<PAGE> 1
---------------------------------------
HARBOR FUND
SEMI-ANNUAL REPORT
[HARBOR FUND LOGO]
APRIL 30, 2000
<PAGE> 2
HARBOR FUND
SEMI-ANNUAL REPORT OVERVIEW
The first half of Harbor Fund's fiscal year ended April 30, 2000. Performance
for this six-month period is shown below for each one 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 ENDED
HARBOR FUNDS IN DESCENDING ORDER OF MARKET RISK 04/30/2000
----------------------------------------------- --------------
<S> <C>
Harbor Growth Fund.......................................... 42.19%
Harbor International Growth Fund............................ 14.56
Harbor Capital Appreciation Fund............................ 22.86
Harbor International Fund II................................ 13.61
Harbor International Fund................................... 4.24
Harbor Value Fund........................................... -2.09
Harbor Bond Fund............................................ 1.40
Harbor Short Duration Fund.................................. 2.38
Harbor Money Market Fund.................................... 2.72
</TABLE>
<TABLE>
<CAPTION>
COMMONLY USED MARKET INDICES
----------------------------
<S> <C>
Morgan Stanley Capital International Europe, Australasia,
and Far East (EAFE); international equity................. 6.72%
Standard & Poor's 500 (S&P 500); domestic equity............ 7.36
Lehman Brothers Aggregate (LB AGG); domestic bonds.......... 1.42
One-Year Government Bonds (1-YR GVT)........................ 2.26
90-Day U.S. Treasury Bills (T-Bills); domestic short-term... 2.76
</TABLE>
<TABLE>
<CAPTION>
30 YEARS
1970-1999
LONG-TERM HISTORIC RETURNS ANNUAL RATES
-------------------------- ------------
<S> <C>
EAFE........................................................ 12.41%
S&P 500..................................................... 13.72
Domestic Bonds (intermediate and long)(1)................... 8.88
1-YR GVT(2)................................................. 7.78
T-Bills(3).................................................. 6.69
Consumer Price Index........................................ 5.11
</TABLE>
<TABLE>
<CAPTION>
MORNINGSTAR
HARBOR FUND EXPENSE RATIOS(A) 1996 1997 1998 1999 2000(C) MEDIAN(4)
----------------------------- ---- ---- ---- ---- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Harbor Growth Fund...................... 0.92% 1.12% 1.00% 0.90% 0.85% 1.25%
Harbor International Growth Fund........ 1.10 1.02 0.96 0.91 0.91 1.32
Harbor Capital Appreciation Fund........ 0.75 0.70 0.68 0.66 0.65 0.92
Harbor International Fund II............ 1.44(b) 0.98 1.15 0.92 0.92 1.12
Harbor International Fund............... 0.99 0.97 0.94 0.92 0.92 1.12
Harbor Value Fund....................... 0.83 0.83 0.79 0.76 0.82 0.83
Harbor Bond Fund........................ 0.70 0.67 0.65 0.60 0.62 0.64
Harbor Short Duration Fund.............. 0.33 0.36 0.36 0.28 0.29 0.48
Harbor Money Market Fund................ 0.64 0.62 0.57 0.46 0.49 0.70
</TABLE>
------------------
1 LB AGG not available for 30 year period; blended historic data used to
approximate total Bond Market Return.
2 Historic data used to approximate total One-Year Government Bonds
Return. Source: Ibbotson Associates
3 A one bill portfolio of the treasury bill having the shortest maturity
not less than one month. Source: Ibbotson Associates
4 Includes all no-load funds with at least five years of performance
history in the 03/31/2000 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. 40-43).
b Annualized figure.
c Annualized figures for the six-month period ended April 30, 2000.
<PAGE> 3
DEAR SHAREHOLDER:
Sportscaster Bill Stern, the Colgate Shave Cream Man, probably would have
described in his dulcet tones over the radio airways the current drama in the
domestic equity market something like the following:
"It's the New Economy, in the black trunks, slugging the Old Economy in the
red trunks.
"New economy has been battering Old Economy with lefts and rights. Judges
at ringside have the high-flying New Economy --unbeaten in three bouts--a sure
winner and new champion by a landslide on all scorecards.
"It looks like the new champ will win by a TKO--as in Technical KO--if not
by a knockout, and send the Old Economy into retirement.
"But wait. Out of nowhere the Old Economy seems to have mounted a rally.
There's a flurry of activity. The crowd is on their feet. What a comeback by the
Old Economy. And the crowd goes wild."
That fight of fantasy is not too far removed from the reality of what was
happening in the domestic equity market late in the first half of Harbor Fund's
fiscal year.
The new economy led by the Internet and high-tech stocks with astronomical
P/E valuations had been the darling of speculators in the market for many, many
months, while the old economy, representing the value style equities with their
dependable, solid--if boring--earnings was scorned to the sidelines.
Suddenly--in March--an interesting if not surprising thing happened. A
solid, stinging uppercut caught new economy high flyers and dot.com IPOs
squarely on the jaw and a long-awaited correction was visited on that group.
Now, many investors were cheering anew in support of their hero--the long
neglected old economy value sector, where things like profits, low P/E ratios,
and necessary and useful products remain important.
As a result, what had been a narrow market, dominated by growth and
technology for so long, suddenly has broadened significantly.
By May 10, the Nasdaq index was 29% below its peak on March 10. Many
Internet stocks had fallen by 50 to 75%. At the same time, money was flowing
into areas of the market virtually ignored during the tech boom.
To illustrate the point, by March 10 some 31 of the 39 industry groups in
the Wilshire 5000 posted better-than-index returns since March 1. In February,
only eight--less than 25%--had done so. And in that same time frame, three of
every four stocks in the S&P 500 were up. In calendar year 1999, just half of
all the stocks in the S&P 500 finished up.
Wilshire also reported that in the first two months of 2000,
large-capitalization stocks with no earnings gained 14%, while profitable big
caps declined 6%. In the March 1 to May 10 time slot, the profitable large-caps
gained 4%, while the profitless group fell by 12%.
Wilshire data shows that investors also were shying away from equities with
huge P/E ratios.
Our take on the broadening of the market in the first half of the fiscal
year is reflected in the accompanying chart, which plots the percentage of 101
Standard & Poors Industries performing better than the S&P 1500 (a composite of
the S&P 500, S&P 400, and S&P 600). That number hit a low of 25.7% in February,
soared to 67.3% in April, and at last glance was still going up. Of course we
don't know how long it will last, but that's clearly a welcome broadening of the
market.
In our view, there are some key guidelines to successful investing. One is
to diversify your stock holdings across domestic and foreign markets, growth and
value styles and large to small market capitalizations. Also, your fixed-income
holdings should reflect global markets, be diversified over short to long
maturities and high to low credit quality securities.
Another of the key guidelines to successful investing is to identify your
investment objectives and adjust your risk to achieve those objectives through
the proportion you hold in diversified equities relative to the proportion you
hold in diversified fixed-income. The greater the proportion in equities, the
more risk you are assuming. But you should take no more than the degree of risk
necessary to achieve your objective.
And finally, invest for the long-term, don't try to time the market--it's
virtually impossible and it can cause you to lose out on some important market
gains.
These guidelines are an admission that the future is always uncertain, but
that by disciplining ourselves to follow sensible rules, we can improve the odds
of being successful.
2
<PAGE> 4
DEAR SHAREHOLDER--CONTINUED
Looking back, the decade of the 1990s was truly a rewarding period for
investors who stayed the course. Looking ahead, there are many reasons for
believing the domestic economic expansion--now the longest in U.S. history--can
continue with relatively low inflation.
We are pleased with the performance of the Harbor Funds both throughout the
last decade and in the first six months of our current fiscal year.
In the trailing 5- and 10-year periods ended April 30, both Harbor Growth
Fund and Harbor Capital Appreciation Fund significantly outperformed the S&P 500
index. Portfolio managers of both funds stayed away from direct Internet stocks
and the high flyers and continued to concentrate on equities of those companies
with strong fundamentals and high-growth capabilities.
Harbor Value Fund performance turned up sharply as the market broadened in
the fiscal second quarter of this year. The Fund has outperformed both small-
and large-capitalization value stocks as measured by the Richards & Tierney
indices over the trailing 5-year period.
On the international equity side, Harbor International Fund has
outperformed the EAFE index by a wide margin in both of the trailing 5- and
10-year periods ended April 30, as has the Harbor International Growth Fund for
the trailing 5 years and since inception in November, 1993. Harbor International
Fund II, like Harbor International Fund, a value style oriented fund, provided
substantially better than EAFE returns in the fiscal first half and widened its
margin over the index since inception in June, 1996.
Our international equity fund managers agree that while there are some
troublesome areas and issues in the global economy, prospects for growth are
good, particularly in Europe, where they believe the economy could grow faster
than the U.S. in the near future.
In the very difficult climate of steadily rising interest rates over the
last year, Harbor Bond Fund maintained a leadership position with excellent
returns solidly above the Lehman Brothers Aggregate index for the trailing 5-
and 10-year periods. Harbor Short Duration Fund continued to outperform 1-year
treasury bonds in both the near and long term.
As always, you are invited to review the detailed performance of the Harbor
Funds on the pages which follow. We encourage you to check the expense ratios on
page one of this report since they are such an important element in the
performance of your investments.
Thank you again for investing with us.
Sincerely,
/s/ Ronald C. Boller
Ronald C. Boller
President
[BAR GRAPH]
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
<TABLE>
<S> <C> <C> <C>
HARBOR GROWTH FUND NET ASSET VALUE: 04/30/2000 $23.61
10/31/1999 $17.52
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2000
----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years 10 years
----------------------------------------------------------------------------
Harbor Growth Fund* 42.19% 114.20% 30.66% 19.59%
----------------------------------------------------------------------------
S&P 500 7.36% 10.35% 25.39% 18.85%
----------------------------------------------------------------------------
</TABLE>
Continued concentration on high growth rate companies with proprietary products
or processes and strong cash flow produced huge rewards for Harbor Growth Fund
in the first half of the Harbor fiscal year. Extraordinary Fund returns far
outpaced those of its peer groups and the S&P 500 in the six months and
trailing 12-month periods.
- The Fund's extraordinary return of 42.19% in the fiscal first half resulted
primarily from a very heavy weighting in technology, where performance
greatly exceeded the market return.
- Principal contributors in the technology area were computer services and
electronic instruments.
- Strong market-beating contributions also came from Fund positions in drugs
and health care.
-------------
* Harbor Growth Fund's performance was attributable to unusually favorable
market conditions, and may not be repeated or consistently achieved in the
future. Total return for the period November 1, 1999 through June 9, 2000 was
50.92%.
[HARBOR GROWTH FUND GRAPH]
<TABLE>
<CAPTION>
GROWTH FUND S&P 500
----------- -------
<S> <C> <C>
4/30/90 10000 10000
4/30/91 13060 11759
4/30/92 13532 13402
4/30/93 13784 14640
4/30/94 15050 15436
4/30/95 15714 18134
4/30/96 22269 23645
4/30/97 20735 29585
4/30/98 29249 41778
4/30/99 27938 50944
4/30/00 59844 56219
</TABLE>
<TABLE>
<S> <C> <C> <C>
HARBOR INTERNATIONAL GROWTH FUND NET ASSET VALUE: 04/30/2000 $20.44
10/31/1999 $19.13
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2000
----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years Since
Inception
----------------------------------------------------------------------------
Harbor International Growth
Fund 14.56% 15.16% 18.04% 14.71%
----------------------------------------------------------------------------
EAFE 6.72% 13.89% 10.36% 9.70%
----------------------------------------------------------------------------
</TABLE>
Even though strength of the dollar against foreign currencies once again
significantly penalized results, Harbor International Growth Fund had strong
gains in the first half of the fiscal year. The Fund outperformed the EAFE
index by a wide margin in the period, as well as in the trailing 12-month and
5-year periods, and since inception.
- Outperformance was attributable to large holdings in technology, media and
telecommunications, but was partially offset by weak performance in finance,
consumer goods and the euro, which declined 13.56% vs the dollar.
[HARBOR INTERNATIONAL GROWTH FUND GRAPH]
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND EAFE
------------------------- ----
<S> <C> <C>
4/30/94 10406 10557
4/30/95 10644 11146
4/30/96 14593 12418
4/30/97 16471 12307
4/30/98 21074 14635
4/30/99 21184 16025
4/30/00 24396 18251
</TABLE>
4
<PAGE> 6
HARBOR FUND--CONTINUED
December 29, 1987. Unless otherwise stated, all comments pertain to the fiscal
half ended April 30, 2000. 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: 04/30/2000 $52.71
10/31/1999 $46.92
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2000
----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years 10 years
----------------------------------------------------------------------------
Harbor Capital Appreciation
Fund 22.86% 36.44% 31.66% 24.76%
----------------------------------------------------------------------------
S&P 500 7.36% 10.35% 25.39% 18.85%
----------------------------------------------------------------------------
</TABLE>
Excellent performance was achieved by Harbor Capital Appreciation Fund in the
first half of the fiscal year, with a gain of 22.86%, more than triple that of
the S&P 500 and well above that of its peer group. The Fund sharply increased
its lead over the S&P index for the trailing 12-month, 5- and 10-year periods.
- Performance was due mainly to the Fund's large holdings in technology, which
in aggregate significantly outperformed the market. Electronic instruments,
semiconductors, telecommunications, and computers & business equipment
represented the major exposure in technology.
- Consumer non-durable holdings in drugs, retail, and media produced
market-beating performance.
- The financial sector also contributed to the Fund's outperformance of the
market.
[HARBOR CAPITAL APPRECIATION FUND GRAPH]
<TABLE>
<CAPTION>
CAPITAL APPRECIATION FUND S&P 500
------------------------- -------
<S> <C> <C>
4/30/90 10000 10000
4/30/91 12455 11759
4/30/92 15136 13402
4/30/93 16879 14640
4/30/94 18918 15436
4/30/95 23087 18134
4/30/96 30387 23645
4/30/97 35210 29585
4/30/98 52282 41778
4/30/99 66936 50944
4/30/00 91328 56219
</TABLE>
<TABLE>
<S> <C> <C> <C>
HARBOR INTERNATIONAL FUND II NET ASSET VALUE: 04/30/2000 $14.91
10/31/1999 $13.83
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2000
----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years Since
Inception
----------------------------------------------------------------------------
Harbor International Fund II 13.61% 20.04% N/A 14.36%
----------------------------------------------------------------------------
EAFE 6.72% 13.89% 10.36% 10.86%
----------------------------------------------------------------------------
</TABLE>
Returns of Harbor International Fund II continued to improve in the first half
of the fiscal year, helped by its technology and telecommunications holdings,
but hurt by its finance related holdings and foreign currency exposure. The
Fund once again significantly outperformed the EAFE index for the 6-months,
trailing 12-months, and since inception. Exceptional gains in local currencies
once again were tempered by the strength of the dollar against foreign
currencies.
- Strong gains came from holdings in Israel, Sweden, Brazil, Finland and Japan,
which represented about a third of the portfolio's value.
- Performance was hurt by results from investments in the Netherlands, France,
the U.K., and Germany, which trailed the results of the EAFE index.
[HARBOR INTERNATIONAL FUND II GRAPH]
<TABLE>
<CAPTION>
INTERNATIONAL FUND EAFE
------------------ ----
<S> <C> <C>
4/30/97 11579 10097
4/30/98 13820 12007
4/30/99 14090 13147
4/30/00 16914 14973
</TABLE>
5
<PAGE> 7
HARBOR FUND--CONTINUED
<TABLE>
<S> <C> <C> <C>
HARBOR INTERNATIONAL FUND NET ASSET VALUE: 04/30/2000 $39.04
10/31/1999 $40.66
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2000
----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years 10 years
----------------------------------------------------------------------------
Harbor International Fund 4.24% 6.25% 14.52% 13.54%
----------------------------------------------------------------------------
EAFE 6.72% 13.89% 10.36% 8.88%
----------------------------------------------------------------------------
</TABLE>
With a portfolio of value style stocks, mainly of companies in Europe, the
Harbor International Fund was helped by its technology and telecommunications
holdings, but hurt by its finance related holdings and foreign currency
exposure. Fund performance in the first half of the fiscal year trailed that of
the EAFE index, but the Fund still significantly outperformed the index for the
trailing 5- and 10-year periods.
- Best first half returns came from holdings in Sweden, Australia, Brazil,
Japan, and Hong Kong--all of which did significantly better than the EAFE
index.
- Holdings in the U.K. and France had disappointing below-index returns as did
those in the Netherlands.
[HARBOR INTERNATIONAL FUND GRAPH]
<TABLE>
<CAPTION>
INTERNATIONAL FUND EAFE
------------------ ----
<S> <C> <C>
4/30/90 10000 10000
4/30/91 10845 10435
4/30/92 12244 9550
4/30/93 12846 11614
4/30/94 16360 13546
4/30/95 18071 14303
4/30/96 21478 15934
4/30/97 25294 15793
4/30/98 32420 18780
4/30/99 33507 20563
4/30/00 35602 23420
</TABLE>
<TABLE>
<S> <C> <C> <C>
HARBOR VALUE FUND NET ASSET VALUE: 04/30/2000 $13.33
10/31/1999 $15.40
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2000
----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years 10 years
----------------------------------------------------------------------------
Harbor Value Fund -2.09% -6.01% 16.43% 13.04%
----------------------------------------------------------------------------
S&P 500 7.36% 10.35% 25.39% 18.85%
----------------------------------------------------------------------------
</TABLE>
In a narrow market dominated throughout most of the first half of the fiscal
year by high growth technology stocks, Harbor Value Fund results bettered those
of its peer group but fell short of the growth-oriented S&P 500 index. However,
the Fund posted a turnaround gain of 13.66% in the last two months of the
period vs 6.45% for the S&P 500.
- Large positions in sectors generally associated with value investing--
including financials, utilities, and basic materials--greatly underperformed
the market in the six months, but rallied late in the period.
- Small positions in technology and energy did outperform the market, but were
not large enough to offset the general weakness that prevailed in value
stocks.
- The Russell 3000 growth index (19.34%) outperformed the Russell 3000 value
index (-.39%) by 19.73% in the period.
[HARBOR VALUE FUND GRAPH]
<TABLE>
<CAPTION>
HARBOR VALUE S&P 500
------------ -------
<S> <C> <C>
4/30/90 10000 10000
4/30/91 11324 11759
4/30/92 12403 13402
4/30/93 13113 14640
4/30/94 13654 15436
4/30/95 15923 18134
4/30/96 20424 23645
4/30/97 24191 29585
4/30/98 33473 41778
4/30/99 36243 50944
4/30/00 34066 56219
</TABLE>
6
<PAGE> 8
HARBOR FUND--CONTINUED
<TABLE>
<S> <C> <C> <C>
HARBOR BOND FUND NET ASSET VALUE: 04/30/2000 $10.72
10/31/1999 $10.85
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2000
----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years 10 years
----------------------------------------------------------------------------
Harbor Bond Fund 1.40% 0.79% 7.41% 9.03%
----------------------------------------------------------------------------
LB AGG 1.42% 1.26% 6.79% 8.09%
----------------------------------------------------------------------------
</TABLE>
Continued robust economic growth and an uptick in inflation provided the
setting for rising interest rates in the first half of the fiscal year. Only
30-year bonds rallied as the Treasury announced a buyback. Volatility and
corporate leverage caused investors to demand higher yields for mortgage and
corporate debt. In this environment, the Harbor Bond Fund was positioned
defensively and virtually matched performance of the Lehman Brothers Aggregate
index.
- Early in the period, the portfolio was positioned slightly lower than the
index duration to protect against a short-run increase in rates. The Fund
benefited from an increased exposure to the long end of the yield curve
designed to take advantage of the Treasury buyback.
- A defensive corporate credit position added value when corporate spreads
widened and investors reacted to increased corporate leverage and the
continued high level of marketplace defaults. Selective positions in emerging
markets added strongly to returns, while mortgage debt added slightly and
limited use of domestic high yield bonds subtracted modestly.
[HARBOR BOND FUND GRAPH]
<TABLE>
<CAPTION>
BOND LB AGG
---- ------
<S> <C> <C>
04/30/90 10000 10000
04/30/91 11500 11519
04/30/92 13192 12786
04/30/93 15311 14482
04/30/94 15596 14605
04/30/95 16603 15673
04/30/96 18210 17028
04/30/97 19683 18235
04/30/98 21768 20224
04/30/99 23548 21493
04/30/00 23735 21763
</TABLE>
<TABLE>
<S> <C> <C> <C>
HARBOR SHORT DURATION FUND NET ASSET VALUE: 04/30/2000 $8.47
10/31/1999 $8.56
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
-----------------------------------------------------------------
Total Return for Periods Ended 04/30/2000
----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years Since
Inception
----------------------------------------------------------------------------
Harbor Short Duration Fund 2.38% 4.47% 5.85% 5.25%
----------------------------------------------------------------------------
1-YR GVT 2.26% 4.61% 5.64% 5.13%
----------------------------------------------------------------------------
</TABLE>
With the Federal Reserve aggressively pursuing a course of tighter monetary
policy to slow and achieve a sustainable pace of economic growth, the first
half of the fiscal year was an adverse period for interest rates and fixed
income investments generally. Rates on one-year treasury bills increased. The
Harbor Short Duration Fund marginally outperformed one-year treasury bills but
underperformed shorter duration 90-day treasury bills in the six months ended
April 30, 2000.
- The portfolio's duration was generally maintained at one year or less, which
reduced its overall yield.
- This shortfall was more than made up for by good performance of higher-
yielding asset-backed securities and collateralized mortgage obligations.
[HARBOR SHORT DURATION FUND GRAPH]
<TABLE>
<CAPTION>
SHORT DURATION 1 YR GVT
-------------- --------
<S> <C> <C>
4/30/92 10065 10133
4/30/93 10650 10649
4/30/94 10914 10913
4/30/95 11530 11534
4/30/96 12175 12265
4/30/97 13089 12964
4/30/98 13895 13770
4/30/99 14667 14504
4/30/00 15323 15172
</TABLE>
7
<PAGE> 9
HARBOR FUND--CONTINUED
<TABLE>
<S> <C> <C> <C>
HARBOR MONEY MARKET FUND NET ASSET VALUE: 04/30/2000 $1.00
10/31/1999 $1.00
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2000
----------------------------------------------------------------------------
Fund/Index 6 months 12 months 5 years 10 years
----------------------------------------------------------------------------
Harbor Money Market Fund 2.72% 5.21% 5.17% 4.88%
----------------------------------------------------------------------------
T-Bills 2.76% 5.20% 5.23% 5.01%
----------------------------------------------------------------------------
-----------------------------------------------------------------
Current Yield for Periods Ended 03/31/2000
----------------------------------------------------------------------------
Harbor Money Market Fund* 7 Days: 5.66% 30 Days: 5.58%
----------------------------------------------------------------------------
</TABLE>
Even though treasury bill yields rose nearly three-quarters of a percent during
the first half of the fiscal year, the Harbor Money Market Fund's return was
within a few basis points of that of 90-day treasury bills.
- Tactical reductions in the portfolio's three-month duration detracted from
relative return.
- This shortfall was offset by holdings of higher-yielding bank obligations and
commercial paper.
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.
-------------
* Reflects the Adviser's agreement not to impose all or a portion of its
advisory fees. Without such waivers the current 7-day and 30-day yields would
have been 5.54% and 5.46%, respectively. The current yield more closely
reflects the current earnings of the Harbor Money Market Fund than the total
return.
[HARBOR MONEY MARKET FUND GRAPH]
<TABLE>
<CAPTION>
MONEY MARKET T-BILLS
------------ -------
<S> <C> <C>
4/30/90 10000 10000
4/30/91 10762 10742
4/30/92 11272 11279
4/30/93 11609 11649
4/30/94 11934 12018
4/30/95 12518 12633
4/30/96 13194 13335
4/30/97 13857 14043
4/30/98 14582 14787
4/30/99 15306 15494
4/30/00 16104 16300
</TABLE>
8
<PAGE> 10
HARBOR GROWTH FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2000 (UNAUDITED)
COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash, convertible bond and short-term investments of 17.5%)
<TABLE>
<S> <C>
Automobile Equipment 0.4
Leisure & Luxury 0.6
Health Care-Hospital Management 0.8
Manufacturing Diversified 1.2
Retail-All Other 1.7
Electric Power 1.9
Drugs & Medicine 3.3
Electronic Components 3.8
Semiconductors 5.5
Electronic Instruments 5.8
Services 7.7
Computer Services 9.7
Computers & Business Equipment 16.6
Telecommunications 23.5
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--82.5%
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
AUTOMOBILE EQUIPMENT--0.4%
70,000 Tower Automotive Inc.*............... $ 1,094
--------
COMPUTER SERVICES--9.7%
100,000 AXENT Technologies Inc.*............. 2,012
110,000 Documentum Inc.*..................... 6,490
158,800 Epicor Software Corp.*............... 635
400,000 Legato Systems Inc.*................. 5,175
27,000 Microsoft Corp.*..................... 1,883
Project Software & Development
240,000 Inc.*................................ 7,320
700,000 Zitel Corp.*......................... 2,494
--------
26,009
--------
COMPUTERS & BUSINESS EQUIPMENT--16.6%
100,000 EMC Corp.*........................... 13,894
350,000 Network Appliance Inc.*.............. 25,878
60,000 Proxim Inc.*......................... 4,616
--------
44,388
--------
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
DRUGS & MEDICINE--3.3%
38,000 Dura Pharmaceuticals Inc.*........... $ 494
60,000 Elan Corp. plc ADR(1)*............... 2,572
134,000 Molecular Devices Corp.*............. 5,760
--------
8,826
--------
ELECTRIC POWER--1.9%
55,400 The AES Corp.*....................... 4,983
--------
ELECTRONIC COMPONENTS--3.8%
110,000 JPM Co.*............................. 619
203,500 Planar Systems Inc.*................. 2,277
150,000 Sawtek Inc.*......................... 7,172
--------
10,068
--------
ELECTRONIC INSTRUMENTS--5.8%
280,000 Checkpoint Systems Inc.*............. 2,502
131,000 GenRad Inc.*......................... 974
280,000 LoJack Corp.*........................ 2,013
415,000 Pinnacle Systems Inc.*............... 9,960
--------
15,449
--------
HEALTH CARE-HOSPITAL MANAGEMENT--0.8%
130,000 Health Management Association*....... 2,072
--------
LEISURE & LUXURY--0.6%
60,000 Carnival Corp. ...................... 1,492
--------
MANUFACTURING DIVERSIFIED--1.2%
100,000 Brunswick Technologies Inc.*......... 919
200,000 Flow International Corp.*............ 2,250
--------
3,169
--------
RETAIL-ALL OTHER--1.7%
45,000 Dollar Tree Stores Inc.*............. 2,604
100,000 TJX Companies Inc. .................. 1,919
--------
4,523
--------
SEMICONDUCTORS--5.5%
200,000 ATMI Inc.*........................... 7,700
150,000 Dallas Semiconductor Corp. .......... 6,441
150,000 Innoveda Inc.*....................... 600
--------
14,741
--------
SERVICES--7.7%
350,000 Advantage Learning Systems Inc.*..... 5,097
340,000 Prosoft I-Net Solutions Inc.*........ 5,695
100,000 QRS Corp.*........................... 3,300
150,000 Wind River Systems Inc.*............. 6,403
--------
20,495
--------
TELECOMMUNICATIONS--23.5%
220,000 Aspect Communications Corp.*......... 7,810
220,000 Comverse Technology Inc.*............ 19,621
200,000 JDS Uniphase Corp.*.................. 20,738
90,000 Nextel Communications Inc.*.......... 9,849
150,000 P-Com Inc.*.......................... 1,622
190,000 Symmetricom Inc.*.................... 2,256
</TABLE>
9
<PAGE> 11
HARBOR GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
Sz237,500 Transcrypt International Inc.*....... $ 683
--------
62,579
--------
TOTAL COMMON STOCKS
(Cost $123,699)................................ 219,888
--------
CONVERTIBLE BOND--0.8%
(Cost $2,413)
PRINCIPAL
AMOUNT
(000S)
-----------------------------------------------------------
SZMANSUR INDUSTRIES, INC.
$ 2,404 8.250%--02/23/2003 PIK(2)............ 2,091
--------
<CAPTION>
SHORT-TERM INVESTMENTS--17.5%
COMMERCIAL PAPER
<S> <C>
American Express Credit Corp.
7,363 5.940%--05/01/2000................. 7,363
Citicorp
6,091 5.990%--05/03/2000................. 6,091
Exxon Project Investment*
9,692 5.990%--05/05/2000................. 9,692
General Electric Capital Corp.
7,088 5.960%--05/04/2000................. 7,088
General Motors Acceptance Corp.
6,069 6.000%--05/08/2000................. 6,069
Prudential Funding Corp.
10,282 5.940%--05/02/2000................. 10,282
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $46,585)................................. 46,585
--------
TOTAL INVESTMENTS--100.8%
(Cost $172,697)................................ 268,564
CASH AND OTHER ASSETS, LESS
LIABILITIES--(0.8)%.............................. (2,065)
--------
TOTAL NET ASSETS--100.0%......................... $266,499
========
</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.
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, 2000 (UNAUDITED)
INVESTMENT HOLDINGS BY COUNTRY (% OF NET ASSETS)
(Excludes net cash and short-term investments of 7.4%)
<TABLE>
<S> <C>
Portugal (PORT) 0.7
Italy (IT) 2.2
Germany (GER) 2.5
Switzerland (SWS) 2.9
Australia (AUS) 3.2
Mexico (MEX) 4.8
Sweden (SW) 4.8
Singapore (SGP) 5.1
Spain (SP) 6.1
Finland (FIN) 8.9
France (FR) 11.1
Netherlands (NET) 13.5
United Kingdom (UK) 26.8
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--92.6%
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
AUTOMOBILE EQUIPMENT--0.0%
Valeo SA Wts. (FR)
58,896 Expire 08/03/2001.............. $ 70
----------
BANKS--8.6%
3,281,099 Banco Bilbao Vizcaya (SP)........ 44,743
Banco Commercial Portugues--
2,203,609 Registered (PORT).............. 10,337
Development Bank of Singapore
5,664,455 (SGP)............................ 78,005
----------
133,085
----------
CHEMICALS-FERTILIZERS--1.2%
243,408 SGL Carbon AG (GER).............. 18,807
----------
COMPUTER SERVICES--7.8%
194,724 Cap Gemini Group (FR)............ 38,237
645,517 Getronics NV (NET)............... 38,497
797,330 Logica plc (UK).................. 24,145
40,822 SAP AG (GER)..................... 19,149
----------
120,028
----------
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
DRUGS & MEDICINE--9.6%
Ares-Serono International SA
14,813 (SWS).......................... $ 45,481
1,118,812 Aventis SA (FR).................. 61,535
1,086,761 Sanofi Synthelabo (FR)........... 40,556
----------
147,572
----------
ELECTRIC POWER--1.1%
Koninklijke Philips Electric
393,020 (NET).......................... 17,546
----------
ELECTRICAL EQUIPMENT--4.3%
13,775,395 Invensys (UK).................... 66,488
----------
HOUSEHOLD PRODUCTS--2.4%
Kimberly-Clark De Mexico SA
11,564,200 (MEX).......................... 37,237
----------
LEISURE & LUXURY--5.8%
9,041,995 Granada Group plc (UK)........... 88,691
----------
MEDIA--13.9%
568,410 Grupo Televisa SA ADR (MEX)(1)... 36,059
2,597,188 Pearson plc (UK)................. 87,869
Verenigde Nederlandse
Uitgeversbedrijven
1,678,078 NV (NET)....................... 89,778
----------
213,706
----------
MISCELLANEOUS TRANSPORT--3.3%
1,778,906 Brambles Industries Ltd. (AUS)... 50,074
----------
POLLUTION CONTROL--2.0%
309,320 Vivendi (FR)..................... 30,595
----------
TELECOMMUNICATIONS--32.6%
Cable & Wireless Communications
2,338,655 plc (UK)....................... 38,815
Ericsson (LM) Tel Co. Series B
826,830 (SW)........................... 73,498
623,753 Kon KPN NV (NET)................. 62,858
1,195,770 Nokia (Ab) Oy Series A (FIN)..... 68,594
1,253,320 Sonera Technologies Oyj (FIN).... 68,933
3,514,210 Telecom Italia Mobile SpA (IT)... 33,545
2,191,267 Telefonica SA (SP)............... 48,766
23,292,843 Vodafone Airtouch plc (UK)....... 106,621
----------
501,630
----------
TOTAL COMMON STOCKS
(Cost $1,179,601)............................ 1,425,529
----------
<CAPTION>
SHORT-TERM INVESTMENTS--6.8%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
-----------------------------------------------------------
<C> <S> <C>
COMMERCIAL PAPER
American Express Credit Corp.
$ 54,166 5.960%--05/01/2000............. 54,166
General Electric Co.
50,000 5.900%--05/01/2000............. 50,000
----------
</TABLE>
11
<PAGE> 13
HARBOR INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS--6.8%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
-----------------------------------------------------------
<C> <S> <C>
TOTAL SHORT-TERM INVESTMENTS
(Cost $104,166).............................. $104,166
----------
TOTAL INVESTMENTS--99.4%
(Cost $1,283,767)............................ 1,529,695
CASH AND OTHER ASSETS, LESS
LIABILITIES--0.6%............................ 9,326
----------
TOTAL NET ASSETS--100.0%....................... $1,539,021
==========
</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.
The accompanying notes are an integral part of the financial statements.
12
<PAGE> 14
HARBOR CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2000 (UNAUDITED)
COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash and short-term investments of 3.6%)
<TABLE>
<S> <C>
Oil Well Equipment & Services 0.5
Cosmetics 0.7
Automobiles 0.9
Conglomerates 0.9
Banks-Money Center 1.0
Miscellaneous High Tech 1.8
Telephones 2.1
Insurance-Other 2.2
Electrical Equipment 2.3
Credit & Miscellaneous Financial 4.0
Electronic Instruments 4.5
Financial Services 4.9
Computer Services 8.1
Media 8.2
Semiconductors 8.2
Retail-All Other 9.3
Computers & Business Equipment 9.5
Drugs & Medicine 10.8
Telecommunications 16.5
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--96.4%
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
AUTOMOBILES--0.9%
877,800 General Motors Corp. Cl. H......... $ 84,543
----------
BANKS-MONEY CENTER--1.0%
1,231,400 Chase Manhattan Corp. New.......... 88,738
----------
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
COMPUTER SERVICES--8.1%
2,326,000 America Online Inc.*............... $ 139,124
768,600 Level 3 Communications Inc.*....... 68,405
3,350,000 Microsoft Corp.*................... 233,662
Qwest Communications International
5,340,900 Inc.*............................ 231,662
80,600 Sycamore Networks Inc.............. 6,327
692,550 Veritas Software Corp.............. 74,287
----------
753,467
----------
COMPUTERS & BUSINESS EQUIPMENT--9.5%
4,227,400 Cisco Systems Inc.*................ 293,078
2,335,600 Compaq Computer Corp............... 68,316
2,323,200 Dell Computer Corp.*............... 116,450
1,360,100 EMC Corp.*......................... 188,969
1,074,600 Equant NV--Registered.............. 83,819
1,389,800 Sun Microsystems Inc.*............. 127,775
----------
878,407
----------
CONGLOMERATES--0.9%
433,300 Corning Inc........................ 85,577
----------
COSMETICS--0.7%
Estee Lauder Cosmetics Inc. Cl.
1,555,500 A................................ 68,636
----------
CREDIT & MISCELLANEOUS FINANCIAL--4.0%
1,176,400 American Express Co................ 176,534
Morgan, Stanley, Dean Witter & Co.
2,576,240 Inc. New......................... 197,726
----------
374,260
----------
DRUGS & MEDICINE--10.8%
2,887,900 American Home Products Corp........ 162,264
2,053,600 Amgen Inc.*........................ 115,002
625,700 Bristol-Myers Squibb Co............ 32,810
459,300 Genetech Inc.*..................... 53,738
1,757,900 Glaxo Wellcome plc ADR(1).......... 110,418
1,286,600 Merck & Co. Inc.................... 89,419
3,382,478 Pharmacia Corp..................... 168,912
2,348,900 Warner-Lambert Co.................. 267,334
----------
999,897
----------
ELECTRICAL EQUIPMENT--2.3%
1,340,900 General Electric Co................ 210,857
----------
ELECTRONIC INSTRUMENTS--4.5%
2,165,900 Hewlett Packard Co................. 292,397
1,069,200 KLA Tencor Corp.*.................. 80,056
287,700 VeriSign Inc....................... 40,098
----------
412,551
----------
FINANCIAL SERVICES--4.9%
5,384,250 Citigroup Inc...................... 320,026
1,285,500 Merrill Lynch & Co. Inc............ 131,041
----------
451,067
----------
INSURANCE--OTHER--2.2%
American International Group
1,818,550 Inc.............................. 199,472
----------
</TABLE>
13
<PAGE> 15
HARBOR CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
Sz
MEDIA--8.2%
3,824,000 CBS Corp........................... $ 224,660
Clear Channel Communications
1,962,800 Inc.*............................ 141,322
230,400 Juniper Networks Inc.*............. 49,003
1,245,800 Omnicom Group...................... 113,446
1,378,500 Time Warner Inc.................... 123,979
Univision Communications Inc. Cl. A
950,100 ADR(1)*.......................... 103,798
----------
756,208
----------
MISCELLANEOUS HIGH TECH--1.8%
1,633,800 Applied Materials Inc.*............ 166,341
----------
OIL WELL EQUIPMENT & SERVICES--0.5%
573,000 Schlumberger Ltd................... 43,870
----------
RETAIL--ALL OTHER--9.3%
613,500 Costco Wholesale Corp. New......... 33,167
2,478,637 Gap Inc............................ 91,090
5,262,550 Home Depot Inc..................... 295,032
3,676,800 Kohl's Corp.*...................... 176,486
1,519,100 Tiffany & Co. New.................. 110,420
2,712,600 Wal-Mart Stores Inc................ 150,210
----------
856,405
----------
SEMICONDUCTORS--8.2%
277,200 Broadcom Corp. Cl. A............... 47,782
2,645,000 Intel Corp......................... 335,419
1,238,500 Motorola Inc....................... 147,459
1,367,800 Texas Instruments Inc.............. 222,780
----------
753,440
----------
TELECOMMUNICATIONS--16.5%
1,355,600 Allegiance Telecom Inc.*........... 95,909
437,200 Applied Micro Circuits Corp........ 56,344
Ericsson (LM) Tel Co. ADR Series
1,779,600 B(1)............................. 157,383
2,296,400 Global Crossing Ltd................ 72,337
713,500 JDS Uniphase Corp.*................ 73,981
Metromedia Fiber Network Inc. Cl.
1,381,000 A................................ 42,638
Nextel Communications Inc. Cl.
850,300 A*............................... 93,055
Nextlink Communications Cl. A
712,500 ADR(1)........................... 60,073
5,972,700 Nokia Corp. ADR(1)................. 339,697
2,103,843 NTL Inc.*.......................... 160,944
334,400 QUALCOMM Inc....................... 36,262
7,185,573 Vodafone Airtouch plc ADR(1)....... 337,722
----------
1,526,345
----------
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
TELEPHONES--2.1%
1,505,500 AT&T Corp.......................... $ 47,894
2,881,500 AT&T Corp.--Liberty Media Cl. A*... 143,895
----------
191,789
----------
TOTAL COMMON STOCKS
(Cost $6,295,679)............................ 8,901,870
----------
<CAPTION>
SHORT-TERM INVESTMENTS--5.8%
PRINCIPAL
AMOUNT
(000S)
-----------------------------------------------------------
<C> <S> <C>
COMMERCIAL PAPER
American Express Credit Corp.
$ 250,000 5.960%--05/01/2000............... 250,000
Chevron USA Inc.
125,000 5.900%--05/01/2000............... 125,000
General Electric Co.
157,685 5.900%--05/01/2000............... 157,685
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $532,685).............................. 532,685
----------
TOTAL INVESTMENTS--102.2%
(Cost $6,828,364)............................ 9,434,555
CASH AND OTHER ASSETS, LESS
LIABILITIES--(2.2)%.......................... (199,469)
----------
TOTAL NET ASSETS--100.0%....................... $9,235,086
==========
</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, 2000 (UNAUDITED)
INVESTMENT HOLDINGS BY COUNTRY (% OF NET ASSETS)
(Excludes net cash of 1.4%)
<TABLE>
<S> <C>
Portugal (PORT) 0.7
Argentina (AGR) 0.9
Singapore (SGP) 1.2
Germany (GER) 1.3
Malaysia (MAL) 3.0
Poland (POL) 3.9
Netherlands (NET) 4.1
Brazil (BR) 4.4
Israel (IL) 4.4
Finland (FIN) 4.7
Italy (IT) 5.7
Hong Kong (HK) 6.6
United Kingdom (UK) 8.0
Japan (JP) 9.4
Switzerland (SWS) 10.3
Sweden (SW) 10.8
France (FR) 19.2
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--96.2%
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
AUTOMOBILES--1.9%
10,300 PSA Peugeot Citroen (FR)........... $ 2,131
--------
BANKS--16.0%
850,000 Banca Naz Del Lavoro (IT)*......... 2,782
43,500 Bank Slaski (POL).................. 2,628
71,373 Banque Nationale de Paris SA
(FR)............................... 5,768
23,000 Deutsche Bank AG--Registered
(GER).............................. 1,545
470,000 Malayan Banking Berhad (MAL)....... 1,954
140,000 Sao Paolo-IMI SpA (IT)............. 1,960
7,500 UBS AG--Registered (SWS)........... 1,837
--------
18,474
--------
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
BUILDING MATERIALS-CONSTRUCTION--1.6%
888 Lafarge SA--Bearer New (FR)*....... $ 71
22,000 Lafarge SA--Bearer (FR)............ 1,822
--------
1,893
--------
COMPUTER SERVICES--0.2%
200,000 Sunevision Holdings Ltd. (HK)...... 261
--------
CONGLOMERATES--5.2%
585,000 Keppel Corp. Ltd. (SGP)............ 1,358
1,300,000 Sime Darby Berhad (MAL)............ 1,526
550,000 Swire Pacific Ltd. Cl. A (HK)...... 3,107
--------
5,991
--------
CONSUMER GOODS--4.0%
91,044 Hunter Douglas NV (NET)............ 2,078
243,000 Salomon & Taylor (JP).............. 1,305
1,185 Swatch Group--Bearer (SWS)......... 1,270
--------
4,653
--------
CONTAINERS--1.0%
8,000 Cie De St Gobain (FR).............. 1,092
--------
DRUGS & MEDICINE--7.4%
19,048 Aventis SA (FR).................... 1,048
1,900 Novartis AG--Registered (SWS)...... 2,654
215 Roche Holdings AG--Genusscheine
(SWS).............................. 2,245
187,893 SmithKline Beecham plc (UK)........ 2,574
--------
8,521
--------
ELECTRONIC INSTRUMENTS--1.0%
6,000 Legrand SA (FR).................... 1,118
--------
FINANCIAL SERVICES--4.0%
49,160 ING Groep NV (NET)................. 2,682
555 Julius Baer Holdings AG--Bearer
(SWS).............................. 1,941
--------
4,623
--------
FOREST PRODUCTS--2.2%
100,000 UPM-Kymmene Oyj (FIN).............. 2,591
--------
GROCERY PRODUCTS--0.9%
1,121,163 Cresud B Shares (ARG).............. 1,077
--------
HOTEL-MOTEL--1.6%
48,500 Accor (FR)......................... 1,801
--------
INSURANCE--5.2%
175,000 Allied Zurich plc (UK)............. 1,741
65,000 Assicurazioni Generali (IT)........ 1,850
16,500 AXA UAP (FR)....................... 2,447
--------
6,038
--------
MACHINERY--3.3%
49,000 Kone Oyj B Shares (FIN)............ 2,806
2,050 Saurer AG--Registered (SWS)........ 1,010
--------
3,816
--------
MANUFACTURING DIVERSIFIED--1.2%
1,000,000 Corus Group plc (UK)............... 1,347
--------
</TABLE>
15
<PAGE> 17
HARBOR INTERNATIONAL FUND II
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
MISCELLANEOUS HIGH TECH--7.4%
80,000 Matsushita Electrical Industries
(JP)............................... $ 2,118
28,000 Sony Corp. (JP).................... 3,217
28,000 Sony Corp. New (JP)*............... 3,240
--------
8,575
--------
PETROLEUM--5.8%
252,837 BP Amoco plc (UK).................. 2,183
10,200,000 Petrol Brasileiro SA Pfd. (BR)..... 2,430
14,000 Total Fina Cl. B (FR).............. 2,124
--------
6,737
--------
REAL ESTATE--1.3%
350,000 Henderson Land Development Co. Ltd.
(HK)............................... 1,532
--------
TELECOMMUNICATIONS--20.6%
19,000 China Telecom Ltd. ADR (HK)(1)..... 2,787
140,000 Ericsson (LM) Tel Co. Series B
(SW)............................... 12,445
77,700 NICE Systems Ltd. ADR (IL)(1)*..... 5,084
50,700 Telecel-Comunicacoes Pessoais SA
(PORT)............................. 810
60,000 Telecomunicacoes De Sao Paulo ADR
(BR)(1)............................ 2,648
--------
23,774
--------
TELEPHONES--1.6%
250,000 Telekomunikacja Polska SA (POL).... 1,834
--------
TIRES & RUBBER--1.6%
45,000 Bridgestone Corp. (JP)............. 977
2,515 Cie Fin Michel Bas--Bearer (SWS)... 904
--------
1,881
--------
TOBACCO--1.2%
187,000 Imperial Tobacco Group plc (UK).... 1,398
--------
TOTAL COMMON STOCKS
(Cost $93,383)................................. 111,158
--------
<CAPTION>
UNITS--1.5%
(Cost $1,141)
<C> <S> <C>
<CAPTION>
VALUE
UNITS (000S)
-----------------------------------------------------------
<C> <S> <C>
1,639,531 Eurotunnel (FR)*................... $ 1,699
--------
<CAPTION>
CONVERTIBLE BOND--0.9%
(Cost $1,023)
<C> <S> <C>
<CAPTION>
PRINCIPAL
AMOUNT
(000S)
-----------------------------------------------------------
<C> <S> <C>
$ 14,054 Lafarge SA (FR)
0.000%--03/20/2001(2).............. 1,082
--------
TOTAL INVESTMENTS--98.6%
(Cost $95,547)................................. 113,939
CASH AND OTHER ASSETS, LESS LIABILITIES--1.4%.... 1,583
--------
TOTAL NET ASSETS--100.0%......................... $115,522
========
</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.
2 Zero coupon bond.
* 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, 2000 (UNAUDITED)
INVESTMENT HOLDINGS BY COUNTRY (% OF NET ASSETS)
(Excludes net cash and short-term investments of 3.2%)
<TABLE>
<S> <C>
South Africa (S. AFR) 1.0
Finland (FIN) 1.2
Denmark (DEN) 1.3
Hong Kong (HK) 1.5
Argentina (ARG) 1.6
Portugal (PORT) 1.7
Spain (SP) 1.7
Germany (GER) 1.8
Singapore (SGP) 2.3
Australia (AUS) 2.6
Brazil (BR) 3.6
Malaysia (MAL) 4.5
Italy (IT) 4.8
Netherlands (NET) 6.6
Switzerland (SWS) 9.1
Japan (JP) 10.3
Sweden (SW) 12.6
France (FR) 14.2
United Kingdom (UK) 14.4
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--95.3%
VALUE
SHARES (000S)
------------------------------------------------------------
<C> <S> <C>
ALUMINUM--1.3%
1,488,000 Pechiney SA Series A (FR)....... $ 65,202
----------
AUTOMOBILES--1.3%
316,000 PSA Peugeot Citroen (FR)........ 65,384
----------
BANKS--18.5%
4,430,509 ABN Amro Holdings NV (NET)...... 91,229
3,257,173 Banca Commercial Italiana
(IT)............................ 15,398
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
------------------------------------------------------------
<C> <S> <C>
20,448,165 Banca Intesa SpA (IT)........... $ 75,287
503,062 Banco Commercial Portugues ADR
(PORT)(1)....................... 12,199
15,346,915 Banco Commercial Portugues--
Registered (PORT)............. 71,992
730,000 Bankinter SA--Registered (SP)... 34,543
670,000 Banque Nationale de Paris SA
(FR)............................ 54,149
176,600 Credit Suisse Group--Registered
(SWS)........................... 31,899
800,000 Deutsche Bank AG--Registered
(GER)........................... 53,746
850,000 Dresdner Bank AG--Registered
(GER)........................... 35,013
30,314,000 Malayan Banking Berhad (MAL).... 126,042
8,925,000 Overseas Chinese Banking Corp.
(SGP)........................... 61,191
5,306,400 Sao Paolo--IMI SpA (IT)......... 74,290
5,735,727 Standard Chartered plc (UK)..... 77,425
248,538 UBS AG--Registered (SWS)........ 60,890
7,962,842 United Overseas Bank (Alien
Market) (SGP)................... 55,528
----------
930,821
----------
CONGLOMERATES--1.6%
42,297,000 Sime Darby Berhad (MAL)......... 49,643
5,250,000 Swire Pacific Ltd. Cl. A (HK)... 29,656
----------
79,299
----------
CONSUMER GOODS--1.0%
722,406 BIC (FR)........................ 28,765
900,699 Hunter Douglas NV (NET)......... 20,553
----------
49,318
----------
CONTAINERS--0.7%
264,000 Cie De St Gobain (FR)........... 36,024
----------
DRUGS & MEDICINE--4.8%
1,357,133 Aventis SA (FR)................. 74,643
69,561 Novartis AG--Registered (SWS)... 97,169
500,000 Novo Nordisk AS Series B
(DEN)........................... 67,127
----------
238,939
----------
FINANCIAL SERVICES--2.3%
2,121,285 ING Groep NV (NET).............. 115,746
----------
FOREST PRODUCTS--1.1%
2,100,000 UPM-Kymmene Oyj (FIN)........... 54,410
----------
GOLD-PRECIOUS METALS--1.0%
1,266,710 Anglo American plc ADR
(UK)(1)......................... 51,618
----------
GROCERY PRODUCTS--1.8%
50,300 Nestle SA--Registered (SWS)..... 88,668
----------
HOTEL-MOTEL--0.9%
1,175,000 Accor (FR)...................... 43,636
----------
INSURANCE--4.2%
5,187,347 Allied Zurich plc (UK).......... 51,608
2,552,000 Assicurazioni Generali SpA
(IT)............................ 72,617
600,000 AXA UAP (FR).................... 88,965
----------
213,190
----------
LIQUOR--1.8%
8,115,770 Diageo plc (UK)................. 65,454
3,050,000 Whitbread plc (UK).............. 27,162
----------
92,616
----------
</TABLE>
17
<PAGE> 19
HARBOR INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
------------------------------------------------------------
<C> <S> <C>
MACHINERY--0.2%
5,390,000 Gencor Ltd. New ADR (S.
AFR)(1)......................... $ 12,478
----------
MEDIA--2.6%
2,500,000 News Corp. Ltd. ADR (AUS)(1).... 128,594
----------
MISCELLANEOUS HIGH TECH--4.0%
871,000 Sony Corp. (JP)................. 100,070
871,000 Sony Corp. New (JP)*............ 100,796
----------
200,866
----------
NATURAL GAS & PIPELINES--1.5%
12,156,862 BG Group plc (UK)............... 73,392
----------
NON-FERROUS METALS--2.7%
26,950,000 Billiton plc ADR (UK)(1)........ 99,475
2,180,643 Rio Tinto plc--Registered
(UK)............................ 33,952
----------
133,427
----------
PAPER--1.3%
1,500,000 Holmen AB Cl. B (SW)............ 35,216
750,000 Stora Enso Oyj (R Shares)
(FIN)........................... 7,739
1,300,000 Svenska Cellulosa Aktiebolaget
SCA Cl. B (SW)................ 24,649
----------
67,604
----------
PETROLEUM--9.0%
14,828,514 BP Amoco plc (UK)............... 128,019
505,900,001 Petrol Brasileiro SA Pfd.
(BR)............................ 120,514
1,800,000 Royal Dutch Petroleum Co. ADR
(NET)(1)........................ 103,275
671,444 Total Fina Cl. B (FR)........... 101,877
----------
453,685
----------
PHOTOGRAPHIC-OPTICAL--5.2%
3,557,000 Canon Inc. (JP)................. 162,677
2,470,000 Fuji Photo Film Co. (JP)........ 99,015
----------
261,692
----------
REAL ESTATE--0.1%
5,306,400 Beni Stabili SpA (IT)........... 2,629
----------
TELECOMMUNICATIONS--15.0%
6,325,000 China Telecom Ltd. (HK)......... 45,270
646,000 Ericsson (LM) Tel Co. ADR Series
B (SW)(1)..................... 57,131
5,160,000 Ericsson (LM) Tel Co. Series B
(SW)............................ 458,679
6,600,000 Telecom Argentina Cl. B (ARG)... 36,655
2,448,351,766 Telecomunicacoes De Sao Paulo
(BR)............................ 61,009
12,000,000 Telefonica De Argentina Cl. B
(ARG)........................... 42,269
14,400,000 Telekom Malaysia Berhad (MAL)... 50,021
----------
751,034
----------
TIRES & RUBBER--2.5%
2,545,000 Bridgestone Corp. (JP).......... 55,252
88,700 Cie Fin Michel Bas--Bearer
(SWS)........................... 31,889
1,127,645 Michelin Cl. B--Registered
(FR)............................ 37,418
----------
124,559
----------
TOBACCO--7.3%
4,455,975 Altadis SA--Registered (SP)..... 52,054
5,187,347 British American Tobacco plc
(UK)............................ 31,983
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
------------------------------------------------------------
59,000 Cie Financiere Richemont AG
Units Cl. A--Bearer (SWS)..... $ 143,348
11,193,410 Imperial Tobacco Group plc
(UK)............................ 83,652
18,818,974 Swedish Match (SW).............. 56,041
18,818,974 Swedish Match--Rights
Expire 06/05/2000 (SW)*....... 1,244
----------
368,322
----------
WATER--1.6%
520,487 Suez Lyonnaise des Eaux (FR).... 81,623
----------
TOTAL COMMON STOCKS
(Cost $2,718,499)............................. 4,784,776
----------
<CAPTION>
UNITS--0.7%
UNITS
------------------------------------------------------------
<C> <S> <C>
33,740,680 Eurotunnel (FR)*................ 34,968
20,000,000 Eurotunnel SA Wts.
Expire 12/31/2001 (FR)*....... 363
20,000,000 Eurotunnel SA Wts.
Expire 10/30/2003 (FR)*....... 1,273
----------
TOTAL UNITS
(Cost $74,178)................................ 36,604
----------
<CAPTION>
CONVERTIBLE BOND--0.8%
(Cost $39,600)
PRINCIPAL
AMOUNT
(000S)
------------------------------------------------------------
<C> <S> <C>
$ 40,000 Liberty Life International BV
(S. AFR) 6.500%--09/30/2004... 38,876
----------
<CAPTION>
SHORT-TERM INVESTMENTS--3.6%
<C> <S> <C>
COMMERCIAL PAPER
American Express Credit Corp.
13,811 5.920%--05/01/2000............ 13,811
17,000 5.990%--05/08/2000............ 17,000
----------
30,811
----------
Citigroup Inc.
18,931 6.030%--05/01/2000............ 18,931
----------
Exxon Project Investment
10,000 5.890%--05/01/2000............ 10,000
15,000 5.970%--05/01/2000............ 15,000
----------
25,000
----------
Ford Motor Company
12,975 5.950%--05/01/2000............ 12,975
15,526 5.950%--05/03/2000............ 15,526
17,169 6.000%--05/09/2000............ 17,169
----------
45,670
----------
</TABLE>
18
<PAGE> 20
HARBOR INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
------------------------------------------------------------
<C> <S> <C>
GE Financial Assurance Holdings
15,262 5.970%--05/02/2000............ $ 15,262
----------
General Electric Capital Corp.
16,098 5.960%--05/04/2000............ 16,098
17,000 6.000%--05/05/2000............ 17,000
----------
33,098
----------
Prudential Funding Corp.
13,779 6.010%--05/10/2000............ 13,779
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $182,551)............................... 182,551
----------
TOTAL INVESTMENTS--100.4%
(Cost $3,014,828)............................. 5,042,807
CASH AND OTHER ASSETS, LESS (21,882)
LIABILITIES--(0.4)%.............................
----------
TOTAL NET ASSETS--100.0%........................ $5,020,925
==========
</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.
19
<PAGE> 21
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2000 (UNAUDITED)
COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes 20.3% of holdings of which 2.2% represents net cash and short-term
investments, and 18.1% represents industry classification less than 1.6%)
<TABLE>
<S> <C>
Miscellaneous High Tech 1.6
Credit & Miscellaneous Financial 1.8
Media 1.8
Conglomerates 2.1
Chemicals-Fertilizers 2.4
Aerospace/Defense 2.7
Electronic Instruments 2.7
Manufacturing Diversified 2.8
Drugs & Medicine 3.4
International Oil 3.7
Electrical Equipment 3.8
Paper 3.8
Electric Power 3.9
Insurance-Life 4.2
Grocery Products 4.3
Insurance-Other 4.5
Banks-Regional 5.1
Computers & Business Equipment 5.2
Financial Services 5.3
Banks-Money Center 5.9
Telephones 8.7
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--97.8%
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
AEROSPACE/DEFENSE--2.7%
8,600 BF Goodrich Co. ..................... $ 274
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
21,100 Boeing Co. .......................... $ 837
14,800 Northrop Grumman Corp. .............. 1,049
6,200 Raytheon Co. Cl. B................... 138
40,500 Rockwell International Corp. ........ 1,595
--------
3,893
--------
AIR TRANSPORTATION--0.5%
3,000 Alaska Air Group Inc.*............... 86
9,000 AMR Corp.*........................... 307
1,600 Delta Air Lines Inc. ................ 84
8,600 Southwest Air Lines Co. ............. 187
1,300 US Airways Group Inc.*............... 36
--------
700
--------
ALUMINUM--0.6%
13,900 Reynolds Metal Co. .................. 924
--------
APPAREL & TEXTILES--0.5%
32,000 National Service Industries Inc. .... 688
--------
AUTOMOBILE EQUIPMENT--1.1%
3,564 Delphi Automotive Systems Corp. ..... 68
1,500 Navistar International Corp.*........ 53
25,300 TRW Inc. ............................ 1,480
--------
1,601
--------
AUTOMOBILES--0.9%
15,009 Ford Motor Co. ...................... 821
4,700 General Motors Corp. ................ 440
--------
1,261
--------
BANKS-MONEY CENTER--5.9%
71,135 BankAmerica Corp. New(1)............. 3,486
18,743 Chase Manhattan Corp.(1)............. 1,351
1,000 State Street Corp. .................. 97
89,435 Wells Fargo & Co. New(1)............. 3,673
--------
8,607
--------
BANKS-REGIONAL--5.1%
1,871 Amsouth Bancorporation............... 27
33,143 Bank One Corp.(1).................... 1,011
1,000 Dime Bancorp Inc. ................... 19
43,378 First Union Corp. ................... 1,383
24,600 First Virginia Banks Inc. ........... 898
1,000 Hibernia Corp. Cl. A................. 11
1,558 Huntington Bancshares Inc. .......... 28
5,430 KeyCorp New.......................... 100
6,720 National City Corp. ................. 114
42,606 PNC Financial Services Group Inc. ... 1,859
66,500 Summit Bancorp....................... 1,687
2,300 Suntrust Banks Inc. ................. 117
6,300 US Bancorp........................... 128
765 Wachovia Corp. ...................... 48
--------
7,430
--------
BUILDING MATERIAL-CONSTRUCTION--1.0%
32,000 Vulcan Materials Co. ................ 1,402
--------
CHEMICALS-FERTILIZERS--2.4%
1,071 Dow Chemical Co. .................... 121
6,999 E.l. Du Pont De Nemours & Co. ....... 332
</TABLE>
20
<PAGE> 22
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
27,100 Hercules Inc. ....................... $ 422
24,000 Praxair Inc. ........................ 1,067
39,300 R.P.M. Inc. ......................... 398
31,200 Rohm & Haas Co. ..................... 1,111
--------
3,451
--------
COMPUTER SERVICES--1.0%
3,100 Electronic Data Systems Corp. New.... 213
1,500 Level 3 Communications Inc.*......... 134
17,000 NSTAR................................ 749
6,800 Qwest Communications International
Inc. ................................ 295
--------
1,391
--------
COMPUTERS & BUSINESS EQUIPMENT--5.2%
4,900 3Com Corp. .......................... 193
14,000 International Business Machines
Corp.(1)............................. 1,563
45,000 MCI WorldCom Inc.(1)................. 2,045
1,693 NCR Corp. New*....................... 65
55,100 Pitney Bowes Inc. ................... 2,252
51,900 Xerox Corp. ......................... 1,372
--------
7,490
--------
CONGLOMERATES--2.1%
3,800 First Data Corp. .................... 185
7,600 Loews Corp. ......................... 419
27,793 Minnesota Mining & Manufacturing
Co. ................................. 2,404
--------
3,008
--------
CONSUMER GOODS--0.1%
10,800 American Greetings Corp. ............ 196
--------
COSMETICS--0.9%
39,800 International Flavors & Fragrances... 1,371
--------
CREDIT & MISCELLANEOUS FINANCIAL--1.8%
800 American Express Co. ................ 120
2,710 Associates First Capital Corp. ...... 60
700 Countrywide Credit Industries
Inc. ................................ 19
21,300 Federal National Mortgage
Association(1)....................... 1,285
14,400 Morgan, Stanley, Dean Witter & Co.
Inc. New............................. 1,105
--------
2,589
--------
DOMESTIC OIL--1.2%
33,000 Kerr McGee Corp. .................... 1,708
--------
DRUGS & MEDICINE--3.4%
23,000 Abbott Laboratories.................. 884
15,500 American Home Products Corp. ........ 871
36,441 Baxter International Inc. ........... 2,373
16,848 Pharmacia Corp. ..................... 841
--------
4,969
--------
ELECTRIC POWER--3.9%
1,500 American Electric Power Inc. ........ 55
44,000 Cinergy Corp. ....................... 1,177
830 Consolidated Edison Inc. ............ 29
2,948 Duke Energy Co. ..................... 169
1,760 Edison International................. 34
3,800 Entergy Corp. ....................... 97
1,600 Firstenergy Corp. ................... 41
29,765 FPL Group Inc. ...................... 1,345
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
18,600 Niagara Mohawk Holdings Corp.*....... $ 258
22,000 Northeast Utilities*................. 473
27,197 OGE Energy Corp. .................... 539
1,700 Peco Energy Co. ..................... 71
4,300 PG & E Corp. ........................ 111
612 Public Service Enterprise Group...... 22
37,300 Scana Corp New....................... 965
2,586 Scottish Power plc ADR(2)............ 82
3,290 Southern Co. ........................ 82
1,301 Texas Utilities Co. ................. 44
300 Unisource Energy Corp.*.............. 5
--------
5,599
--------
ELECTRICAL EQUIPMENT--3.8%
40,800 Emerson Electric Co. ................ 2,239
64,600 Hubbell Inc., Cl. B.................. 1,683
51,400 Thomas & Betts Corp. ................ 1,584
--------
5,506
--------
ELECTRONIC INSTRUMENTS--2.7%
2,400 Hewlett Packard Co. ................. 324
16,500 Micron Technology Inc.* ............. 2,298
11,200 Teradyne Inc. ....................... 1,232
--------
3,854
--------
FINANCIAL SERVICES--5.3%
22,800 A.G. Edwards Inc. ................... 858
28,865 Chubb Corp. ......................... 1,837
64,834 Citigroup Inc.(1).................... 3,853
5,301 FleetBoston Financial Corp. ......... 188
3,900 Goldman Sachs Group Inc. ............ 364
6,300 Lehman Brothers Holdings Inc. ....... 517
984 Merrill Lynch & Co., Inc. ........... 100
1,200 Paine Webber Group Inc. ............. 52
--------
7,769
--------
FOREST PRODUCTS--0.0%
500 Champion International Corp. ........ 33
--------
GROCERY PRODUCTS--4.3%
38,599 Bestfoods............................ 1,939
41,800 Dean Foods Co. ...................... 1,024
62,900 Flowers Industries Inc. ............. 959
39,400 H.J. Heinz Co. ...................... 1,340
71,900 Nabisco Group Holding Corp. ......... 926
--------
6,188
--------
HEALTH CARE-HOSPITAL MANAGEMENT--0.3%
9,500 Columbia/HCA Healthcare Corp. ....... 270
1,900 United Healthcare Corp. ............. 127
--------
397
--------
INSURANCE-LIFE--4.2%
2,700 Conseco Inc. ........................ 15
14,900 Jefferson--Pilot Corp. .............. 992
71,400 Reliastar Financial Corp. ........... 3,075
79,900 Torchmark Inc. ...................... 2,002
--------
6,084
--------
</TABLE>
21
<PAGE> 23
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
INSURANCE-OTHER--4.5%
3,100 Aetna Inc. .......................... $ 179
72,936 Allstate Corp.(1).................... 1,723
17,290 American International Group
Inc.(1).............................. 1,896
24,400 Aon Corp. ........................... 660
1,600 Cigna Corp. ......................... 128
6,800 CNA Financial Group Inc.*............ 209
50,300 St. Paul Companies Inc. ............. 1,792
--------
6,587
--------
INTERNATIONAL OIL--3.7%
6,454 Chevron Corp. ....................... 549
61,881 Exxon Mobil Corp. ................... 4,807
--------
5,356
--------
LEISURE & LUXURY--0.1%
6,503 Sabre Holdings Corp.*................ 227
--------
MACHINE TOOLS--0.5%
42,900 Timken Co. .......................... 794
--------
MACHINERY--0.1%
1,836 Caterpillar Inc. .................... 72
1,454 Deere & Co. ......................... 59
1,500 Ingersoll Rand Co. .................. 70
--------
201
--------
MANUFACTURING DIVERSIFIED--2.8%
60,100 ITT Industries Inc. ................. 1,897
45,600 Parker Hannifin Corp. ............... 2,120
--------
4,017
--------
MEDIA--1.8%
3,400 CBS Corp.*........................... 200
8,400 MediaOne Group Inc.*................. 635
32,200 Viacom Inc. Cl. B*(1)................ 1,751
--------
2,586
--------
MISCELLANEOUS HIGH TECH--1.6%
41,400 Honeywell International Inc. ........ 2,318
--------
MISCELLANEOUS INDUSTRIALS--0.8%
25,800 XL Capital Ltd. Cl. A................ 1,229
--------
MISCELLANEOUS TRANSPORT--0.1%
4,500 FDX Corp.*........................... 170
--------
NATURAL GAS & PIPELINES--1.4%
15,200 National Fuel Gas Co. ............... 721
15,608 Nicor Inc. .......................... 529
26,000 Peoples Energy Corp. ................ 807
--------
2,057
--------
NON-FERROUS METALS--0.6%
18,100 Phelps Dodge Corp. .................. 837
--------
PAPER--3.8%
53,300 Boise Cascade Corp. ................. 1,736
25,000 Bowater Inc. ........................ 1,375
26,900 International Paper.................. 989
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
-----------------------------------------------------------
<C> <S> <C>
28,000 Temple Inland Inc. .................. $ 1,404
--------
5,504
--------
PHOTOGRAPHIC-OPTICAL--1.1%
29,626 Eastman Kodak Co. ................... 1,657
--------
PUBLISHING--0.2%
3,600 Gannett Inc. ........................ 230
--------
RAILROADS--0.1%
3,800 Burlington Northern Santa Fe......... 92
842 Norfolk Southern Corp. .............. 15
--------
107
--------
RESTAURANTS--0.2%
8,100 McDonalds Corp. ..................... 309
--------
RETAIL-ALL OTHER--1.0%
3,100 Best Buy Co. Inc.*................... 250
3,200 Federated Department Stores Inc.*.... 109
13,749 Kmart Corp.*......................... 112
29,496 May Department Stores Co. ........... 811
2,771 Sears, Roebuck & Co. ................ 101
600 Target Corp. ........................ 40
--------
1,423
--------
RETAIL-FOOD STORES--0.9%
61,700 Supervalu Inc. ...................... 1,276
--------
SEMICONDUCTORS--0.4%
4,700 Motorola Inc. ....................... 560
--------
SERVICES--0.6%
21,700 H & R Block Inc. .................... 907
--------
SOFT DRINKS--1.0%
39,800 Pepsico Inc. ........................ 1,460
--------
STEEL--0.7%
88,200 AK Steel Holding Corp. .............. 976
11,700 Bethlehem Steel Corp.*(1) ........... 63
--------
1,039
--------
TELECOMMUNICATIONS--0.2%
5,700 Comcast Corp. ....................... 228
--------
TELEPHONES--8.7%
28,000 ALLTEL Corp. ........................ 1,866
54,784 AT&T Corp.(1)........................ 2,558
12,156 Bell Atlantic Corp. ................. 720
27,696 Bellsouth Corp.(1)................... 1,348
23,550 GTE Corp. ........................... 1,595
70,413 SBC Communications Inc.(1)........... 3,085
23,000 Sprint Corp.(1)...................... 1,415
--------
12,587
--------
TOYS--0.0%
3,300 Toys "R" Us Inc.* ................... 50
--------
TOTAL COMMON STOCKS
(Cost $139,919)................................ 141,825
--------
</TABLE>
22
<PAGE> 24
HARBOR VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS--1.3%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
-----------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT
$ 1,014 Repurchase Agreement with State
Street Bank & Trust dated April 28,
2000 due May 1, 2000 at 4.00%
collateralized by a U.S. Treasury
Bill 6.875% August 15, 2025, par
value of $950 (repurchase proceeds
of $1,014 when closed on May 1,
2000).............................. $ 1,014
U.S. TREASURY BILL
850 5.580%--05/18/2000(1)................ 848
--------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS--CONTINUED
VALUE
(000S)
-----------------------------------------------------------
-----------------------------------------------------------
<C> <S> <C>
TOTAL SHORT-TERM INVESTMENTS
(Cost $1,862).................................. $ 1,862
--------
TOTAL INVESTMENTS--99.1%
(Cost $141,781)................................ 143,687
CASH AND OTHER ASSETS, LESS LIABILITIES--0.9%.... 1,378
--------
TOTAL NET ASSETS--100.0%......................... $145,065
========
</TABLE>
------------------------------------------------------------
FUTURES CONTRACTS WHICH WERE OPEN AT APRIL 30, 2000 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
AGGREGATE UNREALIZED
NUMBER OF FACE VALUE APPRECIATION
DESCRIPTION CONTRACTS (000S) EXPIRATION DATE (000S)
----------- --------- ---------- --------------- ------------
<S> <C> <C> <C> <C>
S & P 500 Index Futures................................. 35 $9 Jun-00 $353
</TABLE>
INVESTMENTS SOLD SHORT AT APRIL 30, 2000 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
VALUE
SHARES SECURITY (000S)
------ -------- ------
<C> <S> <C>
5,400 Alcan Aluminum Ltd. ............ $ 177
13,100 Avon Products Inc. ............. 544
4,800 Burlington Res, Inc. ........... 189
1,000 Canadian Imperial Bank,
Toronto......................... 26
3,200 Cisco Systems Inc. ............. 222
9,000 ConAgra Inc. ................... 170
2,900 Dow Jones & Co. Inc. .......... 188
4,000 Eli Lilly & Co. ................ 309
2,667 Energizer Holdings Inc. ........ 45
4,800 General Electric Co. ........... 755
6,200 General Mills Inc. ............. 226
2,700 Halliburton Co. ................ 119
3,400 Hershey Foods Corp. ............ 154
4,700 Household International Inc. ... 196
2,500 Intel Corp. .................... 317
9,300 Kellogg Co. .................... 227
6,100 Lockheed Martin Corp. .......... 152
2,000 Lucent Technologies Inc. ....... 124
3,800 Masco Corp. .................... 85
3,900 McGraw Hill Co. ................ 205
3,300 Mellon Financial Corp. ......... 106
2,900 Microsoft Corp. ................ 202
6,300 Newell Rubbermaid Inc. ......... 159
7,500 Occidental Pete Corp. .......... 161
4,700 Pfizer Inc. .................... 198
3,900 Phillips Petroleum Co. ......... 185
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES SECURITY (000S)
------ -------- ------
<C> <S> <C>
2,400 Potash Corp Sask Inc. .......... $ 129
8,000 Ralston Purina Co. ............. 142
4,600 Royal Dutch Petroleum Co.
ADR(2).......................... 264
4,300 SLM Holding Corp. .............. 135
14,100 Sara Lee Corp. ................. 212
3,800 Schlumberger Ltd. .............. 291
9,700 Sysco Corp. .................... 365
6,400 Telegobe Inc. .................. 159
1,400 Texaco Inc. .................... 69
3,400 Textron Inc. ................... 211
2,300 Times Mirror Co. Series A New... 224
13,100 Transcanada Pipelines Ltd. ..... 93
6,300 Trizec Hahn Corp. .............. 102
6,000 Tupperware Corp. ............... 113
4,200 UST Inc. ....................... 63
3,400 Union Pac Corp. ................ 143
2,300 Unocal Corp. ................... 74
3,300 Wal Mart Stores Inc. .......... 183
4,200 Warner Lambert.................. 478
2,200 Weyerhaeuser Co. ............... 118
6,100 Winn Dixie Stores Inc. ......... 101
2,900 Wrigley Wm Jr. Co. ............. 210
736 Transocean Sedco Forex Inc. .... 35
------
$9,355
TOTAL INVESTMENTS SOLD SHORT
(proceeds $9,331).........................
======
</TABLE>
------------
1 At April 30, 2000, securities, held by the Fund, or a portion of these
securities, were pledged to cover margin requirements for open future
contracts and investments sold short. (See Note 2 to the Financial
Statements.) The securities pledged had an aggregate market value of $18,216.
2 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.
23
<PAGE> 25
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2000 (UNAUDITED)
TOTAL INVESTMENTS (% OF NET ASSETS)
(Excludes excess of liabilities over other assets and short-term investments of
-23.6%)
<TABLE>
<S> <C>
Asset-Backed Securities 3.8
Foreign Government Obligations 4.5
U.S. Government Obligations 10.8
Corporate Bonds & Notes 51.1
Mortgage-Backed Securities 53.4
</TABLE>
<TABLE>
<CAPTION>
ASSET-BACKED SECURITIES--3.8%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
------------------------------------------------------------
<C> <S> <C>
Bayview Financial Revolving Mortgage
Loan
Series 1999, Cl. M2
$10,000 7.455%--08/25/2029(2,8,11)......... $ 9,834
Firstplus Home Loan Owner Trust
Series 1998-2 Cl. A3
3,477 6.320%--11/10/2013(10,11).......... 3,467
SLM Student Loan Marketing
Association Trust
Series 1995-1 Cl. A2
5,000 6.554%--10/25/2007(8,11)........... 4,968
Student Loan Marketing Association
MTN(1)
5,000 6.080%--06/30/2000(8,11)........... 5,000
---------
TOTAL ASSET-BACKED SECURITIES
(Cost $23,324)................................. 23,269
---------
<CAPTION>
CORPORATE BONDS & NOTES--51.1%
Associates Corp. North America
5,000 6.210%--08/27/2001(8,11)........... 4,999
Atlas Cl. A plc
2,700 8.830%--04/04/2003(2,8)............ 2,700
Banesto Del Inc.
3,000 8.250%--07/28/2002(11)............. 3,019
Banponce Corp.
2,000 6.750%--12/15/2005(11)............. 1,829
Beaver Valley II Funding Corp.
4,000 8.625%--06/01/2007(11)............. 3,950
Beneficial Corp. MTN(1)
10,000 6.500%--04/02/2002(8,11)........... 9,997
Calpine Corp.
3,000 8.750%--07/15/2007(11)............. 2,974
1,200 7.875%--04/01/2008(11)............. 1,135
---------
4,109
---------
Cemex SA MTN(1)
1,000 8.500%--08/31/2000................. 1,003
</TABLE>
<TABLE>
<C> <S> <C>
<CAPTION>
CORPORATE BONDS & NOTES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
------------------------------------------------------------
<C> <S> <C>
Central Power & Light Co.
$ 9,900 6.710%--11/23/2001(8).............. $ 9,893
Century Communications Corp.
1,200 0.000%--03/15/2003(12)............. 888
Cincinnati Financial Corp.
5,000 6.900%--05/15/2028(11)............. 4,225
Citicorp
10,625 7.125%--03/15/2004(11)............. 10,409
Cleveland Electric Illuminating Co.
Series B
2,000 9.500%--05/15/2005(11)............. 2,027
CMS Energy Corp.
1,200 8.125%--05/15/2002................. 1,167
Credit Suisse First Boston
10,000 6.500%--05/01/2008(2,11)........... 9,165
DaimlerChrysler AG
10,000 6.406%--01/18/2002(8,11)........... 10,001
DDTE Capital Corp.
10,000 7.110%--11/15/2003(2,8,11)......... 9,578
Dean Witter Discover & Co. MTN(1)
9,000 6.646%--10/05/2002(8).............. 9,031
First Chicago Corp. MTN(1)
10,000 6.230%--03/11/2002(8,11)........... 10,016
10,000 6.348%--06/26/2002(8,11)........... 9,981
---------
19,997
---------
General Motors Acceptance Corp.
10,000 6.500%--04/29/2002(8,11)........... 9,982
5,000 5.750%--11/10/2003(11)............. 4,707
---------
14,689
---------
General Motors Acceptance Corp.
MTN(1)
8,000 6.500%--12/17/2001(8,11)........... 8,028
3,000 5.550%--09/15/2003(8,11)........... 2,817
---------
10,845
---------
GMACCM Mortgage Trust I
Series 1999-D Cl. A
14,188 6.548%--09/20/2004(2,11)........... 14,175
Gold Eagle Capital Ltd., Cl. B
3,000 11.530%--04/15/2001(2,8)........... 3,185
Goldman Sachs Group LP MTN(1)
10,000 6.340%--02/20/2001(2,8,11)......... 10,013
Gulf STS Utilities Co.
400 8.210%--01/01/2002................. 400
HMH Properties, Inc.
3,000 7.875%--08/01/2005................. 2,715
IBRD World Bank
NZ$ 900 7.250%--05/27/2003................. 432
International American Development
Bank
3,500 5.750%--04/15/2004................. 1,602
</TABLE>
24
<PAGE> 26
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
CORPORATE BONDS & NOTES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
------------------------------------------------------------
<C> <S> <C>
International Game Technology
$ 6,500 7.875%--05/15/2004(11)............. $ 6,191
Korea Development Bank
E10,000 3.636%--05/14/2001(8).............. 4,573
KPNQwest
$ 5,000 8.125%--06/01/2009(2).............. 4,775
Lehman Brothers Holdings Inc. MTN(1)
6,200 7.190%--04/02/2002(8,11)........... 6,229
Merrill Lynch & Co., Inc. MTN(1)
10,000 6.330%--09/30/2000(7).............. 10,006
Mexico Credit Link
5,000 10.557%--02/22/2002(8)............. 4,974
Meyer, Fred Inc. New
5,000 7.150%--03/01/2003(11)............. 4,843
MFN Financial Corp.
1,000 10.000%--03/23/2001(11)............ 945
Nabors Industries Inc.
10,000 6.800%--04/15/2004(11)............. 9,619
Occidental Petroleum Corp.
5,000 6.400%--04/01/2003(7).............. 4,759
Orion Network Sys. Inc.
2,500 12.500%--01/15/2007(9)............. 963
Prudential Funding Corp. MTN(1)
5,000 6.670%--08/01/2000(2,8,11)......... 4,996
Saferco Products Inc. MTN(1)
500 9.630%--05/31/2000(14)............. 502
Salomon Brothers Mortgage Services
VII Inc.
9,350 6.550%--12/15/2029(8).............. 9,356
Salomon Inc. CPI Bond(4)
5,346 3.650%--02/14/2002................. 5,276
Sasco Floating Rate Mortgage
8,933 6.730%--10/21/2013(2,8)............ 8,936
TCI Communications Inc. MTN(1)
5,000 6.855%--09/11/2000(8,11)........... 4,997
Tenet Healthcare Corp.
4,443 8.625%--12/01/2003................. 4,323
Time Warner Inc.
450 7.975%--08/15/2004(11)............. 452
TRW Inc.
3,500 6.625%--06/01/2004(2).............. 3,297
Wells Fargo Bank NA
10,000 6.891%--05/02/2005(8).............. 9,994
Westdeutsche Landesbank Giroz
12,300 6.050%--01/15/2009(11)............. 10,800
Worldcom Inc.
13,250 8.875%--01/15/2006................. 13,670
---------
TOTAL CORPORATE BONDS & NOTES
(Cost $320,753)................................ 310,519
---------
<CAPTION>
FOREIGN GOVERNMENT OBLIGATIONS--4.5%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
------------------------------------------------------------
<C> <S> <C>
Federal Republic of Brazil
$ 8,561 7.000%--01/01/2001(8).............. $ 8,578
Government of New Zealand(13)
NZ$3,400 10.000%--03/15/2002................ 1,738
3,200 5.500%--04/15/2003................. 1,492
---------
3,230
---------
Republic of Argentina
$ 6,800 6.073%--04/10/2005(8,11)........... 6,383
Republic of Philippines
5,000 9.500%--10/21/2024................. 4,794
United Mexican States(8)
3,000 7.493%--06/27/2002................. 3,013
1,589 7.333%--03/25/2005................. 1,587
---------
4,600
---------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $27,938)................................. 27,585
---------
<CAPTION>
MORTGAGE-BACKED SECURITIES--53.4%
<C> <S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS
Chase Mortgage Financial Corp.
REMIC(3)
Series 1993-N Cl. A9
3,000 6.750%--11/25/2024(11)............. 2,632
Collateralized Mortgage Securities
Corp
Series F Cl. 4
119 11.450%--11/01/2015................ 119
Collateralized Mortgage Securities
Corp REMIC(3)
Series 1988-4 Cl. B
139 8.750%--04/20/2019(11)............. 141
Commercial Mortgage Asset Trust
Pass Thru Certificate Series
1999-C1 Cl. A1
4,712 6.250%--08/17/2006(7).............. 4,471
Countrywide Home Loans REMIC(3)
Series 1997-6 Cl. A10
10,000 7.250%--11/25/2027(8,11)........... 9,431
Drexel Burnham Lambert REMIC(3)
Series H Cl. 4
5,841 8.500%--04/01/2017(11)............. 5,851
Federal Home Loan Mortgage Corp.
Pass Thru Certificates
12,262 6.098%--08/15/2032(7,11)........... 11,803
Federal Home Loan Mortgage Corp.
REMIC(3)
1,135 9.000%--12/15/2020(11)............. 1,167
2,764 8.000%--08/15/2022................. 2,747
6,765 6.500%--02/15/2023(5).............. 967
10,000 6.000%--08/15/2026(11)............. 9,035
---------
13,916
---------
</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>
Federal National Mortgage Association
REMIC(3)
$ 743 6.500%--02/25/2007(5,11)........... $ 44
1,118 6.000%--07/25/2017(5).............. 27
304 6.000%--04/25/2019(11)............. 302
2,000 6.500%--12/25/2020(11)............. 1,936
7,396 7.000%--04/18/2027(11)............. 6,541
---------
8,850
---------
GE Capital Mortgage Services Inc.
REMIC(3)
Series 1994-6 Cl. A3
3,620 6.500%--12/25/2022................. 3,182
Series 1998-17 Cl. A3
9,848 6.750%--10/25/2028(11)............. 8,996
---------
12,178
---------
Kidder Peabody Acceptance Corp. I
REMIC(3)
Series 1994-2 Cl. 1A2
1,390 8.243%--09/25/2024(7,11)........... 1,384
Norwest Asset Securities Corp.
REMIC(3)
Series 1997-19 Cl. A8
6,200 7.250%--12/25/2027(11)............. 5,880
Series 1998-12 Cl. A9
5,000 6.750%--06/25/2028(11)............. 4,487
---------
10,367
---------
PNC Mortgage Securities Corp.
REMIC(3)
Series 1998-14 Cl. 3A3
17,726 6.500%--02/25/2029................. 15,833
Series 1999-4 Cl. 1A8
9,800 6.200%--06/25/2029................. 9,234
---------
25,067
---------
PP & L Transition
Series 1999 Cl. A4
10,000 6.720%--12/26/2005................. 9,758
Prudential Home Mortgage Securities
Co. REMIC(3)
Series 1993-55 Cl. A1
756 7.840%--12/25/2023(8,11)........... 753
Residential Asset Securitization
Trust REMIC(3)
Series 1993 Cl. A-8
5,691 6.750%--08/25/2008(11)............. 5,455
Series 1998-A13 Cl. 1A3
6,931 6.500%--12/25/2028(11)............. 6,139
---------
11,594
---------
Residential Funding Mortgage
Securities I Inc.
Series 1997-S8 Cl. A9
9,500 7.500%--06/25/2027(11)............. 9,250
Resolution Trust Corporation Mortgage
Pass Thru Certificate REMIC(3)
Series 1991-3 Cl. 1L
2,693 8.685%--08/25/2021(8,11)........... 2,682
Sears Mortgage Securities Corp.
Series 1992 Cl. A
427 6.922%--10/25/2022(2,8)............ 432
</TABLE>
<TABLE>
<CAPTION>
MORTGAGE-BACKED SECURITIES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
------------------------------------------------------------
<C> <S> <C>
SLM Student Loan Trust
Series 1997-2 Cl. A1
$ 2,137 6.344%--10/25/2005(2,8,11)......... $ 2,124
Series 1997-3 Cl. A1
5,411 6.404%--04/25/2006(8,11)........... 5,390
---------
7,514
---------
Structured Asset Mortgage Investments
Inc. REMIC(3)
Series 1998-9 Cl. 1A3
5,000 6.250%--11/25/2028................. 4,370
---------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS........ 152,563
---------
OTHER MORTGAGE-BACKED SECURITIES
Asset Backed Securities Corp.
7,970 6.515%--03/18/2029(8,11)........... 7,995
EQCC Home Equity Loan Trust
3,124 6.050%--01/25/2010(11)............. 3,099
Federal Home Loan
Pass Thru Certificates
4 10.500%--09/01/2000................ 4
44 8.000%--06/01/2011................. 44
37 8.500%--02/01/2017(11)............. 38
715 7.431%--06/01/2024(7,11)........... 734
907 6.000%--02/01/2029................. 822
---------
1,642
---------
Federal Housing Authority Project
223C Reilly-52
290 5.150%--06/01/2018................. 250
221 Grey 98-4
7,790 7.430%--10/01/2020(11)............. 7,746
221D4 Banco-5
720 7.400%--02/01/2021................. 707
221D4 Banco-15
247 0.010%--05/01/2021................. 246
---------
8,949
---------
Federal National Mortgage Association
Pass Thru Certificates
82 9.000%--03/01/2005(11)............. 85
962 9.000%--11/01/2009(11)............. 990
14 8.500%--12/01/2009................. 14
54 9.500%--04/01/2011................. 57
---------
1,146
---------
Government National Mortgage
Association II(7)
995 6.375%--03/20/2017(11)............. 1,004
391 6.750%--08/15/2017................. 372
2,377 6.750%--08/20/2022(11)............. 2,395
1,525 6.750%--09/20/2023(11)............. 1,535
431 6.375%--05/20/2024(11)............. 432
47 6.750%--07/20/2024................. 48
3,325 6.750%--09/20/2024(11)............. 3,341
366 7.125%--12/20/2024(11)............. 370
1,222 6.375%--01/20/2025(11)............. 1,227
919 6.375%--02/20/2025(11)............. 923
840 7.125%--10/20/2025(11)............. 850
</TABLE>
26
<PAGE> 28
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
MORTGAGE-BACKED SECURITIES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
------------------------------------------------------------
<C> <S> <C>
$ 2,279 7.125%--11/20/2025(11)............. $ 2,304
674 7.125%--12/20/2026(11)............. 680
5,266 6.750%--07/20/2027................. 5,278
---------
20,759
---------
Government National Mortgage
Association
TBA(6)
May Delivery
30,200 6.000%--12/31/2099................. 27,454
62,000 6.500%--12/31/2099................. 58,105
10,000 7.000%--12/31/2099................. 9,619
30,400 7.500%--12/31/2099................. 29,887
---------
125,065
---------
United Airlines Pass Thru Certificate
Series 1993 Cl. C2
3,000 9.060%--06/17/2015(7,11)........... 3,020
---------
TOTAL OTHER MORTGAGE-BACKED SECURITIES........... 171,675
---------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $336,271)................................ 324,238
---------
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS--10.8%
<C> <S> <C>
U.S. Treasury Bonds Strips
7,000 0.010%--05/15/2020................. 2,075
900 0.010%--11/15/2021................. 246
---------
2,321
---------
U.S. Treasury Bonds
6,100 11.250%--02/15/2015................ 8,925
2,900 10.625%--08/15/2015................ 4,077
6,400 8.875%--08/15/2017................. 8,092
4,800 8.750%--08/15/2020................. 6,134
7,500 8.000%--11/15/2021................. 9,017
1,900 6.000%--02/15/2026................. 1,848
2,048 3.875%--04/15/2029................. 2,053
---------
40,146
---------
U.S. Treasury Notes
2,110 5.125%--08/31/2000(11)............. 2,103
21,274 3.625%--07/15/2002(4).............. 21,234
---------
23,337
---------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $65,176)................................. 65,804
---------
<CAPTION>
SHORT-TERM INVESTMENTS--2.9%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
------------------------------------------------------------
<C> <S> <C>
COMMERCIAL PAPER
General Electric Capital Corp.
$ 200 6.090%--05/02/2000................. $ 200
5,000 6.140%--07/13/2000................. 4,936
---------
5,136
---------
Honeywell International Inc.
2,300 6.090%--05/19/2000................. 2,293
USAA Capital Corp.
5,100 6.040%--06/12/2000................. 5,064
---------
TOTAL COMMERCIAL PAPER........................... 12,493
---------
REPURCHASE AGREEMENT
Repurchase Agreement with State
Street Bank & Trust dated April 28,
2000 due May 1, 2000 at 5.60%
collateralized by a U.S. Treasury
Note 8.500% November 15, 2000, par
value of $4,995 (repurchase
proceeds of $5,139 when closed on
5,137 May 1, 2000)....................... 5,137
---------
TOTAL SHORT-TERM INVESTMENTS
(Cost $17,630)................................. 17,630
---------
TOTAL INVESTMENTS--126.5%
(Cost $791,092)................................ 769,045
CASH AND OTHER ASSETS, LESS
LIABILITIES--(26.5)%............................. (161,334)
---------
TOTAL NET ASSETS--100.0%......................... $ 607,711
=========
</TABLE>
27
<PAGE> 29
HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
SWAP AGREEMENTS AT APRIL 30, 2000 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
PAR UNREALIZED
VALUE (DEPRECIATION)
(000S) DESCRIPTION COUNTERPARTY (000S)
------ ----------- ------------ --------------
<C> <S> <C> <C>
Y 580,000 To make or receive semi-annual payments through 04/14/2008 Deutsche Bank AG- $(195)
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
adjusted every six months based upon the JPY-LIBOR-BBA.
377,000 To make or receive semi-annual payments through 04/15/2008 Deutsche Bank AG- (129)
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
adjusted every six months based upon the JPY-LIBOR-BBA.
$ 2,400 To make semi-annual payments through 03/28/2001 of a fixed Deutsche Bank AG- (111)
interest rate of 5.700%. In the event of default of Republic London
of Argentina Floating Rate Notes and/or Spread-Adjusted
Notes, the counterparty is obligated to deliver to the Fund
the Republic of Argentina FRAN's due 04/10/2005 or the
Republic of Argentina SPAN's due 11/30/2002 at par.
1,000 To make semi-annual payments through 03/22/2001 of a fixed Deutsche Bank AG- (51)
interest rate of 6.150%. In the event of default of Republic London
of Argentina Floating Rate Notes and/or Spread-Adjusted
Notes, the counterparty is obligated to deliver to the Fund
the Republic of Argentina FRAN's due 04/10/2005 or the
Republic of Argentina SPAN's due 11/30/2002 at par.
-----
$(486)
=====
</TABLE>
FUTURES CONTRACTS WHICH WERE OPEN AT APRIL 30, 2000 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
UNREALIZED
AGGREGATE APPRECIATION/
NUMBER OF FACE VALUE (DEPRECIATION)
DESCRIPTION CONTRACTS (000S) EXPIRATION DATE (000S)
----------- --------- ---------- --------------- --------------
<S> <C> <C> <C> <C>
U.S. Treasury Bond--30 Yr. (Buy)...................... 258 $ 25,800 Jun-00 $ 24
U.S. Treasury Bond--10 Yr. (Buy)...................... 238 23,800 Jun-00 (15)
U.S. Treasury Note--5 Yr. (Sell)...................... (379) (37,900) Jun-00 237
Eurodollar (Buy)...................................... 90 E$ 22,500 Mar-01 (68)
----
$178
====
</TABLE>
WRITTEN OPTIONS WHICH WERE OPEN AT APRIL 30, 2000 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
NUMBER OF
SHARES/ VALUE
DESCRIPTION CONTRACTS STRIKE PRICE EXPIRATION DATE (000S)
----------- --------- ------------ --------------- ------
<S> <C> <C> <C> <C>
U.S. Treasury Bond (Put).............................. 42 $ 96.00 May-00 $ (12)
U.S. Treasury Bond (Call)............................. 36 98.00 May-00 (11)
U.S. Treasury Bond (Call)............................. 153 100.00 May-00 (7)
U.S. Treasury Notes (Put)............................. 217 96.00 May-00 (14)
U.S. Treasury Notes (Put)............................. 42 95.00 May-00 (5)
U.S. Treasury Notes (Call)............................ 42 99.00 May-00 (3)
U.S. Treasury Notes (Call)............................ 12 98.00 May-00 (3)
Eurodollar Futures (Put).............................. 344 93.00 Dec-00 (353)
Eurodollar Futures (Put).............................. 228 93.50 Dec-00 (465)
Eurodollar Futures (Put).............................. 64 92.75 Mar-01 (56)
Eurodollar Futures (Call)............................. 64 93.25 Mar-01 (17)
-----
Written options outstanding, at value (premiums
received of $767)................................... $(946)
=====
</TABLE>
28
<PAGE> 30
HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2000 (UNAUDITED)
TOTAL INVESTMENTS (% OF NET ASSETS)
(Excludes net cash and short-term investments of 15.9%)
<TABLE>
<S> <C>
Corporate Bonds & Notes 3.1
U.S. Government Obligations 3.8
Mortgage-Backed Securities 10.6
Asset-Backed Securities 66.6
</TABLE>
<TABLE>
<CAPTION>
ASSET-BACKED SECURITIES--66.6%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
------------------------------------------------------------
<C> <S> <C>
Allied Capital Commercial Mortgage
Trust
Series 1998-1 Cl. A
$ 865 6.310%--05/25/2003(1,4)............... $ 845
Arcadia Automobile Receivables
Series 1998-B Cl. A5
7,500 6.060%--06/15/2002.................... 7,263
Beneficial Home Equity Loan Trust
Series 1996-1 Cl. A
1,231 6.309%--04/28/2026(3,4)............... 1,232
BMW Vehicle Owner Trust
Series 1999-A Cl. A2
4,376 6.160%--12/25/2001(4)................. 4,369
Bombardier Receivables Trust I
Series 1996-2 Cl. A
6,000 6.250%--04/15/2004(3,4)............... 6,005
Campobello Master Trust
Series 1999-1A Cl. B
3,000 6.680%--12/15/2006(1,3)............... 2,993
Capital Auto Receivables Assets
5,000 6.810%--02/15/2003.................... 5,000
CIT Marine Trust
Series 1999-A Cl. A
2,000 5.800%--04/15/2010.................... 1,913
CIT RV Trust Cl.
Series 1997-A Cl.A4
545 6.200%--10/15/2006(4)................. 545
Discover Card Master Trust
Series 1995-2 Cl. A
5,955 6.550%--02/18/2003.................... 5,956
Series 1994-2 Cl. A
5,000 6.480%--10/16/2004(3,4)............... 5,020
--------
10,976
--------
</TABLE>
<TABLE>
<CAPTION>
ASSET-BACKED SECURITIES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
------------------------------------------------------------
<C> <S> <C>
Felco Funding III
Series 2000-1 Cl. A3
$ 4,000 7.585%--06/15/2004(1,4)............... $ 4,017
First Chicago Master Trust
Series 1996-R Cl. A
417 6.200%--07/15/2001(3,4)............... 417
Ford Credit Auto Owner Trust
Series 2000-B Cl. A2
6,000 6.820%--08/15/2002.................... 5,993
Green Tree Financial Corp.
Pass Thru Certificates
Series 1995-10 Cl. A4
1,169 6.300%--02/15/2027.................... 1,169
Series 1996-10 Cl. A4
2,575 6.420%--11/15/2028.................... 2,562
Series 1998-A Cl. A2
1,163 6.040%--06/15/2029.................... 1,161
--------
4,892
--------
Honda Auto Lease Trust
Series 1999-1 Cl. A2
6,000 6.650%--07/15/2005(4)................. 5,941
Leaf Master Trust I
Series 1999-1 Cl. A1
5,000 6.396%--11/15/2004(1,3)............... 5,002
Merrill Lynch Home Equity Loan Trust
Series 1992-1 Cl. A
74 6.587%--07/15/2022(3,4)............... 74
Metris Master Trust
Series 1998-1A Cl. B
4,000 6.580%--08/20/2005(3,4)............... 3,984
Norwest Asset Securities Corp.
Series 1999-16 Cl. A1
6,000 6.000%--06/25/2029.................... 5,880
Premier Auto Trust
Series 1998-4 Cl. A2
480 5.560%--04/08/2001.................... 480
Series 1996-3 Cl. CTFS
3,000 6.950%--11/06/2001.................... 3,002
Series 1999-3 Cl. A2
3,045 5.820%--02/08/2002.................... 3,037
--------
6,519
--------
Rental Car Financial Corp.
Series 1997-1 Cl. A1
4,500 6.250%--06/25/2003(1)................. 4,456
</TABLE>
30
<PAGE> 31
HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
ASSET-BACKED SECURITIES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
------------------------------------------------------------
<C> <S> <C>
Saxon Asset Securities Trust
Series 1998-2 Cl. AV2
$ 1,070 6.200%--04/25/2018.................... $ 1,061
Sears Credit Account Master Trust II
Series 1998-1 Cl. A
5,000 5.800%--08/15/2005.................... 4,954
Signet Helco Trust
Series 1995-A Cl. A
1,297 6.400%--06/20/2004(3,4)............... 1,299
Standard Credit Card Master Trust I
Series 1995-J1 Cl. B
4,000 6.389%--08/07/2000(1,3)............... 3,996
Toyota Auto Lease Trust
Series 1998-B Cl. A1
6,166 5.350%--07/25/2002.................... 6,125
--------
TOTAL ASSET-BACKED SECURITIES
(Cost $106,120)................................. 105,751
--------
<CAPTION>
CORPORATE BONDS & NOTES--3.1%
(Cost $5,000)
<C> <S> <C>
Key Bank N A
5,000 6.625%--10/27/2000(3,4)............... 5,004
<CAPTION>
MORTGAGE-BACKED SECURITIES--10.6%
<C> <S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS
Contimortgage Home Equity Trust
Pass Thru Certificates
Series 1998-3 Cl. A10
4,000 5.840%--05/15/2016.................... 3,933
Federal Home Loan Mortgage
Multiclass Mortgage Series 2012 Cl.
A REMIC(2)
8,310 6.900%--04/15/2026(4)................. 8,090
Federal National Mortgage Association
Series 1993-163 Cl. BK REMIC(2)
146 6.150%--11/25/2017(4)................. 145
Series 1996-70 Cl. PD REMIC(2)
2,000 6.250%--07/25/2018.................... 1,974
--------
2,119
--------
Green Tree Financial Corp.
Pass Thru Certificates
Series 1999--1 Cl. A-2
2,656 5.430%--03/01/2020.................... 2,648
--------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $17,112).................................. 16,790
--------
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS--3.8%
(Cost $6,089)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
------------------------------------------------------------
<C> <S> <C>
U.S. Treasury Notes
$ 6,100 6.500%--02/28/2002.................... $ 6,079
<CAPTION>
SHORT-TERM INVESTMENTS--16.6%
<C> <S> <C>
COMMERCIAL PAPER
Banque Generale Du Luxembourg
6,000 6.030%--05/15/2000.................... 5,986
General Electric Capital Corp.
5,000 6.140%--06/06/2000.................... 4,969
--------
TOTAL COMMERCIAL PAPER............................ 10,955
--------
REPURCHASE AGREEMENT
Repurchase Agreement with State Street
Bank & Trust dated April 28, 2000
due May 1, 2000 at 5.65%
collateralized by a U.S. Treasury
Bill 11.250% February 15, 2015, par
value of $10,275 (repurchase
proceeds of $14,915 when closed on
14,908 May 1, 2000)........................ 14,908
--------
U.S. TREASURY BILL
500 5.240%--05/04/2000(4)................. 500
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $26,363).................................. 26,363
--------
TOTAL INVESTMENTS--100.7%
(Cost $160,684)................................. 159,987
CASH AND OTHER ASSETS, LESS LIABILITIES--(0.7)%... (1,167)
--------
TOTAL NET ASSETS--100.0%.......................... $158,820
========
</TABLE>
31
<PAGE> 32
HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED
FUTURES CONTRACTS WHICH WERE OPEN AT APRIL 30, 2000 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
UNREALIZED
AGGREGATE APPRECIATION/
NUMBER OF FACE VALUE EXPIRATION (DEPRECIATION)
DESCRIPTION CONTRACTS (000S) DATE (000S)
----------- --------- ---------- ---------- --------------
<S> <C> <C> <C> <C>
U.S. Treasury Note--5 Yr. (Sell)............................ (211) $ (21,100) Jun-00 $220
U.S. Treasury Note--2 Yr. (Buy)............................. 22 4,400 Jun-00 (37)
Eurodollar (Buy)............................................ 48 E$ 12,000 Jun-00 (30)
----
$153
====
</TABLE>
------------
1 Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30, 2000,
these securities were valued at $25,293 or 15.9% of net assets.
2 REMICs are CMOs which can hold mortgages secured by any type of real property
and issue multiple-class securities backed by those mortgages.
3 Floating rate security. The stated rate represents the rate in effect at
April 30, 2000.
4 At April 30, 2000, securities held by the Fund, or a portion of these
securities, were pledged to cover margin requirements for open future
contracts. (See Note 2 to the Financial Statements.) The securities pledged
had an aggregate market value of $43,859.
E$ Eurodollar.
The accompanying notes are an integral part of the financial statements.
32
<PAGE> 33
<PAGE> 34
HARBOR MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2000 (UNAUDITED)
TOTAL INVESTMENTS (% OF NET ASSETS)
(Excludes net cash of 0.4%)
<TABLE>
<S> <C>
Repurchase Agreement 0.8
Bank Obligations 29.3
Commercial Paper 69.5
</TABLE>
<TABLE>
<CAPTION>
BANK OBLIGATIONS--29.3%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
-----------------------------------------------------------
<C> <S> <C>
Bank Austria Aktiengesellschaf NY
$4,000 6.650%--02/02/2001.................. $ 3,999
Bank of Scotland Treasury Service
4,000 6.000%--06/09/2000.................. 3,974
Bank One NA
4,000 6.020%--05/24/2000.................. 4,000
Canadian Imperial Bank
3,000 6.200%--08/01/2000.................. 2,999
CommerzBank New York Branch
500 5.890%--08/07/2000.................. 499
Harris Trust & Savings Bank
2,000 6.110%--05/30/2000.................. 2,000
Societe Generale
4,000 6.200%--08/16/2000.................. 4,000
Toronto Dominion Bank NY
4,000 6.080%--06/28/2000.................. 4,000
Westpac Banking Corp.
3,000 5.200%--05/10/2000.................. 2,990
-------
TOTAL BANK OBLIGATIONS
(Cost $28,462).................................. 28,461
-------
<CAPTION>
COMMERCIAL PAPER--69.5%
<C> <S> <C>
Abbey National plc
$4,000 6.050%--08/15/2000.................. $ 3,929
Aegon Funding Corp. Yrs. 3&4
3,500 6.100%--07/07/2000.................. 3,460
Banque Et Caisse D'Epargne
4,000 6.120%--08/08/2000.................. 3,933
Banque Generale Du Luxembourg
4,050 6.030%--05/15/2000.................. 4,041
BCI Funding Corp.
4,000 5.910%--05/09/2000.................. 3,995
Bill North American Inc.
4,000 6.020%--05/19/2000.................. 3,988
British Telecommunications plc
4,000 5.890%--05/09/2000.................. 3,995
General Electric Capital Corp.
4,000 6.140%--06/06/2000.................. 3,975
National Rural Utilities
3,800 6.130%--09/12/2000.................. 3,713
Oesterreichische Kontrollbank
4,000 6.180%--06/16/2000.................. 3,968
Paccar Financial Corp.
4,500 6.030%--05/25/2000.................. 4,482
Pacific Mutual
4,000 5.970%--05/03/2000.................. 3,999
San Paolo U.S. Finance Co.
4,000 5.840%--05/01/2000.................. 4,000
Sigma Finance Corp.
4,000 6.060%--08/17/2000.................. 3,927
Svenska Handelsbanken Inc.
4,000 5.900%--05/03/2000.................. 3,999
Swedbank Forenings
4,000 6.041%--06/02/2000.................. 3,979
Telstra Corp. Ltd.
4,000 5.850%--05/05/2000.................. 3,997
-------
TOTAL COMMERCIAL PAPER
(Cost $67,379).................................. 67,380
-------
</TABLE>
<TABLE>
<CAPTION>
REPURCHASE AGREEMENT--0.8%
(Cost $774)
<C> <S> <C>
Repurchase Agreement with State Street
Bank & Trust dated April 28, 2000
due May 1, 2000 at 5.65%
collateralized by a U.S. Treasury
Bill 8.500% February 15, 2020, par
value of $630 (repurchase proceeds
of $774 when closed on May 1,
774 2000)............................... 774
-------
</TABLE>
TOTAL INVESTMENTS--99.6%
(Cost $96,615)(1)............................... 96,615
CASH AND OTHER ASSETS, LESS LIABILITIES--0.4%..... 352
-------
TOTAL NET ASSETS--100.0%.......................... $96,967
=======
------------
1 The aggregate identified cost on a tax basis is the same.
The accompanying notes are an integral part of the financial statements.
33
<PAGE> 35
HARBOR FUND
STATEMENT OF ASSETS AND LIABILITIES--APRIL 30, 2000 (UNAUDITED)
(All amounts in Thousands, except per share amount)
<TABLE>
<CAPTION>
HARBOR
HARBOR INTERNATIONAL
GROWTH GROWTH
--------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
INVESTMENTS, AT IDENTIFIED COST*............................ $172,697 $1,283,767
--------------------------------------------------------------------------------------------------
Investments, at value....................................... $268,564 $1,529,695
Repurchase agreements....................................... -- --
Cash........................................................ 1 --
Cash on deposit with broker for investments sold short...... -- --
Foreign currency, at value (cost: $0; $424; $0; $590;
$4,379; $0; $326; $0; $0)................................. -- 425
Receivables for:
Investments sold.......................................... 195 39,722
Capital shares sold....................................... 1,442 300
Dividends................................................. -- 1,388
Interest.................................................. 84 51
Open forward currency contracts........................... -- --
Variation margin on futures contracts..................... -- --
Deferred organization costs................................. -- --
Withholding tax receivable.................................. -- 1,160
Other assets................................................ 36 3
--------------------------------------------------------------------------------------------------
TOTAL ASSETS.......................................... 270,322 1,572,744
LIABILITIES
Payables for:
Investments purchased..................................... 3,466 29,760
Capital shares reacquired................................. 116 2,490
Dividends to shareholders................................. -- --
Investments sold short, at value (proceeds $0; $0; $0; $0;
$0; $9,331; $0; $0; $0)................................. -- --
Written options, at value (premiums received $0; $0; $0;
$0; $0; $0; $767; $0; $0)............................... -- --
Swap agreements........................................... -- --
Interest on swap agreements............................... -- --
Open forward currency contracts........................... -- --
Variation margin on futures contracts..................... -- --
Dividends payable on investments sold short............... -- --
Accrued expenses:
Adviser's fees............................................ 229 908
Trustees' fees............................................ -- 5
Transfer agent's fees..................................... -- 89
Other..................................................... 12 471
--------------------------------------------------------------------------------------------------
TOTAL LIABILITIES..................................... 3,823 33,723
NET ASSETS.................................................. $266,499 $1,539,021
==================================================================================================
Net assets consist of:
Paid-in capital........................................... $157,973 $1,178,498
Undistributed/(over-distributed) net investment income.... 61 208
Accumulated net realized gain/(loss)...................... 12,598 114,603
Unrealized appreciation/(depreciation) of investments,
swap agreements, written options, foreign currency,
investments sold short and translation of assets and
liabilities in foreign currencies....................... 95,867 245,712
Unrealized appreciation/(depreciation) of futures and
forward contracts....................................... -- --
--------------------------------------------------------------------------------------------------
$266,499 $1,539,021
==================================================================================================
Shares of beneficial interest............................... 11,289 75,293
Net asset value, offering and redemption price per share.... $ 23.61 $ 20.44
</TABLE>
------------
* Including repurchase agreements and short-term investments
The accompanying notes are an integral part of the financial statements.
34
<PAGE> 36
<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>
$6,828,364 $ 95,547 $3,014,828 $141,781 $791,092 $160,684 $96,615
------------------------------------------------------------------------------------------------------
$9,434,555 $113,939 $5,042,807 $142,673 $763,908 $145,079 $95,841
-- -- -- 1,014 5,137 14,908 774
1 239 4 1,837 -- -- 1
-- -- -- 10,632 -- -- --
-- 591 4,369 -- 322 -- --
47,272 2,751 1,022 133 31,544 -- --
15,093 197 1,269 153 681 58 186
4,594 230 19,496 180 -- -- --
263 -- 429 -- 7,300 651 451
-- -- -- -- 12 -- --
-- -- -- -- 291 15 --
-- 5 -- -- -- -- --
-- 268 10,059 -- -- -- --
4 3 5 76 3 29 26
------------------------------------------------------------------------------------------------------
9,501,782 118,223 5,079,460 156,698 809,198 160,740 97,279
255,002 2,469 1,026 613 197,387 -- --
6,900 126 51,501 1,496 1,692 1,881 265
-- -- 5 -- -- 5 12
-- -- -- 9,355 -- -- --
-- -- -- -- 946 -- --
-- -- -- -- 486 -- --
-- -- -- -- 49 -- --
-- -- -- -- 568 -- --
-- -- -- 64 -- -- --
-- -- -- 22 -- -- --
4,324 65 3,439 60 239 24 11
15 1 25 1 3 1 1
217 9 128 14 60 3 17
238 31 2,411 8 57 6 6
------------------------------------------------------------------------------------------------------
266,696 2,701 58,535 11,633 201,487 1,920 312
$9,235,086 $115,522 $5,020,925 $145,065 $607,711 $158,820 $96,967
======================================================================================================
$5,795,419 $ 90,249 $2,542,830 $149,348 $639,202 $185,290 $96,929
(1,850) 316 29,342 162 5,021 24 56
835,326 6,604 422,249 (6,680) (13,044) (25,950) (18)
2,606,191 18,353 2,026,504 1,882 (23,090) (697) --
-- -- -- 353 (378) 153 --
------------------------------------------------------------------------------------------------------
$9,235,086 $115,522 $5,020,925 $145,065 $607,711 $158,820 $96,967
======================================================================================================
175,210 7,747 128,618 10,887 56,699 18,756 96,967
$ 52.71 $ 14.91 $ 39.04 $ 13.33 $ 10.72 $ 8.47 $ 1.00
</TABLE>
35
<PAGE> 37
HARBOR FUND
STATEMENT OF OPERATIONS--SIX MONTHS ENDED APRIL 30, 2000 (UNAUDITED)
(All amounts in Thousands)
<TABLE>
<CAPTION>
HARBOR
HARBOR INTERNATIONAL
GROWTH GROWTH
-------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................................................. $ 28 $ 7,530
Interest.................................................. 1,053 943
Foreign taxes withheld.................................... -- (1,015)
-------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME................................... 1,081 7,458
OPERATING EXPENSES:
Investment advisory fees.................................. 898 5,974
Shareholder communications................................ 6 38
Custodian fees............................................ 29 858
Transfer agent fees....................................... 51 286
Professional fees......................................... 21 44
Trustees' fees and expenses............................... 1 10
Registration fees......................................... 13 40
Amortization of organization costs........................ -- --
Insurance................................................. 1 3
Miscellaneous............................................. 5 13
-------------------------------------------------------------------------------------------
Total operating expenses............................... 1,025 7,266
Advisory fee waived....................................... -- --
Other expense reimbursements and reductions............... (5) (19)
-------------------------------------------------------------------------------------------
Net operating expenses................................. 1,020 7,247
Dividend expense on investments sold short................ -- --
-------------------------------------------------------------------------------------------
NET INVESTMENT INCOME/(LOSS)................................ 61 211
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENT
TRANSACTIONS:
Net realized gain/(loss) on:
Investments............................................ 12,598 115,611
Foreign currency transactions.......................... -- (740)
Investments sold short................................. -- --
Swap agreements........................................ -- --
Futures contracts...................................... -- --
Written options........................................ -- --
Change in net unrealized appreciation/(depreciation) on:
Investments, foreign currency, written options and
investments sold short................................ 42,502 88,777
Swap agreements........................................ -- --
Futures contracts...................................... -- --
Forward currency contracts............................. -- --
Translation of assets and liabilities in foreign
currencies............................................ -- (216)
-------------------------------------------------------------------------------------------
Net gain/(loss) on investment transactions................ 55,100 203,432
-------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................. $55,161 $203,643
===========================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
36
<PAGE> 38
<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>
$ 17,115 $ 1,017 $ 65,290 $ 1,729 $ -- $ -- $ --
7,982 40 6,688 449 20,958 6,515 2,834
(373) (143) (8,611) -- -- -- --
-----------------------------------------------------------------------------------------------------
24,724 914 63,367 2,178 20,958 6,515 2,834
24,601 470 23,286 439 2,137 425 147
145 6 115 7 27 1 11
409 75 2,378 46 62 26 17
1,119 48 931 55 201 10 88
114 24 113 22 40 35 16
46 1 39 1 5 2 1
192 13 14 12 45 21 19
-- 2 -- -- -- -- --
6 1 6 2 2 2 1
42 5 49 5 8 5 5
-----------------------------------------------------------------------------------------------------
26,674 645 26,931 589 2,527 527 305
-- (63) (1,861) -- (641) (212) (59)
(100) (3) (29) (2) (8) (12) (6)
-----------------------------------------------------------------------------------------------------
26,574 579 25,041 587 1,878 303 240
-- -- -- 123 -- -- --
-----------------------------------------------------------------------------------------------------
(1,850) 335 38,326 1,468 19,080 6,212 2,594
844,233 6,587 424,849 (5,021) 2,083 (781) --
-- 118 (1,223) -- (1,168) -- --
-- -- -- 701 -- -- --
-- -- -- -- (124) -- --
-- -- -- 335 (1,521) (816) --
-- -- -- -- 777 -- --
666,137 8,192 (213,600) (1,126) (8,619) (23) --
-- -- -- -- (296) -- --
-- -- -- 131 81 221 --
-- -- -- -- (763) -- --
-- 11 67 -- (450) -- --
-----------------------------------------------------------------------------------------------------
1,510,370 14,908 210,093 (4,980) (10,000) (1,399) --
-----------------------------------------------------------------------------------------------------
$1,508,520 $15,243 $248,419 $(3,512) $ 9,080 $ 4,813 $2,594
======================================================================================================
</TABLE>
37
<PAGE> 39
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,
1999 1998 1999 1998
THROUGH THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment income/(loss)..................... $ 61 $ (572) $ 211 $ 10,391
Net realized gain/(loss) on investments, foreign
currency transactions, investments sold short,
swap agreements, futures contracts and written
options........................................ 12,598 11,014 114,871 99,609
Net unrealized appreciation/(depreciation) of
investments, written options, investments sold
short, swap agreements, futures contracts,
forward foreign currency contracts and
translation of assets and liabilities in
foreign currencies............................. 42,502 51,584 88,561 (19,524)
-----------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................. 55,161 62,026 203,643 90,476
-----------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income............................ -- -- (9,899) (7,338)
Net realized gain on investments................. (10,441) (8,237) (98,795) (18,126)
-----------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS.............. (10,441) (8,237) (108,694) (25,464)
-----------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares................. 108,566 30,066 259,939 480,682
Net asset value of shares issued in connection
with reinvestment of:
Dividends from net investment income........... -- -- 8,659 6,331
Distributions from net realized gain........... 10,293 7,785 94,385 17,189
Cost of shares reacquired........................ (42,329) (34,421) (301,424) (364,953)
-----------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) DERIVED FROM CAPITAL
TRANSACTIONS................................... 76,530 3,430 61,559 139,249
-----------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets............ 121,250 57,219 156,508 204,261
NET ASSETS:
Beginning of period................................ 145,249 88,030 1,382,513 1,178,252
-----------------------------------------------------------------------------------------------------------
END OF PERIOD *.................................... $266,499 $145,249 $1,539,021 $1,382,513
-----------------------------------------------------------------------------------------------------------
NUMBER OF CAPITAL SHARES:
Sold............................................... 4,270 2,152 12,062 25,299
Reinvested in payment of investment income
dividends........................................ -- -- 409 322
Reinvested in payment of capital gain
distributions.................................... 475 648 4,459 876
Reacquired......................................... (1,746) (2,657) (13,917) (19,407)
-----------------------------------------------------------------------------------------------------------
Net increase/(decrease) in shares outstanding...... 2,999 143 3,013 7,090
Outstanding:
Beginning of period.............................. 8,290 8,147 72,280 65,190
-----------------------------------------------------------------------------------------------------------
End of period.................................... 11,289 8,290 75,293 72,280
-----------------------------------------------------------------------------------------------------------
*Includes undistributed/(over-distributed) net
investment income of:.............................. $ 61 $ -- $ 208 $ 9,896
<CAPTION>
HARBOR HARBOR
CAPITAL APPRECIATION INTERNATIONAL II
------------------------- -------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
1999 1998 1999 1998
THROUGH THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2000 1999 2000 1999
---------------------------------------------------- -----------------------------------------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment income/(loss)..................... $ (1,850) $ (2,903) $ 335 $ 1,587
Net realized gain/(loss) on investments, foreign
currency transactions, investments sold short,
swap agreements, futures contracts and written
options........................................ 844,233 742,363 6,705 13,307
Net unrealized appreciation/(depreciation) of
investments, written options, investments sold
short, swap agreements, futures contracts,
forward foreign currency contracts and
translation of assets and liabilities in
foreign currencies............................. 666,137 1,215,136 8,203 10,367
----------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................. 1,508,520 1,954,596 15,243 25,261
----------------------------------------------------
Distributions to shareholders:
Net investment income............................ -- (7,562) (1,349) (1,621)
Net realized gain on investments................. (660,216) (264,694) (4,991) --
----------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS.............. (660,216) (272,256) (6,340) (1,621)
----------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares................. 1,991,757 2,000,011 29,201 63,196
Net asset value of shares issued in connection
with reinvestment of:
Dividends from net investment income........... -- 6,770 1,258 1,537
Distributions from net realized gain........... 619,790 242,192 4,739 --
Cost of shares reacquired........................ (709,566) (1,280,110) (43,370) (86,251)
----------------------------------------------------
NET INCREASE/(DECREASE) DERIVED FROM CAPITAL
TRANSACTIONS................................... 1,901,981 968,863 (8,172) (21,518)
----------------------------------------------------
Net increase/(decrease) in net assets............ 2,750,285 2,651,203 731 2,122
NET ASSETS:
Beginning of period................................ 6,484,801 3,833,598 114,791 112,669
----------------------------------------------------
END OF PERIOD *.................................... $9,235,086 $6,484,801 $115,522 $114,791
-----------------------------------------------------------------------------------------------------------
NUMBER OF CAPITAL SHARES:
Sold............................................... 38,030 47,912 1,971 4,982
Reinvested in payment of investment income
dividends........................................ -- 177 86 126
Reinvested in payment of capital gain
distributions.................................... 12,613 6,332 326 --
Reacquired......................................... (13,651) (30,604) (2,933) (6,816)
----------------------------------------------------
Net increase/(decrease) in shares outstanding...... 36,992 23,817 (550) (1,708)
Outstanding:
Beginning of period.............................. 138,218 114,401 8,297 10,005
----------------------------------------------------
End of period.................................... 175,210 138,218 7,747 8,297
-----------------------------------------------------------------------------------------------------------
*Includes undistributed/(over-distributed) net
investment income of:.............................. $ (1,850) $ -- $ 316 $ 1,330
</TABLE>
The accompanying notes are an integral part of the financial statements.
38
<PAGE> 40
<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,
1999 1998 1999 1998 1999 1998 1999 1998
THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2000 1999 2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 38,326 $ 88,209 $ 1,468 $ 2,856 $ 19,080 $ 30,440 $ 6,212 $ 11,151
423,626 370,001 (3,985) 17,727 47 (11,903) (1,597) (1,844)
(213,533) 442,102 (995) 3,794 (10,047) (14,459) 198 (1,583)
------------------------------------------------------------------------------------------------------------------
248,419 900,312 (3,512) 24,377 9,080 4,078 4,813 7,724
------------------------------------------------------------------------------------------------------------------
(84,215) (78,627) (1,678) (2,716) (16,344) (28,478) (6,729) (10,735)
(371,384) (312,498) (15,960) (17,840) -- (21,226) -- --
------------------------------------------------------------------------------------------------------------------
(455,599) (391,125) (17,638) (20,556) (16,344) (49,704) (6,729) (10,735)
------------------------------------------------------------------------------------------------------------------
170,928 401,642 20,948 35,686 105,532 326,113 116,123 219,523
71,585 65,949 1,630 2,561 13,942 24,008 6,678 10,652
344,121 279,571 15,541 16,912 -- 18,749 -- --
(719,553) (983,726) (29,286) (72,066) (131,679) (169,085) (213,507) (192,966)
------------------------------------------------------------------------------------------------------------------
(132,919) (236,564) 8,833 (16,907) (12,205) 199,785 (90,706) 37,209
------------------------------------------------------------------------------------------------------------------
(340,099) 272,623 (12,317) (13,086) (19,469) 154,159 (92,622) 34,198
5,361,024 5,088,401 157,382 170,468 627,180 473,021 251,442 217,244
------------------------------------------------------------------------------------------------------------------
$5,020,925 $5,361,024 $145,065 $157,382 $607,711 $ 627,180 $ 158,820 $251,442
------------------------------------------------------------------------------------------------------------------
4,184 10,432 1,583 2,299 9,811 29,142 13,650 25,518
1,770 1,781 124 172 1,303 2,189 787 1,240
8,509 7,552 1,179 1,182 -- 1,667 -- --
(17,686) (25,575) (2,218) (4,644) (12,244) (15,202) (25,065) (22,376)
------------------------------------------------------------------------------------------------------------------
(3,223) (5,810) 668 (991) (1,130) 17,796 (10,628) 4,382
131,841 137,651 10,219 11,210 57,829 40,033 29,384 25,002
------------------------------------------------------------------------------------------------------------------
128,618 131,841 10,887 10,219 56,699 57,829 18,756 29,384
------------------------------------------------------------------------------------------------------------------
$ 29,342 $ 75,231 $ 162 $ 372 $ 5,021 $ 2,285 $ 24 $ 541
<CAPTION>
HARBOR
MONEY MARKET
-------------------------
NOVEMBER 1, NOVEMBER 1,
1999 1998
THROUGH THROUGH
APRIL 30, OCTOBER 31,
2000 1999
--- -------------------------
(UNAUDITED)
<S> <C> <C>
$ 2,594 $ 4,494
-- (9)
-- --
---
2,594 4,485
---
(2,594) (4,485)
-- --
---
(2,594) (4,485)
---
75,604 124,631
2,577 4,247
-- --
(78,479) (131,889)
---
(298) (3,011)
---
(298) (3,011)
97,265 100,276
---
$ 96,967 $ 97,265
------------------------------------------------------------------------------------------------------------------
75,604 124,631
2,577 4,247
-- --
(78,479) (131,889)
---
(298) (3,011)
97,265 100,276
---
96,967 97,265
------------------------------------------------------------------------------------------------------------------
$ 56 $ 56
</TABLE>
---------------
39
<PAGE> 41
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)
ON INVESTMENTS,
FUTURES CONTRACTS, WRITTEN
NET ASSET OPTIONS, SWAP AGREEMENTS,
VALUE NET INVESTMENTS SOLD SHORT 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, 2000 (Unaudited)................. $17.52 $ .01 $ 7.28 $ 7.29
October 31, 1999........................... 10.81 (.07) 7.85 7.78
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
---------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL GROWTH FUND
April 30, 2000 (Unaudited)................. $19.13 $ .01 $ 2.82 $ 2.83
October 31, 1999........................... 18.07 .14 1.30 1.44
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
---------------------------------------------------------------------------------------------------------------------
HARBOR CAPITAL APPRECIATION FUND
April 30, 2000 (Unaudited)................. $46.92 $(.01) $10.40 $10.39
October 31, 1999........................... 33.51 (.02) 15.78 15.76
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
---------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND II
April 30, 2000 (Unaudited)................. $13.83 $ .05(c) $ 1.82 $ 1.87
October 31, 1999........................... 11.26 .18(c) 2.54 2.72
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, 2000 (Unaudited)................. $40.66 $ .31(c) $ 1.58 $ 1.89
October 31, 1999........................... 36.97 .67(c) 5.90 6.57
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
---------------------------------------------------------------------------------------------------------------------
HARBOR VALUE FUND(3)
April 30, 2000 (Unaudited)................. $15.40 $ .14 $ (.48) $ (.34)
October 31, 1999........................... 15.21 .27 1.80 2.07
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
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
LESS DISTRIBUTIONS
--------------------------------------------
DIVIDENDS DISTRIBUTIONS IN EXCESS
FROM NET FROM NET OF NET
INVESTMENT REALIZED INVESTMENT
YEAR/PERIOD ENDED INCOME CAPITAL GAINS(d) INCOME
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
HARBOR GROWTH FUND(1)
April 30, 2000 (Unaudited)................. $ -- $(1.20) $ --
October 31, 1999........................... -- (1.07) --
October 31, 1998........................... -- (2.28) --
October 31, 1997........................... -- (4.10) --
October 31, 1996........................... -- (1.85) --
October 31, 1995........................... -- (.32) --
----------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL GROWTH FUND
April 30, 2000 (Unaudited)................. $(.14) $(1.38) $ --
October 31, 1999........................... (.11) (.27) --
October 31, 1998........................... (.12) (.59) --
October 31, 1997........................... (.08) (.36) --
October 31, 1996........................... (.11) -- --
October 31, 1995........................... (.08) -- --
---------------------------------------------------------------------------------------------------------------------
HARBOR CAPITAL APPRECIATION FUND
April 30, 2000 (Unaudited)................. $ -- $(4.60) $ --
October 31, 1999........................... (.07) (2.28) --
October 31, 1998........................... (.07) (4.85) --
October 31, 1997........................... (.02) (.86) --
October 31, 1996........................... (.03) (.31) --
October 31, 1995........................... (.04) (.17) --
---------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND II
April 30, 2000 (Unaudited)................. $(.17) $ (.62) $ --
October 31, 1999........................... (.15) -- --
October 31, 1998........................... (.10) (.53) --
October 31, 1997........................... (.02) (.04) --
October 31, 1996(2)........................ -- -- --
---------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND
April 30, 2000 (Unaudited)................. $(.65) $(2.86) $ --
October 31, 1999........................... (.58) (2.30) --
October 31, 1998........................... (.40) (.90) --
October 31, 1997........................... (.42) (.80) --
October 31, 1996........................... (.41) (.13) --
October 31, 1995........................... (.24) (.94) --
---------------------------------------------------------------------------------------------------------------------
HARBOR VALUE FUND(3)
April 30, 2000 (Unaudited)................. $(.16) $(1.57) $ --
October 31, 1999........................... (.25) (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) --
---------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
40
<PAGE> 42
<TABLE>
<CAPTION>
RATIO OF RATIO OF RATIO OF
RATIO OF ADVISER OR OPERATING INTEREST/
NET ASSET OPERATING SUBADVISER FEES EXPENSES NET OF DIVIDEND
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>
----------------------------------------------------------------------------------------------------------------------------------
$(1.20) $23.61 42.19%(b) $ 266,499 .85%(a) --% .85%(a) --%
(1.07) 17.52 76.51 145,249 .90 -- .90 --
(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 --
----------------------------------------------------------------------------------------------------------------------------------
$(1.52) $20.44 14.56%(b) $1,539,021 .91%(a) --% .91%(a) --%
(.38) 19.13 7.87 1,382,513 .91 -- .91 --
(.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 --
----------------------------------------------------------------------------------------------------------------------------------
$(4.60) $52.71 22.86%(b) $9,235,086 .65%(a) --% .65%(a) --%
(2.35) 46.92 48.59 6,484,801 .66 -- .66 --
(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 --
----------------------------------------------------------------------------------------------------------------------------------
$ (.79) $14.91 13.61%(b,f) $ 115,522 .92%(a,c) .10%(a) .92%(a) --%
(.15) 13.83 24.37(f) 114,791 .92(c) .10 .92 --
(.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) --
----------------------------------------------------------------------------------------------------------------------------------
$(3.51) $39.04 4.24%(b,f) $5,020,925 .92%(a,c) .07%(a) .92%(a) --%
(2.88) 40.66 18.54(f) 5,361,024 .92(c) .06 .92 --
(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 --
----------------------------------------------------------------------------------------------------------------------------------
$(1.73) $13.33 (2.09)%(b) $ 145,065 .82%(a) --% .82%(a) .17%(a,g)
(1.88) 15.40 14.60 157,382 .76 -- .76 --
(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 --
-------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF
NET INVESTMENT
INCOME
TO AVERAGE PORTFOLIO
NET ASSETS (%) TURNOVER (%)
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------------------
.05%(a) 15.75%(a)
(.54) 13.05
(.30) 23.40
(.47) 147.37
(.50) 87.97
(.30) 87.94
-------------------------------------------------------------------------------------------------------------------------------
.03%(a) 88.02%(a)
.78 48.34
.62 85.15
.91 76.19
.99 55.17
1.31(c) 74.86
-------------------------------------------------------------------------------------------------------------------------------
(.04)%(a) 78.40%(a)
(.05) 68.14
.24 69.56
.23 72.80
.11 73.69
.23 51.65
-------------------------------------------------------------------------------------------------------------------------------
.53%(a,c) 68.64%(a)
1.36(c) 51.84
.86(c) 70.34
1.33(c) 57.61
.40(a,c) 2.61(a)
-------------------------------------------------------------------------------------------------------------------------------
1.40%(a,c) 8.16%(a)
1.65(c) 4.01
1.27(c) 13.66
1.20(c) 6.39
1.42(c) 9.73
1.53(c) 14.01
-------------------------------------------------------------------------------------------------------------------------------
2.05%(a) 76.75%(a)
1.65 110.21
1.67 113.55
1.98 145.85
2.65 132.39
3.00 135.93
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See page 43 for notes to the Financial Highlights.
41
<PAGE> 43
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)
ON INVESTMENTS,
FUTURES CONTRACTS, WRITTEN
NET ASSET OPTIONS, SWAP AGREEMENTS,
VALUE NET INVESTMENTS SOLD SHORT 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, 2000 (Unaudited)..... $10.85 $.34(c) $(.18) $ .16
October 31, 1999............... 11.82 .58(c) (.49) .09
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
----------------------------------------------------------------------------------------------------------
HARBOR SHORT DURATION FUND
April 30, 2000 (Unaudited)..... $ 8.56 $.27(c) $(.07) $ .20
October 31, 1999............... 8.69 .46(c) (.15) .31
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
----------------------------------------------------------------------------------------------------------
HARBOR MONEY MARKET FUND
April 30, 2000 (Unaudited)..... $ 1.00 $.03(c) $ -- $ .03
October 31, 1999............... 1.00 .05(c) -- .05
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
----------------------------------------------------------------------------------------------------------
<CAPTION>
LESS DISTRIBUTIONS
--------------------------------------------
DIVIDENDS DISTRIBUTIONS IN EXCESS
FROM NET FROM NET OF NET
INVESTMENT REALIZED INVESTMENT
YEAR/PERIOD ENDED INCOME CAPITAL GAINS(D) INCOME
<S> <C> <C> <C>
HARBOR BOND FUND
April 30, 2000 (Unaudited)..... $(.29) $ -- $ --
October 31, 1999............... (.55) (.51) --
October 31, 1998............... (.66) (.23) --
October 31, 1997............... (.69) -- --
October 31, 1996............... (.74) -- --
October 31, 1995............... (.67) -- --
----------------------------------------------------------------------------------------
HARBOR SHORT DURATION FUND
April 30, 2000 (Unaudited)..... $(.29) $ -- $ --
October 31, 1999............... (.44) -- --
October 31, 1998............... (.54) -- --
October 31, 1997............... (.59) -- --
October 31, 1996............... (.60) -- (.04)
October 31, 1995............... (.52) -- (.01)
----------------------------------------------------------------------------------------------------
HARBOR MONEY MARKET FUND
April 30, 2000 (Unaudited)..... $(.03) $ -- $ --
October 31, 1999............... (.05) -- --
October 31, 1998............... (.05) -- --
October 31, 1997............... (.02) -- --
October 31, 1996............... (.05) -- --
October 31, 1995............... (.06) -- --
----------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
42
<PAGE> 44
<TABLE>
<CAPTION>
RATIO OF RATIO OF RATIO OF
RATIO OF ADVISER OR OPERATING INTEREST/
NET ASSET OPERATING SUBADVISER FEES EXPENSES NET OF DIVIDEND
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>
$ (.29) $10.72 1.40%(b,f) $607,711 .62%(a,c) .21%(a) .62%(a) --%
(1.06) 10.85 0.85(f) 627,180 .61(c) .21 .60 --
(.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 --
-----------------------------------------------------------------------------------------------------------------------------------
$ (.29) $ 8.47 2.38%(b,f) $158,820 .30%(a,c) .20%(a) .29%(a) --%
(.44) 8.56 3.68(f) 251,442 .28(c) .20 .28 --
(.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(h)
(.64) 8.79 7.24(f) 182,292 .35(c) .20 .33 1.26(h)
(.53) 8.82 6.82(f) 105,007 .39(c) .20 .38 1.46(h)
-----------------------------------------------------------------------------------------------------------------------------------
$ (.03) $ 1.00 2.72%(b,f) $ 96,967 .50%(a,c) .12%(a) .49%(a) --%
(.05) 1.00 4.82(f) 97,265 .46(c) .12 .46 --
(.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 --
-----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF
NET INVESTMENT
INCOME
TO AVERAGE PORTFOLIO
NET ASSETS (%) TURNOVER (%)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
6.25%(a,c) 322.26%(a)
5.35(c) 271.14
5.41(c) 278.06
6.04(c) 252.37
6.40(c) 192.64
7.11(c) 88.69
-----------------------------------------------------------------------------------------------------------------------------------
5.85%(a,c) 565.53%(a)
5.36(c) 577.88
5.51(c) 726.92
5.14(c) 1,518.68
6.84(c) 1,277.82
6.19(c) 725.96
-----------------------------------------------------------------------------------------------------------------------------------
5.30%(a,c) N/A
4.73(c) N/A
5.08(c) N/A
4.97(c) N/A
4.85(c) N/A
5.42(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 The total returns would have been lower had certain expenses not been waived
during the periods shown.
g Dividend expense from investments sold short.
h Interest expense from investments sold short.
43
<PAGE> 45
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2000 (UNAUDITED)
NOTE 1--ORGANIZATIONAL MATTERS
Harbor Fund (the "Trust") is registered under the Investment Company Act of
1940, as amended, as an open-ended 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, 2000, 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 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 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
44
<PAGE> 46
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
the Fund's exposure to the underlying instrument or hedge other fund
investments. Losses may arise from changes in the value of the underlying
instruments, if there is an illiquid secondary market for the contracts or if
the counterparties do not perform under the contracts' terms. 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, 2000.
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 asset and an equivalent
liability. The amount of the liability is subsequently "marked-to-market" to
reflect the current market value of the option written. Written options are
valued at the last sale price or, in the absence of a sale, the last offering
price on the market on which it is principally traded. If an option expires on
its stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or loss if the cost of a closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received. If a written put option is exercised, the amount of the premium
originally received reduces the cost of the security which the Fund purchases
upon exercise of the option.
The risk in writing a call 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 counterparties do not perform under the contracts' terms. See Note 3 for
all outstanding written options as of April 30, 2000.
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 investment 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.
45
<PAGE> 47
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
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 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 2.0% 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.
The 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 Fund 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.
TBA SALE COMMITMENTS
Harbor Bond 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.
SHORT SALES
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 or dividends 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. Short sales involve the risk
of an unlimited increase in the market price of a security.
46
<PAGE> 48
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
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 contracts is determined using forward currency
exchange rates supplied by a pricing service. The contract is "marked-to-market"
daily and the change in market value is recorded as an unrealized gain or loss.
When the contract is closed, the Fund records a realized gain or loss equal to
the difference between the value on the open and close date. Losses may arise
from changes in the value of the foreign currency or if the counterparties do
not perform under the contract's terms. The maximum potential loss from such
contracts is the aggregate face value in U.S. dollars at the time the contract
was opened; however, management of the Fund believes the likelihood of such loss
is remote.
FOREIGN CURRENCY TRANSLATIONS
The accounting records of each Fund 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 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.
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 effective yield
method.
47
<PAGE> 49
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Currency in Thousands)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
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.
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, 2000 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------------------ ------------------------
U.S. U.S.
FUND GOVERNMENT OTHER GOVERNMENT OTHER
---- ---------- ----- ---------- -----
<S> <C> <C> <C> <C>
Harbor Growth Fund......................................... $ -- $ 47,153 $ -- $ 16,458
Harbor International Growth Fund........................... -- 736,280 -- 864,729
Harbor Capital Appreciation Fund........................... -- 4,243,549 -- 3,113,587
Harbor International Fund II............................... -- 42,609 -- 52,961
Harbor International Fund.................................. -- 235,820 -- 635,251
Harbor Value Fund.......................................... -- 55,000 -- 52,953
Harbor Bond Fund........................................... 1,122,044 72,325 1,074,803 67,403
Harbor Short Duration Fund................................. 500,931 52,020 547,523 58,796
</TABLE>
Harbor Money Market Fund's purchases and sales (including maturities) of
investment securities (all short-term obligations) aggregated $558,371 and
$573,073 respectively.
The Funds may be subject to taxes imposed by countries in which it invests.
Such taxes are generally based on income and/or capital gains earned or
repatriated. Taxes are accrued and applied to net investment income, net
realized gains and unrealized appreciation as such income and/or gains are
earned.
48
<PAGE> 50
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,
2000 are summarized as follows:
<TABLE>
<CAPTION>
PURCHASES OF SALES OF
FUTURES CONTRACTS FUTURES CONTRACTS
------------------------- -----------------------
U.S. SECURITIES U.S. SECURITIES
------------------------- -----------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
CONTRACTS FACE VALUE CONTRACTS FACE VALUE
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
HARBOR VALUE FUND(1)
Contracts outstanding at beginning of period.............. 45 $ 11 -- $ --
Contracts opened.......................................... 75 19 -- --
Contracts closed.......................................... (85) (21) -- --
------ --------- ---- --------
Open at 04/30/2000........................................ 35 $ 9 -- $ --
====== ========= ==== ========
HARBOR BOND FUND(2)
Contracts outstanding at beginning of period.............. 1,005 $ 100,500 -- $ --
Contracts opened.......................................... 2,696 269,600 977 97,700
Contracts closed.......................................... (3,205) (320,500) (598) (59,800)
------ --------- ---- --------
Open at 04/30/2000........................................ 496 $ 49,600 379 $ 37,900
====== ========= ==== ========
HARBOR SHORT DURATION FUND(3)
Contracts outstanding at beginning of period.............. 100 $ 20,000 -- $ --
Contracts opened.......................................... 156 31,200 566 69,200
Contracts closed.......................................... (234) (46,800) (355) (48,100)
------ --------- ---- --------
Open at 04/30/2000........................................ 22 $ 4,400 211 $ 21,100
====== ========= ==== ========
</TABLE>
<TABLE>
<CAPTION>
PURCHASES OF SALES OF
FUTURES CONTRACTS FUTURES CONTRACTS
----------------------- -----------------------
FOREIGN CURRENCY FOREIGN CURRENCY
----------------------- -----------------------
NUMBER OF CURRENCY NUMBER OF CURRENCY
CONTRACTS AMOUNT(4) CONTRACTS AMOUNT(4)
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
HARBOR BOND FUND
Contracts outstanding at beginning of period.............. 679 E$169,750 -- E --
Contracts opened.......................................... 172 43,000 716 71,600
Contracts closed.......................................... (761) (190,250) (716) (71,600)
---- --------- ---- ---------
Open at 04/30/2000........................................ 90 E$ 22,500 -- E --
==== ========= ==== =========
HARBOR SHORT DURATION FUND
Contracts outstanding at beginning of period.............. 52 E$ 13,000 40 E$ 10,000
Contracts opened.......................................... 236 23,899 11 2,750
Contracts closed.......................................... (240) (24,899) (51) (12,750)
---- --------- ---- ---------
Open at 04/30/2000........................................ 48 E$ 12,000 -- E$ --
==== ========= ==== =========
</TABLE>
------------
1 Amounts disclosed represent S&P Index Contracts.
2 Amounts disclosed represent U.S. Treasury Bond and Note Contracts. (See page
28 for classifications outstanding at the end of the period.)
3 Amounts disclosed represent U.S. Treasury Note Contracts.
4 Amounts disclosed represent Eurodollars (E$), Australian Dollars (A$),
Japanese Yen (Y) and Euros (E) throughout the period, with Eurodollars
outstanding at the end of the period.
49
<PAGE> 51
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,
2000 are summarized as follows:
<TABLE>
<CAPTION>
OPTIONS WRITTEN OPTIONS WRITTEN OPTIONS WRITTEN
---------------------- ---------------------- ----------------------
FEDERAL HOME LOAN
MORTGAGE CORP. U.S. TREASURY FUTURES FOREIGN FUTURES
---------------------- ---------------------- ----------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE NUMBER OF AGGREGATE
CONTRACTS FACE VALUE CONTRACTS FACE VALUE CONTRACTS FACE VALUE
--------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
HARBOR BOND FUND
Options outstanding at beginning of period..... 180 $ 18,000 773 $ 773 293 E$ 733
Options opened................................. -- -- 2,227 2,227 520 1,300
Options closed/expired......................... (180) (18,000) (2,456) (2,456) (113) (283)
---- -------- ------ ------- ---- -------
Open at 04/30/2000............................. -- $ -- 544 $ 544 700 E$1,750
==== ======== ====== ======= ==== =======
</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, 2000. 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% $ 898
Harbor International Growth Fund............................ 0.75 5,974
Harbor Capital Appreciation Fund............................ 0.60 24,601
Harbor International Fund II................................ 0.75 470
Harbor International Fund................................... 0.85 23,286
Harbor Value Fund........................................... 0.60 439
Harbor Bond Fund............................................ 0.70 2,137
Harbor Short Duration Fund.................................. 0.40 425
Harbor Money Market Fund.................................... 0.30 147
</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, 2000, Harbor Capital agreed not to impose advisory fees
of $63, $1,861, $641, $212 and $59 relating to Harbor International Fund II,
Harbor International Fund, Harbor Bond Fund, Harbor Short Duration Fund and
Harbor Money Market Fund, respectively.
The Trust reimburses Harbor Capital for certain legal expenses incurred by
Harbor Capital with respect to the Trust. Such amounts aggregated $24 for the
six-month period ended April 30, 2000.
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.
50
<PAGE> 52
HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Currency in Thousands)
NOTE 4--FEES AND OTHER TRANSACTIONS WITH AFFILIATES--CONTINUED
SHAREHOLDERS
On April 30, 2000, 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.......................................... 36,451 3,940,895
Harbor International Growth Fund............................ 40,197 1,028,919
Harbor Capital Appreciation Fund............................ 1,236 2,902,510
Harbor International Fund II................................ 228,128 130,666
Harbor International Fund................................... 484 1,647,655
Harbor Value Fund........................................... 6,728 3,681,219
Harbor Bond Fund............................................ 11,199 2,509,912
Harbor Short Duration Fund.................................. 379,008 15,418,975
Harbor Money Market Fund.................................... 38,115 20,996,307
</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, 2000
totaled $2,789.
"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, 2000.
CUSTODIAN
Payments to the custodian have been reduced by balance credits applied to
each portfolio for the six-month period ended April 30, 2000. 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 $5, $19, $100, $3, $29, $2, $8, $12 and $6, 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.
51
<PAGE> 53
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, 2000 were as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED NET UNREALIZED
------------------------------ APPRECIATION/
FUND IDENTIFIED COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
---- --------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Harbor Growth Fund........................................ $ 172,697 $ 118,705 $ (22,838) $ 95,867
Harbor International Growth Fund.......................... 1,283,767 303,152 (57,224) 245,928
Harbor Capital Appreciation Fund.......................... 6,828,364 2,727,057 (120,866) 2,606,191
Harbor International Fund II.............................. 95,547 26,660 (8,268) 18,392
Harbor International Fund................................. 3,014,828 2,222,636 (194,657) 2,027,979
Harbor Value Fund......................................... 141,781 15,222 (13,316) 1,906
Harbor Bond Fund.......................................... 791,092 1,722 (23,769) (22,047)
Harbor Short Duration Fund................................ 160,684 41 (738) (697)
</TABLE>
(This document must be preceded or accompanied by a Prospectus.)
52
<PAGE> 54
<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
JOHN P. GOULD Trustee Toledo, Ohio 43699-0048
RODGER F. SMITH Trustee 1-800-422-1050
CONSTANCE L. SOUDERS Vice President and Treasurer
KAREN B. WASIL Secretary CUSTODIAN
INVESTMENT ADVISER STATE STREET BANK AND TRUST COMPANY
HARBOR CAPITAL ADVISORS, INC. P.O. Box 1713
One SeaGate Boston, MA 02105
Toledo, OH 43666
LEGAL COUNSEL
DISTRIBUTOR AND PRINCIPAL UNDERWRITER HALE AND DORR LLP
HCA SECURITIES, INC. 60 State Street
One SeaGate Boston, MA 02109
Toledo, OH 43666
(419) 247-2477
</TABLE>
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Toledo, Ohio 43666
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