SHARES OF THE HARRIS INSIGHT FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY HARRIS TRUST & SAVINGS BANK, OR ANY OF ITS AFFILIATES
AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. AN INVESTMENT IN THE FUNDS
INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED. THE MARKET VALUE OF SHARES MAY FLUCTUATE AND, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THE AMOUNT INVESTED.
<PAGE>
HARRIS INSIGHT FUNDS
January 31, 1996
DEAR SHAREHOLDER:
We are pleased to present the Harris Insight Funds' Annual Report for the
fiscal year ended December 31, 1995. This Report contains important information
on each of the Funds, including performance results, current portfolio holdings,
and the "Market Environment," which provides a year-end review of the U.S.
economy and the Adviser's outlook for 1996. In addition, the Report contains
"Portfolio Management Discussions" authored by members of the Harris Insight
Funds' portfolio management team.
A YEAR IN REVIEW
After an extremely difficult year for domestic equity and bond markets in
1994, most investors began 1995 anticipating modest rates of return. Instead, we
witnessed the largest equity and bond market rallies since 1975 and 1985,
respectively, as inflation remained low and corporate earnings continued to
rise. The equity market's total return exceeded 37% as represented by the S & P
500 Stock Index while the bond market returned more than 34% as represented by
the 30-year U.S. Treasury bond. Money market investors, however, experienced
declining yields as the Federal Reserve lowered the Federal Funds Rate twice to
stimulate further economic growth. Performance results for each of the Funds
appear on pages 4 through 9 of this Report.
NEW FUNDS FOR 1996
As part of our continuing commitment to meet a wider variety of your
investment needs, the Harris Insight Funds will expand its Fund Family from 6 to
17 Funds over the course of this year. A well-rounded Family of Funds allows you
more choices to broaden your participation in different markets and offers even
more options when developing your investment plan. Specifically, we will
increase the number of available stock and bond funds that are intended to help
you achieve your financial goals. Although each Fund invests in different types
of securities, and is managed to achieve its own investment objective, each
Fund offers solid professional management and diversification. It's important to
also note that each Fund adheres to a conservative investment philosophy of
seeking consistent returns without undue risk, which we believe will help
produce competitive long-term performance. As we move further into 1996, be
assured that we will inform you of all the exciting changes regarding the new
Harris Insight Funds. If you have questions regarding this Report or any of the
Harris Insight Funds, please call a representative at (800) 982-8782. We thank
you for your continued interest in the Harris Insight Funds and for the
opportunity to meet your investment needs.
Sincerely,
The Harris Insight Funds
<PAGE>
TABLE OF CONTENTS
Page
Letter to Shareholders...................................................... 1
Market Environment.......................................................... 3
Performance Analysis........................................................ 4
Statement of Net Assets..................................................... 10
Statement of Operations..................................................... 33
Statement of Changes in Net Assets.......................................... 34
Financial Highlights........................................................ 36
Notes to Financial Statements............................................... 42
Report of Independent Accountants........................................... 48
BOARD OF DIRECTORS OFFICERS
Edgar R. Fiedler* Patricia L. Bickimer
Vice President and Economic Counsellor, President and Secretary
The Conference Board
Richard H. Rose
C. Gary Gerst* Treasurer
Chairman of the Board of Directors
Managing Director and General Partner, Lisa Anne Rosen
Chairman Emeritus, La Salle Partners, Ltd. Assistant Secretary
(Real Estate Developer and Manager)
John W. McCarter, Jr.*
Senior Vice President and former Director of
Booz o Allen & Hamilton, Inc. (Consulting Firm);
Director of W.W. Grainger, Inc. and A.M. Castle, Inc.
Ernest M. Roth*
Consultant; Retired Senior Vice President
and Chief Financial Officer,
Commonwealth Edison Company
* Member of Audit and Nominating Committees
2
<PAGE>
MARKET ENVIRONMENT
OUTLOOK FOR U.S ECONOMIC GROWTH WEAKENING
Following reasonable growth in the first half of 1995 and strong performance
in the third quarter, the economy began to struggle toward year-end. This
sluggishness this year-end, while not implying that a recession is imminent, is
still disappointing to economic policy makers and could have a negative impact
on corporate profits. Generally, this loss of momentum appears to be the result
of above-average business inventory levels and below-average consumer spending.
These factors, in turn, appear to have been influenced by a somewhat restrictive
monetary policy.
Despite the slowing expansion, the U.S. has experienced a moderate increase
in jobs. Unfortunately, personal income growth has not paralleled earlier
recoveries and appears to have been responsible for most of the slowdown in
consumer spending. Individuals spent heavily early in the year, however, slow
income growth caused consumer debt levels to increase considerably. This
situation may cause further slowing in the consumer sector unless incomes begin
to grow more rapidly. Clearly technology represented one of the strongest
sectors in 1995 as businesses spent heavily in an attempt to improve
productivity.
FEDERAL RESERVE POLICY BECOMES MORE ACCOMMODATIVE
After doubling the Federal Funds Rate in 1994, the Federal Reserve began
lowering it in 1995. The driving factors were the deceleration in the economy as
well as the positive outlook for low inflation. Both of these factors have
encouraged the Federal Reserve Board of Governors to think that "price
stability" (0% -- 2% inflation) is possible. The financial markets, responding
to lower inflation expectations and improved profitability, rose sharply. If the
Federal Reserve continues to pursue a policy of price stability economic markets
may move higher. However, the Federal Reserve will need to reaffirm this
priority or the skepticism in the equity and bond markets could grow,
particularly if economic momentum continues to slip. A move in this direction
would be the re-appointment of Alan Greenspan as Federal Reserve Chairman, which
appears likely now that Vice-Chairman Blinder has decided to retire.
STOCKS AND BONDS PROVIDED SURPRISINGLY GOOD RETURNS IN 1995
Low inflation and rising earnings during 1995 resulted in sharply higher
stock and bond prices. Overcoming moderate economic growth in the U.S. and
sluggish conditions in Europe and Japan (which limited U.S. exports),
corporations were able to report strong earnings for the year despite a somewhat
restrictive Federal Reserve monetary policy. Corporate cost-cutting and low
inflation provided the catalyst for much higher financial asset prices during
the year. With the outlook for low inflation continuing, the Federal Reserve is
likely to move toward an "easier" credit stance over future months. This should
help sustain corporate profitability and cushion against the risk of a major
correction in stock and bond prices during 1996.
THE OUTLOOK FOR 1996 -- CAUTION PREVAILS
1995 will be a tough act to follow, particularly if the economy continues to
slow and corporate profitability erodes. While this is not a foregone
conclusion, neither the economy nor the stock market has suffered a significant
setback for several years. The difficulties currently being experienced in
Washington over the Federal budget, the recent deceleration in corporate
earnings growth, continued sluggish economic conditions in Europe and the
upcoming elections will all provide fertile ground for more volatile financial
markets in 1996. Recognizing the near-term risks, we continue to view the
long-term investment climate in the U.S. as positive based upon the likelihood
of continued low inflation, lower interest rates and an eventual acceleration in
economic growth. While we remain cautious near-term, expected policy changes
promoting economic growth bode well for the financial markets, longer-term.
David L. Mead
Vice President and Chief Investment Officer
Harris Bankcorp, Inc.
3
<PAGE>
HARRIS INSIGHT CONVERTIBLE FUND
PORTFOLIO MANAGEMENT DISCUSSION
1995 was an excellent year for convertible securities, the best since 1991
and the second best of the past ten years. The decline in long term interest
rates and the strong gains in the equity markets were the two primary forces
driving convertible security prices higher.
The year got off to a strong start and by the end of the first quarter, all
the declines experienced in 1994 had been more than offset. Carrying the
positive momentum of the first quarter, the convertible market accelerated in
the second quarter, producing the best returns for any three month period since
the inception of the Fund in 1988, with the exception of the first quarter of
1991. Although the market slowed somewhat near year-end, positive returns were
realized in both the third and fourth quarters.
The year, however, was not without its challenges. To accommodate the
difficult markets of 1994, the Fund maintained a relatively defensive posture
with above average quality, somewhat shorter average maturities, and reduced
exposure to the price movements of the common equities underlying the con-
vertible securities. While the Fund correctly moved to increase exposures to the
more favorable market environment early in 1995, a truly aggressive portfolio,
relative to the benchmark, was only briefly attained during the second quarter
of the year. Thereafter, with the strong gains in the equity market, more than
half the convertible market was comprised of "equity equivalents*." Since
"equity equivalents" possess few of the defensive characteristics that over time
distinguish convertible securities as an asset class, the Fund has long pursued
a policy of limiting its exposure to "equity equivalent" convertibles. Such a
policy may limit gains in later stages of a strong market and was the chief
reason the Fund lagged its benchmark for the year. This limitation may have been
shared by many other convertible managers as the Lipper index of convertible
mutual funds lagged the ave rage of the convertible benchmarks by more than four
percentage points for the year.
It should also be mentioned that the returns of the common stocks underlying
the convertible securities universe were about ten percentage points less than
the 37.53% gain recorded by the S&P 500 Stock Index.
During the year, the Fund benefited from an average exposure to the
financial industry while an overweighting in the retail sector and an
underweighting in the technology sector served to hold back returns.
Looking ahead to 1996, the climate for bonds appears favorable while a
somewhat more volatile environment for equities could develop. Should this be
the case, convertible securities may again prove relatively rewarding.
* "Equity Equivalents" are convertible securities where the appreciation of the
underlying common stock was sufficient to carry the market value of the
convertible security well above its par value and where a high percentage of
any price change in that common stock, both upward and downward would be
reflected in the price of the convertible security.
4
<PAGE>
HARRIS INSIGHT CONVERTIBLE FUND
PERFORMANCE ANALYSIS
Growth of a $10,000 Investment
February 24, 1988* -- December 31, 1995
DESCRIPTION OF LINE GRAPH
Line graph shown using the plot points below:
Harris Insight First Boston
Convertible Fund Convertible Index
2-88 $ 9,550 $10,000
12-88 10,209 10,551
12-89 11,283 12,003
12-90 9,351 11,178
12-91 11,786 14,434
12-92 13,601 16,674
12-93 15,438 19,769
12-94 14,818 18,836
12-95 17,563 23,304
The graph above shows the results of a hypothetical $10,000 investment in the
Harris Insight Convertible Fund from the inception of the Fund, compared to a
theoretical investment of $10,000 in the First Boston Convertible Index over the
same period. The results for the Fund assume an initial sales charge of 4.50%
that is deducted from the investment on the initial investment date and assume
the reinvestment of all dividends and distributions.
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED 12/31/95
Since
CONVERTIBLE FUND Inception
1 Year 5 Year (2/24/88)
With Maximum Sales Load (4.50%) 13.23% 12.38% 7.43%
Without Sales Load 18.52% 13.43% 8.06%
The performance shown represents past performance and is not a guarantee of
future results. A portfolio's share price and investment return will vary with
market conditions, and the value of shares, when redeemed, may be worth more or
less than the original cost. Total returns include changes in share price and
the reinvestment of income dividends and capital gain distributions.
The First Boston Convertible Index is an index comprised of an unmanaged group
of domestic convertible bonds and preferred stocks with a Standard & Poor's
rating of B\- or better and a minimum issue size of $50 million, and
dollar-denominated Euroconvertibles issued by U.S.-domiciled companies and
having a Standard & Poor's rating of B\- or better and a minimum issue size of
$100 million.
5
<PAGE>
HARRIS INSIGHT EQUITY FUND
PORTFOLIO MANAGEMENT DISCUSSION
During the first quarter of 1995, the strength of common stocks took most
investors by surprise. There was a strong relationship between the
capitalization of companies and their market performance. In fact, investors'
caution towards liquidity within the markets was evidenced by their preference
for larger capitalization companies over smaller or medium sized companies. The
five strongest sectors included: transportation, health care, energy, technology
and financial services. The performance of the Fund was hindered by unfavorable
issue selections, although this was partially offset by emphasis on companies
with a lower price/earnings ratio. At the end of the first quarter, the
portfolio was reconstructed to take advantage of disciplines that had proven
effective in the past.
By the end of the second quarter, the Fund experienced returns greater than
the S&P 500 Stock Index. The positive performance was the result of more
favorable issue selection, as driven by our research model. The strongest model
factors included: dividend discount projections, low price/earnings ratios,
stock price momentum and earnings estimate changes. Also, the Fund was
overweighted in the financial services and consumer staples sectors which were
among the better performers during the quarter. Finally, favorable issue
selection in the technology sector, by far the best performing sector in the
overall market during the second quarter, certainly contributed to enhance
returns.
However, investors' enthusiasm for technology stocks, which provided strong
leadership during the first half of the year, began to wane during the third
quarter as investor interest shifted to financial services companies. The three
other sectors that caught investors' attention -- health care, utilities, and
transportation -- outperformed the S&P 500 Stock Index as investor euphoria for
common stocks continued. Once again, the Fund continued to outperform the S&P
500 Stock Index due to adherence to favorable predictive factors in our research
model, such as earnings estimate changes and price momentum, which resulted in
complimentary issue selection.
In the fourth quarter, investors continued to favor large capitalization
companies which demonstrated stable earnings growth like health care stocks.
Technology, which was by far the best performing sector during the first half of
1995, was the worst performing sector during the fourth quarter. Although
returns from certain economically sensitive issues and companies with medium
sized capitalizations detracted from performance, the Fund benefited from
favorable issue selection in the business machine and retail sectors. For the
full year, issue selection was by far the most important positive factor
affecting the Fund.
Following strong returns from the domestic equity market in 1995, we remain
optimistic towards investing in common stocks in 1996, reflecting the prospect
of low inflation and somewhat lower interest rates. However, we anticipate
increased overall market volatility as investors become increasingly concerned
about companies meeting analysts' earnings expectations in a slower economic
environment.
6
<PAGE>
HARRIS INSIGHT EQUITY FUND
PERFORMANCE ANALYSIS
GROWTH OF A $10,000 INVESTMENT
FEBRUARY 26, 1988* -- DECEMBER 31, 1995
DESCRIPTION OF LINE GRAPH
Line graph shown using the plot points below:
Harris Insight S&P 500
Equity Fund Stock Index
2-88 $ 9,550 $10,000
12-88 10,337 10,690
12-89 13,233 14,071
12-90 12,191 13,634
12-91 15,518 17,779
12-92 16,789 19,131
12-93 19,850 21,055
12-94 19,443 21,332
12-95 26,492 29,339
The graph above shows the results of a hypothetical $10,000 investment in the
Harris Insight Equity Fund from the inception of the Fund, compared to a
theoretical investment of $10,000 in the S&P 500 Stock Index over the same
period. The results for the Fund assume an initial sales charge of 4.50% that is
deducted from the investment on the initial investment date and assume the
reinvestment of all dividends and distributions.
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED 12/31/95
EQUITY FUND Since
1 Year 5 Year Inception
(2/26/88)
With Maximum Sales Load (4.50%) 30.14% 15.72% 13.21%
Without Sales Load 36.26% 16.78% 13.87%
The performance shown represents past performance and is not a guarantee of
future results. A portfolio's share price and investment return will vary with
market conditions, and the value of shares, when redeemed, may be worth more or
less than the original cost. Total returns include changes in share price and
the reinvestment of income dividends and capital gain distributions.
The S&P 500 Stock Index is an index comprised of an unmanaged group of 500
widely held common stocks listed on the New York Stock Exchange, the American
Stock Exchange and the over-the-counter market.
7
<PAGE>
HARRIS INSIGHT MANAGED FIXED INCOME FUND
PORTFOLIO MANAGEMENT DISCUSSION
Still smarting from 1994's bear market, most bond investors began 1995
anticipating, at best, coupon-sized returns. What they got instead was the
biggest bond market rally since 1985. Indeed, in a year of dazzling stock market
returns, it is easy to overlook the magnitude of the bond market's comeback.
Nonetheless, with a gain of over 34%, the performance of the 30-year U.S.
Treasury bond was almost as impressive as the S&P 500 Stock Index's 37.53%
return.
Responding favorably to an accommodative Federal Reserve monetary policy,
bond investors drove interest rates dramatically lower in 1995. With rates
across the yield curve falling approximately 2%, nearly all Treasury securities
closed the year with yields below 6%. In this bull market environment, the
Fund's relative performance was driven primarily by its term structure and its
sector weightings.
Although neutral to the yield curve from the second quarter onward, the Fund
was penalized in the first quarter of 1995 by its barbell structure, a
combination of short and long maturity securities replicating the risk position
of an intermediate maturity security. The barbell, which contributed so much to
1994's strong return, underperformed in 1995 as the yield curve steepened.
Likewise, with corporate bonds, the year's top performing sector, the Fund's
initial corporate underweighting tempered performance. Fortunately, a long
duration position during the fourth quarter's market rally added favorably to
relative returns.
For the year, the Fund returned just under 14%, slightly below the return of
its benchmark, the Lehman Brothers Intermediate Government/Corporate Bond Index
while the Fund's 3-year total return for the period ended December 31, 1995,
outperformed the Index by 2%.
The Fund is currently in a neutral position in relation to the benchmark on
both a duration and term structure basis. However, the Fund is overweighted
across spread sectors, including corporate, asset-backed and mortgage-backed
securities. We anticipate that in a lower volatility, more range- bound market,
higher yielding spread sectors should perform well.
8
<PAGE>
HARRIS INSIGHT MANAGED FIXED INCOME FUND
PERFORMANCE ANALYSIS
GROWTH OF A $10,000 INVESTMENT
APRIL 1, 1991* -- DECEMBER 31, 1995
DESCRIPTION OF LINE GRAPH
Line graph shown using the plot points below:
Harris Insight Lehman Brothers
Managed Fixed Intermediate Government/
Income Fund Corporate Bond Index
4-91 $ 9,550 $10,000
6-91 9,656 10,178
12-91 10,605 11,181
6-92 10,903 11,518
12-92 11,164 11,983
6-93 11,974 12,727
12-93 12,270 13,036
6-94 11,945 12,695
12-94 12,112 12,784
6-95 13,127 14,012
12-95 13,794 14,745
The graph above shows the results of a hypothetical $10,000 investment in the
Harris Insight Managed Fixed Income Fund from the inception of the Fund,
compared to a theoretical investment of $10,000 in the Lehman Brothers
Intermediate Government/Corporate Bond Index over the same period. The results
for the Fund assume an initial sales charge of 4.50% that is deducted from the
investment on the initial investment date and assume the reinvestment of all
dividends and distributions.
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED 12/31/95
MANAGED FIXED Since
INCOME FUND Inception
1 Year 5 Year (4/1/91)
With Maximum Sales Load (4.50%) 8.70% -- 7.00%
Without Sales Load 13.88% -- 8.04%
The performance shown represents past performance and is not a guarantee of
future results. A portfolio's share price and investment return will vary with
market conditions, and the value of shares, when redeemed, may be worth more or
less than the original cost. Total returns include changes in share price and
the reinvestment of income dividends and capital gain distributions.
The Lehman Brothers Intermediate Government/Corporate Bond Index is a weighted
composite of (i) Lehman Brothers Intermediate Government Bond Index, which is
comprised of all publicly issued, non-convertible debt of the U.S. Government or
any agency thereof, quasi-federal corporations, and corporate debt guaranteed by
the U.S. Government with a maturity of between one and ten years and (ii) Lehman
Brothers Corporate Bond Index, which is comprised of all public fixed-rate,
non-convertible investment-grade domestic corporate debt with a maturity of
between one and ten years, excluding collateralized mortgage obligations.
9
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
GOVERNMENT ASSETS FUND
<TABLE>
<CAPTION>
ANNUALIZED
YIELD/RATE PAR
MATURITY (000) VALUE+
AGENCY OBLIGATIONS -- 35.1%
Federal Home Loan Bank Discount Notes -- 11.2%
<S> <C> <C> <C>
5.46% 01/16/96 $ 7,000 $ 6,984,075
5.55% 02/01/96 15,000 14,928,312
5.49% 04/05/96 10,000 9,855,125
31,767,512
Federal Home Loan Mortgage Association Discount Notes -- 9.8%
5.58% 01/19/96 10,000 9,972,100
5.53% 02/09/96 8,000 7,952,073
5.50% 03/13/96 10,000 9,890,000
27,814,173
Federal National Mortgage Association -- 14.1%
5.50% 06/12/96 15,000 14,973,145
7.90% 08/12/96 9,700 9,830,892
5.76% 09/03/96 10,000 10,010,044
5.64% 10/02/96 5,000 4,993,839
39,807,920
TOTAL AGENCY OBLIGATIONS (Cost $99,389,605) 99,389,605
VARIABLE RATE OBLIGATIONS+ -- 37.7%
Federal Farm Credit Bank -- 12.6%
5.60% 01/02/96* 10,000 9,996,567
5.62% 01/02/96* 20,000 19,996,607
5.34% 01/02/96* 5,500 5,497,783
35,490,957
Student Loan Marketing Association -- 12.4%
5.24% 01/02/96* 10,000 9,994,826
5.26% 01/02/96* 10,000 10,002,503
5.31% 01/02/96* 15,000 15,000,000
34,997,329
Federal National Mortgage Association -- 12.7%
5.26% 01/02/96* 6,000 6,000,000
5.58% 01/02/96* 5,000 4,996,998
6.10% 01/02/96* 5,000 5,015,491
5.42% 01/02/96* 5,000 4,999,795
5.53% 01/02/96* 15,000 14,991,033
36,003,317
TOTAL VARIABLE RATE OBLIGATIONS (Cost $106,491,603) 106,491,603
See Notes to Financial Statements.
10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE+
REPURCHASE AGREEMENTS -- 26.9%
<S> <C> <C> <C>
Donaldson, Lufkin & Jenrette, 5.85%
Agreement date 12/29/95, proceeds at maturity
$45,029,250 (Collateralized by $58,606,000
Resolution Funding Corp. Strips 5.85% due 1/15/97
to 7/15/02. The market value is $45,916,044.) 01/02/96 $45,000 $ 45,000,000
Lehman Government Securities, Inc., 5.92%
Agreement date 12/29/95, proceeds at maturity
$31,112,452 (Collateralized by $87,160,000
U.S Treasury Strips, due 8/15/12. The market
value is $31,716,652.) 01/02/96 31,092 31,092,000
TOTAL REPURCHASE AGREEMENTS (Cost $76,092,000) 76,092,000
Shares
TEMPORARY INVESTMENTS -- 0.4%
Goldman Sachs Institutional Liquid Assets Government Portfolio
(Cost $1,099,231) 1,099,231 1,099,231
TOTAL INVESTMENTS -- 100.1% (Cost $283,072,439) 283,072,439
OTHER ASSETS AND LIABILITIES -- (0.1%)
Interest receivable and other assets 1,354,755
Dividends payable (1,412,182)
Accrued expenses (Note 4) (222,233)
Other Assets and Liabilities, Net (279,660)
NET ASSETS -- 100.0%
Applicable to 264,426,089 and 18,366,690 shares outstanding of Class A and Class
C, respectively, each equivalent to $.001 par value; 1.2 billion authorized shares
(Note 9) $282,792,779
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE EACH FOR CLASS
A AND CLASS C SHARES $1.00
+ See Note 2a to the Financial Statements.
+ Rate in effect on 12/31/95.
* Date of next interest rate reset.
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE\^
AGENCY OBLIGATIONS -- 4.3%
<S> <C> <C> <C> <C>
Federal Home Loan Bank 6.15 % 01/04/96 $ 12,500 $ 12,540,552
Federal National Mortgage Association 5.26 01/02/96 10,000 10,000,000
TOTAL AGENCY OBLIGATIONS (COST $22,540,552) 22,540,552
ASSET-BACKED SECURITIES -- 1.7%
Boatmen's Auto Trust 1995 Class A-1
(Cost $8,840,828) 5.772 10/15/96 8,841 8,840,828
COMMERCIAL PAPER -- 50.0%
American Express Credit Corp 5.60 05/13/96 8,000 7,834,489
Associates Corp. of North America 6.00 01/02/96 1,574 1,573,738
Baxter International, Inc. 5.90 01/17/96 3,500 3,490,822
British Columbia (Province of) 5.62 05/03/96 10,000 9,807,983
CIT Group Holdings, Inc. 5.80 01/31/96 25,000 24,879,167
Comdisco, Inc. 5.97 02/20/96 5,000 4,958,542
Commonwealth Edison Co. 6.13 01/19/96 5,000 4,984,675
Conagra, Inc. 5.90 02/02/96 1,000 994,757
Conagra, Inc. 5.85 02/09/96 4,000 3,974,650
Cooper Industries, Inc. 5.97 01/02/96 20,000 19,996,683
Florida Power & Light Co. 5.75 02/02/96 10,000 9,948,889
General Motors Acceptance Corp. 5.80 01/19/96 25,000 24,927,500
Lehman Government Securities, Inc. 6.05 01/31/96 20,000 19,899,167
McCormick and Co., Inc. 5.625 01/22/96 25,000 24,917,969
Merrill Lynch & Co., Inc. 5.72 01/31/96 9,000 8,957,100
Merrill Lynch & Co., Inc. 5.71 02/09/96 8,000 7,950,513
Merrill Lynch & Co., Inc. 5.68 02/29/96 10,000 9,906,911
New Center Asset Trust 6.03 01/02/96 15,000 14,997,488
Preferred Receivables Corp. 5.78 01/25/96 5,000 4,980,733
Preferred Receivables Corp. 5.85 01/25/96 8,250 8,217,825
Province of Quebec 5.58 03/06/96 15,000 14,848,875
Public Service Elec. & Gas Co. 6.00 01/30/96 20,000 19,903,333
Texas Utilities Co. 5.97 01/12/96 5,000 4,990,879
Textron, Inc. 6.04 01/29/96 2,000 1,990,604
Textron, Inc. 5.85 03/12/96 2,000 1,976,925
TOTAL COMMERCIAL PAPER (Cost $260,910,217) 260,910,217
CORPORATE BONDS -- 7.7%
Associates Corp. of North America 8.80 03/01/96 10,000 10,046,752
AT&T Corp. 4.50 02/15/96 10,000 9,970,725
Beta Finance, Inc. 5.87 08/19/96 10,000 9,990,199
Ford Motor Credit Corp. 5.40 02/08/96 10,000 9,992,765
TOTAL CORPORATE BONDS (Cost $40,000,441) 40,000,441
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
<TABLE>
<CAPTION>
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE\^
MUNICIPAL BONDS -- 4.8%
<S> <C> <C> <C> <C>
City of Whiting Indiana (Cost $25,000,000) 5.75% 03/11/96 $25,000 $25,000,000
TIME DEPOSITS -- 1.7%
Sumitomo Bank (Cayman) (Cost $9,000,000) 6.125 01/05/96 9,000 9,000,000
VARIABLE RATE OBLIGATIONS+ -- 29.9%
Asset Backed Trust 1995-Series-A-1 5.9575 01/10/96* 3,000 3,000,000
Bank One Columbus 5.56 01/02/96* 25,000 24,988,156
Beta Finance, Inc. 5.8975 01/13/96* 10,000 10,000,000
Federal Farm Credit Bank 5.62 01/02/96* 20,000 19,996,607
Federal Farm Credit Bank 5.95 01/02/96* 1,500 1,499,205
Federal National Mortgage Association 5.42 01/02/96* 10,000 9,999,589
Federal National Mortgage Association 6.10 01/02/96* 16,000 16,049,571
Federal National Mortgage Association 5.97 01/02/96* 10,000 10,014,120
Federal National Mortgage Association 5.58 01/02/96* 10,000 9,993,996
General Electric Capital Corp. 5.80 02/07/96* 26,000 26,000,000
S.M.M. Trust 5.9496 01/15/96* 15,000 15,000,000
Student Loan Marketing Association 5.26 01/02/96* 10,000 10,002,503
TOTAL VARIABLE RATE OBLIGATIONS (Cost $156,543,747) 156,543,747
Shares
TEMPORARY INVESTMENTS -- 0.1%
Dreyfus Cash Management Plus, Inc. Class A Shares 315,335 315,335
Lehman Prime Money Market Fund Class A Shares 34,271 34,271
TOTAL TEMPORARY INVESTMENT (Cost $349,606) 349,606
TOTAL INVESTMENTS -- 100.2% (Cost $523,185,391) 523,185,391
OTHER ASSETS AND LIABILITIES -- (0.2%)
Interest receivable and other assets 2,454,966
Dividends payable (2,839,719)
Accrued expenses (Note 4) (375,339)
Other Assets and Liabilities, Net (760,092)
Net Assets -- 100.0%
Applicable to 423,577,627, 10, and 98,836,813 shares outstanding of Class A, Class B
and Class C, respectively, $.001 par value; 1.2 billion authorized shares (Note 9) $522,425,299
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE EACH FOR CLASS
A, CLASS B AND CLASS C SHARES $1.00
+ See Note 2a to the Financial Statements.
+ Rate in effect on 12/31/95.
* Date of next interest rate reset.
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE+
MUNICIPAL BONDS -- 98.7%
ALASKA -- 5.2%
<S> <C> <C> <C>
Valdez, Alaska Marine Terminal (BP Petroleum) PS
3.70% 02/09/96 $ 2,000 $ 2,000,000
3.70% 02/12/96 1,300 1,300,000
3.55% 02/14/96 9,000 9,000,000
3.70% 03/06/96 3,000 3,000,000
3.40% 04/11/96 1,000 1,000,000
Valdez, Alaska Marine Terminal (BP Petroleum)
Series C PS
3.55% 02/16/96 3,500 3,500,000
Total Alaska 19,800,000
Arizona -- 4.8%
Maricopa County, Arizona, Pollution Control Revenue,
Southern California Education Series F PS
3.40% 01/04/96 700 700,000
Salt River, Arizona, Agriculture and Improvement Power
District
3.45% 01/19/96 3,050 3,050,000
3.70% 01/11/96 415 415,000
3.85% 01/11/96 2,000 2,000,000
3.70% 01/12/96 1,000 1,000,000
3.80% 01/16/96 1,000 1,000,000
3.45% 02/05/96 1,000 1,000,000
3.50% 02/05/96 500 500,000
3.45% 02/06/96 2,000 2,000,000
3.45% 02/08/96 2,000 2,000,000
3.80% 02/09/96 2,000 2,000,000
3.70% 02/20/96 1,300 1,300,000
3.75% 02/21/96 1,400 1,400,000
TOTAL ARIZONA 18,365,000
COLORADO -- 0.9%
Platte River, Colorado Power Authority TECP
3.70% 01/11/96 500 500,000
3.60% 02/12/96 3,100 3,100,000
TOTAL COLORADO 3,600,000
DISTRICT OF COLUMBIA -- 0.3%
District of Columbia Supplemental Student Loan Revenue Bonds VR
6.00% 01/02/96 1,200 1,200,000
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE+
MUNICIPAL BONDS (CONTINUED)
FLORIDA -- 10.5%
<S> <C> <C> <C>
Dade County, Florida, Capital Asset Acquisition Special
Obligation Revenue Bonds, Series 1990 VR
5.65% 01/08/96 $11,360 $ 11,360,000
Florida Housing Finance Agency Multi-Family Housing
Revenue Bonds VR
5.35% 01/08/96 1,100 1,100,000
Gainesville, Florida Utility TECP
3.80% 02/09/96 2,900 2,900,000
3.70% 03/05/96 4,144 4,144,000
Jacksonville, Florida Health Facility Authority Series C TECP
3.80% 02/02/96 1,700 1,700,000
Jacksonville, Florida Health Facility Authority TECP
3.65% 01/12/96 500 500,000
3.65% 02/05/96 2,200 2,200,000
3.45% 02/16/96 1,000 1,000,000
Sarasota County, Florida, Series B PS
4.00% 01/10/96 1,800 1,800,000
Sunshine State, Florida TECP
3.75% 01/09/96 3,000 3,000,000
3.70% 01/12/96 2,000 2,000,000
3.45% 01/31/96 1,300 1,300,000
3.65% 02/01/96 3,900 3,900,000
3.60% 02/06/96 3,500 3,500,000
TOTAL FLORIDA 40,404,000
GEORGIA -- 7.4%
Burke County Development Authority Pollution Control Revenue PS
3.60% 01/11/96 1,000 1,000,000
3.60% 01/22/96 2,000 2,000,000
3.70% 02/08/96 3,000 3,000,000
3.60% 02/12/96 4,700 4,700,000
Dekalb Private Hospital Authority, Georgia VR
5.05% 01/08/96 15,200 15,200,000
Gwinnet County School District
4.40% 02/01/96 2,315 2,316,724
TOTAL GEORGIA 28,216,724
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE+
MUNICIPAL BONDS (CONTINUED)
<S> <C> <C> <C>
ILLINOIS -- 2.8%
Cook County, Illinois, Catholic Charities VR
5.20% 01/08/96 $ 8,200 $ 8,200,000
Illinois Development Financial Authority VR
5.20% 01/08/96 2,515 2,515,000
TOTAL ILLINOIS 10,715,000
INDIANA -- 4.1%
Indiana Bond Bank VR
3.91% 01/10/96 12,500 12,500,000
Indiana State Educational Facility VR
4.80% 01/08/96 3,000 3,000,000
TOTAL INDIANA 15,500,000
IOWA -- 0.8%
Polk County, Iowa Hospital Equipment Authority VR
5.15% 01/08/96 3,205 3,205,000
KANSAS -- 8.6%
Burlington, Kansas, Pollution Control Revenue Kansas
Gas & Electric PS
3.80% 01/08/96 2,000 2,000,000
3.50% 02/16/96 4,600 4,600,000
Burlington, Kansas, Pollution Control Revenue Kansas
Gas & Electric Series A PS
3.70% 01/09/96 2,700 2,700,000
3.45% 02/15/96 3,000 3,000,000
Burlington, Kansas, Pollution Control Revenue Kansas
Gas & Electric Series B PS
3.65% 02/02/96 1,000 1,000,000
3.50% 02/15/96 2,100 2,100,000
Burlington, Kansas, Pollution Control Revenue Kansas
Gas & Electric Series 1987B PS
3.80% 02/02/96 4,000 4,000,000
Kansas State Department of Transportation Highway
Revenue Series B VR
5.05% 01/08/96 13,600 13,600,000
TOTAL KANSAS 33,000,000
KENTUCKY -- 0.5%
Jefferson County, Kentucky, Pollution Control Revenue,
Louisville Gas & Electric PS
3.75% 02/15/96 2,100 2,100,000
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE+
<S> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
LOUISIANA -- 2.7%
East Baton Rouge Parish Industrial Development
Authority, Pollution Control Revenue Bonds Exxon
Corp. Project Series 1983A VR
5.90% 01/02/96 $ 5,150 $ 5,150,000
Jefferson (Parish of), Louisiana Hospital PS
3.60% 01/16/96 3,500 3,500,000
Jefferson (Parish of), Louisiana Hospital Series E VR
5.15% 01/02/96 1,500 1,500,000
TOTAL LOUISIANA 10,150,000
MAINE -- 0.3%
Maine State Tax Anticipation Notes
4.50% 06/28/96 1,000 1,003,538
MARYLAND -- 2.6%
Howard County Industrial Development Revenue TECP
3.60% 02/15/96 2,000 2,000,000
Maryland Health & Higher Education Pooled Loan Series A VR
5.00% 01/08/96 3,000 3,000,000
Montgomery County, Maryland General Obligation TECP
3.60% 02/07/96 4,900 4,900,000
TOTAL MARYLAND 9,900,000
MASSACHUSETTS -- 0.4%
Boston, Massachusetts Water & Sewer Common Series A
4.70% 01/04/96 1,600 1,600,000
MICHIGAN -- 1.6%
Grand Rapids, Michigan Water Supply
9.00% 06/01/96 2,000 2,039,995
Michigan State Strategic Fund Consumers Power Company Series 1988A VR
5.95% 01/02/96 2,700 2,700,000
University of Michigan
5.95% 01/02/96 1,400 1,400,000
TOTAL MICHIGAN 6,139,995
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE+
MUNICIPAL BONDS (CONTINUED)
MINNESOTA -- 3.5%
<S> <C> <C> <C>
Rochester, Minnesota, Health Care Facility PS
3.80% 02/07/96 $ 1,800 $ 1,800,000
Rochester, Minnesota, Health Care Facility Series B PS
3.70% 01/10/96 1,500 1,500,000
Rochester, Minnesota, Health Care Facility Series C PS
3.55% 01/10/96 3,500 3,500,000
Rochester, Minnesota, Health Care Facility Series F PS
3.60% 02/13/96 1,600 1,600,000
3.80% 02/15/96 1,000 1,000,000
University of Minnesota, Series H PS
3.60% 01/10/96 1,000 1,000,000
3.75% 01/12/96 900 900,000
University of Minnesota, Series I PS
3.85% 02/09/96 2,000 2,000,000
TOTAL MINNESOTA 13,300,000
Mississippi -- 0.6%
Claiborne County, Mississippi Pollution Control Revenue TECP
3.85% 01/08/96 1,400 1,400,000
Jacksonville County, Mississippi Port Facility, Chevron
USA, Inc. Series 1993 VR
5.95% 01/02/96 1,000 1,000,000
TOTAL MISSISSIPPI 2,400,000
MISSOURI -- 2.0%
Independence, Missouri, Water Utility PS
3.75% 01/08/96 2,000 2,000,000
3.40% 02/05/96 2,500 2,500,000
St. Louis, Missouri, Industrial Development Authority,
VR
5.20% 01/02/96 3,000 3,000,000
TOTAL MISSOURI 7,500,000
MONTANA -- 1.2%
Forsythe, Montana, Pollution Control Revenue, (Portland
General Electric), Series A VR
4.80% 01/08/96 2,600 2,600,000
Forsythe, Montana, Pollution Control Revenue, (Portland
General Electric), Series B VR
5.00% 01/08/96 2,000 2,000,000
TOTAL MONTANA 4,600,000
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE+
MUNICIPAL BONDS (CONTINUED)
<S> <C> <C> <C>
NEBRASKA -- 0.8%
Nebraska Public Power District TECP
3.65% 01/18/96 $ 2,000 $ 2,000,000
Omaha, Nebraska Public Power District TECP
3.75% 02/22/96 1,000 1,000,000
TOTAL NEBRASKA 3,000,000
NEW JERSEY -- 0.6%
New Jersey Economic Development Authority (Jersey
Avenue Project) VR
4.95% 01/08/96 2,200 2,200,000
New York -- 4.4%
New York City General Obligation Bonds Series 1994B VR
5.00% 01/02/96 2,200 2,200,000
New York City General Obligation Bonds VR
5.90% 01/02/96 3,900 3,900,000
5.50% 01/08/96 10,800 10,800,000
TOTAL NEW YORK 16,900,000
NORTH CAROLINA -- 1.4%
North Carolina Municipal Power Agency Series B
3.45% 02/14/96 4,000 4,000,000
Wake County, North Carolina Power and Light PS
3.70% 02/13/96 1,300 1,300,000
TOTAL NORTH CAROLINA 5,300,000
OHIO -- 3.0%
Ohio Air Quality Development Authority Revenue Bonds VR
5.50% 01/02/96 6,500 6,500,000
Ohio Air Quality Development Authority Revenue PS
3.50% 01/18/96 3,000 3,000,000
3.40% 02/16/96 2,000 2,000,000
TOTAL OHIO 11,500,000
OREGON -- 3.6%
Saint Helens Gas and Electric VR
5.95% 01/02/96 1,500 1,500,000
State of Oregon General Obligation (Veterans Welfare) Series G VR
5.25% 01/08/96 1,000 1,000,000
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE+
UNICIPAL BONDS (CONTINUED)
OREGON (CONTINUED)
<S> <C> <C> <C>
State of Oregon General Obligation (Veterans Welfare)
Series 1973E VR
5.15% 01/08/96 $11,300 $ 11,300,000
TOTAL OREGON 13,800,000
PENNSYLVANIA -- 1.5%
Delaware County, Pennsylvania, Industrial Development
Authority, Solid Waste Revenue, (Scott Paper),
Series E VR
5.00% 01/08/96 5,800 5,800,000
SOUTH CAROLINA -- 0.7%
Piedmont, South Carolina Municipal Power Agency
Electric Revenue Bonds Series 1985B
8.00% 01/01/96 1,760 1,786,397
York County, South Carolina, Pollution Control Revenue
Series E2 PS
3.80% 02/15/96 1,000 1,000,000
TOTAL SOUTH CAROLINA 2,786,397
TEXAS -- 8.3%
Austin, Texas Independent School District Series B TECP
3.70% 02/20/96 2,000 2,000,000
Austin, Texas Independent School District TECP
3.80% 02/06/96 1,000 1,000,000
Dallas, Texas Water & Sewer TECP
3.70% 01/12/96 3,000 3,000,000
Harris County, Texas Series 1985A VR
5.05% 01/08/96 1,800 1,800,000
Lower Colorado River Authority Revenue
9.50% 01/01/96 1,600 1,631,995
San Antonio, Texas Electric & Gas TECP
3.75% 02/08/96 1,000 1,000,000
Texas Higher Education Authority, Series B, VR
5.15% 01/08/96 11,510 11,510,000
Texas Municipal Power Authority TECP
3.85% 02/05/96 4,875 4,875,000
Texas State Tax and Revenue
4.75% 08/30/96 5,000 5,024,393
TOTAL TEXAS 31,841,388
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE+
MUNICIPAL BONDS (CONTINUED)
UTAH -- 3.6%
<S> <C> <C> <C>
Emery County, Utah, Pollution Control Revenue Bonds PS
3.80% 01/23/96 $ 1,000 $ 1,000,000
3.75% 02/01/96 1,000 1,000,000
Intermountain Power Agency, Utah PS
3.65% 01/11/96 4,000 4,000,000
Intermountain Power Agency, Utah Series F2 PS
3.75% 01/29/96 1,700 1,700,000
3.85% 02/07/96 2,700 2,700,000
3.60% 02/14/96 1,800 1,800,000
Intermountain Power Agency, Utah Series 1985F PS
3.40% 04/11/96 500 500,000
Salt Lake County, Utah PS
3.80% 01/10/96 500 500,000
4.00% 01/10/96 500 500,000
TOTAL UTAH 13,700,000
VERMONT -- 1.8%
State of Vermont TECP
3.75% 01/11/96 7,000 7,000,000
VIRGINIA -- 1.5%
Colonial Heights, Virginia, Industrial Development
Authority, (Philip Morris Companies) VR
5.15% 01/08/96 2,600 2,600,000
Industrial Development Authority of Chesterfield,
Virginia, Pollution Control Revenue, (Philip Morris Companies) VR
5.15% 01/08/96 3,000 3,000,000
TOTAL VIRGINIA 5,600,000
WASHINGTON -- 0.3%
Port of Kalama, Washington Public Corporation Port
Facility Revenue (Conagra, Inc Project) VR
4.85% 01/01/96 1,035 1,035,000
WYOMING -- 6.4%
Converse County, Wyoming, Pollution Control Revenue PS
3.40% 02/14/96 2,800 2,800,000
3.40% 02/16/96 2,800 2,800,000
Gillette County, Wyoming, Pollution Control Revenue PS
3.75% 01/09/96 1,900 1,900,000
3.45% 01/19/96 3,500 3,500,000
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE+
<S> <C> <C> <C>
Lincoln County, Wyoming Pollution Control Revenue PS
3.80% 02/06/96 $ 1,600 $ 1,600,000
3.40% 04/04/96 3,400 3,400,000
Lincoln County, Wyoming Pollution Control Revenue, Exxon VR
5.95% 01/02/96 1,400 1,400,000
Sweetwater County, Wyoming Pollution Control Revenue PS
3.45% 02/14/96 2,700 2,700,000
Sweetwater County, Wyoming Pollution Control Revenue Series B PS
3.90% 01/12/96 4,500 4,500,000
TOTAL WYOMING 24,600,000
TOTAL MUNICIPAL BONDS (Cost $377,762,042) 377,762,042
Shares
TEMPORARY INVESTMENTS -- 1.0%
Federated Tax-Free Obligation Fund 2,879,551 2,879,551
Fidelity Tax-Exempt Money Market Fund 3,460 3,460
Goldman Sachs Institutional Liquid Assets Tax-Exempt Portfolio 854,887 854,887
Nuveen Tax-Exempt Money Market Fund 42 42
TOTAL TEMPORARY INVESTMENTS (Cost $3,737,940) 3,737,940
TOTAL INVESTMENTS -- 99.7% (Cost $381,499,982) 381,499,982
OTHER ASSETS AND LIABILITIES -- 0.3%
Interest receivable and other assets 2,626,981
Dividends payable (1,209,472)
Accrued expenses (Note 4) (201,032)
1,216,477
NET ASSETS -- 100.0%
Applicable to 170,576,120 and 212,146,515 shares outstanding of Class A and Class
C, respectively, $.001 par value; 1.55 billion authorized shares (Note 9) $382,716,459
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE EACH FOR CLASS
A AND CLASS C SHARES $1.00
+ See Note 2a to the Financial Statements.
PS Security with a "put" feature; date shown is when security may be put back
for redemption.
VR Variable rate demand note; interest rate in effect on 12/31/95. Maturity
date is the longer of the next interest rate change or the demand feature.
TECP Tax-Exempt Commercial Paper.
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
CONVERTIBLE FUND
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
CONVERTIBLE PREFERRED STOCK -- 25.7%
AUTO-RELATED -- 2.5%
General Motors Corp. 400 $ 29,300
BANKS -- 4.4%
Ahmanson H.F. & Co. 230 13,599
First Chicago Corp. 500 33,500
Sovereign Bancorp 100 5,700
52,799
BUILDINGS AND CONSTRUCTION -- 1.5%
Owens Corning Capital 300 18,113
FINANCIAL SERVICES -- 2.0%
Merry Land and Investment 100 2,875
Penn Corp. Financial 300 21,413
24,288
HEALTH CARE -- 2.4%
F.H.P. International Corp. 1,100 29,288
INSURANCE -- 1.3%
American General Delaware 200 10,475
St. Paul Capital 100 5,625
16,100
INDUSTRIAL -- 3.3%
Corning Glass Works 200 10,075
GATX Corp. 500 28,750
38,825
OIL -- DOMESTIC -- 3.8%
Diamond Shamrock, Inc. 200 11,300
Unocal Corp. 500 27,500
38,800
OPERATORS OF NON-RESIDENTIAL BUILDING -- 1.4%
Rouse Co. 325 16,778
PAPER-FOREST PRODUCTS -- 3.1%
James River Corp. 800 37,100
TOTAL CONVERTIBLE PREFERRED STOCK (Cost $266,292) 301,391
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
CONVERTIBLE FUND (CONTINUED)
<TABLE>
<CAPTION>
COUPON PAR
RATE MATURITY (000) VALUE+
<S> <C> <C> <C> <C>
CONVERTIBLE CORPORATE BONDS -- 66.0%
ADVERTISING -- 2.2%
Omnicom Group, Inc. 4.50% 09/01/00 $20 $ 26,150
AIRLINE -- 5.1%
Alaska Air Group, Inc. 6.875 06/15/14 35 28,875
AMR Corp. 6.125 11/01/24 30 31,200
60,075
APPAREL AND TEXTILES -- 3.2%
Guilford Mills, Inc. 6.00 09/15/12 40 37,800
AUTO PARTS -- 2.3%
Arvin Industries, Inc. 7.50 09/30/14 27 26,831
BANKS -- 3.4%
Fifth Third Bancorp 4.25 01/15/98 35 40,119
BUILDING AND CONSTRUCTION -- 3.6%
Lafarge Corp. 7.00 07/01/13 40 42,000
ELECTRICAL EQUIPMENT -- 1.8%
General Signal Corp. 5.75 06/01/02 20 20,900
ELECTRONICS -- 2.6%
Altera Corp. 5.75 06/15/02 15 17,606
Integrated Device Technology 5.50 06/01/02 15 12,450
30,056
FINANCIAL SERVICES -- 2.4%
IRT Property 7.30 08/15/03 30 28,350
INDUSTRIAL EQUIPMENt -- 1.9%
Albany International Corp. 5.25 03/15/02 25 22,250
INDUSTRIAL -- 6.1%
Trinova Corp. 6.00 10/15/02 40 38,200
U.S. Filter Corp. 5.00 10/15/00 25 33,313
71,513
INSURANCE -- 2.3%
Horace Mann Educators 6.50 12/01/99 25 26,375
METALS AND MINING -- 3.2%
Inco Ltd. 7.75 03/15/16 35 37,625
OFFICE EQUIPMENT-SERVICES -- 4.7%
EMC Corp. 4.25 01/01/01 15 14,925
Quantum Corp. 6.375 04/01/02 20 21,100
Seagate Technology 5.00 11/01/03 10 18,963
54,988
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
CONVERTIBLE FUND (CONTINUED)
<TABLE>
<CAPTION>
COUPON PAR
RATE MATURITY (000) VALUE+
<S> <C> <C> <C> <C>
CONVERTIBLE CORPORATE BONDS (CONTINUED)
OIL-DOMESTIC -- 3.9%
Ashland Oil, Inc. 6.75% 07/01/14 $25 $ 24,875
Pennzoil Co. 4.75 10/01/03 20 20,400
45,275
PROFESSIONAL SERVICES -- 3.5%
Career Horizons Inc. 7.00 11/01/02 10 11,275
Olsten Corp. 4.875 05/15/03 25 29,531
40,806
RETAIL-FOODS -- 2.2%
Food Lion, Inc. 5.00 06/01/03 25 25,219
RETAIL-GENERAL -- 2.5%
Price Co. 5.50 02/28/12 30 29,250
RETAIL-SPECIALTY -- 3.7%
Pier One Imports, Inc. 6.875 04/01/02 40 42,800
STEEL -- 4.1%
Trimas Corp. 5.00 08/01/03 20 19,899
USX Corp. 7.00 06/15/17 30 28,650
48,549
TRANSPORTATION SERVICES -- 1.3%
Airborne Freight Corp. 6.75 08/15/01 15 15,150
TOTAL CONVERTIBLE CORPORATE BONDS (Cost $720,376) 772,081
U.S. TREASURY OBLIGATIONS -- 5.9%
U.S. Treasury Bills (Cost $69,234) 5.32 03/14/96 70 69,270
SHARES
TEMPORARY INVESTMENTS -- 3.9%
Goldman Sachs Institutional Liquid Assets Government Portfolio 33,291 33,291
Goldman Sachs Institutional Liquid Assets Money Market Portfolio 12,597 12,597
TOTAL TEMPORARY INVESTMENTS (Cost $45,888) 45,888
TOTAL INVESTMENTS -- 101.5% (Cost $1,101,790) 1,188,630
OTHER ASSETS AND LIABILITIES -- (1.5%)
Interest receivable and other assets 15,862
Dividends payable (28,173)
Accrued expenses (Note 4) (5,631)
OTHER ASSETS AND LIABILITIES, NET (17,942)
NET ASSETS -- 100.0%
Applicable to 123,025 shares of $.001 par value; 100,000,000 shares authorized (Note 9) $1,170,688
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $9.52
MAXIMUM PUBLIC OFFERING PRICE (Note 6) $9.97
+ See Note 2a to the Financial Statements.
* Non-income producing security.
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
EQUITY FUND
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
COMMON STOCK -- 106.3%
ADVERTISING -- 0.3%
Omnicom Group, Inc. 4,200 $ 156,450
AEROSPACE -- 7.0%
Lockheed Martin Corp. 30,000 2,370,000
Loral Corp. 22,000 778,250
Teledyne, Inc. 17,500 448,438
Teledyne, Inc. Preferred Series E* 175 2,515
Textron, Inc. 10,000 675,000
4,274,203
AIRLINE -- 3.1%
AMR Corp.* 9,000 668,250
British Airways PLC ADR 7,000 509,250
Delta Airlines, Inc. 10,000 738,750
1,916,250
APPAREL AND TEXTILES -- 1.1%
Nike, Inc., Class B 5,600 389,900
TJX Companies, Inc. 16,100 303,887
693,787
BANKS -- 8.7%
Bank of Boston Corp. 21,000 971,250
Chase Manhattan Corp. 25,000 1,515,625
Chemical Banking Corp. 13,200 775,500
Citicorp. 19,300 1,297,925
Washington Mutual, Inc. 26,000 750,750
5,311,050
BUILDING AND CONSTRUCTION -- 0.2%
Castle & Cooke, Inc.* 8,000 134,000
CHEMICALS -- 2.0%
Dow Chemical Co. 7,000 492,624
Union Carbide Corp. 21,000 787,500
1,280,124
COAL-GAS-PIPELINES -- 2.6%
Coastal Corp. 42,000 1,564,500
ELECTRONICS -- 6.1%
Arrow Electronics, Inc. 4,600 198,375
Avnet, Inc. 19,700 881,575
Dell Computer Corp.* 15,500 536,688
Harris Corp. 20,975 1,145,759
Texas Instruments, Inc. 13,500 698,625
TRINOVA Corp. 10,500 300,562
3,761,584
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
EQUITY FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
COMMON STOCK (CONTINUED)
FINANCIAL SERVICES -- 1.8%
ITT Corp. Common New* 8,000 $424,000
ITT Corp., Inc.* 8,000 192,000
Merrill Lynch & Co., Inc. 10,000 510,000
1,126,000
FOODS -- 6.3%
Conagra, Inc. 13,500 556,875
Dole Food, Inc. 24,000 840,000
IBP, Inc. 43,475 2,195,488
Sara Lee Corp. 7,500 239,063
3,831,426
HOSPITAL SUPPLIES AND SERVICES -- 5.4%
Baxter International, Inc. 48,000 2,010,000
Becton Dickinson & Co. 17,500 1,312,500
3,322,500
HOUSEHOLD FURNITURE AND APPLIANCES -- 1.5%
Premark International, Inc. 17,950 908,719
INSURANCE -- 5.4%
AFLAC, Inc. 10,500 455,438
CIGNA Corp. 10,000 1,032,500
ITT Hartford Group, Inc. 8,000 387,000
Reliastar Financial Corp. 23,700 1,051,688
Transamerica Corp. 5,000 364,374
3,291,000
METALS AND MINING -- 1.3%
Reynolds Metals Company 14,000 792,750
Office Equipment-Services -- 5.9%
Digital Equipment Corp.* 12,000 769,500
International Business Machines Corp. 22,000 2,018,500
Sun Microsystems, Inc.* 18,600 848,625
3,636,625
OIL-INTERNATIONAL -- 8.2%
Exxon Corp. 28,000 2,243,500
Mobil Corp. 24,650 2,760,800
5,004,300
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
EQUITY FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
COMMON STOCK (CONTINUED)
PAPER -- 3.9%
Georgia Pacific Corp. 7,500 $ 514,688
International Paper Co. 9,100 344,663
Mead Corp. 15,050 786,363
Willamette Industries, Inc. 13,500 759,374
2,405,088
PHARMACEUTICALS -- 5.8%
Bristol-Myers Squibb Co. 20,000 1,717,500
Rhone-Poulenc Rorer, Inc. 29,800 1,586,850
Schering Plough Corp. 5,000 273,750
3,578,100
PHOTO AND OPTICAL -- 0.8%
Bausch & Lomb, Inc. 12,500 495,313
PRINITING AND PUBLISHING -- 0.3%
Banta Corp. 4,000 176,000
RAILROADS -- 1.4%
Burlington Northern Santa Fe Corp. 11,000 858,000
RETAIL-FOOD -- 3.8%
Safeway Inc. Co.* 45,000 2,317,500
RETAIL-GENERAL -- 2.3%
Sears Roebuck & Co. 36,000 1,404,000
TOBACCO -- 4.0%
Philip Morris Companies, Inc. 27,000 2,443,500
TRUCKING AND SHIPPING -- 1.2%
American President Companies, Ltd. 17,000 391,000
Ryder Systems, Inc. 14,000 346,500
737,500
UTILITIES -- ELECTRIC -- 7.8%
General Public Utilities Corp. 50,000 1,700,000
New York State Electric & Gas Corp. 65,000 1,681,875
Public Service Co. of Colorado 10,000 353,750
SCEcorp. 57,000 1,011,750
4,747,375
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
EQUITY FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
COMMON STOCK (CONTINUED)
UTILITIES-GAS -- 0.6%
Pacific Enterprises, Inc. 14,000 $ 395,500
UTILITIES -- TELEPHONE -- 7.4%
AT&T Corp. 6,500 420,875
MCI Communications Corp. 20,000 522,500
Southern New England Telecommunications Corp. 42,000 1,669,500
Sprint Corp. 47,050 1,876,119
4,488,994
MISCELLANEOUS -- 0.1%
Olsten Corp. Class B 1,200 47,400
TOTAL COMMON STOCK (Cost $52,390,285) 65,099,538
TEMPORARY INVESTMENTS -- 2.4%
Goldman Sachs Institutional Liquid Assets
Government Portfolio 752,077 752,077
Goldman Sachs Institutional Liquid Assets
Money Market Portfolio 751,950 751,950
TOTAL TEMPORARY INVESTMENTS (Cost $1,504,027) 1,504,027
TOTAL INVESTMENTS -- 108.7% (Cost $53,894,312) 66,603,565
OTHER ASSETS AND LIABILITIES -- (8.7%)
Receivable for investments sold 331,043
Dividends receivable and other assets 159,571
Dividends payable (5,143,975)
Payable for investments purchased (517,912)
Payable for capital stock redeemed (106,805)
Accrued expenses (Note 4) (69,410)
TOTAL OTHER ASSETS AND LIABILITIES, NET (5,347,488)
NET ASSETS -- 100.0%
Applicable to 4,378,626 shares outstanding,
$.001 par value; 100,000,000 authorized
shares (Note 9) $61,256,077
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $13.99
MAXIMUM PUBLIC OFFERING PRICE (Note 6) $14.65
</TABLE>
+ See Note 2a to the Financial Statements.
* Non-income producing security.
See Notes to Financial Statements.
29
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
MANAGED FIXED INCOME FUND
<TABLE>
<CAPTION>
COUPON PAR
RATE MATURITY (000) VALUE+
<S> <C> <C> <C> <C>
AGENCY OBLIGATIONS -- 4.4%
AID -- Israel 6.05% 08/15/00 $ 520 $ 529,750
Federal National Mortgage Association 6.375 10/13/00 620 630,751
Federal Home Loan Bank 7.36 07/01/04 1,000 1,099,970
TOTAL AGENCY OBLIGATIONS (Cost $2,200,985) 2,260,471
MATURITY++
ASSET-BACKED SECURITIES -- 14.8%
AFC Home Equity Loan Trust 1991 Series 3 8.40 08/15/06 409 423,710
AFC Home Equity Loan Trust 1991 Series 4 7.75 02/15/06 178 184,555
Chemical Master Credit Card Trust 1 1995-3 Class A 6.23 04/15/05 1,000 1,021,450
Fleet Financial HomeEquity 1991 Series 1
Class A 8.45 04/15/06 265 271,193
Ford Credit Auto Loan Master Trust Series 1995-1, Class A 6.50 08/15/02 1,000 1,028,582
Goldome Home Equity Trust 1990 Series 1 10.00 07/15/05 364 384,280
Household Affinity Credit Card Master Trust I Series 1994-2,
Class A 7.00 12/15/99 1,000 1,026,650
Nissan Auto Receivables Grantor Trust 1994-A 6.45 09/15/99 516 520,315
Private Label Credit Card Master Trust II Series 1994-1, Class A 7.15 06/20/01 1,000 1,013,279
Security Pacific Home Equity 1991 Class 1A 7.85 05/15/98 206 208,694
Signet Card 1993-3a 4.85 04/15/00 900 892,030
Vanderbilt Mortgage Finance Series 1995-A Class A1 7.15 9/07/19 590 597,363
Western Auto Receivable Trust 1991 Series 3 6.75 07/01/97 122 122,028
TOTAL ASSET-BACKED SECURITIES (Cost $7,573,954) 7,694,129
COLLATERALIZED MORTGAGE OBLIGATIONS -- 24.2%
DLJ Mortgage Association 1995-A A1-S (Interest only security) 1.75 03/25/25 11,927 391,345
Federal Home Loan Mortgage Corporation Series 1758, Class K 5.50 11/15/02 750 745,347
Federal Home Loan Mortgage Corporation Pool W00067 6.42 12/15/05 700 714,875
Federal Home Loan Mortgage Corporation Series 1376, Class B 6.25 10/15/15 978 977,338
Federal Home Loan Mortgage Corporation Series 1571, Class BA 0.00 04/15/19 785 718,275
Federal Home Loan Mortgage Corporation 1988 Series 15, Class A 9.10 10/15/19 2 2,304
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
MANAGED FIXED INCOME FUND (CONTINUED)
<TABLE>
<CAPTION>
COUPON PAR
RATE MATURITY++ (000) VALUE+
<S> <C> <C> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
Federal Home Loan Mortgage Corporation Series 1044, Class D 8.90 % 03/15/20 $1,290 $ 1,331,424
Federal Home Loan Mortgage Corporation Series 1759, Class D 8.15 03/15/21 950 988,594
Federal Home Loan Mortgage Corporation Series 1379, Class G 7.50 04/15/21 1,500 1,561,655
Federal National Mortgage Association 1995-11A 0.00 07/25/02 518 382,511
Federal National Mortgage Association 6.00 01/15/11 1,350 1,336,078
Federal National Mortgage Association 1993-146B 0.00 05/25/23 1,500 1,419,844
GNMA Adjustable Rate Mortgage 6.50 01/15/25 284 289,263
Merrill Lynch Home Equity Loan 1994-1 6.1675 07/15/22 962 960,455
Prudential Home Mortgage Securities 1992-6 A3 7.00 04/25/99 727 728,210
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $12,258,025) 12,547,518
MATURITY
CORPORATE BONDS -- 21.8%
FINANCE BONDS -- 10.3%
Amex Credit 6.125 11/15/01 1,000 1,012,500
Associates Corp. of North America 7.75 02/15/05 190 211,138
Beneficial Corp. 8.40 05/15/08 20 23,550
Beneficial Corp., MTN 9.13 07/25/01 1,000 1,146,250
Caterpillar Financial Services Corp., MTN 8.29 03/04/99 1,000 1,072,500
CIT Group Holdings 8.875 06/15/96 1,000 1,013,860
State Bank of New South Wales 10.375 04/26/99 750 853,594
5,333,392
INDUSTRIAL BONDS -- 7.4%
Atlantic Richfield Co. 9.125 03/01/11 100 125,000
duPont (E.I.) de Nemours & Co. 7.50 06/11/99 440 465,023
General Motors Corp. 9.40 07/15/21 455 592,069
Hertz Corp. 8.30 02/02/98 1,000 1,051,250
Sears Roebuck & Co., MTN 8.39 02/14/02 800 890,000
Waste Management Technologies, Inc. 6.25 10/15/00 700 712,250
3,835,592
UTILITY BONDS -- 4.1%
Commonwealth Edison Co. 6.00 03/15/98 715 715,894
Commonwealth Edison Co. 8.00 04/15/23 420 445,200
Pacific Gas & Electric First Mortgage Bond 7.875 03/01/02 500 547,500
Texas Utilities First Mortgage 7.875 03/01/23 410 435,113
2,143,707
TOTAL CORPORATE BONDS (Cost $10,895,655) 11,312,691
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
MANAGED FIXED INCOME FUND (CONTINUED)
<TABLE>
<CAPTION>
COUPON PAR
RATE MATURITY++ (000) VALUE+
<S> <C> <C> <C> <C>
YANKEE BONDS -- 2.5%
China International Trust Investment 9.00 % 10/15/06 $ 220 $ 249,700
Korea Development Bank 6.50 11/15/02 1,000 1,012,500
TOTAL YANKEE BONDS (Cost $1,221,088) 1,262,200
U.S TREASURY OBLIGATIONS -- 30.8%
U.S Treasury Bond 10.75 08/15/05 845 1,162,103
U.S Treasury Note 5.75 09/30/97 275 277,554
U.S Treasury Note 5.375 11/30/97 300 301,034
U.S Treasury Note 4.75 08/31/98 4,100 4,052,358
U.S Treasury Note 7.75 01/31/00 6,740 7,328,064
U.S Treasury Note 6.75 04/30/00 1,640 1,726,838
U.S Treasury Note 6.25 02/15/03 1,065 1,112,084
14,797,932
TOTAL U.S. TREASURY OBLIGATIONS (Cost $15,630,235) 15,960,035
SHARES
TEMPORARY INVESTMENTS -- 0.1%
Goldman Sachs Institutional Liquid Assets Government Portfolio 20,000 20,000
Goldman Sachs Institutional Liquid Assets Money Market Portfolio 38,607 38,607
TOTAL TEMPORARY INVESTMENTS (Cost $58,607) 58,607
TOTAL INVESTMENTS -- 98.6% (Cost $49,838,549) 51,095,651
OTHER ASSETS AND LIABILITIES -- 1.4%
Receivable for investments sold 1,265,903
Interest receivable and other assets 805,593
Receivable for capital stock sold 20,400
Payable for investments purchased (1,330,622)
Accrued expenses (Note 4) (42,867)
718,407
NET ASSETS -- 100.0%
Applicable to 4,993,979 shares outstanding, $.001 par value; 100,000,000 authorized shares (Note 9) $51,814,058
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $10.38
MAXIMUM PUBLIC OFFERING PRICE (Note 6) $10.87
+ See Note 2a to the Financial Statements.
++ Maturity dates represent weighted average maturities of the underlying securities.
MTN Medium Term Note
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
CASH TAX-FREE MANAGED
GOVERNMENT MANAGEMENT MONEY CONVERTIBLE EQUITY FIXED
ASSETS FUND FUND MARKET FUND FUND FUND INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $18,011,096 $38,407,983 $16,053,364 $65,005 $ 73,163 $3,046,205
Dividends -- -- -- 9,535 1,345,863 --
18,011,096 38,407,983 16,053,364 84,540 1,419,026 3,046,205
EXPENSES (Note 2c):
Investment advisory fee (Note 4) 335,725 675,821 454,684 9,134 365,839 327,473
Service organization fee -- Class A
(Note 5) 966,048 1,826,539 536,519 -- -- --
Shareholder services fee (Note 4) 33,274 49,767 39,484 8,122 20,974 10,324
Administration fee (Note 4) 387,112 830,325 542,065 1,573 63,669 56,091
Custodian fee (Note 4) 72,861 140,457 67,285 4,706 24,677 16,908
Directors' fees and expenses 21,325 45,932 30,310 166 3,584 3,109
Audit fee 11,372 36,454 27,981 15 1,477 1,192
Legal fee 8,741 19,072 12,621 44 1,486 1,340
Amortization of organization expenses
(Note 2e) -- -- -- -- -- 2,800
Reports to shareholders 12,740 27,793 18,350 76 3,355 3,227
Registration fees 63,844 43,529 24,140 6,011 14,660 18,498
Miscellaneous 17,429 43,992 25,396 3,801 6,275 9,812
Total Expenses 1,930,471 3,739,681 1,778,835 33,648 505,996 450,774
Less fee waivers and expense reimbursements
(Notes 4, 5) (270,357) (487,352) (151,945) (23,209) (3,826) (170,083)
Net expenses 1,660,114 3,252,329 1,626,890 10,439 502,170 280,691
NET INVESTMENT INCOME 16,350,982 35,155,654 14,426,474 74,101 916,856 2,765,514
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 7):
Realized net gain (loss) on investments -- 11,705 (968) (2,487) 4,873,879 835,603
Unrealized appreciation for the period -- -- -- 159,092 10,034,375 2,423,206
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS -- 11,705 (968) 156,605 14,908,254 3,258,809
INCREASE IN NET ASSETS FROM OPERATIONS $16,350,982 $35,167,359 $14,425,506 $230,706 $15,825,110 $ 6,024,323
</TABLE>
See Notes to Financial Statements.
33
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TAX-FREE
GOVERNMENT ASSETS FUND CASH MANAGEMENT FUND MONEY MARKET FUND
---------------------- ---------------------- ----------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
12/31/95 12/31/94 12/31/95 12/31/94 12/31/95 12/31/94
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income $ 16,350,982 $9,616,995 $35,155,654 $ 18,003,010 $ 14,426,474 $ 5,567,871
Realized net gain (loss) on
investments -- -- 11,705 1,335 (968) --
Increase in accumulated market
discount -- -- -- -- -- 624
Increase in net assets from
operations 16,350,982 9,616,995 35,167,359 18,004,345 14,425,506 5,568,495
DISTRIBUTIONS TO SHAREHOLDERS
(Notes 2b and 2d):
Net investment income
Class A (14,825,135) (9,089,945) (28,401,627) (17,555,583) (4,987,627) (3,563,178)
Class C (1,525,847) (534,941) (6,754,027) (447,427) (9,438,847) (2,004,693)
Total Distributions (16,350,982) (9,624,886) (35,155,654) (18,003,010) (14,426,474) (5,567,871)
CAPITAL SHARE TRANSACTIONS
(Note 8):
Proceeds from sale of shares 1,748,152,842 1,520,125,149 2,803,066,238 2,759,388,684 933,159,208 671,571,695
Net asset value of shares
issued in reinvestment of
dividends 3,971,290 1,305,596 6,557,546 2,219,537 3,268,939 1,919,763
Cost of shares redeemed (1,708,567,718) (1,546,095,333) (2,849,566,010) (2,548,237,397) (914,311,288) (481,331,816)
Increase (decrease) in net
assets from Capital Share
transactions 43,556,414 (24,664,588) (39,942,226) 213,370,824 22,116,859 192,159,642
Total increase (decrease)
in net assets 43,556,414 (24,672,479) (39,930,521) 213,372,159 22,115,891 192,160,266
NET ASSETS:
Beginning of year 239,236,365 263,908,844 562,355,820 348,983,661 360,600,568 168,440,302
End of year $282,792,779 $239,236,365 $522,425,299 $562,355,820 $382,716,459 $360,600,568
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED FIXED
CONVERTIBLE FUND EQUITY FUND INCOME FUND
---------------- ----------- -------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
12/31/95 12/31/94 12/31/95 12/31/94 12/31/95 12/31/94
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income $74,101 $193,716 $916,856 $915,813 $2,765,514 $ 3,054,499
Realized net gain (loss) on investments (2,487) 110,000 4,873,879 3,487,182 835,603 (2,962,405)
Unrealized appreciation (depreciation)
for the period 159,092 (465,548) 10,034,375 (5,567,665) 2,423,206 (1,328,700)
Increase (decrease) in net assets from
operations 230,706 (161,832) 15,825,110 (1,164,670) 6,024,323 (1,236,606)
DISTRIBUTIONS TO SHAREHOLDERS
(Notes 2b and 2d):
Net investment income (112,506) (215,822) (926,271) (946,060) (2,736,934) (3,043,460)
Realized net gain on investments -- -- (4,885,308) (3,523,815) -- --
Total distributions (112,506) (215,822) (5,811,579) (4,469,875) (2,736,934) (3,043,460)
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 127,741 163,412 34,629,202 19,370,425 15,074,161 11,748,255
Net asset value of shares issued in re-
investment of distributions 38,901 62,205 215,680 2,347,305 1,372,471 1,314,028
Cost of shares redeemed (530,119) (4,495,861) (22,522,382) (24,404,368) (12,252,490) (38,507,120)
Increase (decrease) in net assets from
capital share transactions (363,477) (4,270,244) 12,322,500 (2,686,638) 4,194,142 (25,444,837)
Total increase (decrease) in net assets (245,277) (4,647,898) 22,336,031 (8,321,183) 7,481,531 (29,724,903)
NET ASSETS:
Beginning of year 1,415,965 6,063,863 38,920,046 47,241,229 44,332,527 74,057,430
End of year $1,170,688 $ 1,415,965 $ 61,256,077 $ 38,920,046 $ 51,814,058 $44,332,527
Shares issued 13,659 16,360 2,589,189 1,500,600 1,490,117 1,184,638
Shares issued in lieu of cash
distributions 4,101 6,665 16,147 204,571 135,887 132,874
Shares redeemed (55,971) (477,917) (1,678,367) (1,927,489) (1,219,880) (3,893,654)
(38,211) (454,892) 926,969 (222,318) 406,124 (2,576,142)
Undistributed net investment income $2,151 $40,556 $196 $227 $3,289 $1,600
</TABLE>
See Notes to Financial Statements.
35
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
CLASS A
------------------
YEAR YEAR
ENDED ENDED
12/31/95 12/31/94
-------- --------
<S> <C> <C>
GOVERNMENT ASSETS FUND
Net Asset Value, Beginning of Period $1.00 $1.00
Income from Investment Operations:
Net Investment Income .054 .037
Total from Investment Operations .054 .037
Less Distributions:
Net Investment Income (.054) (.037)
Total Distributions (.054) (.037)
Net Asset Value, End of Period $1.00 $1.00
Total Return 5.51% 3.72%
Ratios/Supplemental Data:
Net Assets, End of Period $(000) 264,426 229,619
Ratios of Expenses to Average Net Assets(1) 0.57% 0.60%
Ratios of Net Investment Income to Average Net Assets 5.36% 3.62%
</TABLE>
(1) Without the voluntary waiver of fees, the expense ratios for the years
ended December 31, 1995, 1994, 1993, 1992 and 1991 would have been 0.67%,
0.66%, 0.70%, 0.70% and 0.78%, respectively, for Class A shares and 0.32%
and 0.31% (annualized) for Class C shares for the year ended December 31,
19 95 and for the period ended December 31, 1994, respectively.
(2) Annualized.
(3) Total returns for periods of less than one year are not annualized.
(4) Commenced operations on May 16, 1994.
<TABLE>
<CAPTION>
CLASS A
------------------
YEAR YEAR
ENDED ENDED
12/31/95 12/31/94
-------- --------
<S> <C> <C>
CASH MANAGEMENT FUND
Net Asset Value, Beginning of Period $1.00 $1.00
Income from Investment Operations:
Net Investment Income .054 .037
Total from Investment Operations .054 .037
Less Distributions:
Net Investment Income (.054) (.037)
Total Distributions (.054) (.037)
Net Asset Value, End of Period $1.00 $1.00
Total Return 5.58% 3.79%
Ratios/Supplemental Data:
Net Assets, End of Period $(000) 423,588 530,366
Ratios of Expenses to Average Net Assets(1) 0.56% 0.55%
Ratios of Net Investment Income to Average Net Assets 5.42% 3.79%
</TABLE>
(1) Without the voluntary waiver of fees, the expense ratios for the years
ended December 31, 1995, 1994, 1993, 1992 and 1991 would have been 0.65%,
0.65%, 0.72%, 0.73% and 0.74%, respectively, for Class A shares and 0.30%
and 0.30% (annualized) for Class C shares for the year ended December 31,
1995 and for the period ended December 31, 1994, respectively.
(2) Annualized.
(3) Total returns for periods of less than one year are not annualized.
(4) Commenced operations on January 5, 1994.
See Notes to Financial Statements.
36
<PAGE>
<TABLE>
<CAPTION>
CLASS A (CONTINUED) CLASS C
- ------------------------------- ----------------------
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/93 12/31/92 12/31/91 12/31/95 12/31/94(4)
- -------- -------- -------- -------- -----------
<C> <C> <C> <C> <C>
$1.00 $1.00 $1.00 $1.00 $1.00
.026 .033 .055 .056 .028
.026 .033 .055 .056 .028
(.026) (.033) (.055) (.056) (.028)
(.026) (.033) (.055) (.056) (.028)
$1.00 $1.00 $1.00 $1.00 $1.00
2.62% 3.42% 5.67% 5.79% 2.82%(3)
263,909 140,134 632,663 18,367 9,617
0.61% 0.66% 0.71% 0.31% 0.29%(2)
2.57% 3.34% 5.45% 5.62% 4.52%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS A (CONTINUED) CLASS C
- ------------------------------- ----------------------
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/93 12/31/92 12/31/91 12/31/95 12/31/94(4)
- -------- -------- -------- -------- -----------
<C> <C> <C> <C> <C>
$1.00 $1.00 $1.00 $1.00 $1.00
.027 .034 .057 .057 .039
.027 .034 .057 .057 .039
(.027) (.034) (.057) (.057) (.039)
(.027) (.034) (.057) (.057) (.039)
$1.00 $1.00 $1.00 $1.00 $1.00
2.69% 3.41% 5.87% 5.86% 4.08%(3)
348,984 383,280 263,419 98,837 31,990
0.57% 0.60% 0.71% 0.29% 0.29%(2)
2.66% 3.34% 5.69% 5.69% 4.79%(2)
</TABLE>
See Notes to Financial Statements.
37
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
CLASS A
------------------
YEAR YEAR
ENDED ENDED
12/31/95 12/31/94
-------- --------
<S> <C> <C>
TAX-FREE MONEY MARKET FUND
Net Asset Value, Beginning of Period $1.00 $1.00
Income from Investment Operations:
Net Investment Income .033 .023
Total from Investment Operations .033 .023
Less Distributions:
Net Investment Income (.033) (.023)
Total Distributions (.033) (.023)
Net Asset Value, End of Period $1.00 $1.00
Total Return 3.31% 2.30%
Ratios/Supplemental Data:
Net Assets, End of Period $(000) 170,570 123,501
Ratios of Expenses to Average Net Assets(1) 0.56% 0.54%
Ratios of Net Investment Income to Average Net Assets 3.25% 2.20%
</TABLE>
(1) Without the voluntary waiver of fees, the expense ratios for the years
ended December 31, 1995, 1994, 1993, 1992 and 1991 would have been 0.65%,
0.65%, 0.71%, 0.73% and 0.75%, respectively, for Class A shares and 0.29%
and 0.30% (annualized) for Class C shares for the year ended December 31, 1
995 and for the period ended December 31, 1994, respectively.
(2) Annualized.
(3) Total returns for periods of less than one year are not annualized.
(4) Commenced operations on January 5, 1994.
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/95 12/31/94
-------- --------
<S> <C> <C>
CONVERTIBLE FUND
Net Asset Value, Beginning of Period $8.78 $9.84
Income from Investment Operations:
Net Investment Income .621 .669
Net Realized and Unrealized Gain (Loss) on Investments .975 (1.049)
Total from Investment Operations 1.596 (.380)
Less Distributions:
Net Investment Income (.856) (.680)
Total Distributions (.856) (.680)
Net Asset Value, End of Period $9.52 $8.78
Total Return(2) 18.52% (4.01)%
Ratios/Supplemental Data:
Net Assets, End of Period $(000) 1,171 1,416
Ratios of Expenses to Average Net Assets(1) 0.80% 0.80%
Ratios of Net Investment Income to Average Net Assets 5.68% 5.21%
Portfolio Turnover Rate 35.59% 31.63%
</TABLE>
(1) Without the voluntary waiver of fees, the expense ratios for the years
ended December 31, 1995, 1994, 1993, 1992 and 1991 would have been 2.58%,
1.26%, 1.20%, 1.26% and 1.66%, respectively.
(2) Sales load is not reflected in total return.
See Notes to Financial Statements.
38
<PAGE>
<TABLE>
<CAPTION>
CLASS A (CONTINUED) CLASS C
- ------------------------------- ----------------------
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/93 12/31/92 12/31/91 12/31/95 12/31/94(4)
- -------- -------- -------- -------- -----------
<C> <C> <C> <C> <C>
$1.00 $1.00 $1.00 $1.00 $1.00
.020 .025 .041 .035 .025
.020 .025 .041 .035 .025
(.020) (.025) (.041) (.035) (.025)
(.020) (.025) (.041) (.035) (.025)
$1.00 $1.00 $1.00 $1.00 $1.00
1.99% 2.54% 4.16% 3.60% 2.56%(3)
168,440 152,821 157,693 212,146 237,100
0.54% 0.62% 0.49% 0.29% 0.28%(2)
1.97% 2.50% 4.08% 3.52% 2.99%(2)
</TABLE>
<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED
12/31/93 12/31/92 12/31/91
- -------- -------- --------
<C> <C> <C>
$9.16 $8.41 $7.18
.538 .487 .609
.680 .783 1.221
1.218 1.270 1.830
(.538) (.520) (.600)
(.538) (.520) (.600)
$9.84 $9.16 $8.41
13.50% 15.40% 26.04%
6,064 7,354 3,732
0.80% 0.80% 0.80%
5.16% 5.83% 6.91%
81.04% 21.27% 62.20%
</TABLE>
See Notes to Financial Statements.
39
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/95 12/31/94**
-------- ----------
<S> <C> <C>
EQUITY FUND
Net Asset Value, Beginning of Period $11.28 $12.86
Income from Investment Operations:
Net Investment Income .229 .263
Net Realized and Unrealized Gain (Loss) on Investments 3.827 (.514)
Total from Investment Operations 4.056 (.251)
Less Distributions:
Net Investment Income (.232) (.263)
Net Realized Gains (1.114) (1.066)
Total Distributions (1.346) (1.329)
Net Asset Value, End of Period $13.99 $11.28
Total Return(4) 36.26% (2.05)%
Ratios/Supplemental Data:
Net Assets, End of Period $(000) 61,256 38,920
Ratios of Expenses to Average Net Assets(1) 0.96% 0.90%
Ratios of Net Investment Income to Average Net Assets 1.75% 1.94%
Portfolio Turnover Rate 75.93% 87.83%
</TABLE>
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/95 12/31/94
-------- --------
<S> <C> <C>
MANAGED FIXED INCOME FUND
Net Asset Value, Beginning of Period $9.66 $10.34
Income from Investment Operations:
Net Investment Income .588 .559
Net Realized and Unrealized Gain (Loss) on Investments .720 (.694)
Total from Investment Operations 1.308 (.135)
Less Distributions:
Net Investment Income (.588) (.545)
Net Realized Gains -- --
Total Distributions (.588) (.545)
Net Asset Value, End of Period $10.38 $9.66
Total Return(4) 13.88% (1.29)%
Ratios/Supplemental Data:
Net Assets, End of Period $(000) 51,814 44,333
Ratios of Expenses to Average Net Assets(1) 0.60% 0.60%
Ratios of Net Investment Income to Average Net Assets 5.91% 5.29%
Portfolio Turnover Rate 194.94% 140.99%
</TABLE>
* Commenced operations April 1, 1991.
** Restated.
(1) Without the voluntary waiver of fees, the expense ratios for the years
ended December 31, 1995, 1994, 1993, 1992 and 1991 would have been 0.97%,
0.92%, 0.96%, 0.98% and 1.01%, respectively, for the Equity Fund and 0.96%,
0.92%, 0.94%, 0.93%, and 1.01%, for the Managed Fixed Income Fund for the
years ended December 31, 1995, 1994, 1993, 1992, and the period ended
December 31, 1991, respectively.
(2) Annualized.
(3) Total returns for periods of less than one year are not annualized.
(4) Sales load is not reflected in total return.
See Notes to Financial Statements.
40
<PAGE>
<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED
12/31/93 12/31/92 12/31/91
- -------- -------- --------
<C> <C> <C>
$11.57 $12.08 $10.05
.197 .267 .282
1.904 .703 2.418
2.101 .970 2.700
(.204) (.290) (.280)
(.607) (1.190) (.390)
(.811) (1.480) (.670)
$12.86 $11.57 $12.08
18.23% 8.19% 27.29%
47,241 31,809 34,150
0.93% 0.96% 0.98%
1.59% 2.16% 2.52%
57.31% 63.79% 77.85%
</TABLE>
<TABLE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
12/31/93 12/31/92 12/31/91*
- -------- -------- ---------
<C> <C> <C>
$10.22 $10.57 $10.00
.563 .630 .474
.435 (.087) .601
.998 .543 1.075
(.564) (.631) (.475)
(.314) (.262) (.030)
(.878) (.893) (.505)
$10.34 $10.22 $10.57
9.91% 5.28% 11.04%(3)
74,057 71,848 44,313
0.60% 0.60% 0.60%(2)
5.32% 6.07% 6.60%(2)
215.07% 133.78% 108.70%
</TABLE>
See Notes to Financial Statements.
41
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
HT Insight Funds, Inc., doing business as Harris Insight Funds (the
"Company"), was incorporated in Maryland on September 16, 1987 as an open-end
diversified management investment company and currently offers six investment
portfolios: Harris Insight Government Assets Fund (the "Government Fund' '),
Harris Insight Cash Management Fund (the "Cash Fund"), Harris Insight Tax-Free
Money Market Fund (the "Tax-Free Fund") (collectively, the "Money Market
Funds"), Harris Insight Convertible Fund (the "Convertible Fund"), Harris
Insight Equity Fund (the "Equity Fund") and Harris Insight Managed Fixed Income
Fund (the "Fixed Income Fund") (collectively, the "Non-Money Market Funds").
During 1993, the Company approved the creation of two new classes of shares
for each Money Market Fund - Class B and Class C Shares -- in addition to the
existing Class A Shares. Shares of each class of a Fund represent equal pro rata
interests in the Fund and are identical in all respects except that Class A and
Class B Shares are subject to service organization fees as described in Note 5.
Class C Shares are not subject to service organization fees. Each of the three
classes of shares of the Money Market Funds declares dividends daily in the same
manner. Class B and Class C Shares were first made available in 1994.
During the fourth quarter of 1992, the Board of Directors of the Company
authorized the creation of an additional portfolio, Harris Insight Intermediate
Municipal Income Fund. As of December 31, 1995 organization expenses, which were
paid by the Adviser, totaled $15,636 which are deferred and will be amortized
over a period not to exceed 60 months from the commencement of operations. The
Fund has not yet commenced operations.
During the second quarter of 1994, the Board of Directors of the Company
authorized the creation of two new portfolios, Harris Insight Prime Reserve Fund
and Harris Insight Hemisphere Free Trade Fund. To date, the Prime Reserve Fund
has not commenced operations and it is anticipated that the Hemisphere Free
Trade Fund will commence operations in the first quarter of 1996.
The Money Market Funds and the Fixed Income Fund invest in debt
instruments; the issuer's ability to meet these obligations may be affected by
political and economic developments in a specified state, region or in their
respective industries.
2. SIGNIFICANT ACCOUNTING POLICIES
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.
(a) Security Valuation -- Each of the Money Market Funds values its
investments using the amortized cost method, which involves initially valuing
investments at cost and thereafter assuming a constant amortization to maturity
of any premium or discount. This method approximates market value.
The value of securities of each of the other Funds (other than bonds
purchased by the Convertible and Fixed Income Funds) is determined based on the
last sale price on the principal exchange on which the securities are traded as
of the close of regular trading on the New York Stock Exchange. In the absence
of any sale on the valuation date, the securities are valued at the closing bid
price. Unlisted securities, including U.S. Government Securities, for which
current over-the-counter market quotations or bids are readily available are
valued at their last bid price. Bonds purchased by the Convertible Fund and the
Fixed Income Fund are valued at the mean of the last bid and asked price. Debt
securities maturing in 60 days or less are valued at amortized cost which
approximates market value. Each asset-backed security held by the Fixed Income
Fund is valued at the daily bid price obtained from a market-maker in the
security.
With respect to all Funds, all other securities for which current market
quotations are not readily available are valued at fair value determined in good
faith using methods established by the Board of Directors.
42
<PAGE>
(b) Federal Income Taxes -- Each Fund intends to continue to qualify as a
regulated investment company under the Internal Revenue Code and to distribute
substantially all of its net investment income and net realized capital gains to
shareholders. Accordingly, no provision for federal income tax is required.
(c) Allocation of Expenses -- Expenses not directly chargeable to a
specific Fund are allocated among the Funds primarily on the basis of relative
net assets.
(d) Distributions -- Each of the Funds declares dividends from net
investment income. The Money Market Funds declare dividends each business day to
shareholders of record that day for payment on the first business day of the
following month. Dividends from the Fixed Income Fund are declared and paid
monthly. Dividends from the Convertible and Equity Funds are declared and paid
quarterly. Each Fund's net realized capital gains, if any, are distributed
annually. Distributions to shareholders are recorded on declaration dates with
respect to the Money Market Funds and on ex-dividend dates with respect to the
Non-Money Market Funds.
The amounts of distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax regulations,
which may differ from those amounts determined under generally accepted
accounting principles. These book/tax differences are either temporary or
permanent in nature. To the extent these differences are permanent, they are
charged or credited to paid-in capital in the period that the difference arises.
(e) Organization Expenses -- Costs incurred in connection with the
Company's organization of the Fixed Income Fund have been deferred and are being
amortized over 60 months from commencement of operations. The balance of
unamortized expenses at December 31, 1995 was $687.
(f) Other -- Investment transactions are recorded on trade date. Interest
income, including the amortization of discount or premium, is recorded as
earned. Discounts and premiums on securities purchased are amortized over the
lives of the respective securities. Dividend income is recorded on the ex
- -dividend date.
3. REPURCHASE AGREEMENTS
During the year ended December 31, 1995, certain of the Funds have invested
in repurchase agreements. In accordance with each Fund's investment objectives
and policies, each Fund may purchase money market instruments from financial
institutions, such as banks and non-bank dealers, subject to the seller's
agreement to repurchase them at an agreed upon date and price. The seller is
required on a daily basis to maintain the value of the collateral subject to the
agreement at not less than the repurchase price (including accrued interest).
The agreements are conditioned upon the collateral being deposited under the
Federal Reserve book-entry system or with the Fund's custodian or a third party
sub-custodian. If the seller defaults and the value of the collateral declines
or if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or limited.
4. ADVISORY, ADMINISTRATION AND DISTRIBUTION ARRANGEMENTS
The Company retains Harris Trust & Savings Bank ("Harris Trust") as
investment adviser, pursuant to advisory contracts for each Fund. As adviser,
Harris Trust is entitled to receive fees payable monthly, based upon the average
daily net asset value of each Fund, at annual rates of 0.14% of the first $100
million of net assets and 0.10% of net assets over $100 million for the Money
Market Funds; and 0.70% of net assets for the Non-Money Market Funds. For the
year ended December 31, 1995, Harris Trust voluntarily waived fees of $9,134 and
reimbursed expenses of $13,960 for the Convertible Fund, and waived fees of
$166,376 for the Fixed Income Fund.
43
<PAGE>
Harris Trust has entered into Portfolio Management Agreements with Harris
Investment Management, Inc. ("HIM") under which HIM undertakes to furnish
investment guidance and policy direction in connection with the daily portfolio
management of the Government, Cash, Convertible, Equity and Fixed Income Funds.
HIM, as portfolio manager, receives a fee directly from Harris Trust, not from
the Funds. Harris Trust and HIM are subsidiaries of Harris Bankcorp, Inc.
Pursuant to an Administration and Accounting Service Agreement and an
Administration Agreement, the Company retains PFPC Inc. ("PFPC"), an indirect
wholly-owned subsidiary of PNC Bank Corp., and First Data Investor Services
Group, Inc. ("First Data"), a wholly-owned subsidiary of First Data Corp., as
Co-Administrator and Accounting Service Agent and Co-Administrator,
respectively. For their services they are paid a combined monthly fee, based on
the aggregate average net assets of the Funds. The fee also covers certain
services of PNC Bank, National Association, as the Company's custodian and PFPC
as the Company's transfer agent which is included in the custodian fee and
shareholder services fee, respectively. For the year ended December 31, 1995,
the Co- Administrators voluntarily waived fees of $23,691 for the Government
Assets Fund, $51,396 for the Cash Management Fund, $34,194 for the Tax- Free
Money Market Fund, $115 for the Convertible Fund, $3,826 for the Equity Fund and
$3,707 for the Managed Fixed Income Fund.
If the total expenses, excluding certain expenses, of any of the Funds
exceed limitations imposed by certain states, Harris Trust, PFPC and First Data
are each required to reimburse the Fund for such excess in proportion to, but
not exceeding, their fees. No reimbursements to meet such state limitations were
made for the year ended December 31, 1995.
Funds Distributor, Inc. ("Funds Distributor") provides services as
distributor in connection with sales of shares of Capital Stock of the Funds.
For the year ended December 31, 1995, Funds Distributor advised the Funds it had
received commissions of approximately $7, $188 and $17, respectively, after
concessions paid to dealers of approximately $106, $3,301, and $255 on sales of
shares of the Convertible, Equity and Managed Fixed Income Funds, respectively.
The Company has a compensation arrangement under which payment of
directors' fees may be deferred by the Director. Interest is accrued on the
deferred balances and is included in directors' fees and expenses. The
accumulated balance of deferred directors' fees and interest thereon relating to
all Funds comprising the Company on December 31, 1995 aggregated approximately
$171,000, a portion of which is included in accrued expenses of each Fund.
5. SERVICE PLANS
The Company has Service Plans adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Plan") for the Funds other than
with respect to Class C shares of the Money Market Funds.
Under the Plan for Money Market Funds, each Money Market Fund may enter
into service agreements with banks and other institutions (each a "Service
Organization") that require the Service Organization to provide certain
shareholder support services and distribution assistance in consideration of the
Fund's payment of up to 0.35% and 0.25% per annum of the average daily net asset
value of the Class A and Class B shares, respectively, held by or for the
benefit of customers of the Service Organization. Service Organization fees paid
to Harris Trust for the year ended December 31, 1995 were $7 19,382, $1,390,583
and $418,768 (net of voluntary waivers of $246,666, $435,956 and $117,751) for
the Class A shares of Government Assets Fund, Cash Management Fund and Tax-Free
Money Market Fund, respectively. There were no Service Organization fees payable
during the year ended December 31, 1995 for the Class B shares of the Money
Market Funds.
Under each of the Non-Money Market Fund Plans, each Non-Money Market Fund
may enter into service agreements with banks and other institutions
(individually, "Service Agent"). A Service Agent may receive fees with respect
to a Fund's shares owned by shareholders for whom
44
<PAGE>
the Service Agent is the dealer or holder of record, or with whom the Service
Agent has a servicing relationship. Funds Distributor may act as a Service Agent
and receive fees. Fees to a Service Agent may be up to a rate of 0.25% per annum
of the average daily net asset value of shares attributable to the Service
Agent. In addition, a Fund may defray all or part of the Service Agent's cost of
preparing, printing and delivering promotional materials, prospectuses and
statements of additional information to prospective shareholders of the Funds by
paying on an annual basis up to the greater of $100,000 or 0.05% of a Fund's
average daily net assets (but not in any case greater than such costs). To date,
no payments have been made pursuant to the Non-Money Market Fund Plans.
6. PUBLIC OFFERING PRICE
Shares of the Non-Money Market Funds are sold at a public offering price
which is equal to the current net asset value of such shares with a maximum
sales load of 4.5%.
7. INVESTMENT TRANSACTIONS
The cost of investments for federal income tax purposes is $1,101,790,
$53,908,313 and $49,838,549 for the Convertible, Equity and Fixed Income Funds,
respectively. The cost of investments is the same for federal income tax
purposes as it is for financial statement purposes for the Money Market Funds.
Purchases and sales of investment securities of the Non-Money Market Funds
(excluding short-term investments) for the year ended December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
CONVERTIBLE EQUITY MANAGED FIXED
FUND FUND INCOME FUND
----------- ----------- -------------
<S> <C> <C> <C>
Purchases $ 433,735 $52,556,867 $ 95,634,448
Sales 870,392 39,028,198 88,362,225
</TABLE>
At December 31, 1995, gross unrealized appreciation (depreciation) for
federal income tax purposes was as follows:
<TABLE>
<CAPTION>
CONVERTIBLE EQUITY MANAGED FIXED
FUND FUND INCOME FUND
----------- ----------- -------------
<S> <C> <C> <C>
Gross Unrealized Appreciation $98,040 $13,037,290 $1,366,080
Gross Unrealized Depreciation (11,200) (342,038) (108,978)
Net Unrealized Appreciation (Depreciation) of
Investment Securities $86,840 $12,695,252 $1,257,102
</TABLE>
At December 31, 1995, the Convertible Fund and the Fixed Income Fund had
available capital loss carryforwards of approximately $2,694,500 and $2,100,000,
respectively, that may be used to offset future net capital gains through 2003
and 2002, respectively. Net capital losses utilized by the Fixed Income Fund
during the year ending December 31, 1995 were approximately $835,000.
8. CAPITAL STOCK
Each Money Market Fund offers three classes of shares: Class A, Class B,
and Class C. Shares of each class represent equal pro rata interests in its
respective portfolio of the Fund and is identical in all respects except that
Class A and Class B shares bear service organization fees.
Since each Money Market Fund has sold, issued as reinvestments of dividends
and redeemed shares only at a constant net asset value of $1.00 per share, the
number of shares represented by such sales, reinvestments and redemptions is the
same as the amounts shown below for such transactions.
45
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT ASSETS FUND
----------------------
YEAR ENDED YEAR ENDED
12/31/95 12/31/94
-------- --------
<S> <C> <C>
Sold
Class A Shares $ 1,616,444,970 $ 1,458,529,417
Class B Shares -- --
Class C Shares 131,707,872 61,595,732
Issued as reinvestments of dividends
Class A Shares 3,971,290 1,305,596
Class B Shares -- --
Class C Shares -- --
Redeemed
Class A Shares (1,585,609,081) (1,494,117,047)
Class B Shares -- --
Class C Shares (122,958,637) (51,978,286)
Net increase (decrease) $ 43,556,414 $ (24,664,588)
</TABLE>
<TABLE>
<CAPTION>
CASH MANAGEMENT FUND
----------------------
YEAR ENDED YEAR ENDED
12/31/95 12/31/94
-------- --------
<S> <C> <C>
Sold
Class A Shares $2,220,465,314 $2,689,101,716
Class B Shares -- --
Class C Shares 582,600,924 70,286,968
Issued as reinvestments of dividends
Class A Shares 6,557,546 2,219,537
Class B Shares -- --
Class C Shares -- --
Redeemed
Class A Shares (2,333,812,101) (2,509,940,217)
Class B Shares -- --
Class C Shares (515,753,909) (38,297,180)
Net increase (decrease) $ (39,942,226) $ 213,370,824
</TABLE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
--------------------------
YEAR ENDED YEAR ENDED
12/31/95 12/31/94
-------- --------
<S> <C> <C>
Sold
Class A Shares $ 375,279,584 $ 310,851,517
Class B Shares -- --
Class C Shares 557,879,624 360,720,178
Issued as reinvestments of dividends
Class A Shares 3,268,939 1,919,763
Class B Shares -- --
Class C Shares -- --
Redeemed
Class A Shares (331,477,377) (357,712,431)
Class B Shares -- --
Class C Shares (582,833,911) (123,619,385)
Net increase $ 22,116,859 $ 192,159,642
</TABLE>
46
<PAGE>
9. NET ASSETS
At December 31, 1995, net assets consisted of:
<TABLE>
<CAPTION>
CASH TAX-FREE MANAGED
GOVERNMENT MANAGEMENT MONEY CONVERTIBLE EQUITY FIXED
ASSETS FUND FUND MARKET FUND FUND FUND INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
Capital Stock
at Par Value $ 282,793 $ 522,416 $ 382,723 $ 123 $ 4,378 $ 4,994
Paid-in Capital 282,509,986 521,892,034 382,339,912 3,776,203 48,553,679 52,648,584
Undistributed Net
Investment Income -- -- -- 2,151 196 3,289
Accumulated Net
Realized Gain
(Loss) -- 10,849 (6,176) (2,694,629) (11,429) (2,099,911)
Unrealized Apprecia-
tion of Investment
Securities -- -- -- 86,840 12,709,253 1,257,102
$282,792,779 $522,425,299 $382,716,459 $1,170,688 $61,256,077 $51,814,058
</TABLE>
47
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Shareholders and Board of Directors of
HARRIS INSIGHT FUNDS
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Harris Insight Government Assets Fund, Harris Insight Cash Management Fund,
Harris Insight Tax-Free Money Market Fund, Harris Insight Convertible Fund,
Harris Insight Equity Fund and Harris Insight Managed Fixed Income Fund
(comprising the Harris Insight Funds, hereafter referred to as the "Fund") at
December 31, 1995, the results of each of their operations, the changes in each
of their net assets and the financial highlights for each of the respective
periods presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1995 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania
January 31, 1996
48
<PAGE>
HARRIS INSIGHT FUNDS
One Exchange Place, Boston, MA 02109
Telephone: (800) 982-8782
INVESTMENT ADVISER
Harris Trust & Savings Bank
111 West Munroe Street
Chicago, Illinois 60603
PORTFOLIO MANAGEMENT AGENT
Harris Investment Management, Inc.
190 South LaSalle Street
Chicago, Illinois 60603
ADMINISTRATION
First Data Investor Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
PFPC Inc.
103 Bellevue Parkway
Wilmington, Delaware 19809
DISTRIBUTOR
Funds Distributor, Inc.
One Exchange Place
Boston, Massachusetts 02109
CUSTODIAN
PNC Bank, N.A.
Broad & Chestnut Streets
Philadelphia, Pennsylvania 19101
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
PFPC Inc.
P.O. Box 8950
Wilmington, Delaware 19885-9628
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
30 South 17th Street
Philadelphia, Pennsylvania 19103
LEGAL COUNSEL
Bell, Boyd & Lloyd
Three First National Plaza
70 West Madison Street
Chicago, Illinois 60602-4207
49
<PAGE>
