — | $(3,347) | $3,274 | $ (73) | ||||||||||
Master Securities Forward Transactions Agreements | |||||||||||||||
Wells Fargo Securities, LLC | — | (24,712) | — | — | (24,712) | ||||||||||
Goldman Sachs & Co. LLC | — | (13,130) | — | — | (13,130) | ||||||||||
Total Borrowings and Other Financing Transactions | $(3,347) | $(37,842) |
The following is a summary by counterparty of the value of OTC financial derivative instruments and collateral (received)/pledged as governed by International Swaps and Derivatives Association, Inc. master agreements as of April 30, 2021.
HARBOR BOND FUND
Financial Derivative Assets | Financial Derivative Liabilities | Net Value of OTC Derivatives (000s) | Collateral (Received)/ Pledged* (000s) | Net Exposure (000s) | ||||||||||||||||
Counterparty | Forward Currency Contracts (000s) | Purchased Options (000s) | Swap Agreements (000s) | Total Over-the- Counter (000s) | Forward Currency Contracts (000s) | Written Options (000s) | Total Over-the- Counter (000s) | |||||||||||||
BNP Paribas SA | $ 42 | $ — | $ — | $ 42 | $ (162) | $ — | $ (162) | $(120) | $ — | $(120) | ||||||||||
Citibank NA | 976 | — | 185 | 1,161 | (586) | — | (586) | 575 | 408 | 574 | ||||||||||
Deutsche Bank AG | 292 | — | — | 292 | — | — | — | 292 | — | 292 | ||||||||||
Goldman Sachs & Co. LLC | — | — | — | — | — | (34) | (34) | (34) | — | (34) | ||||||||||
Goldman Sachs Bank USA | — | 519 | — | 519 | — | (544) | (544) | (25) | — | (25) | ||||||||||
HSBC Bank USA | 536 | — | — | 536 | (77) | — | (77) | 459 | — | 459 | ||||||||||
JP Morgan Chase Bank NA | 18 | — | — | 18 | (954) | (46) | (1,000) | (982) | 1,510 | — | ||||||||||
Société Générale | 47 | — | — | 47 | — | — | — | 47 | — | 47 | ||||||||||
Total Over-the-Counter Exposure | $1,911 | $519 | $185 | $2,615 | $(1,779) | $(624) | $(2,403) |
* | Of the total collateral received and/or pledged listed in the table above, no cash has been received as collateral |
Exchange traded and centrally cleared derivatives are not subject to master netting or similar arrangements.
Note 8—Subsequent Events
Through the date the financial statements were issued, there were no subsequent events or transactions that would have materially impacted the financial statements or related disclosures as presented herein.
89
Harbor Fixed Income Funds
Fees and Expenses Example (Unaudited)
Fees and Expenses Example (Unaudited)
Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees (if any) and (2) ongoing costs, including management fees, distribution and service (12b-1) fees (if any), and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period November 1, 2020 through April 30, 2021.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses for each share class. You may use the information in the respective class 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 of the respective class 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 of the table for each share class below provides information about hypothetical account values and hypothetical expenses based on the respective Fund/Class’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the respective Fund/Class’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 a Fund to 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 and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value November 1, 2020 | Ending Account Value April 30, 2021 | |||||
Harbor Bond Fund | ||||||||
Retirement Class | 0.43% | |||||||
Actual | $2.13 | $1,000 | $ 995.50 | |||||
Hypothetical (5% return) | 2.16 | 1,000 | 1,022.61 | |||||
Institutional Class | 0.51% | |||||||
Actual | $2.52 | $1,000 | $ 995.00 | |||||
Hypothetical (5% return) | 2.56 | 1,000 | 1,022.20 | |||||
Administrative Class | 0.76% | |||||||
Actual | $3.76 | $1,000 | $ 993.80 | |||||
Hypothetical (5% return) | 3.81 | 1,000 | 1,020.93 | |||||
Harbor Convertible Securities Fund | ||||||||
Retirement Class | 0.67% | |||||||
Actual | $3.62 | $1,000 | $1,181.00 | |||||
Hypothetical (5% return) | 3.36 | 1,000 | 1,021.39 | |||||
Institutional Class | 0.75% | |||||||
Actual | $4.06 | $1,000 | $1,180.70 | |||||
Hypothetical (5% return) | 3.76 | 1,000 | 1,020.98 | |||||
Administrative Class | 1.00% | |||||||
Actual | $5.40 | $1,000 | $1,178.50 | |||||
Hypothetical (5% return) | 5.01 | 1,000 | 1,019.71 | |||||
Investor Class | 1.12% | |||||||
Actual | $6.04 | $1,000 | $1,178.30 | |||||
Hypothetical (5% return) | 5.61 | 1,000 | 1,019.10 |
90
Harbor Fixed Income Funds
Fees and Expenses Example—Continued
Fees and Expenses Example—Continued
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value November 1, 2020 | Ending Account Value April 30, 2021 | |||||
Harbor Core Bond Fund | ||||||||
Retirement Class | 0.37% | |||||||
Actual | $1.82 | $1,000 | $ 990.70 | |||||
Hypothetical (5% return) | 1.86 | 1,000 | 1,022.91 | |||||
Institutional Class | 0.45% | |||||||
Actual | $2.22 | $1,000 | $ 990.20 | |||||
Hypothetical (5% return) | 2.26 | 1,000 | 1,022.51 | |||||
Harbor High-Yield Bond Fund | ||||||||
Retirement Class | 0.56% | |||||||
Actual | $2.88 | $1,000 | $1,071.70 | |||||
Hypothetical (5% return) | 2.81 | 1,000 | 1,021.95 | |||||
Institutional Class | 0.64% | |||||||
Actual | $3.28 | $1,000 | $1,071.20 | |||||
Hypothetical (5% return) | 3.21 | 1,000 | 1,021.54 | |||||
Administrative Class | 0.89% | |||||||
Actual | $4.57 | $1,000 | $1,070.60 | |||||
Hypothetical (5% return) | 4.46 | 1,000 | 1,020.27 | |||||
Investor Class | 1.01% | |||||||
Actual | $5.19 | $1,000 | $1,070.80 | |||||
Hypothetical (5% return) | 5.06 | 1,000 | 1,019.66 | |||||
Harbor Money Market Fund | ||||||||
Institutional Class | 0.04% | |||||||
Actual | $0.20 | $1,000 | $1,000.20 | |||||
Hypothetical (5% return) | 0.20 | 1,000 | 1,024.59 | |||||
Administrative Class | 0.04% | |||||||
Actual | $0.20 | $1,000 | $1,000.20 | |||||
Hypothetical (5% return) | 0.20 | 1,000 | 1,024.59 |
* | Reflective of all fee waivers and expense reimbursements |
** | Expenses are equal to the Fund’s annualized net expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
91
Harbor Fixed Income Funds
Additional Information (Unaudited)
Additional Information (Unaudited)
Proxy Voting
Harbor Funds has adopted Proxy Voting Policies and Procedures under which proxies relating to securities held by the Harbor funds are voted. In addition, Harbor Funds files Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. A description of Harbor Funds’ Proxy Voting Policies and Procedures and the proxy voting records (Form N-PX) are available (i) without charge, upon request, by calling Harbor Funds toll-free at 800-422-1050; (ii) on Harbor Funds’ website at harborfunds.com; and (iii) on the SEC’s website at sec.gov.
Householding
Harbor Funds has adopted a policy that allows it to send only one copy of a Fund’s prospectus, proxy materials, annual report and semi-annual report to certain shareholders residing at the same household. This reduces Fund expenses, which benefits you and other shareholders. If you need additional copies or do not want your mailings to be “householded,” please call the Shareholder Servicing Agent at 800-422-1050. Individual copies will be sent within thirty (30) days after the Shareholder Servicing Agent receives your instructions. Your consent to householding is considered valid until revoked.
Quarterly Portfolio Disclosures
The Funds (excluding Harbor Money Market Fund) file a complete portfolio of investments for their first and third fiscal quarters with the SEC as an exhibit to Form N-PORT. The Funds’ Form N-PORT exhibit is available (i) without charge, upon request, by calling Harbor Funds toll-free at 800-422-1050, (ii) on Harbor Funds’ website at harborfunds.com, and (iii) on the SEC’s website at sec.gov.
ADVISORY AGREEMENT APPROVALS
FACTORS CONSIDERED BY THE TRUSTEES IN APPROVING THE INVESTMENT ADVISORY AGREEMENTS AND SUBADVISORY AGREEMENTS OF THE FIXED INCOME FUNDS
The Investment Company Act requires that the Investment Advisory and Subadvisory Agreement of each Fund be approved initially, and following an initial two-year term, at least annually, by the Trust’s Board of Trustees (the “Board” or the “Trustees”), including a majority of the Independent Trustees voting separately.
At a meeting of the Board held on February 19 and 20, 2021 (the “Meeting”), the Board, including the Independent Trustees voting separately, considered and approved the continuation of each Investment Advisory Agreement with Harbor Capital, the adviser to each Fund, and each Subadvisory Agreement with each Fund’s subadviser (each, a “Subadviser”) with respect to Harbor Bond Fund, Harbor Convertible Securities Fund, Harbor Core Bond Fund, Harbor High-Yield Bond Fund and Harbor Money Market Fund (each a “Fund” and, collectively, the “Funds”).
In evaluating each Investment Advisory Agreement and each Subadvisory Agreement, the Trustees reviewed materials furnished by Harbor Capital and each Subadviser, including information about their respective affiliates, personnel, and operations, and also relied upon their knowledge of Harbor Capital and the Subadvisers resulting from their quarterly meetings, periodic telephonic meetings and other prior communications. In connection with the Meeting, which had been called for the purpose of considering the continuation of the Investment Advisory Agreements and Subadvisory Agreements, and at prior meetings, the Trustees, including the Independent Trustees, requested and received materials and presentations relating to Fund performance and the services rendered by Harbor Capital and each Subadviser. These materials included a comprehensive written response from Harbor Capital to a 15(c) request letter prepared by legal counsel to the Independent Trustees in consultation with the Independent Trustees. The Trustees also discussed with representatives of Harbor Capital, at the Meeting and at prior meetings, Harbor Funds’ operations and Harbor Capital’s ability, consistent with the “manager-of-managers” structure of Harbor Funds, to (i) identify and recommend to the Trustees a subadviser for each Fund, (ii) monitor and oversee the performance and investment capabilities of each subadviser, and (iii) recommend the replacement of a subadviser where appropriate. The Trustees specifically considered Harbor Capital’s history as a manager-of-managers, including its history of replacing subadvisers for particular Funds in circumstances in which the Board and Harbor Capital had determined that a change in subadviser was in the best interests of a Fund and its shareholders, whether as a result of (i) long-term underperformance not explained by market conditions or market cycles relative to the subadviser’s investment style, (ii) prolonged style inconsistency, (iii) material adverse changes in management or personnel, or (iv) other factors, such as if Harbor Capital were to identify another subadviser believed to better serve the shareholders than the existing subadviser.
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Harbor Fixed Income Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
At the Meeting, the Trustees, including all of the Independent Trustees voting separately, determined, in the exercise of their business judgment, that the terms of each Investment Advisory Agreement and each Subadvisory Agreement were fair and reasonable and approved the continuation for a one-year period of each such Investment Advisory Agreement and Subadvisory Agreement as being in the best interests of each Fund and its shareholders.
In their deliberations, the Independent Trustees had the opportunity to meet privately without representatives of Harbor Capital or any Subadviser present and were represented throughout the process by legal counsel to the Independent Trustees and the Funds.
In considering the approval of each Fund’s Investment Advisory Agreement and Subadvisory Agreement, the Board, including the Independent Trustees, evaluated a number of factors it considered relevant to its determination. The Board did not identify any single factor as all-important or controlling, and individual Trustees did not necessarily attribute the same weight or importance to each factor.
Among the factors considered by the Trustees in approving the Investment Advisory Agreements and Subadvisory Agreements were the following:
• | The nature, extent, and quality of the services provided by Harbor Capital and each Subadviser, including the background, education, expertise and experience of the investment professionals of Harbor Capital and each Subadviser providing services to the Funds; |
• | The favorable history, reputation, qualifications and background of Harbor Capital and each Subadviser, as well as the qualifications of their respective personnel; |
• | The profitability of Harbor Capital with respect to each Fund, including the effect of revenues of Harbor Services Group, Inc. (“Harbor Services Group”), the Funds’ transfer agent, and Harbor Funds Distributors, Inc. (“Harbor Funds Distributors”), the Funds’ principal underwriter, on such profitability; |
• | The fees charged by Harbor Capital and Subadvisers for investment advisory and subadvisory services, respectively, including, in each case, the portion of the fee to be retained by Harbor Capital, after payment of the Subadviser’s fee, for the investment advisory and related services, including investment, business, legal, compliance, financial and administrative services, that Harbor Capital provides; |
• | The extent to which economies of scale might be realized as each Fund grows, and the extent to which each Fund’s advisory fee level reflects any economies of scale for the benefit of Fund investors; |
• | The fees and expense ratios of each Fund relative to the quality of services provided and the fees and expense ratios of similar investment companies; |
• | The short- and long-term investment performance of each Fund in comparison to peer groups and certain relevant benchmark indices and Harbor Capital’s efforts to address circumstances of underperformance where applicable; |
• | The compensation received by Harbor Services Group and Harbor Funds Distributors in consideration of the services each provides to the Funds; |
• | Any “fall out” benefits that might inure to Harbor Capital and its affiliates as a result of their relationship with the Funds; |
• | Information received at regular meetings throughout the year related to Fund performance and services rendered by Harbor Capital, as well as each of the Subadvisers, and research arrangements with brokers who execute transactions on behalf of each Subadviser; |
• | Information contained in materials provided by Harbor Capital and compiled by Broadridge as to the investment returns, advisory fees and total expense ratios of the Institutional Class of each Fund (and, in certain cases, total expense ratios of the Investor Class) relative to those of other investment companies with similar objectives and strategies managed by other investment advisers, consisting both of a peer group of funds as well as a broader universe of funds compiled by Broadridge; and |
• | Information contained in materials compiled by Morningstar as to the investment returns of the Institutional Class of each Fund relative to those of other investment companies with similar objectives and strategies managed by other investment advisers. |
93
Harbor Fixed Income Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
Nature, Extent, and Quality of Services
The Trustees separately considered the nature, extent, and quality of the services provided by Harbor Capital and each Subadviser. In their deliberations as to the approval of each Fund’s Investment Advisory Agreement and Subadvisory Agreement, the Trustees were mindful of the fact that, by choosing to invest in a Fund, the shareholders had entrusted Harbor Capital with the responsibility, subject to the approval of the Trustees, for selecting each Fund’s Subadviser, overseeing and monitoring that Subadviser’s performance and replacing the Subadviser if necessary. The Trustees also considered as relevant to their determination the favorable history, reputation, qualifications and background of Harbor Capital and each Subadviser, as well as the qualifications of their respective personnel.
The Adviser’s Services. The Board evaluated the nature, extent, and quality of Harbor Capital’s services in light of the Board’s experience with Harbor Capital, as well as materials provided by Harbor Capital concerning the financial and other resources devoted by Harbor Capital to Harbor Funds, including the breadth and depth of experience and expertise of the investment, accounting, administrative, legal and compliance professionals dedicated to Harbor Funds’ operations. The Trustees determined that Harbor Capital has the expertise and resources to identify, select, oversee and monitor each Subadviser and to operate effectively as the “manager-of-managers” for the Funds.
The Subadvisers’ Services. The Trustees’ consideration of the services provided by the Subadvisers included a review of each Subadviser’s portfolio managers, investment philosophy, style and processes and record of consistency therewith, the volatility of its results, its approach to controlling risk, and the quality and extent of its investment capabilities and resources, including the nature and extent of research it receives from broker-dealers (to the extent applicable) and other sources. In their deliberations with respect to each Fund, the Trustees considered the history of Harbor Funds’ relationship with each Subadviser and Harbor Funds’ experience with each Subadviser in this capacity.
The Trustees also considered each Subadviser’s breadth and depth of experience and investment results in managing other accounts similar to the respective Fund. The Trustees had received presentations by investment professionals from the Subadvisers for Harbor Bond Fund, Harbor Convertible Securities Fund, Harbor High-Yield Bond Fund and Harbor Money Market Fund at meetings of the Board held in 2020. The Trustees reviewed information concerning each Subadviser’s historical investment results in managing accounts and/or funds, as applicable, in a manner substantially similar to the relevant Fund.
Investment Performance, Advisory Fees and Expense Ratios
In considering each Fund’s performance, advisory fees and expense ratio, the Trustees requested and received from Harbor Capital data compiled by Broadridge and Morningstar. The Trustees also received information explaining the methodology for compilation of certain of this information and what it was intended to demonstrate. The Trustees analyzed the Institutional Class performance of each Fund, the advisory fees of each Fund, and the Institutional Class expenses of each Fund (after giving effect to waivers and/or reimbursements, if applicable, that reduced the fees or expenses of the Fund or its peer funds) and made certain observations and findings as to each Fund as noted below. The Trustees also reviewed certain Investor Class comparative fee and expense information they considered relevant to their deliberations. In evaluating performance, the Trustees recognized that the performance data reflects a snapshot of a period as of a particular date and that selecting a different performance period could produce significantly different results.
Harbor Bond Fund. The Trustees considered Harbor Bond Fund (inception date December 29, 1987), noting the Fund’s outperformance relative to its Broadridge group and universe medians for the one- and three- periods and underperformance relative to its Broadridge group and universe medians for the five-year period ended December 31, 2020. The Fund’s one-, three- and five-year rolling returns as of December 31, 2020 each ranked in the second quartile, according to Morningstar data. The Trustees also considered the fact that Harbor Bond Fund had outperformed its benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index, for the one-, three- and five-year periods ended December 31, 2020.
The Trustees considered the expertise of Pacific Investment Management Company LLC (“PIMCO”) in managing assets generally and in the bond asset class specifically, noting that PIMCO managed approximately $155.6 billion in “total return” assets out of a firm-wide total of approximately $1.6 trillion in assets under management as of September 30, 2020. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class.
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $2.1 billion, showed the Fund’s management fee was above the group median for the Institutional Class. The actual total expense ratio of the Fund’s Institutional Class was below the Broadridge group median and above the universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
94
Harbor Fixed Income Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
Harbor Convertible Securities Fund. The Trustees considered Harbor Convertible Securities Fund (inception date May 1, 2011), noting its underperformance relative to its Broadridge group and universe medians for the one-, three- and five-year periods ended December 31, 2020. The Fund’s one-, three- and five-year rolling returns as of December 31, 2020 ranked in the third, third and fourth quartiles, respectively, according to Morningstar data. The Trustees also considered the fact that the Fund had underperformed its benchmark, the ICE Bank of America (“ICE BofA”) Merrill Lynch All US Convertibles Ex Mandatory Index, for the one-, three- and five-year periods ended December 31, 2020.
The Trustees considered the expertise of Shenkman Capital Management, Inc. (“Shenkman Capital”) in managing assets generally and in the convertible securities asset class specifically, noting that Shenkman Capital managed approximately $538 million in assets in this asset class, out of a firm-wide total of approximately $24.8 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class and the recent retirement of one of the portfolio managers.
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $175 million, showed the Fund’s management fee was below the group median for the Institutional Class. The actual total expense ratio of the Fund’s Institutional Class was also below the group and universe median expense ratios. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
Harbor Core Bond Fund. The Trustees considered Harbor Core Bond Fund (inception date June 1, 2018), noting the outperformance of its Institutional Class relative to its Broadridge group and universe medians for the one-year and since inception periods ended December 31, 2020. The Fund’s one-year and since inception rolling returns as of December 31, 2020 each ranked in the first quartile, according to Morningstar data. The Trustees also considered the fact that the Fund had outperformed its benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index, for the one-year and since inception periods ended December 31, 2020. The Trustees noted that the short time period since the Fund’s inception did not support making any significant conclusions about the Fund’s performance.
The Trustees considered the expertise of Income Research + Management (“IR+M”) in managing assets generally and in the bond asset class specifically, noting that IR+M managed approximately $13.5 billion in assets in this asset class, out of a firm-wide total of approximately $87.7 billion in assets under management as of November 30, 2020. The Trustees also noted the experience of the Fund’s portfolio managers in this asset class and recent changes to the portfolio management team.
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $125 million, showed the Fund’s management fee was below the group median for the Institutional Class. The actual total expense ratio of the Fund’s Institutional Class was below the group median and slightly above the universe median. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
Harbor High-Yield Bond Fund. The Trustees considered Harbor High-Yield Bond Fund (inception date December 1, 2002), noting its underperformance relative to its Broadridge group median for the one - and five-year periods and relative to its Broadridge universe median for the five-year period ended December 31, 2020. The Trustee’s also noted the Fund’s outperformance relative to its Broadridge group median for the three-year period and relative to its Broadridge universe median for the one- and three-year periods ended December 31, 2020. The Fund’s one-, three- and five-year rolling returns as of December 31, 2020 ranked in the second, second and third quartiles, respectively, according to Morningstar data. The Trustees also considered the fact that the Fund had underperformed its primary benchmark, the ICE BofA Merrill Lynch U.S. Non-Distressed High Yield Index, for the one-, three- and five-year periods ended December 31, 2020. The Trustees considered that the Fund’s subadviser, Shenkman Capital, utilizes a more conservative high yield bond investment strategy that often underperforms in periods when high-yield bonds are generally performing well.
The Trustees considered the expertise of Shenkman Capital in managing assets generally and in the high-yield asset class specifically, noting that Shenkman Capital managed approximately $4.8 billion in assets in this asset class, out of a firm-wide total of approximately $24.8 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers, one of whom is the founder of the firm, in this asset class and a recent addition to the portfolio management team.
95
Harbor Fixed Income Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $450 million, showed the Fund’s management fee was equal to the group median for the Institutional Class. The actual total expense ratio of the Fund’s Institutional Class was below the group and universe medians. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
Harbor Money Market Fund. The Trustees considered Harbor Money Market Fund (inception date December 29, 1987), noting the Fund’s outperformance relative to its group and universe medians for the one-, three- and five-year periods ended December 31, 2020, according to Broadridge. The Trustees considered the Fund’s performance record relative to its benchmark, the ICE BofA Merrill Lynch US 3-Month U.S. Treasury Bill Index, noting that the Fund had underperformed the benchmark for the one-, three- and five-year periods ended December 31, 2020. The Trustees noted that the Fund operates as a “government money market fund,” as defined in Rule 2a-7 under the Investment Company Act.
The Trustees considered the expertise of BNP Paribas Asset Management USA, Inc. (“BNPP AM US”) in managing assets generally and in the short duration fixed income asset class specifically. BNPP AM US managed approximately $97.8 million in short duration assets, out of a firm-wide total of approximately $589.4 billion in assets under management (reflecting the assets of BNP Paribas Asset Management). The Trustees also noted the experience of the Fund’s portfolio manager in this asset class.
The Trustees considered that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $100 million, showed that the Fund’s management fee was below the group median for the Institutional Class. The actual total expense ratio of the Fund’s Institutional Class was below the group and universe medians. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 28, 2022. The Trustees noted that Harbor Capital’s profitability in managing the Fund was negative.
The Trustees also separately considered the allocation between Harbor Capital and each Subadviser of the relevant Fund’s investment advisory fee (i.e., the amount of the advisory fee retained by Harbor Capital relative to that paid to the relevant Subadviser as a subadvisory fee). They determined in each case that the allocation was reasonable and the product of arm’s length negotiation between Harbor Capital and the Subadviser.
Profitability
The Trustees also considered Harbor Capital’s profitability in operating each of the Funds (as well as on a fund complex-wide basis) as presented by Harbor Capital, and the allocation methodology used by Harbor Capital to compute such profitability. The Trustees concluded that the methodology was reasonable and that a reasonable level of profitability was important to provide suitable incentives for Harbor Capital to continue to attract and maintain high-quality personnel and to invest in infrastructure and other resources to support and enhance the Funds’ operations. In considering Harbor Capital’s profitability generally, the Trustees also reviewed the compensation received by Harbor Services Group and Harbor Funds Distributors in consideration of the transfer agency and distribution services, respectively, that are provided to Harbor Funds and any other benefits enjoyed by Harbor Capital and its affiliates as a result of their relationship with Harbor Funds.
The Trustees also considered that profitability calculations with respect to advisory, transfer agency and distribution operations vary significantly depending on whether revenues on which the calculation is based are taken gross or net of amounts paid to third parties, such as subadvisory fee expenses and certain transfer agency expenses, and noted that subadvisory fee expenses are a direct expense of Harbor Capital. The Trustees also noted that Harbor Capital was, in all cases, waiving a portion of its advisory fee and/or paying or reimbursing a portion of Fund expenses. The Trustees determined that Harbor Capital’s profitability in operating each Fund was not excessive.
Economies of Scale
The Trustees also considered the extent to which economies of scale might be realized as each Fund grows, and the extent to which each Fund’s advisory fee level reflects these economies of scale for the benefit of Fund investors. The Trustees specifically considered whether any advisory fee reduction “breakpoints” should be added to the advisory fee payable by any Fund. As noted above, the Trustees concluded that Harbor Capital’s profitability in each case was not excessive. They concluded that the Funds’ fee structures reflected economies of scale to date and that breakpoints in these fee structures were not required at the present time. The Trustees noted they intend to monitor each Fund’s asset growth in connection with future reviews of each Fund’s Investment Advisory Agreement to determine whether breakpoints may be appropriate at such time.
96
Harbor Fixed Income Funds
Additional Information—Continued
Additional Information—Continued
Review of Liqudity Risk Management Program
The Trust has adopted pursuant to Rule 22e-4 under the Investment Company Act (“Rule 22e-4”) a Liquidity Risk Management Program (the “Program”) for the Funds (except Harbor Money Market Fund). The Board has designated a committee of Harbor Capital employees as the Program Administrator.
The Program is designed to assess and manage each Fund’s liquidity risk. For purposes of Rule 22e-4, “liquidity risk” is defined as the risk that a Fund is unable to satisfy redemption requests without significantly diluting remaining investors’ interests in the Fund. Components of the Program include: (i) periodic assessment of each Fund’s liquidity risk based on certain factors; (ii) classification of each Fund’s holdings into one of four liquidity categories (Highly Liquid, Moderately Liquid, Less Liquid and Illiquid) that reflect an estimate of liquidity under current market conditions; (iii) to the extent a Fund does not invest primarily in Highly Liquid investments, establishment of an appropriate Highly Liquid Investment Minimum (“HLIM”) (as defined in Rule 22e-4) for such Fund and ongoing monitoring of the Fund’s net assets to assess compliance with the Fund’s HLIM; (iv) a limit on the ability of a Fund to acquire illiquid investments in excess of 15% of the Fund’s net assets; and (v) periodic reporting to the Board.
At a meeting held on November 10, 2020, the Board of Trustees reviewed the operation and effectiveness of the Program for the period beginning October 1, 2019 and ending September 30, 2020 (the “period”). At the November 10, 2020 meeting, the Board reviewed a report prepared by, and received a presentation from, the Program Administrator regarding the operation of the Program, its adequacy, and the effectiveness of its implementation during the period. The Program Administrator’s report included, among other things, a review of: (i) the operation of the Program overall during the period, which included a period of increased market volatility related to the COVID-19 pandemic in the first half of 2020; (ii) the activities conducted by the Program Administrator with respect to the Program; (iii) the level of portfolio investments classified into each of the four liquidity categories and the services provided by the third-party vendor engaged by the Trust to facilitate such classification with respect to certain of the Funds; and (iv) the most recent liquidity risk assessment for the Funds conducted by the Program Administrator in accordance with Rule 22e-4. Based upon its review, the Program Administrator determined that the Program was adequate and effective in facilitating the Funds’ compliance with Rule 22e-4 during the period.
97
111 South Wacker Drive, 34th Floor | Chicago, IL 60606-4302 | 800-422-1050 | harborfunds.com |
Trustees & Officers
Charles F. McCain
Chairman, President & Trustee
Chairman, President & Trustee
Scott M. Amero
Trustee
Trustee
Donna J. Dean
Trustee
Trustee
Randall A. Hack
Trustee
Trustee
Robert Kasdin
Trustee
Trustee
Kathryn L. Quirk
Trustee
Trustee
Douglas J. Skinner
Trustee
Trustee
Ann M. Spruill
Trustee
Trustee
Erik D. Ojala
Chief Compliance Officer
Chief Compliance Officer
Anmarie S. Kolinski
Treasurer
Treasurer
Kristof M. Gleich
Vice President
Vice President
Gregg M. Boland
Vice President
Vice President
Diana R. Podgorny
Secretary
Secretary
Jodie L. Crotteau
Assistant Secretary
Assistant Secretary
Lana M. Lewandowski
AML Compliance Officer
& Assistant Secretary
AML Compliance Officer
& Assistant Secretary
Lora A. Kmieciak
Assistant Treasurer
Assistant Treasurer
John M. Paral
Assistant Treasurer
Assistant Treasurer
Investment Adviser
Harbor Capital Advisors, Inc.
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4400
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4400
Distributor
Harbor Funds Distributors, Inc.
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4600
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4600
Shareholder Services
Harbor Services Group, Inc.
P.O. Box 804660
Chicago, IL 60680-4108
800-422-1050
P.O. Box 804660
Chicago, IL 60680-4108
800-422-1050
FD.SAR.FI.0421
Semi-Annual Report
April 30, 2021
Target Retirement Funds
Institutional Class | |
Harbor Target Retirement Income Fund | HARAX |
Harbor Target Retirement 2020 Fund | HARJX |
Harbor Target Retirement 2025 Fund | HARMX |
Harbor Target Retirement 2030 Fund | HARPX |
Harbor Target Retirement 2035 Fund | HARUX |
Harbor Target Retirement 2040 Fund | HARYX |
Harbor Target Retirement 2045 Fund | HACCX |
Harbor Target Retirement 2050 Fund | HAFFX |
Harbor Target Retirement 2055 Fund | HATRX |
Harbor Target Retirement 2060 Fund | HATDX |
Table of Contents
This document must be preceded or accompanied by a Prospectus.
Letter from the Chairman
Charles F. McCain Chairman |
Dear Fellow Shareholder:
Looking back on the past two quarters reveals a tale of two markets. After a strong summer market rally, volatility re-emerged last fall, due to continuing investor concerns about the pandemic, increasing political rhetoric, and other geopolitical events. However, the resolution of the presidential election, new vaccine approvals/rollouts, along with the passage of two U.S. fiscal stimulus packages, led to improved investor sentiment and appetite for risk that generated an equity market rally which continued through the first quarter of 2021—although at a slower pace than in the fourth quarter of 2020. U.S. and global equity markets produced positive total returns over the six-month period. The S&P 500 added to its strong performance of 12.15% in the fourth quarter, with a return of 6.17% in the first quarter, outperforming the MSCI EAFE (ND) and the MSCI Emerging Markets (ND) Indexes, which returned 3.38% and 2.29%, respectively, for the first quarter.
Beginning late last fall, we saw a pronounced reversal from a growth-driven to a value-driven equity market, and this rotation has persisted through the first quarter. The market rotation occurred globally, in the U.S., developed, and emerging equity markets—by style (cyclical/value outperformed growth), by market cap (small cap outperformed large cap), and by factor (momentum reversed, while beta remained strong).
Prior to the fourth quarter, U.S. growth-oriented stocks were the dominant outperformers by a large margin, with value-oriented names trading at huge discounts. However, by late in the year and moving through the first quarter, value outperformed growth, with the Russell 3000® Value Index beating the Russell 3000® Growth Index by the widest margin since the first quarter of 2001. Cyclical industries (oil & gas, machinery, construction materials, and metals & mining), along with the Energy and Financials sectors, took center stage. In contrast, the Information Technology, Consumer Staples, and Healthcare sectors retreated. While large caps have been in favor in past years (FAANG stocks et al.), the trend reversed over the six-month reporting period with small caps outperforming, but large caps still hold the lead over the trailing 3- and 5-year periods. The bond markets took a hit, as investors shifted to equities in anticipation of a broader economic recovery, and the yield curve steepened at the long end. The yield on 10-year Treasuries rose from 0.78% after the election to 1.74% in March—one of the most significant moves in decades.
As economies around the world have begun to reopen, and markets have rallied, the focus is shifting from fear to cautious optimism. Growth in the U.S. gross domestic product (GDP) over the past two quarters reflects the long-hoped-for economic recovery now underway, the reopening of businesses, and the massive government response to the COVID-19 pandemic. GDP grew by 4.3% in the fourth quarter and by an estimated 6.4% in the first quarter. The Biden administration passed the $1.9 trillion American Rescue Plan, although without a single Republican vote. Its proposals for still more fiscal stimulus (the American Jobs Plan at $2.3 trillion and the American Families Plan at $1.8 trillion) will have to pass the gauntlet of a divided Congress; the scope, size, and timing of those plans will no doubt undergo protracted negotiations.
Harbor expects that volatility will remain elevated for the foreseeable future. But we also believe there are thoughtful, practical solutions to manage volatility and enable investors to reach their long-term goals. Our subadvisers are active portfolio managers who remain focused on uncovering opportunities and skillfully executing their strategies to deliver shareholder value in a climate of economic and geopolitical uncertainty, unprecedented health challenges, and financial market volatility. I believe thoughtful, active management, adhering to enduring investment principles such as diversification, discipline, and a long-term view, will always stand the test of time.
Over the past year, we’ve seen massive disruptions and challenges that have taken a severe toll on human lives. But the human spirit has remained resilient through it all. We believe there is now more reason for cautious optimism than fear as we look ahead.
I hope you and your families stay safe through this difficult time. Thank you for your confidence and continued investment in Harbor Funds.
June 22, 2021
Charles F. McCain |
Chairman |
1
Harbor Target Retirement Funds
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Adviser
Harbor Capital Advisors, Inc.
(“Harbor Capital”)
111 South Wacker Dr. 34th Floor
Chicago, IL 60606
Portfolio Managers
Paul C. Herbert, CFA, CAIA
Since Inception
Spenser P. Lerner, CFA
Since 2021
Since 2021
Harbor Capital has managed the Funds since inception.
Market Review
The first half of the 2021 fiscal year was a time to turn the page. The previous year had been defined by uncertainty and worry over the severity and duration of the impact of the COVID-19 global health pandemic on economies, markets, and life in general. While these worries have not evaporated, this fiscal period began with transformative developments in the fight against the virus, as well as improved economic readings. It also brought more clarity on change in political power after the U.S. Elections, which would inform the evolving response to the health situation and its impacts. Markets turned to wrestling with the question of what the post-COVID world would look like. Global equity markets broadly found reasons for reopening excitement while bond markets struggled over the effects of government responses.
The Russell 3000® Index, a measure of performance for U.S. stock markets across the market cap range, climbed 31.08% for the six-month period ended April 30, 2021. The index was led by value stocks, which took a turn leading growth stocks as investors cheered undervalued securities in areas that had struggled during the lockdown. All major economic sectors finished higher during the period, with energy the clear leader, gaining 75.94% as commodity prices rebounded, and Financials soaring 53.57% on a steepening yield curve. Utilities and Consumer Staples, more defensive areas that are also more sensitive to rising interest rates, pulled up the rear.
Markets were also higher abroad, with the MSCI EAFE Index, benchmarking developed non-U.S. equity markets, rising 28.84%. The United Kingdom market climbed 36.52%, making it a bright spot, as Financials and Materials stocks rallied. Japan was a weaker performing market as its steadier consumer and Financials stocks didn’t participate as strongly in the rebound. Emerging markets rallied, but not as strongly as developed markets, with the MSCI Emerging Markets (ND) Index gaining 22.95%. Its result was hindered by performance in China, which delivered weak performance after rallying strongly earlier in 2020.
High-quality bonds struggled during the period, with the Bloomberg Barclays U.S. Aggregate Bond Index declining by 1.52% for the six months. The drop was driven by higher interest rates--the 10-year Treasury yield rose from 0.87% to 1.63% over the period—as investors sold off bonds on worries that government support over years past and a continuation of a more accommodative U.S. Federal Reserve policy may lead to higher inflation. High-yield bonds held in better, with the ICE BofA U.S. High Yield Bond Index gaining 8.12%. The index was led by its lower quality segment, especially the energy, travel, and leisure components which rallied on reopening developments.
Performance
Each of the Harbor Target Retirement Funds delivered positive absolute performance for the six-month period. The nearer dated funds, from Income to 2025, which feature larger weightings in fixed-income funds, also outperformed their Composite Indices for the fiscal half year. The table following this section includes returns for the funds as well as their comparative benchmarks for the period, and a discussion of the funds’ performance relative to their Composite Indices is below.
The nearer-dated funds’ relative-to-benchmark results were helped by the performance of the underlying fixed-income funds. For example, the Harbor High-Yield Bond Fund gained 7.12%, outperforming the ICE BofA US Non-Distressed High Yield Index’s 6.44% return. (Returns for all of the underlying funds are for the Institutional Class.) The fund’s results were helped by its overweight and selection within bonds rated CCC, including in Oil & Gas bonds, and an out-of-benchmark position in Convertible Bonds.
The longer-dated funds, which include higher weightings in equity funds, delivered higher absolute returns, but failed to keep pace with their Composite Indices for the six-month period. Harbor International Growth Fund was a relative underperformer, gaining 21.12% but lagging the MSCI All Country World Ex. U.S. Index’s 27.40% return. Negative stock selection within the industrials sector and an underweight position in the rebounding financials sector were primary detractors. Although its contribution was not meaningful enough to offset the detractors, Harbor Mid Cap Value was a particularly strong performer. The Fund gained 52.18%, topping the Russell Midcap Value Index’s 41.41% rise, driven by its greater emphasis on value stocks, smaller-cap stocks, and positive stock selection.
2
Harbor Target Retirement Funds
Manager’s Commentary—Continued
Manager’s Commentary—Continued
Outlook
While much remains unknown about the contours of the reopening and economic rebound, it appears to be clear that markets are differentiating between winners and losers, which we see in higher stock and sector return dispersion. This greater differentiation, in our view, tilts the odds in favor of the active managers selecting securities for the underlying Harbor funds in the Target Retirement Funds’ portfolios at this time. A focus on the long-term, maintaining diversified portfolios, and selecting talented active managers continue to serve as our driving principles.
HARBOR TARGET RETIREMENT FUNDS | Unannualized Total Return 6 Months Ended April 30, 2021 |
Harbor Target Retirement Income Fund | 6.58% |
Harbor Target Retirement 2020 Fund | 9.46 |
Harbor Target Retirement 2025 Fund | 12.89 |
Harbor Target Retirement 2030 Fund | 15.54 |
Harbor Target Retirement 2035 Fund | 18.26 |
Harbor Target Retirement 2040 Fund | 21.18 |
Harbor Target Retirement 2045 Fund | 22.83 |
Harbor Target Retirement 2050 Fund | 25.64 |
Harbor Target Retirement 2055 Fund | 28.49 |
Harbor Target Retirement 2060 Fund | 29.22 |
COMMONLY USED MARKET INDICES | Unannualized Total Return 6 Months Ended April 30, 2021 |
Bloomberg Barclays U.S. Aggregate Bond (domestic bonds) | -1.52% |
MSCI EAFE (ND) (foreign stocks) | 28.84 |
Russell 3000® (entire U.S. stock market) | 31.08 |
HARBOR TARGET RETIREMENT FUND COMPOSITE INDICES | Unannualized Total Return 6 Months Ended April 30, 2021 |
Composite Index Income | 6.22% |
Composite Index 2020 | 9.22 |
Composite Index 2025 | 12.81 |
Composite Index 2030 | 15.58 |
Composite Index 2035 | 18.60 |
Composite Index 2040 | 21.74 |
Composite Index 2045 | 23.53 |
Composite Index 2050 | 26.59 |
Composite Index 2055 | 29.69 |
Composite Index 2060 | 30.40 |
3
Harbor Target Retirement Funds
Manager’s Commentary—Continued
Manager’s Commentary—Continued
Underlying Harbor Funds Performance (Institutional Class Shares)
Total Return for the Period Ended April 30, 2021 | |||||||||||||||||||
EQUITY | 6 Monthsb | One Year | Five Yearsa | Ten Yearsa | Since Inceptiona | Current 7-Day SEC Yield | Inception Date | Expense Ratios*,a | |||||||||||
Subsidized c | Unsubsidized d | Net | Gross | ||||||||||||||||
Harbor Capital Appreciation Fund | 22.67% | 58.33% | 24.99% | 17.78% | 13.05% | N/A | N/A | 12/29/1987 | 0.67% e | 0.72% | |||||||||
Harbor Diversified International All Cap Fund | 34.05 | 51.33 | 9.58 | N/A | 8.11 | N/A | N/A | 11/02/2015 | 0.80 f | 0.93 | |||||||||
Harbor Global Leaders Fund | 19.20 | 42.30 | 18.71 | 12.81 | 18.11 | N/A | N/A | 03/01/2009 | 0.86 e,f | 0.98 | |||||||||
Harbor International Fund | 31.17 | 49.49 | 7.68 | 4.14 | 10.29 | N/A | N/A | 12/29/1987 | 0.77 f | 0.89 | |||||||||
Harbor International Growth Fund | 21.12 | 56.15 | 14.29 | 7.47 | 5.11 | N/A | N/A | 11/01/1993 | 0.85 f | 0.91 | |||||||||
Harbor Large Cap Value Fund | 32.29 | 52.51 | 16.81 | 14.10 | 10.72 | N/A | N/A | 12/29/1987 | 0.69 f | 0.72 | |||||||||
Harbor Mid Cap Growth Fund | 24.80 | 75.54 | 26.78 | 15.92 | 8.30 | N/A | N/A | 11/01/2000 | 0.88 e | 0.91 | |||||||||
Harbor Mid Cap Value Fund | 52.18 | 74.35 | 9.61 | 10.02 | 8.13 | N/A | N/A | 03/01/2002 | 0.85 e,f | 0.90 | |||||||||
Harbor Small Cap Growth Fund | 30.98 | 67.99 | 21.71 | 13.87 | 10.83 | N/A | N/A | 11/01/2000 | 0.89 | 0.89 | |||||||||
Harbor Small Cap Value Fund | 43.43 | 64.31 | 15.44 | 11.98 | 11.10 | N/A | N/A | 12/14/2001 | 0.88 | 0.88 | |||||||||
Harbor Strategic Growth Fund | 25.77 | 43.94 | 17.04 | N/A | 15.87 | N/A | N/A | 11/01/2011 g | 0.71 f | 0.80 | |||||||||
FIXED INCOME | |||||||||||||||||||
Harbor Bond Fund | -0.50% | 2.74% | 4.04% | 3.61% | 6.79% | N/A | N/A | 12/29/1987 | 0.51% e,f | 0.73% | |||||||||
Harbor Core Bond Fund | -0.98 | 1.70 | N/A | N/A | 5.63 | N/A | N/A | 06/01/2018 | 0.45 f | 0.51 | |||||||||
Harbor High-Yield Bond Fund | 7.12 | 16.75 | 6.20 | 5.17 | 6.74 | N/A | N/A | 12/01/2002 | 0.65 e | 0.74 | |||||||||
MONEY MARKET | |||||||||||||||||||
Harbor Money Market Fund | 0.02% | 0.05% | 1.00% | 0.55% | 2.99% | 0.02% | -0.27% | 12/29/1987 | 0.28% e,f | 0.39% |
This report contains the current opinions of Harbor Capital Advisors, Inc. as of the date of this report and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Such opinions are subject to change without notice and securities described herein may no longer be included in, or may at any time be removed from, a Fund’s portfolio. This report is distributed for informational purposes only. Information contained herein has been obtained from sources believed reliable, but not guaranteed.
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050.
The Funds invest in a variety of underlying Harbor funds that are subject to risks associated with their particular investment strategies. By investing in several underlying funds, the Funds have partial exposure to the risks of many different areas of the market. Investments in the Funds are not guaranteed. An investor may experience losses. There is no guarantee that the Funds will provide adequate income through retirement. For information on the different share classes and the risks associated with an investment in the Funds, please refer to the current prospectus.
* | All mutual funds have expense ratios which represent what shareholders pay for operating expenses and management fees. Expense ratios are expressed as an annualized percentage of a fund’s average net assets paid out in expenses. Net expense ratios reflect adjustments due to voluntary or contractual fee waivers or expense reimbursements. Expense ratio information is as of the fund’s current prospectus, as revised and supplemented to date. |
a | Annualized |
b | Unannualized |
c | Reflects reimbursements or waivers in effect during the period |
d | Does not reflect reimbursements or waivers currently in effect |
e | Reflects a contractual management fee waiver effective through February 28, 2022 |
f | Reflects an expense limitation agreement (excluding interest expense, if any) effective through February 28, 2022 |
g | For the period November 1, 2011 (inception of the Predecessor Fund) to January 20, 2015, Mar Vista Investment Partners, LLC served as the Predecessor Fund’s subadviser and for the period January 20, 2015 to March 6, 2017, Mar Vista Investment Partners, LLC served as investment adviser to the Predecessor Fund. |
4
Harbor Target Retirement Funds
Asset Allocation Framework (Unaudited)
Asset Allocation Framework (Unaudited)
Target Asset Allocation (glide path)
Harbor Target Retirement Funds - Target Asset Allocation
Over time, the allocation to asset classes and underlying Harbor funds will change in a predetermined manner as shown in the glide path above. The glide path shows the shifting of the asset allocations over time and illustrates how each Target Retirement Fund’s (except Harbor Target Retirement Income Fund) asset mix becomes more conservative as time elapses.
The principal value of the Funds is not guaranteed at any time, including the target retirement date.
Investment Styles
The Harbor Target Retirement Funds are constructed based on Harbor Capital’s investment experience that, over the long term, stocks generally provide greater growth opportunities and greater risk than bonds, and bonds generally provide more income and lower volatility than stocks. The year in the Fund name refers to the approximate year (the target date) when an investor in the Fund would leave the work force and enter retirement and likely stop making new investments in the Fund. The Harbor Target Retirement Income Fund is designed for investors currently in retirement. The year-specific Target Retirement Funds strive to produce more income and lower volatility as the target year approaches.
Harbor Capital allocates each Fund’s assets among the underlying Harbor funds based on the Fund’s investment objectives and policies. The asset allocation for each Fund (other than the Harbor Target Retirement Income Fund) will change over time as the target date indicated in the Fund’s name draws closer.
HARBOR TARGET RETIREMENT FUNDS — ACTUAL ALLOCATION AS OF APRIL 30, 2021 | |||||||||||||||||||
2060 Fund | 2055 Fund | 2050 Fund | 2045 Fund | 2040 Fund | 2035 Fund | 2030 Fund | 2025 Fund | 2020 Fund | Income Fund | ||||||||||
Equity | |||||||||||||||||||
Harbor Capital Appreciation Fund | 8% | 8% | 7% | 6% | 6% | 5% | 3% | 2% | 2% | 1% | |||||||||
Harbor Diversified International All Cap Fund | 12 | 11 | 10 | 9 | 8 | 7 | 6 | 5 | 3 | 3 | |||||||||
Harbor Global Leaders Fund | 5 | 5 | 4 | 4 | 3 | 3 | 2 | 2 | 1 | 1 | |||||||||
Harbor International Fund | 12 | 11 | 10 | 9 | 8 | 7 | 6 | 5 | 3 | 3 | |||||||||
Harbor International Growth Fund | 11 | 11 | 10 | 9 | 8 | 7 | 6 | 5 | 3 | 3 | |||||||||
Harbor Large Cap Value Fund | 14 | 13 | 12 | 11 | 10 | 8 | 7 | 6 | 4 | 3 | |||||||||
Harbor Mid Cap Growth Fund | 6 | 6 | 5 | 5 | 4 | 4 | 3 | 2 | 2 | 1 | |||||||||
Harbor Mid Cap Value Fund | 9 | 9 | 8 | 7 | 7 | 5 | 5 | 4 | 3 | 2 | |||||||||
Harbor Small Cap Growth Fund | 5 | 5 | 5 | 4 | 4 | 3 | 3 | 2 | 2 | 1 | |||||||||
Harbor Small Cap Value Fund | 7 | 6 | 6 | 5 | 5 | 4 | 4 | 3 | 2 | 1 | |||||||||
Harbor Strategic Growth Fund | 4 | 4 | 3 | 3 | 3 | 2 | 2 | 2 | 2 | 1 | |||||||||
Total Equity | 93 | 89 | 80 | 72 | 66 | 55 | 47 | 38 | 27 | 20 | |||||||||
Fixed Income | |||||||||||||||||||
Harbor Bond Fund | 4% | 6% | 7% | 11% | 11% | 14% | 17% | 22% | 24% | 26% | |||||||||
Harbor Core Bond Fund | 0 | 0 | 4 | 7 | 11 | 14 | 17 | 21 | 24 | 26 | |||||||||
Harbor High-Yield Bond Fund | 3 | 5 | 9 | 10 | 12 | 17 | 19 | 19 | 18 | 18 | |||||||||
Total Fixed Income | 7 | 11 | 20 | 28 | 34 | 45 | 53 | 62 | 66 | 70 | |||||||||
Money Market | |||||||||||||||||||
Harbor Money Market Fund | 0% | 0% | 0% | 0% | 0% | 0% | 0% | 0% | 7% | 10% | |||||||||
100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% |
5
Harbor Target Retirement Income Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
Asset Allocation (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | Annualized | Inception Date | ||||||||||
6 Months | 5 Years | 10 Years | ||||||||||||
Harbor Target Retirement Income Fund | ||||||||||||||
Institutional Class | 6.58% | 14.37% | 6.37% | 4.98% | 01/02/2009 | |||||||||
Comparative Indices | ||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond | -1.52% | -0.27% | 3.19% | 3.39% | — | |||||||||
MSCI EAFE (ND) | 28.84 | 39.88 | 8.87 | 5.22 | — | |||||||||
Russell 3000® | 31.08 | 50.92 | 17.67 | 14.03 | — | |||||||||
Composite Index Income | 6.22 | 11.78 | 5.77 | 4.92 | — |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratio was 0.58%. The Adviser has contractually agreed to limit the Fund’s operating expenses to: (i) the amount of the acquired funds’ fees and expenses; (ii) compensation of the Independent Trustees; and (iii) certain other expenses such as extraordinary items. The expense ratio in the prospectus may differ from the actual expense ratio for the period disclosed within this report. The expense ratio shown in the prospectus is based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050. See the Benchmark Descriptions at the end of this report for a description of the Composite Index.
7
Harbor Target Retirement Income Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value and Cost in Thousands
EQUITY FUNDS—20.0% | |||
Shares | Value | ||
2,233 | Harbor Capital Appreciation Fund | $ 242 | |
35,109 | Harbor Diversified International All Cap Fund | 478 | |
5,485 | Harbor Global Leaders Fund | 205 | |
10,036 | Harbor International Fund | 477 | |
20,669 | Harbor International Growth Fund | 475 | |
26,052 | Harbor Large Cap Value Fund | 572 | |
17,580 | Harbor Mid Cap Growth Fund | 247 | |
14,986 | Harbor Mid Cap Value Fund | 375 | |
11,532 | Harbor Small Cap Growth Fund | 223 | |
5,945 | Harbor Small Cap Value Fund | 268 | |
8,104 | Harbor Strategic Growth Fund | 243 | |
TOTAL EQUITY FUNDS | |||
(Cost $2,750) | 3,805 | ||
FIXED INCOME FUNDS—70.0% | |||
| Shares | Value | |
415,338 | Harbor Bond Fund | $ 4,996 | |
471,359 | Harbor Core Bond Fund | 4,996 | |
333,984 | Harbor High-Yield Bond Fund | 3,320 | |
TOTAL FIXED INCOME FUNDS | |||
(Cost $13,237) | 13,312 | ||
MONEY MARKET FUND—10.0% | |||
(Cost $1,899) | |||
1,898,685 | Harbor Money Market Fund | 1,899 | |
TOTAL INVESTMENTS—100.0% | |||
(Cost $17,886) | 19,016 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0% | — | ||
TOTAL NET ASSETS—100.0% | $19,016 |
AFFILIATED TRANSACTIONS
The Underlying Funds are considered to be affiliated with the Fund. The following table shows investment transactions and earnings from investments in the affiliated funds during the period November 1, 2020 through April 30, 2021.
Underlying Funds | Beginning Balance as of 11/01/2020 (000s) | Purchases of Affiliated Funds (000s) | Sales of Affiliated Funds (000s) | Change in Net Unrealized Gain/(Loss) from Affiliated Funds (000s) | Net Realized Gain/(Loss) | Investment Income from Affiliated Funds (000s) | ||||||||
Sales of Affiliated Funds (000s) | Distributions Received from Affiliated Funds (000s) | |||||||||||||
Harbor Bond Fund | $ 5,448 | $ 512 | $ (828) | $(159) | $ 23 | $ 55 | $ 61 | |||||||
Harbor Capital Appreciation Fund | 259 | 90 | (135) | (16) | 44 | 29 | — | |||||||
Harbor Core Bond Fund | 5,443 | 593 | (824) | (283) | 67 | 108 | 63 | |||||||
Harbor Diversified International Fund | 520 | 36 | (225) | 128 | 19 | — | 5 | |||||||
Harbor Global Leaders Fund | 222 | 46 | (87) | 10 | 14 | 16 | (16) | |||||||
Harbor High-Yield Bond Fund | 3,627 | 221 | (676) | 143 | 5 | — | 17 | |||||||
Harbor International Fund | 521 | 39 | (219) | 116 | 20 | — | 99 | |||||||
Harbor International Growth Fund | 518 | 64 | (207) | 44 | 56 | — | 6 | |||||||
Harbor Large Cap Value Fund | 625 | 64 | (270) | 96 | 57 | 17 | (14) | |||||||
Harbor Mid Cap Growth Fund | 264 | 92 | (136) | (26) | 53 | 35 | (16) | |||||||
Harbor Mid Cap Value Fund | 409 | 41 | (233) | 66 | 92 | — | 35 | |||||||
Harbor Money Market Fund | 2,080 | 136 | (317) | — | — | — | 9 | |||||||
Harbor Small Cap Growth Fund | 242 | 58 | (128) | 3 | 48 | 16 | — | |||||||
Harbor Small Cap Value Fund | 299 | 34 | (172) | 35 | 72 | — | 1 | |||||||
Harbor Strategic Growth Fund | 264 | 25 | (98) | 34 | 18 | 7 | 1 | |||||||
Total | $20,741 | $2,051 | $(4,555) | $ 191 | $588 | $283 | $251 |
The accompanying notes are an integral part of the Financial Statements.
8
Harbor Target Retirement 2020 Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
Asset Allocation (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | Annualized | Inception Date | ||||||||||
6 Months | 5 Years | 10 Years | ||||||||||||
Harbor Target Retirement 2020 Fund | ||||||||||||||
Institutional Class | 9.46% | 19.43% | 7.95% | 5.89% | 01/02/2009 | |||||||||
Comparative Indices | ||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond | -1.52% | -0.27% | 3.19% | 3.39% | — | |||||||||
MSCI EAFE (ND) | 28.84 | 39.88 | 8.87 | 5.22 | — | |||||||||
Russell 3000® | 31.08 | 50.92 | 17.67 | 14.03 | — | |||||||||
Composite Index 2020 | 9.22 | 16.43 | 7.38 | 5.81 | — |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratio was 0.61%. The Adviser has contractually agreed to limit the Fund’s operating expenses to: (i) the amount of the acquired funds’ fees and expenses; (ii) compensation of the Independent Trustees; and (iii) certain other expenses such as extraordinary items. The expense ratio in the prospectus may differ from the actual expense ratio for the period disclosed within this report. The expense ratio shown in the prospectus is based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050. See the Benchmark Descriptions at the end of this report for a description of the Composite Index.
9
Harbor Target Retirement 2020 Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value and Cost in Thousands
EQUITY FUNDS—27.2% | |||
Shares | Value | ||
3,759 | Harbor Capital Appreciation Fund | $ 408 | |
59,504 | Harbor Diversified International All Cap Fund | 810 | |
8,853 | Harbor Global Leaders Fund | 331 | |
17,013 | Harbor International Fund | 809 | |
35,090 | Harbor International Growth Fund | 806 | |
43,620 | Harbor Large Cap Value Fund | 958 | |
30,390 | Harbor Mid Cap Growth Fund | 426 | |
25,553 | Harbor Mid Cap Value Fund | 639 | |
20,153 | Harbor Small Cap Growth Fund | 390 | |
10,364 | Harbor Small Cap Value Fund | 468 | |
13,663 | Harbor Strategic Growth Fund | 410 | |
TOTAL EQUITY FUNDS | |||
(Cost $4,645) | 6,455 | ||
FIXED INCOME FUNDS—65.8% | |||
| Shares | Value | |
469,498 | Harbor Bond Fund | $ 5,648 | |
532,917 | Harbor Core Bond Fund | 5,649 | |
432,921 | Harbor High-Yield Bond Fund | 4,303 | |
TOTAL FIXED INCOME FUNDS | |||
(Cost $15,503) | 15,600 | ||
MONEY MARKET FUND—7.0% | |||
(Cost $1,660) | |||
1,660,465 | Harbor Money Market Fund | 1,660 | |
TOTAL INVESTMENTS—100.0% | |||
(Cost $21,808) | 23,715 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0% | — | ||
TOTAL NET ASSETS—100.0% | $23,715 |
AFFILIATED TRANSACTIONS
The Underlying Funds are considered to be affiliated with the Fund. The following table shows investment transactions and earnings from investments in the affiliated funds during the period November 1, 2020 through April 30, 2021.
Underlying Funds | Beginning Balance as of 11/01/2020 (000s) | Purchases of Affiliated Funds (000s) | Sales of Affiliated Funds (000s) | Change in Net Unrealized Gain/(Loss) from Affiliated Funds (000s) | Net Realized Gain/(Loss) | Investment Income from Affiliated Funds (000s) | ||||||||
Sales of Affiliated Funds (000s) | Distributions Received from Affiliated Funds (000s) | |||||||||||||
Harbor Bond Fund | $ 5,366 | $1,388 | $ (943) | $(183) | $ 20 | $ 58 | $ 68 | |||||||
Harbor Capital Appreciation Fund | 432 | 177 | (250) | (34) | 83 | 53 | — | |||||||
Harbor Core Bond Fund | 5,360 | 1,469 | (929) | (311) | 60 | 115 | 71 | |||||||
Harbor Diversified International All Cap Fund | 884 | 52 | (392) | 199 | 67 | — | 9 | |||||||
Harbor Global Leaders Fund | 356 | 88 | (153) | — | 40 | 29 | — | |||||||
Harbor High-Yield Bond Fund | 4,376 | 530 | (787) | 189 | (5) | — | 131 | |||||||
Harbor International Fund | 885 | 68 | (389) | 157 | 88 | — | 10 | |||||||
Harbor International Growth Fund | 880 | 135 | (392) | 32 | 151 | — | 6 | |||||||
Harbor Large Cap Value Fund | 1,035 | 114 | (464) | 163 | 110 | 30 | 4 | |||||||
Harbor Mid Cap Growth Fund | 462 | 181 | (268) | (44) | 95 | 66 | — | |||||||
Harbor Mid Cap Value Fund | 692 | 64 | (403) | 123 | 163 | — | 17 | |||||||
Harbor Money Market Fund | 1,672 | 272 | (284) | — | — | — | — | |||||||
Harbor Small Cap Growth Fund | 425 | 106 | (237) | 16 | 80 | 32 | — | |||||||
Harbor Small Cap Value Fund | 515 | 58 | (301) | 77 | 119 | — | 2 | |||||||
Harbor Strategic Growth Fund | 440 | 51 | (171) | 37 | 53 | 13 | 2 | |||||||
Total | $23,780 | $4,753 | $(6,363) | $ 421 | $1,124 | $396 | $320 |
The accompanying notes are an integral part of the Financial Statements.
10
Harbor Target Retirement 2025 Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
Asset Allocation (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | Annualized | Inception Date | ||||||||||
6 Months | 5 Years | 10 Years | ||||||||||||
Harbor Target Retirement 2025 Fund | ||||||||||||||
Institutional Class | 12.89% | 25.76% | 9.19% | 6.47% | 01/02/2009 | |||||||||
Comparative Indices | ||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond | -1.52% | -0.27% | 3.19% | 3.39% | — | |||||||||
MSCI EAFE (ND) | 28.84 | 39.88 | 8.87 | 5.22 | — | |||||||||
Russell 3000® | 31.08 | 50.92 | 17.67 | 14.03 | — | |||||||||
Composite Index 2025 | 12.81 | 22.22 | 8.55 | 6.37 | — |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratio was 0.66%. The Adviser has contractually agreed to limit the Fund’s operating expenses to: (i) the amount of the acquired funds’ fees and expenses; (ii) compensation of the Independent Trustees; and (iii) certain other expenses such as extraordinary items. The expense ratio in the prospectus may differ from the actual expense ratio for the period disclosed within this report. The expense ratio shown in the prospectus is based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050. See the Benchmark Descriptions at the end of this report for a description of the Composite Index.
11
Harbor Target Retirement 2025 Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value and Cost in Thousands
EQUITY FUNDS—38.1% | |||
Shares | Value | ||
5,172 | Harbor Capital Appreciation Fund | $ 561 | |
82,404 | Harbor Diversified International All Cap Fund | 1,122 | |
11,869 | Harbor Global Leaders Fund | 443 | |
23,536 | Harbor International Fund | 1,119 | |
48,386 | Harbor International Growth Fund | 1,112 | |
59,601 | Harbor Large Cap Value Fund | 1,308 | |
42,576 | Harbor Mid Cap Growth Fund | 597 | |
35,179 | Harbor Mid Cap Value Fund | 880 | |
28,490 | Harbor Small Cap Growth Fund | 551 | |
14,443 | Harbor Small Cap Value Fund | 653 | |
18,740 | Harbor Strategic Growth Fund | 562 | |
TOTAL EQUITY FUNDS | |||
(Cost $6,587) | 8,908 | ||
FIXED INCOME FUNDS—61.9% | |||
| Shares | Value | |
414,672 | Harbor Bond Fund | $ 4,989 | |
470,509 | Harbor Core Bond Fund | 4,987 | |
452,448 | Harbor High-Yield Bond Fund | 4,497 | |
TOTAL FIXED INCOME FUNDS | |||
(Cost $14,445) | 14,473 | ||
TOTAL INVESTMENTS—100.0% | |||
(Cost $21,032) | 23,381 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0% | — | ||
TOTAL NET ASSETS—100.0% | $23,381 |
AFFILIATED TRANSACTIONS
The Underlying Funds are considered to be affiliated with the Fund. The following table shows investment transactions and earnings from investments in the affiliated funds during the period November 1, 2020 through April 30, 2021.
Underlying Funds | Beginning Balance as of 11/01/2020 (000s) | Purchases of Affiliated Funds (000s) | Sales of Affiliated Funds (000s) | Change in Net Unrealized Gain/(Loss) from Affiliated Funds (000s) | Net Realized Gain/(Loss) | Investment Income from Affiliated Funds (000s) | ||||||||
Sales of Affiliated Funds (000s) | Distributions Received from Affiliated Funds (000s) | |||||||||||||
Harbor Bond Fund | $ 4,437 | $1,408 | $ (721) | $(148) | $ 13 | $ 50 | $ 55 | |||||||
Harbor Capital Appreciation Fund | 553 | 243 | (295) | (32) | 92 | 67 | — | |||||||
Harbor Core Bond Fund | 4,436 | 1,476 | (717) | (256) | 48 | 96 | 59 | |||||||
Harbor Diversified International All Cap Fund | 1,123 | 129 | (471) | 270 | 71 | — | 12 | |||||||
Harbor Global Leaders Fund | 441 | 117 | (163) | 4 | 44 | 36 | — | |||||||
Harbor High-Yield Bond Fund | 4,275 | 780 | (739) | 170 | 11 | — | 129 | |||||||
Harbor International Fund | 1,124 | 137 | (455) | 211 | 102 | — | 13 | |||||||
Harbor International Growth Fund | 1,122 | 217 | (458) | 57 | 174 | — | 8 | |||||||
Harbor Large Cap Value Fund | 1,307 | 180 | (522) | 204 | 139 | 38 | 5 | |||||||
Harbor Mid Cap Growth Fund | 598 | 247 | (311) | (39) | 102 | 85 | 1 | |||||||
Harbor Mid Cap Value Fund | 881 | 140 | (509) | 189 | 179 | — | 22 | |||||||
Harbor Small Cap Growth Fund | 549 | 140 | (260) | 41 | 81 | 41 | — | |||||||
Harbor Small Cap Value Fund | 662 | 83 | (345) | 140 | 113 | — | 3 | |||||||
Harbor Strategic Growth Fund | 557 | 95 | (204) | 53 | 61 | 17 | 2 | |||||||
Total | $22,065 | $5,392 | $(6,170) | $ 864 | $1,230 | $430 | $309 |
The accompanying notes are an integral part of the Financial Statements.
12
Harbor Target Retirement 2030 Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
Asset Allocation (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | Annualized | Inception Date | ||||||||||
6 Months | 5 Years | 10 Years | ||||||||||||
Harbor Target Retirement 2030 Fund | ||||||||||||||
Institutional Class | 15.54% | 30.37% | 10.14% | 7.05% | 01/02/2009 | |||||||||
Comparative Indices | ||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond | -1.52% | -0.27% | 3.19% | 3.39% | — | |||||||||
MSCI EAFE (ND) | 28.84 | 39.88 | 8.87 | 5.22 | — | |||||||||
Russell 3000® | 31.08 | 50.92 | 17.67 | 14.03 | — | |||||||||
Composite Index 2030 | 15.58 | 26.44 | 9.38 | 6.86 | — |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratio was 0.68%. The Adviser has contractually agreed to limit the Fund’s operating expenses to: (i) the amount of the acquired funds’ fees and expenses; (ii) compensation of the Independent Trustees; and (iii) certain other expenses such as extraordinary items. The expense ratio in the prospectus may differ from the actual expense ratio for the period disclosed within this report. The expense ratio shown in the prospectus is based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050. See the Benchmark Descriptions at the end of this report for a description of the Composite Index.
13
Harbor Target Retirement 2030 Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value and Cost in Thousands
EQUITY FUNDS—46.6% | |||
Shares | Value | ||
11,713 | Harbor Capital Appreciation Fund | $ 1,270 | |
160,473 | Harbor Diversified International All Cap Fund | 2,184 | |
22,665 | Harbor Global Leaders Fund | 846 | |
45,887 | Harbor International Fund | 2,182 | |
94,667 | Harbor International Growth Fund | 2,174 | |
115,445 | Harbor Large Cap Value Fund | 2,534 | |
82,940 | Harbor Mid Cap Growth Fund | 1,164 | |
68,332 | Harbor Mid Cap Value Fund | 1,710 | |
55,365 | Harbor Small Cap Growth Fund | 1,071 | |
28,239 | Harbor Small Cap Value Fund | 1,276 | |
30,008 | Harbor Strategic Growth Fund | 900 | |
TOTAL EQUITY FUNDS | |||
(Cost $12,578) | 17,311 | ||
FIXED INCOME FUNDS—53.4% | |||
| Shares | Value | |
522,132 | Harbor Bond Fund | $ 6,281 | |
592,511 | Harbor Core Bond Fund | 6,281 | |
731,061 | Harbor High-Yield Bond Fund | 7,267 | |
TOTAL FIXED INCOME FUNDS | |||
(Cost $19,719) | 19,829 | ||
TOTAL INVESTMENTS—100.0% | |||
(Cost $32,297) | 37,140 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0% | — | ||
TOTAL NET ASSETS—100.0% | $37,140 |
AFFILIATED TRANSACTIONS
The Underlying Funds are considered to be affiliated with the Fund. The following table shows investment transactions and earnings from investments in the affiliated funds during the period November 1, 2020 through April 30, 2021.
Underlying Funds | Beginning Balance as of 11/01/2020 (000s) | Purchases of Affiliated Funds (000s) | Sales of Affiliated Funds (000s) | Change in Net Unrealized Gain/(Loss) from Affiliated Funds (000s) | Net Realized Gain/(Loss) | Investment Income from Affiliated Funds (000s) | ||||||||
Sales of Affiliated Funds (000s) | Distributions Received from Affiliated Funds (000s) | |||||||||||||
Harbor Bond Fund | $ 4,905 | $2,079 | $ (546) | $ (202) | $ 45 | $ 55 | $ 65 | |||||||
Harbor Capital Appreciation Fund | 1,111 | 397 | (359) | (3) | 124 | 140 | — | |||||||
Harbor Core Bond Fund | 4,902 | 2,173 | (555) | (276) | 37 | 107 | 68 | |||||||
Harbor Diversified International All Cap Fund | 1,855 | 288 | (533) | 514 | 60 | — | 20 | |||||||
Harbor Global Leaders Fund | 720 | 192 | (144) | 32 | 46 | 59 | — | |||||||
Harbor High-Yield Bond Fund | 5,956 | 1,759 | (690) | 241 | 1 | — | 193 | |||||||
Harbor International Fund | 1,857 | 296 | (498) | 444 | 83 | — | 21 | |||||||
Harbor International Growth Fund | 1,850 | 360 | (409) | 248 | 125 | — | 13 | |||||||
Harbor Large Cap Value Fund | 2,150 | 293 | (499) | 451 | 139 | 63 | 9 | |||||||
Harbor Mid Cap Growth Fund | 989 | 402 | (332) | 10 | 95 | 147 | — | |||||||
Harbor Mid Cap Value Fund | 1,455 | 287 | (675) | 437 | 206 | — | 37 | |||||||
Harbor Small Cap Growth Fund | 911 | 294 | (340) | 85 | 121 | 71 | — | |||||||
Harbor Small Cap Value Fund | 1,098 | 183 | (435) | 318 | 112 | — | 5 | |||||||
Harbor Strategic Growth Fund | 709 | 135 | (103) | 131 | 28 | 22 | 3 | |||||||
Total | $30,468 | $9,138 | $(6,118) | $2,430 | $1,222 | $664 | $434 |
The accompanying notes are an integral part of the Financial Statements.
14
Harbor Target Retirement 2035 Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
Asset Allocation (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | Annualized | Inception Date | ||||||||||
6 Months | 5 Years | 10 Years | ||||||||||||
Harbor Target Retirement 2035 Fund | ||||||||||||||
Institutional Class | 18.26% | 35.21% | 11.24% | 7.78% | 01/02/2009 | |||||||||
Comparative Indices | ||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond | -1.52% | -0.27% | 3.19% | 3.39% | — | |||||||||
MSCI EAFE (ND) | 28.84 | 39.88 | 8.87 | 5.22 | — | |||||||||
Russell 3000® | 31.08 | 50.92 | 17.67 | 14.03 | — | |||||||||
Composite Index 2035 | 18.60 | 30.87 | 10.26 | 7.44 | — |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratio was 0.70%. The Adviser has contractually agreed to limit the Fund’s operating expenses to: (i) the amount of the acquired funds’ fees and expenses; (ii) compensation of the Independent Trustees; and (iii) certain other expenses such as extraordinary items. The expense ratio in the prospectus may differ from the actual expense ratio for the period disclosed within this report. The expense ratio shown in the prospectus is based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050. See the Benchmark Descriptions at the end of this report for a description of the Composite Index.
15
Harbor Target Retirement 2035 Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value and Cost in Thousands
EQUITY FUNDS—55.5% | |||
Shares | Value | ||
10,341 | Harbor Capital Appreciation Fund | $ 1,121 | |
126,871 | Harbor Diversified International All Cap Fund | 1,727 | |
17,960 | Harbor Global Leaders Fund | 671 | |
36,291 | Harbor International Fund | 1,726 | |
74,806 | Harbor International Growth Fund | 1,718 | |
91,197 | Harbor Large Cap Value Fund | 2,002 | |
65,802 | Harbor Mid Cap Growth Fund | 923 | |
53,973 | Harbor Mid Cap Value Fund | 1,350 | |
43,947 | Harbor Small Cap Growth Fund | 850 | |
22,361 | Harbor Small Cap Value Fund | 1,010 | |
19,703 | Harbor Strategic Growth Fund | 591 | |
TOTAL EQUITY FUNDS | |||
(Cost $9,819) | 13,689 | ||
FIXED INCOME FUNDS—44.5% | |||
| Shares | Value | |
280,192 | Harbor Bond Fund | $ 3,371 | |
317,917 | Harbor Core Bond Fund | 3,370 | |
426,307 | Harbor High-Yield Bond Fund | 4,237 | |
TOTAL FIXED INCOME FUNDS | |||
(Cost $10,949) | 10,978 | ||
TOTAL INVESTMENTS—100.0% | |||
(Cost $20,768) | 24,667 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0% | — | ||
TOTAL NET ASSETS—100.0% | $24,667 |
AFFILIATED TRANSACTIONS
The Underlying Funds are considered to be affiliated with the Fund. The following table shows investment transactions and earnings from investments in the affiliated funds during the period November 1, 2020 through April 30, 2021.
Underlying Funds | Beginning Balance as of 11/01/2020 (000s) | Purchases of Affiliated Funds (000s) | Sales of Affiliated Funds (000s) | Change in Net Unrealized Gain/(Loss) from Affiliated Funds (000s) | Net Realized Gain/(Loss) | Investment Income from Affiliated Funds (000s) | ||||||||
Sales of Affiliated Funds (000s) | Distributions Received from Affiliated Funds (000s) | |||||||||||||
Harbor Bond Fund | $ 2,630 | $1,057 | $ (230) | $ (100) | $ 14 | $ 30 | $ 35 | |||||||
Harbor Capital Appreciation Fund | 936 | 352 | (267) | 13 | 87 | 120 | — | |||||||
Harbor Core Bond Fund | 2,628 | 1,102 | (229) | (142) | 11 | 58 | 37 | |||||||
Harbor Diversified International All Cap Fund | 1,460 | 130 | (320) | 414 | 43 | — | 16 | |||||||
Harbor Global Leaders Fund | 564 | 123 | (78) | 36 | 26 | 47 | — | |||||||
Harbor High-Yield Bond Fund | 3,309 | 1,087 | (292) | 123 | 10 | — | 110 | |||||||
Harbor International Fund | 1,463 | 165 | (321) | 391 | 28 | — | 17 | |||||||
Harbor International Growth Fund | 1,461 | 194 | (235) | 226 | 72 | — | 10 | |||||||
Harbor Large Cap Value Fund | 1,689 | 156 | (313) | 388 | 82 | 50 | 8 | |||||||
Harbor Mid Cap Growth Fund | 778 | 265 | (200) | 24 | 56 | 116 | — | |||||||
Harbor Mid Cap Value Fund | 1,131 | 135 | (425) | 423 | 86 | — | 30 | |||||||
Harbor Small Cap Growth Fund | 716 | 163 | (190) | 94 | 67 | 58 | — | |||||||
Harbor Small Cap Value Fund | 857 | 102 | (291) | 284 | 58 | — | 4 | |||||||
Harbor Strategic Growth Fund | 481 | 76 | (73) | 84 | 23 | 16 | 2 | |||||||
Total | $20,103 | $5,107 | $(3,464) | $2,258 | $663 | $495 | $269 |
The accompanying notes are an integral part of the Financial Statements.
16
Harbor Target Retirement 2040 Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
Asset Allocation (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | Annualized | Inception Date | ||||||||||
6 Months | 5 Years | 10 Years | ||||||||||||
Harbor Target Retirement 2040 Fund | ||||||||||||||
Institutional Class | 21.18% | 40.21% | 12.29% | 8.48% | 01/02/2009 | |||||||||
Comparative Indices | ||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond | -1.52% | -0.27% | 3.19% | 3.39% | — | |||||||||
MSCI EAFE (ND) | 28.84 | 39.88 | 8.87 | 5.22 | — | |||||||||
Russell 3000® | 31.08 | 50.92 | 17.67 | 14.03 | — | |||||||||
Composite Index 2040 | 21.74 | 35.41 | 11.13 | 8.05 | — |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratio was 0.72%. The Adviser has contractually agreed to limit the Fund’s operating expenses to: (i) the amount of the acquired funds’ fees and expenses; (ii) compensation of the Independent Trustees; and (iii) certain other expenses such as extraordinary items. The expense ratio in the prospectus may differ from the actual expense ratio for the period disclosed within this report. The expense ratio shown in the prospectus is based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050. See the Benchmark Descriptions at the end of this report for a description of the Composite Index.
17
Harbor Target Retirement 2040 Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value and Cost in Thousands
EQUITY FUNDS—65.9% | |||
Shares | Value | ||
20,488 | Harbor Capital Appreciation Fund | $ 2,221 | |
242,242 | Harbor Diversified International All Cap Fund | 3,297 | |
34,771 | Harbor Global Leaders Fund | 1,298 | |
69,254 | Harbor International Fund | 3,294 | |
143,057 | Harbor International Growth Fund | 3,286 | |
175,195 | Harbor Large Cap Value Fund | 3,845 | |
126,705 | Harbor Mid Cap Growth Fund | 1,778 | |
103,782 | Harbor Mid Cap Value Fund | 2,597 | |
83,665 | Harbor Small Cap Growth Fund | 1,619 | |
42,326 | Harbor Small Cap Value Fund | 1,912 | |
36,946 | Harbor Strategic Growth Fund | 1,108 | |
TOTAL EQUITY FUNDS | |||
(Cost $18,775) | 26,255 | ||
FIXED INCOME FUNDS—34.1% | |||
| Shares | Value | |
356,841 | Harbor Bond Fund | $ 4,293 | |
404,931 | Harbor Core Bond Fund | 4,292 | |
502,526 | Harbor High-Yield Bond Fund | 4,995 | |
TOTAL FIXED INCOME FUNDS | |||
(Cost $13,476) | 13,580 | ||
TOTAL INVESTMENTS—100.0% | |||
(Cost $32,251) | 39,835 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0% | — | ||
TOTAL NET ASSETS—100.0% | $39,835 |
AFFILIATED TRANSACTIONS
The Underlying Funds are considered to be affiliated with the Fund. The following table shows investment transactions and earnings from investments in the affiliated funds during the period November 1, 2020 through April 30, 2021.
Underlying Funds | Beginning Balance as of 11/01/2020 (000s) | Purchases of Affiliated Funds (000s) | Sales of Affiliated Funds (000s) | Change in Net Unrealized Gain/(Loss) from Affiliated Funds (000s) | Net Realized Gain/(Loss) | Investment Income from Affiliated Funds (000s) | ||||||||
Sales of Affiliated Funds (000s) | Distributions Received from Affiliated Funds (000s) | |||||||||||||
Harbor Bond Fund | $ 3,309 | $1,268 | $ (177) | $ (123) | $ 16 | $ 36 | $ 45 | |||||||
Harbor Capital Appreciation Fund | 1,700 | 644 | (315) | 59 | 133 | 228 | — | |||||||
Harbor Core Bond Fund | 3,306 | 1,324 | (175) | (176) | 13 | 72 | 46 | |||||||
Harbor Diversified International All Cap Fund | 2,645 | 182 | (376) | 775 | 71 | — | 29 | |||||||
Harbor Global Leaders Fund | 1,032 | 220 | (72) | 86 | 32 | 88 | — | |||||||
Harbor High-Yield Bond Fund | 3,709 | 1,393 | (253) | 150 | (4) | — | 127 | |||||||
Harbor International Fund | 2,649 | 220 | (350) | 935 | (160) | — | 32 | |||||||
Harbor International Growth Fund | 2,670 | 324 | (265) | 435 | 122 | — | 19 | |||||||
Harbor Large Cap Value Fund | 3,078 | 257 | (366) | 740 | 136 | 94 | 13 | |||||||
Harbor Mid Cap Growth Fund | 1,411 | 475 | (259) | 58 | 93 | 217 | — | |||||||
Harbor Mid Cap Value Fund | 2,045 | 125 | (511) | 903 | 35 | — | 55 | |||||||
Harbor Small Cap Growth Fund | 1,290 | 276 | (244) | 186 | 111 | 105 | — | |||||||
Harbor Small Cap Value Fund | 1,549 | 55 | (319) | 559 | 68 | — | 8 | |||||||
Harbor Strategic Growth Fund | 860 | 131 | (80) | 174 | 23 | 28 | 4 | |||||||
Total | $31,253 | $6,894 | $(3,762) | $4,761 | $ 689 | $868 | $378 |
The accompanying notes are an integral part of the Financial Statements.
18
Harbor Target Retirement 2045 Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
Asset Allocation (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | Annualized | Inception Date | ||||||||||
6 Months | 5 Years | 10 Years | ||||||||||||
Harbor Target Retirement 2045 Fund | ||||||||||||||
Institutional Class | 22.83% | 43.07% | 13.02% | 8.96% | 01/02/2009 | |||||||||
Comparative Indices | ||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond | -1.52% | -0.27% | 3.19% | 3.39% | — | |||||||||
MSCI EAFE (ND) | 28.84 | 39.88 | 8.87 | 5.22 | — | |||||||||
Russell 3000® | 31.08 | 50.92 | 17.67 | 14.03 | — | |||||||||
Composite Index 2045 | 23.53 | 37.99 | 11.81 | 8.49 | — |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratio was 0.74%. The Adviser has contractually agreed to limit the Fund’s operating expenses to: (i) the amount of the acquired funds’ fees and expenses; (ii) compensation of the Independent Trustees; and (iii) certain other expenses such as extraordinary items. The expense ratio in the prospectus may differ from the actual expense ratio for the period disclosed within this report. The expense ratio shown in the prospectus is based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050. See the Benchmark Descriptions at the end of this report for a description of the Composite Index.
19
Harbor Target Retirement 2045 Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value and Cost in Thousands
EQUITY FUNDS—72.3% | |||
Shares | Value | ||
12,617 | Harbor Capital Appreciation Fund | $ 1,368 | |
150,240 | Harbor Diversified International All Cap Fund | 2,045 | |
21,914 | Harbor Global Leaders Fund | 818 | |
42,957 | Harbor International Fund | 2,043 | |
88,672 | Harbor International Growth Fund | 2,037 | |
109,086 | Harbor Large Cap Value Fund | 2,394 | |
77,775 | Harbor Mid Cap Growth Fund | 1,091 | |
64,324 | Harbor Mid Cap Value Fund | 1,609 | |
51,397 | Harbor Small Cap Growth Fund | 994 | |
26,249 | Harbor Small Cap Value Fund | 1,186 | |
22,851 | Harbor Strategic Growth Fund | 686 | |
TOTAL EQUITY FUNDS | |||
(Cost $11,739) | 16,271 | ||
FIXED INCOME FUNDS—27.7% | |||
| Shares | Value | |
200,082 | Harbor Bond Fund | $ 2,407 | |
155,386 | Harbor Core Bond Fund | 1,647 | |
220,461 | Harbor High-Yield Bond Fund | 2,192 | |
TOTAL FIXED INCOME FUNDS | |||
(Cost $6,214) | 6,246 | ||
TOTAL INVESTMENTS—100.0% | |||
(Cost $17,953) | 22,517 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0% | — | ||
TOTAL NET ASSETS—100.0% | $22,517 |
AFFILIATED TRANSACTIONS
The Underlying Funds are considered to be affiliated with the Fund. The following table shows investment transactions and earnings from investments in the affiliated funds during the period November 1, 2020 through April 30, 2021.
Underlying Funds | Beginning Balance as of 11/01/2020 (000s) | Purchases of Affiliated Funds (000s) | Sales of Affiliated Funds (000s) | Change in Net Unrealized Gain/(Loss) from Affiliated Funds (000s) | Net Realized Gain/(Loss) | Investment Income from Affiliated Funds (000s) | ||||||||
Sales of Affiliated Funds (000s) | Distributions Received from Affiliated Funds (000s) | |||||||||||||
Harbor Bond Fund | $ 1,973 | $ 654 | $ (159) | $ (73) | $ 12 | $ 22 | $ 26 | |||||||
Harbor Capital Appreciation Fund | 1,075 | 383 | (211) | 41 | 80 | 135 | — | |||||||
Harbor Core Bond Fund | 1,168 | 641 | (102) | (65) | 5 | 25 | 17 | |||||||
Harbor Diversified International All Cap Fund | 1,642 | 141 | (255) | 473 | 44 | — | 17 | |||||||
Harbor Global Leaders Fund | 656 | 158 | (70) | 47 | 27 | 54 | — | |||||||
Harbor High-Yield Bond Fund | 1,699 | 589 | (165) | 62 | 7 | — | 57 | |||||||
Harbor International Fund | 1,642 | 168 | (242) | 611 | (136) | — | 19 | |||||||
Harbor International Growth Fund | 1,642 | 241 | (180) | 265 | 69 | — | 11 | |||||||
Harbor Large Cap Value Fund | 1,924 | 208 | (278) | 466 | 74 | 57 | 8 | |||||||
Harbor Mid Cap Growth Fund | 866 | 274 | (142) | 36 | 57 | 126 | — | |||||||
Harbor Mid Cap Value Fund | 1,276 | 125 | (369) | 553 | 24 | — | 32 | |||||||
Harbor Small Cap Growth Fund | 793 | 162 | (141) | 131 | 49 | 60 | — | |||||||
Harbor Small Cap Value Fund | 959 | 91 | (244) | 325 | 55 | — | 5 | |||||||
Harbor Strategic Growth Fund | 541 | 87 | (63) | 103 | 18 | 17 | 2 | |||||||
Total | $17,856 | $3,922 | $(2,621) | $2,975 | $ 385 | $496 | $194 |
The accompanying notes are an integral part of the Financial Statements.
20
Harbor Target Retirement 2050 Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
Asset Allocation (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | Annualized | Inception Date | ||||||||||
6 Months | 5 Years | 10 Years | ||||||||||||
Harbor Target Retirement 2050 Fund | ||||||||||||||
Institutional Class | 25.64% | 48.13% | 14.02% | 9.67% | 01/02/2009 | |||||||||
Comparative Indices | ||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond | -1.52% | -0.27% | 3.19% | 3.39% | — | |||||||||
MSCI EAFE (ND) | 28.84 | 39.88 | 8.87 | 5.22 | — | |||||||||
Russell 3000® | 31.08 | 50.92 | 17.67 | 14.03 | — | |||||||||
Composite Index 2050 | 26.59 | 42.60 | 12.65 | 9.08 | — |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratio was 0.76%. The Adviser has contractually agreed to limit the Fund’s operating expenses to: (i) the amount of the acquired funds’ fees and expenses; (ii) compensation of the Independent Trustees; and (iii) certain other expenses such as extraordinary items. The expense ratio in the prospectus may differ from the actual expense ratio for the period disclosed within this report. The expense ratio shown in the prospectus is based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050. See the Benchmark Descriptions at the end of this report for a description of the Composite Index.
21
Harbor Target Retirement 2050 Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value and Cost in Thousands
EQUITY FUNDS—80.0% | |||
Shares | Value | ||
22,716 | Harbor Capital Appreciation Fund | $ 2,462 | |
268,966 | Harbor Diversified International All Cap Fund | 3,661 | |
39,925 | Harbor Global Leaders Fund | 1,491 | |
76,816 | Harbor International Fund | 3,653 | |
158,944 | Harbor International Growth Fund | 3,651 | |
196,943 | Harbor Large Cap Value Fund | 4,323 | |
138,584 | Harbor Mid Cap Growth Fund | 1,944 | |
115,188 | Harbor Mid Cap Value Fund | 2,882 | |
91,511 | Harbor Small Cap Growth Fund | 1,771 | |
46,760 | Harbor Small Cap Value Fund | 2,112 | |
41,176 | Harbor Strategic Growth Fund | 1,235 | |
TOTAL EQUITY FUNDS | |||
(Cost $20,841) | 29,185 | ||
FIXED INCOME FUNDS—20.0% | |||
| Shares | Value | |
230,434 | Harbor Bond Fund | $ 2,772 | |
130,716 | Harbor Core Bond Fund | 1,386 | |
317,008 | Harbor High-Yield Bond Fund | 3,151 | |
TOTAL FIXED INCOME FUNDS | |||
(Cost $7,293) | 7,309 | ||
TOTAL INVESTMENTS—100.0% | |||
(Cost $28,134) | 36,494 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0% | — | ||
TOTAL NET ASSETS—100.0% | $36,494 |
AFFILIATED TRANSACTIONS
The Underlying Funds are considered to be affiliated with the Fund. The following table shows investment transactions and earnings from investments in the affiliated funds during the period November 1, 2020 through April 30, 2021.
Underlying Funds | Beginning Balance as of 11/01/2020 (000s) | Purchases of Affiliated Funds (000s) | Sales of Affiliated Funds (000s) | Change in Net Unrealized Gain/(Loss) from Affiliated Funds (000s) | Net Realized Gain/(Loss) | Investment Income from Affiliated Funds (000s) | ||||||||
Sales of Affiliated Funds (000s) | Distributions Received from Affiliated Funds (000s) | |||||||||||||
Harbor Bond Fund | $ 1,984 | $ 940 | $ (83) | $ (74) | $ 5 | $ 23 | $ 27 | |||||||
Harbor Capital Appreciation Fund | 1,923 | 803 | (477) | 50 | 163 | 257 | — | |||||||
Harbor Core Bond Fund | 992 | 485 | (39) | (54) | 2 | 22 | 15 | |||||||
Harbor Diversified International All Cap Fund | 2,934 | 229 | (444) | 856 | 86 | — | 33 | |||||||
Harbor Global Leaders Fund | 1,188 | 281 | (111) | 78 | 55 | 102 | — | |||||||
Harbor High-Yield Bond Fund | 2,320 | 868 | (130) | 90 | 3 | — | 81 | |||||||
Harbor International Fund | 2,942 | 308 | (461) | 1,063 | (199) | — | 36 | |||||||
Harbor International Growth Fund | 2,958 | 427 | (351) | 453 | 164 | — | 21 | |||||||
Harbor Large Cap Value Fund | 3,453 | 276 | (394) | 820 | 168 | 107 | 15 | |||||||
Harbor Mid Cap Growth Fund | 1,543 | 591 | (353) | 24 | 139 | 240 | — | |||||||
Harbor Mid Cap Value Fund | 2,271 | 258 | (695) | 989 | 59 | — | 61 | |||||||
Harbor Small Cap Growth Fund | 1,409 | 311 | (273) | 266 | 58 | 116 | — | |||||||
Harbor Small Cap Value Fund | 1,700 | 119 | (398) | 589 | 102 | — | 9 | |||||||
Harbor Strategic Growth Fund | 965 | 142 | (92) | 193 | 27 | 32 | 4 | |||||||
Total | $28,582 | $6,038 | $(4,301) | $5,343 | $ 832 | $899 | $302 |
The accompanying notes are an integral part of the Financial Statements.
22
Harbor Target Retirement 2055 Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
Asset Allocation (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | Annualized | Inception Date | ||||||||||
6 Months | 5 Years | Life of Fund | ||||||||||||
Harbor Target Retirement 2055 Fund | ||||||||||||||
Institutional Class | 28.49% | 53.28% | 14.76% | 11.23% | 11/01/2014 | |||||||||
Comparative Indices | ||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond | -1.52% | -0.27% | 3.19% | 3.19% | — | |||||||||
MSCI EAFE (ND) | 28.84 | 39.88 | 8.87 | 6.24 | — | |||||||||
Russell 3000® | 31.08 | 50.92 | 17.67 | 14.12 | — | |||||||||
Composite Index 2055 | 29.69 | 47.09 | 13.26 | 10.01 | — |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratio was 0.78%. The Adviser has contractually agreed to limit the Fund’s operating expenses to: (i) the amount of the acquired funds’ fees and expenses; (ii) compensation of the Independent Trustees; and (iii) certain other expenses such as extraordinary items. The expense ratio in the prospectus may differ from the actual expense ratio for the period disclosed within this report. The expense ratio shown in the prospectus is based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050. See the Benchmark Descriptions at the end of this report for a description of the Composite Index.
23
Harbor Target Retirement 2055 Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value and Cost in Thousands
EQUITY FUNDS—89.4% | |||
Shares | Value | ||
8,375 | Harbor Capital Appreciation Fund | $ 908 | |
99,948 | Harbor Diversified International All Cap Fund | 1,360 | |
14,932 | Harbor Global Leaders Fund | 558 | |
28,599 | Harbor International Fund | 1,360 | |
59,195 | Harbor International Growth Fund | 1,360 | |
73,005 | Harbor Large Cap Value Fund | 1,602 | |
51,082 | Harbor Mid Cap Growth Fund | 717 | |
42,347 | Harbor Mid Cap Value Fund | 1,060 | |
33,563 | Harbor Small Cap Growth Fund | 649 | |
17,360 | Harbor Small Cap Value Fund | 784 | |
15,138 | Harbor Strategic Growth Fund | 454 | |
TOTAL EQUITY FUNDS | |||
(Cost $8,058) | 10,812 | ||
FIXED INCOME FUNDS—10.6% | |||
| Shares | Value | |
58,625 | Harbor Bond Fund | $ 706 | |
58,075 | Harbor High-Yield Bond Fund | 577 | |
TOTAL FIXED INCOME FUNDS | |||
(Cost $1,283) | 1,283 | ||
TOTAL INVESTMENTS—100.0% | |||
(Cost $9,341) | 12,095 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0% | — | ||
TOTAL NET ASSETS—100.0% | $12,095 |
AFFILIATED TRANSACTIONS
The Underlying Funds are considered to be affiliated with the Fund. The following table shows investment transactions and earnings from investments in the affiliated funds during the period November 1, 2020 through April 30, 2021.
Underlying Funds | Beginning Balance as of 11/01/2020 (000s) | Purchases of Affiliated Funds (000s) | Sales of Affiliated Funds (000s) | Change in Net Unrealized Gain/(Loss) from Affiliated Funds (000s) | Net Realized Gain/(Loss) | Investment Income from Affiliated Funds (000s) | ||||||||
Sales of Affiliated Funds (000s) | Distributions Received from Affiliated Funds (000s) | |||||||||||||
Harbor Bond Fund | $ 431 | $ 338 | $ (46) | $ (18) | $ 1 | $ 4 | $ 8 | |||||||
Harbor Capital Appreciation Fund | 650 | 284 | (99) | 35 | 38 | 88 | — | |||||||
Harbor Diversified International All Cap Fund | 982 | 202 | (149) | 313 | 12 | — | 11 | |||||||
Harbor Global Leaders Fund | 404 | 134 | (26) | 38 | 8 | 36 | — | |||||||
Harbor High-Yield Bond Fund | 350 | 256 | (42) | 12 | 1 | — | 14 | |||||||
Harbor International Fund | 983 | 237 | (157) | 333 | (36) | — | 12 | |||||||
Harbor International Growth Fund | 987 | 250 | (88) | 183 | 28 | — | 7 | |||||||
Harbor Large Cap Value Fund | 1,160 | 226 | (132) | 312 | 36 | 37 | 5 | |||||||
Harbor Mid Cap Growth Fund | 518 | 205 | (62) | 31 | 25 | 81 | — | |||||||
Harbor Mid Cap Value Fund | 762 | 155 | (225) | 357 | 11 | — | 21 | |||||||
Harbor Small Cap Growth Fund | 469 | 137 | (69) | 99 | 13 | 39 | — | |||||||
Harbor Small Cap Value Fund | 569 | 107 | (130) | 206 | 32 | — | 2 | |||||||
Harbor Strategic Growth Fund | 325 | 84 | (33) | 68 | 10 | 11 | 2 | |||||||
Total | $8,590 | $2,615 | $(1,258) | $1,969 | $179 | $296 | $ 82 |
The accompanying notes are an integral part of the Financial Statements.
24
Harbor Target Retirement 2060 Fund
Fund Summary —April 30, 2021 (Unaudited)
Fund Summary —April 30, 2021 (Unaudited)
Asset Allocation (% of investments)
FUND PERFORMANCE
TOTAL RETURNS For the periods ended 04/30/2021 | Unannualized | 1 Year | 5 Years | Annualized | Inception Date | |||||||||
6 Months | Life of Fund | |||||||||||||
Harbor Target Retirement 2060 Fund | ||||||||||||||
Institutional Class | 29.22% | 54.25% | N/A | 24.44% | 11/01/2019 | |||||||||
Comparative Indices | ||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond | -1.52% | -0.27% | N/A | 3.04% | — | |||||||||
MSCI EAFE (ND) | 28.84 | 39.88 | N/A | 12.96 | — | |||||||||
Russell 3000® | 31.08 | 50.92 | N/A | 27.83 | — | |||||||||
Composite Index 2060 | 30.40 | 48.09 | N/A | 20.66 | — |
As stated in the Fund’s prospectus dated March 1, 2021, the expense ratio was 0.78%. The Adviser has contractually agreed to limit the Fund’s operating expenses to: (i) the amount of the acquired funds’ fees and expenses; (ii) compensation of the Independent Trustees; and (iii) certain other expenses such as extraordinary items. The expense ratio in the prospectus may differ from the actual expense ratio for the period disclosed within this report. The expense ratio shown in the prospectus is based on the prior fiscal year, adjusted to reflect changes, if any, in contractual arrangements that occurred prior to the date of the prospectus (or supplement thereto, if applicable).
Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborfunds.com or by calling 800-422-1050. See the Benchmark Descriptions at the end of this report for a description of the Composite Index.
25
Harbor Target Retirement 2060 Fund
Portfolio of Investments—April 30, 2021 (Unaudited)
Portfolio of Investments—April 30, 2021 (Unaudited)
Value and Cost in Thousands
EQUITY FUNDS—93.0% | |||
Shares | Value | ||
891 | Harbor Capital Appreciation Fund | $ 97 | |
10,619 | Harbor Diversified International All Cap Fund | 145 | |
1,596 | Harbor Global Leaders Fund | 60 | |
3,039 | Harbor International Fund | 144 | |
6,289 | Harbor International Growth Fund | 144 | |
7,777 | Harbor Large Cap Value Fund | 171 | |
5,409 | Harbor Mid Cap Growth Fund | 76 | |
4,495 | Harbor Mid Cap Value Fund | 112 | |
3,552 | Harbor Small Cap Growth Fund | 69 | |
1,841 | Harbor Small Cap Value Fund | 83 | |
1,614 | Harbor Strategic Growth Fund | 48 | |
TOTAL EQUITY FUNDS | |||
(Cost $991) | 1,149 | ||
FIXED INCOME FUNDS—7.0% | |||
| Shares | Value | |
3,970 | Harbor Bond Fund | $ 48 | |
3,929 | Harbor High-Yield Bond Fund | 39 | |
TOTAL FIXED INCOME FUNDS | |||
(Cost $87) | 87 | ||
TOTAL INVESTMENTS—100.0% | |||
(Cost $1,078) | 1,236 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0% | — | ||
TOTAL NET ASSETS—100.0% | $1,236 |
AFFILIATED TRANSACTIONS
The Underlying Funds are considered to be affiliated with the Fund. The following table shows investment transactions and earnings from investments in the affiliated funds during the period November 1, 2020 (inception) through April 30, 2021.
Underlying Funds | Beginning Balance as of 11/01/2020 (000s) | Purchases of Affiliated Funds (000s) | Sales of Affiliated Funds (000s) | Change in Net Unrealized Gain/(Loss) from Affiliated Funds (000s) | Investment Income from Affiliated Funds (000s) | |||||||||
Sales of Affiliated Funds (000s) | Distributions Received from Affiliated Funds (000s) | |||||||||||||
Harbor Bond Fund | $ 23 | $ 34 | $ (8) | $ (1) | $— | $— | $ 1 | |||||||
Harbor Capital Appreciation Fund | 46 | 65 | (20) | — | 6 | 7 | — | |||||||
Harbor Diversified International All Cap Fund | 68 | 83 | (32) | 17 | 9 | — | 1 | |||||||
Harbor Global Leaders Fund | 28 | 39 | (11) | 1 | 3 | 3 | — | |||||||
Harbor High-Yield Bond Fund | 18 | 27 | (7) | 1 | — | — | 1 | |||||||
Harbor International Fund | 68 | 84 | (32) | 15 | 9 | — | 1 | |||||||
Harbor International Growth Fund | 68 | 88 | (28) | 6 | 10 | — | — | |||||||
Harbor Large Cap Value Fund | 80 | 97 | (35) | 20 | 9 | 3 | — | |||||||
Harbor Mid Cap Growth Fund | 36 | 51 | (16) | (1) | 6 | 6 | — | |||||||
Harbor Mid Cap Value Fund | 53 | 61 | (33) | 20 | 11 | — | 2 | |||||||
Harbor Small Cap Growth Fund | 32 | 43 | (16) | 4 | 6 | 3 | — | |||||||
Harbor Small Cap Value Fund | 39 | 47 | (23) | 12 | 8 | — | — | |||||||
Harbor Strategic Growth Fund | 23 | 28 | (9) | 4 | 2 | 1 | — | |||||||
Total | $582 | $747 | $(270) | $ 98 | $ 79 | $ 23 | $ 6 |
The accompanying notes are an integral part of the Financial Statements.
26
Harbor Target Retirement Funds
StatementS of Assets and Liabilities—April 30, 2021 (Unaudited)
StatementS of Assets and Liabilities—April 30, 2021 (Unaudited)
(All amounts in thousands, except per share amounts)
Harbor Target Retirement Income Fund | Harbor Target Retirement 2020 Fund | Harbor Target Retirement 2025 Fund | Harbor Target Retirement 2030 Fund | Harbor Target Retirement 2035 Fund | Harbor Target Retirement 2040 Fund | Harbor Target Retirement 2045 Fund | Harbor Target Retirement 2050 Fund | Harbor Target Retirement 2055 Fund | Harbor Target Retirement 2060 Fund | |||||||||||
ASSETS | ||||||||||||||||||||
Investments, at identified cost | $17,886 | $21,808 | $21,032 | $32,297 | $20,768 | $32,251 | $17,953 | $28,134 | $ 9,341 | $1,078 | ||||||||||
Investments in affiliated funds, at value | $19,016 | $23,715 | $23,381 | $37,140 | $24,667 | $39,835 | $22,517 | $36,494 | $12,095 | $1,236 | ||||||||||
Receivables for: | ||||||||||||||||||||
Investments in affiliated funds sold | 10 | — | 16 | — | 2 | — | — | — | — | — | ||||||||||
Capital shares sold | — | 12 | — | 39 | — | 23 | 39 | 53 | 91 | 9 | ||||||||||
Total Assets | 19,026 | 23,727 | 23,397 | 37,179 | 24,669 | 39,858 | 22,556 | 36,547 | 12,186 | 1,245 | ||||||||||
LIABILITIES | ||||||||||||||||||||
Payables for: | ||||||||||||||||||||
Investments in affiliated funds purchased | — | 12 | — | 39 | — | 23 | 39 | 53 | 91 | 9 | ||||||||||
Capital shares reacquired | 10 | — | 16 | — | 2 | — | — | — | — | — | ||||||||||
Total Liabilities | 10 | 12 | 16 | 39 | 2 | 23 | 39 | 53 | 91 | 9 | ||||||||||
NET ASSETS | $19,016 | $23,715 | $23,381 | $37,140 | $24,667 | $39,835 | $22,517 | $36,494 | $12,095 | $1,236 | ||||||||||
Net Assets Consist of: | ||||||||||||||||||||
Paid-in capital | $17,735 | $21,425 | $20,678 | $32,218 | $20,856 | $32,301 | $18,068 | $27,849 | $ 9,343 | $ 993 | ||||||||||
Total distributable earnings/(loss) | 1,281 | 2,290 | 2,703 | 4,922 | 3,811 | 7,534 | 4,449 | 8,645 | 2,752 | 243 | ||||||||||
$19,016 | $23,715 | $23,381 | $37,140 | $24,667 | $39,835 | $22,517 | $36,494 | $12,095 | $1,236 | |||||||||||
NET ASSET VALUE PER SHARE BY CLASS | ||||||||||||||||||||
Institutional Class | ||||||||||||||||||||
Net assets | $19,016 | $23,715 | $23,381 | $37,140 | $24,667 | $39,835 | $22,517 | $36,494 | $12,095 | $1,236 | ||||||||||
Shares of beneficial interest1 | 1,923 | 2,260 | 1,736 | 3,754 | 1,543 | 3,932 | 1,282 | 3,135 | 817 | 92 | ||||||||||
Net asset value per share2 | $ 9.89 | $ 10.49 | $ 13.47 | $ 9.89 | $ 15.99 | $ 10.13 | $ 17.56 | $ 11.64 | $ 14.81 | $13.44 |
1 | Par value $0.01 (unlimited authorizations) |
2 | Per share amounts can be recalculated to the amounts disclosed herein when total net assets and shares of beneficial interest are not rounded to thousands. |
The accompanying notes are an integral part of the Financial Statements.
28
Harbor Target Retirement Funds
StatementS of Operations—Period Ended April 30, 2021 (Unaudited)
StatementS of Operations—Period Ended April 30, 2021 (Unaudited)
(All amounts in thousands)
Harbor Target Retirement Income Fund | Harbor Target Retirement 2020 Fund | Harbor Target Retirement 2025 Fund | Harbor Target Retirement 2030 Fund | Harbor Target Retirement 2035 Fund | Harbor Target Retirement 2040 Fund | Harbor Target Retirement 2045 Fund | Harbor Target Retirement 2050 Fund | Harbor Target Retirement 2055 Fund | Harbor Target Retirement 2060 Fund | |
Investment Income | ||||||||||
Dividends from affiliated funds | $ 251 | $ 320 | $ 309 | $ 434 | $ 269 | $ 378 | $ 194 | $ 302 | $ 82 | $ 6 |
Net Investment Income/(Loss) | 251 | 320 | 309 | 434 | 269 | 378 | 194 | 302 | 82 | 6 |
Realized and Change in Net Unrealized Gain/(Loss) on Investment Transactions | ||||||||||
Net realized gain/(loss) on: | ||||||||||
Sale of affiliated funds | 588 | 1,124 | 1,230 | 1,222 | 663 | 689 | 385 | 832 | 179 | 79 |
Distributions received from affiliated funds | 283 | 396 | 430 | 664 | 495 | 868 | 496 | 899 | 296 | 23 |
Change in net unrealized appreciation/(depreciation) on: | ||||||||||
Affiliated funds | 191 | 421 | 864 | 2,430 | 2,258 | 4,761 | 2,975 | 5,343 | 1,969 | 98 |
Net gain/(loss) on investment transactions | 1,062 | 1,941 | 2,524 | 4,316 | 3,416 | 6,318 | 3,856 | 7,074 | 2,444 | 200 |
Net Increase/(Decrease) in Net Assets Resulting from Operations | $1,313 | $2,261 | $2,833 | $4,750 | $3,685 | $6,696 | $4,050 | $7,376 | $2,526 | $206 |
The accompanying notes are an integral part of the Financial Statements.
29
Harbor Target Retirement Funds
Statements of Changes In Net Assets
Statements of Changes In Net Assets
(All amounts in thousands)
Harbor Target Retirement Income Fund | Harbor Target Retirement 2020 Fund | Harbor Target Retirement 2025 Fund | Harbor Target Retirement 2030 Fund | ||||||||
November 1, 2020 through April 30 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | ||||
INCREASE/(DECREASE) IN NET ASSETS | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||
Operations: | |||||||||||
Net investment income/(loss) | $ 251 | $ 530 | $ 320 | $ 635 | $ 309 | $ 558 | $ 434 | $ 788 | |||
Net realized gain/(loss) on sale of affiliated funds | 588 | (46) | 1,124 | (37) | 1,230 | (285) | 1,222 | (85) | |||
Realized gain distributions received from affiliated funds | 283 | 143 | 396 | 246 | 430 | 258 | 664 | 457 | |||
Change in net unrealized appreciation/(depreciation) on affiliated funds | 191 | 514 | 421 | 688 | 864 | 877 | 2,430 | 1,143 | |||
Net increase/(decrease) in assets resulting from operations | 1,313 | 1,141 | 2,261 | 1,532 | 2,833 | 1,408 | 4,750 | 2,303 | |||
Distributions to Shareholders | |||||||||||
Institutional Class | (620) | (535) | (1,493) | (1,009) | (1,453) | (1,350) | (2,442) | (2,233) | |||
Total distributions to shareholders | (620) | (535) | (1,493) | (1,009) | (1,453) | (1,350) | (2,442) | (2,233) | |||
Net Increase/(Decrease) Derived from Capital Share Transactions | (2,418) | 2,694 | (833) | (1,486) | (64) | 1,915 | 4,364 | (480) | |||
Net increase/(decrease) in net assets | (1,725) | 3,300 | (65) | (963) | 1,316 | 1,973 | 6,672 | (410) | |||
Net Assets | |||||||||||
Beginning of period | 20,741 | 17,441 | 23,780 | 24,743 | 22,065 | 20,092 | 30,468 | 30,878 | |||
End of period | $19,016 | $20,741 | $23,715 | $23,780 | $23,381 | $22,065 | $37,140 | $30,468 |
The accompanying notes are an integral part of the Financial Statements.
31
Harbor Target Retirement 2035 Fund | Harbor Target Retirement 2040 Fund | Harbor Target Retirement 2045 Fund | Harbor Target Retirement 2050 Fund | Harbor Target Retirement 2055 Fund | Harbor Target Retirement 2060 Fund | |||||||||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | |||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||
$ 269 | $ 474 | $ 378 | $ 599 | $ 194 | $ 308 | $ 302 | $ 466 | $ 82 | $ 103 | $ 6 | $ 2 | |||||
663 | 54 | 689 | 116 | 385 | (175) | 832 | 65 | 179 | (220) | 79 | (11) | |||||
495 | 352 | 868 | 553 | 496 | 314 | 899 | 600 | 296 | 163 | 23 | 2 | |||||
2,258 | 713 | 4,761 | 1,118 | 2,975 | 987 | 5,343 | 1,103 | 1,969 | 644 | 98 | 60 | |||||
3,685 | 1,593 | 6,696 | 2,386 | 4,050 | 1,434 | 7,376 | 2,234 | 2,526 | 690 | 206 | 53 | |||||
(1,776) | (1,534) | (2,506) | (2,674) | (1,175) | (1,462) | (2,085) | (2,860) | (458) | (483) | (15) | (1) | |||||
(1,776) | (1,534) | (2,506) | (2,674) | (1,175) | (1,462) | (2,085) | (2,860) | (458) | (483) | (15) | (1) | |||||
2,655 | 100 | 4,392 | 3,305 | 1,786 | 2,914 | 2,621 | 3,516 | 1,437 | 2,200 | 463 | 530 | |||||
4,564 | 159 | 8,582 | 3,017 | 4,661 | 2,886 | 7,912 | 2,890 | 3,505 | 2,407 | 654 | 582 | |||||
20,103 | 19,944 | 31,253 | 28,236 | 17,856 | 14,970 | 28,582 | 25,692 | 8,590 | 6,183 | 582 | — | |||||
$24,667 | $20,103 | $39,835 | $31,253 | $22,517 | $17,856 | $36,494 | $28,582 | $12,095 | $8,590 | $1,236 | $582 |
32
Harbor Target Retirement Funds
Statements of Changes in Net Assets—Capital Stock Activity
Statements of Changes in Net Assets—Capital Stock Activity
(All amounts in thousands)
Harbor Target Retirement Income Fund | Harbor Target Retirement 2020 Fund | Harbor Target Retirement 2025 Fund | Harbor Target Retirement 2030 Fund | ||||||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | ||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||
AMOUNT ($) | |||||||||||
Institutional Class | |||||||||||
Net proceeds from sale of shares | $ 806 | $ 6,474 | $ 1,767 | $ 3,363 | $ 3,006 | $ 5,108 | $ 4,749 | $ 4,092 | |||
Reinvested distributions | 620 | 535 | 1,493 | 1,009 | 1,453 | 1,350 | 2,442 | 2,233 | |||
Cost of shares reacquired | (3,844) | (4,315) | (4,093) | (5,858) | (4,523) | (4,543) | (2,827) | (6,805) | |||
Net increase/(decrease) in net assets | $(2,418) | $ 2,694 | $ (833) | $(1,486) | $ (64) | $ 1,915 | $ 4,364 | $ (480) | |||
SHARES | |||||||||||
Institutional Class | |||||||||||
Shares sold | 82 | 691 | 168 | 344 | 226 | 415 | 486 | 461 | |||
Shares issued due to reinvestment of distributions | 63 | 58 | 146 | 104 | 112 | 111 | 259 | 252 | |||
Shares reacquired | (390) | (469) | (390) | (606) | (340) | (380) | (293) | (764) | |||
Net increase/(decrease) in shares outstanding | (245) | 280 | (76) | (158) | (2) | 146 | 452 | (51) |
The accompanying notes are an integral part of the Financial Statements.
33
Harbor Target Retirement 2035 Fund | Harbor Target Retirement 2040 Fund | Harbor Target Retirement 2045 Fund | Harbor Target Retirement 2050 Fund | Harbor Target Retirement 2055 Fund | Harbor Target Retirement 2060 Fund | |||||||||||
November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | November 1, 2020 through April 30, 2021 | November 1, 2019 through October 31, 2020 | |||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||
$ 2,431 | $ 3,724 | $ 3,004 | $ 4,956 | $ 2,351 | $ 3,759 | $ 2,604 | $ 4,044 | $1,774 | $ 2,753 | $ 710 | $ 721 | |||||
1,776 | 1,534 | 2,506 | 2,674 | 1,175 | 1,462 | 2,085 | 2,860 | 458 | 483 | 15 | 1 | |||||
(1,552) | (5,158) | (1,118) | (4,325) | (1,740) | (2,307) | (2,068) | (3,388) | (795) | (1,036) | (262) | (192) | |||||
$ 2,655 | $ 100 | $ 4,392 | $ 3,305 | $ 1,786 | $ 2,914 | $ 2,621 | $ 3,516 | $1,437 | $ 2,200 | $ 463 | $ 530 | |||||
154 | 264 | 307 | 577 | 138 | 265 | 235 | 434 | 127 | 245 | 57 | 74 | |||||
118 | 109 | 264 | 309 | 72 | 100 | 194 | 299 | 34 | 42 | 1 | — | |||||
(100) | (365) | (114) | (498) | (103) | (158) | (186) | (368) | (56) | (92) | (21) | (19) | |||||
172 | 8 | 457 | 388 | 107 | 207 | 243 | 365 | 105 | 195 | 37 | 55 |
34
Harbor Target Retirement Funds Financial Highlights
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR TARGET RETIREMENT INCOME FUND
Institutional Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 9.57 | $ 9.24 | $ 8.80 | $ 9.25 | $ 8.93 | $ 9.19 |
Income from Investment Operations | ||||||
Net investment income/(loss)a | 0.12 | 0.25 | 0.25 | 0.28 | 0.22 | 0.25 |
Net realized and unrealized gain/(loss) on investments | 0.50 | 0.33 | 0.62 | (0.38) | 0.40 | 0.08 |
Total from investment operations | 0.62 | 0.58 | 0.87 | (0.10) | 0.62 | 0.33 |
Less Distributions | ||||||
Dividends from net investment income | (0.18) | (0.25) | (0.27) | (0.29) | (0.27) | (0.29) |
Distributions from net realized capital gains | (0.12) | — | (0.16) | (0.06) | (0.03) | (0.30) |
Total distributions | (0.30) | (0.25) | (0.43) | (0.35) | (0.30) | (0.59) |
Net asset value end of period | 9.89 | 9.57 | 9.24 | 8.80 | 9.25 | 8.93 |
Net assets end of period (000s) | $19,016 | $20,741 | $17,441 | $12,561 | $13,746 | $13,805 |
Ratios and Supplemental Data (%) | ||||||
Total return | 6.58% d | 6.37% | 10.31% | (1.14)% | 7.17% | 3.91% |
Ratio of total expenses to average net assetsb | — | — | — | — | — | — |
Ratio of net investment income to average net assetsb | 2.56 e | 2.63 | 2.85 | 3.13 | 2.46 | 2.87 |
Portfolio turnoverc | 10 d | 53 | 67 | 28 | 16 | 26 |
HARBOR TARGET RETIREMENT 2020 FUND
Institutional Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 10.18 | $ 9.92 | $ 9.50 | $ 9.90 | $ 9.29 | $ 9.94 |
Income from Investment Operations | ||||||
Net investment income/(loss)a | 0.13 | 0.26 | 0.25 | 0.28 | 0.23 | 0.26 |
Net realized and unrealized gain/(loss) on investments | 0.82 | 0.39 | 0.73 | (0.40) | 0.73 | 0.04 |
Total from investment operations | 0.95 | 0.65 | 0.98 | (0.12) | 0.96 | 0.30 |
Less Distributions | ||||||
Dividends from net investment income | (0.29) | (0.27) | (0.28) | (0.28) | (0.24) | (0.32) |
Distributions from net realized capital gains | (0.35) | (0.12) | (0.28) | — | (0.11) | (0.63) |
Total distributions | (0.64) | (0.39) | (0.56) | (0.28) | (0.35) | (0.95) |
Net asset value end of period | 10.49 | 10.18 | 9.92 | 9.50 | 9.90 | 9.29 |
Net assets end of period (000s) | $23,715 | $23,780 | $24,743 | $25,554 | $27,742 | $25,419 |
Ratios and Supplemental Data (%) | ||||||
Total return | 9.46% d | 6.74% | 11.04% | (1.29)% | 10.77% | 3.56% |
Ratio of total expenses to average net assetsb | — | — | — | — | — | — |
Ratio of net investment income to average net assetsb | 2.55 e | 2.61 | 2.69 | 2.89 | 2.44 | 2.83 |
Portfolio turnoverc | 19 d | 56 | 64 | 31 | 29 | 33 |
See page 39 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
35
HARBOR TARGET RETIREMENT 2025 FUND
Institutional Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 12.70 | $ 12.62 | $ 12.21 | $ 12.76 | $ 11.78 | $ 12.32 |
Income from Investment Operations | ||||||
Net investment income/(loss)a | 0.17 | 0.32 | 0.31 | 0.37 | 0.29 | 0.31 |
Net realized and unrealized gain/(loss) on investments | 1.43 | 0.56 | 1.03 | (0.57) | 1.12 | 0.05 |
Total from investment operations | 1.60 | 0.88 | 1.34 | (0.20) | 1.41 | 0.36 |
Less Distributions | ||||||
Dividends from net investment income | (0.36) | (0.33) | (0.38) | (0.35) | (0.28) | (0.37) |
Distributions from net realized capital gains | (0.47) | (0.47) | (0.55) | — | (0.15) | (0.53) |
Total distributions | (0.83) | (0.80) | (0.93) | (0.35) | (0.43) | (0.90) |
Net asset value end of period | 13.47 | 12.70 | 12.62 | 12.21 | 12.76 | 11.78 |
Net assets end of period (000s) | $23,381 | $22,065 | $20,092 | $17,651 | $21,218 | $14,293 |
Ratios and Supplemental Data (%) | ||||||
Total return | 12.89% d | 7.26% | 12.09% | (1.63)% | 12.38% | 3.39% |
Ratio of total expenses to average net assetsb | — | — | — | — | — | — |
Ratio of net investment income to average net assetsb | 2.64 e | 2.65 | 2.57 | 2.92 | 2.42 | 2.69 |
Portfolio turnoverc | 23 d | 63 | 61 | 36 | 24 | 25 |
HARBOR TARGET RETIREMENT 2030 FUND
Institutional Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 9.23 | $ 9.21 | $ 8.84 | $ 9.25 | $ 8.60 | $ 9.19 |
Income from Investment Operations | ||||||
Net investment income/(loss)a | 0.12 | 0.22 | 0.21 | 0.24 | 0.20 | 0.21 |
Net realized and unrealized gain/(loss) on investments | 1.28 | 0.45 | 0.77 | (0.38) | 0.96 | 0.01 |
Total from investment operations | 1.40 | 0.67 | 0.98 | (0.14) | 1.16 | 0.22 |
Less Distributions | ||||||
Dividends from net investment income | (0.26) | (0.24) | (0.25) | (0.25) | (0.21) | (0.26) |
Distributions from net realized capital gains | (0.48) | (0.41) | (0.36) | (0.02) | (0.30) | (0.55) |
Total distributions | (0.74) | (0.65) | (0.61) | (0.27) | (0.51) | (0.81) |
Net asset value end of period | 9.89 | 9.23 | 9.21 | 8.84 | 9.25 | 8.60 |
Net assets end of period (000s) | $37,140 | $30,468 | $30,878 | $27,973 | $28,618 | $24,634 |
Ratios and Supplemental Data (%) | ||||||
Total return | 15.54% d | 7.62% | 12.21% | (1.57)% | 14.18% | 2.96% |
Ratio of total expenses to average net assetsb | — | — | — | — | — | — |
Ratio of net investment income to average net assetsb | 2.54 e | 2.54 | 2.41 | 2.62 | 2.30 | 2.54 |
Portfolio turnoverc | 18 d | 57 | 46 | 31 | 29 | 31 |
The accompanying notes are an integral part of the Financial Statements.
36
Harbor Target Retirement Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR TARGET RETIREMENT 2035 FUND
Institutional Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 14.67 | $ 14.64 | $ 13.86 | $ 14.44 | $ 12.93 | $ 13.56 |
Income from Investment Operations | ||||||
Net investment income/(loss)a | 0.18 | 0.33 | 0.28 | 0.33 | 0.28 | 0.27 |
Net realized and unrealized gain/(loss) on investments | 2.42 | 0.79 | 1.36 | (0.58) | 1.75 | 0.04 |
Total from investment operations | 2.60 | 1.12 | 1.64 | (0.25) | 2.03 | 0.31 |
Less Distributions | ||||||
Dividends from net investment income | (0.37) | (0.34) | (0.35) | (0.33) | (0.28) | (0.35) |
Distributions from net realized capital gains | (0.91) | (0.75) | (0.51) | — | (0.24) | (0.59) |
Total distributions | (1.28) | (1.09) | (0.86) | (0.33) | (0.52) | (0.94) |
Net asset value end of period | 15.99 | 14.67 | 14.64 | 13.86 | 14.44 | 12.93 |
Net assets end of period (000s) | $24,667 | $20,103 | $19,944 | $15,124 | $15,005 | $11,496 |
Ratios and Supplemental Data (%) | ||||||
Total return | 18.26% d | 7.98% | 12.83% | (1.79)% | 16.31% | 2.70% |
Ratio of total expenses to average net assetsb | — | — | — | — | — | — |
Ratio of net investment income to average net assetsb | 2.34 e | 2.34 | 2.05 | 2.26 | 2.06 | 2.17 |
Portfolio turnoverc | 15 d | 62 | 35 | 29 | 26 | 26 |
HARBOR TARGET RETIREMENT 2040 FUND
Institutional Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 8.99 | $ 9.15 | $ 8.85 | $ 9.30 | $ 8.42 | $ 9.05 |
Income from Investment Operations | ||||||
Net investment income/(loss)a | 0.10 | 0.17 | 0.15 | 0.18 | 0.15 | 0.17 |
Net realized and unrealized gain/(loss) on investments | 1.75 | 0.55 | 0.90 | (0.34) | 1.30 | (0.01) |
Total from investment operations | 1.85 | 0.72 | 1.05 | (0.16) | 1.45 | 0.16 |
Less Distributions | ||||||
Dividends from net investment income | (0.20) | (0.20) | (0.20) | (0.19) | (0.17) | (0.20) |
Distributions from net realized capital gains | (0.51) | (0.68) | (0.55) | (0.10) | (0.40) | (0.59) |
Total distributions | (0.71) | (0.88) | (0.75) | (0.29) | (0.57) | (0.79) |
Net asset value end of period | 10.13 | 8.99 | 9.15 | 8.85 | 9.30 | 8.42 |
Net assets end of period (000s) | $39,835 | $31,253 | $28,236 | $24,050 | $24,940 | $19,448 |
Ratios and Supplemental Data (%) | ||||||
Total return | 21.18% d | 8.15% | 13.43% | (1.84)% | 18.26% | 2.36% |
Ratio of total expenses to average net assetsb | — | — | — | — | — | — |
Ratio of net investment income to average net assetsb | 2.07 e | 2.04 | 1.77 | 1.90 | 1.78 | 2.03 |
Portfolio turnoverc | 10 d | 53 | 28 | 30 | 21 | 30 |
See page 39 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
37
HARBOR TARGET RETIREMENT 2045 FUND
Institutional Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 15.20 | $ 15.46 | $ 14.69 | $ 15.43 | $13.51 | $14.25 |
Income from Investment Operations | ||||||
Net investment income/(loss)a | 0.16 | 0.28 | 0.24 | 0.23 | 0.21 | 0.21 |
Net realized and unrealized gain/(loss) on investments | 3.23 | 0.94 | 1.56 | (0.49) | 2.42 | 0.01 |
Total from investment operations | 3.39 | 1.22 | 1.80 | (0.26) | 2.63 | 0.22 |
Less Distributions | ||||||
Dividends from net investment income | (0.32) | (0.31) | (0.29) | (0.28) | (0.22) | (0.27) |
Distributions from net realized capital gains | (0.71) | (1.17) | (0.74) | (0.20) | (0.49) | (0.69) |
Total distributions | (1.03) | (1.48) | (1.03) | (0.48) | (0.71) | (0.96) |
Net asset value end of period | 17.56 | 15.20 | 15.46 | 14.69 | 15.43 | 13.51 |
Net assets end of period (000s) | $22,517 | $17,856 | $14,970 | $12,410 | $9,863 | $7,211 |
Ratios and Supplemental Data (%) | ||||||
Total return | 22.83% d | 8.21% | 13.48% | (1.83)% | 20.37% | 1.91% |
Ratio of total expenses to average net assetsb | — | — | — | — | — | — |
Ratio of net investment income to average net assetsb | 1.89 e | 1.93 | 1.62 | 1.49 | 1.50 | 1.58 |
Portfolio turnoverc | 13 d | 46 | 29 | 22 | 32 | 24 |
HARBOR TARGET RETIREMENT 2050 FUND
Institutional Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 9.88 | $ 10.17 | $ 9.81 | $ 10.42 | $ 9.23 | $ 10.39 |
Income from Investment Operations | ||||||
Net investment income/(loss)a | 0.10 | 0.17 | 0.12 | 0.13 | 0.12 | 0.12 |
Net realized and unrealized gain/(loss) on investments | 2.37 | 0.66 | 1.08 | (0.33) | 1.81 | (0.03) |
Total from investment operations | 2.47 | 0.83 | 1.20 | (0.20) | 1.93 | 0.09 |
Less Distributions | ||||||
Dividends from net investment income | (0.19) | (0.18) | (0.17) | (0.16) | (0.13) | (0.17) |
Distributions from net realized capital gains | (0.52) | (0.94) | (0.67) | (0.25) | (0.61) | (1.08) |
Total distributions | (0.71) | (1.12) | (0.84) | (0.41) | (0.74) | (1.25) |
Net asset value end of period | 11.64 | 9.88 | 10.17 | 9.81 | 10.42 | 9.23 |
Net assets end of period (000s) | $36,494 | $28,582 | $25,692 | $23,391 | $22,821 | $18,728 |
Ratios and Supplemental Data (%) | ||||||
Total return | 25.64% d | 8.55% | 13.92% | (2.06)% | 22.40% | 1.51% |
Ratio of total expenses to average net assetsb | — | — | — | — | — | — |
Ratio of net investment income to average net assetsb | 1.78 e | 1.76 | 1.28 | 1.20 | 1.27 | 1.34 |
Portfolio turnoverc | 13 d | 47 | 25 | 22 | 33 | 24 |
The accompanying notes are an integral part of the Financial Statements.
38
Harbor Target Retirement Funds Financial Highlights—Continued
Selected Data for a Share Outstanding for the Periods Presented
Selected Data for a Share Outstanding for the Periods Presented
HARBOR TARGET RETIREMENT 2055 FUND
Institutional Class | ||||||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |||||
2020 | 2019 | 2018 | 2017 | 2016 | ||
(Unaudited) | ||||||
Net asset value beginning of period | $ 12.06 | $11.94 | $11.39 | $11.97 | $10.02 | $10.08 |
Income from Investment Operations | ||||||
Net investment income/(loss)a | 0.11 | 0.16 | 0.10 | 0.11 | 0.10 | 0.11 |
Net realized and unrealized gain/(loss) on investments | 3.27 | 0.87 | 1.34 | (0.37) | 2.17 | 0.01 |
Total from investment operations | 3.38 | 1.03 | 1.44 | (0.26) | 2.27 | 0.12 |
Less Distributions | ||||||
Dividends from net investment income | (0.20) | (0.18) | (0.16) | (0.16) | (0.12) | (0.14) |
Distributions from net realized capital gains | (0.43) | (0.73) | (0.73) | (0.16) | (0.20) | (0.04) |
Total distributions | (0.63) | (0.91) | (0.89) | (0.32) | (0.32) | (0.18) |
Net asset value end of period | 14.81 | 12.06 | 11.94 | 11.39 | 11.97 | 10.02 |
Net assets end of period (000s) | $12,095 | $8,590 | $6,183 | $3,756 | $2,728 | $1,240 |
Ratios and Supplemental Data (%) | ||||||
Total return | 28.49% d | 8.83% | 14.24% | (2.31)% | 23.34% | 1.38% |
Ratio of total expenses to average net assetsb | — | — | — | — | — | — |
Ratio of net investment income to average net assetsb | 1.52 e | 1.44 | 0.90 | 0.91 | 0.95 | 1.13 |
Portfolio turnoverc | 12 d | 36 | 14 | 29 | 32 | 33 |
HARBOR TARGET RETIREMENT 2060 FUND
Institutional Class | ||
6-Month Period Ended April 30, 2021 | Year Ended October 31, | |
2020 f | ||
(Unaudited) | ||
Net asset value beginning of period | $10.60 | $10.00 |
Income from Investment Operations | ||
Net investment income/(loss)a | 0.08 | 0.06 |
Net realized and unrealized gain/(loss) on investments | 2.99 | 0.67 |
Total from investment operations | 3.07 | 0.73 |
Less Distributions | ||
Dividends from net investment income | (0.16) | (0.13) |
Distributions from net realized capital gains | (0.07) | — |
Total distributions | (0.23) | (0.13) |
Net asset value end of period | 13.44 | 10.60 |
Net assets end of period (000s) | $1,236 | $ 582 |
Ratios and Supplemental Data (%) | ||
Total returnb | 29.22% d | 7.32% |
Ratio of total expenses to average net assetsb | — | — |
Ratio of net investment income to average net assetsb | 1.33 e | 0.60 |
Portfolio turnoverc | 30 d | 77 |
a | Amounts are based on average daily shares outstanding during the period. |
b | Ratios of income and expenses to average net assets represents the expenses paid by the Fund but does not include the acquired fund fees and expenses from underlying funds. |
c | Amounts do not include the activity of the underlying funds. |
d | Unannualized |
e | Annualized |
f | For the period November 1, 2019 (inception) through October 31, 2020 |
The accompanying notes are an integral part of the Financial Statements.
39
Harbor Target Retirement Funds
Notes to Financial Statements—April 30, 2021 (Unaudited)
Notes to Financial Statements—April 30, 2021 (Unaudited)
Note 1—Organizational Matters
Harbor Funds (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as an open-end management investment company. As of April 30, 2021, the Trust consists of 36 separate portfolios. The portfolios covered by this report are: Harbor Target Retirement Income Fund, Harbor Target Retirement 2020 Fund, Harbor Target Retirement 2025 Fund, Harbor Target Retirement 2030 Fund, Harbor Target Retirement 2035 Fund, Harbor Target Retirement 2040 Fund, Harbor Target Retirement 2045 Fund, Harbor Target Retirement 2050 Fund, Harbor Target Retirement 2055 Fund, and Harbor Target Retirement 2060 Fund (each individually referred to as a “Fund” and collectively referred to as the “Funds” or “Target Retirement Funds”). The Funds invest in a combination of other funds of the Trust (the “Underlying Funds”). Harbor Capital Advisors, Inc. (the “Adviser” or “Harbor Capital”) is the investment adviser for the Funds and the Underlying Funds. The Underlying Funds are managed by subadvisers, none of which is affiliated with the Adviser.
The Funds currently offer one class of shares, designated as Institutional Class.
Note 2—Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. Each Fund follows the investment company reporting requirements under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), which includes the accounting and reporting guidelines under Accounting Standards Codification (“ASC”) Topic 946, Financial Services-Investment Companies. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.
Security Valuation
The holdings of each Target Retirement Fund consist entirely of Institutional Class shares of the Underlying Funds, which are valued at their respective net asset values.
Fair Value Measurements and Disclosures
Various inputs may be used to determine the value of each Fund’s investments, which are summarized in three broad categories defined as Level 1, Level 2, and Level 3. The inputs or methodologies used for valuing securities are not necessarily indicative of the risk associated with investing in those securities. The assignment of an investment to Levels 1, 2, or 3 is based on the lowest level of significant inputs used to determine its fair value.
Level 1– | Quoted prices in active markets for identical securities. |
Level 2– | Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). |
Level 3– | Significant unobservable inputs are used in situations where quoted prices or other observable inputs are not available or are deemed unreliable. Significant unobservable inputs may include each Fund’s own assumptions. |
Each Fund used observable inputs in its valuation methodologies whenever they were available and deemed reliable. At April 30, 2021, all investments held by each Fund (as disclosed in the Portfolio of Investments) were classified as Level 1. There were no Level 3 investments at April 30, 2021 or October 31, 2020.
Description of the Underlying Funds
In pursuing its investment objectives and strategies, each of the Underlying Funds is permitted to engage in a wide range of investment practices. Further information about the Underlying Funds is contained in the Target Retirement Funds’ prospectus and statement of additional information, as well as the prospectus of each of the Underlying Funds. The accounting policies of each of the Underlying Funds are disclosed in each Underlying Fund’s respective shareholder report. Because each Fund invests in the Underlying Funds, shareholders of each Fund will be affected by the investment practices of the Underlying Funds in direct proportion to the amount of assets each Fund allocates to the Underlying Funds.
40
Harbor Target Retirement Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
The Funds do not invest in the Underlying Funds for the purpose of exercising management of control; however, investments by the Funds may represent a significant portion of an Underlying Fund’s net assets. As of April 30, 2021, each Fund held less than 25% of the outstanding shares of any Underlying Fund.
Investment Transactions and Income
Securities transactions are accounted for on the trade date (the date the order to buy or sell is executed). Income and capital gain distributions received from the Underlying Funds are recorded on the ex-dividend date. Gains and losses on securities sold are determined on the basis of identified cost.
Expenses
Expenses incurred by the Trust are charged directly to the Fund that incurred such expense whenever possible. With respect to expenses incurred by any two or more Harbor Funds where amounts cannot be identified on a fund by fund basis, such expenses are generally allocated in proportion to the average net assets or the number of shareholders of each Fund.
Distribution to Shareholders
Distributions on Fund shares are recorded on the ex-dividend date.
Taxes
Each Fund is treated as a separate entity for U.S. federal tax purposes. Each Fund’s policy is to meet the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) applicable to regulated investment companies and to distribute to its shareholders all of its taxable income within the prescribed time. It is also the intention of each Fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code. Therefore, no provision has been made for U.S. federal taxes on income, capital gains or unrealized appreciation of securities held or excise taxes on income and capital gains.
Management has analyzed each Fund’s tax positions for all open tax years (in particular, U.S. federal income tax returns for the tax years ended October 31, 2017–2019), including all positions expected to be taken upon filing the 2020 tax return, in all material jurisdictions where the Funds operate, and has concluded that no provision for income tax is required in any Fund’s financial statements. The Funds will recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statements of Operations.
Note 3—FEES AND OTHER Transactions with Affiliates
Investment Adviser
Harbor Capital is a wholly owned subsidiary of ORIX Corporation. Harbor Capital is the Funds’ investment adviser and is also responsible for administrative and other services. The Funds do not pay any fees for the services of Harbor Capital.
The Funds have entered into an advisory agreement with Harbor Capital. Pursuant to this agreement, Harbor Capital pays all expenses of each Fund, excluding: (i) the amount of acquired funds’ fees and expenses; (ii) compensation of the Independent Trustees; and (iii) certain other expenses such as extraordinary items.
Distributor
Harbor Funds Distributors, Inc. (the “Distributor”), a wholly-owned subsidiary of Harbor Capital, is the distributor for Harbor Funds’ shares. The Funds do not pay any fees for the services of the Distributor.
Transfer Agent
Harbor Services Group, Inc. (“Harbor Services Group”), a wholly owned subsidiary of Harbor Capital, is the transfer and shareholder servicing agent for the Funds. The Funds do not pay any fees for the services of Harbor Services Group.
41
Harbor Target Retirement Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 3—FEES AND OTHER Transactions with Affiliates—Continued
Shareholders
As of April 30, 2021, Harbor Capital and its wholly owned subsidiaries collectively held the following shares of beneficial interest in each of the following Funds:
Number of Shares Owned by Harbor Capital and Subsidiaries | Percentage of Outstanding Shares | ||
Institutional Class | |||
Harbor Target Retirement 2025 Fund | 150 | 0.0% | |
Harbor Target Retirement 2030 Fund | 39,364 | 1.0 | |
Harbor Target Retirement 2035 Fund | 28,377 | 1.8 | |
Harbor Target Retirement 2040 Fund | 5,713 | 0.1 | |
Harbor Target Retirement 2045 Fund | 5,535 | 0.4 | |
Harbor Target Retirement 2050 Fund | 17,329 | 0.6 | |
Harbor Target Retirement 2055 Fund | 7,925 | 1.0 |
Independent Trustees
The Independent Trustees received no remuneration from the Target Retirement Funds for the period ended April 30, 2021.
Indemnification
Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, in the normal course of business the Trust enters into contracts that provide general indemnities to other parties. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.
NOTE 4—TAX INFORMATION
The identified cost for federal income tax purposes of investments owned by each Fund and its respective gross unrealized appreciation and depreciation as of April 30, 2021 are as follows:
Identified Cost (000s) | Gross Unrealized | Net Unrealized Appreciation/ (Depreciation) (000s) | |||||
Appreciation (000s) | (Depreciation) (000s) | ||||||
Harbor Target Retirement Income Fund | $17,886 | $1,157 | $(27) | $1,130 | |||
Harbor Target Retirement 2020 Fund | 21,808 | 1,919 | (12) | 1,907 | |||
Harbor Target Retirement 2025 Fund | 21,032 | 2,438 | (89) | 2,349 | |||
Harbor Target Retirement 2030 Fund | 32,297 | 4,927 | (84) | 4,843 | |||
Harbor Target Retirement 2035 Fund | 20,768 | 3,985 | (86) | 3,899 | |||
Harbor Target Retirement 2040 Fund | 32,251 | 7,638 | (54) | 7,584 | |||
Harbor Target Retirement 2045 Fund | 17,953 | 4,605 | (41) | 4,564 | |||
Harbor Target Retirement 2050 Fund | 28,134 | 8,393 | (33) | 8,360 | |||
Harbor Target Retirement 2055 Fund | 9,341 | 2,760 | (6) | 2,754 | |||
Harbor Target Retirement 2060 Fund | 1,078 | 158 | — | 158 |
Note 5—Subsequent Events
Through the date the financial statements were issued, there were no subsequent events or transactions that would have materially impacted the financial statements or related disclosures as presented herein.
42
Harbor Target Retirement Funds
Fees and Expenses Example (Unaudited)
Fees and Expenses Example (Unaudited)
Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees (if any) and (2) ongoing costs, including management fees, distribution and service (12b-1) fees (if any), and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The expense ratios reflected below do not include the acquired fund fees and expenses from Underlying Funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period November 1, 2020 through April 30, 2021.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses for each share class. You may use the information in the respective class 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 of the respective class 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 of the table for each share class below provides information about hypothetical account values and hypothetical expenses based on the respective Fund/Class’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the respective Fund/Class’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 a Fund to 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 and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annualized Expense Ratios | Expenses Paid During Period* | Beginning Account Value November 1, 2020 | Ending Account Value April 30, 2021 | |||||
Harbor Target Retirement Income Fund | ||||||||
Institutional Class | 0.00% | |||||||
Actual | $0.00 | $1,000 | $1,065.80 | |||||
Hypothetical (5% return) | 0.00 | 1,000 | 1,024.79 | |||||
Harbor Target Retirement 2020 Fund | ||||||||
Institutional Class | 0.00% | |||||||
Actual | $0.00 | $1,000 | $1,094.60 | |||||
Hypothetical (5% return) | 0.00 | 1,000 | 1,024.79 | |||||
Harbor Target Retirement 2025 Fund | ||||||||
Institutional Class | 0.00% | |||||||
Actual | $0.00 | $1,000 | $1,128.90 | |||||
Hypothetical (5% return) | 0.00 | 1,000 | 1,024.79 | |||||
Harbor Target Retirement 2030 Fund | ||||||||
Institutional Class | 0.00% | |||||||
Actual | $0.00 | $1,000 | $1,155.40 | |||||
Hypothetical (5% return) | 0.00 | 1,000 | 1,024.79 | |||||
Harbor Target Retirement 2035 Fund | ||||||||
Institutional Class | 0.00% | |||||||
Actual | $0.00 | $1,000 | $1,182.60 | |||||
Hypothetical (5% return) | 0.00 | 1,000 | 1,024.79 |
43
Harbor Target Retirement Funds
Fees and Expenses Example—Continued
Fees and Expenses Example—Continued
Annualized Expense Ratios | Expenses Paid During Period* | Beginning Account Value November 1, 2020 | Ending Account Value April 30, 2021 | |||||
Harbor Target Retirement 2040 Fund | ||||||||
Institutional Class | 0.00% | |||||||
Actual | $0.00 | $1,000 | $1,211.80 | |||||
Hypothetical (5% return) | 0.00 | 1,000 | 1,024.79 | |||||
Harbor Target Retirement 2045 Fund | ||||||||
Institutional Class | 0.00% | |||||||
Actual | $0.00 | $1,000 | $1,228.30 | |||||
Hypothetical (5% return) | 0.00 | 1,000 | 1,024.79 | |||||
Harbor Target Retirement 2050 Fund | ||||||||
Institutional Class | 0.00% | |||||||
Actual | $0.00 | $1,000 | $1,256.40 | |||||
Hypothetical (5% return) | 0.00 | 1,000 | 1,024.79 | |||||
Harbor Target Retirement 2055 Fund | ||||||||
Institutional Class | 0.00% | |||||||
Actual | $0.00 | $1,000 | $1,284.90 | |||||
Hypothetical (5% return) | 0.00 | 1,000 | 1,024.79 | |||||
Harbor Target Retirement 2060 Fund | ||||||||
Institutional Class | 0.00% | |||||||
Actual | $0.00 | $1,000 | $1,292.20 | |||||
Hypothetical (5% return) | 0.00 | 1,000 | 1,024.79 |
* | Expenses are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
44
Harbor Target Retirement Funds
Additional Information (Unaudited)
Additional Information (Unaudited)
Proxy Voting
Harbor Funds has adopted Proxy Voting Policies and Procedures under which proxies relating to securities held by the Harbor funds are voted. In addition, Harbor Funds files Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. A description of Harbor Funds’ Proxy Voting Policies and Procedures and the proxy voting records (Form N-PX) are available (i) without charge, upon request, by calling Harbor Funds toll-free at 800-422-1050; (ii) on Harbor Funds’ website at harborfunds.com; and (iii) on the SEC’s website at sec.gov.
Householding
Harbor Funds has adopted a policy that allows it to send only one copy of a Fund’s prospectus, proxy materials, annual report and semi-annual report to certain shareholders residing at the same household. This reduces Fund expenses, which benefits you and other shareholders. If you need additional copies or do not want your mailings to be “householded,” please call the Shareholder Servicing Agent at 800-422-1050. Individual copies will be sent within thirty (30) days after the Shareholder Servicing Agent receives your instructions. Your consent to householding is considered valid until revoked.
Quarterly Portfolio Disclosures
The Funds file a complete portfolio of investments for their first and third fiscal quarters with the SEC as an exhibit to Form N-PORT. The Funds’ Form N-PORT exhibit is available (i) without charge, upon request, by calling Harbor Funds toll-free at 800-422-1050, (ii) on Harbor Funds’ website at harborfunds.com, and (iii) on the SEC’s website at sec.gov.
ADVISORY AGREEMENT APPROVALS
FACTORS CONSIDERED BY THE TRUSTEES IN APPROVING THE INVESTMENT ADVISORY AGREEMENTS OF THE TARGET RETIREMENT FUNDS
The Investment Company Act requires that the Investment Advisory Agreement of each Fund be approved initially, and following an initial two-year term, at least annually, by the Trust’s Board of Trustees (the “Board” or the “Trustees”), including a majority of the Independent Trustees voting separately.
At a meeting of the Board held on February 19 and 20, 2021 (the “Meeting”), the Board, including the Independent Trustees voting separately, considered and approved the continuation of an Investment Advisory Agreement with Harbor Capital, the adviser to each Fund, with respect to Harbor Target Retirement Income Fund, Harbor Target Retirement 2020 Fund, Harbor Target Retirement 2025 Fund, Harbor Target Retirement 2030 Fund, Harbor Target Retirement 2035 Fund, Harbor Target Retirement 2040 Fund, Harbor Target Retirement 2045 Fund, Harbor Target Retirement 2050 Fund, Harbor Target Retirement 2055 Fund and Harbor Target Retirement 2060 Fund (each, a “Target Retirement Fund” and collectively, the “Target Retirement Funds”), each a series of Harbor Funds.
In evaluating the Target Retirement Funds’ Investment Advisory Agreement, the Trustees reviewed materials furnished by Harbor Capital, including information about its affiliates, personnel, and operations, and also relied upon their knowledge of Harbor Capital resulting from their quarterly meetings, periodic telephonic meetings and other prior communications. In connection with the Meeting, which had been called for the purpose of considering the continuation of the Investment Advisory Agreement, and at prior meetings, the Trustees, including the Independent Trustees, requested and received materials and presentations relating to Fund performance and the services rendered by Harbor Capital. These materials included a comprehensive written response from Harbor Capital to a 15(c) request letter prepared by legal counsel to the Independent Trustees in consultation with the Independent Trustees.
At the Meeting, the Trustees, including all of the Independent Trustees voting separately, determined, in the exercise of their business judgment, that the terms of the Investment Advisory Agreement were fair and reasonable and approved the continuation for a one-year period of the Investment Advisory Agreement as being in the best interests of each Target Retirement Fund and its shareholders.
In their deliberations, the Independent Trustees had the opportunity to meet privately without representatives of Harbor Capital present and were represented throughout the process by legal counsel to the Independent Trustees and the Funds.
45
Harbor Target Retirement Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
In considering the approval of the Target Retirement Funds’ Investment Advisory Agreement, the Board, including the Independent Trustees, evaluated a number of factors it considered relevant to its determination. The Board did not identify any single factor as all-important or controlling, and individual Trustees did not necessarily attribute the same weight or importance to each factor.
Among the factors considered by the Trustees in approving the Investment Advisory Agreements were the following:
• | The nature, extent, and quality of the services provided by Harbor Capital, including the background, education, expertise and experience of the investment professionals of Harbor Capital providing services to the Target Retirement Funds; |
• | The favorable history, reputation, qualifications and background of Harbor Capital, as well as the qualifications of its personnel; |
• | The profitability of Harbor Capital with respect to each Target Retirement Fund; |
• | While no fees were proposed to be charged by Harbor Capital for investment advisory services, Harbor Capital would benefit from assets invested in the Target Retirement Funds in the form of increased advisory fees from the underlying Harbor Funds attributable to assets invested in such Funds by the Target Retirement Funds; |
• | The fees and expense ratios of each Target Retirement Fund relative to the quality of services provided and the fees and expense ratios of similar investment companies; |
• | The short- and long-term investment performance of each Target Retirement Fund in comparison to peer funds and the impact of the Target Retirement Funds’ glide paths on relative performance; |
• | Any “fall out” benefits that might inure to Harbor Capital and its affiliates as a result of their relationship with the Target Retirement Funds; |
• | Information received at regular meetings throughout the year related to Target Retirement Fund performance and services rendered by Harbor Capital; |
• | Information contained in materials provided by Harbor Capital and compiled by Broadridge as to the investment returns, advisory fees and total expense ratios of the Institutional Class of each Target Retirement Fund relative to those of other investment companies with similar objectives and strategies managed by other investment advisers, consisting both of a peer group of funds as well as a broader universe of funds compiled by Broadridge; and |
• | Information contained in materials compiled by Morningstar as to the investment returns of the Institutional Class of each Target Retirement Fund relative to those of other investment companies with similar objectives and strategies managed by other investment advisers. |
Nature, Extent, and Quality of Services
The Board evaluated the nature, extent, and quality of Harbor Capital’s services in light of the Board’s experience with Harbor Capital, as well as materials provided by Harbor Capital concerning the financial and other resources devoted by Harbor Capital to Harbor Funds, including the breadth and depth of experience and expertise of the investment, accounting, administrative, legal and compliance professionals dedicated to Harbor Funds’ operations. The Trustees determined that Harbor Capital has the expertise and resources to manage and operate effectively each Target Retirement Fund.
Investment Performance, Advisory Fees and Expense Ratios
In considering each Target Retirement Fund’s performance, advisory fees and expense ratio, the Trustees requested and received from Harbor Capital data compiled by Broadridge. The Trustees also received information explaining the methodology for compilation of certain of this information and what it was intended to demonstrate. In evaluating performance, the Trustees recognized that the performance data reflects a snapshot of a period as of a particular date and that selecting a different performance period could produce significantly different results.
Harbor Target Retirement Funds
The Trustees considered the Harbor Target Retirement Funds (inception date of January 2, 2009 for each Target Retirement Fund except the Target Retirement 2055 Fund, which had an inception date of November 1, 2014, and the Target Retirement 2060 Fund, which had an inception date of November 1, 2019). The Trustees noted that the performance analysis conducted by Broadridge included selected mixed-asset peer target funds with the same target year as the performance group and all mixed-asset target date funds with the same target year, with certain exclusions, as the performance universe.
46
Harbor Target Retirement Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
The Trustees considered the expertise of Harbor Capital in managing assets generally and in the target retirement asset class specifically, noting that Harbor Capital had maintained risk-based asset allocation options for retirement plans sponsored by Owens-Illinois and other clients for more than 15 years prior to the 2009 launch of these funds. The Trustees noted that the Target Retirement Funds totaled $227.8 million in assets, out of a firm-wide total of approximately $60.6 billion in assets under management as of December 31, 2020.
The Trustees noted that the glide paths for the Target Retirement Funds are generally more conservative compared to the peer funds in that the equity exposure for the Target Retirement Funds declines more steeply than it does in other target date fund families. The Trustees noted that starting in 2019, Harbor Capital had made changes to the target allocations for Harbor Target Retirement 2025-2040 Funds to increase the Funds’ equity exposure, although the Funds continue to be relatively conservative in their positioning. The Trustees considered how periods of strong equity market performance would negatively impact the performance of the Target Retirement Funds relative to their more aggressively positioned peer funds. The Trustees also considered the fact that Harbor Capital charged no management fee to the Funds and that Harbor Capital pays the expenses of each Target Retirement Fund with limited exceptions. The Trustees noted that Harbor Capital’s profitability in managing the Target Retirement Funds was negative.
Harbor Target Retirement Income Fund. The Trustees noted the Fund’s outperformance for the one-year period relative to its group median and for the one-, three- and five-year periods relative to the universe median and the Fund’s underperformance for the one- and three-year periods relative to its group median as of December 31, 2020, according to Broadridge. The actual total expense ratio of the Fund’s Institutional Class (including acquired fund fees and expenses) was above the peer group and peer universe medians.
Harbor Target Retirement 2020 Fund. The Trustees noted the Fund’s outperformance for the one- and three-year periods and underperformance for the five-year period relative to its group and universe medians as of December 31, 2020, according to Broadridge. The actual total expense ratio of the Fund’s Institutional Class (including acquired fund fees and expenses) was above the peer group and peer universe medians.
Harbor Target Retirement 2025 Fund. The Trustees noted the Fund’s outperformance for the one- and three-year periods relative to its group and universe medians as of December 31, 2020, according to Broadridge. The Trustees noted that the Fund underperformed for the five-year period relative to its universe median and the Fund’s performance was equal to its group median for the five-year period as of December 31, 2020, according to Broadridge. The actual total expense ratio of the Fund’s Institutional Class (including acquired fund fees and expenses) was above the peer group and peer universe medians.
Harbor Target Retirement 2030 Fund. The Trustees noted the Fund’s outperformance for the one- and three-year periods relative to its group and universe medians as of December 31, 2020, according to Broadridge. The Trustees noted that the Fund underperformed for the five-year period relative to its group and universe medians as of December 31, 2020, according to Broadridge. The actual total expense ratio of the Fund’s Institutional Class (including acquired fund fees and expenses) was above the peer group and peer universe medians.
Harbor Target Retirement 2035 Fund. The Trustees noted the Fund’s outperformance for the one- and three-year periods relative to its group and universe medians as of December 31, 2020, according to Broadridge. The Trustees noted that the Fund underperformed for the five-year period relative to its group and universe medians as of December 31, 2020, according to Broadridge. The actual total expense ratio of the Fund’s Institutional Class (including acquired fund fees and expenses) was above the peer group and peer universe medians.
Harbor Target Retirement 2040 Fund. The Trustees noted the Fund’s outperformance relative to its group and universe medians for the one-, three- and five-year periods ended December 31, 2020, according to Broadridge. The actual total expense ratio of the Fund’s Institutional Class (including acquired fund fees and expenses) was above the peer group and peer universe medians.
Harbor Target Retirement 2045 Fund. The Trustees noted the Fund’s outperformance relative to its group and universe medians for the one-, three- and five-year periods ended December 31, 2020, according to Broadridge. The actual total expense ratio of the Fund’s Institutional Class (including acquired fund fees and expenses) was above the peer group and peer universe medians.
Harbor Target Retirement 2050 Fund. The Trustees noted the Fund’s outperformance relative to its group and universe medians for the one-, three- and five-year periods ended December 31, 2020, according to Broadridge. The actual total expense ratio of the Fund’s Institutional Class (including acquired fund fees and expenses) was above the peer group and peer universe medians.
47
Harbor Target Retirement Funds
Additional Information—Continued
Additional Information—Continued
ADVISORY AGREEMENT APPROVALS—Continued
Harbor Target Retirement 2055 Fund. The Trustees noted the Fund’s outperformance relative to its group and universe medians for the one-, three- and five-year periods ended December 31, 2020, according to Broadridge. The actual total expense ratio of the Fund’s Institutional Class (including acquired fund fees and expenses) was above the peer group and peer universe medians.
Harbor Target Retirement 2060 Fund. The Trustees noted the Fund’s outperformance relative to its group and universe medians for the one-year and since inception periods ended December 31, 2020, according to Broadridge. The actual total expense ratio of the Fund’s Institutional Class (including acquired fund fees and expenses) was above the peer group and peer universe medians.
Adviser Fees and Profitability
The Trustees noted that Harbor Capital receives no fee from any of the Target Retirement Funds for Harbor Capital’s services in allocating the Target Retirement Funds’ assets among shares of the other Harbor Funds. They also noted that Harbor Capital benefits indirectly from assets invested in the Target Retirement Funds in the form of increased advisory and other fees from the underlying Harbor Funds attributable to assets invested in such funds by the Target Retirement Funds and that the Board considers the issue of Harbor Capital’s profitability in operating these underlying funds at least annually as part of its annual investment advisory contract review process with respect to all of the Harbor Funds. The Board also noted that Harbor Capital pays the expenses of each Target Retirement Fund with limited exceptions and that Harbor Capital was incurring a loss in operating the Target Retirement Funds.
Economies of Scale
As Harbor Capital does not receive a fee from any of the Target Retirement Funds for Harbor Capital’s services, the Trustees determined that it was unnecessary to consider economies of scale in this context. However, given that Harbor Capital benefits from assets invested in the Target Retirement Funds in the form of increased advisory fees from the underlying Harbor Funds, the Board noted that it considers the issue of breakpoints in the Harbor Funds’ fee schedules at least annually as part of its annual investment contract review process for all of the underlying Harbor Funds.
Review of Liqudity Risk Management Program
The Trust has adopted pursuant to Rule 22e-4 under the Investment Company Act (“Rule 22e-4”) a Liquidity Risk Management Program (the “Program”) for the Funds. The Board has designated a committee of Harbor Capital employees as the Program Administrator.
The Program is designed to assess and manage each Fund’s liquidity risk. For purposes of Rule 22e-4, “liquidity risk” is defined as the risk that a Fund is unable to satisfy redemption requests without significantly diluting remaining investors’ interests in the Fund. Components of the Program include: (i) periodic assessment of each Fund’s liquidity risk based on certain factors; (ii) classification of each Fund’s holdings into one of four liquidity categories (Highly Liquid, Moderately Liquid, Less Liquid and Illiquid) that reflect an estimate of liquidity under current market conditions; (iii) to the extent a Fund does not invest primarily in Highly Liquid investments, establishment of an appropriate Highly Liquid Investment Minimum (“HLIM”) (as defined in Rule 22e-4) for such Fund and ongoing monitoring of the Fund’s net assets to assess compliance with the Fund’s HLIM; (iv) a limit on the ability of a Fund to acquire illiquid investments in excess of 15% of the Fund’s net assets; and (v) periodic reporting to the Board.
At a meeting held on November 10, 2020, the Board of Trustees reviewed the operation and effectiveness of the Program for the period beginning October 1, 2019 and ending September 30, 2020 (the “period”). At the November 10, 2020 meeting, the Board reviewed a report prepared by, and received a presentation from, the Program Administrator regarding the operation of the Program, its adequacy, and the effectiveness of its implementation during the period. The Program Administrator’s report included, among other things, a review of: (i) the operation of the Program overall during the period, which included a period of increased market volatility related to the COVID-19 pandemic in the first half of 2020; (ii) the activities conducted by the Program Administrator with respect to the Program; (iii) the level of portfolio investments classified into each of the four liquidity categories and the services provided by the third-party vendor engaged by the Trust to facilitate such classification with respect to certain of the Funds; and (iv) the most recent liquidity risk assessment for the Funds conducted by the Program Administrator in accordance with Rule 22e-4. Based upon its review, the Program Administrator determined that the Program was adequate and effective in facilitating the Funds’ compliance with Rule 22e-4 during the period.
48
Benchmark Descriptions
Composite Index Income—The Composite Index Income is derived by applying the Harbor Target Retirement Income Fund’s (the “Income Fund”) target asset allocation to the results of the underlying funds’ benchmarks: Russell 1000® Growth Index, Russell Midcap® Growth Index, Russell 2000® Growth Index, Russell 1000® Value Index, Russell Midcap® Value Index, Russell 2000® Value Index, MSCI EAFE (ND) Index, MSCI All Country World Ex. U.S. (ND) Index (with respect to Harbor International Growth Fund weightings, prior to May 28, 2013, the MSCI EAFE Growth (ND) Index), MSCI All Country World (ND) Index, ICE BofA U.S. High Yield Index (H0A0), ICE BofA U.S. Non-Distressed High Yield Index (with respect to the Harbor High-Yield Bond Fund; prior to March 31, 2015, the ICE BofA U.S. High Yield Index (H0A0) was this fund’s benchmark and a component of the Composite Index), Bloomberg Barclays U.S. Aggregate Bond Index, Bloomberg Barclays U.S. TIPS Index, ICE BofA U.S. 3-Month Treasury Bill Index. The weights of the Composite Index Income match the Income Fund’s historical target asset allocation and are adjusted as changes are made to this asset allocation. Refer to the Target Retirement Funds Prospectus for the Income Fund’s target asset allocation. This unmanaged index does not reflect fees and expenses and is not available for direct investment.
Composite Index 2020—The Composite Index 2020 is derived by applying the Harbor Target Retirement 2020 Fund’s (the “2020 Fund”) target asset allocation to the results of the underlying funds’ benchmarks: Russell 1000® Growth Index, Russell Midcap® Growth Index, Russell 2000® Growth Index, Russell 1000® Value Index, Russell Midcap® Value Index, Russell 2000® Value Index, MSCI EAFE (ND) Index, MSCI All Country World Ex. U.S. (ND) Index (with respect to Harbor International Growth Fund weightings, prior to May 28, 2013, the MSCI EAFE Growth (ND) Index), MSCI All Country World (ND) Index, ICE BofA U.S. High Yield Index (H0A0), ICE BofA U.S. Non-Distressed High Yield Index (with respect to the Harbor High-Yield Bond Fund; prior to March 31, 2015, the ICE BofA U.S. High Yield Index (H0A0) was this fund’s benchmark and a component of the Composite Index), Bloomberg Barclays U.S. Aggregate Bond Index, Bloomberg Barclays U.S. TIPS Index, ICE BofA U.S. 3-Month Treasury Bill Index. The weights of the Composite Index 2020 match the 2020 Fund’s historical target asset allocation and are adjusted as changes are made to this asset allocation. Refer to the Target Retirement Funds Prospectus for the 2020 Fund’s target asset allocation. This unmanaged index does not reflect fees and expenses and is not available for direct investment.
Composite Index 2025—The Composite Index 2025 is derived by applying the Harbor Target Retirement 2025 Fund’s (the “2025 Fund”) target asset allocation to the results of the underlying funds’ benchmarks: Russell 1000® Growth Index, Russell Midcap® Growth Index, Russell 2000® Growth Index, Russell 1000® Value Index, Russell Midcap® Value Index, Russell 2000® Value Index, MSCI EAFE (ND) Index, MSCI All Country World Ex. U.S. (ND) Index (with respect to Harbor International Growth Fund weightings, prior to May 28, 2013, the MSCI EAFE Growth (ND) Index), MSCI All Country World (ND) Index, ICE BofA U.S. High Yield Index (H0A0), ICE BofA U.S. Non-Distressed High Yield Index (with respect to the Harbor High-Yield Bond Fund; prior to March 31, 2015, the ICE BofA U.S. High Yield Index (H0A0) was this fund’s benchmark and a component of the Composite Index), Bloomberg Barclays U.S. Aggregate Bond Index, Bloomberg Barclays U.S. TIPS Index. The weights of the Composite Index 2025 match the 2025 Fund’s historical target asset allocation and are adjusted as changes are made to this asset allocation. Refer to the Target Retirement Funds Prospectus for the 2025 Fund’s target asset allocation. This unmanaged index does not reflect fees and expenses and is not available for direct investment.
Composite Index 2030—The Composite Index 2030 is derived by applying the Harbor Target Retirement 2030 Fund’s (the “2030 Fund”) target asset allocation to the results of the underlying funds’ benchmarks: Russell 1000® Growth Index, Russell Midcap® Growth Index, Russell 2000® Growth Index, Russell 1000® Value Index, Russell Midcap® Value Index, Russell 2000® Value Index, MSCI EAFE (ND) Index, MSCI All Country World Ex. U.S. (ND) Index (with respect to Harbor International Growth Fund weightings, prior to May 28, 2013, the MSCI EAFE Growth (ND) Index), MSCI All Country World (ND) Index, ICE BofA U.S. High Yield Index (H0A0), ICE BofA U.S. Non-Distressed High Yield Index (with respect to the Harbor High-Yield Bond Fund; prior to March 31, 2015, the ICE BofA U.S. High Yield Index (H0A0) was this fund’s benchmark and a component of the Composite Index), Bloomberg Barclays U.S. Aggregate Bond Index, Bloomberg Barclays U.S. TIPS Index. The weights of the Composite Index 2030 match the 2030 Fund’s historical target asset allocation and are adjusted as changes are made to this asset allocation. Refer to the Target Retirement Funds Prospectus for the 2030 Fund’s target asset allocation. This unmanaged index does not reflect fees and expenses and is not available for direct investment.
Composite Index 2035—The Composite Index 2035 is derived by applying the Harbor Target Retirement 2035 Fund’s (the “2035 Fund”) target asset allocation to the results of the underlying funds’ benchmarks: Russell 1000® Growth Index, Russell Midcap® Growth Index, Russell 2000® Growth Index, Russell 1000® Value Index, Russell Midcap® Value Index, Russell 2000® Value Index, MSCI EAFE (ND) Index, MSCI All Country World Ex. U.S. (ND) Index (with respect to Harbor International Growth Fund weightings, prior to May 28, 2013, the MSCI EAFE Growth (ND) Index), MSCI All Country World (ND) Index, ICE BofA U.S. High Yield Index (H0A0), ICE BofA U.S. Non-Distressed High Yield Index (with respect to the Harbor High-Yield Bond Fund; prior to March 31, 2015, the ICE BofA U.S. High Yield Index (H0A0) was this fund’s benchmark and a component of the Composite Index), Bloomberg Barclays U.S. Aggregate Bond Index, Bloomberg Barclays U.S. TIPS Index. The weights
49
Benchmark Descriptions—Continued
of the Composite Index 2035 match the 2035 Fund’s historical target asset allocation and are adjusted as changes are made to this asset allocation. Refer to the Target Retirement Funds Prospectus for the 2035 Fund’s target asset allocation. This unmanaged index does not reflect fees and expenses and is not available for direct investment.
Composite Index 2040—The Composite Index 2040 is derived by applying the Harbor Target Retirement 2040 Fund’s (the “2040 Fund”) target asset allocation to the results of the underlying funds’ benchmarks: Russell 1000® Growth Index, Russell Midcap® Growth Index, Russell 2000® Growth Index, Russell 1000® Value Index, Russell Midcap® Value Index, Russell 2000® Value Index, MSCI EAFE (ND) Index, MSCI All Country World Ex. U.S. (ND) Index (with respect to Harbor International Growth Fund weightings, prior to May 28, 2013, the MSCI EAFE Growth (ND) Index), MSCI All Country World (ND) Index, ICE BofA U.S. High Yield Index (H0A0), ICE BofA U.S. Non-Distressed High Yield Index (with respect to the Harbor High-Yield Bond Fund; prior to March 31, 2015, the ICE BofA U.S. High Yield Index (H0A0) was this fund’s benchmark and a component of the Composite Index), Bloomberg Barclays U.S. Aggregate Bond Index. The weights of the Composite Index 2040 match the 2040 Fund’s historical target asset allocation and are adjusted as changes are made to this asset allocation. Refer to the Target Retirement Funds Prospectus for the 2040 Fund’s target asset allocation. This unmanaged index does not reflect fees and expenses and is not available for direct investment.
Composite Index 2045—The Composite Index 2045 is derived by applying the Harbor Target Retirement 2045 Fund’s (the “2045 Fund”) target asset allocation to the results of the underlying funds’ benchmarks: Russell 1000® Growth Index, Russell Midcap® Growth Index, Russell 2000® Growth Index, Russell 1000® Value Index, Russell Midcap® Value Index, Russell 2000® Value Index, MSCI EAFE (ND) Index, MSCI All Country World Ex. U.S. (ND) Index (with respect to Harbor International Growth Fund weightings, prior to May 28, 2013, the MSCI EAFE Growth (ND) Index), MSCI All Country World (ND) Index, ICE BofA U.S. High Yield Index (H0A0), ICE BofA U.S. Non-Distressed High Yield Index (with respect to the Harbor High-Yield Bond Fund; prior to March 31, 2015, the ICE BofA U.S. High Yield Index (H0A0) was this fund’s benchmark and a component of the Composite Index), Bloomberg Barclays U.S. Aggregate Bond Index. The weights of the Composite Index 2045 match the 2045 Fund’s historical target asset allocation and are adjusted as changes are made to this asset allocation. Refer to the Target Retirement Funds Prospectus for the 2045 Fund’s target asset allocation. This unmanaged index does not reflect fees and expenses and is not available for direct investment.
Composite Index 2050—The Composite Index 2050 is derived by applying the Harbor Target Retirement 2050 Fund’s (the “2050 Fund”) target asset allocation to the results of the underlying funds’ benchmarks: Russell 1000® Growth Index, Russell Midcap® Growth Index, Russell 2000® Growth Index, Russell 1000® Value Index, Russell Midcap® Value Index, Russell 2000® Value Index, MSCI EAFE (ND) Index, MSCI All Country World Ex. U.S. (ND) Index (with respect to Harbor International Growth Fund weightings, prior to May 28, 2013, the MSCI EAFE Growth (ND) Index), MSCI All Country World (ND) Index, ICE BofA U.S. High Yield Index (H0A0), Bloomberg Barclays U.S. Aggregate Bond Index. The weights of the Composite Index 2050 match the 2050 Fund’s historical target asset allocation and are adjusted as changes are made to this asset allocation. Refer to the Target Retirement Funds Prospectus for the 2050 Fund’s target asset allocation. This unmanaged index does not reflect fees and expenses and is not available for direct investment.
Composite Index 2055—The Composite Index 2055 is derived by applying the Harbor Target Retirement 2055 Fund’s (the “2055 Fund”) target asset allocation to the results of the underlying funds’ benchmarks: Russell 1000® Growth Index, Russell Midcap® Growth Index, Russell 2000® Growth Index, Russell 1000® Value Index, Russell Midcap® Value Index, Russell 2000® Value Index, MSCI EAFE (ND) Index, MSCI All Country World Ex. U.S. (ND) Index (with respect to Harbor International Growth Fund weightings, prior to May 28, 2013, the MSCI EAFE Growth (ND) Index), MSCI All Country World (ND) Index, ICE BofA U.S. High Yield Index (H0A0), Bloomberg Barclays U.S. Aggregate Bond Index. The weights of the Composite Index 2055 match the 2055 Fund’s historical target asset allocation and are adjusted as changes are made to this asset allocation. Refer to the Target Retirement Funds Prospectus for the 2055 Fund’s target asset allocation. This unmanaged index does not reflect fees and expenses and is not available for direct investment.
Composite Index 2060— The Composite Index 2060 is derived by applying the Harbor Target Retirement 2060 Fund’s (the “2060 Fund”) target asset allocation to the results of the underlying funds’ benchmarks: Russell 1000® Growth Index, Russell Midcap® Growth Index, Russell 2000® Growth Index, Russell 1000® Value Index, Russell Midcap® Value Index, Russell 2000® Value Index, MSCI EAFE (ND) Index, MSCI All Country World Ex. U.S. (ND) Index (with respect to Harbor International Growth Fund weightings, prior to May 28, 2013, the MSCI EAFE Growth (ND) Index), MSCI All Country World (ND) Index, ICE BofA U.S. High Yield Index (H0A0), Bloomberg Barclays U.S. Aggregate Bond Index. The weights of the Composite Index 2060 match the 2060 Fund’s historical target asset allocation and are adjusted as changes are made to this asset allocation. Refer to the Target Retirement Funds Prospectus for the 2060 Fund’s target asset allocation. This unmanaged index does not reflect fees and expenses and is not available for direct investment.
50
111 South Wacker Drive, 34th Floor | Chicago, IL 60606-4302 | 800-422-1050 | harborfunds.com |
Trustees & Officers
Charles F. McCain
Chairman, President & Trustee
Chairman, President & Trustee
Scott M. Amero
Trustee
Trustee
Donna J. Dean
Trustee
Trustee
Randall A. Hack
Trustee
Trustee
Robert Kasdin
Trustee
Trustee
Kathryn L. Quirk
Trustee
Trustee
Douglas J. Skinner
Trustee
Trustee
Ann M. Spruill
Trustee
Trustee
Erik D. Ojala
Chief Compliance Officer
Chief Compliance Officer
Anmarie S. Kolinski
Treasurer
Treasurer
Kristof M. Gleich
Vice President
Vice President
Gregg M. Boland
Vice President
Vice President
Diana R. Podgorny
Secretary
Secretary
Jodie L. Crotteau
Assistant Secretary
Assistant Secretary
Lana M. Lewandowski
AML Compliance Officer
& Assistant Secretary
AML Compliance Officer
& Assistant Secretary
Lora A. Kmieciak
Assistant Treasurer
Assistant Treasurer
John M. Paral
Assistant Treasurer
Assistant Treasurer
Investment Adviser
Harbor Capital Advisors, Inc.
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4400
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4400
Distributor
Harbor Funds Distributors, Inc.
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4600
111 South Wacker Drive, 34th Floor
Chicago, IL 60606-4302
312-443-4600
Shareholder Services
Harbor Services Group, Inc.
P.O. Box 804660
Chicago, IL 60680-4108
800-422-1050
P.O. Box 804660
Chicago, IL 60680-4108
800-422-1050
FD.SAR.TR.0421
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) | The Registrant has elected to include the schedule of investments in securities of unaffiliated issuers 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
There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees since the date of the Registrant’s prior report on Form N-CSR.
ITEM 11 – CONTROLS AND PROCEDURES
(a) | The Registrant’s Principal Executive and Principal Financial Officers concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the 1940 Act) are effective, based on the evaluation of these disclosure controls and procedures as of a date within 90 days of the filing of this report. |
(b) | There was no change 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 has materially affected, or is 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
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 June 22, 2021 on its behalf by the undersigned, thereunto duly authorized.
HARBOR FUNDS
By: /s/ Charles F. McCain
Charles F. McCain
Chairman, President and Trustee
(Principal Executive Officer)
Chairman, President and Trustee
(Principal Executive Officer)
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/ Charles F. McCain Charles F. McCain | Chairman, President and Trustee (Principal Executive Officer) | June 22, 2021 |
By: | /s/ Anmarie S. Kolinski Anmarie S. Kolinski | Treasurer (Principal Financial and Accounting Officer) | June 22, 2021 |
Exhibit Index
Number | Description | |
99.CERT1 | Certification for each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)). | |
99.CERT2 | Certification for each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)). | |
99.906CERT | Certification as required by Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350). |