HARBOR FUND, PRE 14A, 1997-05-09

HARBOR FUND
PRE 14A, 1997-05-09

Previous: HARBOR FUND, 497, 1997-05-09

Next: CALGENE INC /OLD/, SC 13G/A, 1997-05-09

<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant [X]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement

[ ] Definitive additional materials

[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

HARBOR FUND
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

HARBOR FUND
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

- --------------------------------------------------------------------------------

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.

(1) Amount previously paid:

- --------------------------------------------------------------------------------

(2) Form, schedule or registration statement no.:

- --------------------------------------------------------------------------------

(3) Filing party:

- --------------------------------------------------------------------------------

(4) Date filed:

- --------------------------------------------------------------------------------

<PAGE> 2

- --------------------------------------------------------------------------------

HARBOR FUND

June 2, 1997

Dear Shareholder:

You are cordially invited to attend a Special Meeting of
Shareholders of Harbor Fund (the "Trust") to be held on Tuesday,
August 12, 1997 at 9:00 a.m., Eastern time, at One SeaGate, 16th
Floor, Toledo, Ohio 43666.
[HARBOR FUND LOGO]

At this important meeting, you will be asked to consider and
take action on the election of one Trustee and the ratification of
the Board of Trustees' selection of Price Waterhouse LLP as the
Trust's independent public accountants. In addition, you will be asked to
consider several proposals that we believe are important and will allow us to
improve the Funds' operations, simplify disclosure and, hopefully, attract more
investment dollars. You should carefully read the Proxy Statement that discusses
each proposal in detail. The formal Notice of Special Meeting of Shareholders
and the Proxy Statement setting forth in detail the matters to come before the
Meeting are attached hereto, and a proxy card is enclosed for your use. All of
the proposals have been reviewed by your Fund's Board of Trustees, whose primary
role is to represent and protect your interests as a shareholder. In the
Trustees' judgment, the proposals are fair and reasonable and they recommend
that you vote in favor of each proposal.

The proposals for your consideration will not materially affect the way
your Fund is managed. The proposals are designed to simplify the administration
of the Funds and increase the efficiency of the Fund's operations. Some of the
changes will eliminate operational polices that are no longer required by the
regulatory agencies that oversee certain aspects of your Fund's business.

The Trustees propose amending and restating the Funds' investment
restrictions and reclassifying each Fund's investment objective as
non-fundamental. Certain of the Funds' investment restrictions were required by
state laws that are no longer applicable to the Funds, or are more restrictive
than required by federal law. The amended restrictions will expand the range of
investment opportunities and techniques available to the Funds without changing
the funds' investment strategy or risk profile. Also, by adopting a uniform set
of restrictions, compliance and disclosure relating to these restrictions can be
simplified. Reclassifying each Fund's investment objective as non-fundamental
will permit the Trustees greater flexibility in the future to amend a Fund's
objective without the delay and expense associated with another shareholder
meeting.

You will be asked to approve the adoption of a policy to permit the Trust's
Board of Trustees to approve the appointment of a subadviser to a Fund or a
material change to a Fund's subadvisory agreement without further shareholder
approval is proposed for your approval. The Trustees believe that Harbor Capital
Advisors, Inc. is especially qualified to select and recommend subadvisers to
provide portfolio management services to the Funds and the additional delay and
expense associated with seeking further shareholder approval results in
unnecessary expense to your Fund.

The continuing interest of the shareholders in the affairs of the Trust is
gratefully acknowledged. Whether or not you expect to attend the Meeting, it is
important that your shares be represented. Therefore, I urge you to vote FOR the
nominee for election as Trustee and each of the other proposals contained in the
Proxy Statement.

Sincerely,

RONALD C. BOLLER
Ronald C. Boller
President
<PAGE> 3

HARBOR FUND
(THE "TRUST")

<TABLE>
<S> <C> <C>
HARBOR INTERNATIONAL GROWTH FUND HARBOR INTERNATIONAL FUND II HARBOR BOND FUND
HARBOR GROWTH FUND HARBOR INTERNATIONAL FUND HARBOR SHORT DURATION FUND
HARBOR CAPITAL APPRECIATION FUND HARBOR VALUE FUND HARBOR MONEY MARKET FUND
</TABLE>

(EACH, A "FUND")

One SeaGate
Toledo, Ohio 43666

- --------------------------------------------------------------------------------

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held August 12, 1997

- --------------------------------------------------------------------------------

A Special Meeting of Shareholders of each Fund (the "Meeting") referred to
above (the "Funds") will be held on August 12, 1997, at 9:00 a.m. (Eastern time)
at One SeaGate, 16th Floor, Toledo, Ohio 43666, for the following purposes:

(1) WITH RESPECT TO THE TRUST, to elect one Trustee;

(2) WITH RESPECT TO THE TRUST, to ratify the selection of Price Waterhouse LLP
as independent public accountants of the Trust for the fiscal year ending
October 31, 1997;

(3) WITH RESPECT TO EACH FUND, to amend the Fund's investment restrictions;

(4) WITH RESPECT TO EACH FUND, to change the Fund's investment objective from
fundamental to non-fundamental;

(5) WITH RESPECT TO EACH FUND, to adopt a policy to permit the Trust's Board of
Trustees to appoint subadvisers and to approve amendments to subadvisory
agreements.

(6) WITH RESPECT TO HARBOR VALUE FUND, to amend the Fund's investment objective.

(7) WITH RESPECT TO HARBOR GROWTH FUND, to approve a subadvisory agreement with
Emerging Growth Advisors, Inc.

(8) To transact such other business as may properly come before the Meeting and
any adjournment or adjournments thereof.

YOUR TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF
THE PROPOSALS RELATING TO YOUR FUND(S).

Shareholders of record of each Fund at the close of business on May 16,
1997 will be entitled to vote at the Meetings or at any adjournment or
adjournments thereof. The Proxy Statement and Proxy Card are being mailed to
shareholders on or about June 2, 1997.
<PAGE> 4

It is important that you return your signed and dated Proxy Card promptly,
regardless of the size of your holdings, so that a quorum may be assured.

By Order of the Board of Trustees

RONALD C. BOLLER

Ronald C. Boller, President

June 2, 1997

PLEASE COMPLETE, DATE AND SIGN THE PROXY CARD FOR THE SHARES HELD BY YOU AND
RETURN THE PROXY CARD IN THE ENVELOPE PROVIDED SO THAT YOUR VOTE CAN BE
RECORDED. NO POSTAGE IS REQUIRED IF THE ENVELOPE IS MAILED IN THE UNITED STATES.
PROMPT RETURN OF YOUR PROXY OR PROXIES MAY SAVE THE TRUST THE NECESSITY AND
EXPENSE OF FURTHER SOLICITATIONS. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR
SHARES IN PERSON.
<PAGE> 5

HARBOR FUND
(THE "TRUST")

(EACH, A "FUND")

One SeaGate
Toledo, Ohio 43666

PROXY STATEMENT

GENERAL

This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Trustees of Harbor Fund (the "Trust")
to be used at the Special Meeting of Shareholders of each series of the Trust
(the "Funds") to be held at One SeaGate, 16th Floor, Toledo, Ohio 43666 on
Tuesday, August 12, 1997, at 9:00 a.m. (Eastern time) for the purposes set forth
in the accompanying Notice of Meeting.

The Trustees have fixed the close of business on May 16, 1997 as the record
date (the "Record Date") for determining the shareholders of each Fund entitled
to notice of and to vote at the Meeting. Shareholders of record of each Fund on
the Record Date are entitled to one vote per share at the Meeting or any
adjournment of the Meeting relating to their Fund. Appendix A sets forth the
number of shares of beneficial interest of each Fund outstanding as of the
Record Date. Appendix B sets forth the persons who owned beneficially or of
record more than 5% of the shares of any Fund as of the Record Date.

Proxies will be solicited by mail and may also be solicited in person or by
telephone by officers of the Trust, Harbor Capital Advisors, Inc. ("HCA" or the
"Adviser") and by the Trustees. In addition, the Adviser may engage an
independent proxy solicitation firm to assist it in soliciting proxies at a cost
to the Trust of $ .

The following table summarizes the proposals to be voted on at the Meeting
and indicates those shareholders who are being solicited with respect to each
proposal.

SUMMARY OF VOTING ON PROPOSALS

<TABLE>
<CAPTION>
PROPOSAL SHAREHOLDERS SOLICITED
-------- ----------------------
<S> <C> <C>
1. Election of one Trustee. All Funds voting together.
2. Ratification of the selection of Price All Funds voting together.
Waterhouse LLP as independent
accountants for the fiscal year ending
October 31, 1997.
3(a)-(k) Approval of amended and restated Each Fund voting separately.
investment restrictions.
4. Approval of the reclassification of each Each Fund voting separately.
Fund's investment objective from
fundamental to non-fundamental.
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
PROPOSAL SHAREHOLDERS SOLICITED
-------- ----------------------
<S> <C> <C>
5. Adoption of a policy to permit the Each Fund voting separately.
Trustees to appoint subadvisers and to
approve amendments to subadvisory
agreements on behalf of the
shareholders.
6. To amend Harbor Value Fund's investment Harbor Value Fund voting separately.
objective.
7. To approve a subadvisory agreement with Harbor Growth Fund voting separately.
Emerging Growth Advisors, Inc.
</TABLE>

THE TRUST WILL FURNISH, WITHOUT CHARGE, COPIES OF THE TRUST'S MOST RECENT
ANNUAL REPORT TO ANY SHAREHOLDER UPON REQUEST ADDRESSED TO HARBOR FUND, ONE
SEAGATE, TOLEDO, OHIO 43666 OR BY TELEPHONE AT 1-800-422-1050.

This Proxy Statement and the Proxy Card are being mailed to shareholders on
or about June 2, 1997.

PROPOSAL 1

ELECTION OF TRUSTEE

At a meeting on April 30 -- May 1, 1997 (the "Board of Trustees' Meeting"),
the Trustees, including the Trustees who are not "interested persons" of the
Trust (as defined by the Investment Company Act of 1940, as amended (the "1940
Act")) (the "Independent Trustees"), voted to approve, and to recommend to the
shareholders that they approve, a proposal to elect Mr. John P. Gould (the
"Nominee") to the Board of Trustees of the Trust. Mr. Gould is currently a
Trustee and has served in that capacity since his election by the Board of
Trustees in 1994, but he has yet not been elected by the Trust's shareholders.
Information concerning the Nominee and other relevant factors is discussed
below.

Using the enclosed Proxy Card, a shareholder may authorize the proxies to
vote his or her shares for Mr. Gould or may withhold from the proxies authority
to vote for Mr. Gould. If no contrary instructions are given, the proxies will
vote FOR Mr. Gould. Mr. Gould has consented to his nomination and has agreed to
serve if elected. If, for any reason, Mr. Gould should not be available for
election or able to serve as a Trustee, the proxies will exercise their voting
power in favor of a substitute Nominee, if any, as the Trustees may designate.
The Trust has no reason to believe that it will be necessary to designate a
substitute Nominee.

2
<PAGE> 7

INFORMATION CONCERNING THE NOMINEE AND THE TRUSTEE.

The following table sets forth certain information about Mr. Gould and the
Trustees, including each person's principal occupation or employment during the
past five years.

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT FIRST BECAME
NAME, AGE AND POSITIONS WITH TRUST DURING THE LAST FIVE YEARS TRUSTEE
- ------------------------------------- ------------------------------------------------ ------------
<S> <C> <C>
Ronald C. Boller..................... Vice-President -- Investments, Owens-Illinois, 1989
(58)* Inc. (May, 1992-Present); Vice President and
Chairman, President and Trustee Director, Benefit and Risk Finance,
Owens-Illinois, Inc. (January, 1991-May, 1992);
Vice President and Director, Benefit Finance,
Owens-Illinois, Inc. (April, 1988-December,
1990); Director and President, Harbor Capital
Advisors, Inc. ("HCA")(1983-Present); Director,
President, Treasurer and Secretary of HCA
Securities, Inc. ("HCA Securities"); and
President, Harbor Transfer, Inc. ("Harbor
Transfer").
Howard P. Colhoun.................... General Partner, Emerging Growth Partners, L.P. 1986
(61) (investing in small companies) (1982-1996);
Trustee Director, Storage U.S.A. (since 1995); and Vice
President and Director of Mutual Funds, T. Rowe
Price Associates, Inc. (prior to 1982).
John P. Gould........................ Steven G. Rothmeier Professor (since 1996) and 1994
(58) Distinguished Professor of Economics, Graduate
Trustee and Nominee School of Business, University of Chicago (1984-
Present); Dean of Graduate School of Business,
University of Chicago (1983-1993); Trustee and
Chairman Pegasus Funds (1996-Present); Trustee
of Dimensional Fund Advisors, Inc. (1986-
Present); and Trustee of First Prairie Funds
(1985-1996).
Rodger F. Smith...................... Partner, Greenwich Associates (a business 1987
(56) strategy, consulting and research firm) (since
Trustee 1975).
</TABLE>

- -------------------------
* Mr. Boller is deemed to be an "interested person" of the Trust for purposes of
the 1940 Act because of his positions with HCA, HCA Securities and Harbor
Transfer.

INFORMATION CONCERNING MEETINGS OF TRUSTEES AND COMMITTEES

The number of shares of beneficial interest of each Fund beneficially owned
by each Trustee, directly or indirectly, as of May 16, 1997, is set forth in
Appendix C.

Four meetings of the Trustees were held during the fiscal year ended
October 31, 1996. No Trustee attended fewer than seventy-five percent of all
meetings of the Board of Trustees and of any committee of which he was a member
held while he was a Trustee during such years. The Trust has an Audit Committee
comprised of all the Independent Trustees. The Audit Committee of the Trust held
two meetings during the most recent fiscal year. The functions performed by the
Audit Committee are to recommend annually to the entire Board of Trustees a firm
of independent certified public accountants to audit the books and records of
the Trust for the ensuing year; to monitor that firm's performance; and to
review with the firm the scope and results of each audit and determine the need,
if any, to extend audit procedures. The Board of Trustees does not have a
nominating committee.

3
<PAGE> 8

REMUNERATION OF TRUSTEES

The following table sets forth certain information about the compensation
of each Trustee of the Trust for the most recent fiscal year.

<TABLE>
<CAPTION>
PENSION OR
AGGREGATE RETIREMENT BENEFITS AGGREGATE
COMPENSATION ACCRUED AS PART OF COMPENSATION
NAME OF TRUSTEE FROM THE TRUST TRUST EXPENSES FROM THE TRUST
--------------- -------------- ------------------- --------------
<S> <C> <C> <C>
Ronald C. Boller............................ $ 0 $ 0 $ 0
Howard P. Colhoun........................... $25,000 $ 0 $25,000
John P. Gould............................... $25,000 $ 0 $25,000
Rodger F. Smith............................. $25,000 $ 0 $25,000
</TABLE>

OFFICERS

The following table sets forth information with respect to the principal
executive officers of the Trust. Each officer is elected by the Trustees. Each
of the President, Treasurer and Secretary serves until the next annual meeting
of the Trustees and until his or her successor is chosen and qualified or until
his or her death, resignation, removal or disqualification.

<TABLE>
<CAPTION>
NAME, POSITION AND AGE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
---------------------- ----------------------------------------------
<S> <C>
Ronald C. Boller (58)................ Vice-President -- Investments, Owens-Illinois, Inc. (May,
President 1992-Present); Vice President and Director, Benefit and Risk
Finance, Owens-Illinois, Inc. (January, 1991-May, 1992);
Vice President and Director, Benefit Finance,
Owens-Illinois, Inc. (April, 1988-December 1990); Director
and President, HCA (1983-Present); and Director, President,
Treasurer and Secretary of HCA Securities; and President,
Harbor Transfer.
Constance L. Souders (46)............ Senior Vice-President, Treasurer, Secretary (May,
Secretary and Treasurer 1992-Present) and Director of Administration, HCA (January,
1997-Present); Director of Accounting and Fiduciary
Operations, HCA (May, 1992-December, 1996); Manager,
Employee Benefit Plan Asset Administration, Owens-Illinois,
Inc. (July, 1988-May, 1992); Vice President and Director,
Harbor Transfer; and Director, HCA Securities.
</TABLE>

As a result of the responsibilities assumed by HCA and the Trust's
custodian and distributor, the Trust requires no employees. The Trust's
principal executive officers do not receive any compensation from the Trust for
serving as such officers.

THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE IN FAVOR OF THE NOMINEE
LISTED ABOVE.

REQUIRED VOTE

Because your Fund is a series of the Trust, your vote will be counted
together with the votes of shareholders of the other series of the Trust voting
as a single class in the election of Trustees. Election of Mr. Gould requires a
plurality of votes of the shareholders of the entire Trust present at the
Meeting.

4
<PAGE> 9

PROPOSAL 2

RATIFICATION OF SELECTION OF
INDEPENDENT ACCOUNTANTS

As directed by the Trustees and required by the 1940 Act, the ratification
of the selection of the independent accountants for the Trust's fiscal year
ending October 31, 1997 will be voted upon at the Meeting. It is intended that
the persons named in the accompanying Proxy Card will vote for Price Waterhouse
LLP, unless contrary instructions are given. If the selection of the Trust's
independent accountants is not ratified by the shareholders at the Meeting, the
Board will reconsider such selection.

The Trust's financial statements for the fiscal year ended October 31, 1996
were audited by Price Waterhouse LLP. In connection with its audit, Price
Waterhouse LLP reviews the Trust's annual reports to shareholders and their
filings with the Securities and Exchange Commission ("SEC"). In addition to
audit services, Price Waterhouse LLP prepares the Trust's federal and state tax
returns and provides consultation and assistance on accounting, internal control
and related matters.

At a meeting held on October 30, 1996, the Trustees unanimously selected
Price Waterhouse LLP as the Trust's independent accountants for the fiscal year
ending October 31, 1997. In addition, at a meeting held on January 23, 1997, the
Audit Committee met with representatives of Price Waterhouse LLP to review the
services of the independent accountants. The Audit Committees, in turn, reported
on these matters at the meeting of the Trustees held the same day. A
representative of Price Waterhouse LLP is expected to be available at the
Meeting by telephone should any matter arise requiring consultation with the
accountants, and the accountants have been given the opportunity to make a
statement if they so desire.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS.

REQUIRED VOTE

Because your Fund is a series of the Trust, your vote will be counted
together with the votes of shareholders of the other series of the Trust voting
as a single class on the ratification of independent accountants. Ratification
of the independent accountants of the Trust requires the approval of a majority
of the outstanding shares of the Trust present at the Meeting.

PROPOSALS 3(a)-(h)

PROPOSED AMENDMENT AND RESTATEMENT OF
THE FUNDS' INVESTMENT RESTRICTIONS

GENERAL

The Trustees recommend to shareholders of each Fund that they approve
proposals to amend and restate each Fund's investment restrictions. These
investment restrictions are fundamental policies that may be changed by a Fund
only with the approval of a majority of the outstanding shares of that Fund. The
restated investment restrictions, assuming that each of the proposed amendments
is adopted, are set forth in Appendix D to this Proxy Statement.

One reason for the proposals is to adopt insofar as possible a uniform
statement of investment restrictions for the Trust. Such uniformity would
facilitate comparison of different funds' investment restrictions as well as
administration of the restrictions. The proposals would also result in a clearer
and simpler statement of these restrictions.

Another reason for restating the Funds' investment restrictions is to
delete the policies adopted in response to state "Blue Sky" laws and regulations
restricting certain types of investment

5
<PAGE> 10

company practices and investments. The states no longer have the power to
enforce these restrictions, and the elimination of the restrictions may expand
the range of investment opportunities and techniques available in connection
with the management of the Funds' portfolios.

The final reason for restating the Funds' investment restrictions is to
recharacterize certain previously adopted fundamental policies as
non-fundamental. Certain of the investment restrictions are being liberalized to
the extent permitted under the 1940 Act. This recharacterization and
liberalization will grant the Trustees the ability to change these
non-fundamental policies as needed, without seeking further approval from
shareholders.

The following is a summary of the proposed changes to each of the
investment restrictions. The restrictions are summarized individually below and
will be voted upon separately. In order to fully achieve the benefits set forth
above, the Trustees recommend that shareholders approve each of the Proposals.

PROPOSAL 3(A): INVESTMENT POLICY ON ISSUER DIVERSIFICATION

To be diversified under the 1940 Act, a Fund must not, with respect to 75%
of its total assets, invest more than 5% of its total assets in the securities
of any one issuer or acquire more than 10% of the outstanding voting securities
of any one issuer. These restrictions apply only at the time of investment. A
Fund may invest up to 25% of its total assets without regard to these
restrictions. In addition, these restrictions do not apply to holdings of or
investments in cash, cash items, U.S. Government securities or securities of
other investment companies. The current investment restriction of the Funds is
presented as two separate policies. There is no requirement that this
restriction be stated as two policies, and it is proposed to restate these
restrictions in a restriction. The restatement will not effect a substantive
change to the meaning of the restriction. The Trustees propose that each Fund
adopt the following investment restriction in lieu of its current fundamental
policy:

The Fund may not, with respect to 75% of the total assets of the Fund,
purchase the securities of any issuer if such purchase would cause more
than 5% of its total assets (taken at market value) to be invested in
the securities of such issuer, or purchase securities of any issuer if
such purchase would cause more than 10% of the total voting securities
of such issuer to be held by the Fund, except obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.

PROPOSAL 3(B): INVESTMENT POLICY ON INDUSTRY CONCENTRATION

The 1940 Act requires that each investment company adopt a policy, which
cannot be changed without shareholder approval, stating whether 25% or more of
the investment company's assets can be invested (concentrated) in the securities
of issuers in any one industry. The limitation does not apply to investments in
U.S. government securities. Each of the Funds (other than Harbor Money Market
Fund and Harbor International Growth Fund), has adopted a policy not to
concentrate in the securities of issuers in any one industry. This investment
restriction is proposed to be amended to comply with the staff's current
position that the asset limit applicable to a Fund's investments in a certain
industry to permit concentration in that industry should be equal to or in
excess of 25% of the Fund's total assets. Harbor Money Market Fund will retain
its ability to invest more than 25% of its total assets in securities issued or
guaranteed by banks and bank holding companies.

An affirmative vote on this proposal by the shareholders of Harbor Growth
Fund will result in the elimination of the policy with respect to that Fund that
permits the Fund to concentrate its investments in the pharmaceutical, banking
and telephone industries if the subadviser deems investment in those industries
to be a good relative value.

6
<PAGE> 11

As proposed, each Fund's policy would be as follows:

The Fund may not invest 25% or more of its total assets in the
securities of one or more issuers conducting their principal business
activities in the same industry (excluding the U.S. Government or any of
its agencies or instrumentalities), except that 25% or more of the total
assets of Harbor Money Market Fund may be invested in the securities of
banks and bank holding companies, including certificates of deposit and
bankers' acceptances.

PROPOSAL 3(C): INVESTMENT POLICIES ON BORROWING AND PLEDGING ASSETS

The 1940 Act requires that each investment company adopt a policy, which
cannot be changed without shareholder approval, on borrowing. Each Fund
currently has a limitation upon borrowing, although the wording of the
limitation and the permitted amount of borrowing varies slightly. The 1940 Act
prohibits an open-end investment company from issuing any senior security
(including debt), except that an open-end investment company may borrow from
banks in an amount not exceeding 33 1/3% of its total assets. The Trustees have
recommended that the Funds adopt a uniform borrowing policy (i) permitting
borrowing up to the maximum allowed by the 1940 Act, and (ii) permitting the
Funds (except Harbor Money Market Fund) to enter into reverse repurchase
agreements and mortgage dollar rolls accounted for as a financing. For purposes
of the Funds' policy on borrowing, the Funds do not consider certain investments
and practices to be borrowings, including short sales, currency transactions,
mortgage dollar rolls which are not accounted for as a financing, forward
contracts, swaps, interests rate caps, floors and collars, options, future
contracts, options on future contracts and forward commitment transactions.

The fundamental policies on borrowing, if adopted, would be the same for
each Fund (except Harbor Money Market Fund) and would provide as follows:

The Fund may not borrow money, except that (a) the Fund may borrow from
banks (as defined in the Act) or through reverse repurchase agreements
in amounts up to 33 1/3% of its total assets (including the amount
borrowed), (b) the Fund may, to the extent permitted by applicable law,
borrow up to an additional 5% of its total assets for temporary
purposes, (c) the Fund may obtain such short-term credits as may be
necessary for the clearance of purchases and sales of portfolio
securities, (d) the Fund may engage in transactions in mortgage dollar
rolls which are accounted for as financings. Harbor Money Market Fund is
not permitted to invest in reverse repurchase agreements or to engage in
transactions in mortgage dollar rolls accounted for as financings.

The Funds' fundamental policy on pledging their assets was a requirement
imposed by state securities laws that no longer applies to the Funds.
Consequently, it is proposed that the restriction be eliminated.

PROPOSAL 3(D): INVESTMENT POLICY ON REAL ESTATE AND OIL AND GAS

The 1940 Act requires that each investment company adopt a policy, which
cannot be changed without shareholder approval, on acquiring interests in real
estate. The proposed policy does not represent a material change in investment
policy for the Funds. The existing restriction on investment in oil and gas
interests was imposed by state law and is no longer required. While the Fund
does not intend to invest in such interests, it is proposed that the restriction
on oil and gas interests be eliminated. As restated, each Fund's investment
restriction would provide as follows:

The Fund may not purchase, hold or deal in real estate, although the
Fund may purchase and sell securities that are secured by real estate or
interests therein, securities of real estate investment trusts and
mortgage-related securities and may hold and sell real estate acquired
by the Fund as a result of the ownership of securities.

7
<PAGE> 12

PROPOSAL 3(E): INVESTMENT POLICY ON COMMODITIES

The 1940 Act requires that the Funds have a fundamental investment policy,
which cannot be changed without shareholder approval, regarding investments in
commodities. While the Funds do not invest in physical commodities or commodity
contracts, the Funds do enter into financial futures contracts, options or
futures and, in certain cases, currency contracts. Any financial futures
contract or related option is considered to be a commodity contract. Other types
of financial instruments such as forward commitments and swaps might also be
deemed to be commodity contracts. The amendment is being proposed to enable each
Fund to continue to enter into financial futures contracts and related options
for hedging and other permissible purposes and to clarify that certain practices
in which a Fund engages (such as forward foreign currency contracts) or might in
the future engage (such as swaps) are not subject to this restriction.

As amended, each Fund's investment restriction with respect to commodities
would be as follows:

The Fund generally may not invest in commodities or commodity contracts,
except that the Fund may invest in currency and financial instruments
and contracts that are commodities or commodity contracts which are not
deemed to be prohibited commodities or commodities contracts for the
purpose of this restriction.

PROPOSAL 3(F): INVESTMENT POLICY ON INVESTMENTS TO EXERCISE CONTROL

Each Fund has a fundamental policy not to invest in companies for the
purpose of exercising control or management. This restriction is not required by
the 1940 Act and is no longer required by state law. Because the Funds have no
intention to invest in companies to exert control over management, the Trustees
recommend that the restriction be reclassified as non-fundamental.

PROPOSAL 3(G): INVESTMENT POLICY CONCERNING UNSEASONED ISSUERS

To comply with state securities laws, each Fund has a fundamental policy,
which cannot be changed without shareholder approval, prohibiting it from
investing in companies with a record of less than three years' continuous
operation, including predecessors. This restriction is no longer required, is
obsolete and the Trustees recommend that it be eliminated.

PROPOSAL 3(H): INVESTMENT POLICY CONCERNING TRANSACTIONS WITH AFFILIATED PERSONS

To comply with state securities laws, each Fund has a fundamental policy,
which cannot be changed without shareholder approval, prohibiting it from
engaging in portfolio security transactions with the officers or Trustees of the
Fund, its adviser and its underwriter. This restriction is obsolete and each
Fund is subject to the prohibitions on affiliated transactions in the 1940 Act.
The Trustees recommend that the restriction be eliminated.

TRUSTEES' RECOMMENDATION

The Trustees believe that each proposed amendment to the Funds' investment
restrictions will more clearly reflect current regulatory practice, will provide
a more complete range of investment opportunities and will clarify and simplify
the Funds' restrictions.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE
"FOR" THE ADOPTION OF EACH OF THE PROPOSED AMENDED INVESTMENT RESTRICTIONS

REQUIRED VOTE

Approval of each proposed amendment to a Fund's fundamental investment
restrictions requires the affirmative vote of a majority of the outstanding
shares of the Fund which means the

8
<PAGE> 13

vote of the lesser of (A) 67% or more of the shares present at the Meeting, if
the holders of more than 50% of the shares of the Fund are present or
represented by proxy, or (B) more than 50% of the Fund's outstanding shares
("1940 Act Majority"). If a proposed amendment is not approved with respect to a
Fund, the current investment restriction will continue in effect unchanged for
that Fund.

PROPOSAL 4

TO CHANGE EACH FUND'S INVESTMENT OBJECTIVE
FROM FUNDAMENTAL TO NON-FUNDAMENTAL

Each Fund's investment objective is "fundamental" which means that it
cannot be changed by the Trustees without shareholder approval. The Trustees
believe that it is in the best interests of each Fund for the Trustees to be
able to change a Fund's investment objective in the future without the cost and
delay of further shareholder approval. In the unlikely event that a Fund's
investment objective is determined in the future no longer to be appropriate for
that Fund, shareholders would be advised by the Fund of the change in its
investment objective.

If a Fund's shareholders approve this proposal, the Trustees intend to
restate the Fund's objective to a direct declarative statement. This change will
permit a Fund's shareholders, future investors and rating and ranking agencies
to more closely compare the Fund with other investment products with a similar
objective. The restatement of a Fund's investment objective will not effect a
substantive change in the Fund's objective (except Harbor Value Fund, as
described in Proposal 6). The Trustees have no present intention to materially
change a Fund's operating policies to change the investment profile or
investment risk of the Fund. Each Fund's investment objective as currently
stated and as proposed to be restated (amended in the case of Harbor Value Fund)
is set forth in Appendix E.

TRUSTEES' RECOMMENDATION

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND
APPROVE CLASSIFYING THAT FUND'S INVESTMENT OBJECTIVE AS NON-FUNDAMENTAL

REQUIRED VOTE

Approval of this proposal by each Fund requires the approval of a 1940 Act
Majority of that Fund's outstanding shares. If the proposal is not approved with
respect to a Fund, that Fund's investment objective will remain classified as
non-fundamental and will not be restated.

PROPOSAL 5

TO APPROVE A POLICY TO PERMIT THE BOARD OF TRUSTEES AND HCA TO SELECT
SUBADVISERS OR TO AMEND SUBADVISORY AGREEMENTS WITHOUT OBTAINING FURTHER
SHAREHOLDER APPROVAL AND TO APPROVE A TECHNICAL AMENDMENT
TO EACH FUND'S INVESTMENT ADVISORY AGREEMENT

SUMMARY

At the Board of Trustees' Meeting, the Trustees, including the Independent
Trustees, approved, and recommended that shareholders of each Fund approve, a
policy to permit the Adviser, subject to the approval of the Board of Trustees,
to appoint subadvisers, to enter into subadvisory agreements and to amend
existing subadvisory agreements without further shareholder approval (the
"Subadviser Approval Policy"). The implementation of the Subadviser Approval
Policy is subject to the receipt of an exemptive order from the Securities and
Exchange Commission (the "SEC").

9
<PAGE> 14

THE SECTION 15 EXEMPTIVE ORDER

On May 9, 1997, the Trust and HCA filed an exemptive application with the
SEC requesting an order of the SEC (the "Exemptive Order") for relief from the
provisions of Section 15(a) of the 1940 Act and Rule 18f-2 under the 1940 Act.
The provisions of the 1940 Act require that shareholders of a mutual fund
approve a subadvisory agreement with the subadviser and material amendments to
an existing subadvisory agreement. If the Exemptive Order is granted by the SEC,
and shareholders approve this proposal, the Adviser will be authorized, subject
to approval by the Board of Trustees, to evaluate, select and retain new
subadvisers for the respective Funds or modify a Fund's existing subadvisory
agreement without obtaining further approval of the affected Fund's shareholders
whenever the Adviser and the Board of Trustees believe such actions will benefit
that Fund and its shareholders.

THE ADVISER AND THE SUBADVISERS

HCA has served as the Adviser to the Trust since its inception in 1986
pursuant to separate investment advisory agreements between the Trust, on behalf
of each Fund, and the Adviser. Since 1987, the Adviser has selected subadvisers
and recommended that the Board of Trustees approve those subadvisers to make the
day-to-day investment decisions for the Funds. Since that time, the Adviser has
represented itself as an investment adviser whose strength, experience and
expertise lies in its ability to evaluate, select and supervise those
subadvisers who can add the most value to shareholders' investments in the
respective Funds.

Current Subadviser Approval Process. The Trust, on behalf of each Fund,
enters into a separate subadvisory agreement with the Adviser and the respective
subadviser selected by the Adviser. Under the terms of these subadvisory
agreements, the subadvisers have authority to provide the respective Funds with
advice concerning the investment management of that portion of the Fund's assets
allocated to the subadviser by the Adviser. The subadvisers determine what
securities shall be purchased, what securities shall be sold and what portion of
a Fund's assets shall remain uninvested. For these subadvisory services to the
Funds, the Adviser pays each subadviser a monthly fee at an annual rate based on
the average daily net assets of the Fund as specified in the specific
subadvisory agreement. Each subadviser bears its own expenses of providing
subadvisory services to the respective Fund. Neither the Trust nor the Funds
have any responsibility to pay subadvisory fees to any subadviser. Each Fund's
subadvisory arrangements are subject to approval by the Board of Trustees,
including the Independent Trustees, and in the absence of exemptive relief from
the SEC, each subadvisory agreement is subject to the approval of the affected
Fund's shareholders.

Proposed Subadviser Approval Policy. Approval of the Subadviser Approval
Policy will not affect any of the requirements under the federal securities laws
that govern the Trust, the Adviser, the subadvisers or the subadvisory
agreements other than the requirement to call a meeting of the affected Fund's
shareholders. The Board of Trustees of the Trust, including the Independent
Trustees, will continue to evaluate and approve all new subadvisory agreements
between the Adviser and the subadvisers as well as all changes to existing
subadvisory agreements. In addition, if the requested relief is granted by the
SEC, the Trust and Adviser will be subject to several conditions imposed by the
SEC to ensure that the interests of the Funds' shareholders are adequately
protected whenever the Adviser acts under the Subadviser Approval Policy.
Furthermore, within 90 days of a change to a Fund's subadvisory arrangements,
the Trust will provide the affected Fund's shareholders with an information
statement that contains substantially the same information about the subadviser,
the subadvisory agreement and the subadvisory fee that would be required to be
sent to the affected Fund's shareholders in a proxy statement. This information
will permit the affected Fund's shareholders to determine if they are satisfied
with the subadvisory arrangements. If not satisfied, the shareholders would be
able to exchange their shares for another Fund or redeem their shares. Exchanges
and redemptions are not subject to transaction or distribution fees.

10
<PAGE> 15

SHAREHOLDER APPROVAL OF THIS PROPOSAL WILL NOT RESULT IN AN INCREASE OR
DECREASE IN THE TOTAL AMOUNT OF INVESTMENT ADVISORY FEES PAID BY THE FUNDS TO
THE ADVISER. If the Trust implements this policy, the Adviser, pursuant to each
Fund's investment advisory agreement, will continue to provide the same level of
management and administrative services to the Funds as it has always provided.

If the Exemptive Order is granted, the relief would apply to at least the
following situations: (i) the subadviser is removed for substandard performance;
(ii) the individual employee responsible for a Fund moves from employment with
one subadviser to another; (iii) there is a change of control of the subadviser;
(iv) HCA decides to diversify the Fund's management by adding another
subadviser; (v) there is a change in investment style of the Fund; and (vi) HCA
negotiates a reduction (or the subadviser negotiates an increase) in the
subadvisory fee that HCA pays to the subadviser. Furthermore, where there is a
decrease in a subadviser's compensation paid by HCA, the concomitant increase in
the compensation available for retention by HCA would not be deemed to be an
increase in advisory compensation that requires a shareholder meeting. The
Subadviser Approval Policy will not be used to approve any subadviser that is
affiliated with HCA as that term is used in the 1940 Act or to materially amend
any subadvisory agreement with an affiliated subadviser.

As of the date of this Proxy Statement, neither the Trust nor the Adviser
is aware of any reason why a Fund's subadviser will not continue to serve in
that capacity and under the terms of the existing subadvisory agreement, except
as described in Proposal 7. However, some events that affect a subadviser, for
example, a change of control of the subadviser, happen very quickly and without
substantial advance notice to all parties that might be affected.

REASONS FOR REQUESTING SECTION 15 EXEMPTIVE RELIEF

The Trustees believe that providing the Adviser with maximum flexibility to
perform those duties that shareholders expect the Adviser to perform --
selecting, supervising and evaluating subadvisers -- without incurring the
unnecessary delay or expense of obtaining further shareholder approval is in the
best interests of each Fund's shareholders because it will allow each Fund to
operate more efficiently. Currently, in order for the Adviser to appoint a
subadviser or materially modify a subadvisory agreement, the Trust must call and
hold a shareholder meeting of the affected Fund, create and distribute proxy
materials, and solicit votes from the Fund's shareholders. This process is
time-intensive, costly and slow and is borne entirely by the respective Fund.
Without the delay inherent in holding shareholder meetings, each Fund would be
able to act more quickly and with less expense to appoint a subadviser when the
Trustees and the Adviser feel that the appointment would benefit the Fund.

Also, the Trustees believe that is appropriate to vest the selection,
supervision and evaluation of the subadvisers in the Adviser (subject to review
by the Board of Trustees) in light of the management structure of the Trust, as
well as the Adviser's significant experience and expertise in selecting
subadvisers and the shareholders' expectation that the Adviser will utilize that
expertise to select the most competent subadvisers. The Adviser has demonstrated
that it has the requisite expertise to evaluate, select and supervise
subadvisers. For the past ten years, the Adviser has continually evaluated and
refined its subadviser selection process. The Trustees believe that many
investors choose to invest in the Funds because of the Adviser's experience and
expertise in evaluating and choosing subadvisers who can add the most value to a
shareholder's investment in that Trust.

Finally, the Trustees will provide sufficient oversight of the subadviser
selection process to ensure that shareholders' interests are protected whenever
the Adviser selects a subadviser or modifies a subadvisory agreement. The Board,
including a majority of the Independent Trustees, will continue to evaluate and
approve all new subadvisory agreements as well as any modification to existing
subadvisory agreements. In their review, the Trustees will analyze all factors
that they consider to be relevant to the determination, including the nature,
quality and scope of services

11
<PAGE> 16

provided by the subadvisers. The Trustees will compare the investment
performance of the assets managed by the subadviser with other accounts with
similar investment objectives managed by other advisers and will review the
subadviser's compliance with federal securities laws and regulations. The
Trustees believe that their comprehensive review will ensure that the Adviser
continues to act in the best interests of each Fund and its shareholders. Each
subadvisory agreement will continue to be subject to all provisions of the 1940
Act, except for the specific provisions of the 1940 Act for which relief is
granted by the SEC.

TECHNICAL AMENDMENT TO THE INVESTMENT ADVISORY AGREEMENTS

The Trust, on behalf of each Fund, has entered into investment advisory
agreements with the Adviser (each, an "Advisory Agreement" and together, "the
Advisory Agreements"). Each Advisory Agreement contains a clause that
specifically states that any subadvisory agreements entered into by the Adviser
will be approved by shareholders. In order to obviate any interpretive conflict
between the provisions of the Exemptive Order and the Advisory Agreements, the
Trustees, including the Independent Trustees, have approved an amendment to the
Advisory Agreements to change that clause. If this proposal is approved, a
technical amendment (the "Technical Amendment") to each of the Advisory
Agreements will be adopted. Each Advisory Agreement will be amended as follows:

"SUBADVISERS: You may engage one or more investment advisers which are
either registered as such or specifically exempt from registration under
the Investment Advisers Act of 1940, as amended, to act as subadvisers
to provide with respect to the Fund certain services set forth in
Paragraphs 4 and 7 hereof, all as shall be set forth in a written
contract to which the Trust, on behalf of the Fund, and you shall be
parties, which contract shall be subject to approval in accordance with
the requirements of the Investment Company Act of 1940, as amended, and
as such requirements may be modified by rule, regulation or order of the
Securities and Exchange Commission.

Except for the Technical Amendment, all other provisions in each Fund's
Advisory Agreement will remain unchanged.

THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF EACH FUND
VOTE FOR THIS PROPOSAL

REQUIRED VOTE

Approval of this proposal with respect to a Fund requires the affirmative
1940 Act Majority Vote of that Fund's outstanding shares. If one or more of the
Funds does not approve this proposal, the Subadviser Approval Policy will not be
adopted with respect to that Fund. Adoption of the Policy is subject to receipt
of the requested exemptive relief which may take until October, 1997. If the SEC
declines to grant the exemptive relief requested by the Trust and the Adviser,
the Subadviser Approval Policy will not be adopted for any Fund.

PROPOSAL 6

TO APPROVE A CHANGE TO HARBOR VALUE FUND'S INVESTMENT OBJECTIVE

GENERAL

At the Board of Trustees' Meeting, the Trustees, including the Independent
Trustees, voted to approve, and voted to recommend that Harbor Value Fund's
shareholders approve, an amendment to the Fund's investment objective. The
amendment will not result in a change in the way the Fund is currently managed.
As described above in Proposal 4, the Trustees also recommended that the Fund's
investment objective be reclassified as non-fundamental.

12
<PAGE> 17

THE AMENDED INVESTMENT OBJECTIVE

The Fund's current investment objective is to seek "maximum long-term total
return from a combination of capital growth and income through investment in a
portfolio consisting primarily of dividend-paying common stocks." As presently
stated, the investment objective states that the Fund will seek both capital
growth and income. Such a policy could be construed as not permitting the Fund
to aggressively pursue a strategy of investing in common stocks with above
average dividend yield that produce income for the Fund at the expense of
capital growth. Both HCA and the Fund's subadvisers, DePrince, Race and Zollo,
Inc. and Richards & Tierney, Inc., believe that the Fund should be classified as
an "equity-income" fund that seeks total return but with an established focus on
investing for income in dividend paying common stocks.

The Fund's investment objective as amended will be "long term total return
with an emphasis on current income." The Fund will seek to achieve its
investment objective by investing in dividend paying common stocks. At the
present time, the Trustees are not recommending any material changes to the
Fund's operating policies. HCA, the Subadvisers and the Trustees do not believe
that the proposed change to the Fund's investment objective will increase the
risks associated with an investment in the Fund.

TRUSTEES' RECOMMENDATION

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT HARBOR VALUE FUND'S SHAREHOLDERS
APPROVE THE AMENDMENT TO THE FUND'S INVESTMENT OBJECTIVE

REQUIRED VOTE

Approval of this proposal requires the 1940 Act Majority Vote of Harbor
Value Fund's outstanding shares. If the Fund's shareholders do not approve this
proposal, the Fund's investment objective will not be changed.

PROPOSAL 7

TO APPROVE A NEW SUBADVISORY AGREEMENT
ON BEHALF OF HARBOR GROWTH FUND

GENERAL

At the Board of Trustees' Meeting, held May 1, 1997, the Trustees,
including the Independent Trustees, approved, and voted to recommend that Harbor
Growth Fund's shareholders approve, a proposal to approve a new subadvisory
agreement (the "Subadvisory Agreement") among the Trust, on behalf of Harbor
Growth Fund, the Adviser and Emerging Growth Advisors, Inc., the proposed
subadviser ("EGA"). Pursuant to the terms of the Subadvisory Agreement, EGA will
provide portfolio management services to the Fund's portfolio. Prior to May 2,
1997, Nicholas-Applegate Capital Management was responsible for investing the
Fund's portfolio. Effective May 1, 1997, the Board of Trustees terminated the
investment subadvisory agreement (the "Prior Agreement") among the Trust, on
behalf of the Fund, the Adviser and Nicholas-Applegate because the Trustees did
not believe that Nicholas-Applegate could continue to provide the level of
portfolio management services that the Fund requires.

The Subadvisory Agreement provides for a change in the rate of the
subadvisory fee to be paid to EGA. THERE WILL BE NO INCREASE IN ADVISORY FEES
PAID BY THE FUND TO THE ADVISER WHO WILL CONTINUE TO PAY EGA'S SUBADVISORY FEE
OUT OF ITS ASSETS. Under the terms of the Subadvisory Agreement, EGA will pay
its own expenses.

13
<PAGE> 18

THE SUBADVISER

EGA, located at 401 E. Pratt Street, Baltimore, Maryland 21202 is a
Delaware corporation registered as an investment adviser with assets of
$ under management as of May 16, 1997. EGA acts as an investment manager to
several institutional clients although the Fund is currently the only mutual
fund to which it provides services. Mr. Peter S. Welles, the President of EGA,
will provide portfolio management services to the Fund. Since 1992, Mr. Welles
has been providing investment advisory services to private accounts and pension
accounts. Prior to 1996, Mr. Welles was a general partner of Emerging Growth
Partners, L.P., an investment limited partnership. Mr. Welles is the sole
director and officer of EGA.

THE SUBADVISORY AGREEMENT

A copy of the Subadvisory Agreement is attached hereto as Exhibit A and the
following discussion of the terms of the Subadvisory Agreement is qualified in
its entirety by reference to Exhibit A.

The Subadvisory Agreement is substantially the same as the Prior Agreement
with Nicholas-Applegate that was approved by the Fund's shareholders on December
11, 1992 in connection with the appointment of Nicholas-Applegate as the Fund's
subadviser. The Subadvisory Agreement (i) provides that EGA will, subject to the
over-all direction of the Board of Trustees, regularly provide the Fund with
advice concerning the investment management of the portion of the Fund's assets
allocated to EGA and will arrange for the placing of all orders for the purchase
and sale of portfolio securities; (ii) provides that in the event that the
Subadvisory Agreement terminates during any portion of a year, the fee due to
EGA shall be prorated based upon the number of days the Subadvisory Agreement
was in effect; (iii) requires EGA to provide to the Adviser any more favorable
asset based fee arrangements that are provided to other investment clients using
EGA's advisory services; and (iv) provides that EGA is not liable to the Adviser
or the Trust, on behalf of the Fund, except for gross negligence or bad faith or
willful misfeasance in the performance of its duties or by reason of reckless
disregard of its obligations and duties.

If approved by the Fund's shareholders, the Subadvisory Agreement will
remain in effect, unless earlier terminated, until March 17, 1999, and from year
to year thereafter, provided that the Agreement is approved at least annually by
the vote of a majority of the Independent Trustees of the Trust cast in person
at a meeting called for the purpose of voting on such approval, and either by
vote of a majority of the Trustees or a majority of the outstanding shares of
the Fund. The Subadvisory Agreement will terminate automatically in the event of
its assignment or the assignment of the advisory agreement between the Trust, on
behalf of the Fund, and the Adviser, and may be terminated with respect to the
Fund at any time, without penalty charged to the Fund, by a 1940 Act Majority
Vote of the Fund's outstanding shares or by a vote of a majority of the entire
Board of Trustees on 60 days' written notice to EGA or by EGA on 60 days'
written notice to the Trust.

Subadvisory Fee. Under the Prior Agreement, the Adviser, out of its own
assets, paid a subadvisory fee that was equal on an annual basis to a stated
percentage of the Fund's average actual net assets managed by Nicholas-Applegate
as follows:

<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
--------------- -----------
<S> <C>
First $25 million........................................... 0.75%
Next $75 million............................................ 0.625%
Amounts over $100 million................................... 0.50%
</TABLE>

The Adviser was obligated to pay Nicholas-Applegate an annual minimum fee
of $75,000. The subadvisory fee paid by the Adviser to Nicholas-Applegate for
the period from November 1, 1995 to October 31, 1996 was $730,000.

14
<PAGE> 19

Under the Subadvisory Agreement, the Adviser, out of its own assets will
pay EGA a fee that is equal on an annual basis to a stated percentage of the
Fund's average actual net assets managed by EGA as follows:

<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
--------------- -----------
<S> <C>
First $5 million............................................ 1.00%
Next $20 million............................................ 0.75%
Amounts over $25 million.................................... 0.50%
</TABLE>

Under the Subadvisory Agreement, the Adviser will be obligated to pay EGA
an annual minimum fee of $10,000. If the fee under the Subadvisory Agreement had
been in effect for the period from November 1, 1995 to October 31, 1996, the
Adviser would have paid EGA $ .

Although the initial breakpoints in the subadvisory fee rate applicable to
EGA are higher than those applicable to Nicholas-Applegate, the overall effect
of reducing the breakpoint to 0.50% after the Fund's assets reach $25 million is
to reduce the dollar amount that will be paid to EGA. For example, if the Fund's
assets were $100 million, HCA would pay EGA $575,000 which is $81,250 less than
HCA would have paid to Nicholas-Applegate on the same $100 million.

The approval of the Subadvisory Agreement will not result in any change in
the advisory fee that the Fund is obligated to pay the Adviser.

For purposes of satisfying the applicable fee rate and satisfying the
minimum payment requirement, the assets of the Fund and payments by the Adviser
to EGA will be combined with the assets and payments of the Harbor Capital Group
Trust for Defined Benefit Plans that EGA manages.

THE HARBOR GROWTH FUND ADVISORY AGREEMENT

The Adviser is responsible for the over-all management of Harbor Growth
Fund pursuant to a separate advisory agreement between the Trust, on behalf of
the Fund, and the Adviser (the "Growth Fund Advisory Agreement"). The Growth
Fund Advisory Agreement was initially approved by the shareholders of Harbor
Growth Fund on June 25, 1993 and was most recently approved by the Trustees,
including the dependent Trustees, on January 23, 1997. Under the terms of the
Growth Fund Advisory Agreement, the Adviser may furnish the Fund with investment
research, advice and supervision and may furnish an investment program for the
Fund consistent with the investment objective and policies of the Fund. The
Growth Fund Advisory Agreement expressly provides that the Adviser may engage a
subadviser to assist in the management of the Fund's investment portfolio. The
Adviser oversees the management of the Fund by its subadviser and administers
the Fund's business affairs and, in connection therewith, furnishes the Fund
with office facilities and is responsible for clerical, record keeping and
bookkeeping services and for the financial and accounting records required to be
maintained by the Fund, other than those maintained by the Fund's custodian and
shareholder servicing agent. For its services under the Growth Fund Advisory
Agreement, the Adviser receives a fee paid monthly equal to the sum of 0.75% per
annum of the average daily net assets of Harbor Growth Fund. For the fiscal year
ended October 31, 1996, Harbor Growth Fund paid $981,000 to the Adviser as
compensation for advisory services.

TRUSTEES' EVALUATION

As the Board of Trustees' Meeting, the Trustees, including the Independent
Trustees, determined that it would be in the best interests of the Fund and its
shareholders that EGA be approved as the subadviser to the Fund. In making this
determination, the Trustees considered several factors including EGA's
experience as an investment adviser, the quality of the services to be provided
by EGA to the Fund and EGA's investment process that focuses on investment in
companies with market capitalizations or estimated revenues of not more than
$250-$500 million at the time of initial investment. EGA researches a company's
business characteristics looking for those companies

15
<PAGE> 20

with favorable prospective financial dynamics where management is committed to
improving the company's earnings at an above average growth rate and which have
favorable long-term growth dynamics. The Trustees approved the subadvisory fee
to be paid by the Adviser to EGA based on its analysis of the factors described
above. The Trustees believe the Subadvisory Agreement and the proposed
subadvisory fee to be reasonable and fair, and the appointment of EGA to be in
the best interests of the Fund's shareholders.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF HARBOR GROWTH
FUND APPROVE THE SUBADVISORY AGREEMENT

REQUIRED VOTE

Approval of the Subadvisory Agreement requires a 1940 Act Majority Vote of
Harbor Growth Fund's outstanding shares.

As described below in Proposal 5, the Trust and the Adviser have applied
for exemptive relief from the SEC to permit the Trustees to approve the
appointment of subadvisers without further shareholder approval. The Board of
Trustees and the Adviser do not intend to rely on the relief requested in
Proposal 5 to approve the appointment of EGA as subadviser to Harbor Growth
Fund. The approval of the Subadvisory Agreement with EGA will be subject to
approval by the Fund's shareholders. If the Fund's shareholders do not approve
the Subadvisory Agreement, the Trustees will seek to obtain interim advisory
services for the Fund either from EGA or from another advisory organization.
Thereafter, the Trustees would either negotiate a new investment advisory
agreement with an advisory organization selected by the Trustees or make other
appropriate arrangements, in either event subject to approval by the Fund's
shareholders.

ADDITIONAL INFORMATION

THE INVESTMENT ADVISER

The Adviser is a registered investment adviser and Delaware corporation
with its principal offices at One SeaGate, Toledo, Ohio 43666. The Adviser was
incorporated on September 1, 1983. The Adviser, through a series of wholly-owned
subsidiaries, is wholly-owned by Owens-Illinois, Inc. ("Owens-Illinois"). In
addition to managing and administering the assets of the Funds, the Adviser also
manages separate accounts for the Harbor Capital Group Trust for Defined Benefit
Plans.

The address of the directors and officers of the Adviser is One SeaGate,
Toledo, Ohio 43666. The directors and officers and their principal occupations
are shown below. Mr. Boller is Vice-President -- Investments for Owens-Illinois,
Inc., the parent company of the Adviser.

<TABLE>
<CAPTION>
HARBOR CAPITAL ADVISORS, INC. POSITION AND PRINCIPAL OCCUPATION
----------------------------- ---------------------------------
<S> <C>
Ronald C. Boller..................... Director and President, the Adviser; Vice President --
Investments, Owens-Illinois, Inc.
Janice D. Osthimer................... Director and Senior Vice President, the Adviser
Constance L. Souders................. Director, Senior Vice President, Secretary and Treasurer,
the Adviser
</TABLE>

OTHER BUSINESS

As of the date of this Proxy Statement, the Trustees are not aware of any
matters to be presented for action at the Meeting other than those described
above. Should other business properly be brought before the Meeting, it is
intended that the accompanying Proxy Card will be voted in accordance with the
judgment of the persons named as proxies.

16
<PAGE> 21

PROXIES AND VOTING AT THE MEETING

The enclosed proxy is revocable by a shareholder at any time before it is
exercised by written notice to the Trust (addressed to the Secretary at the
Trust's principal executive offices), by executing a superseding proxy or by
attending the Meeting and voting in person. All valid proxies received prior to
the Meeting (including any adjournment thereof) will be voted at the Meeting.
Matters on which a choice has been provided will be voted as indicated on the
Proxy Card and, if no instruction is given, the persons named as proxies will
vote the shares represented thereby in favor of the matters set forth in each
proposal and will use their best judgment in connection with the transaction of
such other business as may properly come before the Meeting.

In the event that at the time any session of the Meeting is called to order
a quorum is not present in person or by proxy, the persons named as proxies may
vote those proxies which have been received to adjourn the Meeting to a later
date. In the event that a quorum is present but sufficient votes in favor of any
of Proposals 1 through 7 have not been received, the persons named as proxies
may propose one or more adjournments of the Meeting to permit further
solicitation of proxies with respect to the proposal. Any adjournment will
require the affirmative vote of a majority of the shares of the Trust (or the
affected Fund) present in person or by proxy at the session of the Meeting to be
adjourned. The persons named as proxies will vote those proxies which they are
entitled to vote in favor of any such proposal in favor of such an adjournment,
and will vote those proxies required to be voted against any such proposal
against any the adjournment. A shareholder vote may be taken on one or more of
the proposals in this Proxy Statement prior to such adjournment if sufficient
votes for their approval have been received and it is otherwise appropriate.

One-third of the shares of the Trust outstanding and entitled to vote shall
be a quorum for the transaction of business at the Meeting, but any lesser
number shall be sufficient for adjournments. Abstentions will be treated as
shares that are present and entitled to vote with respect to each proposal, but
will not be counted as a vote in favor of a proposal. Accordingly, an abstention
from voting on a proposal has the same effect as a vote against the proposal. If
a broker or nominee holding shares in "street name" indicates on the Proxy Card
that it does not have discretionary authority to vote as to a particular
proposal, those shares will not be considered as present and entitled to vote
with respect to the proposal. Accordingly, a "broker non-vote" has no effect on
the voting in determining whether a proposal has been adopted pursuant to
subsection (i) of the 1940 Act Majority definition. In addition, a "broker
non-vote" has no effect on the voting in determining whether a Nominee has been
elected a Trustee pursuant to Proposal 1. However, in determining whether a
proposal has been adopted pursuant to subsection (ii) of the 1940 Act Majority,
a "broker non-vote" will have the same effect as a vote against the proposal
because shares represented by a "broker non-vote" are considered outstanding
shares.

MANNER AND COST OF PROXY SOLICITATION

Each Fund will bear its allocable portion of proxy solicitation expenses,
including the cost of preparing, assembling and mailing materials used in
connection with the solicitation of proxies. The Funds will reimburse brokers,
nominees and similar record holders for their reasonable expenses incurred in
connection with forwarding proxy materials to beneficial holders. In addition to
the solicitation by use of the mails, certain officers and employees of HCA,
none of whom will receive compensation for their services other than their
regular salaries, may solicit the return of proxies personally or by telephone
or fax.

In addition to the solicitation of proxies by mail or in person, the Trust
may also arrange to have votes recorded by telephone by officers and employees
of the Trust, personnel of the Transfer Agent or agents hired by the Transfer
Agent for such purpose. The telephone voting procedure is designed to
authenticate a shareholder's identity, to allow a shareholder to authorize the
voting of shares in accordance with the shareholder's instructions and to
confirm that the voting instructions have been properly recorded. If these
procedures were subject to a successful legal challenge, such

17
<PAGE> 22

votes would not be counted at the Meeting. The Trust has not sought to obtain an
opinion of counsel on this matter and is not aware of any such challenge. A
shareholder will be called on a recorded line at the telephone number shown in
the Transfer Agent's records for the account and could be asked for the
shareholder's Social Security number or other identifying information. The
shareholder will then be given an opportunity to authorize proxies to vote his
shares at the Meetings in accordance with the shareholder's instructions. To
ensure that the shareholder's instructions have been recorded correctly, the
shareholder will also receive a confirmation of the voting instructions in the
mail. A special telephone number will be available in case the voting
information contained in the confirmation is incorrect. If the shareholder
decides after voting by telephone to attend the Meetings, the shareholder can
revoke the proxy at that time and vote the shares at the Meetings. The cost of
the proxy solicitation on behalf of the Trust is expected to be $ .

SHAREHOLDER PROPOSALS

The Trust is not required and does not intend to hold a meeting of
shareholders each year. Instead, meetings will be held only when and if
required. Any shareholders desiring to present a proposal for consideration at
the next meeting of shareholders of their respective Fund must submit the
proposal in writing, so that it is received by the appropriate Fund within a
reasonable time before any meeting.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.

JUNE 2, 1997

18
<PAGE> 23

APPENDIX A

As of May 16, 1997, each Fund had the following number of shares
outstanding:

<TABLE>
<CAPTION>
SHARES
FUND OUTSTANDING
---- -----------
<S> <C>
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..................................
Harbor Money Market Fund....................................
</TABLE>

A-1
<PAGE> 24

APPENDIX B

As of May 16, 1997, the following persons or entities owned beneficially or
of record more than 5% of the outstanding shares of each Fund:

B-1
<PAGE> 25

APPENDIX C

The information as to beneficial ownership set forth in the chart below is
based on statements furnished to the Funds by the Trustees. Each has all voting
and investment powers with respect to the shares indicated. All of the
information is as of May 16, 1997.

None of the Trustees beneficially owned individually, nor did the Trustees
beneficially own as a group, in excess of one percent of the outstanding shares
of any of the Funds as of May 16, 1997.

<TABLE>
<CAPTION>
FUND BOLLER COLHOUN GOULD SMITH
---- ------ ------- ----- -----
<S> <C> <C> <C> <C>
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..........
Harbor Money Market Fund............
</TABLE>

C-1
<PAGE> 26

APPENDIX D

HARBOR FUND
AMENDMENTS TO FUNDAMENTAL INVESTMENT RESTRICTIONS

<TABLE>
<CAPTION>
NO. EACH FUND MAY NOT: EACH FUND MAY NOT:
- --- ------------------ ------------------
CURRENT RESTRICTIONS AMENDED RESTRICTIONS
<C> <S> <C>
1. Invest more than 5% of the value of the with respect to 75% of the total assets
total assets of a Fund (with respect to of the Fund, purchase the securities of
75% of the relevant Fund's total assets any issuer if such purchase would cause
taken at market value) in the securities more than 5% of the Fund's total assets
of any one issuer, except U.S. Government (taken at market value) to be invested in
securities; the securities of such issuer, or
purchase securities of any issuer if
such purchase would cause more than 10%
of the total voting securities of such
issuer to be held by the Fund, except
obligations issued or guaranteed by the
U.S. Government, its agencies or
instrumentalities.
2. purchase the securities of any issuer if See above.
such purchase would cause more than 10%
of the voting securities of such issuer
to be held by a Fund (with respect to 75%
of the relevant Fund's total assets taken
at market value);
3. borrow money except from banks on a borrow money, except (a) the Fund may
temporary basis for extraordinary or borrow from banks (as defined in the Act)
emergency purposes, provided that a Fund or through reverse repurchase agreements
is required to maintain asset coverage of in amounts up to 33 1/3% of its total
300% for all borrowing. This restriction assets (including the amount borrowed),
does not apply to (i) cash collateral (b) the Fund may, to the extent permitted
received as a result of portfolio by applicable law, borrow up to an
securities lending; or (ii) to Harbor additional 5% of its total assets for
Value Fund and Harbor Short duration temporary purposes, (c) the Fund may
Fund, except that each such Fund is obtain such short-term credits as may be
required to maintain asset coverage of necessary for the clearance of purchases
300% for all borrowing; and sales of portfolio securities, and
(d) the Fund may engage in transactions
in mortgage dollar rolls which are
accounted for as financings. Harbor Money
Market Fund is not permitted to invest in
reverse repurchase agreements and
mortgage dollar rolls accounted for as a
financing.
4. act as underwriter of the securities No change recommended.
issued by others, except to the extent
that the purchase of securities in
accordance with a Fund's investment
objective and policies directly from the
issuer thereof and the later disposition
thereof may be deemed to be underwriting;
</TABLE>

D-1
<PAGE> 27
<TABLE>
<CAPTION>
NO. EACH FUND MAY NOT: EACH FUND MAY NOT:
- --- ------------------ ------------------
CURRENT RESTRICTIONS AMENDED RESTRICTIONS
<C> <S> <C>
5. purchase securities if such purchase invest 25% or more of its total assets in
would cause more than 25% in the the securities of one or more issuers
aggregate of the market value of the conducting their principal business
total assets of a Fund to be invested in activities in the same industry
the securities of one or more issuers (excluding the U.S. Government or any of
having their principal business its agencies or instrumentalities).
activities in the same industry, other Harbor Money Market Fund may invest more
than U.S. Government securities (for the than 25% of its total assets in the
purposes of this restriction, (i) securities of banks and bank holding
telephone companies are considered to be companies, including certificates of
a separate industry from gas or electric deposit and bankers' acceptances.
utilities, (ii) wholly-owned finance
companies are considered to be in the
industry of their parents if their
activities are primarily related to
financing the activities of the parents
and (iii) privately issued
mortgage-backed securities collateralized
by mortgages insured or guaranteed by the
U.S. Government, its agencies or
instrumentalities do not represent
interests in any industry) except that
(a) more than 25% of the market value of
the total assets of Harbor Money Market
Fund may be invested in the securities of
banks and bank holding companies,
including certificates of deposit and
bankers' acceptances; and (b) Harbor
International Growth Fund will
concentrate in any one of three
designated industries: pharmaceuticals,
banking and telephone companies (the
"Designated Industries") when the
Subadviser deems securities in any one of
the Designated Industries to be a good
relative value (as defined in the
Prospectus) by investing from 25% to 40%
of the value of its total assets in the
securities of such Designated Industry;
6. issue senior securities, except as No change recommended.
permitted under the Investment Company
Act, and except that Harbor Fund may
issue shares of beneficial interest in
multiple series or classes;
</TABLE>

D-2
<PAGE> 28
<TABLE>
<CAPTION>
NO. EACH FUND MAY NOT: EACH FUND MAY NOT:
- --- ------------------ ------------------
CURRENT RESTRICTIONS AMENDED RESTRICTIONS
<C> <S> <C>
7. purchase or sell real estate (including purchase, hold or deal in real estate,
limited partnership interests but although the Fund may purchase and sell
excluding securities secured by real securities that are secured by real
estate or interests therein), interests estate or interests therein, securities
in oil, gas or mineral leases, of real estate investment trusts and
commodities or commodities contracts, mortgage-related securities and may hold
except futures contracts, including but and sell real estate acquired by the Fund
not limited to contracts for the future as a result of the ownership of
delivery of securities and futures securities.
contracts based on securities indexes, or
engage in arbitrage transactions. Foreign generally may not invest in commodities
currency, forward foreign currency or commodity contracts, except that the
exchange contracts, options on currency, Fund may invest in currency and financial
currency futures contracts and options on instruments and contracts that are
such futures contracts are not deemed to commodities or commodity contracts which
be prohibited commodities or commodities are not deemed to be prohibited
contracts for the purpose of this commodities or commodities contracts for
restriction; the purpose of this restriction.
8. make loans to other persons, except loans No change recommended.
of portfolio securities and except to the
extent that the purchase of debt
obligations and the entry into repurchase
agreements in accordance with such Fund's
investment objectives and policies may be
deemed to be loans;
9. purchase securities of any issuer with a No similar restriction. This restriction
record of less than three years' was required by state securities
continuous operation, including administrators and is no longer required
predecessors, except U.S. Government because of the preemption of state
securities and except securities of such regulation of mutual funds by Congress.
issuers which are rated by at least one There is no requirement in the federal
nationally recognized statistical rating securities laws for such a restriction.
organization (and, with respect to Harbor
International Growth Fund, Harbor
International Fund II, Harbor
International Fund and Harbor Bond Fund,
except obligations issued or guaranteed
by any foreign government or its agencies
or instrumentalities), if such purchase
would cause the investments of a Fund in
all such issuers to exceed 5% of the
value of the total assets of that Fund;
10. purchase from or sell portfolio No similar restriction. This restriction
securities of a Fund to any of the was required by state securities
officers or Trustees of Harbor Fund, its administrators and is no longer required
investment advisers, its principal because of the preemption of state
underwriter or the officers or directors regulation of mutual funds by Congress.
of its investment advisers or principal Each Fund is subject to Section 17 of the
underwriter; 1940 Act that regulates transactions
between mutual funds and affiliated
persons.
</TABLE>

D-3
<PAGE> 29
<TABLE>
<CAPTION>
NO. EACH FUND MAY NOT: EACH FUND MAY NOT:
- --- ------------------ ------------------
CURRENT RESTRICTIONS AMENDED RESTRICTIONS
<C> <S> <C>
11. pledge, mortgage or hypothecate its No similar restriction. This restriction
assets, except that, to secure permitted was required by state securities
borrowings, it may pledge securities administrators and is no longer required
having a market value at the time of because of the preemption of state
pledge not exceeding 15% of the cost of a regulation of mutual funds by Congress.
Fund's total assets and except in Each Fund's activities related to
connection with permitted transactions in borrowing are subject to the limits of
options, futures contracts and options on fundamental investment restriction no. 3
futures contracts; or on borrowing.
12. invest in other companies for the purpose Redesignated as a non-fundamental
of exercising control or management. restriction. See non-fundamental
restriction (g).
13. Notwithstanding the investment policies No change recommended.
and restrictions of a Fund, a Fund may
invest its assets in an open-end
management investment company with
substantially the same investment
objective, policies and restrictions as
the Fund.
</TABLE>

D-4
<PAGE> 30

APPENDIX E

HARBOR FUND
INVESTMENT OBJECTIVES

<TABLE>
<CAPTION>
PROPOSED OBJECTIVE AND
NAME OF FUND CURRENT OBJECTIVE PRINCIPAL INVESTMENT POLICY
- ------------ ----------------- ---------------------------
<S> <C> <C>
Harbor International Growth
Fund......................... seeks long-term growth of The investment objective of
capital through investment in a Harbor International Growth Fund
portfolio consisting of non-U.S. is long-term growth of capital.
equity securities.
The Fund seeks to achieve its
objective by investing primarily
in equity and equity-related
securities of foreign issuers.
Harbor Growth Fund............. seeks long-term growth of The investment objective of
capital by investing primarily Harbor Growth Fund is long-term
in common stocks, the earnings growth of capital.
and security prices of which the
Fund's subadviser expects to The Fund seeks to achieve its
grow at a rate above that of the objective by investing primarily
overall market. in equity and equity-related
securities of companies with
market capitalizations or
estimated revenues of not more
than $250-$500 million at the
time of initial investment.
Harbor Capital Appreciation
Fund......................... seeks long-term growth of The investment objective of
capital by investing primarily Harbor Capital Appreciation Fund
in a portfolio of equity is long-term growth of capital.
securities of established
companies with above-average The Fund seeks to achieve its
prospects for growth. Dividend objective by investing primarily
income is a secondary in equity and equity-related
consideration. securities of companies with
market capitalizations of at
least $1 billion and
above-average prospects for
growth.
Harbor International Fund II... seeks long-term growth of The investment objective of
capital through investment in a Harbor International Fund II is
portfolio consisting primarily long-term total return
of non-U.S. equity securities. principally from growth of
Current income is a secondary capital.
consideration.
The Fund seeks to achieve its
objective by investing primarily
in equity and equity-related
securities of foreign issuers.
</TABLE>

E-1
<PAGE> 31
<TABLE>
<CAPTION>
PROPOSED OBJECTIVE AND
NAME OF FUND CURRENT OBJECTIVE PRINCIPAL INVESTMENT POLICY
- ------------ ----------------- ---------------------------
<S> <C> <C>
Harbor International Fund...... seeks long-term growth of The investment objective of
capital through investment in a Harbor International Fund is
portfolio consisting of non-U.S. long-term total return
equity securities. Current principally from growth of
income is a secondary capital.
consideration.
The Fund seeks to achieve its
objective by investing primarily
in equity and equity-related
securities of foreign issuers.
Harbor Value Fund.............. seeks maximum long-term total The investment objective of
return from a combination of Harbor Value Fund is long-term
capital growth and income total return with an emphasis on
through investment in a current income.
portfolio consisting primarily
of dividend-paying common The Fund seeks to achieve its
stocks. investment objective by
investing in dividend-paying
common stocks.
Harbor Bond Fund............... seeks maximum total return, The investment objective of
consistent with the preservation Harbor Bond Fund is total
of capital and prudent return.
investment management, through
investment in an actively The Fund seeks to achieve its
managed portfolio of objective by investing in an
fixed-income securities. actively managed portfolio of
fixed-income securities of
corporate and governmental
issuers located in the U.S. and
foreign countries.
Harbor Short Duration Fund..... seeks to maximize total return, The investment objective of
consistent with prudent Harbor Short Duration Fund is
investment risk, through total return that is consistent
investment in an actively with preservation of capital.
managed portfolio of short-term
high grade fixed-income The Fund seeks to achieve its
securities. objective by investing in an
actively managed portfolio of
short-term, high grade fixed-
income securities of corporate
and governmental issuers located
in the U.S. and foreign
countries.
</TABLE>

E-2
<PAGE> 32
<TABLE>
<CAPTION>
PROPOSED OBJECTIVE AND
NAME OF FUND CURRENT OBJECTIVE PRINCIPAL INVESTMENT POLICY
- ------------ ----------------- ---------------------------
<S> <C> <C>
Harbor Money Market Fund....... seeks as high a level of current The investment objective of
income as is considered Harbor Money Market Fund is
consistent with the preservation current income.
of capital and liquidity.
Consistent with its policy of
preservation of capital and
liquidity, the Fund seeks to
achieve its objective by
investing in money market
instruments of domestic and
foreign issuers.
</TABLE>

E-3
<PAGE> 33

APPENDIX F

ADDITIONAL FEES PAID BY THE FUNDS
TO THE ADVISER AND/OR ITS AFFILIATES

Harbor Transfer, Inc. provides transfer agency services to the Funds and
HCA Securities Inc. provides distribution services to the Funds. It is expected
that these companies will continue to provide these services.

For the fiscal year ended October 31, 1996, the following Funds paid the
following amounts of compensation to Harbor Transfer, Inc. for transfer agency
services pursuant to their transfer agency agreements with Harbor Transfer, Inc.
No Fund paid any distribution fees to HCA Securities, Inc.

<TABLE>
<CAPTION>
FUND TRANSFER AGENCY FEES
---- --------------------
<S> <C>
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..................................
Harbor Money Market Fund....................................
</TABLE>

F-1
<PAGE> 34

EXHIBIT A
- --------------------------------------------------------------------------------

HARBOR FUND

May 2, 1997

Emerging Growth Advisors, Inc.
401 E. Pratt Street
Suite 211
Baltimore, Maryland 21202
[HARBOR FUND LOGO]

INVESTMENT ADVISORY AGREEMENT FOR SUBADVISER
(HARBOR GROWTH FUND)

Dear Sirs:

Harbor Capital Advisors, Inc. (the "Adviser"), a Delaware corporation, with
its principal offices at One SeaGate, Toledo, Ohio 43666, is the investment
adviser to Harbor Fund (the "Trust") on behalf of Harbor Growth Fund (the
"Fund"). The Trust has been organized under the laws of Delaware to engage in
the business of an investment company. The shares of beneficial interest of the
Trust ("Shares") are divided into multiple series including the Fund, as
established pursuant to a written instrument executed by the Trustees of the
Trust. The Trust is an open-end, management investment company registered under
the Investment Company Act of 1940, as amended (the "Investment Company Act").
Pursuant to authority granted the Adviser by the Trust's Trustees, the Adviser
has selected you to act as a sub-investment adviser of the Fund and to provide
certain other services, as more fully set forth below. You are willing to act as
such a sub-investment adviser and to perform such services under the terms and
conditions hereinafter set forth, and you represent and warrant that you are an
investment adviser registered under the Investment Advisers Act of 1940, as
amended. Accordingly, the Adviser and the Trust on behalf of the Fund agree with
you as follows:

1. Delivery of Fund Documents. The Adviser has furnished you with copies,
properly certified or authenticated, of each of the following:

(a) Agreement and Declaration of Trust of the Trust, as amended and
restated from time to time, and the Certificate of Trust which was
filed with the Delaware Secretary of State dated June 8, 1993 (the
"Declaration of Trust").

(b) By-Laws of the Trust as in effect on the date hereof (the "By-Laws").

(c) Resolutions of the Trustees selecting the Adviser as investment adviser
and you as a sub-investment adviser and approving the form of this
Agreement.

The Adviser will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, including future resolutions of the Trustees approving the
continuance of the items listed in (c) above.

2. Advisory Services. You will regularly provide the Fund with advice
concerning the investment management of that portion of the Fund's assets that
are allocated to you, which advice shall be consistent with the investment
objective and policies of the Fund as set forth in the Fund's Prospectus and
Statement of Additional Information and any investment guidelines or other
instructions received in writing from the Adviser. The Board of Trustees or the
Adviser may, from time to time, make additions to and withdrawals from the
assets of the Fund allocated to you. You
<PAGE> 35

will determine what securities shall be purchased for such portion of the Fund's
assets, what securities shall be held or sold by such portions of the Fund's
assets, and what portion of such assets shall be held uninvested, subject always
to the provisions of the Trust's Declaration of Trust and By-Laws and the
Investment Company Act and to the investment objective, policies and
restrictions (including, without limitation, the requirements of Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code") for qualification as
a regulated investment company) of the Fund, as each of the same shall be from
time to time in effect as set forth in the Fund's Prospectus and Statement of
Additional Information, or any investment guidelines or other instructions
received in writing from the Adviser, and subject, further, to such policies and
instructions as the Board of Trustees may from time to time establish and
deliver to you. In accordance with paragraph 5, you or your agent shall arrange
for the placing of all orders for the purchase and sale of portfolio securities
with brokers or dealers selected by you for that portion of the Fund's assets
for which you serve as sub-investment adviser.

The Adviser shall provide you with written statements of the Declaration of
Trust; By-Laws; the Fund's written investment objective and policies; Prospectus
and Statement of Additional Information and instructions, as in effect from time
to time; and you shall have no responsibility for actions taken in reliance on
any such documents. You will conform your conduct to and will ensure that your
management of the portion of the Fund's assets allocated to you complies with
the Investment Company Act and all rules and regulations thereunder, the
requirements for qualification of the Fund as a regulated investment company
under Subchapter M of the Code, all other applicable federal and state laws and
regulations, and with the provisions of the Fund's Registration Statement as
amended or supplemented under the Securities Act of 1933, as amended, and the
Investment Company Act.

In the performance of your duties hereunder, you are and shall be an
independent contractor and unless otherwise expressly provided herein or
otherwise authorized in writing, shall have no authority to act for or represent
the Trust or the Fund in any way or otherwise be deemed to be an agent of the
Trust or the Fund or of the Adviser. You will make your officers and employees
available to meet with the Trust's officers and Trustees at least quarterly on
due notice to review the investments and investment program of the portion of
the Fund's assets allocated to you in light of current and prospective economic
and market conditions. Nothing in this Agreement shall limit or restrict the
right of any of your directors, officers and employees who may also be a
trustee, officer or employee of the Trust to engage in any other business or to
devote his or her time and attention in part to the management or other aspects
of any business, whether of a similar or a dissimilar nature, nor limit or
restrict your right to engage in any other business or to render service of any
kind to any other corporation, firm, individual or association, except as
specifically prescribed in Section 4.

3. Allocation of Charges and Expenses. You will bear your own costs of
providing services hereunder. Other than as herein specifically indicated, you
will not be required to pay any expenses of the Fund.

4. Compensation of the Subadviser. For all investment management services
to be rendered hereunder, the Adviser will pay a fee, as set forth in Schedule A
attached hereto, quarterly in April, July, October and January, based on a
percentage of the average of the actual net asset values of the portion of the
Fund that you managed at the close of the last business day of each month within
the quarter. Determination of net asset value of the Fund is computed daily by
the Fund's custodian, State Street Bank and Trust Company. Your fee will be
based on the average of the net asset values of the portion of the Fund that you
manage, computed in the manner specified in the Fund's Prospectus and Statement
of Additional Information for the computation of the net assets of the Fund by
State Street Bank and Trust Company, on the last business day of each month
within the quarter. If the determination of net asset value is suspended for the
last business day of the month, then for the purposes of this paragraph 4, the
value of the net assets of the Fund as last determined shall be deemed to be the
value of the net assets. If State Street Bank and Trust Company

2
<PAGE> 36

determines the value of the net assets of the Fund's portfolio more than once on
any day, the last such determination thereof on that day shall be deemed to be
the sole determination thereof on that day for the purposes of this paragraph 4.

You will offer to the Adviser any more favorable asset based fee agreements
that are provided to other investment clients, except that for any such
agreements in effect upon the signing of this Agreement. Such offer shall be
made as soon as practicable after a more favorable asset based fee agreement is
provided for any other investment clients. Should more favorable asset based fee
agreements be offered to others, the Adviser will be notified within (30)
business days after such new asset based fee agreements are established.

Your services to the Fund pursuant to this Agreement are deemed to be
exclusive for a period of seven (7) years from the date of this Agreement and it
is understood that you may not render investment advice, management and other
services to any other registered investment company. The provisions set forth in
the preceding sentence will survive termination of this Agreement except in the
event this Agreement is assigned by or otherwise terminated by the Adviser or
the Trust on behalf of the Fund.

5. Avoidance of Inconsistent Position and Brokerage. In connection with
purchases or sales of portfolio securities for the account of the portion of the
Fund allocated to you, neither you nor any of your directors, officers or
employees will act as a principal or agent or receive any compensation in
connection with the purchase or sale of investment securities by the Fund, other
than the compensation provided for in this Agreement. You or your agent shall
arrange for the placing of all orders for the purchase and sale of portfolio
securities for the portion of the Fund's account allocated to you with brokers
or dealers selected by you. In the selection of such brokers or dealers and the
placing of such orders, you are directed at all times to seek for the Fund the
most favorable execution and net price available. It is also understood that it
is desirable for the Fund that you have access to supplemental investment and
market research and security and economic analyses provided by certain brokers
who may execute brokerage transactions at a higher cost to the Fund than may
result when allocating brokerage to other brokers on the basis of seeking the
most favorable price and efficient execution. Therefore, you are authorized to
place orders for the purchase and sale of securities for the Fund with such
certain brokers, subject to review by the Board of Trustees from time to time
with respect to the extent and continuation of this practice. It is understood
that the services provided by such brokers may be useful to you in connection
with your services to other clients. If any occasion should arise in which you
give any advice to clients of yours concerning the Shares of the Fund, you will
act solely as investment counsel for such clients and not in any way on behalf
of the Fund. Your services to the Fund pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and other services to others, except as specifically
prescribed in Section 4.

You will advise the Trust's custodian and the Adviser on a prompt basis of
each purchase and sale of a portfolio security specifying the name of the
issuer, the description and amount or number of shares of the security
purchased, the market price, commission and gross or net price, trade date,
settlement date and identity of the effecting broker or dealer and such other
information as may be reasonably required. From time to time as the Board of
Trustees or the Adviser may reasonably request, you will furnish to the Trust's
officers and to each of its Trustees reports on portfolio transactions and
reports on issues of securities held in the portfolio, all in such detail as the
Trust or the Adviser may reasonably request.

On occasions when you deem the purchase or sale of a security to be in the
best interest of the Fund as well as other of your clients, you, to the extent
permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities to be sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the

3
<PAGE> 37

transaction, shall be made by you in the manner you consider to be the most
equitable and consistent with your fiduciary obligations to the Fund and to such
other clients.

6. Limitation of Liability of Subadviser. You shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund or the
Adviser in connection with the matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on your
part or from reckless disregard by you of your obligations and duties under this
Agreement.

You shall keep the Fund's books and records to be maintained by you and
shall timely furnish to the Adviser all information relating to your services
hereunder needed by the Adviser to keep the other books and records of the Fund
required by Rule 31a-1 under the Investment Company Act. You agree that all
records which you maintain for the Fund are the property of the Fund and you
shall surrender promptly and without any charge to the Fund any of such records
required to be maintained by you.

7. Duration and Termination of this Agreement. This Agreement shall remain
in force until March 17, 1999 and from year to year thereafter, but only so long
as such continuance, and the continuance of the Adviser as investment adviser of
the Fund, is specifically approved at least annually in the manner prescribed in
the Investment Company Act and the rules and regulations thereunder, subject,
however, to such exemptions as may be granted by the Securities and Exchange
Commission by any rule, regulation or order. This Agreement may, on 60 days'
written notice, be terminated at any time without the payment of any penalty, by
the Board of Trustees, by vote of a majority of the outstanding voting
securities of the Fund, by the Adviser, or by you. This Agreement shall
automatically terminate in the event of its assignment or the assignment of the
investment advisory agreement between the Adviser and the Trust, on behalf of
the Fund. In interpreting the provisions of this Agreement, the definitions
contained in Sections 2(a) of the Investment Company Act (particularly the
definitions of "interested person", "assignment" and "majority of the
outstanding voting securities"), as from time to time amended, shall be applied,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission by any rule, regulations or order.

8. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of the
outstanding voting securities of the Fund and by the Board of Trustees,
including a majority of the Trustees who are not interested persons of the
Adviser or you or of the Trust, cast in person at a meeting called for the
purpose of voting on such approval.

It shall be your responsibility to furnish to the Board of Trustees such
information as may reasonably be necessary in order for the Trustees to evaluate
this Agreement or any proposed amendments thereto for the purposes of casting a
vote pursuant to paragraphs 7 or 8 hereof.

9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.

10. Miscellaneous. It is understood and expressly stipulated that neither
the holders of Shares of the Trust or the Fund nor the Trustees shall be
personally liable hereunder. The name "Harbor Fund" is the designation of the
Trustees for the time being under the Declaration of Trust and all persons
dealing with the Trust or the Fund must look solely to the property of the Trust
or the Fund for the enforcement of any claims against the Trust or the Fund as
neither the Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Trust or the Fund. No
series of the Trust shall be liable for any claims against any other series or
assets of the Trust.

4
<PAGE> 38

The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return one such
counterpart to the Fund and the other such counterpart to the Adviser, whereupon
this letter shall become a binding contract.

HARBOR FUND
(ON BEHALF OF HARBOR GROWTH FUND)

By /s/ RONALD C. BOLLER
----------------------------------
Title: President

HARBOR CAPITAL ADVISORS, INC.

By /s/ CONSTANCE L. SOUDERS
----------------------------------
Title: Senior Vice President

EMERGING GROWTH ADVISORS, INC.

By
----------------------------------
Title:

5
<PAGE> 39

SCHEDULE A

You will receive an advisory fee equal on an annual basis to 1.00% of the
average actual net asset values of the Fund at the close of the last business
day of each month within the quarter up to $5 million; 0.75% on the next $20
million of such average actual net asset values; and 0.50% on such average
actual net asset values thereafter. The annual advisory fee paid by the Adviser
to you shall not be less than $10,000. In the event that this Agreement
terminates during any portion of year, the fee due to you shall be prorated
based upon the number of days the Agreement was in effect. For purposes of
determining the applicable fee rate and satisfying the minimum payment, the
assets of the Fund and the payments of the Adviser to you will be combined with
the assets and payment of the accounts of the Harbor Capital Group Trust for
Defined Benefits Plans f/k/a Owens Illinois Master Retirement Trust account that
you manage.

6
<PAGE> 40

[FORM OF PROXY CARD]

HARBOR FUND
One SeaGate
Toledo, Ohio 43666

This proxy is solicited on behalf of the Board of Trustees of Harbor Fund
for the Special Meeting of Shareholders (the "Meeting"). The undersigned
hereby appoints Ronald C. Boller, Constance L. Souders, Howard P. Colhoun
and Karen B. Wasil, and each of them, attorneys and proxies for the
undersigned, with full power of substitution and revocation to represent
the undersigned and to vote on behalf of the undersigned all shares of
Harbor Fund which the undersigned is entitled to vote at the Special
Meeting of Shareholders to be held at the offices of Harbor Fund, One
SeaGate, Toledo, Ohio 43666 on August 12, 1997, at 9:00 a.m., Eastern time,
and at any adjournments thereof. The undersigned hereby acknowledges
receipt of the Notice of the Special Meeting of Shareholders and the
accompanying Proxy Statement and hereby instructs the attorneys and proxies
to vote the shares as indicated on this Proxy Card. In their discretion,
the proxies are authorized to vote upon such other business as may properly
come before the Meeting. The undersigned hereby revokes any proxy
previously given.

PLEASE SIGN AND DATE THE PROXY CARD, RETURN THE BOTTOM PORTION WITH YOUR
VOTE IN THE ENCLOSED ENVELOPE AND RETAIN THE TOP PORTION. Place the ballot
so that the return address, located on the reverse side of the mail-in
stub, appears through the window of the envelope.

Please indicate your vote by an "X" in the appropriate box on the reverse
side. This proxy, if properly executed, will be voted in the manner
directed by the shareholder. If no direction is made, this proxy will be
voted FOR all Proposals. Please refer to the Proxy Statement for a
discussion of the Proposals.
<PAGE> 41

PLEASE MARK VOTES For Withheld For All Except
/X/ AS IN THIS EXAMPLE

/ / / / / /
1. Election of one Trustee.

INSTRUCTION: To withhold
authority to vote for the
individual nominee, strike
a line through his name
below:

John P. Gould

For Against Abstain

2. Ratification of the selection
and Price Waterhouse LLP as / / / / / /
the independent accountants
of the Trust for the fiscal
year ending October 31, 1997.

3a. Approve restatement of investment / / / / / /
policy on issuer diversification

3b. Approve clarification of investment
policy on industry concentration / / / / / /

3c. Approve change to investment policies
on borrowing and pledging assets / / / / / /

3d. Approve restatement of investment
policy on real estate and oil and gas / / / / / /

3e. Approve restatement of investment
policy on commodities / / / / / /

3f. Approve reclassification of investment
policy on investments to exercise
control as non-fundamental / / / / / /

3g. Approve elimination of investment
policy concerning unseasoned issuers / / / / / /

<PAGE> 42

For Against Abstain

3h. Approve elimination of investment policy
concerning transactions with affiliated / / / / / /
persons

4. Approval of reclassification of each Fund's
investment objective from fundamental to / / / / / /
non-fundamental.

5. Approval of a policy to permit the Trust's
Board of Trustees to appoint subadvisers / / / / / /
and make material changes to subadvisory
agreements without shareholder approval.

6. Approval of a change to Harbor Value
Fund's investment objective: / / / / / /
Harbor Value Fund only.

7. Approval of the subadvisory agreement
with EGA: Harbor Growth Fund only. / / / / / /

Please be sure to sign and date this Proxy Date

Please sign exactly as
your name appears on
Shareholder sign here Co-owner this proxy, if joint
sign here owners, EITHER may sign
this proxy. When signing
as attorney, executor,
administrator, trustee,
guardian or corporate
officer, please give your
full title.