<PAGE> 1
SEMI-ANNUAL REPORT
HARBOR FUND LOGO
APRIL 30, 1997
---------------------------------------------------------------------------
HARBOR FUND
<PAGE> 2
HARBOR FUND
SEMI-ANNUAL REPORT OVERVIEW
The first half of Harbor Fund's fiscal year ended April 30, 1997.
Performance for this six-month period is shown below for each of the nine
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 4/30/97
- ------------------------------------ -------------
<S> <C>
International Growth........................................ 5.52%
Growth...................................................... -5.84%
Capital Appreciation........................................ 10.54%
International II............................................ 10.59%
International............................................... 12.11%
Value....................................................... 11.43%
Bond........................................................ 1.96%
Short Duration.............................................. 2.15%
Money Market................................................ 2.45%
</TABLE>
<TABLE>
<CAPTION>
COMMONLY USED MARKET INDICES
- ----------------------------
<S> <C>
Morgan Stanley Capital International Europe, Australia, and
Far East (EAFE); international equity..................... 1.57%
Standard & Poor's 500 (S&P 500); domestic equity............ 14.68%
Lehman Brothers Aggregate (LB AGG); domestic bonds.......... 1.70%
One-Year Government Bonds (1-YR GVT)........................ 2.29%
90-Day U.S. Treasury Bills (T-Bills); domestic short-term... 2.60%
</TABLE>
<TABLE>
<CAPTION>
30 YEARS
1967-1996
LONG-TERM HISTORIC RETURNS ANNUAL RATES
- -------------------------- ------------
<S> <C>
EAFE........................................................ 12.79%
S&P 500..................................................... 11.85%
Domestic Bonds (intermediate and long)(1)................... 8.16%
1-YR GVT(2)................................................. 7.83%
T-Bills..................................................... 6.74%
Consumer Price Index........................................ 5.38%
</TABLE>
<TABLE>
<CAPTION>
6 MONTHS LIPPER
HARBOR FUND EXPENSE RATIOS 1993 1994 1995 1996 1997 MEDIAN**
- -------------------------- ---- ---- ---- ---- -------- --------
<S> <C> <C> <C> <C> <C> <C>
International Growth................... NA% 1.32%* 1.21%* 1.10%* 1.06%* 1.15%
Growth................................. 0.90% 0.93% 0.93% 0.92% 0.98% 1.08%
Capital Appreciation................... 0.86% 0.81% 0.75% 0.75% 0.72% 0.80%
International II....................... NA% NA% NA% 1.44%*++ 1.17%* 1.41%
International.......................... 1.20%+++ 1.10%+++ 1.04%+++ 0.99%+++ 0.98%+++ 0.99%
Value.................................. 0.88% 1.04% 0.90% 0.83% 0.83% 0.89%
Bond................................... 0.72%* 0.77%* 0.70%* 0.70%* 0.70%* 0.64%
Short Duration***...................... 0.43%* 0.38%* 0.38%* 0.33%* 0.30%* 0.57%
Money Market........................... 0.71%* 0.67%* 0.61%* 0.64%* 0.63%* 0.59%
</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 3/31/97 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 1.12% for 1993, 1.64% for
1994, 1.84% for 1995, 1.59% for 1996, and 0.99% for the period ended
April 30, 1997. 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:
Performance of the US economy and growth of the domestic equity market for
an extended period--if not yet full blown "phenomenal"--has been at the very
least "extraordinary."
Highlights at the close of the first half of Harbor Fund's 1997 fiscal year
included:
- Benign inflation.
- Generally consistent and better-than-expected earnings gains.
- Increased employment and declining unemployment.
- Continued improvement in productivity.
- Tenacity of the bull market, which continued to hit record
highs.
As always, there were pockets of concern, notably over the exceptional
strength of the dollar against most foreign currencies, an unnerving uptick in
interest rates, and the relatively unexciting performance of many fixed income
investments.
And equity asset classes have not been equally favored. As was the case in
1996, performance of the broad market indexes through April 30 of this year
masked the spread of returns experienced across the asset classes.
In reality, market leadership continued to be very narrowly focused, with a
relative handful of large-capitalization growth and blue chip stocks moving
ahead relentlessly. Most small- and mid-cap stocks fared significantly worse
than the large caps. At the same time, most small- and mid-size value stocks
outperformed their growth stock counterparts.
A majority of economic forecasts--including those of many bond fund
managers--did not anticipate the increase in the federal funds rate by the
Federal Reserve open market committee in February. Some jitters in the fixed
income investment market seemed to be calmed when the committee left rates
unchanged at their meeting in May.
Strong appreciation of the US dollar through April of this year could be a
moderating influence in economic growth later this year. Net exports--the
difference between exports and imports in GDP--were negative and dampened
domestic economic growth in the first quarter.
The growing strength of the dollar also significantly moderated some strong
gains for many US investors in international equities, particularly in many
countries in continental Europe.
On the international scene, economic developments--like those in the
US--continued to be mostly favorable. Inflation was declining around the globe
and was at 2.5 percent or less on an annual basis across much of Europe. Markets
reached record high levels in Europe in the first quarter, but declined in
Japan, where fiscal tightening had a negative impact.
Emerging markets in the Far East--particularly in Hong Kong, Taiwan, and
Singapore--struggled during this period, in part because of worry over rising
interest rates in the US.
Performance of the Harbor Funds in the first half of our 1997 fiscal year
was naturally affected to some degree by virtually all of these developments,
since our family of funds is designed to offer investors a full range of
investment opportunities. Most of the Funds turned in strong gains in the
period, particularly Harbor International, Harbor Capital Appreciation, and
Harbor Value.
Also turning in very impressive gains in the 11 months since it was
launched on June 1 of last year was Harbor International II. The Fund has
successfully absorbed the expense of investing a strong inflow of money and
through stock selection has achieved excellent performance compared to the EAFE
Index throughout the period.
2
<PAGE> 4
DEAR SHAREHOLDER--CONTINUED
In the fixed investment area--which was under pressure during the first
half of our fiscal year--Harbor Bond Fund again did well, outperforming the
Lehman Brothers Aggregate index.
Immediately following the end of the fiscal first half, a change was made
in the management of Harbor Growth Fund. Emerging Growth Advisors, Inc., located
in Baltimore, was selected as the subadvisor. The new portfolio manager will use
different techniques in seeking to improve returns and add greater value to
shareholder investments. Generally, the Fund will remain fully invested with a
portfolio of 30 to 40 stocks and average capitalization of holdings will
generally be lower than under the previous manager.
In the fiscal first half, a modification was made in the procedures used by
Richards & Tierney, the subadvisor for 25 percent of the assets of Harbor Value
Fund. The management strategy continues to add diversification and reduce
volatility in the portfolio for the combined active and passive portions of the
Fund's assets and the Russell 3000 Value Index is now the target.
As we look ahead, we recognize that there are some serious challenges as we
continue to pursue our sole objective of adding value to shareholder
investments. While we do not fully share the Federal Reserve Chairman's warning
on "irrational exuberance" in the equity markets, clearly some concern is
warranted.
Much of the hefty improvement in the profitability of American business
over the last few years has come from cost control, restructuring, and
investment in technology to improve productivity, each of which has some lasting
effect. Other sources of the profitability gains--such as moderate wage
increases and strong foreign business--can shift direction and sharply cut into
profits.
Investors also should note that the extended bull market has seen huge
inflows of money into equity mutual funds, but this has been offset by
reductions in individual stock holdings. In 1996, an estimated $240 billion
poured into mutual funds and corporations used strong cash flows to repurchase
about $150 billion of their own stock. On balance, it does not appear the
market's advance has been significantly affected by this activity.
Once again we note that at Harbor Fund we are not market timers and we urge
a long range view for achievement of individual objectives. We believe that any
expectations for continuation of large double-digit gains experienced in such
equity market indexes as the S&P 500 over the previous two years are quite
unrealistic. At the same time, we believe a diversified portfolio structured to
include the degree of risk needed to achieve long term financial goals has
proven to be the most effective approach over time.
As always, we appreciate your continued confidence and your investment in
Harbor Fund.
Sincerely,
Ronald C. Boller
Ronald C. Boller
President
June 23, 1997
3
<PAGE> 5
HARBOR FUND
The following performance figures are annualized for each Fund, except for
the six-month 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; Harbor International
Fund II was June 1, 1996; and all other Funds started December 29, 1987. Unless
otherwise stated, all comments pertain to the six-month period ended April 30,
1997.
<TABLE>
<S> <C> <C> <C>
4/30/97 $15.76
HARBOR INTERNATIONAL GROWTH FUND NET ASSET VALUE: 10/31/96 $15.35
CHART
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
Total Return for Periods Ended 4/30/97
-----------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Int'l Growth 5.52% 12.87% -- 15.32%
-----------------------------------------------------------------------
EAFE 1.57% -0.89% 10.58% 6.11%
-----------------------------------------------------------------------
Total Return for Periods Ended 3/31/97
-----------------------------------------------------------------------
Harbor Int'l Growth 8.32% 14.89% -- 16.28%
-----------------------------------------------------------------------
</TABLE>
Despite difficult conditions in
several international equity markets,
Harbor International Growth Fund had
positive performance in the first half
of the fiscal year, once again
outperforming the EAFE index. Results
of holdings in Europe generally were
strong, even though gains were
penalized by the strength of the
dollar, particularly against
currencies in continental Europe. In
Southeast Asia, worries over higher
U.S. interest rates offset underlying
strength and results were
disappointing. Bank holdings in
Thailand were sold in the first
quarter of this year. The Fund has had
no investments in Japan, which helped
performance relative to the EAFE
index.
<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 10,405.6 10,556.6
04/95 10,643.5 11,146.4
04/96 14,592.6 12,417.6
04/97 16,470.9 12,307.2
Periods ending April 30
</TABLE>
<TABLE>
<S> <C> <C> <C>
4/30/97 $11.27
HARBOR GROWTH FUND NET ASSET VALUE: 10/31/96 $16.00
CHART
</TABLE>
<TABLE>
----------------------------------------------------------------------
Total Return for Periods Ended 4/30/97
---------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years 10 years
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Growth -5.84% -6.89% 8.91% 8.86%
----------------------------------------------------------------------
S&P 500 14.68% 25.12% 17.16% 14.13%
----------------------------------------------------------------------
Total Return for Periods Ended 3/31/97
----------------------------------------------------------------------
Harbor Growth -8.37% -2.45% 7.50% 8.48%
----------------------------------------------------------------------
</TABLE>
Returns of the Harbor Growth Fund
declined in the fiscal first half,
falling well short of the gain in the
S&P 500 index. Fund performance
clearly reflected effects of the
continued pronounced underperformance
of small- and mid-capitalization
stocks and the lack of breadth in the
domestic equity market. The Fund's
relative overweighting in the
technology sector particularly hurt
performance. Emerging Growth Advisors
was named subadvisor, replacing
Nicholas-Applegate Capital Management,
effective May 2. The portfolio will be
restructured with a focus on
purchasing stocks of companies with
lower market capitalization.
<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 12,420.0 11,703.1
04/88 12,035.7 10,947.0
04/89 13,345.6 13,438.6
04/90 13,999.5 14,835.6
04/91 18,283.6 17,444.9
04/92 18,944.2 19,882.4
04/93 19,297.1 21,719.1
04/94 21,069.4 22,900.8
04/95 21,998.7 26,902.8
04/96 31,176.2 35,078.7
04/97 29,028.0 43,891.0
Periods ending April 30
</TABLE>
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>
4/30/97 $27.71
HARBOR CAPITAL APPRECIATION FUND NET ASSET VALUE: 10/31/96 $25.88
CHART
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Total Return for Periods Ended 4/30/97
---------------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Capital 10.54% 15.87% 18.39% 18.44%
Appreciation
---------------------------------------------------------------------------
S&P 500 14.68% 25.12% 17.16% 16.87%
---------------------------------------------------------------------------
Total Return for Periods Ended 3/31/97
---------------------------------------------------------------------------
Harbor Capital 4.78% 12.99% 16.24% 17.79%
Appreciation
---------------------------------------------------------------------------
</TABLE>
Rebounding with a strong performance
in April after declines in February
and March, Harbor Capital Appreciation
Fund posted a double-digit gain for
the fiscal first half. However, the
performance trailed that of the S&P
500 index, largely because of the
continued lack of breadth in the
market with its current bias for a
small number of large blue chip
equities, consumer non-durables and
technology accounted for most of the
shortfall, although many securities in
these sectors performed very well.
Holdings in the capital goods sector
provided a strong gain, while declines
occurred in financials and
transportation.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENTS IN
HARBOR CAPITAL APPRECIATION AND S&P 500
CAPITAL
APPRECIATION S&P 500
<S> <C> <C>
04/88 10,980.0 10,690.2
04/89 13,016.4 13,123.3
04/90 13,797.3 14,487.6
04/91 17,184.0 17,035.6
04/92 20,883.1 19,416.0
04/93 23,288.2 21,209.6
04/94 26,102.3 22,363.6
04/95 31,854.0 26,271.6
04/96 41,925.1 34,255.8
04/97 48,579.7 42,861.4
Periods ending April 30
</TABLE>
<TABLE>
<S> <C> <C> <C>
4/30/97 $11.51
HARBOR INTERNATIONAL FUND II NET ASSET VALUE: 10/31/96 $10.47
CHART
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Total Return for Periods Ended 4/30/97
----------------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor International 10.59% -- -- 15.79%
II
----------------------------------------------------------------------------
EAFE 1.57% -0.89% 10.58% 0.97%
----------------------------------------------------------------------------
Total Return for Periods Ended 3/31/97
----------------------------------------------------------------------------
Harbor International 14.09% -- -- 18.20%
II
----------------------------------------------------------------------------
</TABLE>
Harbor International Fund II
outperformed the EAFE index by
substantial margins in the first half
of the fiscal year and in the 11
months since inception of the Fund.
Inflow of new funds continued to grow
rapidly and stock selection was a key
factor in the strong performance. The
performance was even more impressive
as the Fund overcame the drag of
initial investment expenses and the
penalty of a stronger dollar against
foreign currencies. Oil holdings in
Brazil and Russia made outstanding
contributions to fiscal first half
performance. The portfolio included 78
stocks in 20 countries at the end of
April.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENTS IN
HARBOR INTERNATIONAL II AND EAFE
HARBOR
INTERNATIONAL II EAFE
<S> <C> <C>
04/97 11,578.6 10,096.9
Period ending April 30
</TABLE>
5
<PAGE> 7
HARBOR FUND--CONTINUED
<TABLE>
<S> <C> <C> <C>
4/30/97 $33.70
HARBOR INTERNATIONAL FUND NET ASSET VALUE: 10/31/96 $31.21
CHART
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Total Return for Periods Ended 4/30/97
-------------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor 12.11% 17.77% 15.62% 17.78%
International
-------------------------------------------------------------------------
EAFE 1.57% -0.89% 10.58% 6.39%
-------------------------------------------------------------------------
Total Return for Periods Ended 3/31/97
-------------------------------------------------------------------------
Harbor 13.59% 21.78% 16.78% 18.01%
International
-------------------------------------------------------------------------
</TABLE>
An excellent gain was posted by Harbor
International Fund in the first half
of the fiscal year even though results
were dampened somewhat by the effect
of the strength of the dollar against
currencies particularly throughout
continental Europe. The gain was led
by strong returns from oil holdings in
Brazil and Russia as well as from
performance by multinationals with
dollar-based earnings. Holdings of
eight large companies based in Japan,
representing 8% of the portfolio,
gained 19% in dollar earnings,
compared with a decline of 13% in
terms of dollars for Japanese holdings
in the EAFE index.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
HARBOR INTERNATIONAL AND EAFE
INTERNATIONAL EAFE
<S> <C> <C>
04/88 11,660.0 11,691.8
04/89 16,012.4 12,981.7
04/90 18,226.8 11,284.6
04/91 19,767.0 11,775.6
04/92 22,317.1 10,776.4
04/93 23,414.2 13,106.0
04/94 29,818.6 15,286.6
04/95 32,937.9 16,140.7
04/96 39,146.7 17,981.5
04/97 46,102.0 17,821.7
Periods ending Aril 30
</TABLE>
<TABLE>
<S> <C> <C> <C>
4/30/97 $15.58
HARBOR VALUE FUND NET ASSET VALUE: 10/31/96 $16.04
CHART
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
Total Return for Periods Ended 4/30/97
--------------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Value 11.43% 18.45% 14.29% 14.67%
--------------------------------------------------------------------------
S&P 500 14.68% 25.12% 17.16% 16.87%
--------------------------------------------------------------------------
Total Return for Periods Ended 3/31/97
--------------------------------------------------------------------------
Harbor Value 9.49% 16.32% 14.30% 14.39%
--------------------------------------------------------------------------
</TABLE>
In the first half of the fiscal year,
Harbor Value Fund again posted a
double digit percentage gain, but
underperformed the S&P 500 index,
where results continued to be skewed
by the strong performance of a small
number of large capitalization blue
chip equities. Active management of
the portfolio, focused on equities
with lower market capitalization on
average than that of the S&P 500,
contributed to results. Strong gains
from energy holdings were offset by
shortfalls in utilities, and consumer
non-durable sectors. A change in the
technique used for the passively
managed 25% of assets was implemented
in the period and the strategy
enhanced ability to add broader
diversification.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENTS IN
HARBOR VALUE AND THE S&P 500
VALUE S&P 500
<S> <C> <C>
04/88 10,403.2 10,690.2
04/89 13,730.5 13,123.3
04/90 14,845.6 14,487.6
04/91 16,811.8 17,035.6
04/92 18,413.3 19,416.0
04/93 19,467.8 21,209.6
04/94 20,270.8 22,363.6
04/95 23,639.0 26,271.6
04/96 30,320.1 34,255.8
04/97 35,913.1 42,861.4
Periods ending April 30
</TABLE>
6
<PAGE> 8
HARBOR FUND--CONTINUED
<TABLE>
<S> <C> <C> <C>
4/30/97 $11.17
HARBOR BOND FUND NET ASSET VALUE: 10/31/96 $11.28
CHART
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Total Return for Periods Ended 4/30/97
------------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Bond 1.96% 8.09% 8.33% 9.53%
------------------------------------------------------------------------
LB AGG 1.70% 7.08% 7.36% 8.89%
------------------------------------------------------------------------
Total Return for Periods Ended 3/31/97
------------------------------------------------------------------------
Harbor Bond 2.96% 6.44% 8.14% 9.45%
------------------------------------------------------------------------
</TABLE>
Judicious use of a broad range of
investment opportunities allowed the
Harbor Bond Fund to once again
outperform the Lehman Brothers
Aggregate index in the first half of
the fiscal year--another difficult
period for the financial markets.
While average duration of the Fund
portfolio was lowered over the six
months to about 4.9 years, slightly
above the LB AGG index, the longer
position detracted from results.
However, that penalty was more than
offset by good returns from
overweighting mortgages and
underweighting investment grade
corporates, an allocation to high
yield corporates, and small holdings
of dollar-dominated Latin American
bonds.
<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 10,129.8 10,320.1
04/89 11,081.4 11,139.8
04/90 11,886.5 12,145.5
04/91 13,669.4 13,990.6
04/92 15,680.3 15,529.5
04/93 18,199.4 17,588.8
04/94 18,538.6 17,738.8
04/95 19,735.1 19,036.0
04/96 21,645.6 20,681.6
04/97 23,395.7 22,146.8
Periods ending April 30
</TABLE>
<TABLE>
<S> <C> <C> <C>
4/30/97 $8.62
HARBOR SHORT DURATION FUND NET ASSET VALUE: 10/31/96 $8.79
CHART
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Total Return for Periods Ended 4/30/97
-------------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Short 2.15% 7.51% 5.39% 5.18%
Duration
-------------------------------------------------------------------------
1-Yr GVT 2.29% 5.61% 4.96% 4.90%
-------------------------------------------------------------------------
Total Return for Periods Ended 3/31/97
-------------------------------------------------------------------------
Harbor Short 2.65% 6.85% 5.36% 5.18%
Duration
-------------------------------------------------------------------------
</TABLE>
Returns of Harbor Short Duration Fund
fell short of those of both the 90-day
and one-year treasury bills in the
first half of the fiscal year. Average
duration of holdings in the Fund
portfolio was slightly longer than the
normal 12 months, which hurt
performance compared with that of the
one-year treasury bill with the rise
in investment rates. However, good
returns came from the Fund's holdings
of both asset backed and mortgage
bonds as well as from some futures and
options.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
HARBOR SHORT DURATION AND T-BILLS
SHORT
DURATION 1 YR GVT
<S> <C> <C>
04/92 10,065.2 10,131.3
04/93 10,650.3 10,631.5
04/94 10,914.4 10,891.0
04/95 11,530.1 11,501.9
04/96 12,175.2 12,220.4
04/97 13,089.0 12,906.4
Periods ending April 30
</TABLE>
7
<PAGE> 9
HARBOR FUND--CONTINUED
<TABLE>
<S> <C> <C> <C>
4/30/97 $1.00
HARBOR MONEY MARKET FUND NET ASSET VALUE: 10/31/96 $1.00
CHART
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Total Return for Periods Ended 4/30/97
----------------------------------------------------------------------------
Since
Fund/Index 6 months 12 months 5 years Inception
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Money Market 2.45% 5.02% 4.21% 5.60%
----------------------------------------------------------------------------
T-Bills 2.60% 5.31% 4.48% 5.71%
----------------------------------------------------------------------------
Current Yield for Periods Ended 3/31/97
----------------------------------------------------------------------------
Harbor Money Market 7 days: 4.90% 30 days: 4.83%
----------------------------------------------------------------------------
</TABLE>
Performance of Harbor Money Market
Fund fell a little short of the 90-day
treasury bill but again exceeded that
of the Donaghue's average for all
taxable money funds in the first half
of the fiscal year. The Fund limited
portfolio maturity to 2 1/2 months or
less. Private obligations made up the
bulk of the portfolio, with commercial
paper accounting for more than 45% and
bank obligations for about 33% of
holdings. Money Market shares are
neither insured nor guaranteed by the
US Government. While the 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 10,199.9 10,198.8
04/89 11,035.7 11,019.5
04/90 12,001.2 11,952.1
04/91 12,916.0 12,838.5
04/92 13,528.2 13,481.2
04/93 13,932.0 13,922.9
04/94 14,322.6 14,364.1
04/95 15,023.5 15,099.5
04/96 15,834.6 15,937.9
04/97 16,629.7 16,784.1
Periods ending April 30
</TABLE>
8
<PAGE> 10
HARBOR INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1997 (UNAUDITED)
Investment Holdings By Country (%)
(Excludes net cash and short-term investments of 5.7%)
<TABLE>
<S> <C>
Sweden (SW) 1.9
Malaysia (MAL) 2.5
Belgium (BEL) 2.8
Australia (AUS) 3.1
Mexico (MEX) 3.1
Italy (IT) 3.5
Netherlands (NET) 4.3
Spain (SP) 4.9
Portugal (PORT) 5.0
Germany (GER) 5.9
Switzerland (SWS) 9.4
Hong Kong (HK) 12.1
France (FR) 15.2
United Kingdom (UK) 20.6
</TABLE>
COMMON STOCKS--94.2%
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
APPAREL & TEXTILES--3.9%
Adidas AG (GER)....................... 316,650 $ 33,003
--------
BANKS--9.8%
AMMB Holdings BHD (MAL)............... 3,034,200 20,181
Bank of East Asia (HK)................ 8,914,718 30,669
Standard Chartered PLC (UK)........... 2,185,862 32,947
--------
83,797
--------
BUSINESS SERVICES--6.3%
Adecco SA (SWS)....................... 60,190 20,089
Rentokil Initial (UK)................. 5,150,200 33,723
--------
53,812
--------
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
CHEMICALS--2.0%
SGL Carbon (GER)...................... 123,910 $ 17,279
--------
CONGLOMERATES--2.6%
BTR (UK).............................. 5,569,800 22,749
--------
ELECTRICAL EQUIPMENT--6.4%
ABB AB, Series A (SW)................. 1,330,700 16,200
Siebe PLC (UK)........................ 2,596,423 38,416
--------
54,616
--------
ELECTRONIC COMPONENTS--5.1%
SGS Thomson Microelectronics (FR)..... 395,460 30,490
SGS Thomson Microelectronics (FR)
ADR(1).............................. 165,600 12,979
--------
43,469
--------
GAS & PIPELINE UTILITIES--0.5%
Hong Kong & China Gas (HK)............ 2,745,000 4,359
--------
HOUSEHOLD PRODUCTS--3.1%
Kimberly-Clark De Mexico Cl. A
(MEX)............................... 7,079,000 26,280
--------
INSURANCE--4.8%
AXA UAP (FR).......................... 670,500 41,254
--------
LEISURE--5.7%
Granada Group (UK).................... 3,407,008 49,200
--------
PETROLEUM--3.1%
Woodside Petroleum (AUS).............. 3,389,607 26,962
--------
PHARMACEUTICALS--9.7%
Novartis AG (SWS)..................... 29,205 38,475
Roche Genuss Holdings AG (SWS)........ 2,590 21,875
Synthelabo (FR)....................... 193,852 23,084
--------
83,434
--------
PUBLISHING--4.3%
Ver Ned Uitgevers (NET)............... 1,762,700 36,461
--------
REAL ESTATE--8.0%
Amoy Properties (HK).................. 23,922,500 23,625
Cheung Kong Holdings (HK)............. 3,331,000 29,240
New World Development Co. (HK)........ 2,702,000 15,591
--------
68,456
--------
RETAILING--5.5%
Castorama DuBois Investisse (FR)...... 159,107 23,526
Delhaize Le Lion (BEL)................ 476,145 23,907
--------
47,433
--------
TELECOMMUNICATIONS--13.4%
Portugal Telecom (PORT)............... 1,170,400 43,120
Telecom Italia MOB (IT)............... 9,551,300 30,040
Telefonica de Espana (SP)............. 1,627,700 41,693
--------
114,853
--------
TOTAL COMMON STOCKS
(Cost $750,953)................................... 807,417
--------
</TABLE>
9
<PAGE> 11
HARBOR INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
CORPORATE BONDS--0.1%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- ------
<S> <C> <C>
AMMB Holdings BHD Rts. (MAL)............ $ 910 $ 362
AMMB Holdings BHD Rts. (MAL)............ 910 362
--------
TOTAL CORPORATE BONDS
(Cost $734)....................................... 724
--------
</TABLE>
SHORT-TERM INVESTMENTS--4.5%
<TABLE>
<S> <C> <C>
COMMERCIAL PAPER
Chevron Oil Finance Co.
5.400%--05/01/97.................... 4,074 4,074
Ford Motor Credit Company
5.510%--05/01/97.................... 35,000 35,000
--------
<CAPTION>
VALUE
(000S)
------
<S> <C>
TOTAL SHORT-TERM INVESTMENTS
(Cost $39,074).................................... $ 39,074
--------
TOTAL INVESTMENTS--98.8%
(Cost $790,761)................................... 847,215
CASH AND OTHER ASSETS, LESS LIABILITIES--1.2%.......
10,018
--------
TOTAL NET ASSETS--100%.............................. $857,233
========
</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 organizations.
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 12
HARBOR GROWTH FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1997 (UNAUDITED)
Common Stock Holdings (%)
(Excludes net cash and short-term investments of 7.4%)
<TABLE>
<S> <C>
Air Travel 0.1
Chemicals 0.1
Machinery 0.1
Metals 0.1
Petroleum International 0.1
Publishing 0.1
Real Estate 0.1
Telephone 0.2
Apparel & Textiles 0.4
Automobiles 0.6
Insurance 1.2
Containers & Glass 1.3
Banks 1.4
Broadcasting 1.4
Building Materials 1.4
Food & Beverages 1.6
Medical Supplies 1.7
Leisure Time/Gaming 2.0
Electric Utilities 2.3
Auto Parts 2.3
Environmental Services 2.4
Natural Gas 2.5
Paper Products 2.6
Biotechnology 2.8
Hotels & Restaurants 2.8
Computers & Business Equipment 3.1
Petroleum Services 3.3
Electronics 3.4
Telecommunications Service 3.5
Financial Services 3.6
Computer Software 3.7
Groceries 4.2
Pharmaceuticals 5.3
Business Services 5.4
Telecommunications Equipment 6.7
Health Care 8.9
Retailing 9.9
</TABLE>
COMMON STOCKS--92.6%
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
AIR TRAVEL--0.1%
Airtours................................. 6,000 $ 89
-------
APPAREL & TEXTILES--0.4%
Tommy Hilfiger Corp*..................... 8,400 334
-------
AUTO PARTS--2.3%
Bridgestone Corp......................... 500 106
Tower Automotive Inc*.................... 51,200 1,895
-------
2,001
-------
AUTOMOBILES--0.6%
Bayer Motoren Werk....................... 100 82
Mahindra & Mahindra GDR (1)*............. 4,000 50
Porsche AG............................... 130 169
Qingling Motors*......................... 80,000 44
Volkswagen A G........................... 1,200 152
-------
497
-------
BANKS--1.4%
Banco Central Hispan..................... 2,000 61
Banco Frances Del Rio LA Plata........... 1,300 40
Banco Ganadero S A....................... 400 11
Credito Italiano......................... 59,100 83
Washington Mut Inc....................... 20,300 1,002
-------
1,197
-------
BIOTECHNOLOGY--2.8%
Agouron Pharmaceuticals*................. 8,300 531
Ares Serono SA........................... 80 107
Biogen Inc.*............................. 25,000 800
Centocor Inc*............................ 31,800 894
Genset SA*............................... 4,700 80
-------
2,412
-------
BROADCASTING--1.4%
Evergreen Media*......................... 37,100 1,201
-------
BUILDING MATERIALS--1.4%
Berkeley Group........................... 2,400 27
Caradon Plc.............................. 18,000 72
USG Corp*................................ 33,300 1,141
-------
1,240
-------
BUSINESS SERVICES--5.4%
Adecco SA................................ 170 57
ASE Test Limited*........................ 1,100 41
Avis Europe*............................. 25,000 55
Compass Group............................ 5,000 55
Guangnan (Hldgs)......................... 2,857 0
Guangnan Inv Ltd. (Hldgs)................ 21,600 31
Manpower Inc Wis......................... 42,800 1,717
Orix Corp................................ 1,000 50
Robert Half International Inc.*.......... 32,500 1,276
Service Corp Intl........................ 33,500 1,147
Venture Manufacturing.................... 30,800 87
WPP Group Plc............................ 2,400 98
-------
4,614
-------
CHEMICALS--0.1%
BASF AG.................................. 2,000 77
-------
</TABLE>
11
<PAGE> 13
HARBOR GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
COMPUTERS & BUSINESS EQUIPMENT--3.1%
Computer Horizons Corp.*................. 11,800 $ 514
E M C Corp Mass*......................... 38,100 1,386
Network Appliance Inc*................... 23,800 693
OCE Van Der Griten N V ADR(2)............ 900 109
-------
2,702
-------
COMPUTER SOFTWARE--3.7%
Autodesk Inc............................. 13,300 472
Baan Co Nvf*............................. 1,800 97
BMC Software Inc*........................ 28,600 1,237
Cap Gemini............................... 1,700 103
Electronics For Imaging Inc*............. 28,200 1,107
Saville Sys Plc*......................... 1,800 74
Sema Group............................... 5,300 103
-------
3,193
-------
CONTAINERS & GLASS--1.3%
Crown Cork & Seal Company Inc............ 20,100 1,100
-------
ELECTRIC UTILITIES--2.3%
AES Corp.*............................... 27,700 1,808
Centrais Electricas Brasileiras.......... 2,500 58
YTL Power Intl*.......................... 60,900 97
-------
1,963
-------
ELECTRONICS--3.4%
ASM Lithography Hldg N V*................ 800 63
Datacraft Asia........................... 34,500 76
LSI Logic Corp.*......................... 39,200 1,499
Sawtek Inc*.............................. 38,400 1,138
SGS Thomson Microelectronics*............ 100 8
TDK Corp. ADR(2)......................... 900 66
Thakral Corp............................. 81,000 76
-------
2,926
-------
ENVIRONMENTAL SERVICES--2.4%
United Waste Sys Inc*.................... 33,600 1,134
U S Filter Corp*......................... 32,100 975
-------
2,109
-------
FINANCIAL SERVICES--3.6%
AMMB Holdings Bhd........................ 480 0
Associates First Cap Corp. .............. 25,100 1,287
Banca Fideuram Spa....................... 15,500 39
Equifax Inc.............................. 56,500 1,624
Nichiei Co. ............................. 700 56
Promise Co. ............................. 1,700 70
-------
3,076
-------
FOOD & BEVERAGES--1.6%
Cola Cola Femsa S A CV................... 1,800 63
Fomento Econ Mexico...................... 11,400 54
PanAmerican Beverages Inc. .............. 40,000 1,160
Vina Concha Y Toro S A................... 1,900 62
-------
1,339
-------
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
GROCERIES--4.2%
Kroger Co*............................... 70,000 $ 1,925
Promodes................................. 200 67
Raison Tehtaat........................... 1,050 87
Safeway Inc*............................. 34,100 1,522
-------
3,601
-------
HEALTH CARE--8.9%
Fresenius Med Care AG*................... 2,600 76
Health Mgmt Assoc*....................... 69,400 1,857
Healthsouth Corp.*....................... 73,700 1,456
McKesson Corp. New....................... 14,500 1,049
Oxford Health Plans Inc*................. 23,500 1,548
Tenet Healthcare Corp.*.................. 63,500 1,651
-------
7,637
-------
HOTELS & RESTAURANTS--2.8%
Four Seasons Hotels Inc*................. 48,200 1,072
Host Marriot Corp.*...................... 67,900 1,180
Pizza Express............................ 9,300 104
Telepizza*............................... 2,000 92
-------
2,448
-------
INSURANCE--1.2%
Aegon.................................... 800 58
AXA UAP.................................. 1,300 80
MGIC Investment Corp. Wis................ 10,800 877
-------
1,015
-------
INVESTMENT COMPANIES--0.0%
Guangdong Invest......................... 26,000 24
-------
LEISURE TIME/GAMING--2.0%
Carnival Corp............................ 43,800 1,615
Corp Inter Am Entertainment*............. 14,600 55
Nintendo Ltd............................. 7,200 66
-------
1,736
-------
MACHINERY--0.1%
Schneider S A............................ 1,000 56
Tomra Systems As......................... 3,100 60
-------
116
-------
MEDICAL SUPPLIES--1.7%
Biocompatibles Int*...................... 2,300 53
Boston Scientific Corp.*................. 7,100 342
Safeskin Corp*........................... 46,200 1,034
-------
1,429
-------
METALS--0.1%
Acerinox SA.............................. 400 58
Tubos De Acero De Mexico S A*............ 300 5
-------
63
-------
NATURAL GAS--2.5%
Valero Energy Corp....................... 36,200 1,271
Williams Cos Inc......................... 20,600 904
-------
2,175
-------
PAPER PRODUCTS--2.6%
Fort Howard Corp. New*................... 64,400 2,218
-------
</TABLE>
12
<PAGE> 14
HARBOR GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
PETROLEUM INTERNATIONAL--0.1%
Oil Co Lukoil............................ 1,400 $ 80
-------
PETROLEUM SERVICES--3.3%
Coflexip................................. 3,100 84
Diamond Offshore Drilling Inc*........... 14,600 940
Ensco International Inc.*................ 24,200 1,149
Petroleum Geo Svcs As*................... 2,600 100
Seacor Hldgs Inc*........................ 1,700 73
Tidewater Inc............................ 12,500 502
-------
2,848
-------
PHARMACEUTICALS--5.3%
Cardinal Health Inc...................... 31,100 1,656
Dura Pharmaceuticals*.................... 41,700 1,209
Elan PLC ADR*............................ 45,200 1,537
Novo Nordisk A S......................... 1,600 81
Synthelabo............................... 500 60
-------
4,543
-------
PUBLISHING--0.1%
Schibsted ASA............................ 5,400 93
-------
REAL ESTATE--0.1%
Mitsui Fudosan Co........................ 2,000 23
Silver Grant International............... 50,000 27
-------
50
-------
RETAILING--9.9%
Borders Group Inc.*...................... 65,800 1,399
China Everbright*........................ 30,000 30
Consolidated Stores Corp.*............... 42,600 1,704
Costco Cos Inc*.......................... 60,300 1,741
Dollar Tree Stores Inc*.................. 43,500 1,718
Lindex AB................................ 4,200 90
TJX COS Inc New.......................... 38,900 1,838
-------
8,520
-------
TELECOMMUNICATIONS EQUIPMENT--6.7%
ADC Telecommunications Inc*.............. 20,000 523
Andrew Corp.*............................ 30,050 744
Boston Technology Inc*................... 21,600 432
Ericsson L M Telephone Co................ 1,800 59
Gilat Satellite Networks Ltd*............ 3,300 104
Nokia Corp ADR(2)........................ 16,700 1,079
P-Com Inc.*.............................. 41,400 1,185
Tellabs Inc.*............................ 42,000 1,675
-------
5,801
-------
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
TELECOMMUNICATIONS SERVICE--3.5%
Nextel Communications Inc.*.............. 117,700 $ 1,552
Teleport Communications Group*........... 51,700 1,474
-------
3,026
-------
TELEPHONE--0.2%
Netcom Systems AB*....................... 5,000 68
Telefonica De Argentina S A.............. 1,400 47
Telepar Tel Parana....................... 80,000 55
-------
170
-------
TOTAL COMMON STOCKS
(Cost $77,164)........................... 79,663
-------
<CAPTION>
PRINCIPAL
AMOUNT
(000S)
-------
<S> <C> <C>
CORPORATE BONDS--0.0%
AMMB Holdings............................ $5 $2
AMMB Holdings............................ 5 2
-------
TOTAL CORPORATE BONDS
(Cost $4)........................................... 4
-------
SHORT-TERM INVESTMENTS--7.1%
COMMERCIAL PAPER
American Express Credit Corp.
5.600%--05/01/1997..................... 2,188 2,188
Merrill Lynch & Company Inc.
5.650%--05/01/1997..................... 3,930 3,930
-------
TOTAL SHORT-TERM INVESTMENTS
(Cost $6,118)....................................... 6,118
-------
TOTAL INVESTMENTS--99.7%
(Cost $83,286)...................................... 85,785
-------
CASH AND OTHER ASSETS, LESS LIABILITIES--0.3%.........
258
-------
TOTAL NET ASSETS--100.0%.............................. $86,043
=======
</TABLE>
- ------------
(1) GDR after the name of a foreign holding stands for Global Depository Receipt
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
Receipt representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
13
<PAGE> 15
HARBOR CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1997 (UNAUDITED)
Common Stock Holdings (%)
(Excludes net cash and short-term investments of 3.9%)
<TABLE>
<S> <C>
Apparel & Textiles 0.6
Medical Supplies 0.8
Railway 1.0
Construction & Mining Equipment 1.2
Conglomerate 1.3
Telecommunications Services 1.3
Beverage 1.5
Petroleum Domestic 1.9
Finance 2.0
Petroleum Services 2.5
Investment Companies 2.7
Media 2.7
Aerospace 2.8
Hotels & Restaurants 2.9
Banking 3.7
Networking 3.8
Computer Software 3.9
Household Products 3.9
Insurance 4.7
Telecommunications Equipment 4.7
Retailing 4.9
Computer & Business Equipment 8.8
Business Services 8.9
Electronics 10.4
Drugs & Healthcare 13.2
</TABLE>
COMMON STOCKS--96.1%
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
AEROSPACE--2.8%
Boeing Co............................ 603,100 $ 59,481
----------
APPAREL & TEXTILES--0.6%
Nike Inc............................. 206,600 11,621
----------
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
BANKING--3.7%
Chase Manhattan Corp................. 425,900 $ 39,449
Citicorp............................. 339,400 38,225
----------
77,674
----------
BEVERAGE--1.5%
Pepsico, Inc......................... 928,700 32,388
----------
BUSINESS SERVICES--8.9%
CKS Group Inc.*...................... 592,300 12,512
CUC International Inc.*.............. 1,299,443 27,451
Federal Express Corp.*............... 413,900 22,299
First Data Corporation............... 748,474 25,822
Manpower Inc. Wis.................... 547,300 21,961
Omnicom Group........................ 606,800 32,160
Reuters Holdings PLC ADR Cl. B(1).... 717,300 44,204
----------
186,409
----------
COMPUTER & BUSINESS EQUIPMENT--8.8%
Compaq Computer Corp.*............... 412,700 35,234
Dell Computer Corp.*................. 518,700 43,409
Hewlett-Packard Company.............. 802,600 42,136
International Business Machines...... 181,200 29,128
Seagate Technology*.................. 760,200 34,874
----------
184,781
----------
COMPUTER SOFTWARE--3.9%
Intuit, Inc.*........................ 441,700 9,773
Microsoft Inc.*...................... 371,800 45,174
SAP AG ADR(1)........................ 432,200 26,504
----------
81,451
----------
CONGLOMERATE--1.3%
Case Corp............................ 484,300 26,818
----------
CONSTRUCTION & MINING EQUIPMENT--1.2%
Caterpillar Inc...................... 285,800 25,436
----------
DRUGS & HEALTHCARE--13.2%
Astra A Fria, Series A(2)............ 238,214 9,747
Bristol-Meyers Squibb Co............. 623,800 40,859
Eli Lilly & Co....................... 446,700 39,254
Healthsouth Corp.*................... 1,475,300 29,137
Merck & Co. Inc...................... 533,300 48,264
Pfizer Inc........................... 508,500 48,816
Phycor, Inc.*........................ 452,062 12,036
SmithKline Beecham PLC ADR(1)........ 616,100 49,673
----------
277,786
----------
ELECTRONICS--10.4%
Applied Materials Inc.*.............. 488,800 26,823
Intel Corp........................... 438,200 67,099
International Rectifier Corp.*....... 1,430,700 16,453
KLA Instruments Inc.*................ 782,300 34,812
LSI Logic Corp.*..................... 764,560 29,245
Texas Instruments Inc................ 354,800 31,666
Xilinx Inc.*......................... 251,000 12,299
----------
218,397
----------
</TABLE>
14
<PAGE> 16
HARBOR CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
FINANCE--2.0%
Federal National Mortgage
Association........................ 525,600 $ 21,615
MBNA Corp............................ 634,050 20,924
----------
42,539
----------
HOTELS & RESTAURANTS--2.9%
Hilton Hotels Corp................... 1,435,100 38,748
McDonalds Corp....................... 409,400 21,954
----------
60,702
----------
HOUSEHOLD PRODUCTS--3.9%
Gillette Co.......................... 572,900 48,696
Kimberly Clark Corp.................. 658,800 33,763
----------
82,459
----------
INSURANCE--4.7%
Cigna Corp........................... 164,500 24,737
MGIC Investment Corp................. 562,200 45,679
UNUM Corp............................ 356,200 27,427
----------
97,843
----------
INVESTMENT COMPANIES--2.7%
Morgan Stanley Group Inc............. 520,800 32,875
Charles Schwab Corp.................. 633,800 23,213
----------
56,088
----------
MEDIA--2.7%
Disney (Walt) Co..................... 688,800 56,482
----------
MEDICAL SUPPLIES--0.8%
Boston Scientific Corp.*............. 346,200 16,704
----------
NETWORKING--3.8%
3Com Corp.*.......................... 441,400 12,801
Ascend Communications Inc............ 463,300 21,196
Cisco Systems Inc.*.................. 903,400 46,751
----------
80,748
----------
PETROLEUM DOMESTIC--1.9%
Amerada Hess Corp.................... 495,200 24,079
Union Pacific Res Group Inc.......... 598,600 16,237
----------
40,316
----------
PETROLEUM SERVICES--2.5%
Schlumberger LTD..................... 472,800 52,363
----------
RAILWAY--1.0%
Wisconsin Central Transportation
Corp.*............................. 619,100 20,276
----------
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
RETAILING--4.9%
Dollar General Corp.................. 921,762 $ 29,151
Gap Inc.............................. 710,900 22,660
Gucci Group NV....................... 327,900 22,748
Kohl's Corp.*........................ 583,900 28,538
----------
103,097
----------
TELECOMMUNICATIONS EQUIPMENT--4.7%
Ericsson (LM) Telephone Co.--ADR Cl.
B(1)............................... 927,400 31,184
Nokia Corp. ADR(1)................... 561,000 36,255
Tellabs Inc.*........................ 780,100 31,106
----------
98,545
----------
TELECOMMUNICATIONS SERVICES--1.3%
Vodafone Group PLC ADR(1)............ 617,400 27,320
----------
TOTAL COMMON STOCKS
(Cost $1,627,975)............................... 2,017,724
----------
</TABLE>
SHORT-TERM INVESTMENTS--5.3%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000S)
---------
<S> <C> <C>
COMMERCIAL PAPER
Chevron Oil Finance Co.
5.400%--05/01/97................... $ 31,842 31,842
Ford Motor Credit Co.
5.290%--05/01/96................... 80,000 80,000
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $111,842)................................. 111,842
----------
TOTAL INVESTMENTS--101.4%
(Cost $1,739,817)............................... 2,129,566
CASH AND OTHER ASSETS,
LESS LIABILITIES--(1.4%)........................ (30,100)
----------
TOTAL NET ASSETS--100.0%.......................... $2,099,466
==========
</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.
15
<PAGE> 17
HARBOR INTERNATIONAL FUND II
PORTFOLIO OF INVESTMENTS--APRIL 30, 1997 (UNAUDITED)
Investment Holdings By Country (%)
(Excludes net cash and short-term investments of 4.2%)
<TABLE>
<S> <C>
Finland (FIN) 1.1
Spain (SP) 1.5
Australia (AUS) 1.6
Denmark (DEN) 1.7
Argentina (ARG) 1.8
Norway (NOR) 1.9
Netherlands (NET) 2.4
Poland (POL) 2.9
Portugal (PORT) 2.9
Brazil (BR) 3.1
Malaysia (MAL) 3.6
Singapore (SGP) 3.8
South Africa (S. AFR) 4.0
Russia (RUS) 5.5
Japan (JP) 6.0
Sweden (SW) 8.3
France (FR) 8.8
Hong Kong (HK) 10.5
Switzerland (SWS) 11.9
United Kingdom (UK) 12.5
</TABLE>
COMMON STOCKS--94.8%
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
AEROSPACE--0.8%
Hong Kong Aircraft (HK)............... 219,200 $ 634
-------
APPAREL & TEXTILES--0.4%
Coats Viyella (UK).................... 125,000 263
-------
AUTOMOTIVE--3.5%
Jardine International Motor (HK)...... 600,000 697
Rolls Royce (GB)...................... 330,377 1,301
Volvo AB, Series B (SW)............... 25,000 630
-------
2,628
-------
BANKS--14.1%
Banco Commercial Portugues (PORT)..... 78,892 1,201
Banco Espana de Credito (SP)*......... 125,000 1,107
Bank Slaski (POL)..................... 15,500 1,316
Banque National Paris (FR)............ 30,000 1,280
Barclays Bank PLC (UK)................ 55,570 1,033
Cie Fin Paribas Cl. A (FR)............ 15,000 946
Credit Suisse Group (SWS)............. 7,650 861
FIH (DEN)............................. 23,000 551
Malayan Bank Berhad (MAL)............. 60,000 597
Merita Ltd. (FIN)..................... 250,000 812
National Westminster (UK)............. 35,000 414
Schweiz Bankverein (SWS)*............. 1,200 262
United Overseas Bank (Alien Market)
(SGP)............................... 25,000 235
-------
10,615
-------
BEVERAGES--2.7%
Guinness (UK)......................... 140,000 1,157
Whitbread (UK)........................ 70,000 874
-------
2,031
-------
BUSINESS MACHINES--0.7%
Canon Inc. (JP)....................... 21,000 498
-------
BUSINESS SERVICES--2.4%
ISS International, Series B (DEN)*.... 25,000 740
SGS Holding (SWS)..................... 500 1,035
-------
1,775
-------
CHEMICALS--0.3%
Rhone Poulenc SA (FR)................. 6,500 219
-------
</TABLE>
16
<PAGE> 18
HARBOR INTERNATIONAL FUND II
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
CONGLOMERATES--11.0%
Jardine Matheson (SGP)................ 250,000 $ 1,375
Keppel Corp. (SGP).................... 350,000 1,523
Kinnevik Investment, Series B (SW).... 20,000 519
Kvaerner ASA, Series A (NOR).......... 5,000 249
Oerlikon Buhrle AG (SWS).............. 10,000 990
Renong BHD (MAL)...................... 500,000 685
Sime Darby Berhad (MAL)............... 450,000 1,389
Swire Pacific Ltd. Cl. A (HK)......... 20,000 154
Swire Pacific Ltd. Cl. B (HK)......... 1,025,000 1,363
-------
8,247
-------
CONSUMER GOODS--4.1%
BIC (FR).............................. 1,100 174
Fraser & Neave (SGP).................. 150,000 1,088
Hunter Douglas NV (NET)............... 22,000 1,795
-------
3,057
-------
CONTAINERS & GLASS--0.1%
Krosno SA (POL)....................... 7,000 108
-------
ELECTRIC UTILITIES--4.8%
Cataguazes Leopold, Pfd. A (BR)....... 650,000,000 1,057
China Light & Power (HK).............. 150,000 676
Unified Energy Systems Pfd (RUS)*..... 1,000,000 148
Unified Energy Systems (RUS)*......... 6,500,000 1,690
-------
3,571
-------
ELECTRONICS--2.6%
Matsushita Electrical Industries
(JP)................................ 70,000 1,119
Sony Corp. (JP)....................... 11,000 801
-------
1,920
-------
FOOD--3.3%
Cresud (ARG).......................... 750,000 1,388
Nestle SA (SWS)....................... 900 1,093
-------
2,481
-------
FUNDS--1.0%
Govt. of Poland-Polish National
Investment Fund*.................... 17,500 761
-------
INSURANCE--2.8%
AXA UAP (FR).......................... 19,000 1,169
Winterthur (SWS)...................... 1,300 933
-------
2,102
-------
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
MINING & METALS--5.4%
Anglo American Corp.
South Africa Ltd. (S. AFR).......... 23,000 $ 1,469
Gencor Ltd. ADR (S. AFR)(1)........... 360,000 1,514
RTZ Corp. (UK)........................ 61,341 974
WMC Ltd. (AUS)........................ 20,580 122
-------
4,079
-------
NEWSPAPERS--2.8%
Investec Consultants (PORT)*.......... 30,100 994
News Corp. Ltd. ADR (AUS)(1).......... 240,087 1,107
-------
2,101
-------
OIL & GAS EXPLORATION--0.7%
Elf Aquitaine (FR).................... 4,000 388
Saga Petroleum AS, Series A (NOR)..... 10,000 161
-------
549
-------
OIL & GAS PRODUCTION--6.5%
Norsk Hydro AS (NOR).................. 3,000 146
Oil Co. Lukoil (RUS).................. 40,000 2,273
Petrol Brasileiros, Pfd. (BR)......... 6,000,000 1,261
Saevik Supply Rights (NOR)*........... 75,000 874
Total Cl. B (FR)...................... 4,000 332
-------
4,886
-------
PHARMACEUTICALS--11.6%
Astra AB (SW)......................... 12,000 491
FDM Pharmaceuticals (FR)*............. 35,000 1,349
Nobel Biocare (SW).................... 120,000 1,759
Novartis AG (SWS)..................... 800 1,054
Pharmacia and Upjohn (SW)............. 55,000 1,585
Roche Holdings AG (SWS)............... 150 1,267
SmithKline Beecham PLC (UK)........... 76,764 1,234
-------
8,739
-------
PHOTOGRAPHY--2.7%
China HK Photo (HK)................... 2,900,000 908
Fuji Photo Film Co. (JP).............. 30,000 1,146
-------
2,054
-------
POLLUTION CONTROL--1.3%
Waste Mgmt Intl PLC ADR (UK)(1)*...... 120,000 945
-------
REAL ESTATE--1.7%
Amoy Properties (HK).................. 1,300,000 1,284
-------
TELECOMMUNICATION--2.8%
Ericsson (LM) Tel Co. Ser. B (SW)..... 40,000 1,265
Hong Kong Telecom (HK)................ 490,289 842
-------
2,107
-------
</TABLE>
17
<PAGE> 19
HARBOR INTERNATIONAL FUND II
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
TIRE & RUBBER--2.1%
Bridgestone Corp. (JP)................ 8,000 $ 170
Cie Fin Michel Bas (SWS).............. 3,000 1,433
-------
1,603
-------
TOBACCO--1.6%
BAT Industries (UK)................... 140,000 1,178
-------
TOYS & AMUSEMENTS--1.0%
Salomon & Taylor (JP)................. 233,000 789
-------
TOTAL COMMON STOCKS
(Cost $70,128)........................ 71,224
-------
UNITS--1.0%
(Cost $923)
Eurotunnel (FR)*........................ 700,000 786
-------
</TABLE>
SHORT-TERM INVESTMENTS--5.8%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- ------
<S> <C> <C>
COMMERCIAL PAPER
American Express Credit Corp.
5.500%--05/01/1997.................. $ 1,658 $ 1,658
Prudential Funding Corp.
5.500%--05/02/1997.................. 2,727 2,727
-------
TOTAL SHORT-TERM INVESTMENTS
(Cost $4,385)...................................... 4,385
-------
TOTAL INVESTMENTS--101.6%
(Cost $75,436)..................................... 76,395
-------
CASH AND OTHER ASSETS, LESS LIABILITIES--(1.6%)......
(1,216)
-------
TOTAL NET ASSETS--100.0%............................. $75,179
=======
</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 organizations.
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 20
HARBOR INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1997 (UNAUDITED)
Investment Holdings By Country (%)
(Excludes net cash and short-term investments of 5.2%)
<TABLE>
<S> <C>
Portugal (PORT) 0.9
Australia (AUS) 1.6
Denmark (DEN) 2.0
Singapore (SGP) 2.1
Argentina (ARG) 2.5
Spain (SP) 2.7
Norway (NOR) 3.3
Hong Kong (HK) 3.4
Malaysia (MAL) 3.5
Brazil (BR) 4.1
Russia (RUS) 4.5
South Africa (S. AFR) 5.5
Netherlands (NET) 6.7
Sweden (SW) 7.8
Japan (JP) 8.0
France (FR) 8.5
Switzerland (SWS) 11.4
United Kingdom (UK) 16.3
</TABLE>
COMMON STOCKS--93.3%
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
AUTOMOTIVE--2.0%
Volvo AB, Series B (SW)*............ 3,625,000 $ 91,264
----------
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
BANKS--15.1%
ABN Amro Holdings NV (NET)*......... 1,034,140 $ 71,073
Banco Bilbao Vizcaya (SP)........... 1,285,150 86,494
Banco Commercial Portugues (PORT)... 2,277,684 34,666
Banco Commercial Portugues ADR
(PORT)(1)......................... 420,000 6,457
Banco Intercontinental Espana
(SP).............................. 255,000 38,022
Barclays Bank PLC (UK).............. 4,070,170 75,730
Cie Fin Paribas Cl. A (FR).......... 672,120 42,390
Credit Suisse Group (SWS)........... 426,600 48,040
Malayan Bank Berhad (MAL)........... 8,107,000 80,721
National Westminster Bank (UK)...... 5,605,296 66,319
Royal Bank of Scotland Group (UK)... 6,226,700 58,735
Schweiz Bankverein Wts. (SWS)*...... 27,470 143
Schweiz Bankverein (SWS)*........... 230,786 50,412
United Overseas Bank (Alien Market)
(SGP)............................. 4,633,151 43,531
----------
702,733
----------
BEVERAGES--4.7%
Cadbury Schweppes (UK)*............. 6,241,451 51,793
Guinness (UK)....................... 7,850,000 64,886
South African Breweries Ltd. ADR (S.
AFR)(1)........................... 2,086,044 61,458
Whitbread (UK)...................... 3,050,000 37,964
----------
216,101
----------
BUSINESS MACHINES--1.8%
Canon Inc. (JP)*.................... 3,557,000 84,347
----------
BUSINESS SERVICES--1.6%
SGS Holding (SWS)*.................. 35,500 73,452
----------
CHEMICALS--1.0%
Rhone Poulenc SA (FR)............... 1,329,597 44,719
----------
CONGLOMERATES--4.5%
Keppel Corp. (SGP).................. 12,050,000 52,446
Kvaerner ASA, Series A (NOR)........ 1,252,050 62,240
Sime Darby Berhad (MAL)............. 16,130,000 49,788
Swire Pacific Ltd. Cl. A (HK)....... 6,036,000 46,557
----------
211,031
----------
CONSUMER GOODS--2.5%
BIC (FR)............................ 520,000 82,412
Hunter Douglas NV (NET)............. 426,498 34,806
----------
117,218
----------
ELECTRIC UTILITIES--1.5%
China Light & Power (HK)............ 15,000,000 67,579
----------
</TABLE>
19
<PAGE> 21
HARBOR INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
ELECTRONICS--1.8%
Matsushita Electrical Industries
(JP).............................. 2,500,000 $ 39,981
Sony Corp. (JP)..................... 601,000 43,749
----------
83,730
----------
ENGINEERING--0.6%
Sulzer AG (SWS)..................... 41,250 28,403
----------
FINANCIAL SERVICES--1.7%
Ing Groep NV (NET).................. 1,980,449 77,762
----------
FOOD--1.3%
Nestle SA (SWS)..................... 50,300 61,079
----------
INDUSTRIAL MACHINERY--0.8%
Komatsu (JP)........................ 5,000,000 36,554
----------
INSURANCE--3.1%
AXA (FR)............................ 1,000,000 61,527
SCHW Ruckversicher (SWS)............ 71,500 82,748
----------
144,275
----------
INVESTMENT COMPANIES--1.2%
Kinnevik Investment Ser. B (SW)..... 2,120,510 55,008
----------
MINING & METALS--6.7%
Anglo American Corp. South Africa
Ltd. ADR (S. AFR)(1).............. 1,286,000 81,661
Gencor Ltd. ADR (S. AFR)(1)......... 26,950,000 113,336
RTZ Corp. (UK)...................... 2,113,036 33,562
Trelleborg AB Cl. B (SW)............ 3,312,220 51,722
WMC Ltd. (AUS)...................... 4,867,716 28,850
----------
309,131
----------
NEWSPAPERS--1.0%
News Corp. Ltd. ADR (AUS)(1)........ 2,500,000 46,250
----------
OIL & GAS EXPLORATION--2.3%
LASMO (UK).......................... 15,934,352 57,591
Saga Petroleum AS (NOR)............. 2,809,000 49,110
----------
106,701
----------
OIL & GAS PRODUCTION--13.9%
B G (UK)............................ 15,500,000 44,716
British Petroleum (UK).............. 6,844,084 78,535
Norsk Hydro AS (NOR)................ 872,691 42,524
Oil Co. Lukoil (RUS)................ 3,698,250 207,102
Petrol Brasileiros (BR)............. 435,000,001 91,417
Royal Dutch Petroleum Co. ADR
(NET)(1).......................... 450,000 81,113
Total Cl. B (FR).................... 671,444 55,680
YPF Sociedad Anonima ADR (ARG)(1)... 1,600,000 44,200
----------
645,287
----------
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
PHARMACEUTICALS--7.4%
Novartis AG (SWS)................... 69,561 $ 91,641
Novo Nordisk AS (DEN)............... 933,000 92,299
Pharmacia and Upjohn (SW)........... 2,000,000 57,619
SmithKline Beecham PLC ADR
(UK)(1)........................... 1,270,000 102,394
----------
343,953
----------
PHOTOGRAPHY--2.0%
Fuji Photo Film Co. (JP)............ 2,470,000 94,375
----------
STEEL--0.0%
Von Roll AG (SWS)*.................. 12,000 207
----------
TELECOMMUNICATION--7.6%
Ericsson (LM) Tel Co. Ser. B (SW)... 2,640,000 83,460
Ericsson (LM) Tel Co. ADR Cl. B
(SW)(1)........................... 646,000 21,722
Hong Kong Telecom (HK).............. 25,101,273 43,096
Telebras, Pfd. (BR)................. 865,000,000 99,221
Telecom Argentina Cl. B (ARG)....... 6,600,000 32,673
Telefonica De Argentina Cl. B
(ARG)............................. 12,000,000 39,844
Telekom Malaysia (MAL).............. 4,600,000 32,245
----------
352,261
----------
TIRE & RUBBER--3.4%
Bridgestone Corp. (JP).............. 2,545,000 54,134
CIE Fin Michel Bas (SWS)............ 88,700 42,361
Michelin Cl. B (FR)................. 1,106,300 61,812
----------
158,307
----------
TOBACCO--2.9%
BAT Industries (UK)................. 10,136,807 85,267
Cie Fin Richemont (SWS)............. 33,500 48,519
----------
133,786
----------
TOYS & AMUSEMENTS--0.4%
Nintendo Co. (JP)................... 200,000 14,622
Sega Enterprises (JP)............... 200,000 5,263
----------
19,885
----------
WATER DISTRIBUTION--0.5%
Lyonnaise Des Eaux SA (FR).......... 270,487 24,470
----------
TOTAL COMMON STOCKS
(Cost $2,631,270)................... 4,329,868
----------
UNITS--0.5%
(Cost $65,340)
Eurotunnel (FR)*...................... 20,000,000 22,445
----------
</TABLE>
20
<PAGE> 22
HARBOR INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
CONVERTIBLE BONDS--1.0%
(Cost $39,600)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- ------
<S> <C> <C>
LibLife International BV
6.500%--09/30/2004 (S.AFR).......... $40,000 $ 48,400
----------
</TABLE>
SHORT-TERM INVESTMENTS--4.7%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- ----------
<S> <C> <C>
COMMERCIAL PAPER
American Express Credit Corp.
5.460% - 05/02/1997............... 15,049 15,049
5.500%--05/19/1997................ 19,864 19,864
5.500%--05/20/1997................ 13,074 13,074
----------
47,987
----------
Chevron Oil Finance Co.
5.480%--05/01/1997................ 12,475 12,475
5.460%--05/08/1997................ 17,167 17,167
5.420%--05/14/1997................ 17,402 17,402
----------
47,044
----------
Exxon Asset Management
5.430%--05/19/1997................ $18,000 $ 18,000
----------
General Electric Capital Corp.
5.470%--05/05/1997................ 16,281 16,281
5.500%--05/07/1997................ 18,962 18,962
----------
35,243
----------
General Electric Capital Services
Inc.
5.470%--05/12/1997................ 7,407 7,407
5.450%--05/16/1997................ 13,346 13,346
----------
20,753
----------
Prudential Funding Corp.
5.480%--05/06/1997................ 18,148 18,148
5.450%--05/13/1997................ 15,297 15,297
5.450%--05/15/1997................ 15,524 15,524
----------
18,148 48,969
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $217,996)................................. 217,996
----------
TOTAL INVESTMENTS--99.5%
(Cost $2,954,206)............................... 4,618,709
----------
CASH AND OTHER ASSETS,
LESS LIABILITIES--0.5%.......................... 21,923
----------
TOTAL NET ASSETS--100.0%.......................... $4,640,632
==========
</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 organizations.
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
21
<PAGE> 23
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1997 (UNAUDITED)
Common Stock Holdings (%)
(Excludes net cash and short-term investments of 2.3%)
<TABLE>
<S> <C>
Construction Materials 0.1
Newspapers 0.1
Photographic Equipment 0.1
Computer Software 0.2
Natural Gas 0.8
Groceries 0.9
Air Travel 1.1
Computers & Business Equipment 1.1
Mining 1.1
Construction & Mining Equipment 1.4
Publishing 1.5
Business Services 1.6
Cosmetics 1.6
Household Products 1.6
Metals 1.6
Railroads 1.6
Electrical Equipment 2.1
Aerospace 2.2
Automobile 2.2
Petroleum International 2.3
Financial Services 2.5
Food & Beverage 2.6
Petroleum Services 2.7
Public Utilities/Electric 3.0
Machinery 3.4
Electronics 3.6
Insurance 3.7
Petroleum Domestic 4.3
Chemicals 4.6
Drugs & Healthcare 4.7
Auto Parts 4.9
Retailing 5.7
Telecommunications 5.9
Paper Products 8.7
Banking 12.2
</TABLE>
COMMON STOCKS--97.7%
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
AEROSPACE--2.2%
B F Goodrich & Co. .................... 52,500 $ 2,093
Boeing Co. ............................ 500 49
Lockheed Martin Corp. ................. 1,100 99
TRW Inc. .............................. 9,800 511
United Technologies Corp. ............. 1,300 98
--------
2,850
--------
AIR TRAVEL--1.1%
AMR Corp. DEL* ........................ 1,700 158
Delta Air Lines Inc. DE ............... 400 37
KLM Royal Dutch Airlines ADR (1) ...... 39,200 1,166
--------
1,361
--------
AUTOMOBILE--2.2%
Chrysler Corp. ........................ 3,700 111
Federal Signal Corp. .................. 49,800 1,214
Ford Motor Co. Del .................... 4,600 160
General Motors Corp. .................. 4,100 237
Volvo Aktiebolaget ADR (1) ............ 44,100 1,114
--------
2,836
--------
AUTO PARTS--4.9%
Dana Corp. ............................ 62,600 1,995
Echlin Inc. ........................... 61,100 1,993
ITT Industries Inc. ................... 89,400 2,257
--------
6,245
--------
BANKING--12.2%
Banc One Corp. ........................ 1,694 72
Bank New York Inc. .................... 11,000 435
Bank of Boston Corp. .................. 7,900 575
BankAmerica Corp. ..................... 13,900 1,625
Bankers Trust NY Inc. ................. 1,000 81
Central Fiduciary Banks, Inc. ......... 47,900 1,329
Chase Manhattan Corp. New ............. 13,500 1,250
Citicorp .............................. 15,000 1,689
Corestates Financial Corp. ............ 2,300 116
Crestar Financial Corp. ............... 38,900 1,439
Dime Bancorp Inc. New ................. 10,200 164
First America Bank Corp. .............. 600 40
First Chicago NBD Corp. ............... 6,900 388
First Union Corp. ..................... 7,400 622
Firstar Corp. New ..................... 1,200 35
Fleet Financial Group Inc. ............ 3,000 183
Glendale Fed Svgs Bk CA* .............. 8,500 211
Great Western Financial Corp. ......... 500 21
Greenpoint Financial Corp. ............ 3,500 194
H F Ahmanson & Co. .................... 500 19
Huntington Bancshares, Inc. ........... 3,155 90
J P Morgan & Co Inc.................... 4,000 408
Keycorp New............................ 2,500 130
Mellon Bank Corp. ..................... 3,400 283
National Comm Bancorp ................. 400 17
NationsBank Corp. ..................... 25,300 1,527
Northern Trust Corp. .................. 1,400 62
Norwest Corp. ......................... 8,300 414
PNC Bank Corp. ........................ 4,000 165
Republic NY Corp. ..................... 4,100 376
</TABLE>
22
<PAGE> 24
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
Star Banc Corp. ....................... 4,500 $ 191
Suntrust BKS Inc. ..................... 4,200 213
Synovus Financial Corp. ............... 5,850 142
US Bancorp OR ......................... 1,000 57
Wachovia Corp. New .................... 1,000 59
Wells Fargo & Co. ..................... 4,100 1,094
--------
15,716
--------
BUSINESS SERVICES--1.6%
H & R Block, Inc. ..................... 64,300 2,074
--------
CHEMICALS--4.6%
Dow Chemical Co. ...................... 1,400 119
E I DuPont De Nemours & Co. ........... 4,100 435
Ethyl Corp. ........................... 130,900 1,194
Hercules Inc. ......................... 56,400 2,221
Imperial Chemical Industries PLC ADR
(1) ................................. 40,400 1,874
--------
5,843
--------
COMPUTERS & BUSINESS EQUIPMENT--1.1%
Compaq Computer Corp.*................. 4,600 393
International Business Machines
Corp. ............................... 4,200 675
Seagate Technology*.................... 1,100 50
Western Digital Corp. ................. 4,700 290
--------
1,408
--------
COMPUTER SOFTWARE--0.2%
Microsoft Corp.* ...................... 2,000 243
--------
CONSTRUCTION & MINING EQUIPMENT--1.4%
Foster Wheeler Corp. .................. 47,400 1,831
--------
CONSTRUCTION MATERIALS--0.1%
Armstrong World Industries, Inc. ...... 1,000 66
Sherwin Williams Co. .................. 1,600 48
--------
114
--------
COSMETICS--1.6%
International Flavours ................ 50,200 2,115
--------
DRUGS & HEALTHCARE--4.7%
American Home Products Corp. .......... 26,100 1,729
Bard C R Inc. ......................... 56,600 1,797
Bristol Myers Squibb Co. .............. 3,000 197
Pharmacia and Upjohn Inc. ............. 77,400 2,293
--------
6,016
--------
ELECTRICAL EQUIPMENT--2.1%
Emerson Electric Co. .................. 2,000 102
General Electric Co. .................. 3,800 421
General Signal Corp. .................. 55,700 2,186
--------
2,709
--------
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
ELECTRONICS--3.6%
AMP Inc. .............................. 55,500 $ 1,991
Intel Corp. ........................... 500 77
NCR Corp. New* ........................ 1,693 49
Raytheon Co. .......................... 1,900 83
Teradyne Inc.* ........................ 4,000 131
Thomas & Betts Corp. .................. 51,700 2,346
--------
4,677
--------
FINANCIAL SERVICES--2.5%
American Express Co.................... 2,000 132
Dean Witter Discover & Co. ............ 1,200 46
Federal Home Loan Mortgage Corp. ...... 500 16
Federal National Mortgage Assoc. ...... 8,400 345
Keystone Financial Inc. ............... 500 13
Lehman Brothers Holdings Inc. ......... 8,500 288
Merrill Lynch & Co Inc. ............... 800 76
Salomon Inc. .......................... 4,000 200
State Street Boston Corp. ............. 8,200 646
Travelers Group Inc. .................. 27,304 1,512
--------
3,274
--------
FOOD & BEVERAGE--2.6%
Coca Cola Co. ......................... 7,800 471
CPC International Inc. ................ 26,800 2,214
Lance Inc. ............................ 38,400 696
Sara Lee Corp. ........................ 500 21
--------
3,402
--------
FOREST PRODUCTS--0.0%
Louisiana Pac Corp. ................... 1.500 28
--------
GAS EXPLORATION--0.0%
Burlington Resources, Inc. ............ 700 30
--------
GROCERIES--0.9%
Giant Foods Inc. ...................... 33,200 1,071
Kroger Co.* ........................... 1,000 28
--------
1,099
--------
HOUSEHOLD PRODUCTS--1.6%
Rubbermaid Inc. ....................... 41,800 1,003
Snap On Inc. .......................... 25,800 993
--------
1,996
--------
INSURANCE--3.7%
Allstate Corp. ........................ 11,468 751
American International Group, Inc. .... 2,450 315
CNA Financial Corp.* .................. 6,000 596
Conseco Inc. .......................... 14,700 608
Loews Corp. ........................... 4,300 395
Mid Ocean Limited ..................... 20,100 922
Progressive Corp. of Ohio ............. 2,000 152
Transamerica Corp. .................... 11,900 1,009
USF & G Corp. ......................... 2,000 40
--------
4,788
--------
</TABLE>
23
<PAGE> 25
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
MACHINERY--3.4%
Aeroquip Vickers Inc. ................. 48,100 $ 1,942
Caterpillar Inc. ...................... 1,200 107
Deere & Co. ........................... 1,900 87
Pall Corp. ............................ 94,100 2,176
Parker Hannafin Corp. ................. 500 25
Timken Co. ............................ 400 23
--------
4,360
--------
METALS--1.6%
Aluminum Co. of America ............... 1,000 70
Reynolds Metals Co. ................... 28,500 1,934
--------
2,004
--------
MINING--1.1%
Freeport McMoran Copper & Gold Cl. A... 48,600 1,415
--------
NATURAL GAS--0.8%
Brooklyn United Gas Co. ............... 32,700 895
Columbia Gas Systems Inc. ............. 2,000 124
Enron Corp. ........................... 500 19
--------
1,038
--------
NEWSPAPERS--0.1%
Gannett Inc. .......................... 1,000 87
--------
PAPER PRODUCTS--8.7%
Champion International Corp............ 500 23
Consolidated Papers Inc. .............. 23,500 1,263
International Paper Co. ............... 48,700 2,058
Kimberly Clark Corp.* ................. 1,600 82
Rayonier Inc. ......................... 31,900 1,288
Sonoco Products Co. ................... 35,700 959
Temple Inland Inc. .................... 19,200 1,066
Union Camp Corp. ...................... 34,000 1,653
Unisource Worldwide Inc. .............. 68,900 1,016
Westvaco Corp. ........................ 64,300 1,800
Willamette Industries Inc. ............ 700 45
--------
11,253
--------
PETROLEUM DOMESTIC--4.3%
Amerada Hess Corp. .................... 400 19
Atlantic Richfield Co. ................ 14,800 2,015
Kerr McGee Corp. ...................... 23,300 1,407
Tenneco, Inc. ......................... 53,600 2,137
--------
5,578
--------
PETROLEUM INTERNATIONAL--2.3%
Amoco Corp. ........................... 2,800 234
Chevron Corp. ......................... 1,800 123
Exxon Corp. ........................... 15,800 895
Mobil Corp. ........................... 13,200 1,716
--------
2,968
--------
PETROLEUM SERVICES--2.7%
Dresser Industries Inc. ............... 32,100 959
Mapco Inc. ............................ 41,800 1,238
Rowan Cos Inc.* ....................... 6,000 108
Tosco Corp. ........................... 500 15
Ultramar Diamond Shamrock ............. 36,200 1,163
--------
3,483
--------
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
PHOTOGRAPHIC EQUIPMENT--0.1%
Eastman Kodak Co. ..................... 2,000 $ 167
--------
PUBLIC UTILITIES/ELECTRIC--3.0%
Calenergy Inc.* ....................... 1,200 47
Central & South West Corp. ............ 40,300 811
Cinergy Corp. ......................... 25,300 841
DPL Inc. .............................. 13,000 307
Duke Power Co. ........................ 1,000 44
Edison International .................. 1,200 25
Entergy Corp. ......................... 1,500 35
Illinova Corp. ........................ 17,600 396
LG & E Energy Corp. ................... 22,600 545
Long Island Lighting Co. .............. 16,500 377
Midamerican Energy Holdings Co. ....... 1,400 23
Niagara Mohawk Power Corp.* ........... 9,000 77
P P & L Resources Inc. ................ 1,000 20
Pacificorp ............................ 500 10
Pinnacle West Cap Corp. ............... 2,300 66
Scana Corp. ........................... 7,600 183
Southern Co. .......................... 2,100 43
--------
3,850
--------
PUBLISHING--1.5%
McGraw Hill Cos. Inc. ................. 18,400 936
Reuters Holdings PLC .................. 16,900 1,041
--------
1,977
--------
RAILROADS--1.6%
CSX Corp............................... 1,300 61
Illinois Cent Corp. ................... 45,000 1,496
Trinity Industries Inc. ............... 17,500 459
--------
2,016
--------
RETAILING--5.7%
Borders Group Inc.* ................... 7,000 149
CVS Corp. ............................. 600 30
Dayton Hudson Corp. ................... 700 32
Federated Dept Stores Inc. DEL* ....... 10,000 340
J. C. Penney Inc. ..................... 45,600 2,177
K Mart Corp.* ......................... 16,500 225
Limited, Inc. ......................... 95,461 1,730
May Department Stores Co. ............. 45,200 2,091
Mercantile Stores & Co. ............... 9,300 458
Sears, Roebuck & Co. .................. 1,400 67
Toys R Us, Inc. * ..................... 300 9
--------
7,308
--------
TELECOMMUNICATIONS--5.9%
A T & T Corp. ......................... 11,100 372
Alltel Corp. .......................... 63,100 1,988
Ameritech Corp. ....................... 1,400 86
Bell Atlantic Corp. ................... 1,200 81
BellSouth Corp. ....................... 3,900 174
Frontier Corp. ........................ 91,700 1,456
GTE Corp. ............................. 28,100 1,289
Lucent Technologies Inc. .............. 2,597 154
Northern Telecom Ltd. ................. 500 36
SBC Communications Inc. ............... 900 50
</TABLE>
24
<PAGE> 26
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
Southern New England Telecomm Corp. ... 50,200 $ 1,832
Sprint Corp. .......................... 1,100 48
--------
7,566
--------
TIRES & RUBBER--0.0%
Goodyear Tire and Rubber Co. .......... 600 32
--------
TOTAL COMMON STOCKS
(Cost $120,375) 125,757
--------
</TABLE>
SHORT-TERM INVESTMENTS--2.7%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000S)
--------
<S> <C>
REPURCHASE AGREEMENTS
Repurchase Agreement with State Street
Bank & Trust dated April 30, 1997 due
on demand at 4.50%, collateralized by
a U.S. Treasury Note, 5.00% February
15, 1999, par value of $1,660
(repurchase proceeds of $1,606 when
closed on May 1, 1997)............... $1,606 1,606
<CAPTION>
VALUE
SHARES (000S)
------ ------
<S> <C> <C>
Repurchase Agreement with State Street
Bank & Trust dated April 30, 1997 due
on demand at 4.50%, collateralized by
a U.S. Treasury Note, 5.00% February
15, 1999 par value of $1,890
(repurchase proceeds of $1,829 when
closed on May 1, 1997)............... $1,829 $ 1,829
--------
TOTAL SHORT TERM-INVESTMENTS
(Cost $3,435)..................................... 3,435
--------
TOTAL INVESTMENTS--100.4%
(Cost $123,810)................................... 129,192
CASH AND OTHER ASSETS,
LESS LIABILITIES--(0.4%).......................... (497)
--------
TOTAL NET ASSETS--100%.............................. $128,695
========
</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.
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
25
<PAGE> 27
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1997 (UNAUDITED)
Total Investments (%)
(Excludes net cash and short-term investments of 15.4%)
<TABLE>
<S> <C>
Options 0.6
Asset Backed Securities 1.7
Foreign Bonds 5.4
Corporate Bonds & Notes 14.0
U.S. Government Obligations 16.5
Mortgage Related Securities 46.4
</TABLE>
ASSET BACKED SECURITIES--1.7%
(Cost $5,000)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- ------
<S> <C> <C>
Student Loan Marketing Association
Series 1995 Cl. A-2
5.890%--10/25/2007+................. $ 5,000 $ 5,025
--------
CORPORATE BONDS & NOTES--14.0%
Banco Nacional De Obras Y Serv
6.875%--10/01/1998(3)............... 3,000 2,973
Bancomer SA
8.000%--07/07/1998(3)............... 4,000 4,025
Banesto Del Inc.
8.250%--07/28/2002.................. 3,000 3,135
Banesto Finance Euro CD
7.562%--04/25/2003+................. 2,000 2,039
CTC Mansfield Funding Corp.
11.125%--09/30/2016................. 2,000 2,155
Cemex SA MTN(1)
8.500%--08/31/2000.................. 1,000 995
Comerica Inc.
10.125%--06/01/1998................. 50 52
Commonwealth Edison Co.
8.000%--10/15/2003.................. 3,000 3,021
Georgia Pac Corp.
9.850%--06/15/1997.................. 800 803
Hydro Quebec Yankee Bonds
9.500%--11/15/2030.................. 775 914
Long Island Lighting Co.
6.250%--07/15/2001.................. 5,000 4,827
Saferco Products Inc. MTN(1)
9.630%--05/31/2000.................. 500 538
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- ------
<S> <C> <C>
Salomon Inc.
3.650%--02/14/2002.................. $ 5,000 $ 4,881
Texas Utilities Electric Co.
6.265%--05/01/1999.................. 5,000 5,004
Time Warner Inc.
6.463%--08/15/2000+................. 750 750
7.975%--08/15/2004.................. 450 458
8.110%--08/15/2006.................. 900 924
8.180%--08/15/2007.................. 900 930
--------
3,062
--------
United Air Lines Inc.
6.750%--12/01/1997 MTN(1)........... 4,000 4,010
Xerox Credit Corp.
10.000%--04/01/1999................. 50 53
--------
TOTAL CORPORATE BONDS AND NOTES
(Cost $41,822)................................... 42,487
--------
FOREIGN GOVERNMENT OBLIGATIONS--5.4%
Canadian Government Series A-79
5.400%--05/20/1997.................. 1,000 997
New Zealand
10.000%--03/15/2002................. 6,400 4,829
8.000%--04/15/2004.................. 7,000 4,873
--------
9,702
--------
Republic of Argentina
5.625%--04/01/2000+................. 3,000 1,403
6.750%--03/31/2005+................. 4,850 4,329
--------
5,732
--------
TOTAL FOREIGN BONDS
(Cost $15,816)................................... 16,431
--------
MORTGAGE RELATED SECURITIES--46.4%
COLLATERALIZED MORTGAGE OBLIGATIONS:
Capstead Securities Corp. IV
Series 91 Class VII
8.900%--12/25/2021.................. 419 430
Series 92 Class E
8.500%--02/25/2022.................. 750 759
--------
1,189
--------
Chase Mortgage Financial Corp. REMIC
Series 1992 Cl. A1 Pass Thru REMIC
8.000%--06/25/2024.................. 35 36
Series 1990 Cl. 2A2,
7.500%--03/25/2025.................. 300 301
--------
337
--------
</TABLE>
26
<PAGE> 28
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- --------
<S> <C> <C>
Collateralized Mortgage Securities
Corp.
Series F-4
11.450%--11/01/2015................. $ 326 $ 325
Series 1988 B-4
8.750%--04/20/2019.................. 368 385
--------
710
--------
Drexel Burnham Lambert Series H-4
8.500%--04/01/2017.................. 8,116 8,425
Federal Home Loan Mortgage Corp.
9.500%--05/15/2018.................. 58 59
8.700%--02/15/2020.................. 3,501 3,582
9.000%--12/15/2020.................. 3,394 3,567
--------
7,208
--------
Federal National Mortgage Association
REMIC
6.500%--02/25/2007 IO(2)............ 3,847 370
6.000%--07/25/2017 IO(2)............ 2,865 437
6.500%--06/25/2021.................. 4,729 4,156
--------
4,963
--------
First Boston Mortgage Securities Corp.
Series 92, Cl. A3
7.500%--04/25/2021.................. 637 636
Kidder Peabody Acceptance Corp. I
Series 1994 A1
8.090%--03/25/2024.................. 3,000 3,044
L & N Funding Corp. GNMA Coll.,
Series A-4
12.000%--03/17/2014................. 782 786
MDC Mortgage Funding Corp. Cl. Q-6
9.000%--03/20/2018.................. 14 14
Norwest Mortgage Insurance Corp.
GNMA Coll. Cl. 1-Z
12.375%--01/01/2014................. 149 149
Prudential Home Mortgage Securities
Co.
Series 1993 Cl. A-8
6.750%--08/25/2008.................. 6,015 5,638
8.400%--12/25/2023.................. 6,412 6,599
--------
12,237
--------
Residential Funding Mortgage,
Secs Conduit Series 1991 A-8
9.000%--12/25/2021.................. 248 247
Resolution Trust Corporation
Mortgage Pass Thru Series 1991 L-1
8.780%--08/25/2021+................. 3,000 3,088
Ryland Mortgage Securities Corp.,
Series 1992 B-9
7.797%--07/25/2022+................. 3,000 3,044
</TABLE>
MORTGAGE RELATED SECURITIES--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- ------
<S> <C> <C>
Sears Mortgage Securities Corp.
Series 92 Cl. A
7.396%--10/25/2022+(3).............. $ 1,393 $ 1,425
Sears Savings Bank Mortgage
Pass Thru Series 1992 REMIC
8.669%--05/25/2032+................. 940 952
--------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS...................................... 48,454
--------
OTHER MORTGAGE RELATED SECURITIES:
Federal Housing Authority
Project Banco-221D
7.400%--02/01/2021.................. 872 883
Federal Housing Authority
Project Banco-15
7.450%--05/01/2021.................. 350 354
Federal Housing Authority
Project Reilly #52
5.150%--06/01/2018.................. 317 264
Federal Home Loan Mortgage Corp.
Forward Gold 30 year, TBA(4)
6.500%--05/13/2027.................. 15,000 14,203
Federal Home Loan Mortgage Corp.
Pass Thru Certificates
5.750%--03/01/1999.................. 2 2
10.500%--09/01/2000................. 22 23
7.500%--03/01/2002.................. 23 23
8.000%--06/01/2011.................. 94 97
8.500%--02/01/2017.................. 143 148
7.701%--08/01/2024.................. 2,567 2,679
8.000%--04/01/2025.................. 530 540
8.000%--04/01/2025.................. 388 396
8.000%--05/01/2025.................. 20 20
8.000%--06/01/2025.................. 383 390
8.000%--07/01/2025.................. 420 428
8.000%--07/01/2025.................. 29 30
8.000%--07/01/2025.................. 15 15
8.000%--08/01/2025.................. 429 437
8.000%--09/01/2025.................. 399 407
8.000%--10/01/2025.................. 401 408
8.000%--10/01/2025.................. 479 487
8.000%--10/01/2025.................. 395 400
8.000%--11/01/2025.................. 30 31
8.000%--11/01/2025.................. 343 349
--------
7,310
--------
</TABLE>
27
<PAGE> 29
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- ---------
<S> <C> <C>
Federal National Mortgage Association
Pass Thru Certificates
9.000%--03/01/2005.................. $ 259 $ 270
9.000%--11/01/2009.................. 1,926 2,020
8.500%--12/01/2009.................. 18 18
9.500%--04/01/2011.................. 86 92
--------
2,400
--------
Government National Mortgage
Association
7.000%--03/20/2017.................. 1,679 1,705
6.750%--08/15/2017.................. 423 402
7.125%--08/20/2022.................. 4,609 4,728
7.125%--09/20/2023.................. 3,374 3,461
7.125%--05/20/2024.................. 3,364 3,449
7.125%--05/20/2024.................. 1,382 1,417
7.125%--07/20/2024.................. 96 99
7.125%--09/20/2024.................. 6,959 7,136
6.875%--12/20/2024.................. 757 773
7.000%--01/20/2025.................. 3,426 3,476
6.500%--02/20/2025.................. 1,517 1,539
6.500%--02/20/2025.................. 1,149 1,166
6.875%--10/20/2025.................. 895 913
6.000%--12/20/2026.................. 1,986 1,982
--------
32,246
--------
Government National Mortgage
Association TBA(4)
7.000%--05/19/2027.................. 10,000 9,691
8.500%--06/19/2027.................. 10,000 10,325
8.500%--07/21/2027.................. 11,000 11,333
--------
31,349
--------
United Airlines Pass Thru Certificate
Series 1993 C-2
9.060%--06/17/2015+................. 3,000 3,205
TOTAL OTHER MORTGAGE RELATED SECURITIES............ 92,214
--------
TOTAL MORTGAGE RELATED SECURITIES
(Cost $138,586).................................. 140,668
--------
OPTIONS--0.6%
<CAPTION>
NO. OF
OPTIONS
-----------
CME Put Option, Eurodollars,
Strike Price @ 91.50
Expiration, 03/17/1997.............. 25 1
U.S. Treasury Note Call Option
Strike Price @ 92.72
Expiration, 01/01/1997.............. 25,000,000 1,896
--------
TOTAL OPTIONS
(Cost $1,961).................................... 1,897
--------
</TABLE>
U.S. GOVERNMENT OBLIGATIONS--16.5%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- ------
<S> <C> <C>
Federal Home Loan
Mortgage Corp.
Discount Notes
5.510%-07/03/1997................... $ 400 $ 396
U.S. Treasury Notes
5.375%--11/30/1997(5)............... 30,000 29,925
6.000%--09/30/1998.................. 3,000 2,995
--------
32,920
--------
U.S. Treasury Bond
11.250%--02/15/2015................. 10,800 15,407
6.875%--08/15/2025.................. 1,500 1,472
--------
16,879
--------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $50,196)................................... 50,195
--------
SHORT-TERM INVESTMENTS--29.7%
REPURCHASE AGREEMENTS
Repurchase Agreement with State Street
Bank & Trust dated April 30, 1997
due May 1, 1996 at 4.500%,
collateralized by a U.S. Treasury
Note, 9.125% May 15, 2018, par value
of $1,960 (repurchase proceeds of
$2,411 when closed on May 1,
1997)............................... 2,411 2,411
U.S. TREASURY BILLS
.010%--05/01/1997(5)................ 1,220 1,220
.010%--06/26/1997(5)................ 60 60
.010%--07/03/1997(5)................ 1,220 1,209
.010%--08/07/1997(5)................ 45 44
.010%--08/21/1997................... 620 610
--------
3,143
--------
COMMERCIAL PAPER
Ameritech Corp.
5.290%--05/08/1997.................. 300 300
5.510%--06/23/1997.................. 5,000 4,959
--------
5,259
--------
Australian Wheat Board
5.600%--07/29/1997.................. 1,700 1,676
Caisse D. Amortissement
5.520%--05/06/1997.................. 1,100 1,099
Canadian Wheat Board
5.470%--05/12/1997.................. 4,100 4,093
5.600%--07/18/1997.................. 8,300 8,199
--------
12,292
--------
Citibank Indonesia
94.430%--10/24/1997................. 5,000,000 1,952
</TABLE>
28
<PAGE> 30
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- --------
<S> <C> <C>
E I DuPont De Nemours & Co.
5.500%--05/22/1997.................. $ 5,000 $ 4,984
Export Dev Corp.
5.500%--05/08/1997.................. 3,500 3,496
Ford Motor Credit Co.
5.530%--05/22/1997.................. 5,000 4,984
5.530%--05/23/1997.................. 1,300 1,296
5.520%--05/30/1997.................. 1,400 1,394
5.560%--06/16/1997.................. 500 496
5.560%--06/17/1997.................. 1,500 1,489
--------
9,659
--------
General Electric Capital Corp.
5.550%--06/18/1997.................. 5,700 5,658
5.560%--06/24/1997.................. 8,000 7,933
--------
13,591
--------
Mobil Australia Finance Co.
5.490%--05/15/1997.................. 1,700 1,696
Motorola Inc.
5.480%--05/22/1997.................. 8,400 8,373
National Rural Utilities Coop Fin
5.550%--05/05/1997.................. 600 600
5.250%--05/13/1997.................. 900 898
5.540%--06/26/1997.................. 6,000 5,948
--------
7,446
--------
</TABLE>
SHORT-TERM INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- ------
<S> <C> <C>
New Center Asset Trust
5.550%--05/22/1997.................. $ 5,000 $ 4,984
5.590%--06/30/1997.................. 8,000 7,925
--------
12,909
--------
TOTAL COMMERCIAL PAPER............................. 84,432
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $89,988)................................... 89,986
--------
TOTAL INVESTMENTS--114.3%
(Cost $343,369).................................. 346,689
CASH AND OTHER ASSETS
LESS LIABILITIES--(14.3)%........................ (43,315)
--------
TOTAL NET ASSETS--100.0%........................... $303,374
========
</TABLE>
- ------------
(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.
(3) 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, 1997,
these securities were valued at $8,423 or 2.8% of net assets.
(4) TBA's are mortgage-backed securities traded under delayed delivery
commitments, settling after April 30, 1997. 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).
(5) At April 30, 1997, 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 $32,458.
+ Variable rate security. The stated rate represents the rate in effect at
April 30, 1997.
The accompanying notes are an integral part of the financial statements.
29
<PAGE> 31
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
(All dollar values are represented in thousands)
FUTURES CONTRACTS WHICH WERE OPEN AT APRIL 30, 1997 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
AGGREGATE UNREALIZED
FACE VALUE OF APPRECIATION/
NUMBER OF CONTRACTS EXPIRATION DATE (DEPRECIATION)
CONTRACTS CONTRACTS (000S) OF CONTRACTS (000S)
--------- --------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
U.S. Treasury Bond--30 Yr. (Buy)....................... 275 $27,500 June, 1997 $ 459
U.S. Treasury Note--10 Yr. (Buy)....................... 580 58,000 June, 1997 (203)
U.S. Treasury Note--5 Yr. (Buy)........................ 80 8,000 June, 1997 13
Municipal Bond Index--5 Yr. (Buy)...................... 100 10,000 June, 1997 157
-----
$ 426
=====
</TABLE>
FORWARD CURRENCY CONTRACTS WHICH WERE OPEN AT APRIL 30, 1997 ARE AS
FOLLOWS:
<TABLE>
<CAPTION>
UNREALIZED
MARKET AGGREGATE APPRECIATION/
VALUE FACE VALUE DELIVERY DATE (DEPRECIATION)
CURRENCY COUNTRY (000S) (000S) OF CONTRACT (000S)
-------- ------- ------ ---------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Dollar (Buy)............................ Canada $ 2,151 $ 2,279 May 22, 1997 $(128)
Dollar (Sell)........................... Canada 2,151 2,196 May 22, 1997 45
Dollar (Sell)........................... Canada 2,151 2,196 May 22, 1997 45
Dollar (Sell)........................... Indonesia 1,941 1,936 May 6, 1997 (5)
Dollar (Sell)........................... New Zealand 10,072 10,064 June 3, 1997 (8)
-----
$ (51)
=====
</TABLE>
FORWARD CONTRACTS WHICH WERE OPEN AT APRIL 30, 1997 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION/
(DEPRECIATION)
PAR VALUE (000S) DESCRIPTION COUNTER PARTY (000S)
- ---------------- ----------- ------------- --------------
<C> <S> <C> <C>
$5,000 To make or receive quarterly payments through 4/11/2002 Merrill Lynch Capital $--
based on the difference between (A) the excess of the 10 Services, Inc.
year interest rate swap rate over (B) the 10 year U.S.
Treasury Note rate plus 36.25 basis points.
7,500 To make or receive quarterly payments through 4/11/2002 Merrill Lynch Capital (2)
based on the difference between (A) the excess of the 10 Services, Inc.
year interest rate swap rate over (B) the 10 year U.S.
Treasury Note rate plus 36.50 basis points.
---
$(2)
===
</TABLE>
30
<PAGE> 32
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
(All dollar values are represented in thousands)
WRITTEN OPTIONS WHICH WERE OPEN AT APRIL 30, 1997 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION MONTH/ VALUE
OPTIONS CONTRACTS STRIKE PRICE (000S)
------- --------- ----------------- ------
<S> <C> <C> <C>
Euro Dollar Futures (Put)................................................... 50 June, 1997/93.25 $ --
Euro Dollar Futures (Put)................................................... 300 June, 1997/93.50 --
Euro Dollar Futures (Put)................................................... 200 December, 1997/93.75 (150)
-----
Written options outstanding, at value (premiums received $460).............. $(150)
=====
</TABLE>
The accompanying notes are an integral part of the financial statements.
31
<PAGE> 33
HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1997 (UNAUDITED)
Total Investments (%)
(Excludes net cash and short-term investments of 26.4%)
<TABLE>
<S> <C>
Options 0.2
Asset Backed Securities 1.6
Corporate Notes & Bonds 7.3
Mortgage Related Securities 11.7
U.S. Government Obligations 52.8
</TABLE>
ASSET BACKED SECURITIES--1.6%
(Cost $2,590)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- ------
<S> <C> <C>
SLM Student Loan Tr.
5.611%--10/25/2004+................... $ 3,000 $ 2,590
--------
CORPORATE NOTES & BONDS--7.3%
Carco Auto Loan Master Tr.
7.875%--07/15/1999.................... 4,000 4,031
Norwest Automobile Tr.
5.465%--12/05/1997.................... 2,000 723
Premier Auto Tr.
7.900%--05/04/1999.................... 5,000 5,061
Signet Master Tr.
6.800%--12/15/2000.................... 2,000 2,011
--------
TOTAL CORPORATE NOTES AND BONDS
(Cost $11,843)..................................... 11,826
--------
MORTGAGE RELATED SECURITIES--11.7%
GOVERNMENT AGENCY PASS-THROUGHS:
Federal Home Loan Mortgage
Pool #490010
9.000%--06/01/1997.................... 1,978 497
Government National Mortgage
Association Pass Thru Certificates
Pool #418819
7.500%--12/15/1998.................. 694 696
Pool #428618
7.500%--04/15/1999.................. 74 74
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- ------
<S> <C> <C>
Pool #428620
7.500%--08/15/1999.................. $ 208 $ 209
--------
979
--------
Government National Mortgage Association
Project Construction Loan
7.500%--04/01/1998 TBA(1)............. 278 270
7.500%--05/01/1998 TBA(1)............. 199 194
--------
464
--------
TOTAL GOVERNMENT AGENCY PASS-THROUGHS................ 1,940
--------
COLLATERALIZED MORTGAGE OBLIGATIONS
Federal Home Loan Mortgage Pass Thru
Certificates
5.500%--07/15/2004.................... 4,500 4,466
Federal National Mortgage Association
REMIC Series 1994 Cl. PC
7.000%--05/25/2013 PAC................ 5,000 5,021
Green Tree Financial Corp.
6.000%--10/15/2027.................... 3,000 1,797
Household Affinity Credit Card
7.000%--12/15/1999.................... 3,000 3,022
Nationsbank Auto Owners Trust
6.125%--07/15/1999.................... 3,000 2,713
--------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS............ 17,019
--------
TOTAL MORTGAGE RELATED SECURITIES
(Cost $18,932)..................................... 18,959
--------
U.S. GOVERNMENT OBLIGATIONS--52.8%
U.S. Treasury Notes
5.500%--11/15/1998.................... 5,000 4,950
6.250%--05/31/2000.................... 250 249
6.625%--04/30/2002.................... 800 802
7.000%--07/15/2006.................... 4,000 4,066
--------
10,067
--------
U.S. Treasury Bonds
15.750%--11/15/2001................... 15,000 20,367
Federal Home Loan Bank Construction
Discount Note
5.280%--05/01/1997...................... 55,000 55,000
--------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $85,492)..................................... 85,434
--------
</TABLE>
32
<PAGE> 34
HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
OPTIONS--0.2%
<TABLE>
<CAPTION>
NO. OF
CONTRACTS
---------
<S> <C> <C>
Euro Dollar Call Option
Strike Price @ 93.50
Expiration 06/13/1997................. 125 31
Swap Call Option
Strike Price @ 9.00
Expiration 09/19/1999................. 750,000 46
Swap Call Option
Strike Price @ 10.5
Expiration 09/21/1999................. 1,000,000 95
Swap Call Option
Strike Price @ 9.00
Expiration 09/21/1999................. 750,000 132
--------
TOTAL OPTIONS
(Cost $372)........................................ 304
--------
</TABLE>
SHORT-TERM INVESTMENTS--38.9%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- ------
<S> <C> <C>
REPURCHASE AGREEMENTS
Repurchase Agreement with Citibank dated
April 30, 1997 due April 30, 1998 at
5.3%, collateralized by a U.S.
Treasury Note, January 11, 2030 par
value of $2,000 (repurchase proceeds
of $1,985 when closed on May 1,
1997)................................. $ 1,985 $ 1,985
Repurchase Agreement with Citibank dated
April 30, 1997 due April 30, 1998 at
5.35%, collateralized by a U.S.
Treasury Note, March 31, 1998 par
value $4,055 (repurchase proceeds of
$4,000 when closed on May 1, 1997).... 4,000 4,000
Repurchase Agreement with Salomon
Brothers dated April 30, 1997 due
April 30, 1998 at 5.33%,
collateralized by a U.S. Treasury
Note, May 31, 1997 par value $3,980
(repurchase proceeds of $4,000 when
closed on May 1, 1997)................ 4,000 4,000
Repurchase Agreement with Sanwa Bank
dated April 30, 1997 due April 14,
1998 at 5.15%, collateralized by a
U.S. Treasury Note, March 31, 1999 par
value $6,150 (repurchase proceeds of
$6,135 when closed on May 1, 1997).... 6,135 6,135
--------
TOTAL REPURCHASE AGREEMENTS.......................... $ 16,120
--------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
--------- ------
<S> <C> <C>
BANK OBLIGATION
Bank of Montreal
5.625%--05/01/1997.................... $ 6,000 $ 6,000
Bankers Trust Co.
5.420%--05/23/1997.................... 3,000 3,000
Banque National de Paris
5.600%--05/01/1997.................... 2,483 2,483
Deutsche Bank Euro CD
5.610%--05/13/1997.................... 3,000 3,000
First Union National Bank
5.687%--05/01/1997.................... 6,000 6,000
Westdeutsche Landesbank
5.625%--05/01/1997.................... 6,000 6,000
--------
TOTAL BANK OBLIGATIONS............................... 26,483
--------
U.S. TREASURY BILLS
5.065%--07/24/1997(2)................. 1,000 988
5.600%--04/30/1998.................... 12,085 11,407
--------
12,395
--------
COMMERCIAL PAPER
ABN Amro NA Finance
5.350%--07/24/1997.................. 3,000 2,963
Caisse Des Depots
5.300%--08/06/1997.................. 3,000 2,957
Kingdom of Sweden
5.280%--05/30/1997.................. 2,000 1,991
--------
TOTAL COMMERCIAL PAPER............................... 7,911
--------
TOTAL SHORT TERM INVESTMENTS
(Cost $62,903)..................................... 62,909
--------
TOTAL INVESTMENTS--112.5%
(Cost $182,123).................................... 182,022
CASH AND OTHER ASSETS
LESS LIABILITIES--(12.5%).......................... (20,283)
--------
TOTAL NET ASSETS--100.0%............................. $161,739
========
</TABLE>
33
<PAGE> 35
HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
WRITTEN OPTIONS WHICH WERE OPEN AT APRIL 30, 1997 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION DATE/
OPTIONS CONTRACTS STRIKE PRICE VALUE
------- --------- ---------------- -----
<S> <C> <C> <C>
Euro Dollar Futures (Call)................................................. 125 June, 1997/93.25 $(28)
Written options outstanding, at value (premium received $18)
</TABLE>
FUTURES CONTRACTS WHICH WERE OPEN AT APRIL 30, 1997 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
AGGREGATE UNREALIZED
FACE VALUE OF APPRECIATION/
NUMBER OF CONTRACTS EXPIRATION DATE (DEPRECIATION)
CONTRACTS CONTRACTS (000S) OF CONTRACTS (000S)
--------- --------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
U.S. Treasury Note - 5 Yr. (Sell)......................... 114 $ $11,400 June, 1997 $(13)
Euro Dollar (Buy)......................................... 28 E$ 7,000 June, 1997 (6)
Euro Dollar (Buy)......................................... 8 E$ 2,000 December, 1997 2
Euro Dollar (Buy)......................................... 101 E$ 25,250 June, 1998 47
German Mark (Sell)........................................ 54 DM 68 June, 1997 47
German Mark (Buy)......................................... 54 DM 68 September, 1997 (6)
----
$ 71
====
</TABLE>
STATEMENT OF SECURITIES SOLD SHORT AT APRIL 30, 1997 IS AS FOLLOWS:
<TABLE>
<CAPTION>
SECURITY PAR VALUE VALUE
-------- --------- -----
<S> <C> <C>
U.S. Treasury Note 6.250% -- 3/31/1999..................................................... $6,150 $6,148
U.S. Treasury Note 5.875% -- 11/30/2001.................................................... 2,000 $1,946
------
Total Securities Sold Short (proceeds $8,103).............................................. $8,094
======
</TABLE>
- ------------
(1) TBA's are mortgage-backed securities traded under delayed delivery
commitments, settling after April 30, 1997. 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.
(2) At April 30, 1997, U.S. Treasury Bills held by the fund were pledged to
cover margin requirements for open futures contracts. (See Note 2 to the
Financial Statements). The securities pledged had aggregate market value of
$988,193.
+ Variable rate security. The stated rate represents the rate in effect at
April 30, 1997
The accompanying notes are an integral part of the financial statements.
34
<PAGE> 36
HARBOR MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1997 (UNAUDITED)
Total Investments (%)
(Excludes net cash -0.5%)
<TABLE>
<S> <C>
Corporate Bonds 5.3
Bank Obligations 40.0
Commercial Paper 55.2
</TABLE>
CORPORATE BONDS--5.3%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
------ ------
<S> <C> <C>
Ford Motor Credit
5.742%--10/21/1997..................... $3,003 $ 3,003
Norwest Automobile Tr
5.465%--12/05/1997..................... 722 722
-------
TOTAL CORPORATE BONDS
(Cost $3,725)....................................... 3,725
-------
BANK OBLIGATIONS--40.0%
Abby National Treasury Services PLC Corp.
5.690%--07/02/1997..................... 3,000 3,000
Bankers Trust Co.
5.420%--05/23/1997..................... 2,000 2,000
Barclays Bank Euro CD
5.460%--06/11/1997..................... 2,999 2,999
CIBC Euro CD
5.700%--07/24/1997..................... 3,000 3,000
Deutsche Bank AG NY
5.540%--05/27/1997... 3,000 3,000
First Union National Bank
5.687%--05/01/1997..................... 2,958 2,958
Landes Bank Hesson Thurin
6.010%--07/18/1997..................... 3,000 3,000
Royal Bank of Canada
5.450%--06/02/1997..................... 3,000 3,000
Westdeutsche Landesbank
5.625%--05/01/1997..................... 3,000 3,000
Westdeutsche Landesbank Euro CD
5.520%--07/07/1997..................... 2,000 2,000
-------
TOTAL BANK OBLIGATIONS
(Cost $27,958)...................................... 27,957
-------
</TABLE>
COMMERCIAL PAPER--55.2%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
------ ------
<S> <C> <C>
ABN Amro North America
5.350%--07/24/1997..................... $2,962 $ 2,962
American Brands Inc.
5.380%--05/05/1997..................... 1,999 1,999
Bayer Corp.
5.560%--07/01/1997..................... 2,972 2,972
Caisse D Amortissement
5.300%--08/06/1997..................... 1,971 1,971
Canada Government
5.255%--05/07/1997..................... 1,998 1,998
Daimler Benz N.A.
5.250%--07/15/1997..................... 989 989
General Electric Cap Corp. Disc.
5.330%--06/02/1997..................... 2,986 2,986
Glaxo PLC
5.260%--05/19/1997..................... 1,995 1,995
Halifax Building Society
5.320%--08/01/1997..................... 2,959 2,959
J P Morgan & Co Inc.
5.325%--08/05/1997..................... 2,957 2,957
Nationsbank Corp.
5.610%--07/09/1997..................... 2,968 2,968
Royal Bank of Scotland
5.610%--07/22/1997..................... 2,962 2,962
Toronto Dominion Holdings
5.390%--07/01/1997..................... 2,973 2,973
UBS Finance Delaware Inc.
5.520%--05/14/1997..................... 2,994 2,994
Woolwich
5.270%--07/25/1997..................... 2,963 2,963
-------
TOTAL COMMERCIAL PAPER
(Cost $38,648)...................................... 38,648
-------
TOTAL INVESTMENTS--100.5%
(Cost $70,330)(1)................................... 70,330
-------
CASH AND OTHER ASSETS,
LESS LIABILITIES--(0.5%)............................ (334)
-------
TOTAL NET ASSETS--100.0%.............................. $69,996
=======
</TABLE>
- ------------
(1) The aggregate identified cost on a tax basis is the same.
The accompanying notes are an integral part of the financial statements.
35
<PAGE> 37
HARBOR FUND
STATEMENT OF ASSETS AND LIABILITIES--APRIL 30, 1997 (UNAUDITED)
(All amounts in Thousands, except per share amount)
<TABLE>
<CAPTION>
HARBOR HARBOR
INTERNATIONAL HARBOR CAPITAL
GROWTH GROWTH APPRECIATION
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
INVESTMENTS, AT IDENTIFIED COST*............................ $790,761 $ 83,286 $1,739,817
- ---------------------------------------------------------------------------------------------------------
Investments, at value....................................... $847,215 $ 85,785 $2,129,566
Repurchase agreements....................................... -- -- --
Cash........................................................ 1 3 1
Foreign currency, at value
(cost: $2,776; $167; $0; $464; $1,489; $0; $0; $125;
$0)....................................................... 2,768 166 --
Receivables for:
Investments sold.......................................... 35,506 1,051 16,246
Capital shares sold....................................... 2,921 515 4,249
Dividends................................................. 2,434 23 2,450
Interest.................................................. 6 -- 17
Open forward currency contracts........................... -- -- --
Variation margin on futures contracts..................... -- -- --
Variation margin on swaption.............................. -- -- --
Deferred organization costs................................. 10 -- --
Withholding tax receivable.................................. 136 -- 50
Other assets................................................ 1 110 6
- ---------------------------------------------------------------------------------------------------------
TOTAL ASSETS.......................................... 890,998 87,653 2,152,585
LIABILITIES
Payables for:
Investments purchased..................................... 32,010 1,376 48,403
Capital shares reacquired................................. 302 23 2,094
Dividends to shareholders................................. -- -- --
Written options, at value
(premiums received $0; $0; $0; $0; $0; $0; $460; $18;
$0)..................................................... -- -- --
Securities sold short, at value
(proceeds $0; $0; $0; $0; $0; $0; $0; $8,103; $0)....... -- -- --
Interest on short sales................................... -- -- --
Open forward currency contracts........................... -- -- --
Open forward contracts.................................... -- -- --
Variation margin on futures contracts..................... -- -- --
Accrued expenses:
Adviser's fees............................................ 1,017 192 2,017
Trustees' fees............................................ 1 1 5
Transfer agent's fees..................................... 51 17 219
Other..................................................... 384 1 381
- ---------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES..................................... 33,765 1,610 53,119
NET ASSETS
NET ASSETS.................................................. $857,233 $ 86,043 $2,099,466
=========================================================================================================
Net assets consist of:
Paid-in capital........................................... $783,274 $ 69,947 $1,615,295
Undistributed/(overdistributed) net investment income..... 4,687 (236) 3,063
Accumulated net realized gain/(loss)...................... 12,841 13,833 91,386
Unrealized appreciation/(depreciation) of investments,
written options, foreign currency, investments sold
short and translation of assets and liabilities in
foreign currencies...................................... 56,431 $ 2,499 389,722
Unrealized appreciation/(depreciation) of futures and
forward contracts....................................... -- -- --
- ---------------------------------------------------------------------------------------------------------
$857,233 $ 86,043 $2,099,466
=========================================================================================================
Shares of beneficial interest............................... 54,409 7,634 75,778
Net asset value, offering and redemption price per share.... $15.76 $11.27 $27.71
</TABLE>
- ------------
* Including repurchase agreements
The accompanying notes are an integral part of the financial statements.
36
<PAGE> 38
HARBOR FUND
STATEMENT OF ASSETS AND LIABILITIES--CONTINUED
<TABLE>
<CAPTION>
HARBOR HARBOR HARBOR HARBOR HARBOR HARBOR
INTERNATIONAL II INTERNATIONAL VALUE BOND SHORT DURATION MONEY MARKET
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$75,436 $2,954,206 $123,810 $343,369 $182,123 $70,330
- ----------------------------------------------------------------------------------------
$76,395 $4,618,709 $125,757 $344,278 $165,902 $70,330
-- -- 3,435 2,411 16,120 --
-- -- 1 1 -- 1
457 1,481 -- -- 121 --
1,340 -- 1,208 18,683 35,282 --
168 4,418 190 503 25 156
299 25,549 217 -- -- --
1 628 -- 2,563 2,084 331
-- -- -- 90 -- --
-- -- -- 378 -- --
-- -- -- -- 100 --
18 -- -- -- -- --
10 2,959 5 -- -- --
21 33 21 31 100 5
- ----------------------------------------------------------------------------------------
78,709 4,653,777 130,834 368,938 219,734 70,823
3,400 -- 1,886 64,758 45,712 --
30 5,573 62 155 3,989 760
-- -- -- -- -- 11
-- -- -- 150 28 --
-- -- -- -- 8,094 --
-- -- -- -- 82 --
-- -- -- 141 -- --
-- -- -- 2 -- --
-- -- -- -- 24 --
62 5,976 135 237 47 19
-- -- 1 -- -- --
19 456 8 61 4 29
19 1,140 47 60 15 8
- ----------------------------------------------------------------------------------------
3,530 13,145 2,139 65,564 57,995 827
$75,179 $4,640,632 $128,695 $303,374 $161,739 $69,996
========================================================================================
$73,548 $2,911,574 $108,377 $302,744 $186,090 $69,996
285 22,983 218 802 (1,995) --
385 42,142 14,718 (4,175) (22,421) --
961 1,663,933 5,382 3,630 (6) --
-- -- -- 373 71 --
- ----------------------------------------------------------------------------------------
$75,179 $4,640,632 $128,695 $303,374 $161,739 $69,996
========================================================================================
6,533 137,689 8,260 27,150 18,772 69,996
$11.51 $33.70 $15.58 $11.17 $8.62 $1.00
</TABLE>
37
<PAGE> 39
HARBOR FUND
STATEMENT OF OPERATIONS--SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
(All Amounts in Thousands)
<TABLE>
<CAPTION>
HARBOR
INTERNATIONAL HARBOR
GROWTH GROWTH
- --------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................................................. $ 7,848 $ 131
Interest.................................................. 1,488 145
Securities lending income................................. (3) --
Foreign taxes withheld.................................... (651) (4)
- --------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME................................... 8,682 272
EXPENSES:
Investment adviser's fees................................. 2,618 387
Shareholder communications................................ 35 7
Custodian fees............................................ 715 28
Transfer agent fees....................................... 245 50
Professional fees......................................... 30 19
Trustees' fees and expenses............................... 4 1
Registration fees......................................... 57 10
Amortization of organization costs........................ 3 --
Insurance expense......................................... 3 2
Miscellaneous............................................. 8 6
- --------------------------------------------------------------------------------------
Total expenses......................................... 3,718 510
Advisory fee waived....................................... -- --
Other expense reimbursements and reductions............... (17) (2)
- --------------------------------------------------------------------------------------
Total operating expenses............................... 3,701 508
Interest expense.......................................... -- --
- --------------------------------------------------------------------------------------
NET INVESTMENT INCOME....................................... 4,981 (236)
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENT
TRANSACTIONS:
Net realized gain/(loss) on:
Investments............................................ 13,800 13,826
Foreign currency transactions.......................... (1) --
Short sales............................................ -- --
Futures contracts...................................... -- --
Written options........................................ -- --
Change in net unrealized appreciation/depreciation on:
Investments, written options and short sales........... 2,405 (18,899)
Futures contracts...................................... -- --
Forwards............................................... -- --
Translation of assets and liabilities in foreign
currencies............................................ (16) --
- --------------------------------------------------------------------------------------
Net gain/(loss) on investment transactions................ 16,188 (5,073)
- --------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................. $21,169 $ (5,309)
======================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
38
<PAGE> 40
HARBOR FUND
STATEMENT OF OPERATIONS--CONTINUED
<TABLE>
<CAPTION>
HARBOR HARBOR
CAPITAL HARBOR HARBOR HARBOR HARBOR SHORT HARBOR
APPRECIATION INTERNATIONAL II INTERNATIONAL VALUE BOND DURATION MONEY MARKET
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 8,980 $ 494 $ 46,489 $ 1,819 $ 3 $-- $--
1,724 87 6,943 92 8,680 5,540 1,839
-- -- 5 -- -- -- --
(381) (48) (5,234) (22) -- -- --
- ----------------------------------------------------------------------------------------------------
10,323 533 48,203 1,889 8,683 5,540 1,839
5,666 150 18,502 362 1,018 323 100
120 6 191 4 28 1 10
213 46 2,196 67 78 28 23
645 32 1,281 29 160 7 83
46 16 102 21 34 33 15
13 -- 35 1 2 1 1
148 23 64 14 25 16 16
-- 3 -- -- -- 1 --
4 -- 8 2 3 2 1
18 1 42 4 7 5 4
- ----------------------------------------------------------------------------------------------------
6,873 277 22,421 504 1,355 417 253
-- (41) (1,053) -- (330) (163) (40)
(24) (2) (14) (1) (5) (12) (3)
- ----------------------------------------------------------------------------------------------------
6,849 234 21,354 503 1,020 242 210
-- -- -- -- -- 1,025 --
- ----------------------------------------------------------------------------------------------------
3,474 299 26,849 1,386 7,663 4,273 1,629
96,665 372 42,088 14,815 5,130 (1,012) 9
-- -- 22 -- 508 1,630 --
-- -- -- -- -- (86) --
-- -- -- -- (2,738) (85) --
-- -- -- -- 24 -- --
78,580 743 422,482 (3,340) (765) (1,398) --
-- -- -- -- (3,883) 508 --
-- -- -- -- (382) (173) --
(26) 9 (792) -- (5) -- --
- ----------------------------------------------------------------------------------------------------
175,219 1,124 463,800 11,475 (2,111) (614) 9
- ----------------------------------------------------------------------------------------------------
$178,693 $1,423 $490,649 $12,861 $ 5,552 $ 3,659 $1,638
====================================================================================================
</TABLE>
39
<PAGE> 41
HARBOR FUND
STATEMENT OF CHANGES IN NET ASSETS
(All amounts in Thousands)
<TABLE>
<CAPTION>
HARBOR HARBOR HARBOR
INTERNATIONAL GROWTH GROWTH CAPITAL APPRECIATION
------------------------- ------------------------- -------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
1996 1995 1996 1996 1996 1995
THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1997 1996 1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income.................... $ 4,981 $ 2,845 $ (236) $ (653) $ 3,474 $ 1,345
Net realized gain/(loss) on investments,
foreign currency transactions,
investments sold short, futures and
written options........................ 13,799 16,393 13,826 29,141 96,665 49,265
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.................. 2,389 40,691 (18,899) (10,004) 78,554 115,877
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ 21,169 59,929 (5,309) 18,484 178,693 166,487
- -------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income.................... (3,010) (1,243) -- -- (1,310) (1,102)
Net realized gain on investments......... (13,704) -- (28,481) (15,306) (53,466) (13,411)
In excess of net investment income....... -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS...... (16,714) (1,243) (28,481) (15,306) (54,776) (14,513)
- -------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares......... 489,842 363,320 12,453 30,154 570,593 806,799
Net asset value of shares issued in
connection with reinvestment of:
Dividends from net investment income... 2,695 1,098 -- -- 1,096 901
Distributions from net realized gain... 13,052 -- 26,974 14,703 47,556 11,286
Cost of shares reacquired................ (131,780) (66,550) (33,105) (72,048) (226,911) (313,496)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) DERIVED FROM
CAPITAL TRANSACTIONS................... 373,809 297,868 6,322 (27,191) 392,334 505,490
- -------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets.... 378,263 356,554 (27,468) (24,013) 516,251 657,464
NET ASSETS:
Beginning of period........................ 478,969 122,415 113,511 137,524 1,583,215 925,751
- -------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD*............................. $857,233 $478,969 $ 86,043 $113,511 $2,099,466 $1,583,215
==============================================================================================================================
NUMBER OF CAPITAL SHARES:
Sold....................................... 30,449 25,679 929 1,935 21,147 33,867
Reinvested in payment of ordinary income
dividends................................ 169 88 -- -- 41 39
Reinvested in payment of capital gain
distributions............................ 818 -- 2,215 1,025 1,772 506
Reacquired................................. (8,238) (4,669) (2,602) (4,610) (8,356) (13,136)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in shares
outstanding.............................. 23,198 21,098 542 (1,650) 14,604 21,276
Outstanding:
Beginning of period...................... 31,211 10,113 7,092 8,742 61,174 39,898
- -------------------------------------------------------------------------------------------------------------------------------
End of period............................ 54,409 31,211 7,634 7,092 75,778 61,174
==============================================================================================================================
* Includes undistributed/(over-distributed)
net investment income of:................. $ 4,687 $ 2,716 $ (236) $ -- $ 3,063 $ 899
<CAPTION>
HARBOR
INTERNATIONAL II
-------------------------
NOVEMBER 1, JUNE 1,
1996 1996
THROUGH THROUGH
APRIL 30, OCTOBER 31,
1997 1996
- -----------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income.................... $ 299 $ 12
Net realized gain/(loss) on investments,
foreign currency transactions,
investments sold short, futures and
written options........................ 372 72
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.................. 752 209
- -----------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ 1,423 293
- -----------------------------------------------------------------------
Distributions to shareholders:
Net investment income.................... (31) --
Net realized gain on investments......... (55) --
In excess of net investment income....... -- --
- -----------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS...... (86) --
- -----------------------------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares......... 66,274 12,877
Net asset value of shares issued in
connection with reinvestment of:
Dividends from net investment income... 30 --
Distributions from net realized gain... 52 --
Cost of shares reacquired................ (5,087) (597)
- -----------------------------------------------------------------------
NET INCREASE/(DECREASE) DERIVED FROM
CAPITAL TRANSACTIONS................... 61,269 12,280
- -----------------------------------------------------------------------
Net increase/(decrease) in net assets.... 62,606 12,573
NET ASSETS:
Beginning of period........................ 12,573 --
- -----------------------------------------------------------------------
END OF PERIOD*............................. $75,179 $12,573
=======================================================================
NUMBER OF CAPITAL SHARES:
Sold....................................... 5,764 1,259
Reinvested in payment of ordinary income
dividends................................ 3 --
Reinvested in payment of capital gain
distributions............................ 5 --
Reacquired................................. (440) (58)
- -----------------------------------------------------------------------
Net increase/(decrease) in shares
outstanding.............................. 5,332 1,201
Outstanding:
Beginning of period...................... 1,201 --
- -----------------------------------------------------------------------
End of period............................ 6,533 1,201
=======================================================================
* Includes undistributed/(over-distributed)
net investment income of:................. $ 285 $ 17
</TABLE>
The accompanying notes are an integral part of the financial statements.
40
<PAGE> 42
HARBOR FUND
STATEMENT OF CHANGES IN NET ASSETS--CONTINUED
<TABLE>
<CAPTION>
HARBOR HARBOR HARBOR HARBOR
INTERNATIONAL VALUE BOND SHORT DURATION
------------------------- ------------------------- ------------------------- -------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
1996 1995 1996 1995 1996 1995 1996 1995
THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1997 1996 1997 1996 1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
$ 26,849 $ 52,833 $ 1,386 $ 2,720 $ 7,663 $ 15,752 $ 4,273 $ 9,236
42,110 103,423 14,815 14,008 2,924 (2,713) 449 (764)
421,690 448,771 (3,340) 3,771 (5,035) 5,637 (1,063) 1,252
- ------------------------------------------------------------------------------------------------------------------
490,649 605,027 12,861 20,499 5,552 18,676 3,659 9,724
- ------------------------------------------------------------------------------------------------------------------
(54,227) (49,438) (1,367) (2,656) (8,545) (16,286) (6,904) (9,846)
(103,297) (15,558) (13,934) (7,407) -- -- -- --
-- -- -- -- -- -- -- (600)
- ------------------------------------------------------------------------------------------------------------------
(157,524) (64,996) (15,301) (10,063) (8,545) (16,286) (6,904) (10,446)
- ------------------------------------------------------------------------------------------------------------------
349,604 593,874 14,515 24,176 59,322 124,191 164,329 462,578
46,590 42,301 649 2,514 6,963 13,367 6,904 10,425
93,375 13,889 13,826 6,973 -- -- -- --
(212,189) (427,125) (9,964) (16,504) (39,767) (83,097) (188,547) (394,990)
- ------------------------------------------------------------------------------------------------------------------
277,380 222,939 19,026 17,159 26,518 54,461 (17,314) 78,013
- ------------------------------------------------------------------------------------------------------------------
610,505 762,970 16,586 27,595 23,525 56,851 (20,559) 77,291
4,030,127 3,267,157 112,109 84,514 279,849 222,998 182,298 105,007
- ------------------------------------------------------------------------------------------------------------------
$4,640,632 $4,030,127 $128,695 $112,109 $303,374 $279,849 $ 161,739 $ 182,298
==================================================================================================================
10,584 20,382 934 1,611 5,263 11,140 18,858 52,668
1,479 1,528 42 166 623 1,213 800 1,192
2,963 502 929 492 -- -- -- --
(6,463) (14,625) (634) (1,080) (3,535) (7,447) (21,629) (45,019)
- ------------------------------------------------------------------------------------------------------------------
8,563 7,787 1,271 1,189 2,351 4,906 (1,971) 8,841
129,126 121,339 6,989 5,800 24,799 19,893 20,743 11,902
- ------------------------------------------------------------------------------------------------------------------
137,689 129,126 8,260 6,989 27,150 24,799 18,772 20,743
==================================================================================================================
$ 22,983 $ 50,361 $ 218 $ 199 $ 802 $ 1,684 $ (1,995) $ 636
<CAPTION>
HARBOR
MONEY MARKET
-------------------------
NOVEMBER 1, NOVEMBER 1,
1996 1995
THROUGH THROUGH
APRIL 30, OCTOBER 31,
1997 1996
- ------------------------------
(UNAUDITED)
<S> <C>
$ 1,629 $ 3,029
9 80
-- --
- ------------------------------
1,638 3,109
- ------------------------------
(1,629) (3,029)
(9) (80)
-- --
- ------------------------------
(1,638) (3,109)
- ------------------------------
80,096 86,059
1,561 2,997
-- --
(77,652) (87,557)
- ------------------------------
4,005 1,499
- ------------------------------
4,005 1,499
65,991 64,492
- ------------------------------
$ 69,996 $ 65,991
==============================
80,096 86,059
1,561 2,997
-- --
(77,652) (87,557)
- ------------------------------
4,005 1,499
65,991 64,492
- ------------------------------
69,996 65,991
==============================
$ -- $ --
</TABLE>
41
<PAGE> 43
HARBOR FUND FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------------
NET REALIZED AND
UNREALIZED GAINS (LOSSES)
NET ASSET VALUE ON INVESTMENTS, FUTURES, TOTAL FROM
BEGINNING OF NET INVESTMENT OPTIONS AND FOREIGN INVESTMENT
YEAR/PERIOD ENDED PERIOD INCOME CURRENCY CONTRACTS OPERATIONS
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HARBOR INTERNATIONAL GROWTH FUND
April 30, 1997
(Unaudited)....... $15.35 $ .08* $ .77 $ .85
October 31, 1996.... 12.10 .14* 3.22 3.36
October 31, 1995.... 11.53 .11* .54 .65
October 31,
1994(1)........... 10.00 .07* 1.47 1.54
- ----------------------------------------------------------------------------------------------
HARBOR GROWTH FUND(2)
April 30, 1997
(Unaudited)....... $16.00 $(.03) $ (.60) $ (.63)
October 31, 1996.... 15.73 (.08) 2.20 2.12
October 31, 1995.... 12.83 (.04) 3.26 3.22
October 31, 1994.... 14.01 -- (1.16) (1.16)
October 31, 1993.... 12.42 .01 2.95 2.96
October 31, 1992.... 15.76 .02 (1.01) (.99)
- ----------------------------------------------------------------------------------------------
HARBOR CAPITAL APPRECIATION FUND(3)
April 30, 1997
(Unaudited)....... $25.88 $ .05 $ 2.66 $ 2.71
October 31, 1996.... 23.20 .02 3.00 3.02
October 31, 1995.... 17.31 .04 6.06 6.10
October 31, 1994.... 17.30 .03 1.14 1.17
October 31, 1993.... 16.30 .03 3.03 3.06
October 31, 1992.... 15.18 .02 2.12 2.14
- ----------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND II
April 30, 1997
(Unaudited)....... $10.47 $ .07* $ 1.04 $ 1.11
October 31,
1996(4)........... 10.00 .01* .46 .47
- ----------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND(5)
April 30, 1997
(Unaudited)....... $31.21 $ .19* $ 3.52 $ 3.71
October 31, 1996.... 26.93 .41* 4.41 4.82
October 31, 1995.... 26.87 .39* .85 1.24
October 31, 1994.... 22.85 .26* 3.98 4.24
October 31, 1993.... 16.77 .17* 6.31 6.48
October 31, 1992.... 17.69 .24 (.95) (.71)
- ----------------------------------------------------------------------------------------------
HARBOR VALUE FUND(6)
April 30, 1997
(Unaudited)....... $16.04 $ .17 $ 1.55 $ 1.72
October 31, 1996.... 14.57 .40 2.74 3.14
October 31, 1995.... 13.50 .40 2.13 2.53
October 31, 1994.... 14.31 .36 .27 .63
October 31, 1993.... 13.24 .35 1.22 1.57
October 31, 1992.... 13.10 .41* .49 .90
- ----------------------------------------------------------------------------------------------
<CAPTION>
LESS DISTRIBUTIONS
-----------------------------------
DIVIDENDS FROM DISTRIBUTIONS FROM IN EXCESS OF
NET INVESTMENT NET REALIZED NET INVESTMENT
YEAR/PERIOD ENDED INCOME CAPITAL GAINS** INCOME
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
HARBOR INTERNATIONAL
April 30, 1997
(Unaudited)....... $(.08) $ (.36) $--
October 31, 1996.... (.11) -- --
October 31, 1995.... (.08) -- --
October 31,
1994(1)........... (.01) -- --
- ---------------------------------------------------------------------------
HARBOR GROWTH FUND(2)
April 30, 1997
(Unaudited)....... -- $(4.10) $--
October 31, 1996.... -- (1.85) --
October 31, 1995.... -- (.32) --
October 31, 1994.... -- (.02) --
October 31, 1993.... (.01) (1.36) --
October 31, 1992.... (.04) (2.31) --
- ---------------------------------------------------------------------------
HARBOR CAPITAL APPRECIATION FUND(3)
April 30, 1997
(Unaudited)....... $(.02) $ (.86) $--
October 31, 1996.... (.03) (.31) --
October 31, 1995.... (.04) (.17) --
October 31, 1994.... (.03) (1.13) --
October 31, 1993.... (.02) (2.04) --
October 31, 1992.... (.04) (.98) --
- ---------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND II
April 30, 1997
(Unaudited)....... $(.02) $ (.04) $--
October 31,
1996(4)........... -- -- --
- ---------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND (5)
April 30, 1997
(Unaudited)....... $(.42) $ (.80) $--
October 31, 1996.... (.41) (.13) --
October 31, 1995.... (.24) (.94) --
October 31, 1994.... (.22) -- --
October 31, 1993.... (.22) (.18) --
October 31, 1992.... (.21) -- --
- ----------------------------------------------------------------------------
HARBOR VALUE FUND(6)
April 30, 1997
(Unaudited)....... $(.18) $(2.00) $--
October 31, 1996.... (.40) (1.27) --
October 31, 1995.... (.39) (1.07) --
October 31, 1994.... (.34) (1.10) --
October 31, 1993.... (.35) (.15) --
October 31, 1992.... (.41) (.35) --
- ----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
42
<PAGE> 44
HARBOR FUND FINANCIAL HIGHLIGHTS--CONTINUED
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<TABLE>
<CAPTION>
TAX RATIO OF RATIO OF RATIO OF NET
RETURN NET ASSET NET ASSETS OPERATING EXPENSES INTEREST EXPENSE INVESTMENT INCOME
OF TOTAL VALUE END TOTAL END OF PERIOD TO AVERAGE TO AVERAGE TO AVERAGE
CAPITAL DISTRIBUTIONS OF PERIOD RETURN ($ THOUSANDS) NET ASSETS (%) NET ASSETS (%) NET ASSETS (%)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$-- $ (.44) $15.76 5.52%++ $ 857,233 1.06%*+ -- 1.43%*+
-- (.11) 15.35 27.86 478,969 1.10* -- .99*
-- (.08) 12.10 5.83 122,415 1.21* -- 1.31*
-- (.01) 11.53 15.36 74,734 1.32* -- .87*
- ----------------------------------------------------------------------------------------------------------------------------
$-- $(4.10) $11.27 (5.84)%++ $ 86,043 .98%+ -- (.46)%+
-- (1.85) 16.00 14.84 113,511 .92 -- (.50)
-- (.32) 15.73 25.93 137,524 .93 -- (.30)
-- (.02) 12.83 (8.29) 141,330 .93 -- --
-- (1.37) 14.01 26.17 208,320 .90 -- .11
-- (2.35) 12.42 (7.48) 191,464 .90 -- .14
- ----------------------------------------------------------------------------------------------------------------------------
$-- $ (.88) $27.71 10.54%++ $2,099,466 .72%+ -- .37%+
-- (.34) 25.88 13.22 1,583,215 .75 -- .11
-- (.21) 23.20 35.73 925,751 .75 -- .23
-- (1.16) 17.31 7.25 225,984 .81 -- .24
-- (2.06) 17.30 20.16 145,331 .86 -- .24
-- (1.02) 16.30 14.41 77,445 .91 -- .12
- ----------------------------------------------------------------------------------------------------------------------------
$-- $ (.06) $11.51 10.59%++ $ 75,179 1.17%*+ -- 1.49%*+
-- -- 10.47 4.70 12,573 1.44* -- .40*
- ----------------------------------------------------------------------------------------------------------------------------
$-- $(1.22) $33.70 12.11%++ $4,640,632 .98%*+ -- 1.23%*+
-- (.54) 31.21 18.17 4,030,127 .99* -- 1.42*
-- (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
- ----------------------------------------------------------------------------------------------------------------------------
$-- $(2.18) $15.58 11.43%++ $ 128,695 .83%+ -- 2.20%+
-- (1.67) 16.04 23.08 112,109 .83 -- 2.65
-- (1.46) 14.57 21.02 84,514 .90 -- 3.00
-- (1.44) 13.50 4.80 59,390 1.04 -- 2.66
-- (.50) 14.31 11.99 59,884 .88 -- 2.48
-- (.76) 13.24 7.06 63,974 .84* -- 3.11*
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
AVERAGE
PORTFOLIO COMMISSION
TURNOVER (%) RATE PAID***
- ------------------------------------
<S> <C>
83.53%+ $0.0257
55.17 --
74.86 --
41.80 --
- ------------------------------------
203.82%+ $0.0458
87.97 --
87.94 --
115.89 --
170.85 --
83.83 --
- ------------------------------------
58.82%+ $0.0611
73.69 --
51.65 --
72.89 --
93.24 --
69.33 --
- ------------------------------------
11.47%+ $0.0006
2.61 --
- ------------------------------------
14.41%+ $0.0172
9.73 --
14.01 --
28.70 --
15.70 --
24.67 --
- ------------------------------------
160.63%+ $0.0494
132.39 --
135.93 --
150.94 --
50.20 --
19.68 --
- ------------------------------------
</TABLE>
43
<PAGE> 45
HARBOR FUND FINANCIAL HIGHLIGHTS--CONTINUED
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------------
NET REALIZED AND
UNREALIZED GAINS (LOSSES)
NET ASSET VALUE ON INVESTMENTS, FUTURES, TOTAL FROM
BEGINNING OF NET INVESTMENT OPTIONS AND FOREIGN INVESTMENT
YEAR/PERIOD ENDED PERIOD INCOME CURRENCY CONTRACTS OPERATIONS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HARBOR BOND FUND
April 30, 1997 (Unaudited)...... $11.28 $.29* $ (.07) $ .22
October 31, 1996................ 11.21 .72* .09 .81
October 31, 1995................ 10.41 .74* .73 1.47
October 31, 1994................ 11.92 .68* (1.02) (.34)
October 31, 1993................ 11.35 .68* .82 1.50
October 31, 1992................ 11.11 .79* .50 1.29
- ----------------------------------------------------------------------------------------------------------
HARBOR SHORT DURATION FUND
April 30, 1997 (Unaudited)...... $ 8.79 $.22* $ (.04) $ .18
October 31, 1996................ 8.82 .63* (.02) .61
October 31, 1995................ 8.77 .52* .06 .58
October 31, 1994................ 9.68 .34* (.12) .22
October 31, 1993................ 10.09 .34* .16 .50
October 31, 1992(7)............. 10.00 .29* .08 .37
- ----------------------------------------------------------------------------------------------------------
HARBOR MONEY MARKET FUND
April 30, 1997 (Unaudited)...... $ 1.00 $.02* $ -- $ .02
October 31, 1996................ 1.00 .05* -- .05
October 31, 1995................ 1.00 .06* -- .06
October 31, 1994................ 1.00 .03* -- .03
October 31, 1993................ 1.00 .03* -- .03
October 31, 1992................ 1.00 .04* -- .04
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
LESS DISTRIBUTIONS
-----------------------------------
DIVIDENDS FROM DISTRIBUTIONS FROM IN EXCESS OF
NET INVESTMENT NET REALIZED NET INVESTMENT
YEAR/PERIOD ENDED INCOME CAPITAL GAINS** INCOME
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
HARBOR BOND FUND
April 30, 1997 (Unaudited)...... $ (.33) $-- $--
October 31, 1996................ (.74) -- --
October 31, 1995................ (.67) -- --
October 31, 1994................ (.67) (.50) --
October 31, 1993................ (.68) (.25) --
October 31, 1992................ (.79) (.26) --
- -------------------------------------------------------------------------------------------
HARBOR SHORT DURATION FUND
April 30, 1997 (Unaudited)...... $ (.35) $-- $--
October 31, 1996................ (.60) -- (.04)
October 31, 1995................ (.52) -- (.01)
October 31, 1994................ (1.08) -- --
October 31, 1993................ (.82) (.09) --
October 31, 1992(7)............. (.28) -- --
- -------------------------------------------------------------------------------------------
HARBOR MONEY MARKET FUND
April 30, 1997 (Unaudited)...... $ (.02) $-- $--
October 31, 1996................ (.05) -- --
October 31, 1995................ (.06) -- --
October 31, 1994................ (.03) -- --
October 31, 1993................ (.03) -- --
October 31, 1992................ (.04) -- --
- -------------------------------------------------------------------------------------------
</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, 1997--International II $.01 per share; International
$.01 per share; Bond $.01 per share; Short Duration $.01 per share; and
Money Market less than $.01 per share.
Period ended October 31, 1996--International II $.01 per share;
International $.01 per share; Bond $.03 per share; Short Duration $.02 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 $.01 per share.
** Includes both short-term and long-term capital gains.
*** Average commission rate paid may vary from period to period and fund to fund
depending on the mix of trades executed in various markets where trading
practices and commission rate structures may differ.
The accompanying notes are an integral part of the financial statements.
44
<PAGE> 46
HARBOR FUND FINANCIAL HIGHLIGHTS--CONTINUED
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<TABLE>
<CAPTION>
TAX RATIO OF RATIO OF RATIO OF NET
RETURN NET ASSET NET ASSETS OPERATING EXPENSES INTEREST EXPENSE INVESTMENT INCOME
OF TOTAL VALUE END TOTAL END OF PERIOD TO AVERAGE TO AVERAGE TO AVERAGE
CAPITAL DISTRIBUTIONS OF PERIOD RETURN ($ THOUSANDS) NET ASSETS (%) NET ASSETS (%) NET ASSETS (%)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ -- $ (.33) $11.17 1.96%++ $303,374 .70%*+ -- .01%*+
-- (.74) 11.28 7.56 279,849 .70 -- 6.40
-- (.67) 11.21 14.56 222,998 .70* -- 7.11*
-- (1.17) 10.41 (3.14) 162,221 .77* -- 6.29*
-- (.93) 11.92 13.98 164,382 .72* -- 6.19*
-- (1.05) 11.35 12.14 65,420 .77* -- 7.30*
- ----------------------------------------------------------------------------------------------------------------------------
$ -- $ (.35) $ 8.62 2.15%++ 161,739 .30%*+ 1.27%+ 5.29%*+
-- (.64) 8.79 7.24 182,292 .33 1.26 6.84
-- (.53) 8.82 6.82 105,007 .38* 1.46 6.19*
(.05) (1.13) 8.77 2.53 115,891 .38* 1.26 4.61*
-- (.91) 9.68 5.18 135,189 .43* .69 4.19*
-- (.28) 10.09 3.72++ 186,523 .35*+ 1.19+ 3.79*+
- ----------------------------------------------------------------------------------------------------------------------------
$ -- $ (.02) $ 1.00 2.45%++ $ 69,996 .63%*+ -- 4.88%*+
-- (.05) 1.00 5.08 65,991 .64 -- 4.85
-- (.06) 1.00 5.66 64,492 .61* -- 5.42*
-- (.03) 1.00 3.53 60,024 .67* -- 3.38*
-- (.03) 1.00 2.68 46,879 .71* -- 2.58*
-- (.04) 1.00 3.67 55,244 .69* -- 3.39*
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
AVERAGE
PORTFOLIO COMMISSION
TURNOVER (%) RATE PAID***
- ---------------------------------
<S> <C>
200.07%+ --
192.64 --
88.69 --
150.99 --
119.92 --
52.54 --
- ---------------------------------
1,336.03%+ --
1,277.82 --
725.96 --
895.76 --
1,212.20 --
2,759.70 --
- ---------------------------------
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) For the period June 1, 1996 (commencement of operations) through October 31,
1996.
(5) Effective April 1, 1993, Harbor International Fund appointed Northern Cross
Investments Limited as its Subadviser.
(6) Harbor Value Fund appointed Richards & Tierney, Inc. and DePrince, Race, &
Zollo, Inc. as its Subadvisers effective November 1, 1993 and April 20,
1995, respectively.
(7) For the period January 1, 1992 (commencement of operations) through October
31, 1992.
+ Annualized
++ Unannualized
45
<PAGE> 47
HARBOR SHORT DURATION FUND
STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED
APRIL 30, 1997
--------------------
AMOUNTS IN
THOUSANDS
<S> <C>
Cash flows provided by operating activities:
Investment income received (excluding net amortization of
($177))................................................. $ 6,901
Payment of operating expenses............................. (295)
Interest paid............................................. (1,557)
Purchase of investments................................... (942,758)
Proceeds from sales and maturities of investments......... 1,055,520
Net purchase of short-term investments.................... (67,771)
Cash used for futures contracts........................... (247)
Cash used for forward currency contract................... 1,804
Cash provided by other assets............................. (64)
----------
CASH PROVIDED BY OPERATING ACTIVITIES................... 52,027
----------
Cash flows used for financing activities:
Capital stock proceeds.................................... 164,310
Payment to repurchase capital stock....................... (184,625)
Net proceeds from reverse repurchase agreements........... (56,462)
----------
NET CASH USED FOR FINANCING ACTIVITIES.................. (76,777)
----------
Net decrease in cash........................................ (24,750)
Cash at beginning of period................................. 0
Foreign currency at beginning of period, at cost............ 24,875
----------
Total cash at beginning of period........................... 24,875
Cash at end of period....................................... 0
Foreign currency at end of period, at cost.................. 125
----------
Total cash at end of period............................. $ 125
==========
RECONCILIATION OF NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net increase in net assets resulting from operations........ $ 3,659
----------
Decrease in investments................................... 69,918
Increase in securities sold short and TBA sales........... (77,162)
Change in unrealized depreciation--net.................... (1,398)
Decrease in receivables for securities sold............... 94,211
Decrease in interest receivable........................... 1,184
Decrease in receivables for futures and forward currency
contracts............................................... 39
Increase in other assets.................................. (64)
Decrease in payable for securities purchased.............. (37,774)
Decrease in accrued expense and other liabilities......... (585)
----------
Total adjustments....................................... 48,368
----------
Cash provided by operating activities....................... $ 52,027
==========
</TABLE>
During the period ended April 30, 1997 cash payments of interest expense on
reverse repurchase agreements and short sales were $1,088.
The accompanying notes are an integral part of the financial statements.
46
<PAGE> 48
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--APRIL 30, 1997 (UNAUDITED)
($ in Thousands)
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 nine 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, 1997, the Trust consisted
of the following funds: Harbor International Growth Fund, Harbor Growth Fund,
Harbor Capital Appreciation Fund, Harbor International Fund II, 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 or as otherwise described below, selected
by the adviser which determines valuation 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 the 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 or for which prices are
deemed by the adviser or subadviser not to be representative of market values,
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. The actual calculation of fair market value may be done by others
including the adviser and subadviser.
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.
FUTURE 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
47
<PAGE> 49
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
($ in Thousands)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
margin," and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund 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.
Harbor Short Duration Fund enters into purchased options on interest rate
swaps ("swaptions"). A purchased swaption allows the Fund, as purchaser, and
obligates the writer upon exercise, to enter into an interest rate swap
agreement, in accordance with conditions outlined in the swaption agreement
between the Fund and the counterparty to the agreement. The accounting treatment
relating to purchased swaptions is substantially the same as the policies
described above, except that swaptions are valued by the counterparty to the
swaption agreement.
The risk associated with entering into purchased swaptions is limited to
the value of the swaption. Additionally, swaption agreements involve, to varying
degrees, elements of credit risk, market risk, and interest rate risk. Such
risks involve the possibility that there is not a 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 market conditions
or interest rates.
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 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
48
<PAGE> 50
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
($ in Thousands)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
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.
SWAP AGREEMENTS
Harbor Short Duration Fund enters into swap agreements which involve the
exchange of cash payments based on the specified terms and conditions of such
agreements. The value of each swap is determined by the counterparty to the swap
agreement using a methodology which discounts the expected future cash receipts
or disbursements related to the swap. Unrealized gains or losses are reported as
an asset or a liability in the Statement of Assets and Liabilities. The cash
paid or received on a swap is recognized as a realized loss or gain when such
payment is paid or received.
Entering into swap agreements involves, to varying degrees, elements of
credit risk, market risk, and interest rate risk in excess of the amount
recognized in the Statement of Assets and Liabilities. Such risks involve the
possibility that there is not a 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 market conditions or interest rates.
TBA PURCHASE COMMITMENTS
Harbor Bond Fund and Harbor Short Duration Fund enter 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 that 1.0% from the principal amount. 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 Funds 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
Harbor Bond Fund and Harbor Short Duration Fund enter into "TBA" sale
commitments to hedge portfolio positions or to sell mortgage-backed securities
owned under delayed delivery arrangements. Proceeds of TBA sale commitments are
not received until the contractual settlement date.
49
<PAGE> 51
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
($ in Thousands)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
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 or loss. If
the TBA sale commitment is closed through the acquisition of an offsetting
purchase commitment, the Fund 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 based 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. 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 rate when
accrued or incurred.
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.
50
<PAGE> 52
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
($ in Thousands)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
STATEMENT OF CASH FLOWS
Information on financial transactions which have settled through the
receipt and disbursement of cash is presented in the Statement of Cash Flows for
Harbor Short Duration Fund. The cash amounts shown in the Statement of Cash
Flows is the amount reported as cash and foreign currency in Harbor Short
Duration Fund's Statement of Assets and Liabilities and represents cash on hand
in its custodian and sub-custodian bank accounts and does not include any
short-term investments at April 30, 1997.
INVESTMENT INCOME
Dividends declared are accrued on the ex-dividend date, except that, for
Harbor International Growth Fund, Harbor International Fund II 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 fixed income securities purchased are amortized over
the life of the respective securities using the straight-line 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, Harbor
International Fund II 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, $21 and $21, respectively.
These costs are being amortized on a straight-line basis over a five-year period
from the commencement of operations of the Fund.
FEDERAL TAXES
Each Fund is treated as a separate entity for federal tax purposes. Each
Fund's policy is to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute to its
shareholders all of its taxable income within the prescribed time. It is also
the intention of each Fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code.
Therefore, no provision has been made for federal taxes on income, capital gains
or unrealized appreciation of securities held or excise tax on income and
capital gains.
51
<PAGE> 53
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
($ in Thousands)
NOTE 3--INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, other than short-term securities, for
each Fund for the six-month period ended April 30, 1997 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
--------------------- ---------------------
U.S. U.S.
FUND GOVERNMENT OTHER GOVERNMENT OTHER
---- ---------- ----- ---------- -----
<S> <C> <C> <C> <C>
Harbor International Growth............................... $ -- $592,380 $ -- $271,688
Harbor Growth............................................. -- 99,345 -- 124,217
Harbor Capital Appreciation............................... 9,101 828,201 6,071 524,376
Harbor International II................................... -- 65,435 -- 6,953
Harbor International...................................... -- 367,814 -- 297,487
Harbor Value.............................................. 222 98,114 -- 93,589
Harbor Bond............................................... 260,067 1,857 240,399 20,790
Harbor Short Duration..................................... 458,738 55,998 633,675 50,236
</TABLE>
Harbor Money Market's purchases and sales (including maturities) of
investment securities aggregated $738,893 and $734,415, respectively.
Harbor Short Duration Fund engages in short-selling which obligates the
Fund to replace the security borrowed by purchasing it at the market price at
the time of replacement. Until the security is replaced, the Fund is required to
pay to the lender any accrued interest and may be required to pay a premium. The
Fund would realize a gain if the security declines in price between the date of
the short sale and the date on which the Fund replaces the borrowed security.
The Fund would incur a loss as a result of the short sale if the price of the
security increases between those dates. Until the Fund replaces the borrowed
security, it will maintain a segregated account of cash and/or U.S. Government
securities with its custodian sufficient to cover its short position.
52
<PAGE> 54
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
($ in Thousands)
NOTE 3--INVESTMENT PORTFOLIO TRANSACTIONS--CONTINUED
FUTURES CONTRACTS
Transactions in futures contracts for the period ended April 30, 1997 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.............. 1,065 $ 106,500 -- --
Contracts opened.......................................... 1,752 175,200 -- --
Contracts closed.......................................... (1,782) (178,200) -- --
------ --------- ------ ---------
Open at 4/30/97........................................... 1,035 $ 103,500 -- --
====== ========= ====== =========
HARBOR SHORT DURATION FUND
Contracts outstanding at beginning of period.............. -- $ -- 596 $ 69,700
Contracts opened.......................................... 843 84,300 729 94,800
Contracts closed.......................................... (843) (84,300) (1,211) (153,100)
------ --------- ------ ---------
Open at 4/30/97........................................... -- $ -- 114 $ 11,400
====== ========= ====== =========
</TABLE>
<TABLE>
<CAPTION>
PURCHASES OF SALES OF
FUTURES CONTRACTS FUTURES CONTRACTS
---------------------- ----------------------
FOREIGN BONDS FOREIGN BONDS
---------------------- ----------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
CONTRACTS FACE VALUE CONTRACTS FACE VALUE
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
HARBOR SHORT DURATION FUND
Contracts outstanding at beginning of period.............. 228 $ 57,000 28 $ 7,000
Contracts opened.......................................... 729 151,635 548 87,120
Contracts closed.......................................... (766) (174,318) (522) (94,053)
---- --------- ---- --------
Open at 4/30/97........................................... 191 $ 34,317 54 $ 67
==== ========= ==== ========
</TABLE>
53
<PAGE> 55
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
($ in Thousands)
NOTE 3--INVESTMENT PORTFOLIO TRANSACTIONS--CONTINUED
WRITTEN OPTIONS
Transactions in written options for the period ended April 30, 1997 are
summarized as follows:
<TABLE>
<CAPTION>
OPTIONS WRITTEN
----------------------
FOREIGN FUTURES
----------------------
NUMBER OF AGGREGATE
CONTRACTS FACE VALUE
--------- ----------
<S> <C> <C>
HARBOR BOND FUND
Options outstanding at beginning of period................ 410 $ 410,000
Options opened............................................ 550 550,000
Options closed/expired.................................... (410) (410,000)
---- ---------
Open at 4/30/97........................................... 550 $ 550,000
==== =========
</TABLE>
<TABLE>
<CAPTION>
OPTIONS WRITTEN
----------------------
U.S. TREASURY FUTURES
----------------------
NUMBER OF AGGREGATE
CONTRACTS FACE VALUE
--------- ----------
<S> <C> <C>
HARBOR SHORT DURATION FUND
Options outstanding at beginning of period................ -- $ --
Options opened............................................ 100 100,000
Options closed/expired.................................... (100) (100,000)
---- ---------
Open at 4/30/97........................................... -- $ --
==== =========
</TABLE>
<TABLE>
<CAPTION>
OPTIONS WRITTEN
----------------------
FOREIGN FUTURES
----------------------
NUMBER OF AGGREGATE
CONTRACTS FACE VALUE
--------- ----------
<S> <C> <C>
HARBOR SHORT DURATION FUND
Options outstanding at beginning of period................ -- $ --
Options opened............................................ 125 125,000
Options closed/expired.................................... 0 0
--- --------
Open at 4/30/97........................................... 125 $125,000
=== ========
</TABLE>
54
<PAGE> 56
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
($ in Thousands)
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
agreements for each Fund were in effect during the six-month period ended April
30, 1997. 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% $ 2,618
Harbor Growth............................................... 0.75% 387
Harbor Capital Appreciation................................. 0.60% 5,666
Harbor International II..................................... 0.75% 150
Harbor International........................................ 0.85% 18,502
Harbor Value................................................ 0.60% 362
Harbor Bond................................................. 0.70% 1,018
Harbor Short Duration....................................... 0.40% 323
Harbor Money Market......................................... 0.30% 100
</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, 1997, Harbor agreed not to impose advisory fees of $41, $330, $163 and
$40 relating to Harbor International Fund II, Harbor Bond Fund, Harbor Short
Duration Fund and Harbor Money Market Fund, respectively; and Harbor and
Northern Cross Investments Limited agreed not to impose $1,053 of the advisory
fee for Harbor International Fund.
The Trust reimburses Harbor for certain legal expenses incurred by Harbor
with respect to the Trust. Such amounts aggregated $31 for the six-month period
ended April 30, 1997.
DISTRIBUTOR
HCA Securities, Inc., a wholly-owned subsidiary of Harbor Capital Advisors,
Inc., is the distributor for Harbor Fund shares. Harbor Fund does not reimburse
the distributor for expenses.
SHAREHOLDERS
On April 30, 1997, Harbor, HCA Securities, Inc., Harbor Transfer, Inc., and
various employee benefit plans of Owens-Illinois, Inc. held the following shares
of beneficial interest in the Funds:
<TABLE>
<CAPTION>
HARBOR, HCA
SECURITIES AND BENEFIT PLANS OF
FUND HARBOR TRANSFER OWENS-ILLINOIS, INC.
- ------------------------------------------------------------ --------------- --------------------
<S> <C> <C>
Harbor International Growth................................. 33,584 792,381
Harbor Growth............................................... 40,420 3,618,793
Harbor Capital Appreciation................................. 6,347 2,123,916
Harbor International II..................................... 201,192 53,546
Harbor International........................................ 8,175 1,697,152
Harbor Value................................................ 20,312 2,644,142
Harbor Bond................................................. 35,099 2,081,597
Harbor Short Duration....................................... 677,000 16,690,839
Harbor Money Market......................................... 130,732 18,726,063
</TABLE>
55
<PAGE> 57
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
($ in Thousands)
NOTE 4--FEES AND OTHER TRANSACTIONS WITH AFFILIATES--CONTINUED
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, 1997
totaled $2,532.
"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 $58 for the six-month period ended April 30, 1997.
CUSTODIAN
Payments to the custodian have been reduced by balance credits applied to
each portfolio for the six-month period ended April 30, 1997. For the Harbor
International Growth Fund, Harbor Growth Fund, Harbor Capital Appreciation Fund,
Harbor International Fund II, Harbor International Fund, Harbor Value Fund,
Harbor Bond Fund, Harbor Short Duration Fund, and Harbor Money Market Fund the
reduction amounted to $17, $2, $24, $2, $14, $1, $5, $12, and $3, 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 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, 1997 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................. $0 0.00% $56,462 $3,847 1.38%
</TABLE>
Average debt outstanding and average interest rate during the period are
calculated based on calendar days of the period.
56
<PAGE> 58
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
($ in Thousands)
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.
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, 1997 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.................... $ 790,761 $ 82,963 $ (26,509) $ 56,454
Harbor Growth Fund.................................. 83,286 7,137 (4,638) 2,499
Harbor Capital Appreciation Fund.................... 1,739,817 428,066 (38,317) 389,749
Harbor International Fund II........................ 75,436 4,748 (3,789) 959
Harbor International Fund........................... 2,954,206 1,778,109 (113,606) 1,664,503
Harbor Value Fund................................... 123,810 9,006 (3,624) 5,382
Harbor Bond Fund.................................... 343,369 5,053 (1,733) 3,320
Harbor Short Duration Fund.......................... 182,123 153 (254) (101)
</TABLE>
NOTE 8--SUBSEQUENT EVENTS
Effective May 2, 1997, Harbor Growth Fund engaged a new subadvisor,
Emerging Growth Advisors, Inc.
(This document must be preceded or accompanied by a Prospectus.)
57
<PAGE> 59
<TABLE>
<S> <C> <C>
TRUSTEES AND OFFICERS SHAREHOLDER SERVICING AGENT
Ronald C. Boller Chairman, President and Harbor Transfer, Inc.
Trustee P.O. Box 10048
Howard P. Colhoun Trustee Toledo, Ohio 43699-0048
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, Inc. P.O. Box 1713
One SeaGate Boston, MA 02105
Toledo, OH 43666 LEGAL COUNSEL
DISTRIBUTOR AND Hale and Dorr LLP
PRINCIPAL UNDERWRITER 60 State Street
HCA Securities, Inc. Boston, MA 02109
One SeaGate
Toledo, OH 43666
(419) 247-2477
</TABLE>
[HARBOR FUND LOGO]
One SeaGate
Toledo, Ohio 43666
1-800-422-1050
230,000/6/97 [RECYCLE LOGO]
recycled paper
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM SEC FORM N-30D AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> HARBOR INTERNATIONAL GROWTH FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 790761
<INVESTMENTS-AT-VALUE> 847215
<RECEIVABLES> 40867
<ASSETS-OTHER> 2916
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 890998
<PAYABLE-FOR-SECURITIES> 32010
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1755
<TOTAL-LIABILITIES> 33765
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 783274
<SHARES-COMMON-STOCK> 54409
<SHARES-COMMON-PRIOR> 31211
<ACCUMULATED-NII-CURRENT> 4687
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12841
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 56431
<NET-ASSETS> 857233
<DIVIDEND-INCOME> 7848
<INTEREST-INCOME> 1488
<OTHER-INCOME> (654)
<EXPENSES-NET> 3701
<NET-INVESTMENT-INCOME> 4981
<REALIZED-GAINS-CURRENT> 13799
<APPREC-INCREASE-CURRENT> 2389
<NET-CHANGE-FROM-OPS> 21169
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3010)
<DISTRIBUTIONS-OF-GAINS> (13704)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 30449
<NUMBER-OF-SHARES-REDEEMED> (8238)
<SHARES-REINVESTED> 987
<NET-CHANGE-IN-ASSETS> 378263
<ACCUMULATED-NII-PRIOR> 2716
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 12747
<GROSS-ADVISORY-FEES> 2618
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3718
<AVERAGE-NET-ASSETS> 680875
<PER-SHARE-NAV-BEGIN> 12
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 3
<PER-SHARE-DIVIDEND> (0)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM SEC FORM N-30D AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> HARBOR GROWTH FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 83286
<INVESTMENTS-AT-VALUE> 85785
<RECEIVABLES> 1589
<ASSETS-OTHER> 279
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 87653
<PAYABLE-FOR-SECURITIES> 1376
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 234
<TOTAL-LIABILITIES> 1610
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 69947
<SHARES-COMMON-STOCK> 7634
<SHARES-COMMON-PRIOR> 7092
<ACCUMULATED-NII-CURRENT> (236)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 13833
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2499
<NET-ASSETS> 86043
<DIVIDEND-INCOME> 131
<INTEREST-INCOME> 145
<OTHER-INCOME> (4)
<EXPENSES-NET> 508
<NET-INVESTMENT-INCOME> (236)
<REALIZED-GAINS-CURRENT> 13826
<APPREC-INCREASE-CURRENT> (18899)
<NET-CHANGE-FROM-OPS> (5309)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (28481)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 929
<NUMBER-OF-SHARES-REDEEMED> (2602)
<SHARES-REINVESTED> 2215
<NET-CHANGE-IN-ASSETS> (27468)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 28488
<GROSS-ADVISORY-FEES> 387
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 510
<AVERAGE-NET-ASSETS> 107722
<PER-SHARE-NAV-BEGIN> 16
<PER-SHARE-NII> (0)
<PER-SHARE-GAIN-APPREC> 2
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (2)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM SEC FORM N-30D AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> HARBOR CAPITAL APPRECIATION FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 1739817
<INVESTMENTS-AT-VALUE> 2129566
<RECEIVABLES> 22962
<ASSETS-OTHER> 57
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2152585
<PAYABLE-FOR-SECURITIES> 48403
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4716
<TOTAL-LIABILITIES> 53119
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1615295
<SHARES-COMMON-STOCK> 75778
<SHARES-COMMON-PRIOR> 61174
<ACCUMULATED-NII-CURRENT> 3063
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 91386
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 389722
<NET-ASSETS> 2099466
<DIVIDEND-INCOME> 8980
<INTEREST-INCOME> 1724
<OTHER-INCOME> (381)
<EXPENSES-NET> 6849
<NET-INVESTMENT-INCOME> 3474
<REALIZED-GAINS-CURRENT> 96665
<APPREC-INCREASE-CURRENT> 78554
<NET-CHANGE-FROM-OPS> 178693
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1310)
<DISTRIBUTIONS-OF-GAINS> (53466)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 21147
<NUMBER-OF-SHARES-REDEEMED> (8356)
<SHARES-REINVESTED> 1813
<NET-CHANGE-IN-ASSETS> 516251
<ACCUMULATED-NII-PRIOR> 899
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 48187
<GROSS-ADVISORY-FEES> 5666
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6873
<AVERAGE-NET-ASSETS> 1892374
<PER-SHARE-NAV-BEGIN> 23
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 3
<PER-SHARE-DIVIDEND> (0)
<PER-SHARE-DISTRIBUTIONS> (0)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 26
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM SEC FORM N-30D AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 4
<NAME> HARBOR INTERNATIONAL FUND II
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 75436
<INVESTMENTS-AT-VALUE> 76395
<RECEIVABLES> 1808
<ASSETS-OTHER> 505
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 78709
<PAYABLE-FOR-SECURITIES> 3400
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 130
<TOTAL-LIABILITIES> 3530
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 73548
<SHARES-COMMON-STOCK> 6533
<SHARES-COMMON-PRIOR> 1201
<ACCUMULATED-NII-CURRENT> 285
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 385
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 961
<NET-ASSETS> 75179
<DIVIDEND-INCOME> 494
<INTEREST-INCOME> 87
<OTHER-INCOME> (48)
<EXPENSES-NET> 234
<NET-INVESTMENT-INCOME> 299
<REALIZED-GAINS-CURRENT> 372
<APPREC-INCREASE-CURRENT> 752
<NET-CHANGE-FROM-OPS> 1423
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (31)
<DISTRIBUTIONS-OF-GAINS> (55)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5764
<NUMBER-OF-SHARES-REDEEMED> (440)
<SHARES-REINVESTED> 8
<NET-CHANGE-IN-ASSETS> 62606
<ACCUMULATED-NII-PRIOR> 50361
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 103329
<GROSS-ADVISORY-FEES> 150
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 277
<AVERAGE-NET-ASSETS> 34429
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM SEC FORM N-30D AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 5
<NAME> HARBOR INTERNATIONAL FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 2954206
<INVESTMENTS-AT-VALUE> 4618709
<RECEIVABLES> 30595
<ASSETS-OTHER> 4473
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4653777
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 13145
<TOTAL-LIABILITIES> 13145
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2911574
<SHARES-COMMON-STOCK> 137689
<SHARES-COMMON-PRIOR> 129126
<ACCUMULATED-NII-CURRENT> 22983
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 42142
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1663933
<NET-ASSETS> 4640632
<DIVIDEND-INCOME> 46489
<INTEREST-INCOME> 6943
<OTHER-INCOME> (5229)
<EXPENSES-NET> 21354
<NET-INVESTMENT-INCOME> 26849
<REALIZED-GAINS-CURRENT> 42110
<APPREC-INCREASE-CURRENT> 421690
<NET-CHANGE-FROM-OPS> 490649
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (54227)
<DISTRIBUTIONS-OF-GAINS> (103297)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10584
<NUMBER-OF-SHARES-REDEEMED> (6463)
<SHARES-REINVESTED> 4442
<NET-CHANGE-IN-ASSETS> 610505
<ACCUMULATED-NII-PRIOR> 17
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 68
<GROSS-ADVISORY-FEES> 18502
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 22421
<AVERAGE-NET-ASSETS> 4371514
<PER-SHARE-NAV-BEGIN> 27
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 4
<PER-SHARE-DIVIDEND> (0)
<PER-SHARE-DISTRIBUTIONS> (0)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 31
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM SEC FORM N-30D AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 6
<NAME> HARBOR VALUE FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 123810
<INVESTMENTS-AT-VALUE> 129192
<RECEIVABLES> 1615
<ASSETS-OTHER> 27
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 130834
<PAYABLE-FOR-SECURITIES> 1886
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 253
<TOTAL-LIABILITIES> 2139
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 108377
<SHARES-COMMON-STOCK> 8260
<SHARES-COMMON-PRIOR> 6989
<ACCUMULATED-NII-CURRENT> 218
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 14718
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5382
<NET-ASSETS> 12695
<DIVIDEND-INCOME> 1819
<INTEREST-INCOME> 92
<OTHER-INCOME> (22)
<EXPENSES-NET> 503
<NET-INVESTMENT-INCOME> 1386
<REALIZED-GAINS-CURRENT> 14815
<APPREC-INCREASE-CURRENT> (3340)
<NET-CHANGE-FROM-OPS> 12861
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1367)
<DISTRIBUTIONS-OF-GAINS> (13934)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 934
<NUMBER-OF-SHARES-REDEEMED> (634)
<SHARES-REINVESTED> 971
<NET-CHANGE-IN-ASSETS> 16586
<ACCUMULATED-NII-PRIOR> 199
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 13837
<GROSS-ADVISORY-FEES> 362
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 504
<AVERAGE-NET-ASSETS> 121673
<PER-SHARE-NAV-BEGIN> 15
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 3
<PER-SHARE-DIVIDEND> (0)
<PER-SHARE-DISTRIBUTIONS> (1)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM SEC FORM N-30D AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 7
<NAME> HARBOR BOND FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 343369
<INVESTMENTS-AT-VALUE> 346868
<RECEIVABLES> 22217
<ASSETS-OTHER> 32
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 368938
<PAYABLE-FOR-SECURITIES> 64758
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 513
<TOTAL-LIABILITIES> 65564
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 302744
<SHARES-COMMON-STOCK> 27150
<SHARES-COMMON-PRIOR> 24799
<ACCUMULATED-NII-CURRENT> 802
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4175)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4003
<NET-ASSETS> 303374
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