(PUB) Investing 2015

Morningstar FundInvestor

August

2015

Morningstar Analyst Rating

08-03-15

Morningstar Pillars

Process

Performance

People

Parent

Price

Positive

Neutral

Positive

Morningstar Analyst Rating

Morningstar evaluates mutual funds based on five key pillars, which

its analysts believe lead to funds that are more likely to outperform

over the long term on a risk-adjusted basis.

Analyst Rating Spectrum

Œ „ ´ˇ ¨

Pillar Spectrum

Positive

Negative

Neutral

NAV

20.91

20.68

18.42

12.95

11.11

11.69

9.80

7.11

11.80

13.31

11.92

11.21

Total Return %

1.11

13.76

43.56

18.67

-4.13

20.23

39.46

-37.30

-6.89

15.49

9.89

15.37

+/-S&P 500

-2.24

0.07

11.17

2.67

-6.24

5.17

13.00

-0.30

-12.38

-0.30

4.98

4.49

+/-Russ MV

0.84

-0.99

10.10

0.16

-2.75

-4.52

5.25

1.14

-5.47

-4.73

-2.76

-8.34

Income Return %

0.00

0.78

1.28

2.10

0.80

0.94

1.60

2.39

0.89

0.73

0.94

0.36

Capital Return %

1.11

12.98

42.28

16.57

-4.93

19.29

37.86

-39.69

-7.78

14.76

8.95

15.01

Total Rtn % Rank Cat

Income $

0.00

0.14

0.17

0.23

0.09

0.11

0.28

0.12

0.09

0.11

0.04

Capital Gains $

0.00

0.13

0.00

0.47

0.37

0.29

0.96

Expense Ratio %

1.26

1.30

1.32

1.35

1.32

1.33

1.32

1.38

1.39

Income Ratio %

1.01

1.21

1.43

0.83

0.93

1.68

2.10

1.17

1.06

0.88

-0.15

Turnover Rate %

152

Net Assets $mil

163

112

Performance

07-31-15

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Total

2011

2012

2013

2014

2015

7.36 -1.27 -21.87 15.78 -4.13

12.96 -5.42

6.91 3.90 18.67

15.06 4.36

6.82 11.93 43.56

4.51 4.36

-2.74 7.24 13.76

3.19 -2.25

. . .

Trailing

Total

+/-

+/- Russ %Rank Growth of

Return% S&P 500

Cat

$10,000

3 Mo

6 Mo

1 Yr

3 Yr Avg

5 Yr Avg

10 Yr Avg

15 Yr Avg

-0.14 -1.55

0.83

39 9,986

3.41 -3.14

1.69

59 10,341

8.43 -2.78

1.79

26 10,843

22.45 4.87

3.59

2 18,360

17.09 0.85

1.07

7 22,009

7.92 0.20

-0.45

37 21,430

. . . . .

Tax Analysis

Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat

3 Yr (estimated)

5 Yr (estimated)

10 Yr (estimated)

22.12

0.27

16.80

0.24

7.43

0.45

Potential Capital Gain Exposure: 11% of assets

Rating and Risk

Time Load-Adj

Morningstar

Period Return % Rtn vs Cat

Risk vs Cat

Risk-Adj Rating

1 Yr

8.43

3 Yr

22.45

High

+Avg

5 Yr

17.09

High

+Avg

10 Yr

7.92

Avg

+Avg

Incept

9.92

Other Measures

Standard Index

Best Fit Index

S&P 500

Mstar Mid Value

Alpha

3.0

1.9

Beta

1.08

0.98

R-Squared

Standard Deviation

10.28

Mean

22.45

Sharpe Ratio

2.03

Morningstar’s Take

by Michael Rawson 08-03-15

Harbor Mid Cap Value s time-tested investment

process based on academic research overcomes its

substantial volatility to earn it a Morningstar Analyst

Rating of Bronze.

LSV, a 21-year-old partnership with deep academic

roots, has subadvised this fund since 2004. Josef

Lakonishok, co-portfolio manager and an LSV founder,

helped popularize behavioral finance, first in the

academic world and then in practice. Lakonishok s

studies confirmed that certain stock characteristics,

such as valuation, small size, and momentum, were

associated with higher returns. The fund s process puts

Lakonishok s theories into practice. It ranks mid- and

small-cap U.S. stocks based on valuation and

momentum and targets the stocks in the top 15% on

those metrics. LSV s models weight value more heavily

than momentum, which results in a deeper value tilt

than the typical mid-value fund. The approach is no

longer cutting-edge, but it is disciplined and offers

systematic exposure to value stocks. LSV s ability to

refine the process makes it less rigid than typical

strategic-beta funds.

The fund has delivered decent results over the past

decade, but only for investors who hung on through a

gut-wrenching first five years. The cheap stocks the

fund buys became even cheaper prior to the financial

crisis, leading to a disastrous stretch starting in 2007.

To the firm s credit, they stuck to their time-tested

philosophy and have posted better returns for

investors in the past five years. The fund s 9.6% return

since LSV took over in 2004 lands in the top third of

the mid-value Morningstar Category, although it

trailed the Russell Mid-Cap Value Index. The returns

are less impressive on a risk-adjusted basis but still

land in the top half of the category.

The smaller-cap and deep-value strategy courts

substantial volatility as the stocks in the portfolio are

often less well-diversified and more economically

sensitive than large-blend stocks. In LSV s view, they

also offer better returns. Investors who can tolerate

the elevated risk should be rewarded.

Address:

Harbor Funds

Chicago, IL 60606

800-422-1050

Web Address:

www.harborfunds.com

Inception:

11-01-02

Advisor:

Harbor Capital Advisors Inc

Subadvisor:

LSV Asset Management

NTF Plans:

N/A

Minimum Purchase:

$2500

Add: $0 IRA: $1000

Min Auto Inv Plan:

Add:

Sales Fees:

No-load,

Management Fee:

0.75%

Actual Fees:

Mgt:0.75% Dist:0.25%

Expense Projections:

3Yr:$403

5Yr:$697 10Yr:$1534

Income Distribution:

Annually

Data through July 31, 2015

Harbor Mid Cap Value Investor

Ticker

Status Yield Total Assets

Mstar Category

HIMVX Open

0.7% $595 mil

Mid-Cap Value

97% 98% 96% 97% 100% 100% 98% 97% 98%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 07-15

Historical Profile

Return

Risk

Rating

Above Avg

Investment Style

Equity

Stock %

Manager Change

Partial Manager Change

Growth of $10,000

Investment Values of

Fund

Investment Values of

S&P 500

Performance Quartile

(within Category)

History

10.0

6.0

14.0

18.0

23.6

Portfolio Analysis

06-30-15

Share change since 03-15 Total Stocks:190 Sector

PE Tot Ret% % Assets

Kohl’s Corp

Cnsmr Cyc 14.3 1.93 1.54

Xerox Corporation

Technology 14.9 -19.48 1.45

Public Service Enterpris

Utilities

11.4 2.51 1.44

Cigna Corp

Hlth care 17.9 40.03 1.41

Avery Dennison Corp

Industrl

22.8 18.68 1.26

Edison International

Utilities

12.7 -7.08 1.26

Hartford Financial Servi

Finan Svs 12.9 14.92 1.21

Gap Inc

Cnsmr Cyc 12.7 -11.75 1.16

FirstEnergy Corp

Utilities

32.9 -11.05 1.15

Western Digital Corp

Technology 13.2 -21.36 1.14

Macy’s Inc

Cnsmr Cyc 16.4 6.06 1.12

Amkor Technology Inc

Technology 10.6 -37.89 1.10

CBL & Associates Propert

Real Est

16.9 -13.13 1.09

Whirlpool Corp

Technology 20.9 -7.41 1.07

Entergy Corp

Utilities

15.3 -16.92 1.03

Tesoro Corp

Energy

13.4 32.06 1.02

Ameren Corp

Utilities

16.8 -9.17 1.01

Quest Diagnostics Inc

Hlth care 21.7 11.69 1.01

Piedmont Office Realty T

Real Est

82.0 -1.11 0.99

Flextronics Internationa

Technology 12.0 -1.52 0.97

Current Investment Style

Market Cap %

Giant

0.6

Large

18.6

Mid

48.8

Small

25.4

Micro

6.7

Avg $mil:

6,255

Value Blnd Growth

Large Mid Small

Value Measures

Rel Category

Price/Earnings

Price/Book

Price/Sales

Price/Cash Flow

Dividend Yield %

13.40

1.50

0.72

7.16

2.90

0.95

0.93

0.78

1.11

1.38

Growth Measures

% Rel Category

Long-Term Erngs

Book Value

Sales

Cash Flow

Historical Erngs

9.01

5.31

3.92

2.39

11.61

0.91

1.21

1.17

0.44

1.92

Profitability

% Rel Category

Return on Equity

Return on Assets

Net Margin

16.55

5.09

10.44

1.32

1.12

1.10

Sector

Weightings

% of

Stocks

Rel

S&P 500 High

3 Year

Low

Cyclical 49.19

BasicMat 5.92

6 3

CnsmrCyc12.99

13 9

FinanSvs 19.89

22 18

Real Est 10.39

11 7

Sensitive 30.65

CommSrvs 0.00

0 0

Energy 5.53

10 5

Industrl 12.70

13 9

Technlgy 12.42

16 12

Defensive20.15

CnsmrDef 5.16

10 4

Hlthcare 5.93

9 5

Utilities 9.06

10 5

Composition - Net

(% of Stock)

Cash

1.6

Stocks 98.0

Bonds 0.0

Other

0.5

Foreign 2.0

timely.Pastperformance isnoguaranteeof future results.Accessupdated reports at

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