SecProbe.io

CORRESP
1
filename1.htm

CORRESP

 One International Place, 40th Floor

 100 Oliver Street

Boston, MA 02110-2605

 +1 617 728 7100 Main

+1 617 426 6567 Fax

 www.dechert.com

 EDWIN BATISTA

Associate

Edwin.Batista@dechert.com

 +1 617 728 7165 Direct

+1 617 426 6567 Fax

 February 21, 2024

VIA ELECTRONIC TRANSMISSION

Securities and Exchange Commission

100 F Street, NE

 Washington,
DC 20549

Re:
 Harbor Funds (the “Registrant”)

 
 Post-Effective Amendment No. 172

 
 File Nos. 033-05852; 811-04676

Ladies and Gentlemen:

This correspondence is being filed for the purpose of responding to comments of the staff of the Securities
and Exchange Commission (the “Staff”) provided by Ms. Kimberly A. Browning of the Division of Investment Management with respect to Post-Effective Amendment (“PEA”) No. 172 to the Registrant’s registration
statement on Form N-1A.

 PEA No. 172 was filed for the
purpose of registering shares of Harbor International Compounders Fund (the “Fund”), a new series of the Registrant.

Set forth below are the Staff’s verbal comments together with the Registrant’s responses. Terms used
but not defined herein have the same meaning as in PEA No. 172.

GENERAL

(Prospectus and SAI)

 The Staff reminds the Registrant
that it and its management are responsible for the accuracy and adequacy of the Registrant’s disclosures, notwithstanding any review, comments, action or absence of action by the Staff.

Response:

 The Registrant acknowledges this
statement.

 

February 21, 2024
  Page
 2

      

COMMENT 1:

(Prospectus – Cover Page)

The Staff notes that the name of the Fund appears in brackets. Please inform the staff of the final name of the Fund.

Response:

 Harbor International Compounders
Fund is the final name of the fund.

COMMENT 2:

 (Prospectus – Additional
Information about the Fund’s Investments)

 In
an appropriate location in the text, please disclose if the Fund will provide Shareholders with prior notification regarding a change to the Fund’s investment objective, and if so, please specify the amount of advance notice the Fund will
provide (e.g., 60-days prior to the change).

Response:

 The Registrant confirms that
shareholders will be notified of changes to the Fund’s investment objective. The Registrant notes that Form N-1A requires disclosure of whether a fund’s investment objective may be changed without
shareholder approval but does not require disclosure of any notice requirement or notice period. For this reason, the Registrant respectfully declines to make any changes in response to this comment.

COMMENT 3:

 (Prospectus – Principal
Investment Strategy)

 Please revise the first two
sentences of paragraph one in plain English and clearly articulate the Fund’s principal investment strategy pursuant to the requirements of Form N-1A Items 4 and 9. The first and second sentences say
“…invests primarily in equity securities of non-U.S. companies…” and also “…principally in the common stock of companies”. Please clarify the meaning of “primarily”
in plain English.

Response:

 The Registrant has revised the
disclosure as follows:

 The Fund invests primarily (no less than 65% of its total assets under normal circumstances) in equity securities common
stock of non-U.S. companies, including those located in emerging market countries. The investment strategy utilized by C WorldWide Asset Management Fondsmaeglerselskab A/S,
the Fund’s subadvisor (the “Subadvisor”),

February 21, 2024
  Page
 3

      

 focuses on identifying companies The Fund invests principally in the common stock of companies with market capitalizations of at least $5 billion at the time of
acquisition that are identified as the Subadvisor believes are “compounders” by C WorldWide Asset Management
Fondsmaeglerselskab A/S, the Fund’s subadvisor (the “Subadvisor”). Companies with market capitalizations of $5 billion or more include mid-and
large-capitalization companies.

COMMENT 4:

 (Prospectus – Principal
Investment Strategy)

 The Fund’s Principal
Investment Strategy states “the Fund invests primarily in equity securities of non-U.S. companies, including those located in emerging market countries.” Please define
“non-U.S. companies” in the “Principal Investment Strategy” or “Additional Information about the Fund’s Investments” section and provide a source for the
definition.

Response:

 The Fund defines “non-U.S. companies” to mean foreign or emerging markets companies. The Fund’s “Additional Information about the Fund’s Investments—Foreign Securities” section includes the
following disclosure regarding the method used by the Subadvisor to determine whether an issuer is “economically tied” to a specific foreign or emerging markets country:

 In the case of
non-governmental issuers, the Subadvisor may consider an issuer to be foreign or emerging market issuer if:

•  the company has been classified by MSCI, FTSE, or S&P indices as a foreign or
emerging market issuer;

 •  the equity securities of the company principally trade
on stock exchanges in one or more foreign or emerging market countries;

 •  a
company derives a substantial portion of its total revenue from goods produced, sales made or services performed in one or more foreign or emerging market countries or a substantial portion of its assets are located in one or more foreign or
emerging market countries;

 •  the company is organized under the laws of a
foreign or emerging market country or its principal executive offices are located in a foreign or emerging market country; and/or

February 21, 2024
  Page
 4

      

•  the Subadvisor otherwise determines an issuer to be a foreign or emerging markets
issuer in its discretion based on any other factors relevant to a particular issuer.

The Registrant respectfully believes the existing disclosure is adequate to provide shareholders with sufficient information regarding how the
Subadvisor determines what issuers are considered to be “non-U.S.” issuers. Accordingly, the Registrant declines to revise the disclosure in response to this comment.

COMMENT 5:

 (Prospectus – Principal
Investment Strategy)

 Given the heightened risks of
investing in foreign and emerging market issuers as detailed in the Item 9 disclosure for the fund, please represent supplementally how investing in such foreign and emerging markets is not at odds with the Fund’s disclosure that the Fund will
invest in companies that “experience sustainable growth and compound earnings in the long-term.”

Response:

 The Registrant notes that,
although there are heightened risks of investing in foreign and emerging market issuers, the Subadvisor engages in analysis to identify companies that it believes will “experience sustainable growth and compound earnings in the long-term.”
The Registrant does not believe that the two concepts are at odds.

COMMENT 6A:

 (Prospectus – Principal
Investment Strategy)

 Please add disclosure with
regards to what the Fund’s policy is with respect to an investment that falls below the $5 billion threshold (e.g., sell the investment).

Response:

 The Registrant notes that the
disclosure clearly states that the $5 billion policy is applied at the time of acquisition. The Subadvisor has discretion to determine whether to sell a holding that falls below the $5 billion threshold. Accordingly, because the Fund does
not have a specific policy on this point, the Registrant has not revised the disclosure.

COMMENT 6B:

 (Prospectus – Principal
Investment Strategy)

February 21, 2024
  Page
 5

      

Please add disclosure explaining what capitalization size the $5 billion threshold encompasses and please disclose any attendant
risks.

Response:

 Please see the Registrant’s
response to Comment 3.

 In addition, the Registrant has
added the following disclosure:

 Large Cap Risk: Large
cap stocks may fall out of favor relative to small or mid cap stocks, which may cause the Fund to underperform other equity funds that focus on small or mid cap stocks.

 Mid Cap Risk: The Fund’s performance may be more
volatile because it invests primarily in mid cap stocks. Mid cap companies may have limited product lines, markets and financial resources. Securities of mid cap companies are usually less stable in price and less liquid than those of larger, more
established companies. Additionally, mid cap stocks may fall out of favor relative to small or large cap stocks, which may cause the Fund to underperform other equity funds that focus on small or large cap stocks.

COMMENT 6C:

 (Prospectus – Principal
Investment Strategy)

 Please state in plain English
if the Advisor for purposes of the principal investment strategies may deviate from the $5 billion threshold and indicate any applicable risks.

Response:

 The Fund does not intend to
deviate from the $5 billion threshold for purposes of the Fund’s principal strategies.

COMMENT 7A:

 (Prospectus – Principal
Investment Strategy)

 Please clarify in the Item 4
summary the status of the Fund’s Subadvisor and explain briefly what “discretionary Subadvisor” means in plain English in addition to any attendant risks.

Response:

 The Registrant believes that the
identification of the Subadvisor as such in Item 4, combined with the identification of the Subadvisor’s portfolio managers, sufficiently conveys the role of the Subadvisor in
managing

February 21, 2024
  Page
 6

      

the Fund. Accordingly, the Registrant respectfully declines to revise the disclosure in response to this comment.

COMMENT 7B:

 (Prospectus – Principal
Investment Strategy)

 Please state the
Advisor’s role in managing the Fund in the Item 4 summary (i.e., Discretionary Vs. Non-Discretionary Advisor role).

Response:

 The Registrant respectfully
believes that the existing “Advisor” section of the Fund’s prospectus is adequate to provide shareholders with sufficient information regarding the Advisor’s role in managing the Fund. Accordingly, the Registrant declines to
revise the disclosure in response to this comment.

COMMENT 8:

 (Prospectus – Principal
Investment Strategy)

 Please clarify if
“long-term growth” is defined as 5 years or more of growth. Please harmonize the use of “long-term growth” with the phrase “long-term horizon” used in paragraph 7. If these two phrases mean the same thing, please use
one term. If they do not mean the same thing, please define “long-term horizon.”

Response:

 The Registrant has revised the
disclosure as follows:

 A company is considered a
“compounder” if, in the Subadvisor’s view, it is expected to experience sustainable growth and compound its earnings over a long-term investment horizon (generally defined
as five years or more).

COMMENT 9:

 (Prospectus – Principal
Investment Strategy)

 A fund is required to specify
how it intends to achieve its investment objectives by identifying the fund’s principal investment strategies (including the type or types of securities in which the Fund invests or will invest principally). See Items 4 and 9 of Form N-1A. Accordingly, please delete terms and phrases that suggest the Fund’s description of its investment strategies and risks, including the investments the Fund will use, is incomplete. For example, in the
Fund’s Item 4 strategy summary, the second paragraph’s first sentence states, “…The Subadvisor

February 21, 2024
  Page
 7

      

conducts qualitative assessments of companies, including, among other criteria….” (Emphasis added). Please delete the phrase
“among other” and confirm that Prospectus explains each investment in which the Fund invests principally, along with all attendant principal risks. Further examples of terms or phrases that should not be used include “such as”
and “other.”

Response:

 The Registrant confirms that the
Prospectus explains each investment in which the Fund invests principally, along with all attendant principal risks. The Registrant does not believe that it is possible to describe every factor the Subadvisor will consider in its assessment of
issuers, given that the factors will necessarily vary based on things like industry and geographic region.

COMMENT 10A:

 (Prospectus – Principal
Investment Strategy)

 Please define the term
“stable free cash flows” found in the second paragraph of Item 4 summary.

Response:

 The Registrant has revised the
disclosure as follows:

 The Subadvisor seeks to
identify what it believes to be high-quality companies with consistent, recurring revenues; stable free cash flows (consistent levels of cash left after paying expenses); and sustainable returns on invested capital (a level of return on investment
that can be maintained over the long term).

COMMENT 10B:

 (Prospectus – Principal
Investment Strategy)

 Please define the term
“sustainable returns on invested capital” found in the second paragraph of Item 4 summary.

Response:

 See response to Comment
10A.

COMMENT 10C:

 (Prospectus – Principal
Investment Strategy)

 Please define the term
“diverse structural growth themes” found in the second paragraph of Item 4 summary and provide examples.

February 21, 2024
  Page
 8

      

Response:

 The
Registrant has revised the disclosure as follows:

 The
Subadvisor aims to construct a portfolio of companies exposed to diverse structural growth themes (i.e., a variety of potential drivers of growth).

COMMENT 11:

 (Prospectus – Principal
Investment Strategy)

 Please confirm supplementally
to the Staff whether the Fund has selected any specific countries, geographic regions, or sectors for purposes of its principal investment strategies. If it has, please disclose and add attendant Item 4 risk disclosure.

Response:

 The Fund has not selected any
specific countries, geographic regions, or sectors for purposes of its principal investment strategies.

COMMENT 12:

 (Prospectus – Emerging
Markets)

 The third paragraph states “[a]s a
part of its principal investment strategy, the Fund may invest in eligible securities, such as China A-Shares, that are listed and traded on the Shanghai and Shenzhen Stock Exchanges through the
China–Hong Kong Stock Connect program.” If the Fund is investing in these shares for purposes of its principal investment strategies, disclose in the Fund’s Item 4 summary and risk sections.

Response:

 The Fund invests in China A-Shares as part of its principal investment strategy of investing in non-U.S. equity securities, but does not invest in China A-Shares
as a principal investment strategy. Accordingly, the Registrant has not added Item 4 disclosure.

COMMENT 13:

 (Prospectus – Principal
Investment Strategy)

 The disclosure in paragraph
two states that “[t]he investment process generally results in a portfolio of 25-30 companies and, from time to time, may result in more substantial investments in particular countries, regions or
sectors.” Please clarify what “substantial” means and provide the source of this definition.

February 21, 2024
  Page
 9

      

Response:

The Registrant does not apply a specific test with respect to “substantial investments.” The Registrant notes that this is general
disclosure designed to convey that the Fund may, from time to time, have greater exposure to particular countries, regions, or sectors, and is not designed to convey a particular investment limitation.

COMMENT 14:

 (Prospectus – Principal
Investment Strategy)

 Please harmonize the use of
the term “region” in Item 4 with the use of the term “geographic region” in the Geographic Focus Risk paragraph.

Response:

 The Registrant has revised the
disclosure as follows:

 The investment process
generally results in a portfolio of 25-30 companies and, from time to time, may result in more substantial investments in particular countries, geographic regions or
sectors. Country, geographic region and sector allocations are the outcome of the Subadvisor’s stock selection process.

COMMENT 15:

 (Prospectus – C WorldWide
International Composite Performance Information)

Please confirm if the fees wai