UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
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: October 31
Date of reporting period: October 31, 2022
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):
Annual Report
Harbor Funds
October 31, 2022
Harbor Capital Appreciation Fund Harbor Convertible Securities Fund Harbor Core Bond Fund Harbor Core Plus Fund (formerly, Harbor Bond Fund) Harbor Disruptive Innovation Fund Harbor Diversified International All Cap Fund Harbor Emerging Markets Equity Fund Harbor Global Leaders Fund Harbor High-Yield Bond Fund Harbor International Fund Harbor International Growth Fund Harbor International Small Cap Fund Harbor Large Cap Value Fund Harbor Mid Cap Fund Harbor Mid Cap Value Fund Harbor Money Market Fund Harbor Overseas Fund Harbor Small Cap Growth Fund Harbor Small Cap Value Fund |
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This material is intended for the Funds’ shareholders. It may be distributed to prospective investors only if it is preceded or accompanied by the current prospectus. Prospective investors should carefully consider the investment objectives, risks, charges and expenses of a Harbor Fund before investing. To obtain a summary prospectus or prospectus for this and other information, visit harborcapital.com or call 800-422-1050. Read it carefully before investing.
Harbor Funds Distributors, Inc. is the Distributor of the Harbor Funds.
Harbor Capital Appreciation Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Jennison Associates LLC
Management’s Discussion of
Fund Performance
Fund Performance
MARKET REVIEW
Over the fiscal year, the investment backdrop shifted from one of stimulus to one of high inflation and tightening financial conditions. US equity markets began the period near all-time highs, but surprisingly high inflation spurred the Federal Reserve (the “Fed”) to embark on a tightening path that led to a spike in Treasury yields and a re-pricing of risk, which weighed heavily on higher-valuation, higher-growth stocks. These pressures persisted through the fiscal year, exacerbated by the Ukraine war and COVID-19 lockdowns in China, leading to widespread concerns around global growth. All of the major US stock indices registered significant losses over the period.
PERFORMANCE
Harbor Capital Appreciation Fund returned -36.03% (Retirement Class), -36.08% (Institutional Class), -36.23% (Administrative Class), and -36.31% (Investor Class) in the year ended October 31, 2022, while the Russell 1000® Growth Index, returned -24.60%. The S&P 500 Index returned -14.61%.
Most sectors in the growth benchmark experienced double-digit negative returns during the year. Energy, which has a small weight in the benchmark, was a significant exception, rising more than 60% over the fiscal year. Information Technology, Communication Services, and Consumer Discretionary were particularly challenging.
The strategy’s underperformance during the year reflects the market’s overall re-pricing of risk and a small number of fundamental disappointments. Holdings in information technology (IT) and internet media were the largest detractors. Specifically, Shopify, Netflix, and Snap released disappointing results, with elevated uncertainty around their growth outlooks. We exited the positions in Shopify and Snap during the period.
On the positive side, Eli Lilly and UnitedHealth added value, benefiting in part from the relative defensiveness of the healthcare sector. Schlumberger also posted positive returns over the year, on the back of strong energy trends.
We made adjustments to the portfolio during the year in response to elevated risk and lower growth expectations. Specifically, we reduced positions in companies that benefited disproportionately from the pandemic, as well as social media and select consumer names, and added to more economically-defensive positions in sectors like healthcare. That said, secular growth remains the driving force behind our holdings.
OUTLOOK & STRATEGY
Uncertainty around the near-term path of the economy remains elevated, and the Fed’s commitment to continued rate hikes suggests a challenging growth backdrop in the near term. Central banks outside the US are also tightening to tame inflation, and the dollar’s recent surge further clouds the global outlook.
Share price declines over the fiscal year reflect a combination of an increase in risk aversion and lower equity valuations in the face of higher interest rates. Slowing economic growth and possible recession are leading to lower revenue growth estimates and profit margin assumptions. We have, therefore, reduced earnings forecasts for a number of our holdings in the past few months.
While the past year was particularly challenging, we remain confident in the potential for the secular growth companies in which we invest to deliver superior results and generate strong returns for shareholders over the long term.
2
Harbor Capital Appreciation Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $50,000 INVESTMENT
For the period 11/01/2012 through 10/31/2022
The graph compares a $50,000 investment in the Institutional Class shares of the Fund with the performance of the Russell 1000® Growth Index and the S&P 500 Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | 10 Years | |||||
Harbor Capital Appreciation Fund | ||||||
Retirement Class1 | -36.03% | 9.96% | 13.86% | |||
Institutional Class | -36.08 | 9.88 | 13.81 | |||
Administrative Class | -36.23 | 9.60 | 13.53 | |||
Investor Class | -36.31 | 9.47 | 13.39 | |||
Comparative Indices | ||||||
Russell 1000® Growth | -24.60% | 12.59% | 14.69% | |||
S&P 500 | -14.61 | 10.44 | 12.79 |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.57% (Net) and 0.63% (Gross) (Retirement Class); 0.65% (Net) and 0.71% (Gross) (Institutional Class); 0.90% (Net) and 0.96% (Gross) (Administrative Class); and 1.01% (Net) and 1.07% (Gross) (Investor Class). The net expense ratios reflect a contractual management fee waiver effective through 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
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. 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 markets 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—October 31, 2022
Portfolio of Investments—October 31, 2022
SECTOR ALLOCATION (% of investments) - Unaudited
Portfolio of Investments
Value and Cost in Thousands
COMMON STOCKS—98.5% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—0.8% | |||
319,257 | Northrop Grumman Corp.* | $175,275 | |
AUTOMOBILES—7.9% | |||
7,546,935 | Tesla Inc.* | 1,717,230 | |
BIOTECHNOLOGY—1.6% | |||
1,083,276 | Vertex Pharmaceuticals Inc.* | 337,982 | |
CAPITAL MARKETS—3.2% | |||
882,259 | Goldman Sachs Group Inc. | 303,947 | |
2,402,690 | KKR & Co. Inc. | 116,843 | |
827,170 | S&P Global Inc. | 265,728 | |
686,518 | |||
ENERGY EQUIPMENT & SERVICES—2.0% | |||
8,220,151 | Schlumberger Ltd. | 427,694 | |
ENTERTAINMENT—1.5% | |||
759,421 | Netflix Inc.* | 221,660 | |
2,136,411 | Roblox Corp.* | 95,583 | |
317,243 | |||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—1.3% | |||
1,326,006 | American Tower Corp. | 274,735 | |
FOOD & STAPLES RETAILING—2.4% | |||
1,046,903 | Costco Wholesale Corp. | 525,022 | |
HEALTH CARE EQUIPMENT & SUPPLIES—2.0% | |||
1,100,679 | Abbott Laboratories | 108,901 | |
1,315,184 | Dexcom Inc.* | 158,848 | |
696,830 | Intuitive Surgical Inc.* | 171,748 | |
439,497 | |||
HEALTH CARE PROVIDERS & SERVICES—2.7% | |||
1,067,328 | UnitedHealth Group Inc. | 592,527 | |
HOTELS, RESTAURANTS & LEISURE—3.2% | |||
1,791,614 | Airbnb Inc.* | 191,541 | |
146,922 | Chipotle Mexican Grill Inc.* | 220,138 | |
1,754,921 | Marriott International Inc. | 280,980 | |
692,659 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
INTERACTIVE MEDIA & SERVICES—6.4% | |||
6,476,524 | Alphabet Inc. Class A* | $612,096 | |
6,237,846 | Alphabet Inc. Class C* | 590,474 | |
762,774 | Meta Platforms Inc.* | 71,060 | |
2,565,836 | ZoomInfo Technologies Inc.* | 114,257 | |
1,387,887 | |||
INTERNET & DIRECT MARKETING RETAIL—7.2% | |||
12,144,213 | Amazon.com Inc.* | 1,244,053 | |
363,348 | MercadoLibre Inc. (Argentina)* | 327,602 | |
1,571,655 | |||
IT SERVICES—9.1% | |||
215,097 | Adyen NV (Netherlands)*,1 | 307,072 | |
1,866,165 | Mastercard Inc. Class A | 612,438 | |
1,609,888 | Snowflake Inc.* | 258,065 | |
3,820,723 | Visa Inc. | 791,501 | |
1,969,076 | |||
LIFE SCIENCES TOOLS & SERVICES—1.9% | |||
1,625,872 | Danaher Corp. | 409,183 | |
MEDIA—0.7% | |||
2,948,232 | Trade Desk Inc.* | 156,964 | |
MULTILINE RETAIL—0.6% | |||
728,936 | Target Corp. | 119,728 | |
PERSONAL PRODUCTS—1.4% | |||
1,517,211 | Estée Lauder Companies Inc. | 304,186 | |
PHARMACEUTICALS—5.0% | |||
2,231,346 | Eli Lilly & Co. | 807,948 | |
2,587,418 | Novo Nordisk AS ADR (Denmark)2 | 281,615 | |
1,089,563 | |||
ROAD & RAIL—1.6% | |||
13,371,972 | Uber Technologies Inc.* | 355,293 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—6.0% | |||
519,998 | ASML Holding NV New York Registry Shares (Netherlands) | 245,658 | |
870,569 | Broadcom Inc. | 409,272 | |
4,704,025 | NVIDIA Corp. | 634,902 | |
1,289,832 |
4
Harbor Capital Appreciation Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
SOFTWARE—12.8% | |||
963,395 | Adobe Inc.* | $306,841 | |
1,283,940 | Atlassian Corp. plc (Australia)* | 260,293 | |
1,980,827 | CrowdStrike Holdings Inc.* | 319,310 | |
233,886 | HubSpot Inc.* | 69,361 | |
5,289,041 | Microsoft Corp. | 1,227,745 | |
3,687,796 | salesforce.com Inc.* | 599,599 | |
2,783,149 | |||
SPECIALTY RETAIL—4.2% | |||
1,197,166 | Home Depot Inc. | 354,517 | |
314,923 | O'Reilly Automotive Inc.* | 263,644 | |
4,117,053 | TJX Companies Inc. | 296,839 | |
915,000 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—7.3% | |||
10,287,609 | Apple Inc. | 1,577,502 | |
TEXTILES, APPAREL & LUXURY GOODS—4.8% | |||
979,933 | Lululemon Athletica Inc. (Canada)* | 322,437 | |
845,337 | LVMH Moet Hennessy Louis Vuitton SE (France) | 533,403 | |
1,995,040 | NIKE Inc. | 184,901 | |
1,040,741 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES—0.9% | |||
1,287,521 | T-Mobile US Inc.* | $195,137 | |
TOTAL COMMON STOCKS | |||
(Cost $14,400,909) | 21,351,278 | ||
PREFERRED STOCKS—0.6% | |||
(Cost $109,123) | |||
AUTOMOBILES—0.6% | |||
1,349,486 | Dr. Ing. h.c. F. Porsche AG (Germany)* | 138,031 | |
TOTAL INVESTMENTS—99.1% | |||
(Cost $14,510,032) | 21,489,309 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.9% | 194,799 | ||
TOTAL NET ASSETS—100.0% | $21,684,108 |
FAIR VALUE MEASUREMENTS
As of October 31, 2022, the investments in Adyen NV and LVMH Moet Hennessy Louis Vuitton SE (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 as of October 31, 2022 or 2021.
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. As of October 31, 2022, the aggregate value of these securities was $307,072 or 1% 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.
5
Harbor Convertible Securities Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Shenkman Capital Management, Inc.
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
During the fiscal year ended October 31, 2022, attention has relatively started to move away from the impact of a global pandemic towards risks of stagflation and elevated geopolitical tension around the world. Interest rates rose broadly this year: first on the long end, weighing on growth equities whose future cash flow streams are more sensitive to discount rates, and then on the front end as the Federal Reserve raised interest rates to fight inflation. The 10 year U.S. Treasury yield went from 1.56% to 4.05%, while the 2 year U.S. Treasury yield went from 0.50% to 4.49%, during the last twelve months.
The impacts from higher funding costs, continued inflationary operating cost pressures, and reduced demand expectations all intensified through the year. This has led to a widening of dispersion. During the fiscal year ended October 31, 2022, the S&P 500 was down -14.6%, but over 20% of its constituents were down more than 30%. Unlike last year where there was inconsistent equity style factor impact, this year generally saw some growth oriented companies and smaller sized companies underperform.
The slowing in convertible new issue continued this year, with total issuance of $39 billion down from $92 billion in the previous year. Despite the slowdown, we continue to believe the market opportunities are healthy and that we are able to actively manage our portfolio due to the wide breadth of opportunities in the secondary market.
Performance
Harbor Convertible Securities Fund returned -17.59% (Retirement Class), -17.62% (Institutional Class), -17.84% (Administrative Class), and -17.92 (Investor Class) in the year ended October 31, 2022, while the ICE BofA U.S. Convertible Ex Mandatory Index (the “Index”), returned -21.86%. Energy and Utilities were the only two sectors with positive returns, while all other sectors were negative.
This year the Fund’s performance benefited from both an underweight to the most equity like section of the marketplace (i.e., those convertibles trading with an investment premium of 100% or more) and from positioning and selection within the more bond like section (i.e., those convertibles with an investment premium less than 40%). During the fiscal year, the Fund’s average weighting in the over 100% investment premium bucket was 4.5% compared to the 16.8% weight of the Index. On an attribution basis, the Fund’s positioning in this segment benefited the Fund by 199 basis points of relative outperformance. The Fund’s average weight in the less than 40% investment premium bucket was 67.3% compared to the Index’s average weight of 58.0%. The Fund’s positioning in this segment benefited the Fund by 128 basis points.
The best performing industries in the Fund relative to the Index were Software and IT Services. In Software, the Fund benefited from strong security selection, with Box as the main contributor as we were overweight and the convert returned 3.7%, outperforming the Index. Box contributed 22 basis points to relative performance. Within IT Services, our positioning and active management within Block (formely, Square) convertible structure was the main contributor. The Fund’s average weight to this issuer was 1.12% compared to 1.17% for the Index, but the Fund’s holdings returned -40.2% compared to the Index’s holdings returning -54.2%. Block contributed 37 basis points to relative performance.
The worst performing industries in the Fund relative to the Index were Oil, Gas & Consumable Fuels and Biotechnology. In Oil, Gas & Consumable Fuels, Pioneer Natural Resources was the biggest detractor as we were underweight and the issuer returned 45.2% outperforming the Index. Pioneer Natural Resources detracted -22 basis points from performance. Within Biotechnology, the Fund did not own Global Blood Therapies, which was acquired by Pfizer during the year. The convert returned 95.0% and detracted 17 basis points from relative performance.
6
Harbor Convertible Securities Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $10,000 INVESTMENT
For the period 11/01/2012 through 10/31/2022
The graph compares a $10,000 investment in the Institutional Class shares of the Fund with the performance of the ICE BofA U.S. Convertible Ex Mandatory Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | 10 Years | |||||
Harbor Convertible Securities Fund | ||||||
Retirement Class1 | -17.59% | 6.18% | 6.03% | |||
Institutional Class | -17.62 | 6.10 | 5.97 | |||
Administrative Class | -17.84 | 5.79 | 5.69 | |||
Investor Class | -17.92 | 5.72 | 5.59 | |||
Comparative Index | ||||||
ICE BofA U.S. Convertible Ex Mandatory | -21.86% | 9.94% | 11.01% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.68% (Net) and 0.73% (Gross) (Retirement Class), 0.76% (Net) and 0.81% (Gross) (Institutional Class), 1.01% (Net) and 1.06% (Gross) (Administrative Class), and 1.12% (Net) and 1.17% (Gross) (Investor Class). The net expense ratios reflect a contractual management fee waiver effective through 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
Outlook & Strategy
Higher costs in the form of funding, labor, commodities, and logistics, combined with broader macro economic uncertainty, has led many businesses to focus more on expense management than revenue growth. We believe dispersion in performance of companies will continue to widen as executing in the current environment continues to get more difficult. With much of the market trading below par, the importance of credit underwriting remains even more important this year. Increased funding costs and lowered demand for new issuance has been a headwind to M&A deal formation, despite what we consider to be pockets of attractive valuation in the market. We continue to actively manage the portfolio, seeking balanced convertible securities with high quality credit profiles, which we believe can achieve favorable risk adjusted returns.
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.
7
Harbor Convertible Securities Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
SECTOR ALLOCATION (% of investments) - Unaudited
Portfolio of Investments
Principal Amounts, Value and Cost in Thousands
CONVERTIBLE BONDS—95.5% | |||
Principal Amount | Value | ||
AEROSPACE & DEFENSE—1.1% | |||
Parsons Corp. | |||
$ | 1,473 | 0.250%—08/15/2025 | $1,694 |
AIRLINES—3.0% | |||
Jetblue Airways Corp. | |||
1,807 | 0.500%—04/01/2026 | 1,347 | |
Southwest Airlines Co. | |||
1,509 | 1.250%—05/01/2025 | 1,861 | |
Spirit Airlines Inc. | |||
2,024 | 1.000%—05/15/2026 | 1,681 | |
4,889 | |||
AUTO COMPONENTS—1.5% | |||
LCI Industries | |||
1,507 | 1.125%—05/15/2026 | 1,324 | |
Patrick Industries Inc. | |||
1,460 | 1.750%—12/01/20281 | 1,075 | |
2,399 | |||
AUTOMOBILES—2.1% | |||
Ford Motor Co. | |||
2,015 | 0.000%—03/15/20262 | 2,035 | |
Winnebago Industries Inc. | |||
1,289 | 1.500%—04/01/2025 | 1,445 | |
3,480 | |||
BANKS—0.4% | |||
Bank of America Finance LLC MTN3 | |||
643 | 0.250%—05/01/2023 | 686 | |
BIOTECHNOLOGY—7.4% | |||
Alnylam Pharmaceuticals Inc. | |||
1,222 | 1.000%—09/15/20271 | 1,231 | |
BioMarin Pharmaceutical Inc. | |||
2,765 | 0.599%—08/01/2024 | 2,772 | |
Coherus Biosciences Inc. | |||
806 | 1.500%—04/15/2026 | 614 | |
Exact Sciences Corp. | |||
2,382 | 0.375%—03/15/2027 | 1,693 | |
441 | 1.000%—01/15/2025 | 402 | |
2,095 |
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
BIOTECHNOLOGY—Continued | |||
Halozyme Therapeutics Inc. | |||
$ | 939 | 0.250%—03/01/2027 | $844 |
827 | 1.000%—08/15/20281 | 871 | |
1,715 | |||
Ironwood Pharmaceuticals Inc. | |||
2,042 | 0.750%—06/15/2024 | 2,083 | |
451 | 1.500%—06/15/2026 | 467 | |
2,550 | |||
Qiagen NV | |||
1,200 | 0.000%—12/17/20272 | 1,082 | |
12,059 | |||
COMMUNICATIONS EQUIPMENT—1.3% | |||
Lumentum Holdings Inc. | |||
323 | 0.500%—12/15/2026 | 317 | |
2,190 | 0.500%—06/15/20281 | 1,846 | |
2,163 | |||
CONSUMER FINANCE—0.9% | |||
SoFi Technologies Inc. | |||
1,542 | 0.000%—10/15/20261,2 | 1,112 | |
Upstart Holdings Inc. | |||
596 | 0.250%—08/15/2026 | 329 | |
1,441 | |||
DIVERSIFIED CONSUMER SERVICES—1.2% | |||
Chegg Inc. | |||
596 | 0.125%—03/15/2025 | 519 | |
Stride Inc. | |||
1,635 | 1.125%—09/01/2027 | 1,483 | |
2,002 | |||
ELECTRIC UTILITIES—1.2% | |||
NRG Energy Inc. | |||
1,678 | 2.750%—06/01/2048 | 1,971 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—1.3% | |||
Insight Enterprises Inc. | |||
1,064 | 0.750%—02/15/2025 | 1,521 |
8
Harbor Convertible Securities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—Continued | |||
Itron Inc. | |||
$ | 734 | 0.000%—03/15/20262 | $592 |
2,113 | |||
ENTERTAINMENT—2.5% | |||
IMAX Corp. | |||
1,890 | 0.500%—04/01/2026 | 1,514 | |
Liberty Media Corp. | |||
1,129 | 2.250%—08/15/20271 | 1,044 | |
Live Nation Entertainment Inc. | |||
1,179 | 2.000%—02/15/2025 | 1,215 | |
Pandora Media LLC | |||
269 | 1.750%—12/01/2023 | 280 | |
4,053 | |||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—0.2% | |||
Redfin Corp. | |||
860 | 0.500%—04/01/2027 | 361 | |
FOOD PRODUCTS—0.7% | |||
Post Holdings Inc. | |||
1,129 | 2.500%—08/15/20271 | 1,179 | |
HEALTH CARE EQUIPMENT & SUPPLIES—7.0% | |||
CONMED Corp. | |||
1,681 | 2.250%—06/15/20271 | 1,477 | |
424 | 2.625%—02/01/2024 | 461 | |
1,938 | |||
Dexcom Inc. | |||
1,549 | 0.250%—11/15/2025 | 1,711 | |
Insulet Corp. | |||
993 | 0.375%—09/01/2026 | 1,274 | |
Integra Lifesciences Holdings Corp. | |||
2,718 | 0.500%—08/15/2025 | 2,536 | |
Novocure Ltd. | |||
1,327 | 0.000%—11/01/20252 | 1,140 | |
Nuvasive Inc. | |||
2,341 | 0.375%—03/15/2025 | 2,031 | |
Tandem Diabetes Care Inc. | |||
776 | 1.500%—05/01/20251 | 729 | |
11,359 | |||
HEALTH CARE PROVIDERS & SERVICES—0.4% | |||
Guardant Health Inc. | |||
1,007 | 0.000%—11/15/20272 | 717 | |
HEALTH CARE TECHNOLOGY—2.2% | |||
Allscripts Healthcare Solutions Inc. | |||
885 | 0.875%—01/01/2027 | 1,098 | |
Livongo Health Inc. | |||
2,284 | 0.875%—06/01/2025 | 1,980 | |
NextGen Healthcare Inc. | |||
404 | 3.750%—11/15/20271 | 426 | |
3,504 | |||
HOTELS, RESTAURANTS & LEISURE—5.2% | |||
Booking Holdings Inc. | |||
938 | 0.750%—05/01/2025 | 1,218 | |
DraftKings Inc. | |||
72 | 0.000%—03/15/20282 | 46 | |
Marriott Vacations Worldwide Corp. | |||
1,734 | 0.000%—01/15/20262 | 1,779 |
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
HOTELS, RESTAURANTS & LEISURE—Continued | |||
NCL Corp Ltd. | |||
$ | 2,230 | 1.125%—02/15/20271 | $1,712 |
Royal Caribbean Cruises Ltd. | |||
869 | 6.000%—08/15/20251 | 1,135 | |
The Cheesecake Factory Inc. | |||
604 | 0.375%—06/15/2026 | 498 | |
Vail Resorts Inc. | |||
2,235 | 0.000%—01/01/20262 | 1,989 | |
8,377 | |||
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS—1.1% | |||
Nextera Energy Partners LP | |||
1,801 | 0.000%—06/15/2024-11/15/20251,2 | 1,831 | |
INTERACTIVE MEDIA & SERVICES—4.2% | |||
IAC FinanceCo 2 Inc. | |||
686 | 0.875%—06/15/20261 | 597 | |
IAC FinanceCo 3 Inc. | |||
896 | 2.000%—01/15/20301 | 766 | |
J2 Global Inc. | |||
2,405 | 1.750%—11/01/20261 | 2,341 | |
Snap Inc. | |||
560 | 0.000%—05/01/20272 | 389 | |
1,488 | 0.125%—03/01/20281 | 984 | |
1,373 | |||
Tripadvisor Inc. | |||
2,103 | 0.250%—04/01/2026 | 1,681 | |
6,758 | |||
INTERNET & DIRECT MARKETING RETAIL—2.4% | |||
Etsy Inc. | |||
2,612 | 0.125%—10/01/2026-09/01/2027 | 2,495 | |
666 | 0.250%—06/15/2028 | 519 | |
3,014 | |||
Wayfair Inc. | |||
1,409 | 0.625%—10/01/2025 | 930 | |
3,944 | |||
IT SERVICES—6.7% | |||
Akamai Technologies Inc. | |||
762 | 0.125%—05/01/2025 | 821 | |
2,633 | 0.375%—09/01/2027 | 2,602 | |
3,423 | |||
Block Inc. | |||
2,706 | 0.125%—03/01/2025 | 2,522 | |
DigitalOcean Holdings Inc. | |||
1,095 | 0.000%—12/01/20261,2 | 806 | |
Euronet Worldwide Inc. | |||
1,257 | 0.750%—03/15/2049 | 1,170 | |
Okta Inc. | |||
145 | 0.125%—09/01/2025 | 122 | |
1,002 | 0.375%—06/15/2026 | 801 | |
923 | |||
Perficient Inc. | |||
1,972 | 0.125%—11/15/20261 | 1,485 | |
Shift4 Payments Inc. | |||
716 | 0.500%—08/01/2027 | 554 | |
10,883 |
9
Harbor Convertible Securities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
LEISURE PRODUCTS—0.6% | |||
Peloton Interactive Inc. | |||
$ | 1,416 | 0.000%—02/15/20262 | $1,020 |
MACHINERY—1.6% | |||
Greenbrier Cos. Inc. | |||
1,735 | 2.875%—04/15/2028 | 1,561 | |
John Bean Technologies Corp. | |||
1,299 | 0.250%—05/15/2026 | 1,109 | |
2,670 | |||
MEDIA—3.3% | |||
Cable One Inc. | |||
943 | 0.000%—03/15/20262 | 737 | |
Dish Network Corp. | |||
3,061 | 3.375%—08/15/2026 | 2,124 | |
Liberty Media Corp. | |||
251 | 1.375%—10/15/2023 | 322 | |
2,352 | 2.125%—03/31/20481 | 2,231 | |
2,553 | |||
5,414 | |||
MORTGAGE REAL ESTATE INVESTMENT TRUSTS (REITs)—1.0% | |||
Blackstone Mortgage Trust Inc. | |||
1,872 | 5.500%—03/15/2027 | 1,641 | |
PERSONAL PRODUCTS—0.4% | |||
Herbalife Nutrition Ltd. | |||
745 | 2.625%—03/15/2024 | 687 | |
PHARMACEUTICALS—1.5% | |||
Jazz Investments I Ltd. | |||
1,700 | 1.500%—08/15/2024 | 1,632 | |
671 | 2.000%—06/15/2026 | 753 | |
2,385 | |||
PROFESSIONAL SERVICES—0.7% | |||
FTI Consulting Inc. | |||
752 | 2.000%—08/15/2023 | 1,170 | |
REAL ESTATE MANAGEMENT & DEVELOPMENT—1.5% | |||
Redfin Corp. | |||
827 | 0.000%—10/15/20252 | 431 | |
Zillow Group Inc. | |||
495 | 1.375%—09/01/2026 | 497 | |
1,627 | 2.750%—05/15/2025 | 1,533 | |
2,030 | |||
2,461 | |||
ROAD & RAIL—0.5% | |||
Uber Technologies Inc. | |||
1,050 | 0.000%—12/15/20252 | 872 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—6.5% | |||
Enphase Energy Inc. | |||
1,408 | 0.000%—03/01/2026-03/01/20282 | 1,749 | |
MACOM Technology Solutions Holdings Inc. | |||
1,615 | 0.250%—03/15/2026 | 1,549 | |
Microchip Technology Inc. | |||
2,193 | 0.125%—11/15/2024 | 2,216 | |
ON Semiconductor Corp. | |||
734 | 0.000%—05/01/20272 | 965 | |
Silicon Laboratories Inc. | |||
791 | 0.625%—06/15/2025 | 897 |
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—Continued | |||
SolarEdge Technologies Inc. | |||
$ | 906 | 0.000%—09/15/20252 | $1,015 |
STMicroelectronics NV | |||
2,200 | 0.000%—08/04/20252 | 2,220 | |
10,611 | |||
SOFTWARE—22.3% | |||
Altair Engineering Inc. | |||
1,673 | 1.750%—06/15/20271 | 1,569 | |
Alteryx Inc. | |||
806 | 1.000%—08/01/2026 | 653 | |
Bentley Systems Inc. | |||
357 | 0.125%—01/15/2026 | 314 | |
357 | 0.375%—07/01/2027 | 280 | |
594 | |||
Blackline Inc. | |||
1,074 | 0.000%—03/15/20262 | 873 | |
1,347 | 0.125%—08/01/2024 | 1,365 | |
2,238 | |||
Box Inc. | |||
1,261 | 0.000%—01/15/20262 | 1,572 | |
Ceridian HCM Holding Inc. | |||
576 | 0.250%—03/15/2026 | 492 | |
Coupa Software Inc. | |||
1,265 | 0.125%—06/15/2025 | 1,083 | |
CyberArk Software Ltd. | |||
2,275 | 0.000%—11/15/20242 | 2,677 | |
Datadog Inc. | |||
880 | 0.125%—06/15/2025 | 1,005 | |
Dropbox Inc. | |||
3,078 | 0.000%—03/01/2026-03/01/20282 | 2,705 | |
Envestnet Inc. Co. | |||
2,421 | 0.750%—08/15/2025 | 2,070 | |
Five9 Inc. | |||
2,066 | 0.500%—06/01/2025 | 1,837 | |
InterDigital Inc. | |||
801 | 3.500%—06/01/20271 | 754 | |
Jamf Holding Corp | |||
1,224 | 0.125%—09/01/2026 | 1,008 | |
NICE Ltd. | |||
1,871 | 0.000%—09/15/20252 | 1,753 | |
Palo Alto Networks Inc. | |||
344 | 0.750%—07/01/2023 | 667 | |
Pegasystems Inc. | |||
1,746 | 0.750%—03/01/2025 | 1,463 | |
Q2 Holdings Inc. | |||
1,798 | 0.750%—06/01/2026 | 1,460 | |
Rapid7 Inc. | |||
1,533 | 0.250%—03/15/2027 | 1,216 | |
586 | 2.250%—05/01/2025 | 601 | |
1,817 | |||
Splunk Inc. | |||
3,632 | 1.125%—09/15/2025-06/15/2027 | 3,207 | |
Unity Software Inc. | |||
656 | 0.000%—11/15/20261,2 | 479 | |
Varonis System Inc. | |||
1,391 | 1.250%—08/15/2025 | 1,551 | |
Verint Systems Inc. | |||
2,149 | 0.250%—04/15/2026 | 1,845 | |
Workiva Inc. | |||
809 | 1.125%—08/15/2026 | 951 |
10
Harbor Convertible Securities Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
SOFTWARE—Continued | |||
Zscaler Inc. | |||
$ | 632 | 0.125%—07/01/2025 | $778 |
36,228 | |||
SPECIALTY RETAIL—0.4% | |||
Burlington Stores Inc. | |||
546 | 2.250%—04/15/2025 | 556 | |
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—1.2% | |||
Pure Storage Inc. | |||
1,541 | 0.125%—04/15/2023 | 1,877 | |
TOTAL CONVERTIBLE BONDS | |||
(Cost $169,815) | 155,455 | ||
TOTAL INVESTMENTS—95.5% | |||
(Cost $169,815) | 155,455 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—4.5% | 7,267 | ||
TOTAL NET ASSETS—100.0% | $162,722 |
FAIR VALUE MEASUREMENTS
All investments as of October 31, 2022 (as disclosed in the preceding Portfolio of Investments) were classified as Level 2. There were no Level 3 investments at October 31, 2022 or 2021.
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.
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. As of October 31, 2022, the aggregate value of these securities was $27,680 or 17% 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.
11
Harbor Core Bond Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Income Research + Management
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
During the reporting period there was a lot of market volatility. We saw the resurgence in COVID and geopolitical risk come into play with Russia’s invasion of Ukraine. There was also inflationary pressure, a hawkish Federal Reserve (“Fed”) and fears of an economic slowdown. The Fed stepped in and hiked interest rates four times, and spreads moved wider. All this market volatility and uncertainty led to negative absolute performance for the portfolio.
Performance
Harbor Core Bond Fund returned -16.14% (Retirement Class) and -16.21% (Institutional Class) in the year ended October 31, 2022, compared with the -15.68% return of the Bloomberg U.S. Aggregate Bond Index (the “Index”) during the same period.
On an absolute basis, the portfolio’s allocation to spread product detracted the most to the one-year return. Within securitized, the portfolio’s exposure to Asset-Backed Securities (“ABS”), non-Agency Residential Mortgage-Backed Securities (“RMBS”) and Agency RMBS detracted the most from relative performance. Within corporates, the portfolio’s allocation to Financials, Industrials and Utilities all led to negative relative performance. Holdings that drove negative performance in the Fund included four ABS securities, while the top performers were Occidental Petroleum, a taxable municipal bond (“muni”), and AT&T Inc.
Compared to the Index, the Fund holds a ~24% underweight to government securities and an overweight to spread sectors, with a ~6% credit overweight and a ~16% securitized overweight at the end of the reporting period. Within credit, the Fund holds an overweight to Transportation, Insurance and Finance Companies. The Fund has an underweight to consumer and does not have any exposure to credit non-corporate securities.
We slightly deceased our treasury and securitized allocation and increased the Fund’s credit and taxable muni allocation. U.S. treasury exposure decreased due to adding high quality spread product at cheaper levels. Within credit, we’ve taken advantage of wider spreads to add BBB-rated finance company, insurance, communications, transportation, capital goods, and energy exposure. Thematically, we favor corporate issuers who can weather inflation and/or pass rising costs along to the customer. Within securitized, we have added to the Fund’s ABS exposure, which includes trims in autos, dealer floorplan, and equipment deals in favor of additions to AAA collateralized loan obligations, student loans, rate reduction, and non-traditional ABS. We also decreased the Fund’s agency fixed rate MBS pass through exposure. The majority of decrease is in more technically driven (given Fed involvement and prepayment speeds) Fannie and Freddie 2% and 2.5% coupons.
12
Harbor Core Bond Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $10,000 INVESTMENT
For the period 06/01/2018 through 10/31/2022
The graph compares a $10,000 investment in the Institutional Class shares of the Fund with the performance of the Bloomberg U.S. Aggregate Bond Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | 5 Years | Annualized | ||||
Life of Fund | ||||||
Harbor Core Bond Fund | ||||||
Retirement Class1 | -16.14% | N/A | -0.11% | |||
Institutional Class1 | -16.21 | N/A | -0.19 | |||
Comparative Index | ||||||
Bloomberg U.S. Aggregate Bond1 | -15.68% | N/A | -0.35% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.26% (Net) and 0.32% (Gross) (Retirement Class) and 0.34% (Net) and 0.40% (Gross) (Institutional Class). The net expense ratios reflect an expense limitation agreement effective through 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
Outlook & Strategy
Going forward, investors will need to navigate a market plagued with uncertainty. The Fed, along with most other central banks, has been tightening monetary policy to fight inflation with 50-75 bps of interest rate hikes expected for the remainder of the year. We expect a continued slowdown in economic growth, but the magnitude and length of such is hard to predict. The strengthening U.S. dollar pressured other countries and forced some to intervene in their currency or rate markets to avoid a further deterioration of conditions. This may cause the Fed to pivot sooner than initially anticipated.
We pride ourselves on being bottom-up security selectors. We remain methodical in adding any additional risk at a time when the market could turn in either direction. We believe that the securities that do make it into the Fund’s portfolio are fundamentally sound to withstand market weakness but are also attractively priced should spreads tighten.
1 | The “Life of Fund” return as shown reflects the period 06/01/2018 through 10/31/2022. |
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. 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. 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 Core Bond Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
Investment Allocation (% of investments) - Unaudited
Portfolio of Investments
Principal Amounts, Value and Cost in Thousands
ASSET-BACKED SECURITIES—8.4% | |||
Principal Amount | Value | ||
Aligned Data Centers LLC | |||
Series 2021-1A Cl. A2 | |||
$ | 385 | 1.937%—08/15/20461 | $323 |
AMSR Trust | |||
Series 2021-SFR3 Cl. A | |||
410 | 1.476%—10/17/20381 | 346 | |
CF Hippolyta Issuer LLC | |||
Series 2020-1 Cl. A1 | |||
310 | 1.690%—07/15/20601 | 273 | |
Domino's Pizza Master Issuer LLC | |||
Series 2021-1A Cl. A2I | |||
392 | 2.662%—04/25/20511 | 316 | |
FirstKey Homes Trust | |||
Series 2020-SFR2 Cl. A | |||
361 | 1.266%—10/19/20371 | 316 | |
Series 2022-SFR1 Cl. A | |||
129 | 4.145%—05/17/20391 | 121 | |
437 | |||
Ford Credit Auto Owner Trust | |||
Series 2020-1 Cl. A | |||
250 | 2.040%—08/15/20311 | 230 | |
GM Financial Consumer Automobile Receivables Trust | |||
Series 2022-3 Cl A4 | |||
288 | 3.710%—12/16/2027 | 275 | |
Home Partners of America Trust | |||
Series 2020-2 Cl. A | |||
267 | 1.532%—01/17/20411 | 217 | |
Navient Private Education Refi Loan Trust | |||
Series 2021-A Cl. A | |||
144 | 0.840%—05/15/20691 | 121 | |
Series 2021-BA Cl. A | |||
316 | 0.940%—07/15/20691 | 265 | |
386 | |||
Oak Street Investment Grade Net Lease Fund | |||
Series 2020-1A Cl. A1 | |||
337 | 1.850%—11/20/20501 | 293 | |
Palmer Square CLO Ltd.2 | |||
Series 2013 Cl. 2A | |||
447 | 5.230% (1 Month USD LIBOR + 1.000) 10/17/20311,3 | 435 | |
Palmer Square Loan Funding Ltd. | |||
Series 2022-2A Cl. A1 | |||
374 | 5.130% (3 Month CME Term SOFR + 1.270) 10/15/20301,3 | 370 |
ASSET-BACKED SECURITIES—Continued | |||
Principal Amount | Value | ||
Progress Residential Trust | |||
Series 2019-SFR3 Cl. A | |||
$ | 441 | 2.271%—09/17/20361 | $415 |
Sabey Data Center Issuer LLC | |||
Series 2020-1 Cl. A2 | |||
202 | 3.812%—04/20/20451 | 190 | |
Stack Infrastructure Issuer LLC | |||
Series 2019-2A Cl. A2 | |||
185 | 3.080%—10/25/20441 | 173 | |
Store Master Funding I-VII | |||
Series 2019-1 Cl. A1 | |||
164 | 2.820%—11/20/20491 | 146 | |
Series 2018-1A Cl. A1 | |||
194 | 3.960%—10/20/20481 | 187 | |
333 | |||
Taco Bell Funding LLC | |||
Series 2021-1A Cl. A2II | |||
382 | 2.294%—08/25/20511 | 299 | |
Vantage Data Centers LLC | |||
Series 2020-2A Cl. A2 | |||
251 | 1.992%—09/15/20451 | 201 | |
Wendy's Funding LLC | |||
Series 2021-1A Cl. A2I | |||
201 | 2.370%—06/15/20511 | 157 | |
Series 2019-1A Cl. A2I | |||
162 | 3.783%—06/15/20491 | 148 | |
305 | |||
TOTAL ASSET-BACKED SECURITIES | |||
(Cost $6,589) | 5,817 | ||
COLLATERALIZED MORTGAGE OBLIGATIONS—7.4% | |||
BANK 2021-BNK36 | |||
Series 2021-BN36 Cl. A5 | |||
206 | 2.470%—09/15/2064 | 160 | |
Barclays Commerical Mortgage Securities LLC | |||
Series 2012-C2 Cl. A4 | |||
1 | 3.525%—05/10/2063 | 1 | |
Benchmark Mortgage Trust | |||
Series 2021-B26 Cl. A3 | |||
387 | 2.391%—06/15/2054 | 325 |
14
Harbor Core Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
COLLATERALIZED MORTGAGE OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
BX Commercial Mortgage Trust | |||
Series 2021-VOLT Cl. A | |||
$ | 403 | 4.110% (1 Month USD LIBOR + 0.700) 09/15/20361,3 | $384 |
Series 2019-XL Cl. A | |||
422 | 4.330% (1 Month USD LIBOR + 0.920) 10/15/20361,3 | 414 | |
798 | |||
CIM Trust Corp. | |||
Series 2020-INV1 Cl. A2 | |||
95 | 2.500%—04/25/20501,3 | 78 | |
Commercial Mortgage Pass-Through Certificates | |||
Series 2014-CR21 Cl. A3 | |||
239 | 3.528%—12/10/2047 | 230 | |
Series 2014-UBS3 Cl. A3 | |||
443 | 3.546%—06/10/2047 | 428 | |
658 | |||
Flagstar Mortgage Trust | |||
Series 2021-8INV Cl. A3 | |||
339 | 2.500%—09/25/20511 | 262 | |
Freddie Mac Seasoned Credit Risk Transfer Trust | |||
Series 2020-2 Cl. MA | |||
158 | 2.000%—11/25/2059 | 142 | |
Series 2020-3 Cl. MA | |||
186 | 2.000%—05/25/2060 | 167 | |
Series 2021-1 Cl. MA | |||
261 | 2.000%—09/25/2060 | 231 | |
Series 2020-1 Cl. MA | |||
174 | 2.500%—08/25/2059 | 159 | |
Series 2017-2 Cl. MA | |||
59 | 3.000%—08/25/2056 | 55 | |
Series 2018-1 Cl. MA | |||
121 | 3.000%—05/25/2057 | 112 | |
Series 2019-2 Cl. MA | |||
192 | 3.500%—08/25/2058 | 181 | |
1,047 | |||
FRESB Mortgage Trust | |||
Series 2019-SB63 Cl. A5H | |||
252 | 2.550% (1 Month USD LIBOR + 0.700) 02/25/20393 | 244 | |
GS Mortgage Backed Securities Trust | |||
Series 2020-INV1 Cl. A14 | |||
175 | 2.930%—10/25/20501,3 | 142 | |
Series 2020-PJ4 Cl. A2 | |||
113 | 3.000%—01/25/20511,3 | 93 | |
235 | |||
Invitation Homes Trust | |||
Series 2018-SFR1 Cl. A | |||
102 | 4.110% (1 Month USD LIBOR + 0.700) 03/17/20371,3 | 100 | |
JPMBB Commercial Mortgage Securities Trust | |||
Series 2015-C32 Cl. A2 | |||
44 | 2.816%—11/15/2048 | 44 | |
Series 2019-C6 Cl. A4 | |||
351 | 3.057%—11/13/2052 | 295 | |
339 | |||
MetLife Securitization Trust | |||
Series 2020-INV1 Cl. A2A | |||
135 | 2.500%—05/25/20501,3 | 112 | |
PSMC Trust | |||
Series 2021-2 Cl. A3 | |||
483 | 2.500%—05/25/20511,3 | 412 | |
Series 2020-2 Cl. A2 | |||
58 | 3.000%—05/25/20501,3 | 50 | |
462 |
COLLATERALIZED MORTGAGE OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
Tricon American Homes Trust | |||
Series 2020-SFR1 Cl. A | |||
$ | 334 | 1.499%—07/17/20381 | $286 |
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS | |||
(Cost $5,884) | 5,107 | ||
CORPORATE BONDS & NOTES—24.8% | |||
AEROSPACE & DEFENSE—1.0% | |||
BAE Systems Holdings Inc. | |||
400 | 3.400%—04/15/20301 | 343 | |
Boeing Co. | |||
259 | 5.150%—05/01/2030 | 240 | |
86 | 5.805%—05/01/2050 | 74 | |
314 | |||
Lockheed Martin Corp. | |||
175 | 4.700%—05/15/2046 | 154 | |
Northrop Grumman Corp. | |||
108 | 5.250%—05/01/2050 | 100 | |
911 | |||
AIRLINES—1.3% | |||
Air Canada Pass-Through Trust | |||
201 | 3.600%—03/15/20271 | 179 | |
Delta Air Lines Pass-Through Trust | |||
250 | 3.625%—07/30/2027 | 227 | |
United Airlines Pass-Through Trust | |||
159 | 3.100%—01/07/2030 | 137 | |
639 | 4.000%—04/11/2026 | 578 | |
715 | |||
1,121 | |||
AUTOMOBILES—0.5% | |||
General Motors Financial Co Inc. | |||
334 | 2.400%—10/15/2028 | 263 | |
Toyota Motor Credit Corp. MTN4 | |||
147 | 3.375%—04/01/2030 | 131 | |
394 | |||
BANKS—2.2% | |||
Bank of America Corp. | |||
375 | 4.950%—07/22/2028 | 358 | |
Bank of America Corp. MTN4 | |||
156 | 4.330%—03/15/20505 | 121 | |
Citigroup Inc. | |||
171 | 3.400%—05/01/2026 | 159 | |
129 | 3.520%—10/27/20285 | 114 | |
209 | 4.410%—03/31/20315 | 187 | |
460 | |||
JPMorgan Chase & Co. | |||
366 | 4.200%—07/23/20295 | 332 | |
250 | 4.490%—03/24/20315 | 226 | |
558 | |||
Lloyds Banking Group plc | |||
300 | 2.440% (U.S. Treasury 1 Year Constant Maturity Yield + 1.000) 02/05/20263 | 273 | |
Wells Fargo & Co. MTN4 | |||
172 | 4.810%—07/25/2028 | 163 | |
1,933 |
15
Harbor Core Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
BEVERAGES—0.3% | |||
Anheuser-Busch Cos. LLC / Anheuser-Busch InBev Worldwide Inc. | |||
$ | 268 | 4.900%—02/01/2046 | $230 |
BIOTECHNOLOGY—0.2% | |||
Abbvie Inc. | |||
230 | 4.500%—05/14/2035 | 204 | |
CAPITAL MARKETS—2.2% | |||
Blackstone Holdings Finance Co. LLC | |||
173 | 2.800%—09/30/20501 | 97 | |
216 | 3.500%—09/10/20491 | 144 | |
241 | |||
Goldman Sachs Group Inc. | |||
221 | 3.800%—03/15/2030 | 191 | |
KKR Group Finance Co. II LLC | |||
54 | 5.500%—02/01/20431 | 48 | |
KKR Group Finance Co. III LLC | |||
110 | 5.125%—06/01/20441 | 93 | |
Macquarie Group Ltd. | |||
363 | 1.340%—01/12/20271,5 | 308 | |
Moody's Corp. | |||
188 | 2.550%—08/18/2060 | 97 | |
Morgan Stanley MTN4 | |||
495 | 3.125%—07/27/2026 | 452 | |
215 | 3.620%—04/01/20315 | 183 | |
635 | |||
UBS Group AG | |||
300 | 4.125%—04/15/20261 | 280 | |
1,893 | |||
DIVERSIFIED FINANCIAL SERVICES—0.3% | |||
Ferguson Finance plc | |||
310 | 3.250%—06/02/20301 | 250 | |
DIVERSIFIED TELECOMMUNICATION SERVICES—0.7% | |||
AT&T Inc. | |||
504 | 4.420% (3 Month USD LIBOR + 1.180) 06/12/20243 | 506 | |
Verizon Communications Inc. | |||
122 | 4.500%—08/10/2033 | 109 | |
615 | |||
ELECTRIC UTILITIES—1.3% | |||
Berkshire Hathaway Energy Co. | |||
205 | 6.125%—04/01/2036 | 208 | |
Eversource Energy | |||
150 | 2.900%—10/01/2024 | 143 | |
Exelon Corp. | |||
62 | 4.700%—04/15/2050 | 50 | |
163 | 5.100%—06/15/2045 | 141 | |
191 | |||
Northern States Power | |||
118 | 4.500%—06/01/2052 | 100 | |
Southern Co. | |||
170 | 3.250%—07/01/2026 | 157 | |
228 | 4.250%—07/01/2036 | 191 | |
348 | |||
Xcel Energy Inc. | |||
170 | 3.400%—06/01/2030 | 146 | |
1,136 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
ENTERTAINMENT—0.3% | |||
Magallanes Inc. | |||
$ | 229 | 5.141%—03/15/20521 | $160 |
Walt Disney Co. | |||
124 | 4.700%—03/23/2050 | 108 | |
268 | |||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—0.5% | |||
Digital Realty Trust LP | |||
93 | 3.600%—07/01/2029 | 80 | |
Federal Realty Investment Trust | |||
393 | 1.250%—02/15/2026 | 342 | |
422 | |||
HEALTH CARE PROVIDERS & SERVICES—1.5% | |||
Cigna Corp. | |||
240 | 3.400%—03/01/2027 | 221 | |
CommonSpirit Health | |||
172 | 4.187%—10/01/2049 | 122 | |
CVS Pass-Through Trust | |||
179 | 5.773%—01/10/20331 | 171 | |
91 | 5.880%—01/10/2028 | 90 | |
334 | 8.353%—07/10/20311 | 356 | |
617 | |||
PeaceHealth Obligated Group | |||
440 | 1.375%—11/15/2025 | 389 | |
1,349 | |||
INSURANCE—1.5% | |||
AIA Group Ltd. | |||
419 | 3.600%—04/09/20291 | 370 | |
Equitable Financial Life Global Funding | |||
325 | 1.400%—07/07/20251 | 291 | |
Five Corners Funding Trust | |||
150 | 4.419%—11/15/20231 | 148 | |
Liberty Mutual Group Inc. | |||
300 | 4.569%—02/01/20291 | 270 | |
Lincoln National Corp. | |||
206 | 3.400%—01/15/2031 | 170 | |
Mass Mutual Life Insurance Co. | |||
130 | 3.375%—04/15/20501 | 84 | |
1,333 | |||
INTERNET & DIRECT MARKETING RETAIL—0.1% | |||
Amazon.com Inc. | |||
91 | 4.100%—04/13/2062 | 70 | |
MEDIA—0.6% | |||
Charter Communications Operating LLC / Charter Communications Operating Capital | |||
368 | 6.384%—10/23/2035 | 337 | |
COX Communications Inc. | |||
300 | 1.800%—10/01/20301 | 220 | |
557 | |||
MULTI-UTILITIES—0.3% | |||
PG&E Wildfire Recovery Funding LLC | |||
110 | 3.594%—06/01/2032 | 104 | |
183 | 4.722%—06/01/2039 | 169 | |
273 |
16
Harbor Core Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
OIL, GAS & CONSUMABLE FUELS—1.3% | |||
Dominion Energy Inc. | |||
$ | 230 | 5.250%—08/01/2033 | $215 |
Energy Transfer LP | |||
375 | 3.900%—07/15/2026 | 347 | |
Occidental Petroleum Corp. | |||
474 | 0.000%—10/10/20366 | 246 | |
Schlumberger Holdings Corp. | |||
192 | 3.900%—05/17/20281 | 175 | |
Southern Co. Gas Capital Corp. | |||
170 | 1.750%—01/15/2031 | 125 | |
1,108 | |||
PROFESSIONAL SERVICES—0.2% | |||
Verisk Analytics Inc. | |||
215 | 3.625%—05/15/2050 | 142 | |
ROAD & RAIL—1.0% | |||
Canadian Pacific Railway Co. | |||
140 | 6.125%—09/15/2115 | 127 | |
Norfolk Southern Corp. | |||
115 | 4.837%—10/01/2041 | 101 | |
Penske Truck Leasing Co. LP / PTL Finance Corp. | |||
380 | 3.900%—02/01/20241 | 370 | |
Ryder System Inc. MTN4 | |||
237 | 3.650%—03/18/2024 | 232 | |
830 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—0.2% | |||
Broadcom Inc. | |||
202 | 4.110%—09/15/2028 | 181 | |
SOFTWARE—0.5% | |||
Oracle Corp. | |||
333 | 2.500%—04/01/2025 | 311 | |
253 | 3.950%—03/25/2051 | 166 | |
477 | |||
SPECIALTY RETAIL—0.4% | |||
Home Depot Inc. | |||
170 | 3.300%—04/15/2040 | 128 | |
Lowe's Cos. Inc. | |||
77 | 3.700%—04/15/2046 | 54 | |
49 | 5.000%—04/15/2040 | 42 | |
117 | 5.625%—04/15/2053 | 106 | |
202 | |||
330 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—0.2% | |||
NXP BV/ NXP FDG/ NXP USA Co. | |||
195 | 2.700%—05/01/2025 | 180 | |
TRADING COMPANIES & DISTRIBUTORS—0.9% | |||
AerCap Ireland Capital DAC / AerCap Global Aviation Trust | |||
201 | 3.000%—10/29/2028 | 162 | |
272 | 4.125%—07/03/2023 | 269 | |
431 | |||
Air Lease Corp. | |||
374 | 3.875%—07/03/2023 | 370 | |
801 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
WATER UTILITIES—0.2% | |||
Aquarion Co. | |||
$ | 178 | 4.000%—08/15/20241 | $173 |
TOTAL CORPORATE BONDS & NOTES | |||
(Cost $20,112) | 17,181 | ||
MORTGAGE PASS-THROUGH—18.0% | |||
Federal Home Loan Mortgage Corp. | |||
235 | 2.000%—06/01/2050 | 188 | |
308 | 2.250%—03/25/2054 | 248 | |
500 | 2.500%—11/01/2051-05/01/2052 | 414 | |
1,314 | 3.000%—11/01/2043-08/01/2050 | 1,134 | |
170 | 3.070% (12 Month USD LIBOR + 1.598) 06/01/20473 | 169 | |
1,033 | 3.500%—05/01/2042 | 938 | |
241 | 4.000%—02/01/2046 | 226 | |
145 | 4.500%—03/01/2049 | 139 | |
3,456 | |||
Federal National Mortgage Association | |||
1,603 | 2.000%—08/01/2050-03/01/2051 | 1,279 | |
1,259 | 2.500%—06/01/2050-04/01/2052 | 1,044 | |
1,740 | 3.000%—12/01/2040-08/01/2050 | 1,516 | |
171 | 3.330% (12 Month Treasury Average + 2.250) 12/01/20363 | 179 | |
335 | 3.500%—06/01/2050 | 297 | |
1,613 | 4.000%—04/01/2045-09/01/2049 | 1,502 | |
1,273 | 4.500%—05/01/2046-09/01/2050 | 1,222 | |
7,039 | |||
Government National Mortgage Association | |||
897 | 2.500%—01/20/2051 | 764 | |
408 | 4.000%—09/20/2041-09/15/2046 | 388 | |
895 | 4.500%—01/15/2042-08/20/2047 | 870 | |
2,022 | |||
TOTAL MORTGAGE PASS-THROUGH | |||
(Cost $14,658) | 12,517 | ||
MUNICIPAL BONDS—1.6% | |||
Metropolitan Water Reclamation District of Greater Chicago | |||
145 | 5.720%—12/01/2038 | 151 | |
Michigan State University | |||
100 | 4.165%—08/15/2122 | 69 | |
New York State Urban Development Corp. | |||
555 | 5.770%—03/15/2039 | 566 | |
State of California | |||
300 | 7.500%—04/01/2034 | 350 | |
TOTAL MUNICIPAL BONDS | |||
(Cost $1,301) | 1,136 | ||
U.S. GOVERNMENT OBLIGATIONS—13.0% | |||
U.S. Small Business Administration | |||
Series 2012-20C Cl. 1 | |||
78 | 2.510%—03/01/2032 | 70 | |
Series 2017-20H Cl. 1 | |||
114 | 2.750%—08/01/2037 | 103 | |
Series 2014-20K Cl. 1 | |||
208 | 2.800%—11/01/2034 | 191 |
17
Harbor Core Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
U.S. GOVERNMENT OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
Series 2015-20H Cl. 1 | |||
$ | 212 | 2.820%—08/01/2035 | $196 |
Series 2017-20J Cl. 1 | |||
158 | 2.850%—10/01/2037 | 143 | |
Series 2018-20B Cl. 1 | |||
207 | 3.220%—02/01/2038 | 192 | |
Series 2018-20G Cl. 1 | |||
311 | 3.540%—07/01/2038 | 292 | |
Series 2022-25E Cl. 1 | |||
417 | 3.940%���05/01/2047 | 394 | |
1,581 | |||
U.S. Treasury Bonds | |||
1,579 | 1.125%—08/15/2040 | 935 | |
232 | 2.000%—08/15/2051 | 146 | |
2,045 | 2.250%—02/15/2052 | 1,372 | |
2,710 | 2.375%—02/15/2042 | 1,980 | |
209 | 3.000%—08/15/2052 | 167 | |
54 | 3.375%—08/15/2042 | 47 | |
4,647 |
U.S. GOVERNMENT OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
U.S. Treasury Inflation Index Notes7 | |||
$ | 307 | 0.125%—01/15/2030 | $275 |
U.S. Treasury Notes | |||
553 | 0.500%—03/31/2025 | 504 | |
897 | 1.500%—01/31/2027 | 800 | |
1,002 | 1.875%—02/15/2032 | 833 | |
436 | 3.125%—08/31/2027 | 415 | |
2,552 | |||
TOTAL U.S. GOVERNMENT OBLIGATIONS | |||
(Cost $10,600) | 9,055 | ||
TOTAL INVESTMENTS—73.2% | |||
(Cost $59,144) | 50,813 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—26.8% | 18,564 | ||
TOTAL NET ASSETS—100.0% | $69,377 |
FAIR VALUE MEASUREMENTS
All investments as of October 31, 2022 (as disclosed in the preceding Portfolio of 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 year ended October 31, 2022.
Valuation Description | Beginning Balance as of 11/01/20201 (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 10/31/2022 (000s) | Unrealized Gain/ Loss as of 10/31/2022 (000s) |
Asset-Backed Securities | $465 | $— | $(416) | $(10) | $(39) | $— | $— | $— | $— | $— |
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. As of October 31, 2022, the aggregate value of these securities was $12,405 or 18% 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 as of October 31, 2022. 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 | MTN after the name of a security stands for Medium Term Note. |
5 | 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. |
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. |
The accompanying notes are an integral part of the Financial Statements.
18
Harbor Core Plus Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Income Research + Management
Management’s Discussion of
Fund Performance
Fund Performance
MARKET REVIEW
During the year, there was a lot of market volatility. We saw geopolitical risk come into play with Russia’s invasion of Ukraine. There was also inflationary pressure, a hawkish Federal Reserve (“Fed”) and fears of an economic slowdown. The Fed stepped in and hiked interest rates four times, and spreads moved wider. All this market volatility and uncertainty led to negative absolute performance for the portfolio.
PERFORMANCE
Harbor Core Plus Fund returned -15.78% (Retirement Class), -15.99% (Institutional Class), and -16.20% (Administrative Class) in the year ended October 31, 2022, while the Bloomberg U.S. Aggregate Bond Index (the “Index”) returned -15.68% during the same period.
On an absolute basis, the portfolio’s negative performance was due to the impact of rising rates and wider spreads. The underweight to Treasuries along with out-of index High Yield securities led to negative relative performance. The Fund also has an overweight to names within the Baa2 and Baa3 rating categories, which were more negatively impacted by wider spreads than higher-quality corporates. Holdings that drove negative performance in the Fund included two Asset-Backed Securities (“ABS”) pools and while the top performers were Occidental Petroleum, an Agency Residential Mortgage-Backed Securities (“RMBS”) security and a non-Agency RMBS security.
Compared to the Index, the Fund holds a ~30% underweight to government securities and an overweight to spread sectors, with a ~7% credit overweight and a ~22% Securitized overweight at the end of the year. Within credit names, the Fund holds an overweight to Finance Companies, Technology, Consumer and Capital goods. We have an underweight to Banking and have no exposure to credit non corporate securities.
Since assuming management of the Fund on February 2, 2022, we decreased the Fund’s Treasury exposure, in favor of adding spread product at cheaper levels. We have slightly increased the Fund’s credit exposure, in particular, adding to names within the Baa2 and Baa3 rating categories including brokerage and asset management, finance companies (including business development companies or “BDCs”), REITs, capital goods, communications, consumer, energy, and technology. Additionally, we have increased the Fund’s securitized positioning. We have added to the Fund’s ABS and Agency RMBS exposures. Lastly, we continue to trim Legacy non-Agency RMBS and ABS.
19
Harbor Core Plus Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $10,000 INVESTMENT
For the period 11/01/2012 through 10/31/2022
The graph compares a $10,000 investment in the Institutional Class shares of the Fund with the performance of the Bloomberg U.S. Aggregate Bond Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | 10 Years | |||||
Harbor Core Plus Fund | ||||||
Retirement Class1 | -15.78% | -0.22% | 1.09% | |||
Institutional Class | -15.99 | -0.32 | 1.05 | |||
Administrative Class | -16.20 | -0.57 | 0.79 | |||
Comparative Index | ||||||
Bloomberg U.S. Aggregate Bond | -15.68% | -0.54% | 0.74% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.30% (Net) and 0.31% (Gross) (Retirement Class); 0.38% (Net) and 0.39% (Gross) (Institutional Class); and 0.63% (Net) and 0.64% (Gross) (Administrative Class). The net expense ratios reflect a contractual management fee waiver and an expense limitation agreement (excluding interest expense) effective through 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
OUTLOOK & STRATEGY
Going forward, investors will need to navigate a market plagued with uncertainty. The Fed, along with most other central banks, has been tightening monetary policy to fight inflation with 50-75 bps of interest rate hikes expected for the remainder of the year. We expect a continued slowdown in economic growth, but the magnitude and length of such is hard to predict. The strengthening U.S. dollar pressured other countries and forced some to intervene in their currency or rate markets to avoid a further deterioration of conditions. This may cause the Fed to pivot sooner than initially anticipated.
We pride ourselves on being bottom-up security selectors. We remain methodical in adding any additional risk at a time when the market could turn in either direction. We believe that the securities that do make it into the Fund’s portfolios are fundamentally sound to withstand market weakness but are also attractively priced should spreads tighten.
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 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. 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. 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 Core Plus Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
Investment Allocation (% of investments) - Unaudited
Portfolio of Investments
Principal Amounts, Value and Cost in Thousands
ASSET-BACKED SECURITIES—13.8% | |||
Principal Amount | Value | ||
Air Canada Pass-Through Trust | |||
Series 2017-1AA Cl. PTT | |||
$ | 3,340 | 3.300%—01/15/20301 | $2,788 |
Aligned Data Centers LLC | |||
Series 2021-1A Cl. A2 | |||
7,301 | 1.937%—08/15/20461 | 6,127 | |
American Airlines Pass-Through Trust | |||
Series 15-2 Cl. AA | |||
1,446 | 3.600%—09/22/2027 | 1,281 | |
AMMC CLO 20 Ltd.2 | |||
Series 2017-20A Cl. AR | |||
2,188 | 4.950% (3 Month USD LIBOR + 2.600) 04/17/20291,3 | 2,159 | |
AMMC CLO XII Ltd.2 | |||
Series 2013-12A Cl. AR2 | |||
4,200 | 3.860% (3 Month USD LIBOR + 2.050) 11/10/20301,3 | 4,112 | |
Apidos CLO XXVI2 | |||
Series 2017-26A Cl. A1AR | |||
4,000 | 5.090% (3 Month USD LIBOR + 2.410) 07/18/20291,3 | 3,901 | |
Ares LII CLO Ltd.2 | |||
Series 2019-52A Cl. A1R | |||
4,000 | 5.370% (3 Month USD LIBOR + 2.060) 04/22/20311,3 | 3,886 | |
Birch Grove CLO Ltd.2 | |||
Series 19-AR | |||
4,000 | 4.420% (3 Month USD LIBOR + 1.880) 06/15/20311,3 | 3,915 | |
Catamaran CLO Ltd.2 | |||
Series 2014-1A Cl. A1AR | |||
4,974 | 5.420% (3 Month USD LIBOR + 2.000) 04/22/20301,3 | 4,892 | |
CF Hippolyta Issuer LLC | |||
Series 2021-1A Cl. A1 | |||
7,281 | 1.530%—03/15/20611 | 6,252 | |
DB Master Finance LLC | |||
2,268 | 2.493%—11/20/20511 | 1,822 | |
Series 2021-1A Cl. A23 | |||
4,218 | 2.791%—11/20/20511 | 3,144 | |
4,966 | |||
Diamond Infrastructure Funding LLC | |||
Series 2021-1A | |||
4,375 | 1.760%—04/15/20491 | 3,565 | |
Domino's Pizza Master Issuer LLC | |||
Series 2021-1A Cl. A2I | |||
1,330 | 2.662%—04/25/20511 | 1,071 | |
Series 2021-1A Cl. A2II | |||
6,895 | 3.151%—04/25/20511 | 5,364 | |
6,435 |
ASSET-BACKED SECURITIES—Continued | |||
Principal Amount | Value | ||
Firstkey Homes Trust | |||
Series 2021-SFR1 | |||
$ | 7,359 | 1.538%—08/17/20381 | $6,201 |
Series 2022-SFRA | |||
6,787 | 3.100%—03/17/20391 | 6,067 | |
12,268 | |||
GSAA Home Equity Trust | |||
Series 2006-20 Cl. 1A2 | |||
3,265 | 3.950% (1 Month USD LIBOR + 3.310) 12/25/20463 | 1,022 | |
Home Partners of America Trust | |||
Series 2022-1 | |||
3,279 | 3.930%—04/17/20391 | 3,053 | |
IXIS Real Estate Capital Trust | |||
Series 2005-HE1 Cl. M4 | |||
719 | 4.640% (1 Month USD LIBOR + 2.840) 06/25/20353 | 708 | |
JetBlue Pass Through Trust | |||
Series 2015-2 Cl. AA | |||
4,058 | 4.000%—11/15/2032 | 3,584 | |
JPMorgan Mortgage Acquisition Corp. | |||
Series 2006-HE1 Cl. A4 | |||
128 | 4.166% (1 Month USD LIBOR + 0.580) 01/25/20363 | 128 | |
Series 2007-HE1 Cl. AF3 | |||
680 | 4.188%—05/25/20354 | 455 | |
583 | |||
Morgan Stanley Capital Inc. | |||
Series 2007-HE1 Cl. A2C | |||
1,592 | 3.736% (1 Month USD LIBOR + 0.150) 11/25/20363 | 956 | |
Series 2007-HE6 Cl. A3 | |||
3,095 | 3.770% (1 Month USD LIBOR + 2.230) 05/25/20373 | 2,695 | |
3,651 | |||
New Economy Assets Phase 1 Sponsor LLC | |||
Series 2021 Cl. 1A1 | |||
4,500 | 1.910%—10/20/20611 | 3,778 | |
Palmer Square Loan Funding Ltd. | |||
Series 2021-4A Cl. A1 | |||
3,373 | 4.880% (3 Month USD LIBOR + 2.120) 10/15/20291,3 | 3,319 | |
Planet Fitness Master Issuer LLC | |||
Series 2022-1A Cl. A2I | |||
4,355 | 3.251%—12/05/20511 | 3,709 | |
Series 2018-1A Cl. A2II | |||
614 | 4.666%—09/05/20481 | 577 | |
4,286 |
21
Harbor Core Plus Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
ASSET-BACKED SECURITIES—Continued | |||
Principal Amount | Value | ||
ServiceMaster Funding LLC | |||
Series 2021-1 Cl. A2I | |||
$ | 3,194 | 2.865%—07/30/20511 | $2,448 |
Series 2020-1 Cl A2II | |||
368 | 3.337%—01/30/20511 | 274 | |
2,722 | |||
Servpro Master Issuer LLC | |||
Series 2021-1A Cl A2 | |||
3,448 | 2.394%—04/25/20511 | 2,715 | |
Sound Point CLO XII Ltd.2 | |||
Series 2016-2A Cl. AR2 | |||
3,378 | 5.290% (3 Month USD LIBOR + 2.610) 10/20/20281,3 | 3,338 | |
Specialty Underwriting & Residential Finance Trust | |||
Series 2006-BC4 Cl. A2B | |||
2,391 | 3.806% (1 Month USD LIBOR + 0.220) 09/25/20373 | 889 | |
Stack Infrastructure Issuer LLC | |||
Series 2021-1A Cl. A2 | |||
7,000 | 1.877%—03/26/20461 | 6,057 | |
Taco Bell Funding LLC | |||
Series 2021-1A Cl. A2I | |||
6,948 | 1.946%—08/25/20511 | 5,787 | |
Trinity Rail Leasing 2020 LLC | |||
Series 2020-2A Cl. A2 | |||
5,000 | 2.560%—11/19/20501 | 4,149 | |
United Airlines Pass-Through Trust | |||
Series 2019-2 Cl. AA | |||
1,183 | 2.700%—05/01/2032 | 941 | |
Vantage Data Centers Issuer LLC | |||
Series 2021-1A Cl. A2 | |||
2,000 | 2.165%—10/15/20461 | 1,728 | |
Series 2019-1A Cl. A2 | |||
1,114 | 3.188%—07/15/20441 | 1,055 | |
2,783 | |||
VB-S1 Issuer LLC - Vbtel | |||
Series 2022-1A Cl. C2I | |||
6,810 | 3.156%—02/15/20521 | 5,956 | |
Wendy's Funding LLC | |||
Series 2021-1A Cl. A2I | |||
6,913 | 2.370%—06/15/20511 | 5,378 | |
TOTAL ASSET-BACKED SECURITIES | |||
(Cost $147,353) | 131,246 | ||
COLLATERALIZED MORTGAGE OBLIGATIONS—12.0% | |||
AMSR Trust | |||
Series 2022-SFR1 | |||
7,400 | 2.942%—03/17/20391 | 6,561 | |
Angel Oak Mortgage Trust | |||
Series 2022-1 Cl. A1 | |||
3,673 | 2.881%—12/25/20661,4 | 3,120 | |
Argent Securities Inc. | |||
Series 2006-W4 Cl. A2C | |||
5,595 | 3.906% (1 Month USD LIBOR + 0.320) 05/25/20363 | 1,416 | |
Series 2004-W11 Cl. M3 | |||
800 | 4.711% (1 Month USD LIBOR + 1.125) 11/25/20343 | 782 | |
2,198 | |||
Banc of America Alternative Loan Trust | |||
Series 2006 -7 Cl. A3 | |||
6,868 | 5.913%—10/25/20363 | 2,015 |
COLLATERALIZED MORTGAGE OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
Banc of America Funding Corp. | |||
Series 2007-C Cl. 7A5 | |||
$ | 463 | 4.089% (1 Month USD LIBOR + 0.600) 05/20/20473 | $411 |
BCAP LLC Trust | |||
Series 2007-AA2 Cl. 12A1 | |||
3,160 | 4.006% (1 Month USD LIBOR + 0.420) 05/25/20473 | 2,848 | |
Series 2011-RR5 Cl. 12A1 | |||
178 | 4.653%—03/26/20371,4 | 172 | |
Series 2011-RR4 Cl. 8A1 | |||
1,244 | 5.250%—02/26/20361,3 | 547 | |
3,567 | |||
Bear Stearns Adjustable Rate Mortgage Trust | |||
Series 2000-2 Cl. A1 | |||
11 | 2.778%—11/25/20303 | 10 | |
Series 2004-1 Cl. 12A5 | |||
155 | 2.989%—04/25/20343 | 143 | |
153 | |||
Benchmark Mortgage Trust | |||
Series 2020-B21 | |||
4,730 | 1.978%—12/17/2053 | 3,605 | |
Series 2019-B9 Cl. A5 | |||
5,200 | 4.016%—03/15/2052 | 4,730 | |
8,335 | |||
BX Commercial Mortgage Trust | |||
Series 2021-VOLT Cl. A | |||
1,429 | 4.110% (1 Month USD LIBOR + 4.510) 09/15/20361,3 | 1,360 | |
Series 2022-LP2 | |||
2,428 | 4.390% (1 Month CME Term SOFR + 4.140) 02/15/20391,3 | 2,321 | |
3,681 | |||
Chase Mortgage Finance Corp Trust | |||
Series 2006-A1 Cl. 4A1 | |||
18 | 3.709%—09/25/20363 | 15 | |
Citigroup Commercial Mortgage Trust | |||
Series 2015-GC27 | |||
3,390 | 3.137%—02/10/2048 | 3,209 | |
COMM Mortgage Trust | |||
Series 2016-787S Cl. A | |||
5,400 | 3.545%—02/10/20361 | 4,911 | |
Series 2014-LC17 | |||
6,500 | 3.917%—10/10/2047 | 6,278 | |
11,189 | |||
Countrywide Alternative Loan Trust | |||
Series 2006-6BC Cl. 1A2 | |||
1,772 | 3.986% (1 Month USD LIBOR + 0.400) 05/25/20363 | 1,399 | |
Series 2005-20CB Cl. 2A5 | |||
1,264 | 5.500%—07/25/2035 | 814 | |
Series 2006-1R Cl.2A3 | |||
2,863 | 6.000%—08/25/2037 | 1,497 | |
3,710 | |||
Countrywide Asset-Backed Certificates | |||
Series 2006-2 Cl. M1 | |||
349 | 4.186% (1 Month USD LIBOR + 0.600) 06/25/20363 | 345 | |
Credit Suisse First Boston Mortgage Securities Corp. | |||
Series 2006-C2 Cl. A3 | |||
193 | 6.000%—11/25/2035 | 140 | |
DC Office Trust | |||
Series 2019-MTC Cl. A | |||
4,900 | 2.965%—09/15/20451 | 3,918 |
22
Harbor Core Plus Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
COLLATERALIZED MORTGAGE OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
Deutsche Alt-A Securities Inc. Mortgage Loan Trust | |||
Series 2007-AR2 Cl. A1 | |||
$ | 2,711 | 3.886% (1 Month USD LIBOR + 0.300) 03/25/20373 | $2,539 |
DSLA Mortgage Loan Trust | |||
Series 2006-AR1 Cl. 1A1A | |||
890 | 2.291% (Fed 12 Month Treasury Average Constant Maturity Treasury + 0.920) 3/19/20463 | 712 | |
First Franklin Mortgage Loan Trust | |||
Series 2006-FF14 Cl. A6 | |||
8,000 | 3.896% (1 Month USD LIBOR + 0.310) 10/25/20363 | 6,112 | |
First Horizon Asset Securities Inc. | |||
Series 2005-AR6 Cl. 4A1 | |||
152 | 2.683%—02/25/20363 | 128 | |
First Nationwide Trust | |||
Series 2001-3 Cl. 1A1 | |||
— | 6.750%—08/21/2031 | — | |
GS Mortgage Securities Trust | |||
Series 2015-GC30 | |||
3,888 | 3.119%—05/10/2050 | 3,672 | |
GSMPS Mortgage Loan Trust | |||
Series 2006-RP2 Cl. 1AF1 | |||
3,291 | 3.986% (1 Month USD LIBOR + 0.400) 04/25/20361,3 | 2,719 | |
GSR Mortgage Loan Trust | |||
Series 2005-AR3 Cl. 3A1 | |||
199 | 3.081%—05/25/20353 | 149 | |
IndyMac ARM Trust | |||
Series 2001-H2 Cl. A2 | |||
2 | 3.544%—01/25/20323 | 2 | |
IndyMac INDX Mortgage Loan Trust | |||
Series 2005-AR31 Cl. 1A1 | |||
623 | 3.051%—01/25/20363 | 530 | |
JP Morgan Mortgage Trust | |||
Series 2006-A6 Cl. 1A4L | |||
1,017 | 3.640%—10/25/20363 | 777 | |
Series 2006-S1 Cl. 3A1 | |||
61 | 5.500%—04/25/2036 | 59 | |
836 | |||
JPMDB Commercial Mortgage Securities Trust | |||
Series 2016-C2 Cl. A4 | |||
4,225 | 3.144%—06/15/2049 | 3,858 | |
Manhattan West Mortgage Trust | |||
Series 2020-1MW Cl. A | |||
4,900 | 2.130%—09/10/20391 | 4,131 | |
Merrill Lynch Alternative Note Asset Trust | |||
Series 2007-F1 Cl. 2A6 | |||
427 | 6.000%—03/25/2037 | 172 | |
MetLife Securitization Trust | |||
Series 2018-1A Cl. A | |||
2,211 | 3.750%—03/25/20571,3 | 2,073 | |
Morgan Stanley Bank of America Merrill Lynch Trust | |||
Series 2014-C14 Cl. A5 | |||
2,638 | 4.064%—02/15/2047 | 2,582 | |
Onslow Bay Financial LLC | |||
Series 2018-1 Cl. A2 | |||
2,418 | 4.236% (1 Month USD LIBOR + 0.650) 06/25/20571,3 | 2,339 | |
Residential Asset Securitization Trust | |||
Series 2007-A8 Cl. 2A1 | |||
17,580 | 6.250%—08/25/2037 | 4,999 | |
Residential Funding Mortgage Securities | |||
Series 2007-SA1 Cl. 2A2 | |||
143 | 4.261%—02/25/20373 | 99 | |
Saxon Asset Securities Trust | |||
Series 2006-3 Cl. A3 | |||
1,867 | 3.756% (1 Month USD LIBOR + 0.170) 10/25/20463 | 1,814 |
COLLATERALIZED MORTGAGE OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
Structured Adjustable Rate Mortgage Loan Trust | |||
Series 2005-21A Cl. 3A1 | |||
$ | 134 | 3.914%—04/25/20353 | $128 |
Suntrust Adjustable Rate Mortgage Loan Trust | |||
Series 2007-S1 Cl. 1A | |||
241 | 3.360%—01/25/20373 | 183 | |
Towd Point Mortgage Trust | |||
Series 2019-1 Cl. A1 | |||
5,048 | 3.704%—03/25/20581,3 | 4,661 | |
Tricon American Homes Trust | |||
Series 2020-SFR1 Cl. A | |||
2,320 | 1.499%—07/17/20381 | 1,987 | |
Washington Mutual Mortgage Pass Through Certificates Trust | |||
Series 2006-AR8 Cl. 1A4 | |||
1,564 | 3.676%—08/25/20463 | 1,381 | |
Series 2005-AR6 Cl. 2A1A | |||
159 | 4.046% (1 Month USD LIBOR + 0.460) 04/25/20453 | 151 | |
Series 2005-AR13 Cl. A1A1 | |||
79 | 4.166% (1 Month USD LIBOR + 0.580) 10/25/20453 | 74 | |
1,606 | |||
Wells Fargo Commercial Mortgage Trust | |||
Series 2018-C48 Cl. A5 | |||
7,117 | 4.302%—01/15/2052 | 6,572 | |
WFRBS Commercial Mortgage Trust | |||
Series 2014-C23 | |||
6,450 | 3.917%—10/15/2057 | 6,219 | |
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS | |||
(Cost $134,522) | 113,389 | ||
CORPORATE BONDS & NOTES—33.1% | |||
AEROSPACE & DEFENSE—1.2% | |||
BAE Systems plc | |||
8,580 | 1.900%—02/15/20311 | 6,433 | |
Boeing Co. | |||
4,625 | 5.150%—05/01/2030 | 4,278 | |
1,214 | 5.805%—05/01/2050 | 1,046 | |
5,324 | |||
11,757 | |||
AUTO COMPONENTS—0.6% | |||
Allison Transmission Inc. | |||
2,800 | 4.750%—10/01/20271 | 2,582 | |
Aptiv plc / Aptiv Corp. | |||
5,000 | 4.150%—05/01/2052 | 3,371 | |
5,953 | |||
AUTOMOBILES—2.0% | |||
Ford Motor Credit Co. LLC | |||
4,000 | 3.375%—11/13/2025 | 3,636 | |
3,900 | 3.810%—01/09/2024 | 3,771 | |
7,407 | |||
Nissan Motor Co. Ltd. | |||
3,900 | 4.810%—09/17/20301 | 3,119 | |
Volkswagen Group of America Finance LLC | |||
4,700 | 3.350%—05/13/20251 | 4,428 | |
4,800 | 4.750%—11/13/20281 | 4,397 | |
8,825 | |||
19,351 |
23
Harbor Core Plus Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
BANKS—1.1% | |||
Banco Bilbao Vizcaya Argentaria SA | |||
$ | 300 | 1.125%—09/18/2025 | $263 |
Citigroup Inc. | |||
4,700 | 2.570%—06/03/20315 | 3,680 | |
HSBC Holdings plc | |||
2,850 | 7.340%—11/03/20265 | 2,859 | |
JPMorgan Chase & Co. | |||
4,000 | 1.470%—09/22/20275 | 3,363 | |
10,165 | |||
BEVERAGES—0.4% | |||
Anheuser-Busch Cos. LLC / Anheuser-Busch InBev Worldwide Inc. | |||
4,441 | 4.900%—02/01/2046 | 3,815 | |
BUILDING PRODUCTS—1.6% | |||
Carlisle Cos. Inc. | |||
3,250 | 2.200%—03/01/2032 | 2,393 | |
Carrier Global Corp. | |||
2,925 | 3.377%—04/05/2040 | 2,092 | |
CRH America Finance Inc. | |||
3,200 | 3.950%—04/04/20281 | 2,933 | |
Ferguson Finance plc | |||
4,800 | 4.650%—04/20/20321 | 4,180 | |
Fortune Brands Home & Security Inc. | |||
4,700 | 3.250%—09/15/2029 | 3,859 | |
15,457 | |||
CAPITAL MARKETS—4.4% | |||
Ares Finance Co. IV LLC | |||
4,500 | 3.650%—02/01/20521 | 2,585 | |
BGC Partners Inc. | |||
6,300 | 5.375%—07/24/2023 | 6,267 | |
BlackRock TCP Capital Corp. | |||
5,800 | 2.850%—02/09/2026 | 5,071 | |
Blackstone Holdings Finance Co. LLC | |||
6,000 | 3.200%—01/30/20521 | 3,649 | |
Block Financial LLC Co. | |||
3,600 | 3.875%—08/15/2030 | 3,028 | |
Golub Capital BDC Inc. | |||
5,800 | 2.500%—08/24/2026 | 4,832 | |
Hercules Capital Inc. | |||
2,816 | 2.625%—09/16/2026 | 2,296 | |
KKR Group Finance Co. X LLC | |||
3,000 | 3.250%—12/15/20511 | 1,837 | |
Oaktree Specialty Lending Corp. | |||
3,000 | 2.700%—01/15/2027 | 2,490 | |
Owl Rock Core Income Corp. | |||
5,700 | 4.700%—02/08/2027 | 5,017 | |
Sixth Street Specialty Lending Inc. | |||
5,500 | 2.500%—08/01/2026 | 4,640 | |
41,712 | |||
COMMERCIAL SERVICES & SUPPLIES—0.5% | |||
Allegion US Holding Co. | |||
1,927 | 5.411%—07/01/2032 | 1,767 | |
Triton Container International Ltd. | |||
3,519 | 2.050%—04/15/20261 | 2,975 | |
4,742 | |||
CONSUMER FINANCE—0.7% | |||
Navient Corp. MTN6 | |||
1,704 | 6.125%—03/25/2024 | 1,676 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
CONSUMER FINANCE—Continued | |||
OneMain Finance Corp | |||
$ | 2,800 | 6.875%—03/15/2025 | $2,720 |
Rocket Mortgage LLC / Rocket Mortgage Co-Issuer Inc. | |||
2,856 | 2.875%—10/15/20261 | 2,391 | |
6,787 | |||
DIVERSIFIED CONSUMER SERVICES—0.4% | |||
Service Corp. International | |||
4,400 | 4.000%—05/15/2031 | 3,663 | |
DIVERSIFIED FINANCIAL SERVICES—0.1% | |||
National Rural Utilities Cooperative Corp. | |||
1,222 | 4.750%—04/30/20435 | 1,125 | |
DIVERSIFIED TELECOMMUNICATION SERVICES—0.2% | |||
Verizon Communications Inc. | |||
2,915 | 3.700%—03/22/2061 | 1,911 | |
ELECTRIC UTILITIES—1.2% | |||
Exelon Corp. | |||
3,100 | 4.050%—04/15/2030 | 2,784 | |
1,500 | 5.625%—06/15/2035 | 1,458 | |
4,242 | |||
Jersey Central Power & Light Co. | |||
900 | 4.300%—01/15/20261 | 859 | |
1,600 | 4.700%—04/01/20241 | 1,571 | |
2,430 | |||
Pacific Gas & Electric Co. | |||
2,900 | 3.150%—01/01/2026 | 2,615 | |
1,700 | 3.400%—08/15/2024 | 1,617 | |
4,232 | |||
10,904 | |||
ENTERTAINMENT—0.3% | |||
Magallanes Inc. | |||
4,000 | 5.141%—03/15/20521 | 2,799 | |
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—4.9% | |||
Agree LP Co. | |||
1,400 | 2.900%—10/01/2030 | 1,101 | |
Alexandria Real Estate Equities Inc. | |||
2,100 | 2.750%—12/15/2029 | 1,706 | |
2,300 | 4.850%—04/15/2049 | 1,833 | |
3,539 | |||
Boston Properties LP | |||
4,905 | 2.750%—10/01/2026 | 4,348 | |
Brandywine Operating Partnership LP | |||
5,000 | 4.100%—10/01/2024 | 4,779 | |
Digital Realty Trust LP | |||
5,500 | 4.450%—07/15/2028 | 5,078 | |
EPR Properties | |||
1,900 | 4.500%—06/01/2027 | 1,579 | |
600 | 4.950%—04/15/2028 | 493 | |
2,072 | |||
Equinix Inc. | |||
5,000 | 1.000%—09/15/2025 | 4,389 | |
GLP Capital LP / GLP Financing II Inc. | |||
4,500 | 4.000%—01/15/2030 | 3,721 | |
Highwoods Realty LP | |||
2,500 | 2.600%—02/01/2031 | 1,824 |
24
Harbor Core Plus Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—Continued | |||
Invitation Homes Operating Partnership LP | |||
$ | 4,000 | 2.700%—01/15/2034 | $2,770 |
Physicians Realty LP | |||
1,400 | 3.950%—01/15/2028 | 1,253 | |
Scentre Group Trust | |||
5,700 | 4.375%—05/28/20301 | 4,956 | |
Spirit Realty LP | |||
4,700 | 3.400%—01/15/2030 | 3,757 | |
VICI Properties LP | |||
3,104 | 4.375%—05/15/2025 | 2,953 | |
46,540 | |||
HEALTH CARE PROVIDERS & SERVICES—1.1% | |||
CommonSpirit Health | |||
1,325 | 4.187%—10/01/2049 | 941 | |
CVS Pass-Through Trust | |||
404 | 6.943%—01/10/2030 | 412 | |
4,637 | 7.507%—01/10/20321 | 4,783 | |
5,195 | |||
HCA Inc. | |||
4,000 | 5.375%—09/01/2026 | 3,894 | |
10,030 | |||
HOTELS, RESTAURANTS & LEISURE—0.8% | |||
Expedia Group Inc. | |||
3,450 | 6.250%—05/01/20251 | 3,446 | |
Marriott International Inc. | |||
5,000 | 3.500%—10/15/2032 | 4,000 | |
7,446 | |||
HOUSEHOLD DURABLES—0.4% | |||
Tri Pointe Homes Inc. | |||
1,108 | 5.250%—06/01/2027 | 955 | |
2,863 | 5.700%—06/15/2028 | 2,485 | |
3,440 | |||
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS—0.5% | |||
Vistra Operations Co. LLC | |||
4,990 | 5.125%—05/13/20251 | 4,822 | |
INDUSTRIAL CONGLOMERATES—0.3% | |||
Textron Inc. | |||
3,800 | 2.450%—03/15/2031 | 2,916 | |
INSURANCE—1.0% | |||
AIA Group Ltd. | |||
2,700 | 3.375%—04/07/20301 | 2,296 | |
GA Global Funding Trust | |||
4,000 | 1.950%—09/15/20281 | 3,205 | |
SBL Holdings Inc. | |||
5,675 | 5.000%—02/18/20311 | 4,262 | |
9,763 | |||
MEDIA—0.6% | |||
Charter Communications Operating LLC / Charter Communications Operating Capital | |||
4,775 | 5.375%—05/01/2047 | 3,682 | |
2,400 | 6.384%—10/23/2035 | 2,196 | |
5,878 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
METALS & MINING—0.5% | |||
Anglo American Capital plc | |||
$ | 5,267 | 3.875%—03/16/20291 | $4,523 |
MORTGAGE REAL ESTATE INVESTMENT TRUSTS (REITs)—0.3% | |||
Starwood Property Trust Inc. | |||
3,700 | 4.375%—01/15/20271 | 3,273 | |
OIL, GAS & CONSUMABLE FUELS—1.8% | |||
Hess Midstream Operations LP | |||
2,018 | 5.625%—02/15/20261 | 1,982 | |
Kinder Morgan Inc. | |||
1,193 | 5.050%—02/15/2046 | 968 | |
Occidental Petroleum Corp. | |||
13,200 | 0.000%—10/10/20367 | 6,856 | |
Range Resources Corp. | |||
1,859 | 8.250%—01/15/2029 | 1,934 | |
Sabine Pass Liquefaction LLC | |||
900 | 4.200%—03/15/2028 | 822 | |
5,100 | 4.500%—05/15/2030 | 4,656 | |
5,478 | |||
17,218 | |||
PHARMACEUTICALS—0.4% | |||
Takeda Pharmaceutical Co. Ltd. | |||
1,500 | 2.050%—03/31/2030 | 1,185 | |
Teva Pharmaceutical Finance Netherlands III BV | |||
3,000 | 6.750%—03/01/2028 | 2,835 | |
4,020 | |||
PROFESSIONAL SERVICES—0.2% | |||
KBR Inc. | |||
1,642 | 4.750%—09/30/20281 | 1,438 | |
ROAD & RAIL—0.4% | |||
Canadian Pacific Railway Co. | |||
1,145 | 6.125%—09/15/2115 | 1,040 | |
Norfolk Southern Corp. | |||
3,800 | 4.050%—08/15/2052 | 2,841 | |
3,881 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—1.6% | |||
Broadcom Inc. | |||
6,904 | 3.137%—11/15/20351 | 4,799 | |
4,003 | 3.469%—04/15/20341 | 3,002 | |
7,801 | |||
KLA Corp. | |||
2,900 | 3.300%—03/01/2050 | 1,956 | |
1,230 | 5.650%—11/01/2034 | 1,199 | |
3,155 | |||
NXP BV/ NXP FDG/ NXP USA Co. | |||
4,600 | 3.875%—06/18/2026 | 4,282 | |
15,238 | |||
SOFTWARE—0.6% | |||
Oracle Corp. | |||
3,500 | 3.600%—04/01/2040 | 2,374 | |
VMware Inc. | |||
3,600 | 4.650%—05/15/2027 | 3,409 | |
5,783 |
25
Harbor Core Plus Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
SPECIALTY RETAIL—0.8% | |||
Group 1 Automotive Inc. | |||
$ | 2,900 | 4.000%—08/15/20281 | $2,389 |
Lowe's Cos. Inc. | |||
2,113 | 5.625%—04/15/2053 | 1,907 | |
Macy's Retail Holdings LLC | |||
3,612 | 5.875%—03/15/20301 | 3,039 | |
7,335 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—0.6% | |||
Entegris Escrow Corp. | |||
3,210 | 5.950%—06/15/20301 | 2,937 | |
Lenovo Group Ltd. | |||
2,932 | 5.831%—01/27/20281 | 2,596 | |
5,533 | |||
TRADING COMPANIES & DISTRIBUTORS—1.0% | |||
Aircastle Ltd. | |||
6,200 | 2.850%—01/26/20281 | 4,684 | |
Aviation Capital Group LLC | |||
5,300 | 4.125%—08/01/20251 | 4,826 | |
9,510 | |||
WIRELESS TELECOMMUNICATION SERVICES—0.6% | |||
American Tower Corp. | |||
1,118 | 3.650%—03/15/2027 | 1,012 | |
Crown Castle International Corp. | |||
4,000 | 3.700%—06/15/2026 | 3,716 | |
Sprint Communications Inc. | |||
800 | 6.000%—11/15/2022 | 801 | |
5,529 | |||
TOTAL CORPORATE BONDS & NOTES | |||
(Cost $365,326) | 314,257 | ||
MORTGAGE PASS-THROUGH—26.5% | |||
Federal Home Loan Mortgage Corp. | |||
31,932 | 2.500%—07/01/2050-05/01/2052 | 26,335 | |
— | 2.583% (U.S. Treasury Yield Curve Rate T Note 1 Year Constant Maturity Treasury + 2.247) 06/01/20243 | — | |
5,777 | 2.700%—08/01/2023 | 5,661 | |
8,106 | 3.000%—01/01/2050 | 6,946 | |
258 | 3.500%—01/01/2026-02/01/2035 | 244 | |
5 | 3.726% (U.S. Treasury Yield Curve Rate T Note 1 Year Constant Maturity Treasury + 2.250) 08/01/20353 | 5 | |
13,776 | 4.000%—03/01/2025-11/01/2048 | 12,803 | |
155 | 4.500%—12/01/2040-09/01/2041 | 150 | |
448 | 5.500%—02/01/2038-07/01/2038 | 460 | |
1,617 | 6.000%—01/01/2029-05/01/2040 | 1,671 | |
54,275 | |||
Federal Home Loan Mortgage Corp. REMIC8 | |||
1,514 | 2.725% (1 Month USD LIBOR + 0.350) 08/15/20403 | 1,475 | |
1,500 | 2.914% (1 Month USD LIBOR + 0.350) 10/15/20403 | 1,466 | |
4,452 | 3.000%—05/15/2035 | 434 | |
— | 3.862% (1 Month USD LIBOR + 0.450) 11/15/20303 | — | |
4,571 | 4.000%—10/15/2042 | 819 | |
4,194 | |||
Federal Home Loan Mortgage Corp. STRIP | |||
11,157 | 3.000%—12/15/2027 | 546 |
MORTGAGE PASS-THROUGH—Continued | |||
Principal Amount | Value | ||
Federal Home Loan Mortgage Corp. Structured Pass Through Certificates | |||
Series T-63 Cl. 1A1 | |||
$ | 47 | 2.304% (Fed 12 Month Treasury Average Constant Maturity Treasury + 1.200) 02/25/20453 | $48 |
Series E3 Cl. A | |||
12 | 3.814%—08/15/20323 | 12 | |
60 | |||
Federal National Mortgage Association | |||
31,018 | 2.500%—06/01/2050-04/01/2052 | 25,698 | |
105 | 2.504% (12 Month Treasury Average + 1.400) 10/01/20403 | 105 | |
31,157 | 3.000%—11/01/2025-12/01/2050 | 26,837 | |
22,379 | 3.500%—12/01/2025-01/01/2051 | 20,107 | |
247 | 3.776% (12 Month USD LIBOR + 1.715) 06/01/20353 | 251 | |
19 | 3.820% (12 Month USD LIBOR + 1.695) 05/01/20353 | 19 | |
260 | 3.943% (12 Month USD LIBOR + 1.693) 08/01/20353 | 256 | |
35,662 | 4.000%—02/01/2024-07/01/2051 | 33,059 | |
30,959 | 4.500%—04/01/2023-12/01/2050 | 29,643 | |
1,069 | 5.000%—10/01/2031-06/01/2044 | 1,049 | |
11,083 | 5.500%—01/01/2025-09/01/2041 | 11,338 | |
3,444 | 6.000%—07/01/2023-06/01/2040 | 3,529 | |
151,891 | |||
Federal National Mortgage Association REMIC8 | |||
12,391 | 0.369%—09/25/20573 | 402 | |
26 | 2.869%—05/25/20353 | 26 | |
1,813 | 2.874% (1 Month USD LIBOR + 0.310) 06/25/20553 | 1,781 | |
5,223 | 3.500%—10/25/2041 | 4,787 | |
7,633 | 4.000%—07/25/2050 | 1,498 | |
101 | 4.867%—12/25/20423 | 96 | |
11,296 | 5.000%—04/25/2033-05/25/2045 | 2,504 | |
2,506 | 6.000%—07/25/2041 | 477 | |
11,571 | |||
Government National Mortgage Association | |||
654 | 3.000%—11/15/2049 | 569 | |
4,923 | 3.111%—07/20/20373 | 299 | |
3,974 | 3.211%—07/20/20373 | 343 | |
9,031 | 4.000%—03/20/2041-03/15/2050 | 4,792 | |
24,953 | 5.000%—08/15/2033-06/15/2050 | 20,494 | |
862 | 5.500%—02/20/2039 | 176 | |
383 | 6.000%—10/20/2038 | 61 | |
26,734 | |||
Government National Mortgage Association II | |||
16 | 1.625% (U.S. Treasury Yield Curve Rate T Note 1 Year Constant Maturity Treasury + 1.500) 09/20/2023-07/20/20273 | 15 | |
36 | 1.750% (U.S. Treasury Yield Curve Rate T Note 1 Year Constant Maturity Treasury + 1.500) 10/20/2025-11/20/20293 | 35 | |
9 | 2.000% (U.S. Treasury Yield Curve Rate T Note 1 Year Constant Maturity Treasury + 1.500) 07/20/2024-10/20/20253 | 9 | |
119 | 2.625% (U.S. Treasury Yield Curve Rate T Note 1 Year Constant Maturity Treasury + 1.500) 01/20/2025-02/20/20323 | 116 | |
7 | 2.875% (U.S. Treasury Yield Curve Rate T Note 1 Year Constant Maturity Treasury + 1.500) 05/20/20243 | 7 |
26
Harbor Core Plus Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
MORTGAGE PASS-THROUGH—Continued | |||
Principal Amount | Value | ||
$ | 1,315 | 4.500%—02/20/2049 | $1,268 |
52 | 5.000%—01/20/2049 | 52 | |
1,502 | |||
TOTAL MORTGAGE PASS-THROUGH | |||
(Cost $283,910) | 250,773 | ||
MUNICIPAL BONDS—0.9% | |||
City of Chicago, IL | |||
816 | 7.750%—01/01/2042 | 825 | |
Michigan State University | |||
2,785 | 4.165%—08/15/2122 | 1,914 | |
New York State Dormitory Authority | |||
2,845 | 3.399%—03/15/2032 | 2,406 | |
New York State Urban Development Corp. | |||
3,900 | 1.496%—03/15/2027 | 3,356 | |
TOTAL MUNICIPAL BONDS | |||
(Cost $10,329) | 8,501 | ||
U.S. GOVERNMENT OBLIGATIONS—12.6% | |||
Small Business Administration Participation Certificates | |||
Series 2003-20I Cl. 1 | |||
4 | 5.130%—09/01/2023 | 4 | |
Series 2009-20A Cl. 1 | |||
738 | 5.720%—01/01/2029 | 724 |
U.S. GOVERNMENT OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
Series 2008-20H Cl. 1 | |||
$ | 1,129 | 6.020%—08/01/2028 | $1,118 |
1,846 | |||
U.S. Treasury Bonds | |||
6,787 | 1.375%—08/15/2050 | 3,621 | |
76,649 | 1.750%—08/15/2041 | 50,061 | |
34,359 | 2.000%—08/15/2051 | 21,658 | |
9,447 | 2.250%—02/15/2052 | 6,338 | |
7,730 | 2.375%—02/15/2042 | 5,647 | |
3,595 | 3.000%—08/15/2052 | 2,880 | |
90,205 | |||
U.S. Treasury Inflation Index Notes9 | |||
5,438 | 0.125%—10/15/2024 | 5,280 | |
U.S. Treasury Notes | |||
1,299 | 1.875%—02/15/2032 | 1,080 | |
3,155 | 2.750%—08/15/2032 | 2,824 | |
19,549 | 3.125%—08/31/2027 | 18,610 | |
22,514 | |||
TOTAL U.S. GOVERNMENT OBLIGATIONS | |||
(Cost $159,235) | 119,845 | ||
TOTAL INVESTMENTS—98.9% | |||
(Cost $1,100,675) | 938,011 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—1.1% | 10,018 | ||
TOTAL NET ASSETS—100.0% | $948,029 |
FAIR VALUE MEASUREMENTS
All investments as of October 31, 2022 (as disclosed in the preceding Portfolio of 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 year ended October 31, 2022.
Valuation Description | Beginning Balance as of 11/01/2021 (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 10/31/2022 (000s) | Unrealized Gain/(Loss) as of 10/31/2022 (000s) |
Preferred Stocks | $16,996 | $— | $(17,140) | $— | $(604) | $748 | $— | $— | $— | $— |
27
Harbor Core Plus 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. As of October 31, 2022, the aggregate value of these securities was $273,403 or 29% 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 as of October 31, 2022. 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 as of October 31, 2022. |
5 | 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. |
6 | MTN after the name of a security stands for Medium Term Note. |
7 | Zero coupon bond |
8 | 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. |
9 | 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. |
The accompanying notes are an integral part of the Financial Statements.
28
Harbor Disruptive Innovation Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Adviser
Harbor Capital Advisors, Inc.
Management’s Discussion of
Fund Performance
Fund Performance
MARKET REVIEW
Throughout the year, investor concerns pertaining to elevated inflation, monetary policy tightening, increased geopolitical risk and slowing global growth pressured US equities. Markets were off balance as investors digested surging energy and food prices, which continued to demand a larger portion of consumers’ wallets. In addition, negative real wage growth and tightened financial conditions weighed on investor and consumer sentiment alike. Growth in all its forms came under pressure during the year, with high growth tech and other risk-on investments trailing value stocks and more defensive pockets of the market. This resulted in a challenging environment for risk and long-duration assets, weighing on Fund returns versus the broad market during the year.
Performance
Harbor Disruptive Innovation Fund returned -46.85% (Retirement Class), -46.87% (Institutional Class), -46.96% (Administrative Class), and -47.05% (Investor Class), while the S&P 500 Index returned -14.61%. The Fund lagged the S&P 500 Index during the period and faced notable headwinds from both a stock specific and factor perspective. The higher growth nature of the Fund proved a meaningful headwind during the year given larger exposure to growth-oriented sectors, particularly information technology, a sector which lagged the overall benchmark in terms of performance.
Within information technology, investments within the IT services and software segments experienced declines as investor preference shifted away from companies with duration growth towards those with lower volatility and higher liquidity profiles. Shares of Shopify sold off during the year as investors reacted negatively to management announcing a material increase in investment in 2022, reducing operating margins. Given the market’s prevailing short-term focus and low appetite for increased investment at the expense of margin gains, the stock reacted negatively during the year. In addition, the Fund’s investment in Block traded lower on growing fears that an economic slowdown would adversely impact the revenues of the company’s suite of financial services. Lightspeed Commerce shares were also pressured amidst a broader rotation out of fintech stocks across both scaled providers and digital new entrants.
Within Consumer Discretionary, challenging stock selection within the internet & direct marketing retail and specialty retail industries posed pressure on the Fund’s excess returns relative to the broad market. The Fund’s investment in Carvana weighed on returns versus the Index as inflationary pressures in used cars, as well as other factors resulted in the stock’s repricing during the year. Also, shares of Peloton fell on poor results and subsequent concerns that its customer growth would slow as gyms and health clubs reopened in the post COVID-19 environment.
In addition, biotechnology investments within the Health Care sector pressured excess returns during the year. The Fund’s investment in Cabaletta Bio sold off as investors reacted negatively to top line data from its mucosal Pemphigus Vulgaris (mPV) trial results during the year. In addition, shares of LogicBio Therapeutics fell on the back of the news that its clinical trial for its treatment of methylmalonic acidemia (MMA) has been placed on clinical hold by the FDA.
The Fund’s lack of exposure to the value-oriented Energy and Consumer Staples sectors also posed performance challenges as both groups outperformed the broad market during the period.
Despite overall headwinds facing the Fund’s investment strategy, stock specific investments generated strong results, helping modestly offset relative underperformance during the year. For instance, two of the Fund’s largest contributors to performance were SailPoint Technologies and T-Mobile. SailPoint received a buyout offer, boosting the stock price. T-Mobile continued to show improvements in line with the investment team’s thesis on cash generation and business rationalization. In addition, Dicerna Pharmaceuticals shares rose over 80% as the company was acquired by Novo Nordisk at a premium during the year. Also, the Fund’s investment
29
Harbor Disruptive Innovation Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $50,000 INVESTMENT
For the period 11/01/2012 through 10/31/2022
The graph compares a $50,000 investment in the Institutional Class shares of the Fund with the performance of the Russell Midcap® Growth Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | 10 Years | |||||
Harbor Disruptive Innovation Fund | ||||||
Retirement Class1 | -46.85% | 5.33% | 9.84% | |||
Institutional Class | -46.87 | 5.25 | 9.78 | |||
Administrative Class | -46.96 | 5.00 | 9.51 | |||
Investor Class | -47.05 | 4.88 | 9.39 | |||
Comparative Indices | ||||||
S&P 500 | -14.61% | 10.44% | 12.79% | |||
Russell 3000® Growth | -24.67 | 12.07 | 14.37 |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.80% (Retirement Class); 0.88 (Institutional Class); 1.13% (Administrative Class); and 1.24% (Investor Class) effective through 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
in Akouos surged as the company received FDA clearance of its IND Application for AK-OTOF, a Gene Therapy intended for the treatment of OTOF-mediated hearing loss. The IND for AK-OTOF is the first to receive FDA clearance for a genetic form of hearing loss and the first for an AAV vector therapy with the potential to treat an inner ear condition.
OUTLOOK & STRATEGY
The shift in market leadership during the year illustrates how unpredictable markets can be over shorter-term periods. Exogenous factors and sentiment can have an outsized influence on short-term price movements. Despite these shorter-term impacts, enterprises remain early in their digital transformation efforts, new technological offerings are enabling access to commerce and financial services, and life sciences innovations continue to change how we define, diagnose, and treat disease. Over the long-term, we believe we will be successful in identifying businesses that will extract most of the value created by these trends, as well as others.
Overall, the market’s disfavor for companies investing today for future growth proved a particularly damaging factor to performance. The positive outcome for the Fund’s approach, however, is that in many cases, we believe, today’s valuations do not reflect the broad range of positive outcomes for many of the Fund’s holdings. While volatility adds market risk, the Fund’s underlying investment managers do not see a corresponding increase in the business risks across Fund holdings.
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 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, 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 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 markets regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
30
Harbor Disruptive Innovation Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
SECTOR ALLOCATION (% of investments) - Unaudited
Portfolio of Investments
Value and Cost in Thousands
COMMON STOCKS—95.9% | |||
Shares | Value | ||
AUTOMOBILES—2.5% | |||
11,889 | Tesla Inc.* | $2,705 | |
BIOTECHNOLOGY—9.8% | |||
11,917 | Alkermes plc (Ireland)* | 271 | |
39,791 | Allogene Therapeutics Inc.* | 410 | |
16,313 | Arrowhead Pharmaceuticals Inc.* | 568 | |
12,647 | Ascendis Pharma AS ADR (Denmark)*,1 | 1,454 | |
139,445 | Autolus Therapeutics plc ADR (United Kingdom)*,1 | 397 | |
39,566 | Avidity Biosciences Inc.* | 565 | |
44,112 | Bicycle Therapeutics plc ADR (United Kingdom)*,1 | 1,092 | |
4,301 | Blueprint Medicines Corp.* | 223 | |
23,870 | C4 Therapeutics Inc.* | 230 | |
10,313 | Fate Therapeutics Inc.* | 216 | |
123,874 | Freeline Therapeutics Holdings plc ADR (United Kingdom)*,1 | 90 | |
34,670 | Iovance Biotherapeutics Inc.* | 324 | |
8,005 | Krystal Biotech Inc.* | 612 | |
10,982 | Kymera Therapeutics Inc.* | 333 | |
152,888 | Magenta Therapeutics Inc.* | 197 | |
104,696 | Precision BioSciences Inc.* | 147 | |
25,489 | REGENXBIO Inc.* | 603 | |
32,998 | Repare Therapeutics Inc. (Canada)* | 497 | |
25,917 | Replimune Group Inc.* | 476 | |
62,226 | Rocket Pharmaceuticals Inc.* | 1,161 | |
299,728 | Synlogic Inc.* | 251 | |
64,569 | TCR² Therapeutics Inc.* | 101 | |
20,791 | UniQure NV (Netherlands)* | 387 | |
10,605 | |||
CAPITAL MARKETS—0.2% | |||
3,633 | Coinbase Global Inc.* | 241 | |
CONTAINERS & PACKAGING—2.2% | |||
48,931 | Ball Corp. | 2,417 | |
ELECTRIC UTILITIES—0.5% | |||
6,207 | NextEra Energy Inc. | 481 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—1.1% | |||
14,853 | Wolfspeed Inc.* | 1,170 | |
ENTERTAINMENT—0.7% | |||
15,507 | Sea Ltd. ADR (Singapore)*,1 | 770 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES—3.7% | |||
8,445 | Dexcom Inc.* | $1,020 | |
1,772 | IDEXX Laboratories Inc.* | 637 | |
3,483 | Insulet Corp.* | 901 | |
11,089 | Lantheus Holdings Inc.* | 821 | |
2,070 | The Cooper Companies Inc. | 566 | |
3,945 | |||
HEALTH CARE PROVIDERS & SERVICES—1.6% | |||
6,080 | Amedisys Inc.* | 593 | |
1,565 | Humana Inc. | 874 | |
110,483 | Invitae Corp.* | 285 | |
1,752 | |||
HOTELS, RESTAURANTS & LEISURE—1.3% | |||
927 | Chipotle Mexican Grill Inc.* | 1,389 | |
INTERACTIVE MEDIA & SERVICES—4.6% | |||
20,261 | Alphabet Inc. Class A* | 1,915 | |
19,971 | Alphabet Inc. Class C* | 1,890 | |
2,650 | Meta Platforms Inc.* | 247 | |
21,092 | ZoomInfo Technologies Inc.* | 939 | |
4,991 | |||
INTERNET & DIRECT MARKETING RETAIL—7.3% | |||
36,227 | Amazon.com Inc.* | 3,711 | |
300,746 | Deliveroo plc (United Kingdom)*,2 | 301 | |
20,116 | DoorDash Inc.* | 876 | |
3,384 | MercadoLibre Inc. (Argentina)* | 3,051 | |
7,939 | |||
IT SERVICES—13.2% | |||
2,547 | Adyen NV (Netherlands)*,2 | 3,636 | |
21,772 | Block Inc.* | 1,308 | |
36,173 | Cloudflare Inc.* | 2,037 | |
3,948 | MongoDB Inc.* | 723 | |
43,394 | Okta Inc.* | 2,435 | |
13,952 | PayPal Holdings Inc.* | 1,166 | |
25,806 | Shopify Inc. (Canada)* | 883 | |
12,793 | Snowflake Inc.* | 2,051 | |
14,239 | |||
LEISURE PRODUCTS—0.2% | |||
30,766 | Peloton Interactive Inc.* | 258 |
31
Harbor Disruptive Innovation Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
LIFE SCIENCES TOOLS & SERVICES—5.3% | |||
1,288 | Bio-Rad Laboratories Inc.* | $453 | |
8,682 | Danaher Corp. | 2,185 | |
7,284 | ICON plc (Ireland)* | 1,441 | |
990 | Lonza Group AG (Switzerland) | 510 | |
486 | Mettler-Toledo International Inc.* | 615 | |
1,022 | Thermo Fisher Scientific Inc. | 525 | |
5,729 | |||
MEDIA—1.1% | |||
62,118 | ViacomCBS Inc. | 1,138 | |
PHARMACEUTICALS—1.5% | |||
12,313 | Arvinas Inc.* | 612 | |
5,318 | Catalent Inc.* | 349 | |
1,927 | Eli Lilly & Co. | 698 | |
1,659 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—12.4% | |||
13,018 | Advanced Micro Devices Inc.* | 782 | |
9,860 | Applied Materials Inc. | 871 | |
2,988 | ASML Holding NV (Netherlands) | 1,402 | |
9,752 | Lam Research Corp. | 3,947 | |
55,718 | Microchip Technology Inc. | 3,440 | |
5,052 | NVIDIA Corp. | 682 | |
14,569 | Texas Instruments Inc. | 2,340 | |
13,464 | |||
SOFTWARE—23.9% | |||
13,770 | Atlassian Corp. plc (Australia)* | 2,792 | |
16,616 | Cadence Design Systems Inc.* | 2,515 | |
2,984 | CrowdStrike Holdings Inc.* | 481 | |
5,761 | CyberArk Software Ltd. (Israel)* | 904 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SOFTWARE—Continued | |||
15,559 | Datadog Inc. Class A* | $1,253 | |
16,747 | Fortinet Inc.* | 957 | |
3,182 | HubSpot Inc.* | 944 | |
7,324 | Microsoft Corp. | 1,700 | |
12,689 | Procore Technologies Inc.* | 694 | |
22,428 | salesforce.com Inc.* | 3,646 | |
93,605 | Samsara Inc.* | 1,152 | |
8,701 | ServiceNow Inc.* | 3,661 | |
20,471 | Smartsheet Inc.* | 715 | |
22,015 | Workday Inc.* | 3,430 | |
4,347 | Zoom Video Communications Inc.* | 363 | |
4,223 | Zscaler Inc.* | 651 | |
25,858 | |||
SPECIALTY RETAIL—0.3% | |||
28,761 | AUTO1 Group SE (Germany)*,2 | 194 | |
9,618 | Carvana Co.* | 130 | |
324 | |||
WIRELESS TELECOMMUNICATION SERVICES—2.5% | |||
17,616 | T-Mobile US Inc.* | 2,670 | |
TOTAL COMMON STOCKS | |||
(Cost $148,651) | 103,744 | ||
TOTAL INVESTMENTS—95.9% | |||
(Cost $148,651) | 103,744 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—4.1% | 4,476 | ||
TOTAL NET ASSETS—100.0% | $108,220 |
FAIR VALUE MEASUREMENTS
As of October 31, 2022, the investments in Adyen NV, ASML Holding NV, AUTO1 Group SE, Deliveroo Plc, and Lonza Group AG (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 as of October 31, 2022 or 2021.
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. As of October 31, 2022, the aggregate value of these securities was $4,131 or 4% of net assets. |
The accompanying notes are an integral part of the Financial Statements.
32
Harbor Diversified International All Cap Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Marathon Asset Management Limited
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
The period since October 31, 2021 has been weak for equity markets globally. Inflation was already high at the start of the period; however, at the time, central banks worldwide were largely sanguine in their view that the phenomenon would be a transitory effect of the easing of COVID-19 restrictions, though many others dissented. By December the view had begun to change and central banks worldwide embarked on a series of interest rate rises which have been gaining pace recently, which has depressed equities. Then in February, conflict broke out between Russia and Ukraine, upsetting the globalist view which businesses have adopted since the fall of the Iron Curtain after 1989, sending further shockwaves through the markets and depressing (most) valuations further.
The MSCI All Country World Ex-United States (ACWI ex-U.S.) Index (the “Index”) returned -24.73% (in USD terms) over the 12-month period ended October 31, 2022. Canada, which averaged 8.01% of the Index, was the strongest regional market, returning -13.94% (in USD terms), followed by developed Asian ex-Japan markets (Australia, Hong Kong, Singapore and New Zealand), which constituted 7.71% of the Index on average over the period and which returned -20.95% (in USD terms). European markets returned -22.88% (in USD terms) and averaged 40.54% of the Index over the period and Japan returned -24.67% (in USD terms) with an average weight of 14.19% of the Index. Emerging Markets, which averaged 29.08% of the Index over the period, were the laggard, returning -31.03% (in USD terms).
In such a market one would expect defensive sectors, which offer comparatively stable dividend yields, earnings and cash flows, regardless of external events to perform better than cyclical and highly leveraged growth stocks, and that has proved to be the case, with sectors such as Consumer Staples, Health Care and Utilities all outperforming the benchmark, though all fell. However, Energy has been the standout performer over the period, as already high oil and gas prices spiked following the imposition of sanctions against Russia by most developed markets in the wake of its invasion of Ukraine. However, Information Technology, Communication Services and Consumer Discretionary, the sectors which had led the market for several years, have fallen sharply, as has the Real Estate sector, which is sensitive to interest rates.
Performance
Harbor Diversified International All Cap Fund returned -24.03% (Retirement Class), -24.04% (Institutional Class), -24.24% (Administrative Class), and -24.32% (Investor Class) in the year ended October 31, 2022, while the ACWI ex-U.S. Index returned -24.73% (in USD terms). Regionally, stock selection was broadly neutral, with a strong showing from positions in Japan, the Emerging Markets and Canada being counterbalanced by underperformance from Europe and Pacific ex-Japan. Allocation effects were therefore positive. Although the portfolio is allocated in a region neutral manner, the Emerging Markets team owns certain stocks listed in Developed Markets and the resultant underweight to Emerging Markets and overweight position in Canada, where a couple of these stocks are listed, have been beneficial. From a sector perspective stock selection was positive, with notable outperformance from positions in Information Technology, Financials and Energy somewhat moderated by the performance of positions in Industrials, Consumer Staples and Health Care. Sector allocation was also positive, with the underweight to Real Estate and Information Technology notably beneficial, but underweight positions in Energy, Health Care and Utilities holding performance back.
Among positive contributors, Norway’s Equinor, the UK’s BP and Canadian Natural Resources performed well as investors began to anticipate higher oil prices and therefore earnings. Energy prices were already on a substantial uptrend even before Russia invaded Ukraine causing significant price increases. Canada’s Fairfax Financial, an insurer and investment firm, has performed well over the past 12-months due to a combination of getting past some major losses from catastrophe insurance in the late 2010s and the recent revival in fortunes of its value investment style. Not owning several major Chinese internet companies with a significant weight in the index, including Alibaba and Tencent, has also been beneficial. These stocks
33
Harbor Diversified International All Cap Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $50,000 INVESTMENT
For the period 11/02/2015 through 10/31/2022
The graph compares a $50,000 investment in the Institutional Class shares of the Fund with the performance of the MSCI All Country World Ex. U.S. (ND) Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | Life of Fund | |||||
Harbor Diversified International All Cap Fund | ||||||
Retirement Class1,2 | -24.03% | -0.12% | 2.51% | |||
Institutional Class1 | -24.04 | -0.19 | 2.44 | |||
Administrative Class1 | -24.24 | -0.43 | 2.18 | |||
Investor Class1 | -24.32 | -0.55 | 2.07 | |||
Comparative Index | ||||||
MSCI All Country World Ex. U.S. (ND) | -24.73% | -0.60% | 2.67% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.72% (Net) and 0.84% (Gross) (Retirement Class); 0.80% (Net) and 0.92% (Gross) (Institutional Class); 1.05% (Net) and 1.17% (Gross) (Administrative Class); 1.16% (Net) and 1.28% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
have underperformed since Chinese authorities launched a major anti-trust investigation in late 2020. Not holding Canadian stock Shopify has been the largest relative contributor, as the shares have fallen even further since the start of the period. It was one of the darlings of the North American tech-led market of the last several years, but we believe the company will struggle to meet expectations for growth with significantly increased borrowing costs.
At the other end of the performance tables, the write down of Russian stocks to a nominal value during the first quarter means that both Severstal and X5 Retail appear prominently amongst negative contributors. Away from Russia, HelloFresh, the German-listed meal kit delivery service, has been volatile year-to-date. Although the company expects growth to remain strong, the inflationary pressures in its core markets and an increase in investment into automated customer fulfilment centers and additional distribution capacity will put pressure on margins, and the stock has de-rated alongside most “growth” stocks in the face of rising interest rates. Denmark’s Vestas, the wind turbine manufacturer, extended its year-to-date declines as supply chain issues and competitive pricing eroded earnings and the markets de-rated “growth” stocks further. The share price of Techtronic Industries, a Hong Kong-listed producer of power tools, floorcare and cleaning products, has also declined substantially. Despite the company generating strong results, the market – ever forward looking – has determined that the global environment is not supportive for the company at present. The risk of recession, interest rate increases and the likely resultant fall in housing market transactions have driven negative sentiment towards the stock year-to-date.
Outlook & Strategy
Marathon Asset Management Limited remains committed to the implementation of its bottom-up analytical efforts within the capital cycle investment framework and, therefore, is seeking to invest in companies that exhibit favorable supply side dynamics with management teams that have a track record of allocating capital efficiently. Developments over the last several years, including the pandemic and outbreak of war in Europe, highlight the shortfalls of expending too much energy on forecasted outlooks; the Portfolio Managers are not looking to react to market volatility, rather placing emphasis on trusting the longstanding investment process that they have been committed to over the Subadvisor’s 35 plus year history with low levels of investment turnover.
1 | The “Life of Fund” return as shown reflects the period 11/02/2015 through 10/31/2022. |
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 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.
34
Harbor Diversified International All Cap Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
REGION BREAKDOWN (% of investments) -Unaudited
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of October 31, 2022, there was no foreign currency denomination that comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value and Cost in Thousands
COMMON STOCKS—97.6% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—0.9% | |||
17,794 | Airbus SE (France) | $1,925 | |
308,528 | BAE Systems plc (United Kingdom) | 2,886 | |
1,353,269 | Rolls-Royce Holdings plc (United Kingdom)* | 1,214 | |
11,897 | Thales SA (France) | 1,513 | |
7,538 | |||
AIR FREIGHT & LOGISTICS—0.1% | |||
23,641 | Oesterreichische Post AG (Austria) | 673 | |
AIRLINES—1.0% | |||
152,579 | Air Canada (Canada)* | 2,196 | |
47,450 | Copa Holdings SA (Panama)* | 3,570 | |
217,591 | EasyJet plc (United Kingdom)* | 866 | |
340,924 | Qantas Airways Ltd. (Australia)* | 1,274 | |
7,906 | |||
AUTO COMPONENTS—0.9% | |||
87,400 | Bridgestone Corp. (Japan) | 3,161 | |
236,030 | Gestamp Automocion SA (Spain)*,1 | 831 | |
189,263 | Johnson Electric Holdings Ltd. (Hong Kong) | 195 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
AUTO COMPONENTS—Continued | |||
31,090 | Magna International Inc. (Canada) | $1,732 | |
23,600 | Toyota Industries Corp. (Japan) | 1,216 | |
7,135 | |||
AUTOMOBILES—0.4% | |||
30,788 | Bayerische Motoren Werke AG (Germany) | 2,416 | |
57,500 | Toyota Motor Corp. (Japan) | 798 | |
3,214 | |||
BANKS—11.3% | |||
194,905 | Australia & New Zealand Banking Group Ltd (Australia) | 3,193 | |
611,383 | Bank of Ireland Group plc (Ireland)* | 4,402 | |
59,216 | Bank of Nova Scotia (Canada) | 2,862 | |
3,238,802 | Barclays plc (United Kingdom) | 5,504 | |
110,210 | BNP Paribas SA (France) | 5,168 | |
986,239 | CaixaBank SA (Spain) | 3,270 | |
38,259 | Capitec Bank Holdings Ltd. (South Africa) | 3,962 | |
35,875 | Close Brothers Group plc (United Kingdom) | 404 | |
20,750 | Danske Bank AS (Denmark) | 335 |
35
Harbor Diversified International All Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
BANKS—Continued | |||
157,547 | DBS Group Holdings Ltd. (Singapore) | $3,809 | |
85,157 | DNB Bank ASA (Norway) | 1,506 | |
49,600 | Fukuoka Financial Group Inc. (Japan) | 844 | |
795,600 | Grupo Financiero Banorte SAB de CV (Mexico)* | 6,477 | |
165,297 | HDFC Bank Ltd. ADR (India)2 | 10,300 | |
128,762 | HSBC Holdings plc (Hong Kong) | 661 | |
252,730 | Intesa Sanpaolo SpA (Italy)* | 482 | |
10,091,192 | Lloyds Banking Group plc (United Kingdom) | 4,846 | |
18,047,000 | PT Bank Central Asia TBK (Indonesia) | 10,202 | |
1,133,700 | Resona Holdings Inc. (Japan) | 4,273 | |
163,931 | Shinhan Financial Group Co. Ltd. (South Korea)* | 4,167 | |
333,601 | Standard Chartered plc (United Kingdom) | 1,993 | |
36,500 | Sumitomo Mitsui Financial Group Inc. (Japan) | 1,025 | |
106,300 | Sumitomo Mitsui Trust Holdings Inc. (Japan) | 3,058 | |
278,830 | Svenska Handelsbanken AB (Sweden) | 2,591 | |
322,828 | UniCredit SpA (Italy) | 4,003 | |
108,582 | United Overseas Bank Ltd. (Singapore) | 2,130 | |
91,467 | |||
BEVERAGES—2.6% | |||
34,167 | Anheuser-Busch InBev SA (Belgium) | 1,709 | |
49,200 | Asahi Group Holdings Ltd. (Japan) | 1,377 | |
15,630 | Carlsberg AS (Denmark) | 1,840 | |
28,454 | Coca-Cola Europacific Partners plc (United States) | 1,339 | |
123,398 | Davide Campari-Milano NV (Italy) | 1,108 | |
98,916 | Diageo plc (United Kingdom) | 4,071 | |
40,107 | Heineken NV (Netherlands) | 3,350 | |
352,400 | Kirin Holdings Co. Ltd. (Japan) | 5,180 | |
3,754 | Pernod Ricard SA (France) | 659 | |
20,633 | |||
BIOTECHNOLOGY—0.4% | |||
16,305 | CSL Ltd. (Australia) | 2,919 | |
BUILDING PRODUCTS—1.2% | |||
200,510 | Assa Abloy AB Class B (Sweden) | 4,049 | |
7,654 | Geberit AG (Switzerland) | 3,402 | |
230,964 | GWA Group Ltd. (Australia) | 300 | |
103,400 | LIXIL Group Corp. (Japan) | 1,562 | |
9,313 | |||
CAPITAL MARKETS—2.3% | |||
293,158 | 3i Group plc (United Kingdom) | 3,904 | |
193,515 | Brookfield Asset Management Inc. (Canada) | 7,663 | |
119,300 | Daiwa Securities Group Inc. (Japan) | 466 | |
135,518 | IG Group Holdings plc (United Kingdom) | 1,236 | |
10,200 | JAFCO Group Co. Ltd. (Japan) | 157 | |
444,599 | Jupiter Fund Management plc (United Kingdom) | 529 | |
554,300 | Nomura Holdings Inc. (Japan) | 1,794 | |
19,092 | Rathbone Brothers plc (United Kingdom) | 410 | |
126,136 | St. James's Place plc (United Kingdom) | 1,540 | |
30,128 | UBS Group AG (Switzerland) | 478 | |
18,177 | |||
CHEMICALS—0.8% | |||
171,100 | Air Water Inc. (Japan) | 1,910 | |
54,569 | BASF SE (Germany) | 2,449 | |
26,600 | Nissan Chemical Corp. (Japan) | 1,197 | |
25,600 | Sumitomo Bakelite Co. Ltd. (Japan) | 693 | |
6,249 | |||
COMMERCIAL SERVICES & SUPPLIES—1.9% | |||
15,600 | AEON Delight Co. Ltd. (Japan) | 312 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES—Continued | |||
11,182 | Befesa SA (Germany)*,1 | $388 | |
119,103 | Brambles Ltd. (Australia) | 892 | |
855,446 | Cleanaway Waste Management Ltd. (Australia) | 1,480 | |
33,171 | Elis SA (France) | 380 | |
309,948 | HomeServe plc (United Kingdom) | 4,218 | |
72,713 | Ritchie Bros Auctioneers Inc. (Canada) | 4,750 | |
15,700 | SECOM Co. Ltd. (Japan) | 894 | |
1,111,391 | Serco Group plc (United Kingdom) | 2,079 | |
15,393 | |||
CONSTRUCTION & ENGINEERING—1.0% | |||
20,413 | Ferrovial SA (Spain) | 499 | |
184,100 | Infroneer Holdings Inc. (Japan) | 1,276 | |
346,100 | Obayashi Corp. (Japan) | 2,222 | |
256,000 | Penta-Ocean Construction Co. Ltd. (Japan) | 1,273 | |
163,080 | SNC-Lavalin Group Inc. (Canada) | 2,824 | |
8,094 | |||
CONSTRUCTION MATERIALS—1.2% | |||
160,900 | Beijing Oriental Yuhong Waterproof Technology Co. Ltd. Class A (China) | 542 | |
15,381 | CRH plc (Ireland) | 554 | |
294,100 | Fletcher Building Ltd. (New Zealand) | 878 | |
61,417 | Holcim Ltd. (Switzerland)* | 2,790 | |
5,635 | Imerys SA (France) | 231 | |
39,885 | James Hardie Industries PLC CDI (Australia)*,2 | 871 | |
139,100 | Taiheiyo Cement Corp. (Japan) | 1,890 | |
8,390 | Vicat SA (France) | 192 | |
76,044 | Wienerberger AG (Austria) | 1,738 | |
9,686 | |||
CONSUMER FINANCE—0.1% | |||
317,906 | International Personal Finance plc (United Kingdom) | 283 | |
388,582 | Non-Standard Finance plc (United Kingdom)*,1 | 3 | |
225,062 | Provident Financial plc (United Kingdom) | 422 | |
708 | |||
CONTAINERS & PACKAGING—0.4% | |||
505,486 | DS Smith plc (United Kingdom) | 1,686 | |
149,900 | Toyo Seikan Group Holdings Ltd. (Japan) | 1,714 | |
3,400 | |||
DISTRIBUTORS—0.3% | |||
236,199 | Inchcape plc (United Kingdom) | 2,015 | |
DIVERSIFIED FINANCIAL SERVICES—1.6% | |||
600,417 | AMP Ltd. (Australia)* | 484 | |
2,347,700 | B3 Brasil Bolsa Balcao SA (Brazil)* | 6,836 | |
667,802 | Chailease Holding Co. Ltd. (Taiwan) | 3,080 | |
113,371 | Challenger Ltd. (Australia) | 510 | |
20,670 | Macquarie Group Ltd. (Australia) | 2,242 | |
13,152 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—1.6% | |||
42,786 | BCE Inc. (Canada)3 | 1,930 | |
77,193 | Deutsche Telekom AG (Germany) | 1,457 | |
660,678 | Koninklijke KPN NV (Netherlands) | 1,848 | |
241,900 | Nippon Telegraph & Telephone Corp. (Japan) | 6,672 | |
196,400 | Singapore Telecommunications Ltd. (Singapore) | 346 | |
412,818 | Telstra Group Ltd. (Australia)* | 1,035 | |
13,288 |
36
Harbor Diversified International All Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
ELECTRIC UTILITIES—0.2% | |||
24,093 | Orsted AS (Denmark)1 | $1,988 | |
ELECTRICAL EQUIPMENT—2.5% | |||
102,631 | ABB Ltd. (Switzerland) | 2,850 | |
5,131 | Accelleron Industries AG (Switzerland)* | 87 | |
228,692 | Havells India Ltd. (India)* | 3,372 | |
52,835 | Legrand SA (France) | 4,026 | |
209,100 | Mitsubishi Electric Corp. (Japan) | 1,840 | |
25,375 | Schneider Electric SE (France) | 3,209 | |
259,013 | Vestas Wind Systems AS (Denmark) | 5,106 | |
20,490 | |||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—1.0% | |||
643,315 | Delta Electronics Inc. (Taiwan) | 5,119 | |
18,500 | Kyocera Corp. (Japan) | 896 | |
12,700 | Omron Corp. (Japan) | 592 | |
53,600 | TDK Corp. (Japan) | 1,674 | |
8,281 | |||
ENERGY EQUIPMENT & SERVICES—0.1% | |||
271,876 | John Wood Group plc (United Kingdom)* | 437 | |
109,847 | Petrofac Ltd. (United Kingdom)* | 135 | |
20,321 | Saipem SpA (Italy)* | 20 | |
27,248 | Technip Energies NV (France)* | 352 | |
944 | |||
ENTERTAINMENT—0.2% | |||
23,753 | CTS Eventim AG & Co. KGaA (Germany)* | 1,134 | |
53,770 | Modern Times Group MTG AB Class B (Sweden)* | 403 | |
10,000 | Nintendo Co. Ltd. (Japan) | 406 | |
1,943 | |||
FOOD & STAPLES RETAILING—3.1% | |||
116,980 | Alimentation Couche-Tard Inc. (Canada)* | 5,238 | |
265,703 | Bid Corp. Ltd. (South Africa) | 4,276 | |
194,087 | Clicks Group Ltd. (South Africa) | 3,288 | |
97,243 | Koninklijke Ahold Delhaize NV (Netherlands) | 2,712 | |
69,632 | Loblaw Cos. Ltd. (Canada) | 5,705 | |
18,500 | Matsumotokiyoshi Holdings Co. Ltd. (Japan) | 674 | |
274,816 | Metcash Ltd. (Australia) | 721 | |
37,600 | Seven & I Holdings Co. Ltd. (Japan) | 1,403 | |
500,667 | Tesco plc (United Kingdom) | 1,237 | |
140,921 | X5 Retail Group NV GDR (Russia) | —x | |
25,254 | |||
FOOD PRODUCTS—1.4% | |||
1,371,000 | China Mengniu Dairy Co. Ltd. (China)* | 4,389 | |
170,800 | Delfi Ltd. (Singapore) | 85 | |
193,318 | Devro plc (United Kingdom) | 397 | |
752,000 | First Pacific Co. Ltd. (Hong Kong) | 199 | |
56,500 | Megmilk Snow Brand Co. Ltd. (Japan) | 615 | |
48,200 | NH Foods Ltd. (Japan) | 1,149 | |
49,900 | Toyo Suisan Kaisha Ltd. (Japan) | 1,872 | |
27,446 | Viscofan SA (Spain) | 1,634 | |
14,300 | Yakult Honsha Co. Ltd. (Japan) | 792 | |
11,132 | |||
HEALTH CARE EQUIPMENT & SUPPLIES—1.8% | |||
40,616 | Coloplast AS Class B (Denmark) | 4,527 | |
1,065,338 | ConvaTec Group plc (United Kingdom)1 | 2,666 | |
78,076 | Demant AS (Denmark)* | 2,132 | |
46,021 | Getinge AB Class B (Sweden) | 934 | |
57,010 | GN Store Nord AS (Denmark) | 1,211 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES—Continued | |||
84,989 | Koninklijke Philips NV (Netherlands) | $1,078 | |
33,155 | Smith & Nephew plc (United Kingdom) | 392 | |
7,263 | Sonova Holding AG (Switzerland) | 1,717 | |
14,657 | |||
HEALTH CARE PROVIDERS & SERVICES—0.6% | |||
27,300 | Alfresa Holdings Corp. (Japan) | 314 | |
23,941 | Amplifon SpA (Italy) | 595 | |
66,148 | Fresenius Medical Care AG & Co. KGaA (Germany) | 1,830 | |
90,800 | MediPAL Holdings Corp. (Japan) | 1,126 | |
38,500 | Ship Healthcare Holdings Inc. (Japan) | 738 | |
4,603 | |||
HOTELS, RESTAURANTS & LEISURE—2.7% | |||
45,278 | Aristocrat Leisure Ltd. (Australia) | 1,075 | |
39,838 | Carnival plc (United Kingdom)* | 316 | |
264,992 | Compass Group plc (United Kingdom) | 5,581 | |
250,690 | Entain plc (United Kingdom)* | 3,627 | |
41,805 | Flutter Entertainment plc (Ireland)* | 5,521 | |
267,000 | Galaxy Entertainment Group Ltd. (Hong Kong)* | 1,220 | |
11,725 | InterContinental Hotels Group plc (United Kingdom) | 630 | |
68,824 | Playtech plc (United Kingdom)* | 409 | |
1,100,522 | SSP Group plc (United Kingdom)* | 2,559 | |
708,911 | TUI AG (Germany)* | 1,073 | |
22,011 | |||
HOUSEHOLD DURABLES—0.9% | |||
83,798 | Barratt Developments plc (United Kingdom) | 361 | |
670,200 | Midea Group Co. Ltd. (China) | 3,692 | |
56,700 | Sekisui Chemical Co. Ltd. (Japan) | 708 | |
21,600 | Sony Group Corp. (Japan) | 1,457 | |
692,183 | Taylor Wimpey plc (United Kingdom) | 744 | |
6,962 | |||
HOUSEHOLD PRODUCTS—0.4% | |||
54,410 | Reckitt Benckiser Group plc (United Kingdom) | 3,611 | |
INDUSTRIAL CONGLOMERATES—1.3% | |||
159,500 | CK Hutchison Holdings Ltd. (Hong Kong) | 794 | |
30,817 | DCC plc (United Kingdom) | 1,711 | |
109,000 | Hitachi Ltd. (Japan) | 4,946 | |
40,200 | Jardine Matheson Holdings Ltd. (Hong Kong) | 1,852 | |
246,264 | Melrose Industries plc (United Kingdom)* | 330 | |
153,100 | Nisshinbo Holdings Inc. (Japan) | 1,061 | |
10,694 | |||
INSURANCE—6.3% | |||
66,734 | Admiral Group plc (United Kingdom) | 1,543 | |
1,666,000 | AIA Group Ltd. (Hong Kong) | 12,620 | |
173,701 | AXA SA (France) | 4,289 | |
222,500 | Dai-ichi Life Holdings Inc. (Japan) | 3,534 | |
17,085 | Fairfax Financial Holdings Ltd. (Canada) | 8,391 | |
72,500 | Great Eastern Holdings Ltd. (Singapore) | 917 | |
5,420 | Hannover Rueck SE (Germany) | 882 | |
4,804 | Helvetia Holding AG (Switzerland) | 477 | |
70,891 | Hiscox Ltd. (United Kingdom) | 730 | |
171,700 | Japan Post Holdings Co. Ltd. (Japan) | 1,155 | |
949,382 | Porto Seguro SA (Brazil)* | 4,271 | |
135,855 | Prudential plc (Hong Kong) | 1,262 | |
310,929 | QBE Insurance Group Ltd. (Australia) | 2,436 | |
100,525 | Sampo OYJ (Finland) | 4,597 | |
200,600 | Tokio Marine Holdings Inc. (Japan) | 3,632 | |
50,736 |
37
Harbor Diversified International All Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
INTERACTIVE MEDIA & SERVICES—1.0% | |||
237,592 | Auto Trader Group plc (United Kingdom)1 | $1,422 | |
26,881 | Baidu Inc. ADR (China)*,2 | 2,058 | |
59,818 | Carsales.com Ltd. (Australia) | 775 | |
697,282 | Rightmove plc (United Kingdom) | 3,927 | |
8,182 | |||
INTERNET & DIRECT MARKETING RETAIL—1.5% | |||
29,510 | Cazoo Group Ltd. (Cayman Islands)* | 9 | |
85,604 | HelloFresh SE (Germany)* | 1,711 | |
23,184 | Just Eat Takeaway.com NV (Netherlands)*,1 | 398 | |
52,441 | Naspers Ltd. (South Africa)* | 5,406 | |
354,702 | Vipshop Holdings Ltd. ADR (China)*,2 | 2,472 | |
28,633 | Zalando SE (Germany)*,1 | 660 | |
55,000 | ZOZO Inc. (Japan) | 1,167 | |
11,823 | |||
IT SERVICES—3.2% | |||
14,175 | ALTEN SA (France) | 1,656 | |
1,997,143 | Capita plc (United Kingdom)* | 556 | |
65,973 | Edenred (France) | 3,382 | |
295,443 | Infosys Ltd. ADR (India)2 | 5,534 | |
86,600 | NEC Corp. (Japan) | 2,867 | |
58,200 | NET One Systems Co. Ltd. (Japan) | 1,195 | |
34,000 | NS Solutions Corp. (Japan) | 781 | |
57,400 | NTT Data Corp. (Japan) | 831 | |
5,727 | Reply SpA (Italy) | 623 | |
94,200 | SCSK Corp. (Japan) | 1,390 | |
26,820 | Softcat plc (United Kingdom) | 345 | |
170,345 | Tata Consultancy Services Ltd. (India) | 6,547 | |
25,707 | |||
LEISURE PRODUCTS—0.6% | |||
7,467 | Mips AB (Sweden) | 241 | |
122,500 | Sega Sammy Holdings Inc. (Japan) | 1,567 | |
104,224 | Spin Master Corp. (Canada)1 | 3,221 | |
5,029 | |||
LIFE SCIENCES TOOLS & SERVICES—0.4% | |||
38,583 | Eurofins Scientific SE (France) | 2,470 | |
6,988 | Gerresheimer AG (Germany) | 400 | |
2,870 | |||
MACHINERY—3.4% | |||
30,721 | ALFA Laval AB (Sweden) | 756 | |
14,409 | Andritz AG (Austria) | 670 | |
331,672 | CNH Industrial NV (Italy) | 4,291 | |
18,600 | Daifuku Co. Ltd. (Japan) | 851 | |
92,954 | Fluidra SA (Spain) | 1,262 | |
13,998 | GEA Group AG (Germany) | 489 | |
65,930 | Iveco Group NV (Italy)* | 356 | |
68,300 | Kubota Corp. (Japan) | 953 | |
59,000 | Mitsubishi Heavy Industries Ltd. (Japan) | 2,032 | |
34,000 | Miura Co. Ltd. (Japan) | 693 | |
99,800 | NSK Ltd. (Japan) | 528 | |
124,802 | Rotork plc (United Kingdom) | 366 | |
137,238 | Sandvik AB (Sweden) | 2,145 | |
1,107,100 | Sany Heavy Industry Co. Ltd. (China) | 2,054 | |
27,286 | Stabilus SE (Germany)* | 1,497 | |
534,000 | Techtronic Industries Co. Ltd. (Hong Kong) | 5,056 | |
94,575 | Wartsila OYJ ABP (Finland) | 645 | |
2,985,000 | Weichai Power Co. Ltd. (China) | 2,859 | |
27,503 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
MARINE—0.2% | |||
192,984 | Irish Continental Group plc (Ireland)* | $780 | |
31,100 | Kawasaki Kisen Kaisha Ltd. (Japan) | 472 | |
1,252 | |||
MEDIA—1.5% | |||
40,136 | Euromoney Institutional Investor plc (United Kingdom) | 667 | |
189,600 | Fuji Media Holdings Inc. (Japan) | 1,319 | |
67,951 | Future plc (United Kingdom) | 952 | |
76,900 | Hakuhodo DY Holdings Inc. (Japan) | 648 | |
112,188 | Informa plc (United Kingdom) | 715 | |
2,112,505 | ITV plc (United Kingdom) | 1,627 | |
79,826 | JCDecaux SA (France)* | 1,008 | |
42,613 | MediaSet Espana Comunicacion SA (Spain) | 133 | |
128,320 | Nippon Television Holdings Inc. (Japan) | 957 | |
39,409 | Nordic Entertainment Group AB (Sweden)* | 719 | |
23,095 | Schibsted ASA Class A (Norway) | 356 | |
10,366 | Schibsted ASA Class B (Norway) | 154 | |
79,300 | TBS Holdings Inc. (Japan) | 821 | |
210,574 | WPP plc (United Kingdom) | 1,853 | |
11,929 | |||
METALS & MINING—5.8% | |||
116,918 | Acerinox SA (Spain) | 1,025 | |
261,696 | African Rainbow Minerals Ltd. (South Africa) | 3,685 | |
27,447 | Alleima AB (Sweden)* | 94 | |
30,633 | Anglo American Platinum Ltd. (South Africa) | 2,439 | |
146,183 | ArcelorMittal SA (France) | 3,268 | |
305,261 | Barrick Gold Corp. (Canada) | 4,591 | |
155,977 | BHP Group Ltd. (Australia) | 3,747 | |
91,284 | BlueScope Steel Ltd. (Australia) | 919 | |
25,800 | Dowa Holdings Co. Ltd. (Japan) | 819 | |
453,012 | Evolution Mining Ltd. (Australia) | 601 | |
207,179 | First Quantum Minerals Ltd. (Canada) | 3,654 | |
26,907 | Franco-Nevada Corp. (Canada) | 3,325 | |
1,150,054 | Glencore plc (United Kingdom)* | 6,593 | |
86,243 | Newcrest Mining Ltd. (Australia) | 955 | |
41,590 | OZ Minerals Ltd. (Australia) | 644 | |
66,529 | Rio Tinto plc (United Kingdom) | 3,477 | |
320,373 | Severstal PJSC GDR (Russia) | —x | |
123,276 | Southern Copper Corp. (Peru) | 5,790 | |
50,200 | Sumitomo Metal Mining Co. Ltd. (Japan) | 1,407 | |
47,033 | |||
MULTILINE RETAIL—0.1% | |||
69,500 | Marui Group Co. Ltd. (Japan) | 1,137 | |
OIL, GAS & CONSUMABLE FUELS—5.1% | |||
759,360 | Beach Energy Ltd. (Australia) | 776 | |
2,505,127 | BP plc (United Kingdom) | 13,860 | |
145,056 | Canadian Natural Resources Ltd. (Canada) | 8,700 | |
231,029 | Equinor ASA (Norway) | 8,417 | |
192,100 | INPEX Corp. (Japan) | 1,939 | |
237,179 | PrairieSky Royalty Ltd. (Canada) | 3,684 | |
502,671 | Santos Ltd. (Australia) | 2,454 | |
57,012 | Woodside Energy Group Ltd. (Australia) | 1,318 | |
41,148 | |||
PAPER & FOREST PRODUCTS—0.2% | |||
475,700 | Oji Holdings Corp. (Japan) | 1,649 | |
PERSONAL PRODUCTS—1.5% | |||
523,917 | Dabur India Ltd. (India) | 3,524 | |
276,209 | L'Occitane International SA (Hong Kong) | 678 |
38
Harbor Diversified International All Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
PERSONAL PRODUCTS—Continued | |||
570,144 | Marico Ltd. (India) | $3,627 | |
92,047 | Unilever plc (United Kingdom) | 4,184 | |
12,013 | |||
PHARMACEUTICALS—2.9% | |||
106,514 | Novo Nordisk AS (Denmark) | 11,581 | |
31,186 | Roche Holding AG (Switzerland) | 10,348 | |
14,600 | Sawai Group Holdings Co. Ltd. (Japan) | 422 | |
61,400 | Tsumura & Co. (Japan) | 1,282 | |
23,633 | |||
PROFESSIONAL SERVICES—2.5% | |||
61,328 | Adecco Group AG (Switzerland)* | 1,919 | |
136,285 | ALS Ltd. (Australia) | 997 | |
66,529 | Experian plc (United Kingdom) | 2,121 | |
1,676,750 | Hays plc (United Kingdom) | 2,114 | |
89,786 | Intertek Group plc (United Kingdom) | 3,762 | |
96,554 | IPH Ltd. (Australia) | 614 | |
74,400 | Nomura Co. Ltd. (Japan) | 544 | |
118,255 | PageGroup plc (United Kingdom)* | 570 | |
39,400 | Persol Holdings Co. Ltd. (Japan) | 789 | |
10,280 | Randstad NV (Netherlands) | 512 | |
151,265 | RELX plc (United Kingdom) | 4,063 | |
113,736 | RWS Holdings plc (United Kingdom) | 400 | |
22,500 | TechnoPro Holdings Inc. (Japan)* | 540 | |
4,773 | Teleperformance (France) | 1,279 | |
20,224 | |||
REAL ESTATE MANAGEMENT & DEVELOPMENT—0.6% | |||
157,200 | Daiwa House Industry Co. Ltd. (Japan) | 3,167 | |
46,176 | Singapore Land Group Ltd (Singapore) | 71 | |
195,500 | Swire Pacific Ltd. (Hong Kong) | 1,297 | |
4,535 | |||
ROAD & RAIL—1.6% | |||
78,162 | Canadian Pacific Railway Ltd. (Canada) | 5,827 | |
23,900 | East Japan Railway Co. (Japan) | 1,273 | |
360,600 | Localiza Rent A Car Ltd. (Brazil)* | 4,924 | |
1,013 | Localiza Rent A Car SA (Brazil)* | 14 | |
208,739 | National Express Group plc (United Kingdom)* | 405 | |
105,000 | Senko Group Holdings Co. Ltd. (Japan) | 701 | |
13,144 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—2.8% | |||
65,200 | ASM Pacific Technology Ltd. (Hong Kong) | 359 | |
13,096 | ASML Holding NV (Netherlands) | 6,143 | |
87,000 | MediaTek Inc. (Taiwan) | 1,586 | |
193,700 | Renesas Electronics Corp. (Japan)* | 1,620 | |
15,900 | ROHM Co. Ltd. (Japan) | 1,117 | |
56,259 | SK Hynix Inc. (South Korea) | 3,257 | |
699,000 | Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan) | 8,404 | |
22,486 | |||
SOFTWARE—0.9% | |||
18,157 | Aveva Group plc (United Kingdom) | 650 | |
3,968 | Constellation Software Inc. (Canada) | 5,738 | |
20,600 | Oracle Corp. Japan (Japan) | 1,097 | |
7,485 | |||
SPECIALTY RETAIL—1.3% | |||
22,700 | ABC-Mart Inc. (Japan) | 1,012 | |
1,344,700 | Esprit Holdings Ltd. (Hong Kong)* | 104 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SPECIALTY RETAIL—Continued | |||
1,843,995 | Pepkor Holdings Ltd. (South Africa)1 | $2,279 | |
252,942 | Pets at Home Group plc (United Kingdom) | 836 | |
56,700 | USS Co. Ltd. (Japan) | 855 | |
106,555 | WH Smith plc (United Kingdom)* | 1,441 | |
1,008,500 | Zhongsheng Group Holdings Ltd (China) | 3,828 | |
10,355 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—1.5% | |||
469,000 | Advantech Co. Ltd. (Taiwan) | 4,249 | |
23,147 | Logitech International SA (Switzerland) | 1,151 | |
18,469 | Quadient SA (France) | 260 | |
155,422 | Samsung Electronics Co Ltd. (South Korea) | 6,469 | |
12,129 | |||
TEXTILES, APPAREL & LUXURY GOODS—2.2% | |||
13,830 | Adidas AG (Germany) | 1,350 | |
38,920 | Cie Financiere Richemont SA (Switzerland) | 3,804 | |
29,783 | EssilorLuxottica SA (France) | 4,710 | |
54,595 | Gildan Activewear Inc. (Canada) | 1,723 | |
456,500 | Li Ning Co. Ltd. (China) | 2,361 | |
297,900 | Samsonite International SA (Hong Kong)*,1 | 640 | |
362,700 | Shenzhou International Group Holdings Ltd. (China) | 2,518 | |
1,040,746 | Stella International Holdings Ltd. (Hong Kong) | 1,008 | |
18,114 | |||
THRIFTS & MORTGAGE FINANCE—1.0% | |||
262,897 | Housing Development Finance Corp. Ltd. (India) | 7,861 | |
TOBACCO—0.4% | |||
13,597 | British American Tobacco plc (United Kingdom) | 537 | |
231,827 | Swedish Match AB (Sweden) | 2,384 | |
2,921 | |||
TRADING COMPANIES & DISTRIBUTORS—1.6% | |||
436,100 | BOC Aviation Ltd. (China)1 | 2,918 | |
47,285 | Brenntag SE (Germany) | 2,869 | |
107,857 | Bunzl plc (United Kingdom) | 3,515 | |
101,642 | Finning International Inc. (Canada) | 2,161 | |
61,900 | ITOCHU Corp. (Japan) | 1,600 | |
13,063 | |||
TRANSPORTATION INFRASTRUCTURE—0.9% | |||
89,795 | Getlink SE (France) | 1,421 | |
321,688 | Grupo Aeroportuario del Pacifico SAB de CV Class B (Mexico) | 4,989 | |
50,200 | Mitsubishi Logistics Corp. (Japan) | 1,102 | |
7,512 | |||
WIRELESS TELECOMMUNICATION SERVICES—0.4% | |||
50,800 | KDDI Corp. (Japan) | 1,501 | |
34,971 | Rogers Communications Inc. (Canada) | 1,456 | |
2,957 | |||
TOTAL COMMON STOCKS | |||
(Cost $867,517) | 787,960 | ||
39
Harbor Diversified International All Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
PREFERRED STOCKS—0.2% | |||
(Cost $2,278) | |||
Shares | Value | ||
AUTOMOBILES—0.2% | |||
13,540 | Volkswagen AG (Germany) | $1,733 | |
TOTAL INVESTMENTS—97.8% | |||
(Cost $869,795) | 789,693 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—2.2% | 18,043 | ||
TOTAL NET ASSETS—100.0% | $807,736 |
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of October 31, 2022 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 | $— | $25,335 | $— | $25,335 |
Europe | 181 | 331,345 | — | 331,526 |
Latin America | 36,880 | — | — | 36,880 |
Middle East/Central Asia | 15,834 | 24,931 | — | 40,765 |
North America | 88,710 | — | — | 88,710 |
Pacific Basin | 5,565 | 259,179 | — | 264,744 |
Preferred Stocks | ||||
Europe | — | 1,733 | — | 1,733 |
Total Investments in Securities | $147,170 | $642,523 | $— | $789,693 |
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 year ended October 31, 2022. 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 11/01/2021 (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 3h (000s) | Ending Balance as of 10/31/2022 (000s) | Unrealized Gain/(Loss) as of 10/31/2022 (000s) |
Common Stocks | $3,372 | $314 | $(629) | $— | $99 | $(914) | $— | $(2,242) | $— | $(11,469) |
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 | Ending Balance as of 10/31/2022 (000s) | Valuation Technique | Unobservable Input(s) | Input Value(s) |
Investments in Securities | ||||
Common Stocks | ||||
Severstal PJSC GDR (Russia) | $ — | Market Approach | Estimated Recovery Value | $ 0.00 |
X5 Retail Group NV GDR (Russia) | — | Market Approach | Estimated Recovery Value | $ 0.00 |
$— |
40
Harbor Diversified International All Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
x | Fair valued in accordance with Harbor Funds' Valuation Procedures. |
* | 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. As of October 31, 2022, the aggregate value of these securities was $17,414 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 October 31, 2022. |
h | Transferred from Level 2 to Level 3 due to the unavailability of observable market data for pricing or transferred from Level 3 to Level 2 due to availability of observable market data for pricing |
The accompanying notes are an integral part of the Financial Statements.
41
Harbor Emerging Markets Equity Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Marathon Asset Management Limited
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
The year under review has been a difficult one for equity markets generally and for Emerging Markets in particular, with the MSCI Emerging Markets (EM) Index (the “Index”) returning -31.02% (USD terms) over the period. However, this average hides substantial differences within and between the sub-regions.
Within Emerging Asia, which averaged 78.34% of the Index over the year and returned -34.47%, Indonesia performed well, averaging 1.77% of the Index and delivering positive performance of 5.89% (USD terms) following improvements in local conditions, but all other countries in the region declined as the global outlook worsened. China was the big story, both in the region and the benchmark, due to its substantial weight in the Index (31.91% of the Index, on average, over the period) and the depth of its decline (-47.90% USD terms). Ongoing COVID-19 restrictions due to the country’s “zero tolerance” approach to the disease as well as worries about global growth, inflation and rising interest rates in a heavily leveraged economy resulted in a sharp market decline, exacerbated by an increasingly authoritarian tone from the government.
The Emerging Americas markets, which averaged 8.10% of the index, rose, delivering a return of 16.12% in USD terms over the period. Almost all markets generated positive returns, as the price of most commodities has been elevated. However, Colombia and Argentina were notable outliers, falling due to idiosyncratic issues.
Emerging Europe, the Middle East and Africa (“EMEA”) was more of a mixed bag. The Emerging European markets have been hit hard by the conflict in the Ukraine. Not only has this led to enormous numbers of refugees, but a substantial amount of trade has been curtailed and resources have been diverted to supporting the Ukrainian defense effort. The African markets of Egypt and South Africa also declined; the former at least in part due to its reliance on Ukrainian and Russian grain to feed its population and the latter due to ongoing infrastructure issues leading to water and power shortages as well as strikes in some of its main industries. Conversely, the Middle East fared well. Turkey was the best performing market in the index over the period. Despite inflation of over 80%, the country has cut interest rates twice during the quarter and growth rates are high following very poor performance over recent years. The markets of the Gulf also performed well, benefitting from high energy prices.
Performance
Harbor Emerging Markets Equity Fund returned -32.39% (Retirement Class), -32.42% (Institutional Class), and -32.69% (Investor Class) during the year ended October 31, 2022, while the MSCI Emerging Markets (ND) Index returned -31.03% (USD terms). Regionally, allocation between regions was beneficial, with every region except Emerging EMEA (which was neutral) contributing positively. Stock selection was positive in Korea, Mexico and Brazil; however, stock selection in most other countries lagged, and positions in developed-market-listed stocks (which must either operate predominantly in, or make the preponderant part of their revenue from, Emerging Markets to be included in the Fund) in particular held performance back. At the sector level, stock selection once again lagged, with good performance in Information Technology outweighed by underperformance in other sectors, particularly Industrials, Materials and Consumer Staples. This was largely offset by good allocation between sectors, itself a residual of stock selection rather than a top-down target, with most positions being positive to performance, particularly the underweight to Communication Services and overweight positions in Industrials and Financials; however, the underweight to Utilities held back returns.
At the stock level, Russian names appear among the largest negative contributors to performance. With the onset of the conflict with Ukraine and the imposition of sanctions, Russia was removed from MSCI’s range of indices. The portfolio had limited exposure to Russia at the time, so the overall impact on relative performance has been minimal, indeed the underweight was beneficial from a relative perspective. Lack of exposure to most Russian index names, notably giants Gazprom and Sberbank, was therefore strongly positive. However, the portfolio held
42
Harbor Emerging Markets Equity Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $50,000 INVESTMENT
For the period 11/01/2013 through 10/31/2022
The graph compares a $50,000 investment in the Institutional Class shares of the Fund with the performance of the MSCI Emerging Markets (ND) Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | Life of Fund | |||||
Harbor Emerging Markets Equity Fund | ||||||
Retirement Class1,2 | -32.39% | -0.92% | 0.68% | |||
Institutional Class1 | -32.42 | -1.01 | 0.62 | |||
Investor Class1 | -32.69 | -1.36 | 0.25 | |||
Comparative Index | ||||||
MSCI Emerging Markets (ND)1 | -31.03% | -3.09% | 0.17% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.88% (Net) and 1.47% (Gross) (Retirement Class); 0.96% (Net) and 1.55% (Gross) (Institutional Class); 1.21% (Net) and 1.80% (Gross) (Administrative Class); and 1.32% (Net) and 1.91% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
two Russian positions; Severstal, one of Russia’s largest steel producers, and X5 Retail, which operates convenience stores and hypermarkets. Both positions have been written down to a nominal value and are significant negatives as a result.
Financials appear prominently amongst top performing positions. Indonesia’s PT Bank reported strong earnings recently and is experiencing a post-pandemic surge in demand. It is also benefitting from regulatory reform in Indonesia. HDFC Bank, India’s largest private sector bank focused on consumer and commercial loans, is merging with HDFC Limited, India’s largest private sector mortgage company (and another portfolio holding). After the announcement in early April, the value of both companies initially spiked before falling away on fears over growth in an increasingly inflationary environment; however, the HDFC Bank reported strong earnings growth during the third quarter and the share price responded positively. Brazil’s market bounced back substantially as political uncertainty moderated and commodity price volatility reduced, benefitting B3, the country’s stock exchange and Porto Seguro, an insurer. Mexico’s Banorte reported stronger earnings, profits and loan growth than expected by investors, buoying its share price over the quarter.
At the bottom of the performance table Shenzhou International, a Chinese manufacturer, primarily of apparel, performed poorly. The company has suffered shutdowns due to Chinese COVID-19 outbreaks, and issued a profit warning in March, substantially reducing earnings guidance. Sea, a Singapore listed e-commerce and entertainment business, fell sharply after deciding to downsize its operations in Latin America, India and Europe to restore profitability. The share price of Techtronic Industries, a Hong Kong-listed producer of power tools, floorcare and cleaning products, has also declined substantially. Despite the company generating outstanding results, the market – ever forward looking – has determined that the global environment is not supportive for the company at present. The risk of recession, interest rate increases and the likely resultant fall in housing market transactions have driven negative sentiment towards the stock.
Outlook & Strategy
Marathon Asset Management Limited remains committed to the implementation of its bottom-up analytical efforts within the capital cycle investment framework and, therefore, is seeking to invest in companies that 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; the Portfolio Managers are not looking to react to market volatility, rather placing emphasis on trusting the longstanding investment process that they have been committed to over the Subadvisor’s 35 plus year history with low levels of investment turnover.
1 | The “Life of Fund” return as shown reflects the period 11/01/2013 through October 31, 2022. |
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 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.
43
Harbor Emerging Markets Equity Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
REGION BREAKDOWN (% of investments) -Unaudited
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of October 31, 2022, there was no foreign currency denomination that comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value and Cost in Thousands
COMMON STOCKS—102.4% | |||
Shares | Value | ||
AIRLINES—1.8% | |||
1,502 | Copa Holdings SA (Panama)* | $113 | |
BANKS—17.8% | |||
1,210 | Capitec Bank Holdings Ltd. (South Africa) | 125 | |
23,400 | Grupo Financiero Banorte SAB de CV (Mexico)* | 191 | |
5,219 | HDFC Bank Ltd. ADR (India)1 | 325 | |
569,800 | PT Bank Central Asia TBK (Indonesia) | 322 | |
5,176 | Shinhan Financial Group Co. Ltd. (South Korea)* | 132 | |
1,095 | |||
CHEMICALS—0.0% | |||
2,684,000 | Tianhe Chemicals Group Ltd. (Hong Kong)* | —x | |
CONSTRUCTION MATERIALS—0.3% | |||
5,200 | Beijing Oriental Yuhong Waterproof Technology Co. Ltd. Class A (China) | 18 | |
DIVERSIFIED FINANCIAL SERVICES—5.1% | |||
74,400 | B3 Brasil Bolsa Balcao SA (Brazil)* | 217 | |
21,025 | Chailease Holding Co. Ltd. (Taiwan) | 97 | |
314 | |||
ELECTRICAL EQUIPMENT—1.7% | |||
7,221 | Havells India Ltd. (India)* | 106 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—2.7% | |||
21,000 | Delta Electronics Inc. (Taiwan) | 167 | |
FOOD & STAPLES RETAILING—3.9% | |||
8,441 | Bid Corp. Ltd. (South Africa) | 136 | |
6,166 | Clicks Group Ltd. (South Africa) | 104 | |
9,353 | X5 Retail Group NV GDR (Russia) | —x | |
240 | |||
FOOD PRODUCTS—2.3% | |||
43,000 | China Mengniu Dairy Co. Ltd. (China)* | 138 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
HOUSEHOLD DURABLES—1.9% | |||
21,066 | Midea Group Co. Ltd. (China) | $116 | |
INSURANCE—6.8% | |||
37,200 | AIA Group Ltd. (Hong Kong) | 282 | |
29,977 | Porto Seguro SA (Brazil)* | 135 | |
417 | |||
INTERACTIVE MEDIA & SERVICES—0.8% | |||
640 | Baidu Inc. ADR (China)*,1 | 49 | |
INTERNET & DIRECT MARKETING RETAIL—3.9% | |||
1,579 | Naspers Ltd. (South Africa)* | 163 | |
11,199 | Vipshop Holdings Ltd. ADR (China)*,1 | 78 | |
241 | |||
IT SERVICES—6.2% | |||
9,327 | Infosys Ltd. ADR (India)1 | 174 | |
5,378 | Tata Consultancy Services Ltd. (India) | 207 | |
381 | |||
MACHINERY—4.7% | |||
34,900 | Sany Heavy Industry Co. Ltd. (China) | 65 | |
14,000 | Techtronic Industries Co. Ltd. (Hong Kong) | 132 | |
94,000 | Weichai Power Co. Ltd. (China) | 90 | |
287 | |||
METALS & MINING—8.3% | |||
8,689 | African Rainbow Minerals Ltd. (South Africa) | 122 | |
967 | Anglo American Platinum Ltd. (South Africa) | 77 | |
7,102 | First Quantum Minerals Ltd. (Canada) | 125 | |
21,345 | Severstal PJSC GDR (Russia) | —x | |
3,905 | Southern Copper Corp. (Peru) | 184 | |
508 |
44
Harbor Emerging Markets Equity Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
PERSONAL PRODUCTS—3.7% | |||
16,579 | Dabur India Ltd. (India) | $111 | |
18,002 | Marico Ltd. (India) | 115 | |
226 | |||
ROAD & RAIL—2.4% | |||
10,800 | Localiza Rent A Car Ltd. (Brazil)* | 147 | |
57 | Localiza Rent A Car SA (Brazil)* | 1 | |
148 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—9.2% | |||
281 | ASML Holding NV (Netherlands) | 132 | |
3,000 | MediaTek Inc. (Taiwan) | 55 | |
1,777 | SK Hynix Inc. (South Korea) | 103 | |
23,000 | Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan) | 276 | |
566 | |||
SPECIALTY RETAIL—2.8% | |||
58,576 | Pepkor Holdings Ltd. (South Africa)2 | 72 | |
26,500 | Zhongsheng Group Holdings Ltd (China) | 101 | |
173 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—5.5% | |||
15,000 | Advantech Co. Ltd. (Taiwan) | 136 | |
4,907 | Samsung Electronics Co Ltd. (South Korea) | 204 | |
340 | |||
TEXTILES, APPAREL & LUXURY GOODS—2.5% | |||
14,000 | Li Ning Co. Ltd. (China) | 72 | |
11,500 | Shenzhou International Group Holdings Ltd. (China) | 80 | |
152 | |||
THRIFTS & MORTGAGE FINANCE—4.0% | |||
8,300 | Housing Development Finance Corp. Ltd. (India) | 248 | |
TRADING COMPANIES & DISTRIBUTORS—1.5% | |||
13,800 | BOC Aviation Ltd. (China)2 | 92 | |
TRANSPORTATION INFRASTRUCTURE—2.6% | |||
10,157 | Grupo Aeroportuario del Pacifico SAB de CV Class B (Mexico) | 158 | |
TOTAL COMMON STOCKS | |||
(Cost $9,124) | 6,293 | ||
TOTAL INVESTMENTS—102.4% | |||
(Cost $9,124) | 6,293 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—(2.4)% | (149) | ||
TOTAL NET ASSETS—100.0% | $6,144 |
45
Harbor Emerging Markets Equity Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of October 31, 2022 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 | $— | $799 | $— | $799 |
Europe | — | 132 | — | 132 |
Latin America | 1,146 | — | — | 1,146 |
Middle East/Central Asia | 499 | 787 | — | 1,286 |
North America | 125 | — | — | 125 |
Pacific Basin | 127 | 2,678 | — | 2,805 |
Total Investments in Securities | $1,897 | $4,396 | $— | $6,293 |
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 year ended October 31, 2022. 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 11/01/2021 (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 10/31/2022 (000s) | Unrealized Gain/(Loss) as of 10/31/2022 (000s) |
Common Stocks | $— | $— | $— | $— | $— | $— | $— | $— | $— | $(1,246) |
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 | Ending Balance as of 10/31/2022 (000s) | Valuation Technique | Unobservable Input(s) | Input Value(s) |
Investments in Securities | ||||
Common Stocks | ||||
Severstal PJSC GDR (Russia)1 | $ — | Market Approach | Estimated Recovery | $ 0.00 |
Tianhe Chemicals Group Ltd. (Hong Kong)* | — | Market Approach | Estimated Recovery | HKD 0.00 |
X5 Retail Group NV GDR (Russia)1 | — | Market Approach | Estimated Recovery | $ 0.00 |
$— |
x | Fair valued in accordance with Harbor Funds' Valuation Procedures. |
* | 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. As of October 31, 2022, the aggregate value of these securities was $164 or 3% of net assets. |
h | Transferred from Level 2 to Level 3 due to the unavailability of observable market data for pricing |
HKD | Hong Kong Dollar |
The accompanying notes are an integral part of the Financial Statements.
46
Harbor Global Leaders Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Sands Capital Management, LLC
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
Global equities (measured by the MSCI All Country World (ND) Index (the “Index”)) declined during the period. A weakening macroeconomic environment beset with hawkish central bank policy spurred on by inflation, rising geopolitical tensions between the U.S./China, and the war in Ukraine weighed on the outlook for global growth. Management teams already had limited near-term visibility into operational trends due to pandemic related distortions, and the looming recession has only exacerbated these challenges. From a regional perspective, Latin America was the sole contributor to results and the U.S./Canada and Western Europe were the largest detractors from results. From a sector perspective, 10 out of 11 sectors fell during the period, with growth-oriented sectors taking the largest hit. Energy was the sole sector contributor to results and information technology and consumer discretionary sectors were the largest absolute detractors.
Performance
Harbor Global Leaders Fund returned -35.22% (Retirement Class), -35.27% (Institutional Class), -35.45% (Administrative Class), and -35.50% (Investor Class) in the year ended October 31, 2022, while the Index returned -19.96%. The Fund’s underperformance for the period was driven by both sector allocation and security selection. The currency and regional allocation effects were also modest contributors. Eastern Europe, a zero percent weight, was the top regional contributor to relative results. The U.S./Canada was the top relative detractor. From a sector perspective, real estate, a zero percent weight, and materials contributed most to relative results. Information technology and consumer discretionary were the top relative detractors.
On an absolute basis, the largest individual contributors to the Fund’s investment results were UnitedHealth Group, CoStar Group, Alimentation Couche-Tard, Visa, and Dollar General.
Shares of CoStar Group remained resilient. The company reported strong second quarter results in July where the company reported its third consecutive record sales quarter. Additionally, CoStar raised full-year growth guidance to 17 percent year-over-year, well ahead of its long-term 12-14 percent range and one percent ahead of our estimates. Growth was supported by continued acceleration in the Apartments.com business after multiple quarters of depressed advertising spending following the pandemic. Importantly, the company believes that U.S. construction trends should continue to create tailwinds for the business. As supply continues to exceed demand, property managers will need to increase advertising spend to reduce the numbers of vacant units further bolstering growth. Additionally, the company reported that its recent investments in residential markets are progressing strongly. Revenues of its Homesnap offerings continued to accelerate, growing by 40 percent year-over-year and CoStar announced the successful launch of CitySnap, the first quasi-MLS competitor for New York City. CitySnap already has over a million users and 37 percent of New York’s Real Estate Board’s over 12,000 agents. We believe the early success of these offerings serves as an effective proof-of-concept that CoStar can leverage in markets nationwide.
The largest absolute individual detractors from investment results were Cloudflare, Zur Rose, NAVER, Chegg, and Sea.
Investors reacted negatively in May to lower guidance for Chegg Services revenue, which fell to approximately zero percent growth year-over-year (ex-Busuu) versus previously implied guidance of 10 percent year-over-year growth. This marked an abrupt shift from the positive momentum that the company was seeing earlier in the year. First-quarter results were otherwise fine as Chegg Services revenues were up 14 percent year-over-year and adjusted earnings before interest, tax, depreciation, and amortization grew by eight percent annually putting sales in line with consensus estimates and profits approximately 10 percent above expectations. Looking ahead, we continue to view Chegg as a highly compelling business. We maintain
47
Harbor Global Leaders Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $50,000 INVESTMENT
For the period 11/01/2012 through 10/31/2022
The graph compares a $50,000 investment in the Institutional Class shares of the Fund with the performance of the MSCI All Country World (ND) Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | 10 Years | |||||
Harbor Global Leaders Fund | ||||||
Retirement Class1 | -35.22% | 6.47% | 9.75% | |||
Institutional Class | -35.27 | 6.38 | 9.69 | |||
Administrative Class | -35.45 | 6.11 | 9.41 | |||
Investor Class | -35.50 | 5.99 | 9.29 | |||
Comparative Index | ||||||
MSCI All Country World (ND) | -19.96% | 5.24% | 7.98% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.78% (Net) and 0.87% (Gross) (Retirement Class); 0.86% (Net) and 0.95% (Institutional Class); 1.11% (Net) and 1.20% (Gross) (Administrative Class); and 1.22% (Net) and 1.31% (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 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
that a confluence of forces— in particular the over one million college students who have foregone or postponed enrollment in the last twelve months— is masking underlying U.S. growth for Chegg that will eventually return. International momentum continues to build with subscriptions growing 70 percent in the quarter, study pack adoption tracks above expectations, and the company sees strong retention and engagement rates which could support meaningful price increases. We believe all of these factors allow Chegg to still drive solid revenue growth even if U.S. subscriber growth were to halt.
Outlook & Strategy
Sands Capital Management, LLC seeks to construct a quality growth portfolio based on a diversity of growth drivers to create an idiosyncratic return stream. This diversity of growth drivers—when applied to businesses with varying degrees of growth magnitude and duration—can also reduce inter-portfolio correlations and overall Fund volatility.
We segment the Fund into three categories:
Higher growth - These are rapidly growing businesses with a wider cone of potential outcomes. These are typically companies that are established leaders with profitable operations, limited binary risk, and improving unit economics.
Compounders -These are established businesses with strong competitive moats that have highly visible above-average long-duration growth. These businesses are more insulated from economic cycles.
Growth cyclicals - These are above-average cross-cycle growth businesses with known sensitivity to industry or economic cycles. These companies have an additional emphasis on their competitive advantages, cash generation, and capital return abilities.
At the end of October 2022, the Fund had a 61 percent allocation to compounders, a 16 percent weight to growth cyclicals, and a 20 percent weight to higher growth. While we are not market timers, we do believe there is room to build a larger weight in our higher growth businesses over time and are evaluating opportunities to do so.
The weakness in equity markets conflicts with the fundamental progress exhibited by most of our businesses, in our view. We acknowledge the incremental slowdown in areas such as semiconductors, cloud computing, and advertising spend. However, we believe the secular trends that underlie growth in these areas are unchanged and that the Fund owns the leading businesses that are harnessing digitalization and innovation to offer products and services that increase efficiencies, reduce costs, and produce better outcomes. In our view, recent business results confirm that the Fund’s portfolio holdings are largely progressing towards achieving their earnings growth potential.
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.
48
Harbor Global Leaders Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
REGION BREAKDOWN (% of investments) -Unaudited
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of October 31, 2022, there was no foreign currency denomination that comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value and Cost in Thousands
COMMON STOCKS—98.7% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—2.8% | |||
3,270 | TransDigm Group Inc. (United States)* | $1,883 | |
AUTO COMPONENTS—2.0% | |||
15,157 | Aptiv plc (United States)* | 1,380 | |
BANKS—3.2% | |||
34,233 | HDFC Bank Ltd. ADR (India)1 | 2,133 | |
BIOTECHNOLOGY—2.1% | |||
8,049 | CSL Ltd. (Australia) | 1,441 | |
CAPITAL MARKETS—3.6% | |||
191,383 | Allfunds Group plc (Netherlands) | 1,204 | |
13,092 | Intercontinental Exchange Inc. (United States) | 1,251 | |
2,455 | |||
CHEMICALS—2.0% | |||
5,986 | Sika AG (Switzerland) | 1,350 | |
COMMERCIAL SERVICES & SUPPLIES—3.2% | |||
350,572 | Rentokil Initial plc (United Kingdom) | 2,188 | |
DIVERSIFIED CONSUMER SERVICES—3.7% | |||
115,714 | Chegg Inc. (United States)* | 2,496 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—3.7% | |||
6,560 | Keyence Corp. (Japan) | 2,474 | |
ENTERTAINMENT—3.6% | |||
42,430 | Liberty Media Corp. (United Kingdom)* | 2,449 | |
FOOD & STAPLES RETAILING—3.7% | |||
46,717 | Alimentation Couche-Tard Inc. (Canada) | 2,092 | |
14,278 | Zur Rose Group AG (Switzerland)* | 385 | |
2,477 | |||
HEALTH CARE EQUIPMENT & SUPPLIES—2.3% | |||
9,066 | Steris plc (United States) | 1,565 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
HEALTH CARE PROVIDERS & SERVICES—3.5% | |||
4,221 | UnitedHealth Group Inc. (United States) | $2,343 | |
INSURANCE—3.3% | |||
297,300 | AIA Group Ltd. (Hong Kong) | 2,252 | |
INTERNET & DIRECT MARKETING RETAIL—1.7% | |||
64,714 | Coupang Inc. (South Korea)* | 1,118 | |
IT SERVICES—11.8% | |||
45,426 | Cloudflare Inc. (United States)* | 2,558 | |
4,586 | Globant SA (Argentina)* | 865 | |
42,595 | Shopify Inc. (Canada)* | 1,458 | |
14,938 | Visa Inc. (United States) | 3,095 | |
7,976 | |||
LIFE SCIENCES TOOLS & SERVICES—7.9% | |||
3,872 | Bio-Techne Corp. (United States) | 1,147 | |
11,549 | Iqvia Holdings Inc. (United States)* | 2,422 | |
3,369 | Lonza Group AG (Switzerland) | 1,734 | |
5,303 | |||
MEDIA—3.9% | |||
7,248 | Charter Communications Inc. (United States)* | 2,664 | |
PHARMACEUTICALS—2.2% | |||
10,064 | Zoetis Inc. (United States) | 1,517 | |
PROFESSIONAL SERVICES—6.2% | |||
36,135 | CoStar Group Inc. (United States)* | 2,989 | |
39,350 | Recruit Holdings Co. Ltd. (Japan) | 1,211 | |
4,200 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—6.0% | |||
27,427 | Entegris Inc. (United States) | 2,176 | |
11,729 | Texas Instruments Inc. (United States) | 1,884 | |
4,060 | |||
SOFTWARE—13.3% | |||
1,746 | Constellation Software Inc. (Canada) | 2,525 |
49
Harbor Global Leaders Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
SOFTWARE—Continued | |||
10,681 | Microsoft Corp. (United States) | $2,480 | |
7,561 | Roper Technologies Inc. (United States) | 3,134 | |
1,940 | ServiceNow Inc. (United States)* | 816 | |
8,955 | |||
TRADING COMPANIES & DISTRIBUTORS—3.0% | |||
80,100 | Monotaro Co. Ltd. (Japan) | 1,216 | |
7,017 | Siteone Landscape Supply Inc. (United States)* | 813 | |
2,029 | |||
TOTAL COMMON STOCKS | |||
(Cost $66,257) | 66,708 | ||
TOTAL INVESTMENTS—98.7% | |||
(Cost $66,257) | 66,708 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—1.3% | 845 | ||
TOTAL NET ASSETS—100.0% | $67,553 |
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of October 31, 2022 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 | $2,449 | $6,861 | $— | $9,310 |
Latin America | 865 | — | — | 865 |
Middle East/Central Asia | 2,133 | — | — | 2,133 |
North America | 44,688 | — | — | 44,688 |
Pacific Basin | 1,118 | 8,594 | — | 9,712 |
Total Investments in Securities | $51,253 | $15,455 | $— | $66,708 |
There were no Level 3 Investments at October 31, 2022 or 2021.
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.
50
Harbor High-Yield Bond Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Shenkman Capital Management, Inc.
Management’s Discussion of
Fund Performance
Fund Performance
Market review
In the twelve months ended October 31, 2022, the leveraged debt markets have gone through a major transition as interest rate increases have hurt fixed income, equity market returns, and slowed new financing. Despite these factors default rates have stayed low in the market and credit ratings upgrades have outpaced downgrades. While recession concerns have increased, the large wave of refinancing that occurred from the latter half 2020 through year end 2021 has pushed maturity walls to relatively low levels for the next two years, versus historical levels. This has appeared to push out concern over a spike in defaults. With a record dollar amount of high yield bonds being upgraded to investment grade debt retirements and a low amount of new issuance, the face amount of the high yield bond market as measured by the ICE BofA U.S. Non-Distressed High Yield (H0ND) Index (the “Index”), has declined by about 8% in the last year after steadily growing the two years before that. We believe this could develop into an attractive technical for the market as higher yields and lower average dollar prices, that have been typical during the last decade, may attract interest.
Throughout this past year, the spread to worst on the Index widened about 73 bps to 389 bps. However, with the dramatic move in Treasury rates the yield to worst on the same Index has moved 407 bps to 8.18%. The overall return on the Index was -10.9 % for the 12 months ended October 31, 2022. While all rating tiers posted negative returns, the CCC tier of the market was the worst performer during the period with a return of -12.4%, versus single Bs, which were the best performing rating tier being down 9.9%. With interest rates playing such a large role in the market sell-off, performance by duration tier was more differentiated than by rating tier. The longer duration tiers of the market (bonds having an option-adjusted duration (“OAD”) of 6-8 years) were down about 15.9% in return, while the portion of the market with an OAD of 1-2 years was down 2.5%.
During the last twelve months, no sector had positive performance, however there was significant divergence in performance by sector with approximately a 1100 bp difference in return between the top performing sector and the weakest. The best performing sector in the Index was Oil & Gas which had a return of -3.6%, while the Healthcare sector had the worst performance of -15%.
performance
Harbor High-Yield Bond Fund returned -9.37% (Retirement Class), -9.44% (Institutional Class), -9.73% (Administrative Class), and -9.83% (Investor Class), outperforming the Index’s return of -10.93%. The Fund’s selection in all rating categories added positive attribution performance relative to the Index. The overweight in CCCs was a detraction and the underweight in BBs was a positive in attribution relative to the Index. The Fund’s overweight in shorter duration categories with an option-adjusted duration (OAD) 2 years and shorter was a relative contributor to performance, while the overweight in holdings with a duration greater than 8 years was a detractor. By sector, the Fund’s largest contributor relative to the Index was Healthcare due to selection, while the overweight in the asset class was the largest detractor. Materials was the largest detractor relative to the Index due to selection, the underweight in the sector was a modest detractor. Out-of-Index positions including bank loans, convertible bonds, and BBB rated issues contributed a relatively small positive attribution, with bank loans being the biggest contributor and converts the biggest detractor.
51
Harbor High-Yield Bond Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $10,000 INVESTMENT
For the period 11/01/2012 through 10/31/2022
The graph compares a $10,000 investment in the Institutional Class shares of the Fund with the performance of the ICE BofA U.S. Non-Distressed High Yield Index (H0ND) and the ICE BofA U.S. High Yield Index (H0A0). The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | 10 Years | |||||
Harbor High-Yield Bond Fund | ||||||
Retirement Class1 | -9.37% | 2.00% | 3.43% | |||
Institutional Class | -9.44 | 1.93 | 3.38 | |||
Administrative Class | -9.73 | 1.66 | 3.12 | |||
Investor Class | -9.83 | 1.54 | 2.99 | |||
Comparative Indices | ||||||
ICE BofA U.S. High Yield (H0A0) | -11.45% | 1.90% | 4.07% | |||
ICE BofA U.S. Non-Distressed High Yield (H0ND) | -10.93 | 2.07 | 4.18 |
As stated in the Fund’s prospectus dated March 1, 2022, 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 Adviser has contractually agreed to reduce the management fee to 0.508% through 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
Outlook & Strategy
Investors’ struggle to assess the impact of rising rates and recessionary trends will likely remain a key factor for a portion of the next year. However, we believe due to the relatively low maturity walls in the next year default rates should stay below historical levels. It is our opinion that this expectation of low default rates and the overall higher percentage of BBs in the market, relative to the last two decades, is part of the reason why spreads have only widened modestly. However, yields are at high levels relative to recent history and the average price is fairly low, which could attract increased interest from investors in the asset class. In our opinion with such a large discount in price, early debt retirements and/or spread tightening could lead to an acceleration of the accretion in this discount and potentially enhance returns.
52
Harbor High-Yield Bond Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
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.
All investments involve risk including the possible loss of principal. Fixed income securities fluctuate in price in response to various factors, including changes in interest rates, changes in market conditions and issuer-specific events, and the value of your investment in the Fund may go down. There is a greater risk that the Funds will lose money because they invest in below- investment grade fixed income securities and unrated securities of similar credit quality (commonly referred to as “high-yield securities” or “junk bonds”). These securities are considered speculative because they have a higher risk of issuer default, are subject to greater price volatility and may be illiquid. Because the Funds may invest in securities of foreign issuers, an investment in the Funds is subject to special risks in addition to those of U.S. securities. These risks include heightened political and economic risks, greater volatility, currency fluctuations, higher transaction costs, delayed settlement, possible foreign controls on investment, possible sanctions by government bodies of other countries and less stringent investor protection and disclosure standards of foreign markets.
53
Harbor High-Yield Bond Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
SECTOR ALLOCATION (% of investments) - Unaudited
Portfolio of Investments
Principal Amounts, Value and Cost in Thousands
BANK LOAN OBLIGATIONS—6.5% | |||
Principal Amount | Value | ||
AEROSPACE & DEFENSE—0.2% | |||
TransDigm Inc. | |||
Term Loan F | |||
$ | 260 | 5.924% (3 Month USD LIBOR + 2.250) 12/09/20251 | $255 |
Term Loan G | |||
193 | 5.924% (3 Month USD LIBOR + 2.250) 08/22/20241 | 190 | |
445 | |||
AIRLINES—0.4% | |||
AAdvantage Loyalty IP Ltd. | |||
Term Loan | |||
319 | 8.993% (3 Month USD LIBOR + 4.750) 04/20/20281 | 316 | |
Mileage Plus Holdings LLC | |||
Term Loan B | |||
786 | 8.777% (3 Month USD LIBOR + 5.250) 06/20/20271 | 805 | |
1,121 | |||
AUTO COMPONENTS—0.2% | |||
Clarios Global LP | |||
Term Loan B | |||
512 | 7.004% (1 Month USD LIBOR + 3.250) 04/30/20261 | 500 | |
CAPITAL MARKETS—0.2% | |||
Edelman Financial Engines Center LLC | |||
Second-Lien Term Loan | |||
733 | 10.504% (1 Month USD LIBOR + 6.750) 07/20/20261 | 668 | |
CHEMICALS—0.2% | |||
SCHIH Salt Holdings Inc. | |||
Term Loan B | |||
628 | 8.415% (3 Month USD LIBOR + 4.000) 03/16/20271 | 594 | |
COMMERCIAL SERVICES & SUPPLIES—0.1% | |||
Garda World Security Corp | |||
Term Loan B | |||
392 | 7.240% (1 Month USD LIBOR + 4.250) 10/30/20261 | 375 | |
CONTAINERS & PACKAGING—0.8% | |||
Mauser Packaging Solutions Holding Co. | |||
Term Loan B | |||
2,261 | 6.378% (1 Month USD LIBOR + 3.250) 04/03/20241 | 2,151 |
BANK LOAN OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
DIVERSIFIED FINANCIAL SERVICES—0.1% | |||
The Advisor Group Inc | |||
Term Loan | |||
$ | 211 | 8.250% (1 Month USD LIBOR + 450.000) 07/31/2026 | $203 |
ENTERTAINMENT—0.3% | |||
William Morris Endeavor Entertainment LLC | |||
First-Lien Term Loan B | |||
1,004 | 6.510% (1 Month USD LIBOR + 2.750) 05/18/20251 | 977 | |
HEALTH CARE PROVIDERS & SERVICES—0.3% | |||
LifePoint Health Inc. | |||
First-Lien Term Loan B | |||
398 | 8.165% (3 Month USD LIBOR + 3.750) 11/16/20251 | 353 | |
Surgery Center Holdings Inc. | |||
Term Loan | |||
599 | 7.070% (1 Month USD LIBOR + 3.750) 08/31/20261 | 574 | |
927 | |||
HEALTH CARE TECHNOLOGY—0.2% | |||
Verscend Holding Corp. | |||
Term Loan B | |||
620 | 7.754% (1 Month USD LIBOR + 4.000) 08/27/20251 | 612 | |
HOTELS, RESTAURANTS & LEISURE—0.5% | |||
Caesars Resort Collection LLC | |||
Term Loan B | |||
329 | 6.504% (1 Month USD LIBOR + 2.750) 12/23/20241 | 325 | |
IRB Holding Corp. | |||
Term Loan B | |||
1,165 | 6.504% (1 Month USD LIBOR + 2.750) 02/05/20251 | 1,150 | |
1,475 | |||
INSURANCE—0.3% | |||
Asurion LLC | |||
Term Loan B7 | |||
175 | 6.754% (1 Month USD LIBOR + 3.000) 11/03/20241 | 165 | |
Second-Lien Term Loan B3 | |||
249 | 9.004% (1 Month USD LIBOR + 5.250) 02/03/20281 | 177 | |
Second-Lien Term Loan B4 | |||
429 | 9.004% (1 Month USD LIBOR + 5.250) 01/15/20291 | 303 | |
645 |
54
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
BANK LOAN OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
INSURANCE—Continued | |||
HUB International Ltd. | |||
Term Loan B | |||
$ | 317 | 7.527% (3 Month USD LIBOR + 3.250) 04/25/20251 | $311 |
956 | |||
IT SERVICES—0.3% | |||
OPTIV Security Inc. | |||
First-Lien Term Loan | |||
592 | 7.420% (3 Month USD LIBOR + 3.250) 02/01/20241 | 569 | |
Second-Lien Term Loan | |||
230 | 11.420% (3 Month USD LIBOR + 7.250) 01/31/20251 | 215 | |
784 | |||
MEDIA—0.3% | |||
CSC Holdings LLC | |||
Term Loan B | |||
379 | 5.662% (1 Month USD LIBOR + 2.250) 07/17/20251 | 368 | |
DIRECTV Financing LLC | |||
Term Loan | |||
283 | 8.754% (1 Month USD LIBOR + 5.000) 08/02/20271 | 269 | |
Learfield Communications LLC | |||
Term Loan B | |||
375 | 7.010% (1 Month USD LIBOR + 3.250) 12/01/20231 | 302 | |
939 | |||
PHARMACEUTICALS—0.2% | |||
Bausch + Lomb Corp. | |||
Term Loan | |||
473 | 6.618% (1 Month CME Term SOFR + 3.250) 05/10/20271 | 444 | |
PROFESSIONAL SERVICES—0.4% | |||
Deerfield Dakota Holding LLC | |||
Term Loan B | |||
538 | 7.479% (1 Month CME Term SOFR + 3.750) 04/09/20271,2 | 510 | |
Pre-Paid Legal Services Inc. | |||
Term Loan | |||
564 | 6.820% (1 Month USD LIBOR + 3.750) 12/15/20281 | 548 | |
1,058 | |||
ROAD & RAIL—0.1% | |||
XPO Logistics Inc. | |||
Term Loan | |||
370 | 4.936% (1 Month USD LIBOR + 1.750) 02/24/20251 | 365 | |
SOFTWARE—1.2% | |||
Boxer Parent Co Inc. | |||
Term Loan | |||
861 | 7.504% (1 Month USD LIBOR + 3.750) 10/02/20251 | 830 | |
Finastra USA Inc. | |||
Term Loan B | |||
1,222 | 4.739% (3 Month USD LIBOR + 3.500) 06/13/20241 | 1,110 | |
Term Loan | |||
752 | 10.621% (3 Month USD LIBOR + 7.250) 06/13/20251 | 562 | |
1,672 | |||
Hyland Software Inc. | |||
Term Loan | |||
89 | 7.254% (1 Month USD LIBOR + 3.500) 07/01/20241 | 87 |
BANK LOAN OBLIGATIONS—Continued | |||
Principal Amount | Value | ||
SOFTWARE—Continued | |||
The Ultimate Software Group Inc. | |||
Second-Lien Term Loan | |||
$ | 794 | 8.998% (3 Month USD LIBOR + 5.250) 05/03/20271 | $735 |
3,324 | |||
SPECIALTY RETAIL—0.2% | |||
Michaels Cos. Inc. | |||
Term Loan B | |||
702 | 7.924% (3 Month USD LIBOR + 4.250) 04/15/20281 | 547 | |
TOTAL BANK LOAN OBLIGATIONS | |||
(Cost $19,206) | 18,465 | ||
CONVERTIBLE BONDS—5.1% | |||
AIRLINES—0.3% | |||
Jetblue Airways Corp. | |||
250 | 0.500%—04/01/2026 | 186 | |
Spirit Airlines Inc. | |||
951 | 1.000%—05/15/2026 | 790 | |
976 | |||
AUTOMOBILES—0.1% | |||
Ford Motor Co. | |||
254 | 0.000%—03/15/20263 | 257 | |
BIOTECHNOLOGY—0.1% | |||
Exact Sciences Corp. | |||
553 | 0.375%—03/15/2027 | 393 | |
DIVERSIFIED CONSUMER SERVICES—0.1% | |||
Chegg Inc. | |||
171 | 0.000%—09/01/20263 | 134 | |
DIVERSIFIED TELECOMMUNICATION SERVICES—0.1% | |||
Liberty Latin America Ltd. | |||
397 | 2.000%—07/15/2024 | 354 | |
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—0.1% | |||
Redfin Corp. | |||
800 | 0.500%—04/01/2027 | 336 | |
HEALTH CARE EQUIPMENT & SUPPLIES—0.2% | |||
Integra Lifesciences Holdings Corp. | |||
295 | 0.500%—08/15/2025 | 275 | |
Nuvasive Inc. | |||
310 | 0.375%—03/15/2025 | 269 | |
544 | |||
HEALTH CARE TECHNOLOGY—0.2% | |||
Livongo Health Inc. | |||
574 | 0.875%—06/01/2025 | 498 | |
HOTELS, RESTAURANTS & LEISURE—0.4% | |||
Airbnb Inc. | |||
161 | 0.000%—03/15/20263 | 135 | |
DraftKings Inc. | |||
546 | 0.000%—03/15/20283 | 347 | |
NCL Corp Ltd. | |||
401 | 1.125%—02/15/20272 | 308 | |
Vail Resorts Inc. | |||
300 | 0.000%—01/01/20263 | 267 | |
1,057 |
55
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
INTERACTIVE MEDIA & SERVICES—0.2% | |||
Snap Inc. | |||
$ | 675 | 0.000%—05/01/20273 | $468 |
INTERNET & DIRECT MARKETING RETAIL—0.4% | |||
Etsy Inc. | |||
287 | 0.125%—09/01/2027 | 249 | |
331 | 0.250%—06/15/2028 | 258 | |
507 | |||
Wayfair Inc. | |||
774 | 0.625%—10/01/2025 | 511 | |
1,018 | |||
IT SERVICES—0.5% | |||
Block Inc. | |||
371 | 0.125%—03/01/2025 | 346 | |
474 | 0.250%—11/01/2027 | 356 | |
702 | |||
DigitalOcean Holdings Inc. | |||
554 | 0.000%—12/01/20262,3 | 408 | |
Okta Inc. | |||
539 | 0.375%—06/15/2026 | 430 | |
1,540 | |||
LEISURE PRODUCTS—0.2% | |||
Peloton Interactive Inc. | |||
758 | 0.000%—02/15/20263 | 546 | |
MEDIA—0.2% | |||
Dish Network Corp. | |||
681 | 2.375%—03/15/2024 | 620 | |
ROAD & RAIL—0.1% | |||
Uber Technologies Inc. | |||
368 | 0.000%—12/15/20253 | 306 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—0.0% | |||
Enphase Energy Inc. | |||
60 | 0.000%—03/01/20263 | 74 | |
SOFTWARE—1.6% | |||
Alarm.com Holdings Inc. | |||
90 | 0.000%—01/15/20263 | 74 | |
Alteryx Inc. | |||
344 | 1.000%—08/01/2026 | 279 | |
Bentley Systems Inc. | |||
452 | 0.375%—07/01/2027 | 354 | |
Blackline Inc. | |||
408 | 0.000%—03/15/20263 | 332 | |
Coupa Software Inc. | |||
320 | 0.125%—06/15/2025 | 274 | |
Dropbox Inc. | |||
306 | 0.000%—03/01/20263 | 272 | |
Envestnet Inc. Co. | |||
308 | 0.750%—08/15/2025 | 263 | |
Jamf Holding Corp | |||
322 | 0.125%—09/01/2026 | 265 | |
Pegasystems Inc. | |||
517 | 0.750%—03/01/2025 | 433 | |
Q2 Holdings Inc. | |||
303 | 0.750%—06/01/2026 | 246 | |
Rapid7 Inc. | |||
310 | 0.250%—03/15/2027 | 246 |
CONVERTIBLE BONDS—Continued | |||
Principal Amount | Value | ||
SOFTWARE—Continued | |||
RingCentral Inc. | |||
$ | 737 | 0.000%—03/15/20263 | $566 |
Splunk Inc. | |||
839 | 1.125%—09/15/2025-06/15/2027 | 737 | |
Verint Systems Inc. | |||
290 | 0.250%—04/15/2026 | 249 | |
4,590 | |||
SPECIALTY RETAIL—0.3% | |||
Liberty Interactive LLC | |||
1,675 | 3.750%—02/15/2030 | 770 | |
TOTAL CONVERTIBLE BONDS | |||
(Cost $16,776) | 14,481 | ||
CORPORATE BONDS & NOTES—84.6% | |||
AEROSPACE & DEFENSE—2.3% | |||
Bombardier Inc. | |||
191 | 7.500%—03/15/20252 | 188 | |
Howmet Aerospace Inc. | |||
156 | 5.125%—10/01/2024 | 154 | |
Spirit Aerosystems Inc. | |||
141 | 5.500%—01/15/20252 | 137 | |
TransDigm Inc. | |||
2,244 | 6.250%—03/15/20262 | 2,217 | |
998 | 6.375%—06/15/2026 | 964 | |
1,145 | 8.000%—12/15/20252 | 1,167 | |
4,348 | |||
TransDigm UK Holdings plc | |||
966 | 6.875%—05/15/2026 | 944 | |
Triumph Group Inc. | |||
675 | 8.875%—06/01/20242 | 683 | |
6,454 | |||
AIR FREIGHT & LOGISTICS—0.1% | |||
GXO Logistics Inc. | |||
500 | 2.650%—07/15/2031 | 358 | |
AUTO COMPONENTS—2.5% | |||
Allison Transmission Inc. | |||
857 | 3.750%—01/30/20312 | 686 | |
American Axle & Manufacturing Inc. | |||
703 | 5.000%—10/01/2029 | 572 | |
157 | 6.500%—04/01/2027 | 145 | |
717 | |||
Clarios Global LP / Clarios US Finance Co. | |||
242 | 6.250%—05/15/20262 | 235 | |
1,025 | 8.500%—05/15/20272 | 1,006 | |
1,241 | |||
Dana Financing Luxembourg Sarl | |||
860 | 5.750%—04/15/20252 | 837 | |
Goodyear Tire & Rubber Co. | |||
109 | 4.875%—03/15/2027 | 99 | |
1,319 | 5.000%—05/31/2026-07/15/2029 | 1,218 | |
96 | 5.625%—04/30/2033 | 81 | |
496 | 9.500%—05/31/2025 | 516 | |
1,914 |
56
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
AUTO COMPONENTS—Continued | |||
Tenneco Inc. | |||
$ | 597 | 5.125%—04/15/20292 | $593 |
33 | 7.875%—01/15/20292 | 33 | |
626 | |||
ZF North America Capital Inc. | |||
1,148 | 4.750%—04/29/20252 | 1,076 | |
7,097 | |||
AUTOMOBILES—3.0% | |||
Ford Motor Co. | |||
1,127 | 4.750%—01/15/2043 | 787 | |
376 | 5.291%—12/08/2046 | 279 | |
1,378 | 9.625%—04/22/2030 | 1,540 | |
2,606 | |||
Ford Motor Credit Co. LLC | |||
486 | 3.625%—06/17/2031 | 379 | |
1,446 | 4.125%—08/17/2027 | 1,287 | |
450 | 4.950%—05/28/2027 | 413 | |
607 | 5.125%—06/16/2025 | 587 | |
2,666 | |||
Jaguar Land Rover Automotive plc | |||
583 | 5.500%—07/15/20292 | 413 | |
500 | 5.625%—02/01/20232 | 491 | |
476 | 5.875%—01/15/20282 | 353 | |
676 | 7.750%—10/15/20252 | 625 | |
1,882 | |||
THOR Industries Inc. | |||
1,441 | 4.000%—10/15/20292 | 1,167 | |
8,321 | |||
BEVERAGES—0.2% | |||
Triton Water Holdings Inc. | |||
794 | 6.250%—04/01/20292 | 603 | |
BUILDING PRODUCTS—0.4% | |||
Eco Material Technologies Inc. | |||
827 | 7.875%—01/31/20272 | 774 | |
Standard Industries Inc. | |||
533 | 3.375%—01/15/20312 | 400 | |
1,174 | |||
CAPITAL MARKETS—0.9% | |||
CTR Partnership LP / CareTrust Capital Corp. | |||
133 | 3.875%—06/30/20282 | 112 | |
Global Infrastructure Solutions Inc. | |||
449 | 5.625%—06/01/20292 | 333 | |
457 | 7.500%—04/15/20322 | 339 | |
672 | |||
GrafTech Finance Inc. | |||
448 | 4.625%—12/15/20282 | 364 | |
Metis Merger Sub LLC | |||
756 | 6.500%—05/15/20292 | 608 | |
RP Escrow Issuer LLC | |||
862 | 5.250%—12/15/20252 | 647 | |
2,403 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
CHEMICALS—3.0% | |||
Avient Corp. | |||
$ | 456 | 5.750%—05/15/20252 | $447 |
496 | 7.125%—08/01/20302 | 475 | |
922 | |||
Celanese US Holdings LLC | |||
610 | 6.379%—07/15/2032 | 556 | |
Cheever Escrow Issuer LLC | |||
358 | 7.125%—10/01/20272 | 329 | |
Consolidated Energy Finance SA | |||
371 | 5.625%—10/15/20282 | 312 | |
Illuminate Buyer LLC / Illuminate Holdings IV Inc. | |||
748 | 9.000%—07/01/20282 | 633 | |
Ineos Quattro Finance 2 plc | |||
749 | 3.375%—01/15/20262 | 635 | |
Methanex Corp. | |||
1,460 | 5.125%—10/15/2027 | 1,335 | |
NOVA Chemicals Corp. | |||
316 | 4.875%—06/01/20242 | 308 | |
PMHC II Inc. | |||
1,200 | 9.000%—02/15/20302 | 793 | |
Polar US Borrower LLC / Schenectady International Group Inc. | |||
1,021 | 6.750%—05/15/20262 | 489 | |
SCIH Salt Holdings Inc. | |||
270 | 4.875%—05/01/20282 | 235 | |
SCIL IV LLC / SCIL USA Holdings LLC | |||
444 | 5.375%—11/01/20262 | 354 | |
Standard Industries Inc. | |||
393 | 4.375%—07/15/20302 | 319 | |
Trinseo Materials Operating SCA / Trinseo Materials Finance Inc. | |||
705 | 5.375%—09/01/20252 | 546 | |
Tronox Inc. | |||
536 | 4.625%—03/15/20292 | 415 | |
WR Grace Holdings LLC | |||
268 | 5.625%—08/15/20292 | 208 | |
8,389 | |||
COMMERCIAL SERVICES & SUPPLIES—1.9% | |||
Allied Universal Holdco LLC / Allied Universal Finance Corp. | |||
607 | 6.625%—07/15/20262 | 581 | |
Garda World Security Corp. | |||
238 | 4.625%—02/15/20272 | 212 | |
375 | 6.000%—06/01/20292 | 293 | |
758 | 9.500%—11/01/20272 | 686 | |
1,191 | |||
GFL Environmental Inc. | |||
919 | 4.000%—08/01/20282 | 797 | |
29 | 4.250%—06/01/20252 | 28 | |
1,101 | 4.375%—08/15/20292 | 934 | |
451 | 4.750%—06/15/20292 | 394 | |
199 | 5.125%—12/15/20262 | 190 | |
2,343 | |||
KAR Auction Services Inc. | |||
164 | 5.125%—06/01/20252 | 158 | |
Madison IAQ LLC | |||
162 | 5.875%—06/30/20292 | 111 |
57
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
COMMERCIAL SERVICES & SUPPLIES—Continued | |||
Stericycle Inc. | |||
$ | 249 | 3.875%—01/15/20292 | $217 |
880 | 5.375%—07/15/20242 | 869 | |
1,086 | |||
5,470 | |||
COMMUNICATIONS EQUIPMENT—0.2% | |||
CommScope Inc. | |||
502 | 6.000%—03/01/20262 | 485 | |
CONSTRUCTION & ENGINEERING—0.4% | |||
Picasso Finance Sub Inc. | |||
728 | 6.125%—06/15/20252 | 728 | |
Pike Corp. | |||
560 | 5.500%—09/01/20282 | 479 | |
1,207 | |||
CONSUMER FINANCE—1.5% | |||
Cobra AcquisitionCo LLC | |||
499 | 6.375%—11/01/20292 | 333 | |
goeasy Ltd. | |||
317 | 4.375%—05/01/20262 | 272 | |
Navient Corp. | |||
182 | 5.875%—10/25/2024 | 176 | |
1,266 | 6.750%—06/25/2025-06/15/2026 | 1,213 | |
377 | 7.250%—09/25/2023 | 378 | |
1,767 | |||
Navient Corp. MTN4 | |||
170 | 5.500%—01/25/2023 | 170 | |
526 | 5.625%—08/01/2033 | 372 | |
546 | 6.125%—03/25/2024 | 537 | |
1,079 | |||
OneMain Finance Corp. | |||
798 | 6.125%—03/15/2024 | 781 | |
4,232 | |||
CONTAINERS & PACKAGING—1.1% | |||
ARD Finance SA | |||
413 | 6.500%—06/30/20272 | 298 | |
Ardagh Metal Packaging Finance USA LLC / Ardagh Metal Packaging Finance plc | |||
420 | 6.000%—06/15/20272 | 404 | |
Ardagh Packaging Finance PLC / Ardagh Holdings USA Inc. | |||
1,113 | 5.250%—04/30/2025-08/15/20272 | 979 | |
Mauser Packaging Solutions Holding Co. | |||
219 | 5.500%—04/15/20242 | 215 | |
1,297 | 7.250%—04/15/20252 | 1,169 | |
1,384 | |||
3,065 | |||
DIVERSIFIED CONSUMER SERVICES—0.1% | |||
McGraw-Hill Education Inc. | |||
293 | 5.750%—08/01/20282 | 259 | |
DIVERSIFIED FINANCIAL SERVICES—0.0% | |||
AG TTMT Escrow Issuer LLC | |||
33 | 8.625%—09/30/20272 | 33 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
DIVERSIFIED TELECOMMUNICATION SERVICES—2.3% | |||
Cablevision Lightpath LLC | |||
$ | 293 | 3.875%—09/15/20272 | $249 |
307 | 5.625%—09/15/20282 | 245 | |
494 | |||
Connect Finco Sarl / Connect US Finco LLC | |||
1,253 | 6.750%—10/01/20262 | 1,180 | |
Frontier Communications Holdings LLC | |||
169 | 5.000%—05/01/20282 | 148 | |
303 | 6.000%—01/15/20302 | 238 | |
145 | 6.750%—05/01/20292 | 120 | |
985 | 8.750%—05/15/20302 | 1,007 | |
1,513 | |||
Iliad Holding SAS | |||
481 | 6.500%—10/15/20262 | 446 | |
275 | 7.000%—10/15/20282 | 250 | |
696 | |||
Level 3 Financing Inc. | |||
115 | 3.625%—01/15/20292 | 88 | |
106 | 3.750%—07/15/20292 | 81 | |
169 | |||
Lumen Technologies Inc. | |||
156 | 4.000%—02/15/20272 | 133 | |
95 | 4.500%—01/15/20292 | 67 | |
200 | |||
Northwest Fiber LLC / Northwest Fiber Finance Sub Inc. | |||
352 | 4.750%—04/30/20272 | 317 | |
153 | 10.750%—06/01/20282 | 144 | |
461 | |||
Switch Ltd. | |||
261 | 3.750%—09/15/20282 | 264 | |
Telecom Italia Capital SA | |||
575 | 6.000%—09/30/2034 | 421 | |
84 | 6.375%—11/15/2033 | 65 | |
486 | |||
Zayo Group Holdings Inc. | |||
549 | 4.000%—03/01/20272 | 425 | |
Ziggo Bond Co. BV | |||
729 | 6.000%—01/15/20272 | 657 | |
6,545 | |||
ELECTRIC UTILITIES—1.0% | |||
NRG Energy Inc. | |||
1,557 | 3.875%—02/15/20322 | 1,231 | |
627 | 5.250%—06/15/20292 | 570 | |
376 | 5.750%—01/15/2028 | 360 | |
751 | 6.625%—01/15/2027 | 752 | |
2,913 | |||
ELECTRICAL EQUIPMENT—0.3% | |||
Clarios Global LP | |||
235 | 6.750%—05/15/20252 | 235 | |
Sensata Technologies Inc. | |||
408 | 4.375%—02/15/20302 | 352 | |
Vertiv Group Corp. | |||
320 | 4.125%—11/15/20282 | 279 | |
866 |
58
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—0.2% | |||
CDW LLC/CDW Finance Co. | |||
$ | 675 | 4.125%—05/01/2025 | $643 |
ENERGY EQUIPMENT & SERVICES—1.4% | |||
Archrock Partners LP / Archrock Partners Finance Corp. | |||
579 | 6.250%—04/01/20282 | 540 | |
Centennial Resource Production LLC | |||
695 | 6.875%—04/01/20272 | 675 | |
Enerflex Ltd. | |||
487 | 9.000%—10/15/20272 | 474 | |
Nabors Industries Inc. | |||
628 | 7.375%—05/15/20272 | 619 | |
Nabors Industries Ltd. | |||
384 | 7.500%—01/15/20282 | 357 | |
Precision Drilling Corp. | |||
255 | 6.875%—01/15/20292 | 235 | |
Transocean Phoenix 2 Ltd. | |||
206 | 7.750%—10/15/20242 | 205 | |
Transocean Proteus Ltd. | |||
126 | 6.250%—12/01/20242 | 123 | |
USA Compression Partners LP / USA Compression Finance Corp. | |||
310 | 6.875%—09/01/2027 | 297 | |
Weatherford International Ltd. | |||
373 | 6.500%—09/15/20282 | 357 | |
3,882 | |||
ENTERTAINMENT—1.3% | |||
Lions Gate Capital Holdings LLC | |||
720 | 5.500%—04/15/20292 | 548 | |
Live Nation Entertainment Inc. | |||
249 | 4.750%—10/15/20272 | 222 | |
700 | 4.875%—11/01/20242 | 681 | |
431 | 5.625%—03/15/20262 | 412 | |
419 | 6.500%—05/15/20272 | 418 | |
1,733 | |||
Playtika Holding Corp. | |||
1,548 | 4.250%—03/15/20292 | 1,292 | |
WMG Acquisition Corp. | |||
262 | 3.750%—12/01/20292 | 219 | |
3,792 | |||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—4.1% | |||
American Finance Trust Inc. / American Finance Operating Partner LP | |||
825 | 4.500%—09/30/20282 | 603 | |
Global NET Lease Inc. / Global NET Lease Operating Partnership LP | |||
858 | 3.750%—12/15/20272 | 694 | |
Iron Mountain Inc. | |||
382 | 4.500%—02/15/20312 | 310 | |
68 | 4.875%—09/15/20272 | 63 | |
700 | 5.625%—07/15/20322 | 602 | |
975 | |||
Iron Mountain Information Management Services Inc. | |||
1,264 | 5.000%—07/15/20322 | 1,045 | |
Kennedy-Wilson Inc. | |||
414 | 4.750%—02/01/2030 | 326 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—Continued | |||
MPT Operating Partnership LP / MPT Finance Corp. | |||
$ | 2,894 | 3.500%—03/15/2031 | $1,996 |
155 | 4.625%—08/01/2029 | 123 | |
2,119 | |||
RLJ Lodging Trust LP | |||
466 | 3.750%—07/01/20262 | 426 | |
196 | 4.000%—09/15/20292 | 165 | |
591 | |||
Sabra Health Care LP | |||
291 | 5.125%—08/15/2026 | 264 | |
SBA Communications Corp. | |||
700 | 3.125%—02/01/2029 | 567 | |
Service Properties Trust | |||
446 | 3.950%—01/15/2028 | 329 | |
629 | 4.350%—10/01/2024 | 578 | |
102 | 4.375%—02/15/2030 | 73 | |
278 | 4.500%—06/15/2023 | 275 | |
99 | 4.650%—03/15/2024 | 93 | |
358 | 4.950%—02/15/2027 | 290 | |
341 | 5.500%—12/15/2027 | 295 | |
65 | 7.500%—09/15/2025 | 63 | |
1,996 | |||
Uniti Group LP / Uniti Fiber Holdings Inc. / CSL Capital LLC | |||
739 | 7.875%—02/15/20252 | 733 | |
VICI Properties LP / VICI Note Co. Inc. | |||
645 | 3.500%—02/15/20252 | 601 | |
450 | 4.500%—01/15/20282 | 395 | |
566 | 5.750%—02/01/20272 | 536 | |
1,532 | |||
11,445 | |||
FOOD & STAPLES RETAILING—1.6% | |||
Albertsons Cos. Inc. / Safeway Inc. / New Albertsons LP / Albertsons LLC | |||
505 | 3.250%—03/15/20262 | 454 | |
427 | 3.500%—03/15/20292 | 355 | |
896 | 4.625%—01/15/20272 | 832 | |
240 | 4.875%—02/15/20302 | 214 | |
264 | 5.875%—02/15/20282 | 247 | |
1,224 | 7.500%—03/15/20262 | 1,257 | |
3,359 | |||
US Foods Inc. | |||
1,240 | 6.250%—04/15/20252 | 1,236 | |
4,595 | |||
FOOD PRODUCTS—0.2% | |||
B&G Foods Inc. | |||
497 | 5.250%—04/01/2025 | 453 | |
GAS UTILITIES—0.7% | |||
AmeriGas Partners LP / AmeriGas Finance Corp. | |||
167 | 5.500%—05/20/2025 | 160 | |
1,182 | 5.625%—05/20/2024 | 1,158 | |
534 | 5.750%—05/20/2027 | 493 | |
77 | 5.875%—08/20/2026 | 72 | |
1,883 |
59
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES—0.3% | |||
Garden Spinco Corp. | |||
$ | 264 | 8.625%—07/20/20302 | $272 |
Teleflex Inc. | |||
532 | 4.250%—06/01/20282 | 482 | |
754 | |||
HEALTH CARE PROVIDERS & SERVICES—5.8% | |||
Catalent Pharma Solutions Inc. | |||
534 | 5.000%—07/15/20272 | 503 | |
Centene Corp. | |||
1,361 | 2.450%—07/15/2028 | 1,121 | |
569 | 2.500%—03/01/2031 | 438 | |
60 | 2.625%—08/01/2031 | 46 | |
491 | 3.000%—10/15/2030 | 396 | |
2,001 | |||
DaVita Inc. | |||
503 | 3.750%—02/15/20312 | 364 | |
Encompass Health Corp. | |||
56 | 4.500%—02/01/2028 | 50 | |
417 | 4.625%—04/01/2031 | 345 | |
395 | |||
Global Medical Response Inc. | |||
863 | 6.500%—10/01/20252 | 688 | |
HCA Inc. | |||
1,424 | 7.690%—06/15/2025 | 1,470 | |
714 | 8.360%—04/15/2024 | 730 | |
2,200 | |||
HCA Inc. MTN4 | |||
988 | 7.580%—09/15/2025 | 1,023 | |
Legacy LifePoint Health LLC | |||
83 | 4.375%—02/15/20272 | 66 | |
386 | 5.375%—01/15/20292 | 247 | |
974 | 6.750%—04/15/20252 | 864 | |
1,177 | |||
Molina Healthcare Inc. | |||
984 | 3.875%—11/15/2030-05/15/20322 | 832 | |
339 | 4.375%—06/15/20282 | 305 | |
1,137 | |||
RegionalCare Hospital Partners Holdings Inc. / LifePoint Health Inc. | |||
1,711 | 9.750%—12/01/20262 | 1,368 | |
Surgery Center Holdings Inc. | |||
2,354 | 10.000%—04/15/20272 | 2,288 | |
Tenet Healthcare Corp. | |||
86 | 4.875%—01/01/20262 | 81 | |
780 | 6.125%—10/01/2028-06/15/20302 | 691 | |
2,262 | 6.250%—02/01/20272 | 2,163 | |
348 | 6.875%—11/15/2031 | 296 | |
3,231 | |||
16,375 | |||
HEALTH CARE TECHNOLOGY—1.4% | |||
Verscend Escrow Corp. | |||
3,866 | 9.750%—08/15/20262 | 3,882 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
HOTELS, RESTAURANTS & LEISURE—8.1% | |||
Aramark Services Inc. | |||
$ | 95 | 5.000%—04/01/20252 | $92 |
1,051 | 6.375%—05/01/20252 | 1,042 | |
1,134 | |||
Caesars Entertainment Inc. | |||
3,045 | 6.250%—07/01/20252 | 2,976 | |
1,389 | 8.125%—07/01/20272 | 1,353 | |
4,329 | |||
Caesars Resort Collection LLC / CRC Finco Inc. | |||
1,028 | 5.750%—07/01/20252 | 1,005 | |
CEC Entertainment LLC | |||
495 | 6.750%—05/01/20262 | 464 | |
Cedar Fair LP / Canada's Wonderland Co. / Magnum Management Corp. / Millennium Op | |||
1,100 | 5.500%—05/01/20252 | 1,093 | |
Hilton Domestic Operating Co. Inc. | |||
218 | 3.625%—02/15/20322 | 174 | |
293 | 4.000%—05/01/20312 | 245 | |
419 | |||
Hilton Grand Vacations Borrower Escrow LLC | |||
83 | 4.875%—07/01/20312 | 68 | |
68 | 5.000%—06/01/20292 | 58 | |
126 | |||
International Game Technology plc | |||
587 | 4.125%—04/15/20262 | 546 | |
465 | 6.250%—01/15/20272 | 462 | |
1,008 | |||
IRB Holding Corp. | |||
670 | 7.000%—06/15/20252 | 670 | |
Marriott Ownership Resorts Inc. | |||
481 | 4.750%—01/15/2028 | 416 | |
134 | 6.125%—09/15/20252 | 133 | |
549 | |||
MGM Resorts International | |||
966 | 4.625%—09/01/2026 | 883 | |
713 | 4.750%—10/15/2028 | 620 | |
467 | 5.500%—04/15/2027 | 431 | |
549 | 5.750%—06/15/2025 | 534 | |
1,664 | 6.750%—05/01/2025 | 1,645 | |
4,113 | |||
NCL Corp. Ltd. | |||
522 | 5.875%—02/15/20272 | 467 | |
Park Intermediate Holdings LLC / PK Domestic Property LLC / PK Finance Co-Issuer | |||
549 | 7.500%—06/01/20252 | 551 | |
Premier Entertainment Sub LLC / Premier Entertainment Finance Corp. | |||
294 | 5.625%—09/01/20292 | 219 | |
435 | 5.875%—09/01/20312 | 309 | |
528 | |||
Royal Caribbean Cruises Ltd. | |||
456 | 4.250%—07/01/20262 | 363 | |
471 | 5.500%—04/01/20282 | 364 | |
590 | 8.250%—01/15/20292 | 589 | |
367 | 11.500%—06/01/20252 | 396 | |
415 | 11.625%—08/15/20272 | 399 | |
2,111 |
60
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
HOTELS, RESTAURANTS & LEISURE—Continued | |||
Scientific Games International Inc. | |||
$ | 1,049 | 7.000%—05/15/20282 | $1,017 |
486 | 7.250%—11/15/20292 | 471 | |
1,293 | 8.625%—07/01/20252 | 1,330 | |
2,818 | |||
Travel + Leisure Co. | |||
200 | 6.000%—04/01/2027 | 187 | |
778 | 6.625%—07/31/20262 | 759 | |
946 | |||
Vail Resorts Inc. | |||
287 | 6.250%—05/15/20252 | 286 | |
VOC Escrow Ltd. | |||
218 | 5.000%—02/15/20282 | 180 | |
22,797 | |||
HOUSEHOLD DURABLES—0.5% | |||
LGI Homes Inc. | |||
1,001 | 4.000%—07/15/20292 | 769 | |
M/I Homes Inc. | |||
347 | 3.950%—02/15/2030 | 258 | |
Taylor Morrison Communities Inc. | |||
277 | 5.875%—06/15/20272 | 260 | |
1,287 | |||
HOUSEHOLD PRODUCTS—0.9% | |||
PetSmart Inc. / PetSmart Finance Corp. | |||
2,244 | 4.750%—02/15/20282 | 2,053 | |
619 | 7.750%—02/15/20292 | 583 | |
2,636 | |||
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS—1.2% | |||
Calpine Corp. | |||
700 | 5.250%—06/01/20262 | 665 | |
Nextera Energy Operating Partners LP | |||
329 | 4.250%—07/15/20242 | 320 | |
Vistra Operations Co. LLC | |||
1,096 | 4.375%—05/01/20292 | 940 | |
493 | 5.000%—07/31/20272 | 456 | |
466 | 5.125%—05/13/20252 | 450 | |
216 | 5.500%—09/01/20262 | 208 | |
304 | 5.625%—02/15/20272 | 290 | |
2,344 | |||
3,329 | |||
INSURANCE—1.9% | |||
Acrisure LLC / Acrisure Finance Inc. | |||
1,190 | 7.000%—11/15/20252 | 1,121 | |
389 | 10.125%—08/01/20262 | 387 | |
1,508 | |||
AssuredPartners Inc. | |||
64 | 5.625%—01/15/20292 | 53 | |
309 | 7.000%—08/15/20252 | 296 | |
349 | |||
GTCR AP Finance Inc. | |||
1,269 | 8.000%—05/15/20272 | 1,211 | |
Hub International Ltd. | |||
1,135 | 7.000%—05/01/20262 | 1,123 | |
NFP Corp. | |||
273 | 4.875%—08/15/20282 | 236 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
INSURANCE—Continued | |||
$ | 818 | 6.875%—08/15/20282 | $697 |
167 | 7.500%—10/01/20302 | 159 | |
1,092 | |||
5,283 | |||
INTERACTIVE MEDIA & SERVICES—0.9% | |||
Arches Buyer Inc. | |||
841 | 4.250%—06/01/20282 | 692 | |
Match Group Holdings II LLC | |||
357 | 5.000%—12/15/20272 | 319 | |
23 | 5.625%—02/15/20292 | 20 | |
339 | |||
Tripadvisor Inc. | |||
782 | 7.000%—07/15/20252 | 774 | |
Twitter Inc. | |||
709 | 5.000%—03/01/20302 | 714 | |
2,519 | |||
INTERNET & DIRECT MARKETING RETAIL—0.1% | |||
QVC Inc. | |||
633 | 5.450%—08/15/2034 | 400 | |
IT SERVICES—2.2% | |||
Block Inc. | |||
806 | 3.500%—06/01/2031 | 651 | |
Conduent Business Services LLC / Conduent State & Local Solutions Inc. | |||
599 | 6.000%—11/01/20292 | 492 | |
MoneyGram International Inc. | |||
343 | 5.375%—08/01/20262 | 337 | |
Presidio Holdings Inc. | |||
786 | 4.875%—02/01/20272 | 727 | |
1,418 | 8.250%—02/01/20282 | 1,264 | |
1,991 | |||
Sabre GLBL Inc. | |||
747 | 7.375%—09/01/20252 | 703 | |
1,100 | 9.250%—04/15/20252 | 1,068 | |
1,771 | |||
Twilio Inc. | |||
49 | 3.625%—03/15/2029 | 41 | |
561 | 3.875%—03/15/2031 | 458 | |
499 | |||
ZipRecruiter Inc. | |||
560 | 5.000%—01/15/20302 | 459 | |
6,200 | |||
LEISURE PRODUCTS—0.1% | |||
Wyndham Destinations Inc. | |||
347 | 4.625%—03/01/20302 | 281 | |
LIFE SCIENCES TOOLS & SERVICES—0.6% | |||
Avantor Funding Inc. | |||
551 | 3.875%—11/01/20292 | 466 | |
88 | 4.625%—07/15/20282 | 80 | |
546 | |||
IQVIA Inc. | |||
1,276 | 5.000%—05/15/20272 | 1,218 |
61
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
LIFE SCIENCES TOOLS & SERVICES—Continued | |||
Syneos Health Inc. | |||
$ | 78 | 3.625%—01/15/20292 | $65 |
1,829 | |||
MACHINERY—0.5% | |||
Allison Transmission Inc. | |||
203 | 5.875%—06/01/20292 | 189 | |
EnPro Industries Inc. | |||
447 | 5.750%—10/15/2026 | 428 | |
OT Merger Corp. | |||
761 | 7.875%—10/15/20292 | 493 | |
TK Elevator US Newco Inc. | |||
464 | 5.250%—07/15/20272 | 417 | |
1,527 | |||
MEDIA—8.7% | |||
Altice France Holding SA | |||
261 | 6.000%—02/15/20282 | 169 | |
Altice France SA | |||
787 | 5.500%—10/15/20292 | 601 | |
4,606 | 8.125%—02/01/20272 | 4,224 | |
4,825 | |||
AMC Networks Inc. | |||
970 | 4.250%—02/15/2029 | 752 | |
427 | 4.750%—08/01/2025 | 391 | |
1,143 | |||
Audacy Capital Corp. | |||
366 | 6.750%—03/31/20292 | 105 | |
CCO Holdings LLC / CCO Holdings Capital Corp. | |||
1,490 | 4.250%—02/01/2031-01/15/20342 | 1,120 | |
591 | 4.500%—08/15/2030-06/01/20332 | 461 | |
480 | 4.750%—02/01/20322 | 385 | |
378 | 5.125%—05/01/20272 | 351 | |
350 | 5.375%—06/01/20292 | 313 | |
376 | 5.500%—05/01/20262 | 362 | |
2,992 | |||
CSC Holdings LLC | |||
300 | 4.125%—12/01/20302 | 237 | |
935 | 4.500%—11/15/20312 | 730 | |
934 | 5.750%—01/15/20302 | 716 | |
1,127 | 6.500%—02/01/20292 | 1,064 | |
2,747 | |||
Diamond Sports Group LLC / Diamond Sports Finance Co. | |||
781 | 5.375%—08/15/20262 | 157 | |
DIRECTV Financing LLC / DIRECTV Financing Co-Obligor Inc. | |||
1,485 | 5.875%—08/15/20272 | 1,340 | |
DISH DBS Corp. | |||
655 | 5.125%—06/01/2029 | 442 | |
634 | 5.750%—12/01/20282 | 512 | |
954 | |||
Entercom Media Corp. | |||
129 | 6.500%—05/01/20272 | 38 | |
Graham Holdings Co. | |||
258 | 5.750%—06/01/20262 | 252 | |
Gray Television Inc. | |||
543 | 5.875%—07/15/20262 | 513 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
MEDIA—Continued | |||
Hughes Satellite Systems Corp. | |||
$ | 301 | 5.250%—08/01/2026 | $288 |
781 | 6.625%—08/01/2026 | 738 | |
1,026 | |||
Midas OPCO Holdings LLC | |||
370 | 5.625%—08/15/20292 | 320 | |
Radiate Holdco LLC / Radiate Finance Inc. | |||
145 | 4.500%—09/15/20262 | 123 | |
Sable International Finance Ltd. | |||
414 | 5.750%—09/07/20272 | 368 | |
Sirius XM Radio Inc. | |||
297 | 3.875%—09/01/20312 | 238 | |
1,713 | 4.000%—07/15/20282 | 1,475 | |
270 | 5.000%—08/01/20272 | 249 | |
1,962 | |||
Tegna Inc. | |||
685 | 4.750%—03/15/20262 | 667 | |
Telesat Canada / Telesat LLC | |||
906 | 4.875%—06/01/20272 | 400 | |
394 | 5.625%—12/06/20262 | 186 | |
243 | 6.500%—10/15/20272 | 85 | |
671 | |||
Univision Communications Inc. | |||
923 | 5.125%—02/15/20252 | 893 | |
1,042 | 6.625%—06/01/20272 | 1,031 | |
431 | 7.375%—06/30/20302 | 418 | |
2,342 | |||
Viasat Inc. | |||
1,723 | 5.625%—09/15/20252 | 1,593 | |
Virgin Media Secured Finance plc | |||
231 | 4.500%—08/15/20302 | 191 | |
24,498 | |||
METALS & MINING—0.8% | |||
Condor Merger Sub Inc. | |||
170 | 7.375%—02/15/20302 | 141 | |
FMG Resources August 2006 Pty Ltd. | |||
272 | 4.375%—04/01/20312 | 217 | |
362 | 4.500%—09/15/20272 | 325 | |
284 | 5.125%—05/15/20242 | 277 | |
873 | 5.875%—04/15/20302 | 785 | |
431 | 6.125%—04/15/20322 | 379 | |
1,983 | |||
2,124 | |||
MORTGAGE REAL ESTATE INVESTMENT TRUSTS (REITs)—0.3% | |||
Starwood Property Trust Inc. | |||
685 | 3.625%—07/15/20262 | 597 | |
314 | 3.750%—12/31/20242 | 294 | |
891 | |||
OIL, GAS & CONSUMABLE FUELS—9.3% | |||
Aethon United BR LP / Aethon United Finance Corp. | |||
509 | 8.250%—02/15/20262 | 518 | |
Antero Midstream Partners LP / Antero Midstream Finance Corp. | |||
843 | 5.750%—03/01/2027-01/15/20282 | 801 | |
664 | 7.875%—05/15/20262 | 678 | |
1,479 |
62
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
OIL, GAS & CONSUMABLE FUELS—Continued | |||
Buckeye Partners LP | |||
$ | 350 | 3.950%—12/01/2026 | $308 |
370 | 5.850%—11/15/2043 | 278 | |
606 | 6.750%—08/15/2033 | 562 | |
1,148 | |||
Centennial Resource Production LLC | |||
405 | 5.375%—01/15/20262 | 375 | |
Civitas Resources Inc. | |||
824 | 5.000%—10/15/20262 | 760 | |
CNX Resources Corp. | |||
274 | 6.000%—01/15/20292 | 256 | |
72 | 7.250%—03/14/20272 | 72 | |
580 | 7.375%—01/15/20312 | 576 | |
904 | |||
Colgate Energy Partners III LLC | |||
796 | 5.875%—07/01/20292 | 744 | |
521 | 7.750%—02/15/20262 | 520 | |
1,264 | |||
Comstock Resources Inc. | |||
290 | 5.875%—01/15/20302 | 262 | |
Continental Resources Inc. | |||
520 | 4.900%—06/01/2044 | 369 | |
221 | 5.750%—01/15/20312 | 201 | |
570 | |||
Crestwood Midstream Partners LP / Crestwood Midstream Finance Corp. | |||
734 | 8.000%—04/01/20292 | 735 | |
Crownrock LP / Crownrock Finance Inc. | |||
155 | 5.000%—05/01/20292 | 141 | |
60 | 5.625%—10/15/20252 | 58 | |
199 | |||
DT Midstream Inc. | |||
507 | 4.375%—06/15/20312 | 428 | |
Encino Acquisition Partners Holdings LLC | |||
610 | 8.500%—05/01/20282 | 573 | |
EQM Midstream Partners LP | |||
326 | 4.750%—01/15/20312 | 273 | |
643 | 6.500%—07/15/2048 | 496 | |
769 | |||
Ferrellgas LP / Ferrellgas Finance Corp. | |||
588 | 5.375%—04/01/20262 | 535 | |
Genesis Energy LP / Genesis Energy Finance Corp. | |||
249 | 8.000%—01/15/2027 | 242 | |
Gulfport Energy Operating Corp. | |||
907 | 8.000%—05/17/20262 | 906 | |
Hilcorp Energy I LP / Hilcorp Finance Co. | |||
1,079 | 6.000%—02/01/20312 | 983 | |
399 | 6.250%—04/15/20322 | 367 | |
1,350 | |||
Magnolia Oil & Gas Operating LLC / Magnolia Oil & Gas Finance Corp. | |||
671 | 6.000%—08/01/20262 | 653 | |
Moss Creek Resources Holdings Inc. | |||
334 | 7.500%—01/15/20262 | 308 | |
192 | 10.500%—05/15/20272 | 185 | |
493 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
OIL, GAS & CONSUMABLE FUELS—Continued | |||
Murphy Oil Corp. | |||
$ | 167 | 6.125%—12/01/2042 | $132 |
24 | 6.375%—07/15/2028 | 23 | |
155 | |||
NGL Energy Operating LLC / NGL Energy Finance Corp. | |||
570 | 7.500%—02/01/20262 | 517 | |
NuStar Logistics LP | |||
593 | 5.750%—10/01/2025 | 573 | |
Occidental Petroleum Corp. | |||
653 | 5.500%—12/01/2025 | 656 | |
350 | 5.550%—03/15/2026 | 356 | |
557 | 6.200%—03/15/2040 | 537 | |
474 | 6.450%—09/15/2036 | 471 | |
276 | 6.600%—03/15/2046 | 272 | |
243 | 7.500%—05/01/2031 | 262 | |
70 | 8.500%—07/15/2027 | 76 | |
519 | 8.875%—07/15/2030 | 590 | |
3,220 | |||
Parkland Corp. | |||
886 | 4.500%—10/01/20292 | 748 | |
1,112 | 4.625%—05/01/20302 | 928 | |
299 | 5.875%—07/15/20272 | 281 | |
1,957 | |||
Rattler Midstream LP | |||
576 | 5.625%—07/15/20252 | 592 | |
Sanchez Energy Corp. | |||
3,000 | 0.000%—06/15/2021* | 30 | |
SM Energy Co. | |||
604 | 6.500%—07/15/2028 | 587 | |
Southwestern Energy Co. | |||
240 | 4.750%—02/01/2032 | 208 | |
454 | 8.375%—09/15/2028 | 470 | |
678 | |||
Tallgrass Energy Partners LP / Tallgrass Energy Finance Corp. | |||
1,035 | 6.000%—09/01/20312 | 923 | |
745 | 7.500%—10/01/20252 | 754 | |
1,677 | |||
Targa Resources Partners LP / Targa Resources Partners Finance Corp. | |||
572 | 6.500%—07/15/2027 | 569 | |
Venture Global Calcasieu Pass LLC | |||
1,615 | 3.875%—08/15/2029-11/01/20332 | 1,345 | |
336 | 4.125%—08/15/20312 | 287 | |
1,632 | |||
26,350 | |||
PAPER & FOREST PRODUCTS—0.0% | |||
Glatfelter Corp. | |||
177 | 4.750%—11/15/20292 | 114 | |
PERSONAL PRODUCTS—0.1% | |||
HLF Financing Sarl LLC / Herbalife International Inc. | |||
351 | 4.875%—06/01/20292 | 262 | |
PHARMACEUTICALS—1.7% | |||
Bausch Health Americas Inc. | |||
304 | 9.250%—04/01/20262 | 176 | |
Bausch Health Cos. Inc | |||
157 | 11.000%—09/30/20282 | 122 |
63
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
PHARMACEUTICALS—Continued | |||
Bausch Health Cos. Inc. | |||
$ | 1,150 | 5.500%—11/01/20252 | $921 |
558 | 9.000%—12/15/20252 | 360 | |
1,281 | |||
Catalent Pharma Solutions Inc. | |||
396 | 3.500%—04/01/20302 | 321 | |
Jazz Securities DAC | |||
295 | 4.375%—01/15/20292 | 263 | |
Organon Finance 1 LLC | |||
493 | 5.125%—04/30/20312 | 420 | |
Teva Pharmaceutical Finance Co. LLC | |||
194 | 6.150%—02/01/2036 | 159 | |
Teva Pharmaceutical Finance Netherlands III BV | |||
176 | 2.800%—07/21/2023 | 171 | |
658 | 3.150%—10/01/2026 | 557 | |
200 | 4.750%—05/09/2027 | 177 | |
1,024 | 6.000%—04/15/2024 | 1,014 | |
261 | 7.125%—01/31/2025 | 259 | |
2,178 | |||
4,920 | |||
ROAD & RAIL—1.5% | |||
Carriage Purchaser Inc. | |||
620 | 7.875%—10/15/20292 | 463 | |
Uber Technologies Inc. | |||
1,542 | 7.500%—05/15/2025-09/15/20272 | 1,544 | |
969 | 8.000%—11/01/20262 | 974 | |
2,518 | |||
XPO CNW Inc. | |||
737 | 6.700%—05/01/2034 | 661 | |
XPO Logistics Inc. | |||
546 | 6.250%—05/01/20252 | 552 | |
4,194 | |||
SOFTWARE—1.3% | |||
Boxer Parent Co. Inc. | |||
461 | 7.125%—10/02/20252 | 454 | |
705 | 9.125%—03/01/20262 | 674 | |
1,128 | |||
Consensus Cloud Solutions Inc. | |||
153 | 6.000%—10/15/20262 | 139 | |
379 | 6.500%—10/15/20282 | 335 | |
474 | |||
Elastic NV | |||
974 | 4.125%—07/15/20292 | 815 | |
Open Text Corp. | |||
637 | 3.875%—02/15/2028-12/01/20292 | 540 | |
Open Text Holdings Inc. | |||
374 | 4.125%—02/15/20302 | 299 | |
Symantec Corp. | |||
121 | 5.000%—04/15/20252 | 118 | |
Ziff Davis Inc. | |||
192 | 4.625%—10/15/20302 | 163 | |
3,537 | |||
SPECIALTY RETAIL—1.5% | |||
Asbury Automotive Group Co. | |||
300 | 4.625%—11/15/20292 | 247 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
SPECIALTY RETAIL—Continued | |||
$ | 4 | 4.750%—03/01/2030 | $3 |
1,195 | 5.000%—02/15/20322 | 967 | |
1,217 | |||
AutoNation Inc | |||
219 | 3.850%—03/01/2032 | 171 | |
126 | 4.750%—06/01/2030 | 108 | |
279 | |||
Bath & Body Works Inc. | |||
265 | 6.694%—01/15/2027 | 250 | |
400 | 6.875%—11/01/2035 | 337 | |
587 | |||
Group 1 Automotive Inc. | |||
297 | 4.000%—08/15/20282 | 245 | |
Lithia Motors Inc. | |||
461 | 3.875%—06/01/20292 | 373 | |
Michaels Cos. Inc. | |||
609 | 7.875%—05/01/20292 | 341 | |
Penske Automotive Group Inc. | |||
621 | 3.500%—09/01/2025 | 578 | |
631 | 3.750%—06/15/2029 | 519 | |
1,097 | |||
4,139 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—1.3% | |||
Entegris Escrow Corp. | |||
87 | 4.750%—04/15/20292 | 77 | |
1,225 | 5.950%—06/15/20302 | 1,121 | |
1,198 | |||
HP Inc. | |||
356 | 4.750%—03/01/20292 | 359 | |
NCR Corp. | |||
477 | 5.000%—10/01/20282 | 402 | |
Seagate HDD Cayman Co. | |||
155 | 4.091%—06/01/2029 | 124 | |
945 | 4.125%—01/15/2031 | 712 | |
849 | 5.750%—12/01/2034 | 692 | |
1,528 | |||
Western Digital Corp. | |||
105 | 4.750%—02/15/2026 | 97 | |
3,584 | |||
TEXTILES, APPAREL & LUXURY GOODS—0.3% | |||
Compass Group Diversified Holdings LLC | |||
665 | 5.000%—01/15/20322 | 486 | |
Hanesbrands Inc. | |||
294 | 4.875%—05/15/20262 | 271 | |
757 | |||
THRIFTS & MORTGAGE FINANCE—0.2% | |||
Nationstar Mortgage Holdings Inc. | |||
210 | 5.750%—11/15/20312 | 162 | |
215 | 6.000%—01/15/20272 | 192 | |
354 | |||
PennyMac Financial Services Inc. | |||
268 | 5.750%—09/15/20312 | 202 | |
556 |
64
Harbor High-Yield Bond Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Principal Amounts, Value and Cost in Thousands
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
TRADING COMPANIES & DISTRIBUTORS—0.4% | |||
Alta Equipment Group Inc. | |||
$ | 586 | 5.625%—04/15/20262 | $507 |
WESCO Distribution Inc. | |||
715 | 7.125%—06/15/20252 | 723 | |
1,230 | |||
WIRELESS TELECOMMUNICATION SERVICES—2.0% | |||
C&W Senior Financing DAC | |||
1,278 | 6.875%—09/15/20272 | 1,111 | |
LCPR Senior Secured Financing DAC | |||
571 | 6.750%—10/15/20272 | 533 | |
Sprint Capital Corp. | |||
1,318 | 6.875%—11/15/2028 | 1,362 | |
1,449 | 8.750%—03/15/2032 | 1,703 | |
3,065 |
CORPORATE BONDS & NOTES—Continued | |||
Principal Amount | Value | ||
WIRELESS TELECOMMUNICATION SERVICES—Continued | |||
Sprint Corp. | |||
$ | 247 | 7.125%—06/15/2024 | $250 |
544 | 7.625%—03/01/2026 | 569 | |
819 | |||
5,528 | |||
TOTAL CORPORATE BONDS & NOTES | |||
(Cost $265,080) | 238,350 | ||
TOTAL INVESTMENTS—96.2% | |||
(Cost $301,062) | 271,296 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—3.8% | 10,566 | ||
TOTAL NET ASSETS—100.0% | $281,862 |
FAIR VALUE MEASUREMENTS
All investments as of October 31, 2022 (as disclosed in the preceding Portfolio of Investments) were classified as Level 2. There were no Level 3 investments at October 31, 2022 or 2021.
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.
* | Security in default |
1 | Variable or floating rate security; the stated rate represents the rate in effect as of October 31, 2022. 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. As of October 31, 2022, the aggregate value of these securities was $179,571 or 64% 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.
65
Harbor International Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Marathon Asset Management Limited
Management’s Discussion of
Fund Performance
Fund Performance
MARKET REVIEW
The period since October 31, 2021 has been weak for equity markets globally. Inflation was already high at the start of the period; however, at the time, central banks worldwide were largely sanguine in their view that the phenomenon would be a transitory effect of the easing of COVID-19 restrictions, though many others dissented. By December the view had begun to change and central banks worldwide embarked on a series of interest rate rises which have been gaining pace recently, which has depressed equities. Then in February, conflict broke out between Russia and Ukraine, upsetting the globalist view which businesses have adopted since the fall of the Iron Curtain after 1989, sending further shockwaves through the markets and depressing (most) valuations further.
The MSCI EAFE Index returned -23.00% (USD terms) over the 12-month period ended October 31, 2021. On a regional basis, performance was not highly differentiated with developed Asian ex-Japan markets (Australia, Hong Kong, Singapore and New Zealand), which constituted 12.26% of the Index on average over the period, the best performing, returning -20.95% (USD terms). European markets returned -22.88% (USD terms) and averaged 64.43% of the MSCI EAFE (ND) Index (the “Index”) over the period and Japan lagged slightly, returning -24.67% (USD terms) with an average weight of 22.56% of the Index.
In such a market one would expect defensive sectors, which offer comparatively stable dividend yields, earnings and cash flows, regardless of external events to perform better than cyclical and highly leveraged growth stocks, and that has proved to be the case, with sectors such as Consumer Staples, Health Care and Utilities all outperforming the benchmark, though all fell. However, Energy has been the stand out performer over the period, as already high oil and gas prices spiked following the imposition of sanctions against Russia by most developed markets in the wake of its invasion of Ukraine. However, Information Technology and Consumer Discretionary, the sectors which had led the market for several years, have fallen sharply, as has the Real Estate sector which is sensitive to interest rates.
PERFORMANCE
Harbor International Fund returned -24.19% (Retirement Class), -24.25% (Institutional Class), -24.46% (Administrative Class), and -24.53% (Investor Class) in the year ended October 31, 2022, while the Index returned -23.00%. Regionally, underperformance was largely attributable to stock selection in Europe. Performance was strong in Japan, and neutral in Pacific ex-Japan. The modest off-benchmark allocation to Emerging Markets was also a slight drag on performance. Looking to sectors, stock selection was positive in Financials and Information Technology, but weak in Health Care, Consumer Discretionary, Consumer Staples and Communication Services.
Energy names are a major feature of key contributors to performance, both positive and negative, over the period as the sector was the best performing in the index by a very large margin. As a result, the positions in Equinor of Norway and the UK’s BP contributed strongly. However, a lack of exposure to Shell and France’s TotalEnergies, weighed on returns and the sector did see some idiosyncratic stories where individual companies have not performed well. For example, shares in Saipem, the Italian oil services firm, fell substantially following a shock earnings announcement and profit warning early in the year. Under Italian law, the company was compelled to shore up its capital position and the share price plunged following the announcement of a €2 billion capital raise which was highly dilutive to existing holders.
Elsewhere, HelloFresh, the Germany-listed meal kit delivery service, has been volatile year-to-date. Although growth is expected to remain strong, an increase in investment into automated customer fulfilment centers and additional distribution capacity will put short-term pressure on margins, and the stock has de-rated alongside “growth” stocks this year. A lack of exposure to some Health Care names, notably Switzerland’s Novartis and the UK’s AstraZeneca, which have proved comparatively resilient in a falling market until recently also impacted returns. On the other hand, the position in Novo Nordisk, the Danish firm with a focus on diabetes
66
Harbor International Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $50,000 INVESTMENT
For the period 11/01/2012 through 10/31/2022
The graph compares a $50,000 investment in the Institutional Class shares of the Fund with the performance of the MSCI EAFE (ND) Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | 10 Years | |||||
Harbor International Fund | ||||||
Retirement Class1 | -24.19% | -0.76% | 2.64% | |||
Institutional Class | -24.25 | -0.84 | 2.59 | |||
Administrative Class | -24.46 | -1.08 | 2.33 | |||
Investor Class | -24.53 | -1.20 | 2.22 | |||
Comparative Index | ||||||
MSCI EAFE (ND) | -23.00% | -0.09% | 4.13% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.69% (Net) and 0.80% (Gross) (Retirement Class); 0.77% (Net) and 0.88% (Gross) (Institutional Class); 1.02% (Net) and 1.13% (Gross) (Administrative Class); and 1.13% (Net) and 1.24% (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. The net expense ratios reflect a contractual management fee waiver effective through 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
care, did well for the Fund. The company has met or exceeded expectations at every earnings announcement for the last 18-months, and outperformed as a result. The company is building an anti-obesity weight loss franchise based on its existing GLP-1 business.
Looking to other positions which have outperformed, Glencore, the diversified, Anglo-Swiss natural resources company is notable amongst positive contributors to performance over the year. Many commodities that Glencore mines and trades have risen substantially in price over the period, boosting earnings and providing a fillip to the share price. Nippon Telegraph and Telephone (NTT) outperformed following stronger than anticipated earnings and an increase in dividends. Part of this financial success has been due to good earnings at the NTT Data subsidiary feeding through to the parent; in addition, other divisions either reported good earnings or showed progress on structural reform.
OUTLOOK & STRATEGY
Marathon Asset Management Limited remains committed to the implementation of its bottom-up analytical efforts within the capital cycle investment framework and, therefore, is seeking to invest in companies that exhibit favorable supply side dynamics with management teams that have a track record of allocating capital efficiently. Developments over the last several years, including the pandemic and outbreak of war in Europe, highlight the shortfalls of expending too much energy on forecasted outlooks; the Portfolio Managers are not looking to react to market volatility, rather placing emphasis on trusting the longstanding investment process that they have been committed to over the Subadvisor’s 35 plus year history with low levels of investment turnover.
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 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.
67
Harbor International Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
REGION BREAKDOWN (% of investments) -Unaudited
(Excludes short-term investments and derivatives)
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of October 31, 2022, 25.5% 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 and Cost in Thousands
COMMON STOCKS—98.7% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—1.5% | |||
107,296 | Airbus SE (France) | $11,610 | |
1,832,822 | BAE Systems plc (United Kingdom) | 17,143 | |
7,995,404 | Rolls-Royce Holdings plc (United Kingdom)* | 7,171 | |
69,244 | Thales SA (France) | 8,806 | |
44,730 | |||
AIR FREIGHT & LOGISTICS—0.1% | |||
137,880 | Oesterreichische Post AG (Austria) | 3,923 | |
AIRLINES—0.4% | |||
31,519 | Copa Holdings SA (Panama)* | 2,371 | |
1,269,200 | EasyJet plc (United Kingdom)* | 5,054 | |
1,086,219 | Qantas Airways Ltd. (Australia)* | 4,059 | |
11,484 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
AUTO COMPONENTS—1.1% | |||
509,200 | Bridgestone Corp. (Japan) | $18,416 | |
1,403,169 | Gestamp Automocion SA (Spain)*,1 | 4,941 | |
38,381 | Hankook Tire & Technology Co. Ltd. (South Korea) | 983 | |
593,007 | Johnson Electric Holdings Ltd. (Hong Kong) | 611 | |
137,200 | Toyota Industries Corp. (Japan) | 7,068 | |
32,019 | |||
AUTOMOBILES—0.7% | |||
182,037 | Bayerische Motoren Werke AG (Germany) | 14,289 | |
9,063 | Hyundai Motor Co. (South Korea) | 1,044 | |
336,900 | Toyota Motor Corp. (Japan) | 4,674 | |
20,007 |
68
Harbor International Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
BANKS—10.5% | |||
704,160 | Australia & New Zealand Banking Group Ltd (Australia) | $11,537 | |
310,515 | Axis Bank Ltd. (India) | 3,405 | |
3,551,039 | Bank of Ireland Group plc (Ireland)* | 25,570 | |
19,260,035 | Barclays plc (United Kingdom) | 32,728 | |
655,338 | BNP Paribas SA (France) | 30,731 | |
5,900,554 | CaixaBank SA (Spain) | 19,567 | |
25,391 | Capitec Bank Holdings Ltd. (South Africa) | 2,629 | |
209,013 | Close Brothers Group plc (United Kingdom) | 2,355 | |
121,571 | Danske Bank AS (Denmark) | 1,961 | |
536,434 | DBS Group Holdings Ltd. (Singapore) | 12,969 | |
505,520 | DNB Bank ASA (Norway) | 8,941 | |
289,300 | Fukuoka Financial Group Inc. (Japan) | 4,923 | |
533,100 | Grupo Financiero Banorte SAB de CV (Mexico)* | 4,340 | |
115,559 | Hana Financial Group Inc. (South Korea) | 3,341 | |
110,116 | HDFC Bank Ltd. ADR (India)2 | 6,861 | |
403,569 | HSBC Holdings plc (Hong Kong) | 2,071 | |
1,472,493 | Intesa Sanpaolo SpA (Italy)* | 2,807 | |
389,400 | Kasikornbank PCL (Thailand) | 1,498 | |
60,237,429 | Lloyds Banking Group plc (United Kingdom) | 28,930 | |
12,022,300 | PT Bank Central Asia TBK (Indonesia) | 6,796 | |
6,495,300 | Resona Holdings Inc. (Japan) | 24,480 | |
108,056 | Shinhan Financial Group Co. Ltd. (South Korea)* | 2,746 | |
1,187,933 | Standard Chartered plc (United Kingdom) | 7,098 | |
213,800 | Sumitomo Mitsui Financial Group Inc. (Japan) | 6,004 | |
613,900 | Sumitomo Mitsui Trust Holdings Inc. (Japan) | 17,661 | |
1,657,368 | Svenska Handelsbanken AB (Sweden) | 15,399 | |
1,928,395 | UniCredit SpA (Italy) | 23,915 | |
348,200 | United Overseas Bank Ltd. (Singapore) | 6,831 | |
318,094 | |||
BEVERAGES—4.1% | |||
202,744 | Anheuser-Busch InBev SA (Belgium) | 10,141 | |
282,600 | Asahi Group Holdings Ltd. (Japan) | 7,907 | |
91,015 | Carlsberg AS (Denmark) | 10,717 | |
170,545 | Coca-Cola Europacific Partners plc (United States) | 8,024 | |
718,962 | Davide Campari-Milano NV (Italy) | 6,457 | |
587,030 | Diageo plc (United Kingdom) | 24,158 | |
237,179 | Heineken NV (Netherlands) | 19,813 | |
2,031,100 | Kirin Holdings Co. Ltd. (Japan) | 29,857 | |
21,876 | Pernod Ricard SA (France) | 3,839 | |
6,740,800 | Thai Beverage PCL (Singapore) | 2,739 | |
123,652 | |||
BIOTECHNOLOGY—0.3% | |||
52,869 | CSL Ltd. (Australia) | 9,464 | |
BUILDING PRODUCTS—1.8% | |||
1,185,564 | Assa Abloy AB Class B (Sweden) | 23,939 | |
45,353 | Geberit AG (Switzerland) | 20,161 | |
702,822 | GWA Group Ltd. (Australia) | 913 | |
591,600 | LIXIL Group Corp. (Japan) | 8,936 | |
53,949 | |||
CAPITAL MARKETS—2.1% | |||
1,723,696 | 3i Group plc (United Kingdom) | 22,957 | |
695,100 | Daiwa Securities Group Inc. (Japan) | 2,712 | |
817,119 | IG Group Holdings plc (United Kingdom) | 7,453 | |
58,700 | JAFCO Group Co. Ltd. (Japan) | 901 | |
2,625,373 | Jupiter Fund Management plc (United Kingdom) | 3,124 | |
3,190,100 | Nomura Holdings Inc. (Japan) | 10,323 | |
111,245 | Rathbone Brothers plc (United Kingdom) | 2,391 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
CAPITAL MARKETS—Continued | |||
760,555 | St. James's Place plc (United Kingdom) | $9,287 | |
175,525 | UBS Group AG (Switzerland) | 2,783 | |
61,931 | |||
CHEMICALS—1.2% | |||
986,200 | Air Water Inc. (Japan) | 11,011 | |
325,286 | BASF SE (Germany) | 14,596 | |
155,600 | Nissan Chemical Corp. (Japan) | 7,004 | |
147,000 | Sumitomo Bakelite Co. Ltd. (Japan) | 3,979 | |
36,590 | |||
COMMERCIAL SERVICES & SUPPLIES—1.9% | |||
88,900 | AEON Delight Co. Ltd. (Japan) | 1,777 | |
65,098 | Befesa SA (Germany)*,1 | 2,261 | |
371,041 | Brambles Ltd. (Australia) | 2,778 | |
2,782,044 | Cleanaway Waste Management Ltd. (Australia) | 4,812 | |
190,691 | Elis SA (France) | 2,184 | |
1,825,124 | HomeServe plc (United Kingdom) | 24,841 | |
90,900 | SECOM Co. Ltd. (Japan) | 5,178 | |
6,597,823 | Serco Group plc (United Kingdom) | 12,340 | |
56,171 | |||
CONSTRUCTION & ENGINEERING—1.0% | |||
118,939 | Ferrovial SA (Spain) | 2,907 | |
1,076,300 | Infroneer Holdings Inc. (Japan) | 7,461 | |
2,004,400 | Obayashi Corp. (Japan) | 12,866 | |
1,471,900 | Penta-Ocean Construction Co. Ltd. (Japan) | 7,320 | |
30,554 | |||
CONSTRUCTION MATERIALS—1.6% | |||
105,400 | Beijing Oriental Yuhong Waterproof Technology Co. Ltd. Class A (China) | 355 | |
89,604 | CRH plc (Ireland) | 3,227 | |
1,015,222 | Fletcher Building Ltd. (New Zealand) | 3,031 | |
366,306 | Holcim Ltd. (Switzerland)* | 16,642 | |
31,543 | Imerys SA (France) | 1,291 | |
119,887 | James Hardie Industries PLC CDI (Australia)*,2 | 2,618 | |
800,000 | Taiheiyo Cement Corp. (Japan) | 10,871 | |
49,192 | Vicat SA (France) | 1,128 | |
442,762 | Wienerberger AG (Austria) | 10,121 | |
49,284 | |||
CONSUMER FINANCE—0.1% | |||
1,849,844 | International Personal Finance plc (United Kingdom) | 1,651 | |
2,290,775 | Non-Standard Finance plc (United Kingdom)*,1 | 16 | |
1,343,825 | Provident Financial plc (United Kingdom) | 2,519 | |
4,186 | |||
CONTAINERS & PACKAGING—0.7% | |||
3,006,363 | DS Smith plc (United Kingdom) | 10,026 | |
858,000 | Toyo Seikan Group Holdings Ltd. (Japan) | 9,813 | |
19,839 | |||
DISTRIBUTORS—0.4% | |||
1,410,295 | Inchcape plc (United Kingdom) | 12,031 | |
DIVERSIFIED FINANCIAL SERVICES—0.6% | |||
2,038,592 | AMP Ltd. (Australia)* | 1,644 | |
1,559,400 | B3 Brasil Bolsa Balcao SA (Brazil)* | 4,540 | |
444,545 | Chailease Holding Co. Ltd. (Taiwan) | 2,051 |
69
Harbor International Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
DIVERSIFIED FINANCIAL SERVICES—Continued | |||
374,043 | Challenger Ltd. (Australia) | $1,681 | |
69,072 | Macquarie Group Ltd. (Australia) | 7,493 | |
17,409 | |||
DIVERSIFIED TELECOMMUNICATION SERVICES—2.1% | |||
465,438 | Deutsche Telekom AG (Germany) | 8,785 | |
3,903,484 | Koninklijke KPN NV (Netherlands) | 10,918 | |
1,396,800 | Nippon Telegraph & Telephone Corp. (Japan) | 38,525 | |
653,000 | Singapore Telecommunications Ltd. (Singapore) | 1,150 | |
1,321,584 | Telstra Group Ltd. (Australia)* | 3,314 | |
62,692 | |||
ELECTRIC UTILITIES—0.4% | |||
143,500 | Orsted AS (Denmark)1 | 11,840 | |
ELECTRICAL EQUIPMENT—3.4% | |||
607,026 | ABB Ltd. (Switzerland) | 16,857 | |
30,135 | Accelleron Industries AG (Switzerland)* | 511 | |
152,348 | Havells India Ltd. (India)* | 2,247 | |
314,135 | Legrand SA (France) | 23,939 | |
1,196,600 | Mitsubishi Electric Corp. (Japan) | 10,528 | |
150,431 | Schneider Electric SE (France) | 19,023 | |
1,530,661 | Vestas Wind Systems AS (Denmark) | 30,175 | |
103,280 | |||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—0.7% | |||
428,000 | Delta Electronics Inc. (Taiwan) | 3,405 | |
108,500 | Kyocera Corp. (Japan) | 5,254 | |
72,700 | Omron Corp. (Japan) | 3,391 | |
309,300 | TDK Corp. (Japan) | 9,662 | |
21,712 | |||
ENERGY EQUIPMENT & SERVICES—0.2% | |||
1,582,574 | John Wood Group plc (United Kingdom)* | 2,544 | |
621,658 | Petrofac Ltd. (United Kingdom)* | 768 | |
149,294 | Saipem SpA (Italy)* | 145 | |
159,105 | Technip Energies NV (France)* | 2,054 | |
5,511 | |||
ENTERTAINMENT—0.4% | |||
143,223 | CTS Eventim AG & Co. KGaA (Germany)* | 6,837 | |
313,575 | Modern Times Group MTG AB Class B (Sweden)* | 2,351 | |
57,100 | Nintendo Co. Ltd. (Japan) | 2,318 | |
11,506 | |||
FOOD & STAPLES RETAILING—1.4% | |||
175,363 | Bid Corp. Ltd. (South Africa) | 2,822 | |
128,097 | Clicks Group Ltd. (South Africa) | 2,170 | |
574,528 | Koninklijke Ahold Delhaize NV (Netherlands) | 16,023 | |
108,300 | Matsumotokiyoshi Holdings Co. Ltd. (Japan) | 3,943 | |
944,959 | Metcash Ltd. (Australia) | 2,481 | |
220,600 | Seven & I Holdings Co. Ltd. (Japan) | 8,235 | |
2,976,053 | Tesco plc (United Kingdom) | 7,350 | |
95,013 | X5 Retail Group NV GDR (Russia) | —x | |
43,024 | |||
FOOD PRODUCTS—1.5% | |||
913,000 | China Mengniu Dairy Co. Ltd. (China)* | 2,923 | |
1,159,200 | Devro plc (United Kingdom) | 2,379 | |
2,226,000 | First Pacific Co. Ltd. (Hong Kong) | 589 | |
324,700 | Megmilk Snow Brand Co. Ltd. (Japan) | 3,536 | |
275,800 | NH Foods Ltd. (Japan) | 6,573 | |
1,936,000 | Tingyi Cayman Islands Holding Corp. (China) | 3,026 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
FOOD PRODUCTS—Continued | |||
285,200 | Toyo Suisan Kaisha Ltd. (Japan) | $10,700 | |
163,202 | Viscofan SA (Spain) | 9,718 | |
83,400 | Yakult Honsha Co. Ltd. (Japan) | 4,620 | |
44,064 | |||
HEALTH CARE EQUIPMENT & SUPPLIES—2.9% | |||
239,630 | Coloplast AS Class B (Denmark) | 26,712 | |
6,210,574 | ConvaTec Group plc (United Kingdom)1 | 15,540 | |
462,849 | Demant AS (Denmark)* | 12,639 | |
277,491 | Getinge AB Class B (Sweden) | 5,631 | |
335,720 | GN Store Nord AS (Denmark) | 7,135 | |
512,452 | Koninklijke Philips NV (Netherlands) | 6,500 | |
193,170 | Smith & Nephew plc (United Kingdom) | 2,283 | |
43,799 | Sonova Holding AG (Switzerland) | 10,352 | |
86,792 | |||
HEALTH CARE PROVIDERS & SERVICES—0.9% | |||
159,600 | Alfresa Holdings Corp. (Japan) | 1,837 | |
144,352 | Amplifon SpA (Italy) | 3,586 | |
393,300 | Fresenius Medical Care AG & Co. KGaA (Germany) | 10,879 | |
519,700 | MediPAL Holdings Corp. (Japan) | 6,443 | |
219,700 | Ship Healthcare Holdings Inc. (Japan) | 4,214 | |
26,959 | |||
HOTELS, RESTAURANTS & LEISURE—4.3% | |||
2,671,000 | Ajisen China Holdings Ltd. (China) | 211 | |
145,747 | Aristocrat Leisure Ltd. (Australia) | 3,459 | |
236,661 | Carnival plc (United Kingdom)* | 1,880 | |
1,567,934 | Compass Group plc (United Kingdom) | 33,024 | |
1,482,568 | Entain plc (United Kingdom)* | 21,448 | |
247,037 | Flutter Entertainment plc (Ireland)* | 32,626 | |
861,000 | Galaxy Entertainment Group Ltd. (Hong Kong)* | 3,934 | |
68,324 | InterContinental Hotels Group plc (United Kingdom) | 3,671 | |
400,992 | Playtech plc (United Kingdom)* | 2,383 | |
6,518,378 | SSP Group plc (United Kingdom)* | 15,157 | |
48,038 | Trip.com Group Ltd. ADR (China)*,2 | 1,087 | |
4,208,026 | TUI AG (Germany)* | 6,367 | |
123,704 | Yum China Holdings Inc. (China) | 5,115 | |
130,362 | |||
HOUSEHOLD DURABLES—0.7% | |||
488,230 | Barratt Developments plc (United Kingdom) | 2,106 | |
446,400 | Midea Group Co. Ltd. (China) | 2,459 | |
331,500 | Sekisui Chemical Co. Ltd. (Japan) | 4,140 | |
126,000 | Sony Group Corp. (Japan) | 8,497 | |
4,173,588 | Taylor Wimpey plc (United Kingdom) | 4,487 | |
21,689 | |||
HOUSEHOLD PRODUCTS—0.7% | |||
322,135 | Reckitt Benckiser Group plc (United Kingdom) | 21,378 | |
INDUSTRIAL CONGLOMERATES—1.9% | |||
516,000 | CK Hutchison Holdings Ltd. (Hong Kong) | 2,569 | |
179,432 | DCC plc (United Kingdom) | 9,959 | |
637,000 | Hitachi Ltd. (Japan) | 28,903 | |
129,800 | Jardine Matheson Holdings Ltd. (Hong Kong) | 5,980 | |
22,671 | LG Corp. (South Korea) | 1,258 | |
1,447,437 | Melrose Industries plc (United Kingdom)* | 1,942 | |
880,800 | Nisshinbo Holdings Inc. (Japan) | 6,105 | |
56,716 | |||
INSURANCE—5.3% | |||
396,251 | Admiral Group plc (United Kingdom) | 9,164 |
70
Harbor International Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
INSURANCE—Continued | |||
2,299,200 | AIA Group Ltd. (Hong Kong) | $17,416 | |
1,037,890 | AXA SA (France) | 25,631 | |
1,288,900 | Dai-ichi Life Holdings Inc. (Japan) | 20,471 | |
222,100 | Great Eastern Holdings Ltd. (Singapore) | 2,808 | |
31,576 | Hannover Rueck SE (Germany) | 5,138 | |
27,987 | Helvetia Holding AG (Switzerland) | 2,779 | |
413,028 | Hiscox Ltd. (United Kingdom) | 4,255 | |
1,011,300 | Japan Post Holdings Co. Ltd. (Japan) | 6,801 | |
389,500 | Ping An Insurance Group Co. of China Ltd. (China) | 1,559 | |
632,448 | Porto Seguro SA (Brazil)* | 2,845 | |
583,016 | Prudential plc (Hong Kong) | 5,415 | |
998,133 | QBE Insurance Group Ltd. (Australia) | 7,820 | |
596,004 | Sampo OYJ (Finland) | 27,254 | |
1,160,400 | Tokio Marine Holdings Inc. (Japan) | 21,009 | |
160,365 | |||
INTERACTIVE MEDIA & SERVICES—1.2% | |||
1,383,009 | Auto Trader Group plc (United Kingdom)1 | 8,278 | |
40,871 | Baidu Inc. ADR (China)*,2 | 3,130 | |
190,757 | Carsales.com Ltd. (Australia) | 2,471 | |
4,127,521 | Rightmove plc (United Kingdom) | 23,243 | |
37,122 | |||
INTERNET & DIRECT MARKETING RETAIL—0.9% | |||
300,739 | Cazoo Group Ltd. (Cayman Islands)* | 96 | |
505,449 | HelloFresh SE (Germany)* | 10,104 | |
135,833 | Just Eat Takeaway.com NV (Netherlands)*,1 | 2,331 | |
34,989 | Naspers Ltd. (South Africa)* | 3,607 | |
236,290 | Vipshop Holdings Ltd. ADR (China)*,2 | 1,647 | |
168,662 | Zalando SE (Germany)*,1 | 3,887 | |
320,400 | ZOZO Inc. (Japan) | 6,798 | |
28,470 | |||
IT SERVICES—2.9% | |||
84,201 | ALTEN SA (France) | 9,837 | |
11,923,834 | Capita plc (United Kingdom)* | 3,318 | |
384,157 | Edenred (France) | 19,694 | |
196,814 | Infosys Ltd. ADR (India)2 | 3,686 | |
497,000 | NEC Corp. (Japan) | 16,451 | |
332,700 | NET One Systems Co. Ltd. (Japan) | 6,833 | |
195,200 | NS Solutions Corp. (Japan) | 4,487 | |
328,600 | NTT Data Corp. (Japan) | 4,760 | |
34,532 | Reply SpA (Italy) | 3,756 | |
550,800 | SCSK Corp. (Japan) | 8,126 | |
161,712 | Softcat plc (United Kingdom) | 2,078 | |
113,127 | Tata Consultancy Services Ltd. (India) | 4,348 | |
87,374 | |||
LEISURE PRODUCTS—0.3% | |||
45,289 | Mips AB (Sweden) | 1,465 | |
704,300 | Sega Sammy Holdings Inc. (Japan) | 9,009 | |
10,474 | |||
LIFE SCIENCES TOOLS & SERVICES—0.6% | |||
224,583 | Eurofins Scientific SE (France) | 14,377 | |
40,712 | Gerresheimer AG (Germany) | 2,332 | |
16,709 | |||
MACHINERY—3.6% | |||
66,109 | ALFA Laval AB (Sweden) | 1,627 | |
83,962 | Andritz AG (Austria) | 3,902 | |
1,957,604 | CNH Industrial NV (Italy) | 25,326 | |
107,600 | Daifuku Co. Ltd. (Japan) | 4,925 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
MACHINERY—Continued | |||
550,456 | Fluidra SA (Spain) | $7,476 | |
81,565 | GEA Group AG (Germany) | 2,851 | |
391,530 | Iveco Group NV (Italy)* | 2,116 | |
391,800 | Kubota Corp. (Japan) | 5,465 | |
337,800 | Mitsubishi Heavy Industries Ltd. (Japan) | 11,635 | |
196,200 | Miura Co. Ltd. (Japan) | 3,996 | |
583,900 | NSK Ltd. (Japan) | 3,086 | |
727,142 | Rotork plc (United Kingdom) | 2,131 | |
815,141 | Sandvik AB (Sweden) | 12,738 | |
737,500 | Sany Heavy Industry Co. Ltd. (China) | 1,369 | |
162,064 | Stabilus SE (Germany)* | 8,891 | |
541,500 | Techtronic Industries Co. Ltd. (Hong Kong) | 5,127 | |
550,512 | Wartsila OYJ ABP (Finland) | 3,753 | |
1,970,000 | Weichai Power Co. Ltd. (China) | 1,887 | |
108,301 | |||
MARINE—0.2% | |||
1,123,849 | Irish Continental Group plc (Ireland)* | 4,544 | |
179,200 | Kawasaki Kisen Kaisha Ltd. (Japan) | 2,717 | |
7,261 | |||
MEDIA—2.3% | |||
233,629 | Euromoney Institutional Investor plc (United Kingdom) | 3,880 | |
1,095,300 | Fuji Media Holdings Inc. (Japan) | 7,618 | |
398,869 | Future plc (United Kingdom) | 5,590 | |
439,800 | Hakuhodo DY Holdings Inc. (Japan) | 3,706 | |
653,648 | Informa plc (United Kingdom) | 4,165 | |
12,559,726 | ITV plc (United Kingdom) | 9,670 | |
475,169 | JCDecaux SA (France)* | 5,999 | |
737,600 | Nippon Television Holdings Inc. (Japan) | 5,501 | |
229,837 | Nordic Entertainment Group AB (Sweden)* | 4,196 | |
139,255 | Schibsted ASA Class A (Norway) | 2,149 | |
59,403 | Schibsted ASA Class B (Norway) | 883 | |
456,300 | TBS Holdings Inc. (Japan) | 4,727 | |
1,264,441 | WPP plc (United Kingdom) | 11,127 | |
69,211 | |||
METALS & MINING—4.4% | |||
700,844 | Acerinox SA (Spain) | 6,142 | |
178,235 | African Rainbow Minerals Ltd. (South Africa) | 2,510 | |
197,786 | Alleima AB (Sweden)* | 674 | |
20,532 | Anglo American Platinum Ltd. (South Africa) | 1,635 | |
867,352 | ArcelorMittal SA (France) | 19,388 | |
586,864 | BHP Group Ltd. (Australia) | 14,097 | |
274,690 | BlueScope Steel Ltd. (Australia) | 2,766 | |
147,700 | Dowa Holdings Co. Ltd. (Japan) | 4,690 | |
1,340,420 | Evolution Mining Ltd. (Australia) | 1,778 | |
141,085 | First Quantum Minerals Ltd. (Canada) | 2,489 | |
6,841,525 | Glencore plc (United Kingdom)* | 39,223 | |
277,657 | Newcrest Mining Ltd. (Australia) | 3,075 | |
137,634 | OZ Minerals Ltd. (Australia) | 2,131 | |
398,804 | Rio Tinto plc (United Kingdom) | 20,842 | |
217,215 | Severstal PJSC GDR (Russia) | —x | |
81,888 | Southern Copper Corp. (Peru) | 3,846 | |
290,500 | Sumitomo Metal Mining Co. Ltd. (Japan) | 8,143 | |
133,429 | |||
MULTILINE RETAIL—0.2% | |||
403,900 | Marui Group Co. Ltd. (Japan) | 6,608 | |
OIL, GAS & CONSUMABLE FUELS—5.3% | |||
2,482,949 | Beach Energy Ltd. (Australia) | 2,539 | |
14,889,902 | BP plc (United Kingdom) | 82,380 |
71
Harbor International Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS—Continued | |||
1,374,647 | Equinor ASA (Norway) | $50,083 | |
1,104,200 | INPEX Corp. (Japan) | 11,144 | |
1,661,438 | Santos Ltd. (Australia) | 8,111 | |
187,767 | Woodside Energy Group Ltd. (Australia) | 4,341 | |
158,598 | |||
PAPER & FOREST PRODUCTS—0.3% | |||
2,735,300 | Oji Holdings Corp. (Japan) | 9,483 | |
PERSONAL PRODUCTS—1.1% | |||
22,326 | AMOREPACIFIC Group (South Korea) | 387 | |
347,710 | Dabur India Ltd. (India) | 2,338 | |
917,250 | L'Occitane International SA (Hong Kong) | 2,252 | |
379,813 | Marico Ltd. (India) | 2,416 | |
545,131 | Unilever plc (United Kingdom) | 24,779 | |
32,172 | |||
PHARMACEUTICALS—4.6% | |||
628,982 | Novo Nordisk AS (Denmark) | 68,390 | |
185,229 | Roche Holding AG (Switzerland) | 61,459 | |
84,700 | Sawai Group Holdings Co. Ltd. (Japan) | 2,445 | |
351,400 | Tsumura & Co. (Japan) | 7,339 | |
139,633 | |||
PROFESSIONAL SERVICES—3.8% | |||
366,466 | Adecco Group AG (Switzerland)* | 11,469 | |
356,703 | ALS Ltd. (Australia) | 2,609 | |
401,142 | Experian plc (United Kingdom) | 12,791 | |
10,045,195 | Hays plc (United Kingdom) | 12,665 | |
531,872 | Intertek Group plc (United Kingdom) | 22,282 | |
332,077 | IPH Ltd. (Australia) | 2,112 | |
434,600 | Nomura Co. Ltd. (Japan) | 3,175 | |
689,001 | PageGroup plc (United Kingdom)* | 3,323 | |
230,500 | Persol Holdings Co. Ltd. (Japan) | 4,615 | |
59,893 | Randstad NV (Netherlands) | 2,985 | |
899,588 | RELX plc (United Kingdom) | 24,163 | |
677,179 | RWS Holdings plc (United Kingdom) | 2,381 | |
131,400 | TechnoPro Holdings Inc. (Japan)* | 3,152 | |
28,777 | Teleperformance (France) | 7,710 | |
115,432 | |||
REAL ESTATE MANAGEMENT & DEVELOPMENT—0.7% | |||
907,000 | Daiwa House Industry Co. Ltd. (Japan) | 18,274 | |
626,000 | Swire Pacific Ltd. (Hong Kong) | 4,152 | |
22,426 | |||
ROAD & RAIL—0.6% | |||
138,200 | East Japan Railway Co. (Japan) | 7,364 | |
241,800 | Localiza Rent A Car Ltd. (Brazil)* | 3,302 | |
671 | Localiza Rent A Car SA (Brazil)* | 9 | |
1,216,187 | National Express Group plc (United Kingdom)* | 2,357 | |
600,400 | Senko Group Holdings Co. Ltd. (Japan) | 4,011 | |
17,043 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—1.4% | |||
207,600 | ASM Pacific Technology Ltd. (Hong Kong) | 1,142 | |
30,387 | ASML Holding NV (Netherlands) | 14,254 | |
58,000 | MediaTek Inc. (Taiwan) | 1,057 | |
1,108,600 | Renesas Electronics Corp. (Japan)* | 9,275 | |
91,200 | ROHM Co. Ltd. (Japan) | 6,408 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—Continued | |||
51,272 | SK Hynix Inc. (South Korea) | $2,968 | |
462,000 | Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan) | 5,554 | |
40,658 | |||
SOFTWARE—0.3% | |||
105,696 | Aveva Group plc (United Kingdom) | 3,782 | |
117,600 | Oracle Corp. Japan (Japan) | 6,265 | |
10,047 | |||
SPECIALTY RETAIL—1.0% | |||
131,300 | ABC-Mart Inc. (Japan) | 5,852 | |
4,209,900 | Esprit Holdings Ltd. (Hong Kong)* | 327 | |
1,217,033 | Pepkor Holdings Ltd. (South Africa)1 | 1,504 | |
1,510,273 | Pets at Home Group plc (United Kingdom) | 4,994 | |
324,300 | USS Co. Ltd. (Japan) | 4,893 | |
635,227 | WH Smith plc (United Kingdom)* | 8,588 | |
662,500 | Zhongsheng Group Holdings Ltd (China) | 2,514 | |
28,672 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—0.6% | |||
312,000 | Advantech Co. Ltd. (Taiwan) | 2,827 | |
139,569 | Logitech International SA (Switzerland)3 | 6,941 | |
111,357 | Quadient SA (France) | 1,567 | |
182,253 | Samsung Electronics Co Ltd. (South Korea) | 7,585 | |
18,920 | |||
TEXTILES, APPAREL & LUXURY GOODS—2.2% | |||
81,952 | Adidas AG (Germany) | 8,000 | |
230,536 | Cie Financiere Richemont SA (Switzerland) | 22,531 | |
286,323 | Cie Financiere Richemont SA ADR (South Africa)2 | 2,799 | |
176,771 | EssilorLuxottica SA (France) | 27,952 | |
303,000 | Li Ning Co. Ltd. (China) | 1,567 | |
970,500 | Samsonite International SA (Hong Kong)*,1 | 2,085 | |
236,318 | Shenzhou International Group Holdings Ltd. (China) | 1,641 | |
969,500 | Stella International Holdings Ltd. (Hong Kong) | 939 | |
67,514 | |||
THRIFTS & MORTGAGE FINANCE—0.2% | |||
175,134 | Housing Development Finance Corp. Ltd. (India) | 5,237 | |
TOBACCO—0.6% | |||
79,230 | British American Tobacco plc (United Kingdom) | 3,129 | |
1,349,448 | Swedish Match AB (Sweden) | 13,879 | |
17,008 | |||
TRADING COMPANIES & DISTRIBUTORS—1.6% | |||
290,500 | BOC Aviation Ltd. (China)1 | 1,944 | |
279,799 | Brenntag SE (Germany) | 16,977 | |
641,217 | Bunzl plc (United Kingdom) | 20,894 | |
362,500 | ITOCHU Corp. (Japan) | 9,369 | |
49,184 | |||
TRANSPORTATION INFRASTRUCTURE—0.6% | |||
541,433 | Getlink SE (France) | 8,568 | |
214,299 | Grupo Aeroportuario del Pacifico SAB de CV Class B (Mexico) | 3,324 | |
288,100 | Mitsubishi Logistics Corp. (Japan) | 6,322 | |
18,214 |
72
Harbor International Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES—0.3% | |||
292,300 | KDDI Corp. (Japan) | $8,639 | |
TOTAL COMMON STOCKS | |||
(Cost $3,172,621) | 2,977,046 | ||
PREFERRED STOCKS—0.3% | |||
AUTOMOBILES—0.3% | |||
80,346 | Volkswagen AG (Germany) | 10,284 | |
PERSONAL PRODUCTS—0.0% | |||
9,185 | AMOREPACIFIC Group (South Korea) | 133 | |
TOTAL PREFERRED STOCKS | |||
(Cost $13,391) | 10,417 | ||
SHORT-TERM INVESTMENTS—0.1% | |||
(Cost $2,077) | |||
Shares | Value | ||
2,077 | State Street Navigator Securities Lending Government Money Market Portfolio (1 day yield of 3.120%)4 | $2,077 | |
TOTAL INVESTMENTS—99.1% | |||
(Cost $3,188,089) | 2,989,540 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.9% | 27,295 | ||
TOTAL NET ASSETS—100.0% | $3,016,835 |
RIGHTS/WARRANTS
Description | No. of Contracts | Strike Price | Expiration Date | Cost (000s) | Value (000s) |
Cie Financiere Richemont SA ADR (South Africa)2 | 805,198 | CHF 67.00 | 09/12/2023 | $ — | $37 |
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of October 31, 2022 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 | $— | $19,676 | $— | $19,676 |
Europe | 1,185 | 1,930,999 | — | 1,932,184 |
Latin America | 24,673 | — | — | 24,673 |
Middle East/Central Asia | 10,547 | 19,991 | — | 30,538 |
North America | 10,513 | — | — | 10,513 |
Pacific Basin | 15,791 | 943,671 | — | 959,462 |
Preferred Stocks | ||||
Europe | — | 10,284 | — | 10,284 |
Pacific Basin | — | 133 | — | 133 |
Short-Term Investments | ||||
Investment Company-Securities Lending Investment Fund | 2,077 | — | — | 2,077 |
Total Investments in Securities | $64,786 | $2,924,754 | $— | $2,989,540 |
Financial Derivative Instruments - Assets | ||||
Rights/Warrants | $37 | $— | $— | $37 |
Total Investments | $64,823 | $2,924,754 | $— | $2,989,577 |
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.
73
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 year ended October 31, 2022. 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 11/01/2021 (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 3h (000s) | Ending Balance as of 10/31/2022 (000s) | Unrealized Gain/(Loss) as of 10/31/2022 (000s) |
Common Stocks | $11,568 | $206 | $(1,512) | $— | $87 | $(2,856) | $— | $(7,493) | $— | $(7,678) |
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 | Ending Balance as of 10/31/2022 (000s) | Valuation Technique | Unobservable Input(s) | Input Value(s) |
Investments in Securities | ||||
Common Stocks | ||||
Severstal PJSC GDR (Russia)1 | $ — | Market Approach | Estimated Recovery Value | $ 0.00 |
X5 Retail Group NV GDR (Russia)1 | — | Market Approach | Estimated Recovery Value | $ 0.00 |
$— |
x | Fair valued in accordance with Harbor Funds' Valuation Procedures. |
* | 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. As of October 31, 2022, the aggregate value of these securities was $54,627 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 October 31, 2022. |
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 or transferred from Level 3 to Level 2 due to availability of observable market data for pricing |
CHF | Swiss Franc |
The accompanying notes are an integral part of the Financial Statements.
74
Harbor International Growth Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Baillie Gifford Overseas Limited
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
Inflation has continued to be a prominent consideration for policy makers and central bankers during the past year. The Federal Reserve in the US, the Bank of England, and the European Central Bank have all raised interest rates following continued rises in consumer prices.
Energy costs have been a notable driver of price rises, exacerbated by Russia’s invasion of Ukraine in February. The effects of this have been felt particularly in Europe and the UK. Initiatives aimed at lessening the impact on consumers have been announced, along with measures aimed at reducing energy use.
Although inflation is increasing in Japan, this is from a sufficiently low starting point that the Bank of Japan has felt able to continue with monetary easing. China’s pandemic lockdowns have been easing, leading to some recovery in retail spending and industrial production, but some lending rates have nonetheless been cut there and the effects on global supply chains continue to be felt.
Though we are mindful of these headwinds, we endeavour not to be distracted by short-term considerations. We prefer to approach portfolio construction by considering company fundamentals rather than macroeconomic issues. We aim to find good quality stocks that can produce above average earnings growth and that have the potential to outperform over the long term.
Performance
Harbor International Growth Fund returned -40.76% (Retirement Class), -40.78% (Institutional Class), -40.93% (Administrative Class), and -41.00% (Investor Class) for the twelve months ended October 31, 2022, underperforming the -24.73% return of the MSCI All Country World Ex U.S. (ND) Index.
The Fund underperformed in each of the regions in the benchmark index, led by Europe ex-UK, Developed Asia, and the UK.
Where sectors are concerned, all areas detracted from relative performance apart from Real Estate, where there was a small positive contribution (and where the Fund had no exposure). The main detractors from the Fund’s relative performance included Consumer Discretionary, Information Technology, and Industrials. At the end of October 2022, the Fund was most overweight in the Consumer Discretionary and Industrials sectors, while the most underweight positions were in Financials and Materials.
The Fund’s regional and sectoral positions are outputs of our bottom-up investment process. Given this fundamental approach, it is particularly relevant to consider the individual company holdings that impacted performance. The largest individual detractors from performance included Zalando, Shopify, and Farfetch. The main contributors during the period included United Overseas Bank, Olympus, and Raia Drogasil.
Zalando is a German-listed ecommerce company that specialises in fashion retail. It is the European leader in this area. The company’s revenues have suffered as the cost of living for consumers has risen and consumer confidence has fallen. However, the customer base continues to expand. The long-term investment case for the business is that it has the potential to increase significantly its share of the online fashion market. Shopify of Canada provides a range of services that assist businesses to operate via the internet. These include payment, shipping, and marketing solutions. It has seen some slowing in the rate of growth this year following a strong period during the pandemic, but we are confident that the long-term potential for this business remains intact. We are sufficiently excited by Shopify’s prospects that we added to the Fund’s position during the year. Farfetch, which is listed in the U.K., operates the world’s largest luxury online marketplace. Despite the macro headwinds presented by the need to exit the Russian market and the lockdowns in China, we are encouraged that this is one of
75
Harbor International Growth Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $50,000 INVESTMENT
For the period 11/01/2012 through 10/31/2022
The graph compares a $50,000 investment in the Institutional Class shares of the Fund with the performance of the MSCI All Country World Ex. U.S. (ND) Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | 10 Years | |||||
Harbor International Growth Fund | ||||||
Retirement Class1 | -40.76% | -1.47% | 3.50% | |||
Institutional Class | -40.78 | -1.53 | 3.45 | |||
Administrative Class | -40.93 | -1.79 | 3.19 | |||
Investor Class | -41.00 | -1.90 | 3.06 | |||
Comparative Index | ||||||
MSCI All Country World Ex. U.S. (ND) | -24.73% | -0.60% | 3.27% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.77% (Net) and 0.81% (Gross) (Retirement Class); 0.85% (Net) and 0.89% (Gross) (Institutional Class); 1.10% (Net) and 1.14% (Gross) (Administrative Class); and 1.21% (Net) and 1.25% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
a small number of ecommerce companies where underlying growth has remained strong following the pandemic. We added to the holding during the year to take advantage of a share price that has been adversely affected by fears around post-pandemic normalisation.
United Overseas Bank is a family run Singaporean bank with operations spanning South East Asia. It focuses on lending to individuals and small businesses. Growth has been steady, and credit quality remains strong. We added to the Fund’s position in the company during the year. Olympus is a global leader in the production of endoscopes for medical applications. The company’s revenues and profits have continued to grow during the year, and management have increased their forecasts despite weakness in the Chinese market. Raia Drogasil is Brazil’s leading pharmacy chain. It has around a quarter of the market in Sao Paolo and is growing elsewhere in the country. The company has continued to open stores during the year and revenues are continuing to grow at a respectable rate.
Outlook & Strategy
Macroeconomic and geopolitical headwinds have continued to be a feature of the past year. Our focus remains on identifying well managed, good quality companies whose earnings have the potential, in our view, to grow strongly over the long term. We expect that this investment approach, which we have followed over many years and through many past periods of challenge, will be rewarded through the share prices of the companies in which the Fund invests.
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.
76
Harbor International Growth Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
REGION BREAKDOWN (% of investments) -Unaudited
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of October 31, 2022, there was no foreign currency denomination that comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value and Cost in Thousands
COMMON STOCKS—97.2% | |||
Shares | Value | ||
AUTO COMPONENTS—0.9% | |||
61,940 | Denso Corp. (Japan) | $3,073 | |
AUTOMOBILES—1.1% | |||
108,360 | Suzuki Motor Corp. (Japan) | 3,664 | |
BANKS—2.7% | |||
485,207 | United Overseas Bank Ltd. (Singapore) | 9,519 | |
BEVERAGES—3.2% | |||
4,285 | Anheuser-Busch InBev SA (Belgium) | 214 | |
39,619 | Remy Cointreau SA (France) | 6,059 | |
3,531,240 | Thai Beverage PCL (Thailand) | 1,435 | |
306,710 | United Spirits Ltd. (India)* | 3,323 | |
11,031 | |||
BIOTECHNOLOGY—0.7% | |||
184,343 | Beigene Ltd. (China)* | 2,377 | |
BUILDING PRODUCTS—0.9% | |||
373,941 | NIBE Industrier AB (Sweden) | 2,983 | |
CAPITAL MARKETS—0.9% | |||
347,605 | Hargreaves Lansdown plc (United Kingdom) | 3,038 | |
CHEMICALS—1.3% | |||
115,659 | Asian Paints Ltd. (India) | 4,358 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
DIVERSIFIED FINANCIAL SERVICES—2.8% | |||
52,713 | Exor NV (Netherlands)* | $3,542 | |
388,429 | Investor AB Class B (Sweden) | 6,340 | |
9,882 | |||
ELECTRICAL EQUIPMENT—2.3% | |||
68,856 | Contemporary Amperex Technology Co. Ltd. (China)* | 3,534 | |
83,080 | Nidec Corp. (Japan) | 4,568 | |
8,102 | |||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—2.8% | |||
12,240 | Keyence Corp. (Japan) | 4,615 | |
106,960 | Murata Manufacturing Co. Ltd. (Japan) | 5,064 | |
9,679 | |||
ENTERTAINMENT—1.1% | |||
30,241 | Spotify Technology SA (United States)* | 2,437 | |
54,821 | Ubisoft Entertainment SA (France)* | 1,504 | |
3,941 | |||
FOOD & STAPLES RETAILING—4.6% | |||
274,908 | Jeronimo Martins SGPS SA (Portugal) | 5,689 | |
1,080,980 | Raia Drogasil SA (Brazil)* | 5,506 | |
41,720 | Sugi Holdings Co. Ltd. (Japan) | 1,673 | |
757,220 | Wal-Mart de Mexico SAB de CV (Mexico) | 2,925 | |
15,793 |
77
Harbor International Growth Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES—5.6% | |||
47,980 | Cochlear Ltd. (Australia) | $6,129 | |
406,580 | Olympus Corp. (Japan) | 8,573 | |
88,140 | Sysmex Corp. (Japan) | 4,744 | |
19,446 | |||
HOTELS, RESTAURANTS & LEISURE—2.1% | |||
70,440 | MakeMyTrip Ltd. (India)* | 1,960 | |
875,355 | Trainline plc (United Kingdom)*,1 | 3,331 | |
87,017 | Trip.com Group Ltd. (China)* | 1,955 | |
7,246 | |||
HOUSEHOLD PRODUCTS—1.5% | |||
84,440 | Pigeon Corp. (Japan) | 1,106 | |
134,100 | Unicharm Corp. Common Stock (Japan) | 4,076 | |
5,182 | |||
INSURANCE—3.0% | |||
717,560 | AIA Group Ltd. (Hong Kong) | 5,435 | |
136,821 | ICICI Lombard General Insurance Co Ltd. (India)1 | 1,938 | |
777,100 | Ping An Insurance Group Co. of China Ltd. (China) | 3,111 | |
10,484 | |||
INTERACTIVE MEDIA & SERVICES—5.1% | |||
915,309 | Auto Trader Group plc (United Kingdom)1 | 5,479 | |
201,848 | Baidu Inc. Class A (China)* | 1,935 | |
17,475 | Naver Corp. (South Korea) | 2,073 | |
1,017,848 | Rightmove plc (United Kingdom) | 5,731 | |
978,000 | Z Holdings Corp. (Japan) | 2,524 | |
17,742 | |||
INTERNET & DIRECT MARKETING RETAIL—9.3% | |||
517,636 | Alibaba Group Holding Ltd. (China)* | 4,025 | |
151,368 | Coupang Inc. (South Korea)* | 2,614 | |
254,676 | Farfetch Ltd. (United Kingdom)* | 2,160 | |
42,227 | Games Workshop Group plc (United Kingdom) | 3,100 | |
253,740 | Meituan Class B (China)*,1 | 4,062 | |
6,938 | MercadoLibre Inc. (Brazil)* | 6,255 | |
146,531 | Prosus NV (Netherlands)* | 6,336 | |
156,566 | Zalando SE (Germany)*,1 | 3,609 | |
32,161 | |||
IT SERVICES—3.8% | |||
3,080 | Adyen NV (Netherlands)*,1 | 4,397 | |
36,776 | Bechtle AG (Germany) | 1,271 | |
124,925 | Shopify Inc. (Canada)* | 4,276 | |
437,825 | Wise plc (United Kingdom)* | 3,335 | |
13,279 | |||
LEISURE PRODUCTS—1.3% | |||
28,880 | Shimano Inc. (Japan) | 4,469 | |
LIFE SCIENCES TOOLS & SERVICES—4.1% | |||
7,335 | Lonza Group AG (Switzerland) | 3,776 | |
8,208 | Mettler-Toledo International Inc. (Switzerland)* | 10,383 | |
14,159 | |||
MACHINERY—7.9% | |||
725,297 | Atlas Copco AB Class A (Sweden) | 7,741 | |
6,429 | Atlas Copco AB Class B (Sweden) | 62 | |
315,684 | Epiroc AB Class B (Sweden) | 4,239 | |
14,780 | SMC Corp. (Japan) | 5,933 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
MACHINERY—Continued | |||
581,300 | Techtronic Industries Co. Ltd. (Hong Kong) | $5,504 | |
227,250 | Weir Group plc (United Kingdom) | 3,960 | |
27,439 | |||
PERSONAL PRODUCTS—2.6% | |||
48,940 | Kao Corp. (Japan) | 1,828 | |
206,820 | Shiseido Co. Ltd. (Japan) | 7,143 | |
8,971 | |||
PROFESSIONAL SERVICES—3.0% | |||
121,804 | Experian plc (United Kingdom) | 3,884 | |
65,951 | Intertek Group plc (United Kingdom) | 2,763 | |
116,600 | Recruit Holdings Co. Ltd. (Japan) | 3,588 | |
10,235 | |||
ROAD & RAIL—1.1% | |||
49,383 | Canadian Pacific Railway Ltd. (Canada) | 3,681 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—6.6% | |||
17,544 | ASML Holding NV (Netherlands) | 8,230 | |
638,280 | Longi Green Energy Technology Co. Ltd. (China) | 4,215 | |
169,236 | Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan)2 | 10,416 | |
22,861 | |||
SOFTWARE—1.8% | |||
49,712 | Nemetschek SE (Germany) | 2,370 | |
78,160 | Xero Ltd. (New Zealand)* | 3,881 | |
6,251 | |||
SPECIALTY RETAIL—0.2% | |||
121,233 | AUTO1 Group SE (Germany)*,1 | 815 | |
TEXTILES, APPAREL & LUXURY GOODS—7.1% | |||
20,685 | Adidas AG (Germany) | 2,019 | |
152,068 | Burberry Group plc (United Kingdom) | 3,169 | |
75,800 | Cie Financiere Richemont SA (Switzerland) | 7,408 | |
7,529 | Kering SA (France) | 3,448 | |
539,400 | Li Ning Co. Ltd. (Hong Kong) | 2,790 | |
9,153 | LVMH Moet Hennessy Louis Vuitton SE (France) | 5,776 | |
24,610 | |||
THRIFTS & MORTGAGE FINANCE—2.8% | |||
320,335 | Housing Development Finance Corp. Ltd. (India) | 9,578 | |
TRADING COMPANIES & DISTRIBUTORS—2.0% | |||
39,459 | Ashtead Group plc (United Kingdom) | 2,056 | |
37,652 | IMCD NV (Netherlands) | 4,883 | |
6,939 | |||
WIRELESS TELECOMMUNICATION SERVICES—1.0% | |||
77,980 | SoftBank Group Corp. (Japan) | 3,347 | |
TOTAL COMMON STOCKS | |||
(Cost $332,128) | 336,335 | ||
78
Harbor International Growth Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
PREFERRED STOCKS—2.2% | |||
(Cost $2,347) | |||
Shares | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES—2.2% | |||
21,756 | Sartorius AG (Germany) | $7,671 | |
TOTAL INVESTMENTS—99.4% | |||
(Cost $334,475) | 344,006 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.6% | 2,185 | ||
TOTAL NET ASSETS—100.0% | $346,191 |
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of October 31, 2022 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 | $16,299 | $128,801 | $— | $145,100 |
Latin America | 14,686 | — | — | 14,686 |
Middle East/Central Asia | 1,960 | 19,197 | — | 21,157 |
North America | 10,394 | — | — | 10,394 |
Pacific Basin | 13,030 | 131,968 | — | 144,998 |
Preferred Stocks | ||||
Europe | — | 7,671 | — | 7,671 |
Total Investments in Securities | $56,369 | $287,637 | $— | $344,006 |
There were no Level 3 Investments as of October 31, 2022 or 2021.
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. As of October 31, 2022, the aggregate value of these securities was $23,631 or 7% 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.
79
Harbor International Small Cap Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Cedar Street Asset Management LLC
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
During the fiscal year ended October 31, 2022, global equities experienced their biggest declines since the Global Financial Crisis. Non-US small cap stocks were not immune with the MSCI EAFE Small Cap (ND) Index (the “Index”) posting a decline of 30.2%, calculated in US dollars. Measured in local currency, the decline was 15.8%. Numerous macroeconomic factors contributed to the negative returns, but we believe inflation was likely top of mind and likely sparked much of the fiscal year’s volatility.
Inflation readings differed widely across the globe during the past fiscal year based on local conditions. For example, US core inflation was +6.6% in September 2022, the highest reading since 1982, while Japan’s +2.8% core CPI for the same period was not even its highest in the past decade. Underlying sources of inflationary pressures also differed quite a bit by locality. Inflation in Europe was largely driven by energy costs rising due to the Ukraine war, whereas US inflation was driven by employment shortages and supply chain issues pushing input costs higher, in our view.
Disparate inflationary pressures have consequently resulted in wide variability in the policy responses. Brazil, a country that has had more recent experiences with double-digit inflation, deployed a more aggressive interest rate policy to get ahead of inflation. The ECB and the Fed adopted a wait-and-see approach, hiking gradually and only after it became obvious that inflation was not “transitory.” Japan, consistent with its lower inflation rate, has not tightened at all. In our view, the lack of coordinated policy responses has had just as much of an impact on global interest rate volatility during the past fiscal year as the actual rates set by central banks.
Rising interest rates in fiscal 2022 coincided with relative outperformance of Value style equities versus Growth style equities during the period by between 10 to 20 percentage points in most major equity indexes. Likewise, within the fund’s benchmark, the Index, the Value segment generated a more modest loss of -24.7% versus a loss of -35.7% for the Growth segment.
At a more granular level, some equity market sectors that had outperformed during periods of low interest rates and lower inflation largely underperformed during the past fiscal year. For example, the Technology and Consumer Discretionary segments of the Index both underperformed Health Care and Consumer Staples by about 20 percentage points. However, Real Estate, which performed relatively better at the outset of the fiscal year when it was touted as an “inflation hedge” by many market pundits, experienced similar declines to Tech and Consumer Discretionary stocks as investors recognized the challenges for many real estate companies from a rising interest rate environment, in our view.
Performance
Harbor International Small Cap Fund returned -16.94% (Retirement Class), -17.00% (Institutional Class), -17.25% (Administrative Class), and -17.29% (Investor Class) for the year ended October 31, 2022, while the Index returned -30.28%.
The negative absolute performance was driven primarily by currency translation effects, as our analysis indicates the Fund generated about a 2% loss for the period when measured in local currency.
On a relative basis, outperformance over the period was broad based and primarily reflects positive stock selection effects in the UK, Germany, and Japan, offset by poor stock selection in Canada. From a sector perspective, stock selection in Technology and Industrials sectors and lack of exposure to Real Estate were the main contributors to returns, offset somewhat by stock selection in Energy and Materials sectors.
During the period under review, the main detractors to Fund performance were companies that experienced company-specific issues. For example, Johnson Electric in Hong Kong is an electric vehicle component supplier that was hurt by COVID-19 lockdowns in China. We added to our position due to the company’s ability to continue taking market share in a tough environment. Meanwhile, Resurs Holding in Sweden, experienced a management change and a new round of technology infrastructure investments that likely delays its path to increased profitability. We exited our position to redeploy assets to other investments.
80
Harbor International Small Cap Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $50,000 INVESTMENT
For the period 02/01/2016 through 10/31/2022
The graph compares a $50,000 investment in the Institutional Class shares of the Fund with the performance of the MSCI EAFE Small Cap (ND) Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | Life of Fund | |||||
Harbor International Small Cap Fund | ||||||
Retirement Class1 | -16.94% | 1.53% | 6.38% | |||
Institutional Class1 | -17.00 | 1.45 | 6.31 | |||
Administrative Class1 | -17.25 | 1.17 | 6.03 | |||
Investor Class1 | -17.29 | 1.07 | 5.91 | |||
Comparative Index | ||||||
MSCI EAFE Small Cap (ND)1 | -30.28% | -1.30% | 4.26% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.88% (Net) and 1.17% (Gross) (Retirement Class); 0.96% (Net) and 1.25% (Gross) (Institutional Class); 1.21% (Net) and 1.50% (Gross) (Administrative Class); and 1.32% (Net) and 1.61% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
The Fund’s top contributors include strategic buy-outs and companies that are executing well, despite difficult conditions, in our view. Tower Semiconductor received a buyout offer from Intel with a decent premium, in our view, due to Tower’s manufacturing prowess in analog semiconductors. Round One is a Japanese operator of family entertainment centers in Japan, China, and the US. In the US, Round One has cheaply acquired new space in high vacancy malls and suburban shopping centers. In the aftermath of the pandemic, families are excited to venture out for karaoke, bowling, and Japanese arcade games.
As always, country and sector allocations continue to be driven by company-specific factors and we have not significantly modified our exposures.
Outlook & Strategy
In our view, inflation and efforts to fight it will likely dominate concerns for global equities. Many developed market central banks were late to recognize the persistence of inflation. Real rates, that is interest rates minus inflation, are still negative, suggesting a continuation of tightening monetary policy. In addition, quantitative tightening, the winding down of assets from central bank balance sheets, has yet to meaningfully dent bloated central bank balance sheets, in our view.
With continued monetary tightening, we believe that companies with the combination of good underlying businesses, solid balance sheets, and compelling valuations are likely to outperform.
In addition, we expect some level of mean reversion between the USD and other major currencies in the months/quarters ahead as the current dynamic appears to be unsustainable from a current account perspective. As such, we also believe that non-US equities could see a benefit from currency translation.
In our view, given current market conditions, investors with the ability to deploy USD are in a seemingly favorable position to benefit two ways in the current environment: buying cheaper assets versus comparable U.S. equities and doing so with the increased purchasing power of the USD.
1 | The “Life of Fund” return as shown reflects the period 02/01/2016 through 10/31/2022. |
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. Stocks of small cap companies pose special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. 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.
81
Harbor International Small Cap Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
REGION BREAKDOWN (% of investments) -Unaudited
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of October 31, 2022, 34.4% 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 and Cost in Thousands
COMMON STOCKS—90.9% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—1.2% | |||
62,279 | Hensoldt AG (Germany)* | $1,463 | |
AIR FREIGHT & LOGISTICS—1.3% | |||
4,217,800 | Singapore Post Ltd. (Singapore)* | 1,611 | |
AUTO COMPONENTS—1.1% | |||
1,364,730 | Johnson Electric Holdings Ltd. (Hong Kong) | 1,406 | |
BANKS—1.8% | |||
1,413,156 | Virgin Money UK plc (United Kingdom) | 2,203 | |
BEVERAGES—2.1% | |||
200,699 | A.G. Barr plc (United Kingdom)* | 1,034 | |
881,439 | C&C Group plc (Ireland)* | 1,654 | |
2,688 | |||
CAPITAL MARKETS—1.6% | |||
970,294 | TP ICAP Group plc (Jersey) | 2,046 | |
115,000 | Value Partners Group Ltd. (Hong Kong) | 28 | |
2,074 | |||
CHEMICALS—2.9% | |||
201,394 | Neo Performance Materials Inc. (Canada) | 1,573 | |
110,248 | Victrex plc (United Kingdom) | 2,094 | |
3,667 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES—6.6% | |||
108,819 | ISS A/S AS (Denmark)* | $1,999 | |
74,564 | Loomis AB (Sweden) | 2,088 | |
198,527 | Mears Group PLC (United Kingdom) | 431 | |
910,075 | Serco Group plc (United Kingdom) | 1,702 | |
179,948 | Transcontinental Inc. (Canada) | 2,054 | |
8,274 | |||
CONSTRUCTION & ENGINEERING—1.8% | |||
718,107 | Maire Tecnimont SpA (Italy) | 2,228 | |
CONSUMER FINANCE—1.6% | |||
28,080 | Cembra Money Bank AG (Switzerland) | 2,036 | |
CONTAINERS & PACKAGING—1.2% | |||
5,440 | BillerudKorsnas AB (Sweden) | 70 | |
122,800 | Fuji Seal International Inc. (Japan)* | 1,439 | |
1,509 | |||
DISTRIBUTORS—2.6% | |||
307,560 | B&S Group Sarl (Luxembourg)1 | 1,610 | |
57,136 | PALTAC Corp. (Japan) | 1,623 | |
3,233 | |||
DIVERSIFIED FINANCIAL SERVICES—1.7% | |||
299,628 | BFF Bank SpA (Italy)1 | 2,114 |
82
Harbor International Small Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
ELECTRICAL EQUIPMENT—1.4% | |||
54,426 | Mersen SA (France) | $1,761 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—8.8% | |||
109,877 | Amano Corp. (Japan) | 1,880 | |
173,361 | Anritsu Corp. (Japan) | 1,745 | |
151,310 | Daiwabo Holdings Co. Ltd. (Japan) | 1,952 | |
31,065 | Landis+Gyr Group AG (Switzerland)* | 1,790 | |
126,072 | Optex Group Co. Ltd. (Japan) | 1,736 | |
173,420 | Venture Corp. Ltd. (Singapore) | 1,952 | |
11,055 | |||
ENERGY EQUIPMENT & SERVICES—1.9% | |||
186,135 | Technip Energies NV (France)* | 2,403 | |
FOOD & STAPLES RETAILING—1.3% | |||
192,652 | Qol Holdings Co. Ltd. (Japan) | 1,589 | |
FOOD PRODUCTS—8.0% | |||
50,965 | Ariake Japan Co. Ltd. (Japan) | 1,766 | |
1,922,692 | Aryzta AG (Switzerland)* | 1,971 | |
207,712 | Elders Ltd. (Australia) | 1,732 | |
185,088 | Glanbia plc (Ireland) | 2,137 | |
2,541,682 | Japfa Ltd. (Singapore) | 915 | |
59,405 | Morinaga & Co. Ltd. (Japan) | 1,486 | |
10,007 | |||
GAS UTILITIES—1.6% | |||
87,538 | Rubis SCA (France)* | 1,988 | |
HEALTH CARE EQUIPMENT & SUPPLIES—3.9% | |||
106,233 | Ansell Ltd. (Australia) | 1,918 | |
310,688 | Arjo AB B Shares (Sweden)* | 1,239 | |
142,917 | Eiken Chemical Co. Ltd. (Japan) | 1,765 | |
4,922 | |||
HOTELS, RESTAURANTS & LEISURE—2.4% | |||
95,505 | RESORTTRUST, Inc. (Japan) | 1,470 | |
359,664 | Round One Corp. (Japan) | 1,530 | |
3,000 | |||
INDUSTRIAL CONGLOMERATES—1.2% | |||
74,285 | Indus Holding AG (Germany) | 1,466 | |
INSURANCE—6.0% | |||
47,212 | ASR Nederland NV (Netherlands) | 2,079 | |
183,761 | Coface SA (France) | 2,046 | |
724,287 | Direct Line Insurance Group plc (United Kingdom) | 1,673 | |
1,013,047 | Mapfre SA (Spain) | 1,738 | |
7,536 | |||
IT SERVICES—1.6% | |||
84,624 | Tietoevry OYJ (Finland) | 2,017 | |
LEISURE PRODUCTS—0.5% | |||
41,800 | Globeride Inc. (Japan)* | 653 | |
MACHINERY—7.1% | |||
349,572 | Husqvarna AB (Sweden) | 2,075 | |
19,301 | Krones AG (Germany) | 1,788 | |
80,780 | Nabtesco Corp. (Japan) | 1,716 | |
105,696 | Norma Group SE (Germany) | 1,676 | |
132,812 | OSG Corp. (Japan) | 1,688 | |
8,943 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
MEDIA—4.6% | |||
646,949 | Atresmedia Corp. de Medios de Comunicacion SA (Spain)* | $1,867 | |
80,389 | Criteo SA ADR (France)*,2 | 2,050 | |
53,369 | RTL Group SA (Luxembourg) | 1,812 | |
5,729 | |||
OIL, GAS & CONSUMABLE FUELS—1.3% | |||
1,652,992 | Beach Energy Ltd. (Australia) | 1,690 | |
PAPER & FOREST PRODUCTS—0.8% | |||
279,369 | Navigator Co. SA (Portugal) | 1,064 | |
PERSONAL PRODUCTS—1.5% | |||
315,469 | Ontex Group NV (Belgium)* | 1,861 | |
PHARMACEUTICALS—0.1% | |||
104,280 | Genomma Lab Internacional SAB de CV (Mexico)* | 80 | |
PROFESSIONAL SERVICES—1.5% | |||
153,895 | BeNext-Yumeshin Group Co. (Japan)* | 1,856 | |
ROAD & RAIL—1.7% | |||
562,678 | Redde Northgate plc (United Kingdom) | 2,152 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—1.2% | |||
300,740 | X-FAB Silicon Foundries SE (Belgium)*,1 | 1,557 | |
SOFTWARE—2.8% | |||
174,645 | Computer Engineering & Consulting Ltd. (Japan) | 1,831 | |
222,497 | TomTom NV (Netherlands)* | 1,739 | |
3,570 | |||
TEXTILES, APPAREL & LUXURY GOODS—1.5% | |||
2,729,847 | Coats Group plc (United Kingdom) | 1,894 | |
TRANSPORTATION INFRASTRUCTURE—0.7% | |||
232,553 | ENAV SpA (Italy)1 | 899 | |
TOTAL COMMON STOCKS | |||
(Cost $124,316) | 114,198 | ||
TOTAL INVESTMENTS—90.9% | |||
(Cost $124,316) | 114,198 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—9.1% | 11,405 | ||
TOTAL NET ASSETS—100.0% | $125,603 |
83
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 October 31, 2022 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 | $2,245 | $69,269 | $— | $71,514 |
Latin America | 80 | — | — | 80 |
North America | 3,627 | — | — | 3,627 |
Pacific Basin | — | 38,977 | — | 38,977 |
Total Investments in Securities | $5,952 | $108,246 | $— | $114,198 |
There were no Level 3 Investments as of October 31, 2022 or 2021.
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. As of October 31, 2022, the aggregate value of these securities was $6,180 or 5% 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.
84
Harbor Large Cap Value Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Aristotle Capital Management, LLC
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
U.S. equity markets have been challenged over the past year as inflation, Federal Reserve (Fed) policy, and geopolitical risk have weighed on the economy and investor sentiment. For the one-year period ended October 31, 2022, the S&P 500 returned -14.7%, declining in 7 of 12 months. In terms of style, value has held in better during the risk-off environment on a relative basis with the Russell 1000® Value Index outperforming its growth counterpart by over 17% during the period.
Inflation has been the headline risk during the past year with the U.S. consumer price index (CPI) rising to 9.1% (annualized) in June, the highest level since November 1981. While that rate moderated to 8.2% in September, the Fed has embarked on an interest rate hiking cycle in response with four hikes in 2022 through October, three of which were 75 basis points (bps). This is concurrent to the withdrawal of support for the economy, known as Quantitative Tightening, which ramped up in September. Results of Fed policy included rising yields across the U.S Treasury curve, higher mortgage rates, as well as currency appreciation with the U.S. Dollar Index (DXY) reaching a two-decade high in the third quarter.
U.S. economic indicators have been mixed during the year as gross domestic product (GDP) declined for the first two quarters of 2022, stoking concerns of a possible recession. Employment remained a bright spot as the unemployment rate fell during the first half of the period and settled at 3.5% in September. However, non-farm payrolls may indicate weakness ahead as the number of new jobs created declined from 647 thousand in November 2021 to a low of 263 thousand in September 2022. Further complicating growth and inflation concerns has been the war between Ukraine and Russia, which began in February and has materially impacted the prices and availability of key commodities such as oil, aluminum, and wheat.
Performance
Harbor Large Cap Value Fund returned -12.82 (Retirement Class), -12.90% (Institutional Class), -13.06% (Administrative Class), and -13.15% (Investor Class) for the year ended October 31, 2022, underperforming the -7.00% return of the Russell 1000® Value Index.
The Fund’s underperformance relative to the Russell 1000® Value Index during the year can be attributed to both security selection and sector allocation. Security selection in the Information Technology and Health Care sectors as well as an underweight to the Energy sector detracted the most from relative performance. Conversely, an underweight to the Communication Services sector and security selection in the Materials and Financials sectors contributed the most to relative performance.
Seed and crop protection company, Corteva Agriscience, was the top contributor to relative return during the period. Due to its respected brand and the value-added benefits of its patented seeds and crop protection solutions for farmers, Corteva has been able to more than offset input cost inflation with sustainable price increases. In addition, the company’s ongoing mix shift to higher-margin, premium products, a catalyst we previously identified, is aiding both sales and profit growth. Shares were likely also buoyed by the rise in crop prices. Market participants, perhaps eager to chase short-term trends, poured into the sector. At Aristotle Capital, we look past such gyrations and, as long-term investors, do not attempt to predict short-term changes in commodity prices. We remain excited about what we view to be high-quality characteristics and fundamental improvements that permeate Corteva’s business, not the least of which include its pricing power.
Software company, Adobe, was the top detractor during the year. So far in 2022, Adobe has achieved record revenues with strength in all its businesses, as the acceleration toward digital has continued to drive content creation across industries. During the third quarter, however, the company’s shares declined after announcing its plans to acquire Figma, a web-first collaborative interface design platform, for $20 billion. What at first glance may seem like a steep price,
85
Harbor Large Cap Value Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $50,000 INVESTMENT
For the period 11/01/2012 through 10/31/2022
The graph compares a $50,000 investment in the Institutional Class shares of the Fund with the performance of the Russell 1000® Value Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | 10 Years | |||||
Harbor Large Cap Value Fund | ||||||
Retirement Class1 | -12.82% | 8.72% | 12.49% | |||
Institutional Class | -12.90 | 8.64 | 12.43 | |||
Administrative Class | -13.06 | 8.35 | 12.14 | |||
Investor Class | -13.15 | 8.25 | 12.01 | |||
Comparative Index | ||||||
Russell 1000® Value | -7.00% | 7.21% | 10.30% |
As stated in the Fund’s prospectus dated March 1, 2022, 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 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
Figma’s web-based, multi-player platform could accelerate the delivery of Adobe’s Creative Cloud technologies on the web, increasing Adobe’s reach and total addressable market. Management expects the deal to close in 2023 and the transaction to be accretive by the end of the third year of integration. As is the case with any significant acquisition, we will take our time to understand this deal’s rationale and follow management’s ability to take Figma to “new heights.” This has been the case with previous acquisitions, including Marketo and Magento (although each at a much smaller purchase price). In general, we admire management teams that are able to recognize the evolving needs of their clients and are unafraid of “competing with themselves” by developing new offerings. We will continue to study this acquisition and better understand the desire of content creators to collaborate over the web.
Outlook & Strategy
At Aristotle Capital, our work is focused on individual companies. Where broader issues such as inflation, policy decisions and the pandemic are relevant, we take a long-term approach, attempting to minimize the distractions of what may be on others’ minds. While the headlines focus on short-term news, in our view, the fundamentals of a business are the most important determinants of its long-term stock price performance. Consequently, we believe the best way for an investment manager to consistently add value is to maintain a long-term perspective and focus on understanding a company’s key attributes and value drivers.
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 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 markets regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
86
Harbor Large Cap Value Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
SECTOR ALLOCATION (% of investments) - Unaudited
Portfolio of Investments
Value and Cost in Thousands
COMMON STOCKS—97.3% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—2.3% | |||
191,000 | General Dynamics Corp. | $47,712 | |
AUTO COMPONENTS—1.8% | |||
2,945,000 | Cie Generale des Etablissements Michelin SCA ADR (France)1 | 37,401 | |
BANKS—7.3% | |||
431,000 | Commerce Bancshares Inc. | 30,532 | |
335,000 | Cullen/Frost Bankers Inc. | 51,942 | |
4,893,000 | Mitsubishi UFJ Financial Group Inc. ADR (Japan)1 | 23,046 | |
302,000 | PNC Financial Services Group Inc. | 48,872 | |
154,392 | |||
BEVERAGES—4.6% | |||
871,000 | Coca-Cola Co. | 52,130 | |
179,000 | Constellation Brands Inc. | 44,227 | |
96,357 | |||
BIOTECHNOLOGY—2.9% | |||
225,000 | Amgen Inc. | 60,829 | |
CAPITAL MARKETS—5.2% | |||
201,000 | Ameriprise Financial Inc. | 62,133 | |
513,000 | Blackstone Group Inc. | 46,755 | |
108,888 | |||
CHEMICALS—8.4% | |||
1,338,000 | Corteva Inc. | 87,425 | |
267,000 | Ecolab Inc. | 41,937 | |
510,000 | RPM International Inc. | 48,231 | |
177,593 | |||
CONSTRUCTION MATERIALS—2.5% | |||
158,000 | Martin Marietta Materials Inc. | 53,085 | |
CONSUMER FINANCE—2.6% | |||
517,000 | Capital One Financial Corp. | 54,812 | |
ELECTRIC UTILITIES—2.4% | |||
788,000 | Xcel Energy Inc. | 51,307 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—3.5% | |||
330,000 | Crown Castle International Corp. | $43,976 | |
462,000 | Equity Lifestyle Properties Inc. | 29,549 | |
73,525 | |||
FOOD & STAPLES RETAILING—1.6% | |||
381,027 | Sysco Corp. | 32,982 | |
FOOD PRODUCTS—0.3% | |||
98,007 | Tyson Foods Inc. | 6,699 | |
GAS UTILITIES—2.5% | |||
486,000 | Atmos Energy Corp. | 51,783 | |
HEALTH CARE EQUIPMENT & SUPPLIES—3.7% | |||
626,000 | Alcon Inc. (Switzerland) | 37,986 | |
448,000 | Medtronic plc (Ireland) | 39,128 | |
77,114 | |||
HOUSEHOLD DURABLES—4.7% | |||
677,000 | Lennar Corp. Class A | 54,634 | |
7,126 | Lennar Corp. Class B | 465 | |
661,000 | Sony Corp. ADR (Japan)1 | 44,597 | |
99,696 | |||
HOUSEHOLD PRODUCTS—2.2% | |||
346,000 | Procter & Gamble Co. | 46,596 | |
INDUSTRIAL CONGLOMERATES—2.5% | |||
257,000 | Honeywell International Inc. | 52,433 | |
INSURANCE—2.2% | |||
450,000 | Cincinnati Financial Corp | 46,494 | |
IT SERVICES—0.8% | |||
208,000 | PayPal Holdings Inc.* | 17,385 | |
LIFE SCIENCES TOOLS & SERVICES—2.8% | |||
239,000 | Danaher Corp. | 60,149 | |
MACHINERY—6.7% | |||
363,000 | Oshkosh Corp. | 31,944 | |
204,000 | Parker-Hannifin Corp. | 59,286 | |
499,000 | Xylem Inc. | 51,113 | |
142,343 |
87
Harbor Large Cap Value Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS—5.0% | |||
2,020,000 | Coterra Energy Inc. | $62,883 | |
414,000 | Phillips 66 | 43,176 | |
106,059 | |||
PHARMACEUTICALS—2.6% | |||
538,000 | Merck & Co. Inc. | 54,445 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—5.0% | |||
850,000 | Microchip Technology Inc. | 52,479 | |
444,000 | QUALCOMM Inc. | 52,241 | |
104,720 | |||
SOFTWARE—11.2% | |||
172,000 | Adobe Inc.* | 54,782 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SOFTWARE—Continued | |||
216,000 | ANSYS Inc.* | $47,771 | |
248,000 | Autodesk Inc.* | 53,146 | |
344,000 | Microsoft Corp. | 79,853 | |
235,552 | |||
TOTAL COMMON STOCKS | |||
(Cost $1,603,452) | 2,050,351 | ||
TOTAL INVESTMENTS—97.3% | |||
(Cost $1,603,452) | 2,050,351 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—2.7% | 57,375 | ||
TOTAL NET ASSETS—100.0% | $2,107,726 |
FAIR VALUE MEASUREMENTS
All investments as of October 31, 2022 (as disclosed in the preceding Portfolio of Investments) were classified as Level 1. There were no Level 3 investments as of October 31, 2022 or 2021.
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.
88
Harbor Mid Cap Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
EARNEST Partners, LLC
Management’s Discussion of
Fund Performance
Fund Performance
MARKET REVIEW
The U.S. equity markets, represented by the S&P 500® Index were negative during the 12-months ending October 31, 2022, posting 14.6% losses. The U.S. mid cap market, represented by the Russell Midcap® Index, finished the period down 17.17%.
Investors continued to focus on the posture of the Federal Reserve (the “Fed”), which was expected to increase the federal funds rate to stave off generationally high inflation numbers. Following CPI readings of 9.1% in June, 8.5% in July, and 8.3% in August, the Fed reacted by hiking rates by 75 bps for three months in a row to bring the Fed Funds Rate to the range of 3.00% to 3.25%. Fed chair Jerome Powell has been consistent in stating that fighting inflation is the central bank’s main priority following the increased CPI readings and continued to acknowledge that engineering a “soft landing” would be difficult, unwilling to stray from the Fed’s goal of 2% inflation and maximum employment. The central bank is now projecting a Fed Funds Rate between 4.1% and 4.4% at the end of the year, indicating that it expects to continue to hike rates through December. Previously in June, the Fed estimated the rate to hit 3.4% at the end of this year. Over the long-term, the Fed is projecting a rate of 2.5%, in-line with its long-term PCE inflation projections of 2.0%. Following the Federal Reserve’s indications that it would continue increasing rates, the Dollar saw renewed strength against the basket of global currencies. As a result, the Pound, Euro, and Yuan significantly weakened against the U.S. Dollar, which weighed on international equities during the period. Following the sell-off in the Pound to a record low against the U.S. Dollar, the Bank of England immediately restarted bond purchases to stabilize the currency which has fallen from over $2 in 2007 to about $1.10 at the end of the period. Commodities continued to trend down following chaotic trading in the wake of the Russian invasion in Ukraine in February, although continental Europe faces the conundrum of heading into winter without energy security. Lumber futures hit pre-pandemic lows and Crude Oil traded just above where it began the year to about $79 per barrel.
Performance
Harbor Mid Cap Fund returned -12.36% (Retirement Class), -12.43% (Institutional Class), and -12.72% (Investor Class), outperforming the Russell Midcap® Index, which returned -17.17 for the period ended October 31, 2022. Despite the broader Index contraction, the EARNEST Partners Mid Cap Core strategy was able to protect to the downside and outperformed the Index in the period. The bulk of outperformance was driven by strong security selection (Consumer Discretionary and Financials) although the allocation effect was also a contributor.
Contributing to performance was TJX, one of the world’s largest off-price apparel and home fashions retailers, operating stores such as T.J. Maxx, Marshalls and HomeGoods. The company differentiates itself through its flexible business model, rapidly turning over limited quantities of products sold at bargain prices. TJX is constantly shifting its products to align with current trends and market conditions. TJX shares had positive returns for the period. Despite disruptions within the retail world as inflationary pressures tempered demand from lower income consumers, TJX beat earnings estimates primarily driven by stronger margins which offset the softer sales. TJX’s business model continues to appeal to a broader range of customers relative to traditional retailers. This core business strategy combined with an experienced management team have resulted in strong cash flow and attractive organic growth prospects, The company’s continued focus on operational efficiencies positions them well for further margin improvement and earnings growth as inflation tempers and broader retail spending recovers.
Detracting from performance was Masco Corporation, a leading designer, manufacturer and distributor of home improvement and building products. The Company’s segments include Plumbing Products and Decorative Architectural Products. The company manufactures and distributes its products worldwide.
89
Harbor Mid Cap Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $50,000 INVESTMENT
For the period 12/01/2019 through 10/31/2022
The graph compares a $50,000 investment in the Institutional Class shares of the Fund with the performance of the Russell Midcap® Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | 5 Years | Annualized | ||||
Life of Fund | ||||||
Harbor Mid Cap Fund | ||||||
Retirement Class1 | -12.36% | N/A | 8.73% | |||
Institutional Class1 | -12.43 | N/A | 8.65 | |||
Investor Class1 | -12.72 | N/A | 8.26 | |||
Comparative Index | ||||||
Russell Midcap®1 | -17.17% | N/A | 6.77% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.80% (Net) and 0.93% (Gross) (Retirement Class); 0.88% (Net) and 1.01% (Gross) (Institutional Class); 1.13% (Net) and 1.26% (Gross) (Administrative Class); and 1.24% (Net) and 1.37% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
Despite sales increasing 8% year-over-year, shares were down in the period as operating margins contracted due to higher supply chain costs. The company also felt the impact of foreign exchange headwinds as part of its global exposure. With sustained supply chain and foreign exchange headwinds, management cut its prior 2022 guidance. Despite the near-term headwinds, management’s singular focus on the plumbing and decorative products segments bodes well for shareholders. After exiting the window and cabinet businesses through sale, the remaining business lines, plumbing and decorative products, represent higher margin and more stable businesses. Continued market share gains combined with improved operational efficiencies are expected to supersede the transient headwinds the company currently faces.
OUTLOOK & STRATEGY
As of October 31, 2022, the Fund had an overweight in the Industrials, Information Technology, and Financials and an underweight in Consumer Staples, Consumer Discretionary, and Utilities. The Fund’s relative overweight and underweight positions are an outgrowth of where EARNEST Partners is finding good individual investment opportunities.
In managing the Fund, EARNEST Partners seeks 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 10/31/2022. |
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.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 markets regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
90
Harbor Mid Cap Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
SECTOR ALLOCATION (% of investments) - Unaudited
Portfolio of Investments
Value and Cost in Thousands
COMMON STOCKS—98.8% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—6.3% | |||
6,916 | General Dynamics Corp. | $1,728 | |
26,714 | Hexcel Corp. | 1,488 | |
43,707 | Spirit AeroSystems Holdings Inc. | 1,012 | |
15,543 | Woodward Inc. | 1,425 | |
5,653 | |||
BANKS—1.8% | |||
88,509 | KeyCorp | 1,582 | |
BUILDING PRODUCTS—2.0% | |||
38,740 | Masco Corp. | 1,793 | |
CAPITAL MARKETS—8.2% | |||
17,207 | Houlihan Lokey Inc. | 1,537 | |
17,231 | Intercontinental Exchange Inc. | 1,647 | |
20,986 | Raymond James Financial Inc. | 2,479 | |
25,811 | Stifel Financial Corp. | 1,597 | |
7,260 | |||
CHEMICALS—4.7% | |||
9,506 | Albemarle Corp. | 2,661 | |
10,505 | Eastman Chemical Co. | 807 | |
14,688 | Scotts Miracle-Gro Co. | 674 | |
4,142 | |||
COMMERCIAL SERVICES & SUPPLIES—4.1% | |||
20,701 | Republic Services Inc. | 2,745 | |
21,010 | Stericycle Inc.* | 937 | |
3,682 | |||
COMMUNICATIONS EQUIPMENT—1.6% | |||
19,679 | Lumentum Holdings Inc.* | 1,465 | |
CONTAINERS & PACKAGING—2.6% | |||
8,128 | Packaging Corp. of America | 977 | |
28,948 | Sealed Air Corp. | 1,379 | |
2,356 | |||
ELECTRICAL EQUIPMENT—1.8% | |||
39,643 | Sensata Technologies Holding plc (United Kingdom) | 1,594 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—4.9% | |||
16,446 | Arrow Electronics Inc.* | $1,665 | |
15,496 | Keysight Technologies Inc.* | 2,699 | |
4,364 | |||
ENTERTAINMENT—1.7% | |||
20,439 | Activision Blizzard Inc. | 1,488 | |
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—4.0% | |||
49,720 | Americold Realty Trust | 1,206 | |
16,589 | Boston Properties Inc. | 1,206 | |
4,396 | SBA Communications Corp. | 1,186 | |
3,598 | |||
FOOD & STAPLES RETAILING—1.6% | |||
16,684 | Sysco Corp. | 1,444 | |
HEALTH CARE EQUIPMENT & SUPPLIES—0.8% | |||
22,269 | Dentsply Sirona Inc. | 686 | |
HEALTH CARE PROVIDERS & SERVICES—2.8% | |||
8,675 | AmerisourceBergen Corp. | 1,364 | |
4,991 | Laboratory Corp. of America Holdings | 1,107 | |
2,471 | |||
HOTELS, RESTAURANTS & LEISURE—2.6% | |||
16,137 | Darden Restaurants Inc. | 2,310 | |
HOUSEHOLD DURABLES—2.6% | |||
29,661 | D.R. Horton Inc. | 2,280 | |
INSURANCE—7.1% | |||
15,591 | Reinsurance Group of America Inc. | 2,295 | |
10,442 | Renaissance Holdings Ltd. (Bermuda) | 1,615 | |
18,942 | The Progressive Corp. | 2,432 | |
6,342 | |||
IT SERVICES—5.9% | |||
12,667 | Akamai Technologies Inc.* | 1,119 | |
21,580 | Black Knight Inc.* | 1,305 | |
8,698 | Broadridge Financial Solutions Inc. | 1,305 | |
13,333 | Global Payments Inc. | 1,523 | |
5,252 |
91
Harbor Mid Cap Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
LIFE SCIENCES TOOLS & SERVICES—4.6% | |||
14,450 | Agilent Technologies Inc. | $1,999 | |
3,161 | Bio-Rad Laboratories Inc.* | 1,112 | |
20,273 | Syneos Health Inc.* | 1,021 | |
4,132 | |||
MACHINERY—4.7% | |||
6,013 | Cummins Inc. | 1,470 | |
9,007 | Dover Corp. | 1,177 | |
6,844 | Snap-on Inc. | 1,520 | |
4,167 | |||
MULTI-UTILITIES—1.4% | |||
13,784 | WEC Energy Group Inc. | 1,259 | |
OIL, GAS & CONSUMABLE FUELS—5.0% | |||
17,920 | Continental Resources Inc. | 1,326 | |
100,748 | Coterra Energy Inc. | 3,136 | |
4,462 | |||
PHARMACEUTICALS—1.2% | |||
16,803 | Catalent Inc.* | 1,104 | |
REAL ESTATE MANAGEMENT & DEVELOPMENT—2.3% | |||
28,306 | CBRE Group Inc.* | 2,008 | |
ROAD & RAIL—1.5% | |||
45,062 | CSX Corp. | 1,310 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—4.0% | |||
10,528 | Applied Materials Inc. | $929 | |
17,112 | Entegris Inc. | 1,358 | |
14,949 | Skyworks Solutions Inc. | 1,286 | |
3,573 | |||
SOFTWARE—3.6% | |||
6,654 | ANSYS Inc.* | 1,472 | |
5,870 | Synopsys Inc.* | 1,717 | |
3,189 | |||
SPECIALTY RETAIL—0.7% | |||
8,839 | TJX Companies Inc. | 637 | |
TRADING COMPANIES & DISTRIBUTORS—2.7% | |||
33,369 | Air Lease Corp. | 1,178 | |
11,550 | GATX Corp. | 1,209 | |
2,387 | |||
TOTAL COMMON STOCKS | |||
(Cost $85,957) | 87,990 | ||
TOTAL INVESTMENTS—98.8% | |||
(Cost $85,957) | 87,990 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—1.2% | 1,028 | ||
TOTAL NET ASSETS—100.0% | $89,018 |
FAIR VALUE MEASUREMENTS
All investments as of October 31, 2022 (as disclosed in the preceding Portfolio of Investments) were classified as Level 1. There were no Level 3 investments as of October 31, 2022 or 2021.
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.
92
Harbor Mid Cap Value Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
LSV Asset Management
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
The broad U.S. equity market as measured by the S&P 500 Index was down 15.92% for the twelve months ended October 31, 2022. Global equity markets fell sharply over the twelve months as inflation not seen in 40 years and the Russian invasion of Ukraine weighed heavily on equities. Stocks declined across all market cap ranges although large cap stocks held up slightly better than mid and small cap stocks. After a long rally in growth stocks, value stocks outperformed over the trailing year falling less than their growth counterparts. The value advantage among midcap stocks was nearly 20% as the Russell Midcap® Growth Index was down 28.94% while the Russell Midcap® Value Index declined just 10.18%.
With inflation becoming more entrenched in late 2021 and early 2022, the Federal Reserve began a series of rate hikes to help tame inflation. Thus far in 2022 (through October 31), the Fed has raised rates 300 basis points which sent markets in retreat, particularly higher multiple growth stocks. While growth has slowed in the US, the labor market continues to be resilient with unemployment continuing to remain under 4%. Markets were also rattled in 2022 as Russia’s invasion of Ukraine led to sanctions from the West and uncertainty regarding the Energy situation in Europe given Europe’s reliance on oil and gas from Russia. From a sector perspective, Energy stocks far outpaced all other sectors as oil prices, which were already on the rise before the Russian invasion of Ukraine, climbed even higher after the invasion. Energy stocks in the Russell Midcap® Value Index were up over 50% in the period while the benchmark declined just over 10%. Defensive sectors of the market including Consumer Staples and Utilities also held up well and posted positive returns. Communication Services, Technology and Consumer Discretionary stocks were among the weaker segments of the market.
Performance
Harbor Mid Cap Value Fund returned -2.80% (Retirement Class), -2.88% (Institutional Class), -3.14% (Administrative Class), and -3.20% (Investor Class) for the year ended October 31, 2022, while the Russell Midcap® Value Index returned -10.18%. While the broad equity market sold off in the period, value stocks and the Fund held up much better than the overall market. The Fund’s deeper value bias added value in the period as cheaper stocks on an earnings and cash flow basis held up relatively well. Stock selection added significant value in the period while the Fund’s sector allocation detracted somewhat. The Fund’s underweight to Energy stocks, which were up over 50% during the period had a negative impact on relative performance. In addition, our underweight to Utilities and overweight to Consumer Discretionary also detracted somewhat. However, this was offset by our overweight to Consumer Staples, which held up relatively well. Stock selection added value in several sectors particularly the Industrials and Health Care sectors. Stock selection was also positive in the Technology and Energy sectors.
Top contributors in the Industrials sector included construction machinery stocks Meritor and Allison Transmissions as well as Atlas Air Worldwide and Snap-On Inc. In the Health Care sector, health care distributors McKesson and Cardinal Health added value in addition to Jazz Pharmaceutical in the pharmaceutical industry. In the Energy sector, the Fund is overweight refiners which did well included Marathon Petroleum, Valero and HF Sinclair. Other top contributors included H&R Block in the Consumer Discretionary sector, Consumer Staples holdings Ingles Markets, Molson Coors Beverage and Kroger, as well as Reliance Steel & Aluminum in the Materials sector. Detractors included Industrial Logistics Properties Trust in the Real Estate sector, Consumer Discretionary holdings eBay and Whirlpool, Seagate Technology and Qorvo in the Technology sector and Financial holding Ally Financial.
Outlook & Strategy
The manager’s portfolio decision making process is quantitative and driven by (1) a proprietary model which ranks securities on fundamental measures of value and indicators of near-term appreciation potential and, (2) a portfolio construction process that controls for risk while maximizing the expected return of the portfolio. The objective of the model is to pick undervalued stocks with high near-term appreciation potential.
93
Harbor Mid Cap Value Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $50,000 INVESTMENT
For the period 11/01/2012 through 10/31/2022
The graph compares a $50,000 investment in the Institutional Class shares of the Fund with the performance of the Russell Midcap® Value Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | 10 Years | |||||
Harbor Mid Cap Value Fund | ||||||
Retirement Class1 | -2.80% | 4.38% | 9.84% | |||
Institutional Class | -2.88 | 4.30 | 9.79 | |||
Administrative Class | -3.14 | 4.04 | 9.52 | |||
Investor Class | -3.20 | 3.91 | 9.39 | |||
Comparative Index | ||||||
Russell Midcap® Value | -10.18% | 6.49% | 10.42% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.77% (Net) and 0.81% (Gross) (Retirement Class); 0.85% (Net) and 0.89% (Gross) (Institutional Class); 1.10% (Net) and 1.14% (Gross) (Administrative Class); and 1.21% (Net) and 1.25% (Gross) (Investor Class). 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 02/28/2023. Additionally, the Adviser has contractually agreed to limit the Fun’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 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
Sector weightings are a residual of our 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 are to Financials, Industrials, Technology and Consumer Discretionary stocks. Relative to the value benchmark, the Fund is overweight the Consumer Staples and Consumer Discretionary sectors. The Fund is underweight Industrials, Utilities and Real Estate. The most significant changes in sector weights over the last twelve months were an increase in the relative exposure to Energy and Health Care stocks and a decrease to Financials and Utilities.
The Fund’s portfolio continues to trade at attractive valuations relative to the benchmark and relative to history. The Fund’s portfolio is trading at 8.2x forward earnings compared to 14.0x for the value benchmark and 5.8x cash flow compared to 10.6x for the Russell Midcap Value Index. The Fund is yielding 2.8% compared to 2.2% for the value benchmark.
Over the last two years, after the worst of the market pullback due to the onset of the pandemic, value stocks in general and the Fund in particular have recovered nicely. In addition when we look at the overall market, growth stocks continue to trade at a premium to their long term averages while value stocks remain at a discount. We believe the combination of the relative valuation spreads between growth and value stocks and the attractive absolute and relative valuation of the Fund should bode well for Fund performance going forward.
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.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 markets regions. For information on the different share classes and the risks associated with an investment in the Fund, please refer to the current prospectus.
94
Harbor Mid Cap Value Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
SECTOR ALLOCATION (% of investments) - Unaudited
Portfolio of Investments
Value and Cost in Thousands
COMMON STOCKS—98.9% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—0.7% | |||
3,700 | Huntington Ingalls Industries Inc. | $951 | |
337 | L3Harris Technologies Inc. | 83 | |
14,345 | Moog Inc. | 1,216 | |
2,250 | |||
AIRLINES—0.8% | |||
28,600 | Alaska Air Group Inc.* | 1,272 | |
31,500 | United Airlines Holdings Inc.* | 1,357 | |
2,629 | |||
AUTO COMPONENTS—1.4% | |||
137,900 | American Axle & Manufacturing Holdings Inc.* | 1,336 | |
36,000 | BorgWarner Inc. | 1,351 | |
68,900 | Goodyear Tire & Rubber Co.* | 875 | |
7,340 | Lear Corp. | 1,018 | |
4,580 | |||
AUTOMOBILES—1.6% | |||
70,000 | Harley-Davidson Inc. | 3,010 | |
26,200 | THOR Industries Inc. | 2,135 | |
5,145 | |||
BANKS—4.7% | |||
94,600 | Citizens Financial Group Inc. | 3,869 | |
66,300 | Fifth Third Bancorp | 2,366 | |
127,600 | KeyCorp | 2,280 | |
170,600 | Regions Financial Corp. | 3,745 | |
52,900 | Zions Bancorporation | 2,748 | |
15,008 | |||
BEVERAGES—1.2% | |||
72,300 | Molson Coors Beverage Co. | 3,646 | |
BIOTECHNOLOGY—1.2% | |||
176,100 | Ironwood Pharmaceuticals Inc.* | 1,926 | |
8,800 | United Therapeutics Corp.* | 2,029 | |
3,955 | |||
BUILDING PRODUCTS—1.3% | |||
47,400 | Owens Corning | 4,058 | |
CAPITAL MARKETS—2.6% | |||
14,600 | Ameriprise Financial Inc. | 4,513 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
CAPITAL MARKETS—Continued | |||
60,800 | Bank of New York Mellon Corp. | $2,560 | |
33,700 | Lazard Ltd. (Bermuda) | 1,271 | |
8,344 | |||
CHEMICALS—3.3% | |||
18,100 | Celanese Corp. | 1,740 | |
56,013 | Chemours Co. | 1,604 | |
14,300 | Eastman Chemical Co. | 1,098 | |
95,300 | Huntsman Corp. | 2,550 | |
9,870 | Ingevity Corp.* | 664 | |
52,300 | Koppers Holdings Inc. | 1,305 | |
12,600 | LyondellBasell Industries NV (Netherlands) | 963 | |
21,500 | Trinseo plc (Luxembourg) | 405 | |
10,329 | |||
CONSUMER FINANCE—2.3% | |||
117,500 | Ally Financial Inc. | 3,238 | |
10,900 | Discover Financial Services | 1,139 | |
166,600 | Navient Corp. | 2,522 | |
14,151 | Synchrony Financial | 503 | |
7,402 | |||
CONTAINERS & PACKAGING—3.6% | |||
33,400 | Berry Global Group Inc.* | 1,581 | |
37,700 | Greif Inc. | 2,496 | |
88,500 | O-I Glass Inc.* | 1,443 | |
9,100 | Packaging Corp. of America | 1,094 | |
47,600 | Silgan Holdings Inc. | 2,254 | |
72,300 | WestRock Co. | 2,463 | |
11,331 | |||
DIVERSIFIED CONSUMER SERVICES—0.7% | |||
56,500 | H&R Block Inc. | 2,325 | |
DIVERSIFIED FINANCIAL SERVICES—0.8% | |||
79,987 | Banco Latinoamericano de Comercio Exterior SA (Panama) | 1,255 | |
18,400 | Voya Financial Inc. | 1,258 | |
2,513 | |||
ELECTRIC UTILITIES—1.2% | |||
88,600 | NRG Energy Inc. | 3,934 |
95
Harbor Mid Cap Value Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
ELECTRICAL EQUIPMENT—0.8% | |||
24,900 | Atkore Inc.* | $2,373 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—5.0% | |||
33,100 | Arrow Electronics Inc.* | 3,352 | |
24,200 | Avnet Inc. | 973 | |
53,900 | Jabil Inc. | 3,463 | |
34,200 | Methode Electronics Inc. | 1,410 | |
40,600 | Sanmina Corp.* | 2,276 | |
10,300 | SYNNEX Corp. | 942 | |
125,800 | TTM Technologies Inc.* | 1,926 | |
69,800 | Vishay Intertechnology Inc. | 1,459 | |
15,801 | |||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—6.7% | |||
99,400 | Brandywine Realty Trust | 652 | |
121,600 | Brixmor Property Group Inc. | 2,591 | |
240,078 | Franklin Street Properties Corp. | 691 | |
137,900 | Hersha Hospitality Trust* | 1,262 | |
88,234 | Industrial Logistics Properties Trust | 413 | |
24,900 | Iron Mountain Inc. | 1,247 | |
114,400 | Medical Properties Trust Inc. | 1,310 | |
52,750 | Office Properties Income Trust | 807 | |
86,200 | Omega Healthcare Investors Inc. | 2,740 | |
139,000 | Paramount Group Inc. | 899 | |
138,248 | Piedmont Office Realty Trust Inc. | 1,445 | |
119,500 | Sabra Health Care REIT Inc. | 1,632 | |
102,411 | Service Properties Trust | 831 | |
19,400 | Simon Property Group Inc. | 2,114 | |
95,800 | SITE Centers Corp. | 1,186 | |
82,900 | Tanger Factory Outlet Centers Inc. | 1,493 | |
21,313 | |||
FOOD & STAPLES RETAILING—3.2% | |||
35,145 | Ingles Markets Inc. | 3,317 | |
96,900 | Kroger Co. | 4,582 | |
80,000 | Sprouts Farmers Market Inc.* | 2,360 | |
10,259 | |||
FOOD PRODUCTS—4.3% | |||
37,700 | Archer Daniels Midland Co. | 3,656 | |
66,600 | Conagra Brands Inc. | 2,444 | |
27,600 | Ingredion Inc. | 2,460 | |
8,000 | JM Smucker Co. | 1,205 | |
55,100 | Tyson Foods Inc. | 3,766 | |
13,531 | |||
GAS UTILITIES—1.7% | |||
40,300 | National Fuel Gas Co. | 2,720 | |
78,200 | UGI Corp. | 2,763 | |
5,483 | |||
HEALTH CARE PROVIDERS & SERVICES—3.7% | |||
41,800 | Cardinal Health Inc. | 3,172 | |
35,100 | DaVita Inc.* | 2,563 | |
4,800 | Laboratory Corp. of America Holdings | 1,065 | |
9,200 | McKesson Corp. | 3,582 | |
11,200 | Universal Health Services Inc. | 1,298 | |
11,680 | |||
HOTELS, RESTAURANTS & LEISURE—0.3% | |||
33,700 | Bloomin' Brands Inc.* | 809 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
HOUSEHOLD DURABLES—3.3% | |||
58,200 | Ethan Allen Interiors Inc. | $1,489 | |
12,900 | Meritage Homes Corp.* | 983 | |
59,100 | PulteGroup Inc. | 2,363 | |
53,700 | Toll Brothers Inc. | 2,313 | |
23,500 | Whirlpool Corp. | 3,249 | |
10,397 | |||
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS—1.2% | |||
163,400 | Vistra Corp. | 3,753 | |
INSURANCE—7.8% | |||
55,600 | Aflac Inc. | 3,620 | |
16,500 | Allstate Corp. | 2,083 | |
9,200 | American Financial Group Inc. | 1,335 | |
34,900 | American International Group Inc. | 1,989 | |
21,800 | First American Financial Corp. | 1,099 | |
74,300 | Hartford Financial Services Group Inc. | 5,380 | |
35,800 | Lincoln National Corp. | 1,929 | |
129,100 | Old Republic International Corp. | 2,996 | |
21,800 | Principal Financial Group Inc. | 1,921 | |
75,200 | Universal Insurance Holdings Inc. | 755 | |
37,000 | Unum Group | 1,687 | |
24,794 | |||
INTERNET & DIRECT MARKETING RETAIL—0.8% | |||
59,900 | eBay Inc. | 2,386 | |
IT SERVICES—1.2% | |||
73,300 | DXC Technology Co.* | 2,107 | |
117,600 | Western Union Co. | 1,589 | |
3,696 | |||
LEISURE PRODUCTS—0.5% | |||
19,500 | Brunswick Corp. | 1,378 | |
5,658 | Sturm Ruger & Co. Inc. | 318 | |
1,696 | |||
MACHINERY—5.7% | |||
35,100 | AGCO Corp. | 4,358 | |
74,130 | Allison Transmission Holdings Inc. | 3,132 | |
17,600 | Cummins Inc. | 4,304 | |
20,600 | Snap-on Inc. | 4,574 | |
24,500 | Timken Co. | 1,747 | |
18,115 | |||
MEDIA—2.4% | |||
36,500 | AMC Networks Inc.* | 822 | |
64,500 | Fox Corp. | 1,862 | |
15,600 | Nexstar Media Group Inc. | 2,672 | |
78,300 | TEGNA Inc. | 1,635 | |
38,800 | ViacomCBS Inc. | 711 | |
7,702 | |||
METALS & MINING—1.2% | |||
18,400 | Reliance Steel & Aluminum Co. | 3,707 | |
MORTGAGE REAL ESTATE INVESTMENT TRUSTS (REITs)—0.2% | |||
41,650 | Annaly Capital Management Inc.* | 773 | |
MULTILINE RETAIL—1.1% | |||
41,500 | Big Lots Inc. | 783 |
96
Harbor Mid Cap Value Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
MULTILINE RETAIL—Continued | |||
20,400 | Kohl's Corp. | $611 | |
99,500 | Macy's Inc. | 2,075 | |
3,469 | |||
OIL, GAS & CONSUMABLE FUELS—5.6% | |||
55,700 | Apa Corp. | 2,532 | |
55,400 | Devon Energy Corp. | 4,285 | |
60,500 | HF Sinclair Corp. | 3,701 | |
34,700 | Marathon Petroleum Corp. | 3,943 | |
19,500 | Phillips 66 | 2,034 | |
10,700 | Valero Energy Corp. | 1,343 | |
17,838 | |||
PHARMACEUTICALS—2.0% | |||
29,774 | Jazz Pharmaceuticals plc (Ireland)* | 4,281 | |
18,938 | Prestige Consumer Healthcare Inc.* | 1,032 | |
93,493 | Viatris Inc. | 947 | |
6,260 | |||
PROFESSIONAL SERVICES—0.7% | |||
27,500 | ManpowerGroup Inc. | 2,154 | |
ROAD & RAIL—0.7% | |||
26,268 | Ryder System Inc. | 2,115 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—2.1% | |||
137,800 | Amkor Technology Inc. | 2,865 | |
25,600 | Diodes Inc.* | 1,835 | |
24,400 | Qorvo Inc.* | 2,100 | |
6,800 | |||
SPECIALTY RETAIL—4.2% | |||
31,000 | Best Buy Co. Inc. | 2,121 | |
21,300 | Dick's Sporting Goods Inc. | 2,423 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SPECIALTY RETAIL—Continued | |||
81,800 | Foot Locker Inc. | $2,593 | |
12,000 | Group 1 Automotive Inc. | 2,076 | |
36,200 | ODP Corp.* | 1,433 | |
23,000 | Penske Automotive Group Inc. | 2,567 | |
13,213 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—2.5% | |||
147,900 | HP Inc. | 4,085 | |
49,500 | Seagate Technology Holdings plc (Ireland) | 2,458 | |
93,900 | Xerox Holdings Corp. | 1,374 | |
7,917 | |||
TEXTILES, APPAREL & LUXURY GOODS—0.3% | |||
17,700 | Capri Holdings Ltd. (Virgin Islands)* | 809 | |
THRIFTS & MORTGAGE FINANCE—1.4% | |||
132,900 | MGIC Investment Corp. | 1,814 | |
19,700 | PennyMac Financial Services Inc. | 1,050 | |
77,000 | Radian Group Inc. | 1,607 | |
4,471 | |||
TRADING COMPANIES & DISTRIBUTORS—0.9% | |||
47,758 | Triton International Ltd. (Bermuda) | 2,898 | |
TOTAL COMMON STOCKS | |||
(Cost $285,319) | 313,661 | ||
TOTAL INVESTMENTS—98.9% | |||
(Cost $285,319) | 313,661 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—1.1% | 3,580 | ||
TOTAL NET ASSETS—100.0% | $317,241 |
FAIR VALUE MEASUREMENTS
All investments as of October 31, 2022 (as disclosed in the preceding Portfolio of Investments) were classified as Level 1. There were no Level 3 investments as of October 31, 2022 or 2021.
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.
97
Harbor Money Market Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
BNP Paribas Asset Management USA, Inc.
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
The fiscal year began with an elevated level of uncertainty related to persistent inflationary pressures, the Federal Reserve’s (the “Fed”) response and the resultant impact on the U.S. economy. The effects of the pandemic faded as COVID-19 vaccines were broadly distributed around the globe. Russia invaded Ukraine initiating a military conflict that continues today and has disrupted global energy markets, especially across Europe. Central banks of major economies developed plans for raising monetary policy rates in order to generate price stability and tame inflation while avoiding a deep recession.
In the United States, markets were focused on macroeconomic developments and the Fed’s reaction function. The labor market remains very tight, with historical low levels of unemployment with substantial wage growth. Over the past year inflation has remained stubbornly well above the Fed’s long-term 2% target. Headline inflation rates neared 10% at the peak while core prices, which exclude volatile food and energy factors, have peaked above 6%. As a result, the U.S. Federal Reserve accelerated monetary policy tightening in an effort to reverse price pressures in the economy.
The Fed raised interest rate policy by 300 basis points during the fiscal year after winding down monthly balance sheet purchases in U.S. Treasury and Agency Mortgage-Backed Securities. Chairman Powell indicated that aggressive measures were warranted to combat inflation and that interest rates would remain in restrictive territory until realized inflation was on a clear path to the 2% target. While the Federal Open Market Committee (“FOMC”) believes they can achieve a “soft landing” by tightening policy and reducing inflation without inciting an economic recession, the probability of a recession has increased with persistent price pressures driving monetary tightening.
Benchmark ten-year U.S. Treasury note yields climbed throughout the year to finish the period above 4%. The yield curve inverted in response to rising monetary policy rates with the interest rate differential between 2-year and 10-year U.S. Treasury yields narrowing to -50 basis points. Risk assets suffered amidst the rise in interest rates and economic uncertainty. Equity indices have declined 20% from their peak and credit spreads have widened. Longer duration fixed income assets realized sharply negative returns with interest rates climbing and spreads widening throughout the year. The U.S. dollar benefitted from the policy shift appreciating significantly against major developed economies as the Fed leads the global tightening cycle.
Short-term U.S. Treasury Note yields climbed significantly during the fiscal year while remaining closely tied to policy rates. Money market yields reached the 4% level for the first time in fifteen years. The current level of money market yields is a reward to conservative investors seeking to realize positive returns while attempting to maintain the purchasing power of their assets. We believe that money market yields will slowly rise from current levels before stabilizing as the Fed’s tightening cycle peaks.
PerformancE
For the twelve months ended October 31, 2022, the Fund returned 0.74% (Institutional Class) and 0.66% (Administrative Class), while the ICE BofA U.S. 3-Month Treasury Bill Index returned 0.78%. The duration of the portfolio, a measure of its sensitivity to changes in interest rates, was managed strategically shorter at approximately 20 days to limit the impact of further increases in US Treasury Bill yields.
98
Harbor Money Market Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | 10 Years | |||||
Harbor Money Market Fund | ||||||
Institutional Class | 0.74% | 0.97% | 0.61% | |||
Administrative Class | 0.66 | 0.86 | 0.56 | |||
Comparative Index | ||||||
ICE BofA U.S. 3-Month Treasury Bill | 0.78% | 1.16% | 0.70% |
Current 7-day subsidizeda SEC yield for period ended 10/31/2022: | Institutional Class: 2.56% | Administrative Class: 2.31% |
Current 7-day unsubsidizedb SEC yield for period ended 10/31/2022: | Institutional Class: 2.45% | Administrative Class: 2.20% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.28% (Net) and 0.38% (Gross) (Institutional Class); 0.53% (Net) and 0.63%(Gross) (Administrative Class). The Adviser has contractually agreed to reduce the management fee to 0.18% through 02/28/2023. Additionally, the Adviser has contractually agreed to the limit the Fund’s operating expenses, excluding interest expense (if any), to 0.28% and 0.53% for the Institutional Class and Administrative Class, respectively through 02/28/2023. 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 harborcapital.com or by calling 800-422-1050. 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 expect the Fed to complete the cycle of policy rate increases by mid-2023 before pausing to monitor the impact later in the year. We expect that real, or inflation-adjusted, economic growth in the U.S. will decelerate in response to the economic challenges of elevated interest rates with increased risk of economic recession. The ultimate path of interest rates will be determined by the evolution of growth and inflation data in the coming year. After a record four straight 75 basis point interest rate hikes, the Federal Reserve may be pressured by the market to adjust their policy stance if evidence emerges that the inflation pressures are subsiding and the economy is slowing. The market currently expects policy rates to reach a terminal level between 5-5.25% in the next six months, suggesting an additional 125 basis points of tightening in the coming year.
The transparency of the FOMC will ultimately provide opportunities to tactically adjust the Fund’s duration profile as conditions evolve. Consistent with this stage of the monetary policy tightening cycle, the yield curve has inverted with short term rates exceeding intermediate and longer-term tenors. The front end of the curve is more sensitive to the accelerated pace of monetary policy tightening, while the long end is driven by expectations for growth and inflation. With longer duration fixed income investments suffering from the rise in rates, we believe that government money market funds will remain a safe haven vehicle given rising uncertainty and the currently attractive level of interest rates.
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.
99
Harbor Money Market Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
INVESTMENTS ALLOCATION (% of investments) - Unaudited
Portfolio of Investments
Principal Amounts, Value and Cost in Thousands
U.S. GOVERNMENT AGENCY DEBT—28.2%† | |||
Principal Amount | Value | ||
Federal Home Loan Bank Discount Notes | |||
$ | 5,000 | 2.940%—11/04/2022 | $4,999 |
4,800 | 2.945%—11/01/2022 | 4,800 | |
4,400 | 2.946%—11/03/2022 | 4,399 | |
14,198 | |||
Federal Home Loan Mortgage Corp. Discount Notes | |||
6,000 | 2.570%—11/02/2022 | 6,000 | |
TOTAL U.S. GOVERNMENT AGENCY DEBT | |||
(Cost $20,198) | 20,198 | ||
U.S. TREASURY DEBT—73.4%† | |||
U.S. Treasury Bills | |||
12,500 | 2.552%—11/03/2022 | 12,298 |
U.S. TREASURY DEBT—Continued | |||
Principal Amount | Value | ||
$ | 11,200 | 2.628%—11/01/2022 | $11,200 |
12,500 | 2.671%—11/08/2022 | 12,494 | |
4,500 | 2.797%—11/17/2022 | 4,494 | |
12,000 | 3.010%—11/15/2022 | 11,986 | |
TOTAL U.S. TREASURY DEBT | |||
(Cost $52,472) | 52,472 | ||
TOTAL INVESTMENTS—101.6% | |||
(Cost $72,670) | 72,670 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—(1.6)% | (1,113) | ||
TOTAL NET ASSETS—100.0% | $71,557 |
FAIR VALUE MEASUREMENTS
All investments as of October 31, 2022 (as disclosed in the preceding Portfolio of Investments) were classified as Level 2. There were no Level 3 investments at October 31, 2022 or 2021.
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.
100
Harbor Overseas Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Acadian Asset Management LLC
Management’s Discussion of
Fund Performance
Fund Performance
MARKET REVIEW
As 2021 came to a close, global equities rose after rallying in October, selling-off in November, and recovering in December. In a familiar pattern, developed markets outperformed, led by a strong U.S. market. Rising inflation remained a focal point, intensified by tangled supply chains and demand vastly outpacing supply. In a wobbly first quarter, while concerns about the highly contagious Omicron variant abated, the Russia-Ukraine conflict and central bank tightening weighed on investor sentiment. Investors rotated out of equities into safe-haven assets during the first two months. Gold prices hit peaks not seen since June 2021. In the interim, energy prices witnessed a surge across the globe. The second quarter marked the eighth-largest quarterly decline for global stocks in the last 50 years. Aggressive monetary tightening measures by central banks created a risk off environment in global markets. Both stocks and bonds fell as investors continued to price in future rate hikes and the ensuing risks of a recession. Anemic economic data from some major economies also dampened performance of global equities. In a volatile third quarter, major central banks across the world hiked interest rates to curb inflation, despite fears that this could tip the global economy into a recession. In particular, the Federal Reserve (the “Fed”) continued its aggressive rate hiking, sending global markets into turmoil. As estimates for the Eurozone’s inflation rate rose to 9.6% due to surging food and energy prices, the European Central Bank also raised its key interest rate by 75 bps. In addition, Russia halted gas flows to Germany via Nord Stream 1, further intensifying European energy concerns.
PERFORMANCE
Harbor Overseas Fund returned -20.93% (Retirement Class), -21.00% (Institutional Class), and -21.29% (Investor Class) for the year ended October 31, 2022, outperforming the MSCI EAFE (ND) Index which returned -23.00%.
Performance relative to the benchmark was mainly driven by favorable stock selection and country allocation. From a stock selection perspective, the Fund benefitted from an opportunistic exposure to Canadian energy and a combination of stock selection and an overweight position in Norway, respectively led by positions in Tourmaline Oil and an investment in Equinor. During the 1-year period, our proprietary forecast for Tourmaline Oil showed attractive characteristics across most signals within our Bottom-up stock selection model. Our proprietary Peer Model also contributed to the stock’s alpha forecast. Our opportunistic overweight position was beneficial as the stock’s total return was 70.9% during the period.
Conversely, selections in Switzerland Healthcare, and a combination of stock selection and an underweight position in the United Kingdom were less successful. Leading negative contributors to active return within these markets included an overweight position in Straumann Holding and an underweight in Shell.
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. To realize these insights, Acadian employs a dynamic investment strategy which adapts to the current market environment and utilizes a disciplined, systematic approach to stock selection.
In following a systematic investment process, Acadian continually evaluates the effectiveness of stock selection based on attributes we believe predict future stock prices. Acadian prefers to invest in stocks that are cheaper than their peers because we believe that prices deviate
101
Harbor Overseas Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $50,000 INVESTMENT
For the 03/01/2019 through 10/31/2022
The graph compares a $50,000 investment in the Institutional Class shares of the Fund with the performance of the MSCI EAFE (ND) Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | 5 Years | Annualized | ||||
Life of Fund | ||||||
Harbor Overseas Fund | ||||||
Retirement Class1 | -20.93% | N/A | 3.95% | |||
Institutional Class1 | -21.00 | N/A | 3.86 | |||
Investor Class1 | -21.29 | N/A | 3.49 | |||
Comparative Index | ||||||
MSCI EAFE (ND)1 | -23.00% | N/A | 0.78% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.77% (Net) and 1.19% (Gross) (Retirement Class); 0.85% (Net) and 1.27% (Gross) (Institutional Class); 1.10% (Net) and 1.52% (Gross) (Administrative Class); and 1.21% (Net) and 1.63% (Gross) (Investor Class). The net expense ratios reflect an expense limitation agreement (excluding interest expense, if any) effective through 02/28/2023. 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 harborcapital.com or by calling 800-422-1050.
from intrinsic values due to investor irrationality and market frictions. For this period, our preference for stocks with cheaper valuations was rewarded. The portfolio’s exposure to stocks with other attractive fundamental attributes, such as robust earnings, strong cash flow growth and quality balance sheets, also yielded favorable results.
OUTLOOK & STRATEGY
After rallying to start the second half of the year, global stocks fell for much of September 2022, as concerns over aggressive central bank tightening as well as ongoing geopolitical issues weighed on global growth expectations. The OECD noted that world economies are slowing more than it had previously anticipated. As of September 2022, it estimated global GDP growth of 3% in 2022 and only 2.25% in 2023.
In the U.S., the equity market’s slide reflected growing resignation among investors that the Fed is unlikely to soften its hawkish stance until there is significant evidence that inflation is truly in check. The dollar has risen significantly as the Fed has rapidly pushed U.S. rates higher. That, combined with anxiety about a global slowdown, has caused commodity prices to fall. Oil, which had traded above $120 (WTI) as recently as June, retreated below $80 by quarter end. Russian oil continued to be purchased – at discounted prices – by China and India. The war in Ukraine continued to dominate geopolitical headlines. By quarter end, Russian President Vladimir Putin had announced a partial mobilization of Russian forces, which was soon followed by the annexation of four Ukrainian provinces. The two Nord Stream pipelines, which send natural gas from Russia to Germany, ruptured in late September of 2022. While neither pipeline was operational at the time, the mysterious event further underscored the fragility of Europe’s energy security.
Acadian continuously updates our investment process across model enhancements, risk controls and implementation. We believe our targeted focus, along with our disciplined and granular process, will allow us to add value for our clients.
1 | The “Life of Fund” return as shown reflects the period 03/01/2019 through 10/31/2022. |
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.
102
Harbor Overseas Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
REGION BREAKDOWN (% of investments) -Unaudited
(Excludes short-term investments)
The Fund’s Portfolio of Investments include investments denominated in foreign currencies. As of October 31, 2022, there was no foreign currency denomination that comprised more than 25% of the Fund’s net assets.
Portfolio of Investments
Value and Cost in Thousands
COMMON STOCKS—97.0% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—1.9% | |||
1,128 | Dassault Aviation SA (France) | $168 | |
1,959 | Kongsberg Gruppen ASA (Norway) | 70 | |
12,645 | QinetiQ Group plc (United Kingdom)* | 52 | |
68,300 | Singapore Technologies Engineering Ltd. (Singapore)* | 159 | |
9,764 | Thales SA (France) | 1,242 | |
1,691 | |||
AIR FREIGHT & LOGISTICS—0.3% | |||
1,805 | Mainfreight Ltd. (New Zealand) | 80 | |
3,800 | Nippon Express Holdings Inc. (Japan)* | 191 | |
271 | |||
AUTO COMPONENTS—0.1% | |||
28,000 | Johnson Electric Holdings Ltd. (Hong Kong) | 29 | |
5,906 | Martinrea International Inc. (Canada)* | 38 | |
6,500 | Thai Stanley Electric PCL NVDR (Thailand) | 31 | |
98 | |||
BANKS—6.9% | |||
95,807 | Australia & New Zealand Banking Group Ltd (Australia) | 1,570 | |
40,400 | Bangkok Bank PCL NVDR (Thailand) | 155 | |
2,452 | Bank Handlowy w Warszawie SA (Poland)* | 32 | |
88,736 | Bank Leumi Le-Israel BM (Israel) | 847 | |
30,289 | Commercial Bank of Dubai PSC (United Arab Emirates) | 40 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
BANKS—Continued | |||
60,389 | DNB Bank ASA (Norway) | $1,068 | |
53,361 | Faisal Islamic Bank of Egypt (Egypt) | 52 | |
57,000 | Kasikornbank plc NVDR (Thailand)* | 219 | |
261,577 | NatWest Group plc (United Kingdom)* | 704 | |
741,065 | PT Bank Danamon Indonesia TBK (Indonesia)* | 162 | |
7,647 | Raiffeisen Bank International AG (Austria) | 106 | |
3,400 | Shikoku Bank Ltd. (Japan)* | 20 | |
38,514 | Societe Generale SA (France) | 883 | |
69,667 | Standard Chartered plc (United Kingdom) | 416 | |
6,274 | |||
BEVERAGES—4.8% | |||
56,842 | Australian Vintage Ltd. (Australia)* | 24 | |
10,358 | Carlsberg AS (Denmark) | 1,220 | |
22,379 | Coca-Cola Europacific Partners plc (United Kingdom) | 1,053 | |
5,260 | Coca-Cola HBC AG (Switzerland)* | 115 | |
16,198 | Ginebra San Miguel Inc. (Philippines) | 30 | |
18,907 | Heineken Holding NV (Netherlands) | 1,290 | |
6,140 | Heineken NV (Netherlands) | 513 | |
3,800 | Primo Water Corp. (Canada)* | 55 | |
4,300 | |||
BIOTECHNOLOGY—1.4% | |||
23,673 | Adaptimmune Therapeutics plc ADR (United Kingdom)*,1 | 34 |
103
Harbor Overseas Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
BIOTECHNOLOGY—Continued | |||
6,036 | GENFIT SA (France)* | $24 | |
3,036 | Genmab AS (Denmark)* | 1,170 | |
1,926 | Swedish Orphan Biovitrum AB (Sweden)* | 35 | |
1,263 | |||
BUILDING PRODUCTS—0.3% | |||
10,800 | BRC Asia Ltd. (Singapore) | 12 | |
815 | Compagnie de Saint-Gobain (France) | 33 | |
5,400 | Maezawa Kasei Industries Co. Ltd. (Japan) | 49 | |
1,900 | Noda Corp. (Japan)* | 16 | |
5,888 | Norcros plc (United Kingdom) | 12 | |
4,400 | Okabe Co. Ltd. (Japan) | 21 | |
��� 97,898 | RAS Al Khaimah Ceramics (United Arab Emirates) | 77 | |
465 | Zehnder Group AG (Switzerland) | 25 | |
245 | |||
CAPITAL MARKETS—3.3% | |||
315 | Cie Financiere Tradition SA (Switzerland) | 33 | |
65,244 | Deutsche Bank AG (Germany) | 622 | |
8,486 | Deutsche Boerse AG (Germany) | 1,380 | |
5,328 | Equita Group SpA (Italy) | 18 | |
2,082 | Fiducian Group Ltd. (Australia) | 10 | |
2,256 | Foresight Group Holdings Ltd. (United Kingdom)* | 9 | |
10,762 | IG Group Holdings plc (United Kingdom) | 98 | |
83,841 | Investec plc (United Kingdom) | 420 | |
4,100 | IwaiCosmo Holdings Inc. (Japan) | 35 | |
131,408 | Man Group plc (Jersey) | 327 | |
8,153 | Ninety One plc (United Kingdom) | 19 | |
2,377 | Titanium OYJ (Finland) | 31 | |
3,002 | |||
CHEMICALS—3.7% | |||
2,500 | Achilles Corp. (Japan) | 23 | |
3,400 | ADEKA Corp. (Japan)* | 51 | |
4,100 | AirBoss of America Corp. (Canada)* | 22 | |
9,200 | Carlit Holdings Co. Ltd. (Japan) | 42 | |
2,900 | DAI Nippon Toryo Co. Ltd. (Japan) | 14 | |
42,387 | DGL Group Ltd. (Australia)* | 41 | |
2,900 | Fujimori Kogyo Co. Ltd. (Japan) | 61 | |
800 | Hodogaya Chemical Co. Ltd. (Japan)* | 15 | |
5,353 | ICL Group Ltd. (Israel) | 48 | |
318,537 | Incitec Pivot Ltd. (Australia) | 766 | |
2,800 | Ishihara Sangyo Kaisha Ltd. (Japan) | 19 | |
699 | Johnson Matthey plc (United Kingdom) | 16 | |
1,092 | K+S AG (Germany) | 24 | |
574 | KPX Chemical Co. Ltd. (South Korea) | 19 | |
2,800 | Kyowa Leather Cloth Co. Ltd. (Japan) | 10 | |
2,700 | Methanex Corp. (Canada) | 94 | |
3,426 | Misr Fertilizers Production Co. SAE (Egypt) | 16 | |
2,000 | Moresco Corp. (Japan) | 14 | |
7,786 | Neo Performance Materials Inc. (Canada) | 61 | |
2,200 | Nippon Carbide Industries Co. Inc. (Japan) | 19 | |
1,300 | Okura Industrial Co. Ltd. (Japan) | 16 | |
54,084 | Orica Ltd. (Australia) | 481 | |
728 | PCC Rokita SA (Poland) | 11 | |
21,100 | PTT Global Chemical PCL NVDR (Thailand) | 24 | |
7,100 | Riken Technos Corp. (Japan)* | 25 | |
4,500 | Seiko PMC Corp. (Japan)* | 16 | |
5,600 | Sekisui Kasei Co. Ltd. (Japan)* | 15 | |
2,985 | Serge Ferrari Group (France) | 30 | |
600 | Soken Chemical & Engineering Co. Ltd. (Japan) | 8 | |
38,400 | Sumitomo Chemical Co. Ltd. (Japan)* | 129 | |
1,100 | Sumitomo Seika Chemicals Co. Ltd. (Japan)* | 22 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
CHEMICALS—Continued | |||
6,100 | Tokuyama Corp. (Japan)* | $71 | |
440 | Wacker Chemie AG (Germany) | 51 | |
23,206 | Yara International ASA (Norway) | 1,036 | |
3,310 | |||
COMMERCIAL SERVICES & SUPPLIES—1.1% | |||
4,000 | AEON Delight Co. Ltd. (Japan) | 80 | |
2,100 | AGS Corp. (Japan) | 9 | |
800 | AJIS Co. Ltd. (Japan) | 11 | |
4,000 | Azienda Bresciana Petroli Nocivelli SpA (Italy)* | 15 | |
24,790 | Brambles Ltd. (Australia) | 186 | |
3,173 | Derichebourg SA (France) | 14 | |
340 | Fursys Inc. (South Korea) | 6 | |
2,746 | GL Events SA (France)* | 43 | |
15,710 | ISS A/S AS (Denmark)* | 288 | |
14,200 | Kokuyo Co. Ltd. (Japan) | 176 | |
1,800 | Kyodo Printing Co. Ltd. (Japan) | 31 | |
2,400 | Nac Co. Ltd. (Japan) | 15 | |
5,900 | Prestige International Inc. (Japan)* | 28 | |
1,400 | Pronexus Inc. (Japan) | 9 | |
1,501 | SPIE SA (France) | 35 | |
946 | |||
COMMUNICATIONS EQUIPMENT—0.9% | |||
152,799 | Telefonaktiebolaget LM Ericsson (Sweden) | 849 | |
CONSTRUCTION & ENGINEERING—0.3% | |||
406,000 | Analogue Holdings Ltd. (Hong Kong) | 57 | |
13,188 | Boustead Singapore Ltd. (Singapore) | 7 | |
305 | Burkhalter Holding AG (Switzerland) | 24 | |
1,900 | Dai-Ichi Cutter Kogyo KK (Japan)* | 15 | |
1,706 | Implenia AG (Switzerland)* | 64 | |
3,816 | Lycopodium Ltd. (Australia)* | 17 | |
905 | Morgan Sindall Group plc (United Kingdom) | 16 | |
197,200 | Naim Holdings BHD (Malaysia)* | 20 | |
3,722 | Orascom Construction plc (United Arab Emirates) | 11 | |
2,600 | Yamato Corp. (Japan) | 12 | |
1,500 | Yondenko Corp. (Japan) | 18 | |
261 | |||
CONSTRUCTION MATERIALS—0.1% | |||
4,100 | Asia Pile Holdings Corp. (Japan)* | 14 | |
14,211 | Breedon Group plc (United Kingdom) | 9 | |
12,394 | Qatar National Cement Co. QPSC (Qatar) | 15 | |
800 | Shinagawa Refractories Co. Ltd. (Japan)* | 21 | |
29,705 | Wagners Holding Co. Ltd. (Australia)* | 15 | |
74 | |||
CONSUMER FINANCE—0.0% | |||
3,300 | AEON Financial Service Co. Ltd. (Japan) | 32 | |
284 | H&T Group plc (United Kingdom)* | 2 | |
34 | |||
CONTAINERS & PACKAGING—0.2% | |||
39,400 | Hanwell Holdings Ltd. (Singapore)* | 10 | |
28,882 | Mpact Ltd. (South Africa)* | 44 | |
11,718 | Orora Ltd. (Australia) | 23 | |
1,700 | Pack Corp. (Japan)* | 27 | |
7,533 | Pro-Pac Packaging Ltd. (Australia)* | 1 | |
9,900 | Thantawan Industry PU NVDR (Thailand) | 12 | |
1,700 | Tomoku Co. Ltd. (Japan)* | 17 | |
600 | Winpak Ltd. (Canada)* | 18 | |
152 |
104
Harbor Overseas Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
DISTRIBUTORS—0.1% | |||
4,194 | Inchcape plc (United Kingdom) | $36 | |
1,800 | Uni-Select Inc. (Canada)* | 49 | |
85 | |||
DIVERSIFIED CONSUMER SERVICES—0.1% | |||
3,830 | JLS Co. Ltd. (South Korea) | 20 | |
22,700 | JP-Holdings Inc. (Japan)* | 46 | |
4,500 | Meiko Network Japan Co. Ltd. (Japan)* | 18 | |
7,627 | Shine Justice Ltd. (Australia) | 6 | |
3,700 | Tear Corp. (Japan) | 10 | |
100 | |||
DIVERSIFIED FINANCIAL SERVICES—0.0% | |||
142,000 | Pacific Century Regional Developments Ltd. (Singapore) | 38 | |
DIVERSIFIED TELECOMMUNICATION SERVICES—1.7% | |||
4,273 | B Communications Ltd. (Israel)* | 24 | |
7,100 | HKT Trust & HKT Ltd. (Hong Kong)* | 8 | |
604 | Magyar Telekom Telecommunications plc ADR (Hungary)1 | 2 | |
38,200 | Nippon Telegraph & Telephone Corp. (Japan) | 1,054 | |
30,454 | Spark New Zealand Ltd. (New Zealand)* | 91 | |
125 | Telefonica SA (Spain) | — | |
124,616 | Telstra Group Ltd. (Australia)* | 312 | |
1,491 | |||
ELECTRIC UTILITIES—0.0% | |||
28,769 | Enea SA (Poland)* | 31 | |
ELECTRICAL EQUIPMENT—1.0% | |||
1,200 | Chiyoda Integre Co. Ltd. (Japan) | 18 | |
1,000 | Mirai Industry Co. Ltd. (Japan) | 10 | |
70,600 | Mitsubishi Electric Corp. (Japan) | 621 | |
1,111 | Nexans SA (France) | 104 | |
562 | Somfy SA (France) | 60 | |
2,200 | Takaoka Toko Co. Ltd. (Japan) | 27 | |
51,000 | Xingye Alloy Materials Group Ltd. (Hong Kong)* | 7 | |
5,546 | Zumtobel Group AG (Austria) | 34 | |
881 | |||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—0.6% | |||
2,584 | AT&S Austria Technologie & Systemtechnik AG (Austria)* | 80 | |
3,400 | Celestica Inc. (Canada)* | 37 | |
77,905 | Datatec Ltd. (South Africa)* | 175 | |
5,000 | Kyosan Electric Manufacturing Co. Ltd. (Japan) | 14 | |
320 | Nedap NV (Netherlands) | 17 | |
2,700 | Nihon Denkei Co. Ltd. (Japan) | 26 | |
3,800 | Osaki Electric Co. Ltd. (Japan) | 13 | |
12,592 | Rakon Ltd. (New Zealand)* | 9 | |
39 | Schaffner Holding AG (Switzerland) | 11 | |
2,700 | Sigma Koki Co. Ltd. (Japan) | 27 | |
1,100 | SMK Corp. (Japan) | 20 | |
2,000 | Sun-Wa Technos Corp. (Japan) | 20 | |
7,700 | Topcon Corp. (Japan) | 84 | |
533 | |||
ENERGY EQUIPMENT & SERVICES—0.2% | |||
9,400 | Ensign Energy Services Inc. (Canada)* | 24 | |
62,210 | MMA Offshore Ltd. (Australia)* | 27 | |
3,900 | Pason Systems Inc. (Canada) | 42 | |
9,000 | PHX Energy Services Corp. (Canada) | 55 | |
148 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
ENTERTAINMENT—0.1% | |||
7,900 | Ateam Inc. (Japan)* | $41 | |
306 | Gravity Co. Ltd. ADR (South Korea)*,1 | 13 | |
46,000 | IGG Inc. (Singapore)* | 12 | |
397 | PlayWay SA (Poland)* | 23 | |
89 | |||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—0.0% | |||
57,300 | Pavilion Real Estate Investment Trust (Malaysia)* | 15 | |
FOOD & STAPLES RETAILING—0.8% | |||
2,000 | Axial Retailing Inc. (Japan) | 46 | |
16,210 | Eurocash SA (Poland)* | 39 | |
6,564 | Jeronimo Martins SGPS SA (Portugal) | 136 | |
4,247 | Kesko OYJ Class B (Finland) | 83 | |
6,895 | Kitwave Group plc (United Kingdom)* | 13 | |
6,800 | Lawson Inc. (Japan)* | 217 | |
2,600 | Mitsubishi Shokuhin Co. Ltd. (Japan)* | 53 | |
2,600 | Okuwa Co. Ltd. (Japan) | 16 | |
3,600 | Orsero SpA (Italy)* | 51 | |
2,700 | Qol Holdings Co. Ltd. (Japan) | 22 | |
4,600 | Valor Holdings Co. Ltd. (Japan) | 53 | |
729 | |||
FOOD PRODUCTS—1.6% | |||
900 | Bourbon Corp. (Japan) | 13 | |
1,500,000 | China Starch Holdings Ltd. (Hong Kong)* | 34 | |
39,400 | Delfi Ltd. (Singapore) | 20 | |
121 | Dongwon Industries Co. Ltd. (South Korea) | 20 | |
18,055 | Finsbury Food Group plc (United Kingdom) | 19 | |
42,200 | Hap Seng Plantations Holdings BHD (Malaysia) | 18 | |
2,497 | Industrial Milk Co. (Luxembourg) | 8 | |
39,600 | Innoprise Plantations BHD (Malaysia)* | 13 | |
75,900 | JBS SA (Brazil) | 367 | |
4,178 | JDE Peet's NV (Netherlands)* | 120 | |
58,700 | Kawan Food BHD (Malaysia)* | 27 | |
39,800 | Kim Loong Resources BHD (Malaysia) | 14 | |
900 | Maeil Holdings Co. Ltd. (South Korea) | 5 | |
9,500 | Meiji Holdings Co. Ltd. (Japan)* | 391 | |
1,760 | Nestlé SA (Switzerland) | 192 | |
119 | Neto ME Holdings Ltd. (Israel)* | 5 | |
6,397 | PGG Wrightson Ltd. (New Zealand)* | 15 | |
376,800 | PT Salim Ivomas Pratama TBK (Indonesia) | 10 | |
12,189 | RCL Foods Ltd. (South Africa) | 7 | |
27,953 | Ridley Corp. Ltd. (Australia) | 37 | |
2,400 | S Foods Inc. (Japan) | 44 | |
1,562 | Sajodaerim Corp. (South Korea) | 26 | |
103,800 | Sarawak Plantation BHD (Malaysia) | 49 | |
6,284 | Seeka Ltd. (New Zealand) | 13 | |
1,467 | |||
GAS UTILITIES—0.0% | |||
4,400 | Hiroshima Gas Co. Ltd. (Japan) | 10 | |
HEALTH CARE EQUIPMENT & SUPPLIES—1.8% | |||
4,312 | Carl Zeiss Meditec AG (Germany) | 522 | |
763 | Demant AS (Denmark)* | 21 | |
1,100 | Fukuda Denshi Co. Ltd. (Japan) | 58 | |
924 | Ion Beam Applications (Belgium) | 13 | |
5,000 | JMS Co. Ltd. (Japan) | 18 | |
36 | Paul Hartmann AG (Germany) | 8 | |
2,264 | Sonova Holding AG (Switzerland) | 535 |
105
Harbor Overseas Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES—Continued | |||
4,100 | Straumann Holding AG (Switzerland) | $390 | |
2,969 | Viemed Healthcare Inc. (Canada)* | 19 | |
1,584 | |||
HEALTH CARE PROVIDERS & SERVICES—0.1% | |||
494 | Ilex Medical Ltd. (Israel) | 12 | |
2,000 | Japan Medical Dynamic Marketing Inc. (Japan)* | 16 | |
60,000 | Ladprao General Hospital NVDR (Thailand)* | 9 | |
6,322 | Oriola Corp. Class A (Finland) | 12 | |
951 | Oriola OYJ (Finland) | 2 | |
63,000 | Ratchaphruek Hospital PCL NVDR (Thailand) | 10 | |
54,600 | Srivichai Vejvivat PCL NVDR (Thailand)* | 13 | |
74 | |||
HEALTH CARE TECHNOLOGY—0.0% | |||
2,101 | Ascom Holding AG (Switzerland) | 13 | |
300 | Software Service Inc. (Japan)* | 16 | |
29 | |||
HOTELS, RESTAURANTS & LEISURE—1.1% | |||
81,600 | After You PCL NVDR (Thailand)* | 24 | |
900 | Amiyaki Tei Co. Ltd. (Japan)* | 18 | |
26,652 | Aristocrat Leisure Ltd. (Australia) | 633 | |
169,000 | Berjaya Food BHD (Malaysia) | 33 | |
4,523 | Betsson AB (Sweden)* | 33 | |
404,300 | Champ Resto Indonesia TBK PT (Indonesia)* | 49 | |
10,222 | Cie Des Alpes SA (France)* | 126 | |
83,100 | Jaya Bersama Indo TBK PT (Indonesia)* | —x | |
50,200 | Kimly Ltd. (Singapore) | 12 | |
500 | MTY Food Group Inc. (Canada)* | 20 | |
1,274 | SkiStar AB (Sweden)* | 12 | |
960 | |||
HOUSEHOLD DURABLES—0.1% | |||
5 | Dom Development SA (Poland) | — | |
1,500 | FJ Next Holdings Co. Ltd. (Japan) | 10 | |
3,800 | JANOME Corp. (Japan)* | 16 | |
2,700 | Nihon Trim Co. Ltd. (Japan)* | 43 | |
1,479 | Nikon Corp. (Japan) | 14 | |
698 | Surteco Group SE (Germany) | 13 | |
12,780 | Toya SA (Poland) | 13 | |
109 | |||
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS—1.0% | |||
3,220 | 7C Solarparken AG (Germany) | 14 | |
294,100 | BCPG PCL NVDR (Thailand)* | 74 | |
22,104 | RWE AG (Germany) | 851 | |
939 | |||
INDUSTRIAL CONGLOMERATES—0.1% | |||
2,561 | Industries Qatar QSC (Qatar) | 11 | |
12,700 | Nisshinbo Holdings Inc. (Japan) | 88 | |
14,034 | Qatar Industrial Manufacturing Co QSC (Qatar) | 14 | |
113 | |||
INSURANCE—5.1% | |||
7,700 | Allianz Malaysia BHD (Malaysia) | 21 | |
7,438 | Chesnara plc (United Kingdom)* | 23 | |
69,300 | Dai-ichi Life Holdings Inc. (Japan) | 1,101 | |
21,600 | Japan Post Insurance Co. Ltd. (Japan) | 320 | |
15,500 | MS&AD Insurance Group Holdings Inc. (Japan) | 410 | |
29,021 | NN Group NV (Netherlands) | 1,229 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
INSURANCE—Continued | |||
145,600 | PT Asuransi Tugu Pratama Indonesia TBK (Indonesia)* | $22 | |
9,500 | Sompo Holdings Inc. (Japan) | 396 | |
8,600 | T&D Holdings Inc. (Japan) | 85 | |
55,500 | Tokio Marine Holdings Inc. (Japan) | 1,005 | |
4,612 | |||
INTERNET & DIRECT MARKETING RETAIL—0.0% | |||
11,000 | Hai-O Enterprise BHD (Malaysia)* | 3 | |
IT SERVICES—1.5% | |||
545 | Alten SA (France) | 64 | |
3,286 | B3 Consulting Group AB (Sweden) | 44 | |
1,400 | Business Brain Showa-Ota Inc. (Japan)* | 14 | |
800 | CDS Co. Ltd. (Japan) | 10 | |
819 | Comarch SA (Poland) | 24 | |
41,007 | Computershare Ltd. (Australia) | 664 | |
4,200 | Core Corp. (Japan) | 42 | |
712 | DATAGROUP SE (Germany)* | 39 | |
266 | Digia OYJ (Finland) | 1 | |
2,800 | Fujitsu Ltd. (Japan) | 322 | |
1,300 | Himacs Ltd. (Japan) | 13 | |
2,600 | ID Holdings Corp. (Japan)* | 16 | |
1,800 | I-NET Corp. (Japan) | 16 | |
1,500 | oRo Co. Ltd. (Japan)* | 17 | |
571 | Sopra Steria Group SACA (France)* | 75 | |
1,500 | VINX Corp. (Japan) | 16 | |
700 | Zuken Inc. (Japan) | 16 | |
1,393 | |||
LEISURE PRODUCTS—0.2% | |||
2,400 | Furyu Corp. (Japan)* | 19 | |
30,798 | ME Group International plc (United Kingdom)* | 33 | |
1,500 | Sankyo Co. Ltd. (Japan) | 49 | |
3,600 | TOMY Co. Ltd. (Japan) | 32 | |
133 | |||
LIFE SCIENCES TOOLS & SERVICES—1.7% | |||
707 | Eurofins Scientific SE (France) | 45 | |
24,814 | Qiagen NV (Netherlands)* | 1,081 | |
1,305 | Sartorius Stedim Biotech (France) | 414 | |
1,540 | |||
MACHINERY—0.8% | |||
3,623 | Andritz AG (Austria) | 168 | |
7,300 | Daihatsu Diesel Manufacturing Co Ltd. (Japan) | 27 | |
13,379 | Deutz AG (Germany)* | 51 | |
268 | Exel Industries (France) | 11 | |
26,712 | Famur SA (Poland)* | 17 | |
3,300 | Freund Corp. (Japan) | 16 | |
4,800 | Fuji Corp. (Japan)* | 63 | |
54 | Groupe Gorge SA (France)* | 1 | |
7,500 | Hino Motors Ltd. (Japan)* | 31 | |
1,300 | Nichias Corp. (Japan) | 20 | |
8,800 | Nippon Thompson Co. Ltd. (Japan) | 31 | |
2,200 | Nitto Kohki Co. Ltd. (Japan)* | 23 | |
2,900 | OKUMA Corp. (Japan)* | ��� 97 | |
371 | Palfinger AG (Austria) | 9 | |
3,914 | Prodways Group SA (France)* | 14 | |
135 | Rational AG (Germany) | 76 | |
600 | Rix Corp. (Japan) | 8 | |
4,700 | Sodick Co. Ltd. (Japan)* | 25 | |
151,800 | SUSCO PCL NVDR (Thailand)* | 18 |
106
Harbor Overseas Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
MACHINERY—Continued | |||
2,200 | Tokyo Keiki Inc. (Japan) | $19 | |
3,000 | Toyo Machinery & Metal Co. Ltd. (Japan) | 11 | |
736 | |||
MARINE—2.6% | |||
410 | AP Moller - Maersk AS (Denmark) | 857 | |
7,393 | Belships ASA (Norway)* | 10 | |
2,544 | Kuehne + Nagel International AG (Switzerland) | 542 | |
1,100 | Nippon Concept Corp. (Japan) | 13 | |
310,200 | Samudera Shipping Line Ltd. (Singapore)* | 189 | |
400,000 | SITC International Holdings Co. Ltd. (Hong Kong) | 655 | |
1,029 | Stolt-Nielsen Ltd. (Bermuda)* | 25 | |
2,303 | Western Bulk Chartering AS (Norway)* | 8 | |
1,724 | Wilson ASA (Norway) | 11 | |
2,310 | |||
MEDIA—0.2% | |||
4,842 | Bloomsbury Publishing plc (United Kingdom) | 26 | |
1,900 | FAN Communications Inc. (Japan) | 6 | |
85 | GTN Ltd. (Australia)* | — | |
2,451 | HighCo SA (France) | 11 | |
53,310 | NZME Ltd. (New Zealand) | 34 | |
302,000 | Pico Far East Holdings Ltd. (Hong Kong) | 41 | |
6,600 | Proto Corp. (Japan) | 52 | |
33,805 | PRT Co. Ltd. (Australia)* | —x | |
329 | Publicis Groupe SA (France) | 18 | |
188 | |||
METALS & MINING—8.1% | |||
6,400 | Algoma Steel Group Inc. (Canada) | 43 | |
5,329 | Anglo American plc (United Kingdom) | 160 | |
22,947 | Base Resources Ltd. (Australia) | 4 | |
72,963 | BHP Group Ltd. (Australia) | 1,753 | |
26,296 | Boryszew SA (Poland)* | 24 | |
19,700 | Dundee Precious Metals Inc. (Canada) | 89 | |
10,211 | Evolution Mining Ltd. (Australia) | 13 | |
17,744 | Gem Diamonds Ltd. (United Kingdom) | 6 | |
29,499 | Gerdau SA ADR (Brazil)1 | 147 | |
159,406 | Glencore plc (United Kingdom)* | 914 | |
74,600 | Grange Resources Ltd. (Australia) | 30 | |
23,064 | IGO Ltd. (Australia) | 226 | |
105,087 | Iluka Resources Ltd. (Australia) | 582 | |
41,758 | Lynas Rare Earths Ltd. (Australia)* | 223 | |
2,448 | Major Drilling Group International Inc (Canada)* | 15 | |
14,616 | Mineral Resources Ltd. (Australia)* | 685 | |
1,300 | Mitsui Mining & Smelting Co. Ltd. (Japan)* | 26 | |
11,749 | New Century Resources Ltd. (Australia)* | 8 | |
39,601 | Norsk Hydro ASA (Norway) | 251 | |
35,973 | Perenti Global Ltd. (Australia)* | 22 | |
65,653 | Perseus Mining Ltd. (Australia) | 76 | |
166,672 | Pilbara Minerals Ltd. (Australia)* | 542 | |
686 | Rio Tinto plc ADR (United Kingdom)1 | 37 | |
93,363 | Sierra Rutile Holdings Ltd. (Australia)* | 12 | |
97,730 | Silver Lake Resources Ltd. (Australia)* | 69 | |
393,422 | South32 Ltd. (Australia) | 903 | |
140 | Stalprodukt SA (Poland) | 6 | |
9,600 | Stelco Holdings Inc. (Canada) | 242 | |
19,100 | Torex Gold Resources Inc. (Canada)* | 130 | |
5,500 | Tree Island Steel Ltd. (Canada) | 14 | |
143,000 | Xiwang Special Steel Co. Ltd. (Hong Kong)* | 2 | |
1,873 | Zimplats Holdings Ltd. (Australia) | 31 | |
7,285 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
MULTILINE RETAIL—0.1% | |||
11,800 | Ryohin Keikaku Co. Ltd. (Japan)* | $111 | |
MULTI-UTILITIES—1.6% | |||
100,802 | Engie SA (France) | 1,310 | |
45,600 | Sembcorp. Industries Ltd. (Singapore)* | 94 | |
1,058 | Telecom Plus plc (United Kingdom) | 25 | |
1,429 | |||
OIL, GAS & CONSUMABLE FUELS—9.4% | |||
250,300 | ABM Investama TBK PT (Indonesia) | 63 | |
1,395,100 | Adaro Energy TBK PT (Indonesia) | 356 | |
1,443,900 | AKR Corporindo TBK PT (Indonesia) | 144 | |
942,600 | Banpu plc NVDR (Thailand)* | 310 | |
352,800 | Baramulti Suksessarana TBK PT (Indonesia)* | 102 | |
10,400 | Bayan Resources TBK PT (Indonesia) | 49 | |
3,300 | Baytex Energy Corp. (Canada)* | 18 | |
14,300 | Birchcliff Energy Ltd. (Canada) | 111 | |
24,500 | Bonterra Energy Corp. (Canada)* | 160 | |
39,608 | BP plc ADR (United Kingdom)1 | 1,318 | |
214,500 | Bukit Asam TBK PT (Indonesia) | 54 | |
13,600 | CES Energy Solutions Corp. (Canada) | 29 | |
53,300 | Crescent Point Energy Corp. (Canada) | 417 | |
7,000 | Crew Energy Inc. (Canada)* | 31 | |
27,944 | DNO ASA (Norway)* | 21 | |
17,000 | Enerplus Corp. (Canada)* | 295 | |
29,686 | Equinor ASA (Norway) | 1,082 | |
71 | Esso SA Francaise (France)* | 4 | |
337,600 | Esso Thailand PCL NVDR (Thailand)* | 129 | |
26,200 | Gear Energy Ltd. (Canada) | 26 | |
32,900 | Golden Energy Mines TBK PT (Indonesia)* | 16 | |
3,453 | Hargreaves Services plc (United Kingdom) | 15 | |
344,350 | Horizon Oil Ltd. (Australia)* | 29 | |
19,700 | InPlay Oil Corp. (Canada)* | 49 | |
12,817 | International Petroleum Corp. (Canada)* | 127 | |
18,000 | Kelt Exploration Ltd. (Canada)* | 78 | |
162,500 | Lanna Resources PCL NVDR (Thailand)* | 79 | |
15,717 | Lubelski Wegiel Bogdanka SA (Poland) | 110 | |
20,900 | MEG Energy Corp. (Canada)* | 312 | |
4,409 | New Hope Corp. Ltd. (Australia) | 16 | |
55,295 | New Zealand Refining Co. Ltd. (New Zealand)* | 47 | |
8,700 | NuVista Energy Ltd. (Canada)* | 86 | |
10,529 | OMV AG (Austria) | 485 | |
8,400 | Parex Resources Inc. (Canada) | 128 | |
2,500 | Pegasus Sewing Machine Manufacturing Co. Ltd. (Japan)* | 14 | |
114,000 | PetroChina Co. Ltd. (China) | 44 | |
3,079 | Petroleo Brasileiro SA ADR (Brazil)*,1 | 39 | |
26,000 | Peyto Exploration & Development Corp. (Canada) | 243 | |
33,000 | Pine Cliff Energy Ltd. (Canada) | 41 | |
182,800 | PT Indika Energy TBK (Indonesia)* | 38 | |
52,200 | PT Prima Andalan Mandiri TBK (Indonesia)* | 24 | |
29,600 | PT United Tractors TBK (Indonesia) | 61 | |
37,200 | PTT Exploration & Production PCL NVDR (Thailand) | 178 | |
892 | RAK Petroleum plc (United Kingdom)* | —x | |
3,637 | Shell plc (United Kingdom)* | 101 | |
10,883 | Stanmore Resources Ltd. (Australia)* | 20 | |
254,800 | Star Petroleum Refining PCL NVDR (Thailand)* | 80 | |
40,969 | TerraCom Ltd. (Australia)* | 23 | |
119,200 | Thai Oil PCL NVDR (Thailand)* | 171 | |
10,700 | Tourmaline Oil Corp. (Canada) | 603 | |
83,223 | Whitehaven Coal Ltd. (Australia)* | 483 | |
8,459 |
107
Harbor Overseas Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
PAPER & FOREST PRODUCTS—0.2% | |||
15,838 | Arctic Paper SA (Poland)* | $74 | |
2,600 | Daiken Corp. (Japan) | 35 | |
1,311 | Midway Ltd. (Australia)* | 1 | |
7,200 | Mitsubishi Paper Mills Ltd. (Japan) | 13 | |
14,420 | Navigator Co. SA (Portugal) | 55 | |
25,200 | TA Ann Holdings BHD (Malaysia) | 21 | |
25,869 | Western Forest Products Inc. (Canada) | 23 | |
222 | |||
PERSONAL PRODUCTS—0.0% | |||
2,600 | Mandom Corp. (Japan)* | 26 | |
PHARMACEUTICALS—12.8% | |||
26,020 | Bayer AG (Germany) | 1,368 | |
36,975 | Cronos Australia Ltd. (Australia)* | 21 | |
5,082 | GSK plc (United Kingdom) | 83 | |
11,676 | GSK plc ADR (United Kingdom)1 | 387 | |
1,436 | Ipsen SA (France) | 148 | |
6,515 | Merck KGaA (Germany) | 1,062 | |
22,022 | Novartis AG (Switzerland) | 1,781 | |
20,268 | Novo Nordisk AS (Denmark) | 2,204 | |
284 | Orion OYJ Class A (Finland) | 13 | |
21,200 | Otsuka Holdings Co. Ltd. (Japan) | 680 | |
18,448 | Recordati Industria Chimica E Farmaceutica SpA (Italy) | 693 | |
9,106 | Roche Holding AG (Switzerland) | 3,021 | |
723 | Sanofi (France)* | 62 | |
5,600 | Seikagaku Corp. (Japan) | 34 | |
701 | Vetoquinol SA (France) | 58 | |
11,615 | |||
PROFESSIONAL SERVICES—4.4% | |||
600 | Abist Co. Ltd. (Japan) | 11 | |
2,500 | Asia Air Survey Co. Ltd. (Japan)* | 13 | |
3,529 | Brunel International NV (Netherlands) | 33 | |
1,800 | Creek & River Co. Ltd. (Japan)* | 25 | |
5,300 | en Japan Inc. (Japan)* | 92 | |
1,745 | Impellam Group plc (United Kingdom)* | 12 | |
1,100 | JAC Recruitment Co. Ltd. (Japan) | 19 | |
2,600 | Matching Service Japan Co. Ltd. (Japan)* | 14 | |
2,400 | Meitec Corp. (Japan)* | 40 | |
11,864 | PageGroup plc (United Kingdom)* | 57 | |
2,337 | Poolia AB (Sweden) | 2 | |
8,800 | Recruit Holdings Co. Ltd. (Japan) | 271 | |
64,213 | RELX plc (United Kingdom) | 1,725 | |
5,300 | Sigmaxyz Holdings Inc. (Japan) | 43 | |
8,500 | Space Co. Ltd. (Japan) | 50 | |
3,412 | SThree plc (United Kingdom) | 15 | |
2,700 | UT Group Co. Ltd. (Japan)* | 44 | |
14,260 | Wolters Kluwer NV (Netherlands) | 1,515 | |
1,600 | YAMADA Consulting Group Co. Ltd. (Japan)* | 13 | |
3,994 | |||
REAL ESTATE MANAGEMENT & DEVELOPMENT—2.7% | |||
3,909 | Almogim Holdings Ltd. (Israel)* | 7 | |
7,700 | Daito Trust Construction Co. Ltd. (Japan) | 762 | |
14,800 | Daiwa House Industry Co. Ltd. (Japan) | 298 | |
23,367 | Emaar Development PJSC (United Arab Emirates)* | 27 | |
228,758 | Emaar Properties PJSC (United Arab Emirates) | 378 | |
116,681 | Ever Reach Group Holdings Co. Ltd. (Hong Kong) | 5 | |
998 | K Wah International Holdings Ltd. (Hong Kong) | — | |
75,300 | KSL Holdings BHD (Malaysia)* | 12 | |
100 | Mainstreet Equity Corp. (Canada)* | 8 | |
2,077 | Melcor Developments Ltd. (Canada) | 16 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT—Continued | |||
20,963 | Modern Land China Co. Ltd. (Hong Kong)* | $—x | |
11,500 | Propnex Ltd. (Singapore) | 11 | |
41,000 | Sun Hung KAI Properties Ltd. (Hong Kong)* | 441 | |
65,500 | Swire Pacific Ltd. (Hong Kong) | 434 | |
2,399 | |||
ROAD & RAIL—0.3% | |||
4,400 | Alps Logistics Co. Ltd. (Japan) | 32 | |
1,900 | Chilled & Frozen Logistics Holdings Co. Ltd. (Japan) | 15 | |
50,609 | FirstGroup plc (United Kingdom)* | 61 | |
3,400 | Mullen Group Ltd. (Canada)* | 34 | |
2,800 | Sankyu Inc. (Japan) | 84 | |
9,300 | Seino Holdings Co. Ltd. (Japan) | 72 | |
298 | |||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—0.1% | |||
700 | MegaChips Corp. (Japan) | 12 | |
100 | SCREEN Holdings Co. Ltd. (Japan) | 6 | |
1,500 | Tokyo Seimitsu Co. Ltd. (Japan) | 45 | |
63 | |||
SOFTWARE—2.1% | |||
2,218 | Atlassian Corp. plc (United States)* | 450 | |
4,983 | Check Point Software Technologies Ltd. (Israel)* | 644 | |
4,085 | Enghouse Systems Ltd. (Canada)* | 91 | |
97 | Esker SA (France) | 13 | |
5,400 | ISB Corp. (Japan) | 47 | |
1,521 | LiveChat Software SA (Poland)* | 35 | |
600 | NTT Data Intramart Corp. (Japan) | 6 | |
1,953 | Objective Corp. Ltd. (Australia)* | 18 | |
5,096 | ReadyTech Holdings Ltd. (Australia)* | 11 | |
38,155 | Sage Group plc (United Kingdom) | 318 | |
1,800 | Soliton Systems KK (Japan)* | 13 | |
13,642 | Symbio Holdings Ltd. (Australia) | 28 | |
1,801 | Telcoware Co. Ltd. (South Korea) | 11 | |
6,925 | WiseTech Global Ltd. (Australia) | 256 | |
1,941 | |||
SPECIALTY RETAIL—1.8% | |||
6,743 | Autosports Group Ltd. (Australia) | 8 | |
1,100 | BMTC Group Inc. (Canada) | 10 | |
3,499 | Briscoe Group Ltd. (New Zealand) | 10 | |
21,823 | Carasso Motors Ltd. (Israel) | 137 | |
441 | Castro Model Ltd. (Israel)* | 11 | |
888 | Delta Israel Brands Ltd. (Israel) | 16 | |
16,235 | Frasers Group plc (United Kingdom)* | 120 | |
4,300 | Fuji Corp. (Japan) | 37 | |
1,100 | Himaraya Co. Ltd. (Japan)* | 7 | |
47,999 | Industria de Diseno Textil SA (Spain)2 | 1,089 | |
2,807 | Mobilezone Holding AG (Switzerland)* | 44 | |
6,986 | Naturhouse Health SAU (Spain)* | 11 | |
30,600 | Padini Holdings BHD (Malaysia)* | 22 | |
4,300 | Pet Valu Holdings Ltd. (Canada)* | 116 | |
92,600 | PT Map Aktif Adiperkasa (Indonesia)* | 19 | |
70 | Samse SA (France) | 12 | |
1,669 | |||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—2.1% | |||
15,900 | Brother Industries Ltd. (Japan) | 271 | |
29,300 | Canon Inc. (Japan) | 621 | |
1,712 | EVS Broadcast Equipment SA (Belgium) | 35 | |
7,710 | Gefran SpA (Italy) | 65 | |
4,600 | Maxell Ltd. (Japan) | 38 |
108
Harbor Overseas Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS—Continued | |||
22,000 | Ricoh Co. Ltd. (Japan) | $161 | |
49,100 | Seiko Epson Corp. (Japan) | 667 | |
1,858 | |||
TEXTILES, APPAREL & LUXURY GOODS—0.4% | |||
797 | Bijou Brigitte AG (Germany)* | 27 | |
80 | Hermes International (France)* | 104 | |
500 | Jichodo Co. Ltd. (Japan)* | 20 | |
210,000 | Justin Allen Holdings Ltd. (China)* | 18 | |
94,100 | MC Group PCL NVDR (Thailand) | 25 | |
1,621 | Pandora AS (Denmark) | 85 | |
600 | Rhythm Co. Ltd. (Japan) | 7 | |
42,600 | Sabina PCL NVDR (Thailand) | 28 | |
34,500 | Texhong Textile Group Ltd. (Hong Kong) | 22 | |
836 | Van de Velde NV (Belgium) | 26 | |
362 | |||
THRIFTS & MORTGAGE FINANCE—0.0% | |||
11,335 | MyState Ltd. (Australia)* | 30 | |
TOBACCO—0.1% | |||
4,600 | Japan Tobacco Inc. (Japan)* | 77 | |
TRADING COMPANIES & DISTRIBUTORS—2.3% | |||
80,000 | APAC Resources Ltd. (Hong Kong)* | 10 | |
9,168 | Ferguson plc (Jersey)* | 1,002 | |
38,601 | Ferreycorp SAA (Peru) | 22 | |
21,800 | Finning International Inc. (Canada) | 464 | |
2,900 | Gecoss Corp. (Japan) | 16 | |
34,252 | Howden Joinery Group plc (United Kingdom) | 202 | |
2,349 | Jacquet Metals SA (France) | 36 | |
2,200 | Kanaden Corp. (Japan) | 16 | |
4,900 | Kanematsu Corp. (Japan) | 48 | |
800 | Nanyo Corp. (Japan) | 10 | |
266,000 | New Times Energy Corp. Ltd. (Bermuda)* | 3 | |
900 | NICE Corp. (Japan) | 8 | |
2,300 | Parker Corp. (Japan) | 8 | |
49,100 | PT Hexindo Adiperkasa TBK (Indonesia)* | 18 | |
2,651 | Rexel SA (France) | 47 | |
11,696 | Travis Perkins plc (United Kingdom) | 110 | |
500 | Tsubakimoto Kogyo Co. Ltd. (Japan) | 13 | |
2,033 | |||
TRANSPORTATION INFRASTRUCTURE—0.4% | |||
341,700 | BTS Rail Mass Transit Growth Infrastructure Fund (Thailand)* | 30 | |
1,087 | Grindrod Shipping Holdings Ltd. (Singapore) | 28 | |
21,500 | Orient Overseas International Ltd. (Hong Kong) | 314 | |
91,000 | Qilu Expressway Co. Ltd. (China) | 22 | |
394 | |||
WIRELESS TELECOMMUNICATION SERVICES—0.4% | |||
11,400 | KDDI Corp. (Japan) | 337 | |
3,400 | Okinawa Cellular Telephone Co. (Japan) | 64 | |
401 | |||
TOTAL COMMON STOCKS | |||
(Cost $92,308) | 87,776 | ||
PREFERRED STOCKS—0.9% | |||
Shares | Value | ||
AUTO COMPONENTS—0.0% | |||
6,114 | Schaeffler AG (Germany) | $31 | |
HEALTH CARE EQUIPMENT & SUPPLIES—0.2% | |||
459 | Sartorius AG (Germany) | 162 | |
HOUSEHOLD DURABLES—0.0% | |||
375 | LG Electronics Inc. (South Korea) | 11 | |
MACHINERY—0.1% | |||
173 | KSB SE & Co. KGaA (Germany) | 55 | |
OIL, GAS & CONSUMABLE FUELS—0.6% | |||
100,000 | Petroleo Brasileiro SA (Brazil) | 577 | |
TOTAL PREFERRED STOCKS | |||
(Cost $934) | 835 | ||
SHORT-TERM INVESTMENTS—1.2% | |||
(Cost $1,061) | |||
1,061 | State Street Navigator Securities Lending Government Money Market Portfolio (1 day yield of 3.120%)3 | 1,061 | |
TOTAL INVESTMENTS—99.1% | |||
(Cost $94,303) | 89,672 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—0.9% | 788 | ||
TOTAL NET ASSETS—100.0% | $90,460 |
109
Harbor Overseas Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
FAIR VALUE MEASUREMENTS
The following table summarizes the Fund’s investments as of October 31, 2022 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 | $— | $294 | $— | $294 |
Europe | 4,943 | 43,052 | — | 47,995 |
Latin America | 575 | — | — | 575 |
Middle East/Central Asia | 644 | 1,680 | — | 2,324 |
North America | 4,906 | 127 | — | 5,033 |
Pacific Basin | 355 | 31,200 | — | 31,555 |
Preferred Stocks | ||||
Europe | — | 248 | — | 248 |
Latin America | 577 | — | — | 577 |
Pacific Basin | — | 10 | — | 10 |
Short-Term Investments | ||||
Investment Company-Securities Lending Investment Fund | 1,061 | — | — | 1,061 |
Total Investments in Securities......................................................... | $13,061 | $77,611 | $— | $89,672 |
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 year ended October 31, 2022.
Valuation Description | Beginning Balance as of 11/01/2021 (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 10/31/2022 (000s) | Unrealized Gain/(Loss) as of 10/31/2022 (000s) |
Common Stocks | $2 | $— | $— | $— | $— | $(2) | $— | $— | $— | $(13) |
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 | Ending Balance as of 10/31/2022 (000s) | Valuation Technique | Unobservable Input(s) | Input Value(s) |
Investments in Securities | ||||
Common Stocks | ||||
Jaya Bersama Indo TBK PT (Indonesia)* | $ — | Market Approach | Estimated Recovery | IDR 0.00 |
Modern Land China Co. Ltd. (Hong Kong)* | — | Market Approach | Last Traded Price | HKD 0.11 |
$— |
x | Fair valued in accordance with Harbor Funds’ Valuation Procedures |
* | 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 | All or a portion of this security was out on loan as of October 31, 2022. |
3 | Represents the investment of collateral received from securities lending activities |
HKD | Hong Kong Dollar |
IDR | Indonesian Rupiah |
The accompanying notes are an integral part of the Financial Statements.
110
Harbor Small Cap Growth Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
Westfield Capital Management Company, L.P.
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
U.S. equities finished the third quarter of calendar year 2022 on the lows of the year, marking the largest decline during the first nine months of any year since 2002. Indexes turned sharply negative on the heels of higher-than-expected inflation data in August and a stern commitment by the Federal Reserve in Jackson Hole to tamp down inflation, even if it means inflicting some ‘pain’ and job losses on the U.S. economy. The steep trajectory of rate hikes by the U.S. roiled already unsettled markets and forced other central banks across the globe to follow suit or risk having their currencies devalued. Once again, we witnessed most asset classes falling in tandem with one exception being commodities, and even that was largely driven by strong returns in the energy markets. This unusual correlation further strained financial markets and even drove some policy makers to intervene to prevent more widespread disruptions.
Performance
Harbor Small Cap Growth Fund returned -23.72% (Retirement Class), -23.81% (Institutional Class), -24.00% (Administrative Class), and -24.05% (Investor Class) for the twelve-month period ended October 31, 2022, outperforming the Russell 2000® Growth Index, which returned -26.02%. Relative outperformance was broad based with six sectors adding double digits to relative results. Most notable was relative strength in Health Care and Industrials, which offset relative weakness in Materials.
Health Care was the largest contributor to relative performance, adding 248 basis points (“bps”) of relative returns to the Fund. The relative outperformance was broad based with contribution from investments across Biopharma, Health Care Providers & Services, and Health Care Equipment & Supplies. Precision oncology company Turning Point Therapeutics, Inc. was the top relative contributor within the sector. The company released better-than-expected early clinical trial data of their TRIDENT-1 study which highlighted their drug candidate Repotrectinib as a potential best-in-class ROS1+ agent. The results also showed that this agent will be used for a longer duration than initial consensus expectations forecasted, adding to the peak sales potential. This aided in lifting the company’s share price, and our conviction in the name was validated when Bristol Myers Squibb announced they would be acquiring Turning Point for a substantial premium to the stock’s prior closing price. Option Care Health Inc., a provider of home health care solutions, also positively contributed to relative returns. The stock outperformed following a series of strong earnings reports which were well received by the street, especially considering headwinds to the broader Health Care Services space stemming from the tight labor market coupled with ongoing COVID variants.
Industrials was another strong contributor, adding 186 bps to relative results. Within the sector, the Fund’s performance was balanced with both cyclical and more secular industries adding to relative results. Manufacturer of water drainage solutions Advanced Drainage was the top contributor to relative performance within the sector over the period. The stock outperformed after the company reported margins well above expectations, showing investors that they can push through enough pricing increases to offset rising input costs. We continue to favor the stock and feel their price increases should hold as their commercial and construction end markets remain robust, enabling Advanced Drainage to enhance their margin durability moving forward.
Materials was the largest source of relative weakness, costing 180 bps. Ranpak Holdings Corp., a manufacturer of fiber packaging equipment and products, was the top relative detractor over the period. Shares traded lower given the company’s exposure to Russian paper and the European consumer, which was exacerbated by the company’s liquidity and micro-cap status which caused stock movement to be exaggerated. Despite the sell-off, and the downward pressure placed on several similar high-growth, high-quality companies over the period, we continue to favor Ranpak as we believe it has a large market opportunity and strong execution potential.
111
Harbor Small Cap Growth Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $50,000 INVESTMENT
For the period 11/01/2012 through 10/31/2022
The graph compares a $50,000 investment in the Institutional Class shares of the Fund with the performance of the Russell 2000® Growth Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | 10 Years | |||||
Harbor Small Cap Growth Fund | ||||||
Retirement Class1 | -23.72% | 9.37% | 12.37% | |||
Institutional Class | -23.81 | 9.27 | 12.31 | |||
Administrative Class | -24.00 | 8.99 | 12.00 | |||
Investor Class | -24.05 | 8.88 | 11.91 | |||
Comparative Index | ||||||
Russell 2000® Growth | -26.02% | 5.17% | 10.15% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.79% (Retirement Class); 0.87% (Institutional Class); 1.12% (Administrative Class); and 1.23% (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 harborcapital.com or by calling 800-422-1050.
Outlook & Strategy
With the likelihood of a U.S. recession seeming all but inevitable, the pivotal question is whether the Federal Reserve will pause or pivot their hawkish stance considering slowing economic activity, moderating inflation, and global market instability. Some consumer prices like gasoline have moderated while others like shelter are likely to remain high for some time. We expect a more gradual decline in inflation than many are currently forecasting, although expectations appear to be increasingly moving in our direction. Looking at the earnings outlook, the environment remains challenging with market estimates still likely too high among forecasters. Slowing spending and job growth combined with growing margin pressures and building inventories is a recipe for an economic slowdown. Combine that with rising funding costs due to interest rates and it is hard to envision an outcome that doesn’t propel the economy into a recession in 2023. Based on our quality bias and valuation discipline, we believe we should fare better than high-growth, higher risk, long duration options in this type of an environment as equity markets continue to find their footing and juggle tightening financial conditions not seen in over a decade.
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.
112
Harbor Small Cap Growth Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
SECTOR ALLOCATION (% of investments) - Unaudited
Portfolio of Investments
Value and Cost in Thousands
COMMON STOCKS—97.8% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—1.8% | |||
289,116 | Hexcel Corp. | $16,104 | |
BANKS—2.4% | |||
390,759 | First Interstate BancSystem Inc. | 17,822 | |
77,777 | Silvergate Capital Corp.* | 4,415 | |
22,237 | |||
BIOTECHNOLOGY—9.3% | |||
903,571 | Alkermes plc (Ireland)* | 20,511 | |
88,861 | Apellis Pharmaceuticals Inc.* | 5,375 | |
237,420 | Arcutis Biotherapeutics Inc.* | 4,198 | |
209,700 | Ascendis Pharma AS ADR (Denmark)*,1 | 24,116 | |
160,926 | Blueprint Medicines Corp.* | 8,342 | |
304,454 | Fate Therapeutics Inc.* | 6,369 | |
25,480 | Karuna Therapeutics Inc.* | 5,589 | |
554,575 | Rocket Pharmaceuticals Inc.* | 10,348 | |
84,848 | |||
BUILDING PRODUCTS—3.1% | |||
243,835 | Advanced Drainage Systems Inc. | 28,256 | |
CAPITAL MARKETS—1.3% | |||
386,847 | StepStone Group Inc. | 11,420 | |
CHEMICALS—2.8% | |||
399,190 | Avient Corp. | 13,768 | |
507,870 | Axalta Coating Systems Ltd. (Bermuda)* | 11,844 | |
25,612 | |||
COMMUNICATIONS EQUIPMENT—1.2% | |||
144,890 | Lumentum Holdings Inc.* | 10,787 | |
CONSTRUCTION & ENGINEERING—2.6% | |||
567,779 | Willscot Mobile Mini Holdings Corp.* | 24,148 | |
CONTAINERS & PACKAGING—0.2% | |||
570,149 | Ranpak Holdings Corp.* | 2,167 | |
ELECTRICAL EQUIPMENT—5.9% | |||
209,765 | Atkore Inc.* | 19,990 | |
156,079 | Encore Wire Corp. | 21,475 | |
305,290 | Sensata Technologies Holding plc (United Kingdom) | 12,276 | |
53,741 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
ENERGY EQUIPMENT & SERVICES—1.6% | |||
1,437,910 | NexTier Oilfield Solutions Inc.* | $14,494 | |
ENTERTAINMENT—1.5% | |||
633,269 | Endeavor Group Holdings Inc.* | 13,831 | |
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—5.9% | |||
618,640 | American Assets Trust Inc. | 17,000 | |
48,880 | Innovative Industrial Proper | 5,284 | |
545,490 | Spirit Realty Capital Inc. | 21,182 | |
563,520 | UMH Properties Inc. | 9,884 | |
53,350 | |||
HEALTH CARE EQUIPMENT & SUPPLIES—6.3% | |||
155,700 | Haemonetics Corp.* | 13,227 | |
68,620 | Inspire Medical Systems Inc.* | 13,377 | |
261,950 | Lantheus Holdings Inc.* | 19,382 | |
211,790 | Tandem Diabetes Care Inc.* | 11,892 | |
57,878 | |||
HEALTH CARE PROVIDERS & SERVICES—4.1% | |||
163,714 | Amedisys Inc.* | 15,977 | |
707,487 | Option Care Health Inc.* | 21,408 | |
37,385 | |||
HOTELS, RESTAURANTS & LEISURE—4.7% | |||
111,260 | Churchill Downs Inc. | 23,132 | |
124,010 | Wingstop Inc. | 19,642 | |
42,774 | |||
INSURANCE—3.9% | |||
354,032 | BRP Group Inc.* | 10,037 | |
144,205 | Palomar Holdings Inc.* | 12,828 | |
87,780 | Primerica Inc. | 12,702 | |
35,567 | |||
IT SERVICES—5.2% | |||
712,688 | Flywire Corp.* | 15,644 | |
418,000 | Shift4 Payments Inc.* | 19,215 | |
151,708 | WNS Holdings Ltd. ADR (India)*,1 | 13,059 | |
47,918 | |||
LEISURE PRODUCTS—1.2% | |||
160,933 | BRP Inc. (Canada) | 10,758 |
113
Harbor Small Cap Growth Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
LIFE SCIENCES TOOLS & SERVICES—2.3% | |||
224,330 | Azenta Inc. | $9,960 | |
31,851 | Bio-Rad Laboratories Inc.* | 11,203 | |
21,163 | |||
MACHINERY—6.0% | |||
88,480 | Chart Industries Inc.* | 19,720 | |
240,354 | ITT Inc. | 18,361 | |
121,220 | Lincoln Electric Holdings Inc. | 17,213 | |
55,294 | |||
MULTILINE RETAIL—1.8% | |||
300,260 | Ollie's Bargain Outlet Holdings Inc.* | 16,814 | |
OIL, GAS & CONSUMABLE FUELS—4.6% | |||
496,020 | Northern Oil And Gas Inc. | 16,934 | |
342,760 | PDC Energy Inc. | 24,727 | |
41,661 | |||
PHARMACEUTICALS—4.2% | |||
1,899,802 | Innoviva Inc.* | 25,761 | |
246,621 | Pacira BioSciences Inc.* | 12,765 | |
38,526 | |||
ROAD & RAIL—2.1% | |||
98,580 | Saia Inc.* | 19,604 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—3.7% | |||
163,731 | Lattice Semiconductor Corp.* | 7,942 | |
166,889 | Macom Technology Solutions Holdings Inc.* | 9,658 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—Continued | |||
137,211 | MaxLinear Inc.* | $4,237 | |
146,302 | MKS Instruments Inc. | 12,019 | |
33,856 | |||
SOFTWARE—6.0% | |||
90,490 | Blackline Inc.* | 5,068 | |
300,960 | Braze Inc.* | 8,911 | |
176,950 | Coupa Software Inc.* | 9,419 | |
1,203,839 | Samsara Inc.* | 14,819 | |
468,160 | Smartsheet Inc.* | 16,348 | |
54,565 | |||
SPECIALTY RETAIL—2.1% | |||
529,465 | National Vision Holdings Inc.* | 19,611 | |
TOTAL COMMON STOCKS | |||
(Cost $915,181) | 894,369 | ||
TOTAL INVESTMENTS—97.8% | |||
(Cost $915,181) | 894,369 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—2.2% | 20,295 | ||
TOTAL NET ASSETS—100.0% | $914,664 |
FAIR VALUE MEASUREMENTS
All investments as of October 31, 2022 (as disclosed in the preceding Portfolio of Investments) were classified as Level 1. There were no Level 3 investments as of October 31, 2022 or 2021.
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.
114
Harbor Small Cap Value Fund
Manager’s Commentary (Unaudited)
Manager’s Commentary (Unaudited)
Subadviser
EARNEST Partners LLC
Management’s Discussion of
Fund Performance
Fund Performance
Market Review
The U.S. equity markets, represented by the S&P 500® Index were negative during the 12-months ended October 31, 2022, posting -14.61%. The U.S. small cap market, represented by the Russell 2000 Value® Index (the “Index”), outperformed large cap stocks, yet still declined -10.73% during the period.
Investors continued to focus on the posture of the Federal Reserve (the “Fed”), which was expected to increase the federal funds rate (“Fed Funds Rate”) to stave off generationally high inflation numbers. Following Consumer Price Index (“CPI”) readings of 9.1% in June, 8.5% in July, and 8.3% in August, the Fed reacted by hiking rates by 75 bps for three months in a row to bring the Fed Funds Rate to the range of 3.00% to 3.25%. Fed chair Jerome Powell has been consistent in stating that fighting inflation is the central bank’s main priority following the increased CPI readings and continued to acknowledge that engineering a “soft landing” would be difficult, unwilling to stray from the Fed’s goal of 2% inflation and maximum employment. The central bank is now projecting a Fed Funds Rate between 4.1% and 4.4% at the end of the year, indicating that it expects to continue to hike rates through December. Previously in June, the Fed estimated the rate to hit 3.4% at the end of this year. Over the long-term, the Fed is projecting a rate of 2.5%, in-line with its long-term PCE inflation projections of 2.0%. Following the Federal Reserve’s indications that it would continue increasing rates, the Dollar saw renewed strength against the basket of global currencies. As a result, the Pound, Euro, and Yuan significantly weakened against the U.S. Dollar, which weighed on international equities during the period. Following the sell-off in the Pound to a record low against the U.S. Dollar, the Bank of England immediately restarted bond purchases to stabilize the currency which has fallen from over $2 in 2007 to about $1.10 at the end of the period. Commodities continued to trend down following chaotic trading in the wake of the Russian invasion in Ukraine in February, although continental Europe faces the conundrum of heading into winter without energy security. Lumber futures hit pre-pandemic lows and Crude Oil traded just above where it began the year to about $79 per barrel.
Performance
Harbor Small Cap Value Fund returned -7.16% (Retirement Class), -7.22% (Institutional Class), -7.45% (Administrative Class), and -7.56% (Investor Class) in the year ended October 31, 2022, while the Russell 2000® Value Index returned -10.73%. Despite the broader Index contraction, the EARNEST Partners Small Cap Value strategy was able to protect to the downside and outperformed the Index in the period. While the strategy’s relative underweight to both Communication Services and Real Estate contributed to the relative outperformance, outperformance was also a function of favorable stock selection notably in the Financial and Industrial sectors.
Contributing to performance was Sanmina Corporation. Sanmina is a global electronics manufacturing services provider that serves Original Equipment Manufacturers (OEMs) in technology-driven industries including communication networks and computer hardware and storage. With nearly 80 manufacturing facilities, Sanmina is one of the largest independent manufacturers of printed circuit boards and backplanes. During the period, shares outperformed the benchmark as investors rewarded the company for delivering strong results across business lines. Operating margins also came in at the high-end of the range highlighting the company’s ability to manage costs in a challenging operating environment due to persistent supply chain disruptions. As a global leader in the electronics manufacturing services industry, the market for more complex and integrated component solutions expansion bodes well for Sanmina which is well-positioned to continue benefiting from OEMs outsourcing their advanced product requirements. Given the firm’s operating discipline and strong customer base, Sanmina has further potential to improve margins and drive earnings.
115
Harbor Small Cap Value Fund
Manager’s Commentary—Continued
Manager’s Commentary—Continued
CHANGE IN A $50,000 INVESTMENT
For the period 11/01/2012 through 10/31/2022
The graph compares a $50,000 investment in the Institutional Class shares of the Fund with the performance of the Russell 2000® Value Index. The Fund’s performance assumes the reinvestment of all dividend and capital gain distributions.
TOTAL RETURNS
For the periods ended 10/31/2022
1 Year | Annualized | |||||
5 Years | 10 Years | |||||
Harbor Small Cap Value Fund | ||||||
Retirement Class1 | -7.16% | 6.03% | 11.45% | |||
Institutional Class | -7.22 | 5.94 | 11.39 | |||
Administrative Class | -7.45 | 5.68 | 11.10 | |||
Investor Class | -7.56 | 5.55 | 10.98 | |||
Comparative Index | ||||||
Russell 2000® Value | -10.73% | 5.31% | 9.37% |
As stated in the Fund’s prospectus dated March 1, 2022, the expense ratios were 0.79% (Retirement Class); 0.87% (Institutional Class); 1.12% (Administrative Class); and 1.23% (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 harborcapital.com or by calling 800-422-1050.
Detracting from performance was CONMED Corp., a medical device company focused on the development, manufacture and sale of surgical devices and related equipment. With a global reach, CONMED products are used in a variety of specialty functions including general and orthopedic surgery, gynecology, neurosurgery, thoracic surgery, and gastroenterology. CONMED shares were down in the period despite beating both revenue and earnings per share (“EPS”) estimates. While management remains optimistic about the business environment and growth prospects, full year sales and EPS estimates were lower as a function of mounting foreign exchange pressures, pressures viewed to be transitory in nature. CONMED continues to be well positioned for growth. The company’s exposure to elective procedures continues to recover post-pandemic while it continues to gain market share in a variety of specialty areas that focus on a surgeon’s bespoke needs. Finally, the company continues to identify and execute strategic acquisitions like sports medicine specialist Biorez, creating both organic and acquisitive channels to grow earnings materially over the next several years.
Outlook & Strategy
As of October 31, 2022, the Fund had an overweight in the Industrials and Information Technology sectors and an underweight in Financials, Real Estate, Consumer Staples, Consumer Discretionary, and Utilities. The Fund had a market weight to Energy. The Fund’s relative overweight and underweight positions are an outgrowth of where EARNEST Partners is finding good individual investment opportunities.
In managing the Fund, EARNEST Partners seeks 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.
116
Harbor Small Cap Value Fund
Portfolio of Investments—October 31, 2022
Portfolio of Investments—October 31, 2022
SECTOR ALLOCATION (% of investments) - Unaudited
Portfolio of Investments
Value and Cost in Thousands
COMMON STOCKS—96.1% | |||
Shares | Value | ||
AEROSPACE & DEFENSE—7.4% | |||
762,105 | AAR Corp.* | $33,776 | |
825,809 | Hexcel Corp. | 45,998 | |
374,040 | Moog Inc. | 31,700 | |
998,218 | Parsons Corp.* | 46,796 | |
158,270 | |||
BANKS—12.6% | |||
708,337 | Enterprise Financial Services Corp. | 37,875 | |
828,147 | First Merchants Corp. | 37,184 | |
691,389 | Heartland Financial USA Inc. | 34,099 | |
492,096 | South State Corp. | 44,500 | |
1,089,974 | Trustmark Corp. | 39,860 | |
876,070 | United Bankshares Inc. | 37,102 | |
1,040,297 | United Community Banks | 40,051 | |
270,671 | |||
BIOTECHNOLOGY—1.1% | |||
1,175,886 | Myriad Genetics Inc.* | 24,388 | |
CAPITAL MARKETS—6.0% | |||
712,428 | Houlihan Lokey Inc. | 63,634 | |
281,114 | Raymond James Financial Inc. | 33,211 | |
524,240 | Stifel Financial Corp. | 32,435 | |
129,280 | |||
CHEMICALS—3.7% | |||
607,230 | Cabot Corp. | 44,619 | |
727,623 | Scotts Miracle-Gro Co. | 33,405 | |
78,024 | |||
COMMERCIAL SERVICES & SUPPLIES—4.3% | |||
913,474 | Casella Waste Systems Inc.* | 74,731 | |
2,098,126 | Steelcase Inc. | 16,303 | |
91,034 | |||
CONSUMER FINANCE—1.7% | |||
369,364 | FirstCash Holdings Inc. | 36,364 | |
ELECTRICAL EQUIPMENT—1.4% | |||
449,432 | EnerSys | 29,793 | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—10.9% | |||
367,026 | Advanced Energy Industries Inc. | 28,867 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS—Continued | |||
559,306 | CTS Corp. | $22,104 | |
172,994 | Littelfuse Inc. | 38,102 | |
536,513 | Methode Electronics Inc. | 22,120 | |
399,755 | Plexus Corp.* | 39,336 | |
952,047 | Sanmina Corp.* | 53,362 | |
73,639 | Teledyne Technologies Inc.* | 29,307 | |
233,198 | |||
ENERGY EQUIPMENT & SERVICES—1.5% | |||
2,152,479 | Archrock Inc. | 16,165 | |
334,882 | Core Laboratories NV (Netherlands) | 6,517 | |
464,627 | DMC Global Inc.* | 10,054 | |
32,736 | |||
EQUITY REAL ESTATE INVESTMENT TRUSTS (REITs)—4.1% | |||
1,155,431 | Corporate Office Properties Trust | 30,792 | |
1,517,197 | Pebblebrook Hotel Trust | 24,336 | |
1,036,206 | STAG Industrial Inc. | 32,734 | |
87,862 | |||
FOOD PRODUCTS—3.2% | |||
860,291 | Darling Ingredients Inc.* | 67,516 | |
HEALTH CARE EQUIPMENT & SUPPLIES—1.5% | |||
407,937 | CONMED Corp. | 32,525 | |
HEALTH CARE PROVIDERS & SERVICES—4.6% | |||
2,186,961 | MEDNAX Inc.* | 42,427 | |
156,045 | Molina Healthcare Inc.* | 55,998 | |
98,425 | |||
HOTELS, RESTAURANTS & LEISURE—2.1% | |||
391,561 | Cracker Barrel Old Country Store Inc. | 44,724 | |
HOUSEHOLD DURABLES—1.4% | |||
386,313 | Meritage Homes Corp.* | 29,422 | |
INSURANCE—4.0% | |||
551,124 | Horace Mann Educators Corp. | 21,747 | |
344,233 | Reinsurance Group of America Inc. | 50,661 | |
463,458 | United Fire Group Inc. | 12,560 | |
84,968 |
117
Harbor Small Cap Value Fund
Portfolio of Investments—Continued
Portfolio of Investments—Continued
Value and Cost in Thousands
COMMON STOCKS—Continued | |||
Shares | Value | ||
IT SERVICES—1.0% | |||
3,840,331 | Sabre Corp.* | $22,312 | |
MACHINERY—11.6% | |||
464,627 | Albany International Corp. | 42,569 | |
458,516 | Altra Industrial Motion Corp. | 27,575 | |
1,152,509 | Flowserve Corp.* | 33,054 | |
679,700 | Franklin Electric Co. Inc. | 55,695 | |
720,610 | SPX Technologies Inc.* | 47,445 | |
598,463 | Timken Co. | 42,664 | |
249,002 | |||
PHARMACEUTICALS—1.8% | |||
589,697 | Catalent Inc.* | 38,761 | |
ROAD & RAIL—1.3% | |||
357,112 | Ryder System Inc. | 28,751 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—4.3% | |||
368,717 | Amkor Technology Inc. | 7,666 | |
457,027 | Diodes Inc.* | 32,755 | |
275,270 | Entegris Inc. | 21,840 | |
1,497,326 | FormFactor Inc.* | 30,261 | |
92,522 |
COMMON STOCKS—Continued | |||
Shares | Value | ||
SOFTWARE—1.9% | |||
1,364,075 | Box Inc.* | $39,626 | |
TEXTILES, APPAREL & LUXURY GOODS—0.8% | |||
1,038,544 | Wolverine World Wide Inc. | 17,790 | |
TRADING COMPANIES & DISTRIBUTORS—1.9% | |||
379,300 | GATX Corp. | 39,717 | |
TOTAL COMMON STOCKS | |||
(Cost $1,457,956) | 2,057,681 | ||
TOTAL INVESTMENTS—96.1% | |||
(Cost $1,457,956) | 2,057,681 | ||
CASH AND OTHER ASSETS, LESS LIABILITIES—3.9% | 83,823 | ||
TOTAL NET ASSETS—100.0% | $2,141,504 |
FAIR VALUE MEASUREMENTS
All investments as of October 31, 2022 (as disclosed in the preceding Portfolio of Investments) were classified as Level 1. There were no Level 3 investments as of October 31, 2022 or 2021.
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.
118
Harbor Funds
StatementS of Assets and Liabilities—October 31, 2022
StatementS of Assets and Liabilities—October 31, 2022
(All amounts in thousands, except per share amounts)
Harbor Capital Appreciation Fund | Harbor Convertible Securities Fund | Harbor Core Bond Fund | Harbor Core Plus Fund | Harbor Disruptive Innovation Fund | Harbor Diversified International All Cap Fund | Harbor Emerging Markets Equity Fund | |
ASSETS | |||||||
Investments, at identified cost | $14,510,032 | $169,815 | $59,144 | $1,100,675 | $148,651 | $869,795 | $9,124 |
Investments, at value (Including securities loaned of $0, $0, $0, $0, $0, $1,714 and $0) | $21,489,309 | $155,455 | $50,813 | $938,011 | $103,744 | $789,693 | $6,293 |
Cash | 287,590 | 6,017 | 476 | 9,272 | 3,546 | 13,811 | — |
Foreign currency, at value (cost: $0, $0, $0, $2, $0, $1,215 and $52) | — | — | — | 1 | — | 1,206 | 52 |
Receivables for: | |||||||
Investments sold | — | 1,384 | — | 357 | 1,032 | 332 | — |
Capital shares sold | 7,496 | 28 | 17,908 | 1,401 | 14 | 1,654 | — |
Dividends | 2,826 | — | — | — | 18 | 2,177 | 23 |
Interest | — | 365 | 289 | 6,742 | — | — | — |
Securities lending income | — | — | — | — | — | 1 | — |
Purchased options, at value (cost: $0, $0, $0, $0, $0, $0 and $0) | — | — | — | — | — | — | — |
Withholding tax | 513 | — | — | — | 1 | 634 | — |
Prepaid registration fees | 35 | — | — | 14 | 22 | 26 | 23 |
Other assets | 2,954 | 24 | 8 | 406 | 78 | 90 | 1 |
Total Assets | 21,790,723 | 163,273 | 69,494 | 956,204 | 108,455 | 809,624 | 6,392 |
LIABILITIES | |||||||
Due to custodian | — | — | — | — | — | — | 93 |
Payables for: | |||||||
Investments purchased | 74,797 | 404 | 76 | 5,704 | — | 300 | 1 |
Capital shares reacquired | 15,284 | 2 | — | 1,601 | 59 | 533 | 93 |
Collateral for securities loaned | — | — | — | — | — | — | — |
Dividends to shareholders | — | — | — | — | — | — | — |
Accrued expenses: | |||||||
Tax compliance fee payable (see Note 2) | — | — | — | — | — | — | — |
Management fees | 10,099 | 82 | 10 | 205 | 63 | 505 | 7 |
12b-1 fees | 205 | — | — | 3 | 4 | 3 | 1 |
Transfer agent fees | 1,407 | 12 | 3 | 81 | 9 | 32 | 1 |
Trustees' fees and expenses | 3,476 | 27 | 4 | 459 | 62 | 55 | 5 |
Other | 1,347 | 24 | 24 | 122 | 38 | 460 | 47 |
Total Liabilities | 106,615 | 551 | 117 | 8,175 | 235 | 1,888 | 248 |
NET ASSETS | $21,684,108 | $162,722 | $69,377 | $948,029 | $108,220 | $807,736 | $6,144 |
Net Assets Consist of: | |||||||
Paid-in capital | $15,895,464 | $181,807 | $82,899 | $1,178,301 | $244,627 | $924,064 | $12,478 |
Total distributable earnings/(loss) | 5,788,644 | (19,085) | (13,522) | (230,272) | (136,407) | (116,328) | (6,334) |
$21,684,108 | $162,722 | $69,377 | $948,029 | $108,220 | $807,736 | $6,144 | |
The accompanying notes are an integral part of the Financial Statements.
119
Harbor Capital Appreciation Fund | Harbor Convertible Securities Fund | Harbor Core Bond Fund | Harbor Core Plus Fund | Harbor Disruptive Innovation Fund | Harbor Diversified International All Cap Fund | Harbor Emerging Markets Equity Fund | |
NET ASSET VALUE PER SHARE BY CLASS | |||||||
Retirement Class | |||||||
Net assets | $7,108,919 | $33,711 | $41,312 | $12,389 | $16,353 | $543,857 | $1,391 |
Shares of beneficial interest1 | 106,391 | 3,432 | 4,782 | 1,266 | 3,742 | 55,778 | 269 |
Net asset value per share2 | $66.82 | $9.82 | $8.64 | $9.78 | $4.37 | $9.75 | $5.17 |
Institutional Class | |||||||
Net assets | $13,590,549 | $126,865 | $28,065 | $924,416 | $72,988 | $248,130 | $4,231 |
Shares of beneficial interest1 | 203,778 | 12,921 | 3,248 | 94,611 | 16,904 | 25,450 | 816 |
Net asset value per share2 | $66.69 | $9.82 | $8.64 | $9.77 | $4.32 | $9.75 | $5.18 |
Administrative Class | |||||||
Net assets | $187,390 | $70 | N/A | $11,223 | $2,492 | $7,419 | — |
Shares of beneficial interest1 | 2,925 | 7 | N/A | 1,147 | 682 | 764 | — |
Net asset value per share2 | $64.08 | $9.78 | N/A | $9.78 | $3.66 | $9.71 | — |
Investor Class | |||||||
Net assets | $797,250 | $2,076 | N/A | N/A | $16,387 | $8,330 | $522 |
Shares of beneficial interest1 | 12,925 | 213 | N/A | N/A | 5,015 | 862 | 102 |
Net asset value per share2 | $61.68 | $9.77 | N/A | N/A | $3.27 | $9.66 | $5.14 |
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. |
120
Harbor Funds
StatementS of Assets and Liabilities—October 31, 2022 —Continued
StatementS of Assets and Liabilities—October 31, 2022 —Continued
(All amounts in thousands, except per share amounts)
Harbor Global Leaders Fund | Harbor High-Yield Bond Fund | Harbor International Fund | Harbor International Growth Fund | Harbor International Small Cap Fund | Harbor Large Cap Value Fund | |
ASSETS | ||||||
Investments, at identified cost | $66,257 | $301,062 | $3,188,089 | $334,475 | $124,316 | $1,603,452 |
Investments, at value (Including securities loaned of $0, $0, $1,937, $0, $0 and $0) | $66,708 | $271,296 | $2,989,540 | $344,006 | $114,198 | $2,050,351 |
Cash | 974 | 8,739 | 63,834 | 3,121 | 10,648 | 58,694 |
Foreign currency, at value (cost: $ $0, $0, $14,256, $59, $1,045 and $0) | — | — | 14,031 | 58 | 1,031 | — |
Receivables for: | ||||||
Investments sold | — | 1,247 | 2,270 | 346 | — | 879 |
Capital shares sold | 3 | 1,217 | 1,604 | 115 | 875 | 1,057 |
Dividends | 28 | — | 10,499 | 408 | 217 | 1,471 |
Interest | — | 4,330 | — | — | — | — |
Securities lending income | — | — | 1 | — | — | — |
Purchased options, at value (cost: $0, $0, $0, $0, $0, and $0) | — | — | 37 | — | — | — |
Withholding tax | 6 | — | 3,666 | 311 | 43 | 458 |
Prepaid registration fees | — | 26 | 24 | 21 | — | 21 |
Other assets | 26 | 145 | 3,817 | 128 | 25 | 160 |
Total Assets | 67,745 | 287,000 | 3,089,323 | 348,514 | 127,037 | 2,113,091 |
LIABILITIES | ||||||
Due to custodian | — | — | — | — | — | — |
Payables for: | ||||||
Investments purchased | — | 4,509 | 1,628 | 750 | 1,227 | 1,577 |
Capital shares reacquired | 85 | 283 | 10,238 | 731 | 44 | 2,429 |
Collateral for securities loaned | — | — | 2,077 | — | — | — |
Dividends to shareholders | — | — | — | — | — | — |
Accrued expenses: | ||||||
Tax compliance fee payable (see Note 2) | — | — | 51,309 | — | — | — |
Management fees | 39 | 117 | 1,896 | 225 | 81 | 1,026 |
12b-1 fees | 2 | 4 | 54 | 1 | — | 6 |
Transfer agent fees | 5 | 20 | 247 | 25 | 7 | 88 |
Trustees' fees and expenses | 8 | 151 | 3,550 | 82 | 5 | 127 |
Other | 53 | 54 | 1,489 | 509 | 70 | 112 |
Total Liabilities | 192 | 5,138 | 72,488 | 2,323 | 1,434 | 5,365 |
NET ASSETS | $67,553 | $281,862 | $3,016,835 | $346,191 | $125,603 | $2,107,726 |
Net Assets Consist of: | ||||||
Paid-in capital | $63,483 | $404,053 | $3,607,925 | $348,403 | $132,504 | $1,581,858 |
Total distributable earnings/(loss) | 4,070 | (122,191) | (591,090) | (2,212) | (6,901) | 525,868 |
$67,553 | $281,862 | $3,016,835 | $346,191 | $125,603 | $2,107,726 | |
The accompanying notes are an integral part of the Financial Statements.
121
Harbor Global Leaders Fund | Harbor High-Yield Bond Fund | Harbor International Fund | Harbor International Growth Fund | Harbor International Small Cap Fund | Harbor Large Cap Value Fund | |
NET ASSET VALUE PER SHARE BY CLASS | ||||||
Retirement Class | ||||||
Net assets | $15,702 | $80,052 | $461,129 | $72,107 | $30,387 | $1,326,142 |
Shares of beneficial interest1 | 643 | 9,343 | 12,842 | 5,649 | 2,403 | 67,993 |
Net asset value per share2 | $24.43 | $8.57 | $35.91 | $12.76 | $12.65 | $19.50 |
Institutional Class | ||||||
Net assets | $40,193 | $182,350 | $2,298,600 | $267,148 | $93,640 | $751,476 |
Shares of beneficial interest1 | 1,653 | 21,281 | 63,783 | 20,959 | 7,405 | 38,529 |
Net asset value per share2 | $24.32 | $8.57 | $36.04 | $12.75 | $12.65 | $19.50 |
Administrative Class | ||||||
Net assets | $914 | $368 | $10,375 | $148 | $436 | $3,228 |
Shares of beneficial interest1 | 39 | 43 | 286 | 12 | 35 | 166 |
Net asset value per share2 | $23.58 | $8.61 | $36.29 | $12.73 | $12.60 | $19.50 |
Investor Class | ||||||
Net assets | $10,744 | $19,092 | $246,731 | $6,788 | $1,140 | $26,880 |
Shares of beneficial interest1 | 465 | 2,220 | 6,925 | 536 | 90 | 1,363 |
Net asset value per share2 | $23.09 | $8.60 | $35.63 | $12.66 | $12.58 | $19.72 |
122
Harbor Funds
StatementS of Assets and Liabilities—October 31, 2022 —Continued
StatementS of Assets and Liabilities—October 31, 2022 —Continued
(All amounts in thousands, except per share amounts)
Harbor Mid Cap Fund | Harbor Mid Cap Value Fund | Harbor Money Market Fund | Harbor Overseas Fund | Harbor Small Cap Growth Fund | Harbor Small Cap Value Fund | |
ASSETS | ||||||
Investments, at identified cost | $85,957 | $285,319 | $72,670 | $94,303 | $915,181 | $1,457,956 |
Investments, at value (Including securities loaned of $0, $0, $0, $980, $0 and $0) | $87,990 | $313,661 | $72,670 | $89,672 | $894,369 | $2,057,681 |
Cash | 1,067 | 3,379 | 159 | 1,353 | 15,291 | 66,832 |
Foreign currency, at value (cost: $0, $0, $0, $0, $0, and $0) | — | — | — | — | — | — |
Receivables for: | ||||||
Investments sold | — | 567 | — | 329 | 6,431 | 18,771 |
Capital shares sold | — | 55 | 61 | 414 | 1,382 | 1,351 |
Dividends | 30 | 304 | — | 211 | — | 750 |
Interest | — | — | — | — | — | — |
Securities lending income | — | — | — | — | — | — |
Purchased options, at value (cost: $0, $0, $0, $0, $0, and $0) | — | — | — | — | — | — |
Withholding tax | — | — | — | 89 | — | — |
Prepaid registration fees | 25 | 12 | 13 | — | 21 | 19 |
Other assets | 7 | 86 | 21 | 72 | 97 | 135 |
Total Assets | 89,119 | 318,064 | 72,924 | 92,140 | 917,591 | 2,145,539 |
LIABILITIES | ||||||
Due to custodian | — | — | — | 298 | — | — |
Payables for: | ||||||
Investments purchased | — | 111 | — | 14 | 1,695 | 285 |
Capital shares reacquired | 28 | 378 | 1,298 | 101 | 427 | 2,019 |
Collateral for securities loaned | — | — | — | 1,061 | — | — |
Dividends to shareholders | — | — | 2 | — | — | — |
Accrued expenses: | ||||||
Tax compliance fee payable (see Note 2) | — | — | — | — | — | — |
Management fees | 52 | 191 | 12 | 54 | 564 | 1,273 |
12b-1 fees | — | 6 | — | 1 | 2 | 10 |
Transfer agent fees | 3 | 25 | 7 | 6 | 55 | 136 |
Trustees' fees and expenses | 2 | 75 | 18 | 2 | 117 | 181 |
Other | 16 | 37 | 30 | 143 | 67 | 131 |
Total Liabilities | 101 | 823 | 1,367 | 1,680 | 2,927 | 4,035 |
NET ASSETS | $89,018 | $317,241 | $71,557 | $90,460 | $914,664 | $2,141,504 |
Net Assets Consist of: | ||||||
Paid-in capital | $87,246 | $264,269 | $71,568 | $99,152 | $941,629 | $1,426,720 |
Total distributable earnings/(loss) | 1,772 | 52,972 | (11) | (8,692) | (26,965) | 714,784 |
$89,018 | $317,241 | $71,557 | $90,460 | $914,664 | $2,141,504 | |
The accompanying notes are an integral part of the Financial Statements.
123
Harbor Mid Cap Fund | Harbor Mid Cap Value Fund | Harbor Money Market Fund | Harbor Overseas Fund | Harbor Small Cap Growth Fund | Harbor Small Cap Value Fund | |
NET ASSET VALUE PER SHARE BY CLASS | ||||||
Retirement Class | ||||||
Net assets | $67,079 | $43,591 | N/A | $21,221 | $311,509 | $600,143 |
Shares of beneficial interest1 | 5,389 | 1,822 | N/A | 2,126 | 26,452 | 15,205 |
Net asset value per share2 | $12.45 | $23.93 | N/A | $9.98 | $11.78 | $39.47 |
Institutional Class | ||||||
Net assets | $21,105 | $242,004 | $69,762 | $66,908 | $595,476 | $1,493,462 |
Shares of beneficial interest1 | 1,697 | 10,115 | 69,759 | 6,710 | 50,981 | 37,866 |
Net asset value per share2 | $12.44 | $23.93 | $1.00 | $9.97 | $11.68 | $39.44 |
Administrative Class | ||||||
Net assets | N/A | $3,291 | $1,795 | N/A | $648 | $9,177 |
Shares of beneficial interest1 | N/A | 136 | 1,795 | N/A | 64 | 235 |
Net asset value per share2 | N/A | $24.20 | $1.00 | N/A | $10.10 | $39.06 |
Investor Class | ||||||
Net assets | $834 | $28,355 | N/A | $2,331 | $7,031 | $38,722 |
Shares of beneficial interest1 | 67 | 1,186 | N/A | 235 | 766 | 1,017 |
Net asset value per share2 | $12.37 | $23.90 | N/A | $9.92 | $9.18 | $38.09 |
124
Harbor Funds
StatementS of Operations—Year Ended October 31, 2022
StatementS of Operations—Year Ended October 31, 2022
(All amounts in thousands)
Harbor Capital Appreciation Fund | Harbor Convertible Securities Fund | |
Investment Income | ||
Dividends | $145,497 | $— |
Interest | 2,965 | 1,847 |
Net securities lending income | — | — |
Consent fee income | — | — |
Foreign taxes withheld | (3,266) | — |
Foreign tax reclaims, net of applicable tax compliance fee (see Note 2) | 5,883 | — |
Total Investment Income | 151,079 | 1,847 |
Operating Expenses | ||
Management fees | 178,346 | 1,163 |
12b-1 fees: | ||
Administrative Class | 673 | — |
Investor Class | 2,692 | 6 |
Shareholder communications | 673 | 11 |
Custodian fees | 675 | 21 |
Transfer agent fees: | ||
Retirement Class | 1,770 | 7 |
Institutional Class | 19,530 | 140 |
Administrative Class | 269 | — |
Investor Class | 2,261 | 5 |
Professional fees | 1,571 | 10 |
Trustees' fees and expenses | 1,600 | 10 |
Registration fees | 245 | 58 |
Miscellaneous | 606 | 11 |
Total expenses | 210,911 | 1,442 |
Management fees waived | (14,807) | (89) |
12b-1 fees waived | — | — |
Transfer agent fees waived | (1,649) | (9) |
Other expenses reimbursed | — | — |
Custodian fees reduction | 1 | — |
Net expenses | 194,456 | 1,344 |
Net Investment Income/(Loss) | (43,377) | 503 |
Net Realized and Change in Net Unrealized Gain/(Loss) on Investment Transactions | ||
Net realized gain/(loss) on: | ||
Investments (net of foreign capital gains tax: $0, $0, $0, $0, $0, $141, $31, $0, $0 and $3) | (1,104,467) | (4,062) |
In-kind redemptions | 1,270,427 | — |
Foreign currency transactions | (266) | — |
Futures contracts | — | — |
Purchased options | — | — |
Written options | — | — |
Swap agreements | — | — |
Change in net unrealized appreciation/(depreciation) on: | ||
Investments (net of foreign capital gains tax accrual: $0, $0, $0, $0, $0, $0, $0, $1, $0 and $0) | (14,648,657) | (31,493) |
Forwards currency contracts | — | — |
Futures contracts | — | — |
Purchased options | — | — |
Written options | — | — |
Swap agreements | — | — |
Translations of assets and liabilities in foreign currencies | (38) | — |
Net gain/(loss) on investment transactions | (14,483,001) | (35,555) |
Net Increase/(Decrease) in Net Assets Resulting from Operations | $(14,526,378) | $(35,052) |
The accompanying notes are an integral part of the Financial Statements.
125
Harbor Core Bond Fund | Harbor Core Plus Fund | Harbor Disruptive Innovation Fund | Harbor Diversified International All Cap Fund | Harbor Emerging Markets Equity Fund | Harbor Global Leaders Fund | Harbor High-Yield Bond Fund | Harbor International Fund |
$— | $287 | $673 | $28,192 | $535 | $581 | $— | $115,052 |
2,101 | 40,600 | 27 | 1,241 | 3 | 11 | 16,183 | 284 |
— | — | — | 47 | — | — | — | 184 |
— | 113 | — | — | — | — | 6 | — |
— | — | (13) | (2,429) | (61) | (18) | — | (7,723) |
— | — | — | — | — | — | — | 20,195 |
2,101 | 41,000 | 687 | 27,051 | 477 | 574 | 16,189 | 127,992 |
210 | 3,998 | 1,289 | 7,439 | 182 | 700 | 1,840 | 28,074 |
N/A | 38 | 9 | 22 | — | 3 | 1 | 32 |
N/A | N/A | 74 | 23 | 12 | 39 | 51 | 762 |
12 | 106 | 37 | 25 | 9 | 12 | 33 | 305 |
31 | 152 | 47 | 405 | 73 | 24 | 55 | 537 |
6 | 20 | 7 | 135 | 1 | 4 | 15 | 123 |
57 | 1,133 | 115 | 301 | 12 | 58 | 211 | 2,810 |
N/A | 15 | 3 | 9 | — | 1 | — | 13 |
N/A | N/A | 63 | 19 | 10 | 33 | 43 | 640 |
4 | 117 | 32 | 130 | 37 | 29 | 16 | 395 |
5 | 66 | 10 | 54 | 1 | 5 | 16 | 207 |
32 | 62 | 63 | 63 | 56 | 57 | 60 | 129 |
8 | 30 | 14 | 27 | 5 | 11 | 14 | 77 |
365 | 5,737 | 1,763 | 8,652 | 398 | 976 | 2,355 | 34,104 |
— | (65) | — | — | — | (47) | (282) | — |
— | — | — | — | — | — | — | — |
(6) | (65) | (12) | (51) | (1) | (5) | (15) | (192) |
(78) | (419) | (549) | (1,150) | (178) | (76) | — | (4,381) |
— | — | — | — | — | — | — | — |
281 | 5,188 | 1,202 | 7,451 | 219 | 848 | 2,058 | 29,531 |
1,820 | 35,812 | (515) | 19,600 | 258 | (274) | 14,131 | 98,461 |
(4,988) | (44,234) | (89,328) | (8,828) | (3,628) | 6,311 | (11,795) | 5,068 |
— | — | — | — | — | — | — | — |
— | (2,635) | 9 | (2,572) | (8) | (12) | — | (6,570) |
— | (8,255) | — | — | — | — | — | — |
— | (293) | — | 37 | — | — | — | 130 |
— | 264 | — | — | — | — | — | — |
— | 7,220 | — | — | — | — | — | — |
(11,308) | (192,582) | (42,370) | (272,319) | (4,087) | (50,291) | (32,844) | (1,117,640) |
— | (4,021) | — | — | — | — | — | — |
— | 3,303 | — | — | — | — | — | — |
— | 197 | — | — | — | — | — | (7) |
— | 46 | — | — | — | — | — | — |
— | (5,873) | — | — | — | — | — | — |
— | (153) | — | (90) | — | (1) | — | (691) |
(16,296) | (247,016) | (131,689) | (283,772) | (7,723) | (43,993) | (44,639) | (1,119,710) |
$(14,476) | $(211,204) | $(132,204) | $(264,172) | $(7,465) | $(44,267) | $(30,508) | $(1,021,249) |
126
Harbor Funds
StatementS of Operations—Year Ended October 31, 2022 —Continued
StatementS of Operations—Year Ended October 31, 2022 —Continued
(All amounts in thousands)
Harbor International Growth Fund | Harbor International Small Cap Fund | |
Investment Income | ||
Dividends | $6,738 | $2,532 |
Interest | (2) | 60 |
Net securities lending income | — | — |
Consent fee income | — | — |
Foreign taxes withheld | (637) | (247) |
Foreign tax reclaims, net of applicable tax compliance fee (see Note 2) | — | — |
Total Investment Income | 6,099 | 2,345 |
Operating Expenses | ||
Management fees | 4,264 | 622 |
12b-1 fees: | ||
Administrative Class | 1 | 1 |
Investor Class | 24 | 3 |
Shareholder communications | 24 | 9 |
Custodian fees | 157 | 72 |
Transfer agent fees: | ||
Retirement Class | 20 | 3 |
Institutional Class | 457 | 57 |
Administrative Class | — | — |
Investor Class | 20 | 3 |
Professional fees | 73 | 10 |
Trustees' fees and expenses | 31 | 4 |
Registration fees | 61 | 69 |
Miscellaneous | 22 | 9 |
Total expenses | 5,154 | 862 |
Management fees waived | — | — |
12b-1 fees waived | — | — |
Transfer agent fees waived | (33) | (3) |
Other expenses reimbursed | (334) | (162) |
Custodian fees reduction | — | — |
Net expenses | 4,787 | 697 |
Net Investment Income/(Loss) | 1,312 | 1,648 |
Net Realized and Change in Net Unrealized Gain/(Loss) on Investment Transactions | ||
Net realized gain/(loss) on: | ||
Investments (net of foreign capital gains tax: $977, $0, $0, $0, $0, $0, $0, $0 and $0) | (3,463) | 2,231 |
In-kind redemptions | — | — |
Foreign currency transactions | (186) | (88) |
Futures contracts | — | — |
Purchased options | — | — |
Written options | — | — |
Swap agreements | — | — |
Change in net unrealized appreciation/(depreciation) on: | ||
Investments (net of foreign capital gains tax accrual: $341, $0, $0, $0, $0, $0, $0, $0 and $0) | (308,598) | (16,390) |
Forwards currency contracts | — | — |
Futures contracts | — | — |
Purchased options | — | — |
Written options | — | — |
Swap agreements | — | — |
Translations of assets and liabilities in foreign currencies | (33) | (11) |
Net gain/(loss) on investment transactions | (312,280) | (14,258) |
Net Increase/(Decrease) in Net Assets Resulting from Operations | $(310,968) | $(12,610) |
The accompanying notes are an integral part of the Financial Statements.
127
Harbor Large Cap Value Fund | Harbor Mid Cap Fund | Harbor Mid Cap Value Fund | Harbor Money Market Fund | Harbor Overseas Fund | Harbor Small Cap Growth Fund | Harbor Small Cap Value Fund |
$42,861 | $887 | $10,717 | $— | $3,359 | $6,206 | $28,063 |
430 | 24 | 28 | 755 | 19 | 274 | 529 |
— | — | — | — | 18 | — | — |
— | — | — | — | — | — | — |
(369) | — | — | — | (282) | (12) | (2) |
— | — | — | — | — | — | — |
42,922 | 911 | 10,745 | 755 | 3,114 | 6,468 | 28,590 |
13,825 | 463 | 2,904 | 175 | 492 | 7,103 | 17,143 |
9 | N/A | 9 | 8 | N/A | 2 | 26 |
70 | 2 | 78 | N/A | 2 | 18 | 118 |
54 | 9 | 29 | 12 | 11 | 23 | 116 |
45 | 14 | 23 | 19 | 138 | 52 | 56 |
272 | 7 | 10 | N/A | 4 | 67 | 113 |
912 | 24 | 303 | 84 | 42 | 604 | 1,661 |
3 | N/A | 3 | 3 | N/A | 1 | 10 |
59 | 2 | 66 | N/A | 1 | 15 | 99 |
123 | 3 | 21 | 5 | 48 | 51 | 123 |
131 | 4 | 22 | 3 | 4 | 53 | 130 |
104 | 55 | 61 | 33 | 48 | 68 | 102 |
46 | 9 | 15 | 3 | 10 | 25 | 48 |
15,653 | 592 | 3,544 | 345 | 800 | 8,082 | 19,745 |
— | — | (23) | (103) | — | — | — |
— | — | — | (5) | — | — | — |
(112) | (3) | (19) | (51) | (3) | (46) | (114) |
(621) | (73) | (129) | (65) | (255) | — | — |
— | — | — | — | — | — | — |
14,920 | 516 | 3,373 | 121 | 542 | 8,036 | 19,631 |
28,002 | 395 | 7,372 | 634 | 2,572 | (1,568) | 8,959 |
88,519 | 54 | 29,401 | — | (2,625) | 40,116 | 142,404 |
— | — | — | — | — | — | — |
— | — | — | — | (3,440) | (1) | — |
— | — | — | — | — | — | — |
— | — | — | — | (7) | — | — |
— | — | — | — | — | — | — |
— | — | — | — | — | — | — |
(435,986) | (6,927) | (49,490) | — | (11,538) | (301,227) | (335,267) |
— | — | — | — | — | — | — |
— | — | — | — | — | — | — |
— | — | — | — | — | — | — |
— | — | — | — | — | — | — |
— | — | — | — | — | — | — |
— | — | — | — | (13) | — | — |
(347,467) | (6,873) | (20,089) | — | (17,623) | (261,112) | (192,863) |
$(319,465) | $(6,478) | $(12,717) | $634 | $(15,051) | $(262,680) | $(183,904) |
128
Harbor Funds
Statements of Changes In Net Assets
Statements of Changes In Net Assets
(All amounts in thousands)
Harbor Capital Appreciation Fund | Harbor Convertible Securities Fund | Harbor Core Bond Fund | ||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | |
INCREASE/(DECREASE) IN NET ASSETS | ||||||
Operations: | ||||||
Net investment income/(loss) | $(43,377) | $(131,025) | $503 | $142 | $1,820 | $2,179 |
Net realized gain/(loss) on investments | 165,694 | 10,928,845 | (4,062) | 27,075 | (4,988) | 514 |
Change in net unrealized appreciation/(depreciation) of investments | (14,648,695) | 3,117,791 | (31,493) | 4,033 | (11,308) | (2,867) |
Net increase/(decrease) in assets resulting from operations | (14,526,378) | 13,915,611 | (35,052) | 31,250 | (14,476) | (174) |
Distributions to Shareholders | ||||||
Retirement Class | (1,774,533) | (1,223,020) | (5,078) | (3,426) | (864) | (1,343) |
Institutional Class | (4,236,598) | (3,192,095) | (20,117) | (11,576) | (1,726) | (3,638) |
Administrative Class | (64,010) | (54,447) | (10) | (7) | N/A | N/A |
Investor Class | (245,539) | (170,722) | (352) | (246) | N/A | N/A |
Total distributions to shareholders | (6,320,680) | (4,640,284) | (25,557) | (15,255) | (2,590) | (4,981) |
Net Increase/(Decrease) Derived from Capital Share Transactions | 263,781 | (3,838,863) | 17,371 | 35,899 | (56,045) | 32,042 |
Net increase/(decrease) in net assets | (20,583,277) | 5,436,464 | (43,238) | 51,894 | (73,111) | 26,887 |
Net Assets | ||||||
Beginning of period | 42,267,385 | 36,830,921 | 205,960 | 154,066 | 142,488 | 115,601 |
End of period | $21,684,108 | $42,267,385 | $162,722 | $205,960 | $69,377 | $142,488 |
The accompanying notes are an integral part of the Financial Statements.
129
Harbor Core Plus Fund | Harbor Disruptive Innovation Fund | Harbor Diversified International All Cap Fund | Harbor Emerging Markets Equity Fund | Harbor Global Leaders Fund | |||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 |
$35,812 | $43,831 | $(515) | $(3,004) | $19,600 | $16,800 | $258 | $560 | $(274) | $(532) |
(47,933) | 5,769 | (89,319) | 190,181 | (11,363) | 85,382 | (3,636) | 14,438 | 6,299 | 15,044 |
(199,083) | (34,370) | (42,370) | (90,544) | (272,409) | 190,251 | (4,087) | (244) | (50,292) | 23,318 |
(211,204) | 15,230 | (132,204) | 96,633 | (264,172) | 292,433 | (7,465) | 14,754 | (44,267) | 37,830 |
(4,079) | (5,690) | (23,847) | (9,924) | (59,014) | (6,946) | (766) | (5,910) | (2,179) | (1,703) |
(43,520) | (52,315) | (77,166) | (37,666) | (22,740) | (2,843) | (5,277) | (4,058) | (7,958) | (6,506) |
(541) | (521) | (2,270) | (619) | (638) | (61) | (6) | (6) | (154) | (169) |
N/A | N/A | (25,465) | (8,824) | (661) | (54) | (1,767) | (1,342) | (2,404) | (1,826) |
(48,140) | (58,526) | (128,748) | (57,033) | (83,053) | (9,904) | (7,816) | (11,316) | (12,695) | (10,204) |
(358,945) | (420,389) | 21,971 | (33,569) | (50,281) | 128,700 | (23,004) | (8,535) | (18,033) | (3,833) |
(618,289) | (463,685) | (238,981) | 6,031 | (397,506) | 411,229 | (38,285) | (5,097) | (74,995) | 23,793 |
1,566,318 | 2,030,003 | 347,201 | 341,170 | 1,205,242 | 794,013 | 44,429 | 49,526 | 142,548 | 118,755 |
$948,029 | $1,566,318 | $108,220 | $347,201 | $807,736 | $1,205,242 | $6,144 | $44,429 | $67,553 | $142,548 |
130
Harbor Funds
Statements of Changes In Net Assets—Continued
Statements of Changes In Net Assets—Continued
(All amounts in thousands)
Harbor High-Yield Bond Fund | Harbor International Fund | Harbor International Growth Fund | ||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | |
INCREASE/(DECREASE) IN NET ASSETS | ||||||
Operations: | ||||||
Net investment income/(loss) | $14,131 | $16,128 | $98,461 | $70,124 | $1,312 | $95 |
Net realized gain/(loss) on investments | (11,795) | 22,501 | (1,372) | 256,241 | (3,649) | 72,470 |
Change in net unrealized appreciation/(depreciation) of investments | (32,844) | (949) | (1,118,338) | 989,133 | (308,631) | 119,368 |
Net increase/(decrease) in assets resulting from operations | (30,508) | 37,680 | (1,021,249) | 1,315,498 | (310,968) | 191,933 |
Distributions to Shareholders | ||||||
Retirement Class | (3,765) | (4,718) | (18,874) | (11,372) | (11,011) | (1,144) |
Institutional Class | (10,485) | (13,697) | (68,529) | (33,787) | (55,495) | (4,238) |
Administrative Class | (22) | (36) | (269) | (98) | (36) | (4) |
Investor Class | (946) | (1,046) | (6,320) | (2,615) | (992) | (98) |
Total distributions to shareholders | (15,218) | (19,497) | (93,992) | (47,872) | (67,534) | (5,484) |
Net Increase/(Decrease) Derived from Capital Share Transactions | (33,807) | (84,456) | (438,491) | (659,137) | (146,117) | (112,345) |
Net increase/(decrease) in net assets | (79,533) | (66,273) | (1,553,732) | 608,489 | (524,619) | 74,104 |
Net Assets | ||||||
Beginning of period | 361,395 | 427,668 | 4,570,567 | 3,962,078 | 870,810 | 796,706 |
End of period | $281,862 | $361,395 | $3,016,835 | $4,570,567 | $346,191 | $870,810 |
The accompanying notes are an integral part of the Financial Statements.
131
Harbor International Small Cap Fund | Harbor Large Cap Value Fund | Harbor Mid Cap Fund | Harbor Mid Cap Value Fund | Harbor Money Market Fund | |||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 |
$1,648 | $776 | $28,002 | $19,101 | $395 | $150 | $7,372 | $7,410 | $634 | $29 |
2,143 | 5,696 | 88,519 | 80,096 | 54 | 1,346 | 29,401 | 13,180 | — | — |
(16,401) | 8,388 | (435,986) | 573,558 | (6,927) | 8,160 | (49,490) | 143,579 | — | — |
(12,610) | 14,860 | (319,465) | 672,755 | (6,478) | 9,656 | (12,717) | 164,169 | 634 | 29 |
(731) | (82) | (52,480) | (28,308) | (799) | (56) | (756) | (924) | — | N/A |
(3,330) | (375) | (36,416) | (35,749) | (507) | (11) | (4,476) | (7,543) | (608) | (28) |
(31) | (4) | (126) | (396) | — | N/A | (37) | (109) | (23) | (1) |
(121) | (5) | (979) | (801) | (17) | — | (306) | (617) | — | N/A |
(4,213) | (466) | (90,001) | (65,254) | (1,323) | (67) | (5,575) | (9,193) | (631) | (29) |
80,999 | 15,061 | (40,120) | 378,465 | 35,025 | 41,191 | (111,979) | (46,858) | (13,314) | (13,902) |
64,176 | 29,455 | (449,586) | 985,966 | 27,224 | 50,780 | (130,271) | 108,118 | (13,311) | (13,902) |
61,427 | 31,972 | 2,557,312 | 1,571,346 | 61,794 | 11,014 | 447,512 | 339,394 | 84,868 | 98,770 |
$125,603 | $61,427 | $2,107,726 | $2,557,312 | $89,018 | $61,794 | $317,241 | $447,512 | $71,557 | $84,868 |
132
Harbor Funds
Statements of Changes In Net Assets—Continued
Statements of Changes In Net Assets—Continued
(All amounts in thousands)
Harbor Overseas Fund | Harbor Small Cap Growth Fund | Harbor Small Cap Value Fund | ||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | |
INCREASE/(DECREASE) IN NET ASSETS | ||||||
Operations: | ||||||
Net investment income/(loss) | $2,572 | $922 | $(1,568) | $(4,869) | $8,959 | $5,180 |
Net realized gain/(loss) on investments | (6,072) | 5,234 | 40,115 | 274,401 | 142,404 | 176,834 |
Change in net unrealized appreciation/(depreciation) of investments | (11,551) | 5,841 | (301,227) | 59,863 | (335,267) | 573,211 |
Net increase/(decrease) in assets resulting from operations | (15,051) | 11,997 | (262,680) | 329,395 | (183,904) | 755,225 |
Distributions to Shareholders | ||||||
Retirement Class | (1,921) | (229) | (83,797) | (28,740) | (32,266) | (1,918) |
Institutional Class | (3,283) | (209) | (148,196) | (51,890) | (107,712) | (7,391) |
Administrative Class | — | N/A | (230) | (76) | (624) | (30) |
Investor Class | (12) | — | (2,234) | (667) | (3,413) | (86) |
Total distributions to shareholders | (5,216) | (438) | (234,457) | (81,373) | (144,015) | (9,425) |
Net Increase/(Decrease) Derived from Capital Share Transactions | 57,654 | 14,463 | 281,609 | (108,039) | (229,263) | 240,280 |
Net increase/(decrease) in net assets | 37,387 | 26,022 | (215,528) | 139,983 | (557,182) | 986,080 |
Net Assets | ||||||
Beginning of period | 53,073 | 27,051 | 1,130,192 | 990,209 | 2,698,686 | 1,712,606 |
End of period | $90,460 | $53,073 | $914,664 | $1,130,192 | $2,141,504 | $2,698,686 |
The accompanying notes are an integral part of the Financial Statements.
133
Harbor Funds
Statements of Changes in Net Assets—Capital Stock Activity
Statements of Changes in Net Assets—Capital Stock Activity
(All amounts in thousands)
Harbor Capital Appreciation Fund | Harbor Convertible Securities Fund | Harbor Core Bond Fund | ||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | |
AMOUNT ($) | ||||||
Retirement Class | ||||||
Net proceeds from sale of shares | $2,201,220 | $2,389,246 | $333 | $490 | $20,943 | $9,051 |
Net proceeds from redemption fees | — | — | — | — | — | — |
Reinvested distributions | 1,592,630 | 1,112,207 | 5,077 | 3,426 | 817 | 1,320 |
Cost of shares reacquired | (2,000,911) | (4,135,764) | (687) | (486) | (11,313) | (1,889) |
Cost of shares reacquired through in-kind redemptions | (104,908) | — | — | — | — | — |
Net increase/(decrease) in net assets | $1,688,031 | $(634,311) | $4,723 | $3,430 | $10,447 | $8,482 |
Institutional Class | ||||||
Net proceeds from sale of shares | $2,793,878 | $3,786,458 | $41,896 | $50,213 | $5,104 | $42,246 |
Net proceeds from redemption fees | — | — | — | — | — | — |
Reinvested distributions | 4,073,379 | 3,040,583 | 19,729 | 11,378 | 1,708 | 3,636 |
Cost of shares reacquired | (6,101,128) | (5,949,255) | (49,025) | (29,335) | (73,304) | (22,322) |
Cost of shares reacquired through in-kind redemptions | (2,160,346) | (3,942,327) | — | — | — | — |
Net increase/(decrease) in net assets | $(1,394,217) | $(3,064,541) | $12,600 | $32,256 | $(66,492) | $23,560 |
Administrative Class | ||||||
Net proceeds from sale of shares | $50,951 | $123,033 | $— | $— | N/A | N/A |
Reinvested distributions | 59,341 | 51,536 | 10 | 7 | N/A | N/A |
Cost of shares reacquired | (142,425) | (278,791) | — | — | N/A | N/A |
Net increase/(decrease) in net assets | $(32,133) | $(104,222) | $10 | $7 | N/A | N/A |
Investor Class | ||||||
Net proceeds from sale of shares | $137,419 | $286,891 | $363 | $1,043 | N/A | N/A |
Reinvested distributions | 240,718 | 167,709 | 352 | 246 | N/A | N/A |
Cost of shares reacquired | (376,037) | (490,389) | (677) | (1,083) | N/A | N/A |
Net increase/(decrease) in net assets | $2,100 | $(35,789) | $38 | $206 | N/A | N/A |
The accompanying notes are an integral part of the Financial Statements.
135
Harbor Core Plus Fund | Harbor Disruptive Innovation Fund | Harbor Diversified International All Cap Fund | Harbor Emerging Markets Equity Fund | Harbor Global Leaders Fund | |||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 |
$24,136 | $36,135 | $9,859 | $32,043 | $118,341 | $329,434 | $638 | $766 | $1,792 | $7,280 |
— | — | — | — | — | — | — | — | — | — |
4,079 | 5,645 | 23,286 | 9,728 | 58,029 | 6,749 | 766 | 5,910 | 2,059 | 1,611 |
(167,693) | (31,577) | (30,096) | (49,815) | (251,456) | (205,581) | (16,733) | (19,268) | (1,635) | (7,102) |
— | — | — | — | — | — | — | — | — | — |
$(139,478) | $10,203 | $3,049 | $(8,044) | $(75,086) | $130,602 | $(15,329) | $(12,592) | $2,216 | $1,789 |
$92,911 | $175,893 | $40,752 | $135,900 | $69,833 | $163,955 | $2,796 | $9,815 | $6,957 | $21,906 |
— | — | — | — | — | — | — | — | — | — |
41,739 | 49,348 | 55,436 | 29,565 | 19,287 | 2,530 | 5,251 | 4,057 | 7,698 | 6,354 |
(351,268) | (655,223) | (86,214) | (209,072) | (66,997) | (169,472) | (12,963) | (12,044) | (29,397) | (33,630) |
— | — | — | — | — | — | — | — | — | — |
$(216,618) | $(429,982) | $9,974 | $(43,607) | $22,123 | $(2,987) | $(4,916) | $1,828 | $(14,742) | $(5,370) |
$1,569 | $2,386 | $442 | $1,798 | $1,298 | $1,538 | $— | $3 | $148 | $220 |
538 | 521 | 2,269 | 612 | 638 | 61 | 6 | 6 | 154 | 169 |
(4,956) | (3,517) | (1,000) | (1,027) | (730) | (1,096) | (14) | (11) | (391) | (1,106) |
$(2,849) | $(610) | $1,711 | $1,383 | $1,206 | $503 | $(8) | $(2) | $(89) | $(717) |
N/A | N/A | $10,514 | $48,858 | $1,955 | $1,135 | $2,206 | $3,633 | $606 | $3,452 |
N/A | N/A | 23,829 | 8,628 | 661 | 54 | 1,767 | 1,342 | 2,383 | 1,826 |
N/A | N/A | (27,106) | (40,787) | (1,140) | (607) | (6,724) | (2,744) | (8,407) | (4,813) |
N/A | N/A | $7,237 | $16,699 | $1,476 | $582 | $(2,751) | $2,231 | $(5,418) | $465 |
136
Harbor Funds
Statements of Changes in Net Assets—Capital Stock Activity—Continued
Statements of Changes in Net Assets—Capital Stock Activity—Continued
(All amounts in thousands)
Harbor High-Yield Bond Fund | Harbor International Fund | Harbor International Growth Fund | ||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | |
AMOUNT ($) | ||||||
Retirement Class | ||||||
Net proceeds from sale of shares | $47,382 | $27,854 | $98,153 | $104,298 | $7,637 | $11,119 |
Net proceeds from redemption fees | — | 1 | — | — | — | — |
Reinvested distributions | 3,733 | 4,627 | 18,178 | 11,027 | 9,892 | 1,057 |
Cost of shares reacquired | (43,528) | (68,001) | (347,322) | (391,374) | (27,149) | (63,195) |
Cost of shares reacquired through in-kind redemptions | — | — | — | — | — | — |
Net increase/(decrease) in net assets | $7,587 | $(35,519) | $(230,991) | $(276,049) | $(9,620) | $(51,019) |
Institutional Class | ||||||
Net proceeds from sale of shares | $55,957 | $47,263 | $1,135,261 | $316,507 | $63,120 | $131,088 |
Net proceeds from redemption fees | — | 2 | — | — | — | — |
Reinvested distributions | 10,154 | 13,426 | 63,912 | 31,191 | 39,092 | 3,097 |
Cost of shares reacquired | (106,564) | (105,770) | (1,368,732) | (673,210) | (237,968) | (168,482) |
Cost of shares reacquired through in-kind redemptions | — | — | — | — | — | — |
Net increase/(decrease) in net assets | $(40,453) | $(45,079) | $(169,559) | $(325,512) | $(135,756) | $(34,297) |
Administrative Class | ||||||
Net proceeds from sale of shares | $13 | $307 | $1,230 | $1,576 | $24 | $425 |
Reinvested distributions | 21 | 34 | 265 | 97 | 36 | 4 |
Cost of shares reacquired | (309) | (323) | (2,727) | (7,009) | (347) | (399) |
Net increase/(decrease) in net assets | $(275) | $18 | $(1,232) | $(5,336) | $(287) | $30 |
Investor Class | ||||||
Net proceeds from sale of shares | $9,540 | $11,136 | $15,131 | $27,319 | $582 | $3,075 |
Reinvested distributions | 937 | 1,036 | 6,246 | 2,584 | 983 | 96 |
Cost of shares reacquired | (11,143) | (16,048) | (58,086) | (82,143) | (2,019) | (30,230) |
Net increase/(decrease) in net assets | $(666) | $(3,876) | $(36,709) | $(52,240) | $(454) | $(27,059) |
The accompanying notes are an integral part of the Financial Statements.
137
Harbor International Small Cap Fund | Harbor Large Cap Value Fund | Harbor Mid Cap Fund | Harbor Mid Cap Value Fund | Harbor Money Market Fund | |||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 |
$26,387 | $5,641 | $348,261 | $692,481 | $45,026 | $31,072 | $6,964 | $29,369 | N/A | N/A |
— | — | — | — | — | — | — | — | N/A | N/A |
731 | 40 | 35,373 | 24,265 | 798 | 56 | 756 | 923 | N/A | N/A |
(3,508) | (4,199) | (291,879) | (174,378) | (12,252) | (5,150) | (18,313) | (21,119) | N/A | N/A |
— | — | — | — | — | — | — | — | N/A | N/A |
$23,610 | $1,482 | $91,755 | $542,368 | $33,572 | $25,978 | $(10,593) | $9,173 | N/A | N/A |
$64,841 | $12,680 | $178,362 | $414,990 | $9,725 | $15,309 | $57,830 | $98,494 | $38,664 | $41,708 |
— | — | — | — | — | — | — | — | — | — |
3,197 | 335 | 31,988 | 25,913 | 507 | 11 | 4,303 | 7,300 | 588 | 27 |
(10,241) | (807) | (342,873) | (594,474) | (8,807) | (389) | (160,855) | (152,183) | (51,527) | (54,859) |
— | — | — | — | — | — | — | — | — | — |
$57,797 | $12,208 | $(132,523) | $(153,571) | $1,425 | $14,931 | $(98,722) | $(46,389) | $(12,275) | $(13,124) |
$36 | $23 | $95 | $479 | N/A | N/A | $652 | $1,360 | $2,431 | $1,073 |
31 | 4 | 125 | 396 | N/A | N/A | 23 | 89 | 23 | 1 |
— | (26) | (315) | (10,449) | N/A | N/A | (1,080) | (4,527) | (3,493) | (1,852) |
$67 | $1 | $(95) | $(9,574) | N/A | N/A | $(405) | $(3,078) | $(1,039) | $(778) |
$570 | $1,716 | $7,760 | $7,234 | $242 | $590 | $5,569 | $10,083 | N/A | N/A |
121 | 5 | 931 | 775 | 17 | — | 293 | 595 | N/A | N/A |
(1,166) | (351) | (7,948) | (8,767) | (231) | (308) | (8,121) | (17,242) | N/A | N/A |
$(475) | $1,370 | $743 | $(758) | $28 | $282 | $(2,259) | $(6,564) | N/A | N/A |
138
Harbor Funds
Statements of Changes in Net Assets—Capital Stock Activity—Continued
Statements of Changes in Net Assets—Capital Stock Activity—Continued
(All amounts in thousands)
Harbor Overseas Fund | Harbor Small Cap Growth Fund | Harbor Small Cap Value Fund | ||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | |
AMOUNT ($) | ||||||
Retirement Class | ||||||
Net proceeds from sale of shares | $10,846 | $488 | $60,506 | $65,042 | $175,100 | $267,607 |
Net proceeds from redemption fees | — | — | — | — | — | — |
Reinvested distributions | 1,921 | 229 | 81,741 | 28,102 | 21,850 | 1,313 |
Cost of shares reacquired | (4,158) | (123) | (51,731) | (130,204) | (123,005) | (109,819) |
Cost of shares reacquired through in-kind redemptions | N/A | — | — | — | — | — |
Net increase/(decrease) in net assets | $8,609 | $594 | $90,516 | $(37,060) | $73,945 | $159,101 |
Institutional Class | ||||||
Net proceeds from sale of shares | $54,089 | $14,611 | $221,233 | $133,378 | $288,779 | $682,727 |
Net proceeds from redemption fees | — | — | — | — | — | — |
Reinvested distributions | 3,014 | 209 | 140,465 | 49,341 | 99,186 | 6,427 |
Cost of shares reacquired | (10,449) | (1,000) | (173,419) | (253,829) | (671,440) | (597,683) |
Cost of shares reacquired through in-kind redemptions | — | — | — | — | — | — |
Net increase/(decrease) in net assets | $46,654 | $13,820 | $188,279 | $(71,110) | $(283,475) | $91,471 |
Administrative Class | ||||||
Net proceeds from sale of shares | N/A | N/A | $91 | $139 | $1,029 | $3,183 |
Reinvested distributions | N/A | N/A | 230 | 76 | 557 | 29 |
Cost of shares reacquired | N/A | N/A | (189) | (321) | (2,834) | (5,544) |
Net increase/(decrease) in net assets | N/A | N/A | $132 | $(106) | $(1,248) | $(2,332) |
Investor Class | ||||||
Net proceeds from sale of shares | $2,615 | $67 | $2,086 | $2,733 | $4,759 | $11,816 |
Reinvested distributions | 12 | — | 2,183 | 652 | 3,282 | 83 |
Cost of shares reacquired | (236) | (18) | (1,587) | (3,148) | (26,526) | (19,859) |
Net increase/(decrease) in net assets | $2,391 | $49 | $2,682 | $237 | $(18,485) | $(7,960) |
The accompanying notes are an integral part of the Financial Statements.
139
Harbor 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 Convertible Securities Fund | Harbor Core Bond Fund | ||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | |
SHARES | ||||||
Retirement Class | ||||||
Shares sold | 24,726 | 21,785 | 30 | 36 | 2,385 | 835 |
Shares issued due to reinvestment of distributions | 16,588 | 10,669 | 445 | 265 | 84 | 122 |
Shares reacquired | (24,703) | (37,566) | (56) | (36) | (1,132) | (173) |
Shares reacquired through in-kind redemptions | (1,382) | — | — | — | — | — |
Net increase/(decrease) in shares outstanding | 15,229 | (5,112) | 419 | 265 | 1,337 | 784 |
Institutional Class | ||||||
Shares sold | 33,349 | 34,845 | 3,995 | 3,738 | 501 | 3,947 |
Shares issued due to reinvestment of distributions | 42,475 | 29,172 | 1,729 | 881 | 171 | 337 |
Shares reacquired | (73,341) | (54,624) | (4,626) | (2,192) | (7,405) | (2,093) |
Shares reacquired through in-kind redemptions | (30,336) | (35,668) | — | — | — | — |
Net increase/(decrease) in shares outstanding | (27,853) | (26,275) | 1,098 | 2,427 | (6,733) | 2,191 |
Administrative Class | ||||||
Shares sold | 633 | 1,186 | — | — | N/A | N/A |
Shares issued due to reinvestment of distributions | 643 | 509 | 1 | 1 | N/A | N/A |
Shares reacquired | (1,779) | (2,615) | — | — | N/A | N/A |
Net increase/(decrease) in shares outstanding | (503) | (920) | 1 | 1 | N/A | N/A |
Investor Class | ||||||
Shares sold | 1,763 | 2,817 | 34 | 77 | N/A | N/A |
Shares issued due to reinvestment of distributions | 2,705 | 1,706 | 31 | 19 | N/A | N/A |
Shares reacquired | (4,883) | (4,798) | (61) | (81) | N/A | N/A |
Net increase/(decrease) in shares outstanding | (415) | (275) | 4 | 15 | N/A | N/A |
The accompanying notes are an integral part of the Financial Statements.
141
Harbor Core Plus Fund | Harbor Disruptive Innovation Fund | Harbor Diversified International All Cap Fund | Harbor Emerging Markets Equity Fund | Harbor Global Leaders Fund | |||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 |
2,119 | 2,958 | 1,653 | 2,309 | 10,154 | 24,690 | 95 | 67 | 59 | 196 |
350 | 463 | 3,230 | 726 | 4,733 | 544 | 106 | 565 | 60 | 45 |
(15,525) | (2,600) | (5,607) | (3,539) | (20,840) | (15,525) | (1,615) | (1,605) | (58) | (181) |
— | — | — | — | — | — | — | — | — | — |
(13,056) | 821 | (724) | (504) | (5,953) | 9,709 | (1,414) | (973) | 61 | 60 |
8,400 | 14,403 | 6,128 | 9,890 | 5,624 | 12,409 | 396 | 866 | 222 | 586 |
3,725 | 4,042 | 7,775 | 2,218 | 1,573 | 203 | 724 | 387 | 227 | 178 |
(31,555) | (53,673) | (12,431) | (15,082) | (5,799) | (12,674) | (1,989) | (1,038) | (963) | (908) |
— | — | — | — | — | — | — | — | — | — |
(19,430) | (35,228) | 1,472 | (2,974) | 1,398 | (62) | (869) | 215 | (514) | (144) |
140 | 196 | 98 | 145 | 108 | 116 | — | — | 5 | 6 |
48 | 43 | 375 | 50 | 52 | 5 | 1 | 1 | 5 | 4 |
(471) | (288) | (213) | (80) | (65) | (83) | (3) | (1) | (14) | (30) |
(283) | (49) | 260 | 115 | 95 | 38 | (2) | — | (4) | (20) |
N/A | N/A | 1,688 | 4,063 | 172 | 84 | 320 | 317 | 20 | 96 |
N/A | N/A | 4,405 | 747 | 54 | 4 | 245 | 129 | 74 | 53 |
N/A | N/A | (5,652) | (3,437) | (99) | (45) | (1,080) | (249) | (285) | (133) |
N/A | N/A | 441 | 1,373 | 127 | 43 | (515) | 197 | (191) | 16 |
142
Harbor 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 High-Yield Bond Fund | Harbor International Fund | Harbor International Growth Fund | ||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | |
SHARES | ||||||
Retirement Class | ||||||
Shares sold | 5,353 | 2,797 | 2,586 | 2,222 | 474 | 482 |
Shares issued due to reinvestment of distributions | 409 | 466 | 402 | 253 | 488 | 48 |
Shares reacquired | (4,819) | (6,821) | (8,148) | (8,345) | (1,584) | (2,803) |
Shares reacquired through in-kind redemptions | — | — | — | — | — | — |
Net increase/(decrease) in shares outstanding | 943 | (3,558) | (5,160) | (5,870) | (622) | (2,273) |
Institutional Class | ||||||
Shares sold | 5,906 | 4,738 | 28,770 | 6,787 | 3,777 | 5,719 |
Shares issued due to reinvestment of distributions | 1,109 | 1,353 | 1,406 | 711 | 1,931 | 139 |
Shares reacquired | (11,281) | (10,634) | (34,392) | (14,570) | (14,928) | (7,135) |
Shares reacquired through in-kind redemptions | — | — | — | — | — | — |
Net increase/(decrease) in shares outstanding | (4,266) | (4,543) | (4,216) | (7,072) | (9,220) | (1,277) |
Administrative Class | ||||||
Shares sold | 1 | 31 | 30 | 34 | 2 | 19 |
Shares issued due to reinvestment of distributions | 2 | 3 | 6 | 2 | 2 | — |
Shares reacquired | (32) | (32) | (66) | (150) | (20) | (17) |
Net increase/(decrease) in shares outstanding | (29) | 2 | (30) | (114) | (16) | 2 |
Investor Class | ||||||
Shares sold | 1,051 | 1,113 | 370 | 590 | 35 | 142 |
Shares issued due to reinvestment of distributions | 103 | 104 | 139 | 59 | 48 | 4 |
Shares reacquired | (1,221) | (1,605) | (1,378) | (1,792) | (128) | (1,296) |
Net increase/(decrease) in shares outstanding | (67) | (388) | (869) | (1,143) | (45) | (1,150) |
The accompanying notes are an integral part of the Financial Statements.
143
Harbor International Small Cap Fund | Harbor Large Cap Value Fund | Harbor Mid Cap Fund | Harbor Mid Cap Value Fund | Harbor Money Market Fund | |||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 |
2,025 | 357 | 16,962 | 31,967 | 3,697 | 2,445 | 282 | 1,345 | N/A | N/A |
50 | 3 | 1,628 | 1,253 | 56 | 4 | 31 | 46 | N/A | N/A |
(256) | (262) | (13,983) | (8,155) | (921) | (379) | (740) | (918) | N/A | N/A |
— | — | — | — | — | — | — | — | N/A | N/A |
1,819 | 98 | 4,607 | 25,065 | 2,832 | 2,070 | (427) | 473 | N/A | N/A |
4,917 | 781 | 8,415 | 19,767 | 705 | 1,149 | 2,335 | 4,193 | 38,664 | 41,708 |
220 | 24 | 1,474 | 1,335 | 36 | 1 | 178 | 366 | 588 | 27 |
(747) | (51) | (16,559) | (27,387) | (678) | (28) | (6,634) | (6,827) | (51,527) | (54,859) |
— | — | — | — | — | — | — | — | — | — |
4,390 | 754 | (6,670) | (6,285) | 63 | 1,122 | (4,121) | (2,268) | (12,275) | (13,124) |
3 | 2 | 4 | 25 | N/A | N/A | 26 | 61 | 2,431 | 1,073 |
2 | 1 | 6 | 21 | N/A | N/A | 1 | 4 | 23 | 1 |
— | (2) | (14) | (549) | N/A | N/A | (43) | (204) | (3,493) | (1,852) |
5 | 1 | (4) | (503) | N/A | N/A | (16) | (139) | (1,039) | (778) |
42 | 106 | 368 | 336 | 17 | 45 | 228 | 439 | N/A | N/A |
8 | — | 42 | 40 | 1 | — | 12 | 29 | N/A | N/A |
(80) | (21) | (376) | (409) | (17) | (22) | (341) | (776) | N/A | N/A |
(30) | 85 | 34 | (33) | 1 | 23 | (101) | (308) | N/A | N/A |
144
Harbor 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 Overseas Fund | Harbor Small Cap Growth Fund | Harbor Small Cap Value Fund | ||||
November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | November 1, 2021 through October 31, 2022 | November 1, 2020 through October 31, 2021 | |
SHARES | ||||||
Retirement Class | ||||||
Shares sold | 919 | 36 | 4,693 | 3,479 | 4,452 | 6,313 |
Shares issued due to reinvestment of distributions | 157 | 19 | 5,657 | 1,558 | 548 | 33 |
Shares reacquired | (358) | (10) | (3,906) | (6,960) | (3,074) | (2,559) |
Shares reacquired through in-kind redemptions | — | — | — | — | — | — |
Net increase/(decrease) in shares outstanding | 718 | 45 | 6,444 | (1,923) | 1,926 | 3,787 |
Institutional Class | ||||||
Shares sold | 5,060 | 1,117 | 17,184 | 7,149 | 7,235 | 16,047 |
Shares issued due to reinvestment of distributions | 246 | 18 | 9,796 | 2,749 | 2,486 | 163 |
Shares reacquired | (968) | (71) | (12,362) | (13,526) | (16,748) | (14,020) |
Shares reacquired through in-kind redemptions | — | — | — | — | — | — |
Net increase/(decrease) in shares outstanding | 4,338 | 1,064 | 14,618 | (3,628) | (7,027) | 2,190 |
Administrative Class | ||||||
Shares sold | N/A | N/A | 8 | 8 | 26 | 74 |
Shares issued due to reinvestment of distributions | N/A | N/A | 19 | 5 | 14 | 1 |
Shares reacquired | N/A | N/A | (17) | (19) | (73) | (128) |
Net increase/(decrease) in shares outstanding | N/A | N/A | 10 | (6) | (33) | (53) |
Investor Class | ||||||
Shares sold | 249 | 5 | 201 | 175 | 122 | 287 |
Shares issued due to reinvestment of distributions | 1 | — | 193 | 43 | 85 | 2 |
Shares reacquired | (22) | (2) | (149) | (203) | (666) | (486) |
Net increase/(decrease) in shares outstanding | 228 | 3 | 245 | 15 | (459) | (197) |
The accompanying notes are an integral part of the Financial Statements.
145
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $124.89 | $99.19 | $75.79 | $73.98 | $75.34 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | (0.06) | (0.27) | (0.08) | 0.13 | 0.23 |
Net realized and unrealized gain/(loss) on investments | (39.22) | 38.73 | 30.27 | 8.54 | 6.50 |
Total from investment operations | (39.28) | 38.46 | 30.19 | 8.67 | 6.73 |
Less Distributions | |||||
Dividends from net investment income | — | — | (0.12) | (0.21) | (0.17) |
Distributions from net realized capital gains | (18.79) | (12.76) | (6.67) | (6.65) | (7.92) |
Total distributions | (18.79) | (12.76) | (6.79) | (6.86) | (8.09) |
Net asset value end of period | 66.82 | 124.89 | 99.19 | 75.79 | 73.98 |
Net assets end of period (000s) | $7,108,919 | $11,385,191 | $9,549,061 | $6,970,617 | $5,393,675 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (36.03)% | 41.33% | 42.79% | 13.73% | 9.50% |
Ratio of total expenses to average net assets^ | 0.64 | 0.63 | 0.64 | 0.63 | 0.62 |
Ratio of net expenses to average net assetsa | 0.58 | 0.57 | 0.58 | 0.58 | 0.57 |
Ratio of net investment income/(loss) to average net assetsa | (0.07) | (0.25) | (0.09) | 0.18 | 0.30 |
Portfolio turnover | 34 | 48 | 51 | 40 | 40 |
Administrative Class | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $120.94 | $96.68 | $74.15 | $72.54 | $74.08 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | (0.33) | (0.61) | (0.34) | (0.09) | (0.01) |
Net realized and unrealized gain/(loss) on investments | (37.74) | 37.63 | 29.54 | 8.35 | 6.39 |
Total from investment operations | (38.07) | 37.02 | 29.20 | 8.26 | 6.38 |
Less Distributions | |||||
Dividends from net investment income | — | — | — | — | — |
Distributions from net realized capital gains | (18.79) | (12.76) | (6.67) | (6.65) | (7.92) |
Total distributions | (18.79) | (12.76) | (6.67) | (6.65) | (7.92) |
Net asset value end of period | 64.08 | 120.94 | 96.68 | 74.15 | 72.54 |
Net assets end of period (000s) | $187,390 | $414,600 | $420,324 | $345,550 | $448,241 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (36.23)% | 40.86% | 42.32% | 13.35% | 9.16% |
Ratio of total expenses to average net assets^ | 0.97 | 0.96 | 0.97 | 0.96 | 0.95 |
Ratio of net expenses to average net assetsa | 0.91 | 0.90 | 0.91 | 0.91 | 0.90 |
Ratio of net investment income/(loss) to average net assetsa | (0.41) | (0.57) | (0.41) | (0.13) | (0.01) |
Portfolio turnover | 34 | 48 | 51 | 40 | 40 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
147
Institutional Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$124.78 | $99.18 | $75.78 | $73.97 | $75.32 |
(0.13) | (0.36) | (0.14) | 0.08 | 0.18 |
(39.17) | 38.72 | 30.26 | 8.53 | 6.50 |
(39.30) | 38.36 | 30.12 | 8.61 | 6.68 |
— | — | (0.05) | (0.15) | (0.11) |
(18.79) | (12.76) | (6.67) | (6.65) | (7.92) |
(18.79) | (12.76) | (6.72) | (6.80) | (8.03) |
66.69 | 124.78 | 99.18 | 75.78 | 73.97 |
$13,590,549 | $28,902,862 | $25,579,181 | $21,311,587 | $22,366,214 |
(36.08)% | 41.22% | 42.68% | 13.63% | 9.44% |
0.72 | 0.71 | 0.72 | 0.71 | 0.70 |
0.66 | 0.65 | 0.66 | 0.66 | 0.65 |
(0.16) | (0.33) | (0.16) | 0.11 | 0.23 |
34 | 48 | 51 | 40 | 40 |
Investor Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$117.30 | $94.19 | $72.48 | $71.15 | $72.88 |
(0.40) | (0.72) | (0.43) | (0.17) | (0.10) |
(36.43) | 36.59 | 28.81 | 8.15 | 6.29 |
(36.83) | 35.87 | 28.38 | 7.98 | 6.19 |
— | — | — | — | — |
(18.79) | (12.76) | (6.67) | (6.65) | (7.92) |
(18.79) | (12.76) | (6.67) | (6.65) | (7.92) |
61.68 | 117.30 | 94.19 | 72.48 | 71.15 |
$797,250 | $1,564,732 | $1,282,355 | $1,083,896 | $1,327,790 |
(36.31)% | 40.71% | 42.15% | 13.21% | 9.03% |
1.08 | 1.08 | 1.09 | 1.08 | 1.07 |
1.02 | 1.01 | 1.03 | 1.03 | 1.02 |
(0.52) | (0.69) | (0.53) | (0.25) | (0.13) |
34 | 48 | 51 | 40 | 40 |
148
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $13.69 | $12.49 | $10.82 | $10.47 | $11.27 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.04 | 0.02 | 0.07 | 0.10 | 0.10 |
Net realized and unrealized gain/(loss) on investments | (2.22) | 2.43 | 2.02 | 0.92 | 0.19 |
Total from investment operations | (2.18) | 2.45 | 2.09 | 1.02 | 0.29 |
Less Distributions | |||||
Dividends from net investment income | (0.08) | (0.09) | (0.09) | (0.18) | (0.09) |
Distributions from net realized capital gains | (1.61) | (1.16) | (0.33) | (0.49) | (1.00) |
Total distributions | (1.69) | (1.25) | (0.42) | (0.67) | (1.09) |
Proceeds from redemption fees | — | —* | —* | —* | —* |
Net asset value end of period | 9.82 | 13.69 | 12.49 | 10.82 | 10.47 |
Net assets end of period (000s) | $33,711 | $41,250 | $34,307 | $24,697 | $25,412 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (17.59)% | 20.23% | 19.93% | 10.48% | 2.80% |
Ratio of total expenses to average net assets^ | 0.74 | 0.73 | 0.74 | 0.74 | 0.74 |
Ratio of net expenses to average net assetsa | 0.68 | 0.67 | 0.69 | 0.69 | 0.69 |
Ratio of net investment income/(loss) to average net assetsa | 0.35 | 0.15 | 0.60 | 0.98 | 0.95 |
Portfolio turnover | 66 | 50 | 101 | 74 | 94 |
Administrative Class | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $13.63 | $12.46 | $10.80 | $10.44 | $11.26 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | —* | (0.02) | 0.03 | 0.07 | 0.07 |
Net realized and unrealized gain/(loss) on investments | (2.20) | 2.42 | 2.01 | 0.91 | 0.17 |
Total from investment operations | (2.20) | 2.40 | 2.04 | 0.98 | 0.24 |
Less Distributions | |||||
Dividends from net investment income | (0.04) | (0.07) | (0.05) | (0.13) | (0.06) |
Distributions from net realized capital gains | (1.61) | (1.16) | (0.33) | (0.49) | (1.00) |
Total distributions | (1.65) | (1.23) | (0.38) | (0.62) | (1.06) |
Proceeds from redemption fees | — | —* | —* | —* | —* |
Net asset value end of period | 9.78 | 13.63 | 12.46 | 10.80 | 10.44 |
Net assets end of period (000s) | $70 | $85 | $70 | $59 | $53 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (17.84)% | 19.87% | 19.48% | 10.11% | 2.27% |
Ratio of total expenses to average net assets^ | 1.07 | 1.06 | 1.07 | 1.07 | 1.07 |
Ratio of net expenses to average net assetsa | 1.01 | 1.00 | 1.02 | 1.02 | 1.01 |
Ratio of net investment income/(loss) to average net assetsa | 0.02 | (0.18) | 0.29 | 0.64 | 0.63 |
Portfolio turnover | 66 | 50 | 101 | 74 | 94 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
149
Institutional Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$13.68 | $12.48 | $10.83 | $10.48 | $11.27 |
0.03 | 0.01 | 0.06 | 0.09 | 0.09 |
(2.21) | 2.43 | 2.00 | 0.92 | 0.20 |
(2.18) | 2.44 | 2.06 | 1.01 | 0.29 |
(0.07) | (0.08) | (0.08) | (0.17) | (0.08) |
(1.61) | (1.16) | (0.33) | (0.49) | (1.00) |
(1.68) | (1.24) | (0.41) | (0.66) | (1.08) |
— | —* | —* | —* | —* |
9.82 | 13.68 | 12.48 | 10.83 | 10.48 |
$126,865 | $161,772 | $117,269 | $114,130 | $93,424 |
(17.62)% | 20.18% | 19.63% | 10.39% | 2.82% |
0.82 | 0.81 | 0.82 | 0.82 | 0.82 |
0.76 | 0.75 | 0.77 | 0.77 | 0.76 |
0.27 | 0.06 | 0.55 | 0.89 | 0.88 |
66 | 50 | 101 | 74 | 94 |
Investor Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$13.62 | $12.46 | $10.80 | $10.45 | $11.25 |
(0.01) | (0.04) | 0.02 | 0.05 | 0.05 |
(2.20) | 2.43 | 2.00 | 0.92 | 0.19 |
(2.21) | 2.39 | 2.02 | 0.97 | 0.24 |
(0.03) | (0.07) | (0.03) | (0.13) | (0.04) |
(1.61) | (1.16) | (0.33) | (0.49) | (1.00) |
(1.64) | (1.23) | (0.36) | (0.62) | (1.04) |
— | —* | —* | —* | —* |
9.77 | 13.62 | 12.46 | 10.80 | 10.45 |
$2,076 | $2,853 | $2,420 | $2,066 | $1,861 |
(17.92)% | 19.76% | 19.33% | 9.99% | 2.35% |
1.18 | 1.17 | 1.19 | 1.19 | 1.19 |
1.12 | 1.11 | 1.14 | 1.14 | 1.13 |
(0.10) | (0.29) | 0.17 | 0.52 | 0.51 |
66 | 50 | 101 | 74 | 94 |
150
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018h |
Net asset value beginning of period | $10.61 | $11.06 | $10.64 | $9.84 | $10.00 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.22 | 0.19 | 0.26 | 0.31 | 0.12 |
Net realized and unrealized gain/(loss) on investments | (1.90) | (0.19) | 0.50 | 0.79 | (0.19) |
Total from investment operations | (1.68) | — | 0.76 | 1.10 | (0.07) |
Less Distributions | |||||
Dividends from net investment income | (0.29) | (0.23) | (0.27) | (0.30) | (0.09) |
Distributions from net realized capital gains | — | (0.22) | (0.07) | — | — |
Total distributions | (0.29) | (0.45) | (0.34) | (0.30) | (0.09) |
Net asset value end of period | 8.64 | 10.61 | 11.06 | 10.64 | 9.84 |
Net assets end of period (000s) | $41,312 | $36,557 | $29,428 | $5,298 | $3,061 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (16.14)% | (0.01)% | 7.36% | 11.34% | (0.73)%c |
Ratio of total expenses to average net assets^ | 0.37 | 0.43 | 0.43 | 0.45 | 0.77d |
Ratio of net expenses to average net assetsa | 0.27 | 0.37 | 0.37 | 0.37 | 0.37d |
Ratio of net investment income/(loss) to average net assetsa | 2.28 | 1.77 | 2.35 | 2.98 | 2.98d |
Portfolio turnover | 60 | 47 | 70 | 61 | 97c |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
151
Institutional Class | ||||
2022 | 2021 | 2020 | 2019 | 2018h |
$10.61 | $11.06 | $10.64 | $9.84 | $10.00 |
0.20 | 0.18 | 0.26 | 0.30 | 0.12 |
(1.89) | (0.19) | 0.50 | 0.79 | (0.19) |
(1.69) | (0.01) | 0.76 | 1.09 | (0.07) |
(0.28) | (0.22) | (0.27) | (0.29) | (0.09) |
— | (0.22) | (0.07) | — | — |
(0.28) | (0.44) | (0.34) | (0.29) | (0.09) |
8.64 | 10.61 | 11.06 | 10.64 | 9.84 |
$28,065 | $105,931 | $86,173 | $79,458 | $52,249 |
(16.21)% | (0.09)% | 7.28% | 11.26% | (0.75)%c |
0.45 | 0.51 | 0.51 | 0.53 | 0.85d |
0.36 | 0.45 | 0.45 | 0.45 | 0.45d |
2.03 | 1.70 | 2.35 | 2.89 | 2.86d |
60 | 47 | 70 | 61 | 97c |
152
Harbor 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 PLUS FUND | |||||
Retirement Class | |||||
Year Ended October 31, | 2022m | 2021 | 2020 | 2019 | 2018h |
Net asset value beginning of period | $12.06 | $12.35 | $11.90 | $11.09 | $11.28 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.32 | 0.32 | 0.31 | 0.38 | 0.16 |
Net realized and unrealized gain/(loss) on investments | (2.18) | (0.21) | 0.49 | 0.80 | (0.16) |
Total from investment operations | (1.86) | 0.11 | 0.80 | 1.18 | —* |
Less Distributions | |||||
Dividends from net investment income | (0.40) | (0.27) | (0.35) | (0.37) | (0.19) |
Distributions from net realized capital gains | (0.02) | (0.13) | — | — | — |
Total distributions | (0.42) | (0.40) | (0.35) | (0.37) | (0.19) |
Net asset value end of period | 9.78 | 12.06 | 12.35 | 11.90 | 11.09 |
Net assets end of period (000s) | $12,389 | $172,699 | $166,740 | $12,802 | $6,921 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (15.78)% | 0.88% | 6.82% | 10.84% | 0.01%c |
Ratio of total expenses to average net assets^ | 0.42 | 0.53 | 0.58 | 1.06 | 1.16d |
Ratio of net expenses to average net assetsa | 0.36 | 0.43 | 0.48 | 0.96 | 1.06d |
Ratio of net expenses excluding interest expense to average net assetsa | 0.36 | 0.43 | 0.43 | 0.43 | 0.43d |
Ratio of net investment income/(loss) to average net assetsa | 2.83 | 2.63 | 2.56 | 3.30 | 3.44d |
Portfolio turnover | 219 | 370 | 558 | 644 | 674c |
Administrative Class | |||||
Year Ended October 31, | 2022m | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $12.08 | $12.37 | $11.92 | $11.11 | $11.69 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.29 | 0.28 | 0.28 | 0.35 | 0.31 |
Net realized and unrealized gain/(loss) on investments | (2.21) | (0.21) | 0.48 | 0.79 | (0.53) |
Total from investment operations | (1.92) | 0.07 | 0.76 | 1.14 | (0.22) |
Less Distributions | |||||
Dividends from net investment income | (0.36) | (0.23) | (0.31) | (0.33) | (0.36) |
Distributions from net realized capital gains | (0.02) | (0.13) | — | — | — |
Total distributions | (0.38) | (0.36) | (0.31) | (0.33) | (0.36) |
Net asset value end of period | 9.78 | 12.08 | 12.37 | 11.92 | 11.11 |
Net assets end of period (000s) | $11,223 | $17,270 | $18,302 | $19,498 | $31,111 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (16.20)% | 0.54% | 6.44% | 10.44% | (1.88)% |
Ratio of total expenses to average net assets^ | 0.71 | 0.86 | 0.97 | 1.39 | 1.16 |
Ratio of net expenses to average net assetsa | 0.67 | 0.76 | 0.87 | 1.29 | 1.06 |
Ratio of net expenses excluding interest expense to average net assetsa | 0.67 | 0.76 | 0.76 | 0.76 | 0.76 |
Ratio of net investment income/(loss) to average net assetsa | 2.64 | 2.29 | 2.32 | 3.01 | 2.69 |
Portfolio turnover | 219 | 370 | 558 | 644 | 674 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
153
Institutional Class | ||||
2022m | 2021 | 2020 | 2019 | 2018 |
$12.07 | $12.36 | $11.91 | $11.10 | $11.68 |
0.32 | 0.31 | 0.31 | 0.37 | 0.33 |
(2.21) | (0.21) | 0.48 | 0.80 | (0.52) |
(1.89) | 0.10 | 0.79 | 1.17 | (0.19) |
(0.39) | (0.26) | (0.34) | (0.36) | (0.39) |
(0.02) | (0.13) | — | — | — |
(0.41) | (0.39) | (0.34) | (0.36) | (0.39) |
9.77 | 12.07 | 12.36 | 11.91 | 11.10 |
$924,416 | $1,376,349 | $1,844,961 | $1,958,600 | $1,899,680 |
(15.99)% | 0.79% | 6.72% | 10.74% | (1.63)% |
0.46 | 0.61 | 0.73 | 1.14 | 0.90 |
0.42 | 0.51 | 0.62 | 1.04 | 0.80 |
0.42 | 0.51 | 0.51 | 0.51 | 0.51 |
2.88 | 2.52 | 2.58 | 3.23 | 2.93 |
219 | 370 | 558 | 644 | 674 |
154
Harbor 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 DISRUPTIVE INNOVATION FUND | |||||
Retirement Class | |||||
Year Ended October 31, | 2022 | 2021g | 2020 | 2019 | 2018 |
Net asset value beginning of period | $14.40 | $12.93 | $10.91 | $10.88 | $11.25 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | (0.01) | (0.08) | (0.06) | (0.04) | (0.03) |
Net realized and unrealized gain/(loss) on investments | (4.60) | 3.48 | 4.25 | 1.85 | 0.88 |
Total from investment operations | (4.61) | 3.40 | 4.19 | 1.81 | 0.85 |
Less Distributions | |||||
Dividends from net investment income | — | — | — | — | — |
Distributions from net realized capital gains | (5.42) | (1.93) | (2.17) | (1.78) | (1.22) |
Total distributions | (5.42) | (1.93) | (2.17) | (1.78) | (1.22) |
Net asset value end of period | 4.37 | 14.40 | 12.93 | 10.91 | 10.88 |
Net assets end of period (000s) | $16,353 | $64,310 | $64,242 | $31,265 | $144,137 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (46.85)% | 27.41% | 46.03% | 21.38% | 8.02% |
Ratio of total expenses to average net assets^ | 0.83 | 0.85 | 0.83 | 0.82 | 0.80 |
Ratio of net expenses to average net assetsa | 0.52 | 0.74 | 0.79 | 0.81 | 0.80 |
Ratio of net investment income/(loss) to average net assetsa | (0.15) | (0.56) | (0.53) | (0.37) | (0.28) |
Portfolio turnover | 75 | 182 | 113 | 70 | 85 |
Administrative Class | |||||
Year Ended October 31, | 2022 | 2021g | 2020 | 2019 | 2018 |
Net asset value beginning of period | $13.08 | $11.93 | $10.26 | $10.37 | $10.81 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | (0.03) | (0.11) | (0.08) | (0.06) | (0.06) |
Net realized and unrealized gain/(loss) on investments | (3.97) | 3.19 | 3.92 | 1.73 | 0.84 |
Total from investment operations | (4.00) | 3.08 | 3.84 | 1.67 | 0.78 |
Less Distributions | |||||
Dividends from net investment income | — | — | — | — | — |
Distributions from net realized capital gains | (5.42) | (1.93) | (2.17) | (1.78) | (1.22) |
Total distributions | (5.42) | (1.93) | (2.17) | (1.78) | (1.22) |
Net asset value end of period | 3.66 | 13.08 | 11.93 | 10.26 | 10.37 |
Net assets end of period (000s) | $2,492 | $5,518 | $3,666 | $2,687 | $26,936 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (46.96)% | 26.98% | 45.42% | 21.04% | 7.68% |
Ratio of total expenses to average net assets^ | 1.16 | 1.17 | 1.16 | 1.15 | 1.13 |
Ratio of net expenses to average net assetsa | 0.86 | 1.06 | 1.12 | 1.14 | 1.12 |
Ratio of net investment income/(loss) to average net assetsa | (0.48) | (0.88) | (0.84) | (0.66) | (0.55) |
Portfolio turnover | 75 | 182 | 113 | 70 | 85 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
155
Institutional Class | ||||
2022 | 2021g | 2020 | 2019 | 2018 |
$14.31 | $12.87 | $10.88 | $10.86 | $11.24 |
(0.01) | (0.09) | (0.06) | (0.05) | (0.04) |
(4.56) | 3.46 | 4.22 | 1.85 | 0.88 |
(4.57) | 3.37 | 4.16 | 1.80 | 0.84 |
— | — | — | — | — |
(5.42) | (1.93) | (2.17) | (1.78) | (1.22) |
(5.42) | (1.93) | (2.17) | (1.78) | (1.22) |
4.32 | 14.31 | 12.87 | 10.88 | 10.86 |
$72,988 | $220,842 | $236,863 | $198,544 | $158,680 |
(46.87)% | 27.29% | 45.84% | 21.32% | 7.94% |
0.91 | 0.93 | 0.91 | 0.90 | 0.88 |
0.61 | 0.82 | 0.87 | 0.89 | 0.87 |
(0.24) | (0.64) | (0.58) | (0.48) | (0.36) |
75 | 182 | 113 | 70 | 85 |
Investor Class | ||||
2022 | 2021g | 2020 | 2019 | 2018 |
$12.36 | $11.37 | $9.88 | $10.07 | $10.54 |
(0.03) | (0.12) | (0.09) | (0.08) | (0.08) |
(3.64) | 3.04 | 3.75 | 1.67 | 0.83 |
(3.67) | 2.92 | 3.66 | 1.59 | 0.75 |
— | — | — | — | — |
(5.42) | (1.93) | (2.17) | (1.78) | (1.22) |
(5.42) | (1.93) | (2.17) | (1.78) | (1.22) |
3.27 | 12.36 | 11.37 | 9.88 | 10.07 |
$16,387 | $56,531 | $36,399 | $20,891 | $16,929 |
(47.05)% | 26.88% | 45.32% | 20.83% | 7.57% |
1.27 | 1.29 | 1.28 | 1.27 | 1.25 |
0.96 | 1.17 | 1.24 | 1.26 | 1.24 |
(0.59) | (0.99) | (0.96) | (0.85) | (0.72) |
75 | 182 | 113 | 70 | 85 |
156
Harbor 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 DIVERSIFIED INTERNATIONAL ALL CAP FUND | |||||
Retirement Class | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $13.83 | $10.25 | $11.17 | $10.41 | $11.79 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.23 | 0.21 | 0.14 | 0.26 | 0.21 |
Net realized and unrealized gain/(loss) on investments | (3.36) | 3.50 | (0.81) | 0.92 | (1.19) |
Total from investment operations | (3.13) | 3.71 | (0.67) | 1.18 | (0.98) |
Less Distributions | |||||
Dividends from net investment income | (0.23) | (0.13) | (0.25) | (0.13) | (0.12) |
Distributions from net realized capital gains | (0.72) | — | — | (0.29) | (0.28) |
Total distributions | (0.95) | (0.13) | (0.25) | (0.42) | (0.40) |
Net asset value end of period | 9.75 | 13.83 | 10.25 | 11.17 | 10.41 |
Net assets end of period (000s) | $543,857 | $853,454 | $533,318 | $499,288 | $420,056 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (24.03)% | 36.32% | (6.25)% | 11.99% | (8.55)% |
Ratio of total expenses to average net assets^ | 0.84 | 0.84 | 0.85 | 0.87 | 0.90 |
Ratio of net expenses to average net assetsa | 0.72 | 0.71 | 0.70 | 0.68 | 0.74 |
Ratio of net investment income/(loss) to average net assetsa | 1.98 | 1.54 | 1.32 | 2.42 | 1.87 |
Portfolio turnover | 24 | 51 | 25 | 22 | 42 |
Administrative Class | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $13.77 | $10.22 | $11.14 | $10.39 | $11.76 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.20 | 0.16 | 0.10 | 0.22 | 0.22 |
Net realized and unrealized gain/(loss) on investments | (3.35) | 3.48 | (0.80) | 0.92 | (1.22) |
Total from investment operations | (3.15) | 3.64 | (0.70) | 1.14 | (1.00) |
Less Distributions | |||||
Dividends from net investment income | (0.19) | (0.09) | (0.22) | (0.10) | (0.09) |
Distributions from net realized capital gains | (0.72) | — | — | (0.29) | (0.28) |
Total distributions | (0.91) | (0.09) | (0.22) | (0.39) | (0.37) |
Net asset value end of period | 9.71 | 13.77 | 10.22 | 11.14 | 10.39 |
Net assets end of period (000s) | $7,419 | $9,213 | $6,446 | $6,800 | $5,734 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (24.24)% | 35.76% | (6.54)% | 11.58% | (8.76)% |
Ratio of total expenses to average net assets^ | 1.17 | 1.17 | 1.18 | 1.20 | 1.23 |
Ratio of net expenses to average net assetsa | 1.05 | 1.04 | 1.03 | 1.01 | 1.06 |
Ratio of net investment income/(loss) to average net assetsa | 1.73 | 1.17 | 0.99 | 2.06 | 1.96 |
Portfolio turnover | 24 | 51 | 25 | 22 | 42 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
157
Institutional Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$13.82 | $10.25 | $11.17 | $10.41 | $11.79 |
0.23 | 0.19 | 0.13 | 0.25 | 0.20 |
(3.36) | 3.50 | (0.81) | 0.92 | (1.18) |
(3.13) | 3.69 | (0.68) | 1.17 | (0.98) |
(0.22) | (0.12) | (0.24) | (0.12) | (0.12) |
(0.72) | — | — | (0.29) | (0.28) |
(0.94) | (0.12) | (0.24) | (0.41) | (0.40) |
9.75 | 13.82 | 10.25 | 11.17 | 10.41 |
$248,130 | $332,503 | $247,212 | $257,860 | $238,470 |
(24.04)% | 36.12% | (6.33)% | 11.90% | (8.62)% |
0.92 | 0.92 | 0.93 | 0.95 | 0.98 |
0.80 | 0.79 | 0.78 | 0.76 | 0.82 |
1.99 | 1.43 | 1.25 | 2.34 | 1.72 |
24 | 51 | 25 | 22 | 42 |
Investor Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$13.70 | $10.17 | $11.08 | $10.33 | $11.71 |
0.18 | 0.14 | 0.09 | 0.21 | 0.15 |
(3.33) | 3.47 | (0.80) | 0.91 | (1.17) |
(3.15) | 3.61 | (0.71) | 1.12 | (1.02) |
(0.17) | (0.08) | (0.20) | (0.08) | (0.08) |
(0.72) | — | — | (0.29) | (0.28) |
(0.89) | (0.08) | (0.20) | (0.37) | (0.36) |
9.66 | 13.70 | 10.17 | 11.08 | 10.33 |
$8,330 | $10,072 | $7,037 | $9,122 | $5,456 |
(24.32)% | 35.56% | (6.58)% | 11.43% | (8.93)% |
1.28 | 1.29 | 1.30 | 1.32 | 1.35 |
1.16 | 1.15 | 1.15 | 1.13 | 1.19 |
1.60 | 1.07 | 0.86 | 1.99 | 1.34 |
24 | 51 | 25 | 22 | 42 |
158
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020l | 2019 | 2018 |
Net asset value beginning of period | $11.15 | $10.89 | $11.01 | $9.57 | $10.83 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.09 | 0.14 | 0.07 | 0.21 | 0.12 |
Net realized and unrealized gain/(loss) on investments | (2.76) | 3.52 | (0.02) | 1.32 | (1.27) |
Total from investment operations | (2.67) | 3.66 | 0.05 | 1.53 | (1.15) |
Less Distributions | |||||
Dividends from net investment income | (0.09) | (0.13) | (0.17) | (0.09) | (0.11) |
Distributions from net realized capital gains | (3.22) | (3.27) | — | — | — |
Total distributions | (3.31) | (3.40) | (0.17) | (0.09) | (0.11) |
Net asset value end of period | 5.17 | 11.15 | 10.89 | 11.01 | 9.57 |
Net assets end of period (000s) | $1,391 | $18,760 | $28,935 | $49,052 | $12,146 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (32.39)% | 35.64% | 0.36% | 16.21% | (10.71)% |
Ratio of total expenses to average net assets^ | 1.72 | 1.47 | 1.25 | 1.22 | 1.26 |
Ratio of net expenses to average net assetsa | 0.88 | 0.88 | 0.93 | 1.02 | 1.07 |
Ratio of net investment income/(loss) to average net assetsa | 1.07 | 1.24 | 0.63 | 2.05 | 1.16 |
Portfolio turnover | 28 | 103 | 122 | 53 | 56 |
Investor Class | |||||
Year Ended October 31, | 2022 | 2021 | 2020l | 2019 | 2018 |
Net asset value beginning of period | $11.09 | $10.85 | $10.96 | $9.53 | $10.78 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.07 | 0.10 | 0.01 | 0.09 | 0.09 |
Net realized and unrealized gain/(loss) on investments | (2.75)* | 3.49 | —* | 1.39 | (1.27) |
Total from investment operations | (2.68) | 3.59 | 0.01 | 1.48 | (1.18) |
Less Distributions | |||||
Dividends from net investment income | (0.05) | (0.08) | (0.12) | (0.05) | (0.07) |
Distributions from net realized capital gains | (3.22) | (3.27) | — | — | — |
Total distributions | (3.27) | (3.35) | (0.12) | (0.05) | (0.07) |
Net asset value end of period | 5.14 | 11.09 | 10.85 | 10.96 | 9.53 |
Net assets end of period (000s) | $4,671 | $6,839 | $4,561 | $519 | $614 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (32.69)% | 34.94% | —% | 15.56% | (11.03)% |
Ratio of total expenses to average net assets^ | 2.16 | 1.91 | 1.69 | 1.67 | 1.71 |
Ratio of net expenses to average net assetsa | 1.32 | 1.32 | 1.37 | 1.49 | 1.52 |
Ratio of net investment income/(loss) to average net assetsa | 1.06 | 0.85 | 0.14 | 0.87 | 0.82 |
Portfolio turnover | 28 | 103 | 122 | 53 | 56 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
159
Institutional Class | ||||
2022 | 2021 | 2020l | 2019 | 2018 |
$11.16 | $10.89 | $11.01 | $9.57 | $10.83 |
0.09 | 0.14 | 0.08 | 0.12 | 0.14 |
(2.77) | 3.49 | (0.04) | 1.41 | (1.30) |
(2.68) | 3.63 | 0.04 | 1.53 | (1.16) |
(0.08) | (0.09) | (0.16) | (0.09) | (0.10) |
(3.22) | (3.27) | — | — | — |
(3.30) | (3.36) | (0.16) | (0.09) | (0.10) |
5.18 | 11.16 | 10.89 | 11.01 | 9.57 |
$4,231 | $18,810 | $16,009 | $49,891 | $58,271 |
(32.42)% | 35.37% | 0.28% | 16.13% | (10.77)% |
1.80 | 1.55 | 1.33 | 1.30 | 1.34 |
0.96 | 0.96 | 1.01 | 1.12 | 1.15 |
1.31 | 1.23 | 0.74 | 1.13 | 1.28 |
28 | 103 | 122 | 53 | 56 |
160
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $41.81 | $33.89 | $30.81 | $25.52 | $25.33 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | (0.04) | (0.09) | 0.02 | 0.13 | 0.02 |
Net realized and unrealized gain/(loss) on investments | (13.64) | 10.84 | 4.89 | 5.76 | 2.40 |
Total from investment operations | (13.68) | 10.75 | 4.91 | 5.89 | 2.42 |
Less Distributions | |||||
Dividends from net investment income | — | — | (0.09) | — | (0.03) |
Distributions from net realized capital gains | (3.70) | (2.83) | (1.74) | (0.60) | (2.20) |
Total distributions | (3.70) | (2.83) | (1.83) | (0.60) | (2.23) |
Net asset value end of period | 24.43 | 41.81 | 33.89 | 30.81 | 25.52 |
Net assets end of period (000s) | $15,702 | $24,324 | $17,703 | $12,245 | $6,846 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (35.22)% | 33.12% | 16.56% | 23.72% | 10.01% |
Ratio of total expenses to average net assets^ | 0.92 | 0.87 | 0.90 | 0.92 | 0.96 |
Ratio of net expenses to average net assetsa | 0.78 | 0.78 | 0.78 | 0.80 | 0.82 |
Ratio of net investment income/(loss) to average net assetsa | (0.14) | (0.24) | 0.07 | 0.46 | 0.09 |
Portfolio turnover | 29 | 27 | 55 | 47 | 20 |
Administrative Class | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $40.63 | $33.10 | $30.15 | $25.06 | $24.97 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | (0.14) | (0.22) | (0.08) | 0.06 | (0.05) |
Net realized and unrealized gain/(loss) on investments | (13.21) | 10.58 | 4.77 | 5.63 | 2.34 |
Total from investment operations | (13.35) | 10.36 | 4.69 | 5.69 | 2.29 |
Less Distributions | |||||
Dividends from net investment income | — | — | — | — | — |
Distributions from net realized capital gains | (3.70) | (2.83) | (1.74) | (0.60) | (2.20) |
Total distributions | (3.70) | (2.83) | (1.74) | (0.60) | (2.20) |
Net asset value end of period | 23.58 | 40.63 | 33.10 | 30.15 | 25.06 |
Net assets end of period (000s) | $914 | $1,757 | $2,067 | $3,050 | $1,111 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (35.45)% | 32.71% | 16.13% | 23.35% | 9.61% |
Ratio of total expenses to average net assets^ | 1.25 | 1.20 | 1.23 | 1.25 | 1.29 |
Ratio of net expenses to average net assetsa | 1.11 | 1.11 | 1.11 | 1.13 | 1.15 |
Ratio of net investment income/(loss) to average net assetsa | (0.48) | (0.58) | (0.25) | 0.22 | (0.21) |
Portfolio turnover | 29 | 27 | 55 | 47 | 20 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
161
Institutional Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$41.67 | $33.80 | $30.75 | $25.49 | $25.31 |
(0.08) | (0.13) | —* | 0.11 | 0.01 |
(13.57) | 10.83 | 4.86 | 5.75 | 2.38 |
(13.65) | 10.70 | 4.86 | 5.86 | 2.39 |
— | — | (0.07) | — | (0.01) |
(3.70) | (2.83) | (1.74) | (0.60) | (2.20) |
(3.70) | (2.83) | (1.81) | (0.60) | (2.21) |
24.32 | 41.67 | 33.80 | 30.75 | 25.49 |
$40,193 | $90,307 | $78,120 | $72,429 | $33,574 |
(35.27)% | 33.02% | 16.46% | 23.63% | 9.90% |
1.00 | 0.95 | 0.98 | 1.00 | 1.04 |
0.86 | 0.86 | 0.86 | 0.88 | 0.90 |
(0.25) | (0.33) | 0.01 | 0.37 | 0.03 |
29 | 27 | 55 | 47 | 20 |
Investor Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$39.90 | $32.59 | $29.74 | $24.76 | $24.72 |
(0.18) | (0.25) | (0.11) | (0.01) | (0.09) |
(12.93) | 10.39 | 4.70 | 5.59 | 2.33 |
(13.11) | 10.14 | 4.59 | 5.58 | 2.24 |
— | — | — | — | — |
(3.70) | (2.83) | (1.74) | (0.60) | (2.20) |
(3.70) | (2.83) | (1.74) | (0.60) | (2.20) |
23.09 | 39.90 | 32.59 | 29.74 | 24.76 |
$10,744 | $26,160 | $20,865 | $18,748 | $12,416 |
(35.50)% | 32.53% | 16.01% | 23.18% | 9.50% |
1.36 | 1.31 | 1.35 | 1.37 | 1.41 |
1.22 | 1.22 | 1.23 | 1.25 | 1.27 |
(0.61) | (0.69) | (0.35) | (0.03) | (0.35) |
29 | 27 | 55 | 47 | 20 |
162
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $9.95 | $9.55 | $9.88 | $9.69 | $10.22 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.43 | 0.42 | 0.47 | 0.54 | 0.54 |
Net realized and unrealized gain/(loss) on investments | (1.34) | 0.49 | (0.28) | 0.22 | (0.49) |
Total from investment operations | (0.91) | 0.91 | 0.19 | 0.76 | 0.05 |
Less Distributions | |||||
Dividends from net investment income | (0.47) | (0.51) | (0.52) | (0.57) | (0.58) |
Distributions from net realized capital gains | — | — | — | — | — |
Total distributions | (0.47) | (0.51) | (0.52) | (0.57) | (0.58) |
Proceeds from redemption fees | — | —* | —* | —* | —* |
Net asset value end of period | 8.57 | 9.95 | 9.55 | 9.88 | 9.69 |
Net assets end of period (000s) | $80,052 | $83,594 | $114,145 | $73,676 | $303,627 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (9.37)% | 9.64% | 2.18% | 8.13% | 0.54% |
Ratio of total expenses to average net assets^ | 0.68 | 0.66 | 0.66 | 0.65 | 0.61 |
Ratio of net expenses to average net assetsa | 0.59 | 0.56 | 0.56 | 0.56 | 0.53 |
Ratio of net investment income/(loss) to average net assetsa | 4.66 | 4.21 | 4.88 | 5.53 | 5.50 |
Portfolio turnover | 91 | 126 | 128 | 80 | 53 |
Administrative Class | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $10.00 | $9.59 | $9.92 | $9.71 | $10.25 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.41 | 0.39 | 0.44 | 0.50 | 0.52 |
Net realized and unrealized gain/(loss) on investments | (1.37) | 0.50 | (0.28) | 0.25 | (0.51) |
Total from investment operations | (0.96) | 0.89 | 0.16 | 0.75 | 0.01 |
Less Distributions | |||||
Dividends from net investment income | (0.43) | (0.48) | (0.49) | (0.54) | (0.55) |
Distributions from net realized capital gains | — | — | — | — | — |
Total distributions | (0.43) | (0.48) | (0.49) | (0.54) | (0.55) |
Proceeds from redemption fees | — | —* | —* | —* | —* |
Net asset value end of period | 8.61 | 10.00 | 9.59 | 9.92 | 9.71 |
Net assets end of period (000s) | $368 | $715 | $668 | $686 | $1,374 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (9.73)% | 9.35% | 1.82% | 7.91% | 0.10% |
Ratio of total expenses to average net assets^ | 1.01 | 0.99 | 0.99 | 0.98 | 0.94 |
Ratio of net expenses to average net assetsa | 0.92 | 0.89 | 0.90 | 0.89 | 0.86 |
Ratio of net investment income/(loss) to average net assetsa | 4.34 | 3.85 | 4.60 | 5.13 | 5.18 |
Portfolio turnover | 91 | 126 | 128 | 80 | 53 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
163
Institutional Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$9.95 | $9.55 | $9.88 | $9.68 | $10.21 |
0.43 | 0.41 | 0.46 | 0.52 | 0.54 |
(1.35) | 0.49 | (0.28) | 0.25 | (0.51) |
(0.92) | 0.90 | 0.18 | 0.77 | 0.03 |
(0.46) | (0.50) | (0.51) | (0.57) | (0.57) |
— | — | — | — | — |
(0.46) | (0.50) | (0.51) | (0.57) | (0.57) |
— | —* | —* | —* | 0.01 |
8.57 | 9.95 | 9.55 | 9.88 | 9.68 |
$182,350 | $254,241 | $287,242 | $398,320 | $470,204 |
(9.44)% | 9.55% | 2.09% | 8.16% | 0.45% |
0.76 | 0.74 | 0.74 | 0.73 | 0.69 |
0.67 | 0.64 | 0.65 | 0.64 | 0.62 |
4.62 | 4.12 | 4.86 | 5.35 | 5.40 |
91 | 126 | 128 | 80 | 53 |
Investor Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$9.99 | $9.57 | $9.91 | $9.71 | $10.24 |
0.39 | 0.38 | 0.43 | 0.49 | 0.50 |
(1.36) | 0.50 | (0.29) | 0.24 | (0.49) |
(0.97) | 0.88 | 0.14 | 0.73 | 0.01 |
(0.42) | (0.46) | (0.48) | (0.53) | (0.54) |
— | — | — | — | — |
(0.42) | (0.46) | (0.48) | (0.53) | (0.54) |
— | —* | —* | —* | —* |
8.60 | 9.99 | 9.57 | 9.91 | 9.71 |
$19,092 | $22,845 | $25,613 | $18,993 | $31,549 |
(9.83)% | 9.31% | 1.59% | 7.72% | 0.08% |
1.12 | 1.11 | 1.11 | 1.10 | 1.06 |
1.03 | 1.01 | 1.01 | 1.01 | 0.98 |
4.26 | 3.75 | 4.44 | 5.00 | 5.05 |
91 | 126 | 128 | 80 | 53 |
164
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018j |
Net asset value beginning of period | $48.47 | $36.52 | $39.00 | $58.31 | $69.91 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 1.09 | 0.72 | 0.91 | 0.91 | 1.21 |
Net realized and unrealized gain/(loss) on investments | (12.60) | 11.73 | (2.10) | 1.62 | (8.51) |
Total from investment operations | (11.51) | 12.45 | (1.19) | 2.53 | (7.30) |
Less Distributions | |||||
Dividends from net investment income | (1.05) | (0.50) | (1.29) | (0.97) | (1.30) |
Distributions from net realized capital gains | — | — | — | (20.87) | (3.00) |
Total distributions | (1.05) | (0.50) | (1.29) | (21.84) | (4.30) |
Net asset value end of period | 35.91 | 48.47 | 36.52 | 39.00 | 58.31 |
Net assets end of period (000s) | $461,129 | $872,647 | $871,743 | $1,299,776 | $2,703,360 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (24.19)% | 34.23% | (3.35)% | 10.29% | (11.24)% |
Ratio of total expenses to average net assets^ | 0.81 | 0.80 | 1.61n | 0.80 | 0.74 |
Ratio of net expenses to average net assetsa | 0.69 | 0.69 | 0.69n | 0.67 | 0.64 |
Ratio of net investment income/(loss) to average net assetsa | 2.57 | 1.55 | 2.52n | 2.33 | 1.80 |
Portfolio turnover | 14 | 21 | 12 | 12 | 64 |
Administrative Class | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018j |
Net asset value beginning of period | $48.95 | $36.78 | $39.26 | $58.08 | $69.57 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 1.02 | 0.57 | 0.47 | 0.76 | 0.88 |
Net realized and unrealized gain/(loss) on investments | (12.80) | 11.84 | (1.81) | 1.70 | (8.37) |
Total from investment operations | (11.78) | 12.41 | (1.34) | 2.46 | (7.49) |
Less Distributions | |||||
Dividends from net investment income | (0.87) | (0.24) | (1.14) | (0.41) | (1.00) |
Distributions from net realized capital gains | — | — | — | (20.87) | (3.00) |
Total distributions | (0.87) | (0.24) | (1.14) | (21.28) | (4.00) |
Net asset value end of period | 36.29 | 48.95 | 36.78 | 39.26 | 58.08 |
Net assets end of period (000s) | $10,375 | $15,464 | $15,825 | $70,981 | $90,009 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (24.46)% | 33.80% | (3.67)% | 9.94% | (11.53)% |
Ratio of total expenses to average net assets^ | 1.14 | 1.14 | 1.65n | 1.13 | 1.07 |
Ratio of net expenses to average net assetsa | 1.02 | 1.02 | 1.02n | 1.00 | 0.97 |
Ratio of net investment income/(loss) to average net assetsa | 2.40 | 1.22 | 1.61n | 1.94 | 1.30 |
Portfolio turnover | 14 | 21 | 12 | 12 | 64 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
165
Institutional Class | ||||
2022 | 2021 | 2020 | 2019 | 2018j |
$48.64 | $36.64 | $39.12 | $58.31 | $69.90 |
1.12 | 0.70 | 0.92 | 0.84 | 1.04 |
(12.71) | 11.76 | (2.15) | 1.67 | (8.39) |
(11.59) | 12.46 | (1.23) | 2.51 | (7.35) |
(1.01) | (0.46) | (1.25) | (0.83) | (1.24) |
— | — | — | (20.87) | (3.00) |
(1.01) | (0.46) | (1.25) | (21.70) | (4.24) |
36.04 | 48.64 | 36.64 | 39.12 | 58.31 |
$2,298,600 | $3,307,683 | $2,750,824 | $3,814,616 | $8,577,147 |
(24.25)% | 34.15% | (3.43)% | 10.18% | (11.31)% |
0.89 | 0.89 | 1.76n | 0.88 | 0.82 |
0.77 | 0.77 | 0.77n | 0.75 | 0.72 |
2.68 | 1.50 | 2.52n | 2.11 | 1.53 |
14 | 21 | 12 | 12 | 64 |
Investor Class | ||||
2022 | 2021 | 2020 | 2019 | 2018j |
$48.08 | $36.22 | $38.65 | $57.66 | $69.14 |
0.95 | 0.52 | 0.75 | 0.70 | 0.81 |
(12.57) | 11.64 | (2.12) | 1.65 | (8.33) |
(11.62) | 12.16 | (1.37) | 2.35 | (7.52) |
(0.83) | (0.30) | (1.06) | (0.49) | (0.96) |
— | — | — | (20.87) | (3.00) |
(0.83) | (0.30) | (1.06) | (21.36) | (3.96) |
35.63 | 48.08 | 36.22 | 38.65 | 57.66 |
$246,731 | $374,773 | $323,686 | $510,270 | $895,711 |
(24.53)% | 33.66% | (3.79)% | 9.80% | (11.65)% |
1.25 | 1.25 | 2.10n | 1.25 | 1.19 |
1.13 | 1.13 | 1.14n | 1.12 | 1.09 |
2.28 | 1.13 | 2.06n | 1.80 | 1.21 |
14 | 21 | 12 | 12 | 64 |
166
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $23.53 | $19.10 | $16.14 | $13.70 | $15.71 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.06 | 0.02 | 0.03 | 0.30 | 0.17 |
Net realized and unrealized gain/(loss) on investments | (8.96) | 4.56 | 3.25 | 2.25 | (1.99) |
Total from investment operations | (8.90) | 4.58 | 3.28 | 2.55 | (1.82) |
Less Distributions | |||||
Dividends from net investment income | (0.14) | (0.15) | (0.32) | (0.11) | (0.19) |
Distributions from net realized capital gains | (1.73) | — | — | — | — |
Total distributions | (1.87) | (0.15) | (0.32) | (0.11) | (0.19) |
Net asset value end of period | 12.76 | 23.53 | 19.10 | 16.14 | 13.70 |
Net assets end of period (000s) | $72,107 | $147,545 | $163,202 | $143,276 | $93,815 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (40.76)% | 24.00% | 20.56% | 18.81% | (11.74)% |
Ratio of total expenses to average net assets^ | 0.83 | 0.81 | 0.83 | 0.83 | 0.81 |
Ratio of net expenses to average net assetsa | 0.77 | 0.77 | 0.77 | 0.77 | 0.77 |
Ratio of net investment income/(loss) to average net assetsa | 0.34 | 0.08 | 0.19 | 2.01 | 1.07 |
Portfolio turnover | 18 | 12 | 24 | 16 | 17 |
Administrative Class | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $23.42 | $19.05 | $16.10 | $13.66 | $15.67 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | (0.02) | (0.06) | (0.02) | 0.22 | 0.08 |
Net realized and unrealized gain/(loss) on investments | (8.91) | 4.54 | 3.24 | 2.28 | (1.95) |
Total from investment operations | (8.93) | 4.48 | 3.22 | 2.50 | (1.87) |
Less Distributions | |||||
Dividends from net investment income | (0.03) | (0.11) | (0.27) | (0.06) | (0.14) |
Distributions from net realized capital gains | (1.73) | — | — | — | — |
Total distributions | (1.76) | (0.11) | (0.27) | (0.06) | (0.14) |
Net asset value end of period | 12.73 | 23.42 | 19.05 | 16.10 | 13.66 |
Net assets end of period (000s) | $148 | $662 | $507 | $390 | $330 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (40.93)% | 23.54% | 20.17% | 18.45% | (12.03)% |
Ratio of total expenses to average net assets^ | 1.16 | 1.14 | 1.16 | 1.16 | 1.14 |
Ratio of net expenses to average net assetsa | 1.10 | 1.10 | 1.10 | 1.10 | 1.10 |
Ratio of net investment income/(loss) to average net assetsa | (0.09) | (0.24) | (0.15) | 1.50 | 0.51 |
Portfolio turnover | 18 | 12 | 24 | 16 | 17 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
167
Institutional Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$23.50 | $19.08 | $16.13 | $13.69 | $15.69 |
0.04 | —* | 0.02 | 0.26 | 0.13 |
(8.94) | 4.55 | 3.24 | 2.28 | (1.95) |
(8.90) | 4.55 | 3.26 | 2.54 | (1.82) |
(0.12) | (0.13) | (0.31) | (0.10) | (0.18) |
(1.73) | — | — | — | — |
(1.85) | (0.13) | (0.31) | (0.10) | (0.18) |
12.75 | 23.50 | 19.08 | 16.13 | 13.69 |
$267,148 | $709,080 | $600,240 | $414,528 | $399,911 |
(40.78)% | 23.92% | 20.42% | 18.73% | (11.75)% |
0.91 | 0.89 | 0.91 | 0.91 | 0.89 |
0.85 | 0.85 | 0.85 | 0.85 | 0.85 |
0.21 | 0.01 | 0.11 | 1.75 | 0.84 |
18 | 12 | 24 | 16 | 17 |
Investor Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$23.30 | $18.93 | $16.00 | $13.58 | $15.57 |
(0.02) | (0.11) | (0.04) | 0.21 | 0.11 |
(8.89) | 4.54 | 3.22 | 2.26 | (1.98) |
(8.91) | 4.43 | 3.18 | 2.47 | (1.87) |
— | (0.06) | (0.25) | (0.05) | (0.12) |
(1.73) | — | — | — | — |
(1.73) | (0.06) | (0.25) | (0.05) | (0.12) |
12.66 | 23.30 | 18.93 | 16.00 | 13.58 |
$6,788 | $13,523 | $32,757 | $34,238 | $32,225 |
(41.00)% | 23.41% | 20.06% | 18.29% | (12.12)% |
1.27 | 1.26 | 1.28 | 1.28 | 1.26 |
1.21 | 1.22 | 1.22 | 1.22 | 1.22 |
(0.10) | (0.49) | (0.27) | 1.40 | 0.69 |
18 | 12 | 24 | 16 | 17 |
168
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019k | 2018 |
Net asset value beginning of period | $16.39 | $11.37 | $12.49 | $12.38 | $13.90 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.27 | 0.28 | 0.07 | 0.24 | 0.17 |
Net realized and unrealized gain/(loss) on investments | (2.91) | 4.91 | (0.82) | 0.35 | (1.50) |
Total from investment operations | (2.64) | 5.19 | (0.75) | 0.59 | (1.33) |
Less Distributions | |||||
Dividends from net investment income | (0.28) | (0.17) | (0.37) | (0.10) | (0.09) |
Distributions from net realized capital gains | (0.82) | — | — | (0.38) | (0.10) |
Total distributions | (1.10) | (0.17) | (0.37) | (0.48) | (0.19) |
Net asset value end of period | 12.65 | 16.39 | 11.37 | 12.49 | 12.38 |
Net assets end of period (000s) | $30,387 | $9,559 | $5,525 | $19,408 | $8,213 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (16.94)% | 45.95% | (6.36)% | 5.23% | (9.71)% |
Ratio of total expenses to average net assets^ | 1.11 | 1.17 | 1.37 | 1.24 | 1.07 |
Ratio of net expenses to average net assetsa | 0.88 | 0.88 | 0.88 | 0.88 | 0.87 |
Ratio of net investment income/(loss) to average net assetsa | 2.04 | 1.79 | 0.64 | 1.98 | 1.19 |
Portfolio turnover | 23 | 43 | 39 | 178 | 53 |
Administrative Class | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019k | 2018 |
Net asset value beginning of period | $16.33 | $11.34 | $12.46 | $12.34 | $13.87 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.29 | 0.20 | 0.06 | 0.15 | 0.11 |
Net realized and unrealized gain/(loss) on investments | (2.97) | 4.93 | (0.85) | 0.40 | (1.49) |
Total from investment operations | (2.68) | 5.13 | (0.79) | 0.55 | (1.38) |
Less Distributions | |||||
Dividends from net investment income | (0.23) | (0.14) | (0.33) | (0.05) | (0.05) |
Distributions from net realized capital gains | (0.82) | — | — | (0.38) | (0.10) |
Total distributions | (1.05) | (0.14) | (0.33) | (0.43) | (0.15) |
Net asset value end of period | 12.60 | 16.33 | 11.34 | 12.46 | 12.34 |
Net assets end of period (000s) | $436 | $487 | $333 | $356 | $309 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (17.25)% | 45.44% | (6.65)% | 4.90% | (10.06)% |
Ratio of total expenses to average net assets^ | 1.44 | 1.50 | 1.70 | 1.57 | 1.40 |
Ratio of net expenses to average net assetsa | 1.21 | 1.21 | 1.21 | 1.21 | 1.20 |
Ratio of net investment income/(loss) to average net assetsa | 2.12 | 1.30 | 0.49 | 1.25 | 0.76 |
Portfolio turnover | 23 | 43 | 39 | 178 | 53 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
169
Institutional Class | ||||
2022 | 2021 | 2020 | 2019k | 2018 |
$16.39 | $11.37 | $12.49 | $12.37 | $13.90 |
0.32 | 0.24 | 0.09 | 0.19 | 0.15 |
(2.97) | 4.95 | (0.86) | 0.40 | (1.50) |
(2.65) | 5.19 | (0.77) | 0.59 | (1.35) |
(0.27) | (0.17) | (0.35) | (0.09) | (0.08) |
(0.82) | — | — | (0.38) | (0.10) |
(1.09) | (0.17) | (0.35) | (0.47) | (0.18) |
12.65 | 16.39 | 11.37 | 12.49 | 12.37 |
$93,640 | $49,419 | $25,716 | $25,758 | $50,358 |
(17.00)% | 45.87% | (6.48)% | 5.25% | (9.83)% |
1.19 | 1.25 | 1.45 | 1.32 | 1.15 |
0.96 | 0.96 | 0.96 | 0.96 | 0.95 |
2.32 | 1.53 | 0.76 | 1.60 | 1.05 |
23 | 43 | 39 | 178 | 53 |
Investor Class | ||||
2022 | 2021 | 2020 | 2019k | 2018 |
$16.32 | $11.34 | $12.45 | $12.34 | $13.86 |
0.23 | 0.18 | 0.04 | 0.13 | 0.10 |
(2.92) | 4.93 | (0.84) | 0.40 | (1.48) |
(2.69) | 5.11 | (0.80) | 0.53 | (1.38) |
(0.23) | (0.13) | (0.31) | (0.04) | (0.04) |
(0.82) | — | — | (0.38) | (0.10) |
(1.05) | (0.13) | (0.31) | (0.42) | (0.14) |
12.58 | 16.32 | 11.34 | 12.45 | 12.34 |
$1,140 | $1,962 | $398 | $428 | $619 |
(17.29)% | 45.25% | (6.76)% | 4.70% | (10.08)% |
1.55 | 1.61 | 1.82 | 1.69 | 1.52 |
1.32 | 1.32 | 1.33 | 1.33 | 1.32 |
1.66 | 1.16 | 0.36 | 1.10 | 0.73 |
23 | 43 | 39 | 178 | 53 |
170
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $23.23 | $17.11 | $16.33 | $14.37 | $14.87 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.26 | 0.19 | 0.18 | 0.18 | 0.17 |
Net realized and unrealized gain/(loss) on investments | (3.16) | 6.62 | 0.76 | 2.17 | (0.13) |
Total from investment operations | (2.90) | 6.81 | 0.94 | 2.35 | 0.04 |
Less Distributions | |||||
Dividends from net investment income | (0.22) | (0.17) | (0.16) | (0.16) | (0.13) |
Distributions from net realized capital gains | (0.61) | (0.52) | — | (0.23) | (0.41) |
Total distributions | (0.83) | (0.69) | (0.16) | (0.39) | (0.54) |
Net asset value end of period | 19.50 | 23.23 | 17.11 | 16.33 | 14.37 |
Net assets end of period (000s) | $1,326,142 | $1,472,349 | $655,562 | $457,908 | $313,721 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (12.82)% | 40.62% | 5.80% | 16.92% | 0.18% |
Ratio of total expenses to average net assets^ | 0.64 | 0.64 | 0.64 | 0.65 | 0.64 |
Ratio of net expenses to average net assetsa | 0.61 | 0.61 | 0.61 | 0.61 | 0.60 |
Ratio of net investment income/(loss) to average net assetsa | 1.26 | 0.90 | 1.08 | 1.19 | 1.12 |
Portfolio turnover | 24 | 13 | 26 | 11 | 15 |
Administrative Class | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $23.21 | $17.11 | $16.33 | $14.36 | $14.84 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.19 | 0.13 | 0.13 | 0.14 | 0.13 |
Net realized and unrealized gain/(loss) on investments | (3.14) | 6.59 | 0.75 | 2.17 | (0.15) |
Total from investment operations | (2.95) | 6.72 | 0.88 | 2.31 | (0.02) |
Less Distributions | |||||
Dividends from net investment income | (0.15) | (0.10) | (0.10) | (0.11) | (0.05) |
Distributions from net realized capital gains | (0.61) | (0.52) | — | (0.23) | (0.41) |
Total distributions | (0.76) | (0.62) | (0.10) | (0.34) | (0.46) |
Net asset value end of period | 19.50 | 23.21 | 17.11 | 16.33 | 14.36 |
Net assets end of period (000s) | $3,228 | $3,941 | $11,502 | $12,195 | $15,460 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (13.06)% | 40.05% | 5.42% | 16.60% | (0.23)% |
Ratio of total expenses to average net assets^ | 0.97 | 0.97 | 0.97 | 0.98 | 0.97 |
Ratio of net expenses to average net assetsa | 0.94 | 0.94 | 0.94 | 0.94 | 0.93 |
Ratio of net investment income/(loss) to average net assetsa | 0.92 | 0.64 | 0.78 | 0.91 | 0.84 |
Portfolio turnover | 24 | 13 | 26 | 11 | 15 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
171
Institutional Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$23.23 | $17.11 | $16.33 | $14.37 | $14.87 |
0.25 | 0.18 | 0.17 | 0.17 | 0.16 |
(3.17) | 6.61 | 0.76 | 2.17 | (0.13) |
(2.92) | 6.79 | 0.93 | 2.34 | 0.03 |
(0.20) | (0.15) | (0.15) | (0.15) | (0.12) |
(0.61) | (0.52) | — | (0.23) | (0.41) |
(0.81) | (0.67) | (0.15) | (0.38) | (0.53) |
19.50 | 23.23 | 17.11 | 16.33 | 14.37 |
$751,476 | $1,049,830 | $880,755 | $761,262 | $605,040 |
(12.90)% | 40.52% | 5.72% | 16.83% | 0.11% |
0.72 | 0.72 | 0.72 | 0.73 | 0.72 |
0.69 | 0.69 | 0.69 | 0.69 | 0.68 |
1.17 | 0.84 | 1.02 | 1.12 | 1.05 |
24 | 13 | 26 | 11 | 15 |
Investor Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$23.46 | $17.28 | $16.48 | $14.49 | $14.99 |
0.17 | 0.10 | 0.11 | 0.12 | 0.11 |
(3.18) | 6.68 | 0.76 | 2.19 | (0.14) |
(3.01) | 6.78 | 0.87 | 2.31 | (0.03) |
(0.12) | (0.08) | (0.07) | (0.09) | (0.06) |
(0.61) | (0.52) | — | (0.23) | (0.41) |
(0.73) | (0.60) | (0.07) | (0.32) | (0.47) |
19.72 | 23.46 | 17.28 | 16.48 | 14.49 |
$26,880 | $31,192 | $23,527 | $35,622 | $45,548 |
(13.15)% | 39.96% | 5.32% | 16.39% | (0.27)% |
1.08 | 1.08 | 1.09 | 1.10 | 1.09 |
1.05 | 1.05 | 1.06 | 1.06 | 1.05 |
0.81 | 0.47 | 0.67 | 0.79 | 0.70 |
24 | 13 | 26 | 11 | 15 |
172
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020f | 2022 | 2021 | 2020f |
Net asset value beginning of period | $14.52 | $10.57 | $10.00 | $14.51 | $10.56 | $10.00 |
Income from Investment Operations | ||||||
Net investment income/(loss)a,e | 0.09 | 0.05 | 0.05 | 0.09 | 0.04 | 0.04 |
Net realized and unrealized gain/(loss) on investments | (1.84) | 3.93 | 0.53 | (1.85) | 3.93 | 0.53 |
Total from investment operations | (1.75) | 3.98 | 0.58 | (1.76) | 3.97 | 0.57 |
Less Distributions | ||||||
Dividends from net investment income | (0.05) | (0.03) | (0.01) | (0.04) | (0.02) | (0.01) |
Distributions from net realized capital gains | (0.27) | — | — | (0.27) | — | — |
Total distributions | (0.32) | (0.03) | (0.01) | (0.31) | (0.02) | (0.01) |
Net asset value end of period | 12.45 | 14.52 | 10.57 | 12.44 | 14.51 | 10.56 |
Net assets end of period (000s) | $67,079 | $37,135 | $5,148 | $21,105 | $23,710 | $5,411 |
Ratios and Supplemental Data (%) | ||||||
Total returnb | (12.36)% | 37.61% | 5.86%c | (12.43)%c | 37.54% | 5.75% |
Ratio of total expenses to average net assets^ | 0.92 | 0.93 | 2.28d | 1.00d | 1.01 | 2.36 |
Ratio of net expenses to average net assetsa | 0.80 | 0.80 | 0.80d | 0.88d | 0.88 | 0.88 |
Ratio of net investment income/(loss) to average net assetsa | 0.65 | 0.40 | 0.54d | 0.64d | 0.27 | 0.46 |
Portfolio turnover | 42 | 11 | 9c | 42c | 11 | 9 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
173
Investor Class | ||
2022 | 2021 | 2020f |
$14.44 | $10.54 | $10.00 |
0.04 | (0.01) | 0.01 |
(1.84) | 3.91 | 0.53 |
(1.80) | 3.90 | 0.54 |
—* | —* | —* |
(0.27) | — | — |
(0.27) | —* | —* |
12.37 | 14.44 | 10.54 |
$834 | $949 | $455 |
(12.72)% | 37.00% | 5.42%c |
1.36 | 1.38 | 2.73d |
1.24 | 1.24 | 1.25d |
0.28 | (0.06) | 0.07d |
42 | 11 | 9c |
174
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $24.97 | $16.83 | $20.82 | $21.39 | $23.33 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.49 | 0.42 | 0.43 | 0.48 | 0.50 |
Net realized and unrealized gain/(loss) on investments | (1.18) | 8.21 | (3.73) | 0.47 | (1.52) |
Total from investment operations | (0.69) | 8.63 | (3.30) | 0.95 | (1.02) |
Less Distributions | |||||
Dividends from net investment income | (0.35) | (0.49) | (0.54) | (0.37) | (0.33) |
Distributions from net realized capital gains | — | — | (0.15) | (1.15) | (0.59) |
Total distributions | (0.35) | (0.49) | (0.69) | (1.52) | (0.92) |
Net asset value end of period | 23.93 | 24.97 | 16.83 | 20.82 | 21.39 |
Net assets end of period (000s) | $43,591 | $56,156 | $29,897 | $102,945 | $103,552 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (2.80)% | 51.99% | (16.55)% | 5.53% | (4.75)% |
Ratio of total expenses to average net assets^ | 0.81 | 0.81 | 0.82 | 0.80 | 0.79 |
Ratio of net expenses to average net assetsa | 0.77 | 0.78 | 0.80 | 0.77 | 0.76 |
Ratio of net investment income/(loss) to average net assetsa | 2.00 | 1.78 | 2.39 | 2.39 | 2.15 |
Portfolio turnover | 9 | 18 | 4 | 11 | 24 |
Administrative Class | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $25.24 | $16.98 | $20.98 | $21.52 | $23.47 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.41 | 0.34 | 0.36 | 0.42 | 0.43 |
Net realized and unrealized gain/(loss) on investments | (1.20) | 8.31 | (3.77) | 0.48 | (1.54) |
Total from investment operations | (0.79) | 8.65 | (3.41) | 0.90 | (1.11) |
Less Distributions | |||||
Dividends from net investment income | (0.25) | (0.39) | (0.44) | (0.29) | (0.25) |
Distributions from net realized capital gains | — | — | (0.15) | (1.15) | (0.59) |
Total distributions | (0.25) | (0.39) | (0.59) | (1.44) | (0.84) |
Net asset value end of period | 24.20 | 25.24 | 16.98 | 20.98 | 21.52 |
Net assets end of period (000s) | $3,291 | $3,828 | $4,945 | $18,508 | $42,557 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (3.14)% | 51.53% | (16.85)% | 5.19% | (5.06)% |
Ratio of total expenses to average net assets^ | 1.14 | 1.14 | 1.15 | 1.13 | 1.12 |
Ratio of net expenses to average net assetsa | 1.10 | 1.11 | 1.13 | 1.10 | 1.08 |
Ratio of net investment income/(loss) to average net assetsa | 1.67 | 1.46 | 1.98 | 2.08 | 1.83 |
Portfolio turnover | 9 | 18 | 4 | 11 | 24 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
175
Institutional Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$24.97 | $16.83 | $20.82 | $21.38 | $23.33 |
0.47 | 0.40 | 0.40 | 0.47 | 0.49 |
(1.18) | 8.21 | (3.73) | 0.47 | (1.54) |
(0.71) | 8.61 | (3.33) | 0.94 | (1.05) |
(0.33) | (0.47) | (0.51) | (0.35) | (0.31) |
— | — | (0.15) | (1.15) | (0.59) |
(0.33) | (0.47) | (0.66) | (1.50) | (0.90) |
23.93 | 24.97 | 16.83 | 20.82 | 21.38 |
$242,004 | $355,431 | $277,767 | $520,629 | $714,309 |
(2.88)% | 51.87% | (16.64)% | 5.48% | (4.85)% |
0.89 | 0.89 | 0.90 | 0.88 | 0.87 |
0.85 | 0.86 | 0.88 | 0.85 | 0.83 |
1.93 | 1.71 | 2.25 | 2.33 | 2.09 |
9 | 18 | 4 | 11 | 24 |
Investor Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$24.93 | $16.80 | $20.78 | $21.31 | $23.23 |
0.39 | 0.32 | 0.34 | 0.39 | 0.40 |
(1.18) | 8.20 | (3.74) | 0.48 | (1.53) |
(0.79) | 8.52 | (3.40) | 0.87 | (1.13) |
(0.24) | (0.39) | (0.43) | (0.25) | (0.20) |
— | — | (0.15) | (1.15) | (0.59) |
(0.24) | (0.39) | (0.58) | (1.40) | (0.79) |
23.90 | 24.93 | 16.80 | 20.78 | 21.31 |
$28,355 | $32,097 | $26,785 | $58,928 | $82,539 |
(3.20)% | 51.26% | (16.94)% | 5.08% | (5.20)% |
1.25 | 1.25 | 1.27 | 1.25 | 1.24 |
1.21 | 1.22 | 1.25 | 1.22 | 1.20 |
1.57 | 1.36 | 1.89 | 1.95 | 1.71 |
9 | 18 | 4 | 11 | 24 |
176
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $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 |
Net realized and unrealized gain/(loss) on investments | — | — | — | — | — |
Total from investment operations | — | — | 0.01 | 0.02 | 0.01 |
Less Distributions | |||||
Dividends from net investment income | —* | —* | (0.01) | (0.02) | (0.01) |
Distributions from net realized capital gains | — | — | — | — | — |
Total distributions | —* | —* | (0.01) | (0.02) | (0.01) |
Net asset value end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
Net assets end of period (000s) | $86,044 | $82,034 | $95,159 | $118,032 | $129,826 |
Ratios and Supplemental Data (%) | |||||
Total returnb | 0.74% | 0.03% | 0.64% | 2.02% | 1.44% |
Ratio of total expenses to average net assets^ | 0.39 | 0.38 | 0.39 | 0.35 | 0.35 |
Ratio of net expenses to average net assetsa | 0.13 | 0.02 | 0.19 | 0.28 | 0.20 |
Ratio of net investment income/(loss) to average net assetsa | 0.73 | 0.03 | 0.72 | 2.01 | 1.42 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
177
Administrative Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
—* | —* | — | 0.02 | 0.01 |
— | — | 0.01 | — | — |
— | — | 0.01 | 0.02 | 0.01 |
—* | —* | (0.01) | (0.02) | (0.01) |
— | — | — | — | — |
—* | —* | (0.01) | (0.02) | (0.01) |
1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
$2,918 | $2,834 | $3,611 | $3,135 | $2,086 |
0.66% | 0.03% | 0.51% | 1.76% | 1.36% |
0.64 | 0.63 | 0.64 | 0.60 | 0.60 |
0.25 | 0.02 | 0.29 | 0.53 | 0.29 |
0.69 | 0.03 | 0.49 | 1.79 | 1.36 |
178
Harbor 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 | |||||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019i | 2022 | 2021 | 2020 | 2019i |
Net asset value beginning of period | $14.02 | $10.12 | $10.31 | $10.00 | $14.01 | $10.11 | $10.31 | $10.00 |
Income from Investment Operations | ||||||||
Net investment income/(loss)a,e | 0.46 | 0.28 | 0.17 | 0.24 | 0.43 | 0.29 | 0.17 | 0.24 |
Net realized and unrealized gain/(loss) on investments | (3.14) | 3.79 | (0.09) | 0.07 | (3.12) | 3.77 | (0.11) | 0.07 |
Total from investment operations | (2.68) | 4.07 | 0.08 | 0.31 | (2.69) | 4.06 | 0.06 | 0.31 |
Less Distributions | ||||||||
Dividends from net investment income | (0.36) | (0.17) | (0.27) | — | (0.35) | (0.16) | (0.26) | — |
Distributions from net realized capital gains | (1.00) | — | — | — | (1.00) | — | — | — |
Total distributions | (1.36) | (0.17) | (0.27) | — | (1.35) | (0.16) | (0.26) | — |
Net asset value end of period | 9.98 | 14.02 | 10.12 | 10.31 | 9.97 | 14.01 | 10.11 | 10.31 |
Net assets end of period (000s) | $21,221 | $19,742 | $13,790 | $13,090 | $66,908 | $33,230 | $13,226 | $13,131 |
Ratios and Supplemental Data (%) | ||||||||
Total returnb | (20.93)% | 40.51% | 0.64% | 3.10% | (21.00)% | 40.46% | 0.48% | 3.10% |
Ratio of total expenses to average net assets^ | 1.16 | 1.19 | 1.35 | 1.79 | 1.24 | 1.27 | 1.43 | 1.87 |
Ratio of net expenses to average net assetsa | 0.77 | 0.77 | 0.77 | 0.77 | 0.85 | 0.85 | 0.85 | 0.85 |
Ratio of net investment income/(loss) to average net assetsa | 4.05 | 2.14 | 1.73 | 3.61 | 3.85 | 2.16 | 1.65 | 3.54 |
Portfolio turnover | 100 | 108 | 80 | 73 | 100 | 108 | 80 | 73 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
179
Investor Class | |||
2022 | 2021 | 2020 | 2019i |
$13.96 | $10.08 | $10.28 | $10.00 |
0.38 | 0.23 | 0.14 | 0.21 |
(3.10) | 3.78 | (0.11) | 0.07 |
(2.72) | 4.01 | 0.03 | 0.28 |
(0.32) | (0.13) | (0.23) | — |
(1.00) | — | — | — |
(1.32) | (0.13) | (0.23) | — |
9.92 | 13.96 | 10.08 | 10.28 |
$2,331 | $101 | $35 | $31 |
(21.29)% | 39.98% | 0.14% | 2.80% |
1.60 | 1.63 | 1.80 | 2.24 |
1.21 | 1.21 | 1.22 | 1.22 |
3.67 | 1.73 | 1.41 | 3.17 |
100 | 108 | 80 | 73 |
180
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $19.95 | $15.91 | $13.18 | $14.39 | $15.08 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | (0.01) | (0.07) | (0.04) | (0.01) | (0.05) |
Net realized and unrealized gain/(loss) on investments | (3.94) | 5.41 | 3.25 | 1.56 | 0.82 |
Total from investment operations | (3.95) | 5.34 | 3.21 | 1.55 | 0.77 |
Less Distributions | |||||
Dividends from net investment income | — | — | — | — | — |
Distributions from net realized capital gains | (4.22) | (1.30) | (0.48) | (2.76) | (1.46) |
Total distributions | (4.22) | (1.30) | (0.48) | (2.76) | (1.46) |
Net asset value end of period | 11.78 | 19.95 | 15.91 | 13.18 | 14.39 |
Net assets end of period (000s) | $311,509 | $399,174 | $348,997 | $281,603 | $306,026 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (23.72)% | 34.40% | 24.93% | 16.23% | 5.11% |
Ratio of total expenses to average net assets^ | 0.80 | 0.79 | 0.81 | 0.80 | 0.79 |
Ratio of net expenses to average net assetsa | 0.79 | 0.78 | 0.80 | 0.80 | 0.79 |
Ratio of net investment income/(loss) to average net assetsa | (0.11) | (0.37) | (0.27) | (0.12) | (0.33) |
Portfolio turnover | 75 | 71 | 95 | 74 | 99 |
Administrative Class | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $17.80 | $14.36 | $11.98 | $13.39 | $14.17 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | (0.05) | (0.12) | (0.08) | (0.05) | (0.09) |
Net realized and unrealized gain/(loss) on investments | (3.43) | 4.86 | 2.94 | 1.40 | 0.77 |
Total from investment operations | (3.48) | 4.74 | 2.86 | 1.35 | 0.68 |
Less Distributions | |||||
Dividends from net investment income | — | — | — | — | — |
Distributions from net realized capital gains | (4.22) | (1.30) | (0.48) | (2.76) | (1.46) |
Total distributions | (4.22) | (1.30) | (0.48) | (2.76) | (1.46) |
Net asset value end of period | 10.10 | 17.80 | 14.36 | 11.98 | 13.39 |
Net assets end of period (000s) | $648 | $965 | $866 | $395 | $769 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (24.00)% | 33.91% | 24.49% | 15.87% | 4.76% |
Ratio of total expenses to average net assets^ | 1.13 | 1.12 | 1.14 | 1.13 | 1.12 |
Ratio of net expenses to average net assetsa | 1.12 | 1.11 | 1.13 | 1.12 | 1.11 |
Ratio of net investment income/(loss) to average net assetsa | (0.44) | (0.69) | (0.62) | (0.44) | (0.65) |
Portfolio turnover | 75 | 71 | 95 | 74 | 99 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
181
Institutional Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$19.84 | $15.84 | $13.13 | $14.35 | $15.06 |
(0.03) | (0.08) | (0.05) | (0.03) | (0.06) |
(3.91) | 5.38 | 3.24 | 1.57 | 0.81 |
(3.94) | 5.30 | 3.19 | 1.54 | 0.75 |
— | — | — | — | — |
(4.22) | (1.30) | (0.48) | (2.76) | (1.46) |
(4.22) | (1.30) | (0.48) | (2.76) | (1.46) |
11.68 | 19.84 | 15.84 | 13.13 | 14.35 |
$595,476 | $721,405 | $633,535 | $440,553 | $400,389 |
(23.81)% | 34.29%��� | 24.87% | 16.18% | 4.97% |
0.88 | 0.87 | 0.89 | 0.88 | 0.87 |
0.87 | 0.86 | 0.88 | 0.87 | 0.86 |
(0.19) | (0.45) | (0.35) | (0.20) | (0.40) |
75 | 71 | 95 | 74 | 99 |
Investor Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$16.60 | $13.47 | $11.28 | $12.79 | $13.62 |
(0.06) | (0.13) | (0.08) | (0.06) | (0.11) |
(3.14) | 4.56 | 2.75 | 1.31 | 0.74 |
(3.20) | 4.43 | 2.67 | 1.25 | 0.63 |
— | — | — | — | — |
(4.22) | (1.30) | (0.48) | (2.76) | (1.46) |
(4.22) | (1.30) | (0.48) | (2.76) | (1.46) |
9.18 | 16.60 | 13.47 | 11.28 | 12.79 |
$7,031 | $8,648 | $6,811 | $6,670 | $7,076 |
(24.05)% | 33.84% | 24.32% | 15.81% | 4.58% |
1.24 | 1.23 | 1.26 | 1.25 | 1.24 |
1.23 | 1.23 | 1.25 | 1.24 | 1.23 |
(0.55) | (0.81) | (0.71) | (0.57) | (0.77) |
75 | 71 | 95 | 74 | 99 |
182
Harbor 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 | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $45.11 | $31.65 | $33.55 | $33.60 | $36.16 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.18 | 0.12 | 0.21 | 0.21 | 0.17 |
Net realized and unrealized gain/(loss) on investments | (3.38) | 13.54 | (1.59) | 2.84 | (1.98) |
Total from investment operations | (3.20) | 13.66 | (1.38) | 3.05 | (1.81) |
Less Distributions | |||||
Dividends from net investment income | (0.08) | (0.20) | (0.20) | (0.15) | (0.06) |
Distributions from net realized capital gains | (2.36) | — | (0.32) | (2.95) | (0.69) |
Total distributions | (2.44) | (0.20) | (0.52) | (3.10) | (0.75) |
Net asset value end of period | 39.47 | 45.11 | 31.65 | 33.55 | 33.60 |
Net assets end of period (000s) | $600,143 | $599,016 | $300,473 | $230,861 | $155,036 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (7.16)% | 43.19% | (4.22)% | 10.98% | (5.18)% |
Ratio of total expenses to average net assets^ | 0.80 | 0.79 | 0.80 | 0.80 | 0.79 |
Ratio of net expenses to average net assetsa | 0.79 | 0.78 | 0.80 | 0.80 | 0.79 |
Ratio of net investment income/(loss) to average net assetsa | 0.46 | 0.27 | 0.67 | 0.67 | 0.45 |
Portfolio turnover | 15 | 17 | 17 | 27 | 22 |
Administrative Class | |||||
Year Ended October 31, | 2022 | 2021 | 2020 | 2019 | 2018 |
Net asset value beginning of period | $44.72 | $31.41 | $33.30 | $33.36 | $35.97 |
Income from Investment Operations | |||||
Net investment income/(loss)a,e | 0.05 | (0.02) | 0.10 | 0.11 | 0.06 |
Net realized and unrealized gain/(loss) on investments | (3.35) | 13.42 | (1.57) | 2.82 | (1.98) |
Total from investment operations | (3.30) | 13.40 | (1.47) | 2.93 | (1.92) |
Less Distributions | |||||
Dividends from net investment income | — | (0.09) | (0.10) | (0.04) | — |
Distributions from net realized capital gains | (2.36) | — | (0.32) | (2.95) | (0.69) |
Total distributions | (2.36) | (0.09) | (0.42) | (2.99) | (0.69) |
Net asset value end of period | 39.06 | 44.72 | 31.41 | 33.30 | 33.36 |
Net assets end of period (000s) | $9,177 | $11,962 | $10,082 | $6,537 | $7,253 |
Ratios and Supplemental Data (%) | |||||
Total returnb | (7.45)% | 42.72% | (4.54)% | 10.59% | (5.50)% |
Ratio of total expenses to average net assets^ | 1.13 | 1.12 | 1.13 | 1.13 | 1.12 |
Ratio of net expenses to average net assetsa | 1.12 | 1.11 | 1.13 | 1.12 | 1.11 |
Ratio of net investment income/(loss) to average net assetsa | 0.13 | (0.04) | 0.32 | 0.35 | 0.16 |
Portfolio turnover | 15 | 17 | 17 | 27 | 22 |
See page 185 for notes to the Financial Highlights.
The accompanying notes are an integral part of the Financial Statements.
183
Institutional Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$45.07 | $31.63 | $33.53 | $33.57 | $36.14 |
0.15 | 0.09 | 0.18 | 0.19 | 0.15 |
(3.38) | 13.52 | (1.58) | 2.84 | (2.00) |
(3.23) | 13.61 | (1.40) | 3.03 | (1.85) |
(0.04) | (0.17) | (0.18) | (0.12) | (0.03) |
(2.36) | — | (0.32) | (2.95) | (0.69) |
(2.40) | (0.17) | (0.50) | (3.07) | (0.72) |
39.44 | 45.07 | 31.63 | 33.53 | 33.57 |
$1,493,462 | $2,023,164 | $1,350,681 | $1,346,098 | $1,149,857 |
(7.22)% | 43.11% | (4.33)% | 10.91% | (5.28)% |
0.88 | 0.87 | 0.88 | 0.88 | 0.87 |
0.87 | 0.86 | 0.88 | 0.87 | 0.86 |
0.38 | 0.20 | 0.59 | 0.60 | 0.40 |
15 | 17 | 17 | 27 | 22 |
Investor Class | ||||
2022 | 2021 | 2020 | 2019 | 2018 |
$43.72 | $30.71 | $32.56 | $32.68 | $35.29 |
0.01 | (0.06) | 0.07 | 0.08 | 0.01 |
(3.28) | 13.12 | (1.55) | 2.75 | (1.93) |
(3.27) | 13.06 | (1.48) | 2.83 | (1.92) |
— | (0.05) | (0.05) | — | — |
(2.36) | — | (0.32) | (2.95) | (0.69) |
(2.36) | (0.05) | (0.37) | (2.95) | (0.69) |
38.09 | 43.72 | 30.71 | 32.56 | 32.68 |
$38,722 | $64,544 | $51,370 | $57,931 | $70,819 |
(7.56)% | 42.56% | (4.67)% | 10.48% | (5.60)% |
1.24 | 1.23 | 1.25 | 1.25 | 1.24 |
1.23 | 1.23 | 1.25 | 1.24 | 1.23 |
0.01 | (0.15) | 0.23 | 0.24 | 0.03 |
15 | 17 | 17 | 27 | 22 |
184
Harbor 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 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 |
g | Effective September 1, 2021, the Fund changed its name and Harbor Capital Advisors, Inc. was appointed by the Board of Trustees to manage the Fund’s assets based upon model portfolios provided by multiple non-discretionary subadvisors. |
h | For the period June 1, 2018 (inception) through October 31, 2018 |
i | For the period March 1, 2019 (inception) through October 31, 2019 |
j | Effective August 22, 2018, the Board of Trustees appointed Marathon Asset Management Limited as subadvisor to Harbor International Fund. |
k | Effective May 23, 2019, the Board of Trustees appointed Cedar Street Asset Management LLC as subadvisor to Harbor International Small Cap Fund. |
l | Effective September 23, 2020, the Board of Trustees appointed Marathon Asset Management Limited as subadvisor to Harbor Emerging Markets Equity Fund. |
m | Effective February 2, 2022, the Fund’s name changed from Harbor Bond Fund to Harbor Core Plus Fund and the Board of Trustees appointed Income Research+Management as the subadvisor to the Fund. |
n | 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 ratios of total expenses to average net assets include the tax compliance fee and related interest expense due to this receipt of foreign tax reclaims and interest income by the Fund. For the year ended October 31, 2020, the ratios of net expenses to average net assets including tax compliance fee for the Retirement Class, Institutional Class, Administrative Class, and Investor Class were 1.49%, 1.64%, 1.53%, and 1.98%, respectively. |
The accompanying notes are an integral part of the Financial Statements.
185
Harbor Funds
Notes to Financial Statements—October 31, 2022
Notes to Financial Statements—October 31, 2022
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 October 31, 2022, the Trust consists of the following separate portfolios (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.
Harbor Capital Appreciation Fund | Harbor International Growth Fund |
Harbor Convertible Securities Fund | Harbor International Small Cap Fund |
Harbor Core Bond Fund | Harbor Large Cap Value Fund |
Harbor Core Plus Fund (formerly, Harbor Bond Fund) | Harbor Mid Cap Fund |
Harbor Disruptive Innovation Fund | Harbor Mid Cap Value Fund |
Harbor Diversified International All Cap Fund | Harbor Money Market Fund |
Harbor Emerging Markets Equity Fund | Harbor Overseas Fund |
Harbor Global Leaders Fund | Harbor Small Cap Growth Fund |
Harbor High-Yield Bond Fund | Harbor Small Cap Value Fund |
Harbor International Fund |
Effective February 2, 2022, Harbor Bond Fund was renamed Harbor Core Plus Fund.
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) subject to the approval of the Trust’s Board of Trustees (the “Board of Trustees”), certain expenses may be applied differently to each class of shares in accordance with current regulations of the U.S. 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
Investments are valued pursuant to valuation procedures approved by the Board of Trustees. The valuation procedures permit the Adviser 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 rights and warrants) that are traded 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 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 (or average) of 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. Shares 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.
186
Harbor Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
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. 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, 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 asset-backed and mortgage-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.
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 fair value determinations are made by the Adviser as designated by the Board of Trustees pursuant to the Investment Company Act. Such securities fair value determinations may incorporate significant unobservable inputs that are normally categorized as Level 3 in the fair value hierarchy.
187
Harbor 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 investments are not necessarily indicative of the risk associated with investing in those investments. 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.
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. Dividend information on certain foreign securities may not be available on ex-dividend date, therefore, such dividends will be recorded as soon as reliable information becomes available. 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. 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. 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.
188
Harbor 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 provided for in accordance with each Fund’s understanding of the applicable foreign country’s tax law and 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. Certain Funds have filed for additional foreign tax reclaims related to prior years. These additional foreign tax reclaims are recorded as income when both the amount is known and significant contingencies or uncertainties regarding collectability are removed.
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, 2019–2021), including all positions expected to be taken upon filing the 2022 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.
During 2020 and 2022, Harbor International Fund received payments, including interest, from member countries of the European Union (“EU”) based on foreign tax reclaims relating to amounts withheld on dividends received by the Fund during fiscal years October 31, 2009 through 2021. 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 based on the percentage of foreign tax credits previously passed through to the Fund’s shareholders. 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 filed a closing agreement with the IRS related to the amount received in 2020 and subsequent to October 31, 2022, the agreement was finalized and the related tax compliance fee, including interest, was paid to the IRS. The Fund will enter into another closing agreement with the IRS relating to the amounts received in 2022. The actual tax compliance and related interest due to the IRS will be determined based on the closing agreement with the IRS and may differ from estimates.
In April 2022, Harbor Capital Appreciation Fund received payments, including interest, from a member country of the EU based on foreign tax reclaims relating to amounts withheld on dividends received by the Fund during fiscal years October 31, 2018 through 2021. There was no tax compliance fee due to the IRS given no foreign tax credit was previously passed through to the Fund’s shareholders.
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 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 year end.
189
Harbor 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 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 (“LIBOR”) 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. Management is continuously evaluating the potential effect a discontinuation of LIBOR could have on each Fund’s investments (if applicable) and has determined that it is unlikely the ASU’s adoption will have a material impact on the Fund’s financial statements.
Certain instruments held by the Funds rely in some fashion upon LIBOR. The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced plans to ultimately phase out the use of LIBOR. Although the transition process away from LIBOR has become increasingly well-defined in advance of the anticipated discontinuation date, there remains uncertainty regarding the nature of any replacement rate, and any potential effects of the transition away from LIBOR on the Funds or on certain instruments in which the Funds invests can be difficult to ascertain. The transition process may involve, among other things, increased volatility or illiquidity in markets for instruments that currently rely on LIBOR and may result in a reduction in the value of certain instruments held by the Funds.
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 year, Harbor Core Bond Fund and Harbor Core Plus 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, a 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, a Fund may be subject to the credit risk of both the borrower and the agent that is selling the loan agreement. When a Fund purchases assignments from the agent, it acquires direct rights against the borrower on the loan.
190
Harbor Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
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 fair valued 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 year, Harbor High-Yield Bond Fund invested in loan participations and assignments.
As of October 31, 2022, the Funds do not have unfunded loan commitments outstanding.
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 year, Harbor Core Plus 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. 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 year, Harbor Core Plus Fund entered into reverse repurchase agreements. The average amount of borrowings outstanding for the Fund was $2,934,000 at a weighted average interest rate of -0.456%. Average borrowings outstanding and average interest rate during the year is calculated based on calendar days.
191
Harbor 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 Statements 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. 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 year, Harbor Core Plus Fund entered into sale-buyback transactions. The average amount of borrowings outstanding for the Fund was $1,664,000 at a weighted average interest rate of -0.071%. Average borrowings outstanding and average interest rate during the year is calculated based on calendar days.
Forward Currency Contracts
A forward currency contract is an agreement between two parties to buy and sell currencies at a set price on a future date.
Forward currency contracts are fair valued 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 year, Harbor Core Plus Fund used 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.
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 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
192
Harbor Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
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 year, Harbor Core Plus 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 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.
During the year, Harbor Core Plus Fund purchased and wrote (sold) option contracts to manage its exposure to the bond markets and to fluctuations in interest rates and currency values.
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.
193
Harbor Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
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 year, 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 year are included in “Purchased options” in the Statements of Operations.
During the year, Harbor Diversified International All Cap Fund, Harbor International Fund, and Harbor Overseas Fund held rights/warrants as a result of their investments in underlying securities.
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. Swap agreements may be privately negotiated in the over-the-counter market (“OTC swaps”) or may be cleared through a third party, known as a central clearing party or derivatives clearing organization (“centrally cleared swaps”).
Swaps are fair valued daily and changes in value are recorded as unrealized appreciation or depreciation on the Statement of Operations.
Upon entering a swap agreement, any payments received or made at the beginning of the measurement period are reflected in 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. Daily changes to the fair value of centrally cleared swaps are recorded as Variation margin receivable or payable on centrally cleared swap agreements in the Statements of Assets and Liabilities and are settled daily. An initial margin, typically in form of cash or qualifying highly liquid, high-quality short-term investments, is paid to the central clearing party or derivatives clearing organization when the swap contract is executed and is recorded as Due from brokers on the Statement of Assets and Liabilities.
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 the existence of a master netting arrangement between a Fund and the counterparty, the posting of collateral by the counterparty, and the central clearing party, as counterparty to all centrally cleared swaps, guaranteeing the performance of the swaps through the margin requirements.
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 year, Harbor Core Plus 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
194
Harbor Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 2—Significant Accounting Policies—Continued
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 year, Harbor Core Plus 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.
Other Matters
The Funds in the normal course of business invest in financial instruments where the risk of potential loss exists due to changes in the market, economic, political and regulatory developments, as well as events such as war, terrorism or spread of infectious disease (market risk) or failure or inability of the counterparty to a transaction to perform (credit and counterparty risk). In addition, certain Funds invest primarily in foreign securities and as such are also subject to foreign currencies and foreign securities risks. Each Fund’s prospectus provides further details regarding the Fund’s principal risks.
Note 3—Investment Portfolio Transactions
Investment Portfolio Transactions
Purchases and sales of investments, other than short-term securities and U.S. government obligations, for each Fund for the year ended October 31, 2022 were as follows:
Purchases (000s) | Sales (000s) | |
Harbor Capital Appreciation Fund | $10,154,270 | $16,465,402* |
Harbor Convertible Securities Fund | 114,268 | 113,963 |
Harbor Core Bond Fund | 52,113 | 116,994 |
Harbor Core Plus Fund | 2,779,577 | 3,235,689 |
Harbor Disruptive Innovation Fund | 138,655 | 234,806 |
Harbor Diversified International All Cap Fund | 230,063 | 332,816 |
Harbor Emerging Markets Equity Fund | 6,017 | 35,251 |
Harbor Global Leaders Fund | 27,143 | 57,912 |
Harbor High-Yield Bond Fund | 270,310 | 304,882 |
Harbor International Fund | 507,456 | 981,798 |
Harbor International Growth Fund | 102,168 | 301,745 |
Harbor International Small Cap Fund | 86,316 | 15,901 |
Harbor Large Cap Value Fund | 528,606 | 602,684 |
Harbor Mid Cap Fund | 59,197 | 25,477 |
Harbor Mid Cap Value Fund | 34,730 | 146,149 |
Harbor Overseas Fund | 119,789 | 65,530 |
Harbor Small Cap Growth Fund | 770,437 | 697,511 |
Harbor Small Cap Value Fund | 329,121 | 728,955 |
* | Sales for this Fund include $2,221,943 in connection with in-kind redemptions of the Fund’s capital shares. |
195
Harbor Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 3—Investment Portfolio Transactions—Continued
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 years ended October 31, 2022 and 2021, Harbor Capital Appreciation Fund realized gains of $1,270,427,000 and $2,664,550,000, respectively, 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 loans 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.
The following table shows the Funds that engaged in securities lending during the year and summarizes the value of equity securities loaned and related cash and non-cash collateral as of October 31, 2022.
Value of Securities on Loan (000s) | Cash Collateral (000s) | Non-Cash Collateral (000s) | |
Harbor Diversified International All Cap Fund | $1,714 | $— | $1,812 |
Harbor Emerging Markets Equity Fund | — | — | — |
Harbor Global Leaders Fund | — | — | — |
Harbor International Fund | 1,937 | 2,077 | — |
Harbor International Growth Fund | — | — | — |
Harbor Overseas Fund | 980 | 1,061 | — |
196
Harbor 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 | 0.55% |
Harbor Convertible Securities Fund | 0.65b | 0.60 |
Harbor Core Bond Fund | 0.23c | 0.25 |
Harbor Core Plus Fund | 0.25d | 0.31 |
Harbor Disruptive Innovation Fund | 0.70 | 0.70 |
Harbor Diversified International All Cap Fund | 0.75 | 0.75 |
Harbor Emerging Markets Equity Fund | 0.85 | 0.85 |
Harbor Global Leaders Fund | 0.75e | 0.70 |
Harbor High-Yield Bond Fund | 0.60f | 0.51 |
Harbor International Fund | 0.75g | 0.75 |
Harbor International Growth Fund | 0.75 | 0.75 |
Harbor International Small Cap Fund | 0.85 | 0.85 |
Harbor Large Cap Value Fund | 0.60h | 0.60 |
Harbor Mid Cap Fund | 0.75 | 0.75 |
Harbor Mid Cap Value Fund | 0.75i | 0.74 |
Harbor Money Market Fund | 0.20j | 0.08 |
Harbor Overseas Fund | 0.75 | 0.75 |
Harbor Small Cap Growth Fund | 0.75 | 0.75 |
Harbor Small Cap Value Fund | 0.75 | 0.75 |
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, 2023. |
b | The Adviser has contractually agreed to reduce the management fee to 0.60% through February 28, 2023. |
c | For the period November 1, 2021 through November 30, 2021, the management fee was 0.34%. Effective December 1, 2021, the contractual management fee was reduced to 0.23%. |
d | For the period November 1, 2021 through February 1, 2022, the management fee was 0.48%. In addition, the Adviser 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. Effective February 2, 2022, the contractual management fee was reduced to 0.25%. |
e | The Adviser has contractually agreed to waive 0.05% of its management fee through February 28, 2023. |
f | The Adviser has contractually agreed to reduce the management fee to 0.508% through February 28, 2023. |
g | The management fee is 0.75% on assets up to $12 billion and 0.65% on assets in excess of $12 billion. |
h | The management fee rate is 0.60% on assets up to $4 billion and 0.55% on assets over $4 billion. |
i | 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, 2023. |
j | The Adviser has contractually agreed to reduce the management fee to 0.18% through February 28, 2023. |
197
Harbor Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 4—FEES AND OTHER Transactions with Affiliates—Continued
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 year, the following expense limitation agreements were in effect:
Retirement Class | Institutional Class | Administrative Class | Investor Class | Expense Limitation Agreement Expiration Date | |
Harbor Core Bond Fund1 | 0.26% | 0.34% | N/A | N/A | 02/28/2023 |
Harbor Core Plus Fund2 | 0.30 | 0.38 | 0.63% | N/A | 02/28/2023 |
Harbor Disruptive Innovation Fund3 | 0.50 | 0.58 | 0.83 | 0.94% | 08/31/2022 |
Harbor Diversified International All Cap Fund | 0.72 | 0.80 | 1.05 | 1.16 | 02/28/2023 |
Harbor Emerging Markets Equity Fund | 0.88 | 0.96 | 1.21 | 1.32 | 02/28/2023 |
Harbor Global Leaders Fund | 0.78 | 0.86 | 1.11 | 1.22 | 02/28/2023 |
Harbor International Fund | 0.69 | 0.77 | 1.02 | 1.13 | 02/28/2023 |
Harbor International Growth Fund | 0.77 | 0.85 | 1.10 | 1.21 | 02/28/2023 |
Harbor International Small Cap Fund | 0.88 | 0.96 | 1.21 | 1.32 | 02/28/2023 |
Harbor Large Cap Value Fund | 0.61 | 0.69 | 0.94 | 1.05 | 02/28/2023 |
Harbor Mid Cap Fund | 0.80 | 0.88 | 1.13 | 1.24 | 02/28/2023 |
Harbor Mid Cap Value Fund | 0.77 | 0.85 | 1.10 | 1.21 | 02/28/2023 |
Harbor Money Market Fund4 | N/A | 0.28 | 0.53 | N/A | 02/28/2023 |
Harbor Overseas Fund | 0.77 | 0.85 | 1.10 | 1.21 | 02/28/2023 |
1 | For the period November 1, 2021 through November 30, 2021, the operating expense limitations for the Retirement Class and Institutional Class were 0.37% and 0.45%, respectively. |
2 | For the period November 1, 2021 through February 1, 2022, the operating expense limitations for the Retirement Class, Institutional Class, and Administrative Class were 0.43%, 0.51%, and 0.76%, respectively. |
3 | For the period September 1, 2022 through October 31, 2022, Harbor Capital voluntarily limited the operating expenses for the Retirement Class, Institutional Class, Administrative Class and Investor Class to 0.75%, 0.83%, 1.08% and 1.19%, respectively. |
4 | From November 1, 2021 through March 31, 2022, Harbor Capital voluntarily waived all the expenses of the Fund. Effective April 1, 2022 through October 31, 2022, Harbor Capital voluntarily waived a portion of the expenses of the Fund. This expense waiver resulted in annualized expense ratios for the year ended October 31, 2022 for the Institutional Class and Administrative Class of 0.13% and 0.25%, 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 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.
198
Harbor Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 4—FEES AND OTHER Transactions with Affiliates—Continued
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 Class | 0.21% of the average daily net assets of all Investor Class shares |
Harbor Services Group voluntarily waived a portion of its transfer agent fees during the year ended October 31, 2022. 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 year, the Funds did not enter into any transactions with any other Harbor fund.
Shareholders
As of October 31, 2022, Harbor Capital and its wholly owned subsidiaries collectively held 10% or more of 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 International Small Cap Fund | 32,887 | 1,732,313 | 28,858 | 28,697 | 1,822,755 | 18.5% |
Harbor Overseas Fund | 1,268,409 | 1,223,234 | N/A | 3,430 | 2,495,073 | 27.6 |
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.
199
Harbor Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
NOTE 5—TAX INFORMATION
The amount and character of income and net realized gains to be distributed are determined in accordance with income tax rules and regulations, which may differ from U.S. GAAP. These differences are attributable to permanent book and tax accounting differences that were primarily due to the tax treatment of bonds in default, net investment losses, redemption in-kind distributions, and the use of equalization. Reclassifications, if any, are made to each Fund’s capital account to reflect income and net realized gains available for distribution (or available capital loss carryovers) under income tax rules and regulations. The amounts reclassified on the Statements of Assets and Liabilities for the year ended October 31, 2022 were as follows:
Total Distributable Earnings/(Loss) (000s) | Paid in Capital (000s) | |
Harbor Capital Appreciation Fund | $(1,116,461) | $1,116,461 |
Harbor Convertible Securities Fund | — | — |
Harbor Core Bond Fund | — | — |
Harbor Core Plus Fund | — | — |
Harbor Disruptive Innovation Fund | (7,458) | 7,458 |
Harbor Diversified International All Cap Fund | (2,702) | 2,702 |
Harbor Emerging Markets Equity Fund | (5,025) | 5,025 |
Harbor Global Leaders Fund | (1,658) | 1,658 |
Harbor High-Yield Bond Fund | — | — |
Harbor International Fund | — | — |
Harbor International Growth Fund | 4,030 | (4,030) |
Harbor International Small Cap Fund | (383) | 383 |
Harbor Large Cap Value Fund | (19,452) | 19,452 |
Harbor Mid Cap Fund | (605) | 605 |
Harbor Mid Cap Value Fund | (4,500) | 4,500 |
Harbor Money Market Fund | — | — |
Harbor Overseas Fund | (128) | 128 |
Harbor Small Cap Growth Fund | (1,327) | 1,327 |
Harbor Small Cap Value Fund | (12,479) | 12,479 |
The tax composition of each Fund’s distributions was as follows:
As of October 31, 2022 | As of October 31, 2021 | |||||
Ordinary Income (000s) | Long-Term Capital Gains (000s) | Total (000s) | Ordinary Income (000s) | Long-Term Capital Gains (000s) | Total (000s) | |
Harbor Capital Appreciation Fund | $— | $6,320,680 | $6,320,680 | $— | $4,640,284 | $4,640,284 |
Harbor Convertible Securities Fund | 14,535 | 11,022 | 25,557 | 12,094 | 3,161 | 15,255 |
Harbor Core Bond Fund | 2,590 | — | 2,590 | 3,447 | 1,534 | 4,981 |
Harbor Core Plus Fund | 48,140 | — | 48,140 | 58,526 | — | 58,526 |
Harbor Disruptive Innovation Fund | 50,635 | 78,113 | 128,748 | 22,241 | 34,792 | 57,033 |
Harbor Diversified International All Cap Fund | 27,163 | 55,890 | 83,053 | 9,904 | — | 9,904 |
Harbor Emerging Markets Equity Fund | 6,585 | 1,231 | 7,816 | 5,068 | 6,248 | 11,316 |
Harbor Global Leaders Fund | 846 | 11,849 | 12,695 | 1,503 | 8,701 | 10,204 |
Harbor High-Yield Bond Fund | 15,218 | — | 15,218 | 19,497 | — | 19,497 |
Harbor International Fund | 93,992 | — | 93,992 | 47,872 | — | 47,872 |
Harbor International Growth Fund | 6,574 | 60,959 | 67,533 | 5,484 | — | 5,484 |
Harbor International Small Cap Fund | 2,107 | 2,106 | 4,213 | 466 | — | 466 |
Harbor Large Cap Value Fund | 29,773 | 60,228 | 90,001 | 16,261 | 48,993 | 65,254 |
Harbor Mid Cap Fund | 495 | 828 | 1,323 | 67 | — | 67 |
Harbor Mid Cap Value Fund | 5,575 | — | 5,575 | 9,193 | — | 9,193 |
Harbor Money Market Fund | 631 | — | 631 | 29 | 29 | |
Harbor Overseas Fund | 1,713 | 3,503 | 5,216 | 438 | — | 438 |
Harbor Small Cap Growth Fund | 59,575 | 174,882 | 234,457 | 29,612 | 51,761 | 81,373 |
Harbor Small Cap Value Fund | 2,934 | 141,081 | 144,015 | 8,533 | 892 | 9,425 |
200
Harbor Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
NOTE 5—TAX INFORMATION—Continued
As of October 31, 2022, the components of each Fund’s distributable earnings on a tax basis were as follows:
Undistributed Ordinary Income (000s) | Undistributed Long-Term Capital Gains (000s) | Unrealized Appreciation/ (Depreciation) (000s) | Accumulated Capital and Other Losses (000s) | Other Temporary Differences (000s) | Total Distributable Earnings/ (Loss) (000s) | |
Harbor Capital Appreciation Fund | $— | $— | $6,681,258 | $(890,029) | $(2,585) | $5,788,644 |
Harbor Convertible Securities Fund | 328 | — | (15,524) | (3,870) | (19) | (19,085) |
Harbor Core Bond Fund | 358 | — | (8,364) | (5,513) | (3) | (13,522) |
Harbor Core Plus Fund | 4,858 | — | (164,008) | (70,813) | (309) | (230,272) |
Harbor Disruptive Innovation Fund | — | — | (65,608) | (70,755) | (44) | (136,407) |
Harbor Diversified International All Cap Fund | 11,994 | — | (126,242) | (1,859) | (221) | (116,328) |
Harbor Emerging Markets Equity Fund | 370 | — | (3,093) | (3,604) | (7) | (6,334) |
Harbor Global Leaders Fund | — | 5,336 | (1,116) | (144) | (6) | 4,070 |
Harbor High-Yield Bond Fund | 537 | — | (32,272) | (90,347) | (109) | (122,191) |
Harbor International Fund | 61,976 | — | (312,883) | (414,304) | 74,121 | (591,090) |
Harbor International Growth Fund | — | — | (397) | (1,383) | (432) | (2,212) |
Harbor International Small Cap Fund | 1,626 | 1,738 | (10,247) | — | (18) | (6,901) |
Harbor Large Cap Value Fund | 7,222 | 75,148 | 443,574 | — | (76) | 525,868 |
Harbor Mid Cap Fund | 957 | 1,695 | (880) | — | — | 1,772 |
Harbor Mid Cap Value Fund | 4,058 | 18,254 | 30,759 | — | (62) | 53,009 |
Harbor Money Market Fund | 5 | — | — | — | (16) | (11) |
Harbor Overseas Fund | 2,219 | — | (4,972) | (5,918) | (21) | (8,692) |
Harbor Small Cap Growth Fund | — | 38,757 | (27,018) | (38,636) | (68) | (26,965) |
Harbor Small Cap Value Fund | 6,440 | 130,215 | 578,248 | — | (119) | 714,784 |
As of October 31, 2022, for federal income tax purposes, the following Fund had a qualified late year loss deferral to offset fiscal year 2023 ordinary income:
Qualified Late Year Ordinary Loss Deferral (000s) | |
Harbor Capital Appreciation Fund | $26,492 |
Harbor Disruptive Innovation Fund | 363 |
Harbor Global Leaders Fund | 144 |
Harbor Small Cap Growth Fund | 2,963 |
As of October 31, 2022, the Funds in the following table had capital loss carryforwards for federal tax purposes which will reduce each Fund’s taxable income arising from future net realized gains on investments to the extent permitted by the Internal Revenue Code. Use of the capital loss carryforwards will reduce the amount of the distribution to shareholders which would otherwise be necessary to relieve each Fund of any federal tax liability. The capital loss carryforwards do not expire.
Capital Loss Carryfoward | |||
Short-Term (000s) | Long-Term (000s) | Total (000s) | |
Harbor Capital Appreciation Fund | $(863,537) | $— | $(863,537) |
Harbor Convertible Securities Fund | (3,183) | (687) | (3,870) |
Harbor Core Bond Fund | (3,229) | (2,284) | (5,513) |
Harbor Core Plus Fund (formerly, Harbor Bond Fund) | (39,057) | (31,756) | (70,813) |
Harbor Disruptive Innovation Fund | (64,378) | (6,014) | (70,392) |
Harbor Diversified International All Cap Fund | (1,859) | — | (1,859) |
Harbor Emerging Markets Equity Fund | (2,276) | (1,328) | (3,604) |
Harbor High-Yield Bond Fund | (8,457) | (81,890) | (90,347) |
Harbor International Fund | (414,304) | — | (414,304) |
Harbor International Growth Fund | (1,383) | — | (1,383) |
Harbor Overseas Fund | (5,785) | (133) | (5,918) |
Harbor Small Cap Growth Fund | (938) | (34,735) | (35,673) |
* | A portion of the Harbor Small Cap Growth Fund capital loss carryforward is subject to an annual limitation under the Internal Revenue Code and related regulations. |
201
Harbor Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
NOTE 5—TAX INFORMATION—Continued
The identified cost for federal income tax purposes of investments owned by each Fund and its respective gross unrealized appreciation and depreciation as of October 31, 2022 were as follows:
Identified Cost (000s) | Gross Unrealized | Net Unrealized Appreciation/ (Depreciation) (000s) | ||
Appreciation (000s) | (Depreciation) (000s) | |||
Harbor Capital Appreciation Fund* | $14,808,013 | $7,917,007 | $(1,235,749) | $6,681,258 |
Harbor Convertible Securities Fund* | 170,979 | 3,890 | (19,414) | (15,524) |
Harbor Core Bond Fund* | 59,178 | 4 | (8,368) | (8,364) |
Harbor Core Plus Fund (formerly, Harbor Bond Fund)* | 1,101,976 | 3,970 | (167,978) | (164,008) |
Harbor Disruptive Innovation Fund* | 169,352 | 1,999 | (67,607) | (65,608) |
Harbor Diversified International All Cap Fund* | 917,038 | 78,796 | (205,038) | (126,242) |
Harbor Emerging Markets Equity Fund* | 9,437 | 234 | (3,327) | (3,093) |
Harbor Global Leaders Fund | 67,824 | 11,908 | (13,024) | (1,116) |
Harbor High-Yield Bond Fund* | 303,566 | 542 | (32,814) | (32,272) |
Harbor International Fund* | 3,315,981 | 402,613 | (715,496) | (312,883) |
Harbor International Growth Fund* | 344,081 | 59,045 | (59,442) | (397) |
Harbor International Small Cap Fund | 125,478 | 3,313 | (13,560) | (10,247) |
Harbor Large Cap Value Fund | 1,606,778 | 512,867 | (69,293) | 443,574 |
Harbor Mid Cap Fund | 88,870 | 4,468 | (5,348) | (880) |
Harbor Mid Cap Value Fund | 282,902 | 70,985 | (48,326) | 30,759 |
Harbor Money Market Fund | 72,670 | — | — | — |
Harbor Overseas Fund* | 94,632 | 4,087 | (9,059) | (4,972) |
Harbor Small Cap Growth Fund* | 921,113 | 108,669 | (135,687) | (27,018) |
Harbor Small Cap Value Fund | 1,479,437 | 663,760 | (85,512) | 578,248 |
* | 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 year ended October 31, 2022, 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 year as disclosed in the Statement of Operations, are indicators of the volume of derivative activity for each Fund.
Derivative Instruments
As of October 31, 2022, the fair values of derivatives, by primary risk exposure, were reflected in the Statement of Assets and Liabilities as follows:
HARBOR INTERNATIONAL FUND
Statement of Assets and Liabilities Caption | Equity Contracts (000s) |
Purchased options (rights/warrants) | $37 |
Net realized gain/(loss) and the change in net unrealized appreciation / (depreciation) on derivatives, by primary risk exposure, for the year ended October 31, 2022, were:
202
Harbor Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 6—Derivatives—Continued
HARBOR CORE PLUS FUND
Net realized gain/(loss) on derivatives | Interest Rate Contracts (000s) | Foreign Exchange Contracts (000s) | Credit Contracts (000s) | Total (000s) |
Forward currency contracts | $— | $2,113 | $— | $2,113 |
Futures contracts | (8,255) | — | — | (8,255) |
Purchased options | (293) | — | — | (293) |
Written options | 264 | — | — | 264 |
Swap agreements | 5,412 | — | 1,808 | 7,220 |
Net realized gain/(loss) on derivatives | $(2,872) | $2,113 | $1,808 | $(1,409,) |
Change in net unrealized appreciation/(depreciation) on derivatives | Interest Rate Contracts (000s) | Foreign Exchange Contracts (000s) | Credit Contracts (000s) | Total (000s) |
Forward currency contracts | $— | $(4,201) | $— | $(4,021) |
Futures contracts | 3,303 | — | — | 3,303 |
Purchased options | 197 | — | — | 197 |
Written options | 46 | — | — | 46 |
Swap agreements | (4,557) | — | (1,316) | (5,873) |
Change in net unrealized appreciation/(depreciation) on derivatives | $(1,011) | $(4,201) | $(1,316) | $(6,348) |
HARBOR DIVERSIFIED INTERNATIONAL ALL CAP FUND
Net realized gain/(loss) on derivatives | Equity Contracts (000s) |
Purchased options (rights/warrants) | $37 |
HARBOR INTERNATIONAL FUND
Net realized gain/(loss) on derivatives | Equity Contracts (000s) |
Purchased options (rights/warrants) | $130 |
Change in net unrealized appreciation/(depreciation) on derivatives | Equity Contracts (000s) |
Purchased options (rights/warrants) | $(7) |
HARBOR OVERSEAS FUND
Net realized gain/(loss) on derivatives | Equity Contracts (000s) |
Purchased options (rights/warrants) | $(7) |
Note 7—Subsequent Events
At the meeting of the Board of Trustees held on September 6, 2022, the Board of Trustees voted to liquidate and dissolve Harbor Emerging Markets Equity Fund and Harbor Money Market Fund. The liquidation of the Funds occurred on December 9, 2022. Additional information related to the liquidation can be found in the supplement to the Funds' prospectus and statement of additional information as filed with the SEC on September 12, 2022.
At the meeting of the Board of Trustees held on November 13-14, 2022, the Board of Trustees approved a change in the Harbor Convertible Securities Fund’s investment subadviser. Effective March 1, 2023 (the “Effective Date”), BlueCove Limited (“BlueCove”) will replace Shenkman Capital Management, Inc. (“Shenkman Capital”) as investment subadviser to the Fund. In connection
203
Harbor Funds
Notes to Financial Statements—Continued
Notes to Financial Statements—Continued
Note 7—Subsequent Events—Continued
with the appointment of BlueCove as the Fund’s subadviser, as of the Effective Date, the rate of advisory fees payable by the Fund to Harbor Capital will be reduced from 0.65% to 0.50% annually as a percentage of the Fund’s average net assets. Additional information related to these changes can be found in the supplement to the Fund’s prospectus and statement of additional information as filed with the SEC on December 1, 2022.
At the meeting of the Board of Trustees held on November 13-14, 2022, the Board of Trustees approved the reorganization (the “Reorganization”) of the Harbor High-Yield Bond Fund into the Harbor Scientific Alpha High-Yield ETF, a series of Harbor ETF Trust that operates as an exchange-traded fund (“ETF”) and subadvised by BlueCove. The Reorganization is expected to occur on or about the close of business on February 24, 2023. Additional information related to these changes can be found in the supplement to the Fund’s prospectus and statement of additional information as filed with the SEC on December 1, 2022.
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.
204
Harbor Funds
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
The Board of Trustees and Shareholders of
Harbor Funds
Harbor Funds
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities of Harbor Capital Appreciation Fund, Harbor Convertible Securities Fund, Harbor Core Bond Fund, Harbor Core Plus Fund (formerly, Harbor Bond Fund), Harbor Disruptive Innovation Fund, Harbor Diversified International All Cap Fund, Harbor Emerging Markets Equity Fund, Harbor Global Leaders Fund, Harbor High-Yield Bond Fund, Harbor International Fund, Harbor International Growth Fund, Harbor International Small Cap Fund, Harbor Large Cap Value Fund, Harbor Mid Cap Fund, Harbor Mid Cap Value Fund, Harbor Money Market Fund, Harbor Overseas Fund, Harbor Small Cap Growth Fund, and Harbor Small Cap Value Fund (collectively referred to as the “Funds”), (nineteen of the funds constituting Harbor Funds (the “Trust”)), including the portfolios of investments, as of October 31, 2022, and the related statements of operations and changes in net assets, and the financial highlights for each of the periods indicated in the table below and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds (nineteen of the funds constituting the Trust) at October 31, 2022, the results of their operations, changes in net assets and financial highlights for each of the periods indicated in the table below, in conformity with U.S. generally accepted accounting principles.
Individual fund comprising the Harbor Funds | Statement of operations | Statement of changes in net assets | Financial highlights |
Harbor Capital Appreciation Fund Harbor Convertible Securities Fund Harbor Core Plus Fund (formerly known as Harbor Bond Fund) Harbor Disruptive Innovation Fund Harbor Diversified International All Cap Fund Harbor Emerging Markets Equity Fund Harbor Global Leaders Fund Harbor High-Yield Bond Fund Harbor International Fund Harbor International Growth Fund Harbor International Small Cap Fund Harbor Large Cap Value Fund Harbor Mid Cap Value Fund Harbor Money Market Fund Harbor Small Cap Growth Fund Harbor Small Cap Value Fund | For the year ended October 31, 2022 | For each of the two years in the period ended October 31, 2022 | For each of the five years in the period ended October 31, 2022 |
Harbor Core Bond Fund | For the year ended October 31, 2022 | For each of the two years in the period ended October 31, 2022 | For each of the four years in the period ended October 31, 2022 and the period from June 1, 2018 (inception) through October 31, 2018 |
Harbor Mid Cap Fund | For the year ended October 31, 2022 | For each of the two years in the period ended October 31, 2022 | For each of the two years in the period ended October 31, 2022 and the period from December 1, 2019 (inception) through October 31, 2020 |
Harbor Overseas Fund | For the year ended October 31, 2022 | For each of the two years in the period ended October 31, 2022 | For each of the three years in the period ended October 31, 2022 and for the period from March 1, 2019 (inception) through October 31, 2019 |
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on each of the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
205
Harbor Funds
Report of Independent Registered Public Accounting Firm—Continued
Report of Independent Registered Public Accounting Firm—Continued
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2022, by correspondence with the custodian, brokers and others; when replies were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Harbor Funds investment companies since 2000.
Chicago, Illinois
December 21, 2022
December 21, 2022
206
Harbor 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 May 1, 2022 through October 31, 2022.
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 (May 1, 2022) | Ending Account Value (October 31, 2022) | |
Harbor Capital Appreciation Fund | ||||
Retirement Class | 0.58% | |||
Actual | $2.76 | $1,000 | $893.80 | |
Hypothetical (5% return) | 2.96 | 1,000 | 1,022.21 | |
Institutional Class | 0.66% | |||
Actual | $3.15 | $1,000 | $893.40 | |
Hypothetical (5% return) | 3.36 | 1,000 | 1,021.79 | |
Administrative Class | 0.91% | |||
Actual | $4.34 | $1,000 | $892.40 | |
Hypothetical (5% return) | 4.63 | 1,000 | 1,020.50 | |
Investor Class | 1.02% | |||
Actual | $4.86 | $1,000 | $891.70 | |
Hypothetical (5% return) | 5.19 | 1,000 | 1,019.93 |
207
Harbor Funds
Fees and Expenses Example—Continued
Fees and Expenses Example—Continued
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value (May 1, 2022) | Ending Account Value (October 31, 2022) | |
Harbor Convertible Securities Fund | ||||
Retirement Class | 0.68% | |||
Actual | $3.30 | $1,000 | $924.90 | |
Hypothetical (5% return) | 3.47 | 1,000 | 1,021.69 | |
Institutional Class | 0.76% | |||
Actual | $3.69 | $1,000 | $925.40 | |
Hypothetical (5% return) | 3.87 | 1,000 | 1,021.28 | |
Administrative Class | 1.01% | |||
Actual | $4.90 | $1,000 | $924.10 | |
Hypothetical (5% return) | 5.14 | 1,000 | 1,019.99 | |
Investor Class | 1.12% | |||
Actual | $5.43 | $1,000 | $923.70 | |
Hypothetical (5% return) | 5.70 | 1,000 | 1,019.42 | |
Harbor Core Bond Fund | ||||
Retirement Class | 0.27% | |||
Actual | $1.31 | $1,000 | $928.10 | |
Hypothetical (5% return) | 1.38 | 1,000 | 1,023.81 | |
Institutional Class | 0.36% | |||
Actual | $1.74 | $1,000 | $927.70 | |
Hypothetical (5% return) | 1.84 | 1,000 | 1,023.34 | |
Harbor Core Plus Fund | ||||
Retirement Class | 0.36% | |||
Actual | $1.74 | $1,000 | $926.80 | |
Hypothetical (5% return) | 1.84 | 1,000 | 1,023.34 | |
Institutional Class | 0.42% | |||
Actual | $2.04 | $1,000 | $924.80 | |
Hypothetical (5% return) | 2.14 | 1,000 | 1,023.03 | |
Administrative Class | 0.67% | |||
Actual | $3.25 | $1,000 | $923.60 | |
Hypothetical (5% return) | 3.41 | 1,000 | 1,021.74 | |
Harbor Disruptive Innovation Fund | ||||
Retirement Class | 0.52% | |||
Actual | $2.42 | $1,000 | $846.90 | |
Hypothetical (5% return) | 2.65 | 1,000 | 1,022.52 | |
Institutional Class | 0.61% | |||
Actual | $2.84 | $1,000 | $845.40 | |
Hypothetical (5% return) | 3.11 | 1,000 | 1,022.05 | |
Administrative Class | 0.86% | |||
Actual | $4.00 | $1,000 | $845.30 | |
Hypothetical (5% return) | 4.38 | 1,000 | 1,020.76 | |
Investor Class | 0.96% | |||
Actual | $4.46 | $1,000 | $845.00 | |
Hypothetical (5% return) | 4.89 | 1,000 | 1,020.24 |
208
Harbor Funds
Fees and Expenses Example—Continued
Fees and Expenses Example—Continued
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value (May 1, 2022) | Ending Account Value (October 31, 2022) | |
Harbor Diversified International All Cap Fund | ||||
Retirement Class | 0.72% | |||
Actual | $3.39 | $1,000 | $869.00 | |
Hypothetical (5% return) | 3.67 | 1,000 | 1,021.48 | |
Institutional Class | 0.80% | |||
Actual | $3.77 | $1,000 | $869.00 | |
Hypothetical (5% return) | 4.08 | 1,000 | 1,021.07 | |
Administrative Class | 1.05% | |||
Actual | $4.94 | $1,000 | $867.70 | |
Hypothetical (5% return) | 5.35 | 1,000 | 1,019.78 | |
Investor Class | 1.16% | |||
Actual | $5.46 | $1,000 | $867.10 | |
Hypothetical (5% return) | 5.90 | 1,000 | 1,019.21 | |
Harbor Emerging Markets Equity Fund | ||||
Retirement Class | 0.88% | |||
Actual | $4.05 | $1,000 | $825.90 | |
Hypothetical (5% return) | 4.48 | 1,000 | 1,020.66 | |
Institutional Class | 0.96% | |||
Actual | $4.42 | $1,000 | $824.80 | |
Hypothetical (5% return) | 4.89 | 1,000 | 1,020.24 | |
Investor Class | 1.32% | |||
Actual | $6.06 | $1,000 | $823.70 | |
Hypothetical (5% return) | 6.72 | 1,000 | 1,018.38 | |
Harbor Global Leaders Fund | ||||
Retirement Class | 0.78% | |||
Actual | $3.69 | $1,000 | $878.10 | |
Hypothetical (5% return) | 3.97 | 1,000 | 1,021.17 | |
Institutional Class | 0.86% | |||
Actual | $4.07 | $1,000 | $877.70 | |
Hypothetical (5% return) | 4.38 | 1,000 | 1,020.76 | |
Administrative Class | 1.11% | |||
Actual | $5.25 | $1,000 | $876.30 | |
Hypothetical (5% return) | 5.65 | 1,000 | 1,019.47 | |
Investor Class | 1.22% | |||
Actual | $5.77 | $1,000 | $875.90 | |
Hypothetical (5% return) | 6.21 | 1,000 | 1,018.90 | |
Harbor High-Yield Bond Fund | ||||
Retirement Class | 0.59% | |||
Actual | $2.92 | $1,000 | $964.39 | |
Hypothetical (5% return) | 3.01 | 1,000 | 1,022.16 | |
Institutional Class | 0.67% | |||
Actual | $3.32 | $1,000 | $964.00 | |
Hypothetical (5% return) | 3.41 | 1,000 | 1,021.74 | |
Administrative Class | 0.92% | |||
Actual | $4.55 | $1,000 | $962.91 | |
Hypothetical (5% return) | 4.69 | 1,000 | 1,020.45 | |
Investor Class | 1.03% | |||
Actual | $5.09 | $1,000 | $962.38 | |
Hypothetical (5% return) | 5.24 | 1,000 | 1,019.88 |
209
Harbor Funds
Fees and Expenses Example—Continued
Fees and Expenses Example—Continued
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value (May 1, 2022) | Ending Account Value (October 31, 2022) | |
Harbor International Fund | ||||
Retirement Class | 0.69% | |||
Actual | $3.26 | $1,000 | $875.00 | |
Hypothetical (5% return) | 3.52 | 1,000 | 1,021.64 | |
Institutional Class | 0.77% | |||
Actual | $3.64 | $1,000 | $874.50 | |
Hypothetical (5% return) | 3.92 | 1,000 | 1,021.23 | |
Administrative Class | 1.02% | |||
Actual | $4.81 | $1,000 | $873.40 | |
Hypothetical (5% return) | 5.19 | 1,000 | 1,019.93 | |
Investor Class | 1.13% | |||
Actual | $5.34 | $1,000 | $873.10 | |
Hypothetical (5% return) | 5.75 | 1,000 | 1,019.37 | |
Harbor International Growth Fund | ||||
Retirement Class | 0.77% | |||
Actual | $3.58 | $1,000 | $846.20 | |
Hypothetical (5% return) | 3.92 | 1,000 | 1,021.23 | |
Institutional Class | 0.85% | |||
Actual | $3.95 | $1,000 | $846.60 | |
Hypothetical (5% return) | 4.33 | 1,000 | 1,020.81 | |
Administrative Class | 1.10% | |||
Actual | $5.12 | $1,000 | $845.30 | |
Hypothetical (5% return) | 5.60 | 1,000 | 1,019.52 | |
Investor Class | 1.21% | |||
Actual | $5.63 | $1,000 | $844.60 | |
Hypothetical (5% return) | 6.16 | 1,000 | 1,018.95 | |
Harbor International Small Cap Fund | ||||
Retirement Class | 0.88% | |||
Actual | $4.31 | $1,000 | $941.90 | |
Hypothetical (5% return) | 4.48 | 1,000 | 1,020.66 | |
Institutional Class | 0.96% | |||
Actual | $4.70 | $1,000 | $941.90 | |
Hypothetical (5% return) | 4.89 | 1,000 | 1,020.24 | |
Administrative Class | 1.21% | |||
Actual | $5.92 | $1,000 | $939.60 | |
Hypothetical (5% return) | 6.16 | 1,000 | 1,018.95 | |
Investor Class | 1.32% | |||
Actual | $6.45 | $1,000 | $940.20 | |
Hypothetical (5% return) | 6.72 | 1,000 | 1,018.38 |
210
Harbor Funds
Fees and Expenses Example—Continued
Fees and Expenses Example—Continued
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value (May 1, 2022) | Ending Account Value (October 31, 2022) | |
Harbor Large Cap Value Fund | ||||
Retirement Class | 0.61% | |||
Actual | $3.02 | $1,000 | $962.40 | |
Hypothetical (5% return) | 3.11 | 1,000 | 1,022.05 | |
Institutional Class | 0.69% | |||
Actual | $3.41 | $1,000 | $961.90 | |
Hypothetical (5% return) | 3.52 | 1,000 | 1,021.64 | |
Administrative Class | 0.94% | |||
Actual | $4.65 | $1,000 | $961.10 | |
Hypothetical (5% return) | 4.79 | 1,000 | 1,020.35 | |
Investor Class | 1.05% | |||
Actual | $5.19 | $1,000 | $960.40 | |
Hypothetical (5% return) | 5.35 | 1,000 | 1,019.78 | |
Harbor Mid Cap Fund | ||||
Retirement Class | 0.80% | |||
Actual | $3.92 | $1,000 | $944.60 | |
Hypothetical (5% return) | 4.08 | 1,000 | 1,021.07 | |
Institutional Class | 0.88% | |||
Actual | $4.32 | $1,000 | $944.60 | |
Hypothetical (5% return) | 4.48 | 1,000 | 1,020.66 | |
Investor Class | 1.24% | |||
Actual | $6.07 | $1,000 | $942.80 | |
Hypothetical (5% return) | 6.31 | 1,000 | 1,018.80 | |
Harbor Mid Cap Value Fund | ||||
Retirement Class | 0.77% | |||
Actual | $3.85 | $1,000 | $985.60 | |
Hypothetical (5% return) | 3.92 | 1,000 | 1,021.23 | |
Institutional Class | 0.85% | |||
Actual | $4.25 | $1,000 | $985.60 | |
Hypothetical (5% return) | 4.33 | 1,000 | 1,020.81 | |
Administrative Class | 1.10% | |||
Actual | $5.51 | $1,000 | $984.10 | |
Hypothetical (5% return) | 5.60 | 1,000 | 1,019.52 | |
Investor Class | 1.21% | |||
Actual | $6.05 | $1,000 | $983.50 | |
Hypothetical (5% return) | 6.16 | 1,000 | 1,018.95 | |
Harbor Money Market Fund | ||||
Institutional Class | 0.13% | |||
Actual | $0.66 | $1,000 | $1,007.00 | |
Hypothetical (5% return) | 0.66 | 1,000 | 1,024.53 | |
Administrative Class | 0.25% | |||
Actual | $1.26 | $1,000 | $1,006.20 | |
Hypothetical (5% return) | 1.28 | 1,000 | 1,023.91 |
211
Harbor Funds
Fees and Expenses Example—Continued
Fees and Expenses Example—Continued
Annualized Expense Ratios* | Expenses Paid During Period** | Beginning Account Value (May 1, 2022) | Ending Account Value (October 31, 2022) | |
Harbor Overseas Fund | ||||
Retirement Class | 0.77% | |||
Actual | $3.66 | $1,000 | $887.90 | |
Hypothetical (5% return) | 3.92 | 1,000 | 1,021.23 | |
Institutional Class | 0.85% | |||
Actual | $4.04 | $1,000 | $887.00 | |
Hypothetical (5% return) | 4.33 | 1,000 | 1,020.81 | |
Investor Class | 1.21% | |||
Actual | $5.75 | $1,000 | $885.70 | |
Hypothetical (5% return) | 6.16 | 1,000 | 1,018.95 | |
Harbor Small Cap Growth Fund | ||||
Retirement Class | 0.79% | |||
Actual | $3.90 | $1,000 | $961.60 | |
Hypothetical (5% return) | 4.02 | 1,000 | 1,021.12 | |
Institutional Class | 0.87% | |||
Actual | $4.30 | $1,000 | $960.50 | |
Hypothetical (5% return) | 4.43 | 1,000 | 1,020.71 | |
Administrative Class | 1.12% | |||
Actual | $5.53 | $1,000 | $959.20 | |
Hypothetical (5% return) | 5.70 | 1,000 | 1,019.42 | |
Investor Class | 1.23% | |||
Actual | $6.07 | $1,000 | $959.20 | |
Hypothetical (5% return) | 6.26 | 1,000 | 1,018.85 | |
Harbor Small Cap Value Fund | ||||
Retirement Class | 0.79% | |||
Actual | $4.03 | $1,000 | $1,024.40 | |
Hypothetical (5% return) | 4.02 | 1,000 | 1,021.12 | |
Institutional Class | 0.87% | |||
Actual | $4.44 | $1,000 | $1,023.90 | |
Hypothetical (5% return) | 4.43 | 1,000 | 1,020.71 | |
Administrative Class | 1.12% | |||
Actual | $5.71 | $1,000 | $1,022.80 | |
Hypothetical (5% return) | 5.70 | 1,000 | 1,019.42 | |
Investor Class | 1.23% | |||
Actual | $6.27 | $1,000 | $1,022.00 | |
Hypothetical (5% return) | 6.26 | 1,000 | 1,018.85 |
* | 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 184/365 (to reflect the one-half year period). |
212
Harbor Funds
Additional Information (Unaudited)
Additional Information (Unaudited)
Additional Tax Information
The Funds designate the following portions of their distributions from investment company taxable income for the fiscal year ended October 31, 2022 as qualifying for the dividends received deduction for corporate shareholders.
Percentage of Distribution | |
Harbor Convertible Securities Fund | 21% |
Harbor Diversified International All Cap Fund | 3 |
Harbor International Fund | 1 |
Harbor Large Cap Value Fund | 100 |
Harbor Mid Cap Fund | 62 |
Harbor Mid Cap Value Fund | 100 |
Harbor Small Cap Value Fund | 100 |
Pursuant to Section 852 of the Internal Revenue Code, the Funds designate the following capital gain dividends for the fiscal year ended October 31, 2022:
Amount (000s) | |
Harbor Capital Appreciation Fund | $6,320,680 |
Harbor Convertible Securities Fund | 11,022 |
Harbor Disruptive Innovation Fund | 82,737 |
Harbor Diversified International All Cap Fund | 55,890 |
Harbor Emerging Markets Equity Fund | 2,029 |
Harbor Global Leaders Fund | 13,648 |
Harbor International Growth Fund | 60,959 |
Harbor International Small Cap Fund | 2,299 |
Harbor Large Cap Value Fund | 77,975 |
Harbor Mid Cap Fund | 1,214 |
Harbor Mid Cap Value Fund | 3,656 |
Harbor Overseas Fund | 3,503 |
Harbor Small Cap Growth Fund | 175,832 |
Harbor Small Cap Value Fund | 152,879 |
For the fiscal year ended October 31, 2022, each Fund designates up to the maximum amount of such dividends allowable pursuant to the Internal Revenue Code as qualified dividend income eligible for reduced tax rates. These lower rates range from 0% to 20% depending on an individual’s tax bracket. If a Fund pays a distribution during calendar year 2022, complete information will be reported in conjunction with Form 1099-DIV.
For the fiscal year ended October 31, 2022, each Fund, if applicable, designates up to the maximum amount of such dividends allowable pursuant to the Internal Revenue Code 163 (j) as interest income eligible for income inclusion for corporate shareholders.
The Funds designate the following foreign taxes paid and foreign source income for Federal income tax purposes:
Foreign Taxes Paid (000s) | Foreign Source Earned Income (000s) | |
Harbor Diversified International All Cap Fund | $2,810 | $26,695 |
Harbor Emerging Markets Equity Fund | 334 | 524 |
Harbor International Growth Fund | 904 | 6,720 |
Harbor International Small Cap Fund | 191 | 2,532 |
Harbor Overseas Fund | 222 | 3,200 |
Shareholders who own shares through a taxable Harbor Funds account and that received distributions from a Fund during calendar year 2022 will receive a Form 1099-DIV in January 2023 that will show the tax character of those distributions.
213
Harbor Funds
Additional Information—Continued
Additional Information—Continued
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 toll-free at 800-422-1050; (ii) on Harbor’s website at harborcapital.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 toll-free at 800-422-1050, (ii) on Harbor’s website at harborcapital.com, and (iii) on the SEC’s website at sec.gov.
214
Harbor Funds
Additional Information—Continued
Additional Information—Continued
Trustees and Officers
As of December 2022
The business and affairs of the Trust shall be managed by or under the direction of the Trustees, and they shall have all powers necessary or desirable to carry out that responsibility. The Trustees shall have full power and authority to take or refrain from taking any action and to execute any contracts and instruments that they may consider necessary or desirable in the management of the Trust. Any determination made by the Trustees in good faith as to what is in the interests of the Trust shall be conclusive. The Trustees serve on the Board of Trustees of Harbor Funds and Harbor ETF Trust.
Information pertaining to the Trustees and Officers of Harbor Funds is set forth below. The address of each Trustee and Officer is: [Name of Trustee or Officer] c/o Harbor Funds, 111 South Wacker Drive, 34th Floor, Chicago, IL 60606-4302.
Harbor Funds' Statement of Additional Information includes additional information about the Trust’s Trustees and is available without charge by calling 800-422-1050 or at the Trust’s website at harborcapital.com.
Name (Age) Position(s) with Fund | Term of Office and Length of Time Served1 | Principal Occupation(s) During Past Five Years | Number of Portfolios In Fund Complex Overseen By Trustee | Other Directorships Of Public Companies and Other Registered Investment Companies Held by Trustee During Past Five Years |
INDEPENDENT TRUSTEES | ||||
Scott M. Amero (59) Trustee | Since 2014 | Chairman (2015-2020) and Trustee (2011-Present), Rare (conservation nonprofit); Trustee, The Nature Conservancy, Massachusetts Chapter (2018-Present); Trustee, Adventure Scientists (conservation nonprofit) (2020-Present); Vice Chairman and Global Chief Investment Officer, Fixed Income (2010), Vice Chairman and Global Chief Investment Officer, Fixed Income, and Co-Head, Fixed Income Portfolio Management (2007-2010), BlackRock, Inc. (publicly traded investment management firm). | 29 | None |
Donna J. Dean (71) Trustee | Since 2010 | Chief Investment Officer of the Rockefeller Foundation (a private foundation) (2001-2019). | 29 | None |
Robert Kasdin (64) Trustee | Since 2014 | Senior Vice President and Chief Operating Officer (2015-2022) and Chief Financial Officer (2018-2022), Johns Hopkins Medicine; Trustee and Member of the Finance Committee, National September 11 Memorial & Museum at the World Trade Center (2005-2019); Director, Apollo Commercial Real Estate Finance, Inc. (2014-Present); and Director and Executive Committee Member, The Y in Central Maryland (2018-Present). | 29 | Director of Apollo Commercial Real Estate Finance, Inc. (2014-Present). |
Kathryn L. Quirk (70) Trustee | Since 2017 | Member, Board of Directors and Co-Chair, Governance Committee, Just World International Inc. (nonprofit) (2020 – Present); Vice President, Senior Compliance Officer and Head, U.S. Regulatory Compliance, Goldman Sachs Asset Management (2013-2017); Deputy Chief Legal Officer, Asset Management, and Vice President and Corporate Counsel, Prudential Insurance Company of America (2010-2012); Co-Chief Legal Officer, Prudential Investment Management, Inc., and Chief Legal Officer, Prudential Investments and Prudential Mutual Funds (2008-2012); Vice President and Corporate Counsel and Chief Legal Officer, Mutual Funds, Prudential Insurance Company of America, and Chief Legal Officer, Prudential Investments (2005-2008); Vice President and Corporate Counsel and Chief Legal Officer, Mutual Funds, Prudential Insurance Company of America (2004-2005); Member, Management Committee (2000-2002), General Counsel and Chief Compliance Officer, Zurich Scudder Investments, Inc. (1997-2002). | 29 | None |
Douglas J. Skinner (60) Trustee | Since 2020 | Professor of Accounting (2005-Present), Deputy Dean for Faculty (2015-2016, 2017-Present), Interim Dean (2016-2017), University of Chicago Booth School of Business. | 29 | None |
Ann M. Spruill (68) Trustee | Since 2014 | Partner (1993-2008), member of Executive Committee (1996-2008), Member Board of Directors (2002-2008), Grantham, Mayo, Van Otterloo & Co, LLC (private investment management firm) (with the firm since 1990); Member Investment Committee and Chair of Global Public Equities, Museum of Fine Arts, Boston (2000-2020); and Trustee, Financial Accounting Foundation (2014-2020). | 29 | None |
215
Harbor Funds
Additional Information—Continued
Additional Information—Continued
Trustees and Officers—Continued
Name (Age) Position(s) with Fund | Term of Office and Length of Time Served1 | Principal Occupation(s) During Past Five Years | Number of Portfolios In Fund Complex Overseen By Trustee | Other Directorships Of Public Companies and Other Registered Investment Companies Held by Trustee During Past Five Years |
INDEPENDENT TRUSTEES—Continued | ||||
Landis Zimmerman (63) Trustee | Since 2022 | Independent, non-fiduciary advisor, Gore Creek Asset Management (2006-Present); Member, Japan Science and Technology Agency Investment Advisory Committee (2021-Present); Chief Investment Officer of the Howard Hughes Medical Institute (2004-2021). | 29 | None |
INTERESTED TRUSTEE | ||||
Charles F. McCain (53)* Chairman, Trustee and President | Since 2017 | Chief Executive Officer (2017-Present), Director (2007-Present), President and Chief Operating Officer (2017), Executive Vice President and General Counsel (2004-2017), and Chief Compliance Officer (2004-2014), Harbor Capital Advisors, Inc.; Director and Chairperson (2019-Present), Harbor Trust Company, Inc.; Director (2007-Present) and Chief Compliance Officer (2004-2017), Harbor Services Group, Inc.; Chief Executive Officer (2017-Present), Director (2007-Present), Chief Compliance Officer and Executive Vice President (2007-2017), Harbor Funds Distributors, Inc.; Chief Compliance Officer, Harbor Funds (2004-2017); and Chairman, President and Trustee, Harbor ETF Trust (2021-Present). | 29 | None |
Name (Age) Position(s) with Fund | Term of Office and Length of Time Served1 | Principal Occupation(s) During Past Five Years |
FUND OFFICERS NOT LISTED ABOVE** | ||
Erik D. Ojala (47) Chief Compliance Officer | Since 2017 | Executive Vice President and General Counsel (2017-Present) and Secretary (2010-Present); Senior Vice President and Associate General Counsel (2007-2017), Harbor Capital Advisors, Inc.; Director and Secretary (2019-Present), Harbor Trust Company, Inc.; Director, Executive Vice President (2017-Present) and Chief Compliance Officer (2017-2021), Harbor Funds Distributors, Inc.; Director (2017-Present) and Assistant Secretary (2014-Present), Harbor Services Group, Inc.; AML Compliance Officer (2010-2017) and Vice President and Secretary (2007-2017), Harbor Funds; and Chief Compliance Officer, Harbor ETF Trust (2021-Present). |
Kristof M. Gleich (43) Vice President | Since 2019 | President (2018-Present) and Chief Investment Officer (2020), Harbor Capital Advisors, Inc.; Director, Vice Chairperson, President (2019-Present) and Chief Investment Officer (2020-Present), Harbor Trust Company, Inc.; Vice President, Harbor Funds (2019-Present); Vice President, Harbor ETF Trust (2021-Present); and Managing Director, Global Head of Manager Selection (2010-2018), JP Morgan Chase & Co. |
Gregg M. Boland (59) Vice President and AML Compliance Officer | Since 2019 | Executive Vice President (2020-Present), Vice President (2019-2020), Harbor Capital Advisors, Inc.; President (2019-Present), Senior Vice President – Operations (2016-2019), and Vice President – Operations (2007-2015), Harbor Services Group, Inc.; Senior Vice President, AML Compliance Officer, and OFAC Officer (2019-Present), Harbor Funds Distributors, Inc.; Vice President, Harbor Funds (2019-Present) and Vice President, Harbor ETF Trust (2021-Present). |
Diana R. Podgorny (43) Secretary | Since 2018 | Senior Vice President and Deputy General Counsel (2022-Present), Senior Vice President and Assistant General Counsel (2020-2022), and Vice President and Assistant General Counsel (2017-2020), Harbor Capital Advisors, Inc.; Director and Vice President (2020-Present), Harbor Trust Company, Inc.; Secretary, Harbor Funds (2018-Present); and Secretary, Harbor ETF Trust (2021-Present). |
Lana M. Lewandowski (43) Assistant Secretary | Since 2017 | Vice President and Compliance Director (2022-Present), Legal & Compliance Manager (2016-2022) and Legal Specialist (2012-2015), Harbor Capital Advisors, Inc.; AML Compliance Officer (2017-2022) and Assistant Secretary (2017-Present), Harbor Funds; and AML Compliance Officer (2021-2022) and Assistant Secretary (2021-Present), Harbor ETF Trust. |
John M. Paral (54) Treasurer | Since 2013 | Senior Vice President – Fund Administration and Analysis (2022-Present), Director of Fund Administration and Analysis (2017-2022), Vice President (2012-2022) and Financial Reporting Manager (2007-2017), Harbor Capital Advisors, Inc.; Treasurer (2022-Present) and Assistant Treasurer (2013-2022), Harbor Funds; and Treasurer (2022-Present) and Assistant Treasurer (2021-2022), Harbor ETF Trust. |
216
Harbor Funds
Additional Information—Continued
Additional Information—Continued
Trustees and Officers—Continued
Name (Age) Position(s) with Fund | Term of Office and Length of Time Served1 | Principal Occupation(s) During Past Five Years |
FUND OFFICERS NOT LISTED ABOVE**—Continued | ||
Lora A. Kmieciak (58) Vice President | Since 2017 | Executive Vice President and Chief Financial Officer (2022-Present), Senior Vice President – Fund Administration and Analysis (2017-2022) and Senior Vice President - Business Analysis (2015-2017), Harbor Capital Advisors, Inc.; Vice President (2020 – 2022) and Director (2022-Present), Harbor Trust Company, Inc.; Assistant Treasurer (2017-2022) and Vice President (2022-Present), Harbor Funds; and Assistant Treasurer (2021-2022) and Vice President (2022-Present), Harbor ETF Trust. |
Diane J. Johnson (57) Vice President | Since 2022 | Vice President (2022-Present) and Tax Director (2009-Present), Harbor Capital Advisors, Inc.; Vice President (2022-Present), Harbor Funds; and Vice President (2022-Present), Harbor ETF Trust. |
1 | Each Trustee serves for an indefinite term, until his or her successor is elected. Each Officer is elected annually. |
* | Mr. McCain is deemed an “Interested Trustee” due to his affiliation with the Adviser and Distributor of Harbor Funds. |
** | Officers of the Funds are “interested persons” as defined in the Investment Company Act. |
217
This Privacy Statement Is Not Part of This Report
Harbor’s Privacy Statement
Harbor’s Privacy Statement
Rev. 09/2021
FACTS | WHAT DOES HARBOR DO WITH YOUR PERSONAL INFORMATION? |
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: ◾ Social Security number ◾ Account balances and transaction history ◾ Assets and investment experience ◾ Wire transfer instructions When you are no longer our customer, we continue to share your information as described in this notice. |
How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons Harbor chooses to share; and whether you can limit this sharing. |
Reasons we can share your personal information | Does Harbor share? | Can you limit this sharing? |
For our everyday business purposes— such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes | No |
For our marketing purposes— to offer our products and services to you | Yes | No |
For joint marketing with other financial companies | No | We don’t share |
For our affiliates’ everyday business purposes— information about your transactions and experiences | Yes | No |
For our affiliates’ everyday business purposes— information about your creditworthiness | No | We don’t share |
For nonaffiliates to market to you | No | We don’t share |
Questions? | Call 800-422-1050 or go to harborcapital.com |
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Harbor’s Privacy Statement—Continued
Page 2 | ||
Who we are | ||
Who is providing this notice? | Harbor Capital Advisors, Inc.; Harbor Services Group; Inc.; Harbor Funds Distributors, Inc., Harbor Trust Company, Inc., Harbor Funds, Harbor ETF Trust (collectively, “Harbor”) | |
What we do | ||
How does Harbor protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We maintain physical, electronic and procedural safeguards designed to protect your personal information; however, please be aware that no data security measures can guarantee 100% security. | |
How does Harbor collect my personal information? | We collect your personal information, for example, when you ◾ Open an account or make transactions on your account ◾ Give us your contact information or income information ◾ Tell us about your investment or retirement portfolio We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. | |
Why can’t I limit all sharing? | Federal law gives you the right to limit only ◾ sharing for affiliates’ everyday business purposes—information about your creditworthiness ◾ affiliates from using your information to market to you ◾ sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing. | |
Definitions | ||
Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. ◾ Our affiliates include the financial companies providing this notice, as well as other companies under our parent company, ORIX Corporation. | |
Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. ◾ Nonaffiliates we share with can include companies that perform support services on our behalf or other firms that assist us in providing you with products and services, such as custodians, transfer agents, broker-dealers and marketing service firms (to support our marketing to you), as well as other financial institutions. | |
Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. ◾ Harbor doesn’t jointly market. | |
Other important information | ||
Notice to investors in California and Vermont | Under California and Vermont law, we will not share information we collect about you with outside companies, unless the law allows. For example, we may share information with your consent, to service your accounts, and in connection with legal proceedings. We will limit sharing among our companies to the extent required by applicable law. |
We recommend that you read and retain this notice for your personal files.
219
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
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: October 31
Date of reporting period: October 31, 2022
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):
ITEM 2 – CODE OF ETHICS
(a)
The Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party (the “Code of Ethics”).
(c)
Effective September 30, 2022, Anmarie S. Kolinski, former Harbor Funds principal financial officer, retired. Accordingly, the code of ethics was amended to remove Anmarie S. Kolinski and to add John M. Paral as the new principal financial officer. The code became effective October 1, 2022.
(d)
The Registrant has not granted any waivers, including an implicit waiver, from any provisions of its Code of Ethics during the period covered by this report.
ITEM 3 – AUDIT COMMITTEE FINANCIAL EXPERT
The Registrant’s Board has determined that Douglas J. Skinner, a member of the Audit Committee of the Board of Trustees, is an audit committee financial expert as defined by the Securities and Exchange Commission (the “SEC”). Mr. Skinner is the Eric J. Gleacher Distinguished Service Professor of Accounting and Deputy Dean for Faculty at the University of Chicago Booth School of Business, where his prior positions include John P. and Lillian A. Gould Professor of Accounting, Neubauer Family Faculty Fellow, Interim Dean, and Executive Director of the Accounting Research Center. Mr. Skinner is deemed “independent” as defined by the SEC for purposes of audit committee financial expert determinations.
ITEM 4 – PRINCIPAL ACCOUNTANT FEES AND SERVICES
Items 4(a)—4(d): Audit, Audit-Related, Tax and All Other Fees
Fees billed by Ernst & Young (“EY”):
Fiscal Year Ended October 31, 2022 | Fiscal Year Ended October 31, 2021 | |||||
All fees and services to the Trust that were pre-approved | All fees and services to service affiliates that were pre-approved | All other fees and services to service affiliates that did not require pre-approval | All fees and services to the Trust that were pre-approved | All fees and services to service affiliates that were pre-approved | All other fees and services to service affiliates that did not require pre-approval | |
(a) Audit Fees. | $926,263 | N/A | N/A | $853,475 | N/A | N/A |
(b) Audit-Related Fees. | $9,2501 | $46,0002 | N/A | $5,0001 | $54,4002 | N/A |
(c) Tax Fees. | $663,3983 | $0 | N/A | $600,8383 | $0 | N/A |
(d) All Other Fees. | $113,8664 | $1,7765 | N/A | $104,5404 | $0 | N/A |
1
Includes fees related to the issuance of consents for N-1A filings.
2
Includes fees related to the procedures performed for Harbor Services Group, Inc. required by Rule 17Ad-13(a)(3) of the Securities Exchange Act of 1934.
3
Includes fees related to tax compliance, including foreign tax reclaim filings and tax research and equalization.
4
Includes fees billed in connection with the Registrant’s subscription to the EY PFIC Analyzer, a database used to determine whether foreign equity securities are passive foreign investment companies. Also, for the Registrant’s subscription to the Rapid Security Analyzer, a tool used to determine which foreign equity securities per their respective country has an ASC 740 capital gain exposure.
5
Includes fees billed in connection with the Adviser’s subscription to EY Atlas, a global platform and research tool for accessing accounting and auditing content, including external standards, EY interpretations and thought leadership.
(e)
(1)
Pre-Approval Policies.
The policy of the Registrant’s Audit Committee is to consider and, if appropriate, approve before the principal accountant is engaged for such services, all specific audit, review and non-audit services (other than certain de minimis non-audit services) provided to the Registrant. In making a determination, the Audit Committee considers whether the services are consistent with maintaining the principal accountant’s independence.
In the event of a contingency situation in which the principal accountant is needed to provide services in between scheduled Audit Committee meetings, the Audit Committee is authorized to delegate one or more members of the Committee the responsibility for considering and, if appropriate, pre-approving audit or permitted non-audit services in an amount sufficient to complete services and to determine if such services would be consistent with maintaining the
accountant’s independence. Such member(s) are required to report to the full Audit Committee as to the nature and amount of such services and fees pre-approved at the next scheduled Audit Committee meeting. The Audit Committee would again consider whether such services and fees are consistent with maintaining the principal accountant’s independence.
The Registrant’s Audit Committee is informed at least annually of all audit and non-audit services provided by the principal accountant to the Registrant.
(2)
None of the principal accountant’s fees or services rendered to the Registrant, the Adviser or Harbor Services Group, Inc. were approved pursuant to the waiver provision of paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f)
Not applicable
(g)
Aggregate Non-Audit Fees.
Aggregate Non-Audit Fees of the Registrant
Fiscal Year Ended October 31, 2022: $786,514
Fiscal Year Ended October 31, 2021: $710,378
Aggregate Non-Audit Fees of Other Entities Required to be Pre-approved Pursuant to Paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X
Fiscal Year Ended October 31, 2022: $47,776
Fiscal Year Ended October 31, 2021: $54,400
(h)
For the most recent fiscal year, the Audit Committee has determined that the provision of all non-audit services to service affiliates was compatible with maintaining the principal accountant’s independence.
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 second fiscal quarter of 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
(a)(1) | |
(a)(2) | |
(b) |
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 December 21, 2022 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) | December 21, 2022 |
By: | /s/ John M. Paral John M. Paral | Treasurer (Principal Financial and Accounting Officer) | December 21, 2022 |
Exhibit Index
Number | Description |
99.CODE ETH | Code of Business Conduct and Ethics. |
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). |