Total ordinary dividends may include other income which is not qualified dividend income. If a fund has income other than non-qualified dividend income that exceeds fund expenses, the fund will distribute at least some dividends that are not qualified. Sources of income that are not qualified dividend income include interest, capital gains, securities lending income, certain preferred or foreign dividends, dividends from real estate investment trusts (REIT dividends), and dividends on securities where the Fund did not meet certain holding period requirements.
Mutual fund shareholders are subject to the same holding period requirements as the fund in order to take advantage of the lower tax rate on qualified dividend income. You must hold your Harbor Funds shares for at least 61 days during the 121 days beginning 60 days before the ex-dividend date. As an example, for Harbor Funds' qualified dividend distributions in December, 2014, the ex-dividend date was December 18, 2014. You must have held the shares for 61 days between October 19, 2014 and February 16, 2015 to qualify for the lower tax rates.