Harbor Core Bond and Harbor Core Plus Bond

A Straightforward Approach for Challenging Times

Over the past several months, some bond investors have grappled with a host of worries from persistently high inflation, a tightening Fed, a banking crisis, and squabbling over the debt ceiling. With so many overhanging worries, uncertainty abounds and volatility has surged.

It’s easy to get overwhelmed in such challenging market conditions, but we believe that keeping it simple – focusing on the basics and maintaining a long-term view—is the best way to respond to unstable environments.

Why Income Research + Management

That’s what Income Research + Management brings to the table. Rather than trying to guess how interest rates will react to the next headline, IR+M focuses on its core competencies – detailed fundamental research, careful security selection, and risk-aware portfolio construction.

IR+M believes that it is extremely challenging to forecast the path of interest rates. Consequently, they keep their portfolios’ durations in line with the benchmark (Bloomberg Aggregate Bond Index) and instead spend their time where the probabilities are more in their favor – bond-by-bond security selection. They aim to add value by picking securities that, in their view, are fundamentally sound and reasonably priced. Staying true to their motto “take what the market gives you”, the team aims to tilt their portfolios toward those sectors where they see the most compelling bottom-up opportunities. In addition, unlike many of its competitors, IR+M avoids the complexity of derivates and constructs its portfolios entirely of cash bonds.

The experienced team at IR+M has been carrying out this straightforward process since the firm’s founding 35 years ago. The investment team has a tenure of 13-years on average, and senior portfolio managers have navigated several credit and interest rate cycles over their careers.

IRM’s pragmatic and prudent approach has produced consistent results in a variety of climates, as shown in the table below.

*Composite since inception 08/01/2017.

Source: Morningstar as of 8/1/2017. Quarterly data. Category: Intermediate Core-Plus Bond, rankings based on total return. Morningstar Mutual Fund data and calculations are provided and produced by Morningstar Direct, while Composite performance data, relate solely to the IR +M Core Plus Composite (the "Composite"), when included, is provided by Harbor Capital Advisors, Inc. and/or its affiliates. Gross of fee composite returns are supplied by IR +M Core Plus Composite. Composite Net of fee returns are calculated by Harbor Capital Advisors, Inc., utilizing the Fund's prospectus Net expense ratio (0.38%), and uploaded into Morningstar Direct, with Composite rankings calculated by Morningstar Direct utilizing their proprietary methodology. Morningstar Direct does not categorized Composite performance and the validity of the Composite category has been determined at the sole discretion of Harbor Capital Advisors, Inc., as representative of related performance of the specified Mutual Fund.

Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborcapital.com or by calling 800-422-1050. For the Fund's most recent performance click here.

Two Options

Harbor offers investors two ways to benefit from IR+M’s time-tested approach – Harbor Core Bond and Harbor Core Plus Bond Funds.

Strategy Highlights

• Aware But Not Constrained: The bottom-up security selection process seeks to add value by rotating between sectors based on relative value. The portfolio managers are aware of the benchmark, but not constrained by it, and take the opportunities that the market offers. Purchase and sell decisions focus on fundamental credit analysis, security structure and price relative to other opportunities.
• Disciplined Approach: The team-oriented investment approach is disciplined, repeatable, and research-oriented. The team constructs the portfolio with a risk-aware mindset that is acutely aware of the role bonds fill in a portfolio.
• Stable Experienced and Independent. IR+M is a privately-owned, independent, fixed income investment manager, with over 30 years of experience serving private and institutional clients: The investment team has experience managing through various credit cycles. All members of IR+M's Management Committee and senior portfolio managers have ownership in the firm and are dedicated to its success.

Performance data shown represents past performance and is no guarantee of future results. Past performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborcapital.com or by calling 800-422-1050. For Harbor Core Plus Fund's most recent performance click here. For Harbor Core Bond Fund's most recent performance click here.

Important Information

The views expressed herein are those of Harbor Capital Advisors, Inc. investment professionals. They may not be reflective of current opinions, are subject to change without prior notice, and should not be considered investment advice.

There is no guarantee that the investment objective of the Fund will be achieved. Fixed income investments are affected by interest rate changes and the creditworthiness of the issues held by the Fund. As interest rates rise, the values of fixed income securities held by the Fund are likely to decrease and reduce the value of the Fund's portfolio.

There may be a greater risk that the Fund could lose money due to prepayment and extension risks because the Fund invests, at times, in mortgage-related and/or asset backed securities.

The following table presents the past performance of a composite of certain accounts managed by Income Research + Management (IR+M), the Subadvisor to Harbor Core Plus Fund. The IR+M Aggregate Core Plus Composite (the “Composite”) is comprised of all fee-paying accounts under discretionary management by IR+M that have investment objectives, policies and strategies substantially similar to those of the Fund. The Composite consisted of 6 accounts as of March 31, 2023. Returns include the reinvestment of interest, dividends and any other distributions. Gross performance data shown does not reflect the deduction of fees and expenses. Because the gross performance data shown in the table does not reflect the deduction of investment advisory fees paid by the accounts comprising the Composite and certain other expenses that would be applicable to mutual funds, the net performance data may be more relevant to potential investors in the Fund in their analysis of the historical experience of IR+M in managing portfolios with substantially similar investment objectives, policies and strategies to those of the Fund. To calculate the performance of the Composite net of all operating expenses, the estimated annualized net Fund operating expenses payable by the Institutional Class shares of the Fund for the as of the most recent prospectus dated March 1, 2023 were used. The accounts comprising the Composite have different fees and expenses than those of the Fund used to calculate the net performance data shown. The net composite performance shown would be lower to the extent the related funds or accounts were subject to higher fees and expenses.

The historical performance of the IR+M Composite is not that of Harbor Core Plus Fund and is not indicative of the Fund’s future results. The Fund’s actual performance may vary significantly from the past performance of the IR+M Composite. While the accounts comprising the IR+M Composite incur inflows and outflows of cash from clients, there can be no assurance that the continuous offering of the Fund’s shares and the Fund’s obligation to redeem its shares will not adversely impact the Fund’s performance. Also, not all of the accounts currently comprising the IR+M Composite are subject to certain investment limitations, diversification requirements and other restrictions imposed by the Investment Company Act and the Internal Revenue Code. If these limitations, requirements and restrictions were applicable to the accounts in the IR+M Composite, they may have had an adverse effect on the performance results of the IR+M Composite. However, IR+M does not believe that such accounts would have been managed in a significantly different manner had they been subject to such investment limitations, diversification requirements and other restrictions.

In relation to any data attributed to Morningstar, please note the following: © Morningstar 2023. All rights reserved. Use of this content requires expert knowledge. It is to be used by specialist institutions only. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied, adapted or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information, except where such damages or losses cannot be limited or excluded by law in your jurisdiction. Past financial performance is no guarantee of future results.

The Bloomberg US Aggregate Bond Index is an unmanaged index of investment-grade fixed-rate debt issues with maturities of at least one year. This unmanaged index does not reflect fees and expenses and is not available for direct investment.

Income Research + Management is an independent subadvisor to the Harbor Core Bond Fund and Harbor Core Plus Fund.

Harbor Funds Distributors, Inc. is the Distributor of the Harbor Mutual Funds.

For use with institutions only, not for use with retail investors.

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