N-Q 1 dnq.htm HARBOR FUNDS Harbor Funds
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form N-Q

 

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS 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, IL 60606-4302

(Address of principal executive offices) (Zip code)

 

David G. Van Hooser

HARBOR FUNDS

  

Christopher P. Harvey, Esq.

DECHERT LLP

111 South Wacker Drive, 34th Floor

Chicago, IL 60606-4302

  

200 Clarendon Street, 27th Floor

Boston, MA 02116

(Name and address of agent for service)

Registrant’s telephone number, including area code: (312) 443-4400

Date of fiscal year end: October 31, 2010

Date of reporting period: January 31, 2010

 

 

 

Table of Contents

ITEM 1 – SCHEDULE OF INVESTMENTS

The following is a copy of the schedules as of the close of the reporting period as set forth in Sections 210.12-12 – 12-14 of Regulation S-X [17 CRF 210.12-12 – 12-14]:

Harbor Funds’ schedules of investments as of January 31, 2010 are included.

ITEM 2 – CONTROLS AND PROCEDURES

 

(a) The Principal Executive and Financial Officers concluded that the registrant’s disclosure controls and procedures are effective based on their evaluation of the disclosure controls and procedures as of a date within 90 days of the filing of this report.

 

(b) There were no significant changes in the registrant’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

ITEM 3 – EXHIBITS

A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)) is attached hereto.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed this 30th day of March, 2010 on its behalf by the undersigned, thereunto duly authorized.

 

HARBOR FUNDS
By:   /s/    DAVID G. VAN HOOSER        
 

David G. Van Hooser

Chairman, President, Trustee

And Chief 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/    DAVID G. VAN HOOSER        

David G. Van Hooser

   Chairman, President, Trustee and Chief Executive Officer   March 30, 2010

By:

   

/s/    ANMARIE S. KOLINSKI        

Anmarie S. Kolinski

   Treasurer and Chief Financial Officer   March 30, 2010

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LOGO

 

Quarterly Schedule of Portfolio Holdings

January 31, 2010

Domestic Equity Funds

 

Growth Funds

Harbor Capital Appreciation Fund

Harbor Mid Cap Growth Fund

Harbor Small Cap Growth Fund

Value Funds

Harbor Large Cap Value Fund

Harbor Mid Cap Value Fund

Harbor Small Cap Value Fund

Harbor Small Company Value Fund

Table of Contents

 

Table of Contents

 

 

Portfolios of Investments

     

Growth Funds

     

HARBOR CAPITAL APPRECIATION FUND

      1

HARBOR MID CAP GROWTH FUND

      3

HARBOR SMALL CAP GROWTH FUND

      6

Value Funds

     

HARBOR LARGE CAP VALUE FUND

      8

HARBOR MID CAP VALUE FUND

      11

HARBOR SMALL CAP VALUE FUND

      14

HARBOR SMALL COMPANY VALUE FUND

      16

Notes to Portfolios of Investments

     18

Table of Contents

Harbor Capital Appreciation Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Equity Holdings (% of net assets)

(Excludes net cash and short-term investments of 1.0%)

LOGO

 

COMMON STOCKS—98.3%

    
Shares         Value
(000s)
    
AEROSPACE & DEFENSE—2.4%
1,088,200   

Precision Castparts Corp.

   $ 114,533
1,407,836   

United Technologies Corp.

     95,001
        
       209,534
        
AUTO COMPONENTS—0.7%
2,200,100   

Johnson Controls Inc.

     61,229
        
BIOTECHNOLOGY—4.8%
2,494,300   

Celgene Corp.*

     141,626
4,411,900   

Gilead Sciences Inc.*

     212,962
1,450,300   

Vertex Pharmaceuticals Inc.*

     55,692
        
       410,280
        

COMMON STOCKS—Continued

Shares         Value
(000s)
    
CAPITAL MARKETS—4.4%
6,847,300   

Charles Schwab Corp.

   $ 125,237
1,347,200   

Goldman Sachs Group Inc.

     200,356
2,065,600   

Morgan Stanley

     55,317
        
       380,910
        
CHEMICALS—1.9%
1,015,400   

Monsanto Co.

     77,049
1,123,200   

Praxair Inc.

     84,599
        
       161,648
        
COMMUNICATIONS EQUIPMENT—6.7%
7,985,290   

Cisco Systems Inc.*

     179,430
4,133,000   

Juniper Networks Inc.*

     102,622
7,527,330   

Qualcomm Inc.

     294,996
        
       577,048
        
COMPUTERS & PERIPHERALS—9.9%
2,036,242   

Apple Inc.*

     391,203
4,876,600   

Hewlett-Packard Co.

     229,541
834,200   

International Business Machines Corp.

     102,098
4,407,900   

NetApp Inc.*

     128,402
        
       851,244
        
DIVERSIFIED FINANCIAL SERVICES—1.3%
1,666,300   

Bank of America Corp.

     25,295
2,146,800   

JP Morgan Chase & Co.

     83,596
        
       108,891
        
ELECTRONIC EQUIPMENT & INSTRUMENTS—0.5%
1,545,038   

Agilent Technologies Inc.*

     43,307
        
ENERGY EQUIPMENT & SERVICES—2.9%
3,874,300   

Schlumberger Ltd.

     245,863
        
FOOD & STAPLES RETAILING—1.5%
2,174,093   

Costco Wholesale Corp.

     124,858
        
FOOD PRODUCTS—1.6%
4,457,700   

Unilever plc. (UK)

     136,100
        
HEALTH CARE EQUIPMENT & SUPPLIES—3.6%
898,246   

Alcon Inc.

     139,866
3,004,200   

Baxter International Inc.

     173,012
        
       312,878
        
HEALTH CARE PROVIDERS & SERVICES—3.2%
377,100   

Express Scripts Inc.*

     31,623
3,969,400   

Medco Health Solutions Inc.*

     244,039
        
       275,662
        
HOTELS, RESTAURANTS & LEISURE—1.3%
3,326,604   

Marriott International Inc.

     87,257
1,217,600   

Starbucks Corp.*

     26,531
        
       113,788
        
HOUSEHOLD PRODUCTS—1.4%
1,485,400   

Colgate-Palmolive Co.

     118,877
        
INTERNET & CATALOG RETAIL—3.6%
2,463,000   

Amazon.com Inc.*

     308,885
        
INTERNET SOFTWARE & SERVICES—5.6%
105,071   

Baidu Inc. ADR (CHN)*1

     43,259
719,491   

Google Inc.*

     380,913
3,123,900   

Tencent Holding Ltd. (CHN)

     58,382
        
       482,554
        

 

1

Table of Contents

Harbor Capital Appreciation Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

COMMON STOCKS—Continued

Shares         Value
(000s)
    
IT SERVICES—5.8%
1,060,362   

Mastercard Inc.

   $ 264,985
2,877,000   

VISA Inc.

     236,000
        
       500,985
        
LIFE SCIENCE TOOLS & SERVICES—0.6%
1,399,000   

Illuminia Inc.*

     51,329
        
MACHINERY—0.7%
1,391,056   

Cummins Inc.

     62,820
        
MEDIA—2.1%
6,077,300   

Walt Disney Co.

     179,584
        
MULTILINE RETAIL—2.0%
1,062,100   

Dollar General Corp.*

     24,948
68,033   

Kohl’s Corp.*

     3,427
2,729,663   

Target Corp.

     139,950
        
       168,325
        
OIL, GAS & CONSUMABLE FUELS—4.9%
863,700   

Apache Corp.

     85,308
2,675,800   

Occidental Petroleum Corp.

     209,622
1,135,500   

Petroleo Brasileiro SA ADR (BR)1

     46,067
1,954,600   

Southwestern Energy Co.*

     83,813
        
       424,810
        
PHARMACEUTICALS—8.6%
1,934,100   

Abbott Laboratories

     102,391
3,454,728   

Mylan Inc.*

     62,980
1,652,700   

Novartis AG ADR (SWS)1

     88,469
4,831,400   

Pfizer Inc.

     90,154
2,962,000   

Roche Holdings AG Sponsored ADR (SWS)1

     124,256
1,650,790   

Shire plc ADR (IE)1

     98,387
3,003,200   

Teva Pharmaceutical Industries Ltd. ADR (IL)1

     170,341
        
       736,978
        
ROAD & RAIL—1.1%
1,537,507   

Union Pacific Corp.

     93,019
        
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—3.1%
2,967,509   

Analog Devices Inc.

     80,004
1,084,504   

Cree Inc.*

     60,635
6,569,900   

Intel Corp.

     127,456
        
       268,095
        

COMMON STOCKS—Continued

  
Shares         Value
(000s)		  
    
  SOFTWARE—7.9%   
  6,081,250   

Adobe Systems Inc.*

   $ 196,425   
  11,880,140   

Microsoft Corp.

     334,782   
  1,704,921   

Salesforce.com Inc.*

     108,348   
  762,500   

Vmware Inc.*

     34,625   
          
       674,180   
          
  SPECIALTY RETAIL—1.6%   
  2,524,200   

Staples Inc.

     59,218   
  1,864,535   

Tiffany & Co.

     75,719   
          
       134,937   
          
  TEXTILES, APPAREL & LUXURY GOODS—2.6%   
  1,949,100   

Coach Inc.

     67,985   
  2,499,334   

Nike Inc.

     159,332   
          
       227,317   
          
 
 		 TOTAL COMMON STOCKS
    (Cost $7,051,069) 		    8,445,935   
          
    

PREFERRED STOCKS—0.7%

  

 

(Cost $60,212)

  
  DIVERSIFIED FINANCIAL SERVICES—0.7%   
  3,892,100   

Bank of America Corp.

     58,771   
          
    

SHORT-TERM INVESTMENTS—1.1%

  

 

(Cost $92,830)

  
Principal
Amount
(000s)		             
  REPURCHASE AGREEMENTS   
$ 92,830   

Repurchase Agreement with State Street Corp. dated January 29, 2010 due February 01, 2010 at 0.010% collateralized by U.S Treasury Bonds (market value $94,690)

     92,830   
          
 
 		 TOTAL INVESTMENTS—100.1%
    (Cost $7,204,111)		     8,597,536   
          
  CASH AND OTHER ASSETS, LESS LIABILITIES—(0.1)%     (12,430 ) 
          
  TOTAL NET ASSETS—100.0%   $ 8,585,106   
          

FAIR VALUE MEASUREMENTS

Repurchase Agreements valued at $92,830 are classified as Level 2. All other holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

* Non-income producing security.

 

1 ADR after the name of a foreign holding stands for American Depositary Receipts representing ownership of foreign securities. ADRs are issued by U.S. banking institutions.

 

BR Brazil.

 

CHN China.

 

IE Ireland.

 

IL Israel.

 

SWS Switzerland.

 

UK United Kingdom.

The accompanying notes are an integral part of the Portfolio of Investments.

 

2

Table of Contents

Harbor Mid Cap Growth Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Equity Holdings (% of net assets)

(Excludes net cash and short-term investments of 2.3%)

LOGO

 

COMMON STOCKS—97.7%

Shares         Value
(000s)
    
AEROSPACE & DEFENSE—1.5%
351,500   

BE Aerospace Inc.*

   $ 7,884
        
AIRLINES—2.5%
839,900   

JetBlue Airways Corp.*

     4,149
234,400   

Tam SA (BR)*

     4,275

COMMON STOCKS—Continued

Shares         Value
(000s)
    
AIRLINES—Continued
883,000   

US Airways Group Inc.*

   $ 4,689
        
       13,113
        
BIOTECHNOLOGY—1.0%
140,500   

Alkermes Inc.*

     1,537
122,700   

Amylin Pharmaceuticals Inc.*

     2,206
59,062   

Regeneron Pharmaceuticals Inc.*

     1,575
        
       5,318
        
BUILDING PRODUCTS—2.5%
125,000   

Lennox International Inc.

     4,778
588,900   

Masco Corp.

     7,985
        
       12,763
        
CAPITAL MARKETS—3.5%
212,200   

Ameriprise Financial Inc.

     8,114
231,300   

Invesco Ltd.

     4,464
184,000   

Waddell & Reed Financial Inc. Cl. A

     5,765
        
       18,343
        
CHEMICALS—2.4%
59,300   

CF Industries Holdings Inc.

     5,507
2,880,000   

Huabao International Holdings Ltd. (CHN)

     2,949
159,500   

Intrepid Potash Inc.*

     3,906
        
       12,362
        
COMMERCIAL SERVICES & SUPPLIES—1.0%
280,700   

Corrections Corp. of America Inc.*

     5,252
        
COMMUNICATIONS EQUIPMENT—2.0%
173,000   

Juniper Networks Inc.*

     4,296
279,300   

Riverbed Technology Inc.*

     6,262
        
       10,558
        
COMPUTERS & PERIPHERALS—3.6%
269,000   

Sandisk Corp.*

     6,838
710,600   

Seagate Technology

     11,888
        
       18,726
        
CONSTRUCTION MATERIALS—1.0%
228,100   

Eagle Materials Inc.

     5,203
        
DIVERSIFIED FINANCIAL SERVICES—0.6%
724,300   

Great American Group Inc.*

     2,818
        
ELECTRICAL EQUIPMENT—1.1%
114,070   

Regal Beloit Corp.

     5,407
        
ELECTRONIC EQUIPMENT & INSTRUMENTS—2.2%
443,700   

Jabil Circuit Inc.

     6,425
221,300   

Trimble Navigation Ltd.*

     5,065
        
       11,490
        
ENERGY EQUIPMENT & SERVICES—1.1%
126,300   

Baker Hughes Inc.

     5,719
        
FOOD PRODUCTS—1.4%
88,000   

Green Mountain Coffee Roasters Inc.*

     7,464
        
HEALTH CARE EQUIPMENT & SUPPLIES—3.4%
71,200   

Beckman Coulter Inc.

     4,654
59,500   

Edwards Lifesciences Corp.*

     5,333
289,000   

Hologic Inc.*

     4,355
9,100   

Intuitive Surgical Inc.*

     2,985
        
       17,327
        
HEALTH CARE PROVIDERS & SERVICES—2.2%
221,100   

Coventry Health Care Inc.*

     5,059
123,000   

Humana Inc.*

     5,980
7,100   

Lincare Holdings Inc.*

     261
        
       11,300
        

 

3

Table of Contents

Harbor Mid Cap Growth Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

COMMON STOCKS—Continued

Shares         Value
(000s)
    
HEALTH CARE TECHNOLOGY—1.6%
172,700   

SXC Health Solutions Corp.*

   $ 8,138
        
HOTELS, RESTAURANTS & LEISURE—3.9%
116,200   

Bally Technologies Inc.*

     4,610
260,300   

Cheesecake Factory Inc.*

     5,503
142,600   

Ctrip.com International Ltd. ADR (CHN)1

     4,462
511,260   

MGM Mirage Inc.*

     5,654
        
       20,229
        
HOUSEHOLD DURABLES—5.6%
506,200   

D.R. Horton Inc.

     5,968
315,700   

Jarden Corp.

     9,623
737,000   

MRV Engenharia e Participacoes SA. (BR)

     4,750
220,400   

Pulte Homes Inc.

     2,319
252,364   

Tempur Pedic International Inc.*

     6,281
        
       28,941
        
INSURANCE—1.3%
423,000   

Genworth Financial Inc. Cl. A

     5,854
70,775   

Pearl Group Ltd. (UK)*

     685
        
       6,539
        
INTERNET & CATALOG RETAIL—0.6%
57,000   

Blue Nile Inc.*

     2,938
        
INTERNET SOFTWARE & SERVICES—4.0%
70,000   

Equinix Inc.*

     6,736
265,100   

Rackspace Hosting Inc.*

     4,830
160,200   

Vistaprint NV (NET)*

     8,973
        
       20,539
        
IT SERVICES—1.9%
119,500   

Congnizant Technology Solutions Corp. Cl. A*

     5,217
21,737   

Genpact Ltd.*

     302
234,700   

Western Union Co.

     4,351
        
       9,870
        
LEISURE EQUIPMENT & PRODUCTS—0.9%
248,728   

Pool Corp.

     4,567
        
MACHINERY—3.8%
130,500   

Illinois Tool Works Inc.

     5,688
304,900   

Ingersoll Rand plc

     9,897
174,000   

Kennametal Inc.

     4,260
        
       19,845
        
MEDIA—2.3%
139,600   

DreamWorks Animation SKG Inc.*

     5,436
462,600   

Focus Media Holding Ltd. (CHN)*

     6,208
        
       11,644
        
METALS & MINING—2.1%
101,200   

Cliffs Nat Res Inc.

     4,043
292,000   

Steel Dynamics Inc.

     4,433
204,300   

Titanium Metal Corp.

     2,376
        
       10,852
        
OIL, GAS & CONSUMABLE FUELS—3.3%
176,900   

Frontline Ltd. (NOR)

     5,318
215,389   

Karoon Gas Australia Ltd. (AUS)*

     1,372
73,600   

Massey Energy Corp.

     2,835
56,400   

Peabody Energy Corp.

     2,375
293,500   

Valero Energy Corp.

     5,406
        
       17,306
        

COMMON STOCKS—Continued

Shares         Value
(000s)
    
PERSONAL PRODUCTS—1.7%
142,800   

Avon Products, Inc.

   $ 4,304
117,600   

Herbalife Ltd.

     4,569
        
       8,873
        
PHARMACEUTICALS—4.1%
193,500   

Auxilium Pharmaceuticals Inc.*

     5,449
254,200   

Daiichi Sankyo Co. Ltd. (JP)

     5,300
258,900   

Shionogi & Co. Ltd. (JP)

     5,346
134,896   

Watson Pharmaceuticals Inc.*

     5,176
        
       21,271
        
ROAD & RAIL—1.9%
150,200   

JB Hunt Transport Services Inc.

     4,605
495,300   

Localiza Rent A Car Ltd. (BR)

     5,187
        
       9,792
        
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—8.6%
245,900   

Atheros Communications Inc.*

     7,886
172,500   

Broadcom Corp. Cl. A*

     4,609
517,900   

Cypress Semiconductors Corp.*

     5,205
347,400   

Marvell Technology Group Ltd.*

     6,055
292,700   

Maxim Integrated Products Inc.

     5,117
1,318,130   

RF Micro Devices Inc.*

     5,075
520,500   

Skyworks Solutions Inc.*

     6,605
671,000   

Triquint Semiconductor Inc.*

     4,026
        
       44,578
        
SOFTWARE—4.9%
138,100   

Adobe Systems Inc.*

     4,461
122,800   

BMC Software Inc.*

     4,745
102,400   

Concur Technologies Inc.*

     4,060
112,300   

McAfee Inc.*

     4,234
197,000   

Red Hat Inc.*

     5,362
93,300   

Rovi Corp.*

     2,693
        
       25,555
        
SPECIALTY RETAIL—6.4%
157,900   

Advance Auto Parts Inc.

     6,229
133,700   

Best Buy Co. Inc.

     4,900
203,300   

Dick’s Sporting Goods Inc.*

     4,548
218,450   

Staples Inc.

     5,125
233,200   

Urban Outfitters Inc.*

     7,362
255,800   

Williams-Sonoma Inc.

     4,855
        
       33,019
        
TEXTILES, APPAREL & LUXURY GOODS—4.8%
253,500   

Coach Inc.

     8,842
413,900   

Hanesbrands Inc.*

     9,507
168,500   

Warnco Group Inc.*

     6,525
        
       24,874
        
WIRELESS TELECOMMUNICATION SERVICES—1.0%
126,425   

American Tower Corp.*

     5,367
        
TOTAL COMMON STOCKS
    (Cost $441,711) 		    505,784
        

 

4

Table of Contents

Harbor Mid Cap Growth Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

SHORT-TERM INVESTMENTS—1.5%

 

(Cost $7,895)

  
    
Principal
Amount
(000s)		         Value
(000s)
    
  REPURCHASE AGREEMENTS
$ 7,895   

Repurchase Agreement with Bank of America dated January 29, 2010 due February 01, 2010 at 0.090% collateralized by United States Treasury Bill (market value $8,084)

   $ 7,895
        
 
 		 TOTAL INVESTMENTS—99.2%
    (Cost $449,606)		     513,679
        
  CASH AND OTHER ASSETS, LESS LIABILITIES—0.8%     4,120
        
  TOTAL NET ASSETS—100.0%   $ 517,799
        

 

FAIR VALUE MEASUREMENTS

Repurchase Agreements valued at $7,895 are classified as Level 2. Holdings in the Pharmaceuticals category valued at $5,346 and holdings in the Insurance category valued at $685 are classified as Level 2. All other holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

* Non-income producing security.

 

1 ADR after the name of a foreign holding stands for American Depositary Receipts representing ownership of foreign securities. ADRs are issued by U.S. banking institutions.

 

AUS Australia.

 

BR Brazil.

 

CHN China.

 

JP Japan.

 

NET Netherlands.

 

NOR Norway.

 

UK United Kingdom.

The accompanying notes are an integral part of the Portfolio of Investments.

 

5

Table of Contents

Harbor Small Cap Growth Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Equity Holdings (% of net assets)

(Excludes net cash and short-term investments of 4.2%)

LOGO

 

COMMON STOCKS—95.8%

Shares         Value
(000s)
    
AEROSPACE & DEFENSE—0.7%
246,800   

Hexcel Corp.*

   $ 2,715
        
AIRLINES—1.9%
1,421,350   

US Airways Group Inc.*

     7,547
        
BIOTECHNOLOGY—13.6%
286,500   

Acorda Therapeutics Inc.*

     8,016
227,880   

Alexion Pharmaceuticals Inc.*

     10,567
689,500   

Allos Therapeutics Inc.*

     5,006
334,845   

Amylin Pharmaceuticals Inc.*

     6,020
233,900   

OSI Pharmaceuticals Inc.*

     8,004
192,100   

United Therapeutics Corp.*

     11,443
125,850   

Vertex Pharmaceuticals Inc.*

     4,833
        
       53,889
        
CAPITAL MARKETS—1.4%
101,909   

Stifel Financial Corp.*

     5,330
        

COMMON STOCKS—Continued

Shares         Value
(000s)
    
CHEMICALS—1.7%
455,940   

Solutia Inc.*

   $ 6,269
35,980   

STR Holdings Inc.*

     600
        
       6,869
        
COMMERCIAL BANKS—1.9%
217,948   

Signature Bank*

     7,537
        
COMMERCIAL SERVICES & SUPPLIES—2.0%
419,900   

GEO Group Inc.*

     7,768
        
COMMUNICATIONS EQUIPMENT—2.5%
378,139   

Emulex Corp.*

     4,250
253,618   

Polycom Inc.*

     5,689
        
       9,939
        
CONSTRUCTION & ENGINEERING—1.2%
242,800   

Tutor Perini Corp.

     4,628
        
DIVERSIFIED CONSUMER SERVICES—3.4%
60,700   

American Public Education Inc.*

     2,315
280,600   

K12 Inc.*

     5,609
1,081,600   

Stewart Enterprises Inc. Cl. A

     5,484
        
       13,408
        
ELECTRICAL EQUIPMENT—1.1%
205,455   

Trina Soalr Ltd. (CYM)*

     4,506
        
ENERGY EQUIPMENT & SERVICES—7.1%
397,310   

Exterran Holdings Inc.*

     8,058
154,650   

Oil States International Inc.*

     5,697
305,400   

Rowan Companies Inc.*

     6,560
334,320   

Superior Energy Services Inc.*

     7,679
        
       27,994
        
HEALTH CARE EQUIPMENT & SUPPLIES—8.7%
149,585   

Arthrocare Corp.*

     3,986
707,400   

ev3 Inc.*

     10,314
413,157   

Immucor Inc.*

     7,664
297,400   

Masimo Corp.*

     8,256
135,775   

Orthofix International NV (NET)

     4,091
        
       34,311
        
HEALTH CARE PROVIDERS & SERVICES—4.1%
479,600   

Health Management Associates Inc. Cl. A

     3,184
130,300   

Lincare Holdings Inc.*

     4,798
82,100   

Mednax Inc.*

     4,668
421,850   

Sun Healthcare Group Inc.*

     3,687
        
       16,337
        
HEALTH CARE TECHNOLOGY—2.5%
416,847   

Phase Forward Inc.*

     6,094
255,250   

Team Health Holdings Inc.*

     3,765
        
       9,859
        
INTERNET & CATALOG RETAIL—1.7%
110,450   

Netflix Inc.*

     6,876
        
INTERNET SOFTWARE & SERVICES—2.5%
129,237   

Savvis Inc.*

     2,034
807,376   

SkillSoft plc (IE)*

     7,872
        
       9,906
        
IT SERVICES—1.8%
388,570   

CyberSource Corp.*

     7,025
        
LIFE SCIENCES TOOLS & SERVICES—0.8%
45,826   

Dionex Corp.*

     3,201
        

 

6

Table of Contents

Harbor Small Cap Growth Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

COMMON STOCKS—Continued

Shares         Value
(000s)
    
MACHINERY—3.9%
78,600   

Bucyrus International Inc. Cl. A

   $ 4,117
372,150   

Colfax Corporation*

     4,194
174,610   

Gardner Denver Inc.

     6,958
        
       15,269
        
METALS & MINING—2.4%
352,200   

Jaguar Mining Inc.*

     3,459
234,720   

RTI International Metals Inc.*

     5,809
        
       9,268
        
OIL, GAS & CONSUMABLE FUELS—3.5%
260,942   

Alpha Natural Resources Inc.*

     10,597
252,800   

Quicksilver Resources Inc.*

     3,360
        
       13,957
        
PHARMACEUTICALS—1.4%
662,650   

Adolor Corp.*

     1,041
259,750   

Medicines Co.*

     2,153
480,550   

Santarus Inc.*

     2,273
        
       5,467
        
PROFESSIONAL SERVICES—0.9%
153,140   

Huron Consulting Group Inc.*

     3,651
        
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—4.0%
243,263   

ATMI Inc.*

     4,082
183,100   

Cavium Avium Network Inc.*

     3,957
253,720   

EZ Chip Semiconductor Ltd. (IL)*

     3,019
810,850   

Integrated Device Technology Inc.*

     4,598
        
       15,656
        
SOFTWARE—12.2%
965,176   

Cadence Design Systems Inc.*

     5,608
348,273   

Net 1 UEPS Technologies Inc. (S.AFR)*

     6,227
1,016,900   

Nuance Communications Inc.*

     15,274
463,650   

Quest Software Inc.*

     7,984
221,970   

Red Hat Inc.*

     6,042
373,117   

Solarwinds Inc.*

     7,249
        
       48,384
        

COMMON STOCKS—Continued

Shares         Value
(000s)
    
  SPECIALTY RETAIL—4.0%
  311,450   

Chico’s Inc.*

   $ 3,977
  173,041   

J. Crew Group Inc.*

     6,785
  307,690   

Sonic Automotive Inc. Cl. A*

     2,938
  98,450   

Vitamin Shoppe Inc.*

     2,068
        
       15,768
        
  TRADING COMPANIES & DISTRIBUTORS—1.4%
  125,362   

Beacon Roofing Supply Inc.*

     2,106
  74,600   

Watsco Inc.

     3,578
        
       5,684
        
  TRANSPORTATION INFRASTRUCTURE—1.5%
  192,010   

Aegean Marine Petroleum Network Inc. (GRC)

     5,973
        
 
 		 TOTAL COMMON STOCKS
    (Cost $328,757) 		    378,722
        
    

SHORT-TERM INVESTMENTS—2.5%

 

(Cost $9,949)

  
Principal
Amount
(000s)		           
  REPURCHASE AGREEMENTS
$ 9,949   

Repurchase Agreement with State Street Corp. dated January 29, 2010 due February 01, 2010 at 0.010% collateralized by Federal Home Loan Mortgage Corp. (market value $10,149)

     9,949
        
 
 		 TOTAL INVESTMENTS—98.3%
    (Cost $338,706)		     388,671
        
  CASH AND OTHER ASSETS, LESS LIABILITIES—1.7%     6,771
        
  TOTAL NET ASSETS—100.0%   $ 395,442
        

 

FAIR VALUE MEASUREMENTS

Repurchase Agreements valued at $9,949 are classified as Level 2. All other holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

* Non-income producing security.

 

CYM Cayman Islands.

 

GRC Greece.

 

IE Ireland.

 

IL Israel.

 

NET Netherlands.

 

S.AFR South Africa.

The accompanying notes are an integral part of the Portfolio of Investments.

 

7

Table of Contents

Harbor Large Cap Value Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Equity Holdings (% of net assets)

(Excludes net cash and short-term investments of 2.5%)

LOGO

 

COMMON STOCKS—97.4%

Shares         Value
(000s)
    
AEROSPACE & DEFENSE—4.6%
55,100   

General Dynamics Corp.

   $ 3,683
40,400   

L-3 Communications Holdings Inc.

     3,367

COMMON STOCKS—Continued

Shares        

Value
(000s)

    
AEROSPACE & DEFENSE—Continued
42,900   

Lockheed Martin Corp.

   $ 3,197
        
       10,247
        
AIR FREIGHT & LOGISTICS—1.2%
19,100   

FedEx Corp.

     1,496
19,400   

United Parcel Service Inc.

     1,121
        
       2,617
        
BEVERAGES—0.9%
13,000   

Diageo plc ADR (UK)1

     874
18,200   

PepsiCo Inc.

     1,085
        
       1,959
        
CAPITAL MARKETS—4.1%
40,600   

Bank of New York Mellon Corp.

     1,181
11,500   

BlackRock Inc.

     2,459
10,500   

Franklin Resources Inc.

     1,040
20,100   

Goldman Sachs Group Inc.

     2,989
55,100   

Morgan Stanley

     1,476
        
       9,145
        
CHEMICALS—2.3%
40,500   

Monsanto Co.

     3,073
11,700   

Praxair Inc.

     881
22,900   

Sigma Aldrich Inc.

     1,096
        
       5,050
        
COMMERCIAL BANKS—5.7%
39,600   

BB&T Corp.

     1,104
24,333   

HSBC Holdings plc ADR (UK)1

     1,302
33,500   

Toronto - Dominion Bank Group Inc. (CAN)

     1,975
171,900   

U.S. Bancorp.

     4,311
141,000   

Wells Fargo & Co.

     4,009
        
       12,701
        
COMMERCIAL SERVICES & SUPPLIES—0.5%
33,300   

Waste Management Inc.

     1,067
        
COMMUNICATIONS EQUIPMENT—2.5%
60,400   

Harris Corp.

     2,592
73,000   

Qualcomm Inc.

     2,861
        
       5,453
        
COMPUTERS & PERIPHERALS—1.0%
17,500   

International Business Machines Corp.

     2,142
        
DISTRIBUTORS—0.5%
30,400   

Genuine Parts Co.

     1,146
        
DIVERSIFIED FINANCIAL SERVICES—5.2%
344,600   

Bank of America Corp.

     5,231
161,100   

JP Morgan Chase & Co.

     6,273
        
       11,504
        
DIVERSIFIED TELECOMMUNICATION SERVICES—2.4%
153,200   

AT&T Inc.

     3,885
49,500   

Verizon Communications Inc.

     1,457
        
       5,342
        
ELECTRIC UTILITIES—2.6%
27,100   

E.ON AG ADR (GER)1

     993
9,600   

Exelon Corp.

     438
90,900   

FPL Group Inc.

     4,432
        
       5,863
        

 

8

Table of Contents

Harbor Large Cap Value Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

COMMON STOCKS—Continued

Shares        

Value
(000s)

    
ELECTRONIC EQUIPMENT & INSTRUMENTS—0.5%
58,200   

Corning Inc.

   $ 1,052
        
ENERGY EQUIPMENT & SERVICES—2.1%
41,400   

Schlumberger Ltd.

     2,627
25,100   

Transocean Ltd.

     2,127
        
       4,754
        
FOOD & STAPLES RETAILING—3.0%
16,700   

Costco Wholesale Corp.

     959
51,700   

CVS/Caremark Corp.

     1,674
17,400   

Wal-Mart de Mexico SAB de CV ADR (MEX)1

     767
60,400   

Wal-Mart Stores Inc.

     3,227
        
       6,627
        
FOOD PRODUCTS—0.5%
38,600   

Archer Daniels Midland Co.

     1,157
        
HEALTH CARE EQUIPMENT & SUPPLIES—2.6%
22,400   

Becton Dickinson & Co.

     1,688
24,200   

Covidien plc (IE)

     1,224
65,900   

Medtronic Inc.

     2,826
        
       5,738
        
HEALTH CARE PROVIDERS & SERVICES—0.7%
33,500   

UnitedHealth Group Inc.

     1,106
17,900   

Universal Health Services Inc. Cl. B

     522
        
       1,628
        
HOTELS, RESTAURANTS & LEISURE—2.0%
70,000   

McDonald’s Corp.

     4,370
        
HOUSEHOLD PRODUCTS—1.5%
52,800   

Procter & Gamble Co.

     3,250
        
INDUSTRIAL CONGLOMERATES—3.2%
13,700   

3M Co.

     1,103
377,200   

General Electric Co.

     6,065
        
       7,168
        
INSURANCE—5.9%
49,900   

ACE Ltd.

     2,459
25,500   

Everest Re Group Ltd.

     2,186
160,700   

HCC Insurance Holdings Inc.

     4,355
119,000   

MetLife Inc.

     4,203
        
       13,203
        
IT SERVICES—1.0%
53,600   

Automatic Data Processing Inc.

     2,186
        
LEISURE EQUIPMENT & PRODUCTS—0.4%
49,900   

Mattel Inc.

     984
        
MACHINERY—0.5%
21,400   

Caterpillar Inc.

     1,118
        
MEDIA—1.4%
97,100   

Comcast Corp.

     1,537
54,500   

Walt Disney Co.

     1,611
        
       3,148
        
METALS & MINING—0.9%
51,700   

Allegheny Technologies Inc.

     2,112
        
MULTI-UTILITIES—2.5%
52,500   

Sempra Energy

     2,664
57,300   

Wisconsin Energy Corp.

     2,804
        
       5,468
        

COMMON STOCKS—Continued

Shares        

Value
(000s)

    
MULTILINE RETAIL—0.5%
30,400   

Nordstrom Inc.

   $ 1,050
        
OIL, GAS & CONSUMABLE FUELS—14.5%
23,900   

Apache Corp.

     2,361
19,100   

Cameco Corp. ADR (CAN)1

     517
79,700   

Chevron Corp.

     5,748
1,398,000   

CNOOC Ltd.

     1,999
63,000   

Devon Energy Corp.

     4,215
99,600   

Exxon Mobil Corp.

     6,417
90,300   

Marathon Oil Corp.

     2,692
27,700   

Occidental Petroleum Corp.

     2,170
105,900   

Total SA (FR)

     6,174
        
       32,293
        
PHARMACEUTICALS—8.0%
81,600   

Abbott Laboratories

     4,320
59,100   

Johnson & Johnson

     3,715
57,200   

Merck & Co. Inc.

     2,184
209,000   

Pfizer Inc.

     3,900
64,500   

Teva Pharmaceutical Industries Ltd. ADR (IL)1

     3,658
        
       17,777
        
REAL ESTATE INVESTMENT TRUSTS (REITs)—2.2%
30,000   

Corporate Office Properties Trust

     1,071
20,500   

Public Storage Inc.

     1,623
30,300   

Simon Property Group Inc.

     2,182
        
       4,876
        
REAL ESTATE MANAGEMENT & DEVELOPMENT—0.5%
243,800   

Hongkong Land Holdings Ltd. (HK)

     1,144
        
ROAD & RAIL—0.4%
19,500   

Norfolk Southern Corp.

     918
        
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—2.3%
133,200   

Intel Corp.

     2,584
107,900   

Texas Instruments Inc.

     2,428
        
       5,012
        
SOFTWARE—2.1%
76,400   

Microsoft Corp.

     2,153
110,600   

Oracle Corp.

     2,550
        
       4,703
        
SPECIALTY RETAIL—1.8%
20,000   

Hennes & Mauritz AB (SW)

     1,184
63,600   

Ross Stores Inc.

     2,921
        
       4,105
        
TEXTILES, APPAREL & LUXURY GOODS—2.4%
51,400   

Nike Inc.

     3,277
29,300   

V.F Corp.

     2,110
        
       5,387
        
WIRELESS TELECOMMUNICATION SERVICES—0.5%
23,800   

China Mobile Ltd. ADR (HK)1

     1,117
        
TOTAL COMMON STOCKS
    (Cost $208,991) 		    216,581
        
    

PREFERRED STOCKS—0.1%

(Cost $390)

  
DIVERSIFIED FINANCIAL SERVICES—0.1%
26,000   

Bank of America Corp.

     392
        

 

9

Table of Contents

Harbor Large Cap Value Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

SHORT-TERM INVESTMENTS—2.4%

 

(Cost $5,286)

  
Principal
Amount
(000s)		         Value
(000s)
    
  REPURCHASE AGREEMENTS
$ 5,286   

Repurchase Agreement with State Street Corp. dated January 29, 2010 due February 01, 2010 at 0.010% collateralized by Federal Home Loan Mortgage Corp. (market value $5,310)

   $ 5,286
        
 
 		 TOTAL INVESTMENTS—99.9%
    (Cost $214,667)		     222,259
        
  CASH AND OTHER ASSETS, LESS LIABILITIES—0.1%     135
        
  TOTAL NET ASSETS—100.0%   $ 222,394
        

 

 

FAIR VALUE MEASUREMENTS

Repurchase Agreements valued at $5,286 are classified as Level 2. All other holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

1 ADR after the name of a foreign holding stands for American Depositary Receipts representing ownership of foreign securities. ADRs are issued by U.S. banking institutions.

 

CAN Canada.

 

FR France.

 

GER Germany.

 

HK Hong Kong.

 

IE Ireland.

 

IL Israel.

 

MEX Mexico.

 

SW Sweden.

 

UK United Kingdom.

The accompanying notes are an integral part of the Portfolio of Investments.

 

10

Table of Contents
      

Harbor Mid Cap Value Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Equity Holdings (% of net assets)

(Excludes net cash and short-term investments of 1.5%)

LOGO

COMMON STOCKS—98.5%

Shares         Value
(000s)
    
AEROSPACE & DEFENSE—1.8%
4,400   

Goodrich Corp.

   $ 272
2,900   

L-3 Communications Holdings Inc.

     242
8,600   

Teledyne Technologies Inc.*

     321
        
       835
        
AUTO COMPONENTS—0.6%
6,200   

Autoliv Inc.

     265
        
BEVERAGES—1.1%
25,900   

Coca-Cola Enterprises Inc.

     523
        
CAPITAL MARKETS—1.8%
14,500   

Ameriprise Financial Inc.

     555
6,300   

State Street Corp.

     270
        
       825
        
CHEMICALS—4.7%
12,300   

Arch Chemicals Inc.

     344
9,400   

Ashland Inc.

     380
8,900   

Eastman Chemical Co.

     503
9,000   

Lubrizol Corp.

     663
7,800   

Terra Industries Inc.

     247
        
       2,137
        
COMMERCIAL BANKS—4.1%
17,000   

Banco Latinoamericano de Comercio S.A. (PA)

     241
6,200   

BB&T Corp.

     173
8,000   

Comerica Inc.

     276
18,900   

Fifth Third Bancorp.

     235
44,200   

Huntington Bancshares Inc.

     212
18,200   

KeyCorp

     131
7,100   

PNC Financial Services Group Inc.

     393
36,000   

Regions Financial Corp.

     228
        
       1,889
        
COMMERCIAL SERVICES & SUPPLIES—1.3%
29,400   

R.R. Donnelley & Sons Co.

     583
        
COMMUNICATIONS EQUIPMENT—0.9%
9,800   

Harris Corp.

     421
        
COMPUTERS & PERIPHERALS—2.8%
16,100   

Lexmark International Inc. Cl. A*

     415
23,000   

Seagate Technology

     385
12,900   

Western Digital Corp.*

     490
        
       1,290
        
CONSUMER FINANCE—0.7%
15,900   

AmeriCredit Corp.*

     333
        
CONTAINERS & PACKAGING—1.2%
7,100   

Owens-Illinois Inc.*

     193
7,800   

Rock Tenn Co. Cl. A

     333
        
       526
        
DIVERSIFIED TELECOMMUNICATION SERVICES—0.6%
8,500   

CenturyTel Inc.

     289
        
ELECTRIC UTILITIES—2.3%
11,700   

American Electric Power Company Inc.

     406
17,600   

Pepco Holdings Inc.

     289
10,000   

Pinnacle West Capital Corp.

     358
        
       1,053
        
ELECTRICAL EQUIPMENT—1.2%
5,800   

A. O. Smith Corp.

     247
8,800   

Thomas & Bettes Corp.

     297
        
       544
        

 

11

Table of Contents

Harbor Mid Cap Value Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

COMMON STOCKS—Continued

Shares         Value
(000s)
    
ELECTRONIC EQUIPMENT & INSTRUMENTS—2.0%
17,400   

Benchmark Electronics Inc.*

   $ 317
22,600   

Ingram Micro Inc.*

     382
11,300   

Technitrol Inc.

     50
23,300   

Vishay Intertechnology Inc.*

     176
        
       925
        
ENERGY EQUIPMENT & SERVICES—2.2%
4,900   

Diamond Offshore Drilling Inc.

     448
11,700   

Tidewater Inc.

     548
        
       996
        
FOOD & STAPLES RETAILING—2.0%
27,500   

Safeway Inc.

     617
21,600   

Supervalu Inc.

     318
        
       935
        
FOOD PRODUCTS—4.8%
21,600   

Archer Daniels Midland Co.

     647
4,000   

Bunge Ltd. (BM)

     235
23,700   

ConAgra Foods Inc.

     539
28,600   

Del Monte Foods Co.

     326
10,200   

Fresh Del Monte Produce Inc. (CYM)*

     208
17,900   

Sara Lee Corp.

     217
        
       2,172
        
GAS UTILITIES—0.4%
5,800   

AGL Resources Inc.

     205
        
HEALTH CARE EQUIPMENT & SUPPLIES—1.5%
16,100   

Kinetic Concepts Inc.

     665
        
HEALTH CARE PROVIDERS & SERVICES—3.9%
24,600   

AmerisourceBergen Corp.

     671
6,900   

Cigna Corp.

     233
16,000   

Coventry Health Care Inc.*

     366
19,300   

Kindred Healthcare Inc.*

     326
6,600   

Universal Health Services Inc. Cl. B

     192
        
       1,788
        
HOTELS, RESTAURANTS & LEISURE—1.1%
15,300   

Brinker International Inc.

     250
38,700   

Ruby Tuesday Inc.

     267
        
       517
        
HOUSEHOLD DURABLES—2.6%
15,500   

American Greetings Corp. Cl. A

     286
15,900   

Newell Rubbermaid Inc.

     216
9,100   

Whirlpool Corp.

     684
        
       1,186
        
HOUSEHOLD PRODUCTS—0.4%
5,775   

Blyth Inc.

     162
        
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS—1.1%
17,700   

AES Corp.

     224
19,400   

Mirant Corp.

     273
        
       497
        
INDUSTRIAL CONGLOMERATES—1.7%
121   

Seaboard Corp.

     149
17,400   

Tyco International Ltd.

     616
        
       765
        
INSURANCE—12.5%
7,400   

Aflac Inc.

     358
4,900   

Allied World Assurance Company Holdings Ltd.

     219
15,300   

Allstate Corp.

     458

COMMON STOCKS—Continued

Shares         Value
(000s)
    
INSURANCE—Continued
30,500   

American Equity Investment Life Holding Company

   $ 224
16,600   

American Financial Group, Inc.

     412
21,800   

Aspen Insurance Holdings Ltd. (BM)

     581
10,500   

Chubb Corp.

     525
13,700   

Cincinnati Financial Corp.

     362
7,500   

Endurance Specialty Holdings Ltd. (BM)

     270
5,700   

Everest Re Group Ltd.

     489
17,300   

Horace Mann Educators Corp.

     207
12,400   

Lincoln National Corp.

     305
4,900   

PartnerRE Ltd. (BM)

     366
5,600   

Protective Life Corp.

     94
5,800   

StanCorp Financial Group Inc.

     249
9,500   

Validus Holdings Ltd. (BM)

     252
1,000   

White Mountain Insurance Group Ltd.

     320
        
       5,691
        
IT SERVICES—2.5%
15,500   

Computer Sciences Corp.*

     795
31,500   

Convergys Corp.*

     337
        
       1,132
        
LEISURE EQUIPMENT & PRODUCTS—1.7%
8,300   

Hasbro Inc.

     254
11,700   

Polaris Industries Inc.

     517
        
       771
        
MACHINERY—1.7%
9,500   

Crane Co.

     290
16,500   

EnPro Industries Inc.*

     402
3,400   

Mueller Industries Inc.

     83
        
       775
        
MEDIA—2.0%
14,400   

Dish Network Corp.

     263
18,000   

Gannett Inc.

     291
48,300   

Journal Communications Inc. Cl. A

     170
4,800   

Time Warner Inc.

     209
        
       933
        
MULTI-UTILITIES—7.3%
12,400   

Alliant Energy Corp.

     387
15,200   

CenterPoint Energy Inc.

     212
45,800   

CMS Energy Corp.

     695
10,500   

DTE Energy Co.

     442
20,700   

NiSource Inc.

     295
12,900   

NorthWestern Corp.

     315
9,100   

Public Service Enterprise Group

     278
7,700   

Scana Corporation

     274
4,700   

Sempra Energy

     239
9,300   

Xcel Energy Inc.

     193
        
       3,330
        
MULTILINE RETAIL—0.8%
9,900   

Family Dollar Stores Inc.

     306
3,000   

J.C. Penney Co. Inc.

     74
        
       380
        
OFFICE ELECTRONICS—1.4%
71,500   

Xerox Corp.

     623
        
OIL, GAS & CONSUMABLE FUELS—5.1%
14,500   

Berry Petroleum Co.

     393
7,600   

Holly Corporation

     198
10,300   

Overseas Shipholding Group Inc.

     459
15,000   

Southern Union Corp.

     330
15,900   

Sunoco Inc.

     399

 

12

Table of Contents

Harbor Mid Cap Value Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

COMMON STOCKS—Continued

Shares         Value
(000s)
    
OIL, GAS & CONSUMABLE FUELS—Continued
18,300   

Tesoro Petroleum Corp.

   $ 229
39,200   

USEC Inc.

     157
9,000   

Valero Energy Corp.

     166
        
       2,331
        
PHARMACEUTICALS—3.9%
16,300   

Endo Pharmaceuticals Holdings Inc.

     328
17,800   

Forest Laboratories Inc.*

     528
50,000   

King Pharmaceuticals Inc.*

     600
18,800   

Mylan Inc.*

     343
        
       1,799
        
REAL ESTATE INVESTMENT TRUSTS (REITs)—4.1%
28,300   

Annaly Capital Management Inc.

     492
18,000   

Hospitality Properties Trust

     398
87,800   

HRPT Properties Trust

     586
38,800   

Medical Properties Trust Inc.

     388
        
       1,864
        
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—0.7%
39,200   

Micron Technology Inc.*

     342
        
SPECIALTY RETAIL—4.0%
8,800   

Barnes & Noble Inc.

     154
23,500   

Cabelas Inc.

     379
27,700   

Gap Inc.

     528
20,500   

Radioshack Corp.

     400
27,100   

Stage Stores Inc.

     350
        
       1,811
        
TEXTILES, APPAREL & LUXURY GOODS—0.4%
12,900   

Jones Apparel Group Inc.

     186
        

COMMON STOCKS—Continued

  
Shares         Value
(000s)		  
    
  THRIFTS & MORTGAGE FINANCE—0.4%   
  12,100   

Hudson City Bancorp Inc.

   $ 161   
          
  TOBACCO—0.5%   
  5,300   

Universal Corp.

     241   
          
  WIRELESS TELECOMMUNICATION SERVICES—0.7%   
  10,100   

NII Holdings Inc. Cl. B*

     331   
          
 
 		 TOTAL COMMON STOCKS
    (Cost $50,525) 		    45,027   
          
    

SHORT-TERM INVESTMENTS—1.8%

  

 

(Cost $839)

  
Principal
Amount
(000s)		             
  REPURCHASE AGREEMENTS   
$ 839   

Repurchase Agreement with State Street Corp. dated January 29, 2010 due February 01, 2010 at 0.010% collateralized by Federal Home Loan Mortgage Corp. (market value $859)

     839   
          
 
 		 TOTAL INVESTMENTS—100.3%
    (Cost $51,364)		     45,866   
          
  CASH AND OTHER ASSETS, LESS LIABILITIES—(0.3)%     (151 ) 
          
  TOTAL NET ASSETS—100.0%   $ 45,715   
          

FAIR VALUE MEASUREMENTS

Repurchase Agreements valued at $839 are classified as Level 2. All other holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

* Non-income producing security.

 

BM Bermuda.

 

CYM Cayman Islands.

 

PA Panama.

The accompanying notes are an integral part of the Portfolio of Investments.

 

13

Table of Contents

Harbor Small Cap Value Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Equity Holdings (% of net assets)

(Excludes net cash and short-term investments of 3.1%)

LOGO

 

COMMON STOCKS—96.9%

Shares         Value
(000s)
    
AEROSPACE & DEFENSE—5.6%
439,200   

AAR Corp.*

   $ 10,176
899,400   

Hexcel Corp.*

     9,894
330,098   

Moog Inc. Cl. A*

     9,962
233,200   

Teledyne Technologies Inc.*

     8,689
        
       38,721
        
CAPITAL MARKETS—6.8%
504,573   

Eaton Vance Corp.

     14,536
608,800   

Jefferies Group Inc.*

     15,549
645,468   

Raymond James Financial Inc.

     16,337
        
       46,422
        
CHEMICALS—4.6%
151,447   

Ashland Inc.

     6,120
318,300   

Scotts Miracle-Gro Corp.

     12,637
484,900   

Valspar Corp.

     12,840
        
       31,597
        
COMMERCIAL BANKS—2.7%
447,909   

Trustmark Corp.

     10,213
336,800   

United Bankshares Inc.

     8,386
        
       18,599
        

COMMON STOCKS—Continued

Shares         Value
(000s)
    
COMMUNICATIONS EQUIPMENT—1.8%
1,208,319   

Arris Group Inc.*

   $ 12,131
        
CONSTRUCTION & ENGINEERING—3.2%
233,800   

Granite Construction Inc.

     7,220
332,200   

URS Corp.*

     14,909
        
       22,129
        
CONSUMER FINANCE—2.6%
317,162   

Cash America International Inc.

     11,922
134,000   

Student Loan Corp.

     6,070
        
       17,992
        
ELECTRONIC EQUIPMENT & INSTRUMENTS—6.7%
472,202   

Checkpoint Systems Inc.*

     7,574
811,836   

FLIR Systems Inc.*

     24,014
228,011   

Itron Inc.*

     14,032
        
       45,620
        
ENERGY EQUIPMENT & SERVICES—2.2%
130,200   

Core Laboratories (NET)

     15,227
        
GAS UTILITIES—4.6%
293,400   

Oneok Inc.

     12,378
235,463   

South Jersey Industries Inc.

     9,025
323,500   

WGL Holdings Inc.

     10,265
        
       31,668
        
HEALTH CARE PROVIDERS & SERVICES—6.9%
220,403   

Amedisys Inc.*

     12,111
425,900   

Amerigroup Corp.*

     10,839
499,962   

Healthways Inc.*

     8,530
274,292   

Mednax Inc.*

     15,596
        
       47,076
        
HOTELS, RESTAURANTS & LEISURE—3.0%
391,898   

Brinker International Inc.

     6,396
428,200   

Life Time Fitness Inc.*

     10,255
496,891   

Sonic Corp.*

     4,189
        
       20,840
        
HOUSEHOLD DURABLES—0.9%
263,300   

Meritage Homes Corp.*

     5,895
        
INSURANCE—6.9%
435,597   

Delphi Financial Group Inc.

     8,821
638,900   

Protective Life Corp.

     10,765
348,900   

Reinsurance Group of America

     16,998
350,100   

State Auto Financial Corp.

     5,500
325,833   

United Fire & Casualty Co.

     5,481
        
       47,565
        
INTERNET SOFTWARE & SERVICES—1.5%
421,889   

Digital River Inc.*

     10,602
        
IT SERVICES—4.0%
421,400   

Global Payments Inc.

     18,752
494,800   

SRA International Inc.*

     8,521
        
       27,273
        
LIFE SCIENCES TOOLS & SERVICES—4.2%
247,700   

Covance Inc.*

     14,394
606,486   

Pharmaceutical Product Development Inc.

     14,167
        
       28,561
        
MACHINERY—10.5%
510,400   

Bucyrus International Inc. Cl. A

     26,735
369,800   

Harsco Corp.

     11,005

 

14

Table of Contents

Harbor Small Cap Value Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

COMMON STOCKS—Continued

Shares         Value
(000s)
    
MACHINERY—Continued
265,300   

Snap-on Inc.

   $ 10,846
490,100   

Timken Co.

     10,983
311,300   

Toro Company

     12,125
        
       71,694
        
OIL, GAS & CONSUMABLE FUELS—6.8%
581,600   

Cabot Oil & Gas Corp.

     22,258
416,600   

St. Mary Land & Exploration Co.

     13,348
432,800   

Swift Energy Co.*

     10,846
        
       46,452
        
PROFESSIONAL SERVICES—0.7%
228,038   

School Specialty Inc.*

     5,037
        
REAL ESTATE INVESTMENT TRUSTS (REITs)—2.4%
469,886   

First Potomac Realty

     6,391
1,035,280   

Medical Properties Trust Inc.

     10,363
        
       16,754
        
SPECIALTY RETAIL—1.5%
369,200   

Aaron’s Inc.

     10,286
        
TEXTILES, APPAREL & LUXURY GOODS–2.1%
361,500   

Phillips-Van Heusen Corp.

     14,203
        
THRIFTS & MORTGAGE FINANCE–1.8%
911,450   

Astoria Financial Corp.

     12,031
        

COMMON STOCKS—Continued

Shares         Value
(000s)
    
  TRADING COMPANIES & DISTRIBUTORS–1.3%
  181,684   

Watsco Inc.

   $ 8,714
        
  WIRELESS TELECOMMUNICATION SERVICES–1.6%
  327,500   

SBA Communications Corp.*

     10,838
        
 
 		 TOTAL COMMON STOCKS
    (Cost $580,969) 		    663,927
        
    

SHORT-TERM INVESTMENTS—0.6%

 

(Cost $3,936)

Principal
Amount
(000s)		           
  REPURCHASE AGREEMENTS
$ 3,936   

Repurchase Agreement with State Street Corp. dated January 29, 2010 due February 01, 2010 at 0.010% collateralized by Federal Home Loan Mortgage Corp. (market value $4,015)

     3,936
        
 
 		 TOTAL INVESTMENTS–97.5%
    (Cost $584,905)		     667,863
        
  CASH AND OTHER ASSETS, LESS LIABILITIES—2.5%     17,227
        
  TOTAL NET ASSETS—100.0%   $ 685,090
        

FAIR VALUE MEASUREMENTS

Repurchase Agreements valued at $3,936 are classified as Level 2. All other holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

* Non-income producing security.

 

NET Netherlands.

The accompanying notes are an integral part of the Portfolio of Investments.

 

15

Table of Contents

Harbor Small Company Value Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Equity Holdings (% of net assets)

(Excludes net cash and short-term investments of 13.2%)

LOGO

 

COMMON STOCKS—78.0%

Shares         Value
(000s)
    
AUTO COMPONENTS—4.9%
46,525   

American Axle & Manufacturing Holdings Inc.

   $ 435
3,221   

Autoliv Inc.

     138
4,800   

Lear Corp.

     330
        
       903
        
BIOTECHNOLOGY—1.7%
69,600   

QLT Inc.

     317
        
BUILDING PRODUCTS—2.4%
22,175   

American Woodmark Corp.

     447
        
COMMERCIAL BANKS—16.3%
29,640   

Associated Banc Corp.

     377
7,405   

City National Corp.

     366
10,973   

Comerica Inc.

     379
40,450   

Fulton Financial Corp.

     374
56,964   

KeyCorp

     409
52,705   

Marshall & Ilsley Corp.

     364
1,298   

PNC Financial Services Group Inc.

     72
77,050   

Popular Inc.

     165
54,170   

Regions Financial Corp.

     344
5,760   

Suntrust Bank Inc.

     140
        
       2,990
        
COMMERCIAL SERVICES & SUPPLIES—5.6%
61,395   

Bowne & Co. Inc.

     403
28,666   

Deluxe Corp.

     533

COMMON STOCKS—Continued

Shares         Value
(000s)
    
COMMERCIAL SERVICES & SUPPLIES—Continued
4,992   

Viad Corp.

   $ 99
        
       1,035
        
COMPUTERS & PERIPHERALS—1.7%
104,079   

Adaptec Inc.*

     316
        
CONSUMER FINANCE—1.8%
23,413   

Discover Financial Services

     320
        
ENERGY EQUIPMENT & SERVICES—1.6%
16,790   

Gulf Island Fabrication Inc.

     293
        
FOOD PRODUCTS—4.3%
37,542   

Del Monte Foods Co.

     427
23,363   

Smithfield Foods Inc.*

     352
        
       779
        
HEALTH CARE EQUIPMENT & SUPPLIES—2.2%
11,396   

Cooper Companies Inc.

     403
        
HOTELS, RESTAURANTS & LEISURE—0.6%
4,350   

Royal Caribbean Cruises Ltd.

     113
        
HOUSEHOLD DURABLES—8.4%
2,465   

Black & Decker Corp.

     159
19,144   

CSS Industries Inc.

     332
13,261   

Jarden Corp.

     404
29,695   

M/I Homes Inc.*

     307
92,253   

Standard Pacific Corp.*

     335
        
       1,537
        
INSURANCE—10.4%
35,315   

Assured Guaranty Ltd. (BM)

     800
35,329   

MBIA Inc.*

     174
34,580   

Old Republic International Corp.

     366
23,915   

Stewart Information Services Corp.

     245
19,225   

XL Capital Ltd. (CYM)

     323
        
       1,908
        
LEISURE EQUIPMENT & PRODUCTS—2.1%
35,047   

Jakks Pacific Inc.*

     386
        
MACHINERY—2.6%
42,517   

Blount International Inc.*

     474
        
MARINE—2.2%
12,614   

Alexander & Baldwin Inc.

     403
        
MEDIA—1.9%
32,200   

Harte Hanks Inc.

     340
        
ROAD & RAIL—2.0%
15,884   

Arkansas Best Corp.

     358
        
SPECIALTY RETAIL—2.2%
45,570   

MarineMax Inc.*

     412
        
TEXTILES, APPAREL & LUXURY GOODS—1.4%
28,964   

K-Swiss Inc.

     263
        
THRIFTS & MORTGAGE FINANCE—1.7%
17,040   

Washington Federal Inc.

     318
        
TOTAL COMMON STOCKS
    (Cost $13,220) 		    14,315
        

 

16

Table of Contents

Harbor Small Company Value Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

OTHER INVESTMENT COMPANIES—8.8%

Shares         Value
(000s)
    
  DIVERSIFIED FINANCIAL SERVICES—8.8%
  13,200   

iShares Russell 2000 Index

   $ 795
  14,500   

iShares Russell 2000 Value Index

     818
        
 
 		 TOTAL OTHER INVESTMENT COMPANIES
    (Cost $1,621)		     1,613
        
    

SHORT-TERM INVESTMENTS—7.8%

 

(Cost $1,423)

  
Principal
Amount
(000s)		           
  REPURCHASE AGREEMENTS
$ 1,423   

Repurchase Agreement with State Street Corp. dated January 29, 2010 due February 01, 2010 at 0.010% collateralized by Federal Home Loan Mortgage Corp. (market value $1,452)

     1,423
        
 
 		 TOTAL INVESTMENTS—94.6%
    (Cost $16,264)		     17,351
        
  CASH AND OTHER ASSETS, LESS LIABILITIES—5.4%     996
        
  TOTAL NET ASSETS—100.0%   $ 18,347
        

 

FAIR VALUE MEASUREMENTS

Repurchase Agreements valued at $1,423 are classified as Level 2. All other holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

* Non-income producing security.

 

BM Bermuda.

 

CYM Cayman Islands.

The accompanying notes are an integral part of the Portfolio of Investments.

 

17

Table of Contents

Harbor Domestic Equity Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—January 31, 2010

 

(Currency in thousands)

 

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. The Trust consists of 27 separate portfolios. The portfolios covered by this report include: Harbor Capital Appreciation Fund, Harbor Mid Cap Growth Fund, Harbor Small Cap Growth Fund, Harbor Large Cap Value Fund, Harbor Mid Cap Value Fund, Harbor Small Cap Value Fund and Harbor Small Company Value Fund (formerly, Harbor SMID Value Fund); (individually or collectively referred to as a “Fund” or the “Funds,” respectively). Harbor Capital Advisors, Inc. (the “Adviser” or “Harbor Capital”) is the investment adviser for the Funds.

The Funds may offer up to three classes of shares, designated as Institutional Class, Administrative Class, and Investor Class. The shares of each class represent an interest in the same portfolio of investments of the respective Fund and have equal rights to voting, redemptions, dividends, and liquidations, except that: (i) certain expenses, subject to the approval of the Trust’s Board of Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission 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

Security Valuation

Equity securities, 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 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 were no sales on the valuation day, securities traded principally: (i) on a U.S. exchange, including NASDAQ, will be valued at the mean between the closing bid and asked price; (ii) on a foreign exchange, including United Kingdom securities, will be valued at the official bid price determined as of the close of the primary exchange.

Debt securities, other than short-term securities with a remaining maturity of less than 60 days at the time they are acquired, are valued using evaluated prices furnished by a pricing service selected by the Board of Trustees. An evaluated price represents an assessment by the pricing service using various market inputs of what the pricing service believes is the fair market value of a security at a particular point in time. The pricing service 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 service 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. 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 service’s evaluation process, which means that the evaluated price supplied by the pricing service will frequently differ from that transaction price. Short-term securities with a remaining maturity of less than 60 days at the time they are acquired are stated at amortized cost, which approximates fair value.

When reliable market quotations or evaluated prices supplied by a pricing vendor are not readily available or are not believed to accurately reflect fair value, securities are priced at their fair value, determined by the Trustees Valuation Committee pursuant to procedures adopted by the Board of Trustees. 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. 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 the Fund may value those securities higher or lower than another fund that uses market quotations, official closing prices or evaluated prices supplied by a pricing vendor.

 

18

Table of Contents

Harbor Domestic Equity Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

Fair Value Measurements and Disclosures

In September 2006, the Financial Accounting Standards Board (FASB) issued Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures. ASC 820 establishes a framework for measuring fair value and expands disclosures about fair value measurements in financial statements, effective for the Funds’ current fiscal year.

The various inputs that may be used to determine the value of each Fund’s investments are summarized in three categories defined as Level 1, Level 2 and Level 3. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The assignment of an investment to Level 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 observable inputs are not available. Valuations based on significant unobservable inputs may include the Funds’ own assumptions.

For fair valuations using significant unobservable inputs, ASC 820 requires a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in/out of the Level 3 category during the period. A fair value hierarchy and Level 3 reconciliation, when applicable, can be found at the end of each Fund’s Portfolio of Investments schedule.

ASC 820 also provides guidance on determining when there has been a significant decrease in the trading volume and level of activity for a holding, when a transaction is not orderly, and how that information must be incorporated into a fair value measurement. ASC 820 emphasizes that even if there has been a significant decrease in the trading volume and level of activity for a holding and regardless of the valuation techniques used, the objective of a fair value measurement remains the same. The adoption of ASC 820 had no impact on the Funds’ net assets or results of operations.

The Funds used observable inputs in their valuation methodologies whenever they were available and deemed reliable.

Options

Consistent with its investment policies, each Fund may use options contracts to manage its exposure to the stock and bond markets and to fluctuations in interest rates and currency values. Harbor Large Cap Value Fund is not authorized to engage in options transactions on currencies. Call options tend to decrease a Fund’s exposure to the underlying instrument. Put options tend to increase a Fund’s exposure to the underlying instrument.

Purchased options on equity securities are valued at the last sale price on the market on which they are principally traded. Purchased options on futures contracts are valued based on the settlement price for the underlying futures contract. 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.

Written options on equity securities are valued at the last sale price or, in the absence of a sale, the last offering price on the market on which they are principally traded. Written options on futures contracts are valued based on the settlement price for the underlying futures contract. If an option expires on its stipulated expiration date, or if a Fund enters into a closing purchase transaction, such Fund realizes a gain (or loss if the cost of a closing purchase transaction exceeds the

 

19

Table of Contents

Harbor Domestic Equity Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

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 market price 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 market price 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 counterparties do not perform under the contracts’ terms.

There were no outstanding options as of January 31, 2010.

U.S. Government Securities

Securities issued by U.S. government agencies or government-sponsored enterprises may not be guaranteed by the U.S. Treasury. The Government National Mortgage Association (“GNMA” or “Ginnie Mae”), a wholly owned U.S. government corporation, is authorized to guarantee, with the full faith and credit of the U.S. Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA and backed by pools of mortgages insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. Government-related guarantors (i.e., not backed by the full faith and credit of the U.S. Government) include the Federal National Mortgage Association (“FNMA” or “Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”). On September 7, 2008, the Federal Housing Finance Agency (“FHFA”) placed Fannie Mae and Freddie Mac in conservatorship, while the Treasury agreed to purchase preferred stock as needed to ensure that both Fannie Mae and Freddie Mac maintain a positive net worth (guaranteeing up to $100 billion for each entity). As a consequence, certain fixed income securities of Fannie Mae and Freddie Mac have more explicit U.S. Government support.

Foreign Currency Spot Contracts

The Funds may enter into foreign currency spot contracts to facilitate transactions in foreign securities or to convert foreign currency receipts into U.S. dollars. A foreign currency spot contract is an agreement between two parties to buy and sell currencies at the current market rate, for settlement within two business days. The U.S. dollar value of the contracts is determined using current currency exchange rates supplied by a pricing service selected by the Adviser. The contract is marked-to-market daily for settlements beyond one day and any change in market 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. 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. There is minimal counterparty risk with foreign currency spot contracts, as they are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded foreign currency contracts, guarantees the foreign currency spot contracts against default.

Foreign Currency Translations

The accounting records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars based on the current exchange rates at period end. Purchases and sales of securities are translated into U.S. dollars at the current exchange rate on the respective dates of the transaction. Income and withholding taxes are translated at the prevailing exchange rate when accrued or incurred.

Reported net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign forward currency contracts, disposition of foreign currencies, currency gains and losses realized

 

20

Table of Contents

Harbor Domestic Equity Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

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.

Repurchase Agreements

Each Fund may enter into repurchase agreements with domestic or foreign banks or with any member firm of the Financial Industry Regulatory Authority, Inc. (“FINRA”), or any affiliate of a member firm which is a primary dealer in U.S. government securities. Each repurchase agreement counterparty must meet the minimum credit quality requirements applicable to the respective Fund generally and meet any other appropriate counterparty criteria as determined by the Fund’s Subadviser. The minimum credit quality requirements are those applicable to a Fund’s purchase of securities generally such that if a Fund is permitted to only purchase securities which are rated investment grade (or the equivalent if unrated), that Fund could only enter into repurchase agreements with counterparties that have debt outstanding that is rated investment grade (or the equivalent if unrated). 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 the Fund to close out the repurchase agreement. The securities will be regularly monitored to ensure that the collateral is adequate. In the event of the bankruptcy of the seller or the failure of the seller to repurchase the securities as agreed, the Fund could suffer losses, including loss of interest on or principal of the securities and costs associated with delay and enforcement of the repurchase agreement.

NOTE 3—TAX INFORMATION

The identified cost for federal income tax purposes of investments owned by each Fund (including earned discount on corporate short-term notes and commercial paper) and their respective gross unrealized appreciation and depreciation at January 31, 2010 are as follows:

 

          Gross Unrealized     Net Unrealized
Appreciation/
(Depreciation)		  
     Identified Cost    Appreciation    (Depreciation)    

GROWTH FUNDS

           

Harbor Capital Appreciation Fund*

    $ 7,204,111    $ 1,519,753    $ (126,328 )    $ 1,393,425   

Harbor Mid Cap Growth Fund*

      449,606      76,295      (12,222 )      64,073   

Harbor Small Cap Growth Fund*

      338,706      77,622      (27,657 )      49,965   

VALUE FUNDS

           

Harbor Large Cap Value Fund*

    $ 214,667    $ 14,640    $ (7,048 )    $ 7,592   

Harbor Mid Cap Value Fund*

      51,364      5,360      (10,858 )      (5,498 ) 

Harbor Small Cap Value Fund*

      584,905      156,674      (73,716 )      82,958   

Harbor Small Company Value Fund*

      16,264      1,816      (729 )      1,087   

 

 

* Capital loss carryforwards are available which may reduce taxable income from future net realized gain on investments.

 

21

Table of Contents

LOGO

 

111 South Wacker Drive, 34th Floor   Chicago, IL 60606-4302   800-422-1050   www.harborfunds.com

 

Trustees & Officers

David G. Van Hooser

Chairman, President & Trustee

Raymond J. Ball

Trustee

Howard P. Colhoun

Trustee

John P. Gould

Trustee

Rodger F. Smith

Trustee

Charles F. McCain

Chief Compliance Officer

Anmarie S. Kolinski

Treasurer

Erik D. Ojala

Vice President & Secretary

Brian L. Collins

Vice President

Charles P. Ragusa

Vice President

Jodie L. Crotteau

Assistant Secretary

Susan A. DeRoche

Assistant Secretary

 

Investment Adviser

Harbor Capital Advisors, Inc.

111 South Wacker Drive, 34th Floor

Chicago, IL 60606-4302

Distributor & Principal Underwriter

Harbor Funds Distributors, Inc.

111 South Wacker Drive, 34th Floor

Chicago, IL 60606-4302

312-443-4400

Shareholder Servicing Agent

Harbor Services Group, Inc.

P.O. Box 804660

Chicago, IL 60680-4108

800-422-1050

Custodian

State Street Bank & Trust Company

State Street Financial Center

1 Lincoln Street

Boston, MA 02111

 

03/2010   FD.NQ.EF.0110

Table of Contents

LOGO

 

Quarterly Schedule of Portfolio Holdings

January 31, 2010

International & Global Funds

 

International Equity Funds

Harbor International Fund

Harbor International Growth Fund

Global Equity Funds

Harbor Global Value Fund

Harbor Global Growth Fund

Table of Contents

 

Table of Contents

 

 

Portfolios of Investments

     

International Funds

     

HARBOR INTERNATIONAL FUND

      1

HARBOR INTERNATIONAL GROWTH FUND

      4

Global Funds

     

HARBOR GLOBAL VALUE FUND

      7

HARBOR GLOBAL GROWTH FUND

      9

Notes to Portfolios of Investments

      11

Table of Contents

Harbor International Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Equity Holdings by Country (% of net assets)

(Excludes net cash and short-term investments of 5.2%)

LOGO

 

COMMON STOCKS—87.3%

Shares         Value
(000s)
    
AUTO COMPONENTS—1.2%
4,008,297   

Compagnie Generale des Etablissements Michelin (FR)

   $ 310,394
        
AUTOMOBILES—1.5%
11,063,300   

Honda Motor Co Ltd. (JP)

     374,925
        
BEVERAGES—5.1%
9,384,129   

Anheuser-Busch InBev NV (BEL)

     468,287
23,919,897   

Diageo plc (UK)

     402,049
5,148,623   

Pernod Ricard SA (FR)

     414,143
        
       1,284,479
        
BUILDING PRODUCTS—1.8%
9,374,183   

Cie de Saint-Gobain (FR)

     447,809
        
CAPITAL MARKETS—1.3%
25,115,745   

UBS AG (SWS)*

     327,559
        
CHEMICALS—3.7%
4,871,472   

Linde AG (GER)

     534,293
1,573,523   

Syngenta AG (SWS)

     402,677
        
       936,970
        
COMMERCIAL BANKS—9.9%
8,168,855   

BNP Paribas (FR)

     583,558
43,613,000   

DBS Group Holdings Ltd. (SGP)

     439,411
6,353,875   

Erste Bank der oesterreichischen Sparkassen AG (AUT)

     239,860
27,885,275   

Itau Unibanco Holding SA ADR (BR)1

     534,282

COMMON STOCKS—Continued

Shares         Value
(000s)
    
COMMERCIAL BANKS—Continued
19,480,930   

Standard Chartered plc (UK)

   $ 448,718
19,868,127   

United Overseas Bank Ltd. (SGP)

     254,675
        
       2,500,504
        
COMMUNICATIONS EQUIPMENT—1.2%
30,873,256   

Telefonaktiebolaget LM Ericsson (SW)

     299,190
        
CONSTRUCTION MATERIALS—1.6%
6,096,327   

Holcim Ltd. (SWS)

     417,451
        
DIVERSIFIED FINANCIAL SERVICES—1.3%
19,164,905   

Investor Ab (SW)

     337,372
        
DIVERSIFIED TELECOMMUNICATION SERVICES—1.4%
14,358,033   

Telefonica SA (SP)

     343,954
        
ELECTRICAL EQUIPMENT—3.9%
33,281,022   

ABB Ltd. (SWS)

     602,514
3,719,002   

Schneider Electric SA (FR)

     383,669
        
       986,183
        
FOOD PRODUCTS—3.1%
4,263,902   

Groupe Danone (FR)

     243,822
11,361,100   

Nestle SA (SWS)

     538,536
        
       782,358
        
HOTELS, RESTAURANTS & LEISURE—2.2%
5,899,087   

Accor SA (FR)

     297,611
132,000,000   

Genting Bhd (MAL)

     271,285
        
       568,896
        
INDUSTRIAL CONGLOMERATES—2.4%
50,857,000   

Keppel Corp. (SGP)

     300,491
127,539,047   

Sime Darby Berhad. (MAL)

     317,549
        
       618,040
        
INSURANCE—4.2%
2,532,422   

Allianz SE (GER)

     280,404
21,819,968   

AXA SA (FR)

     449,290
63,822,000   

China Life Insurance Co. Ltd. (CHN)

     281,864
12,108,200   

China Pacific Insurance Ltd. (CHN)*

     45,071
        
       1,056,629
        
IT SERVICES—0.3%
5,933,259   

Redecard SA (BR)

     82,940
        
MACHINERY—5.1%
42,772,331   

Atlas Copco AB (SW)

     579,876
4,614,700   

Fanuc Ltd. (JP)

     441,567
24,342,000   

Sandvik AB (SW)

     264,503
        
       1,285,946
        
MARINE—1.2%
38,205   

A.P. Moller Maersk A/S Series B (DEN)

     298,151
        
MEDIA—0.9%
8,523,802   

JC Decaux SA (FR)*

     219,151
        
METALS & MINING—6.7%
7,680,197   

Anglo American plc (UK)*

     281,794
8,825,108   

Anglo American plc ADR (UK)*1

     160,176
6,265,609   

AngloGold Ashanti Ltd. ADR (S. AFR)1

     223,620
17,329,505   

BHP Billiton (AUS)

     508,366
32,017,936   

Xstrata plc (UK)

     519,534
        
       1,693,490
        
MULTI-UTILITIES—1.5%
11,787,835   

Veolia Environnement SA (FR)

     387,032
        

 

1

Table of Contents

Harbor International Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

COMMON STOCKS—Continued

  
Shares         Value
(000s)		  
    
OIL, GAS & CONSUMABLE FUELS—11.2%   
19,698,829   

BG Group plc (UK)

   $ 362,139   
38,600,588   

BP plc (UK)

     360,145   
11,434,183   

Cameco Corp. ADR (CAN)1

     309,523   
363,136,000   

China Petroleum & Chemical Corp. (CHN)

     282,506   
14,422,607   

Eni SpA (IT)

     335,200   
220,764,000   

Petro China Co. Ltd. (CHN)

     246,555   
4,142,440   

Royal Dutch Shell plc (NET)

     115,027   
2,377,600   

Royal Dutch Shell plc ADR (NET)1

     131,695   
1,373,231   

Sasol Ltd. (S. AFR)

     50,883   
13,584,779   

Statoil ASA (NOR)

     304,863   
5,836,604   

Total SA (FR)

     337,317   
          
       2,835,853   
          
PAPER & FOREST PRODUCTS—0.5%   
7,260,666   

Fibria Celulose SA ADR (BR)1

     132,725   
          
PERSONAL PRODUCTS—0.9%   
2,248,769   

L’Oreal SA (FR)

     237,109   
          
PHARMACEUTICALS—4.3%   
8,754,834   

Novo Nordisk A/S (DEN)

     592,355   
2,939,593   

Roche Holding Ltd. (SWS)

     493,179   
          
       1,085,534   
          
REAL ESTATE MANAGEMENT & DEVELOPMENT—1.6%   
33,768,000   

Cheung Kong Holdings Ltd. (HK)

     397,331   
          
TEXTILES, APPAREL & LUXURY GOODS—1.5%   
11,177,615   

Compagnie Financiere Richemont SA (SWS)

     378,596   
10,835,055   

Nova America SA (BR)*

     — z 
          
       378,596   
          
TOBACCO—4.9%   
12,730,172   

British American Tobacco plc (UK)

     420,794   
11,161,836   

Imperial Tobacco Group plc (UK)

     359,945   
126,437   

Japan Tobacco Inc. (JP)

     456,266   
          
       1,237,005   
          
WIRELESS TELECOMMUNICATION SERVICES—0.9%   
24,893,000   

China Mobile Ltd. (HK)

     234,021   
          
TOTAL COMMON STOCKS
    (Cost $17,486,437)		     22,097,597   
          
    

PREFERRED STOCKS—7.5%

      
COMMERCIAL BANKS—2.3%   
34,468,390   

Banco Bradesco SA (BR)

     572,888   
          
METALS & MINING—1.7%   
18,968,000   

Vale SA (BR)

     424,038   
          
OIL, GAS & CONSUMABLE FUELS—3.2%   
45,118,200   

Petroleo Brasileiro SA (BR)

     817,872   
          

PREFERRED STOCKS—Continued

  
Shares         Value
(000s)		  
    
  PAPER & FOREST PRODUCTS—0.3%   
  7,636,700   

Suzano Papel e Celulose SA (BR)

   $ 82,282   
          
  TEXTILES, APPAREL & LUXURY GOODS—0.0%   
  1,056,355   

Nova America SA (BR)*

     — z 
          
 
 		 TOTAL PREFERRED STOCKS
    (Cost $414,042)		     1,897,080   
          
    

SHORT-TERM INVESTMENTS—5.8%

  
Principal
Amount
(000s)		             
  COMMERCIAL PAPER   
  

Chevron Corp.

  
$ 24,839   

0.060%—02/08/2010

     24,839   
  100,000   

0.070%—02/06/2010

     100,000   
  40,000   

0.080%—02/11/2010

     40,000   
  88,000   

0.090%—02/16/2010

     88,000   
  86,479   

0.100%—02/23/2010

     86,479   
          
       339,318   
          
  

General Electric Co.

  
  36,479   

0.060%—02/08/2010

     36,479   
  216,024   

0.120%—02/09/2010

     216,024   
  88,024   

0.130%—02/12/2010

     88,024   
          
       340,527   
          
  

HSBC Finance Corp.

  
  40,818   

0.060%—02/03/2010

     40,818   
  43,117   

0.070%—02/01/2010

     43,117   
  69,348   

0.120%—02/01/2010

     69,348   
  166,105   

0.130%—02/12/2010

     166,105   
  43,117   

0.140%—02/22/2010

     43,117   
  46,982   

0.150%—02/19/2010

     46,982   
          
       409,487   
          
  

Toyota Motor Credit

  
  295,258   

0.080%—02/02/2010-02/11/2010

     295,258   
  91,103   

0.090%—02/17/2010-02/18/2010

     91,103   
          
       386,361   
          
 
 		 TOTAL SHORT-TERM INVESTMENTS
    (Cost $1,475,693)		     1,475,693   
          
 
 		 TOTAL INVESTMENTS—100.6%
    (Cost $19,376,172)		     25,470,370   
          
  CASH AND OTHER ASSETS, LESS LIABILITIES—(0.6)%     (140,206 ) 
          
  TOTAL NET ASSETS—100.0%   $ 25,330,164   
          

 

2

Table of Contents

Harbor International Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

FAIR VALUE MEASUREMENTS

The following table summarizes the Fund’s investments as of January 31, 2010 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

    $ 223,619    $ 50,883    $ —    $ 274,502

Europe

      670,466      15,241,273      —      15,911,739

Latin America

      749,947      —      —      749,947

North America

      309,523      —      —      309,523

Pacific Basin

      —      4,851,886      —      4,851,886

Preferred Stocks

            

Latin America

      1,897,080      —      —      1,897,080

Short-Term Investments

            

Commercial Paper

      —      1,475,693      —      1,475,693
                           

Total

    $ 3,850,635    $ 21,619,735    $ —    $ 25,470,370
                           

For more information on valuation inputs and their aggregation into the levels used in the table above, please refer to Fair Value Measurements in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

* Non-income producing security.

 

1 ADR after the name of a foreign holding stands for American Depositary Receipts representing ownership of foreign securities. ADRs are issued by U.S. banking institutions.

 

z Fair valued by Harbor Funds’ Valuation Committee.

The accompanying notes are an integral part of the Portfolio of Investments.

 

3

Table of Contents

Harbor International Growth Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Equity Holdings by Country (% of net assets)

(Excludes net cash and short-term investments of 3.7%)

LOGO

 

COMMON STOCKS—95.8%

Shares         Value
(000s)
    
AUTOMOBILES—5.7%
954,145   

Daimler AG—(GER)

   $ 43,895
1,029,836   

Fiat SpA (IT)

     12,906
610,700   

Honda Motor Co. Ltd. (JP)

     20,696
        
       77,497
        
BEVERAGES—5.7%
905,673   

Anheuser-Busch InBev NV (BEL)

     45,195
348,161   

Heineken NV (NET)

     17,178
167,298   

Pernod Ricard SA (FR)

     13,457
        
       75,830
        
BIOTECHNOLOGY—2.0%
128,557   

Actelion Ltd. (SWS)*

     6,802
728,237   

CSL Ltd. (AUS)

     20,016
        
       26,818
        
BUILDING PRODUCTS—0.5%
187,877   

Daikin Industries Ltd. (JP)

     6,981
        
CAPITAL MARKETS—4.6%
961,896   

Credit Suisse Group (SWS)

     41,609
2,788,000   

Daiwa Securities Group Inc. (JP)

     13,942
208,542   

Julius Baer Group Ltd. (SWS)

     6,932
        
       62,483
        

COMMON STOCKS—Continued

Shares         Value
(000s)
    
CHEMICALS—7.3%
357,528   

Akzo Nobel NV (NET)

   $ 21,282
825,423   

Basf SE (GER)

     46,958
75,376   

Novozymes AS (DEN)

     7,719
91,488   

Syngenta AG (SWS)

     23,413
        
       99,372
        
COMMERCIAL BANKS—9.4%
886,643   

Banco Bilbao Vizcaya Argentaria SA (SP)

     13,516
187,778   

BNP Paribas (FR)

     13,414
4,453,210   

HSBC Holdings plc (UK)

     47,674
609,289   

ICICI Bank Ltd. ADR (IND)1

     21,496
8,409,300   

Mizuho Financial Group Inc. (JP)

     16,229
608,646   

Standard Chartered plc (UK)

     14,019
        
       126,348
        
COMMUNICATIONS EQUIPMENT—1.5%
321,304   

Research In Motion Ltd. (CAN)*

     20,229
        
CONSTRUCTION MATERIALS—0.5%
723,894   

Cemex SAB de CV ADR (MEX)

     6,653
        
DISTRIBUTORS—0.7%
2,052,000   

China Resources Enterprise Ltd. (HK)

     6,764
635,000   

Li & Fung Ltd. (HK)

     2,912
        
       9,676
        
DIVERSIFIED TELECOMMUNICATION SERVICES—3.5%
1,974,306   

Telefonica SA (SP)

     47,296
        
ELECTRICAL EQUIPMENT—4.5%
815,671   

ABB Ltd. (SWS)

     14,767
315,241   

Alstom SA (FR)

     21,049
240,123   

Schneider Electric SA (FR)

     24,772
        
       60,588
        
ELECTRONIC EQUIPMENT & INSTRUMENTS—1.0%
3,126,245   

Hon Hai Precision Industry Co. Ltd. (TWN)

     13,027
        
ENERGY EQUIPMENT & SERVICES—3.3%
523,582   

Transocean Ltd. (SWS)

     44,368
        
FOOD & STAPLES RETAILING—3.6%
458,100   

Familymart Company (JP)

     14,487
386,473   

METRO AG (GER)

     21,177
2,006,491   

Tesco plc (UK)

     13,580
        
       49,244
        
FOOD PRODUCTS—2.1%
1,592,800   

JBS SA (BRA)

     7,892
422,762   

Nestle SA (SWS)

     20,040
        
       27,932
        
HEALTH CARE EQUIPMENT & SUPPLIES—1.2%
329,900   

Covidien plc. (IE)

     16,680
        
HOTELS, RESTAURANTS & LEISURE—2.7%
267,128   

Accor SA (FR)

     13,477
1,979,053   

Compass Group plc (UK)

     13,473
311,676   

Ctrip.com International Ltd. ADR (CHN)1

     9,752
        
       36,702
        
HOUSEHOLD DURABLES—4.7%
1,701,308   

Cyrela Brazil Realty (BR)

     19,531
1,365,513   

Gafisa SA (BR)

     17,654
1,002,300   

Panasonic Corp. (JP)

     15,660
1,395,080   

PDG Realty SA Empreendimentos e Participacoes (BR)

     11,109
        
       63,954
        

 

4

Table of Contents

Harbor International Growth Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

COMMON STOCKS—Continued

Shares         Value
(000s)
    
HOUSEHOLD PRODUCTS—1.0%
272,733   

Reckitt Benckiser Group plc (UK)

   $ 14,138
        
INTERNET SOFTWARE & SERVICES—1.0%
16,856   

Baidu Inc. ADR (CHN)*1

     6,940
364,600   

Tencent Holding Ltd. (HK)

     6,754
        
       13,694
        
LIFE SCIENCES TOOLS & SERVICES—1.1%
201,759   

Lonza Group AG (SWS)

     14,348
        
MEDIA—0.8%
249,480   

Publicis Groupe SA (FR)

     10,263
        
METALS & MINING—2.4%
416,043   

ThyssenKrupp AG (GER)

     13,153
750,393   

Vale SA ADR (BR)1

     19,353
        
       32,506
        
OFFICE ELECTRONICS—1.0%
342,900   

Canon Inc. (JP)

     13,403
        
OIL, GAS & CONSUMABLE FUELS—3.6%
9,085,300   

CNOOC Ltd. (HK)

     12,808
2,086,300   

OGX Petroleo e Gas Participacoes SA (BR)

     18,594
386,534   

Reliance Industries Ltd. GDR (IND)2

     17,587
        
       48,989
        
PHARMACEUTICALS—5.7%
379,082   

Novartis AG (SWS)

     20,287
398,773   

Novo Nordisk A/S (DEN)

     26,981
528,596   

Teva Pharmaceutical Industries Ltd. ADR (IL)1

     29,982
        
       77,250
        
REAL ESTATE MANAGEMENT & DEVELOPMENT—3.0%
8,303,000   

CapitaLand Ltd. (SGP)

     22,573
1,142,000   

Cheung Kong Holdings Ltd. (HK)

     13,437
2,079,000   

Hang Lung Properties Ltd. (HK)

     7,176
        
       43,186
        
ROAD & RAIL—1.0%
263,010   

Canadian National Railway Co. (CAN)

     13,132
        
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—1.8%
3,237,986   

Infineon Technologies Ltd. (GER)

     17,868
410,300   

Sumco Corporation (JP)

     7,061
        
       24,929
        

COMMON STOCKS—Continued

  
Shares         Value
(000s)		  
    
  SOFTWARE—3.5%   
  613,341   

Autonomy Corp. plc (UK)*

   $ 15,194   
  294,992   

Longtop Financial Technologies Ltd ADR (CYM)1

     10,224   
  78,000   

Nintendo Co. Ltd. (JP)

     21,747   
          
       47,165   
          
  SPECIALTY RETAIL—2.0%   
  420,485   

Inditex SA (SP)

     26,468   
          
  TEXTILES, APPAREL & LUXURY GOODS—0.8%   
  211,904   

Adidas AG (GER)

     10,801   
          
  TRADING COMPANIES & DISTRIBUTORS—2.6%   
  5,008,000   

Marubeni Corp. (JP)

     29,083   
  3,199,000   

Noble Group (HK)

     6,501   
          
       35,584   
          
 
 		 TOTAL COMMON STOCKS
    (Cost $1,180,746) 		    1,297,534   
          
    

PREFERRED STOCKS—0.5%

  

 

(Cost $7,075)

  
  HEALTH CARE PROVIDERS & SERVICES—0.5%   
  98,486   

Fresenius AG (GER)

     6,706   
          
    

SHORT-TERM INVESTMENTS—4.5%

  

 

(Cost $61,335)

  
Principal
Amount
(000s)		             
  REPURCHASE AGREEMENTS   
$ 61,335   

Repurchase Agreement with State Street Corp. dated January 29, 2010 due February 01, 2010 at 0.010% collateralized by U.S. Treasury Notes (market value $62,563)

     61,335   
          
 
 		 TOTAL INVESTMENTS—100.8%
    (Cost $1,249,156)		     1,365,575   
          
  CASH AND OTHER ASSETS, LESS LIABILITIES—(0.8)%     (11,300 ) 
          
  TOTAL NET ASSETS—100.0%   $ 1,354,275   
          

FAIR VALUE MEASUREMENTS

The following table summarizes the Fund’s investments as of January 31, 2010 based on the inputs used to value them.

 

Asset Category

    Quoted Prices
Level 1
(000s)		    Other Significant
Observable Inputs
Level 2
(000s)		    Significant
Unobservable Inputs
Level 3
(000s)		    Total
(000s)

Common Stocks

            

Europe

    $ 67,982    $ 728,167    $ —    $ 796,149

Latin America

      94,133      —      —      94,133

Middle East/Central Asia

      47,568      21,496      —      69,064

North America

      40,014      —      —      40,014

Pacific Basin

      33,672      264,502      —      298,174

Preferred Stock

            

Europe

      —      6,706      —      6,706

 

5

Table of Contents

Harbor International Growth Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

FAIR VALUE MEASUREMENTS—Continued

 

Asset Category

    Quoted Prices
Level 1
(000s)		    Other Significant
Observable Inputs
Level 2
(000s)		    Significant
Unobservable Inputs
Level 3
(000s)		    Total
(000s)

Short-Term Investments

            

Repurchase Agreement

    $ —    $ 61,335    $ —    $ 61,335
                           

Total

    $ 283,369    $ 1,082,206    $ —    $ 1,365,575
                           

For more information on valuation inputs and their aggregation into the levels used in the table above, please refer to Fair Value Measurements in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

* Non-income producing security.

 

1 ADR after the name of a foreign holding stands for American Depositary Receipts representing ownership of foreign securities. ADRs are issued by U.S. banking institutions.

 

2 GDR after the name of a holding stands for Global Depositary Receipts representing ownership of foreign securities. GDRs are issued by either U.S. or non-U.S. banking organizations.

The accompanying notes are an integral part of the Portfolio of Investments.

 

6

Table of Contents

Harbor Global Value Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Equity Holdings by Country (% of net assets)

(Excludes net cash and short-term investments of 1.9%)

LOGO

 

COMMON STOCKS—98.1%

Shares         Value
(000s)
    
AEROSPACE & DEFENSE—8.4%
27,650   

Boeing Co. (US)

   $ 1,676
39,825   

European Aeronautic Defense and Space Co. (NET)

     778
65,509   

Finmeccanica SpA (IT)

     908
22,850   

Northrop Grumman Corp. (US)

     1,293
        
       4,655
        
AUTO COMPONENTS—2.0%
19,800   

Magna International Inc. Cl. A (CAN)

     1,090
        
CAPITAL MARKETS—3.1%
10,150   

State Street Corp. (US)

     435
100,290   

UBS AG (SWS)*

     1,308
        
       1,743
        
CHEMICALS—3.3%
18,600   

Akzo Nobel NV (NET)

     1,107
67,975   

Clariant Ltd. (SWS)

     746
        
       1,853
        
COMMERCIAL BANKS—10.5%
142,200   

Barclays plc (UK)

     608
40,849   

Credit Agricole SA (FR)

     640
27,200   

DnB NOR ASA (NOR)

     307
106,607   

HSBC Holdings plc (UK)

     1,141
133,000   

Mitsubishi UFJ Financial Group Inc. (JP)

     685
88,925   

Natixis (FR)

     410
15,605   

PNC Financial Services Group Inc. (US)

     865
920,527   

Royal Bank of Scotland Group plc (UK)

     468
21,600   

Sumitomo Mitsui Financial Group Inc. (JP)

     697
        
       5,821
        
COMMUNICATIONS EQUIPMENT—4.2%
261,226   

Alcatel-Lucent (FR)

     880
64,750   

Motorola Inc. (US)

     398
77,575   

Nokia OYJ (FIN)

     1,065
        
       2,343
        
CONSUMER FINANCE—1.3%
19,250   

Capital One Financial Corp. (US)

     710
        

COMMON STOCKS—Continued

Shares         Value
(000s)
    
DIVERSIFIED FINANCIAL SERVICES—5.9%
71,725   

Bank of America Corp. (US)

   $ 1,089
337,323   

Citigroup Inc. (US)

     1,120
111,114   

ING Groep NV (NET)

     1,040
        
       3,249
        
DIVERSIFIED TELECOMMUNICATION SERVICES—1.5%
63,000   

Telenor ASA (NOR)

     819
        
ELECTRIC UTILITIES—1.5%
25,450   

Edison International (US)

     848
        
ELECTRONIC EQUIPMENT & INSTRUMENTS—2.8%
3,700   

Omron Corp. (JP)

     73
58,750   

Tyco Electronics Ltd. (SWS)

     1,462
        
       1,535
        
ENERGY EQUIPMENT & SERVICES—2.1%
57,100   

BJ Services Co. (US)

     1,180
        
FOOD PRODUCTS—1.5%
31,025   

Kraft Foods Inc. (US)

     858
        
HEALTH CARE EQUIPMENT & SUPPLIES—1.8%
17,275   

Zimmer Holdings Inc. (US)*

     973
        
HEALTH CARE PROVIDERS & SERVICES—3.2%
39,125   

Aetna Inc. (US)

     1,173
18,975   

Cardinal Health Inc. (US)

     627
        
       1,800
        
HOUSEHOLD DURABLES—1.0%
7,100   

Whirlpool Corp. (US)

     534
        
HOUSEHOLD PRODUCTS—0.5%
5,892   

Henkel AG & Co. Kgaa (GER)

     257
        
INDUSTRIAL CONGLOMERATES—3.2%
58,600   

Koninklijke Philips Electronics NV (NET)

     1,770
        
INSURANCE—4.9%
55,299   

Aegon NV (NET)

     331
38,750   

Allstate Corp. (US)

     1,160
120,875   

Aviva plc (UK)

     740
8,900   

Renaissance Holdings Ltd. (BM)

     482
        
       2,713
        
IT SERVICES—2.4%
30,300   

Cap Gemini (FR)

     1,345
        
MACHINERY—1.1%
31,200   

THK Co. Ltd. (JP)

     616
        
MEDIA—7.6%
113,550   

Aegis Group plc. (UK)

     216
21,600   

LaGardere SCA. (FR)

     837
35,150   

Omnicom Group Inc. (US)

     1,241
16,300   

Publicis Groupe SA (FR)

     671
48,674   

Vivendi SA (FR)

     1,265
        
       4,230
        
MULTI-UTILITIES—1.4%
15,525   

Sempra Energy (US)

     788
        
MULTILINE RETAIL—2.1%
46,750   

J.C. Penney Co. Inc. (US)

     1,161
        
OIL, GAS & CONSUMABLE FUELS—7.8%
121,400   

BP plc (UK)

     1,133
21,375   

Exxon Mobil Corp. (US)

     1,377

 

7

Table of Contents

Harbor Global Value Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

COMMON STOCKS—Continued

Shares         Value
(000s)
    
OIL, GAS & CONSUMABLE FUELS—Continued
55,800   

Gazprom OAO ADR (RUS)1

   $ 1,353
25,825   

Valero Energy Corp. (US)

     476
        
       4,339
        
PERSONAL PRODUCTS—1.5%
27,488   

Avon Products, Inc. (US)

     828
        
PHARMACEUTICALS—1.1%
9,350   

Johnson & Johnson (US)

     588
        
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—0.5%
4,500   

Tokyo Electron Ltd. (JP)

     273
        
SOFTWARE—3.6%
53,225   

CA Inc. (US)

     1,173
28,775   

Microsoft Corp. (US)

     811
        
       1,984
        
SPECIALTY RETAIL—1.5%
38,100   

Lowe’s Cos. Inc. (US)

     825
        
TRADING COMPANIES & DISTRIBUTORS—3.3%
54,600   

Bunzl plc (UK)

     543
88,425   

Travis Perkins plc (UK)

     1,033
11,750   

Wolseley plc (UK)

     258
        
       1,834
        

COMMON STOCKS—Continued

  
Shares         Value
(000s)		  
    
  WIRELESS TELECOMMUNICATION SERVICES—1.5%   
  392,550   

Vodafone Group plc (UK)

   $ 839   
          
 
 		 TOTAL COMMON STOCKS
    (Cost $61,226) 		    54,401   
          
    

SHORT-TERM INVESTMENTS—2.0%

  

 

(Cost $1,094)

  
Principal
Amount
(000s)		             
  REPURCHASE AGREEMENTS   
$ 1,094   

Repurchase Agreement with State Street Corp. dated January 29, 2010 due February 01, 2010 at 0.010% collateralized by Federal Home Loan Mortgage Corp. (market value $1,120)

     1,094   
          
 
 		 TOTAL INVESTMENTS—100.1%
    (Cost $62,320)		     55,495   
          
  CASH AND OTHER ASSETS, LESS LIABILITIES—(0.1)%     (32 ) 
          
  TOTAL NET ASSETS—100.0%   $ 55,463   
          

 

FAIR VALUE MEASUREMENTS

The following table summarizes the Fund’s investments as of January 31, 2010 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

    $ 2,815    $ 23,463    $ —    $ 26,278

North America

      1,090      24,206      —      25,296

Pacific Basin

      482      2,345      —      2,827

Short-Term Investments

            

Repurchase Agreements

      —      1,094      —      1,094
                           

Total

    $ 4,387    $ 51,108    $ —    $ 55,495
                           

For more information on valuation inputs and their aggregation into the levels used in the table above, please refer to Fair Value Measurements in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

* Non-income producing security.

 

1 ADR after the name of a foreign holding stands for American Depositary Receipts representing ownership of foreign securities. ADRs are issued by U.S. banking institutions.

The accompanying notes are an integral part of the Portfolio of Investments.

 

8

Table of Contents

Harbor Global Growth Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Equity Holdings by Country (% of net assets)

(Excludes net cash and short-term investments of 7.1%)

LOGO

 

COMMON STOCKS—92.1%

Shares         Value
(000s)
    
AEROSPACE & DEFENSE—1.4%
1,053   

Precision Castparts Corp. (US)

   $ 111
        
BEVERAGES—3.4%
5,237   

Anheuser-Busch InBev NV (BEL)

     261
        
BIOTECHNOLOGY—3.9%
1,784   

Celgene Corp. (US)*

     101
4,068   

Gilead Sciences Inc. (US)*

     197
        
       298
        
CAPITAL MARKETS—1.2%
607   

Goldman Sachs Group Inc. (US)

     90
        
CHEMICALS—2.4%
688   

Novozymes AS (DEN)

     71
1,506   

Praxair Inc. (US)

     113
        
       184
        
COMMERCIAL BANKS—14.6%
4,831   

First Midwest Bancorp Inc. (US)

     64
22,677   

HSBC Holdings plc (UK)

     243
3,062   

ICICI Bank Ltd. ADR (IND)1

     108
2,938   

PNC Financial Services Group Inc. (US)

     163
5,750   

Standard Chartered PLC (UK)

     133
14,441   

Wells Fargo & Co. (US)

     410
        
       1,121
        
COMMERCIAL SERVICES & SUPPLIES—0.6%
2,301   

Ritchie Bros Auctioneers Inc. (CAN)

     48
        
COMMUNICATIONS EQUIPMENT—1.6%
1,974   

Research In Motion Ltd. (CAN)*

     124
        
COMPUTERS & PERIPHERALS—3.0%
1,011   

Apple Inc. (US)*

     194
1,747   

Compellent Technologies Inc. (US)

     35
        
       229
        
CONSTRUCTION & ENGINEERING—0.3%
860   

Aecom Technology Corp. (US)*

     23
        

COMMON STOCKS—Continued

Shares         Value
(000s)
    
DISTRIBUTORS—1.8%
30,000   

Li & Fung Ltd. (HK)

   $ 137
        
DIVERSIFIED FINANCIAL SERVICES—4.5%
8,891   

JP Morgan Chase & Co. (US)

     346
        
ELECTRICAL EQUIPMENT—1.2%
5,146   

ABB Ltd. (SWS)

     93
        
ELECTRONIC EQUIPMENT & INSTRUMENTS—0.3%
13,000   

Digital China Holdings (BM)

     21
        
ENERGY EQUIPMENT & SERVICES—2.1%
2,704   

National Oilwell Varco Inc. (US)*

     111
1,661   

Pride International Inc. (US)*

     49
        
       160
        
FOOD PRODUCTS—2.4%
3,943   

Nestle SA (SWS)

     187
        
HEALTH CARE EQUIPMENT & SUPPLIES—3.4%
799   

Intuitive Surgical Inc. (US)*

     262
        
HOTELS, RESTAURANTS & LEISURE—0.3%
259   

Chipotle Mexican Grill Inc. (US)

     25
        
HOUSEHOLD DURABLES—6.5%
36,700   

Construtora Tenda SA. (BR)

     97
12,146   

Cyrela Brazil Realty (BR)

     139
4,514   

Gafisa SA ADR. (BR)1

     116
6,600   

Panasonic Corp. (JP)

     103
6,100   

PDG Realty SA Empreendimentos e Participacoes (BR)

     49
        
       504
        
INTERNET & CATALOG RETAIL—1.0%
627   

Amazon.com Inc. (US)*

     79
        
INTERNET SOFTWARE & SERVICES—2.6%
123   

Baidu Inc. ADR (CHN)*1

     51
213   

Google Inc. (US)*

     113
1,586   

Optenable Inc. (US)

     39
        
       203
        
IT SERVICES—3.5%
1,066   

Mastercard Inc. (US)

     266
        
MARINE—1.0%
817   

Kuehne & Nagel International AG (SWS)

     79
        
MEDIA—3.1%
8,024   

Walt Disney Co. (US)

     237
        
METALS & MINING—2.3%
6,062   

BHP Billiton (AUS)

     178
        
MULTILINE RETAIL—0.7%
3,000   

Lojas Renner SA. (BR)

     57
        
OIL, GAS & CONSUMABLE FUELS—2.4%
12,200   

OGX Petroleo e Gas Participacoes SA (BR)

     109
1,836   

Petroleo Brasileiro SA ADR (BR)1

     74
        
       183
        
REAL ESTATE MANAGEMENT & DEVELOPMENT—3.7%
9,000   

BR Malls Participacoes SA (BR)*

     98
38,000   

Hang Lung Properties Ltd. (HK)

     131
7,500   

IFM Investment Ltd. (US)

     54
        
       283
        

 

9

Table of Contents

Harbor Global Growth Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

COMMON STOCKS—Continued

Shares         Value
(000s)
    
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—0.7%
981   

Cree Inc. (US)*

   $ 55
        
SOFTWARE—4.2%
5,017   

Adobe Systems Inc. (US)*

     162
3,847   

Citrix Systems Inc. (US)*

     160
        
       322
        
SPECIALTY RETAIL—2.5%
2,432   

Inditex SA (SP)

     153
1,347   

RUE21 Inc. (US)

     38
        
       191
        
TEXTILES, APPAREL & LUXURY GOODS—5.6%
4,521   

Compagnie Financiere Richemont SA (SWS)

     153
3,211   

Lululemon Athletica Inc. (CAN)*

     91
2,263   

Polo Ralph Lauren Corp. (US)

     185
        
       429
        
WIRELESS TELECOMMUNICATION SERVICES—3.9%
8,032   

Crown Castle International Corp. (US)*

     297
        
TOTAL COMMON STOCKS
    (Cost $6,014) 		    7,083
        

PREFERRED STOCKS—0.8%

    

 

(Cost $54)

  
Shares         Value
(000s)
    
  MULTILINE RETAIL—0.8%
  8,800   

Lojas Americanas SA (BR)

   $ 62
        
    

SHORT-TERM INVESTMENTS—6.1%

    

 

(Cost $469)

  
Principal
Amount
(000s)		           
  REPURCHASE AGREEMENTS
$ 469   

Repurchase Agreement with State Street Corp. dated January 29, 2010 due February 02, 2010 at 0.010% collateralized by U.S. Treasury Notes (market value $479)

     469
        
 
 		 TOTAL INVESTMENTS—99.0%
    (Cost $6,537)		     7,614
        
  CASH AND OTHER ASSETS, LESS LIABILITIES—1.0%     74
        
  TOTAL NET ASSETS—100.0%   $ 7,688
        

FAIR VALUE MEASUREMENTS

The following table summarizes the Fund’s investments as of January 31, 2010 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

    $ 153    $ 1,219    $ —    $ 1,372

Latin America

      585      155      —      740

Middle East/ Central Asia

      —      108      —      108

North America

      4,243      —      —      4,243

Pacific Basin

      51      569      —      620

Preferred Stocks

            

Latin America

      —      62      —      62

Short-Term Investments

            

Repurchase Agreement

      —      469      —      469
                           

Total

    $ 5,032    $ 2,582    $ —    $ 7,614
                           

For more information on valuation inputs and their aggregation into the levels used in the table above, please refer to Fair Value Measurements in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

* Non-income producing security.

 

1 ADR after the name of a foreign holding stands for American Depositary Receipts representing ownership of foreign securities. ADRs are issued by U.S. banking institutions.

The accompanying notes are an integral part of the Portfolio of Investments.

 

10

Table of Contents

Harbor International & Global Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—January 31, 2010 (Unaudited)

 

(Currency in thousands)

 

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. The Trust consists of 27 separate portfolios. The portfolios covered by this report include Harbor International Fund, Harbor International Growth Fund, Harbor Global Value Fund and Harbor Global Growth Fund (individually or collectively referred to as a “Fund” or the “Funds,” respectively). Harbor Capital Advisors, Inc. (the “Adviser” or “Harbor Capital”) is the investment adviser for the Funds.

The Funds may offer up to three classes of shares, designated as Institutional Class, Administrative Class, and Investor Class. The shares of each class represent an interest in the same portfolio of investments of the respective Fund and have equal rights to voting, redemptions, dividends, and liquidations, except that: (i) certain expenses, subject to the approval of the Trust’s Board of Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission 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

Security Valuation

Equity securities, 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 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 were no sales on the valuation day, securities traded principally: (i) on a U.S. exchange, including NASDAQ, will be valued at the mean between the closing bid and asked price; (ii) on a foreign exchange, including United Kingdom securities, will be valued at the official bid price determined as of the close of the primary exchange.

Debt securities, other than short-term securities with a remaining maturity of less than 60 days at the time they are acquired, are valued using evaluated prices furnished by a pricing service selected by the Adviser and approved by the Board of Trustees. An evaluated price represents an assessment by the pricing service using various market inputs of what the pricing service believes is the fair market value of a security at a particular point in time. The pricing service 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 service 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. 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 service’s evaluation process, which means that the evaluated price supplied by the pricing service will frequently differ from that transaction price. Short-term securities with a remaining maturity of less than 60 days at the time they are acquired are stated at amortized cost, which approximates fair value.

When reliable market quotations or evaluated prices supplied by a pricing vendor are not readily available or are not believed to accurately reflect fair value, securities are priced at their fair value, determined by the Trust’s Valuation Committee pursuant to procedures adopted by the Board of Trustees. 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. 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 the Fund may value those securities higher or lower than another fund that uses market quotations, official closing prices or evaluated prices supplied by a pricing vendor.

 

11

Table of Contents

Harbor International & Global Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

For the Funds which may invest primarily in international equity securities, the fair value pricing procedures recognize that volatility in the U.S. equity markets may cause prices of foreign securities determined at the close of the foreign market or exchange on which the securities are traded to no longer be reliable when the Funds’ net asset values are determined. As a result, many of the international and global Funds’ foreign equity securities may be valued at their fair value in accordance with the fair value pricing procedures on any given day in an accounting period.

Fair Value Measurements

In September 2006, the Financial Accounting Standards Board (FASB) issued Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures. ASC 820 establishes a framework for measuring fair value and expands disclosures about fair value measurements in financial statements, effective for the Funds’ current fiscal year.

The various inputs that may be used to determine the value of each Fund’s investments are summarized in three categories, defined as Level 1, Level 2 and Level 3. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The assignment of an investment to Level 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 observable inputs are not available. Valuations based on significant unobservable inputs may include the Funds’ own assumptions.

For fair valuations using significant unobservable inputs, ASC 820 requires a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in/out of the Level 3 category during the period. A fair value hierarchy and Level 3 reconciliation, when applicable, can be found at the end of each Fund’s Portfolio of Investments schedule.

ASC 820 also provides guidance on determining when there has been a significant decrease in the trading volume and level of activity for a holding, when a transaction is not orderly, and how that information must be incorporated into a fair value measurement. ASC 820 emphasizes that even if there has been a significant decrease in the trading volume and level of activity for a holding and regardless of the valuation techniques used, the objective of a fair value measurement remains the same. The adoption of ASC 820 had no impact on the Funds’ net assets or results of operations.

The Funds used observable inputs in their valuation methodologies whenever they were available and deemed reliable.

Options

Consistent with its investment policies, each Fund may use options contracts to manage its exposure to the stock and bond markets and to fluctuations in interest rates and currency values. Harbor International Fund and Harbor International Growth Fund are not authorized to engage in options transactions on currencies for speculative purposes. Call options tend to decrease a Fund’s exposure to the underlying instrument. Put options tend to increase a Fund’s exposure to the underlying instrument.

Purchased options on futures contracts are valued based on the settlement price for the underlying futures contract. 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 the 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 the 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 paid. The risk associated with

 

12

Table of Contents

Harbor International & Global Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

purchasing options is limited to the premium originally paid. A Fund’s maximum risk of loss from counterparty credit risk is also limited to the premium paid for the contract.

Written options on equity securities are valued at the last sale price or, in the absence of a sale, the last offering price on the market on which they are principally traded. Written options on futures contracts are valued based on the settlement price for the underlying futures contract. If an option expires on its stipulated expiration date, or if a Fund enters into a closing purchase transaction, such 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 market price 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 market price of the underlying security decreases and the option is exercised. In addition, there is a risk such Fund may not be able to enter into a closing transaction because of an illiquid secondary market, or if the counterparties do not perform under the contracts’ terms.

There were no outstanding options as of January 31, 2010.

U.S. Government Securities

Securities issued by U.S. government agencies or government-sponsored enterprises may not be guaranteed by the U.S. Treasury. The Government National Mortgage Association (“GNMA” or “Ginnie Mae”), a wholly owned U.S. government corporation, is authorized to guarantee, with the full faith and credit of the U.S. Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA and backed by pools of mortgages insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. Government-related guarantors (i.e., not backed by the full faith and credit of the U.S. Government) include the Federal National Mortgage Association (“FNMA” or “Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”). On September 7, 2008, the Federal Housing Finance Agency (“FHFA”) placed Fannie Mae and Freddie Mac in conservatorship, while the Treasury agreed to purchase preferred stock as needed to ensure that both Fannie Mae and Freddie Mac maintain a positive net worth (guaranteeing up to $100 billion for each entity). As a consequence, certain fixed income securities of Fannie Mae and Freddie Mac have more explicit U.S. Government support.

Foreign Currency Spot Contracts

The Funds may enter into foreign currency spot contracts to facilitate transactions in foreign securities or to convert foreign currency receipts into U.S. dollars. A foreign currency spot contract is an agreement between two parties to buy and sell currencies at the current market rate, for settlement within two business days. The U.S. dollar value of the contracts is determined using current currency exchange rates supplied by a pricing service selected by the Adviser. The contract is marked-to-market daily for settlements beyond one day and any change in market 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. 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. There is minimal counterparty risk with foreign currency spot contracts, as they are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded foreign currency contracts, guarantees the foreign currency spot contracts against default.

 

13

Table of Contents

Harbor International & Global Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

Foreign Currency Translations

The accounting records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars based on the current exchange rates at period end. Purchases and sales of securities are translated into U.S. dollars at the current exchange rate on the respective dates of the transaction. Income and withholding taxes are translated at the prevailing exchange rate when accrued or incurred.

Reported net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign forward 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.

Repurchase Agreements

Each Fund may enter into repurchase agreements with domestic or foreign banks or with any member firm of the Financial Industry Regulatory Authority, Inc. (“FINRA”), or any affiliate of a member firm which is a primary dealer in U.S. government securities. Each repurchase agreement counterparty must meet the minimum credit quality requirements applicable to the respective Fund generally and meet any other appropriate counterparty criteria as determined by the Fund’s Subadviser. The minimum credit quality requirements are those applicable to a Fund’s purchase of securities generally such that if a Fund is permitted to only purchase securities which are rated investment grade (or the equivalent if unrated), that Fund could only enter into repurchase agreements with counterparties that have debt outstanding that is rated investment grade (or the equivalent if unrated). 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 the Fund to close out the repurchase agreement. The securities will be regularly monitored to ensure that the collateral is adequate. In the event of the bankruptcy of the seller or the failure of the seller to repurchase the securities as agreed, the Fund could suffer losses, including loss of interest on or principal of the securities and costs associated with delay and enforcement of the repurchase agreement.

NOTE 3—TAX INFORMATION

The identified cost for federal income tax purposes of investments owned by each Fund (including earned discount on corporate short-term notes and commercial paper) and their respective gross unrealized appreciation and depreciation at January 31, 2010 are as follows:

 

     Identified Cost    Gross Unrealized     Net Unrealized
Appreciation/
(Depreciation)		  
      Appreciation    (Depreciation)    

INTERNATIONAL EQUITY FUNDS

           

Harbor International Fund*

    $ 19,376,172    $ 6,847,833    $ (753,635 )    $ 6,094,198   

Harbor International Growth Fund*

      1,249,156      152,075      (35,656 )      116,419   

GLOBAL EQUITY FUNDS

           

Harbor Global Value Fund*

    $ 62,320    $ 7,073    $ (13,898 )    $ (6,825 ) 

Harbor Global Growth Fund

      6,537      1,172      (95 )      1,077   

 

 

* Capital loss carryforwards are available which may reduce taxable income from future net realized gain on investments.

 

14

Table of Contents

LOGO

 

111 South Wacker Drive, 34th Floor   Chicago, IL 60606-4302   800-422-1050   www.harborfunds.com

 

Trustees & Officers

David G. Van Hooser

Chairman, President & Trustee

Raymond J. Ball

Trustee

Howard P. Colhoun

Trustee

John P. Gould

Trustee

Rodger F. Smith

Trustee

Charles F. McCain

Chief Compliance Officer

Anmarie S. Kolinski

Treasurer

Erik D. Ojala

Vice President & Secretary

Brian L. Collins

Vice President

Charles P. Ragusa

Vice President

Jodie L. Crotteau

Assistant Secretary

Susan A. DeRoche

Assistant Secretary

 

Investment Adviser

Harbor Capital Advisors, Inc.

111 South Wacker Drive, 34th Floor

Chicago, IL 60606-4302

Distributor & Principal Underwriter

Harbor Funds Distributors, Inc.

111 South Wacker Drive, 34th Floor

Chicago, IL 60606-4302

312-443-4400

Shareholder Servicing Agent

Harbor Services Group, Inc.

P.O. Box 804660

Chicago, IL 60680-4108

800-422-1050

Custodian

State Street Bank & Trust Company

State Street Financial Center

1 Lincoln Street

Boston, MA 02111

 

03/2010   FD.NQ.IG.0110

Table of Contents

LOGO

 

Quarterly Schedule of Portfolio Holdings

January 31, 2010

Strategic Markets Funds

 

Harbor Commodity Real Return Strategy Fund

Table of Contents

Harbor Commodity Real Return Strategy Fund

CONSOLIDATED PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Total Investments (% of net assets)

(Excludes net cash, short-term investments, and derivative positions of -0.1%)

LOGO

 

ASSET-BACKED SECURITIES—1.7%

Principal
Amount
(000s)		         Value
(000s)
    
  

AMMC

  
$ 200   

0.488%—08/08/20171,2

   $ 193
  

Bank of America Mortgage Securities Inc.

  
  75   

6.500%—09/25/20332

     77
  

First Franklin Mortgage

  
  82   

0.281%—11/25/20361,2

     80
  

Harborview Mortgage Loan Trust

  
  254   

Series 2005-2 Cl. 2A1A

0.453%—05/19/20351,2

     158
  

Household Home Equity Loan

  
  226   

0.581%—09/20/20331,2

     198
  

Wells Fargo Mortgage Backed Security Trust

  
  1,000   

5.002%—10/25/2035

     823
        
 
 		 TOTAL ASSET-BACKED SECURITIES
    (Cost $1,531)		     1,529
        
    

CORPORATE BONDS & NOTES—16.0%

  

American Express Bank

  
  200   

0.361%—05/29/20121,2

     196
  

American Express Credit Corp.

  
  400   

0.411%—12/02/20101,2

     399
  

American Express Credit Corp. MTN3

  
  187   

0.393%—06/16/20111,2

     186
  

Argent Inc.

  
  842   

0.431%—10/25/20351,2

     758
  

Bank of America

  
  800   

0.755%—09/11/20121

     788
  

Bank of Nova Scotia

  
  800   

3.400%—01/22/20152

     812
  

Cello Wireless

  
  300   

2.869%—05/20/20111,2

     310
  

Centex Corp.

  
  900   

5.700%—05/15/20142

     923
  

Citigroup Funding Inc. MTN3

  
  1,500   

1.325%—05/07/20101,2

     1,503
  

Citigroup Inc.

  
  500   

0.361%—05/18/20111,2

     495
  

Commonwealth Bank of Australia

  
  2,000   

0.533%—09/17/20141,2,4

     1,996
  

Ford Motor Credit Co.

  
  800   

9.750%—09/15/20102

     826
  

HSBC Finance Corp.

  
  700   

0.524%—05/10/20101,2

     700

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  

Merrill Lynch & Co Inc.

  
$ 1,200   

0.449%—07/25/20111,2

   $ 1,191
  

Metropolitan Life Global Funding

  
  200   

1.378%—09/17/20121,2,4

     201
  300   

2.157%—06/10/20111,2,4

     306
        
       507
        
  

SLM Corp.

  
  300   

1.000%—11/01/20161,2

     205
  700   

1.817%—03/17/20141,2

     585
        
       790
        
  

Sovereign Bancorp Inc.

  
  400   

0.479%—03/23/20101,2

     400
  

Wachovia Corp.

  
  1,504   

2.051%—05/01/20131,2

     1,542
  

Wells Fargo Home Equity Trust

  
  32   

0.481%—12/25/20351,2

     31
        
 
 		 TOTAL CORPORATE BONDS & NOTES
    (Cost $14,216)		     14,353
        
    

FOREIGN GOVERNMENT OBLIGATIONS—4.7%

  

Bundesrepublik Deutschland

  
  1,600   

3.750%—01/04/20154,5

     2,370
  

Svenska Handelsbanken

  
  1,415   

1.254%—09/14/20121,2

     1,427
  

Telecom Italia

  
  400   

0.861%—07/18/20111,2

     399
        
 
 		 TOTAL FOREIGN GOVERNMENT OBLIGATIONS
    (Cost $4,275)		     4,196
        
    

MORTGAGE PASS-THROUGH—0.7%

 

(Cost $604)

  
  

Government National Mortgage Association

  
  613   

0.531%—03/20/20371,2

     602
        
    

U.S. GOVERNMENT AGENCIES—4.0%

  

Federal National Mortgage Association-REMIC6

  
  996   

0.581%—07/25/20371

     984
  1,028   

0.611%—07/25/20371

     1,016
  570   

0.671%—05/25/20361

     563
  244   

0.676%—02/25/20371

     239
        
       2,802
        
  

Small Business Administration

  
  779   

5.510%—11/01/20272

     847
        
 
 		 TOTAL U.S. GOVERNMENT AGENCIES
    (Cost $3,624)		     3,649
        
    

U.S. GOVERNMENT OBLIGATIONS—72.9%

  

U.S. Treasury Bonds

  
  1,100   

1.125%—06/30/20112,5

     1,110
  9,219   

1.875%—07/15/20192,5

     9,753
  2,265   

2.000%–07/15/2014-01/15/20262,5

     2,425
  115   

2.375%–01/15/20252,5

     124

 

1

Table of Contents

Harbor Commodity Real Return Strategy Fund

CONSOLIDATED PORTFOLIO OF INVESTMENTS—Continued

 

 

U.S. GOVERNMENT OBLIGATIONS—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  

U.S. Treasury Bonds—Continued

  
$ 403   

2.500%—01/15/20292,5

   $ 441
  3,655   

3.375%—01/15/20122,5

     3,934
        
       17,787
        
  

U.S. Treasury Notes

  
  2,047   

0.625%—04/15/20132,5

     2,101
  1,431   

1.250%—04/15/20142,5

     1,494
  5,718   

1.375%—07/15/20182,5

     5,839
  510   

1.625%—01/15/20152,5

     536
  8,165   

1.875%—07/15/2013-07/15/20152,5

     8,708
  4,211   

2.000%—01/15/2014-01/15/20162,5

     4,506
  3,325   

2.125%—01/15/20192,5

     3,591
  5,040   

2.375%—04/15/2011-01/15/20172,5

     5,333
  11,674   

2.500%—07/15/20162,5

     12,902
  209   

2.625%—07/15/20172,5

     233
  2,105   

3.000%—07/15/20122,5

     2,283
        
       47,526
        
 
 		 TOTAL U.S. GOVERNMENT OBLIGATIONS
    (Cost $63,651)		     65,313
        
    

PURCHASED OPTIONS—0.1%

 

(Cost $70)

  
No. of
Contracts		           
  

Currency Option

  
  306   

Expires—07/17/2010

     74
        

SHORT-TERM INVESTMENTS—11.5%

  
Principal
Amount
(000s)		         Value
(000s)		  
    
  REPURCHASE AGREEMENTS—5.3%   
$ 3,700   

Repurchase Agreement with Deutsche Bank
dated January 29, 2010 due February 01, 2010 at 0.010% collateralized by U.S Treasury Notes
(market value $3,839)

   $ 3,700   
  1,034   

Repurchase Agreement with State Street Corp.
dated January 29, 2010 due February 01, 2010 at 0.010% collateralized by Federal Home Loan Mortgage Corp.
(market value $1,057)

     1,034   
          
       4,734   
          
  COMMERCIAL PAPER—0.9%   
  800   

Barclays Bank plc

     800   
          
  U.S. TREASURY BILLS—5.3%   
  

U.S. Treasury Bills

  
  1,030   

0.059%—03/11/2010

     1,030   
  690   

0.064%—03/04/2010

     690   
  10   

0.068%—04/01/2010

     10   
  1,290   

0.069%—03/04/2010

     1,290   
  670   

0.086%—03/18/2010

     670   
  1,090   

0.093%—03/11/20102,5

     1,090   
          
       4,780   
          
 
 		 TOTAL SHORT-TERM INVESTMENTS
    (Cost $10,314)		     10,314   
          
 
 		 TOTAL INVESTMENTS—111.6%
    (Cost $98,285)		     100,030   
          
  CASH AND OTHER ASSETS, LESS LIABILITIES—(11.6)%     (10,423 ) 
          
  TOTAL NET ASSETS—100.0%   $ 89,607   
          

 

FAIR VALUE MEASUREMENTS

Holdings in the Options Contracts valued at ($85) are classified as Level 1. Holdings in the Futures Contracts category valued at $24 are classified as Level 1. All other holdings at January 31, 2010 (as disclosed in the preceding Consolidated Portfolio of Investments) are classified as Level 2. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

SWAP AGREEMENTS OPEN AT JANUARY 31, 2010

 

Total Return Swaps on Indicies
Counterparty

  

Floating Rate

  

Pay/Receive
Floating Rate

  

Index

   Expiration Date   Notional
Amount
(000s)		   Unrealized
Appreciation/
(Depreciation)
(000s)		  

Goldman Sachs Bank USA

  

U.S. Treasury Bill

  

Pay

  

Dow Jones-UBS Commodity Index Total ReturnSM

   02/17/2010   $ 10,100   $ (430 ) 

Barclays Bank plc

  

U.S. Treasury Bill

  

Pay

  

Dow Jones-UBS Commodity Index Total ReturnSM

   02/24/2010     5,550     (80 ) 

Barclays Bank plc

  

U.S. Treasury Bill

  

Pay

  

Dow Jones-UBS Commodity Index Total ReturnSM

   02/24/2010     8,330     (116 ) 

Barclays Bank plc

  

U.S. Treasury Bill

  

Pay

  

Dow Jones-UBS Commodity Index Total ReturnSM

   02/24/2010     5,340     (75 ) 

Credit Suisse First Boston

  

U.S. Treasury Bill

  

Pay

  

Dow Jones-UBS Commodity Index Total ReturnSM

   02/24/2010     6,650     (95 ) 

Credit Suisse First Boston

  

U.S. Treasury Bill

  

Pay

   S&P GSCI Copper Total Return Index   02/24/2010     464     (31 ) 

Credit Suisse First Boston

  

U.S. Treasury Bill

  

Receive

   Dow Jones-UBS Commodity Index Total ReturnSM   02/24/2010     454     24   

Goldman Sachs Bank USA

  

U.S. Treasury Bill

  

Pay

  

Dow Jones-UBS Commodity Index Total ReturnSM

   02/24/2010     15,010     (215 ) 

JP Morgan Chase

  

U.S. Treasury Bill

  

Pay

  

Dow Jones-UBS Commodity Index Total ReturnSM

   02/24/2010     1,450     (20 ) 

Morgan Stanley Capital Services Inc.

  

U.S. Treasury Bill

  

Pay

  

Dow Jones-UBS Commodity Index Total ReturnSM

   02/24/2010     13,400     (167 ) 

Morgan Stanley Capital Services Inc.

  

U.S. Treasury Bill

  

Pay

  

Dow Jones-UBS Commodity Index Total ReturnSM

   02/24/2010     7,380     (102 ) 

Morgan Stanley Capital Services Inc.

  

U.S. Treasury Bill

  

Receive

   S&P GSCI Corn Total Return Index   02/24/2010     10     —   

Morgan Stanley Capital Services Inc.

  

U.S. Treasury Bill

  

Pay

  

Dow Jones-UBS Commodity Index Total ReturnSM

   02/24/2010     870     (12 ) 

Morgan Stanley Capital Services Inc.

  

U.S. Treasury Bill

  

Pay

  

Dow Jones-UBS Commodity Index Total ReturnSM

   02/24/2010     15,430     (222 ) 

Morgan Stanley Capital Services Inc.

  

U.S. Treasury Bill

  

Receive

   S&P GSCI Wheat Official Close Index   02/24/2010     169     3   

Morgan Stanley Capital Services Inc.

  

U.S. Treasury Bill

  

Pay

   S&P GSCI Kansas Wheat Official Close Index   02/24/2010     171     (1 ) 

Royal Bank of Scotland plc

  

U.S. Treasury Bill

  

Receive

   S&P GSCI Copper Total Return Index   02/24/2010     361     24   

Royal Bank of Scotland plc

  

U.S. Treasury Bill

  

Pay

   Dow Jones-UBS Commodity Index Total ReturnSM   02/24/2010     1,170     (17 ) 

 

2

Table of Contents

Harbor Commodity Real Return Strategy Fund

CONSOLIDATED PORTFOLIO OF INVESTMENTS—Continued

 

 

SWAP AGREEMENTS—Continued

 

Total Return Swaps on Indicies
Counterparty

  

Floating Rate

  

Pay/Receive
Floating Rate

  

Index

   Expiration Date   Notional
Amount
(000s)		   Unrealized
Appreciation/
(Depreciation)
(000s)		  

Royal Bank of Scotland plc

  

U.S. Treasury Bill

  

Receive

   S&P GSCI Lead Official Close Index   02/24/2010   $ 256   $ 4   

Morgan Stanley Capital Services Inc.

  

London Gold Market

  

N/A

   London Gold Market Fix Ltd.   05/06/2010     200     5   
            —     —   
            —     —   
                 
            $ (1,523 ) 
                 

 

Total Return Swaps on Commodities Counterparty

  

Reference Entity

  

Pay/Receive
Fixed Price

  

Fixed Price
per Unit

   Expiration Date   Number
of Units		   Appreciation/
(Depreciation)
(000s)		  

Deutsche Bank

  

Crude March 2010 Futures

  

Receive

   $136.90   02/17/2010   100   $ 6   

Goldman Sachs Bank USA

  

Corn July 2010 Futures

  

Pay

     420.25   06/25/2010   9     4   

Morgan Stanley Capital Services Inc.

  

Corn December 2010 Futures

  

Receive

     447.00   11/26/2010   5     (3 ) 
                 
            $ 7   
                 

 

Credit Default Swaps
Counterparty

  

Reference Entity

   Buy/Sella,b   Pay/Receive
Fixed Rate		     Expiration Date   Implied
Credit Spreadc		     Market
Valuee		   Upfront
Premium
Paid/(Received) 		    Notional
Amount
(000s)d		   Appreciation/
(Depreciation)
(000s)

BNP Paribas

  

Centex Corp. Senior Unsecured

   Buy   1.000 %    06/20/2014   1.270 %    $ 9   $ (12 )    $ 900   $ 21
                     

 

Interest Rate Swaps
Counterparty

  

Floating Rate Index

  

Pay/Receive
Floating Rate

  

Fixed Rate

   Expiration Date   Notional
Amount
(000s)		   Unrealized
Appreciation/
(Depreciation)
(000s)		  

Morgan Stanley Capital Services Inc.

  

Brazil Cetip Interbank Deposit

  

Pay

   11.600%   01/02/2012   R$ 1,700   $ 2   

Goldman Sachs Bank USA

  

Brazil Cetip Interbank Deposit

  

Pay

   11.670%   01/02/2012     600     —   

HSBC Bank USA, NA

  

Brazil Cetip Interbank Deposit

  

Pay

   11.670%   01/02/2012     800     —   
                 
            $ 2   
                 

Total Swaps

   $ (1,493 ) 
                 

WRITTEN OPTIONS OPEN AT JANUARY 31, 2010

 

Description

    Number of
Shares/Contracts		     Strike
Price		    Expiration Date    Value
(000s)		  

Swap Option (Call)

    (2,000,000 )    $ 2.80    Feb-2010    $ —   

Swap Option (Call)

    (1,100,000 )      3.25    Feb-2010      —   

Swap Option (Call)

    (1,100,000 )      3.25    Apr-2010      (2 ) 

Swap Option (Call)

    (800,000 )      2.50    Dec-2010      (3 ) 

Swap Option (Put)

    (2,600,000 )      3.50    Feb-2010      (4 ) 

Swap Option (Put)

    (2,400,000 )      4.00    Feb-2010      (4 ) 

Swap Option (Put)

    (2,300,000 )      4.25    Apr-2010      (15 ) 

Swap Option (Put)

    (1,000,000 )      5.00    Jun-2010      —   

Swap Option (Put)

    (15 )      71.50    Jul-2010      (79 ) 

Swap Option (Put)

    (2,100,000 )      6.00    Aug-2010      (4 ) 

Swap Option (Put)

    (800,000 )      1.00    Dec-2010      (1 ) 

U.S. Treasury Notes (Call)

    (3 )      117.50    Feb-2010      (3 ) 

U.S. Treasury Notes (Call)

    (6 )      119.00    Feb-2010      (2 ) 

U.S. Treasury Notes (Call)

    (2 )      120.00    Feb-2010      —   

U.S. Treasury Notes (Put)

    (3 )      114.00    Feb-2010      —   

U.S. Treasury Notes (Put)

    (3 )      115.00    Feb-2010      —   

U.S. Treasury Notes (Put)

    (6 )      116.00    Feb-2010      (1 ) 
                

Written options outstanding, at value (premiums received of $206)

    $ (118 ) 
                

 

3

Table of Contents

Harbor Commodity Real Return Strategy Fund

CONSOLIDATED PORTFOLIO OF INVESTMENTS—Continued

 

 

FORWARD CURRENCY CONTRACTS OPEN AT JANUARY 31, 2010

 

Currency

    Market Value
(000s)		    Aggregate
Face Value
(000s)		    Delivery Date    Unrealized
Appreciation/
(Depreciation)
(000s)		  
           

Chinese Yuan (Buy)

    $ 514    $ 519    Jun-2010    $ (5 ) 

Chinese Yuan (Buy)

      206      210    Jan-2011      (4 ) 

Chinese Yuan (Sell)

      208      210    Jun-2010      2   

Euro Currency (Sell)

      2,335      2,389    Mar-2010      54   

Euro Currency (Sell)

      139      142    Apr-2010      3   

Mexican Peso (Buy)

      711      705    Apr-2010      6   

Singapore Dollar (Buy)

      594      600    Feb-2010      (6 ) 

South Korean Won (Buy)

      462      450    Feb-2010      12   

South Korean Won (Buy)

      235      232    Jul-2010      3   

South Korean Won (Buy)

      151      151    Aug-2010      —   

South Korean Won (Buy)

      196      198    Nov-2010      (2 ) 

South Korean Won (Sell)

      177      180    Feb-2010      3   
                 
            $ 66   
                 

FUTURES CONTRACTS OPEN AT JANUARY 31, 2010

 

Description

    Number of
Contracts		     Aggregate
Face Value
(000s)		     Expiration Date    Unrealized
Appreciation/
(Depreciation)
(000s)		  

Euribor Interest Rate 3 month (Buy)

    19      € 4,750      Jun-2010    $ 21   

Euro-Bobl Futures (Buy)

    2        200      Mar-2010      2   

Euro-Bund Futures (Buy)

    15        1,500      Mar-2010      15   

Eurodollar Futures CME 90 day (Buy)

    73      $ 18,250      Jun-2010      112   

Wheat Futures (Buy)

    3        15      Mar-2010      (16 ) 

Wheat Futures (Buy)

    5        25      Dec-2010      (3 ) 

Wheat Futures (Sell)

    (3 )      (15 )    Mar-2010      19   

Wheat Futures (Sell)

    (5 )      (25 )    Dec-2010      3   
               
          $ 153   
               

 

4

Table of Contents

Harbor Commodity Real Return Strategy Fund

CONSOLIDATED PORTFOLIO OF INVESTMENTS—Continued

 

 

DERIVATIVE INSTRUMENTS

The following table summarizes the Fund’s derivative instruments categorized by risk exposure as of January 31, 2010.

 

Risk Exposure Category

    Asset Derivatives
Fair Value
(000s)		    Liability Derivatives
Fair Value
(000s)		  

Commodity Contracts

    $ 92    $ (1,684 ) 

Credit Contracts

      21      —   

Foreign Exchange Contracts

      157      (17 ) 

Interest Rate Contracts

      152      (39 ) 
               

Total

    $ 422    $ (1,740 ) 
               

 

 

 

1 Floating rate security. The stated rate represents the rate in effect at January 31, 2010.

 

2 At January 31, 2010, a portion of securities held by the Fund were pledged to cover margin requirements for open future contracts, written options on futures contracts and swap options. (See Note 2 to the Consolidated Notes to Portfolios of Investments.) The securities pledged had an aggregate market value of $83,102 or 92% of net assets.

 

3 MTN after the name of a security stands for Medium Term Note.

 

4 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. These securities are priced by an independent pricing service selected by the adviser (Harbor Capital Advisors, Inc.), or using valuation procedures approved by the Board of Trustees. At January 31, 2010, these securities were valued at $4,873 or 5% of net assets.

 

5 Treasury inflation-protected securities (TIPS) are securities in which the principal amount is adjusted for inflation and interest payments are applied to the inflation-adjusted principal.

 

6 REMICs are CMOs which can hold mortgages secured by any type of real property and issue multiple-class securities backed by those mortgages.

 

a If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or underlying securities comprising the referenced index or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index.

 

b If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index.

 

c Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues or sovereign issues of an emerging country as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as “Defaulted” indicates a credit event has occurred for the referenced entity or obligation.

 

d The maximum potential amount the Fund could be required to make as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement.

 

e The quoted market prices and resulting values for credit default swap agreements on asset-backed securities and credit indices serve as an indicator of the current status of the payment/performance risk and represent the likelihood of an expected liability (or profit) for the credit derivative should the notional amount of the swap agreement been closed/sold as of the period end. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.

 

R$ Brazilian Real.

The accompanying notes are an integral part of the Consolidated Portfolio of Investments.

 

5

Table of Contents

Harbor Strategic Markets Funds

CONSOLIDATED NOTES TO PORTFOLIO OF INVESTMENTS—January 31, 2010

 

(Currency in thousands)

 

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. The Trust consists of 27 separate portfolios. The portfolio covered by this report is the Harbor Commodity Real Return Strategy Fund (the “Fund”). Harbor Capital Advisors, Inc. (the “Adviser” or “Harbor Capital”) is the investment adviser for the Fund.

Each series of the Trust may offer up to three classes of shares, designated as Institutional Class, Administrative Class and Investor Class. The shares of each class represent an interest in the same portfolio of investments of the respective Fund and have equal rights to voting, redemptions, dividends, and liquidations, except that: (i) certain expenses, subject to the approval of the Trust’s Board of Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission 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

Security Valuation

Equity securities, 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 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 were no sales on the valuation day, securities traded principally: (i) on a U.S. exchange, including NASDAQ, will be valued at the mean between the closing bid and asked price; (ii) on a foreign exchange, including United Kingdom securities, will be valued at the official bid price determined as of the close of the primary exchange.

Debt securities, other than short-term securities with a remaining maturity of less than 60 days at the time they are acquired, are valued using evaluated prices furnished by a pricing service selected by Adviser and approved by the Board of Trustees. An evaluated price represents an assessment by the pricing service using various market inputs of what the pricing service believes is the fair market value of a security at a particular point in time. The pricing service 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 service 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. 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 service’s evaluation process, which means that the evaluated price supplied by the pricing service will frequently differ from that transaction price. Short-term securities with a remaining maturity of less than 60 days at the time they are acquired are stated at amortized cost which approximates fair value.

When reliable market quotations or evaluated prices supplied by a pricing vendor are not readily available or are not believed to accurately reflect fair value, securities are priced at their fair value, determined by the Valuation Committee pursuant to procedures adopted by the Board of Trustees. The 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. 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 the Fund may value those securities higher or lower than another fund that uses market quotations, official closing prices or evaluated prices supplied by a pricing vendor.

 

6

Table of Contents

Harbor Strategic Markets Funds

CONSOLIDATED NOTES TO PORTFOLIO OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

Fair Value Measurements

In September 2006, the Financial Accounting Standards Board (FASB) issued Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures. ASC 820 establishes a framework for measuring fair value and expands disclosures about fair value measurements in financial statements, effective for the Fund’s current fiscal year.

The various inputs that may be used to determine the value of the Fund’s investments are summarized in three categories defined as Level 1, Level 2 and Level 3. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The assignment of an investment to Level 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 observable inputs are not available. Valuations based on significant unobservable inputs may include the Fund’s own assumptions.

For fair valuations using significant unobservable inputs, ASC 820 requires a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in/out of the Level 3 category during the period. A fair value hierarchy and Level 3 reconciliation, when applicable, can be found at the end of the Fund’s Consolidated Portfolio of Investments schedule.

ASC 820 also provides guidance on determining when there has been a significant decrease in the trading volume and level of activity for a holding, when a transaction is not orderly, and how that information must be incorporated into a fair value measurement. ASC 820 emphasizes that even if there has been a significant decrease in the trading volume and level of activity for a holding and regardless of the valuation techniques used, the objective of a fair value measurement remains the same. The adoption of ASC 820 had no impact on the Funds’ net assets or results of operations.

The Fund used observable inputs in its valuation methodologies whenever they were available and deemed reliable.

Futures Contracts

To seek to increase total return or hedge against changes in interest rates, securities prices or currency exchange rates, the Fund may purchase and sell various kinds of futures contracts, and purchase and write call and put options on these futures contracts. Futures contracts tend to increase or decrease the Fund’s exposure to the underlying instrument or hedge other Fund investments. Losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts or if the counterparties do not perform under the contracts’ terms. The maximum potential loss on a long futures contract is the U.S. dollar value of the notional amount at the time the contract is opened. The potential loss on a short futures contract is unlimited. Open futures contracts are valued based on the official daily closing price of futures contracts set by the exchange for the purpose of settling margin accounts, which is referred to as the settlement price. There is minimal counterparty risk with futures contracts, as they are exchange traded, and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default.

A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. Upon entering into such a 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, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Fund as unrealized gains or losses. When the contract is closed or expired, the 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.

See the Consolidated Portfolio of Investments for the Fund for open futures contracts held as of January 31, 2010.

 

7

Table of Contents

Harbor Strategic Markets Funds

CONSOLIDATED NOTES TO PORTFOLIO OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

Options

The Fund may use options contracts to manage its exposure to the stock and bond markets and to fluctuations in interest rates and currency values. The Fund may use options on currencies for cross-hedging purposes. Call options tend to decrease a Fund’s exposure to the underlying instrument. Put options tend to increase a Fund’s exposure to the underlying instrument.

Purchased options on futures contracts are valued based on the settlement price for the underlying futures contract. If the purchased option expires, the Fund realizes a loss in the amount of the premium. If the 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 the Fund exercises a call option, the cost of the securities acquired by exercising the call is increased by the premium paid to buy the call. If the Fund exercises a put option, 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 originally paid. The Fund’s maximum risk from counterparty credit risk of loss is also limited to the premium paid for the contract.

Written options on equity securities are valued at the last sale price or, in the absence of a sale, the last offering price on the market on which they are principally traded. Written options on futures contracts are valued based on the settlement price for the underlying futures contract. If an option expires on its stipulated expiration date, or if the 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, the 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 the Fund purchases upon exercise of the option.

The risk in writing a call option is that the Fund relinquishes the opportunity to profit if the market price of the underlying security increases and the option is exercised. In writing a put option, the Fund assumes the risk of incurring a loss if the market price of the underlying security decreases and the option is exercised. In addition, there is a risk the Fund may not be able to enter into a closing transaction because of an illiquid secondary market, or if the counterparties do not perform under the contracts’ terms. The Fund’s maximum risk from counterparty credit risk of loss is also limited to the premium paid for the contract.

See the Consolidated Portfolio of Investments for the Fund for written options open as of January 31, 2010.

Swap Agreements

The Fund may invest in swap agreements to help manage interest rate risk or credit risk the Fund is subject to in the normal course of pursuing its investment objectives. The Fund may use swaps to manage exposure to changes in interest rates or credit quality, to create or adjust exposure to certain markets, to enhance total return or hedge the value of portfolio securities, or to adjust overall portfolio duration and credit exposure. A swap is a privately negotiated agreement between two parties to exchange cash flows at specified intervals (payment dates) during the agreed-upon life of the contract. Swaps are valued using evaluated prices furnished by a pricing service selected by the Board of Trustees. When evaluated prices supplied by a pricing vendor are not readily available or are not believed to accurately reflect fair value, swaps are priced at their fair value determined by the Valuation Committee pursuant to procedures adopted by the Board of Trustees. In those instances, the procedures provide that swaps would be valued using prices supplied by the Fund’s subadviser using its own internal valuation models that are based upon correlations and relationships between swap price movements and other factors, such as changes in swap curves and interest rates, which are recognized by institutional traders.

The Fund may enter into credit default swap agreements. 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 event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or “par value,” of the reference obligation in exchange for the reference obligation. The Fund may be either the buyer or seller in a credit default swap transaction. If the Fund is a buyer and no event of default occurs, the Fund will lose its investment and recover nothing. However, if an event of default occurs, the Fund (if the buyer) is entitled to receive the full notional value of the reference obligation that may have little or no value. As a seller, a Fund receives a fixed rate of income throughout

 

8

Table of Contents

Harbor Strategic Markets Funds

CONSOLIDATED NOTES TO PORTFOLIO OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

the term of the contract, which typically is between six months and three years, provided that there is no default event. If an event of default occurs, the seller must pay the buyer the full notional value of the reference obligation. There is no exposure to loss of the notional value of credit default swaps outstanding at January 31, 2010. Credit default swap transactions involve greater risks than if a Fund had invested in the reference obligation directly.

Total return swap agreements involve commitments to pay interest in exchange for a market-linked return, both based on notional amounts. To the extent the total return of the security or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty.

The Fund will only enter into currency swap, interest rate swap, mortgage swap, cap or floor transactions with counterparties to such transactions that meet the minimum credit quality requirements applicable to the Fund generally and meet any other appropriate counterparty criteria as determined by the Fund’s Subadviser. The minimum credit quality requirements are those applicable to a Fund’s purchase of securities generally such that if the Fund is permitted to only purchase securities which are rated investment grade (or the equivalent if unrated), the Fund could only enter into one of the above referenced transactions with counterparties that have debt outstanding that is rated investment grade (or the equivalent if unrated).

Entering into swap agreements involves, to varying degrees, elements of credit risk, market risk, and interest rate risk. Such risks involve 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 and that there may be unfavorable changes in market conditions or interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted value of the net cash flows to be received from/paid to the counterparty over the contract’s remaining life or the fair value of the contract. This risk is mitigated by entering into swap agreements with only highly-rated counterparties, the existence of a master netting arrangement with the Fund and the counterparty, and the posting of collateral by the counterparty.

Swap Agreements outstanding at the period end are listed after the Fund’s Consolidated Portfolio of Investments.

Commodities Index-Linked/Structured Notes

The Fund may invest in structured notes, the value of which will rise and fall in response to changes in the underlying commodity index. Structured notes are often leveraged, increasing the volatility of each note’s value relative to the change in the underlying financial index. Structured notes may entail a greater degree of market risk than other types of debt securities because the investor bears the risk of the underlying commodity index. Structured notes may also be more volatile, less liquid, and more difficult to accurately price than less complex securities or more traditional debt securities. These notes are subject to prepayment, credit and interest rate risks. The Fund has the option to request prepayment from the issuer.

Inflation-Indexed Bonds

The Fund may invest in 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, which is adjusted for inflation. Any increase in the principal amount of an inflation-indexed bond will be included as interest income, even though investors do not receive their principal until maturity.

Mortgage-Related and Other Asset-Backed Securities

The Fund may invest in mortgage- or other asset-backed securities. These securities include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities (“SMBSs”) and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. The value of some mortgage or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on

 

9

Table of Contents

Harbor Strategic Markets Funds

CONSOLIDATED NOTES TO PORTFOLIO OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

some mortgage-related securities may expose a Fund to a lower rate of return upon reinvestment of principal. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

U.S. Government Securities

Securities issued by U.S. government agencies or government-sponsored enterprises may not be guaranteed by the U.S. Treasury. The Government National Mortgage Association (“GNMA” or “Ginnie Mae”), a wholly owned U.S. government corporation, is authorized to guarantee, with the full faith and credit of the U.S. Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA and backed by pools of mortgages insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. Government-related guarantors (i.e., not backed by the full faith and credit of the U.S. Government) include the Federal National Mortgage Association (“FNMA” or “Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”). On September 7, 2008, the Federal Housing Finance Agency (“FHFA”) placed Fannie Mae and Freddie Mac in conservatorship, while the Treasury agreed to purchase preferred stock as needed to ensure that both Fannie Mae and Freddie Mac maintain a positive net worth (guaranteeing up to $100 billion for each entity). As a consequence, certain fixed income securities of Fannie Mae and Freddie Mac have more explicit U.S. Government support.

Forward Commitments and When-Issued Securities

The Fund may purchase securities on a when-issued or purchase or sell securities on a forward commitment basis including “TBA” (to be announced) purchase and sale commitments. Purchasing securities on a when-issued or forward commitment basis involves a risk of loss if the value of the security to be purchased declines prior to the settlement date, which risk is in addition to the risk of decline in value of the Fund’s other assets. Although the Fund would generally purchase securities on a when-issued or forward commitment basis with the intention of acquiring securities for its portfolio, the Fund may dispose of a when-issued security or forward commitment prior to settlement if the Subadviser deems it appropriate to do so. The Fund may enter into a forward-commitment sale to hedge its portfolio positions or to sell securities it owned under delayed delivery arrangement. Proceeds of such a sale are not received until the contractual settlement date. While such a contract is outstanding, the Fund must segregate equivalent deliverable securities or hold an offsetting purchase commitment. The Fund may realize short-term gains or losses upon such purchases and sales. These transactions involve a commitment by the Fund to purchase or sell securities at a future date (ordinarily one or two months later). The price of the underlying securities (usually expressed in terms of yield) and the date when the securities will be delivered and paid for (the settlement date) are fixed at the time the transaction is negotiated. When-issued purchases and forward commitment transactions are negotiated directly with the other party, and such commitments are not traded on exchanges.

The value of securities purchased on a when-issued or forward commitment basis and any subsequent fluctuations in their value are reflected in the computation of the Fund’s net asset value starting on the date of the agreement to purchase the securities. The Fund does not earn interest on the securities it has committed to purchase until they are paid for and delivered on the settlement date. When the Fund makes a forward commitment to sell securities it owns, the proceeds to be received upon settlement are included in the Fund’s assets. Fluctuations in the market value of the underlying securities are not reflected in the Fund’s net asset value as long as the commitment to sell remains in effect. Settlement of when-issued purchases and forward commitment transactions generally takes place within two months after the date of the transaction, but the Fund may agree to a longer settlement period.

The Fund will purchase securities on a when-issued basis or purchase or sell securities on a forward commitment basis only with the intention of completing the transaction and actually purchasing or selling the securities. If deemed advisable as a matter of investment strategy, however, the Fund may dispose of or renegotiate a commitment after it is entered into. The Fund also may sell securities it has committed to purchase before those securities are delivered to the Fund on the settlement date. The Fund may realize a capital gain or loss in connection with these transactions. When the Fund purchases securities on a when-issued or forward commitment basis, the Fund will maintain in a segregated account with the Fund’s custodian or set

 

10

Table of Contents

Harbor Strategic Markets Funds

CONSOLIDATED NOTES TO PORTFOLIO OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

aside in the Fund’s records, cash or liquid assets having a value (determined daily) at least equal to the amount of the Fund’s purchase commitments. In the case of a forward commitment to sell portfolio securities, portfolio holdings will be held in a segregated account with the Fund’s custodian or set aside on the Fund’s records while the commitment is outstanding.

See the Consolidated Portfolio of Investments for outstanding forward commitments or when-issued securities as of January 31, 2010.

Short Sales

The Fund may engage in short-selling which obligates the Fund to replace the security borrowed by purchasing it at the market price at the time of replacement. Until the security is replaced, the Fund is required to pay to the lender any accrued interest or dividends, and may be required to pay a premium. The Fund would realize a gain if the security declines in price between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund would incur a loss as a result of the short sale if the price of the security increases between those dates. Until the Fund replaces the borrowed security, it will maintain in a segregated account or set aside in the Fund’s records, cash or liquid securities sufficient to cover its short position. Short sales involve the risk of an unlimited increase in the market price of the borrowed security.

There were no outstanding short sales as of January 31, 2010.

Foreign Forward Currency Contracts

The Fund may enter into foreign forward currency contracts to facilitate transactions in foreign securities or as a hedge against foreign exchange risk related to specific transactions or portfolio positions. The Fund may enter into forward foreign currency exchange contracts for non-hedging purposes. A foreign forward currency contract is an agreement between two parties to buy and sell currencies at a set price on a future date. The U.S. dollar value of the contracts is determined using forward currency exchange rates supplied by a pricing service selected by Harbor Capital. The contract is marked-to-market daily. When the contract is closed, the Fund realizes a gain or loss equal to the difference between the value on the open and close date. 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; however, management of the Fund believes the likelihood of such loss is remote. There is minimal counterparty risk with foreign forward currency contracts as they are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded foreign forward currency contracts, guarantees the contracts against default.

See Consolidated Portfolio of Investments for open foreign forward currency contracts as of January 31, 2010.

Foreign Currency Translations

The accounting records of the Fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars based on the current exchange rates at period end. Purchases and sales of securities are translated into U.S. dollars at the current exchange rate on the respective dates of the transaction. Income and withholding taxes are translated at the prevailing exchange rate when accrued or incurred.

Reported net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign forward 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.

Repurchase Agreements

The Fund may enter into repurchase agreements with domestic or foreign banks or with any member firm of the Financial Industry Regulatory Authority, Inc. (“FINRA”), or any affiliate of a member firm which is a primary dealer in U.S.

 

11

Table of Contents

Harbor Strategic Markets Funds

CONSOLIDATED NOTES TO PORTFOLIO OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

government securities. Each repurchase agreement counterparty must meet the minimum credit quality requirements applicable to the Fund generally and meet any other appropriate counterparty criteria as determined by the Fund’s Subadviser. The minimum credit quality requirements are those applicable to the Fund’s purchase of securities generally such that if the Fund is permitted to only purchase securities which are rated investment grade (or the equivalent if unrated), the Fund could only enter into repurchase agreements with counterparties that have debt outstanding that is rated investment grade (or the equivalent if unrated). In a repurchase agreement, the 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 the Fund to close out the repurchase agreement. The securities will be regularly monitored to ensure that the collateral is adequate. In the event of bankruptcy of the seller or the failure of the seller to repurchase the securities as agreed, the Fund could suffer losses, including loss of interest on or principal of the securities and costs associated with delay and enforcement of the repurchase agreement.

Reverse Repurchase Agreements

The Fund may enter into reverse repurchase agreements with banks and third party broker-dealers. The Fund may use reverse repurchase agreements to borrow short-term funds. Interest on the value of reverse repurchase agreements issued and outstanding is based upon competitive market rates at the time of issuance. At the time the Fund enters into a reverse repurchase agreement, it establishes and maintains a segregated account with the lender containing liquid high-grade securities having a value not less than the repurchase price, including accrued interest, of the reverse repurchase agreement. Reverse repurchase agreements involve the risk that the market value of the securities sold by the 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 market value of securities bought may decline below the repurchase price of securities sold. Activity in reverse repurchase agreements by Harbor Commodity Real Return Strategy Fund for the period ended January 31, 2010 is as follows:

Borrowings

 

Category of Aggregate Short-Term Borrowings

    Balance at End
of Period		    Average
Interest Rate		     Maximum
Amount Outstanding
During the Year		    Average Daily
Amount Outstanding
During the Year		    Average Interest
Rate During
the Year		  

Reverse repurchase agreements with maturity dates of 02/02/2010

    $ 1,465    0.160 %    $ 1,465    $ 563    0.016 % 

Basis of Consolidation for Harbor Commodity Real Return Strategy Fund

The Harbor Cayman Commodity Fund, Ltd. (the “Subsidiary”), a Cayman Islands exempted company, was incorporated on August 4, 2008 as a wholly-owned subsidiary acting as an investment vehicle for the Fund in order to effect certain investments for the Fund consistent with the Fund’s investment objectives and policies specified in its prospectus and statement of additional information. Under the Articles of Association of the Subsidiary, the Fund will remain the sole shareholder of the Subsidiary and retain all rights associated with shares in the Subsidiary. The shares issued by the Subsidiary confer upon a shareholder the right to receive notice of, to attend and to vote at general meetings of the Subsidiary and shall confer upon the shareholder rights in a winding-up or repayment of capital and the right to participate in the profits or assets of the Subsidiary. As of January 31, 2010, the Subsidiary represented approximately $5,395 or approximately 6% of the net assets of the Fund.

NOTE 3—TAX INFORMATION

 

The identified cost for federal income tax purposes of investments owned by the Fund (including earned discount on corporate short-term notes and commercial paper) and their respective gross unrealized appreciation and depreciation at January 31, 2010 are as follows:

 

     Identified Cost    Gross Unrealized     Net Unrealized
Appreciation/
(Depreciation)
      Appreciation    (Depreciation)    

Harbor Commodity Real Return Strategy Fund

    $ 98,285    $ 1,870    $ (125 )    $ 1,745

 

12

Table of Contents

LOGO

 

111 South Wacker Drive, 34th Floor   Chicago, IL 60606-4302   800-422-1050   www.harborfunds.com

 

Trustees & Officers

David G. Van Hooser

Chairman, President & Trustee

Raymond J. Ball

Trustee

Howard P. Colhoun

Trustee

John P. Gould

Trustee

Rodger F. Smith

Trustee

Charles F. McCain

Chief Compliance Officer

Anmarie S. Kolinski

Treasurer

Erik D. Ojala

Vice President & Secretary

Brian L. Collins

Vice President

Charles P. Ragusa

Vice President

Jodie L. Crotteau

Assistant Secretary

Susan A. DeRoche

Assistant Secretary

 

Investment Adviser

Harbor Capital Advisors, Inc.

111 South Wacker Drive, 34th Floor

Chicago, IL 60606-4302

Distributor & Principal Underwriter

Harbor Funds Distributors, Inc.

111 South Wacker Drive, 34th Floor

Chicago, IL 60606-4302

312-443-4400

Shareholder Servicing Agent

Harbor Services Group, Inc.

P.O. Box 804660

Chicago, IL 60680-4108

800-422-1050

Custodian

State Street Bank & Trust Company

State Street Financial Center

1 Lincoln Street

Boston, MA 02111

 

03/2010   FD.NQ.SMF.0110

Table of Contents

LOGO

 

Quarterly Schedule of Portfolio Holdings

January 31, 2010

Fixed Income Funds

 

Harbor High-Yield Bond Fund

Harbor Bond Fund

Harbor Real Return Fund

Harbor Short Duration Fund

Harbor Money Market Fund

Table of Contents

 

Table of Contents

 

 

Portfolios of Investments

     

HARBOR HIGH-YIELD BOND FUND

      1

HARBOR BOND FUND

      10

HARBOR REAL RETURN FUND

      23

HARBOR SHORT DURATION FUND

      28

HARBOR MONEY MARKET FUND

      30

Notes to Portfolios of Investments

     31

Table of Contents

Harbor High-Yield Bond Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Total Investments (% of net assets)

(Excludes net cash and short-term investments of 10.9%)

LOGO

 

BANK LOAN OBLIGATIONS—7.4%

Principal
Amount
(000s)		         Value
(000s)
    
  AUTO COMPONENTS—0.2%
  

Oshkosh Truck Corp.
Term Loan B

  
$ 1,737   

6.290%—12/06/2013

   $ 1,748
        
  AUTOMOBILES—0.1%
  

Adesa
Term Loan

  
  833   

2.750%—10/18/2013

     812
        
  BUILDING PRODUCTS—0.1%
  

Building Materials Inc.
Term Loan

  
  750   

02/22/20141

     739
        
  CAPITAL MARKETS—0.5%
  

Nuveen Investments Inc.

  
  

Term Loan

  
  2,697   

3.000%—11/13/2014

     2,384
  2,000   

12.500%—07/09/2015

     2,102
        
       4,486
        
  CHEMICALS—0.7%
  

PQ Corporation
Term Loan

  
  3,000   

07/30/20151

     2,745
  

Univar Inc.
Term Loan B

  
  3,000   

1.000%—10/10/2014

     2,828
        
       5,573
        
  COMMERCIAL SERVICES & SUPPLIES—0.4%
  

Rental Services Inc.
Term Loan

  
  1,774   

3.500%—11/21/2013

     1,670
  

Servicemaster Company

  
  

Term Loan

  
  90   

2.500%—07/24/2014

     83
  

Term Loan—Closing

  
  902   

2.500%—07/24/2014

     835
        
       918
        
  

West Corporation
Term Loan

  
  997   

3.880%—10/24/2013

     1,009
        
       3,597
        
  COMMUNICATIONS EQUIPMENT—0.1%
  

Commscope Inc.
Term Loan A

  
  548   

2.250%—12/27/2014

     534
        
  ELECTRONIC EQUIPMENT & INSTRUMENTS—0.3%
  

Flextronics Inc.
Term Loan A

  
  2,977   

2.250%—10/01/2014

     2,813
        
  ENERGY EQUIPMENT & SERVICES—0.4%
  

Cie Gen Geophysique
Term Loan

  
  1,000   

9.500%—05/15/2016

     1,075
  

TXU Energy Inc.
Term Loan B

  
  1,500   

4.036%—10/10/2014

     1,226
  

Venoco Inc.
Term Loan

  
  1,500   

9.480%—05/01/2014

     1,388
        
       3,689
        

 

1

Table of Contents

Harbor High-Yield Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

BANK LOAN OBLIGATIONS—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  FOOD PRODUCTS—0.9%
  

B&G Foods Inc.
Term Loan C

  
$ 2,000   

2.000%—02/26/2013

   $ 1,965
  

Michael Foods Inc.
Term Loan B

  
  1,375   

4.500%—04/30/2014

     1,392
  

Pinnacle Foods LLC
Term Loan C

  
  2,000   

5.000%—04/02/2014

     2,020
  

US Food Service
Term Loan

  
  2,744   

2.500%—07/03/2014

     2,440
        
       7,817
        
  HEALTH CARE EQUIPMENT & SUPPLIES—0.1%
  

DJO Reable Therapeutics
Term Loan

  
  894   

3.000%—05/20/2014

     868
        
  HOTELS, RESTAURANTS & LEISURE—1.6%
  

Isle of Capri Casino Inc.
Term Loan A

  
  191   

1.750%—11/25/2013

     190
  

Term Loan B

  
  217   

1.750%—11/25/2013

     215
  

Term Loan—Initial

  
  542   

1.750%—11/25/2013

     538
        
       943
        
  

Las Vagas Sands LLC
Term Loan B

  
  461   

1.750%—05/23/2014

     406
  2,282   

1.750%—05/23/20151

     2,010
        
       2,416
        
  

MGM Mirage Inc.
Term Loan

  
  3,422   

4.000%—10/03/2011

     3,307
  

OSI Restaurants LLC
Term Loan

  
  313   

2.250%—06/14/2013

     283
  3,663   

2.500%—06/14/2014

     3,314
        
       3,597
        
  

VML Finance LLC
Term Loan B

  
  1,993   

4.000%—05/27/2013

     1,905
  1,151   

4.500%—05/25/2012

     1,100
        
       3,005
        
       13,268
        
  HOUSEHOLD PRODUCTS—0.4%
  

Spectrum Brands Inc.

  
  

Term Loan

  
  147   

1.500%—06/30/20121

     147
  

Term Loan B

  
  2,838   

6.500%—06/30/20121

     2,834
        
       2,981
        
  IT SERVICES—0.2%
  

Sunguard Data Systems Inc.
Term Loan B

  
  1,247   

3.630%—02/28/20141

     1,229
        

BANK LOAN OBLIGATIONS—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  MACHINERY—0.3%
  

Manitowoc Inc.
Term Loan B

  
$ 2,621   

4.500%—11/06/20141

   $ 2,615
        
  MEDIA—0.7%
  

Cengage Learning Acquisitions
Term Loan

  
  1,496   

2.500%—07/03/2014

     1,332
  

Cequel Communications LLC
Term Loan A

  
  3,000   

4.500%—05/05/2014

     2,943
  

Intelsat Jackson Holding Ltd.
Term Loan

  
  2,050   

3.000%—02/02/2014

     1,907
        
       6,182
        
  SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—0.3%
  

Sensata Technologies Finance Co.
Term Loan

  
  2,487   

1.750%—04/26/2013

     2,266
        
  SPECIALTY RETAIL—0.1%
  

Dollar General Corp.
Term Loan B

  
  854   

2.750%—07/06/2014

     833
        
 
 		 TOTAL BANK LOAN OBLIGATIONS
    (Cost $57,589)		     62,050
        
    

CONVERTIBLE BONDS—8.5%

  AUTO COMPONENTS—0.4%
  

American Axel Inc.

  
  2,250   

9.250%—01/15/2017

     2,345
  

Arvinmeritor Inc.

  
  1,500   

4.625%—03/01/2026

     1,296
        
       3,641
        
  COMMERCIAL SERVICES & SUPPLIES—1.1%
  

Covanta Holding Corp.

  
  2,000   

4.620%—02/01/2027

     1,862
  

Hertz Corp.

  
  4,475   

8.875%—01/01/2014

     4,710
  1,675   

10.500%—01/01/2016

     1,696
        
       6,406
        
  

United Rentals Inc.

  
  1,250   

1.875%—10/15/2023

     1,222
        
       9,490
        
  DIVERSIFIED FINANCIAL SERVICES—0.5%
  

CIT Group Inc.

  
  2,750   

7.000%—05/01/2016

     2,372
  

NASDAQ OMX Group Inc.

  
  1,500   

2.500%—08/15/2013

     1,425
        
       3,797
        
  DIVERSIFIED TELECOMMUNICATION SERVICES—0.6%
  

Level 3 Communications Inc.

  
  2,300   

3.500%—06/15/2012

     2,105
  1,850   

5.250%—12/15/2011

     1,778
        
       3,883
        
  

Time Warner Telecom Inc.

  
  1,050   

2.375%—04/01/2026

     1,092
        
       4,975
        

 

2

Table of Contents

Harbor High-Yield Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

CONVERTIBLE BONDS—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  ENERGY EQUIPMENT & SERVICES—0.3%
  

Complete Production Services Inc.

  
$ 2,500   

8.000%—12/15/2016

   $ 2,488
        
  HEALTH CARE EQUIPMENT & SUPPLIES—0.7%
  

Hologic Inc.

  
  4,000   

2.000%—12/15/20372

     3,380
  

Kinetic Concepts Inc.

  
  2,000   

3.250%—04/15/20153

     2,058
        
       5,438
        
  HEALTH CARE PROVIDERS & SERVICES—0.4%
  

LifePoint Hospitals Inc.

  
  2,250   

3.500%—05/15/2014

     2,050
  

Omnicare Inc.

  
  1,850   

3.250%—12/15/2035

     1,517
        
       3,567
        
  HOTELS, RESTAURANTS & LEISURE—0.7%
  

Cinemark Inc.

  
  1,400   

8.625%—06/15/2019

     1,466
  

Gaylord Entertainment

  
  2,500   

3.750%—10/01/20143

     2,444
  

Host Hotels & Resorts LP

  
  1,000   

2.625%—04/15/20273

     964
  1,000   

3.250%—04/15/20243

     1,003
        
       1,967
        
  

Scientific Games Corp.

  
  200   

7.875%—06/15/20163

     202
        
       6,079
        
  IT SERVICES—0.4%
  

Savvis Inc.

  
  3,500,000   

3.000%—05/15/2012

     3,207
        
  LIFE SCIENCE TOOLS & SERVICES—0.1%
  

Integra LifeScience Holdings Corp.

  
  750   

2.375%— 02/17/2013

     717
        
  MEDIA—0.8%
  

Interpublic Group Inc.

  
  2,250   

4.250%—03/15/2023

     2,233
  

Lamar Media Corp.

  
  1,250   

6.625%—08/15/2015

     1,197
  

Liberty Media Corp.

  
  1,500   

3.125%—03/30/2023

     1,556
  

Sirius Satellite Radio Inc.

  
  1,365   

3.250%—10/15/2011

     1,287
        
       6,273
        
  METALS & MINING—0.1%
  

Massey Energy Company

  
  1,350   

3.250%—08/01/2015

     1,193
        
  OIL, GAS & CONSUMABLE FUELS—0.4%
  

Cal Divine Int’l Inc.

  
  2,550   

3.250%—12/15/2025

     2,318
  

Pioneer Natural Resources Co.

  
  600   

2.875%—01/15/2038

     626
        
       2,944
        
  PHARMACEUTICALS—0.0%
  

Mylan Inc.

  
  150   

1.250%—03/15/2012

     154
        

CONVERTIBLE BONDS—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT—0.3%
  

Advanced Micro Devices Inc.

  
$ 3,000   

6.000%—05/01/2015

   $ 2,760
        
  SPECIALTY RETAIL—0.9%
  

Limited Brands Inc.

  
  4,750   

8.500%—06/15/2019

     5,201
  

Pantry Inc.

  
  1,750   

3.000%—11/15/2012

     1,558
  

Penske Auto Group Inc.

  
  650   

3.500%—04/01/2026

     648
        
       7,407
        
  TEXTILES, APPAREL & LUXURY GOODS—0.4%
  

Iconix Brand Group Inc.

  
  4,000   

1.875%—06/30/2012

     3,605
        
  WIRELESS TELECOMMUNICATION SERVICES—0.4%
  

Crown Castle International

  
  10   

4.570%—04/15/2017

     575
  

SBA Communications Corp.

  
  3,015   

1.875%—05/01/2013

     3,068
        
       3,643
        
 
 		 TOTAL CONVERTIBLE BONDS
    (Cost $65,159)		     71,378
        
    

CORPORATE BONDS & NOTES—73.2%

  AEROSPACE & DEFENSE—0.3%
  

Alliant Techsystems Inc.

  
  500   

6.750%—04/01/2016

     501
  

Hexcel Corp.

  
  150   

6.750%—02/01/2015

     145
  

Moog Inc.

  
  500   

7.250%—06/15/2018

     484
  

TransDigm Inc.

  
  1,050   

7.750%—07/15/2014

     1,063
        
       2,193
        
  AIRLINES—0.2%
  

Bristow Group Inc.

  
  1,500   

7.500%—09/15/2017

     1,519
        
  AUTO COMPONENTS—1.7%
  

American Axle & Manufacturing Inc.

  
  1,500   

7.875%—03/01/2017

     1,309
  

Arvinmeritor Inc.

  
  2,500   

8.125%—09/15/2015

     2,362
  

Goodyear Tire & Rubber

  
  2,000   

10.500%—05/15/2016

     2,180
  

Tenneco Automotive Inc.

  
  2,750   

8.125%—11/15/2015

     2,736
  2,500   

8.625%—11/15/2014

     2,475
        
       5,211
        
  

TRW Automotive Inc.

  
  1,000   

7.000%—03/15/20143

     973
  2,500   

7.250%—03/15/20173

     2,431
        
       3,404
        
       14,466
        

 

3

Table of Contents

Harbor High-Yield Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  AUTOMOBILES—1.3%
  

Ford Motor Credit Corp.

  
$ 2,250   

8.000%—06/01/2014

   $ 2,287
  8,250   

8.125%—01/15/2020

     8,319
        
       10,606
        
  BEVERAGES—0.2%
  

Constellation Brands Inc.

  
  2,000   

7.250%—05/15/2017

     2,018
        
  BIOTECHNOLOGY—0.2%
  

Talecris Biotherapeutics Inc.

  
  2,000   

7.750%—11/15/20163

     2,050
        
  BUILDING PRODUCTS—1.0%
  

Masco Corp.

  
  1,500   

6.125%—10/03/2016

     1,446
  

Owens Corning Inc.

  
  500   

9.000%—06/15/2019

     576
  

USG Corp.

  
  4,000   

9.500%—01/15/2018

     4,100
  2,500   

9.750%—08/01/20143

     2,663
        
       6,763
        
       8,785
        
  CAPITAL MARKETS—0.3%
  

Nuveen Investments Inc.

  
  2,900   

10.500%—11/15/2015

     2,697
        
  CHEMICALS—1.3%
  

Ashland Inc.

  
  1,500   

9.125%—06/01/20171,3

     1,639
  

Hexion Financial

  
  3,500   

8.875%—02/01/20183

     3,391
  

Huntsman International Inc.

  
  3,000   

5.500%—06/30/20163

     2,632
  3,000   

7.875%—11/15/2014

     2,910
        
       5,542
        
  

Rockwood Specialties Group Inc.

  
  100   

7.500%—11/15/2014

     101
        
       10,673
        
  COMMERCIAL SERVICES & SUPPLIES—7.3%
  

Affinion Group

  
  3,600   

10.125%—10/15/2013

     3,677
  2,500   

11.500%—10/15/2015

     2,600
        
       6,277
        
  

Aramark Corp.

  
  900   

5.000%—06/01/2012

     857
  7,000   

8.500%—02/01/2015

     7,052
        
       7,909
        
  

Ashtead Capital Inc.

  
  550   

9.000%—08/15/20163

     558
  

AVIS Budget Car Rental LLC

  
  2,250   

3.500%—10/01/20143

     2,202
  3,500   

7.625%—05/15/2014

     3,343
  500   

7.750%—05/15/2016

     469
        
       6,014
        
  

Casella Waste Systems Inc.

  
  650   

9.750%—02/01/2013

     652
  

Ceridian Corp.

  
  5,500   

11.250%—11/15/2015

     5,390

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  COMMERCIAL SERVICES & SUPPLIES—Continued
  

Corrections Corp. of America

  
$ 500   

7.750%—06/01/2017

   $ 516
  

FTI Consulting Inc.

  
  500   

7.750%—10/01/2016

     510
  

Geo Group Inc.

  
  200   

7.750%—10/15/20173

     205
  

Iron Mountain Inc.

  
  2,950   

6.625%—01/01/2016

     2,876
  850   

7.750%—01/15/2015

     861
        
       3,737
        
  

Kar Holdings Inc.

  
  800   

8.750%—05/01/2014

     817
  

L-1 Identity Solutions Inc.

  
  3,025   

3.750%—05/15/2027

     2,806
  

Mac-Gray Corp.

  
  450   

7.625%—08/15/2015

     442
  

RSC Equipment Rental Corp.

  
  3,050   

9.500%—12/01/2014

     3,103
  1,750   

10.000%—07/15/20173

     1,912
  850   

10.250%—11/15/20193

     886
        
       5,901
        
  

Service Masters Inc.

  
  5,000   

10.750%—07/15/20153

     5,275
  

United Rentals Inc.

  
  2,650   

7.750%—11/15/20133

     2,580
  3,800   

9.250%—12/15/2019

     3,942
  2,250   

10.875%—06/15/2016

     2,467
        
       8,989
        
  

Waste Services Inc.

  
  1,000   

9.500%—04/15/2014

     1,040
  

West Corp.

  
  2,750   

9.500%—10/15/2014

     2,778
  1,000   

11.000%—10/15/2016

     1,070
        
       3,848
        
       60,886
        
  COMMUNICATIONS EQUIPMENT—0.4%
  

Lucent Technologies Inc.

  
  3,500   

2.875%—06/15/2025

     3,027
  

Syniverse Technologies Inc.

  
  500   

7.750%—08/15/2013

     503
        
       3,530
        
  CONSTRUCTION MATERIALS—0.3%
  

Texas Industries Inc.

  
  1,750   

7.250%—07/15/2013

     1,750
  500   

7.750%—03/15/20143

     500
        
       2,250
        
  CONTAINERS & PACKAGING—1.7%
  

Crown Americas LLC

  
  2,000   

7.625%—05/15/20173

     2,060
  

Graham Packaging Co.

  
  1,500   

8.250%—01/01/20173

     1,530
  2,500   

9.875%—10/15/2014

     2,584
        
       4,114
        
  

Greif Inc.

  
  1,000   

7.750%—08/01/2019

     1,038

 

4

Table of Contents

Harbor High-Yield Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  CONTAINERS & PACKAGING—Continued
  

Reynolds Group

  
$ 5,000   

7.750%—10/15/20163

   $ 5,062
  

Solo Cup Company

  
  1,500   

10.500%—11/01/2013

     1,583
        
       13,857
        
  DIVERSIFIED CONSUMER SERVICES—0.0%
  

Education Management LLC

  
  300   

8.750%—06/01/2014

     311
        
  DIVERSIFIED TELECOMMUNICATION SERVICES—5.2%
  

Cincinnati Bell Inc.

  
  150   

6.300%—12/01/2028

     114
  1,750   

7.000%—02/15/2015

     1,711
  1,750   

8.250%—10/15/2017

     1,763
  3,600   

8.375%—01/15/2014

     3,645
        
       7,233
        
  

Nordic Telephone Co. Holdings ApS

  
  300   

8.875%—05/01/20163

     321
  

Paetec Holding Corp.

  
  1,350   

8.875%—06/30/20173

     1,363
  4,000   

9.500%—07/15/2015

     3,890
        
       5,253
        
  

Qwest Capital Funding Inc.

  
  2,780   

6.500%—11/15/2018

     2,481
  

Qwest Communications International Inc.

  
  4,000   

7.125%—04/01/20183

     2,303
  5,430   

7.500%—02/15/2014

     6,725
  500   

8.000%—10/01/20153

     520
        
       9,548
        
  

Time Warner Telecom Holdings Inc.

  
  1,250   

9.250%—02/15/2014

     1,292
  

Wind Acquisition SA

  
  6,800   

11.750%—07/15/20173

     7,429
  

Windstream Corp.

  
  600   

7.000%—03/15/2019

     565
  8,300   

7.875%—11/01/20173

     8,238
  1,400   

8.625%—08/01/2016

     1,444
        
       10,247
        
       43,804
        
  ELECTRIC UTILITIES—0.1%
  

Ipalco Enterprises Inc.

  
  500   

7.250%—04/01/20163

     510
        
  ELECTRONIC EQUIPMENT & INSTRUMENTS—0.5%
  

Da-Lite Screen Co. Inc.

  
  350   

9.500%—05/15/2011

     350
  

Sanmina Corp.

  
  3,500   

8.125%—03/01/2016

     3,526
        
       3,876
        
  ENERGY EQUIPMENT & SERVICES—0.2%
  

Cie Generale de Geophysique

  
  2,000   

7.750%—05/15/2017

     1,995
        
  FOOD & STAPLES RETAILING—0.9%
  

Ingles Markets Inc.

  
  2,500   

8.875%—05/15/2017

     2,603
  

Rite Aid Corp.

  
  850   

7.500%—03/01/2017

     786

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  FOOD & STAPLES RETAILING—Continued
  

Stater Brothers Holdings

  
$ 1,850   

7.750%—04/15/2015

   $ 1,897
  

Tops Market

  
  2,000   

10.125%—10/15/20153

     2,075
        
       7,361
        
  FOOD PRODUCTS—0.6%
  

Dole Foods Co.

  
  500   

8.000%—10/01/20163

     520
  

Michael Foods Inc.

  
  125   

8.000%—11/15/2013

     128
  

Pinnacle Foods Inc.

  
  2,250   

9.250%—04/01/20153

     2,272
  1,750   

9.750%—03/01/2016

     1,768
        
       4,040
        
       4,688
        
  HEALTH CARE EQUIPMENT & SUPPLIES—1.0%
  

Biomet Inc.

  
  1,500   

10.000%—10/15/2017

     1,639
  3,000   

11.625%—10/15/2017

     3,315
        
       4,954
        
  

DJO Finance LLC

  
  3,500   

10.875%—11/15/2014

     3,727
        
       8,681
        
  HEALTH CARE PROVIDERS & SERVICES—5.8%
  

Accellent Inc.

  
  3,000   

8.375%—02/01/2017

     3,045
  2,400   

10.500%—12/01/2013

     2,418
        
       5,463
        
  

Community Health Systems Inc.

  
  3,500   

8.875%—07/15/2015

     3,627
  

DaVita Inc.

  
  3,000   

7.250%—03/15/2015

     3,019
  

FMC Finance II SA

  
  500   

6.875%—07/15/2017

     519
  

HCA Inc.

  
  2,500   

5.750%—03/15/2014

     2,306
  2,250   

6.300%—10/01/2012

     2,222
  1,200   

6.500%—02/15/2016

     1,110
  2,650   

7.875%—02/15/20203

     2,729
  100   

9.250%—11/15/2016

     106
        
       8,473
        
  

Omega Healthcare Investors Inc.

  
  500   

7.000%—04/01/2014

     504
  

Omnicare Inc.

  
  2,400   

6.875%—12/15/2015

     2,358
  

Psychiatric Solutions Inc.

  
  3,500   

7.750%—07/15/2015

     3,369
  

Select Med Corp.

  
  750   

7.625%—02/01/2015

     739
  

Service Corp International

  
  1,350   

6.750%—04/01/2016

     1,333
  1,500   

7.375%—10/01/2014

     1,522
  250   

7.625%—10/01/2018

     254
        
       3,109
        
  

Universal Hospital Services Inc.

  
  150   

3.859%—06/01/20154

     129
  

Vanguard Health Holding Co. I LLC

  
  2,500   

11.250%—10/01/20152

     2,653

 

5

Table of Contents

Harbor High-Yield Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  HEALTH CARE PROVIDERS & SERVICES—Continued
  

Vanguard Health Holding Co. II LLC

  
$ 6,800   

8.000%—02/01/2018

   $ 6,672
  4,800   

9.000%—10/01/2014

     5,040
  2,993   

10.000%—05/13/2011

     3,004
        
       14,716
        
       48,678
        
  HOTELS, RESTAURANTS & LEISURE—6.8%
  

American Casino & Entertainment

  
  5,000   

11.000%—06/15/20143

     4,475
  

Ameristar Casinos Inc.

  
  1,325   

9.250%—06/01/20143

     1,375
  

Boyd Gaming Corp.

  
  3,310   

6.750%—04/15/2014

     3,078
  

Felcor Lodging Inc.

  
  2,650   

10.000%—10/01/20143

     2,637
  

Global Cash Access LLC

  
  439   

8.750%—03/15/2012

     435
  

Harrahs Operating Inc.

  
  4,300   

10.000%—12/15/2018

     3,440
  

Isle of Capri Casinos

  
  6,500   

7.000%—03/01/2014

     5,809
  

MGM Mirage Inc.

  
  7,250   

8.375%—02/01/2011

     7,005
  2,100   

10.375%—05/15/20143

     2,315
        
       9,320
        
  

Penn National Gaming Inc.

  
  500   

6.750%—03/01/2015

     485
  5,000   

8.750%—08/15/20193

     5,125
        
       5,610
        
  

Pinnacle Entertainment Inc.

  
  3,500   

7.500%—06/15/2015

     3,255
  2,990   

8.250%—03/15/2012

     3,005
  3,700   

8.625%—08/01/20173

     3,728
        
       9,988
        
  

Speedway Motorsports Inc.

  
  250   

6.750%—06/01/2013

     248
  850   

8.750%—06/01/2016

     907
        
       1,155
        
  

Universal City Development

  
  2,250   

8.875%—11/15/20153

     2,278
  2,000   

10.875%—11/15/20163

     2,080
        
       4,358
        
  

Wendy’s Arbys Restaurant LLC

  
  1,500   

10.000%—07/15/2016

     1,643
  

Wyndham Worldwide Corp.

  
  4,000   

6.000%—12/01/2016

     3,878
        
       57,201
        
  HOUSEHOLD DURABLES—0.9%
  

Acco Brands Corp.

  
  4,500   

7.625%—08/15/2015

     4,241
  1,400   

10.625%—03/15/20153

     1,540
        
       5,781
        
  

Jarden Corp.

  
  1,000   

7.500%—01/15/2020

     1,010
  750   

8.000%—05/01/2016

     786
        
       1,796
        
       7,577
        

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  HOUSEHOLD PRODUCTS—0.7%
  

Sealy Mattress Co.

  
$ 3,750   

8.250%—06/15/2014

   $ 3,750
  1,900   

10.875%—04/15/20163

     2,137
        
       5,887
        
  INDEPENDENT POWER PRODUCERS & ENERGY TRADERS—4.2%
  

AES Corp.

  
  2,850   

8.000%—10/15/2017

     2,886
  

Calpine Corp.

  
  4,155   

7.250%—10/15/20173

     4,020
  207   

7.500%—05/15/2018

     200
        
       4,220
        
  

Dynegy Holdings Inc.

  
  1,350   

7.500%—06/01/2015

     1,215
  7,350   

8.375%—05/01/2016

     6,670
        
       7,885
        
  

Edison Mission Energy

  
  3,100   

7.000%—05/15/2017

     2,464
  1,650   

7.200%—05/15/2019

     1,287
        
       3,751
        
  

Mirant Americas Generation LLC

  
  5,225   

8.500%—10/01/2021

     5,042
  

Mirant North America LLC

  
  2,000   

7.375%—12/31/2013

     2,000
  

NRG Energy Inc.

  
  2,500   

7.375%—01/15/2017

     2,491
  

RRI Energy Inc.

  
  6,000   

7.625%—06/15/2014

     5,790
  1,500   

7.875%—06/15/2017

     1,436
        
       7,226
        
       35,501
        
  INDUSTRIAL—0.1%
  

SPX Corp.

  
  600   

7.625%—12/15/2014

     626
        
  INSURANCE—0.1%
  

Hub International Group Holdings Inc.

  
  1,000   

9.000%—12/15/20143

     973
        
  INTERNET & CATALOG RETAIL—0.3%
  

QVC Inc.

  
  2,600   

7.500%—10/01/20192

     2,678
        
  IT SERVICES—0.7%
  

Sungard Data Systems Inc.

  
  975   

9.125%—08/15/2013

     997
  2,250   

10.250%—08/15/2015

     2,346
  2,000   

10.625%—05/15/2015

     2,185
        
       5,528
        
  LEISURE EQUIPMENT & PRODUCTS—0.6%
  

Brunswick Corp.

  
  1,600   

11.250%—11/01/20163

     1,800
  

Easton Bell Sports Inc.

  
  3,000   

9.750%—12/01/20163

     3,143
        
       4,943
        
  LIFE SCIENCE TOOLS & SERVICES—0.1%
  

Bio Rad Labs Inc.

  
  1,000   

8.000%—09/15/20163

     1,040
        

 

6

Table of Contents

Harbor High-Yield Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  MACHINERY—1.6%
  

Actuant Corp.

  
$ 1,450   

6.875%—06/15/2017

   $ 1,417
  

Baldor Electric Company

  
  3,365   

8.625%—02/15/2017

     3,441
  

Terex Corp.

  
  750   

7.375%—01/15/2014

     756
  3,400   

8.000%—11/15/2017

     3,264
  1,750   

10.875%—06/01/2016

     1,938
        
       5,958
        
  

Trinity Industries Inc.

  
  4,000   

3.875%—06/01/2036

     2,975
        
       13,791
        
  MARINE—0.6%
  

Gulfmark Offshore Inc.

  
  550   

7.750%—07/15/2014

     549
  

Hornbeck Offshore Services Inc.

  
  850   

6.125%—12/01/2014

     814
  3,500   

8.000%—09/01/20173

     3,552
        
       4,366
        
       4,915
        
  MEDIA—10.9%
  

Allbritton Communications Co.

  
  3,900   

7.750%—12/15/2012

     3,890
  

Belo Corp.

  
  2,400   

8.000%—11/15/2016

     2,466
  

Cablevision Systems Corp.

  
  250   

7.625%—07/15/2018

     260
  650   

8.500%—04/15/20143

     692
  1,000   

8.625%—09/15/20173

     1,040
        
       1,992
        
  

Cenveo Corp.

  
  2,175   

7.875%—12/01/2013

     2,088
  1,900   

8.875%—02/01/20183

     1,887
        
       3,975
        
  

Clear Channel Communications

  
  5,000   

6.250%—03/15/2011

     4,725
  

Clear Channel Worldwide

  
  3,000   

9.250%—12/15/20173

     3,101
  

Dish DBS Corp.

  
  1,300   

6.625%—10/01/2014

     1,294
  1,500   

7.125%—02/01/2016

     1,511
  1,250   

7.875%—09/01/2019

     1,297
        
       4,102
        
  

Geo Eye Inc.

  
  2,000   

9.625%—10/01/20153

     2,050
  

Hughes Network Systems LLC

  
  1,350   

9.500%—04/15/2014

     1,387
  

Inmarsat Finance plc

  
  3,000   

7.375%—12/01/20173

     3,094
  

Intelsat Bermuda Ltd.

  
  5,250   

11.250%—02/04/2017

     5,355
  

Intelsat Corp.

  
  4,200   

6.500%—11/01/2013

     3,990
  2,650   

7.625%—04/15/2012

     2,676
  250   

9.250%—06/15/2016

     261
  250   

11.250%—06/15/2016

     267
        
       7,194
        

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  MEDIA—Continued
  

Interpublic Group

  
$ 1,000   

10.000%—07/15/2017

   $ 1,110
  

Lamar Media Corp.

  
  4,200   

6.625%—08/15/2015

     4,063
  1,000   

7.250%—01/01/2013

     1,005
        
       5,068
        
  

LIN Television Corp.

  
  3,000   

6.500%—05/15/2013

     2,880
  

Mediacom Broadband LLC

  
  4,950   

8.500%—10/15/2015

     4,938
  

Mediacom LLC

  
  4,600   

9.125%—08/15/20193

     4,623
  

Nielsen Finance LLC

  
  2,100   

9.250%—08/01/20162

     1,932
  3,000   

10.000%—08/01/2014

     3,135
  1,000   

11.625%—02/01/2014

     1,125
        
       6,192
        
  

Telesat Inc.

  
  3,750   

11.000%—11/01/2015

     4,209
  

Valassis Communication Inc.

  
  2,500   

8.250%—03/01/2015

     2,500
  

Viasat Inc.

  
  3,150   

8.875%—09/15/20163

     3,237
  

Videotron Ltee

  
  2,000   

6.875%—01/15/2014

     2,000
  1,250   

9.125%—04/15/20183

     1,350
        
       3,350
        
  

Virgin Media Finance plc

  
  3,550   

9.125%—08/15/2016

     3,710
  3,000   

9.500%—08/15/2016

     3,195
        
       6,905
        
  

Visant Holding Corp.

  
  200   

8.750%—12/01/2013

     206
  

WMG Acquisition Corp.

  
  1,700   

7.375%—04/15/2014

     1,657
  

WMG Holdings Corp.

  
  1,635   

9.500%—12/15/20142

     1,660
        
       91,866
        
  METALS & MINING—1.2%
  

Arch Coal Inc.

  
  2,000   

8.750%—08/01/20163

     2,140
  

Arch Western LLC

  
  1,450   

6.750%—07/01/2013

     1,443
  

Foundation Coal Co.

  
  300   

7.250%—08/01/2014

     303
  

Massey Energy Co.

  
  1,700   

6.875%—12/15/2013

     1,696
  

Steel Dynamics Inc.

  
  1,750   

6.750%—04/01/2015

     1,739
  1,500   

7.375%—11/01/2012

     1,541
        
       3,280
        
  

Teck Resources Ltd.

  
  1,000   

10.750%—05/15/2019

     1,182
        
       10,044
        

 

7

Table of Contents

Harbor High-Yield Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  MULTILINE RETAIL—0.3%
  

Bon Ton Department Stores Inc.

  
$ 2,650   

10.250%—03/15/2014

   $ 2,438
        
  OIL, GAS & CONSUMABLE FUELS—6.4%
  

Amerigas Partners LP

  
  150   

7.125%—05/20/2016

     153
  1,000   

7.250%—05/20/2015

     1,020
        
       1,173
        
  

Bill Barrett Corp.

  
  3,000   

9.875%—07/15/2016

     3,240
  

Chesapeake Energy Corp.

  
  2,000   

6.250%—01/15/2018

     1,905
  250   

6.500%—08/15/2017

     241
  2,000   

6.875%—01/15/2016

     1,980
        
       4,126
        
  

Continental Resources

  
  1,400   

8.250%—10/01/20193

     1,459
  

Denbury Resources Inc.

  
  2,250   

7.500%—04/01/2013

     2,269
  2,000   

9.750%—03/01/2016

     2,117
        
       4,386
        
  

El Paso Corp.

  
  850   

7.000%—06/15/2017

     873
  1,500   

7.250%—06/01/2018

     1,549
        
       2,422
        
  

Encore Acquisition Co.

  
  1,550   

6.000%—07/15/2015

     1,564
  700   

6.250%—04/15/2014

     706
  250   

7.250%—12/01/2017

     253
        
       2,523
        
  

Exco Resources Inc.

  
  2,000   

7.250%—01/15/2011

     2,010
  

Ferrell Gas LP

  
  600   

6.750%—05/01/2014

     594
  1,400   

6.750%—05/01/2014

     1,386
  2,550   

9.125%—10/01/20173

     2,722
        
       4,702
        
  

Helix Energy Solutions Group Inc.

  
  2,000   

9.500%—01/15/20163

     2,060
  

Inergy Finance Corp.

  
  1,200   

6.875%—12/15/2014

     1,203
  2,250   

8.250%—03/01/2016

     2,312
        
       3,515
        
  

Key Energy Services Inc.

  
  3,000   

8.375%—12/01/2014

     3,015
  

Mariner Energy Inc.

  
  1,250   

7.500%—04/15/2013

     1,269
  250   

8.000%—05/15/2017

     246
  1,900   

11.750%—06/30/2016

     2,152
        
       3,667
        
  

Markwest Energy Partners LP

  
  1,000   

8.750%—04/15/2018

     1,045
  

Penn VA Corp.

  
  2,000   

4.500%—11/15/2012

     1,902

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  OIL, GAS & CONSUMABLE FUELS—Continued
  

Petroplus Finance Ltd.

  
$ 1,400   

6.750%—05/01/20143

   $ 1,302
  2,000   

9.375%—09/15/20193

     1,990
        
       3,292
        
  

Pioneer Natural Resources Co.

  
  1,000   

6.650%—03/15/2017

     988
  250   

6.875%—05/01/2018

     247
        
       1,235
        
  

Plains Exploration & Production Company

  
  2,000   

7.625%—06/01/2018

     2,040
  1,100   

10.000%—03/01/2016

     1,226
        
       3,266
        
  

Range Resources Corp.

  
  1,300   

7.250%—05/01/2018

     1,332
  

Tesoro Corp.

  
  1,650   

9.750%—06/01/2019

     1,788
  

Williams Partners LP

  
  1,000   

7.250%—02/01/2017

     1,122
        
       53,280
        
  PAPER & FOREST PRODUCTS—1.0%
  

Boise Paper Holding LLC

  
  1,000   

9.000%—11/17/20173

     1,063
  

Cascades Inc.

  
  3,750   

7.750%—12/15/20173

     3,844
  500   

7.875%—01/15/20203

     511
        
       4,355
        
  

Georgia Pacific Corp.

  
  2,000   

8.250%—05/01/20163

     2,150
  

Graphic Package International

  
  1,000   

9.500%—06/15/2017

     1,072
        
       8,640
        
  SOFTWARE—0.5%
  

GXS Worldwide Inc.

  
  2,500   

9.750%—06/15/20153

     2,438
  

JDA Software Group Inc.

  
  2,000   

8.000%—12/15/20143

     2,080
        
       4,518
        
  SPECIALTY RETAIL—4.0%
  

Michaels Stores Inc.

  
  7,600   

11.375%—11/01/2016

     7,942
  1,500   

12.070%—11/01/20162

     1,249
        
       9,191
        
  

Office Depot Inc.

  
  1,050   

6.250%—08/15/2013

     1,016
  

Pantry Inc.

  
  3,000   

7.750%—02/15/2014

     2,887
  

Penske Auto Group Inc.

  
  5,500   

7.750%—12/15/2016

     5,321
  

Sally Holdings LLC

  
  200   

9.250%—11/15/2014

     209
  

Sonic Automotive Inc.

  
  3,000   

8.625%—08/15/2013

     3,045
  

Susser Holdings LLC

  
  1,300   

10.625%—12/15/2013

     1,360

 

8

Table of Contents

Harbor High-Yield Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  SPECIALTY RETAIL—Continued
  

Toys R Us Inc.

  
$ 4,360   

7.375%—10/15/2018

   $ 4,066
  1,500   

8.500%—12/01/20173

     1,552
  1,000   

10.750%—07/15/20173

     1,112
        
       6,730
        
  

Yankee Acquisition Corp.

  
  3,350   

8.500%—02/15/2015

     3,367
        
       33,126
        
  TEXTILES, APPAREL & LUXURY GOODS—0.6%
  

Hanesbrands Inc.

  
  2,150   

8.000%—12/15/2016

     2,214
  

Levi Strauss & Co.

  
  630   

8.875%—04/01/2016

     658
  1,000   

9.750%—01/15/2015

     1,050
        
       1,708
        
  

Phillips-Van Heusen Corp.

  
  125   

8.125%—05/01/2013

     128
  

Quicksilver Inc.

  
  1,500   

6.875%—04/15/2015

     1,313
        
       5,363
        

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  WIRELESS TELECOMMUNICATION SERVICES—1.1%
  

Nextel Communications

  
$ 3,250   

7.375%—08/01/2015

   $ 2,949
  

Sprint Nextel Corp.

  
  6,200   

8.375%—08/15/2017

     6,076
        
       9,025
        
 
 		 TOTAL CORPORATE BONDS & NOTES
    (Cost $575,470)		     614,394
        
    

SHORT-TERM INVESTMENTS—10.5%

      (Cost $88,260)  
  REPURCHASE AGREEMENTS
  88,260   

Repurchase Agreement with State Street Corp. dated January 29, 2010 due February 01, 2010 at 0.010% collateralized by Federal National Mortgage Association (market value $90,028)

     88,260
        
 
 		 TOTAL INVESTMENTS—99.6%
    (Cost $786,478)		     836,082
        
  CASH AND OTHER ASSETS, LESS LIABILITIES—0.4%     3,099
        
  TOTAL NET ASSETS—100.0%   $ 839,181
        

FAIR VALUE MEASUREMENTS

Holdings in Wireless Telecommunication Services valued at $575 and holdings in Oil, Gas & Consumable Fuels valued at $1,386 are classified as Level 1. All other holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 2. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

9

 

 

 

1 Position or a portion of the position represents an unsettled loan commitment. At period end, the total market value of unsettled commitments totaled $13,958 or 2% of net assets. The coupon rate will be determined at the time of settlement.

 

2 Step coupon security.

 

3 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. These securities are priced by an independent pricing service selected by the adviser (Harbor Capital Advisors, Inc.), or using valuation procedures approved by the Board of Trustees. At January 31, 2010, these securities were valued at $163,215 or 19% of net assets.

 

4 Floating rate security. The stated rate represents the rate in effect at January 31, 2010.

The accompanying notes are an integral part of the Portfolio of Investments.

Table of Contents

Harbor Bond Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Total Investments (% of net assets)

(Excludes net cash, short-term investments, and derivative positions of 40.6%)

LOGO

 

COMMON STOCKS—0.1%

 

(Cost $18,787)

Shares         Value
(000s)
  DIVERSIFIED FINANCIAL SERVICES—0.1%
  363,200   

American International Group Inc.

   $ 3,374
        
    

ASSET-BACKED SECURITIES—1.4%

Principal
Amount
(000s)		           
    
  

Allya Auto Trust Inc.

  
$ 6,500   

1.320%—03/15/20121,2

     6,523
  

American Express Credit Corp. MTN3

  
  4,400   

5.875%—05/02/20131

     4,773
  

American Honda Finance Corp.

  
  4,900   

4.000%—09/20/2011

     6,554
  

Asset Backed Funding Certificates
Series 2006-HE1 Cl. A2A

  
  655   

0.291%—01/25/20371,4

     636
  

Bank of America Commercial Mortgage Inc.

  
  2,500   

5.744%—02/10/20511,5

     2,327
  

Bank of America Credit Card Trust

  
  4,200   

0.813%—04/15/20131,4

     4,208
  9,500   

1.433%—12/16/20131,4

     9,606
        
       13,814
        
  

Bear Stearns Commercial Mortgage Securities

  
  2,745   

5.116%—02/11/20411,5

     2,798
  2,100   

5.471%—01/12/20451,5

     2,094
  7,700   

5.703%—06/11/20501

     7,585
        
       12,477
        
  

Countrywide Asset-Backed Certificates
Series 2001-BC3 Cl. A

  
  318   

0.711%—12/25/20311,4

     157
  

Credit Suisse Mortgage Capital Certification

  
  700   

5.658%—03/15/20391,5

     627
  

Credit-Based Asset Servicing & Securitization LLC
Series 2006-CB9 Cl. A1

  
  964   

0.291%—11/25/20361,4

     793
  

Deutsche Bank Commercial Mortgage

  
  2,600   

5.322%—12/11/20491

     2,345
  

Greenwich Capital Markets Inc.

  
  300   

4.799%—08/10/20421,5

     301
  

GSAMP Trust
Series 2007-FM1 Cl. 2A2

  
  466   

0.301%—12/25/20361,4

     323

ASSET-BACKED SECURITIES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  

Harborview Mortgage Loan Trust
Series 2005-2 Cl. 2A1A

  
$ 693   

0.453%—05/19/20351,4

   $ 431
  

HSI Asset Securitization Corp. Trust
Series 2006-HE2 Cl. 2A1

  
  502   

0.281%—12/25/20361,4

     402
  

Indymac Residential Asset Backed Trust
Series 2006-E Cl. 2A1

  
  39   

0.291%—04/25/20371,4

     38
  

JP Morgan Chase Commercial Mortgage

  
  200   

5.818%—06/15/20491,5

     203
  

JP Morgan Mortgage Acquisition Corp.
Series 2006-WMC3 Cl. A2

  
  7   

0.281%—08/25/20361,4

     7
  

Long Beach Mortgage Loan Trust
Series 2004-4 Cl. 1A1

  
  111   

0.511%—10/25/20341,4

     89
  

Merrill Lynch-Countrywide Commercial Mortgage

  
  2,600   

5.172%—12/12/20491,5

     2,356
  

Morgan Stanley Capital Inc.

  
  1,200   

5.385%—03/12/20441,5

     1,193
  400   

5.809%—12/12/20491

     371
  12,400   

5.880%—06/11/20491,5

     11,336
        
       12,900
        
  

Option One Mortgage Loan Trust
Series 2007-1 Cl. 2A1

  
  113   

0.281%—01/25/20371,4

     113
  

Park Place Securities Inc.
Series 2004-MCW1 Cl. A1

  
  2,805   

0.543%—08/25/20341,4

     2,538
  

SBI Home Equity Loan Trust
Series 2006-1A Cl. 1A2A

  
  423   

0.401%—08/25/20361,2,4

     403
  

Securitized Asset Backed Receivables LLC
Series 2007-HE1 Cl. 2A2

  
  1,229   

0.291%—12/25/20361,4

     533
  

SLM Student Loan Trust

  
  1,062   

0.549%—04/25/20141,4

     1,063
  

Small Business Administration

  
  

Series 2003-20I Cl. 1

  
  559   

5.130%—09/01/20231

     594
  

Series 2001-20A Cl. 1

  
  1,221   

6.290%—01/01/20211

     1,322
  

Series 2000-P10 Cl.1

  
  83   

7.449%—08/01/20101

     85
        
       2,001
        
  

United Airlines Inc.

  
  2,300   

10.400%—05/01/20181

     2,473
  

Wachovia Bank Commercial Mortgage Trust

  
  2,600   

0.408%—06/15/20491,2,4

     1,429
  2,000   

5.308%—11/15/20481

     1,955
  11,800   

5.416%—01/15/20451,5

     11,596
        
       14,980
        
 
 		 TOTAL ASSET-BACKED SECURITIES
    (Cost $83,856)		     92,180
        
    

BANK LOAN OBLIGATIONS—0.2%

 

(Cost $10,725)

  
  

Chrysler Finance Co. (Term B)

  
  11,083   

9.000%—08/03/2014

     10,918
        

 

10

Table of Contents

Harbor Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

 

COLLATERALIZED MORTGAGE OBLIGATIONS—2.2%

Principal
Amount
(000s)		         Value
(000s)
    
  

American General Finance Corp.

  
  

Series 2004-4 Cl. 4A

  
$ 1,452   

2.231%—02/25/20451,4

   $ 1,138
  

Bank of America Funding Corp.

  
  

Series 2005-D Cl. A1

  
  2,205   

3.267%—05/25/20351,5

     2,038
  

Bear Stearns Adjustable Rate Mortgage Trust

  
  

Series 2000-2 Cl. A1

  
  89   

3.228%—11/25/20301,5

     85
  

Series 2003-1 Cl. 6A1

  
  647   

4.991%—04/25/20331,5

     581
        
       666
        
  

Bear Stearns Alt-A Trust

  
  

Series 2006-8 Cl. 3A1

  
  2,641   

0.391%—01/25/20371,4

     1,934
  

Series 2005-4 Cl. 3A1

  
  3,119   

5.310%—05/25/20351,5

     2,240
  

Series 2005-7 Cl. 2A1

  
  1,581   

5.378%—09/25/20351,5

     1,175
        
       5,349
        
  

Bear Stearns Commercial Mortgage Securities

  
  700   

5.331%—02/11/20441

     626
  

Series 2006 PWR11 Cl. A4

  
  1,810   

5.455%—03/11/20391,5

     1,872
  

Series 2007-PW18 Cl. A4

  
  6,400   

5.700%—06/11/20501

     5,884
  

Series 2006 PW12 Cl. A4

  
  2,410   

5.719%—09/11/20381,5

     2,528
        
       10,910
        
  

Bear Stearns Mortgage Funding Trust

  
  

Series 2007-AR1 Cl. 2A1

  
  1,507   

0.301%—06/26/20361,4

     1,466
  

Commercial Mortgage Pass Through Certificate

  
  

Series 2006-C8 Cl. A4

  
  7,700   

5.306%—12/10/20461

     6,966
  

Countrywide Alternative Loan Trust

  
  

Series 2005-59 Class 1A1

  
  21,821   

0.561%—11/20/20351,4

     11,474
  

Countrywide Home Loan Mortgage Pass Through Trust

  
  

Series 2004-HYB9 Cl. 1A1

  
  5,622   

3.401%—02/20/20351,5

     4,808
  

Series 2004-22 Cl. A3

  
  3,225   

3.509%—11/25/20341,5

     2,750
  

Series 2005-HYB9 Cl. 3A2A

  
  1,068   

5.250%—11/20/20251,5

     725
  

Series 2003-10 Cl. A2

  
  76   

5.750%—05/25/20331

     76
        
       8,359
        
  

Federal Home Loan Mortgage Corp. REMIC6

  
  13,199   

0.383%—07/15/2019-08/15/20191,4

     13,015
  2,696   

0.533%—05/15/20361,4

     2,666
  184   

0.683%—11/15/20301,4

     183
  3,685   

5.000%—04/25/20331

     3,927
  328   

8.000%—08/15/20221

     360
  54   

9.000%—12/15/20201

     60
        
       20,211
        
  

Federal Home Loan Mortgage Corp. Structured
Pass Through Securities

  
  

Series T-63 Cl. 1A1

  
  353   

1.744%—02/25/20451,4

     330
  1,232   

3.351%—08/15/20321,5

     1,255
        
       1,585
        

COLLATERALIZED MORTGAGE OBLIGATIONS—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  

Federal National Mortgage Association REMIC6

  
  

Series 2006-5 Cl. 3A2

  
$ 530   

4.689%—02/25/20361,5

   $ 534
  500   

6.500%—01/01/20331

     547
        
       1,081
        
  

First Horizon Mortagge Pass Through

  
  585   

5.387%—09/25/20351,5

     424
  

First Nationwide Trust
Series 2001-3 Cl. 1A1

  
  6   

6.750%—08/25/20311

     5
  

Greenwich Capital Commercial Funding
Series 2007-GG9

  
  2,500   

5.444%—03/10/20391

     2,321
  

GS Mortgage Securities Corporation II
Series 2007-GG10

  
  3,000   

5.805%—08/10/20451,5

     2,616
  

GSR Mortgage Loan Trust

  
  

Series 2005-AR6 Cl. 2A

  
  9,782   

3.336%—09/25/20351,5

     9,059
  

Series 2005-AR7 Cl. 6A

  
  4,071   

5.234%—11/25/20351,5

     3,731
        
       12,790
        
  

IndyMac ARM Trust

  
  

Series 2001-H2 Cl. A2

  
  13   

2.463%—01/25/20321,4

     10
  

IndyMac Index Mortgage Loan Trust

  
  

Series 2005-AR31 Cl. 1A1

  
  3,935   

3.176%—01/25/20361,5

     2,254
  

JP Morgan Chase Commercial Mortgage
Security Trust Class A4

  
  

Series 2007-LD12

  
  1,600   

5.882%—02/15/20511,5

     1,509
  

JP Morgan Chase Commercial Mortgage
Securities Trust 2006

  
  5,125   

5.336%—05/15/20471

     4,646
  

JP Morgan Chase Commercial Mortgage
Securities Trust 2007

  
  15,100   

5.420%—01/15/20491

     13,468
  

JP Morgan Chase Mortgage Trust
2005 S3 1A2

  
  1,974   

5.750%—01/25/20361

     1,691
  

LB-UBS Commercial Mortgage Trust
2006 C6 COML MTG PASS CTF CLA4

  
  2,200   

5.372%—09/15/20391

     2,182
  

Merrill Lynch Mortgage Investors Inc.

  
  

Series 2005-A10 Cl. A

  
  2,111   

0.441%—02/25/20361,4

     1,457
  

Series 2005-3 Cl. 4A

  
  575   

0.481%—11/25/20351,4

     418
        
       1,875
        
  

Merrill Lynch/Countrywide Commercial MTG

  
  

Series 2007-6 Class A4

  
  1,800   

5.485%—03/12/20511,5

     1,495
  

Morgan Stanley Capital I
Series 2007-XLFA Cl. A1

  
  1,226   

0.294%—10/15/20201,2,4

     1,099
  

Residential Funding Mortgage
Series 2006-SA1 Cl. 2A1

  
  989   

5.564%—02/25/20361,5

     646
  

Sovereign Commercial Mortgage Securities
Series 2007-C1 Cl. A2

  
  1,100   

5.787%—07/22/20301,2,5

     1,107

 

11

Table of Contents

Harbor Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

COLLATERALIZED MORTGAGE OBLIGATIONS—Continued

  
Principal
Amount
(000s)		         Value
(000s)		  
    
  

Structured Asset Mortgage Investments Inc.
Series 2005-AR5 Cl. A2

  
$ 2,336   

0.483%—07/19/20351,4

   $ 1,893   
  

Structured Asset Securities Corp.
Series 2001-21A Cl. 1A1

  
  42   

2.607%—01/25/20321,4

     41   
  

Series 2002-1A Cl. 4A

  
  35   

2.920%—02/25/20321,4

     31   
          
       72   
          
  

Thornburg Mortgage Securities Trust
Series 2006-6 Cl. A1

  
  2,343   

0.341%—12/26/20361,4

     2,300   
  

Wachovia Bank Commercial Mortgage Trust
Series 2006-WHL7 Cl. A1

  
  9,457   

0.323%—08/11/20181,2,4

     8,313   
  

Washington Mutual
Series 2005-AR13 Cl. A1A1

  
  760   

0.521%—10/25/20451,4

     545   
  

Wells Fargo Mortgage Backed Securities
Series 2006-AR2 Cl. A1

  
  4,003   

4.950%—03/25/20361,5

     3,549   
          
 
 		 TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
    (Cost $150,357)		     138,053   
          
    

CONVERTIBLE BONDS—0.0%

  

 

(Cost $112)

  
  AUTOMOBILES—0.0%  
  

General Motors Corp.
Series B

  
  36,000   

5.250%—03/06/2032

     227   
          
    

CORPORATE BONDS & NOTES—24.5%

  
  

Access Group Inc.

  
  21,782   

1.549%—10/27/20251,4

     22,336   
  

AIG Sunamerica Fund

  
  20,000   

0.399%—07/26/2010

     19,478 z 
  

Allstate Life Global Funding Trust MTN3

  
  4,600   

5.375%—04/30/20131

     4,995   
  

American Airlines Inc.
Series 2001-2 Cl. A1

  
  82   

6.978%—04/01/20111

     82   
  

American Express Bank

  
  6,500   

5.500%—04/16/20131

     6,959   
  9,500   

6.000%—09/13/20171

     10,109   
          
       17,068   
          
  

American Express Centurion Bank

  
  10,800   

0.291%—03/23/20101,4

     10,798   
  12,692   

0.293%—04/19/20101,4

     12,688   
  9,500   

6.000%—09/13/20171

     10,109   
          
       33,595   
          
  

American Express Corp. MTN3

  
  5,253   

4.625%—09/01/20101

     5,133   
  

American Express Credit Corp.

  
  100   

0.411%—12/02/20101,4

     100   
  6,400   

7.000%—03/19/20181

     7,195   
          
       7,295   
          
  

American Express Credit Corp. MTN3

  
  400   

0.393%—06/16/20111,4

     398   
  

American General Finance Corp. MTN3

  
  1,800   

4.875%—05/15/20101

     1,780   

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  

American Home Mortgage Investment Trust

  
$ 5,700   

0.325%—02/09/20101,2,4

   $ 5,700
  

American International Group Inc.

  
  5,300   

4.875%—03/15/2067

     3,858
  900   

5.050%—10/01/20151

     751
  100   

5.375%—10/18/20111

     99
  1,100   

8.250%—08/15/20181

     1,011
  1,400   

8.625%—05/22/2038

     1,511
        
       7,230
        
  

American International Group Inc. MTN3

  
  7,000   

0.353%—03/20/20121,4

     6,205
  1,800   

4.950%—03/20/20121

     1,749
        
       7,954
        
  

Amgen Inc.

  
  24,000   

6.900%—06/01/20381

     28,307
  

Anheuser-Busch Cos. Inc.

  
  200   

5.500%—01/15/20181

     212
  

ANZ National International Ltd.

  
  6,200   

6.200%—07/19/20131,2

     6,920
  

AstraZeneca plc

  
  1,700   

5.900%—09/15/20171

     1,912
  1,600   

6.450%—09/15/20371

     1,806
        
       3,718
        
  

AT&T Inc.

  
  4,200   

4.950%—01/15/20131

     4,529
  5,000   

5.500%—02/01/20181

     5,287
  2,900   

6.300%—01/15/20381

     2,972
        
       12,788
        
  

BAC Capital Trust VII

  
  2,400   

5.250%—08/10/2035

     2,666
  

Bank of America Corp.

  
  11,600   

2.100%—04/30/20121

     11,834
  33,200   

6.500%—08/01/20161

     35,985
        
       47,819
        
  

Bank of Scotland plc

  
  6,300   

0.317%—12/08/20101,2,4

     6,188
  

Barclays Bank plc

  
  26,700   

5.450%—09/12/20121

     29,019
  

Bear Stearns Cos. Inc.

  
  4,400   

0.483%—08/15/20111,4

     4,398
  4,971   

6.400%—10/02/20171

     5,488
        
       9,886
        
  

Bear Stearns Cos. Inc. MTN3

  
  14,831   

6.950%—08/10/20121

     16,562
  

BNP Paribas

  
  9,600   

5.186%—06/29/20491,2,5

     8,543
  

Cello Wireless

  
  1,600   

2.869%—05/20/20111

     1,653
  

Cemex Inc.

  
  3,100   

6.722%—12/01/20491,2,5

     2,201
  

China Development Bank

  
  100   

5.000%—10/15/20151

     108
  

Citibank NA

  
  700   

1.875%—06/04/20121

     710
  

Citigroup Capital XXI

  
  77,799   

8.300%—12/21/20571,5

     72,742
  

Citigroup Funding Inc.

  
  2,900   

2.250%—12/10/20121

     2,952

 

12

Table of Contents

Harbor Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  

Citigroup Inc.

  
$ 1,500   

1.875%—05/07/20121

   $ 1,525
  1,500   

2.125%—04/30/20121

     1,531
  2,000   

4.750%—05/31/2017

     2,559
  1,700   

5.300%—10/17/20121

     1,792
  32,600   

5.500%—08/27/2012-04/11/20131

     34,289
  3,000   

5.625%—08/27/20121

     3,151
  1,100   

5.850%—07/02/20131

     1,164
  12,200   

6.000%—02/21/2012-08/15/20171

     12,654
  5,600   

6.125%—08/25/20361

     4,766
  9,100   

7.250%—10/01/20101

     9,419
  8,200   

8.500%—05/22/20191

     9,577
        
       82,427
        
  

Codelco Inc.

  
  500   

6.150%—10/24/20361,2

     527
  

Comcast Corp.

  
  1,200   

5.875%—02/15/20181

     1,283
  1,200   

6.450%—03/15/20371

     1,243
        
       2,526
        
  

Countrywide Financial Corp.

  
  2,000   

0.715%—05/07/20121,4

     1,969
  

Daimler Chrysler Auto Trust
Series 2008-B Cl. A2B

  
  1,969   

1.162%—07/08/20111,4

     1,971
  

Series 2008-B Cl. A3B

  
  3,300   

1.712%—09/10/20121,4

     3,314
        
       5,285
        
  

Dell Inc.

  
  8,800   

5.650%—04/15/20181

     9,415
  

Deutsche Bank AG

  
  8,400   

6.000%—09/01/20171

     9,349
  

Deutsche Telekom International Corp.

  
  12,800   

8.500%—06/15/20101

     13,159
  

Dominion Resources Inc.

  
  27,970   

1.303%—06/17/20101

     28,073
  

El Paso Corp. MTN3

  
  200   

8.050%—10/15/20301

     201
  

Enel Finance International SA

  
  12,600   

6.250%—09/15/20171,2

     13,851
  

Export-Import Bank of China

  
  600   

4.875%—07/21/20151,2

     640
  

Fifth Third Bank Corp.

  
  21,900   

8.250%—03/01/20381

     22,669
  

Ford Credit Auto Owner Trust

  
  720   

1.433%—12/15/20101,4

     721
  

Ford Motor Credit Co.

  
  10,500   

3.001%—01/13/20121,4

     9,936
  5,530   

7.250%—10/25/20111

     5,600
  4,700   

7.375%—02/01/20111

     4,784
  2,200   

8.000%—12/15/20161

     2,216
        
       22,536
        
  

Fortis Bank Holding

  
  3,000   

3.000%—04/17/2012

     4,280
  

Gaz Capital SA

  
  900   

6.212%—11/22/20161,2

     896
  

General Electric Capital Corp.

  
  23,519   

0.356%—03/20/20131,4

     22,679
  6,000   

2.000%—09/28/20121

     6,082
  1,100   

3.000%—12/09/20111

     1,143
  14,500   

5.500%—09/15/2067

     16,787
        
       46,691
        

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  

General Electric Capital Corp. MTN3

  
$ 2,000   

0.450%—01/08/20161,4

   $ 1,841
  6,400   

5.875%—01/14/20381

     5,945
  6,300   

6.875%—01/10/20391

     6,568
        
       14,354
        
  

GMAC LLC

  
  800   

6.000%—12/15/20111

     783
  

Goldman Sachs Group Inc.

  
  22,200   

5.950%—01/18/20181

     23,420
  5,200   

6.150%—04/01/20181

     5,542
  9,100   

6.250%—09/01/20171

     9,811
  400   

6.375%—05/02/2018

     619
        
       39,392
        
  

HSBC Holdings plc

  
  1,700   

6.500%—05/02/20361

     1,803
  

International Lease Finance Corp. MTN3

  
  900   

4.950%—02/01/20111

     848
  10,065   

5.300%—05/01/20121

     8,803
        
       9,651
        
  

JP Morgan Chase Bank

  
  7,000   

6.000%—10/01/20171

     7,523
  24,227   

6.625%—03/15/20121

     26,495
  6,200   

7.900%—04/29/20491,5

     6,371
        
       40,389
        
  

JP Morgan Chase Capital XX

  
  800   

6.550%—09/29/20361

     758
  

KeyBank NA

  
  8,500   

2.507%—06/02/20101,2,4

     8,542
  

Keycorp MTN3

  
  2,300   

3 6.500%—05/14/20131

     2,448
  

Korea Development Bank

  
  15,000   

0.718%—04/03/20101,4

     14,945
  

LBG Capital plc

  
  800   

8.500%—12/29/20492

     672
  

Leaseplan Corporation NV

  
  1,500   

3.125%—02/10/2012

     2,140
  

Lehman Brothers Holdings Inc.

  
  11,908   

1.000%—04/05/2011-08/21/2049*

     2,516
  1,100   

5.125%—06/27/2014*

     282
        
       2,798
        
  

Lehman Brothers Holdings Inc. MTN3

  
  10,500   

1.000%—11/10/2010-04/03/2049*

     2,218
  1,100   

2.951%—05/25/2010*

     232
  3,400   

2.954%—07/18/2011*

     718
  13,270   

3.487%—01/26/2017*

     2,803
  200   

5.410%—12/23/2008*

     42
  5,000   

5.625%—01/24/2013*

     1,112
  2,200   

6.875%—05/02/2018*

     495
        
       7,620
        
  

Lloyds Bank plc

  
  47,100   

5.800%—01/13/20201

     46,664
  

Merrill Lynch & Co. Inc.

  
  12,700   

0.831%—05/02/20171,4

     11,336
  5,100   

6.400%—08/28/20171

     5,345
        
       16,681
        
  

Merrill Lynch & Co. Inc. MTN3

  
  17,700   

6.875%—04/25/20181

     19,139
  

MetLife Global Funding I

  
  37,500   

0.651%—07/13/20111

     37,524

 

13

Table of Contents

Harbor Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  

MetLife Inc.

  
$ 1,600   

6.400%—12/15/20361

   $ 1,432
  

Metropolitan Life Global Funding I MTN3

  
  8,800   

0.313%—05/17/20101,2,4

     8,797
  

Monumental Global Funds

  
  3,400   

5.500%—04/22/20131,2

     3,649
  

Morgan Stanley

  
  3,000   

0.977%—07/20/2012

     4,026
  3,000   

1.143%—04/13/2016

     3,797
        
       7,823
        
  

Morgan Stanley MTN3

  
  9,400   

2.373%—05/14/20101,4

     9,457
  

MUFG Capital Finance 5 Ltd.

  
  1,261   

6.299%—01/25/2049

     1,744
  

National Australia Bank Ltd.

  
  32,300   

0.725%—02/08/20101,2,4

     32,301
  5,100   

5.350%—06/12/20131,2

     5,549
        
       37,850
        
  

National City Bank Cleveland Ohio MTN3

  
  7,000   

4.500%—03/15/20101

     7,026
  

Nationwide Life Global Funding

  
  43,200   

5.450%—10/02/20121,2

     44,800
  

NGPL PipeCo LLC

  
  4,000   

6.514%—12/15/20121,2

     4,423
  

Oracle Corp.

  
  10,200   

4.950%—04/15/20131

     11,181
  10,000   

5.750%—04/15/20181

     10,953
        
       22,134
        
  

Peabody Energy Corp.

  
  1,500   

7.875%—11/01/20261

     1,556
  

Petroleos Mexicanos

  
  9,400   

6.000%—03/05/20202

     9,305
  

Petroleum Export Ltd.

  
  306   

5.265%—06/15/20111,2

     303
  

Philip Morris International Inc.

  
  3,000   

5.650%—05/16/20181

     3,203
  

President and Fellows of Harvard College

  
  40,500   

6.500%—01/15/20391,2

     48,161
  

Pricoa Global Funding

  
  6,200   

0.349%—01/30/20121,2,4

     6,051
  5,200   

0.451%—09/27/20131,2,4

     4,948
        
       10,999
        
  

Principal Life Inc. MTN3

  
  4,100   

5.300%—04/24/20131

     4,375
  6,400   

5.550%—04/27/20151

     6,492
        
       10,867
        
  

Qwest Capital Funding Inc.

  
  43   

7.250%—02/15/20111

     44
  

Qwest Corp.

  
  300   

7.500%—06/15/20231

     297
  2,400   

7.625%—06/15/20151

     2,550
        
       2,847
        
  

Ras Laffan LNG III Series B

  
  1,800   

5.838%—09/30/20271,2

     1,812
  

Resona Bank Ltd.

  
  800   

5.850%—09/29/20491,2,5

     739

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  

Rohm & Haas Co.

  
$ 2,500   

6.000%—09/15/20171

   $ 2,641
  

Royal Bank of Scotland Group plc MTN3

  
  5,700   

7.640%—03/31/20431,5

     3,310
  

Royal Bank of Scotland plc

  
  22,900   

0.673%—04/08/20111,2,4

     22,950
  9,800   

3.000%—12/09/20111,2

     10,119
  1,300   

4.875%—08/25/20141,2

     1,335
        
       34,404
        
  

Santander Perpetual SA Unipersonal

  
  10,500   

6.671%—10/29/20491,2,5

     9,971
  

Siemens Finance NV

  
  18,000   

5.500%—02/16/20121,2

     19,508
  

SLM Corp.

  
  10,900   

0.549%—01/27/20141,3,4

     8,892
  8,800   

0.914%—12/15/20104

     11,896
        
       20,788
        
  

Small Business Administration

  
  10,228   

5.720%—01/01/20291

     11,240
  30,478   

6.020%—08/01/20281

     33,747
        
       44,987
        
  

SMFG Preferred Capital GBP 1 Ltd.

  
  600   

6.164%—01/29/2049

     858
  

SMFG Preferred Capital USD 1 Ltd.

  
  2,300   

6.078%—01/29/20491,2,5

     2,201
  

State Street Capital Trust III

  
  4,500   

8.250%—12/29/20491,5

     4,608
  

State Street Capital Trust IV

  
  700   

1.254%—06/01/20671,4

     483
  

Sumitomo Mitsui Banking Corp.

  
  5,900   

5.625%—12/31/20491,2,5

     6,092
  

Sun Life Financial Global Funding

  
  24,500   

0.419%—07/06/20111,2,4

     24,049
  

Suntrust Bank

  
  7,200   

0.822%—12/20/2011

     9,442
  

Swedbank AB

  
  200   

3.625%—12/02/2011

     286
  

Target Corp.

  
  7,900   

5.125%—01/15/20131

     8,547
  

TNK-BP Finance SA

  
  900   

6.125%—03/20/20121,2

     928
  

TransCanada Pipelines Ltd.

  
  2,400   

7.625%—01/15/20391

     2,954
  

TransCapital Invest Ltd.

  
  2,200   

8.700%—08/07/20181,2

     2,544
  

UBS AG

  
  3,200   

5.875%—12/20/20171

     3,381
  

UBS AG MTN3

  
  23,700   

1.198%—05/05/20101,4

     23,752
  3,600   

5.750%—04/25/20181

     3,773
        
       27,525
        
  

UFJ Finance Aruba AEC

  
  200   

6.750%—07/15/20131

     225
  

Union Pacific Corp.

  
  9,400   

5.700%—08/15/20181

     10,034
  

United Airlines Inc.

  
  1,299   

8.310%—06/17/2015*2

     11

 

14

Table of Contents

Harbor Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  

United Health Group Inc.

  
$ 3,700   

4.875%—02/15/20131

   $ 3,953
  

US Bank Capital IX

  
  8,900   

6.189%—03/29/20491,5

     7,476
  

Vale Overseas Ltd.

  
  900   

6.250%—01/23/20171

     958
  900   

6.875%—11/21/20361

     929
        
       1,887
        
  

Verizon Communications Inc.

  
  400   

5.250%—04/15/20131

     438
  

Virginia Electric and Power Co.

  
  600   

6.350%—11/30/20371

     663
  

Wachovia Corp.

  
  1,600   

5.625%—10/15/20161

     1,667
  10,200   

5.750%—02/01/20181

     10,757
        
       12,424
        
  

Wells Fargo & Co.

  
  135,800   

7.980%—12/31/20991,5

     137,837
  

Westpac Banking Corp.

  
  1,000   

0.731%—07/16/20141,2,4

     1,008
        
 
 		 TOTAL CORPORATE BONDS & NOTES
    (Cost $1,497,159)		     1,561,990
        
    

FOREIGN GOVERNMENT OBLIGATIONS—2.1%

  

Brazil Notas Do Tesouro

  
  50   

10.000%—01/01/2017

     231
  

Corp. Nacional del Cobre de Chile

  
  4,000   

7.500%—01/15/20191,2

     4,860
  

Electricite de France NT

  
  5,100   

5.500%—01/26/20141,2

     5,639
  5,100   

6.500%—01/26/20191,2

     5,793
  5,100   

6.950%—01/26/20391,2

     5,964
        
       17,396
        
  

Federative Republic of Brazil

  
  1,700   

10.250%—01/10/2028

     913
  

Government of Canada

  
  18,600   

2.000%—12/01/20141

     17,044
  2,500   

4.500%—06/01/20151

     2,566
        
       19,610
        
  

Intesa Sanpaolo

  
  40,000   

2.375%—12/21/20121

     40,138
  

Petroleos Mexicanos

  
  20,100   

8.000%—05/03/20191

     23,014
  

Societe Financement de l’Economie Francaise

  
  3,000   

0.451%—07/16/20121,2,4

     3,004
  5,500   

2.125%—05/20/2012

     7,745
        
       10,749
        
  

Swedish Housing Finance Corp.

  
  14,900   

3.125%—03/23/20121,2

     15,272
  

United Mexican Inc.

  
  4,400   

6.050%—01/11/20401,7

     4,257
        
 
 		 TOTAL FOREIGN GOVERNMENT OBLIGATIONS
    (Cost $130,157)		     136,440
        

MORTGAGE PASS-THROUGH—16.4%

Principal
Amount
(000s)		         Value
(000s)
    
  

Federal Home Loan Mortgage Corp.

  
$ 54   

3.095%—08/01/20241,4

   $ 55
  976   

5.027%—08/01/20351,4

     1,026
  4,437   

5.500%—08/19/20381

     4,713
  4,755   

6.000%—07/01/2016-08/01/20381

     5,142
        
       10,936
        
  

Federal Home Loan Mortgage Corp. TBA8

  
  58,000   

6.000%—12/01/2040

     62,142
  

Federal Housing Authority Project

  
  63   

7.400%—02/01/2021

     63
  2,536   

7.430%—10/01/2020

     2,543
        
       2,606
        
  

Federal National Mortgage Association

  
  1,052   

1.944%—10/01/20401,4

     1,052
  3,971   

3.548%—08/01/20351,4

     4,102
  10,203   

4.823%—06/01/20351,4

     10,653
  819   

5.022%—05/01/20351,4

     868
  173,772   

5.500%—11/01/2016-11/01/20381

     185,004
  547,225   

6.000%—04/01/2016-03/01/20391

     586,777
        
       788,456
        
  

Federal National Mortgage Association TBA8

  
  31,000   

5.000%—12/01/2040

     31,836
  55,000   

5.500%—12/01/2040

     58,266
  76,000   

6.000%—12/01/2040

     81,296
        
       171,398
        
  

Government National Mortgage Association I TBA8

  
  6,000   

6.000%—12/01/2040

     6,407
  

Government National Mortgage Association II

  
  547   

3.625%—08/20/2022-07/20/20271,4

     563
  945   

3.750%—02/20/20321,4

     970
  385   

4.125%—12/20/2024-11/20/20291,4

     397
  289   

4.375%—03/20/2017-01/20/20251,4

     298
  3   

4.750%—07/20/20241,4

     3
        
       2,231
        
 
 		 TOTAL MORTGAGE PASS-THROUGH
    (Cost $1,006,204)		     1,044,176
        
    

MUNICIPAL BONDS—0.9%

  

Buckeye Tobacco Settlement Financing Authority

  
  2,800   

5.875%—06/01/20301

     2,402
  

California State

  
  2,200   

5.650%—04/01/20391

     2,292
  7,800   

7.500%—04/01/20341

     7,713
  5,300   

7.550%—04/01/20391

     5,207
        
       15,212
        
  

Chicago Transit Authority

  
  800   

6.300%—12/01/20211

     856
  11,200   

6.899%—12/01/20401

     12,225
        
       13,081
        
  

Illinois State

  
  6,400   

4.071%—01/01/20141

     6,518
  

Public Power Generation Agency of Nebraska

  
  600   

7.242%—01/01/20411

     601
  

San Antonio, TX (City of)

  
  6,765   

4.750%—05/15/20371

     6,783

 

15

Table of Contents

Harbor Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

MUNICIPAL BONDS—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  

University of California

  
$ 15,700   

6.270%—05/15/20311

   $ 15,892
        
 
 		 TOTAL MUNICIPAL BONDS
    (Cost $58,921)		     60,489
        
    

U.S. GOVERNMENT AGENCIES—0.3%

  

Federal Home Loan Bank

  
  1,800   

1.000%—12/28/20111

     1,800
  

Federal Home Loan Mortgage Corp.

  
  18,000   

1.125%—06/01/2011-12/15/20111

     18,116
        
 
 		 TOTAL U.S. GOVERNMENT AGENCIES
    (Cost $19,148)		     19,916
        
    

U.S. GOVERNMENT OBLIGATIONS—11.3%

  

U.S. Treasury Bonds

  
  299,092   

1.000%—08/31/20111,7

     301,102
  76,600   

3.125%—01/31/20177

     76,815
  34,600   

3.500%—02/15/20391,7

     28,999
  12,500   

4.375%—02/15/20381,7

     12,289
  5,000   

4.500%—05/15/20381,7

     5,014
  2,500   

4.750%—02/15/20371,7

     2,616
  6,500   

5.375%—02/15/20311,7

     7,359
        
       434,194
        
  

U.S. Treasury Notes

  
  108,600   

1.000%—07/31/2011-10/31/20111,7

     109,350
  4,000   

2.750%—11/30/20161,7

     3,930
  155,000   

4.250%—05/15/20391,7

     148,558
  24,800   

4.375%—11/15/20391,7

     24,265
        
       286,103
        
 
 		 TOTAL U.S. GOVERNMENT OBLIGATIONS
    (Cost $726,090)		     720,297
        
    

SHORT-TERM INVESTMENTS—41.8%

  COMMERCIAL PAPER—0.0%  
  

Calyon Bank

  
  1,100   

5.395%—06/29/2010

     1,099
        
  REPURCHASE AGREEMENTS—35.2%  
  340,300   

Repurchase Agreement with Bank of America January 29, 2010 due February 01, 2010 at 0.120% collateralized by U.S. Treasury Notes
(market value $345,929)

     340,300
  535,600   

Repurchase Agreement with Barclay’s Capital January 29, 2010 due February 01, 2010 at 0.100% collateralized by U.S. Treasury Notes
(market value $538,958)

     535,600
  475,400   

Repurchase Agreement with BNP Paribas January 29, 2010 due February 01, 2010 at 0.110% collateralized by U.S. Treasury Notes
(market value $475,405)

     475,400
  13,700   

Repurchase Agreement with Credit Suisse First Boston dated January 29, 2009 due February 2, 2009 at 0.260% collateralized by U.S. Treasury Notes (market value $13,930)

     13,700
  91,700   

Repurchase Agreement with Goldman Sachs January 29, 2010 due February 01, 2010 at 0.110% collateralized by U.S. Treasury Notes
(market value $126,051)

     91,700

SHORT-TERM INVESTMENTS—Continued

  
Principal
Amount
(000s)		         Value
(000s)		  
    
$ 122,800   

Repurchase Agreement with JP Morgan January 29, 2010 due February 01, 2010 at 0.100% collateralized by U.S. Treasury Notes
(market value $123,556)

   $ 122,800   
  578,400   

Repurchase Agreement with Morgan Stanley January 29, 2010 due February 01, 2010 at 0.100% collateralized by U.S. Treasury Notes
(market value $579,823)

     578,400   
  78,600   

Repurchase Agreement with Salomon Brothers January 29, 2010 due February 01, 2010 at 0.120% collateralized by U.S. Treasury Notes
(market value $79,850)

     78,600   
  9,649   

Repurchase Agreement with State Street Corp. dated January 29, 2010 due February 1, 2010 at 0.010% collateralized by Federal National Mortgage Association (market value $9,842)

     9,649   
          
       2,246,149   
          
  U.S. GOVERNMENT AGENCIES—2.6%  
  

Federal Home Loan Bank Discount Notes

  
  8,200   

0.073%—02/24/20101

     8,200   
  82,000   

0.076%—02/12/20101

     81,998   
          
       90,198   
          
  

Federal Home Loan Mortgage Association Discount Notes

  
  23,500   

0.065%—02/19/20101

     23,499   
  53,000   

0.100%—02/04/20101

     53,000   
          
       76,499   
          
       166,697   
          
  U.S. TREASURY BILLS—4.0%  
  

U.S. Treasury Bills

  
  1,207   

0.010%—04/01/20107

     1,207   
  15,000   

0.043%—02/11/20101,7

     15,000   
  18,000   

0.043%—02/11/2010

     18,000   
  27,000   

0.044%—03/11/20107

     26,999   
  69,800   

0.074%—03/11/2010

     69,798   
  111,100   

0.108%—03/18/20107

     111,094   
  1,310   

0.111%—03/18/2010

     1,310   
  7,700   

0.153%—02/11/2010

     7,700   
  1,600   

0.170%—04/01/2010

     1,600   
  3,870   

0.741%—03/11/20101

     3,870   
          
       256,578   
          
 
 		 TOTAL SHORT-TERM INVESTMENTS
    (Cost $2,670,523)		     2,670,523   
          
 
 		 TOTAL INVESTMENTS—101.2%
    (Cost $6,372,039)		     6,458,583   
  CASH AND OTHER ASSETS, LESS LIABILITIES—(1.2)%     (78,042 ) 
          
  TOTAL NET ASSETS—100.0%   $ 6,380,541   
          

 

16

Table of Contents

Harbor Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

SWAP AGREEMENTS OPEN AT JANUARY 31, 2010

 

Interest Rate Swaps
Counterparty

  

Floating Rate Index

   Pay/Receive
Floating Rate		   Fixed Rate     Expiration Date   Notional
Amount
(000s)		   Unrealized
Appreciation/
(Depreciation)
(000s)		  

Deutsche Bank AG

  

AUD-BBR-BBSW-Bloomberg 3M

   Pay   4.500 %    06/15/2011   AUD$ 4,300   $ (30 ) 

UBS AG

  

AUD-BBR-BBSW-Bloomberg 3M

   Pay   4.500      06/15/2011     56,500     (267 ) 

UBS AG

  

AUD-BBR-BBSW-Bloomberg 6M

   Pay   6.000      09/15/2012     37,800     409   

UBS AG

  

Brazil Cetip Interbank Deposit Rate

   Pay   10.575      01/02/2012   R$ 17,500     76   

Barclays Bank plc

  

Brazil Cetip Interbank Deposit Rate

   Pay   10.600      01/02/2012     3,400     (12 ) 

HSBC BANK USA, NA

  

Brazil Cetip Interbank Deposit Rate

   Pay   10.610      01/02/2012     3,200     (11 ) 

Merrill Lynch & Co., Inc

  

Business Day - CDI

   Pay   11.980      01/02/2012     13,000     137   

UBS AG

  

Brazil Cetip Interbank Deposit Rate

   Pay   12.540      01/02/2012     15,400     288   

HSBC Bank USA, NA

  

Brazil Cetip Interbank Deposit Rate

   Pay   14.765      01/02/2012     900     32 z 

BNP Paribas Bank

  

5-Year French CPI Ex Tobacco

   Pay   2.090      10/15/2010   € 7,200     348   

Barclays Capital plc

  

5-Year French CPI Ex Tobacco

   Pay   2.102      10/15/2010     1,000     46   

UBS Warburg AG

  

5-Year French CPI Ex Tobacco

   Pay   2.145      10/15/2010     1,300     70   

BNP Paribas Bank

  

6-Month EUR-LIBOR

   Pay   4.500      03/18/2014   £ 7,600     1,263   

Deutsche Bank AG

  

6-Month GBP-LIBOR

   Pay   3.000      06/16/2015     11,200     2,532   

HSBC Bank USA, NA

  

6-Month BBA-LIBOR

   Pay   3.000      06/16/2015     215,800     1,501   

Merrill Lynch & Co., Inc.

  

3-Month USD-LIBOR

   Pay   3.000      12/17/2010   $ 263,600     1,036   

Royal Bank of Scotland

  

3-Month USD-LIBOR

   Pay   4.000      12/16/2014     3,400     165   
                 

Total Interest Rate Swaps

   $ 7,583   
                 

 

Credit Default Swaps
Counterparty

  

Reference Entity

   Buy/Sella,b   Pay/Receive
Fixed Rate		     Expiration
Date		   Implied
Credit Spreadc		     Market
Valuee 		    Upfront
Premium
Paid/(Received)		     Notional
Amount
(000s)d		   Appreciation/
(Depreciation)
(000s)		  

Citibank NA

  

General Electric Capital Corp.
6.000% due 06/15/2012

   Sell   1.150 %    03/20/2010   1.435 %    $ —      $ —      $ 100   $ —   

Citibank NA

  

General Electric Capital Corp.
6.000% due 06/15/2012

   Sell   1.100      03/20/2010   1.435        —        —        200     —   

Barclays Bank plc

  

General Electric Capital Corp.
6.000% due 06/15/2010

   Sell   0.770      06/20/2010   2.224        (4 )      —        2,000     (4 ) 

Citibank NA

  

General Electric Credit Corp.
Senior Bond
6.000% due 06/15/2012

   Sell   5.000      06/20/2010   1.412        20        (20 )      1,000     40   

Barclays Bank plc

  

General Electric Capital Corp.
6.000% due 06/15/2012

   Sell   1.020      09/20/2010   1.490        (4 )      —        2,400     (4 ) 

BNP Paribas Bank

  

General Electric Capital Corp.
2.200% due 06/15/2012

   Sell   1.000      09/20/2010   1.467        (1 )      (4 )      300     3   

Deutsche Bank AG

  

General Electric Capital Corp.
6.000% due 06/15/2012

   Sell   1.070      09/20/2010   1.490        (3 )      —        2,500     (3 ) 

Barclays Bank plc

  

General Electric Capital Corp.
6.000% due 06/15/2012

   Sell   0.935      12/20/2010   1.521        (2 )      —        400     (2 ) 

BNP Paribas Bank

  

General Electric Capital Corp.
6.000% due 06/15/2012

   Sell   0.940      12/20/2010   1.521        (7 )      —        1,500     (7 ) 

Citibank NA

  

General Electric Capital Corp.
6.000% due 06/15/2012

   Sell   1.120      12/20/2010   1.521        (2 )      —        600     (2 ) 

Deutsche Bank AG

  

General Electric Capital Corp.
6.000% due 06/15/2012

   Sell   0.950      12/20/2010   1.521        (3 )      —        700     (3 ) 

Barclays Bank plc

  

General Electric Capital Corp.
6.000% due 03/20/2012

   Sell   0.620      03/20/2011   1.630        (68 )      —        5,700     (68 ) 

Deutsche Bank AG

  

Citigroup Inc Senior Bond
1.050% due 03/20/2011

   Sell   1.000      03/20/2011   1.629        893        (893 )      1,000     —   

Merrill Lynch International

  

United Kingdom
1.250% due 03/20/2011

   Sell   1.000      03/20/2011   0.772        (1 )      (4 )      600     3   

UBS AG

  

Citigroup Inc Senior Bond
1.050% due 03/20/2011

   Sell   1.000      03/20/2011   1.629        (32 )      (30 )      4,200     (2 ) 

Citibank NA

  

General Electric Credit Corp.
Senior Bond
5.125% due 08/27/2012

   Sell   5.000      06/20/2011   1.680        101        (95 )      2,000     196   

Citibank NA

  

General Electric Capital Corp.
6.000% due 06/15/2012

   Sell   5.000      06/20/2011   1.680        102        (91 )      2,000     193   

Deutsche Bank AG

  

General Electric Capital Corp. Senior Bond
6.000% due 06/15/2012

   Sell   1.500      09/20/2011   1.763        (4 )      —        1,100     (4 ) 

JP Morgan Chase Bank, NA

  

General Electric Credit Corp.
Senior Bond
5.625% due 09/15/2017

   Sell   5.000      09/20/2011   1.736        143        116        2,500     27   

Merrill Lynch International

  

General Electric Credit Corp.
Senior Bond
1.500% due 09/20/2011

   Sell   1.000      09/20/2011   1.794        (58 )      (77 )      5,000     19   

 

17

Table of Contents

Harbor Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

SWAP AGREEMENTS—Continued

 

Credit Default Swaps Counterparty

  

Reference Entity

   Buy/Sella,b   Pay/Receive
Fixed Rate		     Expiration
Date		   Implied
Credit Spreadc		     Market
Valuee 		    Upfront
Premium
Paid/(Received)		     Notional
Amount
(000s)d		   Appreciation/
(Depreciation)
(000s)		  

JP Morgan Chase Bank, NA

  

Panama
8.875% due 01/20/2012

   Sell   0.730 %    01/20/2012   1.150 %    $ (17 )    $ —      $ 3,000   $ (17 ) 

Morgan Stanley Capital Services, Inc.

  

Panama
8.875% due 02/20/2012

   Sell   0.750      01/20/2012   1.150        (6 )      —        1,000     (6 ) 

Citibank NA

  

CDX HY-8 5Y 35-100%

   Sell   0.401      06/20/2012   N/A        (3 )      —        2,407     (3 ) 

Citibank NA

  

CDX HY-8 100 35-100%

   Sell   0.355      06/20/2012   N/A        (24 )      —        9,629     (24 ) 

Citibank NA

  

CDX HY-8 100 35-100%

   Sell   0.360      06/20/2012   N/A        (11 )      —        4,815     (11 ) 

Barclays Bank plc

  

GMAC LLC
6.875% due 08/28/2012

   Sell   3.650      09/20/2012   5.806        17        —        2,500     17   

Barclays Bank plc

  

Ford Motor Credit
7.000% due 09/20/2012

   Sell   4.150      09/20/2012   5.651        21        —        2,500     21   

Barclays Bank plc

  

GMAC LLC
6.875% due 08/28/2012

   Sell   4.800      09/20/2012   5.806        75        —        2,200     75   

Barclays Bank plc

  

Ford Motor Credit
7.250% due 10/25/2011

   Sell   6.150      09/20/2012   5.651        375        —        7,200     375   

Barclays Bank plc

  

Ford Motor Credit
7.000% due 10/01/2013

   Sell   5.650      09/20/2012   5.651        59        —        1,300     59   

Barclays Bank plc

  

Ford Motor Credit
7.000% due 10/01/2012

   Sell   5.800      09/20/2012   5.651        25        —        500     25   

Citibank NA

  

GMAC LLC
6.875% due 08/28/2012

   Sell   3.720      09/20/2012   5.806        17        —        2,500     17   

Deutsche Bank AG

  

GMAC LLC
6.875% due 08/28/2012

   Sell   4.000      09/20/2012   5.806        23        —        1,600     23   

Barclays Bank plc

  

General Electric Credit Corp.
6.000% due 12/20/2012

   Sell   0.640      12/20/2012   1.901        (198 )      —        5,600     (198 ) 

Deutsche Bank AG

  

CDX IG9 5Y 30-100%

   Sell   0.705      12/20/2012   N/A        293        —        16,918     293   

Morgan Stanley Capital Services, Inc.

  

CDX IG9 5Y 15-30%

   Sell   0.963      12/20/2012   N/A        141        —        6,500     141   

Morgan Stanley Capital Services, Inc.

  

Gazprom
8.625% due 02/20/2013

   Sell   2.180      02/20/2013   2.341        3        —        800     3   

UBS AG

  

Gazprom
8.625% due 04/28/2034

   Sell   2.180      02/20/2013   2.341        25        —        1,500     25   

Bank of America NA

  

SLM Corp.
5.125% due 08/27/2012

   Sell   4.800      03/20/2013   8.124        10        —        3,600     10   

BNP Paribas Bank

  

UBS AG Jersey Senior
5.130% due 03/20/2013

   Sell   0.760      03/20/2013   0.736        38        —        20,470     38   

Citibank NA

  

SLM Corp.
5.125% due 08/27/2012

   Sell   4.850      03/20/2013   8.124        17        —        3,900     17   

Deutsche Bank AG

  

BRK Senior Bond
4.625% due 10/15/2013

   Sell   0.850      03/20/2013   1.147        (22 )      —        2,800     (22 ) 

Deutsche Bank AG

  

CDX IG10 5Y 30-100%

   Sell   0.530      06/20/2013   N/A        59        —        3,889     59 z 

Barclays Bank plc

  

International Lease Finance Corp. Senior Bond
6.150% due 01/20/15

   Sell   5.000      12/20/2013   8.827        (691 )      (1,156 )      6,800     465   

Deutsche Bank AG

  

General Electric Credit Corp.
Senior Bond
5.625% due 09/15/2017

   Sell   4.900      12/20/2013   1.933        209        —        1,900     209 z 

Deutsche Bank AG

  

AIG Senior Bond
6.250% due 05/1/2036

   Sell   5.000      12/20/2013   7.596        (78 )      (315 )      3,500     237 z 

Merrill Lynch International

  

International Lease Finance Corp. Senior Bond
5.000% due 12/20/2009

   Sell   5.000      12/20/2013   8.83        (508 )      (750 )      5,000     242   

Citibank NA

  

General Electric Credit Corp.
Senior Bond
5.625% due 09/15/2017

   Sell   3.850      03/20/2014   1.944        668        —        9,000     668 z 

Deutsche Bank AG

  

CDX HY-8 100 35-100%

   Sell   5.000      12/20/2014   N/A        (366 )      (389 )      3,900     23   

Deutsche Bank AG

  

United Kingdom
1.750% due 12/20/2014

   Sell   1.000      12/20/2014   0.773        19        11        1,700     8   

JP Morgan Chase Bank, NA

  

Mexico
7.500% due 04/08/2016

   Sell   0.920      03/20/2016   1.745        (9 )      —        300     (9 ) 

JP Morgan Chase Bank, NA

  

Panama
8.875% due 09/30/2027

   Sell   1.250      01/20/2017   1.733        (11 )      —        500     (11 ) 

Credit Suisse First Boston

  

Panama
8.850% due 02/20/2012

   Sell   1.200      02/20/2017   1.624        900        —        900     (19 ) 

Credit Suisse First Boston

 

Panama
8.875% due 02/20/2017

   Sell   1.200      02/20/2017   1.739        (19 )      —        900     (19 ) 
                       

Total Credit Default Swaps

   $ 3,093   
                       

Total Swaps

   $ 10,676   
                       

 

18

Table of Contents

Harbor Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

WRITTEN OPTIONS OPEN AT JANUARY 31, 2010

 

Description

    Number of
Shares/Contracts		     Strike
Price		    Expiration Date    Value
(000s)		  

Swap Option (Call)

    (10,600,000 )    € 2.50    Feb-2010    $ (9 ) 

Swap Option (Call)

    (38,000,000 )    $ 3.25    Feb-2010      (2 ) 

Swap Option (Call)

    (47,300,000 )      3.25    Feb-2010      (2 ) 

Swap Option (Call)

    (9,900,000 )      95.00    Feb-2010      (5 ) 

Swap Option (Call)

    (7,600,000 )      2.75    Apr-2010      (8 ) 

Swap Option (Call)

    (16,200,000 )      3.25    Apr-2010      (32 ) 

Swap Option (Call)

    (37,600,000 )      3.25    Apr-2010      (73 ) 

Swap Option (Call)

    (9,400,000 )      3.25    Apr-2010      (18 ) 

Swap Option (Call)

    (17,900,000 )      3.25    Apr-2010      (35 ) 

Swap Option (Call)

    (38,800,000 )      3.50    Apr-2010      (220 ) 

Swap Option (Call)

    (177,600,000 )      3.50    Apr-2010      (1,005 ) 

Swap Option (Call)

    (11,500,000 )      3.50    Jun-2010      (100 ) 

Swap Option (Put)

    (47,300,000 )      4.00    Feb-2010      (88 ) 

Swap Option (Put)

    (9,900,000 )      88.00    Feb-2010      (40 ) 

Swap Option (Put)

    (2,600,000 )      4.00    Apr-2010      (7 ) 

Swap Option (Put)

    (6,000,000 )      4.25    Apr-2010      (39 ) 

Swap Option (Put)

    (3,000,000 )      4.25    Apr-2010      (20 ) 

Swap Option (Put)

    (118,000,000 )      4.25    Apr-2010      (767 ) 

Swap Option (Put)

    (22,600,000 )      4.25    Apr-2010      (147 ) 

Swap Option (Put)

    (33,000,000 )      4.25    Apr-2010      (214 ) 

Swap Option (Put)

    (27,500,000 )      4.25    Apr-2010      (179 ) 

Swap Option (Put)

    (16,200,000 )      4.25    Apr-2010      (105 ) 

Swap Option (Put)

    (7,000,000 )      4.25    Apr-2010      (45 ) 

Swap Option (Put)

    (37,500,000 )      5.00    Apr-2010      (27 ) 

Swap Option (Put)

    (15,600,000 )      5.00    Apr-2010      (11 ) 

Swap Option (Put)

    (68,200,000 )      4.25    Apr-2010      (443 ) 

Swap Option (Put)

    (11,500,000 )      4.50    Jun-2010      (99 ) 

Swap Option (Put)

    (91,000,000 )      5.00    Jun-2010      (27 ) 

Swap Option (Put)

    (135,000,000 )      5.00    Jun-2010      (40 ) 

Swap Option (Put)

    (41,000,000 )      5.00    Jun-2010      (12 ) 

Swap Option (Put)

    (16,000,000 )      5.50    Aug-2010      (12 ) 

Swap Option (Put)

    (26,000,000 )      5.50    Aug-2010      (19 ) 

Swap Option (Put)

    (35,000,000 )      5.50    Aug-2010      (25 ) 

Swap Option (Put)

    (51,300,000 )      6.00    Aug-2010      (42 ) 

Swap Option (Put)

    (244,100,000 )      6.00    Aug-2010      (201 ) 

Swap Option (Put)

    (22,700,000 )      6.00    Aug-2010      (19 ) 

Swap Option (Put)

    (3,000,000 )      6.00    Aug-2010      (2 ) 

Swap Option (Put)

    (22,500,000 )      6.00    Aug-2010      (43 ) 

Swap Option (Put)

    (12,000,000 )      6.00    Aug-2010      (23 ) 

Swap Option (Put)

    (95,500,000 )      6.00    Aug-2010      (183 ) 

Swap Option (Put)

    (35,100,000 )      10.00    Jul-2012      (124 ) 

U.S. Treasury Notes-10 year Future (Call)

    (2,883 )      119.00    Feb-2010      (766 ) 

U.S. Treasury Notes-10 year Future (Call)

    (429 )      121.00    Feb-2010      (7 ) 

U.S. Treasury Notes-10 year Future (Call)

    (50 )      119.00    Apr-2010      (21 ) 

U.S. Treasury Notes-10 year Future (Put)

    (414 )      114.00    Feb-2010      (6 ) 

U.S. Treasury Notes-10 year Future (Put)

    (1,327 )      115.00    Feb-2010      (41 ) 

U.S. Treasury Notes-10 year Future (Put)

    (437 )      116.00    Feb-2010      (41 ) 

U.S. Treasury Notes-10 year Future (Put)

    (50 )      114.00    Apr-2010      (30 ) 
                

Written options outstanding, at value (premiums received of $18,308)

    $ (5,424 ) 
                

FIXED INCOME INVESTMENTS SOLD SHORT AT JANUARY 31, 2010

 

Par Value
(000s)

    

Security

    Value
(000s)		  
$ (19,000 )   

Federal National Mortgage Association TBA

    $ (20,109 ) 
          
 

Fixed Income Investments Sold Short, at value (proceeds $20,064)

    $ (20,109 ) 
          

 

19

Table of Contents

Harbor Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

FORWARD CURRENCY CONTRACTS OPEN AT JANUARY 31, 2010

 

Currency

    Market Value
(000s)		    Aggregate
Face Value
(000s)		    Delivery Date    Unrealized
Appreciation/
(Depreciation)
(000s)		  

Australian Dollar (Buy)

    $ 5,906    $ 6,117    Feb-2010    $ (211 ) 

Brazilian Real (Buy)

      72,191      73,129    Feb-2010      (938 ) 

Brazilian Real (Buy)

      35,662      38,866    Apr-2010      (3,204 ) 

Brazilian Real (Sell)

      72,191      75,647    Feb-2010      3,456   

British Pound Sterling (Sell)

      32,743      32,875    Mar-2010      132   

Canadian Dollar (Buy)

      7,704      7,982    Feb-2010      (278 ) 

Canadian Dollar (Sell)

      19,564      19,857    Feb-2010      293   

Chinese Yuan (Buy)

      8,006      8,087    Mar-2010      (81 ) 

Chinese Yuan (Buy)

      24,055      24,376    Aug-2010      (321 ) 

Chinese Yuan (Buy)

      7,888      8,078    Nov-2010      (190 ) 

Chinese Yuan (Sell)

      8,006      8,058    Mar-2010      52   

Euro Currency (Buy)

      3,490      3,491    Apr-2010      (1 ) 

Euro Currency (Sell)

      29,445      31,519    Feb-2010      2,074   

Euro Currency (Sell)

      37,891      39,701    Mar-2010      1,810   

Euro Currency (Sell)

      13,075      13,359    Apr-2010      284   

Indonesian Rupiah (Buy)

      7,006      6,800    Oct-2010      206   

Indonesian Rupiah (Buy)

      1,675      1,708    Nov-2010      (33 ) 

Japanese Yen (Buy)

      4,512      4,482    Feb-2010      30   

Japanese Yen (Sell)

      17,024      16,921    Feb-2010      (103 ) 

Malaysian Ringgit (Buy)

      4,275      4,249    Feb-2010      26   

Malaysian Ringgit (Buy)

      4,257      4,205    Jun-2010      52   

Malaysian Ringgit (Buy)

      4,237      4,276    Oct-2010      (39 ) 

Malaysian Ringgit (Sell)

      4,276      4,281    Feb-2010      5   

Mexican Peso (Buy)

      3,801      3,762    Apr-2010      39   

Philippine Peso (Buy)

      458      466    Apr-2010      (8 ) 

Singapore Dollar (Buy)

      1,134      1,148    Feb-2010      (14 ) 

Singapore Dollar (Buy)

      1,974      1,998    Mar-2010      (24 ) 

Singapore Dollar (Buy)

      1,131      1,148    Jun-2010      (17 ) 

South Korean Won (Buy)

      8,595      8,509    Feb-2010      86   

South Korean Won (Buy)

      1,711      1,686    Jul-2010      25   

South Korean Won (Buy)

      1,457      1,446    Aug-2010      11   

South Korean Won (Buy)

      5,946      6,022    Nov-2010      (76 ) 

South Korean Won (Sell)

      4,925      5,010    Feb-2010      85   

Taiwan Dollar (Buy)

      1,294      1,283    Jun-2010      11   

Taiwan Dollar (Buy)

      871      866    Oct-2010      5   
                 
            $ 3,144   
                 

FUTURES CONTRACTS OPEN AT JANUARY 31, 2010

 

Description

    Number of
Contracts		     Aggregate
Face Value
(000s)		     Expiration Date    Unrealized
Appreciation/
(Depreciation)
(000s)		  

Euribor Interest Rate 3 month (Buy)

    208      € 52,000      Mar-2010    $ 736   

Euro-Bobl Futures (Buy)

    1,600        160,000      Mar-2010      1,448   

Euro-Bund Futures (Buy)

    524        52,400      Mar-2010      485   

Euro-Bund Futures (Sell)

    (40 )      (4,000 )    Mar-2010      25   

Euro-Bund Futures (Sell)

    (40 )      (4,000 )    Mar-2010      15   

Eurodollar Futures CME-90 day (Buy)

    4,668      $ 1,167,000      Mar-2010      7,891   

Eurodollar Futures CME-90 day (Buy)

    5,187        1,296,750      Jun-2010      5,733   

Eurodollar Futures CME-90 day (Buy)

    765        191,250      Sep-2010      2,316   

Eurodollar Futures CME-90 day (Buy)

    885        221,250      Dec-2010      2,311   

Eurodollar Futures CME-90 day (Buy)

    619        154,750      Mar-2011      1,151   

Eurodollar Futures CME-90 day (Buy)

    52        13,000      Jun-2011      66   

Eurodollar Futures CME-90 day (Buy)

    52        13,000      Sep-2011      64   

Eurodollar Futures CME-90 day (Buy)

    52        13,000      Dec-2011      62   

U.S. Treasury Note Futures—10 year (Buy)

    2,072        207,200      Mar-2010      (2,317 ) 

U.S. Treasury Note Futures—2 year (Buy)

    2,803        560,600      Mar-2010      1,879   

U.S. Treasury Note Futures—5 year (Buy)

    21        2,100      Mar-2010      32   

United Kingdom Pound Sterling Interest Rate 3 month (Buy)

    58      £ 7,250      Mar-2010      155   

United Kingdom Pound Sterling Interest Rate 3 month (Buy)

    120        15,000      Jun-2010      308   
               
          $ 22,360   
               

 

20

Table of Contents

Harbor Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

FAIR VALUE MEASUREMENTS

The following table summarizes the Fund’s investments as of January 31, 2010 based on the inputs used to value them.

 

Asset Category

    Quoted Prices
Level 1
(000s)		    Other Significant
Observable Inputs
Level 2
(000s)		     Significant
Unobservable Inputs
Level 3
(000s)		    Total
(000s)		  

Investments in Securities

           

Asset-Backed Securities

    $ —    $ 92,180      $ —    $ 92,180   

Bank Loan Obligations

      —      10,918        —      10,918   

Collateralized Mortgage Obligations

      —      138,053        —      138,053   

Common Stocks

      3,374      —        —      3,374   

Convertible Bonds

      227      —        —      227   

Corporate Bond & Notes

      —      1,542,512        19,478      1,561,990   

Foreign Government Obligations

      —      136,440        —      136,440   

Mortgage Pass-Through

      —      1,044,176        —      1,044,176   

Municipal Bonds

      —      60,489        —      60,489   

U.S. Government Agencies

      —      19,916        —      19,916   

U.S. Government Obligations

      —      720,297        —      720,297   

Short-Term Investments

           

Commercial Paper

      —      1,099        —      1,099   

Repurchase Agreements

      —      2,246,149        —      2,246,149   

U.S. Government Agencies

      —      166,697        —      166,697   

U.S. Treasury Bills

      —      256,578        —      256,578   
                              

Total Investments in Securities

      3,601      6,435,504        19,478      6,458,583   
                              

Investments In Other Financial Instruments

           

Forward Currency Contracts

      —      3,144        —      3,144   

Futures Contracts

      3,171      19,189        —      22,360   

Options-Written

      —      (5,424 )      —      (5,424 ) 

Securities Sold Short

      —      (20,109 )      —      (20,109 ) 

Swap Agreements

      —      9,471        1,205      10,676   
                              

Total Investments in Other Financial Instruments

      3,171      6,271        1,205      10,647   
                              

Total Investments

    $ 6,772    $ 6,441,775      $ 20,683    $ 6,469,230   
                              

The following is a reconciliation of the Fund’s Level 3 investment during the period ended January 31, 2010.

 

Valuation Description

    Beginning
Balance at
10/31/2009		    Net
Purchases/
(Sales)		     Accrued
Discount/
(Premium)		    Total
Realized
Gain/(Loss)		    Change in
Unrealized
Appreciation/
(Depreciation)		    Net
Transfers
In/(Out) of
Level 3		    Ending
Balance
as of
01/31/2010

Corporate Bonds & Notes

    $ 18,904    $ —      $ 570    $ 1    $ 3    $ —    $ 19,478

Swap Agreements

      1,050      (1,000 )      —      1,054      101      —      1,205
                                                 

Total

    $ 19,954    $ (1,000 )    $ 570    $ 1,055    $ 104    $ —    $ 20,683
                                                 

For more information on valuation inputs and their aggregation into the levels used in the table above, please refer to Fair Value Measurements in Note 2 of the accompanying Notes to Portfolio of Investments.

DERIVATIVE INSTRUMENTS

The following table summarizes the Fund’s derivative instruments categorized by risk exposure as of January 31, 2010.

 

Risk Exposure Category

    Asset Derivatives
Fair Value
(000s)		    Liability Derivatives
Fair Value
(000s)		  

Credit Contracts

    $ 3,531    $ (438 ) 

Foreign Exchange Contracts

      8,682      (5,538 ) 

Interest Rate Contracts

      32,580      (8,061 ) 
               

Total

    $ 44,793    $ (14,037 ) 
               

 

21

Table of Contents

Harbor Bond Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

 

 

 

* Security in default.

 

1 At January 31, 2010, a portion of securities held by the Fund were pledged to cover margin requirements for open future contracts, written options on futures contracts and swap options. (See Note 2 to the Notes to Portfolios of Investments.) The securities pledged had an aggregate market value of $3,517,944 or 55% of net assets.

 

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. These securities are priced by an independent pricing service selected by the adviser (Harbor Capital Advisors, Inc.), or using valuation procedures approved by the Board of Trustees. At January 31, 2010, these securities were valued at $385,640 or 6% of net assets.

 

3 MTN after the name of a security stands for Medium Term Note.

 

4 Floating rate security. The stated rate represents the rate in effect at January 31, 2010.

 

5 Variable rate security. The stated rate represents the rate in effect at January 31, 2010.

 

6 REMICs are CMOs which can hold mortgages secured by any type of real property and issue multiple-class securities backed by those mortgages.

 

7 Treasury inflation-protected securities (TIPS) are securities in which the principal amount is adjusted for inflation and interest payments are applied to the inflation-adjusted principal.

 

8 TBAs are mortgage-backed securities traded under delayed delivery commitments, settling after January 31, 2010. Although the unit price for the trades has been established, the principal value has not been finalized. However, the amount of the commitments will not fluctuate more than 2% from the principal amount. Income on TBAs is not earned until settlement date. (See Note 2 to the Notes to Portfolios of Investments).

 

a If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or underlying securities comprising the referenced index or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index.

 

b If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index.

 

c Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues or sovereign issues of an emerging country as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as “Defaulted” indicates a credit event has occurred for the referenced entity or obligation.

 

d The maximum potential amount the Fund could be required to make as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement.

 

e The quoted market prices and resulting values for credit default swap agreements on asset-backed securities and credit indices serve as an indicator of the current status of the payment/performance risk and represent the likelihood of an expected liability (or profit) for the credit derivative should the notional amount of the swap agreement been closed/sold as of the period end. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.

 

z Fair valued by Harbor Funds’ Valuation Committee.

 

AUD$ Australian Dollar.

 

R$ Brazilian Real.

 

£ British Pound.

 

€ Euro.

The accompanying notes are an integral part of the Portfolio of Investments.

 

22

Table of Contents

Harbor Real Return Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Total Investments (% of net assets)

(Excludes net cash, short-term investments, and derivative positions of –8.3%)

LOGO

 

ASSET-BACKED SECURITIES—1.9%

Principal
Amount
(000s)		         Value
(000s)
    
  

Allya Auto Receivable Trust Inc.

  
$ 1,300   

1.320%—03/15/20121,2

   $ 1,305
  

AMMC

  
  300   

0.488%—08/08/20171,2,3

     289
  

Chase Issuance Trust

  
  800   

0.253%—03/15/20132,3

     798
  

First Franklin Mortgage

  
  197   

0.281%—11/25/20362,3

     192
  

Wells Fargo Mortgage Backed Security Trust

  
  1,600   

5.002%—10/25/2035

     1,317
        
 
 		 TOTAL ASSET-BACKED SECURITIES
    (Cost $3,886)		     3,901
        
    

COLLATERALIZED MORTGAGE OBLIGATIONS—0.2%

  

Bear Stearns Adjustable Rate Mortgage Trust

  
  

Series 2005-2 Cl. A2

  
  7   

2.181%—03/25/20352,3

     7
  

Series 2005-5 Cl. A1

  
  13   

2.530%—08/25/20352,3

     13
  

Series 2005-5 Cl. A2

  
  23   

2.560%—08/25/20352,3

     22
  

Series 2005-2 Cl. A1

  
  23   

2.940%—03/25/20352,3

     21
        
       63
        
  

Federal Home Loan Mortgage Corp. REMIC4

  
  282   

0.463%—02/15/20192,3

     282
  83   

5.500%—05/15/20162

     84
        
       366
        
 
 		 TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
    (Cost $430)		     429
        
    

CORPORATE BONDS & NOTES—19.3%

  

Albertsons Inc.

  
  800   

7.500%—02/15/20112

     822
  

Allstate Life Global Funding Trust MTN5

  
  300   

5.375%—04/30/20132

     326
  

American Express Bank

  
  500   

0.361%—05/29/20122,3

     491
  600   

0.383%—06/12/20123

     589
        
       1,080
        
  

American Express Credit Corp.

  
  140   

7.300%—08/20/20132

     159

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  

American Express Credit Corp. MTN

  
$ 600   

0.393%—06/16/20112,3

   $ 597
  

American Honda Finance MTN5

  
  900   

1.003%—06/20/20111,2,3

     900
  

Bank Of America Auto Trust

  
  1,200   

1.160%—02/15/20121,2,3

     1,204
  

Bank of Nova Scotia

  
  400   

3.400%—01/22/20152

     406
  

BCAP Trust

  
  129   

0.401%—01/25/20372,3

     66
  

Citigroup Funding Inc.

  
  1,500   

5.700%—06/30/20112

     1,569
  700   

6.125%—05/15/20182

     704
        
       2,273
        
  

Citigroup Funding Inc. MTN5

  
  500   

1.325%—05/07/20102,3

     501
  

Citigroup Inc.

  
  1,000   

0.361%—05/18/20112,3

     989
  

Commonwealth Bank of Australia

  
  3,000   

0.533%—09/17/20141,2,3

     2,995
  

Countrywide Home Loan Trust

  
  172   

3.603%—04/20/20352

     157
  

FCE Bank plc

  
  1,800   

7.125%—01/16/2012

     2,496
  

Ford Credit Auto Owner Trust

  
  377   

0.357%—09/15/20101,2

     377
  

Ford Motor Auto Owner Trust

  
  63   

Series 2008-C Cl. A2B

1.133%—01/15/20112,3

     63
  

Ford Motor Credit Co. LLC

  
  100   

7.800%—06/01/20122

     101
  

GATX Financial Corp.

  
  1,000   

5.800%—03/01/20162

     1,007
  

HBOS plc

  
  300   

6.750%—05/21/20181,2

     294
  

Hewlett-Packard Co.

  
  700   

0.366%—03/01/20122,3

     700
  

HSBC Finance Corp.

  
  1,800   

1.749%—10/20/2010

     1,806
  

ING Bank

  
  1,800   

0.881%—01/13/20121,2,3

     1,797
  

LeasePlan Corp. NV1

  
  200   

3.000%—05/07/20122

     206
  

Lehman Brothers Holdings Inc. MTN*5

  
  100   

6.875%—05/02/2018

     22
  

Macquaire Bank Ltd.

  
  5,500   

3.300%—07/17/20141,2

     5,642
  

Merril Lynch Inc. MTN5

  
  1,500   

0.485%—06/05/20122,3

     1,470
  

Merrill Lynch & Co., Inc.

  
  2,900   

0.449%—07/25/20112,3

     2,877
  

Metropolitan Life Global Funding

  
  700   

1.001%—06/25/20101,2,3

     702
  199   

1.378%—09/17/20121,2,3

     201
  300   

2.157%—06/10/20111,2,3

     306
  100   

5.125%—04/10/20131,2

     108
        
       1,317
        

 

23

Table of Contents

Harbor Real Return Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

CORPORATE BONDS & NOTES—Continued

Principal
Amount
(000s)		         Value
(000s)
    
  

Morgan Stanley MTN5

  
$ 1,000   

2.373%—05/14/20102,3

   $ 1,006
  

National Rural Utility Corp.

  
  1,000   

1.026%—07/01/20102,3

     1,003
  

New York Life Global Funding

  
  200   

4.650%—05/09/20131,2

     212
  

Pricoa Global Funding

  
  600   

1.055%—06/04/20101,2,3

     600
  500   

0.349%—01/30/20121,2,3

     488
        
       1,088
        
  

Pulte Homes Inc.

  
  700   

7.875%—08/01/20112

     738
  

Race PT Ltd.

  
  2,119   

0.823%—05/15/20151,3

     2,013
  

SLM Corp.

  
  740   

2.067%—05/03/20192,3

     499
  

Starwood Hotels & Resorts Inc.

  
  1,000   

6.250%—02/15/20132

     1,034
  

Wells Fargo Home Equity Trust

  
  63   

0.481%—12/25/20351,2,3

     63
        
 
 		 TOTAL CORPORATE BONDS & NOTES
    (Cost $39,940)		     40,306
        
    

FOREIGN GOVERNMENT OBLIGATIONS—4.6%

  

Bundesrepublik Deutschland

  
  5,000   

3.750%—01/04/20156

     7,404
  

Buoni Poliennali

  
  1,003   

2.550%—09/15/20416

     1,388
  

Canadian Government Bond

  
  112   

3.000%—12/01/20366

     139
  

Deutsche Bundesrepublik Inflation Linked

  
  202   

1.750%—04/15/20206

     290
  

Japanese Government CPI Linked Bond

  
  29,760   

1.400%—06/10/20182,6

     323
        
 
 		 TOTAL FOREIGN GOVERNMENT OBLIGATIONS
    (Cost $9,782)		     9,544
        
    

MORTGAGE PASS-THROUGH—0.6%

  

Citigroup Mortgage Loan Trust Inc.

  
  633   

1.031%—08/25/20351,2,3

     435
  

Residential Accredit Loans Inc.

  
  194   

0.411%—06/25/20462,3

     73
  

Residential Asset Securitization Trust

  
  131   

0.631%—01/25/20462,3

     60
  

Structured Asset Mortgage Investments

  
  113   

0.441%—05/25/20462,3

     55
  

Washington Mutual Mortgage Pass Through Certificate

  
  90   

2.882%—09/25/20332,3

     90
  648   

5.605%—11/25/20362

     491
        
       581
        
 
 		 TOTAL MORTGAGE PASS-THROUGH
    (Cost $1,374)		     1,204
        
    

U.S. GOVERNMENT AGENCIES—2.7%

  
Principal
Amount
(000s)		         Value
(000s)		  
    
  

Federal National Mortgage Association REMIC4

  
$ 2,276   

0.581%—07/25/20373

   $ 2,249   
  2,276   

0.611%—07/25/20373

     2,250   
  1,253   

0.671%—05/25/20363

     1,240   
          
 
 		 TOTAL U.S. GOVERNMENT AGENCIES
    (Cost $5,723)		     5,739   
          
    

U.S. GOVERNMENT OBLIGATIONS—79.0%

  
  

U.S. Treasury Bonds

  
  651   

1.750%—01/15/20282,6

     636   
  9,321   

1.875%—07/15/20192,6

     9,860   
  9,763   

2.000%—07/15/2014-01/15/20262,6

     10,063   
  20,767   

2.375%—01/15/2025-01/15/20272,6

     22,350   
  7,647   

2.500%—01/15/20292,6

     8,360   
  2,437   

3.375%—04/15/20322,6

     3,073   
  3,344   

3.625%—04/15/20282,6

     4,204   
  12,962   

3.875%—04/15/20292,6

     16,967   
          
       75,513   
          
  

U.S. Treasury Notes

  
  5,220   

0.625%—04/15/20132,6

     5,359   
  7,993   

0.875%—04/15/20102,6

     8,032   
  10,116   

1.250%—04/15/20142,6

     10,562   
  903   

1.375%—07/15/20182,6

     922   
  680   

1.625%—01/15/20152,6

     715   
  31,957   

1.875%—07/15/2013-07/15/20152,6

     34,092   
  6,087   

2.000%—04/15/2012-01/15/20162,6

     6,508   
  4,534   

2.125%—01/15/20192,6

     4,897   
  2,725   

2.375%—04/15/20112,6

     2,828   
  1,609   

2.375%—01/15/20172,3,6

     1,764   
  750   

2.500%—07/15/20162,6

     829   
  2,296   

2.625%—07/15/20172,6

     2,565   
  9,384   

3.000%—07/15/20122,6

     10,174   
  249   

3.500%—01/15/20112,6

     259   
          
       89,506   
          
 
 		 TOTAL U.S. GOVERNMENT OBLIGATIONS
    (Cost $159,029)		     165,019   
          
    

SHORT-TERM INVESTMENTS—2.4%

  
  BANK OBLIGATIONS—1.1%  
  

Istituto Bancario SA2

  
  900   

3.316%—06/09/2010

     900   
  

UBS AG2

  
  1,500   

3.750%—07/01/2010

     1,500   
          
       2,400   
          
  REPURCHASE AGREEMENTS—1.3%  
  2,745   

Repurchase Agreement with State Street Corp.
dated January 29, 2010 due February 01, 2010 at 0.010% collateralized by Federal National Mortgage Association (market value $2,804)

     2,745   
          
 
 		 TOTAL SHORT-TERM INVESTMENTS
    (Cost $5,145)		     5,145   
          
 
 		 TOTAL INVESTMENTS—110.7%
    (Cost $225,309)		     231,287   
  CASH AND OTHER ASSETS, LESS LIABILITIES—(10.7)%     (22,366 ) 
          
  TOTAL NET ASSETS—100.0%   $ 208,921   
          

 

24

Table of Contents

Harbor Real Return Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

SWAP AGREEMENTS OPEN AT JANUARY 31, 2010

 

Interest Rate Swaps
Counterparty

  

Floating Rate Index

   Pay/Receive
Floating Rate		   Fixed Rate     Expiration Date   Notional
Amount
(000s)		   Unrealized
Appreciation/
(Depreciation)
(000s)		  

HSBC Bank USA, NA

  

Brazil Cetip Interbank Deposit

   Pay   2.261 %    01/02/2012   R$ 2,100   $ —   

Morgan Stanley Capital Services, Inc.

  

Brazil Cetip Interbank Deposit

   Pay   10.120      01/02/2012     100     (2 ) 

Barclays Capital plc

  

Brazil Cetip Interbank Deposit

   Pay   10.680      01/02/2012     1,000     (3 ) 

Morgan Stanley Capital Services, Inc.

  

Brazil Cetip Interbank Deposit

   Pay   11.600      01/02/2012     2,800     4   

Morgan Stanley Capital Services, Inc.

  

Brazil Cetip Interbank Deposit

   Pay   12.540      01/02/2012     400     8   

HSBC Bank USA, NA

  

Brazil Cetip Interbank Deposit

   Pay   14.765      01/02/2012     500     18 z 

JP Morgan Chase

  

France CPI Ex Tobacco

   Pay   2.261      07/14/2011   € 400     26   

BNP Paribas Bank

  

France CPI Ex Tobacco

   Pay   1.987      12/15/2011     100     4   
                 

Total Interest Rate Swaps

   $ 55   
                 

 

Credit Default Swaps
Counterparty

  

Reference Entity

   Buy/Sella,b   Pay/Receive
Fixed Rate		     Expiration Date   Implied
Credit Spreadc		     Market
Valuee 		  Upfront
Premium
Paid/(Received)		   Notional
Amount
(000s)d		   Appreciation/
(Depreciation)
(000s)		  

Credit Suisse First Boston

  

GATX Financial Corp.

   Buy   1.070 %    03/20/2016   1.769 %    $ 36   $ —   $ 1,000   $ 36   

Deutsche Bank

  

Pulte Homes Inc.

   Buy   1.000      09/20/2011   1.666        7     3     700     4   

Deutsche Bank

  

Strawood Hotels

   Buy   1.000      03/20/2013   1.564        17     18     1,100     (1 ) 

Deutsche Bank

  

SuperValu

   Buy   1.000      03/20/2011   1.844        7     8     800     (1 ) 
                       

Total Credit Default Swaps

   $ 38   
                       

Total Swaps

   $ 93   
                       

WRITTEN OPTIONS OPEN AT JANUARY 31, 2010

 

Description

    Number of
Shares/Contracts		     Strike
Price		    Expiration Date    Value
(000s)		  

Swap Option (Call)

    (2,000,000 )    $ 2.80    Feb-2010    $ —   

Swap Option (Call)

    (1,200,000 )      3.25    Feb-2010      —   

Swap Option (Call)

    (4,600,000 )      2.75    Apr-2010      (5 ) 

Swap Option (Call)

    (5,600,000 )      3.25    Apr-2010      (11 ) 

Swap Option (Call)

    (1,000,000 )      221.37    Dec-2010      (3 ) 

Swap Option (Put)

    (1,800,000 )      4.00    Feb-2010      (3 ) 

Swap Option (Put)

    (4,600,000 )      4.00    Apr-2010      (12 ) 

Swap Option (Put)

    (6,600,000 )      4.25    Apr-2010      (44 ) 

Swap Option (Put)

    (4,000,000 )      5.00    Jun-2010      (1 ) 

Swap Option (Put)

    (2,000,000 )      5.50    Aug-2010      (1 ) 

Swap Option (Put)

    (5,900,000 )      6.00    Aug-2010      (5 ) 

Swap Option (Put)

    (1,000,000 )      1.00    Dec-2010      (1 ) 

Swap Option (Put)

    (1,100,000 )      10.00    Jul-2012      (4 ) 

U.S. Treasury Notes (Call)

    (2 )      117.50    Feb-2010      (2 ) 

U.S. Treasury Notes (Call)

    (9 )      119.00    Feb-2010      (2 ) 

U.S. Treasury Notes (Call)

    (32 )      120.00    Feb-2010      (2 ) 

U.S. Treasury Notes (Call)

    (5 )      119.00    Apr-2010      (2 ) 

U.S. Treasury Notes (Put)

    (2 )      114.00    Feb-2010      —   

U.S. Treasury Notes (Put)

    (32 )      115.00    Feb-2010      (1 ) 

U.S. Treasury Notes (Put)

    (9 )      116.00    Feb-2010      (1 ) 

U.S. Treasury Notes (Put)

    (5 )      114.00    Apr-2010      (3 ) 
                

Written options outstanding, at value (premiums received of $370 )

    $ (103 ) 
                

FORWARD CURRENCY CONTRACTS OPEN AT JANUARY 31, 2010

 

Currency

    Market Value
(000s)		    Aggregate
Face Value
(000s)		    Delivery Date    Unrealized
Appreciation/
(Depreciation)
(000s)		  

Chinese Yuan (Buy)

    $ 364    $ 368    Mar-2010    $ (4 ) 

Chinese Yuan (Buy)

      913      922    Jun-2010      (9 ) 

Chinese Yuan (Buy)

      360      369    Nov-2010      (9 ) 

Chinese Yuan (Buy)

      265      270    Jan-2011      (5 ) 

Chinese Yuan (Sell)

      365      367    Mar-2010      2   

Chinese Yuan (Sell)

      267      270    Jun-2010      3   

Euro Currency(Sell)

      192      206    Feb-2010      14   

Euro Currency(Sell)

      8,972      9,167    Apr-2010      195   

 

25

Table of Contents

Harbor Real Return Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

FORWARD CURRENCY CONTRACTS OPEN AT JANUARY 31, 2010—Continued

 

Currency

    Market Value
(000s)		    Aggregate
Face Value
(000s)		    Delivery Date    Unrealized
Appreciation/
(Depreciation)
(000s)		  

Japanese Yen (Buy)

    $ 1,019    $ 1,012    Feb-2010    $ 7   

Japanese Yen (Sell)

      1,448      1,437    Apr-2010      (11 ) 

Malaysian Ringgit (Buy)

      4      4    Feb-2010      —   

Malaysian Ringgit (Buy)

      4      4    Oct-2010      —   

Malaysian Ringgit (Sell)

      4      4    Feb-2010      —   

Mexican Peso (Buy)

      1,729      1,713    Apr-2010      16   

Philippine Peso (Sell)

      3      3    Apr-2010      —   

Singapore Dollar (Buy)

      1,287      1,300    Feb-2010      (13 ) 

Singapore Dollar (Buy)

      200      200    Jun-2010      —   

South Korean Won (Buy)

      1,096      1,072    Feb-2010      24   

South Korean Won (Buy)

      503      494    Jul-2010      9   

South Korean Won (Buy)

      81      80    Aug-2010      1   

South Korean Won (Buy)

      706      716    Nov-2010      (10 ) 

South Korean Won (Sell)

      649      660    Feb-2010      11   
                 
            $ 221   
                 

FUTURES CONTRACTS OPEN AT JANUARY 31, 2010

 

Description

    Number of
Contracts		    Aggregate
Face Value
(000s)		    Expiration Date    Unrealized
Appreciation/
(Depreciation)
(000s)

Euribor Interest Rate 3 month (Buy)

    17    € 4,250    Jun-2010    $ —

Euro-Bobl Futures (Buy)

    4      400    Mar-2010      3

Euro-Bund Futures (Buy)

    23      2,300    Mar-2010      24

Eurodollar Futures CME 90 day (Buy)

    176    $ 44,000    Jun-2010      185
               
            $ 212
               

FAIR VALUE MEASUREMENTS

The following table summarizes the Fund’s investments as of January 31, 2010 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
Level3
(000s)		    Total
(000s)		  

Investments in Securities

           

Asset Backed Securities

    $ —    $ 3,901      $ —    $ 3,901   

Collaterralized Mortgage Obligations

      —      429        —      429   

Corporate Bond & Notes

      —      40,306        —      40,306   

Foreign Government Obligations

      —      9,544        —      9,544   

Mortgage-Pass Through

      —      1,204        —      1,204   

U.S. Government Agencies

      —      5,739        —      5,739   

U.S. Government Obligations

      —      165,019        —      165,019   

Short-Term Investments

           

Bank Obligations

      —      2,400        —      2,400   

Repurchase Agreements

      —      2,745        —      2,745   
                              

Total Investments in Securities

      —      231,287        —      231,287   
                              

Investments in Other Financial Instruments

           

Forward Currency Contracts

      —      221        —      221   

Futures Contracts

      —      212        —      212   

Options-Written

      —      (103 )      —      (103 ) 

Swap Agreements

      —      75        18      93   
                              

Total Investments in Other Financial Instruments

      —      405        18      423   
                              

Total Investments

    $ —    $ 231,692      $ 18    $ 231,710   
                              

 

26

Table of Contents

Harbor Real Return Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

FAIR VALUE MEASUREMENTS—Continued

The following is a reconciliation of the Fund’s Level 3 investment during the period ended January 31, 2010.

 

Valuation Description

    Beginning
Balance at
10/31/2009		    Net
Purchases/
(Sales)		    Accrued
Discount/
(Premium)		    Total
Realized
Gain/(Loss)		    Change in
Unrealized
Appreciation/
(Depreciation)		    Net
Transfers
In/(Out)
of Level 3		    Ending
Balance
as of
01/31/2010

Swap Agreements

    $ 18    $ —    $ —    $ —    $ —    $ —    $ 18
                                                

For more information on valuation inputs and their aggregation into the levels used in the table above, please refer to Fair Value Measurements in Note 2 of the accompanying Notes to Portfolios of Investments

DERIVATIVE INSTRUMENTS

The following table summarizes the Fund’s derivative instruments categorized by risk exposure as of January 31, 2010.

 

Risk Exposure Category

    Asset Derivatives
Fair Value
(000s)		    Liability Derivatives
Fair Value
(000s)		  

Credit Contracts

    $ 40    $ (2 ) 

Foreign Exchange Contracts

      282      (61 ) 

Interest Rate Contracts

      272      (108 ) 
               

Total

    $ 594    $ (171 ) 
               

 

 

 

* Security in default.

 

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. These securities are priced by an independent pricing service selected by the adviser (Harbor Capital Advisors, Inc.), or using valuation procedures approved by the Board of Trustees. At January 31, 2010, these securities were valued at $20,137 or 10% of net assets.

 

2 At January 31, 2010, a portion of securities held by the Fund were pledged to cover margin requirements for open future contracts, written options on futures contracts and swap options. (See Note 2 to the Notes to Portfolios of Investments.) The securities pledged had an aggregate market value of $205,339 or 98% of net assets.

 

3 Floating rate security. The stated rate represents the rate in effect at January 31, 2010.

 

4 REMICs are CMOs which can hold mortgages secured by any type of real property and issue multiple-class securities backed by those mortgages.

 

5 MTN after the name of a security stands for Medium Term Note.

 

6 Treasury inflation-protected securities (TIPS) are securities in which the principal amount is adjusted for inflation and interest payments are applied to the inflation-adjusted principal.

 

a If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or underlying securities comprising the referenced index or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index.

 

b If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index.

 

c Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues or sovereign issues of an emerging country as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identifìed as “Defaulted” indicates a credit event has occurred for the referenced entity or obligation.

 

d The maximum potential amount the Fund could be required to make as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defìned under the terms of that particular swap agreement.

 

e The quoted market prices and resulting values for credit default swap agreements on asset-backed securities and credit indices serve as an indicator of the current status of the payment/performance risk and represent the likelihood of an expected liability (or profìt) for the credit derivative should the notional amount of the swap agreement been closed/sold as of the period end. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.

 

z Fair valued by Harbor Funds’ Valuation Committee.

 

R$ Brazilian Real.

 

€ Euro.

The accompanying notes are an integral part of the Portfolio of Investments.

 

27

Table of Contents

Harbor Short Duration Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Total Investments (% of net assets)

(Excludes net cash, short-term investments, and derivative positions of 2.1%)

LOGO

 

ASSET-BACKED SECURITIES—11.8%

  
Principal
Amount
(000s)		          Value
(000s)		  
   
 

Ameriquest Mortgage Securities Inc.
Series 2006-R1 Cl. M1

  
$ 1,000     

0.621%—03/25/20361

   $ 278   
 

Contimortgage Home Equity Trust
Series 1996-4 Cl. A10

  
  942     

0.713%—01/15/20281

     359   
 

HSI Asset Securitization Corp. Trust
Series 2006-OPT2 Cl. M1

  
  1,000     

0.601%—01/25/20361

     436   
 

Residential Asset Mortgage Products Inc.
Series 2003-RS4 Cl. AIIB

  
  416     

0.891%—05/25/20331

     258   
 

Residential Asset Securities Corp.
Series 2005-KS10 Cl. M2

  
  1,000     

0.671%—11/25/20351

     144   
 

Series 2005-KS1 Cl. M1

  
  1,000     

0.681%—02/25/20351

     621   
 

Series 2001-KS2 Cl. AII

  
  — a   

0.691%—06/25/20311

     — a 
 

Series 2004-KS4 Cl. A2B3

  
  956     

0.991%—05/25/20341

     489   
         
      1,254   
         
 

Residential Funding Mortgage Securities II Inc.
Series 2003-HS2 Cl. AIIB

  
  142     

0.481%—06/25/20281

     56   
 

Specialty Underwriting & Residential Finance
Series 2004-BC4 Cl. M1

  
  590     

1.031%—10/25/20351

     333   
 

Wells Fargo Home Equity Trust
Series 2005-4 Cl. AI3

  
  1,000     

0.611%—12/25/20351,2

     911   
         
 
 		 TOTAL ASSET-BACKED SECURITIES
    (Cost $8,053)		     3,885   
         
   

COLLATERALIZED MORTGAGE OBLIGATIONS—13.5%

  
 

Federal Home Loan Mortgage Corp. REMIC3

  
  790     

0.783%—02/15/20251

     790   
  842     

4.375%—04/15/2015

     867   
         
      1,657   
         

COLLATERALIZED MORTGAGE OBLIGATIONS—Continued

  
Principal
Amount
(000s)		          Value
(000s)		  
   
 

Federal National Mortgage Association REMIC3

  
 

Series 1997-68 Cl. FC

  
$ 631     

0.750%—05/18/20271

   $ 626   
  584     

1.650%—01/25/20231

     586   
         
      1,212   
         
 

First Horizon Alternative Mortgage Securities
Series 2006-FA6 Cl. IIA1

  
  — a   

6.250%—11/25/2036

     — a 
 

Government National Mortgage Association

  
  680     

0.783%—10/16/20291

     679   
 

Structured Adjustable Rate Mortgage Loan Trust
Series 2004-20 Cl. 1A1

  
  734     

2.831%—01/25/20354

     540   
 

Structured Asset Securities Corp.
Series 2002-1A Cl. 2A1

  
  419     

3.029%—02/25/20324

     339   
         
 
 		 TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
    (Cost $4,701)		     4,427   
         
   

U.S. GOVERNMENT AGENCIES—22.0%

  
 

Federal Home Loan Mortgage Corp.

  
  5,000     

4.750%—01/18/2011

     5,208   
 

Federal National Mortgage Association

  
  2,000     

1.000%—11/23/2011

     2,006   
         
 
 		 TOTAL U.S. GOVERNMENT AGENCIES
    (Cost $7,086)		     7,214   
         
   

U.S. GOVERNMENT OBLIGATIONS—50.6%

  
 

U.S. Treasury Notes

  
  13,400     

1.125%—01/15/2012

     13,486   
  3,000     

3.125%—08/31/2013

     3,152   
         
 
 		 TOTAL U.S. GOVERNMENT OBLIGATIONS
    (Cost $16,504)		     16,638   
         
   

SHORT-TERM INVESTMENTS—2.1%

  

 

(Cost $690)

  
  REPURCHASE AGREEMENTS  
  690     

Repurchase Agreement with State Street Corp.
dated January 29, 2010 due February 02, 2010 at
0.010% collateralized by U.S. Treasury Bills
(market value $704)

     690   
         
 
 		 TOTAL INVESTMENTS—100.0%
    (Cost $37,034)		     32,854   
  CASH AND OTHER ASSETS, LESS LIABILITIES—0.0%     (8 ) 
         
  TOTAL NET ASSETS—100.0%   $ 32,846   
         

 

 

28

Table of Contents

Harbor Short Duration Fund

PORTFOLIO OF INVESTMENTS—Continued

 

 

FUTURES CONTRACTS OPEN AT JANUARY 31, 2010

 

Description

    Number of
Contracts		    Aggregate
Face Value
(000s)		    Expiration Date    Unrealized
Appreciation/
(Depreciation)
(000s)

U.S. Treasury Note Futures—2 year (Buy)

    10    $ 2,000    Mar-2010    $ 2
               

FAIR VALUE MEASUREMENTS

Holdings in the Future Contracts category valued at $2 are classified as Level 1. All other holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 2. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

DERIVATIVE INSTRUMENTS

The following table summarizes the Fund’s derivative instruments categorized by risk exposure as of January 31, 2010.

 

Risk Exposure Category

    Asset Derivatives
Fair Value
(000s)		    Liability Derivatives
Fair Value
(000s)

Commodity Contracts

    $ —    $ —

Foreign Exchange Contracts

      —      —

Interest Rate Contracts

      2      —
             

Total

    $ 2    $ —
             

 

 

 

1 Floating rate security. The stated rate represents the rate in effect at January 31, 2010.

 

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. These securities are priced by an independent pricing service selected by the adviser (Harbor Capital Advisors, Inc.), or using valuation procedures approved by the Board of Trustees. At January 31, 2010, these securities were valued at $911 or 3% of net assets.

 

3 REMICs are CMOs which can hold mortgages secured by any type of real property and issue multiple-class securities backed by those mortgages.

 

4 Variable rate security. The stated rate represents the rate in effect at January 31, 2010.

 

a Rounds to less than $1,000.

The accompanying notes are an integral part of the Portfolio of Investments.

 

29

Table of Contents

Harbor Money Market Fund

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

Total Investments (% of net assets)

(Excludes net cash of –0.2%)

LOGO

 

U.S. GOVERNMENT AGENCIES—94.7%

Principal
Amount
(000s)		         Value
(000s)
    
  

Federal Farm Credit Bank

  
$ 5,000   

0.231%—12/27/2010

   $ 4,999
  

Federal Home Loan Bank Discount Notes

  
  45,065   

0.010%—02/05/2010-05/21/2010

     45,056
  

Federal Home Loan Mortgage Corp. Discount Notes

  
  47,204   

0.010%—02/08/2010-08/17/2010

     47,192
  7,900   

0.010%—03/01/2010

     7,898
  4,000   

0.242%—08/24/2010

     4,001
        
       59,091
        

 

U.S. GOVERNMENT AGENCIES—Continued

  
Principal
Amount
(000s)		         Value
(000s)		  
    
  

Federal National Mortgage Association Discount Notes

  
$ 54,170   

0.010%–02/03/2010-04/01/2010

   $ 54,167   
          
 
 		 TOTAL U.S. GOVERNMENT AGENCIES
    (Cost $163,313)		     163,313   
          
    

U.S. TREASURY BILLS—5.5%

  

 

(Cost $9,592)

  
  

U.S. Treasury Bills

  
  9,600   

0.010%—05/27/2010-06/10/2010

     9,592   
          
 
 		 TOTAL INVESTMENTS—100.2%
    (Cost $172,905)1		     172,905   
  CASH AND OTHER ASSETS, LESS LIABILITIES—(0.2)%     (389 ) 
          
  TOTAL NET ASSETS—100.0%   $ 172,516   
          

 

FAIR VALUE MEASUREMENTS

All holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 2. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

1 The aggregate identified cost on a tax basis is the same.

The accompanying notes are an integral part of the Portfolio of Investments.

 

30

Table of Contents

Harbor Fixed Income Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—January 31, 2010

 

(Currency in thousands)

 

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. The Trust consists of 27 separate portfolios. The portfolios covered by this report include Harbor High-Yield Bond Fund, Harbor Bond Fund, Harbor Real Return Fund, Harbor Short Duration Fund and Harbor Money Market Fund (individually or collectively referred to as a “Fund” or the “Funds,” respectively). Harbor Capital Advisors, Inc. (the “Adviser” or “Harbor Capital”) is the investment adviser for the Funds.

The Funds of the Trust may offer up to three classes of shares, designated as Institutional Class, Administrative Class, and Investor Class. The shares of each class represent an interest in the same portfolio of investments of the respective Fund and have equal rights to voting, redemptions, dividends, and liquidations, except that: (i) certain expenses, subject to the approval of the Trust’s Board of Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission 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

Security Valuation

Except in the case of Harbor Money Market Fund, debt securities, other than short-term securities with a remaining maturity of less than 60 days at the time they are acquired, are valued using evaluated prices furnished by a pricing service selected by the Adviser and approved by the Board of Trustees. An evaluated price represents an assessment by the pricing service using various market inputs of what the pricing service believes is the fair market value of a security at a particular point in time. The pricing service 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 service 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. 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 service’s evaluation process, which means that the evaluated price supplied by the pricing service will frequently differ from that transaction price. Short-term securities with a remaining maturity of less than 60 days at the time they are acquired are stated at amortized cost which approximates fair value.

Equity securities, 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 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 were no sales on the valuation day, securities traded principally: (i) on a U.S. exchange, including NASDAQ, will be valued at the mean between the closing bid and asked price; (ii) on a foreign exchange, including United Kingdom securities, will be valued at the official bid price determined as of the close of the primary exchange.

When reliable market quotations or evaluated prices supplied by a pricing vendor are not readily available or are not believed to accurately reflect fair value, securities are priced at their fair value, determined by the Trust’s Valuation Committee pursuant to procedures adopted by the Board of Trustees. 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. 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 the Fund may value those securities higher or lower than another fund that uses market quotations, official closing prices or evaluated prices supplied by a pricing vendor.

 

31

Table of Contents

Harbor Fixed Income Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

Securities of Harbor Money Market Fund are valued utilizing the amortized cost method as set forth in Rule 2a-7 under the Investment Company Act and the Fund’s Rule 2a-7 procedures.

Fair Value Measurements

In September 2006, the Financial Accounting Standards Board (FASB) issued Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures. ASC 820 establishes a framework for measuring fair value and expands disclosures about fair value measurements in financial statements, effective for the Funds’ current fiscal year.

The various inputs that may be used to determine the value of each Fund’s investments are summarized in three categories defined as Level 1, Level 2 and Level 3. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The assignment of an investment to Level 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 observable inputs are not available.

For fair valuations using significant unobservable inputs, ASC 820 requires a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in/out of the Level 3 category during the period. A fair value hierarchy and Level 3 reconciliation, when applicable, can be found at the end of each Fund’s Portfolio of Investments schedule.

ASC 820 also provides guidance on determining when there has been a significant decrease in the trading volume and level of activity for a holding, when a transaction is not orderly, and how that information must be incorporated into a fair value measurement. ASC 820 emphasizes that even if there has been a significant decrease in the trading volume and level of activity for a holding and regardless of the valuation techniques used, the objective of a fair value measurement remains the same. The adoption of ASC 820 had no impact on the Funds’ net assets or results of operations.

The Funds used observable inputs in their valuation methodologies whenever they were available and deemed reliable.

Futures Contracts

To seek to increase total return or hedge against changes in interest rates, securities prices or currency exchange rates, each Fund (except Harbor Money Market Fund) may purchase and sell various kinds of futures contracts, and purchase and write call and put options on these futures contracts. Harbor High-Yield Bond Fund is not authorized to enter into currency futures contracts and options on such contracts. Futures contracts tend to increase or decrease a Fund’s exposure to the underlying instrument or hedge other Fund investments. Losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts or if the counterparties do not perform under the contracts’ terms. The maximum potential loss on a long futures contract is the U.S. dollar value of the notional amount at the time the contract is opened. The potential loss on a short futures contract is unlimited. Open futures contracts are valued based on the official daily closing price of futures contracts set by the exchange for the purpose of settling margin accounts, which is referred to as the settlement price. There is minimal counterparty risk with futures contracts as they are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default.

A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. Upon entering into such a 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. Such

 

32

Table of Contents

Harbor Fixed Income Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

receipts or payments are known as “variation margin,” and are recorded by a Fund as unrealized gains or losses. When the contract is closed or expired, 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 and there is no assurance that a portfolio manager will be able to close out its position when the portfolio manager 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 portfolio manager would not otherwise elect to do so. In addition, a Fund may be required to deliver or take delivery of instruments.

See the Portfolio of Investments for each Fund for open futures contracts held as of January 31, 2010.

Options

Consistent with its investment policies, each Fund (excluding Harbor Money Market Fund) may use options contracts to manage its exposure to the stock and bond markets and to fluctuations in interest rates and currency values. Harbor High-Yield Bond Fund is not authorized to engage in options transactions on currencies. Harbor Bond Fund, Harbor Real Return Fund, and Harbor Short Duration Fund may use options on currencies for cross-hedging purposes. Call options tend to decrease a Fund’s exposure to the underlying instrument. Put options tend to increase a Fund’s exposure to the underlying instrument.

Purchased options on futures contracts are valued based on the settlement price for the underlying futures contract. If the 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 originally paid. A Fund’s maximum risk of loss from counterparty credit risk is also limited to the premium paid.

Written options on equity securities are valued at the last sale price or, in the absence of a sale, the last offering price on the market on which they are principally traded. Written options on futures contracts are valued based on the settlement price for the underlying futures contract. If an option expires on its stipulated expiration date, or if a Fund enters into a closing purchase transaction, such 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 which 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 market price 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 market price 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 counterparties do not perform under the contracts’ terms.

See the Portfolio of Investments for each Fund for written options open as of January 31, 2010.

Swap Agreements

Each Fund, except Harbor Money Market Fund, may invest in swap agreements to help manage interest rate risk or credit risk these Fund are subject to in the normal course of pursuing its investment objectives. These Funds may use swaps to

 

33

Table of Contents

Harbor Fixed Income Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

manage exposure to changes in interest rates or credit quality, to create or adjust exposure to certain markets, to enhance total return or hedge the value of portfolio securities, or to adjust overall portfolio duration and credit exposure. A swap is a privately negotiated agreement between two parties to exchange cash flows at specified intervals (payment dates) during the agreed-upon life of the contract. Swaps are valued using evaluated prices furnished by a pricing service selected by the Board of Trustees. When evaluated prices supplied by a pricing vendor are not readily available or are not believed to accurately reflect fair value, swaps are priced at their fair value determined by the Valuation Committee pursuant to procedures adopted by the Board of Trustees. In those instances, the procedures provide that swaps would be valued using prices supplied by the Fund’s subadviser using its own internal valuation models that are based upon correlations and relationships between swap price movements and other factors, such as changes in swap curves and interest rates, which are recognized by institutional traders.

Each Fund, except the Harbor Money Market Fund, may enter into credit default swap agreements. 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 event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or “par value,” of the reference obligation in exchange for the reference obligation. A Fund may be either the buyer or seller in a credit default swap transaction. If a Fund is a buyer and no event of default occurs, the Fund will lose its investment and recover nothing. However, if an event of default occurs, the Fund (if the buyer) is entitled to receive the full notional value of the reference obligation that may have little or no value. As a seller, a Fund receives a fixed rate of income throughout the term of the contract, which typically is between six months and three years, provided that there is no default event. If an event of default occurs, the seller must pay the buyer the full notional value of the reference obligation. The maximum exposure to loss of the notional value of credit default swaps outstanding at January 31, 2010 for the Harbor Bond Fund is $177,328. Credit default swap transactions involve greater risks than if a Fund had invested in the reference obligation directly.

A Fund will only enter into currency swap, interest rate swap, mortgage swap, cap or floor transactions with counterparties to such transactions that meet the minimum credit quality requirements applicable to the Fund generally and meet any other appropriate counterparty criteria as determined by the Fund’s Subadviser. The minimum credit quality requirements are those applicable to a Fund’s purchase of securities generally such that if the Fund is permitted to only purchase securities which are rated investment grade (or the equivalent if unrated), the Fund could only enter into one of the above referenced transactions with counterparties that have debt outstanding that is rated investment grade (or the equivalent if unrated).

Entering into swap agreements involves, to varying degrees, elements of credit risk, market risk, and interest rate risk. Such risks involve 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 and that there may be unfavorable changes in market conditions or interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted value of the net cash flows to be received from/paid to the counterparty over the contract’s remaining life or the fair value of the contract. This risk is mitigated by entering into swap agreements with only highly-rated counterparties, the existence of a master netting arrangement with the fund and the counterparty, and the posting of collateral by the counterparty.

Swap agreements outstanding at the period end, if any, are listed after each Funds’ portfolio.

Loan Participations and Assignments

Each Fund, except the Harbor Money Market Fund, may invest in 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 participations 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 “lender”) that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. When investing in a loan participation, the Fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the loan agreement and only upon receipt by the lender of payments from the borrower. As a result, the Fund may be subject to the credit risk of both the borrower and the lender that is selling the loan agreement. When the Fund purchases assignments from lenders it acquires direct rights against the borrower on the loan.

 

34

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Harbor Fixed Income Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

See the Portfolio of Investments for each Fund for unfunded loan commitments at the period ended January 31, 2010.

Inflation-Indexed Bonds

Harbor Real Return Fund invests primarily in inflation-indexed bonds. Harbor Bond Fund and Harbor Short Duration Fund also may invest in 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, which is adjusted for inflation. Any increase in the principal amount of an inflation-indexed bond will be included as interest income, even though investors do not receive their principal until maturity.

Mortgage-Related and Other Asset-Backed Securities

Each Fund, except Harbor Money Market Fund, may invest in mortgage- or other asset-backed securities. These securities include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities (“SMBSs”) and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose a Fund to a lower rate of return upon reinvestment of principal. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

U.S. Government Securities

Securities issued by U.S. government agencies or government-sponsored enterprises may not be guaranteed by the U.S. Treasury. The Government National Mortgage Association (“GNMA” or “Ginnie Mae”), a wholly owned U.S. government corporation, is authorized to guarantee, with the full faith and credit of the U.S. Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA and backed by pools of mortgages insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. Government-related guarantors (i.e., not backed by the full faith and credit of the U.S. Government) include the Federal National Mortgage Association (“FNMA” or “Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”). On September 7, 2008, the Federal Housing Finance Agency (“FHFA”) placed Fannie Mae and Freddie Mac in conservatorship, while the Treasury agreed to purchase preferred stock as needed to ensure that both Fannie Mae and Freddie Mac maintain a positive net worth (guaranteeing up to $100 billion for each entity). As a consequence, certain fixed income securities of Fannie Mae and Freddie Mac have more explicit U.S. Government support.

Forward Commitments and When-Issued Securities

Each Fund may purchase securities on a when-issued or purchase or sell securities on a forward commitment basis including “TBA” (to be announced) purchase and sale commitments. Purchasing securities on a when-issued or forward commitment basis involves a risk of loss if the value of the security to be purchased declines prior to the settlement date, which risk is in addition to the risk of decline in value of a Fund’s other assets. Although a Fund would generally purchase securities on a when-issued or forward commitment basis with the intention of acquiring securities for its portfolio, such Fund may dispose of a when-issued security or forward commitment prior to settlement if the Subadviser deems it appropriate to do so. Each Fund may enter into a forward-commitment sale to hedge its portfolio positions or to sell securities it owned under delayed delivery arrangement. Proceeds of such a sale are not received until the contractual settlement date. While such a contract is outstanding, a Fund must segregate equivalent deliverable securities or hold an offsetting purchase commitment. A Fund may realize short-term gains or losses upon such purchases and sales. These transactions involve a commitment by a Fund to purchase or sell securities at a future date (ordinarily one or two months

 

35

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Harbor Fixed Income Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

later). The price of the underlying securities (usually expressed in terms of yield) and the date when the securities will be delivered and paid for (the settlement date) are fixed at the time the transaction is negotiated. When-issued purchases and forward commitment transactions are negotiated directly with the other party, and such commitments are not traded on exchanges.

The value of securities purchased on a when-issued or forward commitment basis and any subsequent fluctuations in their value are reflected in the computation of a Fund’s net asset value starting on the date of the agreement to purchase the securities. A Fund does not earn interest on the securities it has committed to purchase until they are paid for and delivered on the settlement date. When a Fund makes a forward commitment to sell securities it owns, the proceeds to be received upon settlement are included in the Fund’s assets. Fluctuations in the market value of the underlying securities are not reflected in a Fund’s net asset value as long as the commitment to sell remains in effect. Settlement of when-issued purchases and forward commitment transactions generally takes place within two months after the date of the transaction, but a Fund may agree to a longer settlement period.

A Fund will purchase securities on a when-issued basis or purchase or sell securities on a forward commitment basis only with the intention of completing the transaction and actually purchasing or selling the securities. If deemed advisable as a matter of investment strategy, however, a Fund may dispose of or renegotiate a commitment after it is entered into. A Fund also may sell securities it has committed to purchase before those securities are delivered to the Fund on the settlement date. A Fund may realize a capital gain or loss in connection with these transactions.

When a Fund purchases securities on a when-issued or forward commitment basis, the Fund will maintain in a segregated account with the Fund’s custodian or set aside in the Fund’s records, cash or liquid assets having a value (determined daily) at least equal to the amount of the Fund’s purchase commitments. In the case of a forward commitment to sell portfolio securities, portfolio holdings will be held in a segregated account with a Fund’s custodian or set aside on the Fund’s records while the commitment is outstanding.

See the Portfolio of Investments for each Fund for outstanding forward commitments or when-issued securities as of January 31, 2010, if any.

Short Sales

Each Fund, except Harbor Money Market Fund, may engage in short-selling which obligates a Fund to replace the security borrowed by purchasing it at the market price at the time of replacement. Until the security is replaced, such Fund is required to pay to the lender any accrued interest or dividends, and may be required to pay a premium. A Fund would realize a gain if the security declines in price between the date of the short sale and the date on which the Fund replaces the borrowed security. A Fund would incur a loss as a result of the short sale if the price of the security increases between those dates. Until a Fund replaces the borrowed security, it will maintain in a segregated account or set aside in such Fund’s records, cash or liquid securities sufficient to cover its short position. Short sales involve the risk of an unlimited increase in the market price of the borrowed security.

See the Portfolio of Investments for each Fund for outstanding short sales as of January 31, 2010, if any.

Foreign Forward Currency Contracts

Each Fund, except Harbor High-Yield Bond Fund and Harbor Money Market Fund, may enter into foreign forward currency contracts to facilitate transactions in foreign securities or as a hedge against foreign exchange risk related to specific transactions or portfolio positions. A foreign forward currency contract is an agreement between two parties to buy and sell currencies at a set price on a future date. The U.S. dollar value of the contracts is determined using forward currency exchange rates supplied by a pricing service selected by Harbor Capital. The contract is marked-to-market daily and the change in market value is recorded as an unrealized gain or loss. When the contract is closed, a Fund records a realized gain or loss equal to the difference between the value on the open and close date. Losses may arise from changes

 

36

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Harbor Fixed Income Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

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; however, management of the Fund believes the likelihood of such loss is remote. There is minimal counterparty risk with foreign forward currency contracts as they are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded foreign forward currency contracts, guarantees the contracts against default.

See the Portfolio of Investments for each Fund for outstanding foreign forward currency contracts as of January 31, 2010.

Foreign Currency Translations

The accounting records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars based on the current exchange rates at period end. Purchases and sales of securities are translated into U.S. dollars at the current exchange rate on the respective dates of the transaction. Income and withholding taxes are translated at the prevailing exchange rate when accrued or incurred.

Reported net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of foreign forward 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.

Repurchase Agreements

Each Fund may enter into repurchase agreements with domestic or foreign banks or with any member firm of the Financial Industry Regulatory Authority, Inc. (“FINRA”), or any affiliate of a member firm which is a primary dealer in U.S. government securities. Each repurchase agreement counterparty must meet the minimum credit quality requirements applicable to the respective Fund generally and meet any other appropriate counterparty criteria as determined by the Fund’s Subadviser. The minimum credit quality requirements are those applicable to a Fund’s purchase of securities generally such that if a Fund is permitted to only purchase securities which are rated investment grade (or the equivalent if unrated), that Fund could only enter into repurchase agreements with counterparties that have debt outstanding that is rated investment grade (or the equivalent if unrated). 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 the Fund to close out the repurchase agreement. The securities will be regularly monitored to ensure that the collateral is adequate. In the event of the bankruptcy of the seller or the failure of the seller to repurchase the securities as agreed, the Fund could suffer losses, including loss of interest on or principal of the securities and costs associated with delay and enforcement of the repurchase agreement.

Reverse Repurchase Agreements

Harbor Short Duration Fund may enter into reverse repurchase agreements with banks and third party broker-dealers. The Fund may use reverse repurchase agreements to borrow short term funds. Interest on the value of reverse repurchase agreements issued and outstanding is based upon competitive market rates at the time of issuance. At the time the Fund enters into a reverse repurchase agreement, it establishes and maintains a segregated account with the lender containing liquid high-grade securities having a value not less than the repurchase price, including accrued interest, of the reverse repurchase agreement. Reverse repurchase agreements involve the risk that the market value of the securities sold by the 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 market value of securities bought may decline below the repurchase price of securities sold.

 

37

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Harbor Fixed Income Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—Continued

 

(Currency in thousands)

 

 

NOTE 3—TAX INFORMATION

The identified cost for federal income tax purposes of investments owned by each Fund (including earned discount on corporate short-term notes and commercial paper) and their respective gross unrealized appreciation and depreciation at January 31, 2010 are as follows:

 

          Gross Unrealized     Net Unrealized
Appreciation/
(Depreciation)		  
     Identified Cost    Appreciation    (Depreciation)    

Harbor High-Yield Bond Fund

    $ 786,478    $ 51,022    $ (1,418 )    $ 49,604   

Harbor Bond Fund

      6,372,039      176,665      (90,121 )      86,544   

Harbor Real Return Fund*

      225,309      6,642      (664 )      5,978   

Harbor Short Duration Fund*

      37,034      300      (4,480 )      (4,180 ) 

 

 

* Capital loss carryforwards are available which may reduce taxable income from future net realized gain on investments.

 

38

Table of Contents

LOGO

 

111 South Wacker Drive, 34th Floor   Chicago, IL 60606-4302   800-422-1050   www.harborfunds.com

 

Trustees & Officers

David G. Van Hooser

Chairman, President & Trustee

Raymond J. Ball

Trustee

Howard P. Colhoun

Trustee

John P. Gould

Trustee

Rodger F. Smith

Trustee

Charles F. McCain

Chief Compliance Officer

Anmarie S. Kolinski

Treasurer

Erik D. Ojala

Vice President & Secretary

Brian L. Collins

Vice President

Charles P. Ragusa

Vice President

Jodie L. Crotteau

Assistant Secretary

Susan A. DeRoche

Assistant Secretary

 

Investment Adviser

Harbor Capital Advisors, Inc.

111 South Wacker Drive, 34th Floor

Chicago, IL 60606-4302

Distributor & Principal Underwriter

Harbor Funds Distributors, Inc.

111 South Wacker Drive, 34th Floor

Chicago, IL 60606-4302

312-443-4400

Shareholder Servicing Agent

Harbor Services Group, Inc.

P.O. Box 804660

Chicago, IL 60680-4108

800-422-1050

Custodian

State Street Bank & Trust Company

State Street Financial Center

1 Lincoln Street

Boston, MA 02111

 

03/2010   FD.NQ.FIF.0110

Table of Contents

LOGO

 

Quarterly Schedule of Portfolio Holdings

January 31, 2010

Target Retirement Funds

 

Harbor Target Retirement Income Fund

Harbor Target Retirement 2010 Fund

Harbor Target Retirement 2015 Fund

Harbor Target Retirement 2020 Fund

Harbor Target Retirement 2025 Fund

Harbor Target Retirement 2030 Fund

Harbor Target Retirement 2035 Fund

Harbor Target Retirement 2040 Fund

Harbor Target Retirement 2045 Fund

Harbor Target Retirement 2050 Fund

Table of Contents

 

Table of Contents

 

 

Portfolios of Investments

     

HARBOR TARGET RETIREMENT INCOME FUND

      1

HARBOR TARGET RETIREMENT 2010 FUND

     2

HARBOR TARGET RETIREMENT 2015 FUND

      3

HARBOR TARGET RETIREMENT 2020 FUND

     4

HARBOR TARGET RETIREMENT 2025 FUND

     5

HARBOR TARGET RETIREMENT 2030 FUND

     6

HARBOR TARGET RETIREMENT 2035 FUND

     7

HARBOR TARGET RETIREMENT 2040 FUND

     8

HARBOR TARGET RETIREMENT 2045 FUND

     9

HARBOR TARGET RETIREMENT 2050 FUND

     10

Notes to Portfolios of Investments

     11

Table of Contents

Harbor Target Retirement Income Fund†

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

HARBOR EQUITY FUNDS—19.4%

Shares         Value
(000s)
    
HARBOR DOMESTIC EQUITY FUNDS—12.6%
14,682   

Harbor Capital Appreciation Fund

   $ 455
31,082   

Harbor Mid Cap Growth Fund

     205
17,166   

Harbor Small Cap Growth Fund

     168
101,659   

Harbor Large Cap Value Fund

     692
32,729   

Harbor Mid Cap Value Fund

     313
7,814   

Harbor Small Cap Value Fund

     124
18,605   

Harbor Small Company Value Fund

     126
        
       2,083
        
HARBOR INTERNATIONAL EQUITY FUNDS—6.8%
15,301   

Harbor International Fund

     786
32,528   

Harbor International Growth Fund

     338
        
       1,124
        
TOTAL HARBOR EQUITY FUNDS
    (Cost $2,497)		     3,207
        

HARBOR FIXED INCOME FUNDS—65.5%

Shares         Value
(000s)
    
36,949   

Harbor High-Yield Bond Fund

   $ 390
580,985   

Harbor Bond Fund

     7,158
320,421   

Harbor Real Return Fund

     3,310
        
TOTAL HARBOR FIXED INCOME FUNDS
    (Cost $10,218)		     10,858
        
    

SHORT-TERM INVESTMENTS—15.1%

(Cost $2,505)

  
2,504,692   

Harbor Money Market Fund

     2,505
        
TOTAL INVESTMENTS—100.0%
    (Cost $15,220)		     16,570
        
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0%     1
        
TOTAL NET ASSETS—100.0%   $ 16,571
        

 

FAIR VALUE MEASUREMENTS

All holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

† The Harbor Target Retirement Income Fund is investing in Institutional shares of affiliated Harbor Funds.

The accompanying notes are an integral part of the Portfolio of Investments.

 

1

Table of Contents

Harbor Target Retirement 2010 Fund†

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

HARBOR EQUITY FUNDS—27.2%

Shares         Value
(000s)
    
HARBOR DOMESTIC EQUITY FUNDS—17.7%
2,685   

Harbor Capital Appreciation Fund

   $ 83
5,679   

Harbor Mid Cap Growth Fund

     37
3,134   

Harbor Small Cap Growth Fund

     31
18,564   

Harbor Large Cap Value Fund

     126
5,979   

Harbor Mid Cap Value Fund

     57
1,427   

Harbor Small Cap Value Fund

     23
3,401   

Harbor Small Company Value Fund

     23
        
       380
        
HARBOR INTERNATIONAL EQUITY FUNDS—9.5%  
2,789   

Harbor International Fund

     143
5,930   

Harbor International Growth Fund

     62
        
       205
        
TOTAL HARBOR EQUITY FUNDS
    (Cost $546) 		    585
        
    

HARBOR STRATEGIC MARKETS FUNDS—1.5%

    

(Cost $34)

  
4,940   

Harbor Commodity Real Return Strategy Fund

     33
        

HARBOR FIXED INCOME FUNDS—56.1%

      
Shares         Value
(000s)		  
    
10,197   

Harbor High-Yield Bond Fund

   $ 108   
63,693   

Harbor Bond Fund

     785   
30,106   

Harbor Real Return Fund

     311   
          
TOTAL HARBOR FIXED INCOME FUNDS
    (Cost $1,166)		     1,204   
          
    

SHORT-TERM INVESTMENTS—15.2%

      

(Cost $326)

  
325,688   

Harbor Money Market Fund

     326   
          
TOTAL INVESTMENTS—100.0%
    (Cost $2,072)		     2,148   
          
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0%     — a 
          
TOTAL NET ASSETS—100.0%   $ 2,148   
          

 

FAIR VALUE MEASUREMENTS

All holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

† The Harbor Target Retirement 2010 Fund is investing in Institutional shares of affiliated Harbor Funds.

 

a Rounds to less than $1,000.

 

The accompanying notes are an integral part of the Portfolio of Investments.

 

2

Table of Contents

Harbor Target Retirement 2015 Fund†

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

HARBOR EQUITY FUNDS—33.1%

Shares         Value
(000s)
    
HARBOR DOMESTIC EQUITY FUNDS—21.5%
8,852   

Harbor Capital Appreciation Fund

   $ 274
18,737   

Harbor Mid Cap Growth Fund

     123
10,348   

Harbor Small Cap Growth Fund

     101
61,282   

Harbor Large Cap Value Fund

     418
19,730   

Harbor Mid Cap Value Fund

     189
4,711   

Harbor Small Cap Value Fund

     75
11,216   

Harbor Small Company Value Fund

     76
        
       1,256
        
HARBOR INTERNATIONAL EQUITY FUNDS—11.6%
9,222   

Harbor International Fund

     474
19,606   

Harbor International Growth Fund

     204
        
       678
        
TOTAL HARBOR EQUITY FUNDS
    (Cost $1,739)		     1,934
        
    

HARBOR STRATEGIC MARKETS FUNDS—2.7%

(Cost $157)

  
23,553   

Harbor Commodity Real Return Strategy Fund

     158
        

 

HARBOR FIXED INCOME FUNDS—53.0%

  
Shares         Value
(000s)		  
    
41,924   

Harbor High-Yield Bond Fund

   $ 442   
161,525   

Harbor Bond Fund

     1,990   
63,550   

Harbor Real Return Fund

     657   
          
TOTAL HARBOR FIXED INCOME FUNDS
    (Cost $2,970)		     3,089   
          
    

SHORT-TERM INVESTMENTS—11.2%

  

(Cost $651)

  
651,212   

Harbor Money Market Fund

     651   
          
TOTAL INVESTMENTS—100.0%
    (Cost $5,517)		     5,832   
          
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0%     — a 
          
TOTAL NET ASSETS—100.0%   $ 5,832   
          

 

FAIR VALUE MEASUREMENTS

All holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

† The Harbor Target Retirement 2015 Fund is investing in Institutional shares of affiliated Harbor Funds.

 

a Rounds to less than $1,000.

The accompanying notes are an integral part of the Portfolio of Investments.

 

3

Table of Contents

Harbor Target Retirement 2020 Fund†

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

HARBOR EQUITY FUNDS—38.1%

Shares         Value
(000s)
    
HARBOR DOMESTIC EQUITY FUNDS—24.7%
35,722   

Harbor Capital Appreciation Fund

   $ 1,107
75,623   

Harbor Mid Cap Growth Fund

     498
41,769   

Harbor Small Cap Growth Fund

     409
247,348   

Harbor Large Cap Value Fund

     1,685
79,632   

Harbor Mid Cap Value Fund

     763
19,012   

Harbor Small Cap Value Fund

     301
45,268   

Harbor Small Company Value Fund

     308
        
       5,071
        
HARBOR INTERNATIONAL EQUITY FUNDS—13.4%
37,229   

Harbor International Fund

     1,913
79,146   

Harbor International Growth Fund

     822
        
       2,735
        
TOTAL HARBOR EQUITY FUNDS
    (Cost $5,976)		     7,806
        
    

HARBOR STRATEGIC MARKETS FUNDS—3.7%

(Cost $676)

  
112,505   

Harbor Commodity Real Return Strategy Fund

     755
        

HARBOR FIXED INCOME FUNDS—52.1%

  
Shares         Value
(000s)		  
    
175,769   

Harbor High-Yield Bond Fund

   $ 1,854   
558,433   

Harbor Bond Fund

     6,880   
186,493   

Harbor Real Return Fund

     1,927   
          
TOTAL HARBOR FIXED INCOME FUNDS
    (Cost $9,917)		     10,661   
          
    

SHORT-TERM INVESTMENTS—6.1%

  

(Cost $1,250)

  
1,250,315   

Harbor Money Market Fund

     1,250   
          
TOTAL INVESTMENTS—100.0%
    (Cost $17,819)		     20,472   
          
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0%     — a 
          
TOTAL NET ASSETS—100.0%   $ 20,472   
          

 

FAIR VALUE MEASUREMENTS

All holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

† The Harbor Target Retirement 2020 Fund is investing in Institutional shares of affiliated Harbor Funds.

 

a Rounds to less than $1,000.

The accompanying notes are an integral part of the Portfolio of Investments.

 

4

Table of Contents

Harbor Target Retirement 2025 Fund†

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

HARBOR EQUITY FUNDS—47.6%

Shares         Value
(000s)
    
HARBOR DOMESTIC EQUITY FUNDS—31.0%
4,934   

Harbor Capital Appreciation Fund

   $ 153
10,420   

Harbor Mid Cap Growth Fund

     69
5,709   

Harbor Small Cap Growth Fund

     56
33,944   

Harbor Large Cap Value Fund

     231
10,969   

Harbor Mid Cap Value Fund

     105
2,609   

Harbor Small Cap Value Fund

     41
6,217   

Harbor Small Company Value Fund

     42
        
       697
        
HARBOR INTERNATIONAL EQUITY FUNDS—16.6%
5,084   

Harbor International Fund

     261
10,818   

Harbor International Growth Fund

     113
        
       374
        
TOTAL HARBOR EQUITY FUNDS
    (Cost $968) 		    1,071
        
    

HARBOR STRATEGIC MARKETS FUNDS—4.7%

(Cost $103)

  
15,622   

Harbor Commodity Real Return Strategy Fund

     105
        

HARBOR FIXED INCOME FUNDS—46.7%

  
Shares         Value
(000s)		  
    
21,169   

Harbor High-Yield Bond Fund

   $ 223   
55,670   

Harbor Bond Fund

     686   
13,839   

Harbor Real Return Fund

     143   
          
TOTAL HARBOR FIXED INCOME FUNDS
    (Cost $1,016)		     1,052   
          
    

SHORT-TERM INVESTMENTS—1.0%

  

(Cost $23)

  
22,784   

Harbor Money Market Fund

     23   
          
TOTAL INVESTMENTS—100.0%
    (Cost $2,110)		     2,251   
          
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0%     — a 
          
TOTAL NET ASSETS—100.0%   $ 2,251   
          

 

FAIR VALUE MEASUREMENTS

All holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

† The Harbor Target Retirement 2025 Fund is investing in Institutional shares of affiliated Harbor Funds.

 

a Rounds to less than $1,000.

The accompanying notes are an integral part of the Portfolio of Investments.

 

5

Table of Contents

Harbor Target Retirement 2030 Fund†

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

HARBOR EQUITY FUNDS—57.5%

Shares         Value
(000s)
    
HARBOR DOMESTIC EQUITY FUNDS—37.3%
68,896   

Harbor Capital Appreciation Fund

   $ 2,134
145,717   

Harbor Mid Cap Growth Fund

     960
80,308   

Harbor Small Cap Growth Fund

     786
474,484   

Harbor Large Cap Value Fund

     3,231
153,019   

Harbor Mid Cap Value Fund

     1,466
36,634   

Harbor Small Cap Value Fund

     581
86,617   

Harbor Small Company Value Fund

     589
        
       9,747
        
HARBOR INTERNATIONAL EQUITY FUNDS—20.2%
71,716   

Harbor International Fund

     3,684
152,559   

Harbor International Growth Fund

     1,587
        
       5,271
        
TOTAL HARBOR EQUITY FUNDS
    (Cost $11,834)		     15,018
        

HARBOR STRATEGIC MARKETS FUNDS—5.0%

  

(Cost $1,192)

  
Shares         Value
(000s)		  
    
194,662   

Harbor Commodity Real Return Strategy Fund

   $ 1,306   
          
    

HARBOR FIXED INCOME FUNDS—37.5%

  
260,896   

Harbor High-Yield Bond Fund

     2,752   
500,055   

Harbor Bond Fund

     6,161   
86,509   

Harbor Real Return Fund

     894   
          
TOTAL HARBOR FIXED INCOME FUNDS
    (Cost $9,165)		     9,807   
          
TOTAL INVESTMENTS—100.0%
    (Cost $22,191)		     26,131   
          
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0%     — a 
          
TOTAL NET ASSETS—100.0%   $ 26,131   
          

 

FAIR VALUE MEASUREMENTS

All holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

† The Harbor Target Retirement 2030 Fund is investing in Institutional shares of affiliated Harbor Funds.

 

a Rounds to less than $1,000.

The accompanying notes are an integral part of the Portfolio of Investments.

 

6

Table of Contents

Harbor Target Retirement 2035 Fund†

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

HARBOR EQUITY FUNDS—67.7%

Shares         Value
(000s)
    
HARBOR DOMESTIC EQUITY FUNDS—43.9%
2,267   

Harbor Capital Appreciation Fund

   $ 70
4,793   

Harbor Mid Cap Growth Fund

     32
2,617   

Harbor Small Cap Growth Fund

     26
15,508   

Harbor Large Cap Value Fund

     105
5,002   

Harbor Mid Cap Value Fund

     48
1,205   

Harbor Small Cap Value Fund

     19
2,831   

Harbor Small Company Value Fund

     19
        
       319
        
HARBOR INTERNATIONAL EQUITY FUNDS—23.8%
2,353   

Harbor International Fund

     121
4,991   

Harbor International Growth Fund

     52
        
       173
        
TOTAL HARBOR EQUITY FUNDS
    (Cost $415) 		    492
        

HARBOR STRATEGIC MARKETS FUNDS—4.3%

  

(Cost $29)

  
Shares         Value
(000s)		  
    
4,546   

Harbor Commodity Real Return Strategy Fund

   $ 30   
          
    

HARBOR FIXED INCOME FUNDS—28.0%

  
    
6,494   

Harbor High-Yield Bond Fund

     69   
9,989   

Harbor Bond Fund

     123   
1,135   

Harbor Real Return Fund

     12   
          
TOTAL HARBOR FIXED INCOME FUNDS
    (Cost $193)		     204   
          
TOTAL INVESTMENTS—100.0%
    (Cost $637)		     726   
          
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0%     — a 
          
TOTAL NET ASSETS—100.0%   $ 726   
          

 

FAIR VALUE MEASUREMENTS

All holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

† The Harbor Target Retirement 2035 Fund is investing in Institutional shares of affiliated Harbor Funds.

 

a Rounds to less than $1,000.

The accompanying notes are an integral part of the Portfolio of Investments.

 

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Harbor Target Retirement 2040 Fund†

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

HARBOR EQUITY FUNDS—77.8%

Shares         Value
(000s)
    
HARBOR DOMESTIC EQUITY FUNDS—50.5%
51,895   

Harbor Capital Appreciation Fund

   $ 1,608
109,681   

Harbor Mid Cap Growth Fund

     723
59,889   

Harbor Small Cap Growth Fund

     586
354,933   

Harbor Large Cap Value Fund

     2,417
114,480   

Harbor Mid Cap Value Fund

     1,097
27,567   

Harbor Small Cap Value Fund

     437
64,805   

Harbor Small Company Value Fund

     441
        
       7,309
        
HARBOR INTERNATIONAL EQUITY FUNDS—27.3%
53,853   

Harbor International Fund

     2,766
114,242   

Harbor International Growth Fund

     1,188
        
       3,954
        
TOTAL HARBOR EQUITY FUNDS
    (Cost $8,099)		     11,263
        

HARBOR STRATEGIC MARKETS FUNDS—4.0%

  

(Cost $519)

  
Shares         Value
(000s)		  
    
86,381   

Harbor Commodity Real Return Strategy Fund

   $ 580   
          
    

HARBOR FIXED INCOME FUNDS—18.2%

  
95,872   

Harbor High-Yield Bond Fund

     1,011   
127,981   

Harbor Bond Fund

     1,577   
3,680   

Harbor Real Return Fund

     38   
          
TOTAL HARBOR FIXED INCOME FUNDS
    (Cost $2,454)		     2,626   
          
TOTAL INVESTMENTS—100.0%
    (Cost $11,072)		     14,469   
          
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0%     — a 
          
TOTAL NET ASSETS—100.0%   $ 14,469   
          

 

FAIR VALUE MEASUREMENTS

All holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

† The Harbor Target Retirement 2040 Fund is investing in Institutional shares of affiliated Harbor Funds.

 

a Rounds to less than $1,000.

 

The accompanying notes are an integral part of the Portfolio of Investments.

 

8

Table of Contents

Harbor Target Retirement 2045 Fund†

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

HARBOR EQUITY FUNDS—87.9%

Shares         Value
(000s)
    
HARBOR DOMESTIC EQUITY FUNDS—57.3%
2,483   

Harbor Capital Appreciation Fund

   $ 77
5,244   

Harbor Mid Cap Growth Fund

     35
2,873   

Harbor Small Cap Growth Fund

     28
17,079   

Harbor Large Cap Value Fund

     116
5,519   

Harbor Mid Cap Value Fund

     53
1,313   

Harbor Small Cap Value Fund

     21
3,128   

Harbor Small Company Value Fund

     21
        
       351
        
HARBOR INTERNATIONAL EQUITY FUNDS—30.6%
2,559   

Harbor International Fund

     131
5,444   

Harbor International Growth Fund

     57
        
       188
        
TOTAL HARBOR EQUITY FUNDS
    (Cost $465) 		    539
        

HARBOR STRATEGIC MARKETS FUNDS—3.1%

  

(Cost $19)

  
Shares         Value
(000s)		  
    
2,859   

Harbor Commodity Real Return Strategy Fund

   $ 19   
          
    

HARBOR FIXED INCOME FUNDS—9.0%

  
2,078   

Harbor High-Yield Bond Fund

     22   
2,679   

Harbor Bond Fund

     33   
          
TOTAL HARBOR FIXED INCOME FUNDS
    (Cost $53)		     55   
          
TOTAL INVESTMENTS—100.0%
    (Cost $537)		     613   
          
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0%     — a 
          
TOTAL NET ASSETS—100.0%   $ 613   
          

 

FAIR VALUE MEASUREMENTS

All holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

† The Harbor Target Retirement 2045 Fund is investing in Institutional shares of affiliated Harbor Funds.

 

a Rounds to less than $1,000.

The accompanying notes are an integral part of the Portfolio of Investments.

 

9

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Harbor Target Retirement 2050 Fund†

PORTFOLIO OF INVESTMENTS—January 31, 2010 (Unaudited)

 

 

HARBOR EQUITY FUNDS—90.0%

Shares         Value
(000s)
    
HARBOR DOMESTIC EQUITY FUNDS—58.6%
60,308   

Harbor Capital Appreciation Fund

   $ 1,869
127,367   

Harbor Mid Cap Growth Fund

     839
69,779   

Harbor Small Cap Growth Fund

     683
414,882   

Harbor Large Cap Value Fund

     2,825
134,076   

Harbor Mid Cap Value Fund

     1,285
31,882   

Harbor Small Cap Value Fund

     505
75,982   

Harbor Small Company Value Fund

     517
        
       8,523
        
HARBOR INTERNATIONAL EQUITY FUNDS—31.4%
62,150   

Harbor International Fund

     3,193
132,245   

Harbor International Growth Fund

     1,375
        
       4,568
        
TOTAL HARBOR EQUITY FUNDS
    (Cost $9,322)		     13,091
        

HARBOR STRATEGIC MARKETS FUNDS—2.9%

  

(Cost $376)

  
Shares         Value
(000s)		  
    
63,650   

Harbor Commodity Real Return Strategy Fund

   $ 427   
          
    

HARBOR FIXED INCOME FUNDS—7.1%

  
50,621   

Harbor Bond Fund

     624   
39,259   

Harbor High-Yield Bond Fund

     414   
          
TOTAL HARBOR FIXED INCOME FUNDS
    (Cost $956)		     1,038   
          
TOTAL INVESTMENTS—100.0%
    (Cost $10,654)		     14,556   
          
CASH AND OTHER ASSETS, LESS LIABILITIES—0.0%     — a 
          
TOTAL NET ASSETS—100.0%   $ 14,556   
          

 

FAIR VALUE MEASUREMENTS

All holdings at January 31, 2010 (as disclosed in the preceding Portfolio of Investments) are classified as Level 1. There were no Level 3 holdings at any point during the period.

For more information on valuation inputs and their aggregation into the levels identified above, please refer to the Fair Value Measurements section in Note 2 of the accompanying Notes to Portfolios of Investments.

 

 

 

† The Harbor Target Retirement 2050 Fund is investing in Institutional shares of affiliated Harbor Funds.

 

a Rounds to less than $1,000.

The accompanying notes are an integral part of the Portfolio of Investments.

 

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Harbor Target Retirement Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—January 31, 2010

 

(Currency in thousands)

 

NOTE 1—ORGANIZATIONAL MATTERS

 

Harbor Funds (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust consists of 27 separate portfolios. The portfolios covered by this report include a series of ten target retirement funds: Harbor Target Retirement Income Fund, Harbor Target Retirement 2010 Fund, Harbor Target Retirement 2015 Fund, Harbor Target Retirement 2020 Fund, Harbor Target Retirement 2025 Fund, Harbor Target Retirement 2030 Fund, Harbor Target Retirement 2035 Fund, Harbor Target Retirement 2040 Fund, Harbor Target Retirement 2045 Fund and Harbor Target Retirement 2050 Fund; (individually referred to as a “Fund” and collectively referred to as the “Funds” or the “Target Retirement Funds”). The Funds invest in a combination of other funds of the Trust (the “Underlying Funds”). Harbor Capital Advisors, Inc. (the “Adviser” or “Harbor Capital”) is the investment adviser for the Funds and the Underlying Funds. The Underlying Funds are managed by subadvisers, none of which are affiliated with the Adviser.

The Funds may offer up to three classes of shares, designated as Institutional Class, Administrative Class, and Investor Class. The shares of each class represent an interest in the same portfolio of investments of the respective Fund and have equal rights to voting, redemptions, dividends, and liquidations, except that: (i) certain expenses, subject to the approval of the Trust’s Board of Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission 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

Security Valuation

The assets of each Target Retirement Fund consist primarily of Institutional Class shares of the underlying Harbor Funds, which are valued at their respective net asset values.

Each Underlying Fund normally values the securities in its portfolio on the basis of market quotations and valuations provided by independent pricing services.

When reliable market quotations are not readily available or when market quotations are considered unreliable, securities are priced at their fair value, calculated according to procedures adopted by the Board of Trustees, which may include utilizing an independent pricing service. An Underlying Fund may also use fair-value pricing if the value of some or all of the Underlying Fund’s securities have been materially affected by events occurring before the Underlying 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. When fair value pricing is employed, the prices of securities used by an Underlying Fund to calculate its NAV may differ from market quotations or official closing prices for the same securities. This means the Underlying Fund may value those securities higher or lower than another fund that uses market quotations or official closing prices.

Fair Value Measurements

In September 2006, the Financial Accounting Standards Board (FASB) issued Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures. ASC 820 establishes a framework for measuring fair value and expands disclosures about fair value measurements in financial statements, effective for the Funds’ current fiscal year.

The various inputs that may be used to determine the value of each Fund’s investments are summarized in three categories defined as Level 1, Level 2 and Level 3. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The assignment of an investment to Level 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.).

 

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Harbor Target Retirement Funds

NOTES TO PORTFOLIOS OF INVESTMENTS—Continued

 

(Currency in thousands)

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES—Continued

 

Level 3—Significant unobservable inputs are used in situations where quoted prices or observable inputs are not available. Valuations based on significant unobservable inputs may include the Funds’ own assumptions.

For fair valuations using significant unobservable inputs, ASC 820 requires a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in/out of the Level 3 category during the period. A fair value hierarchy and Level 3 reconciliation, when applicable, can be found at the end of each Fund’s Portfolio of Investments schedule.

The Funds used observable inputs in their valuation methodologies whenever they were available and deemed reliable.

Description of the Underlying Funds

In pursuing its investment objectives and programs, each of the Underlying Funds is permitted to engage in a wide range of investment practices. Further information about the Underlying Funds is contained in the statement of additional information, as well as the prospectuses of each of the Underlying Funds. Because each Fund invests in the Underlying Funds, shareholders of each Fund will be affected by these investment practices of the Underlying Funds in direct proportion to the amount of assets each Fund allocates to the Underlying Funds.

Related Parties

The Funds do not invest in the Underlying Funds for the purpose of exercising management or control; however, investments by the Funds may represent a significant portion of an Underlying Fund’s net assets. At January 31, 2010, each Fund held less than 10% of the outstanding shares of any Underlying Fund.

The Funds, in aggregate, held less than 20% of the total outstanding shares of any Underlying Fund.

NOTE 3—TAX INFORMATION

The identified cost for federal income tax purposes of investments owned by each Fund and their respective gross unrealized appreciation and depreciation at January 31, 2010 are as follows:

 

     Identified Cost    Gross Unrealized     Net Unrealized
Appreciation/
(Depreciation)
      Appreciation    (Depreciation)    

Harbor Target Retirement Income Fund

    $ 15,220    $ 1,350    $ —      $ 1,350

Harbor Target Retirement 2010 Fund

      2,072      76      —        76

Harbor Target Retirement 2015 Fund

      5517      315      —        315

Harbor Target Retirement 2020 Fund

      17,819      2,659      (6 )      2,653

Harbor Target Retirement 2025 Fund

      2,110      141      —        141

Harbor Target Retirement 2030 Fund

      22,191      3,953      (13 )      3,940

Harbor Target Retirement 2035 Fund

      637      89      —        89

Harbor Target Retirement 2040 Fund

      11,072      3,406      (9 )      3,397

Harbor Target Retirement 2045 Fund

      537      76      —        76

Harbor Target Retirement 2050 Fund

      10,654      3,913      (11 )      3,902

 

12

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LOGO

 

111 South Wacker Drive, 34th Floor   Chicago, IL 60606-4302   800-422-1050   www.harborfunds.com

 

Trustees & Officers

David G. Van Hooser

Chairman, President & Trustee

Raymond J. Ball

Trustee

Howard P. Colhoun

Trustee

John P. Gould

Trustee

Rodger F. Smith

Trustee

Charles F. McCain

Chief Compliance Officer

Anmarie S. Kolinski

Treasurer

Erik D. Ojala

Vice President & Secretary

Brian L. Collins

Vice President

Charles P. Ragusa

Vice President

Jodie L. Crotteau

Assistant Secretary

Susan A. DeRoche

Assistant Secretary

Investment Adviser

Harbor Capital Advisors, Inc.

111 South Wacker Drive, 34th Floor

Chicago, IL 60606-4302

Distributor & Principal Underwriter

Harbor Funds Distributors, Inc.

111 South Wacker Drive, 34th Floor

Chicago, IL 60606-4302

312-443-4400

Shareholder Servicing Agent

Harbor Services Group, Inc.

P.O. Box 804660

Chicago, IL 60680-4108

800-422-1050

Custodian

State Street Bank & Trust Company

State Street Financial Center

1 Lincoln Street

Boston, MA 02111

 

 

03/2010   FD.NQ.T.0110