Harbor Capital Appreciation Fund Update—August 2019

We visited the offices of Jennison Associates, subadvisor to Harbor Capital Appreciation, and our discussions confirmed the many qualitative positives behind our use of the fund in many of our portfolios. We are confident it will continue to outperform the large-cap growth index and the broader S&P 500. Capacity constraints are not a concern given the strategy invests predominantly in large-cap U.S. stocks. And the fund’s five-year trailing returns have consistently ranked in the top third of its category in recent years.

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Year-End 2018 Investment Commentary

Across the board, it was an extremely difficult year to make money in the financial markets, with almost every asset class and financial market down for the year. The contrast with 2017’s strong market results is also striking—and serves as a useful reminder of the unpredictability of markets.

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Third Quarter 2018 Investment Commentary

In 2018, US stocks have strongly outperformed emerging-market (EM) stocks, but this kind of divergence is not unusual. Still, given the negative headlines surrounding emerging markets, we highlight several points this quarter that indicate EM stocks remain attractive and their long-term growth outlook remains intact. On the other hand, US stocks look expensive and there are reasons to think the near- and medium-term outlook for them is not so rosy. They represent a risk to our portfolios, which is why we maintain a meaningful underweight to US stocks.

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