<PAGE> 1
SEMI-ANNUAL REPORT
LOGO
APRIL 30, 1996
----------------------------------------------------------------------
HARBOR FUND
<PAGE> 2
HARBOR FUND
SEMI-ANNUAL REPORT OVERVIEW
The first half of Harbor Fund's fiscal year ended on April 30, 1996.
Performance for this six-month period is shown below for each of the eight
portfolios. All performance figures included in this report are total returns
and assume the reinvestment of dividends. The Long-Term Historic Returns
represent unmanaged indices and are included as an indication of longer-term
potential associated with taking different levels of market risk.
<TABLE>
<CAPTION>
UNANNUALIZED
6 MONTHS
HARBOR FUNDS IN ORDER OF MARKET RISK ENDED 4/30/96
--------------------------------------------------------------------------------- --------------------------
<S> <C>
International Growth............................................................. 19.54%
Growth........................................................................... 16.13%
Capital Appreciation............................................................. 8.02%
International.................................................................... 12.49%
Value............................................................................ 15.79%
Bond............................................................................. 1.46%
Short Duration................................................................... 1.89%
Money Market..................................................................... 2.51%
</TABLE>
<TABLE>
<CAPTION>
COMMONLY USED MARKET INDICES
---------------------------------------------------------------------------------
<S> <C>
Morgan Stanley Capital International Europe, Australia, and Far East
(EAFE); international equity................................................... 13.21%
Standard & Poor's 500 (S&P 500); domestic equity................................. 13.87%
Lehman Brothers Aggregate (LB AGG); domestic bonds............................... 0.53%
One-Year Government Bonds
(1-YR GVT)..................................................................... 2.60%
90-Day U.S. Treasury Bills
(T-Bills); domestic short-term................................................. 2.61%
</TABLE>
<TABLE>
<CAPTION>
30 YEARS
1966-1995
LONG-TERM HISTORIC RETURNS ANNUAL RATES
--------------------------------------------------------------------------------- --------------------------
<S> <C>
EAFE............................................................................. 12.39%
S&P 500.......................................................................... 10.68%
Domestic Bonds (intermediate and long)(1)........................................ 8.24%
1-YR GVT(2)...................................................................... 7.85%
T-Bills.......................................................................... 6.72%
Consumer Price Index............................................................. 5.39%
</TABLE>
<TABLE>
<CAPTION>
6 MONTHS LIPPER
HARBOR FUND EXPENSE RATIOS 1992 1993 1994 1995 1996 MEDIAN**
-------------------------------------------- ---- ---- ---- ---- -------- --------
<S> <C> <C> <C> <C> <C> <C>
International Growth........................ NA% NA% 1.32%* 1.21%* 1.15%* 1.15%
Growth...................................... 0.90% 0.90% 0.93% 0.93% 0.91% 1.00%
Capital Appreciation........................ 0.91% 0.86% 0.81% 0.75% 0.76% 0.81%
International............................... 1.28% 1.20%+++ 1.10%+++ 1.04%+++ 1.00%+++ 1.07%
Value....................................... 0.84%* 0.88% 1.04% 0.90% 0.88% 0.90%
Bond........................................ 0.77%* 0.72%* 0.77%* 0.70%* 0.69%* 0.63%
Short Duration***........................... 0.35%*++ 0.43%* 0.38%* 0.38%* 0.31%* 0.59%
Money Market................................ 0.69%* 0.71%* 0.67%* 0.61%* 0.62%* 0.57%
</TABLE>
------------------
(1) LB AGG not available for 30 year period; blended historic data used to
approximate total Bond Market Return.
(2) Historic data used to approximate total One-Year Government Bonds
Return.
* Reflects the Adviser's agreement not to impose all or a portion of its
advisory fees.
** Includes all funds in the 3/31/96 Lipper Universe with the same
investment objective as the comparable Harbor Fund portfolio and with
similar total assets.
*** For operating expenses only. Total expense ratio, including interest
expense for the Short Duration Fund, is 1.54% for 1992, 1.12% for
1993, 1.64% for 1994, 1.84% for 1995, and 1.25% for 6 months in 1996.
Harbor Short Duration Fund commenced operations 1/1/92.
++ Annualized
+++ Reflects the Adviser's and Subadviser's agreement not to impose a
portion of the advisory fee.
<PAGE> 3
DEAR SHAREHOLDER:
Looking back over the first six months of our fiscal year, from our
perspective here's how significant developments unfolded:
- DOMESTIC EQUITIES -- BUFFETED BY UNEXPECTED ECONOMIC NEWS --
WEATHERED A STORM MIDWAY THROUGH THE FIRST HALF OF OUR FISCAL
YEAR AND POSTED ANOTHER OUTSTANDING GAIN.
- BOND MARKETS WERE HARD HIT IN THE MAELSTROM, BUT BOND FUNDS
MANAGED TO POST POSITIVE RESULTS ON THE STRENGTH OF EARLIER
PERFORMANCE.
- OVERALL PERFORMANCE OF INTERNATIONAL STOCKS AND BONDS VIRTUALLY
MIRRORED THOSE OF U.S. MARKETS -- NOT A COMMON OCCURRENCE.
For the U.S. financial markets, the bull market continued unabated in 1995
and early in 1996. As the Harbor fiscal year began in November the economy had
slowed to a crawl and -- coupled with subdued inflation -- appeared to present a
very favorable climate for the stock and bond markets.
Even when the Federal Reserve open market committee reduced the federal
funds rate by one-quarter of a point to 5.25 percent in January this year there
seemed to be plenty of room for further easing since rates had been raised on
seven consecutive occasions ending in January last year.
In February, strong employment reports, higher consumer spending, dimming
prospects for a balanced budget, and dumping of bonds by hedge funds were cited
as factors behind an unexpected spike in interest rates.
In the wake, bond prices plunged. With interest rates moving to attractive
buying levels, longer term bond returns turned negative. The yield on the
30-year treasury bond, which had dropped to just under 6 percent at year end,
rose to more than 7 percent before falling somewhat as the first half of our
fiscal year closed.
For the six months ended April 30, the Lehman Brothers Aggregate domestic
bond index barely posted a positive return and managed that only on the strength
of gains in the first three months of the period.
In a departure from the trend in which returns in the domestic stock and
bond markets have performed in tandem for many years, the domestic stock market
fared markedly better than bonds, although returns in the second half of the
period also fell substantially from those of the first three months.
Among reasons for the strong equity market result:
- Higher than expected corporate earnings. Return on equity
reached an all time high.
- Continuing improvement in productivity and increased global
competition -- factors helping keep inflation low.
- Record high levels of corporate stock buyback -- $38 billion
through April -- together with continued strong merger and
acquisition activity.
- Signs of an improvement in the rate of personal savings by
Americans.
- Continued infusion of net new investments into equity mutual
funds at record levels although for bonds net new investment has
been about zero.
International equity returns also were strong in the first half of our
fiscal year, with the popular domestic and international indexes -- the S&P 500
and the Europe, Australia, and Far East (EAFE) -- remarkably close and up more
than 13 percent in the period.
The rate of inflation in most countries around the globe is at levels below
that in the U.S. Worldwide restraint in fiscal and monetary policy have been
important positive forces, but in Europe, Germany is now leading the way in
easing monetary policy. Japan has been even more aggressive in struggling to
emerge from a three year recession with lower interest rates and government
spending.
In the first half of our fiscal year, equity returns turned up sharply in
Japan and were strong elsewhere in the Far East as well as in France, Spain, and
the Netherlands.
2
<PAGE> 4
DEAR SHAREHOLDER--CONTINUED
On a broader scale, continued globalization of business may well turn out
to be the most significant economic change of the century. Global integration
and advances in technology foster economic growth and productivity gains. This
evolving integration could be the foundation on which the domestic economy can
continue to grow and extend growth of the U.S. equity market.
Over the last decade, the U.S. has dramatically improved its competitive
position in world markets and is a clear leader in many areas of technology.
U.S. multinationals now produce much more outside the country than do
competitors in Europe and Japan. This helps smooth out cyclical performance.
At the same time, international equity markets -- which make up 60 percent
of the world's market capitalization -- are attractive to American investors.
Obviously, world markets run the gamut from very mature to very volatile. They
often perform very differently from domestic markets and can provide needed
balance in portfolios of U.S. investors that foreign business of American
companies does not replicate.
The S&P 500 index narrowly outperformed the EAFE index in the first half of
our fiscal year. However, the Harbor International Growth Fund substantially
outperformed both indexes in the same period. U.S. stocks did better than
international equities in 1995, but the converse was true in six of the last 15
years.
Since September, 1993 shares of Harbor International Fund have not been
available to new investors. In November, 1993, Harbor began offering shares of
Harbor International Growth Fund to those investors seeking to diversify their
investment portfolio by investing in the foreign markets. Harbor International
Growth Fund fills an important niche at the aggressive end of the risk and
return scale and the Fund's performance since inception has been excellent --
outperforming the EAFE for that period.
Harbor is pleased to announce another international fund, Harbor
International Fund II, whose investment objective and policies are similar to
those of Harbor International Fund. The new Fund is managed by James J. LaTorre,
Jr., president of Summit International Investments, Inc., a registered
investment adviser. For several years, Mr. LaTorre provided research and
analytic services to Hakan Castegren, the portfolio manager of Harbor
International Fund. In that capacity, Mr. LaTorre traveled widely to visit
portfolio companies and interview the management of companies being considered
for investment by Mr. Castegren. While the investment style of these two
portfolio managers may be similar, over time each manager's decisions will
result in different securities being selected for the Funds. Investors should
not expect performance of the Fund portfolios to be identical. If you are
interested in learning more about the new Fund, call for the Fund's prospectus
at 1-800-422-1050 or write to Harbor Fund at the address on the back of this
report.
As we approach an important milestone -- the 10th anniversary of the
founding of the first Harbor fund, Harbor Growth Fund, on November 19, 1986 --
we are proud of the performance and continued growth of Harbor Fund. Net assets
topped $6 billion for the first time in the first half of our fiscal year.
We thank you for investing with Harbor Fund and appreciate your confidence
in our products.
Sincerely,
Ronald C. Boller
Ronald C. Boller
President
June 12, 1996
3
<PAGE> 5
HARBOR FUND
The following performance figures are annualized for each Fund except for
the six months total return calculations. The date of inception for Harbor
International Growth Fund was November 1, 1993; Harbor Growth Fund was November
19, 1986; Harbor Short Duration Fund was January 1, 1992; and all other Funds
started December 29, 1987. Unless otherwise stated, all comments pertain to the
fiscal half ended April 30, 1996.
<TABLE>
<S> <C> <C> <C>
HARBOR INTERNATIONAL GROWTH FUND NET ASSET VALUE: 4/30/96 $14.35
10/31/95 $12.10
</TABLE>
CHART
<TABLE>
<CAPTION>
------------------------------------------------------------------
Total Return for Periods Ended 4/30/96
------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Int'l 19.54% 37.10% -- 16.32%
Growth
------------------------------------------------------------------
EAFE 13.21% 11.40% 8.84% 9.05%
------------------------------------------------------------------
Total Return for Periods Ended 3/31/96
------------------------------------------------------------------
Harbor Int'l 18.77% 42.30% -- 16.86%
Growth
------------------------------------------------------------------
</TABLE>
Harbor International Growth Fund had
outstanding results in the first six
months of fiscal 1996, significantly
outperforming the EAFE index for the
first half and trailing 12 months. In
the period, growth stocks worldwide
continued to outperform equity markets
in general. Earnings per share growth
of all companies in the portfolio
averaged over 15% in the 12 months
ended April 30. Portfolio changes
included increased weightings in
France and the United Kingdom, where
returns were strong, and elimination
of holdings in Argentina and Germany,
where they were not. On April 30, the
Fund held 33 equities in 11 countries.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN HARBOR
INTERNATIONAL GROWTH AND EAFE
INTERNATIONAL
GROWTH EAFE
<S> <C> <C>
04/94 $10,405.57 $10,556.58
04/95 10,643.55 11,146.38
04/96 14,592.58 12,417.58
</TABLE>
*For the period November 1, 1993 (inception) ending April 30, 1996
<TABLE>
<S> <C> <C> <C>
HARBOR GROWTH FUND NET ASSET VALUE: 4/30/96 $16.18
10/31/95 $15.73
</TABLE>
CHART
<TABLE>
<CAPTION>
------------------------------------------------------------------
Total Return for Periods Ended 4/30/96
------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Growth 16.13% 41.72% 11.26% 12.79%
------------------------------------------------------------------
S&P 500 13.87% 30.39% 14.99% 14.26%
------------------------------------------------------------------
Total Return for Periods Ended 3/31/96
------------------------------------------------------------------
Harbor Growth 8.99% 34.81% 9.71% 12.25%
------------------------------------------------------------------
</TABLE>
Harbor Growth Fund outperformed the
S&P 500 Index in the first half of the
current fiscal year and in the 12
months ended April 30. Mid-cap growth
stocks, where the Fund portfolio is
concentrated, generally had
accelerating earnings growth and
performed well. The median earnings
growth rate for holdings in the
portfolio was 26% at the end of April.
Solid returns from the overweighted
technology and consumer durables
sectors more than offset declines in
basic materials and consumer
non-durables. Holdings declined in
technology to about 20% of the
portfolio, and increased in apparel,
consumer services, and
telecommunications.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
HARBOR GROWTH AND S&P 500
GROWTH S&P 500
<S> <C> <C>
04/87 $12,420.00 $11,703.00
04/88 12,036.00 10,947.00
04/89 13,346.00 13,440.00
04/90 14,000.00 14,838.00
04/91 18,284.00 17,449.00
04/92 18,944.00 19,889.00
04/93 19,297.00 21,725.00
04/94 21,069.00 22,907.00
04/95 21,999.00 26,910.00
04/96 31,176.20 35,087.90
</TABLE>
Periods ending April 30
4
<PAGE> 6
HARBOR FUND--CONTINUED
Performance data quoted represents past performance and is not predictive
of future performance. Actual return and principal value on an investment will
fluctuate, and the shares, when redeemed, may be worth more or less than their
original cost.
<TABLE>
<S> <C> <C> <C>
HARBOR CAPITAL APPRECIATION FUND NET ASSET VALUE: 4/30/96 $24.69
10/31/95 $23.20
</TABLE>
CHART
<TABLE>
<CAPTION>
------------------------------------------------------------------
Total Return for Periods Ended 4/30/96
------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Capital 8.02% 31.62% 19.53% 18.75%
Appreciation
------------------------------------------------------------------
S&P 500 13.87% 30.39% 14.99% 15.93%
------------------------------------------------------------------
Total Return for Periods Ended 3/31/96
------------------------------------------------------------------
Harbor Capital 3.95% 30.77% 18.14% 18.38%
Appreciation
------------------------------------------------------------------
</TABLE>
Harbor Capital Appreciation Fund's
portfolio of predominantly larger
capitalization growth stocks
underperformed the S&P 500 index
during the first six months of the
fiscal year. Holdings in the
technology sector had a volatile first
half performance, regaining some of
the decline later in the period.
Holdings in health care, business
services, and retail had strong
returns. Technology holdings declined
from almost 40% of the portfolio to
just over 31%, while health care and
financial services sectors increased.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN HARBOR
CAPITAL APPRECIATION AND THE S&P 500
CAPITAL S&P
APPRECIATION
<S> <C> <C>
04/88 $10,980.00 $10,690.00
04/89 13,016.00 13,124.00
04/90 13,797.00 14,490.00
04/91 17,184.00 17,040.00
04/92 20,883.00 19,421.00
04/93 23,288.00 21,215.00
04/94 26,102.00 22,369.00
04/95 31,854.00 26,279.00
04/96 41,925.10 34,264.80
</TABLE>
Periods ending April 30
<TABLE>
<S> <C> <C> <C>
HARBOR INTERNATIONAL FUND NET ASSET VALUE: 4/30/96 $29.71
10/31/95 $26.93
</TABLE>
CHART
<TABLE>
<CAPTION>
------------------------------------------------------------------
Total Return for Periods Ended 4/30/96
------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor 12.49% 18.85% 14.64% 17.78%
International
------------------------------------------------------------------
EAFE 13.21% 11.40% 8.84% 7.29%
------------------------------------------------------------------
Total Return for Periods Ended 3/31/96
------------------------------------------------------------------
Harbor Int'l 8.07% 18.62% 14.14% 17.56%
------------------------------------------------------------------
</TABLE>
Generally robust international equity
markets overcame the negative
effects--for dollar based
investors--of a strong dollar in the
first half of the fiscal year. Harbor
International Fund returns fell
slightly below those of the EAFE index
in the period. In Europe, returns from
holdings in France and the Netherlands
(15.6% of the portfolio), were
propelled by declining interest rates.
In Spain, Sweden and the Netherlands,
overweighting amplified good
performance for a disproportional
contribution to portfolio results. The
Fund also benefitted from good
performance in Argentina and Brazil.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
HARBOR INTERNATIONAL AND EAFE
INTERNATIONAL EAFE
<S> <C> <C>
04/88 $11,691.76 $11,660.00
04/89 12,981.70 16,012.00
04/90 11,284.64 18,226.00
04/91 11,775.56 19,766.00
04/92 10,766.40 22,317.00
04/93 13,106.00 23,414.00
04/94 15,286.62 29,818.00
04/95 16,140.68 32,937.00
04/96 17,981.47 39,146.00
</TABLE>
Periods ending April 30
5
<PAGE> 7
HARBOR FUND--CONTINUED
The following performance figures are annualized for each Fund except for
the six months total return calculations. The date of inception for Harbor
International Growth Fund was November 1, 1993; Harbor Growth Fund was November
19, 1986; Harbor Short Duration Fund was January 1, 1992; and all other Funds
started December 29, 1987. Unless otherwise stated, all comments pertain to the
fiscal half ended April 30, 1996.
<TABLE>
<S> <C> <C> <C>
HARBOR VALUE FUND NET ASSET VALUE: 4/30/96: $15.30
10/31/95: $14.57
</TABLE>
CHART
<TABLE>
<CAPTION>
------------------------------------------------------------------
Total Return for Periods Ended 4/30/96
------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Value 15.79% 28.26% 12.52% 14.23%
------------------------------------------------------------------
S&P 500 13.87% 30.39% 14.99% 15.93%
------------------------------------------------------------------
Total Return for Periods Ended 3/31/96
------------------------------------------------------------------
Harbor Value 13.35% 29.95% 12.20% 14.16%
------------------------------------------------------------------
</TABLE>
Active portfolio management produced
good results in the first half of the
fiscal year and Harbor Value Fund
outperformed both the S&P 500 index
and the value oriented segment of the
market. Turnover rate (annualized) was
high in the fiscal first half because
of opportunities in cyclical equities.
For example, on April 30 the portfolio
was triple weighted in papers because
of the potential created by the
significant inventory correction.
Financial holdings -- banks and
insurance -- doubled from a year ago
to nearly 15% of the portfolio.
Positions in energy, utilities and
retail declined. Quantitative
techniques used to passively manage
25% of assets added broad
diversification as intended but had a
modest negative effect on total
performance relative to the overall
market for the period.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
HARBOR VALUE AND THE S&P 500
VALUE S&P 500
<S> <C> <C>
04/88 $10,403.20 $10,690.10
04/89 13,730.50 13,124.30
04/90 14,846.00 14,489.50
04/91 16,812.00 17,040.00
04/92 18,413.00 19,421.00
04/93 19,468.00 21,215.00
04/94 20,271.00 22,369.00
04/95 23,639.00 26,279.00
04/96 30,320.10 34,264.80
</TABLE>
Periods ending April 30
<TABLE>
<S> <C> <C> <C>
HARBOR BOND FUND NET ASSET VALUE: 4/30/96: $11.06
10/31/95: $11.21
</TABLE>
CHART
<TABLE>
<CAPTION>
------------------------------------------------------------------
Total Return for Periods Ended 4/30/96
------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Bond 1.46% 9.68% 9.63% 9.70%
------------------------------------------------------------------
LB AGG 0.53% 8.64% 8.13% 9.11%
------------------------------------------------------------------
Total Return for Periods Ended 3/31/96
------------------------------------------------------------------
Harbor Bond 3.21% 11.97% 9.92% 9.82%
------------------------------------------------------------------
</TABLE>
In anticipation of continued slow
domestic economic growth and stable
interest rates, the average duration
of the Harbor Bond Fund portfolio in
the first half of the fiscal year was
maintained at a level well above that
of the Lehman Brothers Aggregate
index. Despite the well publicized
upward spike in rates, the Fund
substantially outperformed the index.
Currency hedged foreign bonds --
mainly large allocations in Germany,
Finland, the U.K., and Canada --
greatly enhanced performance. A small
allocation in emerging markets also
helped. Portfolio duration in excess
of the market was maintained through
the end of the period on the
expectation that rates will start to
decline.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
HARBOR BOND AND LB AGG
BOND LB AGG
<S> <C> <C>
04/88 $10,130.00 $10,320.00
04/89 11,081.00 11,140.00
04/90 11,886.00 12,146.00
04/91 13,669.00 13,991.00
04/92 15,680.00 15,529.00
04/93 18,199.00 17,589.00
04/94 18,539.00 17,739.00
04/95 19,735.00 19,036.00
04/96 21,645.50 20,681.60
</TABLE>
Periods ending April 30
6
<PAGE> 8
HARBOR FUND--CONTINUED
Performance data quoted represents past performance and is not predictive
of future performance. Actual return and principal value on an investment will
fluctuate, and the shares, when redeemed, may be worth more or less than their
original cost.
<TABLE>
<S> <C> <C> <C>
HARBOR SHORT DURATION FUND NET ASSET VALUE: 4/30/96: $8.68
10/31/95: $8.82
</TABLE>
CHART
<TABLE>
------------------------------------------------------------------
Total Return for Periods Ended 4/30/96
------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Short Duration 1.89% 5.59% -- 4.65%
------------------------------------------------------------------
1-YR Govt 2.60% 6.25% 5.24% 4.74%
------------------------------------------------------------------
Total Return for Periods Ended 3/31/96
------------------------------------------------------------------
Harbor Short Duration 2.79% 6.55% -- 4.79%
------------------------------------------------------------------
</TABLE>
Plagued by volatile interest rates,
Harbor Short Duration underperformed
both 90-day and one-year treasury
bills in the first half of the fiscal
year. Reductions in the Federal funds
rate early in the period caused short
rates to fall and the yield curve to
widen. Later, rates on one-year
obligations rose in response to
stronger than expected economic news.
Average duration of the portfolio was
reduced from a high of 14 months early
in the period to 7 months at the
close. This added to returns, as did
holdings of asset-backed, mortgage and
money market securities.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
HARBOR VALUE AND THE S&P 500
SHORT DURATION 1 YR GVT
<S> <C> <C>
04/92 $10,065.00 $10,131.00
04/93 10,650.00 10,632.00
04/94 10,914.00 10,891.00
04/95 11,530.00 11,502.00
04/96 12,175.20 12,220.40
</TABLE>
<TABLE>
<S> <C> <C> <C>
HARBOR MONEY MARKET FUND NET ASSET VALUE: 4/30/96: $1.00
10/31/95: $1.00
</TABLE>
CHART
<TABLE>
<CAPTION>
------------------------------------------------------------------
Total Return for Periods Ended 4/30/96
------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Money Market 2.51% 5.40% 4.16% 5.67%
------------------------------------------------------------------
T-Bills 2.61% 5.55% 4.42% 5.75%
------------------------------------------------------------------
Current Yield for Periods Ended 3/31/96
------------------------------------------------------------------
Harbor Money Market 7 days: 4.71% 30 days: 4.70%
------------------------------------------------------------------
</TABLE>
Periods ending April 30
Performance of the Harbor Money Market
Fund slightly trailed that of 90-day
treasury bills in the first half of
the fiscal year. Average duration of
the portfolio ranged from 1.7 to 2.7
months. Pursuit of a yield curve
strategy favoring one-year securities
hurt returns while the choice of money
market obligations added value. Money
market shares are neither insured nor
guaranteed by the U.S. Government.
While Harbor Money Market Fund seeks
to maintain a stable price per share,
there is no assurance the Fund will be
able to do so.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
HARBOR MONEY MARKET AND T-BILLS
MONEY MARKET T-BILLS
<S> <C> <C>
04/88 $10,200.00 $10,199.00
04/89 11,036.00 11,019.00
04/90 12,001.00 11,952.00
04/91 12,916.00 12,838.00
04/92 13,528.00 13,481.00
04/93 13,932.00 13,923.00
04/94 14,323.00 14,364.00
04/95 15,024.00 15,099.00
04/96 15,834.60 15,937.90
</TABLE>
Periods ending April 30
7
<PAGE> 9
HARBOR INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1996 (UNAUDITED)
Investment Holdings By Country (%)
(Excludes net cash and short-term investments of 4.6%)
<TABLE>
<S> <C>
Belgium (BEL) 0.3
Australia (AUS) 3.1
Netherlands (NET) 3.8
Mexico (MEX) 4.0
Spain (SP) 5.8
Sweden (SW) 8.2
Thailand (THAI) 8.5
United Kingdom (UK) 13.3
Hong Kong (HK) 13.5
Switzerland (SWS) 16.8
France (FR) 18.1
</TABLE>
COMMON STOCKS--95.4%
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C>
APPAREL & TEXTILES--4.2%
Christian Dior (FR).............. 99,850 $ 13,288,572
-------------
AUTOMOBILE PARTS--3.4%
Autoliv AB (SW).................. 196,700 10,707,390
-------------
BANKS--13.4%
Banco Popular Espanol (SP)....... 6,965 1,152,760
Bangkok Bank (THAI).............. 976,000 14,147,635
Bank of East Asia (HK)........... 492,800 1,656,419
Standard Chartered PLC (UK)...... 1,380,000 12,880,552
Thai Farmers Bank PCL (THAI)..... 1,096,700 12,596,178
-------------
42,433,544
-------------
BUSINESS SERVICES--3.5%
Societe Generale Surveill Holding
(SWS).......................... 4,860 10,933,326
-------------
CONGLOMERATES--11.0%
BBC Brown Boveri AG (SWS)........ 4,066 4,887,165
Cheung Kong (Holdings) (HK)...... 2,052,000 14,656,690
Siebe PLC (UK)................... 985,000 12,696,804
Swire Pacific Ltd. Cl. A (HK).... 309,800 2,643,331
-------------
34,883,990
-------------
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C>
ELECTRICAL EQUIPMENT--4.6%
Asea AB (SW)..................... 61,540 $ 6,283,397
Legrand-ADP (FR)................. 63,220 8,108,370
-------------
14,391,767
-------------
ELECTRONICS--1.9%
SGS Thomson Microelectronics
(FR)........................... 64,700 3,079,328
SGS Thomson Microelectronics ADR
(FR)(1)........................ 64,900 3,050,300
-------------
6,129,628
-------------
HOUSEHOLD PRODUCTS--4.0%
Kimberly-Clark De Mexico Cl. A
(MEX).......................... 699,000 12,752,933
-------------
LEISURE--5.2%
Granada Group (UK)............... 1,322,075 16,337,466
-------------
PETROLEUM--6.5%
Repsol SA (SP)................... 295,600 10,826,879
Woodside Petroleum (AUS)......... 1,685,000 9,751,027
-------------
20,577,906
-------------
PHARMACEUTICALS--18.3%
Astra A Fria (SW)................ 204,000 9,048,884
Ciba Geigy AG (SWS).............. 14,870 17,216,027
Roche Genuss Holdings AG (SWS)... 1,335 10,473,974
Sandoz AG (SWS).................. 8,990 9,794,390
Synthelabo (FR).................. 144,700 11,266,586
-------------
57,799,861
-------------
PUBLISHING--3.8%
Ver Ned Uitgevers (NET).......... 717,000 12,035,109
-------------
REAL ESTATE--7.5%
Amoy Properties (HK)............. 8,440,000 9,492,661
Sun Hung Kai Properties (HK)..... 1,499,300 14,294,759
-------------
23,787,420
-------------
RETAILING--6.1%
Carrefour (FR)................... 9,620 7,503,305
Castorama DuBois
Investisse (FR)................ 56,700 10,831,544
Delhaize Le Lion (BEL)........... 20,400 1,006,600
-------------
19,341,449
-------------
UTILITIES--2.0%
Iberdrola SA (SP)................ 320,000 3,127,999
Telefonica de Espana (SP)........ 184,900 3,288,155
-------------
6,416,154
-------------
TOTAL COMMON STOCKS
(Cost $262,505,263).............. 301,816,515
-------------
</TABLE>
8
<PAGE> 10
HARBOR INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
SHORT-TERM INVESTMENTS--6.2%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
COMMERCIAL PAPER
Chevron Oil Finance Co.
5.250%--05/01/96............... $ 6,000,000 $ 6,000,000
Ford Motor Credit Company
5.290%--05/01/96............... 13,679,000 13,679,000
-------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $19,679,000)........................... 19,679,000
-------------
<CAPTION>
VALUE
------------
<S> <C>
TOTAL INVESTMENTS--101.6%
(Cost $282,184,263).......................... $321,495,515
CASH AND OTHER ASSETS,
LESS LIABILITIES--(1.6)%..................... (5,095,333)
-------------
TOTAL NET ASSETS--100%......................... $316,400,182
=============
</TABLE>
- ------------
(1) ADR after the name of a foreign holding stands for American Depository
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 11
HARBOR GROWTH FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1996 (UNAUDITED)
Common Stock Holdings (%)
(Excludes net cash and short-term investments of 3.8%)
<TABLE>
<S> <C>
Insurance 0.7
Business Services 1.2
Paper Products 1.2
Natural Gas 1.3
Other Consumer Nondurables 1.4
Electronic Instruments 2.1
Entertainment 2.3
Oil & Gas Production 2.6
Biotechnology 3.0
Hotels & Restaurants 3.0
Other Communication/Industrial
Services 3.6
Recreational Products 3.6
Leisure Time/Gaming 4.9
Computer & Business Automation 5.0
Apparel & Textiles 5.2
Oil Services & Equipment 5.3
Broadcasting 5.6
Credit & Finance 6.0
Telecommunications 6.6
Telecommunications Equipment 7.2
Drugs & Health Care 7.8
Computer Software 8.3
Retailing 8.3
</TABLE>
COMMON STOCKS--96.2%
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
APPAREL & TEXTILES--5.2%
Gucci Group NV.................... 55,000 $ 2,990,625
Nautica Enterprises, Inc.......... 42,000 1,953,000
Nike Inc. ........................ 25,300 2,213,750
-----------
7,157,375
-----------
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
BIOTECHNOLOGY--3.0%
Amgen Inc.*....................... 30,300 $ 1,742,250
Biogen Inc.*...................... 10,700 704,863
Genetics Institute Inc.*.......... 24,000 1,704,000
-----------
4,151,113
-----------
BROADCASTING--5.6%
Infinity Broadcasting Corp.*...... 54,600 1,583,400
Tele-Communications Inc.*......... 135,000 2,750,625
Tele-Communications Inc.*
Liberty Media Group, Series A... 68,750 1,882,031
Tele-Communications Inc.*
TCI Group, Series A............. 75,000 1,434,375
-----------
7,650,431
-----------
BUSINESS SERVICES--1.2%
America Online Inc. .............. 24,700 1,580,800
-----------
COMPUTER & BUSINESS
AUTOMATION--5.0%
Ceridian Corp.*................... 42,900 2,048,475
Cisco Systems Inc.*............... 43,200 2,241,000
Computer Sciences Corp.*.......... 34,100 2,523,400
-----------
6,812,875
-----------
COMPUTER SOFTWARE--8.3%
Cadence Design Systems Inc.*...... 70,800 3,699,300
Parametric Technology Corp. ...... 56,000 2,254,000
Sterling Software Inc.*........... 45,000 3,498,750
Synopsys Inc. .................... 46,000 1,897,500
-----------
11,349,550
-----------
CREDIT & FINANCE--6.0%
Advanta Corp...................... 48,800 2,726,700
Equifax Inc. ..................... 90,000 2,205,000
Green Tree Financial Corp. ....... 24,100 813,375
SunAmerica Inc. .................. 45,000 2,452,500
-----------
8,197,575
-----------
DRUGS & HEALTH CARE--7.8%
Elan PLC.......................... 27,000 1,785,375
Genesis Health Ventures, Inc...... 54,000 1,599,750
Healthsource Inc. ................ 68,000 2,320,500
Omnicare Inc. .................... 45,000 2,700,000
Tenet Healthcare Corp............. 76,000 1,558,000
United Healthcare Corp............ 12,700 742,950
-----------
10,706,575
-----------
ELECTRONIC INSTRUMENTS--2.1%
FORE Systems...................... 37,000 2,923,000
-----------
ENTERTAINMENT--2.3%
Viacom Inc.*...................... 30,100 1,234,100
Regal Cinemas, Inc................ 47,400 1,931,550
-----------
3,165,650
-----------
</TABLE>
10
<PAGE> 12
HARBOR GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
HOTELS & RESTAURANTS--3.0%
HFS Inc. ......................... 55,400 $ 2,846,175
Host Marriott Corp.*.............. 98,300 1,314,763
------------
4,160,938
------------
INSURANCE--0.7%
MGIC Investment Corp. ............ 17,700 960,225
------------
LEISURE TIME/GAMING--4.9%
ITT Corp.......................... 43,300 2,635,888
International Game Technology..... 110,000 1,705,000
Mirage Resorts Inc.*.............. 44,600 2,335,925
------------
6,676,813
------------
NATURAL GAS--1.3%
Williams Cos. Inc................. 35,000 1,789,375
------------
OIL & GAS PRODUCTION--2.6%
Pogo Producing Co. ............... 47,100 1,701,488
Triton Energy Corp. .............. 33,000 1,815,000
------------
3,516,488
------------
OIL SERVICES & EQUIPMENT--5.3%
Input/Output Inc. ................ 90,000 3,127,500
Tidewater Inc. ................... 41,300 1,755,250
Western Atlas, Inc.*.............. 39,500 2,370,000
------------
7,252,750
------------
OTHER COMMUNICATION/INDUSTRIAL
SERVICES--3.6%
CUC International Inc.*........... 38,950 1,280,481
Corrections Corp. America......... 30,000 1,912,500
MFS Communications Inc............ 50,000 1,734,375
------------
4,927,356
------------
OTHER CONSUMER
NONDURABLES--1.4%
Oakley Inc.*...................... 40,000 1,840,000
------------
PAPER PRODUCTS--1.2%
Fort Howard Corp. New............. 73,800 1,623,600
------------
RECREATIONAL PRODUCTS--3.6%
Harley Davidson, Inc. ............ 55,000 2,426,875
Mattel, Inc. ..................... 93,625 2,434,250
------------
4,861,125
------------
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
RETAILING--8.3%
Borders Group Inc. ............... 17,400 $ 556,800
Gap, Inc.......................... 70,000 2,108,750
Kohl's Corp.*..................... 45,000 1,546,875
Proffitts Inc.*................... 47,900 1,568,725
Staples Inc.*..................... 127,613 2,424,638
Sunglass Hut International
Inc. ........................... 44,400 1,298,700
Viking Office Products Inc.*...... 30,900 1,834,688
------------
11,339,176
------------
TELECOMMUNICATIONS--6.6%
LCI International Inc.*........... 106,900 2,779,400
MCI Communications Corp........... 55,000 1,619,060
Nextel Communications Inc.*....... 85,000 1,540,625
Worldcom Inc. GA.................. 66,600 3,130,200
------------
9,069,285
------------
TELECOMMUNICATIONS
EQUIPMENT--7.2%
Aspect Telecommunications Corp.... 45,000 2,587,500
ECI Telecom LTD................... 82,000 2,142,250
Glenayre Technologies Inc.*....... 26,100 1,213,650
Newbridge Networks Corp........... 28,000 1,802,500
Octel Communications Corp......... 46,000 2,058,500
------------
9,804,400
------------
TOTAL COMMON STOCKS
(Cost $91,348,796)................ 131,516,475
------------
SHORT-TERM INVESTMENTS--3.8%
(Cost $5,225,000)
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
COMMERCIAL PAPER
Dow Chemical Co.
5.350%--05/01/1996.............. $5,225,000 5,225,000
------------
TOTAL INVESTMENTS--100.0%
(Cost $96,573,796)........................... $136,741,475
CASH AND OTHER ASSETS,
LESS LIABILITIES--(0.0%)..................... 9,283
------------
TOTAL NET ASSETS--100.0%....................... $136,750,758
============
</TABLE>
- ------------
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
11
<PAGE> 13
HARBOR CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1996 (UNAUDITED)
Common Stock Holdings (%)
(Excludes net cash and short-term investments of 1.9%)
<TABLE>
<S> <C>
Telecommunications
Equipment 0.8
Machinery 0.9
Biotechnology 1.1
Railway 1.1
Restaurants 1.1
Apparel & Textiles 1.2
Leisure Time 1.2
Petroleum Services 1.2
Banking 1.5
Pharmaceuticals 1.6
Finance 1.7
Hotels 1.7
Airline 2.0
Household Products 2.2
Aerospace 2.4
Telecommunications Services 3.0
Beverage 3.1
Insurance 3.2
Media 3.6
Computer &
Business Equipment 6.1
Networking 6.2
Computer Software 8.0
Electronics 8.6
Retailing 8.6
Business Services 10.9
Drugs & Healthcare 15.1
</TABLE>
COMMON STOCKS--98.1%
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C>
AEROSPACE--2.4%
Boeing Co. ................... 398,000 $ 32,685,750
------------
AIRLINE--2.0%
AMR Corp. Del*................ 299,400 26,721,450
------------
APPAREL & TEXTILES--1.2%
Nike Inc...................... 188,700 16,511,250
------------
BANKING--1.5%
Citicorp...................... 249,000 19,608,750
------------
BEVERAGE--3.1%
Coca-Cola Co. ................ 169,700 13,830,550
Pepsico, Inc. ................ 437,800 27,800,300
------------
41,630,850
------------
BIOTECHNOLOGY--1.1%
Chiron Corp.*................. 145,900 14,061,113
------------
BUSINESS SERVICES--10.9%
America Online Inc............ 378,400 24,217,600
CKS Group Inc................. 595,800 18,618,750
CUC International Inc.*....... 459,762 15,114,676
First Data Corporation........ 285,237 21,678,012
General Motors Class E........ 288,100 16,241,638
Omnicom Group................. 487,200 21,132,300
Reuters Holdings PLC ADR Cl.
B(1)........................ 443,700 30,005,213
------------
147,008,189
------------
COMPUTER & BUSINESS
EQUIPMENT--6.1%
Compaq Computer Corp.*........ 158,200 7,376,075
Dell Computer Corp.*.......... 432,100 19,822,588
Hewlett-Packard Company....... 348,900 36,939,788
Seagate Technology............ 316,900 18,380,200
------------
82,518,651
------------
COMPUTER SOFTWARE--8.0%
Adobe Systems Inc. ........... 192,400 8,273,200
Computer Associates
International, Inc. ........ 393,600 28,880,400
Intuit, Inc.*................. 179,300 9,323,600
Macromedia Inc................ 401,200 15,120,225
Microsoft Corp.*.............. 261,900 29,692,913
Sag AG ADR(1)................. 351,600 15,521,698
------------
106,812,036
------------
DRUGS & HEALTHCARE--15.1%
Astra A Fria, Series A(2)..... 666,600 29,568,560
Eli Lilly & Co. .............. 360,900 21,293,100
General Nutrition Cos.
Inc.*....................... 903,300 17,614,350
Healthsouth Corp.............. 525,800 19,520,325
Johnson & Johnson............. 260,400 24,087,000
Pfizer Inc.................... 320,300 22,060,663
Phycor, Inc.*................. 391,975 19,304,769
</TABLE>
12
<PAGE> 14
HARBOR CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C>
SmithKline Beecham PLC
ADR(1)...................... 452,500 $ 24,435,000
United Healthcare Corp. ...... 428,300 25,055,550
--------------
202,939,317
--------------
ELECTRONICS--8.6%
Applied Materials Inc.*....... 325,500 13,020,000
Intel Corp. .................. 473,300 32,066,075
International Rectifier
Corp.*...................... 774,700 17,430,750
KLA Instruments Inc.*......... 251,200 7,253,400
LSI Logic Corp.*.............. 566,100 20,379,600
Tellabs Inc................... 458,100 25,310,025
--------------
115,459,850
--------------
FINANCE--1.7%
Federal National Mortgage
Association................. 749,800 22,962,625
--------------
HOTELS--1.7%
ITT Corp. .................... 375,400 22,852,475
--------------
HOUSEHOLD PRODUCTS--2.2%
Gillette Co. ................. 292,400 15,789,600
Kimberly Clark Corp. ......... 192,700 13,994,838
--------------
29,784,438
--------------
INSURANCE--3.2%
Cigna Corp.................... 184,400 20,906,350
MGIC Investment Corp. ........ 404,700 21,954,975
--------------
42,861,325
--------------
LEISURE TIME--1.2%
Harrahs Entertainment Inc.*... 479,500 16,542,750
--------------
MACHINERY--0.9%
Harnischfeger Industries
Inc. ....................... 307,300 12,445,650
--------------
MEDIA--3.6%
Disney (Walt) Co. ............ 478,400 29,660,800
Infinity Broadcasting
Corp.*...................... 664,550 19,271,950
--------------
48,932,750
--------------
NETWORKING--6.2%
Ascend Communications Inc..... 332,500 20,448,750
Cisco Systems, Inc.*.......... 838,400 43,492,000
3Com Corp.*................... 414,800 19,132,650
--------------
83,073,400
--------------
PETROLEUM SERVICES--1.2%
Schlumberger LTD.............. 186,400 16,449,800
--------------
PHARMACEUTICALS--1.6%
Ciba Geigy AG(2).............. 18,590 21,522,928
--------------
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C>
RAILWAY--1.1%
Wisconsin Central
Transportation Corp.*....... 174,000 $ 14,703,000
--------------
RESTAURANTS- 1.1%
McDonald's Corporation........ 314,700 15,066,263
--------------
RETAILING--8.6%
Autozone Inc.*................ 666,700 24,334,550
Dollar General Corp. ......... 749,250 19,761,465
Gucci Group NV................ 259,000 14,083,125
Kohl's Corp.*................. 529,400 18,198,125
Lowes Cos Inc................. 436,200 14,121,975
Micro Warehouse, Inc.*........ 307,400 13,218,200
Sunglass Hut International
Inc. ....................... 399,200 11,676,600
--------------
115,394,040
--------------
TELECOMMUNICATIONS
EQUIPMENT--0.8%
Ericsson (LM) Telephone Co.
ADR Cl. B(1)................ 535,000 10,900,625
--------------
TELECOMMUNICATIONS
SERVICES--3.0%
MCI Communications Corp....... 785,900 23,134,931
Vodafone Group PLC ADR(1)..... 434,400 17,430,300
--------------
40,565,231
--------------
TOTAL COMMON STOCKS
(Cost $1,047,433,623)......... 1,320,014,506
--------------
</TABLE>
SHORT-TERM INVESTMENTS--2.9%
(Cost $38,359,000)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
COMMERCIAL PAPER
Ford Motor Credit Co.
5.290%--05/01/96............ $38,359,000 38,359,000
--------------
TOTAL INVESTMENTS--101.0%
(Cost $1,085,792,623)...................... $1,358,373,506
CASH AND OTHER ASSETS,
LESS LIABILITIES--(1.0)%................... (12,996,555)
--------------
TOTAL NET ASSETS--100.0%..................... $1,345,376,951
==============
</TABLE>
- ------------
(1) ADR after the name of a foreign holding stands for American Depository
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.
(2) Foreign currency-denominated. Market value is translated at the current
exchange rate.
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
13
<PAGE> 15
HARBOR INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1996 (UNAUDITED)
Investment Holdings By Country (%)
(Excludes net cash and short-term investments of 3.6%)
<TABLE>
<S> <C>
Portugal (PORT) 0.8
Denmark (DEN) 1.5
South Korea (S.KOR) 1.5
Russia (RUS) 2.4
Australia (AUS) 2.6
Brazil (BR) 2.6
Argentina (ARG) 2.7
Norway (NOR) 2.8
Spain (SP) 3.2
Singapore (SGP) 3.3
Malaysia (MAL) 4.3
Hong Kong (HK) 5.7
Netherlands (NET) 6.6
Sweden (SW) 7.5
Japan (JP) 7.9
South Africa (S.AFR) 7.9
France (FR) 9.0
Switzerland (SWS) 10.8
United Kingdom (UK) 13.3
</TABLE>
COMMON STOCKS--94.5%
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C>
AUTOMOTIVE--1.9%
Hyundai Motor Co. GDR
(S.KOR)(1)................... 680,000 $ 10,880,000
Hyundai Motor Co. GDR
Nonvoting
(S.KOR)(1)................... 50,000 800,000
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C>
Volvo AB (SW)(a)............... 2,625,000 $ 60,053,352
--------------
71,733,352
--------------
BANKS--15.5%
ABN Amro Holdings NV (NET)..... 993,395 51,355,148
Banco Bilbao Vizcaya (SP)...... 1,285,150 48,786,259
Banco Commercial Portugues
(PORT)....................... 2,277,684 26,081,216
Banco Commercial Portugues ADR
(PORT)(2).................... 420,000 4,777,500
Banco Intercontinental Espana
(SP)......................... 250,000 26,262,940
Bank of Seoul (S.KOR).......... 3,631,887 33,274,932
Barclays Bank PLC (UK)......... 3,758,513 41,510,588
Cie Fin Paribas Cl. A (FR)..... 647,566 41,577,279
Credit National (FR)........... 77,133 6,025,074
CS Holding (SWS)............... 415,720 37,659,579
Korea Long Term Credit Bank
(S.KOR)...................... 373,496 12,170,639
Malayan Bank Berhad (MAL)...... 7,707,000 75,100,211
National Westminster Bank
(UK)......................... 5,523,813 50,770,340
Royal Bank of Scotland Group
(UK)......................... 6,013,418 46,788,074
SCHW Bankverein (SWS).......... 112,646 42,084,941
United Overseas Bank (Alien
Market) (SGP)................ 4,500,693 43,855,452
--------------
588,080,172
--------------
BEVERAGES--6.2%
Cadbury Schweppes (UK)......... 6,178,025 47,744,341
Guinness (UK).................. 5,750,000 41,243,998
Heineken NV (NET).............. 250,000 52,250,289
South African Breweries Ltd.
ADR (S.AFR)(2)............... 2,053,054 59,373,090
Whitbread (UK)................. 3,050,000 34,326,230
--------------
234,937,948
--------------
BUSINESS MACHINES--1.8%
Canon Inc. (JP)................ 3,500,000 69,497,812
--------------
BUSINESS SERVICES--2.1%
SGS Holding (SWS).............. 35,000 78,737,943
--------------
CHEMICALS--2.8%
Ciba Geigy AG (SWS)............ 65,214 75,502,757
Rhone Poulenc SA (FR).......... 1,300,000 31,136,949
--------------
106,639,706
--------------
CONGLOMERATES--6.1%
Cheung Kong (Holdings) (HK).... 7,000,000 49,998,455
Keppel Corp. (SGP)............. 6,600,000 59,617,161
Kvaerner AS (NOR).............. 652,050 26,746,230
Sime Darby Berhad (MAL)........ 15,600,000 43,164,152
Swire Pacific Ltd. Cl. A
(HK)......................... 6,000,000 51,194,281
--------------
230,720,279
--------------
</TABLE>
14
<PAGE> 16
HARBOR INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C>
CONSTRUCTION--0.7%
Hunter Douglas NV (NET)........ 413,994 $ 26,107,165
--------------
CONSUMER GOODS--1.5%
BIC (FR)....................... 500,000 55,049,816
--------------
ELECTRIC UTILITIES--1.9%
AO Mosenergo ADR (RUS)(2)(a)... 40,000 440,000
China Light & Power (HK)....... 15,000,000 70,779,972
--------------
71,219,972
--------------
ELECTRONICS--2.2%
Matsushita Electrical
Industries (JP).............. 2,500,000 44,152,113
Sony Corp. (JP)................ 600,000 38,949,323
--------------
83,101,436
--------------
ENGINEERING--0.7%
Sulzer AG (SWS)................ 41,250 27,773,203
--------------
FINANCIAL SERVICES--1.5%
Ing Groep NV (NET)............. 739,467 57,018,664
--------------
FOOD--1.5%
Nestle SA (SWS)................ 50,000 55,478,112
--------------
HOUSEHOLD APPLIANCES--0.3%
Electrolux AB (SW)............. 250,000 12,578,929
--------------
INSURANCE--2.0%
SCHW Ruckversicher (SWS)....... 71,500 74,680,529
--------------
INVESTMENT COMPANIES--1.6%
Kinnevik Investment Series B
(SW)......................... 1,600,000 62,026,626
--------------
MINING & METALS--8.1%
Anglo American Corp.
South Africa Ltd. ADR
(S.AFR)(2)................... 1,260,000 85,050,000
Gencor Ltd. ADR (S.AFR)(2)..... 26,250,000 105,364,875
Pasminco Ltd. (AUS)............ 3,000,000 4,387,396
RTZ Corp. (UK)................. 2,095,573 32,861,251
Trelleborg AB Cl. B (SW)....... 3,312,220 44,587,983
WMC Ltd. (AUS)................. 4,867,716 35,517,783
--------------
307,769,288
--------------
NEWSPAPERS--1.6%
News Corp. Ltd. ADR
(AUS)(2)..................... 2,500,000 58,750,000
--------------
OIL & GAS EXPLORATION--2.3%
LASMO (UK)..................... 15,571,836 44,864,834
Saga Petroleum AS (NOR)........ 2,809,000 40,967,634
--------------
85,832,468
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C>
OIL & GAS PRODUCTION--11.0%
British Gas (UK)............... 11,000,000 38,955,582
British Petroleum (UK)......... 6,411,007 57,674,050
LUKOIL ADR (RUS)(2)............ 3,698,250 $ 90,089,370
Norsk Hydro AS (NOR)........... 833,333 37,916,943
Petrol Brasileiros (BR)........ 435,000,000 50,637,319
Royal Dutch Petroleum Co. ADR
(NET)(2)..................... 450,000 64,462,500
Total Cl. B (FR)............... 644,615 43,666,380
YPF Sociedad Anonima ADR
(ARG)(2)..................... 1,600,000 35,000,000
--------------
418,402,144
--------------
PHARMACEUTICALS--6.0%
Astra AB Ser. A (SW)........... 950,000 42,139,412
Novo Nordisk AS (DEN).......... 450,000 58,378,276
Roussel Uclaf (FR)............. 250,000 58,816,383
SmithKline Beecham PLC ADR
(UK)(2)...................... 1,270,000 68,580,000
--------------
227,914,071
--------------
PHOTOGRAPHY--2.0%
Fuji Photo Film Co. (JP)....... 2,450,000 76,247,119
--------------
SHIPYARD--0.6%
Jurong Shipyard (SGP).......... 4,000,000 22,902,322
--------------
STEEL--0.0%
Von Roll AG (SWS)*............. 12,000 267,548
--------------
TELECOMMUNICATION--8.1%
Ericsson (LM) Tel Co.
Series B (SW)................ 2,640,000 53,405,278
Ericsson (LM) Tel Co. ADR Cl. B
(SW)(2)...................... 440,000 8,965,000
Hong Kong Telecom (HK)......... 23,815,779 45,413,301
Telebras (BR).................. 865,000,000 46,815,521
Telecom Argentina
Cl. B (ARG).................. 6,600,000 29,953,762
Telefonica De Argentina Cl. B
(ARG)........................ 12,000,000 35,183,019
Telefonica De Espana (SP)...... 2,500,000 44,458,564
Telekom Malaysia (MAL)......... 4,600,000 43,348,614
--------------
307,543,059
--------------
TIRE & RUBBER--3.1%
Bridgestone Corp. (JP)......... 2,500,000 46,300,053
CIE Fin Michel Bas (SWS)....... 34,700 17,564,185
Michelin Cl. B (FR)............ 1,100,000 54,414,329
--------------
118,278,567
--------------
TOYS & AMUSEMENTS--0.7%
Nintendo Co. (JP).............. 200,000 15,426,988
Sega Enterprises (JP).......... 200,000 10,195,558
--------------
25,622,546
--------------
</TABLE>
15
<PAGE> 17
HARBOR INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C>
WATER DISTRIBUTION--0.7%
Lyonnaise Des Eaux SA (FR)..... 264,750 $ 26,540,820
--------------
TOTAL COMMON STOCKS
(Cost $2,403,706,969).......... 3,581,451,616
--------------
UNITS--0.6%
(Cost $65,340,097)
Eurotunnel (FR)................ 20,000,000 22,599,398
--------------
</TABLE>
CONVERTIBLE BONDS--1.3%
(Cost $39,600,000)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
LibLife International BV
6.500%--09/30/2004 (S.AFR)..... $40,000,000 50,800,000
-----------
SHORT-TERM INVESTMENTS--3.1%
COMMERCIAL PAPER
American Express Credit Corp.
5.310%--05/01/1996........... 5,328,000 5,328,000
5.280%--05/02/1996........... 9,116,000 9,116,000
5.270%--05/10/1996........... 14,075,000 14,075,000
-----------
28,519,000
-----------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- --------------
<S> <C> <C>
General Motors Acceptance Corp.
5.280%--05/03/1996........... $10,000,000 $ 10,000,000
5.360%--05/07/1996........... 7,486,000 7,486,000
5.350%--05/08/1996........... 11,996,000 11,996,000
5.350%--05/09/1996........... 10,776,000 10,776,000
5.310%--05/15/1996........... 10,898,000 10,898,000
--------------
51,156,000
--------------
Prudential Funding Corp.
5.270%--05/01/1996........... 3,785,000 3,785,000
5.280%--05/06/1996........... 10,921,000 10,921,000
5.270%--05/13/1996........... 10,066,000 10,066,000
5.280%--05/14/1996........... 13,883,000 13,883,000
--------------
38,655,000
--------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $118,330,000)........................ 118,330,000
--------------
TOTAL INVESTMENTS--99.5%
(Cost $2,626,977,066)...................... $3,773,181,014
CASH AND OTHER ASSETS,
LESS LIABILITIES--0.5%..................... 17,533,977
--------------
TOTAL NET ASSETS--100.0%..................... $3,790,714,991
==============
</TABLE>
- ------------
(a) Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions, exempt from
registration, normally to qualified institutional buyers. At April 30, 1996,
these securities were valued at $60,493,352 or 1.60% of net assets.
(1) GDR after the name of a foreign holding stands for Global Depository
Receipts representing ownership of foreign securities. GDRs are issued by
either U.S. or non-U.S. banking organizations.
(2) ADR after the name of a foreign holding stands for American Depository
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.
The accompanying notes are an integral part of the financial statements.
16
<PAGE> 18
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1996 (UNAUDITED)
Common Stock Holdings (%)
(Excludes net cash and short-term investments of 4.8%)
<TABLE>
<S> <C>
Hotels & Restaurants 0.1
Leisure Time 0.1
Mining 0.1
Newspapers 0.1
Petroleum Services 0.1
Photographic Equipment 0.1
Pollution Control 0.1
Railroads 0.1
Aerospace 0.2
Machinery 0.2
Financial Services 0.3
Household Products 0.3
Gas Exploration 0.4
Natural Gas 0.4
Trucking 0.4
Tools 0.6
Wood Products 0.6
Business Services 1.0
Apparel 1.1
Computers & Business Equipment 1.1
Cosmetics 1.2
Tobacco 1.2
Construction Materials 1.7
Automobile 1.8
Retailing 2.3
Conglomerates 2.6
Electronics 2.7
Metals 2.8
Paper Products 2.8
Public Utilities/Electric 5.1
Insurance 5.4
Petroleum Domestic 5.4
Drugs & Healthcare 5.7
Electrical Equipment 6.3
Chemicals 6.4
Petroleum International 6.8
Food & Beverage 7.8
Banking 9.5
Telecommunications 10.3
</TABLE>
COMMON STOCKS--95.2%
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
AEROSPACE--0.2%
Boeing Co......................... 500 $ 41,063
Lockheed Martin Corp.............. 1,100 88,688
United Technologies Corp.......... 500 55,250
------------
185,001
------------
APPAREL--1.1%
V.F. Corp......................... 19,900 1,134,300
------------
AUTOMOBILE--1.8%
Chrysler Corp..................... 1,100 69,025
Federal Signal Corp. ............. 2,900 75,763
Ford Motor Co..................... 46,800 1,678,950
General Motors Corp. ............. 800 43,400
------------
1,867,138
------------
BANKING--9.5%
AmSouth Bancorporation............ 18,400 706,100
Banc One Corp. ................... 1,694 58,867
BankAmerica Corp. ................ 600 45,450
BayBanks Inc...................... 8,300 869,425
Boatmens Bancshares, Inc.......... 1,000 38,750
Central Fiduciary Banks, Inc...... 36,600 1,262,700
Chase Manhattan Corp. New......... 300 20,663
Corestates Financial Corp. ....... 1,600 62,400
Crestar Financial Corp............ 22,550 1,271,256
First America Bank Corp........... 600 27,150
First American Corp. TN........... 17,500 748,125
Firstar Corp. New................. 600 27,900
Great Western Financial Corp. .... 500 11,500
Greenpoint Financial Corp. ....... 13,600 392,700
H F Ahmanson & Co. ............... 500 11,875
Huntington Bancshares, Inc. ...... 1,050 25,463
J P Morgan & Co Inc. ............. 500 42,063
Jefferson Bankshares Inc. ........ 36,500 780,188
Magna Group Inc................... 51,800 1,165,500
NationsBank Corp.................. 1,400 111,650
Roosevelt Financial Group Inc..... 40,000 770,000
Signet Banking Corp. ............. 15,100 369,950
Summit Bancorporation............. 32,463 1,152,437
US Bancorp OR..................... 1,000 32,375
------------
10,004,487
------------
BUSINESS SERVICES--1.0%
Automatic Data Processing, Inc.... 600 23,325
General Motors Corp. Cl. E........ 1,100 62,013
H & R Block, Inc. ................ 300 10,538
Ogden Corp. ...................... 40,600 822,150
R.R. Donelley & Sons Co. ......... 1,500 54,000
Sysco Corp........................ 1,300 41,763
------------
1,013,789
------------
CHEMICALS--6.4%
Akzo Nobel NV ADR(1).............. 20,400 1,183,200
Crompton & Knowles Corp........... 21,100 324,413
Dow Chemical Co. ................. 2,900 257,738
E I DuPont De Nemours & Co........ 1,600 128,600
Eastman Chemical Co. ............. 500 33,625
Ethyl Corp. ...................... 124,300 1,289,613
</TABLE>
17
<PAGE> 19
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
Lawter International Inc.......... 33,300 $ 362,138
Morton International Inc.......... 1,400 49,525
PPG Industries, Inc............... 1,000 50,625
Potash Corp. Saskatchewan
Inc.(2)......................... 1,000 70,500
R.P.M. Inc. OH.................... 18,300 281,363
Rohm & Haas Co. .................. 23,300 1,546,538
Witco Corp. ...................... 33,100 1,129,538
------------
6,707,416
------------
COMPUTERS & BUSINESS EQUIPMENT--1.1%
Hewlett Packard Co. .............. 1,400 148,225
International Business Machines
Corp. .......................... 1,400 150,500
Xerox Corp. ...................... 5,500 805,750
------------
1,104,475
------------
CONGLOMERATES--2.6%
B.A.T. Industries PLC ADR(1)...... 33,200 512,525
Harcourt General Inc. ............ 2,300 101,200
ITT Corp. New*.................... 500 30,438
ITT Industries Inc. .............. 72,400 1,991,000
Minnesota Mining & Manufacturing
Co. ............................ 2,100 138,075
------------
2,773,238
------------
CONSTRUCTION MATERIALS--1.7%
Armstrong World Industries,
Inc. ........................... 1,000 57,000
Masco Corp. ...................... 62,500 1,703,125
Sherwin Williams Co............... 300 14,025
------------
1,774,150
------------
CONTAINERS & GLASS--0.0%
Crown Cork & Seal Inc.*........... 600 28,275
------------
COSMETICS--1.2%
International Flavours............ 25,000 1,228,125
------------
DRUGS & HEALTHCARE--5.7%
Abbott Labs....................... 35,500 1,442,188
Bausch & Lomb Inc................. 800 31,900
Bristol Myers Squibb Co........... 3,700 304,325
Johnson & Johnson................. 1,000 92,500
Merck & Co. Inc................... 5,200 314,600
Pfizer Inc. ...................... 1,100 75,763
Pharmacia and Upjohn Inc. ........ 47,300 1,809,225
Rhone Poulenc Rorer, Inc.......... 600 37,200
Schering Plough Corp. ............ 1,200 68,850
Warner Lambert Co. ............... 16,500 1,843,875
------------
6,020,426
------------
ELECTRICAL EQUIPMENT--6.3%
Cooper Industries Inc............. 43,900 1,865,750
General Electric Co............... 12,900 999,750
General Signal Corp............... 49,400 1,877,200
National Service Industries,
Inc............................. 300 11,100
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
Philips Electronics NV............ 51,300 $ 1,840,388
Westinghouse Electric Corp. ...... 1,000 18,875
------------
6,613,063
------------
ELECTRONICS--2.7%
AMP Inc........................... 27,000 1,208,250
Motorola Inc. .................... 500 30,625
Raytheon Co....................... 900 45,563
Thomas & Betts Corp............... 39,600 1,559,250
------------
2,843,688
------------
ENTERTAINMENT--0.0%
Polygram NV ADR(1)................ 700 41,038
------------
FINANCIAL SERVICES--0.3%
American Express Co............... 1,500 72,750
Dean Witter Discover & Co......... 600 32,700
Federal National Mortgage
Association..................... 3,200 98,000
Merrill Lynch & Co Inc. .......... 800 48,300
Travelers Group Inc. ............. 1,202 73,923
------------
325,673
------------
FOOD & BEVERAGE--7.8%
CPC International Inc. ........... 23,500 1,624,438
Campbell Soup Co. ................ 900 56,250
Coca Cola Co...................... 8,200 668,300
Conagra Inc....................... 1,400 54,075
Dean Foods Co. ................... 25,700 600,738
Grand Met PLC ADR(1).............. 67,700 1,802,513
Hormel Foods Corp. ............... 9,000 239,625
Lance Inc......................... 49,600 784,300
Pepsico Inc....................... 800 50,800
Sara Lee Corp. ................... 2,000 62,000
Tasty Baking Corp. ............... 13,300 144,638
Unilever NV....................... 15,400 2,102,100
------------
8,189,777
------------
GAS EXPLORATION--0.4%
Burlington Resources, Inc......... 700 26,075
Occidental Petroleum Corp......... 13,200 339,900
Oryx Energy Co.*.................. 500 8,000
Union Texas Petroleum Holdings
Inc. ........................... 500 9,688
------------
383,663
------------
GROCERIES--0.0%
Albertsons Inc. .................. 800 30,800
Kroger Co.*....................... 500 20,563
------------
51,363
------------
HOTELS & RESTAURANTS--0.1%
Dial Corp. DE..................... 400 11,250
Harrahs Entertainment Inc.*....... 300 10,350
McDonald's Corporation............ 1,800 86,175
------------
107,775
------------
</TABLE>
18
<PAGE> 20
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
HOUSEHOLD PRODUCTS--0.3%
Gillette Co. ..................... 600 $ 32,400
Procter & Gamble Co............... 2,900 245,050
------------
277,450
------------
INSURANCE--5.4%
Allstate Corp..................... 3,868 150,369
American Financial Group, Inc..... 11,700 358,313
American General Corp............. 37,800 1,327,725
American International Group,
Inc............................. 1,050 95,944
ITT Hartford Group Inc. .......... 38,700 1,891,463
Lincoln National Corp............. 16,500 796,125
Loews Corp........................ 2,000 152,500
Ohio Casualty Corp ............... 3,300 111,788
Safeco Corp. ..................... 600 19,800
St. Paul Companies, Inc........... 400 21,250
Torchmark Inc..................... 16,600 713,800
Unitrin, Inc...................... 300 13,988
------------
5,653,065
------------
LEISURE TIME--0.1%
Carnival Corp. ................... 1,700 49,300
Disney (Walt) Co. ................ 1,000 62,000
------------
111,300
------------
MACHINERY--0.2%
Barnes Group, Inc................. 300 13,913
Caterpillar Inc................... 800 51,200
Deere & Co........................ 900 34,988
Parker Hannafin Corp. ............ 1,400 59,150
Timken Co......................... 400 15,850
------------
175,101
------------
METALS--2.8%
Alcan Aluminum LTD................ 1,800 57,375
Allegheny Ludlum Corp. ........... 46,000 908,500
Aluminum Co. of America........... 600 37,425
Barrick Gold Corp................. 1,400 42,875
Inco LTD(2)....................... 2,600 87,425
Reynolds Metals Co. .............. 35,100 1,757,625
USX U S Steel..................... 2,100 69,300
------------
2,960,525
------------
MINING--0.1%
Freeport McMoran Copper & Gold Cl.
A............................... 150 4,744
Freeport McMoran Copper & Gold Cl.
B............................... 2,806 92,247
Homestake Mining Co. ............. 700 14,088
Placer Dome, Inc.................. 1,000 27,750
Santa Fe Pacific Gold Corp. ...... 1,320 19,635
------------
158,464
------------
NATURAL GAS--0.4%
Enron Corp. ...................... 500 20,125
Enserch Corp. .................... 7,100 152,650
Nova Corp. Alberta(2)............. 11,000 105,875
Sonat, Inc. ...................... 500 21,813
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
Transcanada Pipelines Ltd.(2)..... 5,800 $ 81,925
Westcoast Energy, Inc.(2)......... 1,500 23,250
Williams Companies, Inc. ......... 600 30,675
------------
436,313
------------
NEWSPAPERS--0.1%
Gannett Inc. ..................... 1,000 68,375
------------
PAPER PRODUCTS--2.8%
Champion International Corp. ..... 1,500 72,375
Consolidated Papers Inc. ......... 14,500 793,875
International Paper Co............ 31,200 1,244,100
Union Camp Corp. ................. 600 32,625
Westvaco Corp..................... 26,800 830,800
------------
2,973,775
------------
PETROLEUM DOMESTIC--5.4%
Amerada Hess Corp................. 400 22,650
Ashland Inc....................... 300 12,338
Atlantic Richfield Co. ........... 16,500 1,942,875
Freeport McMoran Inc.............. 666 24,309
Kerr McGee Corp. ................. 300 19,163
Tenneco, Inc...................... 25,000 1,371,875
Unocal Corp. ..................... 24,600 790,275
USX Marathon Group................ 66,300 1,458,600
------------
5,642,085
------------
PETROLEUM INTERNATIONAL--6.8%
Amoco Corp. ...................... 32,100 2,343,300
Chevron Corp...................... 11,300 655,400
Exxon Corp........................ 16,700 1,419,500
Mobil Corp........................ 7,200 828,000
Royal Dutch Petroleum Corp. ...... 7,500 1,074,375
Texaco, Inc....................... 9,100 778,050
------------
7,098,625
------------
PETROLEUM SERVICES--0.1%
Schlumberger Ltd. ................ 1,200 105,900
------------
PHOTOGRAPHIC EQUIPMENT--0.1%
Eastman Kodak Co.................. 2,000 153,000
------------
POLLUTION CONTROL--0.1%
WMX Technologies Inc. ............ 1,900 66,025
------------
PUBLIC UTILITIES/ELECTRIC--5.1%
Baltimore Gas & Electric Co....... 2,800 73,850
Central & South West Corp. ....... 42,800 1,166,300
Chilgener SA ADR(1)............... 16,000 358,000
Consolidated Edison Co. NY Inc.... 4,100 120,438
Dominion Resources Inc. VA........ 6,000 231,000
Duke Power Co. ................... 2,500 117,500
Edison International.............. 4,900 78,400
Entergy Corp. .................... 3,000 79,500
Houston Industries, Inc. ......... 7,200 153,900
Illinova Corp. ................... 3,400 86,700
Midamerican Energy Co............. 1,400 23,975
Northeast Utilities............... 3,600 57,150
Pacificorp........................ 22,300 446,000
</TABLE>
19
<PAGE> 21
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
PECO Energy Co.................... 44,200 $ 1,099,475
PP & L Resources Inc. ............ 3,100 70,138
Public Service Enterprise Group... 38,000 992,750
Southern Co. ..................... 4,500 99,000
Unicom Corp....................... 5,000 137,500
------------
5,391,576
------------
PUBLISHING--0.0%
Time Warner Inc................... 500 20,438
------------
RAILROADS--0.1%
CSX Corp.......................... 800 41,000
Union Pacific Corp................ 600 40,875
------------
81,875
------------
RETAILING--2.3%
Autozone Inc.*.................... 600 21,900
Dillard Department Stores Inc. ... 1,600 64,200
J. C. Penney Inc.................. 20,300 1,004,850
Limited, Inc. .................... 761 15,791
May Department Stores Co. ........ 20,900 1,065,900
Melville Corp..................... 600 23,325
Sears, Roebuck & Co............... 1,800 89,775
Toys R Us, Inc.*.................. 300 8,363
WalMart Stores, Inc. ............. 3,900 93,113
------------
2,387,217
------------
TELECOMMUNICATIONS--10.3%
360 Communications Co.*........... 1,600 37,600
AT&T Corp. ....................... 10,900 667,625
Airtouch Communications Inc.*..... 9,800 306,250
Alltel Corp. ..................... 1,000 32,875
Ameritech Corp. .................. 7,200 420,300
Bell Atlantic Corp................ 5,000 325,000
BellSouth Corp.................... 16,000 640,000
Frontier Corp. ................... 62,100 1,963,913
GTE Corp.......................... 37,700 1,635,211
Northern Telecom Ltd.............. 2,000 103,000
Nynex Corp........................ 11,900 584,588
Pacific Telesis Group............. 4,600 157,550
SBC Communications Inc. .......... 7,500 375,000
Southern New England
Telecomm Corp................... 33,700 1,499,650
Sprint Corp. ..................... 39,700 1,672,363
Telefonica De Espana S A
ADR(1).......................... 3,800 199,975
U S West Inc. .................... 7,100 232,525
------------
10,853,425
------------
TIRES & RUBBER--0.0%
Goodyear Tire and Rubber Co. ..... 600 31,275
------------
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
TOBACCO--1.2%
Philip Morris Companies Inc....... 13,500 $ 1,216,688
------------
TOOLS--0.6%
Snap On Inc. ..................... 12,300 590,400
------------
TRUCKING--0.4%
Ryder Systems Inc. ............... 14,100 410,663
------------
WOOD PRODUCTS--0.6%
Rayonier Inc. .................... 18,400 660,100
------------
TOTAL COMMON STOCKS
(Cost $89,532,544)................ 99,920,520
------------
SHORT-TERM INVESTMENT--5.3%
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
REPURCHASE AGREEMENTS
Repurchase Agreement with State
Street Bank & Trust dated April
30, 1996 due May 1, 1996 at
4.250%, collateralized by a U.S.
Treasury Note, 4.375% November
15, 1996, par value of
$3,549,000 (repurchase proceeds
of $3,522,416 when closed on May
1, 1996)........................ $3,522,000 3,522,000
Repurchase Agreement with State
Street Bank & Trust dated April
30, 1996 due May 1, 1996 at
4.250%, collateralized by a U.S.
Treasury Bond, 11.125% August
15, 2003, par value of
$1,820,000 (repurchase proceeds
of $2,027,239 when closed on May
1, 1996)........................ 2,027,000 2,027,000
------------
TOTAL SHORT TERM-INVESTMENTS
(Cost $5,549,000)............................ 5,549,000
------------
TOTAL INVESTMENTS--100.5%
(Cost $95,081,544)........................... $105,469,520
CASH AND OTHER ASSETS,
LESS LIABILITIES--(0.5%)..................... (558,732)
------------
TOTAL NET ASSETS--100%......................... $104,910,788
============
</TABLE>
- ------------
(1) ADR after the name of a foreign holding stands for American Depository
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.
(2) Canadian security U. S. dollar denominated.
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
20
<PAGE> 22
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1996 (UNAUDITED)
Total Investments (%)
(Excludes net cash and short-term investments of 9.8%)
<TABLE>
<S> <C>
Options 0.7
Asset Backed Securities 2.1
Foreign Bonds 8.1
Corporate Bonds & Notes 19.6
Mortgage Related Securities 59.7
</TABLE>
ASSET BACKED SECURITIES--2.1%
(Cost $5,000,000)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
Student Loan Marketing Association
Series 1995 Cl. A-2
6.011%--10/25/2007+.............. $ 5,000,000 $ 5,000,000
------------
CORPORATE BONDS & NOTES--19.6%
AMR Corp. MTN(1)
10.000%--03/07/2001.............. 2,000,000 2,234,774
Banco Nacional De Obras Y Serv
6.875%--10/01/1998(a)............ 3,000,000 2,861,250
Banesto Del Inc.
8.250%--07/28/2002............... 3,000,000 3,170,469
Banesto Finance
7.125%--04/21/2003+.............. 2,000,000 1,970,626
Banmer SA
8.000%--07/07/1998(a)............ 4,000,000 3,885,000
CTC Mansfield Funding Corp.
11.125%--09/30/2016.............. 2,000,000 2,079,522
Capital One Bank MTN(1)
5.977%--07/11/1996+.............. 5,000,000 5,000,240
Cemex SA MTN(1)
8.500%--08/31/2000............... 1,000,000 936,300
Comerica Inc.
10.125%--06/01/1998.............. 50,000 53,367
Commonwealth Edison Co.
8.000%--10/15/2003............... 3,068,040 3,013,899
Great Western Bank
Beverly Hills, CA
10.500%--05/30/2000.............. 700,000 759,973
Heller Financial, Inc.
6.450%--02/15/1997............... 150,000 150,083
Hydro Quebec Yankee Bonds
9.500%--11/15/2030............... 775,000 908,454
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
Long Island Lighting Co.
6.250%--07/15/2001............... $ 4,825,639 $ 4,645,265
Saferco Products Inc. MTN(1)
9.630%--05/31/2000............... 500,000 549,058
Texas New Mexico Power Co.
11.250%--01/15/1997.............. 775,000 801,172
Texas Utilities Electric Co.
5.813%--05/01/1999+.............. 5,000,000 5,010,385
Time Warner Inc.
6.210%--08/15/2000+.............. 750,000 756,341
7.975%--08/15/2004............... 450,000 449,736
8.110%--08/15/2006............... 900,000 905,433
8.180%--08/15/2007............... 900,000 901,141
------------
3,012,651
------------
United Air Lines Inc.
6.750%--12/01/1997 MTN(1)........ 4,000,000 3,992,912
10.250%--07/15/2021.............. 1,500,000 1,758,702
------------
5,751,614
------------
Xerox Credit Corp.
10.000%--04/01/1999.............. 50,000 54,383
TOTAL CORPORATE BONDS AND NOTES
(Cost $46,376,378)............... 46,848,485
------------
FOREIGN BONDS--8.1%
Canadian Government Series A-79
8.750%--12/01/2005.............. C$ 9,300,000 7,283,374
Federal Republic of Germany
7.500%--11/11/2004.............. DM10,000,000 7,048,490
Mexico (UTD MES ST)
6.547%--12/31/2019+.............. $ 1,250,000 1,003,125
Republic of Argentina
5.844%--05/31/1996+.............. $ 200,000 201,500
Series L
6.313%--03/31/2005............... $ 5,000,000 3,818,750
------------
4,020,250
------------
TOTAL FOREIGN BONDS
(Cost $19,421,806)............... 19,355,239
------------
MORTGAGE RELATED SECURITIES--59.7%
COLLATERALIZED MORTGAGE OBLIGATIONS:
Capstead Securities Corp. IV
Series 91 Class VII
8.900%--12/25/2021............... 539,800 554,392
Capstead Securities Corp. IV
Series 92 Class E
8.500%--02/25/2022............... 750,000 761,836
</TABLE>
21
<PAGE> 23
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
MORTGAGE RELATED SECURITIES--CONTINUED
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
Chase Mortgage Financial Corp.
REMIC
Series 1990 Cl. 2A2,
7.500%--03/25/2025............... $ 583,340 $ 584,791
Chase Mortgage Financial Corp.
Series 1992 Cl. A1 Pass Thru
REMIC 8.000%--06/25/2024......... 106,211 107,204
Collaterized Mortgage Securities
Corp. Series F-4
11.450%--11/01/2015.............. 440,992 480,844
Collaterized Mortgage Securities
Corp. Series 1988 B-4
8.750%--04/20/2019............... 472,609 488,205
Drexel Burnham Lambert
Series H-4
8.500%--04/01/2017............... 7,306,182 7,447,330
Federal Home Loan Mortgage Corp.
9.500%--05/15/2018............... 160,434 163,763
8.500%--01/15/2019............... 943,526 943,808
8.700%--02/15/2020............... 5,000,000 5,123,795
9.000%--12/15/2020............... 4,257,578 4,442,225
------------
10,673,591
------------
Federal National Mortgage
Association REMIC
6.500%--02/25/2007 IO(2)......... 6,023,852 618,222
6.000%--07/25/2017 IO(2)......... 2,865,442 515,977
8.500%--11/25/2018............... 533,708 532,192
6.500%--06/25/2021............... 4,384,555 3,614,754
------------
5,281,145
------------
First Boston Mortgage Securities
Corp. Series 92, Cl. A3
7.500%--04/25/2021............... 2,802,751 2,803,645
Kidder Peabody Acceptance Corp.
Series 1994 A1
7.901%--03/25/2024............... 3,000,000 2,987,814
L & N Funding Corp.
GNMA Coll., Series A-4
12.000%--03/17/2014.............. 1,072,634 1,131,965
MDC Mortgage Funding Corp.
Cl. Q-6
9.000%--03/20/2018............... 14,392 14,351
Norwest Mortgage
Insurance Corp. GNMA Coll. Cl.
1-Z
12.375%--01/01/2014.............. 189,903 206,227
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
Prudential Home Mortgage
Securities Co. Series 1993 Cl.
A-8
6.750%--08/25/2008............... $ 6,014,913 $ 5,533,172
Residential Funding Mortgage,
Secs Conduit Series 1991 A-8
9.000%--12/25/2021............... 406,576 415,016
Resolution Trust Corporation
Mortgage Pass Thru
Series 1991 L-1
8.780%--08/25/2021+.............. 3,000,000 3,042,652
Ryan Mortgage Acceptance Corp. IV
8.900%--06/01/2016............... 146,009 145,415
9.000%--08/01/2016............... 573,496 596,246
------------
741,661
------------
Ryland Mortgage Securities Corp.,
Series 1992 B-9
8.008%--07/25/2022+.............. 3,000,000 3,047,814
Sears Mortgage Securities Corp.
Series 92 Cl. A
7.591%--10/25/2022+(a)........... 1,836,130 1,859,656
Sears Savings Bank Mortgage
Pass Thru Series 1992 REMIC
8.708%--05/25/2032+.............. 1,154,363 1,166,808
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS...................... 49,330,119
------------
OTHER MORTGAGE RELATED SECURITIES:
Federal Housing Authority
Project Banco-221D
7.400%--02/01/2021............... 894,615 893,357
Federal Housing Authority
Project Banco-15
7.450%--05/01/2021............... 354,904 354,128
Federal Housing Authority
Project Reilly #52
5.150%--06/01/2018............... 324,677 259,945
Federal Home Loan Mortgage Corp.
Forward Gold 30 year, TBA(b)
6.500%--06/15/2026............... 15,000,000 14,278,125
8.000%--06/15/2026............... 4,000,000 4,047,500
------------
18,325,625
------------
</TABLE>
22
<PAGE> 24
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
MORTGAGE RELATED SECURITIES--CONTINUED
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
Federal Home Loan Mortgage Corp.
Pass Thru Certificates
5.750%--03/01/1999.............. $ 10,218 $ 9,196
10.500%--09/01/2000.............. 26,864 28,234
7.500%--03/01/2002.............. 34,413 34,069
8.000%--06/01/2011.............. 116,006 118,941
8.500%--02/01/2017.............. 165,659 171,146
7.584%--06/01/2024.............. 3,566,852 3,653,801
8.000%--04/01/2025.............. 927,617 938,228
8.000%--05/01/2025.............. 23,234 23,500
8.000%--06/01/2025.............. 439,313 444,339
8.000%--07/01/2025.............. 474,214 479,638
8.000%--08/01/2025.............. 496,103 501,778
8.000%--09/01/2025.............. 426,474 431,352
8.000%--10/01/2025.............. 1,399,039 1,415,043
8.000%--11/01/2025.............. 449,299 454,439
8.000%--12/01/2025.............. 30,595 30,945
------------
8,734,649
------------
Federal National Mortgage
Association Pass Thru
Certificates
9.000%--03/01/2005............... 343,303 363,000
9.000%--11/01/2009............... 2,317,217 2,424,388
8.500%--12/01/2009............... 18,625 19,149
9.500%--04/01/2011............... 125,783 133,714
6.283%--12/01/2027............... 8,058,820 8,101,653
------------
11,041,904
------------
Government National Mortgage
Association
6.500%--03/20/2017............... 1,880,367 1,879,745
6.750%--08/15/2017............... 432,149 408,448
7.000%--09/20/2023............... 4,000,389 4,025,947
6.500%--05/20/2024............... 4,023,688 4,036,922
7.000%--05/20/2024............... 1,710,876 1,734,935
7.375%--06/20/2024............... 7,956,172 8,032,543
7.250%--07/20/2024............... 112,575 113,534
7.250%--08/20/2024............... 4,099,742 4,134,668
7.250%--09/20/2024............... 8,183,186 8,252,899
7.000%--12/20/2024............... 838,460 850,251
6.500%--01/20/2025............... 4,032,321 4,062,479
7.500%--02/20/2025............... 1,815,941 1,841,478
7.000%--02/25/2025............... 1,365,045 1,384,241
------------
40,758,090
------------
Government National Mortgage
Association TBA(b)
7.000%--06/19/2026............... 10,000,000 9,643,750
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
United Airlines Pass Thru
Certificate Series 1993 C-2
9.060%--06/17/2015+.............. $ 3,000,000 $ 3,144,807
TOTAL OTHER MORTGAGE RELATED
SECURITIES....................... 93,156,255
------------
TOTAL MORTGAGE RELATED SECURITIES
(Cost $142,829,883).............. 142,486,374
------------
</TABLE>
OPTIONS--0.7%
<TABLE>
<CAPTION>
NO. OF
CONTRACTS
-----------
<S> <C> <C>
U.S. Treasury Note Call Option
Strike Price @ 92.938
Expiration, 06/17/1996........... 25,000 1,603,000
CME Put Option, Eurodollars,
Strike Price @ 91.00
Expiration, 06/18/1996........... 145,000 5,664
------------
TOTAL OPTIONS
(Cost $1,709,622)................ 1,608,664
------------
</TABLE>
SHORT-TERM INVESTMENTS--20.5%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
REPURCHASE AGREEMENTS
Repurchase Agreement with State
Street Bank & Trust dated April
30, 1996 due May 1, 1996 at
4.250%, collateralized by a U.S.
Treasury Note, 6.25% August 31,
1996, par value of $2,045,000
(repurchase proceeds of
$2,285,270 when closed on May 1,
1996)............................ $ 2,285,000 2,285,000
U.S. TREASURY BILLS
4.730%--05/09/1996............... 70,000 69,926
4.800%--05/23/1996#.............. 290,000 289,158
5.030%--08/22/1996#.............. 570,000 560,957
4.980%--08/29/1996#.............. 985,000 968,682
5.100%--10/17/1996#.............. 1,100,000 1,073,716
------------
2,962,439
------------
</TABLE>
23
<PAGE> 25
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
SHORT-TERM INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
COMMERCIAL PAPER
American Telephone & Telegraph Co.
5.290%--06/27/1996............... $ 700,000 $ 694,137
Amoco Co.
5.230%--06/13/1996............... 2,300,000 2,285,632
Commonwealth Bank of Australia
5.260%--10/22/1996............... 1,600,000 1,559,323
E I DuPont De Nemours & Co.
5.260%--06/27/1996............... 2,300,000 2,280,845
Ford Motor Credit Co.
5.250%--06/26/1996............... 1,000,000 991,833
5.300%--07/09/1996............... 1,500,000 1,484,762
5.280%--07/26/1996............... 1,800,000 1,777,296
------------
4,253,891
------------
General Electric Capital Corp.
5.300%--08/06/1996............... 1,500,000 1,478,579
Her Majesty in Right of Canada
5.250%--06/03/1996............... 11,000,000 10,947,063
Hewlett Packard Co.
5.250%--07/23/1996............... 2,900,000 2,864,898
Minnesota Mining & Manufacturing
Co.
5.250%--05/23/1996............... 2,300,000 2,292,621
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
Pitney Bowes Credit Corp.
5.260%--07/24/1996............... $ 2,000,000 $ 1,975,453
Rockwell International Corp.
5.280%--05/30/1996............... 8,000,000 7,965,973
Toys R Us Inc.
5.250%--05/22/1996............... 3,700,000 3,688,669
5.300%--05/22/1996............... 900,000 897,218
------------
4,585,887
------------
Wal-Mart Stores Inc.
5.270%--07/10/1996............... 500,000 494,876
TOTAL COMMERCIAL PAPER............. 43,679,178
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $48,926,921)........................... 48,926,617
------------
TOTAL INVESTMENTS--110.7%
(Cost $264,264,610).......................... $264,225,379
CASH AND OTHER ASSETS,
LESS LIABILITIES--(10.7%).................... (25,638,345)
------------
TOTAL NET ASSETS--100.0%....................... $238,587,034
============
</TABLE>
- ------------
# At April 30, 1996, U.S. Treasury Bills held by the Fund were pledged to cover
margin requirements for open futures contracts and written options on
futures contracts. (See Note 2 to the Financial Statements). The securities
pledged had an aggregate market value of $2,892,513.
+ Variable rate security. The stated rate represents the rate in effect at
April 30, 1996.
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30, 1996,
these securities were valued at $8,605,906 or 3.6% of net assets.
(b) TBA's are mortgage-backed securities traded under delayed delivery
commitments, settling after April 30, 1996. Although the unit price for the
trades has been established, the principal value has not been finalized.
However, the amount of the commitments will not fluctuate more than 2% from
the principal amount. Income on TBA's is not earned until settlement date.
(See Note 2 to the Financial Statements).
(1) MTN after the name of a security stands for Medium Term Note.
(2) Interest only (IO) securities represent the right to receive the monthly
interest payments on an underlying pool of mortgage loans. These are subject
to the risk of accelerated principal paydowns. The amount represents the
notional amount on which current interest is calculated.
The accompanying notes are an integral part of the financial statements.
24
<PAGE> 26
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
FUTURES CONTRACTS WHICH WERE OPEN AT APRIL 30, 1996 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
AGGREGATE
NUMBER OF FACE VALUE OF EXPIRATION DATE UNREALIZED
CONTRACTS CONTRACTS CONTRACTS OF CONTRACTS DEPRECIATION
- --------------------------------------------- --------- -------------- ----------------- --------------
<S> <C> <C> <C> <C>
U.S. Treasury Bond--30 Yr. (Buy)....................... 105 $ 10,500,000 June, 1996 $ (666,094)
U.S. Treasury Note--10 Yr. (Buy)....................... 420 42,000,000 June, 1996 (839,750)
U.S. Treasury Note--5 Yr. (Buy)........................ 80 8,000,000 June, 1996 (56,250)
Deutsche Mark--10 Yr. (Buy)............................ 50 DEM 12,500,000 June, 1996 (16,928)
------------
$ (1,579,022)
============
</TABLE>
WRITTEN OPTIONS WHICH WERE OPEN AT APRIL 30, 1996 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION MONTH/
OPTIONS CONTRACTS STRIKE PRICE VALUE
- --------------------------------------------- -------------- ----------------- --------------
<S> <C> <C> <C>
U.S. Treasury Bond (Put)............................................ 400 June/112 $(918,164)
Euro Dollar Futures (Put)........................................... 60 June/93 (28,178)
---------
Written options outstanding, at value (premium received $373,094)... $(946,342)
=========
</TABLE>
FORWARD CURRENCY CONTRACTS WHICH WERE OPEN AT APRIL 30, 1996 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
UNREALIZED
MARKET AGGREGATE DELIVERY DATE APPRECIATION/
CURRENCY COUNTRY VALUE FACE VALUE OF CONTRACT (DEPRECIATION)
- ----------------------------------------------- ------- ---------- ------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
Dollar (Sell).................................. Canada $2,945,276 $2,939,664 October 21, 1996 $ (5,612)
Deutsche Mark (Sell)........................... Germany 7,160,791 7,673,678 December 2, 1996 512,887
Deutsche Mark (Sell)........................... Germany 1,078,559 1,156,147 December 9, 1996 77,588
--------
$584,863
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE> 27
HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1996 (UNAUDITED)
Total Investments (%)
(Excludes net cash and short-term investments of -17.1%)
<TABLE>
<S> <C>
Options 0.2
Corporate Bonds & Notes 5.8
U.S. Government Obligations 27.5
Mortgage Related Securities 37.8
Asset Backed Securities 45.8
</TABLE>
ASSET BACKED SECURITIES--45.8%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
Banc One Auto Trust
6.850%--11/15/1997............. $ 1,000,000 $ 1,006,629
Carco Auto Loan Master Trust
7.875%--03/15/1998............. 3,000,000 3,011,637
Case Equipment Loan Trust
4.300%--05/15/1999............. 1,341,941 1,315,074
Caterpillar Fin'l Asset Trust
6.100%--08/25/2001............. 1,946,645 1,950,380
Discover Card Trust
7.300%--05/21/1999............. 2,500,000 2,514,498
Ford Cr. Auto Loan Master Trust
6.875%--01/15/1997............. 3,000,000 3,023,157
Green Tree Financial Corp.
6.000%--07/15/2018............. 3,331,950 3,338,877
8.150%--04/15/2025............. 1,900,000 1,944,762
------------
5,283,639
------------
MBNA Master Credit Card Trust
7.750%--10/15/1998............. 3,450,000 3,475,423
Mellon Home Equity Loan Trust
5.620%--04/15/2026+............ 1,000,000 1,002,089
Navistar Financial Owners Trust
7.650%--12/22/1997............. 1,150,404 1,154,637
6.050%--04/15/2002............. 2,250,000 2,236,880
------------
3,391,517
------------
Peoples Bank Cr. Card Trust
5.100%--08/15/1997............. 3,500,000 3,484,352
Premier Auto Trust
7.350%--05/04/1997............. 552,834 553,619
7.050%--07/04/1998............. 2,900,000 2,931,897
8.050%--04/04/2000............. 600,000 619,973
------------
4,105,489
------------
Private Label Credit Card MTII
7.150%--06/20/1997............. 4,000,000 4,030,916
Signet Master Trust
4.850%--12/15/1996............. 3,000,000 2,984,667
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
Standard Credit Card Master Trust
I
9.000%--08/07/1996............. $ 3,000,000 $ 3,011,997
8.625%--01/07/2002............. 4,000,000 4,076,636
------------
7,088,633
------------
TOTAL ASSET BACKED SECURITIES
(Cost $47,843,411)............... 47,668,100
------------
CORPORATE BONDS & NOTES--5.8%
General Electric Capital Corp.
MTN(1)
7.750%--12/30/1996............ 2,500,000 2,533,574
Norwest Corp. MTN(1)
7.875%--01/30/1997............. 1,600,000 1,629,250
Schering Plough Corp.
Zero Coupon Bond
(12/02/1996)................... 2,000,000 1,935,114
------------
TOTAL CORPORATE BONDS & NOTES
(Cost $6,070,473)................ 6,097,938
------------
MORTGAGE RELATED SECURITIES--37.8%
GOVERNMENT AGENCY PASS-THROUGHS:
Federal Home Loan Mortgage Corp.
Pool #490010
9.000%--06/01/1997............. 680,327 687,884
------------
COLLATERALIZED MORTGAGE OBLIGATIONS:
Countrywide Fund Corp Series
1994-5 Cl. A1
6.500%--02/25/2002............. 685,924 684,160
Federal National Mortgage
Association REMIC
Series 1992 Cl. B IOette(2)
8.000%--07/25/1997............. 152,590 152,140
Series 1993 Cl. B
5.250%--06/25/2001............. 4,000,000 3,968,636
Series 1994 Cl. PB
6.500%--01/17/2007............. 2,000,000 2,004,158
Series 1992 Cl. L IOette(2)
9.570%--02/25/2007............. 6,945,100 1,513,359
Series 1992 Cl. H
7.500%--09/25/2007............. 11,661,291 2,129,223
Series 1994 Cl. B
4.750%--06/25/2008............. 3,000,000 2,982,657
Series 1992 Cl. E
6.000%--12/25/2012............. 273,174 272,311
Series 1991 Cl. L IOette(2)
11.612%--12/25/2021............ 10,919,056 3,558,213
Series 1993 Cl. J
Zero Coupon Bond
08/25/2023..................... 7,937,600 3,676,101
------------
20,256,798
------------
</TABLE>
26
<PAGE> 28
HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
MORTGAGE RELATED SECURITIES--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
Federal Home Loan Mortgage Corp.
Pass Thru Certificates
5.500%--08/25/2001............. $ 2,339,346 $ 2,329,729
4.750%--08/25/2000............. 1,877,233 1,868,520
5.000%--08/15/2002............. 4,257,479 4,222,477
5.500%--07/15/2004............. 6,000,000 5,892,414
11.568%--09/15/2007
IOette(2)...................... 11,101,850 3,305,680
------------
17,618,820
------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS...................... 38,559,778
------------
TOTAL MORTGAGE RELATED SECURITIES
(Cost $40,027,916)........................... 39,247,662
------------
U.S. GOVERNMENT OBLIGATIONS--27.5%
U.S. Treasury Notes
6.125%--05/31/1997............. 4,050,000 4,067,717
5.750%--09/30/1997............. 9,350,000 9,335,377
5.375%--11/30/1997............. 7,250,000 7,188,817
5.875%--04/30/1998............. 2,000,000 1,987,031
7.750%--12/31/1999#............ 2,150,000 2,248,094
6.250%--05/31/2000............. 250,000 248,906
5.500%--12/31/2000............. 1,000,000 964,375
6.375%--03/31/2001............. 2,500,000 2,496,875
------------
28,537,192
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $28,570,881)........................... 28,537,192
------------
OPTIONS--0.2%
(Cost $155,245)
<CAPTION>
NO. OF
CONTRACTS
-----------
<S> <C> <C>
U.S. Treasury Note Call Option
Strike Price @ 110.00
Expiration 08/24/1996.......... 100 179,688
------------
</TABLE>
SHORT TERM INVESTMENTS--13.9%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
BANK OBLIGATION
Dresdner Bank
5.312%--05/01/1996............. $ 525,000 $ 525,000
U.S. TREASURY BILLS
5.045%--08/22/1996#............ 1,000,000 984,212
5.045%--10/31/1996............. 4,000,000 3,897,233
5.245%--05/01/1997............. 6,000,000 5,678,140
5.270%--05/01/1997............. 3,000,000 2,839,070
------------
13,398,655
------------
REPURCHASE AGREEMENTS
Repurchase Agreement with UBS
Tri-Party dated April 30, 1996
due on demand at 5.20%, collat-
eralized by a U.S. Treasury
Note, 5.25% January 31, 2001,
par value of $500,000 (repur-
chase proceeds of $485,140 when
closed on May 1, 1996)......... 485,000 485,000
TOTAL SHORT TERM INVESTMENTS
(Cost $14,414,090)........................... 14,408,655
------------
TOTAL INVESTMENTS--131.0%
(Cost $137,082,016).......................... $136,139,235
CASH AND OTHER ASSETS,
LESS LIABILITIES--(31.0%).................... (32,209,493)
------------
TOTAL NET ASSETS--100.0%....................... $103,929,742
=============
</TABLE>
- ------------
# At April 30, 1996, U.S. Treasury Bills and Notes held by the fund were
pledged to cover margin requirements for open futures and forward contracts.
(See Note 2 to the Financial Statements). The securities pledged had
aggregate market value of $3,232,306.
+ Variable rate security. The stated rate represents the rate in effect at
April 30, 1996.
(1) MTN after the name of a security stands for Medium Term Note.
(2) IOette Securities are a type of CMO (often called a "double REMIC") tranche
with an extremely small principle amount and extremely high coupon rate of
interest. The characteristics of an IOette are expected to resemble an IO
security.
The accompanying notes are an integral part of the financial statements.
27
<PAGE> 29
HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
FUTURES CONTRACTS WHICH WERE OPEN AT APRIL 30, 1996 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
AGGREGATE UNREALIZED
NUMBER OF FACE VALUE OF EXPIRATION DATE APPRECIATION/
CONTRACTS CONTRACTS CONTRACTS OF CONTRACTS (DEPRECIATION)
- ----------------------------------------------------------- --------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
U.S. Treasury Note--10 Yr. (Sell).......................... 32 $ 3,200,000 September, 1996 $ 25,822
U.S. Treasury Note--10 Yr. (Buy)........................... 76 7,600,000 June, 1996 (102,156)
U.S. Treasury Note--5 Yr. (Sell)........................... 46 4,600,000 June, 1996 (36,912)
Canadian Dollar--10 Yr. (Buy).............................. 45 CAD 4,500,000 September, 1996 5,449
----------
$ (107,797)
==========
</TABLE>
FORWARD CURRENCY CONTRACTS WHICH WERE OPEN AT APRIL 30, 1996 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
UNREALIZED
MARKET AGGREGATE DELIVERY DATE APPRECIATION/
CURRENCY COUNTRY VALUE FACE VALUE OF CONTRACT (DEPRECIATION)
- ------------------------------------------------------- ------- ---------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Deutsche Mark (Buy).................................... Germany $3,447,655 $3,500,000 May 20, 1996 $(52,345)
Deutsche Mark (Sell)................................... Germany 1,670,384 1,700,000 May 20, 1996 29,616
Deutsche Mark (Sell)................................... Germany 1,767,430 1,800,000 May 20, 1996 32,570
--------
$ 9,841
========
</TABLE>
STATEMENT OF SECURITIES SOLD SHORT AT APRIL 30, 1996 IS AS FOLLOWS:
<TABLE>
<CAPTION>
NUMBER OF
ISSUE CONTRACTS/PAR VALUE
- -------------------------------------------------------------------------------------------- ------------- --------
<S> <C> <C>
PURCHASED OPTIONS
- --------------------------------------------------------------------------------------------
U.S. Treasury Note - 10 Yr. (Call) Strike Price @ 110 Expires 06/21/96...................... 25 $ 2,344
OTHER SECURITIES
- --------------------------------------------------------------------------------------------
U.S. Treasury Note 5.250%--01/31/2001....................................................... $ 500,000 477,188
--------
Total Securities Sold Short (proceeds $517,048)............................................. $479,532
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
28
<PAGE> 30
HARBOR MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1996 (UNAUDITED)
Total Investments (%)
(Excludes cash -0.1%)
<TABLE>
<S> <C>
Bank Obligations 31.8
Commercial Paper 32.8
Federal Agencies 35.5
</TABLE>
BANK OBLIGATIONS--31.8%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
ABN Amro -- CD
5.005%--08/09/96................. $2,000,027 $ 2,000,026
Bank of Montreal -- CD
5.360%--06/14/96................. 2,000,000 2,000,000
Bank of Nova Scotia -- CD
5.370%--07/16/96................. 2,000,000 2,000,000
Bank One Indianapolis N.A. -- CD
5.320%--06/05/96................. 2,000,018 2,000,018
Bayerische Landesbank Euro CD
5.100%--07/05/96................. 2,000,248 2,000,248
Canadian Imperial Bank of Commerce
-- CD
5.320%--06/12/96................. 2,000,000 2,000,000
Dresdner Bank of NY -- TD
5.312%--05/01/96................. 222,000 222,000
Mellon Bank N.A.
5.320%--05/31/96................. 2,000,000 2,000,000
Toronto Dominion Bank -- CD
5.090%--08/23/96................. 2,000,000 2,000,000
Trust Company of Atlanta Banker's
Acceptance
5.480%--05/08/96................. 998,934 998,934
Union Bank of Switzerland Euro CD
5.050%--07/08/96................. 2,000,077 2,000,077
-----------
TOTAL BANK OBLIGATIONS.......................... 19,221,303
-----------
</TABLE>
FEDERAL AGENCIES--35.5%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
Federal Home Loan Mortgage Discount
Notes
5.170%--07/10/96................. $2,667,908 $ 2,667,908
5.190%--07/12/96................. 9,896,200 9,896,200
5.190%--07/18/96................. 2,966,265 2,966,265
Federal National Mortgage
Association Discount Notes
5.180%--07/24/96................. 5,927,480 5,927,480
-----------
TOTAL FEDERAL AGENCIES.......................... 21,457,853
-----------
COMMERCIAL PAPER--32.8%
Cheltenham + Glouster PLC
5.280%--07/02/96................. 1,981,813 1,981,813
Commerzbank U S Finance
5.290%--06/03/96................. 1,990,302 1,990,302
Corporate Asset Fund
5.230%--07/12/96................. 1,987,797 1,987,797
Daimler Benz N.A.
5.265%--07/09/96................. 1,979,818 1,979,818
Ford Motor Credit Corp.
5.285%--07/29/96................. 1,973,869 1,973,869
Glaxo PLC
5.270%--07/08/96................. 1,980,091 1,980,091
International Nederland US Funding
Corp.
5.270%--07/09/96................. 1,979,798 1,979,798
McKenna Triangle National Corp.
5.310%--07/02/96................. 1,981,710 1,981,710
Sandoz Corp.
5.270%--07/29/96................. 1,973,943 1,973,943
Student Loan Corp
5.285%--07/26/96................. 1,974,749 1,974,749
-----------
TOTAL COMMERCIAL PAPER.......................... 19,803,890
-----------
TOTAL INVESTMENTS--100.1%
(Cost $60,483,046)(1)......................... $60,483,046
-----------
CASH AND OTHER ASSETS,
LESS LIABILITIES--(0.1%)...................... (7,211)
-----------
TOTAL NET ASSETS--100.0%........................ $60,475,835
===========
</TABLE>
- ------------
(1) The aggregate identified cost on a tax basis is the same.
The accompanying notes are an integral part of the financial statements.
29
<PAGE> 31
HARBOR FUND
STATEMENT OF ASSETS AND LIABILITIES--APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
HARBOR HARBOR
INTERNATIONAL GROWTH GROWTH
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS, AT IDENTIFIED COST*............................................... $282,184,263 $ 96,573,796
- -------------------------------------------------------------------------------------------------------------------------
Investments, at value.......................................................... $321,495,515 $136,741,475
Repurchase agreements.......................................................... -- --
Cash........................................................................... 699 1,054
Foreign currency, at value
(cost: $375,569; $0; $196,186; $854,467; $0; $699,978; $28; $0).............. 373,238 --
Receivables for:
Investments sold............................................................. 4,353,681 962,030
Capital shares sold.......................................................... 5,073,697 126,608
Dividends.................................................................... 716,175 3,300
Interest..................................................................... 11,913 --
Open forward currency contracts, net......................................... -- --
Deferred organization costs.................................................... 16,818 --
Withholding tax receivable..................................................... 149,131 --
Other assets................................................................... 8,882 84,971
- -------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS............................................................. 332,199,749 137,919,438
LIABILITIES
Payables for:
Investments purchased........................................................ 15,107,518 480,172
Capital shares reacquired.................................................... 398,304 518,405
Dividends to shareholders.................................................... -- --
Securities sold short, at value
(proceeds $0; $0; $0; $0; $0; $0; $517,048; $0)............................ -- --
Written options, at value
(premiums received $0; $0; $0; $0; $0; $373,094; $0; $0)................... -- --
Reverse repurchase agreements................................................ -- --
Interest on reverse repurchase agreements and short sales.................... -- --
Variation margin on futures contracts........................................ -- --
Accrued expenses:
Adviser's fees............................................................... 175,590 165,971
Trustees' fees............................................................... 1,398 --
Transfer agent's fees........................................................ -- 4,132
Other........................................................................ 116,757 --
- -------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES........................................................ 15,799,567 1,168,680
NET ASSETS
NET ASSETS..................................................................... $316,400,182 $136,750,758
=========================================================================================================================
Net assets consist of:
Paid-in capital.............................................................. $274,052,292 $ 85,209,832
Undistributed (overdistributed) net investment income........................ 1,183,557 (307,752)
Accumulated net realized gain/(loss)......................................... 1,868,404 11,680,999
Unrealized appreciation (depreciation) of investments, written options,
foreign currency, investments sold short and translation of assets and
liabilities in foreign currencies.......................................... 39,295,929 40,167,679
Unrealized (depreciation) of futures and forward currency contracts.......... -- --
- -------------------------------------------------------------------------------------------------------------------------
$316,400,182 $136,750,758
=========================================================================================================================
Shares of beneficial interest.................................................. 22,052,509 8,450,240
Net asset value, offering and redemption price per share....................... $14.35 $16.18
</TABLE>
- ------------
* Including repurchase agreements
The accompanying notes are an integral part of the financial statements.
30
<PAGE> 32
HARBOR FUND
STATEMENT OF ASSETS AND LIABILITIES--CONTINUED
<TABLE>
<CAPTION>
HARBOR CAPITAL HARBOR HARBOR HARBOR HARBOR HARBOR
APPRECIATION INTERNATIONAL VALUE BOND SHORT DURATION MONEY MARKET
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
$1,085,792,623 $2,626,977,066 $ 95,081,544 $264,264,610 $ 137,082,016 $ 60,483,046
- ---------------------------------------------------------------------------------------------------------
$1,358,373,506 $3,773,181,014 $ 99,920,520 $261,940,379 $ 135,654,235 $ 60,483,046
-- -- 5,549,000 2,285,000 485,000 --
13,097 663 751 774 108 269
194,169 846,569 -- 687,426 28 --
-- -- 1,599,659 14,014,844 4,586,137 --
3,215,213 2,773,388 139,992 187,052 4,057 215,246
731,601 12,438,483 224,854 -- -- --
5,637 507,594 655 2,827,516 1,465,517 117,840
-- -- -- 584,863 9,841
-- -- -- -- 2,820 --
60,365 5,282,181 7,097 -- -- --
3,839 33,749 1,156 14,504 12,242 16,223
1,362,597,427 3,795,063,641 107,443,684 282,542,358 142,219,985 60,832,624
- ---------------------------------------------------------------------------------------------------------
15,778,696 -- 2,400,355 42,515,499 12,419,926 --
665,642 1,209,525 21,634 132,479 183,842 329,084
-- -- -- -- -- 7,581
-- -- -- -- 479,532 --
-- -- -- 946,342 -- --
-- -- -- -- 25,155,000 --
-- -- -- -- 24,454 --
-- -- -- 261,099 2,300 --
643,658 2,233,151 57,939 81,005 18,984 6,646
4,884 14,684 1,235 565 694 695
1,431 225,740 22,211 18,335 2,629 12,783
126,165 665,550 29,522 -- 2,882 --
- ---------------------------------------------------------------------------------------------------------
17,220,476 4,348,650 2,532,896 43,955,324 38,290,243 356,789
$1,345,376,951 $3,790,714,991 $104,910,788 $238,587,034 $ 103,929,742 $ 60,475,835
=========================================================================================================
$1,056,480,474 $2,587,190,617 $ 87,342,758 $240,991,742 $ 104,924,062 $ 60,475,835
889,728 14,202,336 282,915 3,136,630 (376,445) --
15,427,883 43,234,678 6,897,139 (3,911,979) 385,345 --
272,578,866 1,146,087,360 10,387,976 (635,200) (905,264) --
-- -- -- (994,159) (97,956) --
- ---------------------------------------------------------------------------------------------------------
$1,345,376,951 $3,790,714,991 $104,910,788 $238,587,034 $ 103,929,742 $ 60,475,835
=========================================================================================================
54,492,173 127,575,158 6,854,955 21,578,541 11,968,115 60,475,835
$24.69 $29.71 $15.30 $11.06 $8.68 $1.00
</TABLE>
31
<PAGE> 33
HARBOR FUND
STATEMENT OF OPERATIONS--SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
HARBOR
INTERNATIONAL HARBOR
GROWTH GROWTH
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends............................................................... $ 2,376,381 $ 161,589
Interest................................................................ 281,113 144,767
Securities lending income............................................... 25,450 --
Foreign taxes withheld.................................................. (254,870) (615)
- ---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME................................................. 2,428,074 305,741
EXPENSES:
Investment adviser's fees............................................... 709,437 502,788
Shareholder communications.............................................. 8,834 3,343
Custodian fees.......................................................... 244,561 37,492
Transfer agent fees..................................................... 86,581 37,496
Professional fees....................................................... 23,500 20,047
Trustees' fees and expenses............................................. 1,394 1,123
Registration fees....................................................... 21,160 10,115
Amortization of organization costs...................................... 3,325 --
Insurance expense....................................................... 986 1,405
Miscellaneous........................................................... 3,929 3,655
- ---------------------------------------------------------------------------------------------------------
Total expenses....................................................... 1,103,707 617,464
Advisory fee waived..................................................... -- --
Other expense reimbursements and reductions............................. (8,082) (3,971)
- ---------------------------------------------------------------------------------------------------------
Total operating expenses............................................. 1,095,625 613,493
Interest expense........................................................ -- --
- ---------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME..................................................... 1,332,449 (307,752)
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENT TRANSACTIONS:
Net realized gain/(loss) on:
Investments.......................................................... 5,501,276 11,673,823
Foreign currency transactions........................................ (1,023) --
Short sales.......................................................... -- --
Futures contracts.................................................... -- --
Written options...................................................... -- --
Change in net unrealized appreciation/(depreciation) on:
Investments, written options and short sales......................... 25,958,396 8,765,412
Futures contracts.................................................... -- --
Forwards............................................................. -- --
Translation of assets and liabilities in foreign currencies.......... (14,554) --
- ---------------------------------------------------------------------------------------------------------
Net gain/(loss) on investment transactions.............................. 31,444,095 20,439,235
- ---------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS......... $ 32,776,544 $20,131,483
=========================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
32
<PAGE> 34
HARBOR FUND
STATEMENT OF OPERATIONS--CONTINUED
<TABLE>
<CAPTION>
HARBOR HARBOR
CAPITAL HARBOR HARBOR HARBOR SHORT HARBOR
APPRECIATION INTERNATIONAL VALUE BOND DURATION MONEY MARKET
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
$ 4,402,107 $ 31,850,362 $ 1,633,397 $ -- $ -- $ --
956,379 5,326,118 118,393 8,551,424 4,566,390 1,680,577
-- 626,120 -- -- -- --
(128,709) (3,018,931) (34,730) -- -- --
- --------------------------------------------------------------------------------------------------
5,229,777 34,783,669 1,717,060 8,551,424 4,566,390 1,680,577
3,277,424 14,976,062 286,183 817,212 250,613 91,035
42,837 187,464 2,777 15,779 526 6,840
190,986 1,786,382 63,422 63,325 29,698 16,285
431,719 1,348,883 23,506 130,542 5,968 77,876
38,045 105,338 26,789 33,936 29,988 16,375
10,030 37,110 937 2,415 1,179 652
202,315 56,120 13,139 23,847 10,157 15,750
-- -- -- -- 2,084 --
2,790 13,679 996 1,704 1,582 1,023
12,877 40,935 3,459 4,992 3,709 3,162
- --------------------------------------------------------------------------------------------------
4,209,023 18,551,973 421,208 1,093,752 335,504 228,998
-- (974,068) -- (280,509) (125,156) (36,412)
(27,481) (26,044) (1,416) (4,989) (17,152) (4,147)
- --------------------------------------------------------------------------------------------------
4,181,542 17,551,861 419,792 808,254 193,196 188,439
-- -- -- -- 590,076 --
- --------------------------------------------------------------------------------------------------
1,048,235 17,231,808 1,297,268 7,743,170 3,783,118 1,492,138
16,791,934 43,449,682 7,067,813 (2,330,302) (377,800) 27,986
-- (90,887) 95 267,095 (320,843) --
-- -- -- -- 349,351 --
-- -- -- 1,829,641 (86,111) --
-- -- -- 369,482 -- --
77,287,138 353,104,186 5,436,443 (1,845,892) (861,305) --
-- -- -- (3,651,822) (27,634) --
-- -- -- 475,073 9,841 --
-- (489,413) -- (7,963) -- --
- --------------------------------------------------------------------------------------------------
94,079,072 395,973,568 12,504,351 (4,894,688) (1,314,501) 27,986
- --------------------------------------------------------------------------------------------------
$ 95,127,307 $ 413,205,376 $13,801,619 $ 2,848,482 $ 2,468,617 $1,520,124
==================================================================================================
</TABLE>
33
<PAGE> 35
HARBOR FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
HARBOR HARBOR HARBOR
INTERNATIONAL GROWTH GROWTH CAPITAL APPRECIATION
--------------------------- --------------------------- ------------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
1995 1994 1995 1994 1995 1994
THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1996 1995 1996 1995 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income........... $ 1,332,449 $ 1,144,431 $ (307,752) $ (415,737) $ 1,048,235 $ 1,181,224
Net realized gain (loss) on
investments, foreign currency
transactions, investments sold
short, futures and written
options....................... 5,500,253 (3,560,432) 11,673,823 15,819,020 16,791,934 12,262,188
Net unrealized appreciation
(depreciation) of investments,
written options, investments
sold short, futures, forward
foreign currency contracts and
translation of assets and
liabilities in foreign
currencies.................... 25,943,842 9,466,764 8,765,412 16,576,097 77,287,138 153,009,037
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS...................... 32,776,544 7,050,763 20,131,483 31,979,380 95,127,307 166,452,449
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income........... (1,242,975) (533,368) -- -- (1,102,402) (531,337)
Net realized gain on
investments................... -- -- (15,306,126) (3,521,352) (13,411,011) (2,447,010)
In excess of net investment
income........................ -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS.................. (1,242,975) (533,368) (15,306,126) (3,521,352) (14,513,413) (2,978,347)
- ---------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sale of
shares........................ 181,472,690 61,328,962 16,082,443 16,883,782 470,351,523 684,101,709
Net asset value of shares issued
in connection with
reinvestment of:
Dividends from net investment
income...................... 1,098,031 508,914 -- -- 1,102,402 477,561
Distributions from net
realized gain............... -- -- 14,703,059 3,443,756 11,286,150 2,273,460
Cost of shares reacquired....... (20,118,761) (20,674,167) (36,383,929) (52,591,542) (143,727,926) (150,559,997)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) DERIVED
FROM CAPITAL TRANSACTIONS..... 162,451,960 41,163,709 (5,598,427) (32,264,004) 339,012,149 536,292,733
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets........................ 193,985,529 47,681,104 (773,070) (3,805,976) 419,626,043 699,766,835
NET ASSETS:
Beginning of period............... 122,414,653 74,733,549 137,523,828 141,329,804 925,750,908 225,984,073
- ---------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD*.................... $316,400,182 $122,414,653 $136,750,758 $137,523,828 $1,345,376,951 $ 925,750,908
=================================================================================================================================
NUMBER OF CAPITAL SHARES:
Sold.............................. 13,324,821 5,406,005 1,060,916 1,192,603 20,232,261 33,627,694
Reinvested in payment of ordinary
income dividends................ 87,913 49,558 -- -- 48,585 28,511
Reinvested in payment of capital
gain distributions.............. -- -- 1,024,603 290,612 497,407 135,729
Reacquired........................ (1,473,461) (1,823,877) (2,377,710) (3,756,684) (6,183,748) (6,951,697)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares
outstanding..................... 11,939,273 3,631,686 (292,191) (2,273,469) 14,594,505 26,840,237
Outstanding:
Beginning of period............. 10,113,236 6,481,550 8,742,431 11,015,900 39,897,668 13,057,431
- ---------------------------------------------------------------------------------------------------------------------------------
End of period................... 22,052,509 10,113,236 8,450,240 8,742,431 54,492,173 39,897,668
=================================================================================================================================
* Includes undistributed
(over-distributed) net investment
income of:........................ $ 1,183,557 $ 1,087,442 $ (307,752) $ (211,347) $ 889,728 $ 960,261
</TABLE>
The accompanying notes are an integral part of the financial statements.
34
<PAGE> 36
HARBOR FUND
STATEMENT OF CHANGES IN NET ASSETS--CONTINUED
<TABLE>
<CAPTION>
HARBOR
HARBOR HARBOR HARBOR SHORT
INTERNATIONAL VALUE BOND DURATION
------------------------------- ----------------------------- ----------------------------- -------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
1995 1994 1995 1994 1995 1994 1995
THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30,
1996 1995 1996 1995 1996 1995 1996
- ---------------------------------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
$ 17,231,808 $ 47,493,311 $ 1,297,268 $ 2,056,438 $ 7,743,170 $ 13,389,379 $ 3,783,118
43,358,795 15,242,800 7,067,908 7,373,341 135,916 2,384,007 (435,403)
352,614,773 93,622,254 5,436,443 3,842,458 (5,030,604) 10,414,593 (879,098)
- ---------------------------------------------------------------------------------------------------------------------------
413,205,376 156,358,365 13,801,619 13,272,237 2,848,482 26,187,979 2,468,617
- ---------------------------------------------------------------------------------------------------------------------------
(49,437,653) (28,584,757) (1,148,601) (2,011,154) (6,487,186) (11,944,373) (4,661,220)
(15,558,603) (108,512,496) (7,407,164) (4,674,163) -- -- --
-- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
(64,996,256) (137,097,253) (8,555,765) (6,685,317) (6,487,186) (11,944,373) (4,661,220)
- ---------------------------------------------------------------------------------------------------------------------------
360,348,056 508,760,305 14,679,927 22,822,824 61,124,105 105,017,689 200,302,834
42,300,895 24,870,202 1,084,460 1,895,201 5,278,956 9,623,304 4,649,547
13,888,462 97,656,598 6,973,681 4,428,889 -- -- --
(241,188,360) (513,025,623) (7,586,968) (10,610,411) (47,175,736) (68,106,919) (203,836,652)
- ---------------------------------------------------------------------------------------------------------------------------
175,349,053 118,261,482 15,151,100 18,536,503 19,227,325 46,534,074 1,115,729
- ---------------------------------------------------------------------------------------------------------------------------
523,558,173 137,522,594 20,396,954 25,123,423 15,588,621 60,777,680 (1,076,874)
3,267,156,818 3,129,634,224 84,513,834 59,390,411 222,998,413 162,220,733 105,006,616
- ---------------------------------------------------------------------------------------------------------------------------
$3,790,714,991 $3,267,156,818 $104,910,788 $ 84,513,834 $238,587,034 $222,998,413 $ 103,929,742
===========================================================================================================================
12,708,138 19,981,750 997,488 1,674,245 5,406,778 9,769,878 22,729,843
1,528,212 1,023,044 73,894 141,367 468,518 893,978 530,423
501,750 4,017,137 492,144 371,240 -- -- --
(8,501,397) (20,136,448) (509,086) (786,808) (4,189,932) (6,360,695) (23,194,658)
- ---------------------------------------------------------------------------------------------------------------------------
6,236,703 4,885,483 1,054,440 1,400,044 1,685,364 4,303,161 65,608
121,338,455 116,452,972 5,800,515 4,400,471 19,893,177 15,590,016 11,902,507
- ---------------------------------------------------------------------------------------------------------------------------
127,575,158 121,338,455 6,854,955 5,800,515 21,578,541 19,893,177 11,968,115
===========================================================================================================================
$ 14,202,336 $ 48,009,848 $ 282,915 $ 121,373 $ 3,136,630 $ 1,445,006 $ (376,445)
<CAPTION>
HARBOR
SHORT HARBOR
DURATION MONEY MARKET
------------- -----------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
1994 1995 1994
THROUGH THROUGH THROUGH
OCTOBER 31, APRIL 30, OCTOBER 31,
1995 1996 1995
- -------------------------------------------------------------------
(UNAUDITED)
<C> <C> <C>
$ 6,741,610 $ 1,492,138 $ 3,552,967
(22,574) 27,986 65,167
411,828 -- --
- -------------------------------------------------------------------
7,130,864 1,520,124 3,618,134
- -------------------------------------------------------------------
(6,753,096) (1,492,138) (3,552,967)
-- (27,986) (65,167)
(112,940) -- --
- -------------------------------------------------------------------
(6,866,036) (1,520,124) (3,618,134)
- -------------------------------------------------------------------
522,143,550 44,288,322 83,477,627
6,849,399 1,460,670 3,522,178
-- -- --
(540,142,259) (49,764,875) (82,532,152)
- -------------------------------------------------------------------
(11,149,310) (4,015,883) 4,467,653
- -------------------------------------------------------------------
(10,884,482) (4,015,883) 4,467,653
115,891,098 64,491,718 60,024,065
- -------------------------------------------------------------------
$ 105,006,616 $ 60,475,835 $ 64,491,718
===================================================================
59,267,963 44,288,322 83,477,627
778,668 1,460,670 3,522,178
-- -- --
(61,358,458) (49,764,875) (82,532,152)
- -------------------------------------------------------------------
(1,311,827) (4,015,883) 4,467,653
13,214,334 64,491,718 60,024,065
- -------------------------------------------------------------------
11,902,507 60,475,835 64,491,718
===================================================================
$ (112,940) -- --
</TABLE>
35
<PAGE> 37
HARBOR FUND FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------------
NET REALIZED AND LESS DISTRIBUTIONS
UNREALIZED GAINS (LOSSES) ----------------------------------
NET ASSET VALUE ON INVESTMENTS, FUTURES, TOTAL FROM DIVIDENDS FROM DISTRIBUTIONS FROM
YEAR/PERIOD BEGINNING OF NET INVESTMENT OPTIONS AND FOREIGN INVESTMENT NET INVESTMENT NET REALIZED
ENDED PERIOD INCOME CURRENCY CONTRACTS OPERATIONS INCOME CAPITAL GAINS**
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL GROWTH FUND
April 30, 1996
(Unaudited).... $ 12.10 $ .06* $ 2.30 $ 2.36 $ (.11) $ --
October 31, 1995.... 11.53 .11* .54 .65 (.08) --
October 31, 1994(1). 10.00 .07* 1.47 1.54 (.01) --
- ------------------------------------------------------------------------------------------------------------------------------
HARBOR GROWTH FUND(2)
April 30, 1996
(Unaudited)........ $ 15.73 $ (.04) $ 2.34 $ 2.30 $ -- $(1.85)
October 31, 1995.... 12.83 (.04) 3.26 3.22 -- (.32)
October 31, 1994.... 14.01 -- (1.16) (1.16) -- (.02)
October 31, 1993.... 12.42 .01 2.95 2.96 (.01) (1.36)
October 31, 1992.... 15.76 .02 (1.01) (.99) (.04) (2.31)
October 31, 1991.... 10.21 .04 6.53 6.57 (.08) (.94)
October 31, 1990.... 12.95 .10 (2.24) (2.14) (.11) (.49)
- ------------------------------------------------------------------------------------------------------------------------------
HARBOR CAPITAL APPRECIATION FUND(3)
April 30, 1996
(Unaudited)........ $ 23.20 $ .02 $ 1.81 $ 1.83 $ (.03) $ (.31)
October 31, 1995.... 17.31 .04 6.06 6.10 (.04) (.17)
October 31, 1994.... 17.30 .03 1.14 1.17 (.03) (1.13)
October 31, 1993.... 16.30 .03 3.03 3.06 (.02) (2.04)
October 31, 1992.... 15.18 .02 2.12 2.14 (.04) (.98)
October 31, 1991.... 10.65 .06 5.47 5.53 (.14) (.86)
October 31, 1990.... 13.42 .15 (1.53) (1.38) (.21) (1.18)
- ------------------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND(4)
April 30, 1996
(Unaudited)........ $ 26.93 $ .14* $ 3.18 $ 3.32 $ (.41) $ (.13)
October 31, 1995.... 26.87 .39* .85 1.24 (.24) (.94)
October 31, 1994.... 22.85 .26* 3.98 4.24 (.22) --
October 31, 1993.... 16.77 .17* 6.31 6.48 (.22) (.18)
October 31, 1992.... 17.69 .24 (.95) (.71) (.21) --
October 31, 1991.... 15.74 .16 2.47 2.63 (.34) (.34)
October 31, 1990.... 15.99 .37* .27 .64 (.17) (.72)
- ------------------------------------------------------------------------------------------------------------------------------
HARBOR VALUE FUND(5)
April 30, 1996
(Unaudited)........ $ 14.57 $ .20 $ 1.98 $ 2.18 $ (.18) $(1.27)
October 31, 1995.... 13.50 .40 2.13 2.53 (.39) (1.07)
October 31, 1994.... 14.31 .36 .27 .63 (.34) (1.10)
October 31, 1993.... 13.24 .35 1.22 1.57 (.35) (.15)
October 31, 1992.... 13.10 .41* .49 .90 (.41) (.35)
October 31, 1991.... 10.84 .46* 2.71 3.17 (.47) (.44)
October 31, 1990.... 13.77 .51* (2.13) (1.62) (.51) (.80)
- ------------------------------------------------------------------------------------------------------------------------------
HARBOR BOND FUND
April 30, 1996
(Unaudited)........ $ 11.21 $ .37* $ (.20) $ .17 $ (.32) $ --
October 31, 1995.... 10.41 .74* .73 1.47 (.67) --
October 31, 1994.... 11.92 .68* (1.02) (.34) (.67) (.50)
October 31, 1993.... 11.35 .68* .82 1.50 (.68) (.25)
October 31, 1992.... 11.11 .79* .50 1.29 (.79) (.26)
October 31, 1991.... 10.03 .83* 1.09 1.92 (.84) --
October 31, 1990.... 10.55 .84* (.44) .40 (.83) (.09)
- ------------------------------------------------------------------------------------------------------------------------------
HARBOR SHORT DURATION FUND
April 30, 1996
(Unaudited)........ $ 8.82 $ .23* $ (.06) $ .17 $ (.31) $ --
October 31, 1995.... 8.77 .52* .06 .58 (.52) --
October 31, 1994.... 9.68 .34* (.12) .22 (1.08) --
October 31, 1993.... 10.09 .34* .16 .50 (.82) (.09)
October 31, 1992(6). 10.00 .29* .08 .37 (.28) --
- ------------------------------------------------------------------------------------------------------------------------------
HARBOR MONEY MARKET FUND
April 30, 1996
(Unaudited)........ $ 1.00 $ .02* $ -- $ .02 $ (.02) $ --
October 31, 1995.... 1.00 .06* -- .06 (.06) --
October 31, 1994.... 1.00 .03* -- .03 (.03) --
October 31, 1993.... 1.00 .03* -- .03 (.03) --
October 31, 1992.... 1.00 .04* -- .04 (.04) --
October 31, 1991.... 1.00 .06 -- .06 (.06) --
October 31, 1990.... 1.00 .08 -- .08 (.08) --
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
In Excess of
Net Investment
Income
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
HARBOR INTERNATIONAL GROWTH FUND
April 30, 1996
(Unaudited)...... $ --
October 31, 1995...... --
October 31, 1994(1)... --
- ------------------------------------------------------------------------------------------------------------------------------
HARBOR GROWTH FUND(2)
April 30, 1996
(Unaudited).......... $ --
October 31, 1995...... --
October 31, 1994...... --
October 31, 1993...... --
October 31, 1992...... --
October 31, 1991...... --
October 31, 1990...... --
- ------------------------------------------------------------------------------------------------------------------------------
HARBOR CAPITAL APPRECIATION FUND (3)
April 30, 1996
(Unaudited).......... $ --
October 31, 1995...... --
October 31, 1994...... --
October 31, 1993...... --
October 31, 1992...... --
October 31, 1991...... --
October 31, 1990...... --
- -----------------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND (4)
April 30, 1996
(Unaudited).......... $ --
October 31, 1995...... --
October 31, 1994...... --
October 31, 1993...... --
October 31, 1992...... --
October 31, 1991...... --
October 31, 1990...... --
- ------------------------------------------------------------------------------------------------------------------------------
HARBOR VALUE FUND(5)
April 30, 1996
(Unaudited).......... $ --
October 31, 1995...... --
October 31, 1994...... --
October 31, 1993...... --
October 31, 1992...... --
October 31, 1991...... --
October 31, 1990...... --
- ------------------------------------------------------------------------------------------------------------------------------
HARBOR BOND FUND
April 30, 1996
(Unaudited).......... $ --
October 31, 1995...... --
October 31, 1994...... --
October 31, 1993...... --
October 31, 1992...... --
October 31, 1991...... --
October 31, 1990...... --
- ------------------------------------------------------------------------------------------------------------------------------
HARBOR SHORT DURATION FUND
April 30, 1996
(Unaudited).......... $ --
October 31, 1995...... (.01)
October 31, 1994...... --
October 31, 1993...... --
October 31, 1992(6)... --
- ------------------------------------------------------------------------------------------------------------------------------
HARBOR MONEY MARKET FUND
April 30, 1996
(Unaudited).......... $ --
October 31, 1995...... --
October 31, 1994...... --
October 31, 1993...... --
October 31, 1992...... --
October 31, 1991...... --
October 31, 1990...... --
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Reflects the Adviser's or Subadviser's agreement not to impose all or a
portion of its advisory fees; the fees not imposed would have amounted to the
following:
Period ended April 30, 1996 -- International $.01 per share; Bond $.01 per
share; Short Duration $.01 per share; Money Market less than $.01 per share.
Year ended October 31, 1995 -- International Growth $.01 per share;
International $.01 per share; Bond $.03 per share; Short Duration $.02 per
share; and Money Market less than $.01 per share.
Year ended October 31, 1994 -- International Growth $.02 per share;
International $.01 per share; Bond $.03 per share; Short Duration less than
$.01 per share; and Money Market less than $.01 per share.
Year ended October 31, 1993 -- International less than $.01 per share; Bond
$.02 per share; Short Duration $.02 per share; and Money Market less than
$.01 per share.
Year ended October 31, 1992 -- Value $.01 per share; Bond $.04 per share;
Short Duration $.01 per share; and Money Market less than $.01 per share.
Year ended October 31, 1991 -- Value $.01 per share; Bond $.04 per share.
Year ended October 31, 1990 -- International $.01 per share; Value $.02 per
share; Bond $.02 per share.
** Includes both short-term and long-term capital gains.
The accompanying notes are an integral part of the financial statements.
36
<PAGE> 38
HARBOR FUND FINANCIAL HIGHLIGHTS--CONTINUED
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<TABLE>
<CAPTION>
RATIO OF RATIO OF RATIO OF NET
NET ASSETS OPERATING EXPENSES INTEREST EXPENSE INVESTMENT INCOME
TAX RETURN TOTAL NET ASSET VALUE TOTAL END OF PERIOD TO AVERAGE TO AVERAGE TO AVERAGE
OF CAPITAL DISTRIBUTIONS END OF PERIOD RETURN ($ THOUSANDS) NET ASSETS (%) NET ASSETS (%) NET ASSETS (%)
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
$ -- $ (.11) $ 14.35 19.54%++ $ 316,400 1.15%*+ -- 1.40%*+
-- (.08) 12.10 5.83 122,415 1.21* -- 1.31*
-- (.01) 11.53 15.36 74,734 1.32* -- 0.87*
- ---------------------------------------------------------------------------------------------------------------------------------
$ -- $ (1.85) $ 16.18 16.13%++ $ 136,751 0.91%+ -- (0.46)%+
-- (.32) 15.73 25.93 137,524 0.93 -- (0.30)
-- (.02) 12.83 (8.29) 141,330 0.93 -- --
-- (1.37) 14.01 26.17 208,320 0.90 -- 0.11
-- (2.35) 12.42 (7.48) 191,464 0.90 -- 0.14
-- (1.02) 15.76 68.72 211,494 0.91 -- 0.32
-- (.60) 10.21 (17.43) 122,622 0.94 -- 0.74
- ---------------------------------------------------------------------------------------------------------------------------------
$ -- $ (.34) $ 24.69 8.02%++ $ 1,345,377 0.76%+ -- 0.19%+
-- (.21) 23.20 35.73 925,751 0.75 -- 0.23
-- (1.16) 17.31 7.25 225,984 0.81 -- 0.24
-- (2.06) 17.30 20.16 145,331 0.86 -- 0.24
-- (1.02) 16.30 14.41 77,445 0.91 -- 0.12
-- (1.00) 15.18 55.35 80,316 0.89 -- 0.47
-- (1.39) 10.65 (11.52) 54,560 0.88 -- 1.18
- ---------------------------------------------------------------------------------------------------------------------------------
$ -- $ (0.54) $ 29.71 12.49%++ $ 3,790,715 1.00%*+ -- 0.98%*+
-- (1.18) 26.93 5.06 3,267,157 1.04* -- 1.53*
-- (.22) 26.87 18.57 3,129,634 1.10* -- 1.09*
-- (.40) 22.85 39.51 2,275,053 1.20* -- 1.28*
-- (.21) 16.77 (4.08) 700,733 1.28 -- 1.98
-- (.68) 17.69 17.74 205,703 1.35 -- 1.76
-- (.89) 15.74 3.81 63,745 1.40* -- 2.82*
- ---------------------------------------------------------------------------------------------------------------------------------
$ -- $ (1.45) $ 15.30 15.79%++ $ 104,911 0.88%+ -- 2.72%+
-- (1.46) 14.57 21.02 84,514 0.90 -- 3.00
-- (1.44) 13.50 4.80 59,390 1.04 -- 2.66
-- (.50) 14.31 11.99 59,884 0.88 -- 2.48
-- (.76) 13.24 7.06 63,974 0.84* -- 3.11*
-- (.91) 13.10 30.18 43,066 0.93* -- 3.61*
-- (1.31) 10.84 (13.00) 23,453 1.01* -- 3.96*
- ---------------------------------------------------------------------------------------------------------------------------------
$ -- $ (.32) $ 11.06 1.46%++ $ 238,587 0.69%*+ -- 6.63%*+
-- (.67) 11.21 14.56 222,998 0.70* -- 7.11*
-- (1.17) 10.41 (3.14) 162,221 0.77* -- 6.29*
-- (.93) 11.92 13.98 164,382 0.72* -- 6.19*
-- (1.05) 11.35 12.14 65,420 0.77* -- 7.30*
-- (.84) 11.11 20.01 40,486 0.86* -- 8.12*
-- (.92) 10.03 4.03 24,341 1.22* -- 8.30*
- ---------------------------------------------------------------------------------------------------------------------------------
$ -- $ (.31) $ 8.68 1.89%++ $ 103,930 0.31%*+ 0.94%+ 6.04%*+
-- (.53) 8.82 6.82 105,007 0.38* 1.46 6.19*
(.05) (1.13) 8.77 2.53 115,891 0.38* 1.26 4.61*
-- (.91) 9.68 5.18 135,189 0.43* 0.69 4.19*
-- (.28) 10.09 3.72++ 186,523 0.35*+ 1.19+ 3.79*+
- ---------------------------------------------------------------------------------------------------------------------------------
$ -- $ (.02) $ 1.00 2.51%++ $ 60,476 0.62%*+ -- 4.92%*+
-- (.06) 1.00 5.66 64,492 0.61* -- 5.42*
-- (.03) 1.00 3.53 60,024 0.67* -- 3.38*
-- (.03) 1.00 2.68 46,879 0.71* -- 2.58*
-- (.04) 1.00 3.67 55,244 0.69* -- 3.39*
-- (.06) 1.00 6.25 57,093 0.66 -- 5.70
-- (.08) 1.00 8.02 49,968 0.66 -- 7.54
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
AVERAGE
PORTFOLIO COMMISSION
TURNOVER (%) RATE PAID
<S> <C>
- --------------------------------
62.10%+ $ .03
74.86 --
41.80 --
- --------------------------------
78.38%+ $ .06
87.94 --
115.89 --
170.85 --
83.83 --
97.64 --
95.95 --
- --------------------------------
80.65%+ $ .06
51.65 --
72.89 --
93.24 --
69.33 --
89.99 --
162.43 --
- --------------------------------
7.07%+ $ .02
14.01 --
28.70 --
15.70 --
24.67 --
18.63 --
28.28 --
- --------------------------------
136.86%+ $ .04
135.93 --
150.94 --
50.20 --
19.68 --
32.60 --
31.41 --
- --------------------------------
201.34%+ --
88.69 --
150.99 --
119.92 --
52.54 --
58.45 --
90.99 --
- --------------------------------
1,127.52%+ --
725.96 --
895.76 --
1,212.20 --
2,759.70 --
- --------------------------------
N/A --
N/A --
N/A --
N/A --
N/A --
N/A --
N/A --
- --------------------------------
</TABLE>
(1) For the period November 1, 1993 (commencement of operations) through October
31, 1994.
(2) Effective January 1, 1993, Harbor Growth Fund appointed Nicholas Applegate
Capital Management as its Subadviser.
(3) Effective May 1, 1990, Harbor Capital Appreciation Fund appointed Jennison
Associates Capital Corp. as its Subadviser.
(4) Effective April 1, 1993, Harbor International Fund appointed Northern Cross
Investments Limited as its Subadviser.
(5) Harbor Value Fund appointed Richards & Tierney, Inc. and DePrince, Race, &
Zollo, Inc. as its Subadvisers effective November 1, 1993 and April 20,
1995, respectively.
(6) For the period January 1, 1992 (commencement of operations) through October
31, 1992.
+ Annualized
++ Unannualized
37
<PAGE> 39
HARBOR SHORT DURATION FUND
STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE PERIOD
NOVEMBER 1, 1995
THROUGH
APRIL 30, 1996
----------------
<S> <C>
Cash flows used for operating activities:
Interest (excluding net amortization of $279,739)...................................... $ 4,329,442
Operating expenses paid................................................................ (227,092)
Interest paid.......................................................................... (710,728)
Purchase of long-term portfolio investments............................................ (645,231,207)
Proceeds from disposition of long-term portfolio investments........................... 690,606,217
Purchase of short-term portfolio investments........................................... (1,229,485,680)
Proceeds from disposition of short-term portfolio investments.......................... 1,249,493,076
Purchase of securities sold short...................................................... (88,551,836)
Proceeds from securities sold short.................................................... 66,829,990
Net cash used for futures contracts.................................................... (273,658)
Net cash used for forward currency contracts........................................... (330,684)
Cash used for interest purchased....................................................... (6,154,890)
Cash provided by interest sold......................................................... 7,730,709
Cash provided by other assets.......................................................... 13,811
----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES............................................ 48,037,470
----------------
Cash flows provided by financing activities:
Cash provided from issuance of shares of capital stock................................. 200,303,312
Cash used to repurchase shares of capital stock........................................ (217,162,829)
Cash dividends paid.................................................................... (11,673)
Cash provided from reverse repurchase agreements....................................... 211,956,000
Cash used to liquidate reverse repurchase agreements................................... (243,200,375)
----------------
NET CASH USED FOR FINANCING ACTIVITIES............................................... (48,115,565)
Net decrease in cash..................................................................... (78,095)
----------------
Cash at beginning of period.............................................................. 78,204
Foreign currency at beginning of period, at cost......................................... 27
----------------
Total cash at beginning of period........................................................ 78,231
Cash at end of period.................................................................... 108
Foreign currency at end of period, at cost............................................... 28
----------------
Total cash at end of period.......................................................... $ 136
================
RECONCILIATION OF NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS TO NET CASH USED FOR
OPERATIONS TO NET CASH USED FOR OPERATING ACTIVITIES:
Net increase in net assets resulting from operations..................................... $ 2,468,617
----------------
Decrease in investments................................................................ 51,588,524
Increase in securities sold short...................................................... (22,057,409)
Change in unrealized depreciation--net................................................. 861,305
Decrease in receivables for securities sold............................................ 3,538,830
Decrease in interest receivable........................................................ 1,618,610
Increase in receivable for variation margin on futures contract........................ (413)
Increase in receivable for forward currency contracts.................................. (9,841)
Decrease in other assets 13,811
Increase in payable for securities purchased........................................... 10,169,984
Decrease in accrued expense and other liabilities...................................... (154,548)
----------------
Total adjustments.................................................................... 45,568,853
----------------
Net cash used for operating activities................................................... $ 48,037,470
================
</TABLE>
The accompanying notes are an integral part of the financial statements.
38
<PAGE> 40
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--APRIL 30, 1996 (UNAUDITED)
NOTE 1--ORGANIZATIONAL MATTERS
Harbor Fund (the "Trust") is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company, consisting of a
series of eight diversified investment portfolios (the "Funds"), each of which
is represented by a separate series of shares of beneficial interest and having
an unlimited number of shares authorized. As of April 30, 1996, the Trust
consisted of the following funds: Harbor International Growth Fund, Harbor
Growth Fund, Harbor Capital Appreciation Fund, Harbor International Fund, Harbor
Value Fund, Harbor Bond Fund, Harbor Short Duration Fund and Harbor Money Market
Fund.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements. The preparation of
financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The policies are in conformity with generally accepted
accounting principles for investment companies.
SECURITY VALUATION
Equity securities are valued at the last sale price on an exchange or the
National Association of Securities Dealers Automated Quotation ("NASDAQ") system
or, in the case of unlisted securities or listed securities for which there were
no sales on the valuation day, the mean between the closing bid and asked price.
Securities listed or traded on foreign exchanges are valued at the last sale
price on that exchange on the valuation day, or if no sale occurs, at the
official bid price (both the last sale price and official bid price are
determined as of the close of the London Foreign Exchange).
Except for Harbor Money Market Fund, debt securities, other than short-term
securities with a remaining maturity of less than sixty days, are valued at
prices furnished by a pricing service, selected by the adviser, which determines
valuations for normal institutional-size trading units of such securities using
market information, transactions for comparable securities and various
relationships between securities which are generally recognized by institutional
traders. Short-term securities with a remaining maturity of less than sixty days
are stated at amortized cost which approximates value. Open futures contracts
are valued based on the last sale price on the exchange on which such futures
are principally traded.
Securities for which there are no such prices are valued at their fair
value as determined in good faith under consistently applied procedures
established by and under the supervision of the Board of Trustees.
Securities of the Harbor Money Market Fund are valued utilizing the
amortized cost method as set forth in Rule 2a-7 under the Investment Company Act
of 1940, as amended.
FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract, a
Fund is required to pledge to the broker an amount of cash, U.S. Government
securities or other high quality debt securities equal to the minimum "initial
margin" requirements of the exchange. Pursuant to the contract, the Fund agrees
to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin," and are recorded by the Fund as unrealized gains or losses.
When the contract is closed, the Fund
39
<PAGE> 41
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
records a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
Each Fund (excluding the Money Market Fund) may use futures contracts to
manage its exposure to the stock and bond markets and to fluctuations in
currency values. Futures contracts tend to increase or decrease the Fund's
exposure to the underlying instrument or hedge other fund investments. Losses
may arise from changes in the value of the underlying instruments, if there is
an illiquid secondary market for the contracts, or if the counterparties do not
perform under the contracts' terms.
OPTIONS
Each Fund (excluding the Money Market Fund) may use options contracts to
manage its exposure to the stock and bond markets and to fluctuations in
interest rates and currency values. Options contracts tend to increase or
decrease the Fund's exposure to the underlying instrument, or hedge other fund
investments.
When a Fund purchases an option, the premium paid by the Fund is included
in the Fund's Statement of Assets and Liabilities as an investment and
subsequently "marked-to-market" to reflect the option's current market value.
Purchased options are valued at the last sale price on the market on which it is
principally traded. If the purchased option expires, the Fund realizes a loss in
the amount of the premium. If the Fund enters into a closing sale transaction,
it realizes a gain or loss, depending on whether the proceeds from the sale are
greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security and the
proceeds from such sale are decreased by the premium originally paid. The risk
associated with purchasing options is limited to the premium originally paid.
When a Fund writes an option, the premium received by the Fund is presented
in the Fund's Statement of Assets and Liabilities as an asset and an equivalent
liability. The amount of the liability is subsequently "marked-to-market" to
reflect the current market value of the option written. Written options are
valued at the last sale price or, in the absence of a sale, the last offering
price on the market on which it is principally traded. If an option expires on
its stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or loss if the cost of a closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received. If a written put option is exercised, the amount of the premium
originally received reduces the cost of the security which the Fund purchases
upon exercise of the option.
The risk in writing a call is that the Fund relinquishes the opportunity to
profit if the market price of the underlying security increases and the option
is exercised. In writing a put option, the Fund assumes the risk of incurring a
loss if the market price of the underlying security decreases and the option is
exercised. In addition, there is a risk the Fund may not be able to enter into a
closing transaction because of an illiquid secondary market, or if the
counterparties do not perform under the contracts' terms.
OPTIONS ON FUTURES CONTRACTS
The valuation, accounting principles and risks involved with options on
futures are similar to those described above relating to options purchased or
written directly on the underlying debt securities. In addition, upon exercise,
the premium paid would decrease the unrealized gain or increase the unrealized
loss on the futures.
40
<PAGE> 42
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
PURCHASED INTEREST RATE CAP AGREEMENTS
Harbor Bond Fund and Harbor Short Duration Fund may purchase interest rate
caps for hedging purposes in order to seek to increase total return. A purchased
interest rate cap is an agreement to receive periodic interest payments, based
on a notional principal amount, to the extent that a specified interest index
rises above a specified interest rate in exchange for the premium paid. When a
Fund purchases an interest rate cap, the premium paid by the Fund is amortized
to income over the life of the cap (or over the life of the investment(s) hedged
by the cap, if shorter) on a straight line basis. Interest rate caps are
marked-to-market daily based on quotations from market makers and the change, if
any, is recorded as an unrealized gain or loss in the Statement of Assets and
Liabilities. Periodic payments of interest, if any, are reported as interest
income in the Statement of Operations. If there is a default by the other party
to such a transaction, the Fund will have contractual remedies pursuant to the
agreements related to the transaction.
Because there is no organized market for these agreements, the value
reported in the Statement of Assets and Liabilities may differ from that which
would be realized in the event the Fund terminated its position in the
agreement. Entering into these agreements involves, to varying degrees, elements
of credit, interest rate and market risk in excess of the amount recognized in
the Statement of Assets and Liabilities. Such risks involve the possibility that
there is no liquid market for these agreements, that the counterparty to the
agreements may default on its obligation to perform and that there may be
adverse changes in interest rates and unfavorable changes in the price of the
security or index underlying these transactions.
TBA PURCHASE COMMITMENTS
Bond Fund enters into "TBA" (to be announced) purchase commitments to
purchase securities for a fixed unit price at a future date beyond customary
settlement time. Although the unit price has been established, the principal
value has not been finalized. However, the amount of the commitment will not
fluctuate more than 2.0% from the principal amount. The Fund holds, and
maintains until the settlement date, cash or high-grade debt obligations in an
amount sufficient to meet the purchase price. TBA purchase commitments may be
considered securities in themselves, and involve a risk of loss if the value of
the security to be purchased declines prior to the settlement date, which risk
is in addition to the risk of decline in the value of the Fund's other assets.
Risks may also arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts. Unsettled TBA
purchase commitments are valued at the current market value of the underlying
securities, generally according to the procedures described under "Security
Valuation" above.
Although the Fund will generally enter into TBA purchase commitments with
the intention of acquiring securities for its portfolio, the Fund may dispose of
a commitment prior to settlement if the Fund's Subadviser deems it appropriate
to do so.
TBA SALE COMMITMENTS
Bond Fund enters into "TBA" sale commitments to hedge its portfolio
positions or to sell mortgage-backed securities it owns under delayed delivery
arrangements. Proceeds of TBA sale commitments are not received until the
contractual settlement date. During the time a TBA sale commitment is
outstanding, equivalent deliverable securities, or an offsetting TBA purchase
commitment (deliverable on or before the sale commitment date), are held as
"cover" for the transaction.
Unsettled TBA sale commitments are valued at the current market value of
the underlying securities, generally according to the procedures described under
"Security Valuation" above. The contract is "marked-to-market" daily and the
change in market value is recorded by the Fund as an unrealized gain and loss.
If the TBA sale commitment is closed through the acquisition of an offsetting
purchase commitment, the Fund
41
<PAGE> 43
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
realizes a gain or loss on the commitment without regard to any unrealized gain
or loss on the underlying security. If the Fund delivers securities under the
commitment, the Fund realizes a gain or loss from the sale of the securities
upon the unit price established at the date the commitment was entered into.
FORWARD CURRENCY CONTRACTS
Each Fund (excluding the Money Market Fund) may enter into forward foreign
currency contracts in order to manage currency exposure. A forward currency
contract is an agreement between two parties to buy and sell currencies at a set
price on a future date. The U.S. dollar value of the contracts is determined
using forward currency exchange rates supplied by a pricing service. The
contract is "marked-to-market" daily and the change in market value is recorded
as an unrealized gain or loss. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value on the open and
close date. Purchases and sales of forward currency contracts having the same
settlement date and broker are offset and any realized gain or loss is
recognized on the date of offset; otherwise a gain or loss is recognized upon
settlement. Losses may arise from changes in the value of the foreign currency
or if the counterparties do not perform under the contracts' terms. The maximum
potential loss from such contracts is the aggregate face value in U.S. dollars
at the time the contract was opened; however, management of the Fund believes
the likelihood of such loss is remote.
FOREIGN CURRENCY TRANSLATIONS
The accounting records of the Funds are maintained in U.S. dollars.
Investment securities and other assets and liabilities denominated in a foreign
currency are translated into U.S. dollars based on the current exchange rates at
period end. Purchases and sales of securities are translated into U.S. dollars
at the current exchange rate on the respective dates of the transaction. Income
and withholding taxes are translated at the prevailing exchange rates when
accrued or incurred.
Effective November 1, 1994, the Funds adopted Statement of Position (SOP)
93-4: Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies. In accordance with this SOP, reported net realized gains
and losses on foreign currency transactions represent net gains and losses from
sales and maturities of forward currency contracts, disposition of foreign
currencies, currency gains and losses realized between the trade and settlement
dates on securities transactions, and the difference between the amount of net
investment income accrued and the U.S. dollar amount actually received. The
effects of changes in foreign currency exchange rates on investments in
securities are not isolated in the Statement of Operations from the effects of
changes in market prices of these securities. Such fluctuations are included
with the net realized and unrealized gain or loss on investments.
REPURCHASE AGREEMENTS
The Trust's custodian takes possession through the federal book-entry
system of securities collateralizing repurchase agreements. The value of the
underlying assets at the time of purchase is required to be at least equal to
the repurchase price to protect the Fund in the event of default by the seller.
SECURITIES TRANSACTIONS
Securities transactions are accounted for on the trade date (the date the
order to buy or sell is executed). Realized gains or losses on security
transactions are determined on the basis of identified cost for both federal
income tax and financial reporting purposes.
42
<PAGE> 44
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
INVESTMENT INCOME
Dividends declared are accrued on the ex-dividend date, except that, for
Harbor International Growth Fund and Harbor International Fund, certain
dividends are recorded as soon as the Fund is notified of the ex-dividend date.
Interest income is accrued daily as earned. Discounts and premiums on securities
purchased are amortized over the life of the respective securities using the
straight-line method. Discount on zero coupon bonds is accreted using the
effective yield method.
DISTRIBUTION TO SHAREHOLDERS
Distributions are recorded on the ex-dividend date.
EXPENSES
Expenses incurred by the Trust with respect to any two or more Funds are
allocated in proportion to the net assets of each Fund, except where allocations
of direct expense to each Fund can be otherwise fairly made.
DEFERRED ORGANIZATION COSTS
Certain costs incurred by Harbor International Growth Fund and Harbor Short
Duration Fund in connection with its organization and its registration with the
Securities and Exchange Commission and with various states aggregated
approximately $33,000 and $21,000, respectively. These costs are being amortized
on a straight-line basis over a five-year period from the commencement of
operations of the Fund.
FEDERAL TAXES
Each Fund is treated as a separate entity for federal tax purposes. Each
Fund's policy is to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute to its
shareholders all of its taxable income within the prescribed time. It is also
the intention of each Fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code.
Therefore, no provision has been made for federal taxes on income, capital gains
or unrealized appreciation of securities held or excise tax on income and
capital gains.
NOTE 3--INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, other than short-term securities, for
each Fund for the year ended April 30, 1996 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
---------------------------- ----------------------------
U.S. U.S.
FUND GOVERNMENT OTHER GOVERNMENT OTHER
- ---- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Harbor International Growth............... $ -- $210,830,582 $ -- $ 58,310,099
Harbor Growth............................. -- 50,808,808 -- 70,161,378
Harbor Capital Appreciation............... 2,877,265 763,531,949 4,846,385 430,442,751
Harbor International...................... -- 254,391,834 -- 119,013,609
Harbor Value.............................. -- 68,813,208 -- 62,127,482
Harbor Bond............................... 209,569,443 11,641,200 197,173,454 18,806,928
Harbor Short Duration..................... 604,328,040 51,850,579 656,330,002 30,526,681
</TABLE>
Harbor Money Market's purchases and sales (including maturities) of
investment securities (all short term obligations) aggregated $854,324,079 and
$859,607,264, respectively.
43
<PAGE> 45
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 3--INVESTMENT PORTFOLIO TRANSACTIONS--CONTINUED
Harbor Short Duration Fund engages in short-selling which obligates the
Fund to replace the security borrowed by purchasing it at the market price at
the time of replacement. Until the security is replaced, the Fund is required to
pay to the lender any accrued interest and may be required to pay a premium. The
Fund would realize a gain if the security declines in price between the date of
the short sale and the date on which the Fund replaces the borrowed security.
The Fund would incur a loss as a result of the short sale if the price of the
security increases between those dates. Until the Fund replaces the borrowed
security, it will maintain a segregated account of cash and/or U.S. Government
securities with its custodian sufficient to cover its short position.
Harbor Bond Fund enters into forward sale commitments to sell a specified
security at a specified price on a specified future date. The forward sales that
create short positions are accounted for as short sells as described above.
Transactions in futures contracts for the period ended April 30, 1996 are
summarized as follows:
<TABLE>
<CAPTION>
PURCHASES OF SALES OF
FUTURES CONTRACTS FUTURES CONTRACTS
--------------------------- ---------------------------
U.S. BONDS U.S. BONDS
--------------------------- ---------------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
CONTRACTS FACE VALUE CONTRACTS FACE VALUE
--------- --------------- --------- ---------------
<S> <C> <C> <C> <C>
HARBOR BOND FUND
Contracts outstanding at beginning of period....... 625 $ 62,500,000 -- --
Contracts opened................................... 1,710 171,000,000 -- --
Contracts closed................................... (1,730) (173,000,000) -- --
------ -------------- ------ -------------
Open at 4/30/96.................................... 605 $ 60,500,000 -- --
====== ============== ====== =============
HARBOR SHORT DURATION FUND
Contracts outstanding at beginning of period....... 200 $ 20,000,000 355 $ 35,500,000
Contracts opened................................... 217 21,700,000 557 55,700,000
Contracts closed................................... (341) (34,100,000) (834) (83,400,000)
------ -------------- ------ -------------
Open at 4/30/96.................................... 76 $ 7,600,000 78 $ 7,800,000
====== ============== ====== =============
</TABLE>
<TABLE>
<CAPTION>
PURCHASES OF SALES OF
FUTURES CONTRACTS FUTURES CONTRACTS
--------------------------- ---------------------------
FOREIGN BONDS FOREIGN BONDS
--------------------------- ---------------------------
NUMBER OF CURRENCY NUMBER OF CURRENCY
CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- --------------- --------- ---------------
<S> <C> <C> <C> <C>
HARBOR BOND FUND
Contracts outstanding at beginning of period....... 200 $ 30,000,000 -- --
Contracts opened................................... 296 34,800,000 -- --
Contracts closed................................... (446) (52,300,000) -- --
------- ------------- ------- -------------
Open at 4/30/96.................................... 50 $ 12,500,000 -- --
======= ============= ======= =============
HARBOR SHORT DURATION FUND
Contracts outstanding at beginning of period....... 5 $ 1,250,000 -- $ --
Contracts opened................................... 331 68,250,000 208 34,625,000
Contracts closed................................... (291) (65,000,000) (202) (33,125,000)
Contracts expired.................................. -- -- (6) (1,500,000)
------- ------------- ------- -------------
Open at 4/30/96.................................... 45 $ 4,500,000 -- $ --
======= ============= ======= =============
</TABLE>
44
<PAGE> 46
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 3--INVESTMENT PORTFOLIO TRANSACTIONS--CONTINUED
SECURITIES LENDING
The market value of securities on loan to broker/dealers at April 30, 1996,
and the securities collateralizing such loans, were:
<TABLE>
<CAPTION>
MARKET VALUE MARKET VALUE
OF LOANED OF COLLATERAL
FUND SECURITIES SECURITIES
-------------------------------------------------------------- ------------ -----------------
<S> <C> <C>
Harbor International Growth................................... $ 40,470,179 $ 43,686,685
Harbor International.......................................... 489,842,883 518,740,283
</TABLE>
The Fund receives securities issued or guaranteed by the U.S. Government or
its agencies, cash or letters of credit as collateral against the loaned
securities in an amount at least equal to 100% of the current market value of
securities loaned; however, in the event of default or bankruptcy by the other
party to the agreement, realization and/or retention of the collateral may be
subject to legal proceedings.
WRITTEN OPTIONS
Transactions in written options for the period ended April 30, 1996 are
summarized as follows:
<TABLE>
<CAPTION>
OPTIONS WRITTEN
---------------------------
U.S. TREASURY FUTURES
---------------------------
NUMBER OF AGGREGATE
CONTRACTS FACE VALUE
--------- ------------
<S> <C> <C>
HARBOR BOND FUND
Options outstanding at beginning of period.............................. 300 $ 30,000,000
Options opened.......................................................... 400 40,000,000
Options expired......................................................... (300) (30,000,000)
---- ------------
Open at 4/30/96......................................................... 400 $ 40,000,000
==== ============
</TABLE>
<TABLE>
<CAPTION>
OPTIONS WRITTEN
----------------------------
FOREIGN FUTURES
----------------------------
NUMBER OF CURRENCY
CONTRACTS AMOUNT
--------- -------------
<S> <C> <C>
HARBOR BOND FUND
Options outstanding at beginning of period............................. 265 $ 265,000,000
Options opened......................................................... 60 60,000,000
Options expired........................................................ (265) (265,000,000)
------- -------------
Open at 4/30/96........................................................ 60 $ 60,000,000
======= =============
</TABLE>
NOTE 4--FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER
Harbor Capital Advisors, Inc. ("Harbor"), an indirect wholly-owned
subsidiary of Owens-Illinois, Inc., is the Trust's investment adviser and is
also responsible for administrative and other services. Separate advisory
45
<PAGE> 47
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 4--FEES AND OTHER TRANSACTIONS WITH AFFILIATES--CONTINUED
agreements for each Fund were in effect during the year ended April 30, 1996.
The agreements provide for fees based on an annual percentage rate of average
daily net assets as follows:
<TABLE>
<CAPTION>
ANNUAL
PERCENTAGE FEES
FUND RATE EARNED
------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Harbor International Growth........................................ 0.75% $ 709,437
Harbor Growth...................................................... 0.75% 502,788
Harbor Capital Appreciation........................................ 0.60% 3,277,424
Harbor International............................................... 0.85% 14,976,062
Harbor Value....................................................... 0.60% 286,183
Harbor Bond........................................................ 0.70% 817,212
Harbor Short Duration.............................................. 0.40% 250,613
Harbor Money Market................................................ 0.30% 91,035
</TABLE>
Harbor has from time to time agreed not to impose all or a portion of its
advisory fees and bear a portion of the expenses incurred in the operation of
certain Funds in order to limit Fund expenses. During the six-month period ended
April 30, 1996, Harbor agreed not to impose advisory fees of $280,509, $125,156,
and $36,412, and relating to Harbor Bond Fund, Harbor Short Duration Fund and
Harbor Money Market Fund, respectively; and Harbor and Northern Cross
Investments Limited agreed not to impose $974,068 of the advisory fee for Harbor
International Fund.
DISTRIBUTOR
HCA Securities, Inc., a wholly-owned subsidiary of Harbor Capital Advisors,
Inc., is the distributor for Harbor Fund shares. Harbor Fund does not reimburse
the distributor for expenses.
SHAREHOLDERS
On April 30, 1996, Harbor, HCA Securities, Inc., Harbor Transfer, Inc., and
various employee benefit plans of Owens-Illinois, Inc. held the following shares
of beneficial interest in the Funds:
<TABLE>
<CAPTION>
HARBOR, HCA
SECURITIES AND BENEFIT PLANS OF
FUND HARBOR TRANSFER OWENS-ILLINOIS, INC.
------------------------------------------------------------ --------------- --------------------
<S> <C> <C>
Harbor International Growth................................. 101,690 405,005
Harbor Growth............................................... 19,273 5,193,736
Harbor Capital Appreciation................................. 6 1,997,836
Harbor International........................................ 4 1,601,805
Harbor Value................................................ 7 2,078,635
Harbor Bond................................................. 8 1,672,575
Harbor Short Duration....................................... 931,367 10,069,289
Harbor Money Market......................................... 38,152 18,544,152
</TABLE>
TRANSFER AGENT
Harbor Transfer, Inc., a wholly-owned subsidiary of Harbor Capital
Advisors, Inc., is the shareholder servicing agent for the Funds. Fees incurred
for these transfer agent services for the six-month period ended April 30, 1996
totalled $2,142,571.
46
<PAGE> 48
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 4--FEES AND OTHER TRANSACTIONS WITH AFFILIATES--CONTINUED
"NON-INTERESTED" TRUSTEES
The fees and expenses of the non-interested Trustees allocated to each Fund
are shown on each Fund's Statement of Operations. Trustees' fees and expenses
for all Funds aggregated $54,840 for the six-month period ended April 30, 1996.
CUSTODIAN
Payments to the custodian have been reduced by balance credits applied to
each portfolio for the six-month period ended April 30, 1996. For the Harbor
International Growth Fund, Harbor Growth Fund, Harbor Capital Appreciation Fund,
Harbor International Fund, Harbor Value Fund, Harbor Bond Fund, Harbor Short
Duration Fund, and Harbor Money Market Fund the reduction amounted to $8,082,
$3,971, $27,481, $26,044, $1,416, $4,989, $17,152, and $4,147, respectively.
NOTE 5--BORROWINGS
Short Duration Fund enters into reverse repurchase agreements with third
party broker-dealers. The Fund may use reverse repurchase agreements to borrow
short term funds. Interest on the value of reverse repurchase agreements issued
and outstanding is based upon competitive market rates at the time of issuance.
At the time the Fund enters into a reverse repurchase agreement, it establishes
and maintains a segregated account with the lender containing liquid high grade
securities having a value not less than the repurchase price, including accrued
interest, of the reverse repurchase agreement. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the repurchase price of the securities and, if the proceeds from
the reverse repurchase agreement are invested in securities, that the market
value of the securities bought may decline below the repurchase price of
securities sold. Activity in reverse repurchase agreements by the Short Duration
Fund for the six-month period ended April 30, 1996 is as follows:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE DAILY
AMOUNT AMOUNT AVERAGE
BALANCE AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE AT END OF INTEREST DURING THE DURING THE DURING THE
SHORT-TERM BORROWINGS PERIOD RATE PERIOD PERIOD PERIOD
- ------------------------------------------- ----------- ------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Reverse repurchase agreements with matur-
ity dates from 8/15/98 thru 12/31/99..... $25,155,000 5.25% $50,434,550 $ 29,463,179 2.48%
</TABLE>
NOTE 6--COMMITMENTS AND CONTINGENCIES
In connection with its former fidelity bond and directors and officers
errors and omissions liability insurance policy, the Trust, on behalf of each
Fund, must maintain a "reserve premium" for five years representing
approximately 100% of its allocated annual premium for each Fund. Such amounts
are included in "Other assets" in each Fund's Statement of Assets and
Liabilities.
47
<PAGE> 49
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 7--TAX INFORMATION
The identified cost for federal income tax purposes of investments owned by
each Fund (including earned discount on corporate short-term notes and
commercial paper) and their respective gross unrealized appreciation and
depreciation at April 30, 1996 were as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED NET UNREALIZED
------------------------------- APPRECIATION/
NAME OF FUND IDENTIFIED COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
- ------------------------------------------ --------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Harbor International Growth Fund.......... $ 282,184,263 $ 39,538,740 $ (227,488) $ 39,311,252
Harbor Growth Fund........................ 96,573,796 40,505,303 (337,624) 40,167,679
Harbor Capital Appreciation Fund.......... 1,085,792,623 280,436,449 (7,855,566) 272,580,883
Harbor International Fund................. 2,626,977,066 1,226,902,566 (80,698,618) 1,146,203,948
Harbor Value Fund......................... 95,081,544 11,797,538 (1,409,562) 10,387,976
Harbor Bond Fund.......................... 264,264,610 3,196,086 (3,235,317) (39,231)
Harbor Short Duration Fund................ 137,082,016 520,989 (1,463,770) (942,781)
</TABLE>
(This document must be preceded or accompanied by a Prospectus.)
48
<PAGE> 50
<TABLE>
<S> <C> <C>
TRUSTEES AND OFFICERS SHAREHOLDER SERVICING AGENT
Ronald C. Boller Chairman, President and Harbor Transfer, Inc.
Trustee P.O. Box 2282
Howard P. Colhoun Trustee Toledo, Ohio 43603-2282
John P. Gould Trustee 1-800-422-1050
Rodger F. Smith Trustee CUSTODIAN
Constance L. Souders Secretary and Treasurer State Street Bank and Trust
INVESTMENT ADVISER Company
Harbor Capital Advisors, P.O. Box 1713
Inc. Boston, MA 02105
One SeaGate LEGAL COUNSEL
Toledo, OH 43666 Hale and Dorr
DISTRIBUTOR AND 60 State Street
PRINCIPAL UNDERWRITER Boston, MA 02109
HCA Securities, Inc.
One SeaGate
Toledo, OH 43666
(419) 247-2477
</TABLE>
[Harbor Fund logo]
One SeaGate
Toledo, Ohio 43666
1-800-422-1050
225,000/6/96 (RECYCLE LOGO)
recycled paper
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> INTERNATIONAL GROWTH
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 282,184,263
<INVESTMENTS-AT-VALUE> 321,495,515
<RECEIVABLES> 10,304,597
<ASSETS-OTHER> 399,637
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 332,199,749
<PAYABLE-FOR-SECURITIES> 15,107,518
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 692,049
<TOTAL-LIABILITIES> 15,799,567
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 274,052,292
<SHARES-COMMON-STOCK> 22,052,509
<SHARES-COMMON-PRIOR> 10,113,236
<ACCUMULATED-NII-CURRENT> 1,183,557
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,868,404
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 39,295,929
<NET-ASSETS> 316,400,182
<DIVIDEND-INCOME> 2,376,381
<INTEREST-INCOME> 281,113
<OTHER-INCOME> (229,420)
<EXPENSES-NET> 1,095,625
<NET-INVESTMENT-INCOME> 1,332,449
<REALIZED-GAINS-CURRENT> 5,500,253
<APPREC-INCREASE-CURRENT> 25,943,842
<NET-CHANGE-FROM-OPS> 32,776,544
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,242,975)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13,324,821
<NUMBER-OF-SHARES-REDEEMED> (1,473,461)
<SHARES-REINVESTED> 87,913
<NET-CHANGE-IN-ASSETS> 193,985,529
<ACCUMULATED-NII-PRIOR> 1,094,083
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (3,631,849)
<GROSS-ADVISORY-FEES> 709,437
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,103,707
<AVERAGE-NET-ASSETS> 191,330,115
<PER-SHARE-NAV-BEGIN> 12.10
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 2.30
<PER-SHARE-DIVIDEND> (0.11)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.35
<EXPENSE-RATIO> 1.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> GROWTH
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 96,573,796
<INVESTMENTS-AT-VALUE> 136,741,475
<RECEIVABLES> 1,091,938
<ASSETS-OTHER> 86,025
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 137,919,438
<PAYABLE-FOR-SECURITIES> 480,172
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 688,508
<TOTAL-LIABILITIES> 1,168,680
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 85,209,832
<SHARES-COMMON-STOCK> 8,450,240
<SHARES-COMMON-PRIOR> 8,742,431
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (307,752)
<ACCUMULATED-NET-GAINS> 11,680,999
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 40,167,679
<NET-ASSETS> 136,750,758
<DIVIDEND-INCOME> 161,589
<INTEREST-INCOME> 144,767
<OTHER-INCOME> (615)
<EXPENSES-NET> 613,493
<NET-INVESTMENT-INCOME> (307,752)
<REALIZED-GAINS-CURRENT> 11,673,823
<APPREC-INCREASE-CURRENT> 8,765,412
<NET-CHANGE-FROM-OPS> 20,131,483
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (15,306,126)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,060,916
<NUMBER-OF-SHARES-REDEEMED> (2,377,710)
<SHARES-REINVESTED> 1,024,603
<NET-CHANGE-IN-ASSETS> (773,070)
<ACCUMULATED-NII-PRIOR> 46,408,181
<ACCUMULATED-GAINS-PRIOR> 15,434,486
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 502,788
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 617,464
<AVERAGE-NET-ASSETS> 134,845,978
<PER-SHARE-NAV-BEGIN> 15.73
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> 2.34
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.85)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.18
<EXPENSE-RATIO> 0.91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> CAPITAL APPRECIATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 1,085,792,623
<INVESTMENTS-AT-VALUE> 1,358,373,506
<RECEIVABLES> 4,012,816
<ASSETS-OTHER> 211,105
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,362,597,427
<PAYABLE-FOR-SECURITIES> 15,778,696
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,441,780
<TOTAL-LIABILITIES> 17,220,476
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,056,480,474
<SHARES-COMMON-STOCK> 54,492,173
<SHARES-COMMON-PRIOR> 39,897,668
<ACCUMULATED-NII-CURRENT> 889,728
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15,427,883
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 272,578,866
<NET-ASSETS> 1,345,376,951
<DIVIDEND-INCOME> 4,402,107
<INTEREST-INCOME> 956,379
<OTHER-INCOME> (128,709)
<EXPENSES-NET> 4,181,542
<NET-INVESTMENT-INCOME> 1,048,235
<REALIZED-GAINS-CURRENT> 16,791,934
<APPREC-INCREASE-CURRENT> 77,287,138
<NET-CHANGE-FROM-OPS> 95,127,307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,102,402)
<DISTRIBUTIONS-OF-GAINS> (13,411,011)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,232,261
<NUMBER-OF-SHARES-REDEEMED> (6,183,748)
<SHARES-REINVESTED> 545,992
<NET-CHANGE-IN-ASSETS> 419,626,043
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 15,313,302
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,277,424
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,209,023
<AVERAGE-NET-ASSETS> 1,101,362,120
<PER-SHARE-NAV-BEGIN> 23.20
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 1.81
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> (0.31)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 24.69
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> INTERNATIONAL
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 2,626,977,066
<INVESTMENTS-AT-VALUE> 3,773,181,014
<RECEIVABLES> 21,001,646
<ASSETS-OTHER> 880,981
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,795,063,641
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,348,650
<TOTAL-LIABILITIES> 4,348,650
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,587,190,617
<SHARES-COMMON-STOCK> 127,575,158
<SHARES-COMMON-PRIOR> 121,338,455
<ACCUMULATED-NII-CURRENT> 14,202,336
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 43,234,678
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,146,087,360
<NET-ASSETS> 3,790,714,991
<DIVIDEND-INCOME> 31,850,362
<INTEREST-INCOME> 5,326,118
<OTHER-INCOME> (2,392,811)
<EXPENSES-NET> 17,551,861
<NET-INVESTMENT-INCOME> 17,231,808
<REALIZED-GAINS-CURRENT> 43,358,795
<APPREC-INCREASE-CURRENT> 352,614,773
<NET-CHANGE-FROM-OPS> 413,205,376
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (49,437,653)
<DISTRIBUTIONS-OF-GAINS> (15,558,603)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,708,138
<NUMBER-OF-SHARES-REDEEMED> (8,501,397)
<SHARES-REINVESTED> 2,029,962
<NET-CHANGE-IN-ASSETS> 523,558,173
<ACCUMULATED-NII-PRIOR> 943,895
<ACCUMULATED-GAINS-PRIOR> 12,046,960
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14,976,062
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18,551,973
<AVERAGE-NET-ASSETS> 3,543,140,693
<PER-SHARE-NAV-BEGIN> 26.93
<PER-SHARE-NII> 0.14
<PER-SHARE-GAIN-APPREC> 3.18
<PER-SHARE-DIVIDEND> (0.41)
<PER-SHARE-DISTRIBUTIONS> (0.13)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 29.71
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> VALUE
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 95,081,544
<INVESTMENTS-AT-VALUE> 105,469,520
<RECEIVABLES> 1,972,257
<ASSETS-OTHER> 1,907
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 107,443,684
<PAYABLE-FOR-SECURITIES> 2,400,355
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 132,541
<TOTAL-LIABILITIES> 2,532,896
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 87,342,758
<SHARES-COMMON-STOCK> 6,854,955
<SHARES-COMMON-PRIOR> 5,800,515
<ACCUMULATED-NII-CURRENT> 282,915
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,897,139
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,387,976
<NET-ASSETS> 104,910,788
<DIVIDEND-INCOME> 1,633,397
<INTEREST-INCOME> 118,393
<OTHER-INCOME> (34,730)
<EXPENSES-NET> 419,792
<NET-INVESTMENT-INCOME> 1,297,268
<REALIZED-GAINS-CURRENT> 7,067,908
<APPREC-INCREASE-CURRENT> 5,436,443
<NET-CHANGE-FROM-OPS> 13,801,619
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,148,601)
<DISTRIBUTIONS-OF-GAINS> (7,407,164)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 997,488
<NUMBER-OF-SHARES-REDEEMED> (509,086)
<SHARES-REINVESTED> 566,038
<NET-CHANGE-IN-ASSETS> 20,396,954
<ACCUMULATED-NII-PRIOR> 134,248
<ACCUMULATED-GAINS-PRIOR> 7,236,395
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 286,183
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 421,208
<AVERAGE-NET-ASSETS> 96,043,404
<PER-SHARE-NAV-BEGIN> 14.57
<PER-SHARE-NII> 0.20
<PER-SHARE-GAIN-APPREC> 1.98
<PER-SHARE-DIVIDEND> (0.18)
<PER-SHARE-DISTRIBUTIONS> (1.27)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.30
<EXPENSE-RATIO> 0.88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> BOND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 264,264,610
<INVESTMENTS-AT-VALUE> 264,225,379
<RECEIVABLES> 17,614,275
<ASSETS-OTHER> 702,704
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 282,542,358
<PAYABLE-FOR-SECURITIES> 42,515,499
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,439,825
<TOTAL-LIABILITIES> 43,955,324
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 240,991,742
<SHARES-COMMON-STOCK> 21,578,541
<SHARES-COMMON-PRIOR> 19,893,177
<ACCUMULATED-NII-CURRENT> 3,136,630
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (3,911,979)
<ACCUM-APPREC-OR-DEPREC> (1,629,359)
<NET-ASSETS> 238,587,034
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,551,424
<OTHER-INCOME> 0
<EXPENSES-NET> 808,254
<NET-INVESTMENT-INCOME> 7,743,170
<REALIZED-GAINS-CURRENT> 135,916
<APPREC-INCREASE-CURRENT> (5,030,604)
<NET-CHANGE-FROM-OPS> 2,848,482
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6,487,186)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,406,778
<NUMBER-OF-SHARES-REDEEMED> (4,189,932)
<SHARES-REINVESTED> 468,518
<NET-CHANGE-IN-ASSETS> 15,588,621
<ACCUMULATED-NII-PRIOR> 1,880,646
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (4,047,895)
<GROSS-ADVISORY-FEES> 817,212
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,093,752
<AVERAGE-NET-ASSETS> 234,772,106
<PER-SHARE-NAV-BEGIN> 11.21
<PER-SHARE-NII> 0.37
<PER-SHARE-GAIN-APPREC> (0.20)
<PER-SHARE-DIVIDEND> (0.32)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.06
<EXPENSE-RATIO> 0.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> SHORT DURATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 137,082,016
<INVESTMENTS-AT-VALUE> 136,139,235
<RECEIVABLES> 6,065,552
<ASSETS-OTHER> 15,198
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 142,219,985
<PAYABLE-FOR-SECURITIES> 12,419,926
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25,870,317
<TOTAL-LIABILITIES> 38,290,243
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 104,924,062
<SHARES-COMMON-STOCK> 11,968,115
<SHARES-COMMON-PRIOR> 11,902,507
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (376,445)
<ACCUMULATED-NET-GAINS> 385,345
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,003,220)
<NET-ASSETS> 103,929,742
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,566,390
<OTHER-INCOME> 0
<EXPENSES-NET> 783,272
<NET-INVESTMENT-INCOME> 3,783,118
<REALIZED-GAINS-CURRENT> (435,403)
<APPREC-INCREASE-CURRENT> (879,098)
<NET-CHANGE-FROM-OPS> 2,468,617
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,661,220)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 22,729,843
<NUMBER-OF-SHARES-REDEEMED> (23,194,658)
<SHARES-REINVESTED> 530,423
<NET-CHANGE-IN-ASSETS> (1,076,874)
<ACCUMULATED-NII-PRIOR> 501,657
<ACCUMULATED-GAINS-PRIOR> 820,748
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 250,613
<INTEREST-EXPENSE> 590,076
<GROSS-EXPENSE> 335,504
<AVERAGE-NET-ASSETS> 125,995,221
<PER-SHARE-NAV-BEGIN> 8.82
<PER-SHARE-NII> 0.23
<PER-SHARE-GAIN-APPREC> (0.06)
<PER-SHARE-DIVIDEND> (0.31)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 8.68
<EXPENSE-RATIO> 0.31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> MONEY MARKET
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 60,483,046
<INVESTMENTS-AT-VALUE> 60,483,046
<RECEIVABLES> 333,086
<ASSETS-OTHER> 16,492
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 60,832,624
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 356,789
<TOTAL-LIABILITIES> 356,789
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60,475,835
<SHARES-COMMON-STOCK> 60,475,835
<SHARES-COMMON-PRIOR> 64,491,718
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 60,475,835
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,680,577
<OTHER-INCOME> 0
<EXPENSES-NET> 188,439
<NET-INVESTMENT-INCOME> 1,492,138
<REALIZED-GAINS-CURRENT> 27,986
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,520,124
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,492,138)
<DISTRIBUTIONS-OF-GAINS> (27,986)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 44,288,322
<NUMBER-OF-SHARES-REDEEMED> (49,764,875)
<SHARES-REINVESTED> 1,460,670
<NET-CHANGE-IN-ASSETS> (4,015,883)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 91,035
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 228,998
<AVERAGE-NET-ASSETS> 61,023,687
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
