Harbor Funds' Board of Trustees appointed Marathon Asset Management LLP (Marathon-London) to serve as subadviser to Harbor International Fund effective August 22, 2018. Marathon-London immediately began transitioning the Fund’s portfolio pursuant to a plan that was developed jointly with Harbor Capital Advisors and the Fund's Board of Trustees.

We are pleased that the transition of the Harbor International Fund’s portfolio is now substantially complete. Approximately 98% of the Fund’s portfolio now reflects Marathon-London’s selected securities. The very limited number of remaining legacy securities will continue to be sold by Marathon-London at opportunistic times over the coming weeks.

Marathon-London has been very effective in limiting the market impact associated with the sales and purchases of portfolio securities throughout this transition. Both internal and third-party analysis indicates that the market impact of the transition has been minimal.

As of October 31, 2018, the Fund had net assets of $12.3 billion. Cash has remained at only modestly higher levels compared with cash levels prior to the appointment of Marathon-London. Cash in the Fund’s portfolio averaged 3.9% during the portfolio transition through October 31, 2018.

We have been monitoring performance closely during this period and note that the Fund’s performance has experienced a decline relative to its benchmark index during the portfolio transition. With the portfolio transition now substantially complete, the performance of the Fund going forward will be driven by Marathon-London’s investment decisions and not legacy holdings.

We published updated capital gains distribution estimates for the Fund as of October 31, 2018 and will provide another update in early December, prior to the December 14th record date. While the estimated distribution remains significant, it has continued to come out at the lower end of our early estimates and we do not expect the distribution estimate to materially change at this point.

Additional information about the appointment of Marathon-London is available from the links below:

Harbor International Fund Manager Change: Questions & Answers
Harbor International Fund Summary Prospectus

If you have questions, please call Harbor Shareholder Services at 800-422-1050, Monday through Friday, between 8:00 a.m. and 6:00 p.m. Eastern time.

The Harbor Funds lineup of actively managed, no-load mutual funds had combined net assets of approximately $60 billion as of September 30, 2018. Each Harbor fund is managed by an institutional investment firm selected by Harbor Capital Advisors, Inc. and approved by the Harbor Funds Board of Trustees based on the firm's experience in a specific asset class. Fees and expenses apply to an investment in Harbor Funds and are described in each fund's current prospectus.

There is no guarantee that the investment objective of the Fund will be achieved. Stocks fluctuate in price and the value of your investment in the Fund may go down. Investing in international markets poses special risks, including potentially greater price volatility due to social, political and economic factors, as well as currency exchange rate fluctuations. These risks are more severe for securities of issuers in emerging market regions. Stocks of small and mid cap companies also pose special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. The subadviser’s assessment of the capital cycle for a particular industry or company may be incorrect. Investing in companies at inopportune phases of the capital cycle can result in the Fund purchasing company stock at pricing levels that are higher than the market dynamics would support and therefore subject the Fund to greater risk that the stock price would decline rather than increase over time.