How does Harvest come up with their prices?
For most securities, Harvest relies on its relationships with outside broker/dealers and their trading desks, who give live market quotes on individual bonds and other securities as opposed to matrix prices. We use live traders (as opposed to a matrix pricing service) in order to address the intricacies of each individual security as well as the position size. This provides more accuracy, especially on products that typically trade "by appointment" or do not have actual "closing prices."

Fixed income securities sent to Harvest for pricing are first sorted by type and then blindly distributed to the appropriate traders at the broker/dealer firms. The traders who price securities for Harvest Investments, Ltd. are employed (secondarily) by our firm. While they work full time for outside broker-dealers, the prices they give us are on behalf of Harvest. The prices they submit are considered Harvest's prices. All of the firm's traders are specialists in their given field, and they price our securities for us just as they would any other security that they trade throughout the day. They have access to Wall Street inventories, market research, and numerous other resources via their broker/dealer. Harvest then internally "flags" certain prices for review and implements various spot checks in order to maintain the quality of our prices.

Why do I see variance between the client prices and Harvest's prices?
There are two types of price variance in Harvest's reports. First, there are items that have more than 3% price variance. Such items are "flagged" in the report. These are items that Harvest has deemed should be reviewed by the auditor and his/her client due to price discrepancy. Each of these items has been double checked by Harvest, and we believe that the client's price is outside of the acceptable market range.

The second type of price discrepancy involves items with less than 3% price variance. While Harvest does not deem these outside of an acceptable range, please feel free to bring any item to our attention if you have a question. That being said, it is very common for fixed income items to have varying market indications on any given day.

Many of the fixed income securities do not have actual "closing prices," nor do they trade consistently and with clearly defined markets like their equity counterparts. Rather, they trade "by appointment," or whenever a buyer and a seller agree on a transaction price. Due to the nature of these products, different traders will have different opinions as to what a bond is worth. It is not uncommon in this field, depending on the security type, for various traders to bid the exact same security at prices that range more than a point apart. This is especially true of esoteric products, lower-rated bonds, and small lots of mortgage pools and the like.

Should I replace my client's market values with Harvest's for the audit?
Harvest Prices and Market Values are to be used as an independent reference point used in determining the reasonableness of the prices/values used by the audit client in their internal ledger and reporting systems. When our independent valuations are close enough to your audit clients', then we deem the client prices/values to be "reasonable" and usable for the audit. Harvest Prices/Values, as the reference point, are not intended to be substitute for the audit clients' numbers. In cases where the Harvest and audit client's prices/values are not close enough, we recommend that the auditor investigate further the client's valuations to see if they are indeed usable in the audit or need to be revised.

If an item is flagged in Harvest's report, should my client not own it?
Harvest "flags" individual securities in its reports by hi-lighting them in special lists and totals in its reports. A good rule of thumb to use regarding a "flag" is to realize that there is something about the involved item(s) that Harvest thinks you should know- that the client market price looks strange/wrong; that a bond is below investment grade; that a stock issue is illiquid; that a CMO tranche is very volatile; etc. We do not intend to suggest that such investments are inappropriate for your clients and their constituents to hold, or that they do play a larger role in a portfolio strategy that is perfectly acceptable to your client and their constituent interests. Just because an item is flagged in one or reports does not mean that it is a bad investment. But it does mean that there is something we want to make sure you know about the item before you move on/sign off.

Why are there differences between the balances on the "Allmkt" and "balance" tabs?
On the balance page we only reflect your client's numbers for par/shares and market values. The balance page is meant to be a check that when Harvest took all of your client information and loaded it into our systems/processes, that we included all the items submitted to us by you (as represented by the original client report). So we type in the par/share and market value totals from the original client report at the top, and then we pull in the client information on par/shares and market values that was loaded into our systems, and compare them to make sure no items were excluded or loaded improperly. The results for this sheet should always match- the totals from the original client report you submitted should always equal the totals that come out of the Harvest system/process. Otherwise, it means that some items were excluded, doubled, or that something else went wrong in our process.

On the Allmkt page, we show the client's par/shares and market value AND the Harvest market prices/values. This page is meant to provide an independent test of your client's market values, so that you can move forward in your audit and reporting with confidence that your client's numbers are reasonable. Our market values are meant to provide the required independent reference point for this.

How are Harvest's fees determined?
Harvest's IPR fees are based on a combination of the types of securities that are to be reviewed and the size of the portfolio, in terms of both dollar value and number of items. Other report fees, such as PSPTs, DITs, AIs, etc. are based solely upon the number of items to be reviewed. POL fees are based upon the complexity of the investment policy. POLs are quoted after a thorough review of the documentation in order to determine the number of tests necessary to completely assess adherence to the policy.

Additional fees result when portfolio documents are sent to Harvest in paper format or the documentation is incomplete (for example: missing CUSIPs or client prices.) Extra fees may also be charged if there are items in the portfolio that require research in order to price. Clients are always advised ahead of time when items are encountered that will result in higher than expected fees. Rush jobs also require extra fees.

Quotes can be provided upon request for any report type by checking off the appropriate box on Harvest's Job Request Form.