<PAGE> 1
SEMI-ANNUAL REPORT
HARBOR FUND LOGO
APRIL 30, 1999
---------------------------------------------------------------------------
HARBOR FUND
<PAGE> 2
HARBOR FUND
SEMI-ANNUAL REPORT OVERVIEW
The first half of Harbor Fund's fiscal year ended April 30, 1999. Performance
for this six-month period is shown below for each of the nine portfolios. All
performance figures included in this report are total returns and assume the
reinvestment of dividends. The Long-Term Historic Returns represent unmanaged
indices and are included as an indication of longer-term potential associated
with taking different levels of market risk.
<TABLE>
<CAPTION>
UNANNUALIZED
6 MONTHS
HARBOR FUNDS IN ORDER OF MARKET RISK ENDED 4/30/1999
------------------------------------ ---------------
<S> <C>
Harbor Growth Fund.......................................... 17.17%
Harbor International Growth Fund............................ 7.31
Harbor Capital Appreciation Fund............................ 33.80
Harbor International Fund II................................ 17.71
Harbor International Fund................................... 16.41
Harbor Value Fund........................................... 19.38
Harbor Bond Fund............................................ 1.46
Harbor Short Duration Fund.................................. 1.60
Harbor Money Market Fund.................................... 2.34
</TABLE>
<TABLE>
<CAPTION>
COMMONLY USED MARKET INDICES
----------------------------
<S> <C>
Morgan Stanley Capital International Europe, Australia, and
Far East (EAFE); international equity..................... 15.28%
Standard & Poor's 500 (S&P 500); domestic equity............ 22.32
Lehman Brothers Aggregate (LB AGG); domestic bonds.......... 0.69
One-Year Government Bonds (1-YR GVT)........................ 1.70
90-Day U.S. Treasury Bills (T-Bills); domestic short-term... 2.25
</TABLE>
<TABLE>
<CAPTION>
30 YEARS
1969-1998
LONG-TERM HISTORIC RETURNS ANNUAL RATES
- -------------------------- ------------
<S> <C>
EAFE(1)..................................................... 11.72%
S&P 500..................................................... 12.67
Domestic Bonds (intermediate and long)(2)................... 8.88
1-YR GVT(3)................................................. 7.88
T-Bills(4).................................................. 6.76
Consumer Price Index........................................ 5.23
</TABLE>
<TABLE>
<CAPTION>
6 MONTHS MORNINGSTAR
HARBOR FUND EXPENSE RATIOS(A) 1995 1996 1997 1998 1999(B) MEDIAN(5)
- ----------------------------- ---- ---- ---- ---- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Harbor Growth Fund........................... 0.93% 0.92% 1.12% 1.00% 0.92% 1.19%
Harbor International Growth Fund............. 1.21 1.10 1.02 0.96 0.91 1.17
Harbor Capital Appreciation Fund............. 0.75 0.75 0.70 0.68 0.66 0.98
Harbor International Fund II................. N/A 1.44(b) 0.98 1.15 0.92 1.01
Harbor International Fund.................... 1.04 0.99 0.97 0.94 0.92 1.01
Harbor Value Fund............................ 0.90 0.83 0.83 0.79 0.76 0.85
Harbor Bond Fund............................. 0.70 0.70 0.67 0.65 0.61 0.60
Harbor Short Duration Fund................... 0.38 0.33 0.36 0.36 0.30 0.69
Harbor Money Market Fund..................... 0.61 0.64 0.62 0.57 0.49 0.75
</TABLE>
------------------
1 EAFE date of inception is January 1970; 1969 is a replication of the
index as calculated by InterSec Research.
2 LB AGG not available for 30 year period; blended historic data used to
approximate total Bond Market Return.
3 Historic data used to approximate total One-Year Government Bonds
Return. Source: Ibbotson Associates
4 A one bill portfolio of the treasury bill having the shortest maturity
not less than one month. Source: Ibbotson Associates
5 Includes all no-load funds with at least five years of performance
history in the 3/31/1999 Morningstar Universe with the same investment
style as the comparable Harbor Fund portfolio.
a Harbor Fund expense ratios are for operating expenses only and are
shown net of all expense offsets (see Financial Highlights pgs. 38-41).
b Annualized figure.
<PAGE> 3
DEAR SHAREHOLDER:
Seeds of change wafted in like scantly noticed spring breezes during the
first half of Harbor Fund's fiscal year as the nation's longest peacetime
economic expansion and the bull market plowed ahead relentlessly.
Almost lost amid the remarkable overall economic and market performance
were these noteworthy developments in the six months ended April 30:
- Profits of U.S. corporations--while not glowing--generally surprised on
the high side in the first quarter of the calendar year.
- In the booming domestic equity market, strong gains late in the period by
value and smaller over-the-counter stocks suggested the onset of a shift
in favor of those issues and away from a handful of large stocks which
had dominated the spotlight and created a narrow market for almost three
years.
- Medium- and long-term interest rates in the U.S. increased sharply after
January and performance of treasury securities lagged that of other
sectors as the yield spreads between treasuries and both mortgage-backed
securities and corporate bonds declined.
- Financial crisis among Asia's emerging nations--which began late in
1997--appeared to be bottoming out in April this year. Asia seemed to be
gaining a competitive advantage because of currency devaluations there.
- Merger and acquisition activity in Europe in the first four months this
year escalated from its previous already hectic pace. The outburst seems
likely to put the activity in Europe in the same league with the U.S. at
$1 trillion a year.
- Japan began to show signs of an economic pulse, with small but real
progress in corporate restructurings, recapitalization of the banks, and
some life in equities.
One other significant market development deserves comment--the Internet
stock craze.
Looking back over the past two or three decades there seems to have been
three truly spotlighted market situations: the PC growth momentum of the 1980s,
the biotech cycle in the early 90s, and now the Internet.
In a recent discussion with Sig Segalas, president of Jennison Associates
and portfolio manager of Harbor Capital Appreciation Fund, we agreed that direct
Internet market plays seem outrageously priced, valuations have gone sky high
and there is likely to be a bloodbath, and still the effect of the Internet on
the lives of this generation will be singularly profound.
While the Harbor Capital Appreciation Fund has almost no direct investments
in Internet stocks, the Internet phenomenon is having a positive effect on Fund
performance. Clearly, the Internet has long-term implications for marketing,
which while presently small, ultimately will be broad and disinflationary, since
it can offer lower prices and reduce distribution costs.
Taken individually, the Internet craze and the shifts from what had been
the expected or the status quo we have mentioned could not be termed dramatic.
But collectively, they merit the attention of serious investors and observers of
the worldwide economic stage. After all, domestic corporate profits were
generally poor last year, having declined by several percent from the previous
year. Some economists said that more of the same was in store because of
pressure for higher wages coupled with lack of pricing power.
No less an expert than Federal Reserve Chairman Alan Greenspan, speaking at
an international banking conference in May of this year, gave a lion's share of
the credit for what he called truly phenomenal performance of the U.S. economy
to impressive productivity improvements. Mr. Greenspan said output per hour of
work increased at an annual rate of about 1% during the early 1990s, but more
recently has been rising at close to 3% and noted that investments in computer
and other information age technology were playing an important role in that
productivity improvement. Mr. Greenspan also observed that he viewed the soaring
trade deficit as another possible danger to the U.S. economy, since there is a
limit to how far deficits can be sustained. At the same time the financial
crisis involving emerging nations in the Far East is likely to gradually
dissipate and these countries should move onto a significant recovery path, he
said.
2
<PAGE> 4
DEAR SHAREHOLDER--CONTINUED
None of this review is meant to make a case for continuation of the strong
economic and equity market upswing. What it says to us, among other things, is
that change is inevitable and successful investing should take this into
account. As always, we at Harbor Fund are solidly in the camp of those who
believe that the best way to do that is to have a well thought out game plan
that meets your needs and objectives and to stay the course through the market's
ups and downs. In our view, predicting their occurrence is somewhere in the
range of difficult to impossible.
Captivated by the performance of large capitalization stocks for five years
now, some investors appear to be straying from the concept of diversification.
It is admittedly difficult to hold international and small capitalization stocks
when the performance disparity with large capitalizations stocks has been so
great -- and lasted for so long. Diversification is a risk control strategy and
is frequently painful in the shorter-term. We hope our investors realize that if
they could know which market or security was about to outperform, investing
would be easy. Without such prescience, the best course of action remains
diversification -- the spreading of risk.
To Harbor Fund shareholders who have been exposed to our semi-annual
letters, our philosophy of investing for the long-term to meet specific
objectives no doubt sounds like a broken record. But we believe our investors
generally share our philosophy and we commend such resolve.
In the first half of Harbor's fiscal year ended April 30, Harbor Capital
Appreciation Fund once again was the star performer, outperforming the continued
exceptional performance of the S&P 500 index by a wide margin in the period. The
Fund also continued to outperform the S&P index over the trailing five-year
period.
Harbor Value Fund and Harbor Growth Fund turned in credible performances in
the fiscal first half. Harbor Value Fund had strong gains late in the period as
the narrow market skewed to a few large growth stocks broadened and narrowly
missed matching the large gain in the S&P 500. Harbor Growth Fund, with a
portfolio of small growth stocks, achieved a good turnaround performance in the
period.
Harbor International Fund ll posted the best gain among our international
equity funds in the period, outperforming the EAFE index by a significant
margin. Harbor International Fund also outgained the index for the six months, a
turnaround after having trailed the EAFE index for the fiscal year ended October
31, 1998 for the first time in its 11 year history.
Harbor Bond Fund performance was hurt by rising domestic interest rates,
particularly late in the fiscal first half, but posted a gain and continued to
significantly outperform the Lehman Brothers Aggregate Index.
As always, we invite your review of the detailed performance of the Harbor
funds on the pages which follow and since expenses are a very important element
in the performance of your investments, we also urge you to review the fund
expense ratios on page one of this report.
Thank you for investing in the Harbor Funds. As always, we welcome your
thoughts and comments.
Sincerely,
/s/ Ronald C. Boller
Ronald C. Boller
President
3
<PAGE> 5
HARBOR FUND
The following performance figures are annualized for each Fund except for the
six-month total return calculations. The date of inception for Harbor Growth
Fund was November 19, 1986; Harbor International Growth Fund was November 1,
1993; Harbor International Fund II was June 1, 1996; Harbor Short Duration Fund
was January 1, 1992; and all other Funds started December 29, 1987. Unless
otherwise stated, all comments pertain to the fiscal half ended April 30, 1999.
<TABLE>
<S> <C> <C> <C>
HARBOR GROWTH FUND NET ASSET VALUE: 4/30/1999 $11.63
10/31/1998 $10.81
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Total Return for Periods Ended 4/30/1999
- ----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years 10 years
- ----------------------------------------------------------------------------
Harbor Growth Fund 17.17% -4.48% 13.17% 11.35%
- ----------------------------------------------------------------------------
S&P 500 22.32% 21.94% 26.97% 18.85%
- ----------------------------------------------------------------------------
Total Return for Periods Ended 3/31/1999
- ----------------------------------------------------------------------------
Harbor Growth Fund 19.96% -5.10% 13.26% 11.95%
- ----------------------------------------------------------------------------
</TABLE>
Harbor Growth Fund achieved a turnaround
performance and continued to outperform
its peer group in the first half of
Harbor's fiscal year. The gain did not
match the S&P 500 which benefited from
the performance of a few large growth
stocks. This narrow market started to
broaden late in the period.
- Small cap holdings in technology--which
dominated the portfolio--performed well
in computer business equipment,
instruments and semiconductors but
underperformed in computer services.
- Retail, media and electrical equipment
had a positive effect but were offset
by shortfalls in the health sector.
[GRAPH]
<TABLE>
<CAPTION>
4/30/89 4/30/90 4/30/91 4/30/92 4/30/93 4/30/94 4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND 10000 10490 13700 14195 14459 15787 16484 23361 21751 30682 29307
S&P 500 10000 11040 12981 14795 16162 17041 20019 26103 32661 46121 56241
</TABLE>
<TABLE>
<S> <C> <C> <C>
HARBOR INTERNATIONAL GROWTH FUND NET ASSET VALUE: 4/30/1999 $19.01
10/31/1998 $18.07
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Total Return for Periods Ended 4/30/1999
- ----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years Since
Inception
- ----------------------------------------------------------------------------
Harbor International Growth 7.31% 0.52% 15.28% 14.62%
Fund
- ----------------------------------------------------------------------------
EAFE 15.28% 9.50% 8.71% 8.95%
- ----------------------------------------------------------------------------
Total Return for Periods Ended 3/31/1999
- ----------------------------------------------------------------------------
Harbor International Growth 18.65% 0.25% 15.24% 14.73%
Fund
- ----------------------------------------------------------------------------
</TABLE>
Harbor International Growth Fund posted a
7.31% gain in the first half of the
fiscal year--a turnaround performance
from the previous six months--but the
returns trailed those of the EAFE index.
Since it was founded over five years ago,
the Fund's average annual return is
14.62%, compared with an average annual
gain of 8.95% in the index.
- Strength of the dollar against most
foreign currencies--primarily the
euro--was a major factor in Fund
results. Currency exchange adversely
affected returns from most of the
portfolio holdings.
- A rotation in the markets away from
growth stocks to cyclical stocks
adversely affected performance.
- Bright spots included investments in
the electrical and electronics sector,
broadcasting and publishing and
leisure.
GRAPH
<TABLE>
<CAPTION>
4/30/94 4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
<S> <C> <C> <C> <C> <C> <C>
INTERNATIONAL GROWTH FUND 10406 10644 14593 16471 21074 21184
EAFE 10557 11146 12418 12307 14635 16025
</TABLE>
4
<PAGE> 6
HARBOR FUND--CONTINUED
Performance data quoted represents past performance and is not predictive of
future performance. Actual return and principal value on an investment will
fluctuate, and the shares, when redeemed, may be worth more or less than their
original cost.
<TABLE>
<S> <C> <C> <C>
HARBOR CAPITAL APPRECIATION FUND NET ASSET VALUE: 4/30/1999 $42.25
10/31/1998 $33.51
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Total Return for Periods Ended 4/30/1999
- -----------------------------------------------------------------
Fund/Index 6 months 12 months 5 years 10 years
- ----------------------------------------------------------------------------
Harbor Capital Appreciation 33.80% 28.03% 28.75% 21.65%
Fund
- ----------------------------------------------------------------------------
S&P 500 22.32% 21.94% 26.97% 18.85%
- ----------------------------------------------------------------------------
Total Return for Periods Ended 3/31/1999
- ----------------------------------------------------------------------------
Harbor Capital Appreciation 45.72% 33.02% 28.79% 22.39%
Fund
- ----------------------------------------------------------------------------
</TABLE>
Outstanding gains were achieved by Harbor
Capital Appreciation Fund in the fiscal
first half as the fund significantly
outperformed the S&P 500 for the six
months as well as the trailing 1-, 5- and
10-year periods.
- Gains from technology and financial
holdings contributed to the
outperformance.
- In technology--which averaged 35% of
the portfolio--telecommunications,
semiconductors and electronic
instrument stocks were especially
strong.
- An exceptional gain in brokerage firm
holdings as well as outstanding gains
from banks and other credit related
holdings paced the strong portfolio
gains in the financial area.
[GRAPH]
<TABLE>
<CAPTION>
4/30/89 4/30/90 4/30/91 4/30/92 4/30/93 4/30/94 4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND 10000 10600 13202 16044 17891 20053 24472 32209 37322 55418 70952
S&P500 10000 11040 12981 14795 16162 17041 20019 26103 32661 46121 56241
</TABLE>
<TABLE>
<S> <C> <C> <C>
HARBOR INTERNATIONAL FUND II NET ASSET VALUE: 4/30/1999 $13.09
10/31/1998 $11.26
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Total Return for Periods Ended 4/30/1999
- ----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years Since
Inception
- ----------------------------------------------------------------------------
Harbor International Fund II 17.71% 1.96% N/A 12.48%
- ----------------------------------------------------------------------------
EAFE 15.28% 9.50% 8.71% 9.83%
- ----------------------------------------------------------------------------
Total Return for Periods Ended 3/31/1999
- ----------------------------------------------------------------------------
Harbor International Fund II 29.34% -1.55% N/A 11.42%
- ----------------------------------------------------------------------------
</TABLE>
Excellent performance was achieved by
Harbor International Fund II in the first
half of the fiscal year despite a drag on
reported gains as a result of strength of
the dollar against most foreign
currencies, particularly the euro, with
the Fund outperforming the EAFE index.
- Strength of the dollar against foreign
currencies in the fiscal first half
adversely affected returns from
holdings in 14 countries where 94% of
the portfolio was invested at the end
of the period.
- Returns from holdings in a majority of
the countries in which the portfolio is
invested outperformed the EAFE index.
- Difficult countries for the fund during
this period included Poland and
Portugal.
GRAPH
<TABLE>
<CAPTION>
4/30/97 4/30/98 4/30/99
<S> <C> <C> <C>
INTERNATIONAL FUND 11579.00 13820.00 14090.00
EAFE 10097.00 12007.00 13147.00
</TABLE>
5
<PAGE> 7
HARBOR FUND--CONTINUED
<TABLE>
<S> <C> <C> <C>
HARBOR INTERNATIONAL FUND NET ASSET VALUE: 4/30/1999 $39.93
10/31/1998 $36.97
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Total Return for Periods Ended 4/30/1999
- ----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years 10 years
- ----------------------------------------------------------------------------
Harbor International Fund 16.41% 3.35% 15.42% 14.32%
- ----------------------------------------------------------------------------
EAFE 15.28% 9.50% 8.71% 5.98%
- ----------------------------------------------------------------------------
Total Return for Periods Ended 3/31/1999
- ----------------------------------------------------------------------------
Harbor International Fund 21.82% 0.00% 14.79% 14.23%
- ----------------------------------------------------------------------------
</TABLE>
On track and gaining momentum as the
first half of the fiscal year progressed,
Harbor International Fund outperformed
the EAFE index in the period despite the
penalty to reported gains from strength
of the dollar against the euro and other
foreign currencies.
- Twelve countries representing about
two-thirds of the portfolio
outperformed the EAFE index for the
period.
- Strength of the dollar against most
foreign currencies in the fiscal first
half adversely affected returns from
holdings in 15 countries where almost
91% of the portfolio was invested at
the end of the period.
- Performance in Brazil, Denmark,
Portugal and Switzerland was
considerably below that of the EAFE
index.
[GRAPH]
<TABLE>
<CAPTION>
4/30/89 4/30/90 4/30/91 4/30/92 4/30/93 4/30/94 4/30/95 4/30/96 4/30/97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL FUND 10000.00 11383.00 12344.00 13937.00 14622.00 18622.00 20570.00 24448.00 28791.00
EAFE 10000.00 8693.00 9071.00 8301.00 10096.00 11776.00 12433.00 13851.00 13728.00
<CAPTION>
4/30/98 4/30/99
<S> <C> <C>
INTERNATIONAL FUND 36903.00 38140.00
EAFE 16325.00 17875.00
</TABLE>
<TABLE>
<S> <C> <C> <C>
HARBOR VALUE FUND NET ASSET VALUE: 4/30/1999 $16.16
10/31/1998 $15.21
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Total Return for Periods Ended 4/30/1999
- ----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years 10 years
- ----------------------------------------------------------------------------
Harbor Value Fund 19.38% 8.28% 21.56% 14.63%
- ----------------------------------------------------------------------------
S&P 500 22.32% 21.94% 26.97% 18.85%
- ----------------------------------------------------------------------------
Total Return for Periods Ended 3/31/1999
- ----------------------------------------------------------------------------
Harbor Value Fund 17.12% -3.06% 19.68% 13.94%
- ----------------------------------------------------------------------------
</TABLE>
Strong performance in the Harbor Value
Fund portfolio in the fiscal second
quarter signaled a broadening of the
narrow market with its focus on large
growth stock and the Fund's returns in
the fiscal first half fell just short of
those of the large growth dominated S&P
500.
- Portfolio returns in the basic
materials, technology and financial
sectors exceeded the S&P 500.
- Paper, forest products and chemicals
had particularly attractive performance
in the basic materials sector.
- Telecommunications did well in the
technology sector, while banks,
insurance and other credit related
holdings led the financial sector.
- Performance was held down by poor
performance in the consumer, capital
goods, energy, transportation and
utilities sectors.
GRAPH
<TABLE>
<CAPTION>
4/30/89 4/30/90 4/30/91 4/30/92 4/30/93 4/30/94 4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HARBOR VALUE 10000.00 10812.00 12244.00 13410.00 14178.00 14763.00 17216.00 22082.00 26156.00 36191.00 39186.00
S&P 500 10000.00 11040.00 12981.00 14795.00 16162.00 17041.00 20019.00 26103.00 32661.00 46121.00 56241.00
</TABLE>
6
<PAGE> 8
HARBOR FUND--CONTINUED
<TABLE>
<S> <C> <C> <C>
HARBOR BOND FUND NET ASSET VALUE: 4/30/1999 $11.21
10/31/1998 $11.82
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Total Return for Periods Ended 4/30/1999
- ----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years 10 years
- ----------------------------------------------------------------------------
Harbor Bond Fund 1.46% 8.18% 8.59% 9.71%
- ----------------------------------------------------------------------------
LB AGG 0.69% 6.27% 8.03% 8.89%
- ----------------------------------------------------------------------------
Total Return for Periods Ended 3/31/1999
- -----------------------------------------------------------------
Harbor Bond Fund 0.49% 8.07% 8.31% 9.87%
- -----------------------------------------------------------------
</TABLE>
Liquidity and calm returned to the bond
markets in the first half of Harbor's
fiscal year following a massive flight to
quality and extreme volatility late last
summer. Interest rates and fixed income
risk premiums have returned to pre-
crisis levels. The Harbor Bond Fund
significantly outperformed the Lehman
Brothers Aggregate Index in the period.
- The effect of rising interest rates in
the fiscal first half had only a small
impact on the Fund portfolio as
duration was moved closer to near-index
levels as a result of the crisis.
- An overweight in mortgages, high-yield
corporates and limited emerging market
positions all rebounded strongly as
markets stabilized.
[GRAPH]
<TABLE>
<CAPTION>
04/30/89 04/30/90 04/30/91 04/30/92 04/30/93 04/30/94 04/30/95 04/30/96 04/30/97 04/30/98 04/30/99
<S> <C> <C>
BOND 10000 10726 12335 14150 16423 16729 17809 19533 21112 23349 25258
LB AGG 10000 10903 12559 13941 15789 15924 17088 18565 19881 22050 23433
</TABLE>
<TABLE>
<S> <C> <C> <C>
HARBOR SHORT DURATION FUND NET ASSET VALUE: 4/30/1999 $8.60
10/31/1998 $8.69
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Total Return for Periods Ended 4/30/1999
- ----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years Since
Inception
- ----------------------------------------------------------------------------
Harbor Short Duration Fund 1.60% 5.56% 6.09% 5.36%
- ----------------------------------------------------------------------------
1-YR GVT 1.70% 5.33% 5.86% 5.20%
- ----------------------------------------------------------------------------
Total Return for Periods Ended 3/31/1999
- ----------------------------------------------------------------------------
Harbor Short Duration Fund 1.93% 5.86% 6.00% 5.40%
- ----------------------------------------------------------------------------
</TABLE>
Rising interest rates in the latter
months of the fiscal first half made it a
difficult period and returns of the
Harbor Short Duration Fund fell slightly
below those of one-year treasury bills
and well below those of 90-day
treasuries. Fund returns for the trailing
one- and five-year periods remained well
above those of both one-year and 90-day
treasury bills.
- Average duration of the portfolio
during the first three months of 1999
was about 18 months, which hurt
performance against the treasury
benchmarks.
- Sector allocation--high allotment to
asset-backed, mortgages and
corporates--in the period helped
performance as did a yield curve
posture of overweighted short
securities and underweighted long
securities.
- At the end of the fiscal first half,
portfolio duration was near neutral at
13 months and the portfolio was made up
of 66% non-treasuries and 34%
treasuries and money market
instruments.
GRAPH
<TABLE>
<CAPTION>
4/30/92 4/30/93 4/30/94 4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHORT DURATION 10065 10650 10914 11530 12175 13089 13895 14667
1 YR GVT 10133 10649 10913 11534 12265 12964 13770 14504
</TABLE>
7
<PAGE> 9
HARBOR FUND--CONTINUED
<TABLE>
<S> <C> <C> <C>
HARBOR MONEY MARKET FUND NET ASSET VALUE: 4/30/1999 $1.00
10/31/1998 $1.00
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Total Return for Periods Ended 4/30/1999
- ----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years 10 years
- ----------------------------------------------------------------------------
Harbor Money Market Fund 2.34% 4.96% 5.10% 5.23%
- ----------------------------------------------------------------------------
T-Bills 2.25% 4.78% 5.21% 5.33%
- ----------------------------------------------------------------------------
Current Yield for Periods Ended 3/31/1999
- -----------------------------------------------------------------
Harbor Money Market Fund 7 Days: 4.51% 30 Days: 4.52%
- ----------------------------------------------------------------------------
</TABLE>
Returns of the Harbor Money Market Fund
bettered those of 90-day treasury bills
and significantly outperformed one-year
treasuries in the fiscal first half--a
period in which short-term securities did
better than those of longer duration.
- Average sector allocation in the
portfolio during the six months--50% in
commercial paper, 47% in bank
obligations, and 3% in asset-backed--
helped performance.
- Duration of the portfolio for most of
the period was near 45 days in
anticipation that very short-term rates
would not fall, which also contributed
to performance.
An investment in the Harbor Money Market
Fund is not insured or guaranteed by the
FDIC or any other government agency.
Although the Fund seeks to preserve the
value of your investment at $1.00 per
share, it is possible to lose money by
investing in the Fund.
[GRAPH]
<TABLE>
<CAPTION>
4/30/89 4/30/90 4/30/91 4/30/92 4/30/93 4/30/94 4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET 10000.00 10875.00 11704.00 12259.00 12625.00 12978.00 13614.00 14349.00 15069.00 15857.00 16645.00
T-BILLS 10000.00 10846.00 11651.00 12234.00 12635.00 13035.00 13703.00 14463.00 15231.00 16038.00 16805.00
</TABLE>
8
<PAGE> 10
HARBOR GROWTH FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1999 (UNAUDITED)
COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash, convertible bond and short-term investment of 5.1%)
<TABLE>
<S> <C>
Machinery
0.4
Automobile Equipment
1.8
Retail-All Other
1.7
Leisure & Luxury
2.6
Electric Power
3.0
Manufacturing Diversified
3.0
Health Care-Hospital Management
3.3
Apparel & Textiles
3.6
Drugs & Medicine
5.2
Miscellaneous High Tech
5.6
Electronic Instruments
6.4
Semiconductors
6.6
Computer Services
15.5
Computers & Business Equipment
15.5
Telecommunications
20.7
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--94.9%
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
APPAREL & TEXTILES--3.6%
100,000 TJX Companies Inc........................... $ 3,331
-------
AUTOMOBILE EQUIPMENT--1.7%
70,000 Tower Automotive Inc.*...................... 1,610
-------
COMPUTER SERVICES--15.5%
100,000 AXENT Technologies Inc.*.................... 938
90,000 Documentum Inc.*............................ 1,406
170,000 Legato Systems Inc.*........................ 6,874
158,800 Platinum Software Corp.*.................... 1,131
110,000 Project Software & Development Inc.*........ 2,420
60,000 Visio Corp.*................................ 1,620
100,000 Zitel Corp.*................................ 156
-------
14,545
-------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
COMPUTERS & BUSINESS EQUIPMENT--15.5%
55,000 EMC Corp.*.................................. $ 5,992
125,000 Network Appliance Inc.*..................... 6,289
60,000 Proxim Inc.*................................ 2,310
-------
14,591
-------
DRUGS & MEDICINE--5.2%
38,000 Dura Pharmaceuticals Inc.*.................. 456
30,000 Elan Corp. plc ADR(1)*...................... 1,545
120,000 Molecular Devices Corp.*.................... 2,880
-------
4,881
-------
ELECTRIC POWER--3.0%
55,400 The AES Corp.*.............................. 2,770
-------
ELECTRONIC INSTRUMENTS--6.4%
160,000 Checkpoint Systems Inc.*.................... 1,570
122,000 GenRad Inc.*................................ 2,257
280,000 LoJack Corp.*............................... 2,170
-------
5,997
-------
HEALTH CARE-HOSPITAL MANAGEMENT--3.3%
130,000 Health Management Association*.............. 2,032
95,000 Safeskin Corp.*............................. 926
37,500 UroCor Inc.*................................ 185
-------
3,143
-------
LEISURE & LUXURY--2.6%
60,000 Carnival Corp............................... 2,475
-------
MACHINERY--0.4%
170,000 Hirsch International Corp.*................. 404
-------
MANUFACTURING DIVERSIFIED--3.0%
60,000 AFC Cable Systems Inc.*..................... 1,980
165,000 Brunswick Technologies Inc.*................ 866
-------
2,846
-------
MISCELLANEOUS HIGH TECH--5.6%
110,000 JPM Co.*.................................... 1,141
203,500 Planar Systems Inc.*........................ 1,501
75,000 Sawtek Inc.*................................ 2,644
-------
5,286
-------
RETAIL-ALL OTHER--1.8%
45,000 Dollar Tree Stores Inc.*.................... 1,643
-------
SEMICONDUCTORS--6.6%
107,500 Advanced Technology Materials Inc.*......... 2,473
75,000 Dallas Semiconductor Corp................... 3,187
150,000 Summit Design Inc.*......................... 511
-------
6,171
-------
TELECOMMUNICATIONS--20.7%
150,000 Aspect Telecommunications Corp.*............ 1,195
110,000 Comverse Technology Inc.*................... 7,054
90,000 Nextel Communications Inc.*................. 3,684
150,000 P-Com Inc.*................................. 877
237,500 Transcrypt International Inc.*.............. 534
50,000 Uniphase Corp.*............................. 6,069
-------
19,413
-------
TOTAL COMMON STOCKS
(Cost $79,589)........................................ 89,106
-------
</TABLE>
9
<PAGE> 11
HARBOR GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
CONVERTIBLE BOND--2.1%
(Cost $2,226)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------
Mansur Industries Inc.
$2,217 8.250%--03/02/2023 PIK(2)................. $ 1,929
-------
SHORT-TERM INVESTMENT--2.0%
(Cost $1,899)
REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank
& Trust dated April 30, 1999 due May 3,
1999 at 3.750%, collateralized by a U.S.
Treasury Note, 6.125% July 31, 2000, par
value of $1,885 (repurchase proceeds of
1,899 $1,900 when closed on May 3, 1999)........ 1,899
-------
TOTAL INVESTMENTS--99.0%
(Cost $83,714)........................................ 92,934
CASH AND OTHER ASSETS, LESS LIABILITIES--1.0%........... 953
-------
TOTAL NET ASSETS--100.0%................................ $93,887
=======
</TABLE>
- ------------
1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking organizations.
2 PIK--Payment in-kind security
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 12
HARBOR INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1999 (UNAUDITED)
INVESTMENT HOLDINGS BY COUNTRY (% OF NET ASSETS)
(Excludes net cash and short-term investments of 5.1%)
<TABLE>
<S> <C>
Hong Kong (HK)
0.1
Australia (AUS)
0.7
Germany (GER)
1.3
Mexico (MEX)
3.0
Denmark (DEN)
3.1
Singapore (SGP)
3.4
Portugal (PORT)
3.8
Switzerland (SWS)
4.0
Finland (FIN)
4.1
Netherlands (NET)
5.8
Spain (SP)
11.6
Italy (IT)
15.0
France (FR)
16.0
United Kingdom (UK)
23.0
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--94.9%
VALUE
SHARES (000S)
- ------------------------------------------------------------------
<C> <S> <C>
AUTOMOTIVE--4.2%
683,157 Valeo SA (FR)........................... $ 57,735
58,896 Valeo SA Wts. (FR) Expire 08/03/2001.... 199
----------
57,934
----------
BANKS--25.1%
3,879,025 Banco Bilbao Vizcaya (SP)............... 58,025
1,886,203 Banco Commercial Portugues--Registered
(PORT).................................. 53,182
1,604,460 Banco Santander Central Hispano SA
(SP).................................... 34,848
4,385,100 Development Bank of Singapore (SGP)..... 46,532
182,550 Paribas (FR)............................ 19,400
163,100 UBS AG--Registered (SWS)................ 55,375
15,801,150 Unicredito Italiano SpA (IT)............ 80,123
----------
347,485
----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
- ------------------------------------------------------------------
<C> <S> <C>
BUSINESS SERVICES--4.2%
331,719 Brambles Industries Ltd. (AUS).......... $ 9,748
8,216,315 Rentokil Initial plc (UK)............... 48,211
----------
57,959
----------
CHEMICALS--1.3%
322,043 SGL Carbon AG (GER)..................... 17,708
----------
ELECTRICAL EQUIPMENT--5.2%
14,282,346 Invensys (UK)........................... 72,604
----------
FINANCIAL SERVICES--1.2%
268,700 ING Groep NV (NET)...................... 16,549
----------
FOOD PROCESSING EQUIPMENT--0.5%
757,100 Raisio Group plc (FIN).................. 6,918
----------
HOUSEHOLD PRODUCTS--3.0%
10,765,400 Kimberly-Clark De Mexico SA (MEX)....... 41,943
----------
INSURANCE--6.7%
3,029,100 Allied Zurich AG (UK)................... 40,153
403,504 AXA UAP (FR)............................ 52,089
----------
92,242
----------
LEISURE--6.4%
4,169,747 Granada Group plc (UK).................. 88,946
----------
MEDIA--9.5%
3,192,169 Pearson plc (UK)........................ 67,785
1,559,334 Verenigde Nederlandse Uitgeversbedrijven
NV (NET)................................ 63,091
----------
130,876
----------
PHARMACEUTICALS--6.6%
253,317 Sanofi SA (FR).......................... 39,686
255,344 Synthelabo (FR)......................... 52,196
----------
91,882
----------
REAL ESTATE--0.1%
170,000 Henderson Land Development Co. Ltd.
(HK).................................... 1,007
----------
TELECOMMUNICATIONS--17.3%
414,187 Tele Danmark AS Cl. B (DEN)............. 42,683
2,973,300 Telecom Italia Mobile SpA (Savings)
(IT).................................... 9,957
9,048,510 Telecom Italia Mobile SpA (IT).......... 53,912
11,971,700 Telecom Italia SpA (Savings) (IT)....... 64,259
1,417,858 Telefonica SA (SP)...................... 66,429
1,417,858 Telefonica SA Wts. (SP) Expire
05/20/1999.............................. 1,318
----------
238,558
----------
TELECOMMUNICATIONS EQUIPMENT--3.6%
653,480 Nokia (Ab) Oy Series A (FIN)............ 50,360
----------
TOTAL COMMON STOCKS
(Cost $1,100,793)................................... 1,312,971
----------
</TABLE>
11
<PAGE> 13
HARBOR INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT--2.1%
(Cost $28,648)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ------------------------------------------------------------------
COMMERCIAL PAPER
American Express Credit Corp.
$28,648 4.820%--05/03/1999...................... $ 28,648
----------
TOTAL INVESTMENTS--97.0%
(Cost $1,129,441)................................... 1,341,619
CASH AND OTHER ASSETS, LESS LIABILITIES--3.0%......... 40,838
----------
TOTAL NET ASSETS--100.0%.............................. $1,382,457
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE> 14
HARBOR CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1999 (UNAUDITED)
COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash and short-term investments of 3.9%)
<TABLE>
<S> <C>
Aerospace/Defense
0.4
Savings & Loans
0.6
Hotel--Motel
0.8
Retail--Drug Stores
0.9
Miscellaneous High Tech
1.9
Cosmetics
2.0
Restaurants
2.0
Banks--Money Centers
2.9
Electrical Equipment
3.1
Insurance--Other
3.4
Telecommunications
3.5
Electronic Instruments
4.4
Financial Services
4.5
Credit & Miscellaneous Financial
5.0
Semiconductors
6.6
Media
7.3
Retail--All Other
8.2
Computer Services
9.2
Drugs & Medicine
11.8
Computers & Business Equipment
17.6
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--96.1%
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
AEROSPACE/DEFENSE--0.4%
221,000 Raytheon Co. Cl. A....................... $ 15,270
83,200 Raytheon Co. Cl. B....................... 5,845
----------
21,115
----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
BANKS-MONEY CENTERS--2.9%
2,017,800 Chase Manhattan Corp. New................ $ 166,973
----------
COMPUTER SERVICES--9.2%
509,700 America Online Inc....................... 72,760
1,683,200 Cadence Design Systems Inc............... 22,828
665,200 Intuit Inc............................... 57,290
475,800 Level 3 Communications Inc............... 42,852
2,769,000 Microsoft Corp........................... 225,154
Qwest Communications International
1,297,700 Inc...................................... 110,872
----------
531,756
----------
COMPUTERS & BUSINESS EQUIPMENT--17.6%
477,700 Ascend Communications Inc................ 46,158
1,815,000 Cisco Systems Inc.*...................... 207,023
1,955,700 Dell Computer Corp.*..................... 80,550
688,000 EMC Corp.*............................... 74,949
524,700 Equant NV--Registered.................... 46,829
860,100 International Business Machines Corp..... 179,922
3,100,800 MCI WorldCom Inc......................... 254,847
424,300 Sun Microsystems Inc..................... 25,378
1,638,100 Xerox Corp............................... 96,238
----------
1,011,894
----------
COSMETICS--2.0%
596,800 Estee Lauder Cosmetics Inc............... 59,755
1,062,900 Gillette Co.............................. 55,470
----------
115,225
----------
CREDIT & MISCELLANEOUS FINANCIAL--5.0%
1,616,500 Associates First Capital Corp............ 71,631
3,176,262 MBNA Corp................................ 89,531
Morgan, Stanley, Dean Witter & Co.
1,275,820 Inc...................................... 126,545
----------
287,707
----------
DRUGS & MEDICINE--11.8%
2,074,500 American Home Products Corp.............. 126,545
88,100 Bristol Myers Squibb Co.................. 5,600
988,100 Eli Lilly & Co........................... 72,749
1,451,500 Merck & Co. Inc.......................... 101,968
775,100 Pfizer Inc............................... 89,185
980,300 Pharmacia & Upjohn Inc................... 54,897
2,552,100 Schering Plough Corp..................... 123,298
1,515,700 Warner-Lambert Co........................ 102,973
----------
677,215
----------
ELECTRICAL EQUIPMENT--3.1%
1,705,700 General Electric Co...................... 179,951
----------
ELECTRONIC INSTRUMENTS--4.4%
1,486,700 Hewlett Packard Co....................... 117,263
1,161,400 KLA Tencor Corp.*........................ 57,634
697,800 Tellabs Inc.*............................ 76,453
----------
251,350
----------
FINANCIAL SERVICES--4.5%
640,400 Charles Schwab Corp...................... 70,284
2,507,900 Citigroup Inc............................ 188,719
----------
259,003
----------
HOTEL-MOTEL--0.8%
1,260,500 Promus Hotel Corp. New................... 45,378
----------
</TABLE>
13
<PAGE> 15
HARBOR CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
INSURANCE-OTHER--3.4%
2,418,000 Ace Ltd.................................. $ 73,145
1,050,300 American International Group Inc......... 123,345
----------
196,490
----------
MEDIA--7.3%
4,481,200 CBS Corp................................. 204,175
1,731,000 Clear Channel Communication*............. 120,305
1,315,800 Omnicom Group............................ 95,396
----------
419,876
----------
MISCELLANEOUS HIGH TECH--1.9%
2,039,900 Applied Materials Inc.................... 109,390
----------
RESTAURANTS--2.0%
2,712,600 McDonalds Corp........................... 114,946
----------
RETAIL-ALL OTHER--8.2%
1,672,225 Gap Inc.................................. 111,307
2,355,700 Home Depot Inc........................... 141,195
1,554,600 Kohl's Corp.*............................ 103,284
2,734,400 Staples Inc.............................. 82,032
761,600 Wal-Mart Stores Inc...................... 35,034
----------
472,852
----------
RETAIL--DRUG STORES--0.9%
1,049,100 CVS Corp................................. 49,963
----------
SAVINGS & LOANS--0.6%
787,400 Washington Mutual Inc.................... 32,382
----------
SEMICONDUCTORS--6.6%
1,028,000 Altera Corp.............................. 74,273
2,463,600 Intel Corp............................... 150,742
1,510,500 Texas Instruments Inc.................... 154,260
----------
379,275
----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
- -----------------------------------------------------------------
TELECOMMUNICATIONS--3.5%
922,000 Airtouch Communications Inc.............. $ 86,092
852,500 Allegiance Telecom Inc................... 39,215
1,024,800 Nokia Corp. ADR(1)....................... 76,027
----------
201,334
----------
TOTAL COMMON STOCKS
(Cost $3,797,551).................................. 5,524,075
----------
SHORT-TERM INVESTMENTS--2.8%
PRINCIPAL
AMOUNT
(000S)
- -----------------------------------------------------------------
<C> <S> <C>
COMMERCIAL PAPER
Chevron USA Inc.
$100,000 4.850% - 05/03/1999...................... 100,000
American Express Credit Corp.
60,831 4.820% - 05/03/1999...................... 60,831
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $160,831).................................... 160,831
----------
TOTAL INVESTMENTS--98.9%
(Cost $3,958,382).................................. 5,684,906
CASH AND OTHER ASSETS, LESS LIABILITIES--1.1%........ 64,161
----------
TOTAL NET ASSETS--100%............................... $5,749,067
==========
</TABLE>
- ------------
1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
14
<PAGE> 16
HARBOR INTERNATIONAL FUND II
PORTFOLIO OF INVESTMENTS--APRIL 30, 1999 (UNAUDITED)
INVESTMENT HOLDINGS BY COUNTRY (% OF NET ASSETS)
(Excludes net cash of 1.7%)
<TABLE>
<S> <C>
Canada (CAN)
0.2
Israel (IL)
0.9
South Africa (S. AFR)
1.1
Malaysia (MAL)
1.3
Argentina (ARG)
1.6
Poland (POL)
1.7
Portugal (PORT)
2.2
Singapore (SGP)
2.5
Brazil (BR)
3.4
Finland (FIN)
4.6
Netherlands (NET)
6.5
Italy (IT)
6.5
Japan (JP)
7.4
Sweden (SW)
8.4
United Kingdom (UK)
13.7
Switzerland (SWS)
16.5
France (FR)
19.8
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--96.1%
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
APPAREL & TEXTILES--0.0%
126,000,000 Texpar SA Pfd. (BR)*..................... $ 1
--------
AUTOMOTIVE--1.8%
60,000 Autoliv Inc. (SW)........................ 2,084
--------
BANKS--23.8%
300,000 Banca Commercial Italiana (IT)........... 2,469
1,000,000 Banca Nazional Del Lavoro (IT)*.......... 3,412
43,500 Bank Slaski (POL)........................ 1,970
58,873 Banque National Paris (FR)............... 4,879
95,000 Barclays Bank plc (UK)................... 3,023
13,000 Credit Suisse Group--Registered (SWS).... 2,578
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
20,500 Societe Generale (FR).................... $ 3,669
7,500 UBS AG--Registered (SWS)................. 2,546
United Overseas Bank (Alien Market)
365,052 (SGP).................................... 2,819
--------
27,365
--------
BEVERAGES--2.8%
283,280 Diageo plc (UK).......................... 3,263
--------
CONGLOMERATES--1.4%
1,600,000 Sime Darby Berhad (MAL)(2)............... 1,553
--------
CONSUMER GOODS--4.2%
100,591 Hunter Douglas NV (NET).................. 3,879
243,000 Salomon & Taylor (JP).................... 977
--------
4,856
--------
CONTAINERS & GLASS--1.7%
11,500 Cie De St. Gobain (FR)................... 1,974
--------
ELECTRONICS--4.4%
80,000 Matsushita Electrical Industries (JP).... 1,521
38,000 Sony Corp. (JP).......................... 3,548
--------
5,069
--------
FINANCIAL SERVICES--5.1%
57,500 ING Groep NV (NET)....................... 3,541
725 Julius Baer Holdings AG B (SWS).......... 2,359
--------
5,900
--------
FOOD--1.1%
1,121,163 Cresud B Shares (ARG).................... 1,267
--------
INDUSTRIAL MACHINERY--3.3%
24,000 Kone Oy B Shares (FIN)................... 2,558
2,050 Saurer AG--Registered (SWS).............. 1,200
--------
3,758
--------
INSURANCE--6.4%
125,000 Allied Zurich AG (UK).................... 1,657
22,500 AXA UAP (FR)............................. 2,905
Instituto Nazionale delle Assicurazioni
600,000 SpA (IT)................................. 1,585
85,000 Liberty Life Associates (S. AFR)......... 1,225
--------
7,372
--------
LEISURE--0.9%
10,000 Tag Heuer International SA (SWS)......... 1,001
--------
MEDIA--3.8%
75,400 Investec Consulting (PORT)............... 2,500
200,000 Reed International (UK).................. 1,819
--------
4,319
--------
MINING & METALS--5.2%
1,000 Alusuisse Lonza GR--Registered (SWS)..... 1,196
980,000 Billiton plc (UK)........................ 3,330
30,000 Pechiney SA (FR)......................... 1,268
1,458,048 Sedna Geotech Inc. (CAN)*................ 180
--------
5,974
--------
OIL & GAS PRODUCTION--2.4%
100,000 Perez Companc SA (ARG)................... 620
13,500,000 Petrol Brasileiro Pfd. (BR).............. 2,171
--------
2,791
--------
</TABLE>
15
<PAGE> 17
HARBOR INTERNATIONAL FUND II
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
PHARMACEUTICALS--10.2%
220,000 Nobel Biocare (SW)....................... $ 3,481
1,900 Novartis AG--Registered (SWS)............ 2,781
60,548 Rhone Poulenc SA Series A (FR)........... 2,878
197,893 SmithKline Beecham plc (UK).............. 2,617
--------
11,757
--------
PHOTOGRAPHY--1.0%
30,000 Fuji Photo Film Co. (JP)................. 1,133
--------
TELECOMMUNICATIONS--5.9%
155,000 Ericsson (LM) Tel Co. Series B (SW)...... 4,069
34,500 NICE Systems Ltd. ADR (IL)(1)*........... 992
13,500,000 Telesp Tel Sao Paulo Pfd. (BR)........... 1,764
--------
6,825
--------
TELECOMMUNICATIONS EQUIPMENT--2.4%
36,000 Nokia (Ab) Oy Series A (FIN)............. 2,774
--------
TIRES & RUBBER--4.0%
50,000 Bridgestone Corp. (JP)................... 1,340
7,500 Cie Fin Michel Bas (SWS)................. 3,200
--------
4,540
--------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
- -----------------------------------------------------------------
TOBACCO--2.4%
45,000 Seita (FR)............................... $ 2,710
--------
TOYS & AMUSEMENTS--1.9%
3,000 Swatch Group (SWS)....................... 2,139
--------
TOTAL COMMON STOCKS
(Cost $101,575)...................................... 110,425
--------
UNITS--2.2%
(Cost $760)
<C> <S> <C>
1,565,588 Eurotunnel (FR)*......................... 2,481
--------
TOTAL INVESTMENTS--98.3%
(Cost $102,335)...................................... 112,906
CASH AND OTHER ASSETS, LESS LIABILITIES--1.7%.......... 1,957
--------
TOTAL NET ASSETS--100.0%............................... $114,863
========
</TABLE>
- ------------
1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking organizations.
2 Fair Valued (See Note 2 to the Financial Statements.)
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
16
<PAGE> 18
HARBOR INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1999 (UNAUDITED)
INVESTMENT HOLDINGS BY COUNTRY (% OF NET ASSETS)
(Excludes net cash and short-term investments of 3.9%)
<TABLE>
<S> <C>
Finland (FIN)
1.3
Australia (AUS)
1.5
Denmark (DEN)
1.7
Portugal (PORT)
1.8
South Africa (S. AFR)
2.1
Singapore (SGP)
2.5
Brazil (BR)
2.6
Malaysia (MAL)
2.6
Argentina (ARG)
2.9
Spain (SP)
3.3
Italy (IT)
5.0
Japan (JP)
6.0
Sweden (SW)
6.1
Netherlands (NET)
6.8
Switzerland (SWS)
11.1
France (FR)
14.4
United Kingdom (UK)
24.4
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--94.5%
VALUE
SHARES (000S)
- ------------------------------------------------------------------
<C> <S> <C>
AUTOMOTIVE--1.2%
2,434,000 Volvo Ab Series B (SW).................. $ 64,189
----------
BANKS--26.8%
4,376,478 ABN Amro Holdings NV (NET).............. 104,256
15,650,000 Banca Commercial Italiana (IT).......... 128,789
8,401,350 Banco Bilbao Vizcaya (SP)............... 125,673
Banco Commercial Portugues--Registered
3,069,383 (PORT).................................. 86,542
Banco Commercial Portugues ADR
503,062 (PORT)(1)............................... 14,117
1,380,000 Bankinter SA--Registered (SP)........... 57,876
4,182,950 Barclays Bank plc (UK).................. 133,102
176,600 Credit Suisse Group--Registered (SWS)... 35,014
30,314,000 Malayan Bank Berhad (MAL)(2)............ 68,495
5,826,367 National Westminster Bank (UK).......... 140,124
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
- ------------------------------------------------------------------
<C> <S> <C>
Overseas Chinese Banking Corp. (Alien
8,500,000 Market) (SGP)........................... $ 79,673
772,120 Paribas (FR)............................ 82,056
3,078,986 Royal Bank of Scotland Group (UK)....... 72,712
3,306,400 San Paolo--IMI SpA (IT)................. 49,599
303,000 Societe Generale (FR)................... 54,223
5,691,100 Standard Chartered plc (UK)............. 102,447
248,538 UBS AG--Registered (SWS)................ 84,383
United Overseas Bank (Alien Market)
7,540,570 (SGP)................................... 58,233
----------
1,477,314
----------
BEVERAGES--3.9%
5,483,830 Cadbury Schweppes (UK).................. 73,133
7,750,000 Diageo plc (UK)......................... 89,267
3,050,000 Whitbread (UK).......................... 51,519
----------
213,919
----------
CONGLOMERATES--0.7%
42,297,000 Sime Darby Berhad (MAL)(2).............. 41,067
----------
CONSUMER GOODS--1.3%
722,406 BIC (FR)................................ 40,523
879,254 Hunter Douglas NV (NET)................. 33,903
----------
74,426
----------
CONTAINERS & GLASS--2.0%
264,000 Cie De St. Gobain (FR).................. 45,320
2,100,000 UPM Kymmene Oy (FIN).................... 63,558
----------
108,878
----------
ELECTRONICS--1.5%
871,000 Sony Corp. (JP)......................... 81,323
----------
FINANCIAL SERVICES--2.3%
2,072,795 ING Groep NV (NET)...................... 127,660
----------
FOOD--1.7%
50,300 Nestle SA--Registered (SWS)............. 93,070
----------
INSURANCE--7.3%
5,187,347 Allied Zurich (UK)...................... 68,762
2,552,000 Assicurazioni Generali (IT)............. 99,345
600,000 AXA UAP (FR)............................ 77,455
Schweiz Ruckversicher--Registered
71,500 (SWS)................................... 156,431
----------
401,993
----------
MEDIA--1.5%
2,500,000 News Corp. Ltd. ADR (AUS)(1)............ 81,563
----------
MINING & METALS--4.9%
Anglo American Corp. South Africa Ltd.
1,286,000 ADR (S. AFR)(1)......................... 66,390
26,950,000 Billiton plc ADR (UK)(1, 2)............. 91,586
5,390,000 Gencor Ltd. New ADR (S. AFR)(1, 2)...... 11,454
1,488,000 Pechiney SA (FR)........................ 62,877
2,113,036 Rio Tinto--Registered (UK).............. 36,882
----------
269,189
----------
OIL & GAS PRODUCTION--10.3%
13,676,470 BG (UK)................................. 77,005
7,260,149 BP Amoco (UK)........................... 137,817
505,900,001 Petrol Brasileiro Pfd. (BR)............. 81,352
Royal Dutch Petroleum Co. ADR
1,800,000 (NET)(1)................................ 105,638
671,444 Total Cl. B (FR)........................ 91,927
YPF Sociedad Anonima ADR Cl. D
1,710,000 (ARG)(1)................................ 71,820
----------
565,559
----------
</TABLE>
17
<PAGE> 19
HARBOR INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ------------------------------------------------------------------
<C> <S> <C>
PAPER PRODUCTS--0.9%
1,500,000 Mo Och Domsjo Ab Series B (SW).......... $ 38,580
750,000 Stora Enso Oyj (R Shares) (FIN)......... 8,755
----------
47,335
----------
PHARMACEUTICALS--6.8%
69,561 Novartis AG--Registered (SWS)........... 101,809
933,000 Novo Nordisk AS Series B (DEN).......... 91,507
1,357,133 Rhone Poulenc Series A (FR)............. 64,515
SmithKline Beecham plc ADR Cl. A
1,800,000 (UK)(1)................................. 118,238
----------
376,069
----------
PHOTOGRAPHY--3.3%
3,557,000 Canon Inc. (JP)......................... 86,974
2,470,000 Fuji Photo Film Co. (JP)................ 93,282
----------
180,256
----------
TELECOMMUNICATIONS--6.5%
5,280,000 Ericsson (LM) Tel Co. Series B (SW)..... 138,618
Ericsson (LM) Tel Co. ADR Series B
1,292,000 (SW)(1)................................. 34,884
6,600,000 Telecom Argentina Cl. B (ARG)........... 45,229
12,000,000 Telefonica De Argentina Cl. B (ARG)..... 44,658
14,400,000 Telekom Malaysia Berhad (MAL)(2)........ 36,081
296,600,000 Telesp Participaco Pfd. (BR)*........... 7,232
397,200,038 Telesp Tel Sao Paulo Pfd. (BR).......... 51,892
----------
358,594
----------
TIRES & RUBBER--2.8%
2,545,000 Bridgestone Corp. (JP).................. 68,196
88,700 Cie Fin Michel Bas (Bearer) (SWS)....... 37,847
1,127,645 Michelin Cl. B (FR)..................... 51,164
----------
157,207
----------
TOBACCO--7.2%
5,187,347 British American Tobacco plc (UK)....... 43,727
Cie Financiere Richemont AG Units CI. A
59,000 (SWS)................................... 100,312
10,725,000 Imperial Tobacco (UK)................... 106,108
1,407,150 Seita (FR).............................. 84,731
18,818,974 Swedish Match (SW)...................... 61,786
----------
396,664
----------
WATER DISTRIBUTION--1.6%
520,487 Suez Lyonnaise des Eaux (FR)............ 88,525
----------
TOTAL COMMON STOCKS
(Cost $2,725,203)................................... 5,204,800
----------
UNITS--0.9%
(Cost $69,918)
29,691,799 Eurotunnel (FR)*........................ 47,050
Eurotunnel Wts. (FR) Expire
20,000,000 12/31/2001--10/31/2003.................. 3,380
----------
50,430
----------
CONVERTIBLE BOND--0.7%
(Cost $39,600)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ------------------------------------------------------------------
LibLife International BV
$40,000 6.500%--09/30/2004 (S. AFR)............. $ 38,000
----------
SHORT-TERM INVESTMENTS--3.6%
COMMERCIAL PAPER
American Express Credit Corp.
9,779 4.780%--05/03/1999...................... 9,779
6,675 4.780%--05/04/1999...................... 6,675
6,168 4.780%--05/05/1999...................... 6,168
----------
22,622
----------
Chevron USA Inc.
12,437 4.680%--05/07/1999...................... 12,437
16,500 4.800%--05/14/1999...................... 16,500
16,500 4.800%--05/17/1999...................... 16,500
----------
45,437
----------
Commercial Credit Co.
11,578 4.780%--05/04/1999...................... 11,578
----------
Exxon Corp.
11,510 4.770%--05/05/1999...................... 11,510
----------
General Motors Acceptance Corp.
11,866 4.770%--05/10/1999...................... 11,866
16,138 4.800%--05/18/1999...................... 16,138
----------
28,004
----------
Prudential Funding Corp.
15,504 4.740%--05/06/1999...................... 15,504
17,525 4.780%--05/11/1999...................... 17,525
16,207 4.800%--05/12/1999...................... 16,207
16,500 4.800%--05/13/1999...................... 16,500
10,540 4.810%--05/19/1999...................... 10,540
----------
76,276
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $195,427)..................................... 195,427
----------
TOTAL INVESTMENTS--99.7%
(Cost $3,030,148)................................... 5,488,657
CASH AND OTHER ASSETS, LESS LIABILITIES--0.3%......... 18,916
----------
TOTAL NET ASSETS--100.0%.............................. $5,507,573
==========
</TABLE>
- ------------
1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking organizations.
2 Fair Valued (See Note 2 to the Financial Statements.)
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 20
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1999 (UNAUDITED)
COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes 19.3% of holdings of which 1.7% represents net cash and short-term
investments and 17.6% represents industry classification less than 1.5%)
<TABLE>
<S> <C>
Building Material - Construction
1.5
International Oil
1.5
Media
1.5
Credit & Miscellaneous Financial
1.9
Insurance - Other
1.9
Railroads
2.2
Drugs & Medicine
2.3
Aerospace/Defense
2.4
Conglomerates
2.4
Natural Gas & Pipelines
2.4
Domestic Oil
2.6
Computers & Business Equipment
2.8
Insurance - Life
3.0
Financial Services
3.4
Electric Power
3.6
Electrical Equipment
4.3
Retail - All Other
4.3
Grocery Products
4.9
Chemicals - Fertilizers
5.2
Telephones
5.5
Paper
6.1
Banks - Money Center
6.8
Banks - Regional
8.2
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--98.3%
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
AEROSPACE/DEFENSE -- 2.4%
1,000 Boeing Co.................................. $ 41
2,200 Lockheed Martin Corp....................... 95
28,100 Northrop Grumman Corp...................... 1,797
1,900 Raytheon Co. Cl. B......................... 133
46,100 Rockwell International Corp. New........... 2,380
--------
4,446
--------
AIR TRANSPORTATION--0.9%
3,000 Alaska Air Group Inc.*..................... 132
9,000 AMR Corp.*................................. 628
1,600 Delta Air Lines Inc........................ 102
2,400 Southwest Air Lines Co..................... 78
13,800 US Airways Group Inc.*..................... 751
--------
1,691
--------
ALUMINUM--1.2%
2,000 Alcoa Inc.................................. 125
32,600 Reynolds Metal Co.......................... 2,033
--------
2,158
--------
APPAREL & TEXTILES--0.7%
31,900 National Service Industries Inc............ 1,242
--------
AUTOMOBILE EQUIPMENT--1.0%
59,000 Genuine Parts Co........................... 1,770
1,500 Navistar International Corp.*.............. 78
--------
1,848
--------
AUTOMOBILES--0.6%
8,900 Ford Motor Co.............................. 569
5,100 General Motors Corp........................ 454
--------
1,023
--------
BANKS-MONEY CENTER--6.8%
23,300 Bank New York Inc.......................... 932
99,840 BankAmerica Corp........................... 7,187
36,000 Chase Manhattan Corp. New.................. 2,979
1,000 State Street Corp.......................... 88
30,500 Wells Fargo & Co........................... 1,317
--------
12,503
--------
BANKS-REGIONAL--8.2%
65,259 Bank One Corp.............................. 3,850
1,000 Dime Bancorp Inc. New...................... 23
33,700 First American Corp........................ 1,308
13,826 First Union Corp........................... 766
25,300 First Virginia Banks Inc. Rts.............. 1,263
3,400 Fleet Financial Group Inc.................. 146
1,000 Hibernia Corp. Cl. A....................... 13
19,217 Huntington Bancshares Inc.................. 681
2,000 KeyCorp New................................ 62
27,600 Mercantile Bank Corp. Inc.................. 1,573
1,560 National City Corp......................... 112
43,400 PNC Bank Corp.............................. 2,512
62,700 Summit Bancorp............................. 2,657
1,100 Suntrust Banks Inc......................... 79
1,000 Wachovia Corp. New......................... 88
--------
15,133
--------
</TABLE>
19
<PAGE> 21
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
BUILDING MATERIAL-CONSTRUCTION--1.5%
22,000 Armstrong World Industries Inc............. $ 1,205
39,900 York International Inc..................... 1,646
--------
2,851
--------
CHEMICALS-FERTILIZERS--5.2%
32,200 Air Products & Chemical Inc................ 1,513
1,400 Dow Chemical Co............................ 184
28,600 E.l. Du Pont De Nemours & Co............... 2,020
57,200 Hercules Inc............................... 2,163
58,200 Millenium Chemicals Inc.................... 1,571
57,500 R.P.M. Inc................................. 809
29,200 Rohm & Haas Co............................. 1,309
--------
9,569
--------
COMPUTERS & BUSINESS EQUIPMENT--2.8%
7,685 Compaq Computer Corp....................... 171
8,800 International Business Machines Corp....... 1,841
38,900 MCI WorldCom Inc........................... 3,197
1,693 NCR Corp. New*............................. 69
--------
5,278
--------
COMPUTER SERVICES--1.1%
22,400 Level 3 Communications Inc.*............... 2,017
--------
CONGLOMERATES--2.4%
51,000 Fortune Brands Inc......................... 2,015
1,300 Loews Corp................................. 95
26,200 Minnesota Mining & Manufacturing Co........ 2,332
--------
4,442
--------
CREDIT & MISCELLANEOUS FINANCIAL--1.9%
800 American Express Co........................ 105
710 Associates First Capital Corp.............. 31
700 Countrywide Credit Industries Inc.......... 32
28,600 Federal National Mortgage Association...... 2,029
13,200 Morgan, Stanley, Dean Witter & Co. Inc..... 1,309
--------
3,506
--------
CRUDE PRODUCERS--0.7%
46,600 Mitchell Energy & Development Corp. Cl.
A.......................................... 702
33,200 Mitchell Energy & Development Corp. Cl.
B.......................................... 510
--------
1,212
--------
DOMESTIC OIL--2.6%
49,300 Kerr McGee Corp............................ 2,089
28,000 Murphy Oil Corp............................ 1,314
40,100 Pennzenergy Co............................. 519
64,400 Pennzoil Quaker State Co................... 833
--------
4,755
--------
DRUGS & MEDICINE--2.3%
42,400 Baxter International Inc................... 2,671
1,600 Bristol Myers Squibb Co.................... 102
27,500 Pharmacia & Upjohn Inc..................... 1,540
--------
4,313
--------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
ELECTRIC POWER--3.6%
1,500 American Electric Power Inc................ $ 62
29,400 BEC Energy................................. 1,250
59,800 Cinergy Corp............................... 1,783
6,000 Commonwealth Energy System................. 243
2,000 Consolidated Edison Inc.................... 91
1,500 Duke Energy Co............................. 84
2,300 Edison International....................... 56
1,500 Entergy Corp............................... 47
400 Firstenergy Corp........................... 12
1,000 FPL Group Inc.............................. 56
46,300 Niagara Mohawk Holdings Corp.*............. 619
46,400 Northeast Utilities *...................... 742
39,200 OGE Energy Corp............................ 929
5,200 PG & E Corp................................ 162
1,500 PP & L Resources Inc....................... 42
600 Pacificorp................................. 10
1,700 Peco Energy Co............................. 81
1,300 Pinnacle West Capital Corp................. 50
800 Public Service Enterprise Group............ 32
4,300 Southern Co................................ 116
1,700 Texas Utilities Co......................... 68
2,500 Unicom Corp................................ 97
4,400 Unisource Energy Corp.*.................... 48
--------
6,680
--------
ELECTRICAL EQUIPMENT--4.3%
43,700 Emerson Electric Co........................ 2,819
54,000 Hubbell Inc. Cl. B......................... 2,582
60,000 Thomas & Betts Corp........................ 2,520
--------
7,921
--------
ELECTRONIC INSTRUMENTS--1.3%
65,800 Harris Corp................................ 2,274
2,400 Hewlett Packard Co......................... 189
1,000 Micron Technology Inc.*.................... 37
--------
2,500
--------
FINANCIAL SERVICES--3.4%
1,700 Capital One Financial Corp................. 295
1,000 Chubb Corp................................. 59
73,156 Citigroup Inc.............................. 5,505
1,700 Lehman Brothers Holdings Inc............... 94
3,900 Merrill Lynch & Company Inc................ 327
1,200 Paine Webber Group Inc..................... 56
--------
6,336
--------
FOREST PRODUCTS--0.0%
500 Champion International Corp................ 27
--------
GROCERY PRODUCTS--4.9%
5,907 Archer Daniels Midland Co.................. 89
51,700 Bestfoods.................................. 2,595
61,100 Dean Foods Co.............................. 2,181
74,300 Flowers Industries Inc..................... 1,579
11,900 Hannaford Brothers Co...................... 519
47,400 H.J. Heinz Co.............................. 2,213
--------
9,176
--------
HEALTH CARE-HOSPITAL MANAGEMENT--0.1%
6,300 Columbia/HCA Healthcare Corp............... 156
1,900 United Healthcare Corp..................... 107
--------
263
--------
</TABLE>
20
<PAGE> 22
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
INSURANCE-LIFE--3.0%
700 Conseco Inc................................ $ 22
22,100 Equitable Companies Inc.................... 1,488
58,100 Reliastar Financial Corp................... 2,135
53,700 Torchmark Inc.............................. 1,836
--------
5,481
--------
INSURANCE-OTHER--1.9%
16,936 Allstate Corp.............................. 616
18,312 American International Group Inc........... 2,151
1,600 Cigna Corp................................. 140
12,700 CNA Financial Group Inc.*.................. 518
1,128 St. Paul Companies Inc..................... 32
--------
3,457
--------
INTERNATIONAL OIL--1.5%
1,900 Chevron Corp............................... 190
17,300 Exxon Corp................................. 1,437
10,500 Mobil Corp................................. 1,100
1,300 Texaco Inc................................. 82
--------
2,809
--------
MACHINERY--1.4%
2,400 Caterpillar Inc............................ 155
48,000 Cooper Industries Inc...................... 2,322
1,900 Deere & Co................................. 82
1,500 Ingersoll Rand Co.......................... 104
--------
2,663
--------
MANUFACTURING DIVERSIFIED--1.3%
51,900 Parker Hannifin Corp....................... 2,436
--------
MEDIA--1.5%
3,400 CBS Corp.*................................. 155
10,000 MediaOne Group Inc.*....................... 816
6,100 Time Warner Inc............................ 427
32,200 Viacom Inc. *.............................. 1,316
--------
2,714
--------
NATURAL GAS & PIPELINES--2.4%
26,300 Columbia Energy Group...................... 1,264
36,200 MCN Energy Group Inc....................... 722
17,100 National Fuel Gas Co....................... 748
20,400 Nicor Inc.................................. 742
25,100 Peoples Energy Corp........................ 938
--------
4,414
--------
NON-FERROUS METALS--0.9%
114,300 Cyprus Amax Minerals Co.................... 1,757
--------
PAPER--6.1%
60,400 Boise Cascade Corp......................... 2,431
41,400 Bowater Inc................................ 2,220
42,600 Kimberly Clark Corp........................ 2,612
19,000 Rayonier Inc............................... 867
31,700 Temple Inland Inc.......................... 2,187
21,700 Williamette Industries Inc................. 1,014
--------
11,331
--------
PHOTOGRAPHIC- OPTICAL--1.0%
25,500 Eastman Kodak Co........................... 1,903
--------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
PUBLISHING--0.1%
2,000 Gannett Inc................................ $ 142
--------
RAILROADS--2.2%
110,100 Burlington Northern Santa Fe............... 4,032
1,100 Norfolk Southern Corp...................... 36
--------
4,068
--------
REAL ESTATE INVESTMENT TRUSTS--0.7%
16,500 Equity Residential Properties Trust........ 763
23,100 FelCor Lodging Trust Inc................... 553
--------
1,316
--------
RESTAURANTS--0.1%
3,400 McDonalds Corp............................. 144
--------
RETAIL--ALL OTHER--4.3%
55,400 Best Buy Co. Inc.*......................... 2,645
600 Dayton Hudson Corp......................... 40
8,200 Federated Department Stores Inc.*.......... 383
40,700 J.C. Penney Inc............................ 1,857
4,900 Kmart Corp.*............................... 73
59,750 May Department Stores Co................... 2,379
1,400 Sears, Roebuck & Co........................ 64
13,200 Wal-Mart Stores Inc........................ 607
--------
8,048
--------
RETAIL--DRUG STORES--1.1%
57,400 Longs Drug Stores Corp..................... 1,973
1,400 Rite Aid Corp.............................. 33
--------
2,006
--------
RETAIL--FOOD STORES--0.1%
1,400 Albertsons Inc............................. 72
2,100 American Stores Co. New.................... 66
--------
138
--------
SERVICES--1.3%
51,000 H & R Block Inc............................ 2,454
--------
SEMICONDUCTORS--0.1%
2,700 Motorola Inc............................... 216
--------
STEEL--1.1%
89,700 Allegheny Teledyne Inc..................... 2,007
8,300 Bethlehem Steel Corp.*..................... 76
--------
2,083
--------
TELEPHONES--5.5%
17,400 Ameritech Corp............................. 1,191
40,236 AT&T Corp.................................. 2,032
8,700 Bell Atlantic Corp......................... 501
36,200 Bellsouth Corp............................. 1,620
44,000 GTE Corp................................... 2,945
27,100 SBC Communications Inc..................... 1,518
3,500 Sprint Corp................................ 359
--------
10,166
--------
TIRES & RUBBER--0.7%
57,900 Cooper Tire & Rubber Co.................... 1,270
--------
</TABLE>
21
<PAGE> 23
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------
<C> <S> <C>
TOYS--0.1%
4,300 Toys "R" Us Inc.*.......................... $ 94
--------
TOTAL COMMON STOCKS
(Cost $158,400)...................................... 182,000
--------
SHORT-TERM INVESTMENT--0.9%
(Cost $1,665)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------
REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank
& Trust dated April 30, 1999 due on May
3, 1999 at 3.75%, collateralized by a
U.S. Treasury Note, 6.125% July 31, 2000,
par value of $1,655 (repurchase proceeds
$1,665 of $1,665 when closed on May 3, 1999).... $ 1,665
--------
TOTAL INVESTMENTS--99.2%
(Cost $160,065)...................................... 183,665
CASH AND OTHER ASSETS, LESS LIABILITIES--0.8%.......... 1,507
--------
TOTAL NET ASSETS--100%................................. $185,172
========
</TABLE>
- ------------
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
22
<PAGE> 24
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1999 (UNAUDITED)
TOTAL INVESTMENTS (% OF NET ASSETS)
(Excludes net cash and short-term investments of -19.6%)
<TABLE>
<S> <C>
Options
0.1
Foreign Government Obligations
2.4
Asset-Backed Securities
4.4
U.S. Government Obligations
8.1
Corporate Bonds & Notes
50.8
Mortgage-Backed Securities
53.8
</TABLE>
<TABLE>
<CAPTION>
ASSET-BACKED SECURITIES--4.4%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------
<C> <S> <C>
Firstplus Home Loan Owner Trust
Series 1998-2 Cl. A3
$ 6,250 6.320%--11/10/2013(10)................... $ 6,299
SLM Student Loan Trust
Series 1997-2 Cl. A1
3,015 5.047%--10/25/2005(8).................... 3,005
Series 1997-3 Cl. A1
7,201 5.107%--04/25/2006(8).................... 7,170
Series 1995-1 Cl. A2
5,000 5.257%--10/25/2007(8).................... 4,987
---------
15,162
---------
Student Loan Marketing Association MTN(1)
5,000 5.684%--06/30/2000(7).................... 4,992
---------
TOTAL ASSET-BACKED SECURITIES
(Cost $26,463)...................................... 26,453
---------
<CAPTION>
CORPORATE BONDS & NOTES--50.8%
<C> <S> <C>
Associates Corp. North America
5,000 5.104%--08/27/2001(8).................... 5,000
Banesto Del Inc.
3,000 8.250%--07/28/2002....................... 3,145
Banponce Corp.
2,000 6.750%--12/15/2005....................... 1,959
Beaver Valley Funding Corp.
4,000 8.625%--06/01/2007....................... 4,310
Beneficial Corp. MTN(1)
10,000 5.210%--04/01/2002(8).................... 10,038
Calpine Corp.
3,000 8.750%--07/15/2007....................... 3,143
1,200 7.875%--04/01/2008....................... 1,218
---------
4,361
---------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000s)
- -----------------------------------------------------------------
<C> <S> <C>
Cemex SA MTN(1)
$ 1,000 8.500%--08/31/2000....................... $ 1,015
Central Maine Power MTN(1)
10,000 6.389%--10/25/1999(8).................... 10,007
10,000 6.380%--02/24/2000....................... 9,995
---------
20,002
---------
Century Communications Corp.(12)
1,200 0.000%--03/15/2003....................... 870
Chrysler Financial Corp. MTN(1)
10,000 4.968%--07/05/2000(8).................... 10,001
Cincinnati Financial Corp.
5,000 6.900%--05/15/2028....................... 4,913
Citicorp
10,625 7.125%--03/15/2004....................... 11,066
Cleveland Electric Illuminating Co.
2,000 9.500%--05/15/2005....................... 2,170
CMS Energy Corp.
1,200 8.125%--05/15/2002....................... 1,229
Credit Suisse First Boston
(Acquired 03/24/1999, Cost $9,857)(2)
10,000 6.500%--05/01/2008....................... 9,783
CSC Holdings Inc.
1,200 9.875%--04/01/2023....................... 1,344
Dean Witter Discover & Co. MTN(1)
9,000 5.375%--10/05/2002(8).................... 9,044
DTE Capital Corp.
(Acquired 11/18/1998, Cost $10,000)(2)
10,000 7.110%--11/15/2003....................... 9,910
Echostar DBS Corp.
(Acquired 04/23/1999, Cost $1,251)(2)
1,200 9.250%--02/01/2006....................... 1,254
First Chicago Corp. MTN(1)
Series 178
10,000 5.080%--03/11/2002(8).................... 10,059
10,000 5.100%--06/26/2002(8).................... 10,016
---------
20,075
---------
First Securities Corp.
12,325 7.875%--10/15/1999....................... 12,459
Florida Gas Transmission Co.
(Acquired 03/24/1999, Cost $2,024)(2)
2,000 8.140%--11/01/1999....................... 2,023
General Motors Acceptance Corp. MTN(1)
8,000 5.375%--12/17/2001(8).................... 8,045
3,000 5.550%--09/15/2003....................... 2,941
---------
10,986
---------
General Motors Acceptance Corp.
10,000 5.121%--04/29/2002(8).................... 10,026
5,000 5.750%--11/10/2003....................... 4,944
---------
14,970
---------
</TABLE>
23
<PAGE> 25
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
CORPORATE BONDS & NOTES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------
<C> <S> <C>
Goldman Sachs Group LP MTN(1)
(Acquired 01/06/1998, Cost $10,000)(2)
$10,000 5.180%--01/09/2001(8).................... $ 10,018
(Acquired 03/03/1999, Cost $10,000)(2)
10,000 5.230%--02/20/2001(8).................... 9,994
---------
20,012
---------
Gulf STS Utilities Co.
400 8.210%--01/01/2002....................... 410
Hydro Quebec Yankee Bonds Debenture
775 9.500%--11/15/2030....................... 1,037
International American Development
Bank(7)
NZ$3,500 5.750%--04/15/2004....................... 1,940
Korea Development Bank(7)
DM10,000 3.258%--05/14/2001....................... 5,214
Merrill Lynch & Company Inc. MTN(1)
$10,000 5.050%--09/30/2000(7).................... 9,981
Mexico Credit Link
5,000 5.750%--04/15/2004(8).................... 5,278
Meyer, Fred Inc. New
5,000 7.150%--03/01/2003....................... 5,135
Nabors Industries Inc.
10,000 6.800%--04/15/2004....................... 10,038
Occidental Petroleum Corp.
5,000 6.400%--04/01/2003(7).................... 4,938
Orion Network Sys. Inc.
2,500 0.000%--01/15/2007(9).................... 1,538
Prudential Funding Corp. MTN Tranche
20(1)
5,000 4.620%--08/01/2000(8).................... 5,027
Quest Diagnostics
7,053 6.250%--12/05/2002....................... 7,046
3,158 6.750%--12/05/2002....................... 3,155
---------
10,201
---------
RJR Nabisco Inc.
1,400 8.750%--07/15/2007....................... 1,580
Saferco Products Inc. MTN(1)
(Acquired 07/12/1990, Cost $500)(2)
500 9.630%--05/31/2000....................... 523
Salomon Inc. CPI Bond(13)
5,186 3.650%--02/14/2002....................... 4,970
TCI Communications Inc.
2,000 6.375%--09/15/1999....................... 2,009
5,000 5.395%--09/11/2000 MTN(1,8) 4,982
---------
6,991
---------
Tenet Healthcare Corp.
4,443 8.625%--12/01/2003....................... 4,533
Time Warner Inc.
450 7.975%--08/15/2004....................... 483
United Mexican States
3,000 6.250%--06/27/2002(8).................... 2,730
Westdeutsche Landesbank
15,000 6.050%--01/15/2009....................... 14,677
Worldcom Inc.
13,250 8.875%--01/15/2006....................... 14,221
---------
TOTAL CORPORATE BONDS & NOTES
(Cost $304,511)..................................... 303,384
---------
FOREIGN GOVERNMENT OBLIGATIONS--2.4%
Republic of Argentina
$ 500 5.000%--04/01/2000(8).................... $ 400
6,800 11.447%--04/10/2005(8)................... 6,477
---------
6,877
---------
Republic of Korea Loan Earls
5,000 8.281%--04/08/2000(7).................... 5,020
Republic of Korea Loan Earls II
2,630 8.281%--04/08/2000(7).................... 2,641
---------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $14,648)...................................... 14,538
---------
MORTGAGE-BACKED SECURITIES--53.8%
COLLATERALIZED MORTGAGE OBLIGATIONS
Chase Mortgage Financial Corp. REMIC(3)
Series 1993-N Cl. A9
3,000 6.750%--11/25/2024....................... 2,950
Collateralized Mortgage Securities Corp
Series F Cl. 4
168 11.450%--11/01/2015...................... 168
Collateralized Mortgage Securities Corp
REMIC(3)
Series 1988-4 Cl. B
205 8.750%--04/20/2019....................... 214
Commercial Mortgage Asset Trust
Pass Thru Certificate
Series 1999-C1 Cl. A1
4,981 6.250%--01/17/2032(7).................... 5,036
Countrywide Home Loans REMIC(3)
Series 1997-6 Cl. A10
10,125 7.250%--11/25/2027....................... 10,125
Drexel Burnham Lambert REMIC(3)
Series H Cl. 4
7,966 8.500%--04/01/2017....................... 8,204
Federal Home Loan Mortgage Corp. REMIC(3)
521 8.700%--02/15/2020....................... 522
1,646 9.000%--12/15/2020....................... 1,712
2,552 8.000%--08/15/2022....................... 2,705
51 7.000%--10/15/2022....................... 51
8,923 6.500%--02/15/2023 IO(5)................. 1,229
10,000 6.000%--08/15/2026....................... 9,589
---------
15,808
---------
</TABLE>
24
<PAGE> 26
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
MORTGAGE-BACKED SECURITIES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------
<C> <S> <C>
Federal National Mortgage Association
REMIC(3)
$ 1,364 6.500%--02/25/2007 IO(5)................. $ 101
2,402 6.000%--07/25/2017 IO(5)................. 124
1,218 6.000%--04/25/2019....................... 1,216
2,000 6.500%--12/25/2020....................... 1,998
6,897 7.000%--04/18/2027....................... 6,610
---------
10,049
---------
GE Capital Mortgage Services Inc.
REMIC(3)
Series 1994-6 Cl. A3
3,620 6.500%--12/25/2022....................... 3,477
Series 1998-17 Cl. A3
9,952 6.750%--10/25/2028....................... 9,815
---------
13,292
---------
Kidder Peabody Acceptance Corp. REMIC(3)
Series 1994-2 Cl. 1A2
2,686 7.569%--09/25/2024(7).................... 2,690
Norwest Asset Securities Corp. REMIC(3)
Series 1998-12 Cl. A9
5,000 6.750%--06/25/2028....................... 4,927
Series 1997-19 Cl. A8
6,200 7.250%--12/25/2027....................... 6,301
---------
11,228
---------
Norwest Mortgage Insured Inc.
Series 1 Cl. Z
78 12.375%--01/01/2014...................... 78
PNC Mortgage Securities Corp. REMIC(3)
Series 1998-14 Cl. 3A3
17,726 6.500%--02/25/2029....................... 17,143
Series 1999-4 Cl. 1A8
9,800 6.290%--06/25/2029....................... 9,633
---------
26,776
---------
Prudential Home Mortgage Securities Co.
REMIC(3)
Series 1993-55 Cl. A1
1,426 7.845%--12/26/2023(8).................... 1,441
Series 1993 Cl. A-8
5,824 6.750%--08/25/2008....................... 5,802
---------
7,243
---------
Residential Asset Securitization Trust
REMIC(3)
Series 1998-A13 Cl. 1A3
6,931 6.500%--12/25/2028....................... 6,627
Residential Funding Mortgage Securities
Inc.
Series 1997-S8 Cl. A9
9,500 7.500%--06/25/2021....................... 9,707
Resolution Trust Corporation Mortgage
REMIC(3)
Pass Thru Certificate
Series 1991-3 Cl. 1L
3,000 8.680%--08/25/2021(8).................... 3,026
Sears Mortgage Securities Corp.
Series 92 Cl. A
(Acquired 06/30/1993, Cost $607)(2)
617 6.922%--10/25/2022(8).................... 624
Structured Asset Mortgage Investments
Inc. REMIC(3)
Series 1998-9 Cl. 1A3
5,000 6.250%--11/25/2028....................... 4,723
---------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS............. 138,568
---------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000s)
- -----------------------------------------------------------------
<C> <S> <C>
OTHER MORTGAGE-BACKED SECURITIES
Federal Home Loan Mortgage Corp.
Forward Gold 30 Year, TBA(6) May
Delivery
$22,900 6.000%--12/31/1999....................... $ 22,363
Federal Home Loan Mortgage Corp.
Pass Thru Certificates
11 10.500%--09/01/2000...................... 11
1 7.500%--03/01/2002....................... 1
59 8.000%--06/01/2011....................... 61
57 8.500%--02/01/2017....................... 60
958 7.254%--06/01/2024(7).................... 999
15,418 6.058%--08/15/2032(7).................... 15,547
---------
16,679
---------
Federal Housing Authority Project
221D4 Banco-5
792 7.400%--02/01/2021....................... 817
221D4 Banco-15
305 7.450%--05/01/2021....................... 314
221 Grey 98-4
7,946 7.450%--05/01/2021....................... 8,097
223C Reilly-52
300 5.150%--06/01/2018....................... 277
---------
9,505
---------
Federal National Mortgage Association
Pass Thru Certificates
124 9.000%--03/01/2005....................... 131
4,797 6.500%--01/25/2009....................... 4,530
1,193 9.000%--11/01/2009....................... 1,267
16 8.500%--12/01/2009....................... 16
57 9.500%--04/01/2011....................... 62
1,532 5.910%--10/01/2032(7).................... 1,541
---------
7,547
---------
Federal National Mortgage Association
TBA(6)
May Delivery
25,000 6.500%--12/31/1999....................... 24,977
Government National Mortgage Association
403 6.750%--08/15/2017....................... 405
Government National Mortgage Association
II(7)
1,162 6.375%--03/20/2017....................... 1,192
2,881 6.625%--08/20/2022....................... 2,951
1,923 6.625%--09/20/2023....................... 1,968
667 6.875%--05/20/2024....................... 684
60 6.625%--07/20/2024....................... 61
4,113 6.625%--09/20/2024....................... 4,210
444 6.125%--12/20/2024....................... 453
1,558 6.375%--01/20/2025....................... 1,596
1,475 6.375%--02/20/2025....................... 1,510
1,115 6.125%--10/20/2025....................... 1,139
3,060 6.125%--11/20/2025....................... 3,126
903 6.125%--12/20/2026....................... 918
7,832 6.625%--07/20/2027....................... 7,957
---------
27,765
---------
Government National Mortgage Association
TBA(6)
May Delivery
30,000 6.000%--12/31/1999....................... 29,259
41,000 6.500%--12/31/1999....................... 40,975
---------
70,234
---------
</TABLE>
25
<PAGE> 27
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
MORTGAGE-BACKED SECURITIES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------
<C> <S> <C>
United Airlines
Pass Thru Certificate Series 1993 Cl.
C2
$ 3,000 9.060%--06/17/2015(7).................... $ 3,265
---------
TOTAL OTHER MORTGAGE-BACKED SECURITIES................ 182,740
---------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $322,028)..................................... 321,308
---------
OPTIONS--0.1%
NO. OF
CONTRACTS
- -----------------------------------------------------------------
U.S. Treasury Bonds Call Options
Strike Price @ 96.16
900,000 Expiration, 05/17/1999................... 50
Strike Price @ 95.63
1,100,000 Expiration, 05/17/1999................... 58
Strike Price @ 96.19
3,400,000 Expiration, 05/24/1999................... 186
Strike Price @ 99.01
11,000,000 Expiration, 08/20/1999................... 57
Strike Price @ 99.29
10,000,000 Expiration, 08/20/1999................... 127
---------
TOTAL OPTIONS
(Cost $533)......................................... 478
---------
U.S. GOVERNMENT OBLIGATIONS--8.1%
PRINCIPAL
AMOUNT
(000S)
- -----------------------------------------------------------------
U.S. Treasury Bonds
$ 900 7.250%--05/15/2016....................... 1,029
1,600 8.875%--08/15/2017....................... 2,124
---------
3,153
---------
U.S. Treasury Strips
9,060 0.000%--02/15/2019....................... 2,748
19,100 0.000%--08/15/2019....................... 5,656
---------
8,404
---------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000s)
- -----------------------------------------------------------------
<C> <S> <C>
U.S. Treasury Notes
$15,000 6.625%--06/30/2001....................... $ 15,464
20,568 3.625%--07/15/2002(4).................... 20,523
800 6.375%--08/15/2002....................... 827
---------
36,814
---------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $49,082)...................................... 48,371
---------
SHORT-TERM INVESTMENTS--3.8%
REPURCHASE AGREEMENT
Repurchase Agreement with State Street
Bank & Trust dated April 30, 1999 due
May 3, 1999 at 3.750%, collateralized
by a U.S. Treasury Note, 5.875% July
31, 1999, par value of $10,700
(repurchase proceeds of $10,673 when
10,670 closed on May 3, 1999)................. 10,670
---------
U.S. TREASURY BILLS
40 4.270%--05/13/1999(11)................... 40
1,825 4.400%--06/24/1999(11)................... 1,813
265 4.527%--06/24/1999....................... 263
85 4.652%--06/24/1999....................... 84
---------
2,200
---------
COMMERCIAL PAPER
Columbia/HCA Healthcare Corp.
10,000 6.687%--09/30/1999....................... 9,959
---------
TOTAL SHORT-TERM INVESTMENTS
(Cost $22,829)...................................... 22,829
---------
TOTAL INVESTMENTS--123.4%
(Cost $740,094)..................................... 737,361
CASH AND OTHER ASSETS LESS LIABILITIES--(23.4)%....... (139,738)
---------
TOTAL NET ASSETS--100.0%.............................. $ 597,623
=========
</TABLE>
26
<PAGE> 28
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
SWAP AGREEMENTS WHICH WERE OPEN AT APRIL 30, 1999 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
NOTIONAL UNREALIZED
AMOUNTS (DEPRECIATION)
(000S) DESCRIPTION COUNTERPARTY (000S)
- -------- ----------- ----------------- --------------
<C> <S> <C> <C>
To make or receive semi-annual payments through 4/14/2008 Deutsche Bank AG-
based on the difference between (A) the 10 year fixed New York Branch
interest rate of 2.295% over (B) the 10 year floating rate
Y580,000.. adjusted every six months based upon the JPY-LIBOR-BBA. $(293)
To make or receive semi-annual payments through 4/15/2008 Deutsche Bank AG-
based on the difference between (A) the 10 year fixed New York Branch
interest rate of 2.305% over (B) the 10 year floating rate
Y377,000.. adjusted every six months based upon the JPY-LIBOR-BBA. (193)
-----
$(486)
=====
</TABLE>
FUTURES CONTRACTS WHICH WERE OPEN AT APRIL 30, 1999 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
UNREALIZED
AGGREGATE APPRECIATION/
NUMBER OF FACE VALUE (DEPRECIATION)
DESCRIPTION CONTRACTS (000S) EXPIRATION DATE (000S)
----------- --------- ---------- --------------- --------------
<S> <C> <C> <C> <C>
Eurodollar Futures (Buy).............................. 45 E$11,250 December 1999 $ (49)
Eurodollar Futures (Buy).............................. 45 11,250 March 2000 (60)
Eurodollar Futures (Buy).............................. 45 11,250 June 2000 (62)
Eurodollar Futures (Buy).............................. 56 14,000 September 2000 (59)
Eurodollar Futures (Buy).............................. 11 2,750 June 2001 1
Eurodollar Futures (Buy).............................. 33 8,250 September 2001 --
Eurodollar Futures (Buy).............................. 11 2,750 March 2001 2
Municipal Bond Index (Buy)............................ 200 $ 200 June 1999 (228)
U.S. Treasury Bonds--20 Year (Buy).................... 193 19,300 June 1999 38
U.S. Treasury Notes--10 Year (Buy).................... 331 33,100 June 1999 (97)
-----
$(514)
=====
</TABLE>
WRITTEN OPTIONS WHICH WERE OPEN AT APRIL 30, 1999 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
NUMBER OF
SHARES/ VALUE
DESCRIPTION CONTRACTS EXPIRATION DATE STRIKE PRICE (000S)
----------- --------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
U.S. Treasury Bond Futures (Call).................. 137 May 1999 $130.00 $ (2)
U.S. Treasury Bond Futures (Call).................. 188 May 1999 128.00 (3)
U.S. Treasury Bond Futures (Call).................. 279 May 1999 126.00 (9)
U.S. Treasury Bond (Call).......................... 10,000,000 August 1999 101.25 (38)
U.S. Treasury Note (Call).......................... 11,000,000 August 1999 100.34 (22)
U.S. Treasury Bond Futures (Put)................... 457 May 1999 116.00 (50)
U.S. Treasury Bond Futures (Put)................... 137 May 1999 118.00 (47)
U.S. Treasury Bond (Put)........................... 20,000,000 August 1999 97.97 (33)
U.S. Treasury Note (Put)........................... 11,000,000 August 1999 97.54 (77)
-----
Written options outstanding, at value (premiums
received of $678)................................ $(281)
=====
</TABLE>
FORWARD CURRENCY CONTRACTS WHICH WERE OPEN AT APRIL 30, 1999 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
UNREALIZED
AGGREGATE APPRECIATION/
MARKET VALUE FACE VALUE (DEPRECIATION)
CURRENCY (000S) (000S) DELIVERY DATE (000S)
- -------- ------------ ---------- ------------- --------------
<S> <C> <C> <C> <C>
Eurodollar (Sell).................................... $2,575 $2,585 July 1999 $ 10
Eurodollar (Sell).................................... 2,576 2,586 July 1999 10
New Zealand Dollar (Buy)............................. 3,990 3,817 May 1999 173
New Zealand Dollar (Sell)............................ 1,050 994 May 1999 (56)
New Zealand Dollar (Sell)............................ 3,151 2,982 May 1999 (169)
New Zealand Dollar (Sell)............................ 1,943 1,896 June 1999 (47)
-----
$ (79)
=====
</TABLE>
27
<PAGE> 29
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
- ------------
1 MTN after the name of a security stands for Medium Term Note.
2 Security was purchased under Rule 144A of the Securities Act of 1933 or is a
private placement and, unless registered under the Act or exempted from
registration, may only be sold to qualified institutional investors. The
aggregate value of restricted securities at April 30, 1999 was $44,129,
which represents 7.4% of net assets.
3 REMICs are CMOs which can hold mortgages secured by any type of real
property and issue multiple-class securities backed by those mortgages.
4 Treasury inflation-protected securities (TIPS) are securities in which the
principal amount is adjusted for inflation and interest payments are applied
to the inflation-adjusted principal.
5 Interest only (IO) securities represent the right to receive the monthly
interest payments on an underlying pool of mortgage loans. These are subject
to the risk of accelerated principal paydowns. The amount represents the
notional amount on which current interest is calculated.
6 TBA's are mortgage-backed securities traded under delayed delivery
commitments, settling after April 30, 1999. Although the unit price for the
trades has been established, the principal value has not been finalized.
However, the amount of the commitments will not fluctuate more than 2% from
the principal amount. Income on TBA's is not earned until settlement date.
(See Note 2 to the Financial Statements).
7 Variable rate security. The stated rate represents the rate in effect at
April 30, 1999.
8 Floating rate security. The stated rate represents the rate in effect at
April 30, 1999.
9 Step Coupon security. The rate will be 0.0% until January 1, 2002. The rate
becomes 12.5% after the stated date.
10 Step Coupon security. The rate will increase 1.07% per month until the
coupon reaches 15%.
11 At April 30, 1999, U.S. Treasury Bills held by the Fund were pledged to
cover margin requirements for open futures contracts and written options on
futures contracts. (See Note 2 to the Financial Statements.) The securities
pledged had an aggregate market value of $1,853.
12 Zero coupon bond.
13 Inflation-Indexed Bonds are fixed income securities whose principal value is
periodically adjusted to the rate of inflation.
E$ Eurodollar
Y Japanese Yen
NZ$ New Zealand Dollar
DM Deutsche Mark
The accompanying notes are an integral part of the financial statements.
28
<PAGE> 30
HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1999 (UNAUDITED)
TOTAL INVESTMENTS (% OF NET ASSETS)
(Excludes net cash and short-term investments of 1.9%)
<TABLE>
<S> <C>
Corporate Bonds & Notes
7.3
U.S. Government Obligations
26.5
Mortgage-Backed Securities
28.0
Asset-Backed Securities
36.3
</TABLE>
<TABLE>
<CAPTION>
ASSET-BACKED SECURITIES--36.3%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ------------------------------------------------------------------
<C> <S> <C>
Beneficial Home Equity Loan Trust
Series 1996-1 Cl. A
$ 2,207 5.116%--04/28/2026(4)...................... $ 2,208
Campobello Master Trust
Series 1999-1A Cl. B
3,000 5.462%--12/15/2006(4)...................... 3,000
Chase Manhattan Auto Owner Trust
Series 1996-C Cl. A3
1,949 5.950%--11/15/2000......................... 1,956
CIT Marine Trust
Series 1999-A Cl. A
2,000 5.80%--04/15/2010.......................... 1,996
CIT RV Trust Cl
Series 1997-A Cl. A4
3,105 6.200%--10/15/2006......................... 3,122
Discover Card Master Trust
Series 1994-2 Cl. A
5,000 5.276%--10/16/2004(4)...................... 5,033
EQCC Home Equity Loan Trust
Series 1996-4 Cl. A9
4,000 6.89%--01/15/2028.......................... 4,019
First Chicago Master Trust
Series 1996-R Cl. A
5,000 4.996%--07/15/2001(4)...................... 5,004
Ford Credit Auto Owner Trust
Series 1998-C Cl. A4
3,000 5.810%--03/15/2002......................... 3,017
Green Tree Financial Corp.
Series 1995-10 Cl. A4
4,000 6.300%--02/15/2027......................... 4,029
Green Tree Home Equity Loan Trust
Series 1998-A Cl. A2
3,000 6.040%--06/15/2029......................... 3,018
MBNA Master Credit Card Trust II
Series 1996-D Cl. B
4,000 5.216%--09/15/2003(4)...................... 3,995
Metris Master Trust
Series 1998-1A Cl. B
(Acquired 08/04/1998, Cost $4,000)(1)
4,000 5.377%--08/20/2005(4)...................... 3,964
ML Home Equity Loan Trust
1,328 5.400%--07/15/2022(4)...................... 1,329
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000s)
- ------------------------------------------------------------------
Nationsbank Auto Owners Trust
Series 1996-A Cl. A3
$ 135 6.375%--07/15/2000......................... $ 135
Newcourt Equipment Trust Securities
Series 1998-1 Cl. A2
4,000 5.170%--09/20/2000......................... 4,000
Norwest Automobile Trust
Series 1996-A Cl. CTFS
5,000 5.30%--05/15/2003.......................... 5,007
Premier Auto Trust
Series 1996-3 Cl. CTFS
3,000 6.950%--11/06/2000......................... 3,047
Series 1998-4 Cl. A2
3,926 5.560%--04/08/2001......................... 3,937
--------
6,984
--------
Saxon Asset Securities Trust
Series 1998-2 Cl. AV2
4,000 6.200%--04/25/2018......................... 4,016
Toyota Auto Lease Trust
Series 1998-B Cl. A1
4,000 5.350%--07/25/2002......................... 3,996
--------
TOTAL ASSET-BACKED SECURITIES
(Cost $69,888)........................................ 69,828
--------
CORPORATE BONDS & NOTES--7.3%
<C> <S> <C>
Chrysler Financial Corp. MTN(2)
4,000 4.897%--06/06/2000......................... 4,001
Key Bank N A
5,000 5.246%--10/27/2000(4)...................... 5,016
Salomon Inc.
Series D & E
(Acquired 12/09/1997, Cost $5,102)(1)
5,000 6.300%--02/14/2000(4)...................... 5,046
--------
TOTAL CORPORATE BONDS & NOTES
(Cost $14,028)........................................ 14,063
--------
MORTGAGE-BACKED SECURITIES--28.0%
GOVERNMENT AGENCY PASS-THROUGHS
Federal National Mortgage Association
MTN(2)
16,000 5.820%--08/25/1999......................... 16,040
4,000 5.650%--04/28/2000......................... 4,020
--------
20,060
--------
COLLATERALIZED MORTGAGE OBLIGATIONS
Allied Capital Commercial Mortgage Trust
Series 1998-1 Cl. A
(Acquired 01/28/1998, Cost $2,031)(1)
2,042 6.310%--05/25/2003......................... 2,036
Contimortgage Home Equity Trust
Pass Thru Certificates
Series 1998-3 Cl. A10
4,000 5.840%--05/15/2016......................... 4,003
Champion Home Equity Loan Trust
Series 1997-2 Cl. A1
243 6.590%--11/25/2010......................... 242
</TABLE>
29
<PAGE> 31
HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
MORTGAGE-BACKED SECURITIES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ------------------------------------------------------------------
<C> <S> <C>
CRIIMI MAE CMBS Corp.
Series 1998-1 Cl. A1
(Acquired 05/29/1998, Cost $3,011)(1)
$ 3,150 5.697%--10/20/2001......................... $ 3,100
Federal Home Loan Mortgage Multiclass
Mortgage
Cl. A MTN REMIC(2,3)
10,601 6.90%--04/15/2026.......................... 10,592
Federal National Mortgage Association
Series 1993-163 Cl. BK
983 6.150%--11/25/2017......................... 984
Federal National Mortgage Association
REMIC(3)
Series 1993-175 Cl. Z
4,407 5.750%--10/25/2006......................... 4,411
Green Tree Financial Corp.
Pass Thru Certificates--Cl. A2
4,000 6.300%--02/15/2027......................... 4,003
Signet Helco Trust
Series 1995-A Cl. A
1,948 5.198%--06/20/2004(4)...................... 1,948
WFS Financial Owner Trust
Series 1998B Cl. A2
2,409 5.777%--01/20/2001......................... 2,414
--------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS............... 33,733
--------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $53,747)........................................ 53,793
--------
U.S. GOVERNMENT OBLIGATIONS--26.5%
Federal Home Loan Banks
7,000 4.950%--02/24/2000......................... 6,985
10,000 5.525%--08/28/2000......................... 10,023
--------
17,008
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000S) (000s)
- ------------------------------------------------------------------
<C> <S> <C>
U.S. Treasury Notes
$10,500 4.500%--01/31/2001......................... $ 10,405
13,800 5.000%--04/30/2001......................... 13,785
10,000 4.750%--02/15/2004......................... 9,803
--------
33,993
--------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $51,092)........................................ 51,001
--------
SHORT-TERM INVESTMENTS--10.2%
REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank
& Trust dated April 30, 1999 due May 3,
1999 at 4.840%, collateralized by a U.S.
Treasury Note, 6.500% October 15, 2006,
par value of $9,225 (repurchase proceeds
9,692 of $9,696 when closed on May 3,1999)..... 9,692
--------
BANK OBLIGATIONS
Commerzbank AG NY Branch
3,000 5.140%--09/15/1999......................... 3,001
6,000 Paribas NY Branch 4.910%--06/17/1999....... 6,000
--------
9,001
--------
U.S. GOVERNMENT OBLIGATION--SHORT-TERM
1,000 U.S. Treasury Bill 4.395%--05/27/1999(5)... 997
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $19,690)........................................ 19,690
--------
TOTAL INVESTMENTS--108.3%
(Cost $208,445)....................................... 208,375
CASH AND OTHER ASSETS LESS LIABILITIES--(8.3)%.......... (15,916)
--------
TOTAL NET ASSETS--100.0%................................ $192,459
========
</TABLE>
FUTURES CONTRACTS WHICH WERE OPEN AT APRIL 30, 1999 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
AGGREGATE UNREALIZED
NUMBER OF FACE VALUE (DEPRECIATION)
DESCRIPTION CONTRACTS (000S) EXPIRATION DATE (000S)
----------- --------- ---------- --------------- --------------
<S> <C> <C> <C> <C>
U.S. Treasury Note--2 Year (Buy)............................ 89 $17,800 June, 1999 $ (37)
U.S. Treasury Note--5 Year (Buy)............................ 200 20,000 June, 1999 (158)
-----
$(195)
=====
</TABLE>
- ------------
1 Security was purchased under Rule 144A of the Securities Act of 1933 or is a
private placement and, unless registered under the Act or exempted from
registration, may only be sold to qualified institutional investors. The
aggregate value of restricted securities at April 30, 1999 was $14,146, which
represents 7.4% of net assets.
2 MTN after the name of a security stands for Medium Term Note.
3 REMICs are CMOs which can hold mortgages secured by any type of real property
and issue multiple-class securities backed by those mortgages.
4 Floating rate security. The stated rate represents the rate in effect at
April 30, 1999.
5 At April 30, 1999, a U.S. Treasury Bill held by the Fund was pledged to cover
margin requirements for open futures contracts. (See Note 2 to the Financial
Statements.) The security pledged had an aggregate market value of $997.
The accompanying notes are an integral part of the financial statements.
30
<PAGE> 32
HARBOR MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 1999 (UNAUDITED)
TOTAL INVESTMENTS (% OF NET ASSETS)
(Excludes net cash of -4.0%)
<TABLE>
<S> <C>
Asset-Backed Securities
3.2
Corporate Bonds & Notes
4.2
Repurchase Agreement
8.7
Bank Obligations
30.5
Commercial Paper
57.4
</TABLE>
<TABLE>
<CAPTION>
ASSET-BACKED SECURITIES--3.2%
(Cost $3,000)
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------
Ford Credit Auto Owner Trust
$3,000 5.089%--01/18/2000....................... $ 3,000
--------
BANK OBLIGATIONS--30.5%
Bank Austria Aktiengesel NY
1,000 5.670%--07/23/1999....................... 1,001
Bank of Nova Scotia
4,000 4.910%--08/12/1999....................... 4,000
CBA Del Fin Inc. Yrs. 3+4
4,000 4.879%--07/06/1999....................... 3,965
ING Bank Amsterdam
3,000 5.000%--09/09/1999....................... 3,000
Landesbank Hessen Thuringen
4,000 5.190%--02/29/2000....................... 3,999
Morgan Guaranty Trust Co. NY
3,000 4.990%--12/10/1999....................... 3,000
National Bank of Canada NY
3,000 5.760%--06/10/1999....................... 3,002
National Westminster Bank plc
3,000 5.737%--05/07/1999....................... 3,000
Paribas NY Branch
4,000 4.910%--06/17/1999....................... 4,000
--------
TOTAL BANK OBLIGATIONS
(Cost $28,967)....................................... 28,967
--------
COMMERCIAL PAPER--57.4%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------
ABN Amro North America
$3,000 4.775%--05/25/1999....................... $ 2,991
ANZ Delaware
4,000 4.820%--07/07/1999....................... 3,964
Banque Et Caisse D Epargne
4,000 4.820%--08/03/1999....................... 3,951
Bayerische Landesbank
4,000 4.980%--11/19/1999....................... 3,998
CSW Credit Inc.
4,000 4.790%--05/17/1999....................... 3,992
Den Norske Bank ASA Yrs. 1+2
3,000 4.898%--06/18/1999....................... 2,981
Deutsche Bank Financial, Inc.
3,000 4.830%--08/10/1999....................... 2,959
Nordbanken North America Inc. 1+2
3,000 4.927%--05/28/1999....................... 2,989
Paccar Financial Corp.
4,000 4.750%--05/06/1999....................... 3,997
Province De Quebec
4,000 4.929%--10/14/1999....................... 3,911
Queens Health System
4,000 4.900%--05/10/1999....................... 3,995
Sigma Finance Corp.
4,000 4.820%--07/28/1999....................... 3,953
Southland Corp.
4,000 4.800%--06/04/1999....................... 3,982
UBS Finance Delaware Inc.
3,000 4.750%--07/22/1999....................... 2,968
Westdeutsche Landesbank Giroz
4,000 5.160%--09/17/1999....................... 4,001
--------
TOTAL COMMERCIAL PAPER
(Cost $54,632)....................................... 54,632
--------
CORPORATE BONDS & NOTES--4.2%
(Cost $4,009)
Household Financial Corp.
4,000 7.750%--06/01/1999....................... 4,009
--------
REPURCHASE AGREEMENT--8.7%
(Cost $8,319)
Repurchase Agreement with State Street Bank
& Trust dated April 30, 1999 due on May
3, 1999 at 4.840%, collateralized by a
U.S. Treasury Bond, 10.750% May 15, 2003,
par value of $6,820 (repurchase proceeds
8,319 of $8,322 when closed on May 3, 1999).... 8,319
--------
TOTAL INVESTMENTS--104.0%
(Cost $98,927)(1).................................... 98,927
CASH AND OTHER ASSETS, LESS LIABILITIES--(4.0%)........ (3,816)
--------
TOTAL NET ASSETS--100.0%............................... $95,111
========
</TABLE>
- ------------
1 The aggregate identified cost on a tax basis is the same.
The accompanying notes are an integral part of the financial statements.
31
<PAGE> 33
HARBOR FUND
STATEMENT OF ASSETS AND LIABILITIES--APRIL 30, 1999 (UNAUDITED)
(All amounts in Thousands, except per share amount)
<TABLE>
<CAPTION>
HARBOR
HARBOR INTERNATIONAL
GROWTH GROWTH
- ------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
INVESTMENTS, AT IDENTIFIED COST*............................ $ 83,714 $1,129,441
- ------------------------------------------------------------------------------------------
Investments, at value....................................... $ 91,035 $1,341,619
Repurchase agreements....................................... 1,899 --
Cash........................................................ -- --
Foreign currency, at value (cost: $0; $841; $0; $91; $172;
$0; $19; $0; $0 )......................................... -- 839
Receivables for:
Investments sold.......................................... 1,107 100,529
Capital shares sold....................................... 50 12,309
Dividends................................................. -- 1,584
Interest.................................................. 34 4
Open forward currency contracts........................... -- --
Deferred organization costs................................. -- --
Withholding tax receivable.................................. -- 987
Other assets................................................ 1 3
- ------------------------------------------------------------------------------------------
TOTAL ASSETS.......................................... 94,126 1,457,874
LIABILITIES
Payables for:
Investments purchased..................................... -- 73,789
Capital shares reacquired................................. 93 520
Dividends to shareholders................................. -- --
Written options, at value (premiums received $0; $0; $0;
$0; $0; $0; $678; $0; $0)............................... -- --
Swap agreements........................................... -- --
Interest on swap agreements............................... -- --
Open forward currency contracts........................... -- --
Variation margin on futures contracts..................... -- --
Accrued expenses:
Adviser's fees............................................ 133 818
Trustees' fees............................................ 1 5
Transfer agent's fees..................................... 6 51
Other..................................................... 6 234
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES..................................... 239 75,417
NET ASSETS
NET ASSETS.................................................. $ 93,887 $1,382,457
- ------------------------------------------------------------------------------------------
Net assets consist of:
Paid-in capital........................................... $ 77,323 $1,124,336
Undistributed/(overdistributed) net investment income..... (261) 2,440
Accumulated net realized gain/(loss)...................... 7,605 43,571
Unrealized appreciation/(depreciation) of investments,
swap agreements, written options, foreign currency, and
translation of assets and liabilities in foreign
currencies.............................................. 9,220 212,110
Unrealized depreciation of futures and forward
contracts............................................... -- --
- ------------------------------------------------------------------------------------------
$ 93,887 $1,382,457
- ------------------------------------------------------------------------------------------
Shares of beneficial interest............................... 8,070 72,705
Net asset value, offering and redemption price per share.... $ 11.63 $ 19.01
</TABLE>
- ------------
* Including repurchase agreements and short term investments.
The accompanying notes are an integral part of the financial statements.
32
<PAGE> 34
HARBOR FUND
STATEMENT OF ASSETS AND LIABILITIES--CONTINUED
<TABLE>
<CAPTION>
HARBOR
CAPITAL HARBOR HARBOR HARBOR HARBOR HARBOR HARBOR
APPRECIATION INTERNATIONAL II INTERNATIONAL VALUE BOND SHORT DURATION MONEY MARKET
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$3,958,382 $ 102,335 $3,030,148 $160,065 $740,094 $208,445 $ 98,927
- ------------------------------------------------------------------------------------------------------
$5,684,906 $ 112,906 $5,488,657 $182,000 $726,691 $198,683 $ 90,608
-- -- -- 1,665 10,670 9,692 8,319
107 435 -- 2 2,472 -- --
-- 91 146 -- 19 -- --
95,654 6,659 -- 3,113 18,816 5,008 --
19,405 -- 1,168 363 1,754 190 445
1,543 353 21,851 201 -- -- --
21 -- 382 -- 6,111 1,100 865
-- -- -- -- 173 -- --
-- 10 -- -- -- -- --
28 225 7,891 4 -- -- --
4 3 5 1 2 2 1
- ------------------------------------------------------------------------------------------------------
5,801,668 120,682 5,520,100 187,349 766,708 214,675 100,238
46,444 5,494 -- 1,942 166,051 21,986 3,951
3,183 204 6,444 134 639 28 1,116
-- -- -- -- -- 7 21
-- -- -- -- 281 -- --
-- -- -- -- 486 -- --
-- -- -- -- 9 -- --
-- -- -- -- 252 -- --
-- -- -- -- 1,104 191 --
2,789 59 3,640 84 232 -- 11
21 -- 29 1 2 1 1
153 12 161 9 27 1 10
11 50 2,253 7 2 2 17
- ------------------------------------------------------------------------------------------------------
52,601 5,819 12,527 2,177 169,085 22,216 5,127
$5,749,067 $ 114,863 $5,507,573 $185,172 $597,623 $192,459 $ 95,111
- ------------------------------------------------------------------------------------------------------
$3,715,188 $ 104,838 $2,918,397 $157,697 $602,264 $215,689 $ 95,111
520 239 32,247 277 2,739 59 --
306,835 (749) 99,722 3,598 (3,964) (23,024) --
1,726,524 10,535 2,457,207 23,600 (2,823) (70) --
-- -- -- -- (593) (195) --
- ------------------------------------------------------------------------------------------------------
$5,749,067 $ 114,863 $5,507,573 $185,172 $597,623 $192,459 $ 95,111
- ------------------------------------------------------------------------------------------------------
136,078 8,775 137,933 11,460 53,335 22,367 95,111
$ 42.25 $ 13.09 $ 39.93 $ 16.16 $ 11.21 $ 8.60 $ 1.00
</TABLE>
33
<PAGE> 35
HARBOR FUND
STATEMENT OF OPERATIONS--SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
(All Amounts in Thousands)
<TABLE>
<CAPTION>
HARBOR
HARBOR INTERNATIONAL
GROWTH GROWTH
- -------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................................................. $ 26 $ 9,080
Interest.................................................. 159 1,016
Foreign taxes withheld.................................... -- (1,193)
- -------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME................................... 185 8,903
OPERATING EXPENSES:
Investment advisory fees.................................. 365 4,918
Shareholder communications................................ 5 41
Custodian fees............................................ 13 659
Transfer agent fees....................................... 40 295
Professional fees......................................... 12 41
Trustees' fees and expenses............................... 1 10
Registration fees......................................... 5 14
Amortization of organization costs........................ -- --
Insurance expense......................................... 1 3
Miscellaneous............................................. 5 12
- -------------------------------------------------------------------------------------------
Total operating expenses............................... 447 5,993
Advisory fee waived....................................... -- --
Other expense reimbursements and reductions............... (1) (7)
- -------------------------------------------------------------------------------------------
Net operating expenses................................. 446 5,986
- -------------------------------------------------------------------------------------------
NET INVESTMENT INCOME/(LOSS)................................ (261) 2,917
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENT
TRANSACTIONS:
Net realized gain/(loss) on:
Investments............................................ 7,605 42,739
Foreign currency transactions.......................... -- 1,921
Futures contracts...................................... -- --
Written options........................................ -- --
Change in net unrealized appreciation/depreciation on:
Investments, foreign currency and written options...... 7,439 35,567
Swap agreements........................................ -- --
Futures contracts...................................... -- --
Forward currency contracts............................. -- --
Translation of assets and liabilities in foreign
currencies............................................ -- (132)
- -------------------------------------------------------------------------------------------
Net gain/(loss) on investment transactions................ 15,044 80,095
- -------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...... $14,783 $83,012
- -------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
34
<PAGE> 36
HARBOR FUND
STATEMENT OF OPERATIONS--CONTINUED
<TABLE>
<CAPTION>
HARBOR HARBOR
CAPITAL HARBOR HARBOR HARBOR HARBOR SHORT HARBOR
APPRECIATION INTERNATIONAL II INTERNATIONAL VALUE BOND DURATION MONEY MARKET
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 13,507 $ 1,152 $ 70,736 $ 2,151 $ -- $ -- $ --
3,374 68 5,518 27 15,170 4,974 2,422
(76) (104) (6,816) (3) -- -- --
- ----------------------------------------------------------------------------------------------------
16,805 1,116 69,438 2,175 15,170 4,974 2,422
14,745 446 22,153 513 1,829 355 141
123 9 145 6 25 1 11
274 73 2,125 52 58 30 17
851 54 1,048 50 172 8 85
108 15 132 14 36 23 9
40 1 46 1 4 2 1
135 8 21 10 17 13 15
-- 2 -- -- -- -- --
6 1 7 2 2 7 4
32 2 42 3 7 4 4
- ----------------------------------------------------------------------------------------------------
16,314 611 25,719 651 2,150 443 287
-- (58) (1,573) -- (548) (177) (56)
(31) (2) (36) (1) (5) (3) (2)
- ----------------------------------------------------------------------------------------------------
16,283 551 24,110 650 1,597 263 229
- ----------------------------------------------------------------------------------------------------
522 565 45,328 1,525 13,573 4,711 2,193
314,182 7,525 100,909 5,212 (593) (577) 2
-- 78 (1,296) -- (316) -- --
-- -- -- -- (1,977) (63) --
-- -- -- -- 1,167 -- --
1,001,606 10,809 661,131 24,164 (3,377) (803) --
-- -- -- -- 287 -- --
-- -- -- -- (1,694) (303) --
-- -- -- -- 112 -- --
-- (57) (1,859) -- 218 -- --
- ----------------------------------------------------------------------------------------------------
1,315,788 18,355 758,885 29,376 (6,173) (1,746) 2
- ----------------------------------------------------------------------------------------------------
$1,316,310 $18,920 $804,213 $30,901 $ 7,400 $ 2,965 $2,195
- ----------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE> 37
HARBOR FUND
STATEMENT OF CHANGES IN NET ASSETS
(All amounts in Thousands)
<TABLE>
<CAPTION>
HARBOR HARBOR
GROWTH INTERNATIONAL GROWTH
------------------------- -------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
1998 1997 1998 1997
THROUGH THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment income/(loss)..................... $ (261) $ (326) $ 2,917 $ 6,786
Net realized gain/(loss) on investments, foreign
currency transactions, futures, swap agreements
and written options............................ 7,605 8,582 44,660 20,985
Net unrealized appreciation/(depreciation) of
investments, foreign currency, swap agreements,
written options, futures, forward foreign
currency contracts and translation of assets
and liabilities in foreign currencies.......... 7,439 (17,161) 35,435 119,462
- -----------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................. 14,783 (8,905) 83,012 147,233
- -----------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income............................ -- -- (7,338) (6,885)
Net realized gain on investments................. (8,236) (17,011) (18,127) (33,284)
- -----------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS.............. (8,236) (17,011) (25,465) (40,169)
- -----------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares................. 10,413 31,571 265,115 346,315
Net asset value of shares issued in connection
with reinvestment of:
Dividends from net investment income........... -- -- 6,331 6,004
Distributions from net realized gain........... 7,784 16,392 17,189 31,697
Cost of shares reacquired........................ (18,887) (38,585) (141,977) (231,778)
- -----------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) DERIVED FROM CAPITAL
TRANSACTIONS................................... (690) 9,378 146,658 152,238
- -----------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets............ 5,857 (16,538) 204,205 259,302
NET ASSETS:
Beginning of period................................ 88,030 104,568 1,178,252 918,950
- -----------------------------------------------------------------------------------------------------------
END OF PERIOD *.................................... $ 93,887 $ 88,030 $1,382,457 $1,178,252
- -----------------------------------------------------------------------------------------------------------
NUMBER OF CAPITAL SHARES:
Sold............................................... 864 2,581 13,760 19,055
Reinvested in payment of investment income
dividends........................................ -- -- 323 381
Reinvested in payment of capital gain
distributions.................................... 647 1,428 876 2,010
Reacquired......................................... (1,588) (3,223) (7,444) (13,172)
- -----------------------------------------------------------------------------------------------------------
Net increase/(decrease) in shares outstanding...... (77) 786 7,515 8,274
Outstanding:
Beginning of period.............................. 8,147 7,361 65,190 56,916
- -----------------------------------------------------------------------------------------------------------
End of period.................................... 8,070 8,147 72,705 65,190
- -----------------------------------------------------------------------------------------------------------
*Includes undistributed/(over-distributed) net
investment income of: $ (261) $ -- $ 2,440 $ 6,861
<CAPTION>
HARBOR HARBOR
CAPITAL APPRECIATION INTERNATIONAL II
------------------------- -------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
1998 1997 1998 1997
THROUGH THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1999 1998 1999 1998
- ---------------------------------------------------- -----------------------------------------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment income/(loss)..................... $ 522 $ 8,271 $ 565 $ 1,159
Net realized gain/(loss) on investments, foreign
currency transactions, futures, swap agreements
and written options............................ 314,182 261,400 7,603 (8,241)
Net unrealized appreciation/(depreciation) of
investments, foreign currency, swap agreements,
written options, futures, forward foreign
currency contracts and translation of assets
and liabilities in foreign currencies.......... 1,001,606 168,339 10,752 4,384
- ----------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................. 1,316,310 438,010 18,920 (2,698)
- ----------------------------------------------------
Distributions to shareholders:
Net investment income............................ (7,561) (5,588) (1,621) (1,046)
Net realized gain on investments................. (264,693) (405,518) -- (5,767)
- ----------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS.............. (272,254) (411,106) (1,621) (6,813)
- ----------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares................. 1,154,769 1,292,926 31,985 51,753
Net asset value of shares issued in connection
with reinvestment of:
Dividends from net investment income........... 6,770 4,957 1,538 984
Distributions from net realized gain........... 242,193 368,493 -- 5,455
Cost of shares reacquired........................ (532,319) (658,086) (48,628) (70,969)
- ----------------------------------------------------
NET INCREASE/(DECREASE) DERIVED FROM CAPITAL
TRANSACTIONS................................... 871,413 1,008,290 (15,105) (12,777)
- ----------------------------------------------------
Net increase/(decrease) in net assets............ 1,915,469 1,035,194 2,194 (22,288)
NET ASSETS:
Beginning of period................................ 3,833,598 2,798,404 112,669 134,957
- ----------------------------------------------------
END OF PERIOD *.................................... $5,749,067 $3,833,598 $114,863 $112,669
- -----------------------------------------------------------------------------------------------------------
NUMBER OF CAPITAL SHARES:
Sold............................................... 28,476 39,019 2,600 4,305
Reinvested in payment of investment income
dividends........................................ 177 176 126 88
Reinvested in payment of capital gain
distributions.................................... 6,332 13,076 -- 490
Reacquired......................................... (13,308) (20,159) (3,956) (5,998)
- ----------------------------------------------------
Net increase/(decrease) in shares outstanding...... 21,677 32,112 (1,230) (1,115)
Outstanding:
Beginning of period.............................. 114,401 82,289 10,005 11,120
- ----------------------------------------------------
End of period.................................... 136,078 114,401 8,775 10,005
- -----------------------------------------------------------------------------------------------------------
*Includes undistributed/(over-distributed) net
investment income of: $ 520 $ 7,559 $ 239 $ 1,295
</TABLE>
The accompanying notes are an integral part of the financial statements.
36
<PAGE> 38
HARBOR FUND
STATEMENT OF CHANGES IN NET ASSETS--CONTINUED
<TABLE>
<CAPTION>
HARBOR HARBOR HARBOR HARBOR
INTERNATIONAL VALUE BOND SHORT DURATION
------------------------- ------------------------- ------------------------- -------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
1998 1997 1998 1997 1998 1997 1998 1997
THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1999 1998 1999 1998 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 45,328 $ 69,592 $ 1,525 $ 2,988 $ 13,573 $ 22,503 $ 4,711 $ 9,847
99,613 311,388 5,212 16,485 (1,719) 23,446 (640) 1,683
659,272 (32,500) 24,164 (8,661) (4,454) (4,989) (1,106) 404
- ------------------------------------------------------------------------------------------------------------------
804,213 348,480 30,901 10,812 7,400 40,960 2,965 11,934
- ------------------------------------------------------------------------------------------------------------------
(78,626) (57,053) (1,498) (3,026) (12,214) (23,922) (4,652) (11,059)
(312,499) (127,358) (17,840) (33,943) (21,225) (7,601) -- --
- ------------------------------------------------------------------------------------------------------------------
(391,125) (184,411) (19,338) (36,969) (33,439) (31,523) (4,652) (11,059)
- ------------------------------------------------------------------------------------------------------------------
226,346 569,168 15,589 41,274 196,756 213,780 80,606 141,646
65,949 48,178 1,418 2,862 10,278 20,005 4,616 11,017
279,568 114,139 16,911 32,344 18,750 6,756 -- --
(565,779) (897,201) (30,777) (41,214) (75,143) (139,551) (108,320) (98,770)
- ------------------------------------------------------------------------------------------------------------------
6,084 (165,716) 3,141 35,266 150,641 100,990 (23,098) 53,893
- ------------------------------------------------------------------------------------------------------------------
419,172 (1,647) 14,704 9,109 124,602 110,427 (24,785) 54,768
5,088,401 5,090,048 170,468 161,359 473,021 362,594 217,244 162,476
- ------------------------------------------------------------------------------------------------------------------
$5,507,573 $5,088,401 $185,172 $170,468 $597,623 $ 473,021 $ 192,459 $217,244
- ------------------------------------------------------------------------------------------------------------------
6,030 14,930 1,038 2,565 17,306 18,415 9,326 16,395
1,782 1,372 98 186 919 1,737 535 1,279
7,552 3,252 1,182 2,187 1,667 594 -- --
(15,082) (23,939) (2,068) (2,608) (6,590) (12,047) (12,496) (11,438)
- ------------------------------------------------------------------------------------------------------------------
282 (4,385) 250 2,330 13,302 8,699 (2,635) 6,236
137,651 142,036 11,210 8,880 40,033 31,334 25,002 18,766
- ------------------------------------------------------------------------------------------------------------------
137,933 137,651 11,460 11,210 53,335 40,033 22,367 25,002
- ------------------------------------------------------------------------------------------------------------------
$ 32,247 $ 65,545 $ 277 $ 250 $ 2,739 $ 1,380 $ 59 $ --
<CAPTION>
HARBOR
MONEY MARKET
-------------------------
NOVEMBER 1, NOVEMBER 1,
1998 1997
THROUGH THROUGH
APRIL 30, OCTOBER 31,
1999 1998
- --- --------------
(UNAUDITED) -----------
<S> <C> <C>
$ 2,193 $ 4,154
2 3
-- --
- ---
2,195 4,157
- ---
(2,193) (4,154)
(2) (3)
- ---
(2,195) (4,157)
- ---
76,379 149,784
2,062 3,927
-- --
(83,606) (126,975)
- ---
(5,165) 26,736
- ---
(5,165) 26,736
100,276 73,540
- ---
$ 95,111 $ 100,276
- -----------------------------
76,379 149,784
2,062 3,927
-- --
(83,606) (126,975)
- ---
(5,165) 26,736
100,276 73,540
- ---
95,111 100,276
- -----------------------------
$ -- $ --
</TABLE>
37
<PAGE> 39
HARBOR FUND FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------------
NET REALIZED AND
UNREALIZED GAINS/(LOSSES)
NET ASSET ON INVESTMENTS, FUTURES,
VALUE NET OPTIONS, SWAP AGREEMENTS TOTAL FROM
BEGINNING INVESTMENT AND FOREIGN CURRENCY INVESTMENT
YEAR/PERIOD ENDED OF PERIOD INCOME/(LOSS) CONTRACTS OPERATIONS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
HARBOR GROWTH FUND(1)
April 30, 1999 (Unaudited)...... $10.81 $ (.03) $ 1.92 $ 1.89
October 31, 1998................ 14.20 (.04) (1.07) (1.11)
October 31, 1997................ 16.00 -- 2.30 2.30
October 31, 1996................ 15.73 (.08)(e) 2.20 2.12
October 31, 1995................ 12.83 (.04) 3.26 3.22
October 31, 1994................ 14.01 -- (1.16) (1.16)
- ---------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL GROWTH FUND
April 30, 1999 (Unaudited)...... $18.07 $ .04 $ 1.28 $ 1.32
October 31, 1998................ 16.15 .11 2.52 2.63
October 31, 1997................ 15.35 .12 1.12 1.24
October 31, 1996................ 12.10 .14(e) 3.22 3.36
October 31, 1995................ 11.53 .11(c) .54 .65
October 31, 1994................ 10.00 .07(c) 1.47 1.54
- ---------------------------------------------------------------------------------------------------------
HARBOR CAPITAL APPRECIATION FUND
April 30, 1999 (Unaudited)...... $33.51 $-- $11.08 $11.08
October 31, 1998................ 34.01 .07 4.35 4.42
October 31, 1997................ 25.88 .06 8.95 9.01
October 31, 1996................ 23.20 .02 3.00 3.02
October 31, 1995................ 17.31 .04 6.06 6.10
October 31, 1994................ 17.30 .03 1.14 1.17
- ---------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND II
April 30, 1999 (Unaudited)...... $11.26 $ .05(c) $ 1.93 $ 1.98
October 31, 1998................ 12.14 .12(c) (.37) (.25)
October 31, 1997................ 10.47 .10(c) 1.63 1.73
October 31, 1996(2)............. 10.00 .01(c) .46 .47
- ---------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND
April 30, 1999 (Unaudited)...... $36.97 $ .34(c) $ 5.50 $ 5.84
October 31, 1998................ 35.84 .51(c) 1.92 2.43
October 31, 1997................ 31.21 .41(c) 5.44 5.85
October 31, 1996................ 26.93 .41(c) 4.41 4.82
October 31, 1995................ 26.87 .39(c) .85 1.24
October 31, 1994................ 22.85 .26(c) 3.98 4.24
- ---------------------------------------------------------------------------------------------------------
HARBOR VALUE FUND(3)
April 30, 1999 (Unaudited)...... $15.21 $ .14 $ 2.58 $ 2.72
October 31, 1998................ 18.17 .27 .79 1.06
October 31, 1997................ 16.04 .34 4.13 4.47
October 31, 1996................ 14.57 .40 2.74 3.14
October 31, 1995................ 13.50 .40 2.13 2.53
October 31, 1994................ 14.31 .36 .27 .63
- ---------------------------------------------------------------------------------------------------------
<CAPTION>
LESS DISTRIBUTIONS
----------------------------------------------------------
DIVIDENDS DISTRIBUTIONS IN EXCESS
FROM NET FROM NET OF NET
INVESTMENT REALIZED INVESTMENT TAX RETURN
YEAR/PERIOD ENDED INCOME CAPITAL GAINS(D) INCOME OF CAPITAL
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
HARBOR GROWTH FUND(1)
April 30, 1999 (Unaudited)...... $-- $(1.07) --$ --$
October 31, 1998................ -- (2.28) -- --
October 31, 1997................ -- (4.10) -- --
October 31, 1996................ -- (1.85) -- --
October 31, 1995................ -- (.32) -- --
October 31, 1994................ -- (.02) -- --
- ---------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL GROWTH FUND
April 30, 1999 (Unaudited)...... $(.11) $ (.27) --$ --$
October 31, 1998................ (.12) (.59) -- --
October 31, 1997................ (.08) (.36) -- --
October 31, 1996................ (.11) -- -- --
October 31, 1995................ (.08) -- -- --
October 31, 1994................ (.01) -- -- --
- ---------------------------------------------------------------------------------------------------------
HARBOR CAPITAL APPRECIATION FUND
April 30, 1999 (Unaudited)...... $(.06) $(2.28) --$ --$
October 31, 1998................ (.07) (4.85) -- --
October 31, 1997................ (.02) (.86) -- --
October 31, 1996................ (.03) (.31) -- --
October 31, 1995................ (.04) (.17) -- --
October 31, 1994................ (.03) (1.13) -- --
- ---------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND II
April 30, 1999 (Unaudited)...... $(.15) -$- --$ --$
October 31, 1998................ (.10) (.53) -- --
October 31, 1997................ (.02) (.04) -- --
October 31, 1996(2)............. -- -- -- --
- ---------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND
April 30, 1999 (Unaudited)...... $(.58) $(2.30) --$ --$
October 31, 1998................ (.40) (.90) -- --
October 31, 1997................ (.42) (.80) -- --
October 31, 1996................ (.41) (.13) -- --
October 31, 1995................ (.24) (.94) -- --
October 31, 1994................ (.22) -- -- --
- ---------------------------------------------------------------------------------------------------------
HARBOR VALUE FUND(3)
April 30, 1999 (Unaudited)...... $(.14) $(1.63) --$ --$
October 31, 1998................ (.28) (3.74) -- --
October 31, 1997................ (.34) (2.00) -- --
October 31, 1996................ (.40) (1.27) -- --
October 31, 1995................ (.39) (1.07) -- --
October 31, 1994................ (.34) (1.10) -- --
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
38
<PAGE> 40
HARBOR FUND FINANCIAL HIGHLIGHTS--CONTINUED
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<TABLE>
<CAPTION>
RATIO OF RATIO OF
RATIO OF ADVISER OR OPERATING RATIO OF
NET ASSET OPERATING SUBADVISER FEES EXPENSES NET OF INTEREST
VALUE NET ASSETS EXPENSES NOT IMPOSED ALL OFFSETS TO EXPENSE
TOTAL END TOTAL END OF PERIOD TO AVERAGE TO AVERAGE AVERAGE TO AVERAGE
DISTRIBUTIONS OF PERIOD RETURN (000S) NET ASSETS (%)(4) NET ASSETS (%) NET ASSETS (%) NET ASSETS (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
$(1.07) $11.63 17.17%(b) $ 93,887 .92%(a) --% .92%(a) --%
(2.28) 10.81 (8.73) 88,030 1.00 -- 1.00 --
(4.10) 14.20 18.64 104,568 1.12 -- 1.12 --
(1.85) 16.00 14.84 113,511 .93 -- .92 --
(.32) 15.73 25.93 137,524 .93 -- .93 --
(.02) 12.83 (8.29) 141,330 .93 -- .93 --
- -------------------------------------------------------------------------------------------------------------------------------
$ (.38) $19.01 7.31%(b) $1,382,457 .91%(a) --% .91%(a) --%
(.71) 18.07 16.96 1,178,252 .96 -- .96 --
(.44) 16.15 8.13 918,950 1.02 -- 1.02 --
(.11) 15.35 27.86 478,969 1.11 -- 1.10 --
(.08) 12.10 5.83(f) 122,415 1.21(c) .10 1.21 --
(.01) 11.53 15.36(f) 74,734 1.32(c) .25 1.32 --
- -------------------------------------------------------------------------------------------------------------------------------
$(2.34) $42.25 33.80%(b) $5,749,067 .66%(a) --% .66%(a) --%
(4.92) 33.51 15.72 3,833,598 .68 -- .68 --
(.88) 34.01 35.73 2,798,404 .70 -- .70 --
(.34) 25.88 13.22 1,583,215 .75 -- .75 --
(.21) 23.20 35.73 925,751 .75 -- .75 --
(1.16) 17.31 7.25 225,984 .81 -- .81 --
- -------------------------------------------------------------------------------------------------------------------------------
$ (.15) $13.09 17.71%(b,f) $ 114,863 .92%(a,c) .10%(a) .92%(a) --%
(.63) 11.26 (1.98)(f) 112,669 1.15(c) .10 1.15 --
(.06) 12.14 16.64(f) 134,957 .99(c) .20 .98 --
-- 10.47 4.70(b,f) 12,573 1.46(a,c) .26(a) 1.44(a) --
- -------------------------------------------------------------------------------------------------------------------------------
$(2.88) $39.93 16.41%(b,f) $5,507,573 .92%(a,c) .06%(a) .92%(a) --%
(1.30) 36.97 6.97(f) 5,088,401 .94(c) .06 .94 --
(1.22) 35.84 19.26(f) 5,090,048 .97(c) .05 .97 --
(.54) 31.21 18.17(f) 4,030,127 .99(c) .05 .99 --
(1.18) 26.93 5.06(f) 3,267,157 1.04(c) .03 1.04 --
(.22) 26.87 18.57(f) 3,129,634 1.10(c) .03 1.10 --
- -------------------------------------------------------------------------------------------------------------------------------
$(1.77) $16.16 19.38%(b) $ 185,172 .76%(a) --% .76%(a) -- %
(4.02) 15.21 6.69 170,468 .79 -- .79 --
(2.34) 18.17 31.08 161,359 .83 -- .83 --
(1.67) 16.04 23.08 112,109 .83 -- .83 --
(1.46) 14.57 21.02 84,514 .90 -- .90 --
(1.44) 13.50 4.80 59,390 1.04 -- 1.04 --
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF
NET INVESTMENT
INCOME
TO AVERAGE PORTFOLIO
NET ASSETS (%) TURNOVER (%)
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
(.54)%(a) 14.98%(a)
(.30) 23.40
(.47) 147.37
(.50) 87.97
(.30) 87.94
-- 115.89
- -------------------------------------------------------------------------------------------------------------------------------
.44%(a) 51.46%(a)
.62 85.15
.91 76.19
.99 55.17
1.31(c) 74.86
.87(c) 41.80
- -------------------------------------------------------------------------------------------------------------------------------
.02%(a) 56.34%(a)
.24 69.56
.23 72.80
.11 73.69
.23 51.65
.24 72.89
- -------------------------------------------------------------------------------------------------------------------------------
.95%(a,c) 46.74%(a)
.86(c) 70.34
1.33(c) 57.61
.40(a,c) 2.61(a)
- -------------------------------------------------------------------------------------------------------------------------------
1.73%(a,c) .11%(a)
1.27(c) 13.66
1.20(c) 6.39
1.42(c) 9.73
1.53(c) 14.01
1.09(c) 28.70
- -------------------------------------------------------------------------------------------------------------------------------
1.77%(a) 110.32%(a)
1.67 113.55
1.98 145.85
2.65 132.39
3.00 135.93
2.66 150.94
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See page 41 for notes to the Financial Highlights.
39
<PAGE> 41
HARBOR FUND FINANCIAL HIGHLIGHTS--CONTINUED
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------------
NET REALIZED AND
UNREALIZED GAINS/(LOSSES)
NET ASSET ON INVESTMENTS, FUTURES,
VALUE NET OPTIONS, SWAP AGREEMENTS TOTAL FROM
BEGINNING INVESTMENT AND FOREIGN CURRENCY INVESTMENT
YEAR/PERIOD ENDED OF PERIOD INCOME/(LOSS) CONTRACTS OPERATIONS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HARBOR BOND FUND
April 30, 1999 (Unaudited)...... $11.82 $.28(c) $ (.12) $ .16
October 31, 1998................ 11.57 .61(c) .53 1.14
October 31, 1997................ 11.28 .68(c) .30 .98
October 31, 1996................ 11.21 .72(c) .09 .81
October 31, 1995................ 10.41 .74(c) .73 1.47
October 31, 1994................ 11.92 .68(c) (1.02) (.34)
- ---------------------------------------------------------------------------------------------------------
HARBOR SHORT DURATION FUND
April 30, 1999 (Unaudited)...... $ 8.69 $.23(c) $ (.09) $ .14
October 31, 1998................ 8.66 .48(c) .09 .57
October 31, 1997................ 8.79 .45(c,e) .01 .46
October 31, 1996................ 8.82 .63(c) (.02) .61
October 31, 1995................ 8.77 .52(c) .06 .58
October 31, 1994................ 9.68 .34(c) (.12) .22
- ---------------------------------------------------------------------------------------------------------
HARBOR MONEY MARKET FUND
April 30, 1999 (Unaudited)...... $ 1.00 $.02(c) $ -- $ .02
October 31, 1998................ 1.00 .05(c) -- .05
October 31, 1997................ 1.00 .02(c) -- .02
October 31, 1996................ 1.00 .05(c) -- .05
October 31, 1995................ 1.00 .06(c) -- .06
October 31, 1994................ 1.00 .03(c) -- .03
- ---------------------------------------------------------------------------------------------------------
<CAPTION>
LESS DISTRIBUTIONS
----------------------------------------------------------
DIVIDENDS DISTRIBUTIONS IN EXCESS
FROM NET FROM NET OF NET
INVESTMENT REALIZED INVESTMENT TAX RETURN
YEAR/PERIOD ENDED INCOME CAPITAL GAINS(D) INCOME OF CAPITAL
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HARBOR BOND FUND
April 30, 1999 (Unaudited)...... $ (.26) $(.51) $ -- $ --
October 31, 1998................ (.66) (.23) -- --
October 31, 1997................ (.69) -- -- --
October 31, 1996................ (.74) -- -- --
October 31, 1995................ (.67) -- -- --
October 31, 1994................ (.67) (.50) -- --
- ---------------------------------------------------------------------------------------------------------
HARBOR SHORT DURATION FUND
April 30, 1999 (Unaudited)...... $ (.23) $ -- $ -- $ --
October 31, 1998................ (.54) -- -- --
October 31, 1997................ (.59) -- -- --
October 31, 1996................ (.60) -- (.04) --
October 31, 1995................ (.52) -- (.01) --
October 31, 1994................ (1.08) -- -- (.05)
- ---------------------------------------------------------------------------------------------------------
HARBOR MONEY MARKET FUND
April 30, 1999 (Unaudited)...... $ (.02) $ -- $ -- $ --
October 31, 1998................ (.05) -- -- --
October 31, 1997................ (.02) -- -- --
October 31, 1996................ (.05) -- -- --
October 31, 1995................ (.06) -- -- --
October 31, 1994................ (.03) -- -- --
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
40
<PAGE> 42
HARBOR FUND FINANCIAL HIGHLIGHTS--CONTINUED
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<TABLE>
<CAPTION>
RATIO OF RATIO OF
RATIO OF ADVISER OR OPERATING RATIO OF
NET ASSET OPERATING SUBADVISER FEES EXPENSES NET OF INTEREST
VALUE NET ASSETS EXPENSES NOT IMPOSED ALL OFFSETS TO EXPENSE
TOTAL END TOTAL END OF PERIOD TO AVERAGE TO AVERAGE AVERAGE TO AVERAGE
DISTRIBUTIONS OF PERIOD RETURN (000S) NET ASSETS (%)(4) NET ASSETS(%) NET ASSETS(%) NET ASSETS (%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (.77) $11.21 1.46%(b,f) $597,623 .61%(a,c) .21%(a) .61%(a) -- %
(.89) 11.82 10.33(f) 473,021 .65(c) .22 .65 --
(.69) 11.57 8.96(f) 362,594 .67(c) .23 .67 --
(.74) 11.28 7.56(f) 279,849 .70(c) .24 .70 --
(.67) 11.21 14.56(f) 222,998 .70(c) .25 .70 --
(1.17) 10.41 (3.14)(f) 162,221 .77(c) .25 .77 --
- -----------------------------------------------------------------------------------------------------------------------------------
$ (.23) $ 8.60 1.60%(b,f) $192,459 .30%(a,c) .20%(a) .30%(a) -- %
(.54) 8.69 6.81(f) 217,244 .36(c) .20 .36 --
(.59) 8.66 5.48(f) 162,476 .38(c) .20 .36 .64
(.64) 8.79 7.24(f) 182,292 .35(c) .20 .33 1.26
(.53) 8.82 6.82(f) 105,007 .39(c) .20 .38 1.46
(1.13) 8.77 2.53(f) 115,891 .38(c) .20 .38 1.26
- -----------------------------------------------------------------------------------------------------------------------------------
$ (.02) $ 1.00 2.34%(b,f) $ 95,111 .50%(a,c) .12%(a) .49%(a) -- %
(.05) 1.00 5.20(f) 100,276 .57(c) .12 .57 --
(.02) 1.00 5.11(f) 73,540 .63(c) .12 .62 --
(.05) 1.00 5.08(f) 65,991 .64(c) .12 .64 --
(.06) 1.00 5.66(f) 64,492 .61(c) .12 .61 --
(.03) 1.00 3.53(f) 60,024 .67(c) .12 .67 --
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF
NET INVESTMENT
INCOME
TO AVERAGE PORTFOLIO
NET ASSETS (%) TURNOVER (%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
5.18%(a,c) 234.76%(a)
5.41(c) 278.06
6.04(c) 252.37
6.40(c) 192.64
7.11(c) 88.69
6.29(c) 150.99
- -----------------------------------------------------------------------------------------------------------------------------------
5.30%(a,c) 578.92%(a)
5.51(c) 726.92
5.14(c) 1,518.68
6.84(c) 1,277.82
6.19(c) 725.96
4.61(c) 895.76
- -----------------------------------------------------------------------------------------------------------------------------------
4.67%(a,c) N/A
5.08(c) N/A
4.97(c) N/A
4.85(c) N/A
5.42(c) N/A
3.38(c) N/A
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Effective May 2, 1997, Harbor Growth Fund appointed Emerging Growth Advisors,
Inc. as its subadviser.
2 For the period June 1, 1996 (commencement of operations) through October 31,
1996.
3 Harbor Value Fund appointed Richards & Tierney, Inc. and DePrince, Race, &
Zollo, Inc. as its subadvisers effective November 1, 1993 and April 20, 1995,
respectively.
4 Percentage does not reflect reduction for credit balance arrangements.
a Annualized.
b Unannualized.
c Reflects the adviser's or subadviser's agreement not to impose all or a
portion of its advisory fees.
d Includes both short-term and long-term capital gains.
e Based on monthly average of shares outstanding during the fiscal year.
f Total return would have been lower had certain expenses not been waived during
the period shown.
41
<PAGE> 43
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--APRIL 30, 1999 (UNAUDITED)
(Currency in Thousands)
NOTE 1--ORGANIZATIONAL MATTERS
Harbor Fund (the "Trust") is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company, consisting of a
series of nine diversified investment portfolios (each series a "Fund",
collectively, the "Funds"), each of which is represented by a separate series of
shares of beneficial interest and having an unlimited number of shares
authorized. As of April 30, 1999, the Trust consisted of the following funds:
Harbor Growth Fund, Harbor International Growth Fund, Harbor Capital
Appreciation Fund, Harbor International Fund II, Harbor International Fund,
Harbor Value Fund, Harbor Bond Fund, Harbor Short Duration Fund and Harbor Money
Market Fund.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements. The preparation of
financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The policies are in conformity with generally accepted
accounting principles for investment companies.
SECURITY VALUATION
Equity securities are valued at the last sale price on an exchange or the
National Association of Securities Dealers Automated Quotation ("NASDAQ") system
or, in the case of unlisted securities or listed securities for which there were
no sales on the valuation day, the mean between the closing bid and asked price.
Securities listed or traded on foreign exchanges are valued at the last sale
price on that exchange on the valuation day, or if no sale occurs, at the
official bid price (both the last sale price and official bid price are
determined as of the close of the London Foreign Exchange).
Except for Harbor Money Market Fund, debt securities, other than short-term
securities with a remaining maturity of less than sixty days, are valued at
prices furnished by a pricing service, or as otherwise described below, selected
by the Adviser, which determines valuation for normal institutional-size trading
units of such securities using market information, transactions for comparable
securities and various relationships between securities which are generally
recognized by institutional traders. Short-term securities with a remaining
maturity of less than sixty days are stated at the amortized cost which
approximates value. Open futures contracts are valued based on the last sale
price on the exchange on which such futures are principally traded.
Securities for which there are no such prices or for which prices are
deemed by the Adviser or Subadviser not to be representative of market values,
are valued at their fair value as determined in good faith under consistently
applied procedures established by and under the supervision of the Board of
Trustees. The actual calculation of fair market value may be done by others
including the Adviser and Subadviser.
Securities of the Harbor Money Market Fund are valued utilizing the
amortized cost method as set forth in Rule 2a-7 under the Investment Company Act
of 1940, as amended and the Fund's Rule 2a-7 procedures.
FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract, a
Fund is required to pledge to the broker an amount of cash, U.S. Government
securities or other liquid securities equal to the minimum "initial margin"
requirements of the exchange. Pursuant to
42
<PAGE> 44
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Currency in Thousands)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
the contract, the Fund agrees to receive from or pay to the broker an amount of
cash equal to the daily fluctuation in value of the contract. Such receipts or
payments are known as "variation margin," and are recorded by the Fund as
unrealized gains or losses. When the contract is closed or expired, the Fund
records a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
Consistent with its investment policies, each Fund (excluding the Money
Market Fund) may use futures contracts to manage its exposure to the stock and
bond markets and to fluctuations in currency values. Futures contracts tend to
increase or decrease the Fund's exposure to the underlying instrument or hedge
other fund investments. Losses may arise from changes in the value of the
underlying instrument, if there is an illiquid secondary market for the
contracts or if the counterparties do not perform under the contract's terms.
The maximum potential loss on a long futures contract is the U.S. dollar value
of the notional amount at the time the contract is opened. The potential loss on
a short futures contract is unlimited. See Note 3 for open futures contracts
held as of April 30, 1999.
OPTIONS
Consistent with its investment policies, each Fund (excluding the Money
Market Fund) may use option contracts to manage its exposure to the stock and
bond markets and to fluctuations in interest rates and currency values. Option
contracts tend to increase or decrease the Fund's exposure to the underlying
instrument, or hedge other fund investments.
When a Fund purchases an option, the premium paid by the Fund is included
in the Fund's Statement of Assets and Liabilities as an investment and
subsequently "marked-to-market" to reflect the option's current market value.
Purchased options are valued at the last sale price on the market on which they
are principally traded. If the purchased option expires, the Fund realizes a
loss in the amount of the premium. If the Fund enters into a closing sale
transaction, it realizes a gain or loss, depending on whether the proceeds from
the sale are greater or less than the cost of the option. If the Fund exercises
a call option, the cost of the securities acquired by exercising the call is
increased by the premium paid to buy the call. If the Fund exercises a put
option, it realizes a gain or loss from the sale of the underlying security and
the proceeds from such sale are decreased by the premium originally paid. The
risk associated with purchasing options is limited to the premium originally
paid.
When a Fund writes an option, the premium received by the Fund is presented
in the Fund's Statement of Assets and Liabilities as an equivalent liability.
The amount of the liability is subsequently "marked-to-market" to reflect the
current market value of the option written. Written options are valued at the
last sale price or, in the absence of a sale, the last offering price on the
market on which it is principally traded. If an option expires on its stipulated
expiration date, or if the Fund enters into a closing purchase transaction, the
Fund realizes a gain (or loss if the cost of a closing purchase transaction
exceeds the premium received when the option was written) without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, the Fund
realizes a gain or loss from the sale of the underlying security and the
proceeds of the sale are increased by the premium originally received. If a
written put option is exercised, the amount of the premium originally received
reduces the cost of the security which the Fund purchases upon exercise of the
option.
The risk in writing a call option is that the Fund relinquishes the
opportunity to profit if the market price of the underlying security increases
and the option is exercised. In writing a put option, the Fund assumes the risk
of incurring a loss if the market price of the underlying security decreases and
the option is exercised. In addition, there is a risk the Fund may not be able
to enter into a closing transaction because of an illiquid secondary market, or
if the
43
<PAGE> 45
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Currency in Thousands)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
counterparties do not perform under the contract's terms. See Note 3 for all
outstanding written options as of April 30, 1999.
SWAP AGREEMENTS
To the extent permitted under their respective investment policies, Harbor
Bond Fund and Harbor Short Duration Fund may invest in swap agreements which
involve the exchange of cash payments based on the specified terms and
conditions of such agreements. A swap is an agreement to exchange the return
generated by one instrument for the return generated by another instrument. The
value of each swap is determined by the counterparty to the swap agreement using
a methodology which discounts the expected future cash receipts or disbursements
related to the swap. The Fund may also enter into interest rate swap agreements
which involve the exchange by the Fund with another party of their respective
commitments to pay or receive interest, (e.g., an exchange of floating rate
payments for fixed rate payments with respect to a notional amount of
principal). Interest rate swaps are "marked-to-market" daily. Unrealized gains
or losses are reported as an asset or a liability in the Statement of Assets and
Liabilities. The cash paid or received on a swap is recognized as a realized
loss or gain when such a payment is paid or received.
Entering into swap agreements involves, to varying degrees, elements of
credit risk, market risk, and interest rate risk in excess of the amount
recognized in the Statement of Assets and Liabilities. Such risks involve the
possibility that there is not a liquid market for these agreements, that the
counterparty to the agreements may default on its obligation to perform and that
there may be unfavorable changes in market conditions or interest rates.
TBA/WHEN-ISSUED PURCHASE COMMITMENTS
Harbor Bond Fund, Harbor Short Duration Fund and Harbor International Fund
may enter into TBA (to be announced) and when-issued purchase commitments to
purchase securities for a fixed unit price at a future date beyond customary
settlement time. Although the unit price for a TBA has been established, the
principal value has not been finalized. However, the amount of the commitment
will not fluctuate more than 1.0% from the principal amount. The price of a
when-issued security and the date when the security will be delivered and paid
for are fixed at the time the transaction is negotiated.
Each Fund holds, and maintains until the settlement date, cash or liquid
securities in an amount sufficient to meet the purchase price. TBA and
when-issued purchase commitments may be considered securities in themselves, and
involve a risk of loss if the value of the security to be purchased declines
prior to the settlement date, which risk is in addition to the risk of decline
in the value of the Fund's other assets. Risks may also arise upon entering into
these contracts from the potential inability of counterparties to meet the terms
of their contracts. Unsettled TBA and when-issued purchase commitments are
valued at the current market value of the underlying securities, generally
according to the procedures described under "Security Valuation" above.
Although the Funds will generally enter into TBA and when-issued purchase
commitments with the intention of acquiring securities for its portfolio, a Fund
may dispose of a commitment prior to settlement if the Fund's Subadviser deems
it appropriate to do so.
44
<PAGE> 46
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Currency in Thousands)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
TBA SALE COMMITMENTS
Harbor Bond Fund and Harbor Short Duration Fund may enter into TBA sale
commitments to hedge portfolio positions or to sell mortgage-backed securities
owned under delayed delivery arrangements. Proceeds of TBA sale commitments are
not received until the contractual settlement date.
Unsettled TBA sale commitments are valued at the current market value of
the underlying securities, generally according to the procedures described under
"Security Valuation" above. The contract is "marked-to-market" daily and the
change in market value is recorded by the Fund as an unrealized gain or loss. If
the TBA sale commitment is closed through the acquisition of an offsetting
purchase commitment, the Fund realizes a gain or loss on the commitment without
regard to any unrealized gain or loss on the underlying security. If the Fund
delivers securities under the commitment, the Fund realizes a gain or loss from
the sale of the securities based upon the unit price established at the date on
which the commitment was entered.
FORWARD CURRENCY CONTRACTS
Consistent with its investment policies, each Fund (excluding the Money
Market Fund) may enter into forward foreign currency contracts to facilitate
transactions in foreign securities or as a hedge against either specific
transactions or portfolio positions. A forward currency contract is an agreement
between two parties to buy and sell currencies at a set price on a future date.
The U.S. dollar value of the contract is determined using forward currency
exchange rates supplied by a pricing service. The contract is "marked-to-market"
daily and the change in market value is recorded as an unrealized gain or loss.
When the contract is closed, the Fund records a realized gain or loss equal to
the difference between the value on the open and close date. Losses may arise
from changes in the value of the foreign currency or if the counterparties do
not perform under the contract's terms. The maximum potential loss from such a
contract is the aggregate face value in U.S. dollars at the time the contract
was opened; however, management of the Fund believes the likelihood of such a
loss is remote.
FOREIGN CURRENCY TRANSLATIONS
The accounting records of the Funds are maintained in U.S. dollars.
Investment securities and other assets and liabilities denominated in a foreign
currency are translated into U.S. dollars based on the current exchange rates at
period end. Purchases and sales of securities are translated into U.S. dollars
at the current exchange rate on the respective dates of the transaction. Income
and withholding taxes are translated at the prevailing exchange rate when
accrued or incurred.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses realized
between the trade and settlement dates on securities transactions, and the
difference between the amount of net investment income accrued and tax reclaims
receivable and the U.S. dollar amount actually received. The effects of changes
in foreign currency exchange rates on investments in securities are not isolated
in the Statement of Operations from the effects of changes in market prices of
these securities. Such fluctuations are included with the net realized and
unrealized gain or loss on investments.
45
<PAGE> 47
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Currency in Thousands)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements with certain banks and
broker dealers whereby the Fund acquires a security for cash and obtains a
simultaneous commitment from the seller to repurchase the security at an agreed
upon price and date. The Trust's custodian takes possession through the federal
book-entry system of securities collateralizing repurchase agreements. The value
of the underlying assets at the time of purchase is required to be at least
equal to the repurchase price to protect the Fund in the event of default by the
seller.
SECURITIES TRANSACTIONS
Securities transactions are accounted for on the trade date (the date the
order to buy or sell is executed). Realized gains or losses on security
transactions are determined on the basis of identified cost for both federal
income tax and financial reporting purposes.
INVESTMENT INCOME
Dividends declared are accrued on the ex-dividend date. For Harbor
International Growth Fund, Harbor International Fund II and Harbor International
Fund, certain dividends are recorded after the ex-dividend date, but as soon as
the Fund is notified of such dividends. Interest income is accrued daily as
earned. Discounts and premiums on fixed income securities purchased are
amortized over the life of the respective securities using the straight-line
method. Discounts and premiums on high-yield securities are amortized using the
effective yield method for the Harbor Bond Fund and Harbor Short Duration Fund.
DISTRIBUTION TO SHAREHOLDERS
Distributions are recorded on the ex-dividend date.
EXPENSES
Expenses incurred by the Trust with respect to any two or more Funds are
allocated in proportion to the net assets of each Fund, except where allocations
of direct expense to each Fund can be otherwise fairly made.
DEFERRED ORGANIZATION COSTS
Certain costs incurred by Harbor International Fund II in connection with
its organization and its registration with the Securities and Exchange
Commission and with various states aggregated approximately $21. These costs are
being amortized on a straight-line basis over a five-year period from the
commencement of operations of the Fund.
FEDERAL TAXES
Each Fund is treated as a separate entity for federal tax purposes. Each
Fund's policy is to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute to its
shareholders all of its taxable income within the prescribed time. It is also
the intention of each Fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code.
Therefore, no provision has been made for federal taxes on income, capital gains
or unrealized appreciation of securities held or excise tax on income and
capital gains.
46
<PAGE> 48
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Currency in Thousands)
NOTE 3--INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, other than short-term securities, for
each Fund for the six-month period ended April 30, 1999 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------------------ ------------------------
U.S. U.S.
FUND GOVERNMENT OTHER GOVERNMENT OTHER
---- ---------- ----- ---------- -----
<S> <C> <C> <C> <C>
Harbor Growth Fund................................... $ -- $ 7,122 $ -- $ 17,973
Harbor International Growth Fund..................... -- 424,920 -- 324,592
Harbor Capital Appreciation Fund..................... -- 1,772,289 -- 1,339,696
Harbor International Fund II......................... -- 26,788 -- 44,503
Harbor International Fund............................ -- 6,890 -- 372,582
Harbor Value Fund.................................... 1,578 101,729 -- 118,868
Harbor Bond Fund..................................... 729,889 211,202 702,168 47,002
Harbor Short Duration Fund........................... 480,019 44,198 462,342 44,934
</TABLE>
Harbor Money Market Fund's purchases and sales (including maturities) of
investment securities (all short-term obligations) aggregated $618,464 and
$622,603, respectively.
Harbor Value Fund, Harbor Bond Fund and Harbor Short Duration Fund may
engage in short-selling which obligates the Fund to replace the security
borrowed by purchasing it at the market price at the time of replacement. Until
the security is replaced, the Fund is required to pay to the lender any accrued
interest and may be required to pay a premium. The Fund would realize a gain if
the security declines in price between the date of the short sale and the date
on which the Fund replaces the borrowed security. The Fund would incur a loss as
a result of the short sale if the price of the security increases between those
dates. Until the Fund replaces the borrowed security, it will maintain a
segregated account of cash or liquid securities with its custodian sufficient to
cover its short position.
Harbor Bond Fund enters into forward sale commitments to sell a specified
security at a specified price on a specified future date. The forward sales that
create short positions are accounted for as short sells as described above.
47
<PAGE> 49
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Currency in Thousands)
NOTE 3--INVESTMENT PORTFOLIO TRANSACTIONS--CONTINUED
FUTURES CONTRACTS
Transactions in futures contracts for the six-month period ended April 30,
1999 are summarized as follows:
<TABLE>
<CAPTION>
PURCHASES OF SALES OF
FUTURES CONTRACTS FUTURES CONTRACTS
----------------------- -----------------------
U.S. BONDS U.S. BONDS
----------------------- -----------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
CONTRACTS FACE VALUE CONTRACTS FACE VALUE
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
HARBOR BOND FUND
Contracts outstanding at beginning of period............ 1,322 $ 122,300 -- $ --
Contracts opened........................................ 2,377 198,100 305 30,500
Contracts closed........................................ (2,975) (267,800) (305) (30,500)
------ ---------- ---- ---------
Open at 4/30/99......................................... 724 $ 52,600 -- $ --
====== ========== ==== =========
HARBOR SHORT DURATION FUND
Contracts outstanding at beginning of period............ 41 $ 8,200 -- $ --
Contracts opened........................................ 346 49,200 -- --
Contracts closed........................................ (98) (19,600) -- --
------ ---------- ---- ---------
Open at 4/30/99......................................... 289 $ 37,800 -- $ --
====== ========== ==== =========
</TABLE>
<TABLE>
<CAPTION>
PURCHASES OF SALES OF
FUTURES CONTRACTS FUTURES CONTRACTS
----------------------- -----------------------
FOREIGN CURRENCY FOREIGN CURRENCY
----------------------- -----------------------
NUMBER OF CURRENCY NUMBER OF CURRENCY
CONTRACTS AMOUNT* CONTRACTS AMOUNT
--------- -------- --------- --------
<S> <C> <C> <C> <C>
HARBOR BOND FUND
Contracts outstanding at beginning of period.............. 176 E$ 44,000 -- $ --
Contracts opened.......................................... 180 45,000 -- --
Contracts closed.......................................... (110) (27,500) -- --
---- --------- ---- ------
Open at 4/30/99........................................... 246 E$ 61,500 $ --
==== ========= ==== ======
HARBOR SHORT DURATION FUND
Contracts outstanding at beginning of period.............. -- C$ -- -- $ --
Contracts opened.......................................... 75 75,000 -- --
Contracts closed.......................................... (75) (75,000) -- --
---- --------- ---- ------
Open at 4/30/99........................................... -- C$ -- -- $ --
==== ========= ==== ======
</TABLE>
- -------------------------
* Amounts disclosed represent Eurodollar (E$) and Canadian Dollars (C$)
throughout the period.
48
<PAGE> 50
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Currency in Thousands)
NOTE 3--INVESTMENT PORTFOLIO TRANSACTIONS--CONTINUED
WRITTEN OPTIONS
Transactions in written options for the six-month period ended April 30,
1999 are summarized as follows:
<TABLE>
<CAPTION>
OPTIONS WRITTEN
-------------------------
U.S. TREASURY FUTURES
-------------------------
NUMBER OF AGGREGATE
CONTRACTS FACE VALUE
--------- ----------
<S> <C> <C>
HARBOR BOND FUND
Options outstanding at beginning of period................ 60,001,000 $ 61,000
Options opened............................................ 22,002,468 24,468
Options closed/expired.................................... (30,002,270) (32,270)
----------- --------
Open at 4/30/99........................................... 52,001,198 $ 53,198
=========== ========
</TABLE>
NOTE 4--FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER
Harbor Capital Advisors, Inc. ("Harbor Capital"), an indirect wholly-owned
subsidiary of Owens-Illinois, Inc., is the Trust's Investment Adviser and is
also responsible for administrative and other services. Separate advisory
agreements for each Fund were in effect during the six-month period ended April
30, 1999. The agreements provide for fees based on an annual percentage rate of
average daily net assets as follows:
<TABLE>
<CAPTION>
ANNUAL
PERCENTAGE FEES
FUND RATE EARNED
---- ---------- ------
<S> <C> <C>
Harbor Growth Fund.......................................... 0.75% $ 365
Harbor International Growth Fund............................ 0.75 4,918
Harbor Capital Appreciation Fund............................ 0.60 14,745
Harbor International Fund II................................ 0.75 446
Harbor International Fund................................... 0.85 22,153
Harbor Value Fund........................................... 0.60 513
Harbor Bond Fund............................................ 0.70 1,829
Harbor Short Duration Fund.................................. 0.40 355
Harbor Money Market Fund.................................... 0.30 141
</TABLE>
Harbor Capital has from time to time agreed not to impose all or a portion
of its advisory fees and bear a portion of the expenses incurred in the
operation of certain Funds in order to limit Fund expenses. During the six-month
period ended April 30, 1999, Harbor Capital agreed not to impose advisory fees
of $58, $548, $177 and $56 relating to Harbor International Fund II, Harbor Bond
Fund, Harbor Short Duration Fund and Harbor Money Market Fund, respectively; and
Harbor Capital and Northern Cross Investments Limited agreed not to impose
$1,573 of the advisory fee for Harbor International Fund.
The Trust reimburses Harbor Capital for certain legal expenses incurred by
Harbor Capital with respect to the Trust. Such amounts aggregated $46 for the
six-month period ended April 30, 1999.
49
<PAGE> 51
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Currency in Thousands)
NOTE 4--FEES AND OTHER TRANSACTIONS WITH AFFILIATES--CONTINUED
DISTRIBUTOR
HCA Securities, Inc., a wholly-owned subsidiary of Harbor Capital Advisors,
Inc., is the distributor for Harbor Fund shares. Harbor Fund does not reimburse
the distributor for expenses.
SHAREHOLDERS
On April 30, 1999, Harbor Capital Advisors, Inc., HCA Securities, Inc.,
Harbor Transfer, Inc., and various employee benefit plans of Owens-Illinois,
Inc. held the following shares of beneficial interest in the Funds:
<TABLE>
<CAPTION>
HARBOR CAPITAL, HCA
SECURITIES AND BENEFIT PLANS OF
FUND HARBOR TRANSFER OWENS-ILLINOIS, INC.
---- ------------------- --------------------
<S> <C> <C>
Harbor Growth Fund.......................................... 33,639 3,559,355
Harbor International Growth Fund............................ 35,791 949,730
Harbor Capital Appreciation Fund............................ 8 2,750,356
Harbor International Fund II................................ 215,285 117,253
Harbor International Fund................................... 5 1,632,450
Harbor Value Fund........................................... 12 3,480,491
Harbor Bond Fund............................................ 10 2,794,614
Harbor Short Duration Fund.................................. 3,783,756 16,472,051
Harbor Money Market Fund.................................... 36,226 20,903,074
</TABLE>
TRANSFER AGENT
Harbor Transfer, Inc., a wholly-owned subsidiary of Harbor Capital
Advisors, Inc., is the shareholder servicing agent for the Funds. Fees incurred
for these transfer agent services for the six-month period ended April 30, 1999
totaled $2,603.
"NON-INTERESTED" TRUSTEES
The fees and expenses of the non-interested Trustees allocated to each Fund
are shown on each Fund's Statement of Operations. Trustees' fees and expenses
for all Funds aggregated $106 for the six-month period ended April 30, 1999.
CUSTODIAN
Payments to the custodian have been reduced by balance credits applied to
each portfolio for the six-month period ended April 30, 1999. For the Harbor
Growth Fund, Harbor International Growth Fund, Harbor Capital Appreciation Fund,
Harbor International Fund II, Harbor International Fund, Harbor Value Fund,
Harbor Bond Fund, Harbor Short Duration Fund, and Harbor Money Market Fund the
reduction amounted to $1, $7, $31, $2, $36, $1, $5, $3 and $2, respectively. The
Funds could have invested a portion of the assets utilized in connection with
balance credit arrangements in an income producing asset if the Funds had not
entered into such arrangements. The credits approximate the earnings the Funds
could have received.
50
<PAGE> 52
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Currency in Thousands)
NOTE 5--TAX INFORMATION
The identified cost for federal income tax purposes of investments owned by
each Fund (including earned discount on corporate short-term notes and
commercial paper) and their respective gross unrealized appreciation and
depreciation at April 30, 1999 were as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED NET UNREALIZED
----------------------------- APPRECIATION/
FUND IDENTIFIED COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
- ---- --------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Harbor Growth Fund.................................. $ 83,714 $ 34,893 $(25,673) $ 9,220
Harbor International Growth Fund.................... 1,129,441 250,146 (37,968) 212,178
Harbor Capital Appreciation Fund.................... 3,958,382 1,771,224 (44,700) 1,726,524
Harbor International Fund II........................ 102,335 18,501 (7,930) 10,571
Harbor International Fund........................... 3,030,148 2,543,126 (84,617) 2,458,509
Harbor Value Fund................................... 160,065 30,225 (6,625) 23,600
Harbor Bond Fund.................................... 740,094 3,541 (6,274) (2,733)
Harbor Short Duration Fund.......................... 208,445 262 (332) (70)
</TABLE>
(This document must be preceded or accompanied by a Prospectus.)
51
<PAGE> 53
<TABLE>
<S> <C> <C>
TRUSTEES AND OFFICERS SHAREHOLDER SERVICING AGENT
RONALD C. BOLLER Chairman, President and HARBOR TRANSFER, INC.
Trustee P.O. Box 10048
HOWARD P. COLHOUN Trustee Toledo, Ohio 43699-0048
JOHN P. GOULD Trustee 1-800-422-1050
RODGER F. SMITH Trustee CUSTODIAN
CONSTANCE L. SOUDERS Secretary and Treasurer STATE STREET BANK AND TRUST
INVESTMENT ADVISER COMPANY
HARBOR CAPITAL ADVISORS, INC. P.O. Box 1713
One SeaGate Boston, MA 02105
Toledo, OH 43666 INDEPENDENT ACCOUNTANTS
DISTRIBUTOR AND PRINCIPAL UNDERWRITER PRICEWATERHOUSECOOPERS LLP
HCA SECURITIES, INC. 160 Federal Street
One SeaGate Boston, MA 02110
Toledo, OH 43666 LEGAL COUNSEL
(419) 247-2477 HALE AND DORR LLP
60 State Street
Boston, MA 02109
</TABLE>
HARBOR FUND LOGO
One SeaGate
Toledo, Ohio 43666
1-800-422-1050
259,500/06-1999 (LOGO)
recycled paper
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> HARBOR GROWTH FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-30-1999
<INVESTMENTS-AT-COST> 83,714
<INVESTMENTS-AT-VALUE> 92,934
<RECEIVABLES> 1,191
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 94,126
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 239
<TOTAL-LIABILITIES> 239
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 77,323
<SHARES-COMMON-STOCK> 8,070
<SHARES-COMMON-PRIOR> 8,147
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (261)
<ACCUMULATED-NET-GAINS> 7,605
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,220
<NET-ASSETS> 93,887
<DIVIDEND-INCOME> 26
<INTEREST-INCOME> 159
<OTHER-INCOME> 0
<EXPENSES-NET> 446
<NET-INVESTMENT-INCOME> (261)
<REALIZED-GAINS-CURRENT> 7,605
<APPREC-INCREASE-CURRENT> 7,439
<NET-CHANGE-FROM-OPS> 14,783
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (8,236)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 864
<NUMBER-OF-SHARES-REDEEMED> (1,588)
<SHARES-REINVESTED> 647
<NET-CHANGE-IN-ASSETS> 5,857
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 8,582
<OVERDISTRIB-NII-PRIOR> (326)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 365
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 447
<AVERAGE-NET-ASSETS> 98,114
<PER-SHARE-NAV-BEGIN> 10.81
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 1.92
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.07)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.63
<EXPENSE-RATIO> 0.91
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> HARBOR INTERNATI0NAL GROWTH FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-30-1999
<INVESTMENTS-AT-COST> 1,129,441
<INVESTMENTS-AT-VALUE> 1,342,458
<RECEIVABLES> 115,413
<ASSETS-OTHER> 3
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,457,874
<PAYABLE-FOR-SECURITIES> 73,789
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,628
<TOTAL-LIABILITIES> 75,417
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,124,336
<SHARES-COMMON-STOCK> 72,705
<SHARES-COMMON-PRIOR> 65,190
<ACCUMULATED-NII-CURRENT> 2,440
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 43,571
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 212,110
<NET-ASSETS> 1,382,457
<DIVIDEND-INCOME> 9,080
<INTEREST-INCOME> 1,016
<OTHER-INCOME> (1,193)
<EXPENSES-NET> 5,986
<NET-INVESTMENT-INCOME> 2,917
<REALIZED-GAINS-CURRENT> 44,660
<APPREC-INCREASE-CURRENT> 35,435
<NET-CHANGE-FROM-OPS> 83,012
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,338)
<DISTRIBUTIONS-OF-GAINS> (18,127)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13,760
<NUMBER-OF-SHARES-REDEEMED> (7,444)
<SHARES-REINVESTED> 1,199
<NET-CHANGE-IN-ASSETS> 204,205
<ACCUMULATED-NII-PRIOR> 6,786
<ACCUMULATED-GAINS-PRIOR> 20,985
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,918
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,993
<AVERAGE-NET-ASSETS> 1,325,016
<PER-SHARE-NAV-BEGIN> 18.07
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 1.28
<PER-SHARE-DIVIDEND> (0.11)
<PER-SHARE-DISTRIBUTIONS> (0.27)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.01
<EXPENSE-RATIO> 0.91
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> HARBOR CAPITAL APPRECIATION FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-30-1999
<INVESTMENTS-AT-COST> 3,958,382
<INVESTMENTS-AT-VALUE> 5,685,013
<RECEIVABLES> 116,651
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,801,668
<PAYABLE-FOR-SECURITIES> 46,444
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,157
<TOTAL-LIABILITIES> 52,601
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,715,188
<SHARES-COMMON-STOCK> 136,078
<SHARES-COMMON-PRIOR> 114,401
<ACCUMULATED-NII-CURRENT> 520
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 306,835
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,726,524
<NET-ASSETS> 5,749,067
<DIVIDEND-INCOME> 13,507
<INTEREST-INCOME> 3,374
<OTHER-INCOME> (76)
<EXPENSES-NET> 16,283
<NET-INVESTMENT-INCOME> 522
<REALIZED-GAINS-CURRENT> 314,182
<APPREC-INCREASE-CURRENT> 1,001,606
<NET-CHANGE-FROM-OPS> 1,316,310
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,561)
<DISTRIBUTIONS-OF-GAINS> (264,693)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 28,476
<NUMBER-OF-SHARES-REDEEMED> (13,308)
<SHARES-REINVESTED> 6,509
<NET-CHANGE-IN-ASSETS> 1,915,469
<ACCUMULATED-NII-PRIOR> 8,271
<ACCUMULATED-GAINS-PRIOR> 261,400
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14,745
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16,314
<AVERAGE-NET-ASSETS> 4,970,525
<PER-SHARE-NAV-BEGIN> 33.51
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 11.08
<PER-SHARE-DIVIDEND> (0.06)
<PER-SHARE-DISTRIBUTIONS> (2.28)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 42.25
<EXPENSE-RATIO> 0.65
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> HARBOR INTERNATIONAL FUND II
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-30-1999
<INVESTMENTS-AT-COST> 102,335
<INVESTMENTS-AT-VALUE> 113,432
<RECEIVABLES> 7,237
<ASSETS-OTHER> 13
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 120,682
<PAYABLE-FOR-SECURITIES> 5,494
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 325
<TOTAL-LIABILITIES> 5,819
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 104,838
<SHARES-COMMON-STOCK> 8,775
<SHARES-COMMON-PRIOR> 10,005
<ACCUMULATED-NII-CURRENT> 239
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (749)
<ACCUM-APPREC-OR-DEPREC> 10,535
<NET-ASSETS> 114,863
<DIVIDEND-INCOME> 1,152
<INTEREST-INCOME> 68
<OTHER-INCOME> (104)
<EXPENSES-NET> 551
<NET-INVESTMENT-INCOME> 565
<REALIZED-GAINS-CURRENT> 7,603
<APPREC-INCREASE-CURRENT> 10,752
<NET-CHANGE-FROM-OPS> 18,920
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,621)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,600
<NUMBER-OF-SHARES-REDEEMED> (3,956)
<SHARES-REINVESTED> 126
<NET-CHANGE-IN-ASSETS> 2,194
<ACCUMULATED-NII-PRIOR> 1,159
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (8,241)
<GROSS-ADVISORY-FEES> 446
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 611
<AVERAGE-NET-ASSETS> 120,291
<PER-SHARE-NAV-BEGIN> 11.26
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 1.93
<PER-SHARE-DIVIDEND> (0.15)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.09
<EXPENSE-RATIO> 0.91
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> HARBOR INTERNATIONAL FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-30-1999
<INVESTMENTS-AT-COST> 3,030,148
<INVESTMENTS-AT-VALUE> 5,488,803
<RECEIVABLES> 31,292
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,520,100
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,527
<TOTAL-LIABILITIES> 12,527
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,918,397
<SHARES-COMMON-STOCK> 137,933
<SHARES-COMMON-PRIOR> 137,651
<ACCUMULATED-NII-CURRENT> 32,247
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 99,722
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,457,207
<NET-ASSETS> 5,507,573
<DIVIDEND-INCOME> 70,736
<INTEREST-INCOME> 5,518
<OTHER-INCOME> (6,816)
<EXPENSES-NET> 24,110
<NET-INVESTMENT-INCOME> 45,328
<REALIZED-GAINS-CURRENT> 99,613
<APPREC-INCREASE-CURRENT> 959,272
<NET-CHANGE-FROM-OPS> 804,213
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (78,626)
<DISTRIBUTIONS-OF-GAINS> (312,499)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,030
<NUMBER-OF-SHARES-REDEEMED> (15,082)
<SHARES-REINVESTED> 9,334
<NET-CHANGE-IN-ASSETS> 419,172
<ACCUMULATED-NII-PRIOR> 69,592
<ACCUMULATED-GAINS-PRIOR> 311,388
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 22,153
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 25,719
<AVERAGE-NET-ASSETS> 5,270,063
<PER-SHARE-NAV-BEGIN> 36.97
<PER-SHARE-NII> 0.34
<PER-SHARE-GAIN-APPREC> 5.50
<PER-SHARE-DIVIDEND> (0.58)
<PER-SHARE-DISTRIBUTIONS> (2.30)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 39.93
<EXPENSE-RATIO> 0.93
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> HARBOR VALUE FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-30-1999
<INVESTMENTS-AT-COST> 160,065
<INVESTMENTS-AT-VALUE> 183,667
<RECEIVABLES> 3,681
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 187,349
<PAYABLE-FOR-SECURITIES> 1,942
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 235
<TOTAL-LIABILITIES> 2,177
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 157,697
<SHARES-COMMON-STOCK> 11,460
<SHARES-COMMON-PRIOR> 11,210
<ACCUMULATED-NII-CURRENT> 277
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,598
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,600
<NET-ASSETS> 185,172
<DIVIDEND-INCOME> 2,151
<INTEREST-INCOME> 27
<OTHER-INCOME> (3)
<EXPENSES-NET> 650
<NET-INVESTMENT-INCOME> 1,525
<REALIZED-GAINS-CURRENT> 5,212
<APPREC-INCREASE-CURRENT> 24,164
<NET-CHANGE-FROM-OPS> 30,901
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,498)
<DISTRIBUTIONS-OF-GAINS> (17,840)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,038
<NUMBER-OF-SHARES-REDEEMED> (2,068)
<SHARES-REINVESTED> 1,280
<NET-CHANGE-IN-ASSETS> 14,704
<ACCUMULATED-NII-PRIOR> 2,988
<ACCUMULATED-GAINS-PRIOR> 16,485
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 513
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 651
<AVERAGE-NET-ASSETS> 173,687
<PER-SHARE-NAV-BEGIN> 15.21
<PER-SHARE-NII> .14
<PER-SHARE-GAIN-APPREC> 2.58
<PER-SHARE-DIVIDEND> (0.14)
<PER-SHARE-DISTRIBUTIONS> (1.63)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.16
<EXPENSE-RATIO> .77
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> HARBOR BOND FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-30-1999
<INVESTMENTS-AT-COST> 740,094
<INVESTMENTS-AT-VALUE> 739,852
<RECEIVABLES> 26,854
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 766,708
<PAYABLE-FOR-SECURITIES> 166,051
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,034
<TOTAL-LIABILITIES> 169,085
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 602,264
<SHARES-COMMON-STOCK> 53,335
<SHARES-COMMON-PRIOR> 40,033
<ACCUMULATED-NII-CURRENT> 2,739
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (3,964)
<ACCUM-APPREC-OR-DEPREC> (3,416)
<NET-ASSETS> 597,623
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 15,170
<OTHER-INCOME> 0
<EXPENSES-NET> 1,597
<NET-INVESTMENT-INCOME> 13,573
<REALIZED-GAINS-CURRENT> (1,719)
<APPREC-INCREASE-CURRENT> (4,454)
<NET-CHANGE-FROM-OPS> 7,400
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12,214)
<DISTRIBUTIONS-OF-GAINS> (21,225)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17,306
<NUMBER-OF-SHARES-REDEEMED> (6,590)
<SHARES-REINVESTED> 2,586
<NET-CHANGE-IN-ASSETS> 124,602
<ACCUMULATED-NII-PRIOR> 22,503
<ACCUMULATED-GAINS-PRIOR> 23,446
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,829
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,150
<AVERAGE-NET-ASSETS> 528,444
<PER-SHARE-NAV-BEGIN> 11.82
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> (0.11)
<PER-SHARE-DIVIDEND> (0.26)
<PER-SHARE-DISTRIBUTIONS> (0.51)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.21
<EXPENSE-RATIO> 0.61
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> HARBOR SHORT DURATION FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-30-1999
<INVESTMENTS-AT-COST> 208,445
<INVESTMENTS-AT-VALUE> 208,375
<RECEIVABLES> 6,298
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 214,675
<PAYABLE-FOR-SECURITIES> 21,986
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 230
<TOTAL-LIABILITIES> 22,216
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 215,689
<SHARES-COMMON-STOCK> 22,367
<SHARES-COMMON-PRIOR> 25,002
<ACCUMULATED-NII-CURRENT> 59
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (23,024)
<ACCUM-APPREC-OR-DEPREC> (265)
<NET-ASSETS> 192,459
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,974
<OTHER-INCOME> 0
<EXPENSES-NET> 263
<NET-INVESTMENT-INCOME> 4,711
<REALIZED-GAINS-CURRENT> (640)
<APPREC-INCREASE-CURRENT> (1,106)
<NET-CHANGE-FROM-OPS> 2,965
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,652)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,326
<NUMBER-OF-SHARES-REDEEMED> (12,496)
<SHARES-REINVESTED> 535
<NET-CHANGE-IN-ASSETS> (24,785)
<ACCUMULATED-NII-PRIOR> 9,847
<ACCUMULATED-GAINS-PRIOR> 1,683
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 355
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 443
<AVERAGE-NET-ASSETS> 179,391
<PER-SHARE-NAV-BEGIN> 8.69
<PER-SHARE-NII> 0.23
<PER-SHARE-GAIN-APPREC> (0.09)
<PER-SHARE-DIVIDEND> (0.23)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 8.60
<EXPENSE-RATIO> 0.29
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> HARBOR MONEY MARKET FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-30-1999
<INVESTMENTS-AT-COST> 98,927
<INVESTMENTS-AT-VALUE> 98,927
<RECEIVABLES> 1,310
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100,238
<PAYABLE-FOR-SECURITIES> 3,951
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,176
<TOTAL-LIABILITIES> 5,127
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 95,111
<SHARES-COMMON-STOCK> 95,111
<SHARES-COMMON-PRIOR> 100,276
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 95,111
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,422
<OTHER-INCOME> 0
<EXPENSES-NET> 229
<NET-INVESTMENT-INCOME> 2,193
<REALIZED-GAINS-CURRENT> 2
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,195
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,193)
<DISTRIBUTIONS-OF-GAINS> (2)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 76,379
<NUMBER-OF-SHARES-REDEEMED> (83,606)
<SHARES-REINVESTED> 2,062
<NET-CHANGE-IN-ASSETS> (5,165)
<ACCUMULATED-NII-PRIOR> 4,154
<ACCUMULATED-GAINS-PRIOR> 3
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 141
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 287
<AVERAGE-NET-ASSETS> 94,698
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .49
</TABLE>
