HARRIS INSIGHT(REGISTRATION MARK) FUNDS
ANNUAL REPORT
DECEMBER 31, 1997
HARRIS INSIGHT(REGISTRATION MARK) FUNDS
POWERFUL INSIGHT. SOLID INVESTMENTS.(SERVICE MARK)
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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HARRIS INSIGHT(REGISTRATION MARK) FUNDS
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DEAR SHAREHOLDER:
It is with pleasure that we report to you results for the Harris Insight Funds
for the year ended December 31, 1997.
Within this Annual Report you will find Harris Investment Management's review of
the fixed income and equity markets during 1997, as well as their outlook for
the markets and the economy for 1998 and beyond. A summary report for each
Harris Insight Fund is also provided, containing information about the major
factors which influenced each Fund's performance, as well as a complete list of
portfolio holdings.
STRONG HARRIS INSIGHT FUNDS PERFORMANCE CONTINUES
A number of the Harris Insight Funds posted strong performance results for the
year ended December 31, 1997. Furthermore, the solid performance of many of our
individual Funds was recognized during the year by national publications
including THE WALL STREET JOURNAL (for example, on November 24, 1997 and
December 8, 1997) and the December issue of MUTUAL FUNDS MAGAZINE. (FOR MORE
DETAILED PERFORMANCE INFORMATION ON THE FUNDS, PLEASE CALL 1-800-982-8782.)
We are particularly pleased that MORNINGSTAR, a highly respected firm which
monitors mutual fund performance, has awarded the Harris Insight Equity Fund an
overall rating of five stars -- Morningstar's highest rating -- for
risk-adjusted performance.*
While the total return figures for the Funds speak for themselves, we believe
that these results reflect the disciplined research and analysis that the Funds'
portfolio management agent, Harris Investment Management, utilizes to seek to
identify the most promising securities for each Fund.
FUNDS EXPERIENCE SIGNIFICANT GROWTH IN ASSETS
Partly reflecting this strong investment performance, assets in the Harris
Insight Family of Funds grew considerably in 1997. In December, CRAIN'S CHICAGO
BUSINESS listed the Harris Insight Funds as the tenth largest mutual fund
complex based in Chicago among 25 mutual fund companies with operations in the
city (based on assets under management). At year end, total assets in the Harris
Insight Funds neared the $6 billion mark. Increasing fund assets provides a
larger base over which to spread certain expenses associated with operating
mutual funds.
We expect this asset growth to continue, as we focus our efforts in 1998 on
further developing retail and institutional distribution of the Harris Insight
Funds. This effort will include expanded sales and marketing to individual
investors and retirement plan sponsors, such as 401(k) and other defined
contribution plans.
To facilitate our retail distribution efforts, the sales loads on Class A Shares
were eliminated. Additionally, converting the Class A Shares of the Harris
Insight Equity and Fixed Income Funds to "no-load" will help our effort to
market directly to individual investors.
NEW HARRIS INSIGHT FUNDS ARE CREATED
To further broaden the range of alternatives available to meet different
investment objectives, there were five additions to the Harris Insight Family of
Funds in 1997:
(BULLET) BALANCED FUND, which seeks to provide current income and capital
appreciation by investing in a balanced portfolio of fixed income and
equity securities.
(BULLET) CONVERTIBLE SECURITIES FUND, which seeks to provide capital
appreciation and current income by investing primarily in securities,
such as bonds, debentures, notes, preferred stocks or warrants, that
are convertible into common stocks.
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HARRIS INSIGHT(REGISTRATION MARK) FUNDS
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(BULLET) EMERGING MARKETS FUND, which seeks to provide capital appreciation by
investing primarily in a diversified portfolio of publicly traded
equity securities of companies located in emerging markets that the
subadviser believes to be undervalued.**
(BULLET) INTERMEDIATE GOVERNMENT BOND FUND, which seeks to provide a high level
of current income, consistent with preservation of capital, by
investing primarily in U.S. government securities having an
intermediate-term average maturity.
(BULLET) SMALL-CAP VALUE FUND, which seeks to provide capital appreciation by
investing primarily in equity securities of smaller to medium
capitalization companies that the portfolio manager believes have
above-average growth potential and appear to be undervalued.***
Hansberger Global Investors, Inc., an international investment manager who
brings significant expertise to the Funds, was retained as sub-adviser to invest
and manage the assets of the Emerging Markets Fund as well as the International
Fund (after approval by shareholders of the International Fund in early August).
PLANS FOR 1998 AND BEYOND
One of our primary goals as a provider of mutual funds is to seek to deliver
exceptional investment performance to our shareholders. Providing a broad range
of products and services is another. As we look forward to the year ahead, we
will be expanding the range of services we offer. For example, by the end of the
first quarter, we expect our Internet site, WWW.HARRISINSIGHT.COM to offer
online account access for shareholders to monitor their account holdings.
Shareholders and prospective investors currently use this electronic
"superhighway" to access general fund information, current performance, and
insight into the markets. By the middle of the year, we plan on offering
Internet transactional capabilities, enabling shareholders to buy and sell
shares, as well as electronically exchange from one Fund to another. Finally, we
plan to develop asset allocation tools for investors to assist individuals in
identifying which Fund or Funds are best suited to match their investment
objectives.
As always, we welcome your comments and suggestions as to how we can best serve
your needs. We highly value the confidence you have placed in us. Whether you
are new to our growing Harris Insight Family of Funds, or have been with us for
a number of years, we thank you. We look forward to the year ahead and the years
to come.
SINCERELY,
/S/ RICHARD W. INGRAM
RICHARD W. INGRAM
PRESIDENT AND CHIEF FINANCIAL OFFICER
HARRIS INSIGHT FUNDS
* MORNINGSTAR'S STAR RATING IS A MEASURE OF RISK AND RETURN TO ASSESS HOW WELL
A FUND HAS COMPENSATED INVESTORS FOR ITS LEVEL OF VOLATILITY. IF A FUND
RANKS IN THE TOP 10% OF ITS ASSET CLASS (SUCH AS DOMESTIC STOCK,
INTERNATIONAL STOCK, TAXABLE BOND, OR MUNICIPAL BOND) IT RECEIVES 5 STARS.
THE OVERALL RATING IS A WEIGHTED AVERAGE OF A FUND'S 3-, 5-, AND 10-YEAR
STAR RATINGS, WITH LONGER TIME PERIODS WEIGHTED MORE HEAVILY. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
** INTERNATIONAL INVESTING, ESPECIALLY IN EMERGING MARKETS, INVOLVES SPECIAL
RISKS, SUCH AS CURRENCY-EXCHANGE AND SHARE-PRICE FLUCTUATION THAT MAY BE
CAUSED BY POLITICAL OR FINANCIAL FACTORS ABROAD.
*** THERE ARE SPECIAL RISKS INVOLVED WHEN INVESTING IN A FUND WHICH INVESTS IN
THE SHARES OF SMALL-SIZED COMPANIES, WHICH TEND TO BE MORE VOLATILE AND LESS
LIQUID THAN STOCKS OF LARGER COMPANIES.
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TABLE OF CONTENTS
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Letter to Shareholders ................................................ 1
The Market Environment
Economic Review .................................................. 4
Fixed Income Markets Review ...................................... 6
Equity Markets Review ............................................ 7
Portfolio Management Review ........................................... 8-23
Tax Information-- Fixed Income and Equity Funds ....................... 24
Statement of Net Assets
Money Market Funds:
Government Money Market Fund ................................... 26
Money Market Fund .............................................. 27-28
Tax-Exempt Money Market Fund ................................... 29-33
Fixed Income Funds:
Short/Intermediate Bond Fund ................................... 34-37
Bond Fund ...................................................... 38-41
Intermediate Government Bond Fund .............................. 42-43
Intermediate Tax-Exempt Bond Fund .............................. 44-46
Tax-Exempt Bond Fund ........................................... 47-49
Convertible Securities Fund .................................... 50-52
Equity Funds
Equity Fund .................................................... 53-54
Equity Income Fund ............................................. 55-56
Growth Fund .................................................... 57-58
Small-Cap Opportunity Fund ..................................... 59-62
Small-Cap Value Fund ........................................... 63-64
Index Fund ..................................................... 65-70
Balanced Fund .................................................. 71-75
International Fund ............................................. 76-78
Emerging Markets Fund .......................................... 79-80
Statements of Operations .............................................. 82-83
Statements of Changes in Net Assets ................................... 84-87
Statements of Changes -- Capital Stock Activity ....................... 88-93
Financial Highlights .................................................. 94-105
Notes to Financial Statements ......................................... 106-117
Report of Independent Accountants ..................................... 118
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THE MARKET ENVIRONMENT
ECONOMIC REVIEW
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As we enter 1998, international economic developments continue to dominate the
world financial scene. Problems in the "Asian Tigers" have spread to South Korea
and are threatening to resurface in Hong Kong. Another major concern is that
these problems could act to postpone the long-awaited Japanese economic
recovery.
ASIAN PROBLEMS HAVING "SPILLOVER" EFFECT
Just as Asia's economic problems have refused to die, so have investors become
more concerned that the future effect on the U.S. could be greater than
previously thought. Corporate earnings disappointments appear to be occurring
more frequently with the blame attributed to fallout from Asia's financial
problems. Unfortunately, the events taking place in the region have begun to
spill over into other parts of the world including South America and Russia.
There is hope that fundamental changes in the developing world's banking and
monetary activities will eventually lead to more stable economies and financial
markets. However, that is in the LONG run. In the SHORT run, the medicine being
prescribed by the International Monetary Fund (IMF) is likely to delay the
economic recovery in most of the "Tigers." This is unfortunate and is the result
of the IMF's primary focus on solving structural banking and economic problems
rather than dealing with the immediate currency crises.
U.S. CORPORATE EARNINGS NEGATIVELY IMPACTED
As a result, the earnings progress of many U.S. companies is likely to be
negatively impacted in 1998 due to dramatically reduced Asian demand for U.S.
exports as well as added competition resulting from an influx of low-priced
imports from that region.
While it is not clear whether all members of the Federal Reserve FULLY recognize
the potential risk the Asian crises presents, Chairman Greenspan does appear to
be sensitive to it. He has begun to publicly discuss his concerns, not only for
future economic growth, but also for the increased possibility of deflationary
price pressures.
FED EASING POSSIBLE IN MONTHS AHEAD
Inflation expectations have moderated in recent months causing long-term bond
yields to decline. This, in conjunction with investors' flight-to-quality
resulting from the economic uncertainties discussed earlier, has caused the
yield curve to flatten significantly. This flattening implies that the U.S.
economy could slow over future months and raises the possibility that the
Federal Reserve could "ease" monetary policy in the foreseeable future.
Investors should not assume that all the news is bad, however. Falling interest
rates and energy prices in conjunction with rising "real" income growth will
encourage consumers to maintain their spending and could provide valuation
support for both stocks and bonds.
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THE MARKET ENVIRONMENT
ECONOMIC REVIEW (CONTINUED)
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ECONOMIC GROWTH TO SLOW SOMEWHAT
Our conclusion is that "real" U.S. economic growth will slow from last year,
expanding by approximately 2 percent in 1998. Corporate profits, which began to
weaken in the fourth quarter of 1997, should rise by 5-7 percent in 1998.
Currently this earnings outlook is less optimistic than the consensus view.
Therefore, if it is accurate, it implies that further negative earnings
surprises could lie ahead.
LONG-TERM OUTLOOK IS POSITIVE
In a longer-term context, the outlook for both the economy and the financial
markets is improving. The prospects for lower budget deficits and even the
possibility of budget surpluses have enhanced the chances of further tax
reduction. This possibility, in conjunction with continued deregulation efforts
should result in enhanced LONGER-TERM growth prospects for the U.S.
DAVID L. MEAD
VICE PRESIDENT AND CHIEF INVESTMENT OFFICER
HARRIS TRUST AND SAVINGS BANK
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THE MARKET ENVIRONMENT
FIXED INCOME MARKETS REVIEW
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With the equity markets taking the center stage spotlight during the course of
1997, the fixed income markets played the role of best supporting actor. Stable
Federal Reserve Board monetary policy contributed to the relative calm in the
fixed income markets during the second half of the year.
Late in the first quarter, the Federal Reserve raised the Federal Funds rate
from 5.25% to 5.50%, in a preemptive effort to stifle inflationary pressures
resulting from higher-than-expected growth in the economy. Interest rates
consequently rose 40 to 50 basis points across the yield curve. Although first
quarter returns for fixed income investors were disappointing, the fixed income
markets rebounded in the second quarter to post the best performance in over a
year.
Despite solid expansion in the economy, tightness in the labor market, and signs
of upward pressure on wages, inflation remained in check. Inflation registered a
1.7 percent gain for all of 1997, the smallest increase in 11 years.
The low level of inflation deterred the Federal Reserve from raising interest
rates to moderate the growth in the economy. As a result, with the exception of
the modest Federal Reserve tightening in late March, the Fed has left interest
rates unchanged for nearly a year.
U.S. Government bond issuance declined in 1997, and the reduction in supply
helped provide an underpinning for bond prices. A declining Federal budget
deficit and positive news about the prospects for a balanced budget in fiscal
1998 also provided support to the market. Lastly, uncertainty surrounding the
European Monetary Union -- and more recently the Asian currency crisis --
increased the relative attractiveness of dollar-denominated assets.
On the other hand, demand for fixed income investments on the part of individual
investors remained somewhat slack. While 1997 was a record year for mutual fund
sales, the Investment Company Institute reported that new money flowing into
funds was heavily skewed toward equities. Through the end of November,
approximately $36 billion had flowed into fixed income mutual funds, compared to
roughly $209 billion into stock funds.
Nonetheless, and for the first time in four years, mutual funds that invest
primarily in Treasury bonds received net flows of cash in October. This was
followed by net purchases of $8 billion in November, the most in a single month
since January of 1994.
1997 ended with the yield on the 30-year Treasury bond falling just below 6
percent.
MARK E. NEWLIN, C.F.A.
DIRECTOR OF FIXED INCOME MANAGEMENT
HARRIS INVESTMENT MANAGEMENT, INC.
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THE MARKET ENVIRONMENT
EQUITY MARKETS REVIEW
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Equity investors were treated to another record-setting year in 1997, as the
Standard & Poor's 500(REGISTRATION MARK) Stock Index returned 33.4 percent. This
was the eleventh-best year in the history of the market.
The equity markets experienced a sharp increase in volatility. In fact, on
nearly a third of the trading days over the course of the year the S&P 500
finished the day up or down at least one percent from the previous day.
Volatility during 1997 was double that of 1996 and three times that of 1995.
Investor concern over the financial turmoil in the Asian markets contributed to
market volatility during the fourth quarter, with concerns coming to a head on
October 27. Markets worldwide plunged.
Despite the concern over the economic troubles in the Far East, investors always
came back to the realization that the situation in the United States was very
different. The equity markets in the U.S. had strong fundamental underpinnings,
and every market dip was followed by a strong rebound.
In part, the market was buoyed by strong corporate earnings. Corporate profits
have been rising every year since 1992, and are at their highest levels since
the 1960's. For the five-year period ending in 1997, Standard & Poor's estimates
that profits among the companies that comprise the S&P 500 Index rose 163
percent.
While the economy continued on its course of moderate growth, investors
continued to receive positive news about inflation. Not since 1986 had the
inflation rate been as low as that experienced over the course of 1997 (1.7
percent).
Individual investors also helped fuel the markets' rise. When larger and
institutional investors rushed to exit the markets, individual investors saw
buying opportunities and stepped in, providing stability. According to the
Investment Company Institute, a record amount of money flowed into mutual funds
that invest in stocks and bonds. Through the end of November, the Institute
reported that $209 billion of new money was invested in equity mutual funds.
As 1997 drew to a close, so did the best three-year period performance by the
S&P 500 since 1928. With double-digit returns in excess of 20 percent for the
last three years, the Index has returned a cumulative 133 percent.
WILLIAM O. LESZINSKE
PRESIDENT AND CHIEF INVESTMENT OFFICER
HARRIS INVESTMENT MANAGEMENT, INC.
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GOVERNMENT MONEY MARKET FUND SUMMARY
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INVESTMENT OBJECTIVE
The Fund seeks to provide investors with as high a level of current income as is
consistent with its investment policies and preservation of capital and
liquidity. The Fund invests exclusively in U.S. Government securities that have
remaining maturities of 397 days or less and certain repurchase agreements.
INVESTMENT RESULTS
Like its other Harris Insight money market fund counterparts, this Fund posted
excellent performance results in 1997. The continuation of the consistent strong
performance of both classes of Shares boosted the trailing twelve-month rankings
into the top 15 percent of their respective peer groups as measured by Lipper
Analytical Services, Inc., a well-regarded firm which monitors fund performance.
The performance of the Class A Shares also was in the top quartile of funds for
three, and five-year time periods. Additionally, the Institutional Shares now
carry a top quartile ranking for the three-year period ended December 31, 1997.
MONEY MARKET FUND SUMMARY
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INVESTMENT OBJECTIVE
The Fund seeks to provide investors with as high a level of current income as is
consistent with its investment policies and with preservation of capital and
liquidity. The Fund invests in a broad range of money market instruments that
have remaining maturities of 397 days or less.
INVESTMENT RESULTS
In a continuation of consistent strong performance, the Fund posted excellent
performance in 1997. In particular, the Class A and Institutional Shares were
ranked in the top 10 percent of their respective peer group universes -- that
is, funds with similar investment objectives against which the Funds are
compared -- for the third and fourth quarter by Lipper. As a result, the returns
have improved the trailing twelve-month Lipper rankings, moving both classes of
Shares into the top 10 percent of their peer groups. The performance of the
Class A Shares also places it in the top quartile of funds for the one, three,
and five-year time periods ended December 31, 1997.
The Fund's very strong showing was responsible for a significant amount of
new assets flowing into the Fund. In the fourth quarter alone, the Fund
increased its assets by $313 million.
TAX-EXEMPT MONEY MARKET FUND SUMMARY
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INVESTMENT OBJECTIVE
The Fund seeks to provide investors with as high a level of current income
(exempt from federal income taxes) as is consistent with its investment policies
and preservation of capital and liquidity. The Fund invests primarily in
high-quality municipal obligations that have remaining maturities of 397 days or
less.
INVESTMENT RESULTS
Yields on short-term tax-exempt securities remained relatively unchanged during
1997. In the first half of the year, rates rose in direct response to the
Federal Reserve Board raising the Federal Funds rate. However, rates fell in the
second half of the year as inflation remained in check. Year-end supply pressure
on daily variable rate demand notes -- such as those the Fund invests in -- led
to higher interest rates during the last week of the year, in what proved to be
a very short-term event. As part of a longer-term strategy, the Fund continued
to reduce exposure to these more volatile daily variable rate notes while moving
into weekly notes. During the fourth quarter, daily notes were reduced from 17
percent to 13 percent of the Fund's holdings. The increase in yield more than
compensated the Fund for the slight extension in maturity.
For the year, Class A Shares of the Fund placed in the top 25% of its
Lipper universe, while the Institutional Shares ranked in the top 32% of its
Lipper universe.
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The Harris Insight Money Market Funds are neither insured nor guaranteed by the
U.S. Government, and there can be no assurance that the Funds will be able to
maintain a stable $1.00 share price.
A portion of income from the Tax-Exempt Money Market Fund may be subject to
some state and/or local taxes and, for certain investors, a portion may be
subject to the federal alternative minimum tax.
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SHORT/INTERMEDIATE BOND FUND SUMMARY
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GROWTH OF A $10,000 INVESTMENT IN THE SHORT/INTERMEDIATE BOND FUND AND THE
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX FROM INCEPTION
THROUGH DECEMBER 31, 1997.
PERFORMANCE BENCHMARK:
Lehman Brothers Intermediate Government/Corporate Bond Index - A weighted
composite of ( I ) the 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 )
the 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.
INVESTMENT OBJECTIVE:
The Fund seeks to provide a high level of total return, including a competitive
level of current income. The Fund seeks to achieve its investment objective by
investing primarily in investment grade debt securities with a
short/intermediate term average maturity.
INVESTMENT RESULTS:
The Fund continued to offer solid returns in 1997. In fact, with the
Institutional Shares returning 1.47 percent on a total return basis during the
fourth quarter, and 7.15 percent for the year, the Fund maintained its WALL
STREET JOURNAL "Scorecard" rating of "A," placing 20th out of 88 funds for the
year as reported by Lipper.
Led by a "flight-to-quality" rush into U.S. Treasury instrument, the fixed
income market posted strong fourth quarter returns. Demand was concentrated in
longer-term issues, with the financial turmoil in Asia prompting a 50-basis
point decline in the 30-year Treasury bond yield to approach a historical low.
Activity in shorter-term issues was muted, however. Anchored around a 5.50
percent Federal Funds rate, short-term interest rates were held in check by the
absence of any imminent easing in Federal Reserve Board monetary policy.
CHART
[GRAPHIC OMITTED]
Following are the plot points for the Short/Intermediate Bond Fund from
inception through December 31, 1997.
INDEX INSTITUTIONAL SHARES
FEB.'96 $10,000 $9,948
MAR.'96 $9,949 $9,888
JUN.'96 $10,011 $9,948
SEP.'96 $10,189 $10,114
DEC.'96 $10,439 $10,361
MAR.'97 $10,427 $10,355
JUN.'97 $10,735 $10,656
SEP.'97 $11,024 $10,942
DEC.'97 $11,260 $11,102
INDEX CLASS A SHARES
APR.'91 $10,000 $10,020
DEC.'91 $11,308 $11,104
DEC.'92 $12,165 $11,690
DEC.'93 $13,510 $12,848
DEC.'94 $13,036 $12,682
DEC.'95 $15,544 $14,443
DEC.'96 $15,995 $14,949
DEC.'97 $17,556 $15,979
AVERAGE ANNUAL TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
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1 YEAR 5 YEAR INCEPTION**
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INSTITUTIONAL SHARES 7.15% -- 5.79%
CLASS A SHARES 6.89% 6.45% 7.18%
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* Total returns include changes in share price and the reinvestment of income
dividends and all capital gain distributions.
** The inception date for the Fund's performance is February 26, 1996 with
respect to the Institutional Shares, and April 1, 1991 with respect to the
Class A Shares. Inception for the Index begins on the month-end closest to
the inception date of the Fund (or class thereof).
Performance figures represent past performance and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
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BOND FUND SUMMARY
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GROWTH OF A $10,000 INVESTMENT IN THE BOND FUND AND THE LEHMAN BROTHERS
AGGREGATE BOND INDEX FROM INCEPTION THROUGH DECEMBER 31, 1997.
Performance Benchmark:
Lehman Brothers Aggregate Bond Index - An index composed of the Lehman
Government/Corporate Index and the Mortgage-Backed Securities Index including
Treasury issues, agency issues, corporate bond issues and mortgage-backed
securities.
INVESTMENT OBJECTIVE:
The Fund seeks to provide a high level of total return, including a competitive
level of current income. The Fund seeks to achieve its investment objective by
investing primarily in investment grade debt securities of varying maturities.
INVESTMENT RESULTS:
Although record employment and solid manufacturing gains imply to most investors
higher interest rates, this combination did not prevent bond yields from
reaching record lows in the fourth quarter of 1997. The primary factor behind
market activity was the financial turmoil in Asia, which prompted a
flight-to-quality rush to U.S. Treasury issues. The subsequent increase in
demand boosted prices, consequently sparking declines in rates. While short-term
rates were anchored near the 5.5-percent-Federal-Funds level, long rates drifted
sharply lower in what appeared to be an inflation-free economy. The overall
effect of these dynamics was a significant flattening in the interest rate yield
curve. Year-over-year, two-year rates fell 23 basis points and thirty-year rates
declined 72 basis points (100 basis points = one percentage point).
In this bullish declining rate environment, the Fund's strategy of long
duration and spread sector overweights worked well, placing the Fund 37 out of
137 funds in its Lipper peer group for the year.
CHART
[GRAPHIC OMITTED]
Following are the plot points for the Bond Fund from inception through December
31, 1997.
INDEX INSTITUTIONAL SHARES
APR.'96 $10,000 $9,972
JUN.'96 $10,114 $10,068
SEP.'96 $10,300 $10,234
DEC.'96 $10,609 $10,540
MAR.'97 $10,550 $10,448
JUN.'97 $10,939 $10,828
SEP.'97 $11,303 $11,226
DEC.'97 $11,636 $11,532
INDEX CLASS A SHARES
APR.'96 $10,000 $9,973
JUN.'96 $10,114 $10,067
SEP.'96 $10,300 $10,227
DEC.'96 $10,609 $10,526
MAR.'97 $10,550 $10,428
JUN.'97 $10,939 $10,801
SEP.'97 $11,303 $11,191
DEC.'97 $11,636 $11,488
AVERAGE ANNUAL TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
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1 YEAR INCEPTION**
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INSTITUTIONAL SHARES 9.41% 8.68%
CLASS A SHARES 9.14% 8.48%
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* Total returns include changes in share price and the reinvestment of income
dividends and all capital gain distributions.
** The inception date for the Fund's performance is April 16, 1996 with respect
to the Institutional Shares, and April 22, 1996 with respect to the Class A
Shares. Inception for the Index begins on the month-end closest to the
inception date of the Fund (or class thereof).
Performance figures represent past performance and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
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INTERMEDIATE GOVERNMENT BOND FUND SUMMARY
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GROWTH OF A $10,000 INVESTMENT IN THE INTERMEDIATE GOVERNMENT BOND FUND AND THE
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT BOND INDEX FROM INCEPTION THROUGH
DECEMBER 31, 1997.
PERFORMANCE BENCHMARK:
Lehman Brothers Intermediate Government Bond Index -- An index comprised of all
public obligations of the U.S. Treasury, excluding flower bonds and foreign
targeted issues, all publicly issued debt of U.S. Government agencies and
quasi-federal corporations and corporate debt guaranteed by the U.S. Government.
All issues have maturities between 1 and 9.9997 years and an outstanding par
value of at least $100 million dollars. Price, coupon and total return are
reported on a month-end to month-end basis.
INVESTMENT OBJECTIVE:
The Fund seeks to provide a high level of current income, consistent with the
preservation of capital, by investing primarily in U.S. Government securities
having an intermediate-term average maturity.
INVESTMENT RESULTS:
The end of the year represented the first nine months this Fund has been in
operation, having been created from a Harris Trust and Savings Bank collective
investment fund at the end of March.
The Fund's long duration versus its benchmark index enhanced the Fund's
return during the fourth quarter of the year, as U.S. Treasury securities staged
a significant rally in prices.
Contributing to the strong performance by the Fund during the summer months
was strength in bond prices resulting from ideas the Fed would not take any
action regarding interest rates. Additionally, prices were bolstered by the
Treasury Department's reduction in the size of the weekly Bill and monthly Note
auctions, as well as the cancellation of the July and October ten-year note
auctions. This reduced issuance, combined with historically low volatility
levels, produced an environment in which mortgage securities led all sectors of
the fixed income market.
CHART
[GRAPHIC OMITTED]
Following are the plot points for the Intermediate Government Bond Fund from
inception through December 31, 1997.
INDEX INSTITUTIONAL SHARES CLASS A SHARES
JAN.'85 $10,000 $10,185 $10,197
DEC.'85 $11,801 $11,706 $11,689
DEC.'86 $13,343 $13,209 $13,148
DEC.'87 $13,824 $13,666 $13,574
DEC.'88 $14,709 $14,578 $14,443
DEC.'89 $16,575 $16,368 $16,180
DEC.'90 $18,160 $17,889 $17,623
DEC.'91 $20,719 $20,304 $19,967
DEC.'92 $22,154 $23,480 $21,262
DEC.'93 $23,967 $23,091 $22,984
DEC.'94 $23,548 $23,361 $22,541
DEC.'95 $26,945 $26,199 $25,492
DEC.'96 $28,038 $27,264 $26,475
DEC.'97 $30,203 $29,396 $28,476
AVERAGE ANNUAL TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
- -----------------------------------------------------------
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- -----------------------------------------------------------
INSTITUTIONAL SHARES 7.82% 6.27% 7.96% 8.64%
CLASS A SHARES 7.56% 6.02% 7.69% 8.38%
- -----------------------------------------------------------
* Total returns include changes in share price and the reinvestment of income
dividends and capital gains distributions.
** The inception date for the Fund's performance with respect to both of the
Institutional and Class A Shares is January 1, 1985. Inception for the index
begins on the month-end closest to the inception date of the Fund (or class
thereof).
Performance information includes the performance of the Intermediate
Government Bond Fund's predecessor collective fund for periods before the
Fund commenced operations. Performance for the collective fund has been
adjusted to reflect the Fund's estimate of its expense ratio for the first
year of operations as a mutual fund. The collective fund was not registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), or
subject to certain investment restrictions that are imposed by the 1940 Act.
If the collective fund had been registered under the 1940 Act, its
performance may have been adversely affected. The collective fund did not
impose any charges that correspond to the advisory and other fees of the
Intermediate Government Bond Fund. Therefore, the quoted performance figures
for the collective fund have been reduced to reflect expenses of 0.50% and
0.75%, the estimated expense ratios of the Institutional and Class A Shares
of the Intermediate Government Bond Fund, respectively, at the inception of
its operations.
Performance figures represent past performance and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
11
<PAGE>
INTERMEDIATE TAX-EXEMPT BOND FUND SUMMARY
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE INTERMEDIATE TAX-EXEMPT BOND FUND, LEHMAN
BROTHERS QUALITY INTERMEDIATE MUNICIPAL BOND INDEX AND THE LEHMAN BROTHERS
MUNICIPAL BOND FUND INDEX FROM INCEPTION THROUGH DECEMBER 31, 1997.
PERFORMANCE BENCHMARKS:
Lehman Brothers Quality Intermediate Municipal Bond Index - An index comprised
of 22,839 bonds. The bonds are rated A or better, have maturities between 2 and
17 years, and are selected from issues larger than $50 million dated since
January 1986.
Lehman Brothers Municipal Bond Fund Index - An index comprised of 8,000
bonds. The bonds are all investment-grade, fixed-rate, long-term maturities
(greater than two years) and are selected from issues larger than $50 million
dated since January 1984.
The Lehman Brothers Quality Intermediate Municipal Bond Index has been
selected as the Fund's primary benchmark because that Index better reflects the
investment objectives and policies of the Fund.
INVESTMENT OBJECTIVE:
The Fund seeks to provide a high level of current income that is exempt from
federal income tax. The Fund seeks to achieve its investment objective by
investing, under normal market conditions, at least 80% of its assets in
municipal securities with a dollar weighted average portfolio maturity of
between 3 and 10 years.
INVESTMENT RESULTS:
During the fourth quarter, prices on municipal bonds lagged those in the
government market. Consequently, the ratio between tax-exempt and Treasury
yields rose. At the end of the year, tax-exempt issues were yielding 90 percent
of the yield of the long Treasury bond. With bond insurance accounting for more
than 50 percent of new issue volume, it was increasingly difficult for the Fund
to buy issues that offered attractive yields. Competition for bonds offering
attractive yields was high and credit spreads narrowed substantially.
While the Fund benefited in this environment from its holdings of
higher-quality issues, the Fund's emphasis on quality issues somewhat limited
its performance over the course of the year, as lower-quality issues experienced
better relative performance. From a yield standpoint, however, we did not
believe investors were provided with enough additional incentive to buy lower
quality issues.
CHART
[GRAPHIC OMITTED]
Following are the plot points for the Intermediate Tax-Exempt Bond Fund from
inception through December 31, 1997.
LB QUARTERLY LB MUNICIPAL INSTITUTIONAL CLASS A
INTERMEDIATE INDEX BOND INDEX SHARES SHARES
JAN.'86 $10,000 $10,000 $10,051 $10,048
DEC.'86 $11,931 $10,940 $10,915
DEC.'87 $10,368 $12,111 $10,920 $10,869
DEC.'88 $11,034 $13,324 $11,419 $11,338
DEC.'89 $12,101 $14,781 $12,345 $12,227
DEC.'90 $13,011 $15,858 $13,128 $12,970
DEC.'91 $14,460 $17,784 $14,576 $14,364
DEC.'92 $15,517 $19,352 $15,562 $15,298
DEC.'93 $17,055 $21,729 $16,892 $16,565
DEC.'94 $16,589 $20,606 $16,371 $16,013
DEC.'95 $18,878 $24,202 $18,283 $17,839
DEC.'96 $19,683 $25,274 $18,843 $18,340
DEC.'97 $21,123 $27,597 $20,050 $19,465
AVERAGE ANNUAL TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
- -----------------------------------------------------------
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- -----------------------------------------------------------
INSTITUTIONAL SHARES 6.41% 5.20% 6.26% 5.96%
CLASS A SHARES 6.14% 4.94% 6.00% 5.70%
- -----------------------------------------------------------
* Total returns include changes in share price and the reinvestment of income
dividends and all capital gain distributions.
** The inception date for the Fund's performance with respect to both of the
Institutional and Class A Shares is January 1, 1986. Inception for the Index
begins on the month-end closest to the inception date of the Fund (or class
thereof).
Performance information includes the performance of the Intermediate
Tax-Exempt Bond Fund's predecessor common trust fund for periods before the
Fund commenced operations. Performance for the common trust fund has been
adjusted to reflect the Fund's estimate of its expense ratio for the first
year of operations as a mutual fund. The common trust fund was not registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), or
subject to certain investment restrictions that are imposed by the 1940 Act.
If the common trust fund had been registered under the 1940 Act, its
performance may have been adversely affected. The common trust fund did not
impose any charges that correspond to the advisory and other fees of the
Intermediate Tax-Exempt Bond Fund. Therefore, the quoted performance figures
for the common trust fund have been reduced to reflect expenses of 0.80% and
1.05%, the estimated expense ratios of the Institutional and Class A Shares
of the Intermediate Tax-Exempt Bond Fund, respectively, at commencement of
operations.
Performance figures represent past performance and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
A portion of income may be subject to some state and/or local taxes and, for
certain investors, a portion may be subject to the federal alternative
minimum tax.
12
<PAGE>
TAX-EXEMPT BOND FUND SUMMARY
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE TAX-EXEMPT BOND FUND AND THE LEHMAN
BROTHERS MUNICIPAL BOND INDEX FROM INCEPTION THROUGH DECEMBER 31, 1997.
PERFORMANCE BENCHMARK:
Lehman Brothers Municipal Bond Index - An index comprised of 40,342 actual
bonds. The bonds are all investment-grade, fixed-rate, long-term maturities
(greater than two years) and are selected from issues larger than $50 million
dated since January 1980.
INVESTMENT OBJECTIVE:
The Fund seeks to provide a high level of current income that is exempt from
federal income tax. The Fund seeks to achieve its investment objective by
investing at least 80% of its assets, under normal market conditions, in a broad
range of municipal bonds and other obligations issued by state and local
governments to finance their operations or special projects.
INVESTMENT RESULTS:
Although the Treasury market experienced a flight-to-quality in the fourth
quarter of the year, prices on municipal bonds lagged those in the government
market. Consequently, the ratio between tax-exempt and Treasury yields rose. At
the end of the year, tax-exempt issues were yielding 90 percent of the yield of
the long Treasury bond. With bond insurance accounting for more than 50 percent
of new issue volume, it was increasingly difficult for the Fund to buy issues
that offered attractive yields. Competition for bonds offering attractive yields
was high and credit spreads narrowed substantially.
Nonetheless, the Fund's investment strategy of extending duration greatly
enhanced performance. In addition, the Fund benefited from increasing its
position in triple-A rated securities as credit spreads narrowed.
CHART
[GRAPHIC OMITTED]
Following are the plot points for the Tax-Exempt Bond Fund from inception
through December 31, 1997.
INDEX INSTITUTIONAL SHARES CLASS A SHARES
JAN.'85 $10,000 $10,154 $10,152
DEC.'85 $12,003 $11,814 $11,785
DEC.'86 $14,321 $13,887 $13,819
DEC.'87 $14,537 $13,372 $13,273
DEC.'88 $16,014 $14,729 $14,584
DEC.'89 $17,742 $16,330 $16,129
DEC.'90 $19,035 $17,245 $16,990
DEC.'91 $21,346 $19,247 $18,916
DEC.'92 $23,228 $20,857 $20,447
DEC.'93 $26,081 $23,558 $23,037
DEC.'94 $24,733 $21,838 $21,302
DEC.'95 $29,050 $24,993 $24,319
DEC.'96 $30,337 $25,932 $25,153
DEC.'97 $33,125 $28,148 $27,235
AVERAGE ANNUAL TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
- -----------------------------------------------------------
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- -----------------------------------------------------------
INSTITUTIONAL SHARES 8.55% 6.18% 7.73% 8.28%
CLASS A SHARES 8.28% 5.90% 7.45% 8.01%
- -----------------------------------------------------------
* Total returns include changes in share price and the reinvestment of income
dividends and all capital gain distributions.
** The inception date for the Fund's performance with respect to both of the
Institutional and Class A Shares is January 1, 1985. Inception for the Index
begins on the month-end closest to the inception date of the Fund (or class
thereof).
Performance information includes the performance of the Tax-Exempt Bond
Fund's predecessor common trust fund for periods before the Fund commenced
operations. Performance for the common trust fund has been adjusted to
reflect the Fund's estimate of its expense ratio for the first year of
operations as a mutual fund. The common trust fund was not registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), or subject
to certain investment restrictions that are imposed by the 1940 Act. If the
common trust fund had been registered under the 1940 Act, its performance may
have been adversely affected. The common trust fund did not impose any
charges that correspond to the advisory and other fees of the Tax-Exempt Bond
Fund. Therefore, the quoted performance figures for the common trust fund
have been reduced to reflect expenses of 0.80% and 1.05%, the estimated
expense ratios of the Institutional and Class A Shares of the Tax-Exempt Bond
Fund, respectively, at commencement of operations.
Performance figures represent past performance and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
A portion of income may be subject to some state and/or local taxes and, for
certain investors, a portion may be subject to the federal alternative
minimum tax.
13
<PAGE>
CONVERTIBLE SECURITIES FUND SUMMARY
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE CONVERTIBLE SECURITIES FUND AND THE FIRST
BOSTON CONVERTIBLE INDEX FROM INCEPTION THROUGH DECEMBER 31, 1997.
PERFORMANCE BENCHMARK:
First Boston Convertible Index - 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.
INVESTMENT OBJECTIVE:
The Fund seeks to provide capital appreciation and current income by investing
primarily in securities such as bonds, debentures, notes, preferred stocks or
warrants that are convertible into, or provide an option to purchase, common
stocks.
INVESTMENT RESULTS:
This Fund has been in existence for nine months, having been created from a
Harris Trust and Savings Bank collective investment fund at the end of March.
Despite a difficult market environment, the Fund performed well in 1997,
outperforming both its benchmark and its Lipper peer group average. In addition,
the Fund's performance exceeds its benchmark for the one-, three- and five-year
periods.
CHART
[GRAPHIC OMITTED]
Following are the plot points for the Convertible Securities Fund from inception
through December 31, 1997.
INDEX INSTITUTIONAL SHARES CLASS A SHARES
JAN.'85 $10,000 $10,652 $10,645
DEC.'85 $12,732 $12,500 $12,464
DEC.'86 $14,988 $15,625 $15,561
DEC.'87 $14,626 $15,186 $15,084
DEC.'88 $16,703 $17,407 $17,239
DEC.'89 $19,009 $19,694 $19,548
DEC.'90 $18,536 $15,678 $15,446
DEC.'91 $23,528 $19,934 $19,600
DEC.'92 $26,348 $23,444 $22,994
DEC.'93 $30,240 $26,689 $26,103
DEC.'94 $29,583 $25,864 $25,226
DEC.'95 $36,376 $30,824 $30,000
DEC.'96 $40,614 $37,314 $36,232
DEC.'97 $46,449 $44,282 $42,870
AVERAGE ANNUAL TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
- ---------------------------------------------------------------
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- ---------------------------------------------------------------
INSTITUTIONAL SHARES 18.68% 13.56% 11.30% 12.12%
CLASS A SHARES 18.32% 13.27% 11.01% 11.84%
- ---------------------------------------------------------------
* Total returns include changes in share price and the reinvestment of income
dividends and all capital gain distributions.
** The inception date for the Fund's performance with respect to both of the
Institutional and Class A Shares is January 1, 1985. Inception for the index
begins on the month-end closest to the inception date of the Fund (or class
thereof).
Performance information includes the performance of the Convertible
Securities Fund's predecessor collective fund for periods before the Fund
commenced operations. Performance for the collective fund has been adjusted
to reflect the Fund's estimate of its expense ratio for the first year of
operations as a mutual fund. The collective fund was not registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), or subject to
certain investment restrictions that are imposed by the 1940 Act. If the
collective fund had been registered under the 1940 Act, its performance may
have been adversely affected. The collective fund did not impose any charges
that correspond to the advisory and other fees of the Convertible Securities
Fund. Therefore, the quoted performance figures for the collective fund have
been reduced to reflect expenses of 0.92% and 1.17%, the estimated expense
ratios of the Institutional and Class A Shares of the Convertible Securities
Fund, respectively, at the inception of its operations.
Performance figures represent past performance and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
14
<PAGE>
EQUITY FUND SUMMARY
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE EQUITY FUND AND THE S&P 500 STOCK INDEX
FROM INCEPTION THROUGH DECEMBER 31, 1997.
PERFORMANCE BENCHMARK:
S&P 500 Stock Index - 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.
INVESTMENT OBJECTIVE:
The Fund seeks to provide capital appreciation and current income. The Fund
seeks to achieve its investment objective by investing primarily in common
stocks of larger capitalization companies.
INVESTMENT RESULTS:
Despite performance which lagged in the fourth quarter, 1997 was an excellent
year for the Fund, with the Fund significantly outperforming both its peer group
universe and finishing the year comfortably ahead of the S&P 500.
Performance during the quarter was dampened by heightened market
volatility, including the tumultuous effects of the Asian financial crisis,
strong flows into U.S. stocks from mutual funds and foreign investors and a
strong bond market.
Our shareholders were rewarded in 1997 not only with strong performance,
but with a five-star overall ranking for the Fund from MORNINGSTAR, INC., its
highest rating for risk-adjusted performance. We believe this distinction
validates our value added approach to selecting individual securities for the
Fund's portfolio of investments.
Following are the plot points for the Equity Fund from inception through
December 31, 1997.
CHART
[GRAPHIC OMITTED]
INDEX INSTITUTIONAL SHARES
FEB.'96 $10,000 $9,797
MAR.'96 $10,096 $9,752
JUN.'96 $10,552 $9,973
SEP.'96 $10,875 $10,365
DEC.'96 $11,785 $11,366
MAR.'97 $12,093 $11,568
JUN.'97 $14,209 $13,197
SEP.'97 $15,278 $15,268
DEC.'97 $15,717 $15,445
CHART
[GRAPHIC OMITTED]
INDEX CLASS A SHARES
FEB.'88 $10,000 $10,200
DEC.'88 $10,700 $10,823
DEC.'89 $14,069 $13,855
DEC.'90 $13,623 $12,765
DEC.'91 $17,784 $16,248
DEC.'92 $19,149 $17,578
DEC.'93 $21,061 $20,784
DEC.'94 $21,337 $20,537
DEC.'95 $29,323 $27,738
DEC.'96 $36,089 $34,437
DEC.'97 $48,129 $46,645
AVERAGE ANNUAL TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
- -----------------------------------------------------------
1 YEAR 5 YEAR INCEPTION**
- -----------------------------------------------------------
INSTITUTIONAL SHARES 35.89% -- 26.37%
CLASS A SHARES 35.45% 21.55% 16.91%
- -----------------------------------------------------------
* Total returns include changes in share price and the reinvestment of income
dividends and all capital gain distributions.
** The inception date for the Fund's performance is February 26, 1996 with
respect to the Institutional Shares, and February 26, 1988 with respect to
the Class A Shares. Inception for the Index begins on the month-end closest
to the inception date of the Fund (or class thereof).
Performance figures represent past performance and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
15
<PAGE>
EQUITY INCOME FUND SUMMARY
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE EQUITY INCOME FUND AND THE S&P 500 STOCK
INDEX FROM INCEPTION THROUGH DECEMBER 31, 1997.
PERFORMANCE BENCHMARK:
S&P 500 Stock Index - 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.
INVESTMENT OBJECTIVE:
The Fund seeks to provide current income and, secondarily, capital appreciation.
The Fund seeks to achieve its investment objective by investing primarily in
common stocks and convertible securities believed to offer good value, an
attractive yield and dividend growth potential.
INVESTMENT RESULTS:
The Fund outperformed its Lipper universe by 400 basis points but fell short of
the performance of the S&P 500 by 150 basis points. During the fourth quarter,
the Fund's return was affected by an overweight in Technology issues, which
underperformed during the period.
Interest-rate-sensitive companies continue to be our primary provider of
yield enhancements. Utilities staged a sizable comeback during the fourth
quarter (after underperforming the market for the first three quarters), but
still underperformed the S&P 500. For the year, the best performing sectors were
Financial and Healthcare. Performance clearly benefited from a combination of
strong issue selection and selected sector exposures.
Since May, 1997, the Fund has continuously ranked among the top 15
performing equity income funds on a year-over-year basis in the WALL STREET
JOURNAL'S "Mutual Fund Scorecard" column.
CHART
[GRAPHIC OMITTED]
Following are the plot points for the Equity Income Fund from inception through
December 31, 1997.
INDEX INSTITUTIONAL SHARES CLASS A SHARES
JAN.'94 $10,000 $10,327 $10,326
JUN.'94 $9,658 $9,540 $9,529
DEC.'94 $10,131 $9,957 $9,934
JUN.'95 $12,172 $11,676 $11,634
DEC.'95 $13,923 $13,625 $13,559
JUN.'96 $15,342 $14,462 $14,376
DEC.'96 $17,135 $16,071 $15,949
JUN.'97 $20,659 $18,900 $18,740
DEC.'97 $22,852 $21,198 $20,978
AVERAGE ANNUAL TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
- -----------------------------------------------------------
1 YEAR INCEPTION**
- -----------------------------------------------------------
INSTITUTIONAL SHARES 31.90% 20.65%
CLASS A SHARES 31.53% 20.33%
- -----------------------------------------------------------
* Total returns include changes in share price and the reinvestment of income
dividends and all capital gain distributions.
** The inception date for the Fund's performance with respect to both of the
Institutional and Class A Shares is January 1, 1994. Inception for the Index
begins on the month-end closest to the inception date of the Fund (or class
thereof).
Performance information includes the performance of the Equity Income Fund's
predecessor common trust fund for periods before the Fund commenced
operations. Performance for the common trust fund has been adjusted to
reflect the Fund's estimate of its expense ratio for the first year of
operations as a mutual fund. The common trust fund was not registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), or subject
to certain investment restrictions that are imposed by the 1940 Act. If the
common trust fund had been registered under the 1940 Act, its performance may
have been adversely affected. The common trust fund did not impose any
charges that correspond to the advisory and other fees of the Equity Income
Fund. Therefore, the quoted performance figures for the common trust fund
have been reduced to reflect expenses of 0.93% and 1.18%, the estimated
expense ratios of the Institutional and Class A Shares of the Equity Income
Fund, respectively, at commencement of operations.
Performance figures represent past performance and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
16
<PAGE>
GROWTH FUND SUMMARY
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE GROWTH FUND AND THE S&P 500 STOCK INDEX
FROM INCEPTION THROUGH DECEMBER 31, 1997.
PERFORMANCE BENCHMARK:
S&P 500 Stock Index - 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.
INVESTMENT OBJECTIVE:
The Fund seeks to provide capital appreciation and, secondarily, current income.
The Fund seeks to achieve its investment objective by investing primarily in
common stocks and convertible securities believed to offer above-average growth
potential.
INVESTMENT RESULTS:
A very strong fourth quarter helped boost the return of this Fund for the year.
During the quarter the Fund outperformed its Lipper peer group average by 260
basis points. With value-type companies being favored by the market during the
quarter, the most important factor behind the enhanced return was the
portfolio's emphasis on growth companies with lower price-earnings ratios.
Another major factor contributing to returns was the portfolio's under-exposure
to foreign earnings relative to the growth universe.
Issue selection was the major factor influencing performance of this Fund in the
first quarter of 1997, while during the second quarter the Fund benefited from
having a fully invested position in common stocks as well as having a favorable
balance between large capitalization U.S. multinational and mid-capitalization
companies. The Fund's lack of major exposure to these mid-cap companies proved
to be somewhat of a drag on performance in the third quarter.
CHART
[GRAPHIC OMITTED]
Following are the plot points for the Growth Fund from inception through
December 31, 1997.
INDEX INSTITUTIONAL SHARES CLASS A SHARES
APR.'92 $10,000 $10,000 $10,000
DEC.'92 $11,049 $10,910 $10,893
DEC.'93 $12,153 $11,587 $11,542
DEC.'94 $12,312 $11,581 $11,507
DEC.'95 $16,920 $15,801 $15,668
DEC.'96 $20,824 $20,370 $20,149
DEC.'97 $27,771 $27,052 $26,706
AVERAGE ANNUAL TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
- -----------------------------------------------------------
1 YEAR 5 YEAR INCEPTION**
- -----------------------------------------------------------
INSTITUTIONAL SHARES 32.81% 19.92% 19.01%
CLASS A SHARES 32.54% 19.64% 18.74%
- -----------------------------------------------------------
* Total returns include changes in share price and the reinvestment of income
dividends and all capital gain distributions.
** The inception date for the Fund's performance with respect to both of the
Institutional and Class A Shares is April 1, 1992. Inception for the Index
begins on the month-end closest to the inception date of the Fund (or class
thereof).
Performance information includes the performance of the Growth Fund's
predecessor common trust fund for periods before the Fund commenced
operations. Performance for the common trust fund has been adjusted to
reflect the Fund's estimate of its expense ratio for the first year of
operations as a mutual fund. The common trust fund was not registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), or subject
to certain investment restrictions that are imposed by the 1940 Act. If the
common trust fund had been registered under the 1940 Act, its performance may
have been adversely affected. The common trust fund did not impose any
charges that correspond to the advisory and other fees of the Growth Fund.
Therefore, the quoted performance figures for the common trust fund have been
reduced to reflect expenses of 1.10% and 1.35%, the estimated expense ratios
of the Institutional and Class A Shares of the Growth Fund, respectively, at
commencement of operations.
Performance figures represent past performance and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
17
<PAGE>
SMALL-CAP OPPORTUNITY FUND SUMMARY
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE SMALL-CAP OPPORTUNITY FUND AND THE RUSSELL
2000 SMALL STOCK INDEX FROM INCEPTION THROUGH DECEMBER 31, 1997.
PERFORMANCE BENCHMARK:
Russell 2000 Small Stock Index - An index of the 2,000 smallest stocks in the
Russell 3000 Index. The smallest companies have a market capitalizations
approximating $100 million, whereas the largest company has a market
capitalization of $2.2 billion. The total adjusted market capitalization of the
Russell 2000 Index was $756 billion in 1997.
INVESTMENT OBJECTIVE:
The Fund seeks to provide long term capital appreciation. The Fund seeks to
achieve its investment objective by investing primarily in equity securities of
smaller to medium capitalization companies.
INVESTMENT RESULTS:
The Fund finished the year on a very positive note, outperforming the Russell
2000 benchmark and its Lipper peer group. With respect to its performance
relative to these peers -- other funds with similar objectives that the Fund is
compared against -- the Fund outperformed its Lipper peer group average by
almost 5 percent.
Especially noteworthy during 1997 was the performance of small cap issues
during the second quarter. For the first time since 1994, small cap stocks -- as
measured by the Russell 2000 Index -- outperformed large cap stocks. In
particular, small cap technology, producer goods and consumer durables all were
up over 20% during the period. This strong performance continued into the third
quarter of the year.
CHART
[GRAPHIC OMITTED]
Following are the plot points for the Small-Cap Opportunity Fund from inception
through December 31, 1997.
INDEX INSTITUTIONAL SHARES CLASS A SHARES
JAN.'85 $10,000 $10,515 $10,514
DEC.'85 $13,105 $12,055 $12,027
DEC.'86 $13,850 $13,691 $13,625
DEC.'87 $12,635 $14,194 $14,090
DEC.'88 $15,781 $17,624 $17,452
DEC.'89 $18,343 $20,660 $20,408
DEC.'90 $14,765 $18,269 $18,002
DEC.'91 $21,564 $26,974 $26,515
DEC.'92 $25,534 $32,100 $31,475
DEC.'93 $30,362 $36,975 $36,149
DEC.'94 $29,809 $35,602 $34,719
DEC.'95 $38,287 $44,966 $43,742
DEC.'96 $44,602 $53,421 $51,849
DEC.'97 $54,575 $67,029 $64,883
AVERAGE ANNUAL TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
- ---------------------------------------------------------------
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- ---------------------------------------------------------------
INSTITUTIONAL SHARES 25.47% 15.86% 16.79% 15.80%
CLASS A SHARES 25.14% 15.57% 16.50% 15.51%
- ---------------------------------------------------------------
* Total returns include changes in share price and the reinvestment of income
dividends and all capital gain distributions.
** The inception date for the Fund's performance with respect to both of the
Institutional and Class A Shares is January 1, 1985. Inception for the Index
begins on the month-end closest to the inception date of the Fund (or class
thereof).
Performance information includes the performance of the Small-Cap Opportunity
Fund's predecessor common trust fund for periods before the Fund commenced
operations. Performance for the common trust fund has been adjusted to
reflect the Fund's estimate of its expense ratio for the first year of
operations as a mutual fund. The common trust fund was not registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), or subject
to certain investment restrictions that are imposed by the 1940 Act. If the
common trust fund had been registered under the 1940 Act, its performance may
have been adversely affected. The common trust fund did not impose any
charges that correspond to the advisory and other fees of the Small-Cap
Opportunity Fund. Therefore, the quoted performance figures for the common
trust fund have been reduced to reflect expenses of 1.20% and 1.45%, the
estimated expense ratios of the Institutional and Class A Shares of the
Small-Cap Opportunity Fund, respectively, at commencement of operations.
Performance figures represent past performance and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
Historically, small company stocks have been more volatile than large company
stocks, U.S. Government bonds and Treasury bills.
18
<PAGE>
SMALL-CAP VALUE FUND SUMMARY
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE SMALL-CAP VALUE FUND AND THE RUSSELL 2000
SMALL STOCK INDEX FROM INCEPTION THROUGH DECEMBER 31, 1997.
PERFORMANCE BENCHMARK:
Russell 2000 Small Stock Index - An index of the 2,000 smallest stocks in the
Russell 3000 Index. The smallest companies have a market capitalizations
approximating $100 million, whereas the largest company has a market
capitalization of $2.2 billion. The total adjusted market capitalization of the
Russell 2000 Index was $756 billion in 1997.
INVESTMENT OBJECTIVE:
The Fund seeks to provide capital appreciation by investing primarily in equity
securities of companies with smaller to medium capitalizations that the
Portfolio Management Agent believes are conservatively valued in the
marketplace.
INVESTMENT RESULTS:
This Fund was converted from a Harris Trust and Savings Bank collective
investment fund on March 24, 1997. Concurrent with the conversion, the Fund
adopted the Russell 2000 as its benchmark. (The Russell 2500, the benchmark that
had been used by the collective investment fund since 1991, is generally not
available to the public.)
The Fund's performance for the full year comfortably exceeded its Lipper
peer group average as well as its benchmark. The Fund's strong showing was
attributable to its holdings in financials, utilities and consumer staples,
while technology and energy lagged.
Small stocks, have lagged the performance of large-cap stocks for more than
four years through 1997. Depending upon the benchmark chosen, small-cap stocks
may be 15 to 25 percent undervalued relative to larger-cap issues.
CHART
[GRAPHIC OMITTED]
Following are the plot points for the Small-Cap Value Fund from inception
through December 31, 1997.
INDEX INSTITUTIONAL SHARES CLASS A SHARES
JAN.'85 $10,000 $11,273 $11,270
DEC.'85 $13,105 $13,073 $13,051
DEC.'86 $13,850 $15,855 $15,785
DEC.'87 $12,635 $16,236 $16,120
DEC.'88 $15,781 $19,709 $19,506
DEC.'89 $18,343 $22,473 $22,205
DEC.'90 $14,765 $18,818 $18,536
DEC.'91 $21,564 $26,655 $26,208
DEC.'92 $25,534 $31,000 $30,388
DEC.'93 $30,362 $35,636 $34,850
DEC.'94 $29,809 $34,491 $33,651
DEC.'95 $38,287 $43,855 $42,663
DEC.'96 $44,602 $50,455 $48,977
DEC.'97 $54,575 $65,380 $63,223
AVERAGE ANNUAL TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
- ---------------------------------------------------------------
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- ---------------------------------------------------------------
INSTITUTIONAL SHARES 29.58% 16.10% 14.95% 15.53%
CLASS A SHARES 29.09% 15.78% 14.64% 15.23%
- ---------------------------------------------------------------
* Total returns include changes in share price and the reinvestment of income
dividends and all capital gain distributions.
** The inception date for the Fund's performance with respect to both the
Institutional and Class A Shares is January 1, 1985. Inception for the index
begins on the month-end closest to the inception date of the Fund (or class
thereof).
Performance information includes the performance of the Small-Cap Value
Fund's predecessor collective fund for periods before the Fund commenced
operations. Performance for the collective fund has been adjusted to reflect
the Fund's estimate of its expense ratio for the first year of operations as
a mutual fund. The collective fund was not registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), or subject to certain
investment restrictions that are imposed by the 1940 Act. If the collective
fund had been registered under the 1940 Act, its performance may have been
adversely affected. The collective fund did not impose any charges that
correspond to the advisory and other fees of the Small-Cap Value Fund.
Therefore, the quoted performance figures for the collective fund have been
reduced to reflect expenses of 1.00% and 1.24%, the estimated expense ratios
of the Institutional and Class A Shares of the Small-Cap Value Fund,
respectively, at the inception of its operations.
Performance figures represent past performances and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
Historically, small company stocks have been more volatile than large company
stocks, U.S. Government bonds and Treasury bills.
19
<PAGE>
INDEX FUND SUMMARY
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE INDEX FUND AND THE S&P 500 STOCK INDEX
FROM INCEPTION THROUGH DECEMBER 31, 1997.
PERFORMANCE BENCHMARK:
S&P 500 Stock Index - 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.
INVESTMENT OBJECTIVE:
The Fund seeks to provide the return and risk characteristics of the S&P 500
Index, which emphasizes large capitalization companies.
INVESTMENT RESULTS:
Reflecting the strong performance of the overall market and the Standard and
Poor's 500 Stock Index, the Fund posted excellent results in 1997. Once again in
1997, S&P 500 Index funds ranked highly relative to all equity funds as
increased market volatility, especially in the fourth quarter, posed challenges
detrimental to performance.
As an unmanaged index, the S&P 500 Stock Index (the "Index") is constructed
and its returns are calculated without subtracting any fees or operational
costs. The Index Fund, an actual investment portfolio, inescapably incurs some
operational and transactional costs in striving to replicate the Index.
Moreover, when the S&P 500 rises a sizable percentage, as it did in this year's
first half, it is more difficult to match the Index as S&P calculates the return
for its index assuming dividends are available for reinvestment immediately on
the "Ex date", where in the real world, cash dividends are received with a lag
of 2-6 weeks, and during this period the prices of the stocks into which they
shall be reinvested are moving away on the upside. Tracking error at year-end
was a negative 58 basis points after expenses, but is expected to narrow
significantly over time.
CHART
[GRAPHIC OMITTED]
Following are the plot points for the Index Fund from inception through December
31, 1997.
INDEX INSTITUTIONAL SHARES CLASS A SHARES
APR.'92 $10,000 $10,028 $10,027
DEC.'92 $11,049 $10,730 $10,711
DEC.'93 $12,153 $11,750 $11,700
DEC.'94 $12,312 $11,841 $11,761
DEC.'95 $16,920 $16,218 $16,069
DEC.'96 $20,824 $19,902 $19,679
DEC.'97 $27,771 $26,427 $26,077
AVERAGE ANNUAL TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
- -----------------------------------------------------------
1 YEAR 5 YEAR INCEPTION**
- -----------------------------------------------------------
INSTITUTIONAL SHARES 32.78% 19.75% 18.53%
CLASS A SHARES 32.51% 19.48% 18.25%
- -----------------------------------------------------------
* Total returns include changes in share price and the reinvestment of income
dividends and all capital gain distributions.
** The inception date for the Fund's performance with respect to both of the
Institutional and Class A Shares is April 1, 1992. Inception for the Index
begins on the month-end closest to the inception date of the Fund (or class
thereof).
Performance information includes the performance of the Index Fund's
predecessor common trust fund for periods before the Fund commenced
operations. Performance for the common trust fund has been adjusted to
reflect the Fund's estimate of its expense ratio for the first year of
operations as a mutual fund. The common trust fund was not registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), or subject
to certain investment restrictions that are imposed by the 1940 Act. If the
common trust fund had been registered under the 1940 Act, its performance may
have been adversely affected. The common trust fund did not impose any
charges that correspond to the advisory and other fees of the Index Fund.
Therefore, the quoted performance figures for the common trust fund have been
reduced to reflect expenses of 0.45% and 0.70%, the estimated expense ratios
of the Institutional and Class A Shares of the Index Fund, respectively, at
commencement of operations.
Performance figures represent past performance and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
20
<PAGE>
BALANCED FUND SUMMARY
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE BALANCED FUND, S&P 500 STOCK INDEX AND
LEHMAN BROTHERS AGGREGATE BOND INDEX FROM INCEPTION THROUGH DECEMBER 31, 1997.
PERFORMANCE BENCHMARKS:
S&P 500 Stock Index - 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.
Lehman Brothers Aggregate Bond Index - An index composed of the Lehman
Brothers/Corporate Index and the Mortgage-Backed Securities Index including
Treasury issues, agency issues, corporate bond issues and mortgage-backed
securities.
INVESTMENT OBJECTIVE:
The Fund seeks to provide current income and capital appreciation by investing
in a balanced portfolio of fixed income and equity securities.
INVESTMENT RESULTS:
This Fund has been in operation since the end of March, having been created from
the conversion of a Collective Investment Fund.
For the nine months the Fund was in existence, equities produced the best
returns. However, in the fourth quarter fixed income securities had the
strongest gains. During the fourth quarter, fixed income securities rose just
under three percent, while large-cap and small-cap equity issues advanced one
percent and half a percent, respectively.
The Fund outperformed its benchmark in the quarter for two major reasons.
First, the Fund had a higher exposure to bonds than its peer group; with 45
percent of the Fund invested in bonds compared to approximately 36 percent for
the average balanced fund. Second, the stocks held performed well relative to
comparable equity funds, especially the small-cap value issues. Equity
performance for large cap issues was enhanced by favorable returns from
overweighted positions in financial services and retail issues, while small cap
stocks also benefited from a sizable financial exposure and good issue selection
in the utility and capital goods areas.
Outperformance earlier in the year was attributed to significant gains
achieved by both the large cap and small cap equities held in the Fund. At
year-end, the portfolio's equity position at 54 percent, remains near the
midpoint of its 40 to 65 percent equity range, with small-cap issues
overweighted relative to large-cap issues.
CHART
[GRAPHIC OMITTED]
Following are the plot points for the Balanced Fund from inception through
December 31, 1997.
LB AGGREGATE INSTITUTIONAL
BOND INDEX S&P 500 INDEX SHARES CLASS A SHARES
MAR.'97 $10,000 $10,000 $9,843 $10,000
APR.'97 $10,150 $10,597 $10,000 $10,278
JUN.'97 $10,368 $11,749 $10,758 $10,909
SEP.'97 $10,714 $12,633 $11,846 $12,001
DEC.'97 $11,030 $12,996 $12,025 $12,172
AGGREGATE TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
- ------------------------------------------------------
INCEPTION**
- ------------------------------------------------------
INSTITUTIONAL SHARES 20.24%
CLASS A SHARES 21.72%
- ------------------------------------------------------
* Total returns include changes in share price and the reinvestment of income
dividends and all capital gain distributions.
** The inception date of the Fund's Institutional Shares is March 24, 1997,
and April 16, 1997 for the Class A Shares. Inception for the Index begins on
the month-end closest to the inception date of the fund.
Performance figures represent past performance and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
21
<PAGE>
INTERNATIONAL FUND SUMMARY
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE INTERNATIONAL FUND AND THE MSCI EAFE INDEX
FROM INCEPTION THROUGH DECEMBER 31, 1997.
PERFORMANCE BENCHMARK:
MSCI EAFE Index - An index consisting of companies listed on the stock exchanges
of Europe, Australasia and the Far East. The Index is capitalization weighted
and replicates the industry composition and sampling of the large, medium and
small capitalization companies of each local market.
INVESTMENT OBJECTIVE:
The Fund seeks to provide international diversification and capital
appreciation. Current income is a secondary objective. The Fund seeks to achieve
its investment objective by investing primarily in securities of foreign
issuers.
INVESTMENT RESULTS:
The fourth quarter marked the first full quarter that Hansberger Global
Investors has acted as subadviser to this Fund, having been appointed on August
6, 1997.
The international markets generated mixed performance in 1997. Stocks
rallied in many Western European countries, where the combination of favorable
economic environments and improved corporate productivity led to better
earnings, while Asian markets were especially weak. The fourth quarter witnessed
the start of some of the worst economic downturns in recent memory for many
Asian economies.
The portfolio was overweighted in the Asian region (excluding Japan) and
had exposure to several emerging market issues, which penalized returns. As a
result, the Fund underperformed its Lipper International and EAFE benchmarks
during the quarter.
CHART
[GRAPHIC OMITTED]
Following are the plot points for the International Fund from inception through
December 31, 1997.
INDEX INSTITUTIONAL SHARES CLASS A SHARES
JAN.'87 $10,000 $10,000 $10,000
DEC.'87 $12,493 $11,015 $11,006
DEC.'88 $16,065 $12,621 $12,579
DEC.'89 $17,799 $14,115 $14,013
DEC.'90 $13,671 $10,987 $10,874
DEC.'91 $15,379 $12,300 $12,154
DEC.'92 $13,557 $11,761 $11,595
DEC.'93 $18,023 $14,655 $14,419
DEC.'94 $19,476 $15,284 $15,011
DEC.'95 $21,725 $15,923 $15,593
DEC.'96 $23,107 $16,737 $16,354
DEC.'97 $23,583 $15,923 $15,502
AVERAGE ANNUAL TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
- ---------------------------------------------------------------
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- ---------------------------------------------------------------
INSTITUTIONAL SHARES -4.87% 6.25% 3.75% 4.35%
CLASS A SHARES -5.21% 5.98% 3.48% 4.09%
- ---------------------------------------------------------------
* Total returns include changes in share price and the reinvestment of income
dividends and all capital gain distributions.
** The inception date for the Fund's performance with respect to both of the
Institutional and Class A Shares is January 1, 1987. Inception for the Index
begins on the month-end closest to the inception date of the Fund (or class
thereof).
Performance information includes the performance of the International Fund's
predecessor common trust fund for periods before the Fund commenced
operations. Performance for the common trust fund has been adjusted to
reflect the Fund's estimate of its expense ratio for the first year of
operations as a mutual fund. The common trust fund was not registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), or subject
to certain investment restrictions that are imposed by the 1940 Act. If the
common trust fund had been registered under the 1940 Act, its performance may
have been adversely affected. The common trust fund did not impose any
charges that correspond to the advisory and other fees of the International
Fund. Therefore, the quoted performance figures for the common trust fund
have been reduced to reflect expenses of 1.40% and 1.65%, the estimated
expense ratios of the Institutional and Class A Shares of the International
Fund, respectively, at commencement of operations.
Performance figures represent past performance and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
International investing, especially in emerging markets, poses greater
potential risks as well as rewards when compared to U.S. investing, as a
result of market and currency fluctuations caused by political and financial
factors abroad.
22
<PAGE>
EMERGING MARKETS SUMMARY
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE EMERGING MARKETS FUND AND THE MSCI
EMERGING MARKETS INDEX FROM INCEPTION THROUGH DECEMBER 31, 1997.
PERFORMANCE BENCHMARK:
The MSCI Emerging Market Index -- An index that measures performance for a
universe of emerging markets. The emerging markets as defined by MSCI share some
of the following characteristics:
1) Gross National Product substantially below the average for developed
economies, which is consistent with the World Bank's classification
criteria.
2) Greater government regulation limiting or banning foreign ownership in
industries and companies than that which prevails in developed markets.
3) Less sophisticated regulatory environment, trading hours, or back office
operations.
4) Restrictions on repatriation of initial capital, dividends, interest and/or
capital gains.
5) Greater perceived risk than in developed markets.
6) A general perception by the investment community that the country should be
considered emerging.
INVESTMENT OBJECTIVE:
The Fund seeks to provide capital appreciation by investing primarily in a
diversified portfolio of publicly traded equity securities of companies located
in emerging markets.
INVESTMENT RESULTS:
This Fund commenced operations on October 21, 1997. Hansberger Global Investors
was appointed the investment subadviser.
Because the Fund was invested entirely in cash at its inception, Hansberger
immediately set about the task of deploying assets. The fourth quarter witnessed
the start of some of the worst economic downturns in recent memory for many
Asian countries. Although the problems in each country varied, the spark that
started the crisis in each country was the sudden loss in confidence in the
value of local currencies. More fundamentally, the countries' woes tended to be
based on an over-reliance on inexpensive foreign capital.
The Fund performed in line with its benchmark for the short time period of
the Fund's existence. The Fund ended the year with investments in 28 countries.
CHART
[GRAPHIC OMITTED]
Following are the plot points for the Emerging Markets Fund from inception
through December 31, 1997.
INDEX INSTITUTIONAL SHARES CLASS A SHARES
OCT.'97 $10,000 $9,340 $9,340
NOV.'97 $9,616 $8,590 $8,580
DEC.'97 $9,768 $8,550 $8,540
AGGREGATE TOTAL RETURNS* FOR THE PERIOD ENDED 12-31-97
- ------------------------------------------------------
INCEPTION**
- ------------------------------------------------------
INSTITUTIONAL SHARES -14.50%
CLASS A SHARES -14.60%
- ------------------------------------------------------
* Total returns include changes in share price and the reinvestment of income
dividends and all capital gain distributions.
** The inception date for the Fund's performance is October 21, 1997.
Inception for the Index begins on the month-end closest to the inception date
of the Fund.
Performance figures represent past performance and are not a guarantee of
future results. The investment return and principal value of shares will
fluctuate and shares, when redeemed, may be worth more or less than the
original amount invested.
International investing, especially in emerging markets, poses greater
potential risks as well as rewards when compared to U.S. investing, as a
result of market and currency fluctuations caused by political and financial
factors abroad.
23
<PAGE>
TAX INFORMATION
FIXED INCOME FUNDS
For the year ended December 31, 1997, the following Harris Insight
Portfolios declared dividends from net realized capital gains:
<TABLE>
<CAPTION>
SHORT-TERM CAPITAL LONG-TERM CAPITAL
GAIN, PER SHARE GAIN, PER SHARE
------------------------ -------------------
07/29/97 12/18/97 12/18/97 %(1)
-------- -------- -------- ----
<S> <C> <C> <C> <C>
Bond Fund .............................. $0.0103 $0.1029 $0.0412 9%
Intermediate Government Bond Fund ...... -- 0.0413 -- --
Intermediate Tax-Exempt Fund ........... 0.0068 -- 0.0428 0%
Tax-Exempt Fund ........................ 0.0113 0.0275 0.0821 31%
Convertible Securities Fund ............ -- 1.3644 2.4025 46%
<FN>
(1) Percentage of distribution attributable to "28 Percent Rate Gains"
</FN>
</TABLE>
EQUITY FUNDS
For the year ended December 31, 1997, the following Harris Insight
Portfolios declared dividends from net realized capital gains:
<TABLE>
<CAPTION>
SHORT-TERM CAPITAL LONG-TERM CAPITAL
GAIN, PER SHARE GAIN, PER SHARE
-------------------- ---------------------------------------------
07/29/97 12/18/97 07/29/97 %(1) 12/18/97 %(1)
-------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Equity Fund ............................ $0.1004 $0.3808 $0.6506 100% $1.9967 51%
Equity Income Fund ..................... -- 0.1654 0.1756 100% 1.1231 45%
Growth Fund ............................ 0.0134 -- 0.5461 100% 1.4860 25%
Small-Cap Opportunity Fund ............. -- 0.0378 0.2138 100% 1.4180 34%
Small-Cap Value Fund ................... -- 0.8274 -- -- 1.9166 20%
Index Fund ............................. 0.0105 0.0338 0.1070 100% 0.5575 2%
International Fund ..................... 0.0028 0.1837 -- 100% 1.0765 1%
<FN>
(1) Percentage of distribution attributable to "28 Percent Rate Gains"
</FN>
</TABLE>
FOR CORPORATE SHAREHOLDERS ONLY:
The percentage of dividends from net investment income declared for the
year ended December 31, 1997, which qualify for the corporate dividends
received deduction is as follows:
Equity Fund ...................................................... 100%
Equity Income Fund ............................................... 100%
Growth Fund ...................................................... 100%
Small-Cap Opportunity Fund ....................................... 100%
Small-Cap Value Fund ............................................. 100%
Index Fund ....................................................... 100%
FOR SHAREHOLDERS OF INTERNATIONAL FUND ONLY:
For the year ended December 31, 1997, the International Fund distributed
$1,246,333 of foreign source income on which the Fund paid foreign taxes of
$347,466. This information is being furnished to you pursuant to notice
requirements of Sections 853 (a) and 855 (d) of the Internal Revenue Code, as
amended, and the Treasury Regulations thereunder.
24
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
HARRIS INSIGHT FUNDS
GOVERNMENT MONEY MARKET FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
AGENCY OBLIGATIONS -- 33.4%
FEDERAL FARM CREDIT BANK -- 3.2%
5.900% 04/01/98 $10,000 $ 9,995,730
------------
FEDERAL HOME LOAN BANK -- 8.0%
5.810% 11/04/98 10,000 9,995,072
5.825% 12/17/98 15,000 14,994,387
------------
24,989,459
------------
FEDERAL HOME LOAN MORTGAGE CORP. -- 4.8%
5.690% 01/30/98 15,000 14,931,246
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 6.5%
5.700% 01/21/98 10,345 10,312,242
5.890% 05/21/98 10,000 9,996,664
------------
20,308,906
------------
STUDENT LOAN MARKETING ASSOCIATION-- 10.9%
5.860% 06/10/98 5,000 4,997,217
5.600% 08/11/98 9,000 8,988,461
5.775% 09/09/98 10,000 9,995,448
5.820% 09/16/98 10,000 9,996,739
------------
33,977,865
------------
TOTAL AGENCY OBLIGATIONS
(Cost $104,203,206) 104,203,206
------------
VARIABLE RATE OBLIGATIONS(DOUBLE DAGGER) -- 36.0%
FEDERAL HOME LOAN BANK -- 14.5%
5.790% 01/02/98* 11,000 11,011,098
5.736% 01/20/98* 10,000 9,994,394
5.741% 01/20/98* 15,000 14,993,199
5.788% 03/04/98* 9,000 8,999,259
------------
44,997,950
------------
FEDERAL HOME LOAN MORTGAGE CORP. -- 4.8%
5.580% 01/02/98* 15,000 14,998,236
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 5.5%
5.590% 01/01/98* 11,000 10,999,785
5.504% 01/06/98* 6,000 6,000,000
------------
16,999,785
------------
STUDENT LOAN MARKETING ASSOCIATION-- 11.2%
5.619% 01/06/98* 10,000 9,998,605
5.639% 01/06/98* 10,000 10,000,888
5.689% 01/06/98* 15,000 15,000,000
------------
34,999,493
------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $111,995,464) 111,995,464
------------
U.S. TREASURY OBLIGATIONS -- 3.2%
U.S. Treasury Notes
(Cost $10,018,673)
7.250% 02/15/98 10,000 10,018,673
------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
REPURCHASE AGREEMENTS -- 27.3%
HSBC Securities, Inc.,
6.000%
Agreement dated 12/31/97,
proceeds at maturity
$23,183,725 (Collateralized by
$23,880,000 FNMA 0.00%,
due 02/26/98. The market
value is $23,641,200.) 01/02/98 $23,176 $ 23,176,000
Lehman Brothers, Inc.
6.700%
Agreement dated 12/31/97,
proceeds at maturity
$62,023,078 (Collateralized by
$170,838,381 FHLMC,
FNMA and FMGC 7.000% to
12.500%, due from 11/01/04
to 01/01/25. The market
value is $63,233,666.) 01/02/98 62,000 62,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $85,176,000) 85,176,000
------------
TOTAL INVESTMENTS -- 99.9%
(Cost $311,393,343) 311,393,343
------------
OTHER ASSETS IN EXCESS OF
LIABILITIES-- 0.1% 170,517
------------
NET ASSETS -- 100.0%
Applicable to 63,970,381 and 247,593,551
shares outstanding of Institutional Class
and Class A, respectively, $.001 par value;
1.5 billion authorized shares (Note 9) $311,563,860
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
EACH FOR INSTITUTIONAL CLASS AND
CLASS A SHARES $1.00
=====
- ----------
(DAGGER) See Note 2a to the Financial Statements.
(DOUBLE DAGGER) Rate in effect on 12/31/97.
* Date of next interest rate reset.
See Notes to Financial Statements.
26
<PAGE>
HARRIS INSIGHT FUNDS
MONEY MARKET FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
ASSET-BACKED SECURITIES -- 8.9%
Americredit Automobile Receivables Trust
5.660% 01/30/98 $ 16,319 $ 16,318,708
Arcadia Automobile Receivables Trust
5.650% 03/16/98 11,210 11,209,608
5.888% 01/15/99 15,000 15,000,000
Barnett Auto Trust
5.654% 01/16/98 5,910 5,910,021
Caterpillar Financial Asset Trust
5.723% 01/16/98 3,109 3,109,238
Contimortgage Home Equity Loan Trust
5.906% 01/15/99 7,840 7,840,000
Green Tree Lease Finance
5.906% 01/20/99 15,000 15,000,000
Heller Equipment Asset Receivables Trust
5.733% 02/22/98 5,287 5,286,563
The Money Store Auto Grantor Trust
5.690% 02/22/98 12,840 12,839,877
WFS Financial Owner Trust
5.710% 02/22/98 26,268 26,267,651
World Financial Properties
6.030% 01/08/98 32,665 32,665,130
-------------
TOTAL ASSET-BACKED SECURITIES
(Cost $151,446,796) 151,446,796
-------------
CERTIFICATES OF DEPOSIT -- 7.5%
Bankers Trust Co.
6.220% 04/02/98 39,000 38,997,219
6.000% 12/10/98 9,745 9,745,000
Societe Generale
6.100% 03/25/98 15,000 14,999,023
5.960% 10/21/98 43,690 43,676,592
Sumitomo Bank
5.650% 01/06/98 20,000 20,000,000
-------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $127,417,834) 127,417,834
-------------
COMMERCIAL PAPER -- 34.1%
Autoliv, Inc.
6.000% 01/16/98 10,000 9,975,000
Cooper Industries, Inc.
6.450% 01/05/98 10,000 9,992,833
CXC, Inc.
5.870% 01/06/98 70,000 69,942,931
5.880% 01/14/98 5,000 4,989,383
Ford Motor Credit Corp.
5.700% 01/14/98 75,000 74,845,625
General Electric Capital Corp.
5.870% 01/21/98 45,000 44,853,250
Goldman, Sachs & Co.
5.850% 01/28/98 60,000 59,736,750
Heller Financial, Inc.
5.650% 01/14/98 43,500 43,411,248
Household Finance Corp.
5.900% 01/16/98 25,000 24,938,542
Merrill Lynch & Co., Inc.
5.710% 01/14/98 45,000 44,907,213
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
COMMERCIAL PAPER (CONTINUED)
Oakland, Alameda County, California
5.940% 01/21/98 $ 20,100 $ 20,100,000
Salomon, Inc.
6.000% 01/02/98 30,000 29,995,000
Sheffield Receivables Corp.
5.750% 01/14/98 30,000 29,937,708
5.900% 01/16/98 40,000 39,901,667
Transamerica Financial Corp.
5.710% 01/14/98 73,500 73,348,447
-------------
TOTAL COMMERCIAL PAPER
(Cost $580,875,597) 580,875,597
-------------
CORPORATE BONDS -- 15.7%
Associates Corp. of North America
7.300% 03/15/98 3,000 3,005,857
6.500% 09/09/98 19,000 19,087,147
BankBoston Bank Note
5.905% 08/06/98 50,000 50,000,000
Bankers Trust Co.
5.910% 08/07/98 10,000 9,994,805
Beta Finance
5.850% 08/07/98 25,000 25,000,000
6.000% 10/27/98 43,000 43,000,000
Chrysler Financial Corp.
7.310% 03/24/98 4,705 4,717,140
General Motors Acceptance Corp.
5.875% 03/30/98 8,000 7,992,499
GTE Corp.
8.850% 03/01/98 18,000 18,084,227
Heller Financial, Inc.
9.375% 03/15/98 9,700 9,760,172
International Lease Finance Corp.
5.625% 03/01/98 3,350 3,347,546
PHH Corp.
5.985% 08/12/98 16,200 16,198,614
Racers QHEL Series 1997, Class A-2
5.831% 01/08/98 33,000 32,997,979
Salomon, Inc.
6.700% 12/01/98 25,200 25,343,046
-------------
TOTAL CORPORATE BONDS
(Cost $268,529,032) 268,529,032
-------------
VARIABLE RATE OBLIGATIONS(DOUBLE DAGGER) -- 27.7%
Bank One Dayton
5.510% 01/01/98* 32,000 31,997,756
Bankers Trust Co.
5.690% 01/01/98* 10,000 9,998,515
Banque Nationale de Paris
5.650% 04/28/98 42,000 41,993,484
5.904% 10/21/98 30,000 30,000,000
CIT Group Holdings, Inc.
5.600% 01/02/98* 28,000 27,992,688
Compagnie Bancaire
6.029% 10/23/98 50,000 50,000,000
See Notes to Financial Statements.
27
<PAGE>
HARRIS INSIGHT FUNDS
MONEY MARKET FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
VARIABLE RATE OBLIGATIONS(DOUBLE DAGGER) (CONTINUED)
Federal Home Loan Bank
5.790% 01/01/98* $ 6,000 $ 6,005,993
5.900% 04/28/98* 12,500 12,505,552
Federal National Mortgage Association
5.504% 01/06/98* 10,000 10,000,000
General American Insurance Co.
5.890% 01/01/98* 30,000 30,000,000
Household Finance Corp.
6.070% 01/02/98* 50,000 50,000,000
Kansas Electric Power Co.
6.000% 01/07/98* 10,000 10,000,000
Lehman Brothers Holdings, Inc.
6.011% 01/13/98* 35,000 35,000,000
6.169% 01/27/98* 3,000 3,000,725
6.763% 03/27/98 10,000 10,016,750
Main Place Funding Corp.
5.898% 01/26/98* 21,500 21,521,638
PHH Corp.
6.000% 01/12/98* 10,000 10,000,000
Salomon, Inc.
5.873% 01/20/98* 22,000 22,000,000
Sanwa Business Credit Corp.
6.059% 10/07/98 20,000 20,000,000
Student Loan Marketing Association
5.639% 01/06/98* 10,000 10,000,890
Transamerica Funding Agreement
5.906% 01/15/98* 30,000 30,000,000
-------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $472,033,991) 472,033,991
-------------
TIME DEPOSITS -- 4.4%
First Chicago Corp.
(Cost $75,000,000)
6.375% 01/02/98 75,000 75,000,000
-------------
REPURCHASE AGREEMENTS -- 1.5%
Lehman Brothers, Inc.
5.750%
Agreement dated 12/31/97,
proceeds at maturity
$26,008,306 (Collateralized
by $41,681,145 FHLMC
and FNMA 7.000% to 8.500%,
due from 03/01/17 to
07/01/22. The market value
is $26,520,131.)
(Cost $26,000,000) 01/02/98 26,000 26,000,000
-------------
SHARES VALUE(DAGGER)
------ ------------
TEMPORARY INVESTMENTS -- 0.0%
Dreyfus Cash Management Plus, Inc.
Class A Shares 368,550 $ 368,550
Goldman Sachs Financial Square
Money Market Portfolio 520 520
Lehman Prime Money Market Fund
Class A Shares 3 3
--------------
TOTAL TEMPORARY INVESTMENTS
(Cost $369,073) 369,073
--------------
TOTAL INVESTMENTS -- 99.8%
(Cost $1,701,672,323) 1,701,672,323
--------------
OTHER ASSETS IN EXCESS OF
LIABILITIES-- 0.2% 4,222,940
--------------
NET ASSETS -- 100.0%
Applicable to 1,028,087,244 and
677,802,202 shares outstanding of
Institutional Class and Class A,
respectively, $.001 par value;
2.35 billion authorized shares (Note 9) $1,705,895,263
==============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
EACH FOR INSTITUTIONAL CLASS AND
CLASS A SHARES $1.00
=====
- ----------
(DAGGER) See Note 2a to the Financial Statements.
(DOUBLE DAGGER) Rate in effect on 12/31/97.
* Date of next interest rate reset.
See Notes to Financial Statements.
28
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT MONEY MARKET FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS -- 99.4%
ALABAMA -- 0.2%
Chatom, Alabama, Industrial Development
Board Pollution Control Revenue Bonds
(Alabama Electric) TECP
3.750% 02/13/98 $ 1,200 $ 1,200,000
-----------
ALASKA -- 3.4%
Anchorage, Alaska, Electric Utility
Revenue Bonds Series 1996D VR
3.700% 01/07/98 1,500 1,500,000
Valdez, Alaska, Marine Terminal Revenue
Bonds (Arco Transportation Project)
Series A TECP
3.700% 02/12/98 1,000 1,000,000
Valdez, Alaska, Marine Terminal Revenue
Bonds (Arco Transportation Project)
Series C TECP
3.900% 01/15/98 7,000 7,000,000
3.750% 02/06/98 6,500 6,500,000
3.800% 02/13/98 6,000 6,000,000
3.900% 03/09/98 2,600 2,600,000
-----------
24,600,000
-----------
ARIZONA -- 9.0%
Apache County, Arizona, Industrial
Development Authority Pollution Control
Revenue Bonds (Tucson Electric
Power Co. Project) Series B VR
4.050% 01/07/98 17,000 17,000,000
Apache County, Arizona, Industrial
Development Authority Revenue Bonds
(Tucson Electric Power Co.)
Series 1983C VR
3.800% 01/07/98 10,550 10,550,000
Maricopa County, Arizona, Pollution
Control Revenue Bonds (Arizona Public
Service Co.) Series 1994B VR
4.950% 01/01/98 1,000 1,000,000
Maricopa County, Arizona, Pollution
Control Revenue Bonds TECP
3.650% 02/24/98 6,450 6,450,000
Salt River, Arizona, Agricultural Improvement
& Power District Project TECP
3.850% 01/21/98 15,800 15,800,000
3.800% 02/18/98 12,000 12,000,000
3.750% 05/14/98 2,100 2,100,000
------------
64,900,000
------------
CALIFORNIA -- 3.2%
California Community College Financing
Authority TRANS Series A
4.500% 06/30/98 5,425 5,441,740
Los Angeles County, California, TRANS
Series A
4.500% 06/30/98 3,600 3,611,102
Riverside County, California, TRANS Series A
4.500% 06/30/98 14,000 14,036,485
-----------
23,089,327
-----------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
COLORADO -- 0.3%
Platte River Power Authority TECP
3.800% 02/17/98 $ 2,000 $ 2,000,000
-----------
CONNECTICUT -- 0.3%
Connecticut State Special Assessment
Unemployment Compensation
Advance Fund Revenue Bonds
(Connecticut Unemployment Project)
Series 1993C PS
3.900% 07/01/98 2,000 2,000,000
-----------
DISTRICT OF COLUMBIA -- 3.3%
District of Columbia General Obligation
Notes VR
3.850% 01/07/98 14,000 14,000,000
District of Columbia Supplemental
Student Loan Revenue Bonds
Series 1985 PS
4.100% 07/01/98 3,000 3,001,443
District of Columbia TRANS Series A VR
4.000% 01/07/98 4,700 4,700,000
District of Columbia TRANS Series B
4.500% 09/30/98 2,000 2,009,027
-----------
23,710,470
-----------
FLORIDA -- 3.7%
City of Orlando, Florida, TECP
3.850% 01/12/98 2,000 2,000,000
Gainesville, Florida, Utility System TECP
3.750% 01/15/98 2,000 2,000,000
Jacksonville, Florida, Electric Authority TECP
3.750% 01/16/98 5,000 5,000,000
3.600% 02/03/98 1,300 1,300,000
Jacksonville, Florida, Pollution Control
Revenue Refunding Bonds (Florida
Power & Light Co.) Series 1992
3.700% 03/05/98 1,000 1,000,000
Sunshine State GFC TECP
3.750% 01/15/98 6,000 6,000,000
3.700% 02/17/98 5,000 5,000,000
3.800% 02/23/98 4,000 4,000,000
-----------
26,300,000
-----------
GEORGIA -- 1.1%
Burke County, Georgia, Development
Authority Pollution Control Revenue
Bonds (Oglethorpe Power Corp.
Vogtle Project) Series B
3.800% 05/28/98 4,000 4,000,000
Georgia Municipal Electric Authority
Revenue Bonds TECP
3.650% 02/03/98 1,900 1,900,000
Georgia Municipal Electric Authority
Revenue Bonds VR
3.850% 01/07/98 1,900 1,900,000
-----------
7,800,000
-----------
See Notes to Financial Statements.
29
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT MONEY MARKET FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
HAWAII -- 2.5%
City & County of Honolulu, Hawaii TECP
3.800% 01/13/98 $ 4,000 $ 4,000,000
3.700% 02/06/98 3,000 3,000,000
3.700% 02/11/98 4,800 4,800,000
3.750% 03/11/98 6,000 6,000,000
-----------
17,800,000
-----------
IDAHO -- 1.0%
State of Idaho TANS
4.625% 06/30/98 7,500 7,526,518
-----------
ILLINOIS -- 3.2%
Chicago, Illinois, Park District TANS
4.750% 09/21/98 5,000 5,030,717
Cook County, Illinois, Revenue Bonds
(Catholic Charities) VR
4.000% 01/07/98 8,300 8,300,000
Illinois Health Facilities Authority Revenue
Bonds (Loyola University) Series B VR
3.650% 01/07/98 8,000 8,000,000
Peoria & Marshall Counties, Illinois,
Community Unit School
District No. 321 TANS
4.350% 11/02/98 2,000 2,002,942
-----------
23,333,659
-----------
INDIANA -- 3.5%
Indiana Health Facilities Finance Authority
Hospital Revenue Bonds (Charity Group)
Series 1997F VR
3.650% 01/07/98 8,000 8,000,000
Rockport, Indiana, Pollution Control
Revenue Bonds (Indiana & Michigan
Power Co.) Series 1985A VR
3.850% 01/07/98 3,845 3,845,000
Rockport, Indiana, Pollution Control
Revenue Refunding Bonds (Indiana &
Michigan Power Co. Project)
Series B VR
3.700% 01/07/98 13,000 13,000,000
-----------
24,845,000
-----------
IOWA -- 0.2%
Polk County, Iowa, Hospital Equipment
Authority Revenue Bonds VR
3.800% 01/07/98 1,530 1,530,000
-----------
KANSAS -- 5.4%
Burlington, Kansas, Pollution Control
Revenue Bonds TECP
3.800% 02/26/98 2,000 2,000,000
Burlington, Kansas, Pollution Control
Revenue Bonds (Kansas City Power &
Light) Series 1985B TECP
3.800% 02/05/98 3,200 3,200,000
3.850% 03/09/98 8,300 8,300,000
3.850% 03/10/98 2,500 2,500,000
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
KANSAS (CONTINUED)
Burlington, Kansas, Pollution Control
Revenue Bonds (Kansas City Power &
Light) Series A TECP
3.650% 02/06/98 $ 2,500 $ 2,500,000
3.800% 03/10/98 2,300 2,300,000
3.850% 03/10/98 7,000 7,000,000
Burlington, Kansas, Pollution Control
Revenue Bonds (Kansas City Power &
Light) Series B TECP
3.800% 02/17/98 1,250 1,250,000
3.650% 03/02/98 3,600 3,600,000
Kansas State Department of Transportation
Highway Revenue Bonds Series B VR
3.600% 01/07/98 6,400 6,400,000
-----------
39,050,000
-----------
KENTUCKY -- 1.8%
Clark County, Kentucky, Pollution Control
Revenue Bonds (East Kentucky Power)
Series J-2 PS
3.700% 04/15/98 2,500 2,500,000
Kentucky Economic Development Finance
Authority Hospital Facilities Revenue
Bonds (Baptist Healthcare System) VR
3.650% 01/07/98 10,600 10,600,000
-----------
13,100,000
-----------
LOUISIANA -- 3.1%
Caddo Parish, Louisiana, Industrial
Development Board Revenue Bonds
(Atlas Project) Series B VR
3.850% 01/07/98 5,500 5,500,000
Jefferson Parish, Louisiana, Hospital
Service District No. 2 Revenue Bonds
(East Jefferson General Hospital) VR
3.800% 01/07/98 8,600 8,600,000
West Baton Rouge Parish, Louisiana, TECP
3.800% 02/25/98 4,000 4,000,000
West Baton Rouge Parish, Louisiana,
Industrial District No. 3 Revenue Bonds
(Dow Chemical Co. Project) Series B VR
5.050% 01/01/98 4,000 4,000,000
-----------
22,100,000
-----------
MARYLAND -- 4.8%
Anne Arundel County, Maryland, TECP
3.850% 01/06/98 8,700 8,700,000
3.800% 02/05/98 1,500 1,500,000
3.750% 02/10/98 2,500 2,500,000
Maryland Health & Higher Education
Series C TECP
3.800% 01/21/98 7,950 7,950,000
Montgomery County, Maryland, TECP
3.750% 02/09/98 6,000 6,000,000
3.750% 02/11/98 8,000 8,000,000
-----------
34,650,000
-----------
See Notes to Financial Statements.
30
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT MONEY MARKET FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
MICHIGAN -- 2.1%
Michigan State Hospital Finance Authority
Revenue Bonds Series 1997F VR
3.650% 01/07/98 $ 5,000 $ 5,000,000
Oakland County, Michigan, Economic
Development Corp. Limited Obligation
Revenue Bonds (Cranbrook Educational
Community) Series A VR
4.150% 01/07/98 2,000 2,000,000
Rochester, Michigan, Community School
District State Aid General
Obligation Notes
4.000% 04/15/98 7,900 7,904,394
-----------
14,904,394
-----------
MINNESOTA -- 1.3%
Rochester, Minnesota, Health Care
Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center)
Series C TECP
3.800% 02/19/98 5,500 5,500,000
Rochester, Minnesota, Health Care
Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center)
Series F TECP
3.700% 01/14/98 4,000 4,000,000
-----------
9,500,000
-----------
MISSOURI -- 2.7%
Missouri State Health & Educational
Facilities Authority Revenue Bonds
(Washington University) Series B VR
5.000% 01/01/98 5,400 5,400,000
Missouri State Health & Educational
Facilities Authority Revenue Bonds
(Washington University)
Series 1996A VR
5.000% 01/01/98 3,800 3,800,000
St. Louis County, Missouri, Industrial
Development Authority Hospital
Revenue Bonds (Charity Obligation
Group) Series E VR
3.900% 01/07/98 10,000 10,000,000
-----------
19,200,000
-----------
MONTANA -- 0.2%
Forsyth, Montana, Pollution Control
Revenue Bonds (Portland General
Electric Co. Project) Series 1983A VR
3.650% 01/07/98 1,200 1,200,000
-----------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
NEBRASKA -- 2.8%
City of Lincoln, Nebraska,
Electric System TECP
3.750% 02/10/98 $ 6,300 $ 6,300,000
3.850% 03/06/98 4,100 4,100,000
3.800% 03/09/98 1,800 1,800,000
3.800% 03/11/98 2,200 2,200,000
3.750% 05/15/98 5,000 5,000,000
Nebraska Educational Facilities
Authority Revenue Bonds VR
4.050% 01/07/98 1,000 1,000,000
-----------
20,400,000
-----------
NEVADA -- 3.2%
Clark County, Nevada, Industrial
Development Revenue Bonds (Nevada
Power Co. Project) Series C VR
3.850% 01/01/98 11,845 11,845,000
Clark County, Nevada, Pollution Control
Revenue Bonds (Nevada Power Co.
Project) Series D VR
3.700% 01/07/98 11,400 11,400,000
-----------
23,245,000
-----------
NEW MEXICO -- 1.6%
State of New Mexico General Obligation
Bonds (Capital Project)
6.100% 09/01/98 6,504 6,600,702
State of New Mexico TRANS
4.500% 06/30/98 5,000 5,015,432
-----------
11,616,134
-----------
NEW YORK -- 2.7%
New York City General Obligation Bonds
Series 1992B VR
4.150% 01/01/98 2,800 2,800,000
New York City General Obligation Bonds
Series 1995F-3 VR
3.650% 01/07/98 1,000 1,000,000
New York City General Obligation Bonds
Series 1993 Subseries A-10 VR
4.150% 01/01/98 4,065 4,065,000
New York City Municipal Water Finance
Authority Water & Sewer System
Revenue Bonds Series A
4.400% 06/15/98 1,000 1,002,175
New York City Municipal Water Finance
Authority Water & Sewer System
Revenue Bonds TECP
3.800% 03/06/98 6,000 6,000,000
New York State Energy Research &
Development Authority Pollution
Control Revenue Bonds
(Niagara Mohawk Power Corp.)
Series 1985C VR
4.950% 01/01/98 4,900 4,900,000
-----------
19,767,175
-----------
See Notes to Financial Statements.
31
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT MONEY MARKET FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
OHIO -- 4.8%
Cuyahoga County, Ohio, Hospital
Revenue Bonds (Cleveland Clinic
Foundation) Series C VR
3.650% 01/07/98 $ 7,000 $ 7,000,000
Ohio State Air Quality Development
Authority Revenue Bonds
(Ohio Edison Project) Series A PS
3.950% 02/01/98 8,500 8,500,905
Ohio State Air Quality Development
Authority Revenue Bonds (Pollution
Control Project) Series B TECP
3.800% 02/09/98 4,420 4,420,000
Ohio State Public Facilities Series IIA
4.500% 05/01/98 15,000 15,026,207
-----------
34,947,112
-----------
OKLAHOMA -- 0.3%
Tulsa, Oklahoma, Industrial Authority
Revenue Bonds (University of Tulsa)
Series B VR
3.800% 01/07/98 2,100 2,100,000
-----------
OREGON -- 0.8%
Port of Saint Helens, Oregon, Pollution
Control Revenue Bonds (Portland
General Electric) Series B VR
4.950% 01/01/98 6,100 6,100,000
-----------
SOUTH CAROLINA -- 0.9%
South Carolina Public Service Authority
Revenue Bonds Series B
4.000% 01/01/98 1,500 1,500,009
York County, South Carolina, Pollution
Control Revenue Bonds PS
3.700% 03/15/98 5,000 5,000,000
-----------
6,500,009
-----------
TENNESSEE -- 2.2%
Metropolitan Government Nashville &
Davidson County, Tennessee, Health &
Education Facilities Revenue Bonds
Series 1985A
3.650% 01/15/98 1,000 1,000,000
Tennessee State BANS Series A VR
3.600% 01/07/98 15,000 15,000,000
-----------
16,000,000
-----------
TEXAS -- 10.9%
Austin, Texas, Utility System TECP
3.800% 01/09/98 3,250 3,250,000
Brazos River Authority, Texas, Pollution
Control Revenue Bonds
(Monsanto Co. Project) VR
3.700% 01/07/98 2,200 2,200,000
Brazos River, Texas TECP
3.800% 01/22/98 2,050 2,050,000
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
TEXAS (CONTINUED)
Denton, Texas, Independent School
District General Obligation Bonds
Series B PS
3.900% 08/15/98 $ 5,000 $ 5,000,000
Gulf Coast Waste Disposal Authority
Pollution Control Revenue Bonds
(Exxon Project) VR
4.950% 01/01/98 8,000 8,000,000
Harris County, Texas, Industrial
Development Pollution Control
Revenue Bonds (Exxon Project) VR
4.900% 01/01/98 3,000 3,000,000
Nueces County, Texas, Health Facilities
Development Corp. Revenue Bonds
(Driscoll Children's Foundation Project) VR
3.850% 01/07/98 1,480 1,480,000
Plano, Texas, Independent School District
General Obligation Notes
5.500% 02/15/98 2,250 2,254,643
Texas Higher Education Authority
Revenue Bonds Series 1985B VR
3.800% 01/07/98 5,560 5,560,000
Texas North East Independent School
District General Obligation Notes
6.500% 02/01/98 1,500 1,503,379
Texas Small Business Industrial
Development Revenue Bonds
Series 1986 VR
3.850% 01/07/98 16,500 16,500,000
Texas State TRANS Series A
4.750% 08/31/98 10,000 10,058,067
University of Texas Board of
Regents TECP
3.700% 04/08/98 1,666 1,666,000
University of Texas Series A TECP
3.750% 04/08/98 8,000 8,000,000
University of Texas TECP
3.700% 02/11/98 7,841 7,841,000
-----------
78,363,089
-----------
UTAH -- 2.6%
Emery County, Utah, Pollution Control
Revenue Bonds (Pacificorp Project) VR
5.000% 01/01/98 3,040 3,040,000
Intermountain Power Agency TECP
3.700% 01/08/98 4,100 4,100,000
3.700% 02/17/98 5,000 5,000,000
3.800% 02/26/98 1,400 1,400,000
3.700% 04/09/98 5,200 5,200,000
-----------
18,740,000
-----------
VIRGINIA -- 0.3%
Peninsula Port Authority of Virginia
Coal Terminal Revenue Bonds
(Dominion Terminal Associates Project)
Series 1987D VR
5.000% 01/01/98 2,505 2,505,000
-----------
See Notes to Financial Statements.
32
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT MONEY MARKET FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
WASHINGTON -- 1.3%
Washington State Public Power Supply
System Nuclear Project No. 1 Revenue
Bonds Series 1993 1A-3 VR
3.600% 01/07/98 $ 3,400 $ 3,400,000
Washington State Public Power Supply
System Nuclear Project No. 1
Refunding Revenue Bonds
Series 1A-1 VR
3.650% 01/07/98 5,800 5,800,000
-----------
9,200,000
-----------
WISCONSIN -- 8.2%
Burlington Area Wisconsin School
District TRANS
4.240% 09/15/98 4,575 4,577,749
Delavan Darien, Wisconsin, School
District BANS
4.150% 04/15/98 2,000 2,001,303
Dodgeville, Wisconsin, School
District TRANS
4.140% 10/06/98 3,000 3,000,871
Elkhorn, Wisconsin, Area School
District BANS
4.250% 04/01/98 2,000 2,000,000
Hamilton, Wisconsin, School District TRANS
4.100% 08/25/98 3,000 3,001,671
Hortonville, Wisconsin, School
District TRANS
4.180% 10/21/98 2,500 2,500,562
Jefferson, Wisconsin, School District TRANS
4.170% 09/08/98 1,190 1,190,384
Kenosha, Wisconsin, Unified School
District No. 1 TRANS
4.200% 09/28/98 5,000 5,001,771
4.280% 09/28/98 3,800 3,803,500
Lake Mills, Wisconsin, School District TRANS
4.130% 09/01/98 2,000 2,000,380
Middleton-Cross Plains, Wisconsin,
Area School District TRANS
4.250% 08/26/98 3,500 3,504,365
Onalaska, Wisconsin, School
District TRANS
4.180% 10/21/98 1,350 1,350,304
Oshkosh, Wisconsin, Area School
District TRANS
4.150% 08/24/98 5,000 5,008,053
Rhinelander, Wisconsin, School
District TRANS
4.100% 09/28/98 5,450 5,450,748
Shorewood, Wisconsin, School
District TRANS
4.100% 09/01/98 5,000 5,001,580
Silver Lake, Wisconsin, School
District No.1 BANS
4.400% 02/01/98 1,895 1,895,821
Waterloo, Wisconsin, School District TRANS
4.200% 10/09/98 1,450 1,451,062
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
WISCONSIN (CONTINUED)
West de Pere, Wisconsin, School
District TRANS
4.130% 09/29/98 $ 1,700 $ 1,700,361
Wisconsin State Health & Educational
Facilities Authority Revenue Bonds
Series 1997F VR
3.650% 01/07/98 5,000 5,000,000
------------
59,440,485
------------
WYOMING -- 0.5%
Lincoln County, Wyoming, Pollution
Control Revenue Bonds (Exxon Project)
Series B VR
5.100% 01/01/98 2,400 2,400,000
Platte County, Wyoming, Pollution
Control Revenue Bonds (Tri-State
Generation and Transmission Project)
Series B VR
4.500% 01/01/98 1,200 1,200,000
------------
3,600,000
------------
TOTAL MUNICIPAL BONDS
(Cost $716,863,372) 716,863,372
------------
SHARES
--------
TEMPORARY INVESTMENTS -- 0.3%
Federated Tax-Free Obligation Fund 1,149,431 1,149,431
Goldman Sachs Financial Square
Tax-Exempt Money Market Portfolio 872,371 872,371
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $2,021,802) 2,021,802
------------
TOTAL INVESTMENTS -- 99.7%
(Cost $718,885,174) 718,885,174
------------
OTHER ASSETS IN EXCESS OF
LIABILITIES-- 0.3% 2,171,829
------------
NET ASSETS -- 100.0%
Applicable to 497,979,815 and
223,074,816 shares outstanding of
Institutional Class and Class A,
respectively, $.001 par value;
1.5 billion authorized shares (Note 9) $721,057,003
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE EACH FOR
INSTITUTIONAL CLASS AND CLASS A SHARES $1.00
=====
- ----------
(DAGGER) 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 12/31/97. Maturity
date is the later of the next interest rate change or exercise of the
demand feature.
BANS -- Bond Anticipation Note.
TANS -- Tax Anticipation Note.
TECP -- Tax Exempt Commercial Paper.
TRANS -- Tax and Revenue Anticipation Note.
See Notes to Financial Statements.
33
<PAGE>
HARRIS INSIGHT FUNDS
SHORT/INTERMEDIATE BOND FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- -------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- -------- -------- -------- ------------
AGENCY OBLIGATIONS -- 3.2%
AID - Israel Guaranteed Notes
6.050% 08/15/00 $ 520 $ 520,650
Federal Home Loan Bank
7.360% 07/01/04 1,000 1,073,390
Federal Home Loan Mortgage Corp.
7.100% 04/10/07 2,500 2,689,950
Federal National Mortgage Association
8.400% 10/25/04 5,000 5,205,250
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $9,094,630) 9,489,240
-----------
ASSET-BACKED SECURITIES -- 26.6%
AESOP Funding II Series 1997-1, Class A1
6.220% 10/20/01 5,000 5,018,287
AFC Home Equity Loan Trust
Series 1991-4, Class A
7.750% 02/15/06 84 85,643
Banco Nacional de Mexico, S.A.
Series 1996-A, Class A1
6.250% 12/01/03 5,000 4,966,406
BankBoston Marine Asset Backed Trust
Series 1997-2, Class A7
6.820% 04/15/13 1,900 1,936,689
Bridgestone/Firestone Master Trust
Series 1996-1, Class A
6.170% 07/01/03 4,000 4,018,099
California Infrastructure SCE-1
Series 1997-1, Class A6
6.380% 09/25/08 2,325 2,347,160
Capita Equipment Receivables Trust
Series 1996-1, Class A4
6.280% 06/15/00 3,500 3,508,050
Case Equipment Loan Trust
Series 1997-A, Class B
6.700% 03/15/04 750 763,110
Charming Shoppes Master Trust
Series 1997-1, Class A
6.030% 04/15/06 2,500 2,500,000
Chemical Credit Card Master Trust I
Series 1996-1, Class A
5.550% 09/15/03 3,000 2,960,046
Citibank Credit Card Master Trust I
Series 1997-2, Class B
6.700% 02/15/04 5,000 5,065,242
First Bankcard Credit Card Master Trust
Private Placement
Series 1997-1, Class A
5.858% 05/15/03 3,000 3,000,000
First USA Credit Card Master Trust
Series 1997-6, Class A
6.420% 03/17/05 930 940,750
Ford Credit Auto Loan Master Trust
Series 1995-1, Class A
6.500% 08/15/02 1,000 1,010,900
Goldome Credit Corp. Home Equity Trust
Series 1990-1, Class A
10.000% 07/15/05 147 149,290
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- -------- -------- -------- ------------
ASSET-BACKED SECURITIES (CONTINUED)
Green Tree Financial Corp.
Series 1997-4, Class A5
6.880% 02/15/29 $ 5,365 $ 5,370,868
Merrill Lynch Home Equity Loan
Series 1994-1, Class A1
6.168% 07/15/22 403 402,455
Metris Master Trust Series 1997-1, Class A
6.870% 10/20/05 5,350 5,510,393
Premier Auto Trust Series 1995-4,
Class CTFS
6.200% 09/06/00 4,662 4,690,613
Premier Auto Trust Series 1996-1,
Class CTFS
6.350% 07/06/00 4,000 4,022,788
Rental Car Funding Corp. Series 1997-1,
Class A3
6.600% 05/25/05 6,300 6,296,062
SBC Glacier Finance Ltd. Series 1997-1,
Class A
5.879% 09/10/04 3,500 3,500,000
Standard Credit Card Master Trust
Series 1995-3, Class A
7.850% 02/07/02 2,000 2,064,985
The Money Store Home Equity Trust
Series 1994-B, Class A3
7.100% 11/15/16 2,125 2,148,280
Toyota Auto Lease Trust Series 1997-A,
Class B
6.750% 04/26/04 3,500 3,513,125
WFS Financial Owner Trust Series 1996-A,
Class A3
6.050% 06/01/00 2,502 2,502,257
-----------
TOTAL ASSET-BACKED SECURITIES
(Cost $77,946,670) 78,291,498
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 16.9%
Asset Securitization Corp. Series 1997-D4,
Class PS1 IO
1.211% 04/14/29 68,476 5,264,123
Chase Mortgage Finance Corp.
Series 1993-0, Class A5
6.600% 12/25/09 3,811 3,824,410
DLJ Mortgage Acceptance Corp.
Series 1997-CF2, Class CP IO
1.363% 11/15/04 51,000 3,814,800
DLJ Mortgage Acceptance Corp.
Series 1995-Q1, Class A1-S IO
1.986% 03/25/25 320 63,909
DLJ Mortgage Acceptance Corp.
Series 1996-M, Class A1
8.592% 11/28/11 6,719 6,904,160
Federal Home Loan Mortgage Corp.
Series 1571, Class BA PO
7.971% 04/15/19 357 347,243
Federal National Mortgage Association
Series 1990-32, Class E
9.000% 12/25/04 6,650 6,876,100
See Notes to Financial Statements.
34
<PAGE>
HARRIS INSIGHT FUNDS
SHORT/INTERMEDIATE BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- -------- -------- -------- ------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
Federal National Mortgage Association
Series 1993-146, Class B PO
7.286% 05/25/23 $ 248 $ 244,599
Federal National Mortgage Association
Series 1994-85, Class E
6.000% 11/25/06 1,200 1,197,231
Federal National Mortgage Association
Series 1996-M4, Class A
7.750% 03/17/17 4,382 4,482,355
Federal National Mortgage Association
Series 1997-20 IO
1.840% 03/25/27 36,289 2,021,291
Federal National Mortgage Association
Series G-18, Class Z
8.750% 06/25/21 3,260 3,514,010
Merrill Lynch Mortgage Investors, Inc.
Series 1997-C2, Class C
6.735% 12/10/29 2,575 2,576,207
Norwest Asset Securities Corp.
Series 1997-10, Class A6
6.750% 08/25/27 2,615 2,635,659
PNC Mortgage Securities Corp.
Series 1997-5, Class A8
6.750% 10/25/27 6,000 6,039,375
Prudential Home Mortgage Securities
Series 1992-6, Class A3
7.000% 04/25/99 14 14,393
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $49,849,257) 49,819,865
-----------
MORTGAGE-BACKED SECURITIES -- 8.1%
Federal Home Loan Mortgage Corp.
7.500% 05/01/27 950 973,270
Federal National Mortgage Association
7.000% 01/15/27 5,100 5,136,656
Federal National Mortgage Association
Pool #303724
6.000% 01/01/11 6,912 6,864,852
Federal National Mortgage Association
Pool #305189
9.000% 01/01/25 50 52,727
Federal National Mortgage Association
Pool #305555
9.000% 01/01/25 383 407,120
Federal National Mortgage Association
Pool #306031
9.000% 02/01/25 955 1,015,297
Federal National Mortgage Association
Pool #306674
9.000% 03/01/25 316 335,742
Federal National Mortgage Association
Pool #317306
9.000% 07/01/25 302 321,269
Federal National Mortgage Association
Pool #338001
9.000% 10/01/25 22 23,089
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- -------- -------- -------- ------------
MORTGAGE-BACKED SECURITIES (CONTINUED)
Government National Mortgage
Association Pool #8747
6.875% 11/20/25 $ 188 $ 192,160
Government National Mortgage
Association Pool #326150
7.000% 09/15/23 249 252,072
Government National Mortgage
Association Pool #333668
7.000% 07/15/23 681 690,222
Government National Mortgage
Association Pool #345039
7.000% 09/15/23 734 744,596
Government National Mortgage
Association Pool #345536
7.000% 01/15/24 490 496,260
Government National Mortgage
Association Pool #351638
7.000% 06/15/23 648 657,340
Government National Mortgage
Association Pool #377553
7.000% 07/15/25 673 678,613
Government National Mortgage
Association Pool #383330
7.000% 07/15/23 951 959,259
Government National Mortgage
Association Pool #391901
7.000% 07/15/25 800 806,657
Government National Mortgage
Association Pool #397755
7.000% 05/15/24 673 682,065
Government National Mortgage
Association Pool #406568
7.000% 07/15/25 953 961,267
Government National Mortgage
Association Pool #407660
7.000% 09/15/24 725 730,956
Government National Mortgage
Association Pool #780023
7.000% 09/15/24 791 801,128
-----------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $23,219,891) 23,782,617
-----------
CORPORATE BONDS -- 25.8%
ELECTRIC -- 1.8%
Consolidated Edison Co., Inc.
6.625% 07/01/05 2,150 2,198,375
6.450% 12/01/07 2,400 2,409,000
Pacific Gas & Electric Co.
7.875% 03/01/02 500 531,250
-----------
5,138,625
-----------
See Notes to Financial Statements.
35
<PAGE>
HARRIS INSIGHT FUNDS
SHORT/INTERMEDIATE BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- -------- -------- -------- ------------
CORPORATE BONDS (CONTINUED)
FINANCE - BANK -- 4.0%
Banco Santiago S.A.
7.000% 07/18/07 $ 3,730 $ 3,683,375
First Chicago NBD Bancorp
7.250% 08/15/04 3,320 3,473,550
First Chicago NBD Institutional
7.950% 12/01/26 875 910,000
National City Capital Trust I
6.750% 06/01/99 3,600 3,628,440
-----------
11,695,365
-----------
FINANCE - NON-BANK -- 8.3%
American Express Credit Corp.
6.125% 11/15/01 440 440,000
Associates Corp. of North America
5.750% 10/15/03 190 186,675
Beneficial Corp.
8.400% 05/15/08 20 22,900
Beneficial Finance Corp., MTN
9.130% 07/25/01 1,000 1,091,250
Caterpillar Financial Services Corp.,
MTN
8.290% 03/04/99 1,000 1,025,000
Ford Motor Credit Euro Bond
6.375% 04/03/00 3,485 3,511,138
Hartford Life, Inc.
7.100% 06/15/07 3,915 4,037,344
Household Finance Corp.
8.550% 10/15/04 3,000 3,105,000
Lehman Brothers Holdings, Inc.
7.375% 05/15/04 4,540 4,727,275
Racers QHEL Series 1997, Class A-1
9.499% 05/15/17 1,115 1,135,851
Sears, Roebuck Acceptance Corp.
7.010% 09/19/02 1,400 1,443,750
Smith Barney Holdings, Inc.
5.875% 02/01/01 3,885 3,836,438
-----------
24,562,621
-----------
INDUSTRIAL -- 8.9%
Black & Decker Corp.
7.500% 04/01/03 2,950 3,090,125
Browning - Ferris Industries, Inc.
6.100% 01/15/03 1,000 996,250
Comdisco, Inc. MTN
5.750% 05/22/98 4,000 4,003,600
E.I. duPont de Nemours & Co. Euro
7.500% 06/11/99 440 448,800
Ford Motor Co.
9.000% 09/15/01 4,000 4,340,000
Heinz (H.J.) Co. Euro
7.500% 04/26/00 1,000 1,026,250
Lockheed Martin Corp.
6.550% 05/15/99 4,200 4,226,250
Raytheon Co.
6.750% 08/15/07 3,765 3,845,006
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- -------- -------- -------- ------------
CORPORATE BONDS (CONTINUED)
INDUSTRIAL (CONTINUED)
Sears, Roebuck Co. MTN
8.390% 02/14/02 $ 800 $ 860,000
Walt Disney Co.
6.375% 03/30/01 2,785 2,816,331
WMX Technologies, Inc.
6.250% 10/15/00 700 696,500
-----------
26,349,112
-----------
OIL -- 0.0%
Atlantic Richfield Co.
9.125% 03/01/11 100 123,875
-----------
TRANSPORTATION -- 2.8%
CSX Corp.
7.250% 05/01/27 4,730 5,049,275
Norfolk Southern Corp.
7.350% 05/15/07 3,000 3,195,000
-----------
8,244,275
-----------
TOTAL CORPORATE BONDS
(Cost $74,357,643) 76,113,873
-----------
EURO BONDS -- 1.3%
State Bank of New South Wales
(Cost $3,943,619)
10.375% 04/26/99 3,750 3,956,250
-----------
INTERNATIONAL BONDS -- 1.6%
Telstra Corp. Ltd. Euro Bond
(Cost $4,578,283)
6.500% 11/28/05 4,625 4,680,500
-----------
SUPRANATIONAL BONDS -- 1.1%
African Development Bank
(Cost $3,106,649)
7.750% 12/15/01 3,000 3,176,250
-----------
YANKEE BONDS -- 3.8%
Export-Import Bank Korea
6.500% 11/15/06 2,185 1,633,288
Glaxo Wellcome P.L.C. Euro Bond
6.125% 01/25/06 3,655 3,623,019
Korea Development Bank
5.875% 12/01/98 4,000 3,735,000
7.375% 09/17/04 1,415 1,124,925
Korea Electric Power Global
6.375% 12/01/03 1,455 1,089,431
-----------
TOTAL YANKEE BONDS
(Cost $12,443,333) 11,205,663
-----------
See Notes to Financial Statements.
36
<PAGE>
HARRIS INSIGHT FUNDS
SHORT/INTERMEDIATE BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- -------- -------- -------- ------------
U.S. TREASURY OBLIGATIONS -- 11.4%
U.S. Treasury Notes
6.375% 05/15/99 $ 5,000 $ 5,048,000
7.500% 10/31/99 1,515 1,562,389
7.750% 12/31/99 2,850 2,962,091
6.750% 04/30/00 10,000 10,229,099
5.500% 12/31/00 5,200 5,171,659
7.500% 11/15/01 1,650 1,749,907
5.750% 08/15/03 3,240 3,242,818
7.875% 11/15/04 2,845 3,182,104
7.000% 07/15/06 40 43,194
------------
33,191,261
------------
U.S. Treasury Notes - TIPS
3.375% 01/15/07 585 581,344
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $33,570,615) 33,772,605
------------
COMMERCIAL PAPER -- 1.0%
Autoliv, Inc.
(Cost $2,849,426)
7.250% 01/02/98 2,850 2,849,426
------------
SHARES
------
TEMPORARY INVESTMENTS -- 0.0%
Goldman Sachs Financial Square
Money Market Portfolio 10,738 10,738
Goldman Sachs Institutional Liquid
Assets Money Market Portfolio 6,891 6,891
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $17,629) 17,629
------------
TOTAL INVESTMENTS -- 100.8%
(Cost $294,977,645) 297,155,416
------------
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.8% (2,347,154)
------------
NET ASSETS -- 100.0%
Applicable to 28,296,143 and 579,978
shares outstanding of Institutional
Class and Class A, respectively,
$.001 par value; 200,000,000
authorized shares (Note 9) $294,808,262
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE ($288,886,544/28,296,143) $10.21
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER CLASS A SHARE
($5,921,718/579,978) $10.21
======
- ----------
(DAGGER) See Note 2a to the Financial Statements.
MTN -- Medium Term Note.
IO -- Interest Only security.
PO -- Principal Only security.
TIPS -- Treasury Inflation Protection Securities.
See Notes to Financial Statements.
37
<PAGE>
HARRIS INSIGHT FUNDS
BOND FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- -------- -------- -------- ------------
ASSET-BACKED SECURITIES -- 27.1%
AESOP Funding II Series 1997-1,
Class A1
6.220% 10/20/01 $ 2,000 $ 2,007,315
Banco Nacional de Mexico, S.A.
Series 1996-A, Class A1
6.250% 12/01/03 2,000 1,986,562
BankBoston Marine Asset Backed Trust
Series 1997-2, Class A7
6.820% 04/15/13 2,350 2,395,379
Bridgestone/Firestone Master Trust
Series 1996-1, Class A
6.170% 07/01/03 2,080 2,089,411
California Infrastructure SCE-1
Series 1997-1, Class A6
6.380% 09/25/08 1,000 1,009,531
Capita Equipment Receivables Trust
Series 1996-1, Class A4
6.280% 06/15/00 500 501,150
Case Equipment Loan Trust
Series 1997-A, Class B
6.700% 03/15/04 750 763,110
Charming Shoppes Master Trust
Series 1997-1, Class A
6.030% 04/15/06 2,500 2,500,000
Chase Commercial Mortgage Securities
Corp. Series 1997-1, Class A-1
7.270% 07/19/04 2,181 2,249,505
Chemical Credit Card Master Trust
Series 1995-2, Class A
6.230% 06/15/03 610 613,104
Citibank Credit Card Master Trust I
Series 1997-2, Class B
6.700% 02/15/04 1,000 1,013,048
First Bankcard Credit Card Master Trust
Private Placement Series 1997-1,
Class A
5.858% 05/15/03 1,000 1,000,000
First Plus Home Loan Trust
Series 1997-3, Class A6
7.080% 07/10/17 1,125 1,150,214
First USA Credit Card Master Trust
Series 1997-6, Class A
6.420% 03/17/05 150 151,734
Green Tree Financial Corp.
Series 1997-4, Class A5
6.880% 02/15/29 2,000 2,002,188
Green Tree Financial Corp.
Series 1997-7, Class A8
6.860% 08/15/29 3,489 3,512,070
Household Credit Card Master Trust I
Series 1995-1, Class A
5.858% 12/15/02 780 781,404
Metris Master Trust Series 1997-1,
Class A
6.870% 10/20/05 3,350 3,443,850
Rental Car Funding Corp.
Series 1997-1, Class A3
6.600% 05/25/05 3,447 3,444,846
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- -------- -------- ------- ------------
ASSET-BACKED SECURITIES (CONTINUED)
SBC Glacier Finance Ltd. Series 1997-1,
Class A
5.879% 09/10/04 $ 1,500 $ 1,500,000
Standard Credit Card Master Trust
Series 1994-3, Class B
7.000% 04/07/01 400 404,462
Standard Credit Card Master Trust
Series 1995-3, Class A
7.850% 02/07/02 250 258,475
Team Fleet Financing Corp.
Series 1997-1, Class A
7.350% 05/15/03 1,250 1,296,094
The Money Store Home Equity Trust
Series 1994-B, Class A3
7.100% 11/15/16 759 767,243
Toyota Auto Lease Trust
Series 1997-A, Class B
6.750% 04/26/04 1,500 1,505,625
-----------
TOTAL ASSET-BACKED SECURITIES
(Cost $38,009,954) 38,346,320
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 22.0%
American Southwest Financial
Securities Corp. Series 1996-FH,
Class A1
6.675% 11/25/38 443 445,350
Asset Securitization Corp.
Series 1997-D4, Class PS1 IO
1.211% 04/14/29 16,365 1,258,049
Chase Mortgage Finance Corp.
Series 1993-0, Class A5
6.600% 12/25/09 953 956,103
Countrywide Funding Corp.
Series 1994-11, Class A12
7.069% 05/25/24 545 539,980
DLJ Mortgage Acceptance Corp.
Series 1996-M, Class A1
8.592% 11/28/11 896 920,555
Federal Home Loan Mortgage Corp.
Series 1865, Class PE
7.000% 07/15/26 750 769,911
Federal Home Loan Mortgage Corp.
Series 1871, Class H
7.000% 11/15/12 1,000 1,024,017
Federal National Mortgage Association
Series 110, Class 2 IO
9.000% 11/25/19 2,656 762,184
Federal National Mortgage Association
Series 145, Class 1 PO
7.910% 06/25/22 2,646 2,099,840
Federal National Mortgage Association
Series 1992-216, Class ZB
7.000% 12/25/22 553 550,850
Federal National Mortgage Association
Series 1993-210, Class S
10.094% 11/25/23 1,145 1,037,256
See Notes to Financial Statements.
38
<PAGE>
HARRIS INSIGHT FUNDS
BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- -------- -------- -------- ------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
Federal National Mortgage Association
Series 1994-30, Class H
6.250% 11/25/22 $ 2,550 $ 2,544,868
Federal National Mortgage Association
1996-53, Class PE
6.500% 11/18/10 2,375 2,395,900
Federal National Mortgage Association
Series 1997-20 IO
1.840% 03/25/27 18,356 1,022,452
Federal National Mortgage Association
Series G-18, Class Z
8.750% 06/25/21 2,504 2,699,192
GE Capital Mortgage Services, Inc.
Series 1994-10, Class A23
6.500% 03/25/24 2,418 2,290,338
GE Capital Mortgage Services, Inc.
Series 1997-5, Class A2
7.500% 06/25/27 2,000 2,028,200
Merrill Lynch Mortgage Investors, Inc.
Series 1997-C2, Class C
6.735% 12/10/29 1,140 1,140,534
Norwest Asset Securities Corp.
Series 1997-10, Class A6
6.750% 08/25/27 2,100 2,116,590
PNC Mortgage Securities Corp.
Series 1997-5, Class A8
6.750% 10/25/27 2,188 2,201,966
Residential Asset Securitization Trust
Series 1997-A8, Class A3
7.000% 10/25/27 2,250 2,249,071
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $30,349,330) 31,053,206
-----------
MORTGAGE-BACKED SECURITIES -- 8.0%
Federal National Mortgage Association
7.000% 01/15/13 1,945 1,973,567
7.000% 01/15/28 7,875 7,931,602
Federal National Mortgage Association
Pool #305555
9.000% 01/01/25 391 416,004
Federal National Mortgage Association
Pool #359740
7.000% 10/01/26 330 332,387
Federal National Mortgage Association
Pool #364248
7.000% 01/01/27 338 340,751
Federal National Mortgage Association
Pool #364731
7.000% 12/01/26 331 333,781
-----------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $11,248,271) 11,328,092
-----------
CORPORATE BONDS -- 20.7%
ELECTRIC -- 0.7%
Public Service Electric & Gas Co.
6.500% 05/01/04 1,000 1,013,750
-----------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- -------- -------- -------- ------------
CORPORATE BONDS (CONTINUED)
FINANCE - BANK -- 4.0%
Banco Santiago S.A.
7.000% 07/18/07 $ 1,610 $ 1,589,875
BankBoston Corp.
7.000% 09/15/07 2,500 2,575,000
First Chicago NBD Institutional
7.950% 12/01/26 400 416,000
Mellon Financial Co.
6.300% 06/01/00 500 502,500
Wachovia Bank-NC Euro Bond
7.000% 10/17/08 500 524,250
----------
5,607,625
----------
FINANCE - NON-BANK -- 6.8%
American General Institutional Capital
Securities Series A
7.570% 12/01/45 590 609,912
Commercial Credit Co.
7.750% 03/01/05 210 226,275
Ford Motor Credit Euro Bond
6.375% 04/03/00 700 705,250
Hartford Life, Inc.
7.100% 06/15/07 2,090 2,155,313
Lehman Brothers Holdings, Inc.
8.800% 03/01/15 630 743,400
PaineWebber Group, Inc.
6.750% 02/01/06 1,000 1,008,750
Racers QHEL Series 1997, Class A-1
9.499% 05/15/17 1,050 1,069,635
Sears, Roebuck Acceptance Corp.
7.010% 09/19/02 1,350 1,392,187
Smith Barney Holdings, Inc.
5.875% 02/01/01 200 197,500
6.500% 10/15/02 200 202,500
Xerox Credit Corp. Euro Bond
5.400% 09/11/00 1,300 1,276,340
----------
9,587,062
----------
INDUSTRIAL -- 6.6%
Air Products & Chemicals, Inc.
6.862% 10/25/03 2,250 2,303,438
Black & Decker Corp.
7.500% 04/01/03 130 136,175
Boston University
7.625% 07/15/97 410 453,563
Chrysler Corp.
7.450% 03/01/27 805 869,400
Dayton-Hudson Corp.
9.750% 11/01/98 500 513,560
Ford Motor Co.
8.875% 01/15/22 1,120 1,381,800
Hertz Corp.
6.500% 04/01/00 500 503,750
Honeywell, Inc.
7.350% 05/15/00 200 205,750
Pepsico, Inc. Euro Bond
5.800% 08/31/98 500 498,940
See Notes to Financial Statements.
39
<PAGE>
HARRIS INSIGHT FUNDS
BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- -------- -------- -------- ------------
CORPORATE BONDS (CONTINUED)
INDUSTRIAL (CONTINUED)
Procter & Gamble Co. Euro Bond
9.625% 01/14/01 $ 400 $ 440,000
Wal-Mart Stores, Inc.
9.100% 07/15/00 100 107,250
Wal-Mart Stores, Inc. Euro Bond
6.750% 05/24/02 125 127,344
Walt Disney Co.
6.375% 03/30/01 500 505,625
Xerox Corp. Euro Bond
5.750% 07/21/00 1,310 1,300,175
-----------
9,346,770
-----------
TELEPHONE -- 0.1%
Bell South Telecommunication, Inc.
7.625% 05/15/35 215 227,094
-----------
TRANSPORTATION -- 2.5%
CSX Corp.
7.900% 05/01/17 650 723,937
7.250% 05/01/27 1,610 1,718,675
Norfolk Southern Corp.
7.800% 05/15/27 975 1,105,406
-----------
3,548,018
-----------
TOTAL CORPORATE BONDS
(Cost $28,489,485) 29,330,319
-----------
EURO BONDS -- 0.4%
State Bank of New South Wales
(Cost $523,270)
10.375% 04/26/99 500 527,500
-----------
INTERNATIONAL BONDS -- 0.5%
Telstra Corp. Ltd. Euro Bond
(Cost $744,118)
6.500% 11/28/05 750 759,000
-----------
SUPRANATIONAL BONDS -- 1.5%
African Development Bank
(Cost $2,071,100)
7.750% 12/15/01 2,000 2,117,500
-----------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- -------- -------- -------- ------------
YANKEE BONDS -- 1.6%
Export-Import Bank Korea
6.500% 11/15/06 $ 240 $ 179,400
Glaxo Wellcome P.L.C. Euro Bond
6.125% 01/25/06 550 545,187
Hydro-Quebec
8.050% 07/07/24 220 255,200
Korea Development Bank
7.375% 09/17/04 1,045 830,775
Korea Electric Power Global
6.375% 12/01/03 605 452,994
-----------
TOTAL YANKEE BONDS
(Cost $2,619,535) 2,263,556
-----------
U.S. TREASURY OBLIGATIONS -- 19.0%
U.S. Treasury Bonds
6.750% 08/15/26 660 727,241
-----------
U.S. Treasury Notes
4.750%* 10/31/98 500 496,560
5.500% 04/15/00 11,700 11,661,740
6.500% 05/31/01 500 512,060
6.625% 06/30/01 6,985 7,180,370
7.500% 11/15/01 3,510 3,722,530
-----------
23,573,260
-----------
U.S. Treasury Notes - TIPS
3.375% 01/15/07 2,600 2,583,751
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $26,798,352) 26,884,252
-----------
MUNICIPAL BONDS -- 1.0%
New York City Municipal Water Financing
Authority Revenue Bonds Series B
(Cost $1,352,718)
5.250% 06/15/29 1,405 1,392,706
-----------
COMMERCIAL PAPER -- 4.3%
Autoliv, Inc.
(Cost $6,023,787)
7.250% 01/02/98 6,025 6,023,787
-----------
See Notes to Financial Statements.
40
<PAGE>
HARRIS INSIGHT FUNDS
BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ ------------
TEMPORARY INVESTMENTS -- 0.0%
Goldman Sachs Financial Square
Money Market Portfolio 9,430 $ 9,430
Goldman Sachs Institutional Liquid
Assets Money Market Portfolio 5,569 5,569
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $14,999) 14,999
------------
TOTAL INVESTMENTS -- 106.1%
(Cost $148,244,919) 150,041,237
------------
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (6.1%)
Payable for Investments Purchased (9,879,052)
Other Assets and Liabilities, Net 1,220,723
------------
Total Liabilities in Excess of
Other Assets (8,658,329)
------------
NET ASSETS -- 100.0%
Applicable to 13,772,792 and 91,766
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 9) $141,382,908
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE ($140,447,073/13,772,792) $10.20
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER CLASS A SHARE
($935,835/91,766) $10.20
======
- ----------
(DAGGER) See Note 2a to the Financial Statements.
* Security pledged as collateral for futures contracts.
IO -- Interest Only Security.
PO -- Principal Only Security.
TIPS -- Treasury Inflation Protection Securities.
NUMBER OF UNREALIZED
CONTRACTS APPRECIATION
---------- ------------
Futures Contracts -- Long Position
U.S. Treasury Notes, March 1998 100 $ 90,625
U.S. Treasury Bonds, March 1998 30 37,500
--- --------
Total Futures Contracts 130 $128,125
=== ========
See Notes to Financial Statements.
41
<PAGE>
HARRIS INSIGHT FUNDS
INTERMEDIATE GOVERNMENT BOND FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- ------- -------- -------- ------------
AGENCY OBLIGATIONS -- 28.4%
AID - Israel Guaranteed Notes
6.050% 08/15/00 $ 1,400 $ 1,401,750
Banco Vivienda del Peru
9.980% 08/01/08 3,300 3,795,000
Federal Farm Credit Bank
7.170% 04/25/02 3,500 3,661,875
Federal Home Loan Bank
6.040% 06/21/00 2,450 2,463,279
Federal Home Loan Mortgage Corp.
5.900% 01/09/98 1,082 1,080,582
7.010% 07/11/07 850 874,327
Federal National Mortgage Association
6.375% 10/13/00 1,500 1,503,030
Honduras Aid
13.000% 06/01/01 1,498 1,640,497
Private Export Funding Corp.
9.450% 12/31/99 5,000 5,337,500
7.030% 10/31/03 1,650 1,734,562
6.310% 09/30/04 2,000 2,032,500
Small Business Administration Participation
Certificates, Series 1995-20J, Class 1
6.850% 10/01/15 2,843 2,912,553
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $27,939,813) 28,437,455
-----------
ASSET-BACKED SECURITIES -- 4.2%
BankBoston Marine Asset Backed Trust
Series 1997-2, Class A3
6.320% 03/15/06 1,600 1,602,400
California Infrastructure SCE-1
Series 1997-1, Class A6
6.380% 09/25/08 575 580,391
Metris Master Trust Series 1997-1, Class A
6.870% 10/20/05 2,000 2,056,030
-----------
TOTAL ASSET-BACKED SECURITIES
(Cost $4,213,963) 4,238,821
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 11.5%
Federal Home Loan Mortgage Corp.
Series 1397, Class FA
6.250% 08/15/18 354 353,938
Federal National Mortgage Association
Series 1990-96, Class E
9.670% 01/25/17 792 815,857
Federal National Mortgage Association
Series 1992-29, Class A
6.400% 09/25/14 714 711,335
Federal National Mortgage Association
Series 1993-146, Class B PO
7.286% 05/25/23 495 489,196
Federal National Mortgage Association
Series 1996-M4, Class A
7.750% 03/17/17 1,878 1,919,875
Federal National Mortgage Association
Series 1997-20 IO
1.840% 03/25/27 12,379 688,268
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- ------- -------- ------- ------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
Federal National Mortgage Association
Series 1997-M2, Class A
7.350% 09/17/03 $ 3,328 $ 3,439,734
Federal National Mortgage Association
Series 1997-M5, Class C
6.740% 08/25/07 3,000 3,094,200
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $11,358,761) 11,512,403
-----------
MORTGAGE-BACKED SECURITIES -- 23.8%
Federal Home Loan Mortgage Corp.
Pool #W10002
6.775% 11/01/03 2,320 2,388,150
Federal Home Loan Mortgage Corp.
Pool #865008
8.454% 02/01/18 56 59,003
Federal National Mortgage Association
Pool #8217
11.000% 12/01/15 1,674 1,863,049
Federal National Mortgage Association
Pool #73738
6.825% 11/01/01 3,765 3,861,750
Federal National Mortgage Association
Pool #73755
6.890% 01/01/02 2,895 2,961,224
Federal National Mortgage Association
Pool #303724
6.000% 01/01/11 3,573 3,548,126
Federal National Mortgage Association
Pool #375255
6.920% 07/01/04 997 1,008,725
Government National Mortgage
Association Pool #8720
6.875% 10/20/25 506 517,771
Government National Mortgage
Association Pool #162989
9.000% 05/15/16 22 23,586
Government National Mortgage
Association Pool #227125
9.000% 07/15/17 115 125,334
Government National Mortgage
Association Pool #346458
8.000% 03/15/23 283 294,920
Government National Mortgage
Association Pool #352110
7.000% 08/15/23 3,290 3,335,395
Government National Mortgage
Association Pool #780389
9.000% 08/15/09 3,506 3,817,265
-----------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $23,144,848) 23,804,298
-----------
See Notes to Financial Statements.
42
<PAGE>
HARRIS INSIGHT FUNDS
INTERMEDIATE GOVERNMENT BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
- ------ -------- -------- ------------
U.S. TREASURY OBLIGATIONS -- 25.6%
U.S. Treasury Bonds
10.750% 08/15/05 $ 2,300 $ 2,992,875
6.750% 08/15/26 400 440,752
------------
3,433,627
------------
U.S. Treasury Notes
6.250%* 03/31/99 6,000 6,044,939
5.875% 08/31/99 1,400 1,404,802
5.875% 11/15/99 3,000 3,011,580
7.750% 01/31/00 15 15,606
6.625% 06/30/01 1,675 1,721,850
7.500% 11/15/01 650 689,357
5.875% 11/30/01 8,000 8,034,079
7.250% 08/15/04 330 356,901
------------
21,279,114
------------
U.S. Treasury Notes - TIPS
3.375% 01/15/07 900 894,375
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $25,452,877) 25,607,116
------------
SHARES
------
TEMPORARY INVESTMENTS -- 5.2%
Goldman Sachs Financial Square
Treasury Obligation Portfolio
(Cost $5,154,710) 5,154,710 5,154,710
------------
TOTAL INVESTMENTS -- 98.7%
(Cost $97,264,972) 98,754,803
------------
OTHER ASSETS IN EXCESS OF
LIABILITIES-- 1.3% 1,320,221
------------
NET ASSETS -- 100.0%
Applicable to 6,008,794 and 43,274
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 9) $100,075,024
============
VALUE(DAGGER)
------------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE ($99,359,448/6,008,794) $16.54
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER CLASS A SHARE
($715,576/43,274) $16.54
======
- ----------
(DAGGER) See Note 2a to the Financial Statements.
* Security pledged as collateral for futures contracts.
IO -- Interest Only security.
PO -- Principal Only security.
TIPS -- Treasury Inflation Protection Securities.
NUMBER OF UNREALIZED
CONTRACTS APPRECIATION
--------- ------------
Futures Contracts -- Long Position
U.S. Treasury Notes, March 1998 100 $84,375
=== =======
See Notes to Financial Statements.
43
<PAGE>
HARRIS INSIGHT FUNDS
INTERMEDIATE TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS -- 99.7%
ALASKA -- 3.4%
Anchorage, Alaska, Electric Utility Revenue
Bonds Series 1996D VR
3.700% 01/07/98 $ 6,500 $ 6,500,000
-----------
ARIZONA -- 13.7%
Arizona State Transportation Board Highway
Revenue Bonds Series A
6.500% 07/01/11 6,300 6,859,125
Maricopa County, Arizona, Unified School
District No. 48 Scottsdale General
Obligation Bonds
7.750% 07/01/02 1,570 1,799,612
Phoenix, Arizona, General Obligation
Bonds Series A
7.500% 07/01/08 5,000 6,318,750
Salt River Project, Arizona, Agriculture
& Improvement District Revenue
Bonds Series B
6.500% 01/01/04 6,050 6,776,000
Tucson, Arizona, Street & Highway
User Revenue Bonds Series A
7.000% 07/01/11 1,800 2,216,250
7.000% 07/01/12 2,000 2,460,000
-----------
26,429,737
-----------
CALIFORNIA -- 3.7%
Metropolitan Water District, Southern
California Waterworks Revenue Bonds
Series C
5.250% 07/01/15 4,000 4,055,000
Redding, California, Joint Powers
Financing Authority Electric System
Revenue Bonds Series A
5.250% 06/01/15 3,000 3,041,250
-----------
7,096,250
-----------
COLORADO -- 3.0%
Denver, Colorado, City and County Airport
Revenue Bonds Series A
7.500% 11/15/06 5,000 5,800,000
-----------
CONNECTICUT -- 1.6%
Connecticut State Clean Water
Revenue Bonds
5.250% 03/01/15 3,000 3,078,750
-----------
DELAWARE -- 2.0%
Delaware State General Obligation Bonds
6.125% 04/01/01 3,700 3,935,875
-----------
FLORIDA -- 6.3%
Florida State Department of
Transportation-Right of Way General
Obligation Bond Series B
5.000% 07/01/15 5,105 5,105,000
Gainesville, Florida, Utilities System
Revenue Bonds Series A
5.750% 10/01/07 1,500 1,659,375
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
FLORIDA (CONTINUED)
Reedy Creek, Florida, Improvement
District, Florida Utilities Revenue Bonds
Series 1991-1
6.500% 10/01/16 $ 5,000 $ 5,456,250
-----------
12,220,625
-----------
GEORGIA -- 0.6%
Georgia State General Obligation Bonds
Series C
7.250% 07/01/02 1,000 1,132,500
-----------
ILLINOIS -- 6.8%
Chicago, Illinois, Board of Education
General Obligation Bonds
6.750% 12/01/09 1,000 1,193,750
Chicago, Illinois, Metropolitan Water
Reclamation District-Greater Chicago
Capital Improvement General
Obligation Bonds
6.600% 01/01/02 2,600 2,830,750
6.300% 12/01/09 2,000 2,245,000
DuPage County, Illinois, First Preservation
District General Obligation Bonds
6.000% 11/01/03 2,000 2,185,000
4.300% 10/01/04 1,475 1,478,687
Sangamon County, Illinois, School District
General Obligation Bonds
6.900% 01/01/07 2,700 3,199,500
-----------
13,132,687
-----------
INDIANA -- 4.0%
Indiana Health Facility Financing Authority
Hospital Revenue Bonds (Clarian
Health Partners) Series A
6.000% 02/15/05 4,000 4,345,000
Indiana Municipal Power Agency, Power
Supply System Revenue Bonds Series B
6.000% 01/01/11 3,000 3,352,500
-----------
7,697,500
-----------
KANSAS -- 1.5%
Kansas State Department of Transportation
Highway Revenue Bonds
7.250% 03/01/04 2,555 2,970,187
-----------
KENTUCKY -- 1.9%
Kentucky Economic Development Finance
Authority Hospital Facilities Revenue
Bonds (Pikeville United Methodist
Hospital)
5.625% 02/01/17 3,500 3,648,750
-----------
MARYLAND -- 2.0%
Maryland State Department of
Transportation Revenue Bonds
4.200% 06/15/03 680 680,850
See Notes to Financial Statements.
44
<PAGE>
HARRIS INSIGHT FUNDS
INTERMEDIATE TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
MARYLAND (CONTINUED)
Maryland State General Obligation Bonds
5.300% 10/15/99 $ 2,000 $ 2,050,000
Montgomery County, Maryland,
General Obligation Bonds
8.600% 05/01/03 1,000 1,207,500
-----------
3,938,350
-----------
MASSACHUSETTS -- 0.9%
Massachusetts State Health & Educational
Facilities Authority Revenue Bonds
(Northeastern University) Series D
7.125% 10/01/10 1,500 1,646,250
-----------
MICHIGAN -- 5.3%
Chippewa County, Michigan, Hospital
Finance Revenue Bonds (Chippewa
County War Memorial Hospital) Series A
5.000% 11/01/04 1,075 1,085,750
Chippewa County, Michigan, Hospital
Finance Revenue Bonds (Chippewa
County War Memorial Hospital)
Series B
5.000% 11/01/04 2,140 2,161,400
Detroit, Michigan, Water Supply System
Revenue Bonds Series A
5.300% 07/01/09 1,000 1,073,750
Kent County, Michigan, General Obligation
Bonds Refuse Disposal System Series A
4.625% 11/01/04 3,480 3,562,650
Oakland University, Michigan,
Revenue Bonds
5.000% 05/15/10 1,180 1,209,500
5.100% 05/15/11 1,175 1,204,375
-----------
10,297,425
-----------
MINNESOTA -- 1.2%
Minnesota State General Obligation Bonds
4.900% 08/01/02 2,300 2,383,375
-----------
MISSISSIPPI -- 1.7%
Mississippi River Bridge Authority
Revenue Bonds
6.750% 11/01/12 3,000 3,315,000
-----------
MISSOURI -- 1.0%
Kansas City, Missouri, General
Obligation Bonds (Streetlight Project)
Series B
5.000% 02/01/14 1,990 2,007,412
-----------
NEBRASKA -- 0.6%
Omaha, Nebraska, General Obligation
Bonds
5.125% 12/01/99 1,070 1,096,750
-----------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
NEW JERSEY -- 2.9%
New Jersey State Highway Authority,
Garden State Parkway General
Revenue Bonds
6.200% 01/01/10 $ 5,000 $ 5,693,750
-----------
NEW YORK -- 4.5%
New York State General Obligation Bonds
Series B
6.375% 08/15/00 3,750 3,970,313
New York City General Obligation Bonds
Series H
6.000% 08/01/10 3,000 3,225,000
Westchester County, New York, General
Obligation Bonds Series D
4.625% 11/15/10 1,600 1,578,000
-----------
8,773,313
-----------
NORTH CAROLINA -- 3.3%
Mecklenburg County, North Carolina,
General Obligation Bonds
5.000% 04/01/08 6,000 6,315,000
-----------
OHIO -- 4.3%
Ohio State Natural Resource Capital
Facilities General Obligation Bonds
Series C
4.700% 04/01/04 2,470 2,550,275
Warren, Ohio, Hospital Revenue Bonds
(Warren General Hospital Project)
Series B
7.300% 11/15/14 5,000 5,862,500
-----------
8,412,775
-----------
SOUTH CAROLINA -- 1.4%
South Carolina State Capital Improvement
General Obligation Bonds Series V
6.500% 02/01/00 2,635 2,758,239
-----------
TENNESSEE -- 3.1%
Tennessee State General Obligation Bonds
5.000% 05/01/08 5,700 5,949,375
-----------
TEXAS -- 8.7%
Austin, Texas, Independent School
District General Obligation Bonds
7.000% 08/01/04 5,210 6,017,550
Bexar County, Texas, Detention
Facilities General Obligation Bonds
7.250% 06/15/04 1,000 1,170,000
Harris County, Texas, General
Obligation Bonds
9.000% 06/01/02 1,250 1,482,813
Spring Branch, Texas, Independent
School District General
Obligation Bonds
6.500% 02/01/02 1,750 1,903,125
See Notes to Financial Statements.
45
<PAGE>
HARRIS INSIGHT FUNDS
INTERMEDIATE TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
TEXAS (CONTINUED)
University of Texas Revenue Bonds
Financing System Series B
6.000% 08/15/06 $ 3,540 $ 3,973,650
West Central Texas Municipal Water
District Revenue Bonds, Water
Transmission Line Contract
6.750% 11/01/03 2,000 2,250,000
-----------
16,797,138
-----------
UTAH -- 5.8%
Jordan, Utah, School District General
Obligation Bonds
5.000% 06/15/01 1,670 1,726,363
Utah State General Obligation Bonds
6.000% 07/01/01 5,000 5,337,500
Utah State General Obligation Bonds
Series 1991G
5.500% 07/01/98 4,100 4,135,547
-----------
11,199,410
-----------
VIRGINIA -- 1.7%
Virginia Commonwealth Transportation
Board Revenue Bonds Northern Virginia
Transportation District PG-B
5.000% 05/15/15 3,310 3,297,588
-----------
WASHINGTON -- 1.6%
Washington State Motor Vehicle Fuel Tax
General Obligation Bonds Series F
5.300% 07/01/13 1,000 1,025,000
Washington State Public Power Supply
System Nuclear Project No. 2
Revenue Bonds
5.750% 07/01/09 2,000 2,160,000
-----------
3,185,000
-----------
WISCONSIN -- 1.2%
Wisconsin State Transportation Revenue
Bonds Series A
7.500% 07/01/04 2,000 2,355,000
-----------
TOTAL MUNICIPAL BONDS
(Cost $187,154,552) 193,064,011
-----------
SHARES VALUE(DAGGER)
-------- ------------
TEMPORARY INVESTMENTS -- 0.1%
Federated Tax-Free Obligation Fund 121,636 $ 121,636
Goldman Sachs Financial Square
Tax-Exempt Money Market Portfolio 152,709 152,709
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $274,345) 274,345
------------
TOTAL INVESTMENTS -- 99.8%
(Cost $187,428,897) 193,338,356
------------
OTHER ASSETS IN EXCESS OF
LIABILITIES-- 0.2% 315,057
------------
NET ASSETS -- 100.0%
Applicable to 17,957,500 and 59,934
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 9) $193,653,413
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE ($193,009,223/17,957,500) $10.75
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER CLASS A SHARE
($644,190/59,934) $10.75
======
- ----------
(DAGGER) See Note 2a to the Financial Statements.
VR -- Variable rate demand note; interest rate in effect on 12/31/97. Maturity
date is the later of the next interest rate change or exercise of the
demand feature.
See Notes to Financial Statements.
46
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS -- 96.6%
ARIZONA -- 0.7%
Maricopa County, Arizona, Hospital
Revenue Bonds
6.125% 04/01/18 $1,250 $ 1,328,125
-----------
CALIFORNIA -- 6.1%
California Educational Facilities Authority
Revenue Bonds (Stanford University
Project) Series N
5.200% 12/01/27 5,000 5,018,750
California State General Obligation Bonds
5.000% 10/01/23 3,000 2,932,500
San Diego, California, Public Facilities
Financing Authority Sewer Revenue
Bonds Series A
5.250% 05/15/22 3,000 3,015,000
-----------
10,966,250
-----------
COLORADO -- 0.6%
Colorado Springs, Colorado, Utilities
Revenue Bonds Unrefunded Balance
Series A
6.500% 11/15/15 1,000 1,093,750
-----------
CONNECTICUT -- 1.6%
Connecticut State General Obligation
Bonds Series B
6.000% 11/15/01 2,725 2,915,750
-----------
FLORIDA -- 6.7%
Florida State, Broward County Expressway
Authority General Obligation Bonds
9.875% 07/01/09 4,000 5,760,000
Gainesville, Florida, Utilities System
Revenue Bonds Series A
5.200% 10/01/22 4,990 5,008,712
Orlando, Florida, Utilities Commission
Water & Electric Revenue Bonds Series D
6.750% 10/01/17 1,000 1,231,250
-----------
11,999,962
-----------
GEORGIA -- 4.0%
Atlanta, Georgia, Airport Facilities
Revenue Bonds
6.000% 01/01/07 2,000 2,235,000
Georgia State General Obligation Bonds
Series C
7.250% 07/01/02 1,500 1,698,750
Metropolitan Atlanta Rapid Transportation
Authority, Georgia Sales Tax Revenue
Bonds Series N
6.200% 07/01/10 2,890 3,276,537
-----------
7,210,287
-----------
ILLINOIS -- 13.1%
Chicago, Illinois, General Obligation Bonds
5.250% 01/01/27 3,000 2,970,000
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
ILLINOIS (CONTINUED)
Chicago, Illinois, Wastewater
Transmission Revenue Bonds
5.250% 01/01/28 $ 4,000 $ 4,005,000
De Kalb & Kane Counties, Illinois,
Community United School
District No. 427 General Obligation
Bonds
5.500% 01/01/11 1,325 1,419,406
5.550% 01/01/12 1,125 1,209,375
Illinois Development Finance Authority
Revenue Bonds (School
District No. U46 Project)
9.000% 01/01/07 4,250 5,684,375
Illinois Development Finance Authority
Revenue Bonds (School District
PG - Rockford School No. 205)
6.650% 02/01/11 4,000 4,725,000
Illinois Educational Facilities Authority
Revenue Bonds (Shedd Aquarium
Society)
5.350% 07/01/13 1,270 1,303,337
5.400% 07/01/14 1,240 1,272,550
Illinois State Sales Tax Revenue Bonds
Series V
6.375% 06/15/20 1,000 1,088,750
-----------
23,677,793
-----------
INDIANA -- 4.7%
Indiana Municipal Power Agency,
Power Supply System Revenue Bonds
Series B
6.000% 01/01/11 6,455 7,213,463
Saint Joseph's County, Indiana,
Educational Facilities Revenue Bonds
(University of Notre Dame Du Lac Project)
6.500% 03/01/26 1,000 1,236,250
-----------
8,449,713
-----------
KENTUCKY -- 2.3%
Kentucky Economic Development Finance
Authority Hospital Facilities Revenue Bonds
(Pikeville United Methodist Hospital)
5.625% 02/01/17 2,000 2,085,000
5.700% 02/01/28 2,000 2,080,000
-----------
4,165,000
-----------
MASSACHUSETTS -- 2.7%
Massachusetts State Health and
Educational Facilities Authority Revenue
Bonds (Berklee College of Music)
Series E
5.100% 10/01/27 2,000 1,972,500
See Notes to Financial Statements.
47
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
MASSACHUSETTS (CONTINUED)
Massachusetts State Turnpike Authority
Metropolitan Highway System Revenue
Bonds Series A
5.000% 01/01/37 $ 3,000 $ 2,906,250
-----------
4,878,750
-----------
MICHIGAN -- 12.9%
Detroit, Michigan, Water Supply System
Revenue Bonds
6.500% 07/01/15 1,000 1,188,750
East Grand Rapids, Michigan, Public
School District General Obligation Bonds
5.000% 05/01/16 2,500 2,496,875
Kent County, Michigan, Refuse Disposal
Systems General Obligation Bonds
Series A
5.000% 11/01/06 4,105 4,294,856
Michigan State Trunk Line Revenue
Bonds Series A
5.250% 11/15/04 2,460 2,592,225
Oakland County, Michigan, Economic
Development Corp. Limited Obligation
Revenue Bonds (Cranbrook Educational
Community) Series C
6.900% 11/01/14 2,725 3,137,156
Pinckney, Michigan, Community Schools
General Obligation Bonds
5.500% 05/01/27 6,500 6,670,625
Royal Oak, Michigan, Hospital Finance
Authority Revenue Bonds (William
Beaumont Hospital)
5.500% 01/01/18 2,825 2,906,219
-----------
23,286,706
-----------
MINNESOTA -- 1.4%
Metropolitan Council Minneapolis-St. Paul
Metropolitan Area General Obligation
Bonds Series B
5.150% 09/01/08 2,425 2,515,938
-----------
MISSISSIPPI -- 1.8%
Mississippi River Bridge Authority
Revenue Bonds
6.750% 11/01/12 3,000 3,315,000
-----------
NEW JERSEY -- 1.3%
New Jersey State Highway Authority,
Garden State Parkway General
Revenue Bonds
6.200% 01/01/10 2,000 2,277,500
-----------
NEW YORK -- 5.6%
New York City General Obligation Bonds
Series H
6.000% 08/01/13 3,500 3,723,125
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
NEW YORK (CONTINUED)
New York City Municipal Water Finance
Authority Water & Sewer System
Revenue Bonds Series A
5.625% 06/15/19 $ 3,000 $ 3,090,000
Port Authority of New York and
New Jersey Consolidated Series One
Hundred Revenue Bonds
5.625% 10/15/17 3,175 3,286,125
-----------
10,099,250
-----------
NORTH CAROLINA -- 2.3%
Mecklenburg County, North Carolina,
General Obligation Bonds
5.000% 04/01/08 4,000 4,210,000
-----------
OHIO -- 1.2%
Ohio State Higher Educational Facilities
Community Revenue Bonds
(Denison University Project)
5.350% 11/01/10 1,000 1,043,750
5.400% 11/01/11 1,000 1,037,500
-----------
2,081,250
-----------
OKLAHOMA -- 0.9%
Tulsa, Oklahoma, Industrial Authority
Revenue Bonds (University of Tulsa)
Series A
6.000% 10/01/16 1,500 1,689,375
-----------
PENNSYLVANIA -- 2.8%
Somerset County, Pennsylvania,
General Authority Commonwealth
Lease Revenue Bonds
6.250% 10/15/11 4,670 5,008,575
-----------
TENNESSEE -- 2.4%
Tennessee State General Obligation Bonds
5.500% 05/01/27 4,180 4,347,200
-----------
TEXAS -- 12.2%
Crowley, Texas, Independent School
District General Obligation Bonds
5.200% 08/01/24 5,595 5,601,994
Dallas, Texas, General Obligation Bonds
6.000% 02/15/03 2,320 2,520,100
Harris County, Texas, Criminal Justice
Center General Obligation Bonds
5.500% 10/01/12 2,540 2,660,650
Houston, Texas, Water & Sewer
System Revenue Bonds Series A
6.200% 12/01/23 4,750 5,314,063
North Texas Health Facilities Development
Corp. Revenue Bonds (United
Regulatory Health Care System
Income Project)
5.000% 09/01/09 1,000 1,021,250
5.000% 09/01/10 1,000 1,012,500
See Notes to Financial Statements.
48
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
- ------------ -------- -------- ------------
MUNICIPAL BONDS (CONTINUED)
TEXAS (CONTINUED)
Tarrant County, Texas, Water Control &
Improvement District No. 001 Water
Revenue Bonds
4.750% 03/01/12 $ 4,000 $ 3,895,000
------------
22,025,557
------------
VERMONT -- 1.5%
Vermont Educational & Health Buildings
Financing Agency Revenue Bonds
(Middlebury College Project)
5.500% 11/01/16 2,550 2,658,375
------------
VIRGINIA -- 2.7%
Norfolk, Virginia, Water Revenue Bonds
5.875% 11/01/15 2,400 2,577,000
Richmond, Virginia, General Obligation
Bonds Series B
6.500% 07/15/02 2,160 2,373,300
------------
4,950,300
------------
WASHINGTON -- 2.2%
Washington State Public Power Supply
System Nuclear Project No. 3 Revenue
Bonds Series A
5.250% 07/01/17 4,000 4,005,000
------------
WISCONSIN -- 2.9%
Wisconsin State General Obligation
Bonds Series 3
5.250% 11/01/10 5,000 5,293,750
------------
TOTAL MUNICIPAL BONDS
(Cost $164,651,261) 174,449,156
------------
SHARES VALUE(DAGGER)
--------- ------------
TEMPORARY INVESTMENTS -- 2.1%
Federated Tax-Free Obligation Fund 1,845,590 $ 1,845,590
Goldman Sachs Financial Square
Tax-Exempt Money Market Portfolio 1,896,280 1,896,280
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $3,741,870) 3,741,870
------------
TOTAL INVESTMENTS -- 98.7%
(Cost $168,393,131) 178,191,026
------------
OTHER ASSETS IN EXCESS OF
LIABILITIES-- 1.3% 2,324,324
------------
NET ASSETS -- 100.0%
Applicable to 17,091,270 and 61,169
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 9) $180,515,350
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE ($179,871,600/17,091,270) $10.52
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER CLASS A SHARE
($643,750/61,169) $10.52
======
- ----------
(DAGGER) See Note 2a to the Financial Statements.
See Notes to Financial Statements.
49
<PAGE>
HARRIS INSIGHT FUNDS
CONVERTIBLE SECURITIES FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ ------------
COMMON STOCK -- 4.2%
BANKS -- 2.8%
First Chicago NBD Corp. 20,000 $ 1,670,000
-----------
BUSINESS SERVICES -- 0.0%
Olsten Corp. 1 15
-----------
DRUGS -- 0.0%
Crescendo Pharmaceuticals Corp.* 1,083 12,455
-----------
OFFICE EQUIPMENT -- 0.7%
Quantum Corp.* 19,384 388,891
-----------
OIL AND GAS -- 0.7%
Enron Corp. 20,000 423,750
-----------
TOTAL COMMON STOCK
(Cost $1,185,064) 2,495,111
-----------
CONVERTIBLE PREFERRED STOCK -- 50.6%
BANKS -- 1.7%
National Australia Bank Ltd. 13,500 383,906
Sovereign Bancorp, Inc. 4,900 612,500
-----------
996,406
-----------
CHEMICALS -- 1.3%
Corning, Inc. 12,950 798,044
-----------
CONSTRUCTION -- 1.2%
Owens Corning Capital 14,700 716,625
-----------
CONTAINERS -- 1.1%
Crown Cork & Seal Co., Inc. 14,000 658,000
-----------
ELECTRIC & GAS -- 2.5%
Citizens Utilities Trust 14,800 706,700
Houston Industries, Inc. 14,000 798,875
-----------
1,505,575
-----------
ELECTRONICS -- 1.6%
Echostar Communications Corp.* 20,000 930,000
-----------
FOOD & BEVERAGES -- 5.1%
Chiquita Brands International, Inc. 10,000 615,000
Dole Food Co. 5,000 217,500
Ralston Purina Co. 31,250 2,175,781
-----------
3,008,281
-----------
FOREST PRODUCTS & PAPER -- 2.9%
Fort James Corp. Series K 3,820 210,100
Fort James Corp. Series L 22,850 1,273,888
International Paper Capital Trust 5,000 238,750
-----------
1,722,738
-----------
HEALTH CARE SERVICES -- 1.1%
Laboratory Corp. of America 5,000 231,250
Medpartners, Inc.* 19,000 418,000
-----------
649,250
-----------
SHARES VALUE(DAGGER)
------ ------------
CONVERTIBLE PREFERRED STOCK (CONTINUED)
HOTELS, RESTAURANTS -- 2.6%
Felcor Suite Hotels, Inc. 15,000 $ 429,375
Hilton Hotels Corp. 39,100 1,099,688
----------
1,529,063
----------
INSURANCE -- 3.3%
American General 9,800 695,800
American Heritage Life Investment Corp. 2,500 142,500
Conseco Finance Trust IV* 15,000 768,750
St. Paul Capital, Inc. 4,900 352,800
----------
1,959,850
----------
LEISURE -- 0.6%
Mattel, Inc. 24,000 384,000
----------
MACHINERY & EQUIPMENT -- 1.8%
Breed Technologies Inc. Capital Trust* 15,000 721,875
Cooper Industries, Inc. 18,500 337,625
----------
1,059,500
----------
MEDIA -- 5.4%
Evergreen Media Corp. 10,000 771,250
Merrill Lynch & Co., Inc. "Cox" STRYPES 4,850 164,294
Merrill Lynch & Co., Inc. "I.G.L." STRYPES 16,800 579,600
Sinclair Broadcasting Group, Inc. 9,500 543,875
Snyder Communications, Inc. STRYPES 20,000 680,000
Triathlon Broadcasting Co. 48,500 491,062
----------
3,230,081
----------
MISCELLANEOUS FINANCE -- 9.5%
Equity Residential Properties Trust 20,000 512,500
Excel Realty Trust, Inc. Series A 25,000 742,188
Merrill Lynch & Co., Inc. "SAI" STRYPES 5,000 352,500
Penncorp Financial Group, Inc. 14,700 1,192,537
Rouse Co. 15,000 750,000
Security Capital Pacific Trust 31,700 1,038,175
U.S. Restaurant Properties, Inc.* 20,000 510,000
Wendy's Financing 10,000 550,000
----------
5,647,900
----------
OFFICE EQUIPMENT -- 1.9%
Ikon Office Solutions, Inc. 10,000 677,500
Microsoft Corp. 5,000 448,750
----------
1,126,250
----------
OIL & GAS -- 2.1%
EVI, Inc.* 20,000 920,000
Ultramar Diamond Shamrock Corp. 5,300 326,612
----------
1,246,612
----------
TELEPHONES -- 2.0%
AirTouch Communications, Inc. 10,000 356,250
IXC Communications, Inc. 1,969 276,152
Salomon, Inc. 9,800 580,650
----------
1,213,052
----------
See Notes to Financial Statements.
50
<PAGE>
HARRIS INSIGHT FUNDS
CONVERTIBLE SECURITIES FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------- ------------
CONVERTIBLE PREFERRED STOCK (CONTINUED)
THRIFT INSTITUTIONS -- 2.9%
Ahmanson, (H.F.) & Co. 12,530 $ 1,722,875
-----------
TOTAL CONVERTIBLE PREFERRED STOCK
(Cost $25,569,719) 30,104,102
-----------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- ------------
CONVERTIBLE CORPORATE BONDS -- 40.9%
AEROSPACE -- 0.9%
Kellstrom Industries, Inc.
5.750% 10/15/02 $ 500 541,875
-----------
BANKS -- 0.9%
Bankatlantic Bancorp, Inc.
5.625% 12/01/07 500 543,125
-----------
BUSINESS SERVICES -- 2.0%
Berkshire Hathaway, Inc.
1.000% 12/02/01 500 799,375
Mail-Well, Inc.
5.000% 11/01/02 300 363,000
-----------
1,162,375
-----------
DRUGS -- 1.7%
Atrix Laboratories, Inc.
7.000% 12/01/04 500 480,000
Dura Pharmaceuticals, Inc.
3.500% 07/15/02 490 545,737
-----------
1,025,737
-----------
ELECTRONICS -- 9.3%
Activision, Inc.
6.750% 01/01/05 500 530,000
C-Cube Microsystems, Inc.
5.875% 11/01/05 300 252,375
Gilat Satellite Networks
6.500% 06/03/04 500 481,250
Hewlett Packard Co.
0.000% 10/14/17 1,400 735,000
Kent Electronics Corp.
4.500% 09/01/04 475 397,219
Mascotech, Inc.
4.500% 12/15/03 500 444,375
Quantum Corp.
7.000% 08/01/04 225 205,594
Reptron Electronics, Inc.
6.750% 08/01/04 385 313,294
S3, Inc.
5.750% 10/01/03 485 337,075
Technomatix Technologies, Ltd.
5.250% 08/15/04 630 622,125
Veritas Software Corp.
5.250% 11/01/04 500 545,625
VLSI Technology, Inc.
8.250% 10/01/05 250 243,438
World Access, Inc.
4.500% 10/01/02 500 429,375
-----------
5,536,745
-----------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- ------------
CONVERTIBLE CORPORATE BONDS (CONTINUED)
ENERGY SERVICES -- 0.9%
Enserch Corp.
6.375% 04/01/02 $ 500 $ 538,750
----------
HEALTH CARE SERVICES -- 6.1%
Alza Corp.
5.000% 05/01/06 1,490 1,560,775
Atria Communities, Inc.
5.000% 10/15/02 500 513,750
Hybridon, Inc.
9.000% 04/01/04 290 146,450
NCS Healthcare, Inc.
5.750% 08/15/04 250 255,625
Thermolase Corp.
4.375% 08/05/04 500 452,500
Thermotrex Corp.
3.250% 11/01/07 750 735,938
----------
3,665,038
----------
HOTELS & RESTAURANTS -- 0.4%
Capstar Hotel Corp.
4.750% 10/15/04 100 100,500
Signature Resorts, Inc.
5.750% 01/15/07 120 116,850
----------
217,350
----------
INSURANCE -- 3.8%
American International Group, Inc.
2.250% 07/30/04 975 975,000
Fremont General Corp.
0.000% 10/12/98 1,000 1,058,750
Loews Corp.
3.125% 09/15/07 250 250,625
----------
2,284,375
----------
LEISURE -- 0.3%
Family Golf Centers, Inc.
5.750% 10/15/04 150 159,750
----------
MACHINERY & EQUIPMENT -- 1.2%
Halter Marine Group, Inc.
4.500% 09/15/04 200 223,000
Mark IV Industries, Inc.
4.750% 11/01/04 500 469,375
----------
692,375
----------
MEDIA -- 0.8%
Omnicom Group, Inc.
4.250% 01/03/07 330 459,525
----------
OFFICE EQUIPMENT -- 1.1%
Credit Suisse First Boston
7.250% 07/01/99 250 293,750
U.S. Office Products Co.
5.500% 05/15/03 375 354,375
----------
648,125
----------
See Notes to Financial Statements.
51
<PAGE>
HARRIS INSIGHT FUNDS
CONVERTIBLE SECURITIES FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- ------------
CONVERTIBLE CORPORATE BONDS (CONTINUED)
OIL & GAS -- 4.8%
Lomak Petroleum, Inc.
6.000% 02/01/07 $ 500 $ 537,500
Pennzoil Co.
6.500% 01/15/03 1,220 2,314,950
-----------
2,852,450
-----------
POLLUTION CONTROL -- 2.2%
U.S. Filter Corp.
4.500% 12/15/01 750 772,500
USA Waste Services, Inc.
4.000% 02/01/02 500 558,125
-----------
1,330,625
-----------
RETAIL -- 2.2%
Corporate Express, Inc.
4.500% 07/01/00 250 219,687
Nine West Group, Inc.
5.500% 07/15/03 415 339,262
Petsmart, Inc.
6.750% 11/01/04 200 208,250
Rite Aid Corp.
5.250% 09/15/02 500 536,875
-----------
1,304,074
-----------
TELEPHONES -- 2.3%
Tele-Communications International, Inc.
4.500% 02/15/06 100 87,000
Telefonica Europe BV
2.000% 07/15/02 500 541,250
U.S. Cellular Corp.
0.000% 06/15/00 2,000 727,500
-----------
1,355,750
-----------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $22,830,521) 24,318,044
-----------
RIGHTS AND WARRANTS -- 0.0%
Security Capital Group, Inc.*
(Cost $0) 2,247 11,797
-----------
SHARES VALUE(DAGGER)
------ ------------
TEMPORARY INVESTMENTS -- 3.9%
Dreyfus Cash Management Plus #719 1,146,260 $ 1,146,260
Goldman Sachs Financial Square
Money Market Portfolio 1,139,127 1,139,127
-----------
TOTAL TEMPORARY INVESTMENTS
(Cost $2,285,387) 2,285,387
-----------
TOTAL INVESTMENTS -- 99.6%
(Cost $51,870,691) 59,214,441
-----------
OTHER ASSETS IN EXCESS OF
LIABILITIES-- 0.4% 254,523
-----------
NET ASSETS -- 100.0%
Applicable to 2,082,105 and 2,995 shares
of beneficial interest outstanding of
Institutional and Class A, respectively,
$.001 par value (Note 9) $59,468,964
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($59,383,549/2,082,105) $28.52
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE ($85,415/2,995) $28.52
======
- ----------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
STRYPES -- Structured Yield Product Exchangeable for Stock.
See Notes to Financial Statements.
52
<PAGE>
HARRIS INSIGHT FUNDS
EQUITY FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ ------------
COMMON STOCK -- 98.1%
AEROSPACE -- 4.0%
Lockheed Martin Corp. 153,100 $ 15,080,350
Northrop Grumman Holdings Corp. 128,200 14,743,000
Textron, Inc. 71,900 4,493,750
------------
34,317,100
------------
AIR TRANSPORT -- 3.5%
AMR Corp.* 113,200 14,546,200
Delta Air Lines, Inc. 70,800 8,425,200
UAL Corp.* 75,300 6,965,250
------------
29,936,650
------------
ALCOHOLIC BEVERAGES & TOBACCO -- 1.7%
Philip Morris Cos., Inc. 332,000 15,043,750
------------
APPAREL, TEXTILES -- 1.1%
VF Corp. 210,000 9,646,875
------------
AUTOS -- 3.7%
Ford Motor Co. 657,100 31,992,556
------------
BANKS -- 4.3%
Bankers Trust New York Corp. 30,800 3,463,075
Chase Manhattan Corp. 161,480 17,682,060
Comerica, Inc. 43,200 3,898,800
Southtrust Corp. 191,400 12,106,050
------------
37,149,985
------------
BUSINESS SERVICES -- 0.7%
Olsten Corp. 380,950 5,714,250
------------
CHEMICALS -- 0.4%
Lyondell Petrochemical Co. 137,400 3,641,100
------------
CONSTRUCTION -- 1.8%
Centex Corp. 248,500 15,639,969
------------
DRUGS -- 4.7%
Bergen Brunswig Corp. Class A 232,450 9,791,956
Bristol-Myers Squibb Co. 194,500 18,404,562
McKesson Corp. 79,300 8,579,269
PharMerica, Inc.* 346,695 3,596,961
------------
40,372,748
------------
ELECTRIC & GAS -- 7.9%
GPU, Inc. 485,500 20,451,687
Long Island Lighting Co. 743,300 22,391,912
N.Y. State Electric & Gas Corp. 717,800 25,481,900
------------
68,325,499
------------
ELECTRONICS -- 1.6%
Arrow Electronics, Inc.* 185,100 6,004,181
Lucent Technologies, Inc. 45,821 3,659,952
Tektronix, Inc. 98,950 3,927,078
------------
13,591,211
------------
ENERGY SERVICES -- 1.4%
Ensco International, Inc. 366,800 12,287,800
------------
SHARES VALUE(DAGGER)
------ ------------
COMMON STOCK (CONTINUED)
FOOD & BEVERAGES -- 4.4%
Conagra, Inc. 131,500 $ 4,314,844
Dean Foods Co. 364,700 21,699,650
Smithfield Foods, Inc.* 357,100 11,628,069
-----------
37,642,563
-----------
FOREST PRODUCTS & PAPER -- 3.8%
Georgia Pacific Corp. 249,600 15,163,200
Georgia Pacific Timber Group* 249,600 5,662,800
International Paper Co. 280,300 12,087,937
-----------
32,913,937
-----------
HEALTH CARE SERVICES -- 1.9%
Beverly Enterprises, Inc.* 695,200 9,037,600
MedPartners, Inc.* 327,300 7,323,337
-----------
16,360,937
-----------
INSURANCE -- 6.6%
American Bankers Insurance Group, Inc. 327,400 15,039,937
Cigna Corp. 21,400 3,703,537
Conseco, Inc. 319,400 14,512,737
Equitable Cos., Inc. 377,600 18,785,600
Travelers Group, Inc. 86,650 4,668,269
-----------
56,710,080
-----------
LEISURE -- 0.8%
Brunswick Corp. 214,000 6,486,875
-----------
MACHINERY & EQUIPMENT -- 3.5%
Aeroquip Vickers, Inc. 141,500 6,942,344
Parker-Hannifin Corp. 200,600 9,202,525
Timken Co. 404,100 13,890,937
-----------
30,035,806
-----------
MEDIA -- 1.4%
Omnicom Group, Inc. 280,600 11,890,425
-----------
METALS -- 0.8%
USX-U.S. Steel Group, Inc. 214,300 6,696,875
-----------
MISCELLANEOUS FINANCE -- 5.2%
Bear Stearns Cos., Inc. 384,750 18,275,625
Lehman Brothers Holdings, Inc. 92,900 4,737,900
Merrill Lynch & Co., Inc. 229,800 16,761,038
Morgan Stanley Dean Witter Discover & Co. 90,900 5,374,463
-----------
45,149,026
-----------
OFFICE EQUIPMENT -- 5.6%
Compaq Computer Corp.* 258,750 14,603,203
Digital Equipment Corp.* 196,600 7,274,200
Harris Corp. 153,150 7,025,756
International Business Machines Corp. 117,100 12,244,269
Quantum Corp.* 206,800 4,148,925
Tech Data Corp.* 89,800 3,490,975
-----------
48,787,328
-----------
See Notes to Financial Statements.
53
<PAGE>
HARRIS INSIGHT FUNDS
EQUITY FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ ------------
COMMON STOCK (CONTINUED)
OIL & GAS -- 8.2%
Exxon Corp. 53,700 $ 3,285,769
Sun Co., Inc. 297,800 12,526,213
Texaco, Inc. 147,000 7,993,125
Tidewater, Inc. 268,000 14,773,500
Ultramar Diamond Shamrock Corp. 310,100 9,884,438
USX-Marathon Group, Inc. 674,500 22,764,375
-----------
71,227,420
-----------
RETAIL -- 6.1%
BJ's Wholesale Club, Inc.* 246,800 7,743,350
Dayton Hudson Corp. 172,900 11,670,750
Ross Stores, Inc. 179,200 6,518,400
Tandy Corp. 272,200 10,496,713
TJX Cos., Inc. 479,100 16,469,063
-----------
52,898,276
-----------
RETAIL - FOOD -- 3.6%
Kroger Co.* 188,300 6,955,331
Safeway, Inc.* 380,500 24,066,625
-----------
31,021,956
-----------
TELEPHONES -- 3.5%
Telefonos de Mexico S.A. ADR 375,600 21,057,075
US West, Inc. Communications Group 213,400 9,629,675
-----------
30,686,750
-----------
THRIFT INSTITUTIONS -- 3.5%
Ahmanson (H.F.) & Co. 291,600 19,518,975
Golden West Financial Corp. 109,600 10,720,250
-----------
30,239,225
-----------
TRUCKING -- 2.4%
Caliber Systems, Inc. 106,200 5,170,613
Cummins Engine Co., Inc. 133,600 7,890,750
Paccar, Inc. 140,100 7,355,250
-----------
20,416,613
-----------
TOTAL COMMON STOCK
(Cost $638,330,128) 846,823,585
-----------
SHARES VALUE(DAGGER)
------ ------------
TEMPORARY INVESTMENTS -- 2.0%
Dreyfus Cash Management Plus #719 8,814,491 $ 8,814,491
Goldman Sachs Financial Square Money
Market Portfolio 8,814,349 8,814,349
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $17,628,840) 17,628,840
------------
TOTAL INVESTMENTS -- 100.1%
(Cost $655,958,968) 864,452,425
------------
LIABILITIES IN EXCESS OF
OTHER ASSETS-- (0.1%) (763,931)
------------
NET ASSETS -- 100.0%
Applicable to 48,097,794 and 1,015,552
shares outstanding of Institutional Class
and Class A, respectively, $.001 par value;
200,000,000 authorized shares (Note 9) $863,688,494
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($845,828,744/48,097,794) $17.59
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE
($17,859,750/1,015,552) $17.59
======
- ----------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
ADR -- American Depository Receipt.
See Notes to Financial Statements.
54
<PAGE>
HARRIS INSIGHT FUNDS
EQUITY INCOME FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ ------------
COMMON STOCK -- 95.9%
AEROSPACE -- 5.1%
Northrop Grumman Holdings Corp. 7,500 $ 862,500
Primex Technologies, Inc. 1,040 35,100
Textron, Inc. 2,600 162,500
United Technologies Corp. 14,400 1,048,500
----------
2,108,600
----------
AIR TRANSPORT -- 3.7%
AMR Corp.* 7,500 963,750
British Airways P.L.C. ADR 1,900 178,006
UAL Corp.* 4,400 407,000
----------
1,548,756
----------
ALCOHOLIC BEVERAGES & TOBACCO -- 2.8%
Philip Morris Cos., Inc. 25,700 1,164,531
----------
APPAREL, TEXTILES -- 1.1%
VF Corp. 10,400 477,750
----------
AUTOS -- 3.1%
Ford Motor Co. 26,300 1,280,481
----------
BANKS -- 10.3%
Bankers Trust New York Corp. 10,100 1,135,619
Chase Manhattan Corp. 7,800 854,100
First Chicago NBD Corp. 9,171 765,778
Keycorp 8,700 616,069
Mellon Bank Corp. 15,200 921,500
----------
4,293,066
----------
BUSINESS SERVICES -- 0.3%
Deluxe Corp. 4,000 138,000
----------
CHEMICALS -- 1.0%
Dow Chemical Co. 3,000 304,500
Olin Corp. 2,100 98,437
----------
402,937
----------
CONSTRUCTION -- 0.1%
Centex Corp. 1,000 62,937
----------
DRUGS -- 6.1%
American Home Products Corp. 2,200 168,300
Bristol-Myers Squibb Co. 18,300 1,731,637
McKesson Corp. 2,200 238,012
Warner-Lambert Co. 3,200 396,800
----------
2,534,749
----------
ELECTRIC & GAS -- 7.8%
Entergy Corp. 15,700 470,019
GPU, Inc. 9,000 379,125
Long Island Lighting Co. 7,000 210,875
New Century Energies, Inc. 9,600 460,200
Nicor, Inc. 3,000 126,562
Pacific Enterprises 20,400 767,550
Texas Utilities Co. 12,800 532,000
Unicom Corp. 10,400 319,800
----------
3,266,131
----------
SHARES VALUE(DAGGER)
------ ------------
COMMON STOCK (CONTINUED)
ELECTRICAL -- 0.7%
General Electric Co. 1,500 $ 110,062
Honeywell, Inc. 2,800 191,800
----------
301,862
----------
ELECTRONICS -- 2.6%
Intel Corp. 15,200 1,066,850
----------
ENERGY SERVICES -- 1.2%
Ensco International, Inc. 15,300 512,550
----------
INSURANCE -- 5.6%
Cigna Corp. 7,700 1,332,581
Conseco, Inc. 18,600 845,137
Lincoln National Corp. 2,100 164,062
----------
2,341,780
----------
MACHINERY & EQUIPMENT -- 1.7%
Deere & Co. 7,800 454,838
Timken Co. 7,000 240,625
----------
695,463
----------
METALS -- 3.4%
Phelps Dodge Corp. 7,000 435,750
USX-U.S. Steel Group, Inc. 31,900 996,875
----------
1,432,625
----------
MISCELLANEOUS FINANCE -- 3.3%
Merrill Lynch & Co., Inc. 12,600 919,013
SLM Holding Corp. 3,200 445,200
----------
1,364,213
----------
OFFICE EQUIPMENT -- 10.1%
Compaq Computer Corp.* 16,050 905,822
Dell Computer, Inc.* 9,100 764,400
International Business Machines Corp. 7,200 752,850
Microsoft Corp.* 8,600 1,111,013
Quantum Corp.* 21,900 439,369
Sun Microsystems, Inc.* 2,200 87,725
Western Digital Corp.* 3,200 51,400
Xerox Corp. 1,200 88,575
----------
4,201,154
----------
OIL & GAS -- 12.2%
Atlantic Richfield Co. 8,600 689,075
Exxon Corp. 26,600 1,627,588
Phillips Petroleum Co. 25,700 1,249,663
Sun Co., Inc. 15,955 671,107
Texaco, Inc. 10,800 587,250
USX-Marathon Group, Inc. 8,300 280,125
----------
5,104,808
----------
RETAIL -- 3.0%
BJ's Wholesale Club, Inc.* 9,500 298,063
Dayton Hudson Corp. 11,600 783,000
Penney, J.C. Co. 2,700 162,844
----------
1,243,907
----------
See Notes to Financial Statements.
55
<PAGE>
HARRIS INSIGHT FUNDS
EQUITY INCOME FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ ------------
COMMON STOCK (CONTINUED)
RETAIL - FOOD -- 0.4%
Safeway, Inc.* 2,500 $ 158,125
-----------
TELEPHONES -- 9.2%
AT&T Corp. 15,400 943,250
BCE, Inc. 20,600 686,238
Bell Atlantic Corp. 12,748 1,160,068
British Telecommunications P.L.C. ADR 6,300 505,969
GTE Corp. 10,000 522,500
-----------
3,818,025
-----------
THRIFT INSTITUTIONS -- 0.7%
Washington Mutual, Inc. 4,500 286,875
-----------
TRUCKING -- 0.4%
Cummins Engine Co., Inc. 2,600 153,563
-----------
TOTAL COMMON STOCK
(Cost $26,641,705) 39,959,738
-----------
TEMPORARY INVESTMENTS -- 3.7%
Dreyfus Cash Management Plus #719 765,782 765,782
Goldman Sachs Financial Square
Money Market Portfolio 760,234 760,234
-----------
TOTAL TEMPORARY INVESTMENTS
(Cost $1,526,016) 1,526,016
-----------
TOTAL INVESTMENTS -- 99.6%
(Cost $28,167,721) 41,485,754
-----------
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.4% 179,618
-----------
NET ASSETS -- 100.0%
Applicable to 2,476,887 and 76,120 shares
of beneficial interest outstanding of
Institutional Class and Class A, respectively,
$.001 par value (Note 9) $41,665,372
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($40,424,203/2,476,887) $16.32
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE ($1,241,169/76,120) $16.31
======
- ----------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
ADR -- American Depository Receipt.
See Notes to Financial Statements.
56
<PAGE>
HARRIS INSIGHT FUNDS
GROWTH FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- -------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK -- 96.8%
AEROSPACE -- 2.4%
Textron, Inc. 20,000 $ 1,250,000
United Technologies Corp. 20,000 1,456,250
-----------
2,706,250
-----------
AIR TRANSPORT -- 0.8%
Southwest Airlines Co. 37,500 923,437
-----------
ALCOHOLIC BEVERAGES & TOBACCO -- 2.4%
Philip Morris Cos., Inc. 43,000 1,948,437
RJR Nabisco Holdings Corp. 20,000 750,000
-----------
2,698,437
-----------
AUTO RELATED -- 1.3%
Cooper Tire & Rubber Co. 35,000 853,125
ITT Industries, Inc. 16,854 528,794
-----------
1,381,919
-----------
BANKS -- 4.3%
BankBoston Corp. 12,100 1,136,644
Citicorp 5,000 632,187
Southtrust Corp. 25,000 1,581,250
State Street Corp. 25,000 1,454,687
-----------
4,804,768
-----------
BUSINESS SERVICES -- 0.9%
Computer Sciences Corp.* 12,000 1,002,000
-----------
CHEMICALS -- 0.9%
Dow Chemical Co. 10,000 1,015,000
-----------
COSMETICS & SOAP -- 1.4%
Procter & Gamble Co. 19,000 1,516,437
-----------
DRUGS -- 12.9%
Abbott Laboratories, Inc. 30,332 1,988,642
American Home Products Corp. 12,500 956,250
Bristol-Myers Squibb Co. 27,000 2,554,875
Dura Pharmaceuticals, Inc.* 10,000 458,750
Johnson & Johnson 15,000 988,125
McKesson Corp. 8,500 919,594
Merck & Co., Inc. 6,000 637,500
Pfizer, Inc. 24,000 1,789,500
Schering Plough Corp. 67,400 4,187,225
-----------
14,480,461
-----------
ELECTRICAL -- 2.8%
General Electric Co. 42,000 3,081,750
-----------
ELECTRONICS -- 5.2%
Intel Corp. 35,000 2,456,562
Lucent Technologies, Inc. 9,139 729,978
Sundstrand Corp. 25,000 1,259,375
Tellabs, Inc.* 25,000 1,317,187
-----------
5,763,102
-----------
ENERGY SERVICES -- 0.9%
Ensco International, Inc. 30,000 1,005,000
-----------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
FOOD & BEVERAGES -- 7.9%
Archer Daniels Midland Co. 26,250 $ 569,297
Coca Cola Co. 12,500 832,812
Coca-Cola Enterprises, Inc. 30,000 1,066,875
Conagra, Inc. 53,400 1,752,187
Dean Foods Co. 40,000 2,380,000
Pepsico, Inc. 36,000 1,311,750
Smithfield Foods, Inc.* 30,000 976,875
-----------
8,889,796
-----------
FOREST PRODUCTS & PAPER -- 0.9%
Fort James Corp. 27,500 1,051,875
-----------
HEALTH CARE SERVICES -- 0.9%
Medtronic, Inc. 20,000 1,046,250
-----------
INSURANCE -- 10.2%
AMBAC Financial Group, Inc. 33,000 1,518,000
American Bankers Insurance Group, Inc. 35,000 1,607,812
American International Group, Inc. 20,048 2,180,220
Conseco, Inc. 25,000 1,135,937
Reliastar Financial Corp. 20,000 823,750
Sunamerica, Inc. 30,000 1,282,500
Travelers Group, Inc. 44,999 2,424,321
Vesta Insurance Group, Inc. 7,150 424,531
-----------
11,397,071
-----------
MACHINERY & EQUIPMENT -- 5.4%
Aeroquip Vickers, Inc. 25,000 1,226,563
Applied Materials, Inc.* 28,000 841,750
Deere & Co. 15,000 874,688
Illinois Tool Works, Inc. 14,000 841,750
Parker-Hannifin Corp. 50,000 2,293,750
-----------
6,078,501
-----------
MISCELLANEOUS FINANCE -- 4.1%
Bear Stearns Cos., Inc. 17,000 807,500
Merrill Lynch & Co., Inc. 20,000 1,458,750
Morgan Stanley Dean Witter Discover & Co. 10,000 591,250
SLM Holding Corp. 12,500 1,739,063
-----------
4,596,563
-----------
OFFICE EQUIPMENT -- 12.6%
BMC Software, Inc.* 17,000 1,113,500
Cisco Systems, Inc.* 19,500 1,087,125
Compaq Computer Corp.* 23,750 1,340,391
Computer Associates International, Inc. 20,000 1,057,500
Hewlett Packard Co. 20,000 1,250,000
International Business Machines Corp. 18,000 1,882,125
Microsoft Corp.* 24,500 3,165,094
Quantum Corp.* 25,000 501,563
Sun Microsystems, Inc.* 20,000 797,500
Tech Data Corp.* 25,000 971,875
Xerox Corp. 12,500 922,656
-----------
14,089,329
-----------
See Notes to Financial Statements.
57
<PAGE>
HARRIS INSIGHT FUNDS
GROWTH FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
OIL & GAS -- 7.3%
Atlantic Richfield Co. 10,000 $ 801,250
Coastal Corp. 20,000 1,238,750
Global Marine, Inc.* 40,000 980,000
Phillips Petroleum Co. 50,000 2,431,250
Tidewater, Inc. 27,000 1,488,375
Tosco Corp. 31,000 1,172,188
------------
8,111,813
------------
RETAIL -- 4.5%
Costco Cos., Inc.* 15,000 668,438
Dayton Hudson Corp. 23,000 1,552,500
Federated Department Stores, Inc.* 30,000 1,291,875
TJX Cos., Inc. 42,500 1,460,938
----------
4,973,751
----------
RETAIL - FOOD -- 2.3%
Safeway, Inc.* 40,800 2,580,600
------------
TELEPHONES -- 0.9%
GTE Corp. 20,000 1,045,000
------------
THRIFT INSTITUTIONS -- 1.7%
Washington Mutual, Inc. 30,000 1,912,500
------------
TRUCKING -- 1.9%
CNF Transportation, Inc. 22,500 863,438
Pittston Brink's Group 15,000 603,750
Ryder System, Inc. 20,000 655,000
------------
2,122,188
------------
TOTAL COMMON STOCK
(Cost $67,227,241) 108,273,798
------------
SHARES VALUE(DAGGER)
-------- ------------
TEMPORARY INVESTMENTS -- 2.6%
Dreyfus Cash Management Plus #719 1,483,900 $ 1,483,900
Goldman Sachs Financial Square
Money Market Portfolio 1,484,074 1,484,074
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $2,967,974) 2,967,974
------------
TOTAL INVESTMENTS -- 99.4%
(Cost $70,195,215) 111,241,772
------------
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.6% 664,705
------------
NET ASSETS -- 100.0%
Applicable to 4,813,724 and 122,037 shares
of beneficial interest outstanding of
Institutional Class and Class A, respectively,
$.001 par value (Note 9) $111,906,477
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL CLASS SHARE
($109,140,069/4,813,724) $22.67
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER CLASS A SHARE ($2,766,408/122,037) $22.67
======
- ----------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
See Notes to Financial Statements.
58
<PAGE>
HARRIS INSIGHT FUNDS
SMALL-CAP OPPORTUNITY FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK -- 94.8%
AEROSPACE -- 1.9%
Gencorp, Inc. 25,000 $ 625,000
Midwest Express Holdings, Inc.* 30,000 1,164,375
Thiokol Corp. 40,000 3,250,000
Triumph Group, Inc.* 9,000 299,250
----------
5,338,625
----------
AIR TRANSPORT -- 1.0%
AVTEAM, Inc. Class A* 15,000 127,500
Circle International Group, Inc. 50,000 1,146,875
Expeditors International, Inc. 35,000 1,347,500
----------
2,621,875
----------
ALCOHOLIC BEVERAGES & TOBACCO -- 0.8%
Consolidated Cigar Holdings, Inc. Class A* 25,000 689,062
Holt's Cigar Holdings, Inc* 25,200 229,950
Robert Mondavi Corp. Class A* 25,000 1,215,625
----------
2,134,637
----------
APPAREL, TEXTILES -- 1.2%
Fossil, Inc.* 20,000 500,000
Nautica Enterprises, Inc.* 40,000 930,000
Springs Industries, Inc. Class A 23,100 1,201,200
Stride Rite Corp. 36,500 438,000
Vans, Inc.* 10,000 150,000
----------
3,219,200
----------
AUTO RELATED -- 1.2%
Aftermarket Technology Corp.* 51,550 934,344
Barnes Group, Inc. 55,000 1,251,250
Breed Technologies, Inc. 16,900 308,425
Mascotech, Inc. 40,000 735,000
Myer Industries, Inc. 5,500 93,844
----------
3,322,863
----------
AUTOS -- 0.1%
Navistar International Corp.* 10,000 248,125
----------
BANKS -- 7.8%
City National Corp. 10,000 369,375
Commerce Bancshares, Inc. 53,603 3,631,603
Compass Bancshares, Inc. 25,000 1,093,750
Corus Bankshares, Inc. 17,000 672,562
Everen Capital Corp. 11,475 545,063
First International Bancorp, Inc. 2,500 30,312
Friedman, Billings, Ramsey Group, Inc.
Class A* 25,000 448,438
Hibernia Corp. 15,000 282,187
Keystone Financial, Inc. 10,000 400,000
North Fork Bancorp, Inc. 60,000 2,013,750
Old Kent Financial Corp. 104,996 4,160,466
Provident Financial Group, Inc. 41,250 2,000,625
Provident Bankshares Corp. 25,000 1,596,875
Southtrust Corp. 17,400 1,100,550
U.S. Bancorp, Inc. 10,000 730,000
Westamerica Bancorp 11,100 1,134,975
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
BANKS (CONTINUED)
Western Bancorp 25,000 $ 815,625
Zions Bancorp 15,000 675,000
-----------
21,701,156
-----------
BUSINESS SERVICES -- 7.8%
A.C. Nielsen Corp.* 40,000 975,000
Best Software, Inc.* 15,000 138,750
CDI Corp.* 10,000 457,500
C.H. Robinson Worldwide, Inc. 40,000 895,000
Checkpoint Systems, Inc. 62,000 1,085,000
Complete Business Solutions, Inc.* 20,000 857,500
Computer Task Group, Inc.* 10,000 355,625
Conning Corp.* 9,000 148,500
Corestaff, Inc.* 73,000 1,934,500
Corrections Corp.* 40,000 1,482,500
Deltek Systems, Inc.* 25,000 390,625
G. & K. Services, Inc. Class A 28,600 1,197,625
Gartner Group, Inc.* 40,000 1,490,000
Ha-Lo Industries, Inc.* 29,950 778,700
Mastech Corp.* 20,000 635,000
Merrill Corp. 74,000 1,683,500
National Computer Systems, Inc. 25,000 881,250
Norrell Corp. 27,600 548,550
Pairgain Technologies, Inc.* 20,000 387,500
Reynolds & Reynolds Co. Class A 159,000 2,931,560
Robert Half International, Inc.* 15,000 600,000
Shared Medical Systems Corp. 18,000 1,188,000
Sodak Gaming, Inc.* 50,000 318,750
Vision Twenty-One, Inc.* 18,000 162,000
-----------
21,522,935
-----------
CHEMICALS -- 1.4%
Agribiotech, Inc.* 34,500 586,500
Carbide/Graphite Group, Inc.* 15,000 506,250
Hexcel Corp.* 10,000 249,375
Robbins & Myers, Inc. 20,000 792,500
Tredegar Industries, Inc. 6,500 428,187
Valspar Corp. 40,000 1,275,000
-----------
3,837,812
-----------
CONSTRUCTION -- 3.9%
Apogee Enterprises, Inc. 40,000 475,000
Centex Construction Products, Inc. 30,000 903,750
Centex Corp. 35,240 2,217,917
Fleetwood Enterprises, Inc. 14,925 633,380
Halter Marine Group, Inc.* 58,500 1,689,187
Lennar Corp. 50,000 1,078,125
LNR Property Corp. 50,000 1,181,250
Toll Brothers, Inc.* 40,000 1,070,000
Triangle Pacific Corp.* 45,000 1,524,375
-----------
10,772,984
-----------
CONTAINERS -- 0.3%
Sealed Air Corp.* 15,000 926,250
-----------
See Notes to Financial Statements.
59
<PAGE>
HARRIS INSIGHT FUNDS
SMALL-CAP OPPORTUNITY FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
COSMETICS & SOAP -- 0.6%
Alberto-Culver Co. Class A 50,000 $ 1,350,000
Alberto-Culver Co. Class B 5,200 166,725
Enamelon, Inc.* 18,000 229,500
-----------
1,746,225
-----------
DRUGS -- 2.4%
Bergen Brunswig Corp. Class A 37,100 1,562,837
K V Pharmaceutical Co. Class A* 27,800 576,850
K V Pharmaceutical Co. Class B* 6,000 126,375
McKesson Corp. 40,000 4,327,500
-----------
6,593,562
-----------
ELECTRIC & GAS -- 0.5%
Piedmont Natural Gas Co., Inc. 36,100 1,297,344
-----------
ELECTRICAL -- 0.9%
Axsys Technologies, Inc.* 25,000 459,375
Credence Systems Corp.* 25,000 737,500
Kent Electronics Corp.* 25,000 628,125
Thomas Industries, Inc. 31,500 622,125
-----------
2,447,125
-----------
ELECTRONICS -- 7.0%
Analog Devices, Inc.* 2 55
Apex PC Solutions, Inc.* 50,000 1,068,750
BMC Industries, Inc. 25,000 403,125
C&D Technologies, Inc. 21,700 1,047,025
CFM Technologies, Inc.* 35,000 533,750
Cognex Corp.* 35,000 953,750
Dallas Semiconductor Corp. 25,000 1,018,750
Digital Lightwave, Inc.* 45,000 587,812
Dupont Photomasks, Inc.* 9,000 313,875
Globecom System, Inc.* 19,000 213,750
Hypercom Corp.* 13,500 190,687
Input/Output, Inc.* 16,500 489,844
International Manufacturing Services, Inc.* 900 6,300
Micrel, Inc.* 70,000 1,951,250
Microchip Technology, Inc.* 45,000 1,350,000
PageMart Wireless, Inc. Class A* 25,000 196,875
Photronics Labs, Inc.* 50,000 1,212,500
PMC-Sierra, Inc.* 100,000 3,100,000
Preview Travel, Inc.* 45,000 337,500
Rambus, Inc.* 18,000 823,500
Tracor, Inc.* 35,000 1,063,125
Vitesse Semiconductors Corp.* 66,950 2,527,362
-----------
19,389,585
-----------
ENERGY SERVICES -- 0.1%
Global Industries Ltd.* 20,000 340,000
-----------
FOOD & BEVERAGES -- 1.5%
Delta & Pine Land Co. 27,333 833,656
Earthgrains Co. 13,000 611,000
Suiza Foods Corp.* 46,835 2,789,610
-----------
4,234,266
-----------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
FOREST PRODUCTS & PAPER -- 1.8%
Buckeye Technologies, Inc.* 25,000 $ 1,156,250
Caraustar Industries, Inc. 3,400 116,450
Fibermark, Inc.* 30,000 645,000
Kimberly-Clark Corp. 16,821 829,486
Wausau-Mosinee Paper Corp. 113,393 2,282,034
-----------
5,029,220
-----------
HEALTH CARE SERVICES -- 5.4%
Computer Motion, Inc.* 28,800 295,200
Cytyc Corp.* 14,000 348,250
Depuy, Inc. 25,000 718,750
Focal, Inc.* 13,000 138,125
Mentor Corp. 64,600 2,357,900
Millipore Corp. 40,000 1,357,500
Parexel International Co.* 40,000 1,480,000
Safeskin Corp.* 51,000 2,900,625
Total Renal Care Holdings, Inc.* 66,666 1,833,315
Universal Health Services, Inc. Class B* 64,400 3,244,150
Ventana Medical Systems, Inc.* 25,000 381,250
-----------
15,055,065
-----------
HOTELS & RESTAURANTS -- 1.6%
CKE Restaurants, Inc. 51,200 2,156,800
Prime Hospitality Corp.* 25,000 509,375
Promus Hotel Corp.* 28,582 1,200,444
Ryan's Family Steak Houses, Inc.* 65,000 556,562
-----------
4,423,181
-----------
HOUSEHOLD GOODS -- 2.5%
Blyth Industries, Inc.* 22,500 673,594
Bush Industries, Inc. Class A 4,500 117,000
Ethan Allen Interiors, Inc. 40,000 1,542,500
First Brands Corp. 53,400 1,438,462
La-Z-Boy, Inc. 20,000 862,500
Miller (Herman), Inc. 32,200 1,746,850
Oneida Ltd. 21,375 570,445
-----------
6,951,351
-----------
INSURANCE -- 3.5%
Capital Re Corp. 14,000 868,875
Medical Assurance, Inc.* 27,100 762,187
Nationwide Financial Services, Inc. Class A 75,000 2,709,375
Old Republic International Corp. 100,000 3,718,750
Vesta Insurance Group, Inc. 25,000 1,484,375
-----------
9,543,562
-----------
LEISURE -- 0.4%
American Skiing Co.* 15,000 223,125
Fairfield Communities, Inc.* 18,225 804,178
-----------
1,027,303
-----------
MACHINERY & EQUIPMENT -- 4.3%
ADC Telecommunications, Inc.* 103,600 4,325,300
Crane Co. 20,250 878,344
Graco, Inc. 1 37
Griffon Corp.* 58,000 848,250
See Notes to Financial Statements.
60
<PAGE>
HARRIS INSIGHT FUNDS
SMALL-CAP OPPORTUNITY FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
MACHINERY & EQUIPMENT (CONTINUED)
Idex Corp. 52,500 $ 1,830,937
IRI International Corp.* 9,000 126,000
PRI Automation, Inc.* 20,000 577,500
Scotsman Industries, Inc. 15,000 366,562
Smith International, Inc.* 35,000 2,148,125
SPS Technologies, Inc.* 20,000 872,500
-----------
11,973,555
-----------
MEDIA -- 3.1%
Central Newspapers, Inc. Class A 10,000 739,375
Omnicom Group, Inc. 72,000 3,051,000
Outdoor Systems, Inc.* 37,500 1,439,062
Pulitzer Publishing Co. 10,000 628,125
Univision Communications, Inc. Class A* 25,000 1,745,312
VDI Media, Inc.* 23,000 215,625
Westwood One, Inc.* 23,500 863,625
-----------
8,682,124
-----------
METALS -- 2.7%
Atchison Casting Corp.* 30,000 487,500
Chase Industries, Inc.* 10,000 255,000
Gibraltar Steel Corp.* 20,000 385,000
Kaynar Technologies, Inc.* 23,000 649,750
Precision Castparts Corp. 60,000 3,618,750
Reliance Steel & Aluminum Corp. 23,000 684,250
Valmont Industries, Inc. 40,000 780,000
Wyman-Gordon Co.* 32,300 633,888
-----------
7,494,138
-----------
MISCELLANEOUS FINANCE -- 4.2%
Allied Capital Corp. 10,000 226,250
Americredit Corp.* 67,000 1,855,063
CB Commercial Real Estate Services
Group, Inc.* 25,000 804,688
Comdisco, Inc. 56,250 1,880,859
Eaton Vance Corp. 5,000 188,750
First Industrial Realty Trust, Inc. 10,000 361,250
First Union Real Estate, Inc. 15,000 243,750
Healthcare Financial Partners, Inc.* 32,500 1,137,500
Homeside, Inc.* 9,000 248,063
Innkeepers USA Trust, Inc. 21,500 333,250
Kilroy Realty Corp. 19,000 546,250
New Century Financial Corp.* 3,800 38,000
Public Storage, Inc. 10,000 293,750
Quick & Reilly Group, Inc. 70,695 3,039,885
TCF Financial Corp. 7,766 263,559
Waterlink, Inc.* 9,600 158,400
-----------
11,619,267
-----------
OFFICE EQUIPMENT -- 4.0%
Aspen Technology, Inc.* 30,000 1,016,250
Bea Systems, Inc.* 60,000 1,038,750
Black Box Corp.* 20,000 707,500
Comverse Technology, Inc.* 20,000 775,000
Electronics for Imaging, Inc.* 30,000 496,875
FlexiInternational Software, Inc.* 8,000 124,000
Henry (Jack) & Associates, Inc. 45,000 1,226,250
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
OFFICE EQUIPMENT (CONTINUED)
Information Management Resources, Inc.* 26,250 $ 984,375
Jetfax, Inc.* 29,000 155,875
MTS Systems Corp. 47,400 1,777,500
Network Associates, Inc.* 1,700 89,569
Peritus Software Services, Inc.* 200 4,075
QAD, Inc.* 4,500 56,813
Quantum Corp.* 12,000 240,750
Safeguard Scientific, Inc.* 24,000 753,000
Sterling Commerce, Inc.* 16,000 615,000
Systemsoft Corp.* 20,000 127,500
Tech Data Corp.* 25,000 971,875
-----------
11,160,957
-----------
OIL & GAS -- 6.7%
BJ Services Co.* 20,000 1,438,750
Costilla Energy, Inc.* 33,000 358,875
Eagle Geophysical, Inc.* 1,800 23,400
EVI, Inc.* 25,000 1,293,750
Falcon Drilling Cos, Inc.* 25,000 876,563
Key Energy Group, Inc.* 22,500 487,969
Newfield Exploration Co.* 82,600 1,925,613
North Carolina Natural Gas, Inc. 25,000 868,750
Nuevo Energy Co.* 36,000 1,467,000
Patterson Energy, Inc.* 73,800 2,855,138
Pride International, Inc.* 160,000 4,040,000
Stone Energy Corp.* 10,000 335,000
Tosco Corp. 35,000 1,323,438
United Meridian Corp.* 43,500 1,223,438
-----------
18,517,684
-----------
PHOTOGRAPHIC -- 0.4%
Panavision, Inc.* 40,000 1,032,500
-----------
POLLUTION CONTROL -- 0.5%
American Disposal Services, Inc.* 8,500 309,188
Donaldson, Inc. 14,000 630,875
Layne Christensen Co.* 24,000 312,000
-----------
1,252,063
-----------
RETAIL -- 7.9%
Abercrombie & Fitch Co. Class A* 20,000 625,000
Arbor Drugs, Inc. 203,750 3,769,375
Burlington Coat Factory, Inc.* 32,400 532,575
Dress Barn, Inc.* 50,000 1,400,000
Eagle Hardware & Garden, Inc.* 60,000 1,162,500
Garden Ridge Corp.* 50,000 712,500
Goody's Family Clothing, Inc.* 30,000 815,625
Just for Feet, Inc.* 26,000 339,625
Linens 'N Things, Inc.* 80,000 3,490,000
Meyer Fred, Inc.* 10,000 363,750
Neiman-Marcus Group, Inc.* 52,000 1,573,000
Paul Harris Stores, Inc.* 10,000 100,000
Pier 1 Imports, Inc. 43,000 972,875
Regis Corp. 42,500 1,067,813
Ross Stores, Inc. 17,500 636,563
The Sports Authority, Inc.* 58,000 855,500
Tiffany & Co., Inc. 55,000 1,983,438
See Notes to Financial Statements.
61
<PAGE>
HARRIS INSIGHT FUNDS
SMALL-CAP OPPORTUNITY FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
RETAIL (CONTINUED)
Track N' Trail, Inc.* 45,000 $ 393,750
U.S. Office Products Co.* 37,500 726,563
Wolverine World Wide, Inc. 19,500 441,188
------------
21,961,640
------------
RETAIL - FOOD -- 1.5%
Dominick's Supermarkets, Inc.* 70,000 2,555,000
Foodmaker, Inc.* 80,000 1,205,000
Ruddick Corp. 29,400 512,663
------------
4,272,663
------------
TELEPHONES -- 0.6%
Boston Communications Group, Inc.* 24,000 258,000
LCI International, Inc.* 35,000 1,076,250
Tel-Save Holdings, Inc.* 20,000 395,000
------------
1,729,250
------------
THRIFT INSTITUTIONS -- 2.8%
Albank Financial Corp. 15,000 765,000
Anchor Bancorp Wisconsin, Inc. 30,000 1,080,000
Charter One Financial, Inc. 19,110 1,199,152
Dime Bancorp, Inc. 21,000 635,250
MAF Bancorp, Inc. 15,000 530,625
Onbancorp, Inc. 50,100 3,532,050
------------
7,742,077
------------
TRUCKING -- 0.5%
Consolidated Freightways Corp.* 100,000 1,362,500
------------
TOTAL COMMON STOCK
(Cost $187,872,551) 262,524,669
------------
CONVERTIBLE PREFERRED STOCK -- 0.7%
MISCELLANEOUS FINANCE -- 0.2%
Excel Realty Trust, Inc. Series A 20,000 593,750
------------
OIL AND GAS -- 0.5%
Cross Timbers Oil Co. Series A 36,120 1,313,865
------------
TOTAL CONVERTIBLE PREFERRED STOCK
(Cost $1,487,860) 1,907,615
------------
SHARES VALUE(DAGGER)
-------- ------------
TEMPORARY INVESTMENTS -- 4.5%
Dreyfus Cash Management Plus #719 6,252,273 $ 6,252,273
Goldman Sachs Financial Square
Money Market Portfolio 6,179,720 6,179,720
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $12,431,993) 12,431,993
------------
TOTAL INVESTMENTS -- 100.0%
(Cost $201,792,404) 276,864,277
------------
LIABILITIES IN EXCESS OF
OTHER ASSETS -- 0.0% (25,884)
------------
NET ASSETS -- 100.0%
Applicable to 15,495,485 and 140,737
shares of beneficial interest outstanding of
Institutional Class and Class A, respectively,
$.001 par value (Note 9) $276,838,393
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($274,352,936/15,495,485) $17.71
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE ($2,485,457/140,737) $17.66
======
- ----------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
See Notes to Financial Statements.
62
<PAGE>
HARRIS INSIGHT FUNDS
SMALL-CAP VALUE FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK -- 90.6%
AEROSPACE -- 3.5%
Alliant Techsystems, Inc.* 21,700 $1,209,775
Esterline Technologies Corp.* 62,800 2,260,800
----------
3,470,575
----------
AIR TRANSPORT -- 2.7%
Continental Airlines, Inc. Class B* 55,900 2,690,187
----------
ALCOHOLIC BEVERAGES & TOBACCO-- 3.0%
Universal Corp. 72,200 2,969,225
----------
APPAREL, TEXTILES -- 1.5%
Guilford Mills, Inc. 22,700 621,412
Kellwood Co. 16,200 486,000
Oxford Industries, Inc. 13,100 425,750
----------
1,533,162
----------
AUTO RELATED -- 1.5%
Clarcor, Inc. 20,900 619,162
Mascotech, Inc. 49,300 905,887
----------
1,525,049
----------
BANKS -- 5.0%
CCB Financial Corp. 10,700 1,150,250
Compass Bancshares, Inc. 32,350 1,415,312
GBC Bancorp 8,000 506,000
Old Kent Financial Corp. 35,016 1,387,509
One Valley Bancorp 14,075 545,406
----------
5,004,477
----------
BUSINESS SERVICES -- 4.8%
Aviall, Inc.* 122,400 1,828,350
Franklin Covey Co.* 29,200 642,400
Kelly Services, Inc. Class A 53,200 1,596,000
Selective Insurance Group, Inc. 28,600 772,200
----------
4,838,950
----------
CHEMICALS -- 1.7%
Georgia Gulf Corp. 25,000 765,625
Robbins & Myers, Inc. 24,100 954,962
----------
1,720,587
----------
CONSTRUCTION -- 8.9%
Centex Corp. 46,700 2,939,181
Fleetwood Enterprises, Inc. 16,300 691,731
Owens Corning, Inc. 57,500 1,962,187
Vulcan Materials Co. 22,600 2,308,025
Webb Corp. 36,800 956,800
----------
8,857,924
----------
CONTAINERS -- 0.7%
Libbey, Inc. 19,700 746,137
----------
COSMETICS & SOAP -- 0.5%
Paragon Trade Brands, Inc.* 40,000 515,000
----------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
ELECTRIC & GAS -- 5.4%
Central Hudson Gas & Electric Corp. 15,900 $ 697,612
Central Louisiana Electric Co. 13,900 450,012
IES Industries, Inc. 21,700 798,831
National Fuel Gas Co. 36,000 1,752,750
Oklahoma Gas & Electric Co. 8,300 453,906
Piedmont Natural Gas Co., Inc. 20,800 747,500
Washington Water Power Co. 21,400 520,288
-----------
5,420,899
-----------
ELECTRONICS -- 6.2%
Harman International Industries, Inc. 32,200 1,366,488
Hutchinson Technology, Inc.* 75,100 1,642,813
Marshall Industries, Inc.* 64,400 1,932,000
Superior Telecom, Inc.* 35,600 1,230,425
-----------
6,171,726
-----------
ENERGY SERVICES -- 1.0%
Zeigler Coal Holding Co. 61,800 1,008,113
-----------
FOREST PRODUCTS & PAPER -- 0.8%
Schweitzer-Mauduit International, Inc. 21,700 808,325
-----------
HEALTH CARE SERVICES -- 4.4%
Cooper Cos., Inc.* 41,200 1,684,050
Dexter Corp. 17,000 734,188
Haemonetics Corp.* 50,000 700,000
Lincare Holdings, Inc.* 22,600 1,288,200
-----------
4,406,438
-----------
HOUSEHOLD GOODS -- 0.5%
La-Z-Boy, Inc. 11,000 474,375
-----------
INSURANCE -- 10.3%
Chartwell Re Corp. 18,400 621,000
First American Financial Corp. 41,100 3,036,263
Gallagher (Arthur J.) & Co. 78,500 2,703,344
Life RE Corp. 17,400 1,134,263
Old Republic International Corp. 60,970 2,267,322
Protective Life Corp. 9,100 543,725
-----------
10,305,917
-----------
LEISURE -- 0.7%
Brunswick Corp. 23,500 712,344
-----------
MACHINERY & EQUIPMENT -- 2.4%
Graco, Inc. 63,397 2,365,501
-----------
MEDIA -- 3.3%
King World Productions, Inc.* 57,000 3,291,750
-----------
METALS -- 1.9%
Cleveland Cliffs, Inc. 26,800 1,227,775
Reliance Steel & Aluminum Corp. 23,400 696,150
-----------
1,923,925
-----------
See Notes to Financial Statements.
63
<PAGE>
HARRIS INSIGHT FUNDS
SMALL-CAP VALUE FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
MISCELLANEOUS FINANCE -- 4.6%
Eaton Vance Corp. 37,300 $ 1,408,075
Lehman Brothers Holdings, Inc. 62,600 3,192,600
-----------
4,600,675
-----------
OFFICE EQUIPMENT -- 5.4%
HMT Technology Corp.* 164,500 2,138,500
Storage Technology Corp.* 25,700 1,591,794
Systems & Computer Technology Corp.* 33,800 1,677,325
-----------
5,407,619
-----------
OIL & GAS -- 2.1%
Comstock Resources, Inc.* 22,800 272,175
Lomak Petroleum, Inc. 51,600 838,500
Washington Gas Light Corp. 33,700 1,042,594
-----------
2,153,269
-----------
PHOTOGRAPHIC -- 1.0%
Innovex, Inc. 44,000 1,009,250
-----------
RETAIL -- 6.1%
BJ's Wholesale Club, Inc.* 18,300 574,163
Burlington Coat Factory, Inc.* 66,800 1,098,025
Carson Pirie Scott & Co.* 23,900 1,197,988
Footstar, Inc.* 66,500 1,787,188
Herbalife International, Inc. Class A 22,333 474,583
Herbalife International, Inc. Class B* 44,666 960,333
-----------
6,092,280
-----------
RETAIL - FOOD -- 0.7%
RARE Hospitality International, Inc.* 75,100 675,900
-----------
TOTAL COMMON STOCK
(Cost $75,035,801) 90,699,579
-----------
SHARES VALUE(DAGGER)
-------- ------------
TEMPORARY INVESTMENTS -- 7.7%
Dreyfus Cash Management Plus #719 3,841,842 $ 3,841,842
Goldman Sachs Financial Square
Money Market Portfolio 3,841,726 3,841,726
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $7,683,568) 7,683,568
------------
TOTAL INVESTMENTS -- 98.3%
(Cost $82,719,369) 98,383,147
------------
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.7% 1,725,159
------------
NET ASSETS -- 100.0%
Applicable to 3,023,304 and 8,856 shares
of beneficial interest outstanding of
Institutional Class and Class A, respectively,
$.001 par value (Note 9) $100,108,306
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($99,815,876/3,023,304) $33.02
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE ($292,430/8,856) $33.02
======
- ----------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
See Notes to Financial Statements.
64
<PAGE>
HARRIS INSIGHT FUNDS
INDEX FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK -- 98.9%
AEROSPACE -- 2.2%
Allegheny Teledyne, Inc. 6,895 $ 178,408
Allied Signal, Inc. 22,100 860,519
B.F. Goodrich Co. 2,100 87,019
Boeing Co. 39,192 1,917,958
E.G. & G., Inc. 1,900 39,544
General Dynamics Corp. 2,500 216,094
Lockheed Martin Corp. 7,671 755,593
Northrop Grumman Holdings Corp. 2,600 299,000
Raytheon Co. Class A* 1,842 90,881
Raytheon Co. Class B 9,400 474,700
Rockwell International Corp. 8,200 428,450
Textron, Inc. 6,500 406,250
United Technologies Corp. 9,200 669,875
----------
6,424,291
----------
AIR TRANSPORT -- 0.4%
AMR Corp.* 3,600 462,600
Delta Air Lines, Inc. 2,900 345,100
Southwest Airlines Co. 8,550 210,544
U.S. Airways Group, Inc.* 3,600 225,000
----------
1,243,244
----------
ALCOHOLIC BEVERAGES & TOBACCO -- 2.1%
Anheuser-Busch Cos., Inc. 19,700 866,800
Brown-Forman Corp. 2,700 149,175
Coors Adolph Co. 1,200 39,750
Fortune Brands, Inc. 6,700 248,319
Philip Morris Cos., Inc. 94,700 4,291,094
Seagram Co., Ltd. 14,600 471,762
UST, Inc. 7,400 273,337
----------
6,340,237
----------
APPAREL, TEXTILES -- 0.3%
Fruit of the Loom, Inc.* 3,000 76,875
Liz Claiborne, Inc. 2,800 117,075
Nike, Inc. 11,400 447,450
Reebok International, Ltd.* 2,200 63,387
Russell Corp. 1,600 42,500
Springs Industries, Inc. Class A 800 41,600
VF Corp. 5,000 229,687
----------
1,018,574
----------
AUTO RELATED -- 0.6%
Cooper Tire & Rubber Co. 2,300 56,062
Dana Corp. 4,000 190,000
Eaton Corp. 3,100 276,675
Echlin, Inc. 2,000 72,375
Genuine Parts Co. 7,225 245,198
Goodyear Tire & Rubber Co. 6,100 388,112
ITT Industries, Inc. 4,700 147,462
T.R.W., Inc. 4,800 256,200
----------
1,632,084
----------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
AUTOS -- 1.7%
Chrysler Corp. 27,000 $ 950,062
Ford Motor Co. 47,300 2,302,919
General Motors Corp. 28,900 1,752,062
-----------
5,005,043
-----------
BANKS -- 8.4%
Banc One Corp. 22,848 1,240,932
Bank of New York Co., Inc. 14,800 855,625
BankAmerica Corp. 27,276 1,991,148
BankBoston Corp. 5,700 535,444
Bankers Trust New York Corp. 3,900 438,506
Barnett Banks, Inc. 7,800 560,625
Chase Manhattan Corp. 16,584 1,815,948
Citicorp 17,900 2,263,231
Comerica, Inc. 4,200 379,050
CoreStates Financial Corp. 7,900 632,494
Fifth Third Bancorp 6,000 489,750
First Chicago NBD Corp. 11,513 961,335
First Union Corp. 24,600 1,260,750
Fleet Financial Group, Inc. 9,855 738,509
Huntington Bancshares, Inc. 7,600 272,650
J.P. Morgan & Co., Inc. 7,000 790,125
Keycorp 8,556 605,872
MBNA Corp. 19,837 541,798
Mellon Bank Corp. 9,800 594,125
National City Corp. 8,500 558,875
NationsBank Corp. 27,888 1,695,939
Norwest Corp. 29,300 1,131,712
PNC Bank Corp. 12,000 684,750
Republic New York Corp. 2,200 251,212
State Street Corp. 6,400 372,400
Suntrust Banks, Inc. 8,400 599,550
Synovus Financial Corp. 6,800 222,700
U.S. Bancorp 9,628 1,077,734
Wachovia Corp. 6,300 511,087
Wells Fargo & Co. 3,433 1,165,289
-----------
25,239,165
-----------
BUSINESS SERVICES -- 1.9%
Automatic Data Processing, Inc. 11,500 705,812
Cendant Corp.* 31,249 1,074,192
Ceridian Corp.* 3,200 146,600
Cognizant Corp. 6,400 285,200
Computer Sciences Corp.* 3,000 250,500
Deluxe Corp. 3,200 110,400
Dun & Bradstreet Corp. 6,700 207,281
Ecolab, Inc. 2,600 144,137
Federal Express Corp.* 4,500 274,781
First Data Corp. 17,400 508,950
H & R Block, Inc. 4,100 183,731
Ikon Office Solutions, Inc. 5,300 149,062
Interpublic Group of Cos., Inc. 4,850 241,591
John H. Harland Co. 1,200 25,200
Moore Corp., Ltd. 3,500 52,937
National Service Industries, Inc. 1,800 89,212
See Notes to Financial Statements.
65
<PAGE>
HARRIS INSIGHT FUNDS
INDEX FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
BUSINESS SERVICES (CONTINUED)
Netscape Communications Corp.* 27 $ 655
Oracle Corp.* 38,287 851,886
Service Corp. International 9,300 343,519
Shared Medical Systems Corp. 900 59,400
----------
5,705,046
----------
CASINOS -- 0.1%
Harrah's Entertainment, Inc.* 4,050 76,444
Mirage Resorts, Inc.* 7,500 170,625
----------
247,069
----------
CHEMICALS -- 3.1%
Air Products & Chemicals, Inc. 4,300 353,675
Avery Dennison Corp. 4,100 183,475
Corning, Inc. 9,000 334,125
Dow Chemical Co. 8,900 903,350
E.I. du Pont de Nemours & Co. 44,200 2,654,762
Eastman Chemical Co. 3,100 184,644
F.M.C. Corp.* 1,500 100,969
Great Lakes Chemical Corp. 2,400 107,700
Hercules, Inc. 4,000 200,250
Minnesota Mining & Manufacturing Co. 16,200 1,329,412
Monsanto Co. 23,100 970,200
Morton International, Inc. 5,200 178,750
Nalco Chemical Co. 2,700 106,819
P.P.G. Industries, Inc. 7,000 399,875
Praxair, Inc. 6,200 279,000
Rohm & Haas Co. 2,400 229,800
Sigma Aldrich Corp. 3,900 154,050
Union Carbide Corp. 4,900 210,394
W.R. Grace & Co. 2,900 233,269
----------
9,114,519
----------
CONSTRUCTION -- 0.4%
Armstrong World Industries, Inc. 1,700 127,075
Centex Corp. 1,100 69,231
Fleetwood Enterprises, Inc. 1,200 50,925
Fluor Corp. 3,300 123,337
Foster Wheeler Corp. 1,600 43,300
Kaufman & Broad Home Corp. 1,000 22,437
Masco Corp. 6,300 320,512
Owens Corning, Inc. 2,100 71,662
Pulte Corp. 1,000 41,812
Sherwin Williams Co. 6,700 185,925
----------
1,056,216
----------
CONTAINERS -- 0.2%
Ball Corp. 900 31,781
Bemis Co., Inc. 2,100 92,531
Crown Cork & Seal Co., Inc. 5,100 255,637
Owens-Illinois, Inc.* 5,500 208,656
----------
588,605
----------
COSMETICS & SOAP -- 2.7%
Alberto-Culver Co. Class B 2,300 73,744
Avon Products, Inc. 5,300 325,287
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
COSMETICS & SOAP (CONTINUED)
Clorox Co. 4,000 $ 316,250
Colgate-Palmolive Co. 11,600 852,600
Gillette Co. 22,000 2,209,625
International Flavors & Fragrances, Inc. 4,400 226,600
Procter & Gamble Co. 52,800 4,214,100
-----------
8,218,206
-----------
DRUGS -- 9.3%
Abbott Laboratories, Inc. 30,100 1,973,431
Allergan, Inc. 2,600 87,262
Alza Corp.* 3,300 104,981
American Home Products Corp. 25,400 1,943,100
Amgen, Inc.* 10,500 568,312
Bristol-Myers Squibb Co. 39,000 3,690,375
Cardinal Health, Inc. 4,200 315,525
Eli Lilly & Co. 43,500 3,028,687
Johnson & Johnson 52,000 3,425,500
Mallinckrodt, Inc. 2,900 110,200
Merck & Co., Inc. 47,200 5,015,000
Pfizer, Inc. 50,600 3,772,862
Pharmacia & Upjohn, Inc. 20,080 735,430
PharMerica, Inc.* 1,820 18,882
Schering Plough Corp. 28,700 1,782,987
Warner-Lambert Co. 10,600 1,314,400
-----------
27,886,934
-----------
ELECTRIC & GAS -- 2.9%
American Electric Power Co. 7,400 382,025
Baltimore Gas & Electric Co. 5,800 197,562
Carolina Power & Light Co. 6,000 254,625
Central & South West Corp. 8,300 224,619
Cinergy Corp. 6,136 235,085
Consolidated Edison Co. N.Y., Inc. 9,200 377,200
Consolidated Natural Gas Co. 3,700 223,850
Dominion Resources, Inc. 7,250 308,578
DTE Energy Co. 5,700 197,719
Duke Energy Corp. 14,061 778,628
Eastern Enterprises 800 36,000
Edison International 15,500 421,406
Entergy Corp. 9,300 278,419
F.P.L. Group, Inc. 7,100 420,231
FirstEnergy Corp.* 9,000 261,000
GPU, Inc. 4,800 202,200
Houston Industries, Inc. 11,293 301,382
Niagara Mohawk Power Corp.* 5,800 60,900
Nicor, Inc. 1,900 80,156
Northern States Power Co. 2,700 157,275
Oneok, Inc. 1,100 44,412
P.P.& L. Resources, Inc. 6,500 155,594
Pacific Enterprises 3,300 124,162
Pacific Gas & Electric Co. 17,100 520,481
Pacificorp 11,600 316,825
PECO Energy Co. 8,700 210,975
Peoples Energy Corp. 1,400 55,125
Public Service Enterprise Group, Inc. 9,200 291,525
Sonat, Inc. 3,400 155,550
See Notes to Financial Statements.
66
<PAGE>
HARRIS INSIGHT FUNDS
INDEX FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
ELECTRIC & GAS (CONTINUED)
Southern Co. 26,800 $ 693,450
Texas Utilities Co. 9,407 390,978
Unicom Corp. 8,500 261,375
Union Electric Co. 4,000 173,000
-----------
8,792,312
-----------
ELECTRICAL -- 4.1%
CBS Corp. 27,600 812,475
Cooper Industries, Inc. 4,700 230,300
Emerson Electric Co. 17,300 976,369
General Electric Co. 128,100 9,399,337
Grainger W.W., Inc. 1,900 184,656
Honeywell, Inc. 5,000 342,500
Johnson Controls, Inc. 3,300 157,575
Nextlevel Systems, Inc.* 5,400 96,525
-----------
12,199,737
-----------
ELECTRONICS -- 3.6%
A.M.P., Inc. 8,696 365,232
Advanced Micro Devices, Inc.* 5,600 100,450
Andrew Corp.* 3,587 85,864
Intel Corp. 63,900 4,484,981
KLA Tencor Corp.* 3,300 127,256
LSI Logic Corp.* 5,600 110,600
Lucent Technologies, Inc. 25,136 2,007,738
Micron Technology, Inc.* 8,300 215,800
Motorola, Inc. 23,300 1,329,556
National Semiconductor Corp.* 5,600 145,250
Parametric Technology Corp.* 5,100 240,975
Perkin Elmer Corp. 1,800 127,912
Scientific Atlanta, Inc. 3,100 51,925
Tektronix, Inc. 1,950 77,391
Tellabs, Inc.* 7,200 379,350
Texas Instruments, Inc. 15,200 684,000
Thomas & Betts Corp. 2,200 103,950
-----------
10,638,230
-----------
ENERGY SERVICES -- 0.9%
Baker Hughes, Inc. 6,500 283,562
Halliburton Co. 10,000 519,375
Helmerich & Payne, Inc. 1,000 67,875
Rowan Cos., Inc.* 3,400 103,700
Schlumberger, Ltd. 19,400 1,561,700
Unova, Inc.* 2,100 34,519
Western Atlas, Inc.* 2,100 155,400
-----------
2,726,131
-----------
FOOD & BEVERAGES -- 5.9%
Archer Daniels Midland Co. 22,053 478,274
Campbell Soup Co. 18,000 1,046,250
Coca Cola Co. 97,000 6,462,625
Conagra, Inc. 18,500 607,031
CPC International, Inc. 5,700 614,175
General Mills, Inc. 6,300 451,237
Heinz H.J. Co. 14,500 736,781
Hershey Foods Corp. 5,600 346,850
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
FOOD & BEVERAGES (CONTINUED)
Kellogg Co. 16,100 $ 798,962
Pepsico, Inc. 59,900 2,182,606
Pioneer Hi-Bred International, Inc. 2,600 278,850
Quaker Oats Co. 5,400 284,850
Ralston Purina Group 4,200 390,337
Sara Lee Corp. 18,800 1,058,675
Unilever N.V 25,200 1,573,425
Whitman Corp. 4,100 106,856
Wm. Wrigley Jr., Co. 4,600 365,987
-----------
17,783,771
-----------
FOREST PRODUCTS & PAPER -- 1.2%
Boise Cascade Corp. 1,900 57,475
Champion International, Corp. 3,700 167,656
Fort James Corp. 7,600 290,700
Georgia Pacific Corp. 3,600 218,700
Georgia Pacific Timber Group* 3,600 81,675
International Paper Co. 11,807 509,177
Kimberly-Clark Corp. 22,328 1,101,049
Louisiana-Pacific Corp. 4,300 81,700
Mead Corp. 4,200 117,600
Potlatch Corp. 900 38,700
Stone Container Corp.* 3,954 41,270
Temple Inland, Inc. 2,200 115,087
Union Camp Corp. 2,800 150,325
Westvaco Corp. 4,000 125,750
Weyerhaeuser Co. 7,900 387,594
Willamette Industries, Inc. 4,400 141,625
-----------
3,626,083
-----------
HEALTH CARE SERVICES -- 1.9%
Bausch & Lomb, Inc. 2,200 87,175
Baxter International, Inc. 10,900 549,769
Becton, Dickinson & Co. 4,900 245,000
Beverly Enterprises, Inc.* 4,000 52,000
Biomet, Inc. 4,600 117,300
Boston Scientific Corp.* 7,700 353,237
C.R. Bard, Inc. 2,300 72,019
Columbia HCA Healthcare Corp. 25,582 757,867
Guidant Corp. 5,800 361,050
HBO & Co. 7,800 373,912
Healthsouth Corp.* 15,100 419,025
Humana, Inc.* 6,400 132,800
Manor Care, Inc. 2,550 89,250
Medtronic, Inc. 18,300 957,319
Millipore Corp. 1,800 61,087
St. Jude Medical, Inc.* 3,600 109,800
Tenet Healthcare Corp.* 11,900 394,187
U.S. Surgical Corp. 2,800 82,075
United Healthcare Corp. 7,300 362,719
-----------
5,577,591
-----------
HOTELS & RESTAURANTS -- 0.9%
Darden Restaurants, Inc. 6,100 76,250
Hilton Hotels Corp. 9,700 288,575
ITT Corp.* 4,600 381,225
See Notes to Financial Statements.
67
<PAGE>
HARRIS INSIGHT FUNDS
INDEX FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
HOTELS & RESTAURANTS (CONTINUED)
Marriott International, Inc. 5,100 $ 353,175
McDonald's Corp. 26,900 1,284,475
Tricon Global Restaurants, Inc.* 6,030 175,247
Wendy's International, Inc. 5,100 122,719
-----------
2,681,666
-----------
HOUSEHOLD GOODS -- 0.3%
Black & Decker Corp. 3,700 144,531
Maytag Corp. 3,900 145,519
Newell Co. 6,300 267,750
Rubbermaid, Inc. 5,900 147,500
Tupperware Corp. 2,500 69,687
Whirlpool Corp. 2,900 159,500
-----------
934,487
-----------
INSURANCE -- 5.1%
Aetna, Inc. 5,953 420,059
Allstate Corp. 16,970 1,542,149
American General Corp. 9,596 518,784
American International Group, Inc. 27,412 2,981,055
Aon Corp. 6,400 375,200
Chubb Corp. 6,800 514,250
Cigna Corp. 2,900 501,881
Cincinnati Financial Corp. 2,100 295,575
Conseco, Inc. 7,600 345,325
General Re Corp. 3,100 657,200
Hartford Financial Services Group, Inc. 4,700 439,744
Jefferson-Pilot Corp. 2,800 218,050
Lincoln National Corp. 4,100 320,312
Loews Corp. 4,600 488,175
Marsh & McLennan Cos., Inc. 6,400 477,200
MBIA, Inc. 3,400 227,162
MGIC Investment Corp. 4,700 312,550
Progressive Corp. 2,800 335,650
Providian Financial Corp. 3,700 167,194
Safeco Corp. 5,500 267,437
St. Paul Cos., Inc. 3,300 270,806
Sunamerica, Inc. 7,200 307,800
Torchmark Corp. 5,500 231,344
Transamerica Corp. 2,600 276,900
Travelers Group, Inc. 45,792 2,467,044
U.S.F.& G. Corp. 4,600 101,487
UNUM Corp. 5,500 299,062
-----------
15,359,395
-----------
LEISURE -- 0.2%
Brunswick Corp. 3,900 118,219
Hasbro, Inc. 5,150 162,225
Jostens, Inc. 1,100 25,369
Mattel, Inc. 11,437 426,028
-----------
731,841
-----------
MACHINERY & EQUIPMENT -- 2.1%
Aeroquip Vickers, Inc. 800 39,250
Applied Materials, Inc.* 14,300 429,894
Briggs & Stratton Corp. 1,000 48,562
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
MACHINERY & EQUIPMENT (CONTINUED)
Case Corp. 2,900 $ 175,269
Caterpillar, Inc. 14,700 713,869
Cincinnati Milacron, Inc. 1,600 41,500
Crane Co. 1,900 82,413
D.S.C. Communication Corp.* 4,700 112,213
Deere & Co. 9,900 577,294
Dover Corp. 8,600 310,675
Dresser Industries, Inc. 6,900 289,369
General Signal Corp. 2,000 84,375
Harnischfeger Industries, Inc. 2,000 70,625
Illinois Tool Works, Inc. 9,700 583,213
Ingersoll Rand Co. 6,600 267,300
McDermott International, Inc. 2,200 80,575
Nacco Industries, Inc. 300 32,156
Pall Corp. 5,033 104,120
Parker-Hannifin Corp. 4,425 202,997
Raychem Corp. 3,400 146,413
Snap-On, Inc. 2,400 104,700
Stanley Works, Inc. 3,500 165,156
Tenneco, Inc. 6,700 264,650
Thermo Electron Corp.* 5,900 262,550
Timken Co. 2,500 85,938
Tyco International Ltd. 20,800 937,300
----------
6,212,376
----------
MEDIA -- 3.1%
Clear Channel Communications, Inc.* 3,900 309,806
Comcast Corp. Class A 4,800 152,400
Comcast Corp. Special Class A Non-Voting 9,200 289,800
Dow Jones & Co., Inc. 3,800 204,013
Gannett Co., Inc. 11,200 692,300
King World Productions, Inc.* 1,100 63,525
Knight-Ridder, Inc. 3,700 192,400
McGraw-Hill Cos., Inc. 3,900 288,600
Meredith Corp. 1,900 67,806
New York Times Co. 3,800 251,275
Omnicom Group, Inc. 6,400 271,200
R.R. Donnelley & Sons, Inc. 6,000 223,500
Tele-Communications, Inc. Class A* 19,652 547,800
Time Warner, Inc. 21,900 1,357,800
Times Mirror Co. 3,700 227,550
Tribune Co. 4,900 305,025
U.S. West Media Group* 23,700 684,338
Viacom, Inc. Class A* 560 22,890
Viacom, Inc. Class B* 12,943 536,326
Walt Disney Co. 26,400 2,615,250
----------
9,303,604
----------
METALS -- 0.9%
Alcan Aluminium Ltd. 8,900 245,863
Aluminum Co. of America 6,800 478,550
Armco, Inc.* 3,200 15,800
Asarco, Inc. 1,700 38,144
Barrick Gold Corp. 14,100 262,613
Battle Mountain Gold Co. 9,000 52,875
Bethlehem Steel Corp.* 4,500 38,813
See Notes to Financial Statements.
68
<PAGE>
HARRIS INSIGHT FUNDS
INDEX FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- -----------
COMMON STOCK (CONTINUED)
METALS (CONTINUED)
Cyprus AMAX Minerals Co. 3,650 $ 56,119
Engelhard Corp. 5,687 98,812
Freeport-McMoran Copper & Gold, Inc. 7,700 121,275
Homestake Mining Co. 5,800 51,475
Inco, Ltd. 6,600 112,200
Inland Steel Industries, Inc. 2,000 34,250
Newmont Mining Corp. 6,174 181,361
Nucor Corp. 3,400 164,263
Phelps Dodge Corp. 2,600 161,850
Placer Dome, Inc. 9,400 119,263
Reynolds Metals Co. 2,900 174,000
USX-U.S. Steel Group, Inc. 3,300 103,125
Worthington Industries, Inc. 3,850 63,044
-----------
2,573,695
-----------
MISCELLANEOUS FINANCE -- 3.1%
American Express Co. 18,300 1,633,275
Beneficial Corp. 2,100 174,563
Charles Schwab Corp. 10,350 434,053
Choicepoint, Inc.* 570 27,218
Countrywide Credit Industries, Inc. 4,100 175,788
Equifax, Inc. 5,900 209,081
Federal Home Loan Mortgage Corp. 27,200 1,140,700
Federal National Mortgage Association 41,500 2,368,094
Green Tree Financial Corp. 5,400 141,413
Household International, Inc. 4,200 535,763
Merrill Lynch & Co., Inc. 13,000 948,188
Morgan Stanley Dean Witter Discover & Co. 22,969 1,358,042
-----------
9,146,178
-----------
OFFICE EQUIPMENT -- 7.7%
3Com Corp.* 13,100 456,863
Adobe Systems, Inc. 2,800 115,150
Apple Computer, Inc.* 5,000 65,313
Autodesk, Inc. 1,900 69,825
Bay Networks, Inc.* 7,800 199,388
Cabletron Systems, Inc.* 6,100 91,500
Cisco Systems, Inc.* 39,300 2,190,975
Compaq Computer Corp.* 29,712 1,676,871
Computer Associates International, Inc. 21,562 1,140,091
Data General Corp.* 1,700 29,644
Dell Computer, Inc.* 12,900 1,083,600
Digital Equipment Corp.* 6,200 229,400
EMC Corp.* 19,400 532,288
Harris Corp. 3,200 146,800
Hewlett Packard Co. 40,700 2,543,750
International Business Machines Corp. 38,400 4,015,200
Microsoft Corp.* 46,900 6,058,894
Novell, Inc.* 13,700 101,894
Pitney Bowes, Inc. 5,600 503,650
Seagate Technology, Inc.* 9,700 186,725
Silicon Graphics, Inc.* 6,954 86,490
Sun Microsystems, Inc.* 14,500 578,188
Unisys Corp.* 6,900 95,738
Xerox Corp. 12,900 952,181
-----------
23,150,418
-----------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
OIL & GAS -- 7.6%
Amerada Hess Corp. 3,700 $ 203,038
Amoco Corp. 19,200 1,634,400
Anadarko Petroleum Corp. 2,400 145,650
Apache Corp. 3,600 126,225
Ashland, Inc. 2,900 155,694
Atlantic Richfield Co. 12,600 1,009,575
Burlington Resources, Inc. 6,882 308,400
Chevron Corp. 25,800 1,986,600
Coastal Corp. 4,200 260,138
Columbia Gas System, Inc. 2,200 172,838
Enron Corp. 12,000 498,750
Exxon Corp. 96,800 5,922,950
Kerr-McGee Corp. 1,900 120,294
Mobil Corp. 30,700 2,216,156
Occidental Petroleum Corp. 13,000 381,063
Oryx Energy Co.* 4,100 104,550
Pennzoil Co. 1,900 126,944
Phillips Petroleum Co. 10,400 505,700
Royal Dutch Petroleum Co. 83,900 4,546,331
Sun Co., Inc. 2,855 120,088
Texaco, Inc. 20,700 1,125,563
Unocal Corp. 9,800 380,363
USX-Marathon Group, Inc. 11,400 384,750
Williams Cos., Inc. 12,500 354,688
-----------
22,790,748
-----------
PHOTOGRAPHIC -- 0.3%
Eastman Kodak Co. 13,200 802,725
Polaroid Corp. 1,800 87,638
-----------
890,363
-----------
POLLUTION CONTROL -- 0.3%
Browning-Ferris Industries, Inc. 7,700 284,900
Laidlaw, Inc. 12,500 170,313
Safety-Kleen Corp. 2,300 63,106
Waste Management, Inc. 17,594 483,835
-----------
1,002,154
-----------
RAILROADS -- 0.8%
Burlington Northern Santa Fe Corp. 6,131 569,800
CSX Corp. 8,600 464,400
Norfolk Southern Corp. 15,000 462,188
Union Pacific Corp. 9,600 599,400
Union Pacific Resources Group, Inc. 9,951 241,312
-----------
2,337,100
-----------
RETAIL -- 4.3%
American Greetings Corp. 3,000 117,375
Autozone, Inc.* 5,900 171,100
Charming Shoppes, Inc.* 4,200 19,425
Circuit City Stores, Inc. 3,800 135,138
Costco Cos., Inc.* 8,321 370,805
CVS Corp. 6,600 422,813
Dayton Hudson Corp. 8,600 580,500
Dillard's Inc. Class A 4,500 158,625
Federated Department Stores, Inc.* 8,200 353,113
Gap, Inc. 15,750 558,141
See Notes to Financial Statements.
69
<PAGE>
HARRIS INSIGHT FUNDS
INDEX FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
RETAIL (CONTINUED)
Harcourt General, Inc. 2,800 $ 153,300
Home Depot, Inc. 28,499 1,677,879
K Mart Corp.* 19,200 222,000
Limited, Inc. 10,713 273,182
Longs Drug Stores, Inc. 1,400 44,975
Lowe's Cos., Inc. 6,800 324,275
May Department Stores Co. 9,200 484,725
Mercantile Stores Co., Inc. 1,500 91,313
Nordstrom, Inc. 3,200 192,400
Penney, J.C. Co. 9,700 585,031
Pep Boys-Manny, Moe & Jack 2,400 57,300
Rite Aid Corp. 4,900 287,569
Sears, Roebuck & Co. 15,400 696,850
Tandy Corp. 4,100 158,106
TJX Cos., Inc. 6,200 213,125
Toys "R" Us, Inc.* 11,500 361,531
Wal-Mart Stores, Inc. 88,600 3,494,163
Walgreen Co. 19,500 611,813
Woolworth Corp.* 5,600 114,100
-----------
12,930,672
-----------
RETAIL - FOOD -- 0.6%
Albertson's, Inc. 9,600 454,800
American Stores Co. 10,600 217,963
Giant Food, Inc. 2,400 80,850
Great Atlantic & Pacific Tea Co., Inc. 1,100 32,656
Kroger Co.* 10,000 369,375
Supervalu, Inc. 2,400 100,500
Sysco Corp. 6,900 314,381
Winn-Dixie Stores, Inc. 5,600 244,650
-----------
1,815,175
-----------
TELEPHONES -- 7.2%
AirTouch Communications, Inc.* 20,000 831,250
Alltel Corp. 7,400 303,863
Ameritech Corp. 21,500 1,730,750
AT&T Corp. 63,542 3,891,948
Bell Atlantic Corp. 30,402 2,766,582
BellSouth Corp. 38,800 2,184,925
Frontier Corp. 6,400 154,000
GTE Corp. 37,400 1,954,150
MCI Communications Corp. 27,100 1,160,219
Northern Telecom, Ltd. 10,300 916,700
SBC Communications, Inc. 35,704 2,615,318
Sprint Corp. 16,800 984,900
US West, Inc. Communications Group 18,700 843,838
WorldCom, Inc.* 35,500 1,073,875
-----------
21,412,318
-----------
THRIFT INSTITUTIONS -- 0.4%
Ahmanson (H.F.) & Co. 3,900 261,056
Golden West Financial Corp. 2,300 224,969
Washington Mutual, Inc. 9,870 629,213
-----------
1,115,238
-----------
SHARES VALUE(DAGGER)
------ ------------
COMMON STOCK (CONTINUED)
TRUCKING -- 0.1%
Caliber Systems, Inc. 1,100 $ 53,556
Cummins Engine Co., Inc. 1,600 94,500
Paccar, Inc. 3,090 162,225
Ryder System, Inc. 3,000 98,250
------------
408,531
------------
TOTAL COMMON STOCK
(Cost $190,189,026) 295,859,047
------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
-------- ---------- ----- ------------
U.S. TREASURY OBLIGATIONS -- 0.3%
U.S. Treasury Bills**
(Cost $966,248)
5.534% 08/20/98 $1,000 966,522
------------
SHARES
--------
TEMPORARY INVESTMENTS -- 1.4%
Dreyfus Cash Management Plus #719 2,139,800 2,139,800
Goldman Sachs Financial Square
Money Market Portfolio 2,139,923 2,139,923
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $4,279,723) 4,279,723
------------
TOTAL INVESTMENTS -- 100.6%
(Cost $195,434,997) 301,105,292
------------
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (0.6%) (1,967,548)
------------
NET ASSETS -- 100.0%
Applicable to 12,426,662 and 295,268 shares
of beneficial interest outstanding of
Institutional Class and Class A, respectively,
$.001 par value (Note 9) $299,137,744
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($292,195,655/12,426,662) $23.51
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE ($6,942,089/295,268) $23.51
======
- ----------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
**Security pledged as collateral for futures contracts.
NUMBER OF UNREALIZED
CONTRACTS APPRECIATION
--------- ------------
Futures Contracts -- Long Position
S&P 500 Index, March 1998 13 $31,700
== =======
See Notes to Financial Statements.
70
<PAGE>
HARRIS INSIGHT FUNDS
BALANCED FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ ------------
COMMON STOCK -- 54.1%
AEROSPACE -- 2.3%
Alliant Techsystems, Inc.* 1,100 $ 61,325
Esterline Technologies Corp.* 3,500 126,000
Lockheed Martin Corp. 5,400 531,900
Northrop Grumman Holdings Corp. 4,550 523,250
Textron, Inc. 5,700 356,250
----------
1,598,725
----------
AIR TRANSPORT -- 1.8%
AMR Corp.* 4,100 526,850
Continental Airlines, Inc. Class B* 2,900 139,562
Delta Air Lines, Inc. 2,650 315,350
UAL Corp.* 2,900 268,250
----------
1,250,012
----------
ALCOHOLIC BEVERAGES & TOBACCO-- 1.0%
Philip Morris Cos., Inc. 11,200 507,500
Universal Corp. 4,600 189,175
----------
696,675
----------
APPAREL, TEXTILES -- 0.6%
Guilford Mills, Inc. 1,000 27,375
Kellwood Co. 900 27,000
Oxford Industries, Inc. 700 22,750
VF Corp. 7,800 358,312
----------
435,437
----------
AUTO RELATED -- 0.1%
Clarcor, Inc. 1,100 32,587
Mascotech, Inc. 2,600 47,775
----------
80,362
----------
AUTOS -- 1.8%
Ford Motor Co. 25,400 1,236,660
----------
BANKS -- 2.4%
Bankers Trust New York Corp. 1,200 134,925
CCB Financial Corp. 600 64,500
Chase Manhattan Corp. 5,800 635,100
Comerica, Inc. 1,800 162,450
Compass Bancshares, Inc. 1,800 78,750
GBC Bancorp 400 25,300
Old Kent Financial Corp. 2,410 95,496
One Valley Bancorp 750 29,062
Southtrust Corp. 7,100 449,075
----------
1,674,658
----------
BUSINESS SERVICES -- 0.7%
Aviall, Inc.* 7,300 109,044
Franklin Covey Co.* 2,400 52,800
Kelly Services, Inc. Class A 2,800 84,000
Olsten Corp. 15,900 238,500
Selective Insurance Group, Inc. 1,600 43,200
----------
527,544
----------
SHARES VALUE(DAGGER)
------ ------------
COMMON STOCK (CONTINUED)
CHEMICALS -- 0.4%
Georgia Gulf Corp. 1,400 $ 42,875
Lyondell Petrochemical Co. 6,200 164,300
Robbins & Myers, Inc. 1,200 47,550
----------
254,725
----------
CONSTRUCTION -- 1.6%
Centex Corp. 12,000 755,250
Fleetwood Enterprises, Inc. 900 38,194
Owens Corning, Inc. 2,700 92,137
Vulcan Materials Co. 1,600 163,400
Webb Corp. 1,700 44,200
----------
1,093,181
----------
CONTAINERS -- 0.1%
Libbey, Inc. 1,100 41,662
----------
COSMETICS & SOAP -- 0.0%
Paragon Trade Brands, Inc.* 1,800 23,175
----------
DRUGS -- 2.4%
Bergen Brunswig Corp. Class A 13,000 547,625
Bristol-Myers Squibb Co. 7,200 681,300
McKesson Corp. 3,100 335,381
PharMerica, Inc.* 11,604 120,402
----------
1,684,708
----------
ELECTRIC & GAS -- 3.9%
Central Hudson Gas & Electric Corp. 400 17,550
Central Louisiana Electric Co. 1,100 35,612
GPU, Inc. 17,100 720,337
IES Industries, Inc. 1,300 47,856
Long Island Lighting Co. 27,500 828,437
N.Y. State Electric & Gas Corp. 26,100 926,550
National Fuel Gas Co. 2,000 97,375
Washington Water Power Co. 1,600 38,900
----------
2,712,617
----------
ELECTRONICS -- 1.2%
Arrow Electronics, Inc.* 7,000 227,062
Harman International Industries, Inc. 1,800 76,387
Hutchinson Technology, Inc.* 4,200 91,875
Lucent Technologies, Inc. 1,800 143,775
Marshall Industries, Inc.* 3,600 108,000
Superior Telecom, Inc.* 1,700 58,756
Tektronix, Inc. 3,750 148,828
----------
854,683
----------
ENERGY SERVICES -- 0.8%
Ensco International, Inc. 15,800 529,300
Zeigler Coal Holding Co. 3,400 55,462
----------
584,762
----------
FOOD & BEVERAGES -- 2.0%
Conagra, Inc. 4,800 157,500
Dean Foods Co. 13,600 809,200
Smithfield Foods, Inc.* 12,650 411,916
----------
1,378,616
----------
See Notes to Financial Statements.
71
<PAGE>
HARRIS INSIGHT FUNDS
BALANCED FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ ------------
COMMON STOCK (CONTINUED)
FOREST PRODUCTS & PAPER -- 2.0%
Georgia Pacific Corp. 10,600 $ 643,950
Georgia Pacific Timber Group* 10,600 240,487
International Paper Co. 10,700 461,437
Schweitzer-Mauduit International, Inc. 1,100 40,975
----------
1,386,849
----------
HEALTH CARE SERVICES -- 1.2%
Beverly Enterprises, Inc.* 25,500 331,500
Cooper Cos., Inc.* 2,200 89,925
Dexter Corp. 900 38,869
Haemonetics Corp.* 2,800 39,200
Lincare Holdings, Inc.* 1,000 57,000
MedPartners, Inc.* 13,300 297,587
----------
854,081
----------
HOUSEHOLD GOODS -- 0.0%
La-Z-Boy, Inc. 600 25,875
----------
INSURANCE -- 4.3%
American Bankers Insurance Group, Inc. 12,000 551,250
Chartwell Re Corp. 900 30,375
Cigna Corp. 2,700 467,269
Conseco, Inc. 11,700 531,619
Equitable Cos., Inc. 14,400 716,400
First American Financial Corp. 2,300 169,912
Gallagher (Arthur J.) & Co. 4,400 151,525
Life RE Corp. 1,000 65,188
Old Republic International Corp. 3,900 145,031
Protective Life Corp. 500 29,875
Travelers Group, Inc. 3,450 185,869
----------
3,044,313
----------
LEISURE -- 0.4%
Brunswick Corp. 8,800 266,750
----------
MACHINERY & EQUIPMENT -- 1.9%
Aeroquip Vickers, Inc. 5,600 274,750
Graco, Inc. 3,900 145,519
Parker-Hannifin Corp. 7,600 348,650
Timken Co. 16,400 563,750
----------
1,332,669
----------
MEDIA -- 0.9%
King World Productions, Inc.* 3,600 207,900
Omnicom Group, Inc. 9,400 398,325
----------
606,225
----------
METALS -- 0.6%
Cleveland Cliffs, Inc. 1,600 73,300
Reliance Steel & Aluminum Corp. 1,500 44,625
USX-U.S. Steel Group, Inc. 9,600 300,000
----------
417,925
----------
MISCELLANEOUS FINANCE -- 2.8%
Bear Stearns Cos., Inc. 14,100 669,750
Eaton Vance Corp. 2,000 75,500
Lehman Brothers Holdings, Inc. 8,200 418,200
SHARES VALUE(DAGGER)
------ ------------
COMMON STOCK (CONTINUED)
MISCELLANEOUS FINANCE (CONTINUED)
Merrill Lynch & Co., Inc. 8,500 $ 619,969
Morgan Stanley Dean Witter Discover & Co. 3,000 177,375
----------
1,960,794
----------
OFFICE EQUIPMENT -- 3.2%
Compaq Computer Corp.* 9,950 561,553
Digital Equipment Corp.* 7,900 292,300
Harris Corp. 5,400 247,725
HMT Technology Corp.* 8,200 106,600
International Business Machines Corp. 5,100 533,269
Quantum Corp.* 7,900 158,494
Storage Technology Corp.* 1,700 105,294
Systems & Computer Technology Corp.* 1,800 89,325
Tech Data Corp.* 3,500 136,063
----------
2,230,623
----------
OIL & GAS -- 4.3%
Comstock Resources, Inc.* 1,000 11,938
Exxon Corp. 2,600 159,088
Lomak Petroleum, Inc. 2,300 37,375
Sun Co., Inc. 11,200 471,100
Texaco, Inc. 5,400 293,625
Tidewater, Inc. 10,800 595,350
Ultramar Diamond Shamrock Corp. 12,400 395,250
USX-Marathon Group, Inc. 29,100 982,125
Washington Gas Light Corp. 1,900 58,781
----------
3,004,632
----------
PHOTOGRAPHIC -- 0.0%
Innovex, Inc. 1,900 43,581
----------
RETAIL -- 3.2%
BJ's Wholesale Club, Inc.* 9,800 307,475
Burlington Coat Factory, Inc.* 3,400 55,888
Carson Pirie Scott & Co.* 1,300 65,163
Dayton Hudson Corp. 6,300 425,250
Footstar, Inc.* 3,700 99,438
Herbalife International, Inc. Class A 1,100 23,375
Herbalife International, Inc. Class B* 2,200 47,300
Ross Stores, Inc. 6,500 236,438
Tandy Corp. 10,200 393,338
TJX Cos., Inc. 16,500 567,188
----------
2,220,853
----------
RETAIL - FOOD -- 1.6%
Kroger Co.* 8,300 306,581
RARE Hospitality International, Inc.* 3,300 29,700
Safeway, Inc.* 13,100 828,575
----------
1,164,856
----------
TELEPHONES -- 1.8%
Telefonos de Mexico S.A. ADR 15,300 857,756
US West, Inc. Communications Group 8,700 392,588
----------
1,250,344
----------
See Notes to Financial Statements.
72
<PAGE>
HARRIS INSIGHT FUNDS
BALANCED FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ ------------
COMMON STOCK (CONTINUED)
THRIFT INSTITUTIONS -- 1.7%
Ahmanson (H.F.) & Co. 12,000 $ 803,250
Golden West Financial Corp. 4,100 401,031
-----------
1,204,281
-----------
TRUCKING -- 1.1%
Caliber Systems, Inc. 3,900 189,881
Cummins Engine Co., Inc. 5,100 301,219
Paccar, Inc. 5,200 273,000
-----------
764,100
-----------
TOTAL COMMON STOCK
(Cost $31,455,295) 37,906,953
-----------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
-------- ---------- ----- ------------
ASSET-BACKED SECURITIES -- 6.8%
Banco Nacional de Mexico, S.A.
Series 1996-A, Class A1
6.250% 12/01/03 $ 375 372,480
California Infrastructure PG&E-1
Series 1997-1, Class A8
6.480% 12/26/09 500 503,750
Case Equipment Loan Trust
Series 1997-A, Class B
6.700% 03/15/04 500 508,740
Chase Commercial Mortgage
Securities Corp. Series 1997-1,
Class A-1
7.270% 07/19/04 727 749,835
First Plus Home Loan Trust
Series 1997-3, Class A6
7.080% 07/10/17 285 291,387
Green Tree Financial Corp.
Series 1997-4, Class A5
6.880% 02/15/29 650 650,711
Rental Car Financing Corp.
Series 1997-1, Class A3
6.600% 05/25/05 1,000 999,375
Team Fleet Financing Corp.
Series 1997-1, Class A
7.350% 05/15/03 375 388,828
World Omni Automobile Lease
Series 1997-A, Class A4
6.900% 06/25/03 275 281,378
-----------
TOTAL ASSET-BACKED SECURITIES
(Cost $4,684,601) 4,746,484
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 9.6%
Asset Securitization Corp.
Series 1997-D4, Class PS1 IO
1.211% 04/14/29 6,351 488,266
Asset Securitization Corp.
Series 1997-D5, Class PS1 IO
1.367% 02/14/41 3,000 325,781
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
-------- ---------- ----- ------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
Federal Home Loan Mortgage Corp.
Pool #1897 Class G
7.250% 03/15/22 $ 600 $ 615,085
Federal National Mortgage Association
Series 110, Class 2 IO
9.000% 11/25/19 885 254,061
Federal National Mortgage Association
Series 145, Class 1 PO
7.910% 06/25/22 882 699,946
Federal National Mortgage Association
Series 1993-210, Class S
10.094% 11/25/23 285 258,182
Federal National Mortgage Association
Series 1996-53, Class PE
6.500% 11/18/10 800 807,040
Federal National Mortgage Association
Series 1997-20 IO
1.840% 03/25/27 4,451 247,939
Federal National Mortgage Association
Series G-18, Class Z
8.750% 06/25/21 751 809,758
Federal National Mortgage Association
Series X-13, Class G
6.500% 08/25/22 845 851,760
GE Capital Mortgage Services, Inc.
Series 1994-10, Class A23
6.500% 03/25/24 631 598,007
Merrill Lynch Mortgage Investors, Inc.
Series 1997-C2, Class C
6.735% 12/10/29 285 285,134
Norwest Asset Securities Corp.
Series 1997-10, Class A6
6.750% 08/25/27 475 478,753
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $6,521,059) 6,719,712
-----------
MORTGAGE-BACKED SECURITIES -- 8.6%
Federal National Mortgage Association
7.000% 01/15/28 500 503,594
Federal National Mortgage Association
Pool #250888
7.000% 04/01/12 1,873 1,901,489
Federal National Mortgage Association
Pool #303948
7.500% 06/01/26 1,712 1,752,520
Federal National Mortgage Association
Pool #345739
7.500% 03/01/27 101 103,411
Federal National Mortgage Association
Pool #363317
7.500% 11/01/26 45 46,444
Federal National Mortgage Association
Pool #368941
7.500% 12/01/26 531 544,108
Federal National Mortgage Association
Pool #371323
7.500% 03/01/27 433 443,309
See Notes to Financial Statements.
73
<PAGE>
HARRIS INSIGHT FUNDS
BALANCED FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
-------- ---------- ----- ------------
MORTGAGE-BACKED SECURITIES (CONTINUED)
Government National Mortgage Association
Pool #354675
6.500% 10/15/23 $ 743 $ 735,307
-----------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $5,914,639) 6,030,182
-----------
CORPORATE BONDS -- 11.4%
ELECTRIC -- 0.7%
Public Service Co. of Colorado
6.600% 02/01/01 500 508,125
-----------
FINANCE - BANK -- 1.9%
BankBoston Corp.
7.000% 09/15/07 400 412,000
National City Capital Trust I
6.750% 06/01/99 400 403,160
Wachovia Bank-NC Euro Bond
7.000% 10/17/08 500 524,250
-----------
1,339,410
-----------
FINANCE - NON-BANK -- 3.8%
American General Institutional Capital
Securities Series A
7.570% 12/01/45 90 93,038
Ford Motor Credit Euro Bond
6.375% 04/03/00 375 377,813
Hartford Life, Inc.
7.100% 06/15/07 500 515,625
Lehman Brothers Holdings, Inc.
8.800% 03/01/15 250 295,000
Racers QHEL Series 1997, Class A-1
9.499% 05/15/17 430 438,041
Sears, Roebuck Acceptance Corp.
7.010% 09/19/02 400 412,500
Xerox Credit Corp. Euro Bond
5.400% 09/11/00 500 490,900
-----------
2,622,917
-----------
INDUSTRIAL -- 3.6%
Air Products & Chemicals, Inc.
6.862% 10/25/03 535 547,706
Black & Decker Corp.
7.500% 04/01/03 310 324,725
Boston University
7.625% 07/15/97 120 132,750
Chrysler Corp.
7.450% 03/01/27 410 442,800
Ford Motor Co.
8.875% 01/15/22 220 271,425
Walt Disney Co.
6.375% 03/30/01 500 505,625
WMX Technologies, Inc.
7.100% 08/01/26 305 319,106
-----------
2,544,137
-----------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
-------- ---------- ----- ------------
CORPORATE BONDS (CONTINUED)
TRANSPORTATION -- 1.4%
CSX Corp.
7.900% 05/01/17 $ 155 $ 172,631
7.250% 05/01/27 535 571,113
Norfolk Southern Corp.
7.800% 05/15/27 230 260,763
-----------
1,004,507
-----------
TOTAL CORPORATE BONDS
(Cost $7,793,138) 8,019,096
-----------
SUPRANATIONAL BONDS -- 1.2%
African Development Bank
(Cost $788,901)
7.750% 12/15/01 770 815,238
-----------
YANKEE BONDS -- 2.2%
Export-Import Bank Korea
6.500% 11/15/06 325 242,938
Glaxo Wellcome P.L.C. Euro Bond
6.125% 01/25/06 500 495,625
Hydro-Quebec
8.050% 07/07/24 545 632,200
Korea Development Bank
7.375% 09/17/04 90 71,550
Korea Electric Power Global
6.375% 12/01/03 150 112,313
-----------
TOTAL YANKEE BONDS
(Cost $1,622,951) 1,554,626
-----------
U.S. TREASURY OBLIGATIONS -- 4.8%
U.S. Treasury Bonds
8.750% 08/15/20 170 226,918
6.750% 08/15/26 135 148,754
-----------
375,672
-----------
U.S. Treasury Notes
5.875% 08/31/99 500 501,715
6.625% 06/30/01 160 164,475
6.250% 01/31/02 140 142,556
7.875% 11/15/04 230 257,253
7.000% 07/15/06 1,215 1,312,030
-----------
2,378,029
-----------
U.S. Treasury Notes - TIPS
3.375% 01/15/07 620 616,125
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $3,331,715) 3,369,826
-----------
MUNICIPAL BONDS -- 0.5%
New York City Municipal Water
Financing Authority Revenue
Bonds Series B
(Cost $327,348)
5.250% 06/15/29 340 337,025
-----------
See Notes to Financial Statements.
74
<PAGE>
HARRIS INSIGHT FUNDS
BALANCED FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ ------------
TEMPORARY INVESTMENTS -- 0.9%
Dreyfus Cash Management Plus #719 336,241 $ 336,241
Goldman Sachs Financial Square
Money Market Portfolio 338,782 338,782
-----------
TOTAL TEMPORARY INVESTMENTS
(Cost $675,023) 675,023
-----------
TOTAL INVESTMENTS -- 100.1%
(Cost $63,114,670) 70,174,165
-----------
LIABILITIES IN EXCESS OF
OTHER ASSETS-- (0.1%) (59,236)
-----------
NET ASSETS -- 100.0%
Applicable to 4,649,002 and 46,872 shares
of beneficial interest outstanding of
Institutional Class and Class A, respectively,
$.001 par value (Note 9) $70,114,929
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($69,415,124/4,649,002) $14.93
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE ($699,805/46,872) $14.93
======
- ----------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
ADR -- American Depository Receipt.
IO -- Interest Only security.
PO -- Principal Only security.
TIPS -- Treasury Inflation Protection Securities.
See Notes to Financial Statements.
75
<PAGE>
HARRIS INSIGHT FUNDS
INTERNATIONAL FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK -- 96.7%
ARGENTINA -- 1.7%
Telefonica de Argentina S.A. ADR 50,000 $1,862,500
Transportadora de Gas del Sur S.A. ADR 90,000 1,006,875
----------
2,869,375
----------
AUSTRALIA -- 1.9%
Burns, Philp & Co., Ltd. 1,593,000 249,107
Coles Myer, Ltd. 101,469 487,260
National Australia Bank, Ltd. 143,126 1,998,482
Westpac Banking Corp., Ltd. 81,213 519,421
----------
3,254,270
----------
AUSTRIA -- 1.8%
Bank Austria AG 40,000 1,897,107
Boehler-Uddeholm AG 20,000 1,170,673
----------
3,067,780
----------
BELGIUM -- 0.5%
Etablissement Delhaize Freres &
Cie Le Lion S.A 17,640 895,096
----------
BRAZIL -- 1.4%
Aracruz Celulose S.A. ADR 50,000 718,750
Rhodia-Ster S.A. GDR* 360,000 387,000
Telecomunicacoes Brasileiras S.A. ADR 11,000 1,280,812
----------
2,386,562
----------
CANADA -- 1.8%
Moore Corp., Ltd. 100,000 1,512,500
Noranda Forest, Inc. 150,000 812,358
Primex Forest Products, Ltd. 180,000 767,285
----------
3,092,143
----------
CHINA -- 0.7%
Shandong Huaneng Power Co., Ltd. ADR 180,000 1,237,500
----------
CZECH REPUBLIC -- 1.9%
Komercni Banka A.S. ADR* 155,000 1,942,615
SPT Telecom A.S.* 13,000 1,387,267
----------
3,329,882
----------
DENMARK -- 3.5%
Den Danske Bank 10,000 1,333,390
Tele Danmark A.S.-B 36,700 2,277,935
Unidanmark A.S.-A 34,100 2,505,006
----------
6,116,331
----------
FINLAND -- 2.3%
Kemira Oyj 145,000 1,371,321
Merita, Ltd.-A 320,000 1,751,177
Rauma Group Oyj 60,339 941,848
----------
4,064,346
----------
FRANCE -- 6.9%
AXA-UAP 18,358 1,421,130
Bail Investissement 13,000 1,726,603
Banque Nationale de Paris 44,550 2,368,995
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
FRANCE (CONTINUED)
Elf Aquitaine S.A 9,400 $ 1,093,775
Eridania Beghin-Say S.A 7,050 1,102,760
Groupe Danone 6,900 1,232,991
Suez Lyonnaise des Eaux 2,609 288,835
Rhone-Poulenc-A 35,000 1,568,521
Total S.A.-B 10,300 1,121,452
-----------
11,925,062
-----------
GERMANY -- 3.6%
Bilfinger & Berger Bau A.G 53,500 1,690,062
Karstadt A.G 2,700 934,017
VEBA A.G 17,121 1,166,449
Viag A.G 4,400 2,410,402
-----------
6,200,930
-----------
HONG KONG -- 5.3%
Cathay Pacific Airways 676,000 549,645
Cheung Kong (Holdings), Ltd. 206,000 1,349,269
Dairy Farm International Holdings, Ltd. 1,661,828 1,794,774
Guoco Group, Ltd. 475,000 1,161,711
Hutchison Whampoa, Ltd. 213,000 1,336,014
Jardine Strategic Holdings, Ltd. 600,000 1,584,000
Swire Pacific, Ltd.-A 270,000 1,480,976
-----------
9,256,389
-----------
INDIA -- 1.2%
Crompton Greaves, Ltd. GDR* 480,000 744,000
Indian Aluminum Co., Ltd. GDR* 235,000 442,035
Industrial Credit & Investment Corp. of India,
Ltd. GDR 65,000 840,450
-----------
2,026,485
-----------
INDONESIA -- 0.8%
PT Indosat 565,000 1,048,802
PT Pabrik Kertas Tjiwi Kimia 1,280,000 314,477
-----------
1,363,279
-----------
ISRAEL -- 0.9%
Koor Industries Ltd., ADR 72,000 1,579,500
-----------
ITALY -- 3.7%
Assicurazioni Generali 51,260 1,259,758
Banca Commerciale Italiana 873,000 3,036,743
Edison S.P.A 114,000 689,934
Montedison S.P.A 767,600 689,886
Telecom Italia Mobile S.P.A 127,776 816,673
-----------
6,492,994
-----------
JAPAN -- 5.1%
Daito Trust Construction Co., Ltd. 160,000 980,764
Daiwa House Industry Co., Ltd. 41,000 217,580
Daiwa Securities Co., Ltd. 149,000 515,686
Dowa Fire & Marine Insurance Co. 345,000 1,032,179
Ito-Yokado Co., Ltd. 17,000 869,474
Kao Corp. 32,000 462,694
Kyudenko Co., Ltd. 215,000 1,089,708
See Notes to Financial Statements.
76
<PAGE>
HARRIS INSIGHT FUNDS
INTERNATIONAL FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK (CONTINUED)
JAPAN (CONTINUED)
Kyushu Electric Power Co., Inc. 90 $ 1,301
Marubeni Corp. 551,000 970,450
Nomura Securities Co., Ltd. 73,000 976,918
Shizuoka Bank, Ltd. 48,000 516,839
Tokio Marine & Fire Insurance Co. 71,000 808,177
Yamanouchi Pharmaceutical Co., Ltd. 20,000 430,699
----------
8,872,469
----------
KOREA -- 1.8%
Cho Hung Bank Co., Ltd. GDR 355,000 724,555
Korea Fund, Inc.* 352,000 2,332,000
----------
3,056,555
----------
MALAYSIA -- 0.4%
AMMB Holdings BHD 220,000 144,128
Malaysia International Shipping, BHD 413,000 604,799
----------
748,927
----------
MEXICO -- 0.4%
Elamex S.A. de C.V 100,000 750,000
----------
NETHERLANDS -- 2.4%
Eriks Holdings N.V 15,000 980,402
European Vinyls Corp. International N.V 65,000 1,442,856
Unilever N.V 28,224 1,740,306
----------
4,163,564
----------
NEW ZEALAND -- 1.7%
Air New Zealand, Ltd. 680,000 1,362,205
Brierley Investments, Ltd. 2,325,000 1,660,514
----------
3,022,719
----------
NORWAY -- 2.5%
Kvaerner A.S.A 38,000 1,938,094
Union Bank of Norway 65,000 2,318,850
----------
4,256,944
----------
PAKISTAN -- 0.7%
Pakistan Telecommunications, Ltd. GDR 15,000 1,133,400
----------
PERU -- 0.4%
Banco Wiese ADR 140,000 700,000
----------
PHILIPPINES -- 0.3%
Philippine National Bank* 240,000 535,354
----------
POLAND -- 0.7%
Mostostal Export S.A. ADR 510,000 1,287,750
----------
PORTUGAL -- 1.5%
Banco Totta & Acores S.A 75,000 1,474,345
Electricidade de Portugal S.A. ADR* 30,000 1,162,500
----------
2,636,845
----------
SHARES VALUE(DAGGER)
------ ------------
COMMON STOCK (CONTINUED)
RUSSIA -- 1.5%
Irkutskenergo ADR 80,000 $ 788,320
Lukoil Holding ADR 19,000 1,744,675
-----------
2,532,995
-----------
SINGAPORE -- 0.9%
Asia Food & Properties, Ltd.* 4,000 368
City Developments, Ltd. 338,000 1,564,685
-----------
1,565,053
-----------
SLOVAKIA -- 1.8%
Nafta A.S 30,000 1,139,001
Slovakofarma A.S. GDR 56,000 485,352
Vychodoslovenske Zeleziarne A.S.* 75,000 1,472,106
-----------
3,096,459
-----------
SLOVENIA -- 0.8%
SKB Banka GDR 85,000 1,445,000
-----------
SOUTH AFRICA -- 1.6%
Sappi, Ltd. 150,000 755,186
Southvaal Holdings Ltd. 63,000 970,954
Standard Bank Investment Corp., Ltd. 22,000 960,227
-----------
2,686,367
-----------
SPAIN -- 6.6%
Autopistas Concesionaria Espanola S.A 134,158 1,800,035
Banco Bilbao Vizcaya S.A 56,540 1,828,833
Banco Santander S.A 54,299 1,813,346
Iberdrola S.A 172,774 2,272,815
Repsol S.A 50,302 2,145,210
Telefonica de Espana 52,499 1,498,345
-----------
11,358,584
-----------
SWEDEN -- 3.4%
Astra AB-A 1 17
ABB AB-A 28,000 331,722
ABB AB-B 112,500 1,325,721
Electrolux AB-B 26,600 1,847,232
Getinge Industries AB-B 87,000 1,381,586
Stadshypotek AB-A* 2,193 52,515
Svenska Handelsbanken-A 29,600 1,024,052
-----------
5,962,845
-----------
SWITZERLAND -- 3.2%
ABB AG* 720 905,831
Nestle S.A 1,517 2,276,722
Zurich Versicherungs-Gesellschaft 4,800 2,290,494
-----------
5,473,047
-----------
THAILAND -- 1.7%
Thai Farmers Bank Public Co., Ltd. 660,000 1,199,412
Thailand International Fund* 200 1,778,000
-----------
2,977,412
-----------
See Notes to Financial Statements.
77
<PAGE>
HARRIS INSIGHT FUNDS
INTERNATIONAL FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
---------- -----------
COMMON STOCK (CONTINUED)
TURKEY -- 0.4%
Yapi Ve Kredi Bankasi A.S 19,980,000 $ 762,085
------------
UNITED KINGDOM -- 17.0%
BICC Group P.L.C 709,353 2,007,544
British Telecommunications P.L.C 203,174 1,599,648
BTR P.L.C 606,932 1,837,520
Cable & Wireless P.L.C 110,500 972,725
Caradon P.L.C 398,795 1,177,845
Coats Viyella P.L.C 543,859 818,808
Commercial Union P.L.C 81,404 1,137,176
De La Rue P.L.C 97,677 636,446
General Electric Co., P.L.C 97,518 633,004
Glaxo Wellcome P.L.C 109,694 2,599,079
Hillsdown Holdings P.L.C 750,000 1,832,575
HSBC Holdings P.L.C 61,325 1,515,590
National Power P.L.C 108,291 1,069,099
Rolls-Royce P.L.C 596,727 2,307,374
Royal Bank of Scotland Group P.L.C 97,037 1,234,215
Sainsbury (J.) P.L.C 257,750 2,158,692
SmithKline Beecham P.L.C 162,656 1,667,372
Tesco P.L.C 148,500 1,209,500
Thames Water P.L.C 77,500 1,155,962
Unilever P.L.C 102,525 878,905
United Utilities P.L.C 85,982 1,103,510
------------
29,552,589
------------
TOTAL COMMON STOCK
(Cost $181,876,727) 167,734,887
------------
PREFERRED STOCK -- 2.4%
MEXICO -- 1.5%
Telefonos de Mexico 11.25%, PRIDES 47,000 2,602,625
------------
NETHERLANDS -- 0.9%
Ballast Nedam N.V 28,000 1,450,255
------------
TOTAL PREFERRED STOCK
(Cost $3,857,425) 4,052,880
------------
CURRENCY -- 0.0%
Italian Lira
(Cost $3) 4,206 2
------------
SHARES VALUE(DAGGER)
------ ------------
RIGHTS AND WARRANTS -- 0.0%
Asia Food & Properties, Ltd.* 300 $ 16
DCB Holdings* 1,850 0
------------
TOTAL RIGHTS AND WARRANTS
(Cost $0) 16
------------
TOTAL INVESTMENTS -- 99.1%
(Cost $185,734,155) 171,787,785
------------
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.9% 1,635,650
------------
NET ASSETS -- 100.0%
Applicable to 12,913,138 and 94,946
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 9) $173,423,435
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($172,158,008/12,913,138) $13.33
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE ($1,265,427/94,946) $13.33
======
- ----------
(DAGGER) See Note 2a to the financial statements.
* Non-income producing security.
ADR -- American Depository Receipt.
GDR -- Global Depository Receipt.
See Notes to Financial Statements.
78
<PAGE>
HARRIS INSIGHT FUNDS
EMERGING MARKETS
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
-------- ------------
COMMON STOCK -- 79.7%
ARGENTINA -- 1.9%
Banco Rio de La Plata S.A. ADR* 15,400 $ 215,600
Transportadora de Gas del Sur S.A. ADR 11,500 128,656
----------
344,256
----------
BRAZIL -- 7.1%
Aracruz Celulose S.A. ADR 11,500 165,312
Companhia Vale do Rio Doce ADR 9,000 181,044
Industrias Klabin de Papele Celulose
S.A. ADR 38,100 174,117
Petroleo Brasileiro S.A. ADR 10,600 247,902
Rhodia-Ster S.A. GDR* 55,000 59,125
Rossi Residencial S.A. - GDR* 20,000 107,520
Telecomunicacoes Brasileiras S.A. ADR 2,400 279,450
Usinas Siderurgicas de Minas Gerais S.A 12,800 75,699
----------
1,290,169
----------
CHILE -- 1.0%
Empresa Nacional de Electricidad
S.A. ADR 10,400 183,950
----------
CHINA -- 2.0%
Harbin Power Equipment Co., Ltd. 1,160,000 140,728
Jingwei Textile Machinery Co., Ltd. 860,000 84,354
Shandong Huaneng Power Co., Ltd. ADR 20,000 137,500
----------
362,582
----------
COLOMBIA -- 0.9%
Banco Industrial Colombiano ADR 11,800 165,200
----------
CZECH REPUBLIC -- 4.3%
Czech Power Co.* 5,200 170,221
Deza Valasske Mezirici A.S 1,700 117,673
Komercni Banka A.S. ADR* 13,200 165,436
Metrostav A.S 1,800 109,020
Skoda Plzen A.S.* 11,700 206,515
----------
768,865
----------
ECUADOR -- 2.2%
La Cemento Nacional GDR 1,000 203,968
Pliva DD GDR 12,000 199,308
----------
403,276
----------
GREECE -- 1.0%
Hellenic Telecommunication Organization
S.A 9,000 184,631
----------
HONG KONG -- 6.0%
Cafe De Coral Holdings, Ltd. 686,000 149,626
Dairy Farm International Holdings, Ltd. 165,000 178,200
Giordano International, Ltd. 274,000 94,595
Guoco Group, Ltd. 20,000 48,914
Hutchison Whampoa, Ltd. 15,000 94,086
Jardine Matheson Holdings, Ltd.* 24,000 122,400
Pacific Ports Co., Ltd.* 766,000 140,382
Shanghai Petrochemical Co. Ltd. 600,000 93,698
Techtronic Industries Co. 690,000 160,294
----------
1,082,195
----------
SHARES VALUE(DAGGER)
-------- -----------
COMMON STOCK (CONTINUED)
HUNGARY -- 5.6%
BorsodChem Rt.* 5,500 $ 198,219
EGIS Rt.* 5,300 332,193
Graboplast Rt 4,300 227,403
Magyar Tavkozlesi Rt. ADR* 5,000 130,000
Pick Szeged Rt.* 1,500 119,724
----------
1,007,539
----------
INDIA -- 5.7%
BSES, Ltd. GDR 6,500 85,046
Crompton Greaves, Ltd. GDR* 57,000 88,350
Indian Aluminum Co., Ltd. GDR* 32,000 60,192
Larsen and Toubro, Ltd. 20,000 206,840
Raymond, Ltd. GDR 49,000 154,987
Reliance Industries Ltd. GDR 25,000 211,050
State Bank of India, Ltd. GDR 8,000 145,600
Ta Ta Engineering & Locomotive GDR 11,500 86,894
----------
1,038,959
----------
INDONESIA -- 1.9%
PT Ciputra Development 860,000 39,128
PT Kalbe Farma 446,000 79,138
PT Pabrik Kertas Tjiwi Kimia 480,000 117,929
PT Semen Cibinong TBK 2,370,000 107,828
----------
344,023
----------
KOREA -- 1.8%
Cho Hung Bank Co., Ltd. GDR 30,000 61,230
Samsung Electronics Co., Ltd. GDR* 6,000 83,940
SK Telecom Co. Ltd. ADR 26,540 172,510
----------
317,680
----------
MALAYSIA -- 3.5%
Malakoff BHD 45,000 93,645
Malayan Banking BHD 58,000 168,381
O.Y.L. Industries BHD 74,000 173,005
Road Builder (M) Holdings BHD 223,000 143,229
Tractors Malaysia Holdings BHD 155,000 50,972
----------
629,232
----------
MEXICO -- 3.8%
Altos Hornos de Mexico S.A.* 43,000 99,208
Grupo Industrial Durango S.A. ADR* 12,600 179,550
Grupo Mexico S.A. Series B 33,000 121,164
Telefonos de Mexico S.A. ADR 2,300 128,944
Transportacion Maritima Mexicana
S.A. de C.V. ADR* 27,000 165,375
----------
694,241
----------
PERU -- 2.4%
Banco Wiese ADR 30,000 150,000
Luz del Sur S.A 7,100 126,025
Southern Peru Copper Corp. 12,100 161,838
----------
437,863
----------
See Notes to Financial Statements.
79
<PAGE>
HARRIS INSIGHT FUNDS
EMERGING MARKETS
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
--------- ------------
COMMON STOCK (CONTINUED)
PHILIPPINES -- 3.8%
Filinvest Land, Inc. 1,500,000 $ 60,152
Metropolitan Bank & Trust Co. 30,200 206,259
MRC Allied Industries, Inc.* 2,200,000 55,139
Philippine National Bank* 87,000 194,066
Pilipino Telephone Corp.* 440,000 49,626
Solid Group, Inc. 2,785,000 111,683
----------
676,925
----------
POLAND -- 0.8%
Mostostal Export S.A. ADR 60,000 151,500
----------
PORTUGAL -- 0.8%
Electricidade de Portugal, S.A.* 7,500 142,172
----------
RUSSIA -- 7.4%
Lukoil Holding ADR 2,400 220,380
Nizhny Novogorod Syzinform ADR* 20,000 127,500
Norilsk Nickel* 32 186,875
Rostelecom* 7 241,500
Slavneft-Megionneftegas 4 200,000
Surgutneftegaz ADR 23,700 242,238
Unified Energy Systems ADR* 4,000 120,000
----------
1,338,493
----------
SINGAPORE -- 1.3%
City Developments, Ltd. 21,000 97,214
Osprey Maritime, Ltd. 175,000 140,213
----------
237,427
----------
SLOVAKIA -- 4.9%
Drotovna A.S.* 14,481 205,395
Nafta A.S 3,000 113,900
Slovakofarma A.S. GDR 24,200 209,741
Slovenske Energeticke Stroja* 11,633 92,667
Slovnaft A.S.* 4,600 122,978
Vychodoslovenske Zeleziarne A.S.* 7,500 147,211
----------
891,892
----------
SLOVENIA -- 0.9%
SKB Banka GDR 9,600 163,200
----------
SOUTH AFRICA -- 2.5%
Murray & Roberts Holdings, Ltd. 80,000 120,830
Sappi, Ltd. 31,000 156,072
Standard Bank Investment Corp., Ltd. 4,000 174,587
----------
451,489
----------
THAILAND -- 2.8%
Bangkok Bank Public Co., Ltd. 49,000 122,122
Land and House Public Co., Ltd. 90,000 17,944
Phatra Thanakit Public Company Ltd. 72,000 40,001
Precious Shipping Public Co., Ltd. 235,000 151,302
Siam Cement Public Co., Ltd. 7,000 55,246
Thai Farmers Bank Public Co., Ltd. 63,000 114,489
----------
501,104
----------
SHARES VALUE(DAGGER)
--------- ------------
COMMON STOCK (CONTINUED)
TURKEY -- 1.7%
Cimsa Cimento Sanayi Ve Ticaret A.S 1,800,000 $ 97,770
Kartonsan Karton Sanayi Ve Ticaret A.S 1,600,000 98,494
Yapi Ve Kredi Bankasi A.S 3,000,000 114,427
-----------
310,691
-----------
VENEZUELA -- 1.7%
Mavesa, S.A. ADR 24,600 156,825
Siderurgica Venezolana Sivensa S.A.C.A. ADR 38,000 158,992
-----------
315,817
-----------
TOTAL COMMON STOCK
(Cost $16,809,334) $14,435,371
-----------
PREFERRED STOCK -- 0.7%
MEXICO -- 0.7%
Telefonos de Mexico 11.25%, PRIDES
(Cost $125,350) 2,300 127,362
-----------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
-------- ---------- ------ -----------
U.S. TREASURY OBLIGATIONS -- 22.9%
U.S. Treasury Bills
4.680% 01/08/98 $1,582 1,580,560
4.830% 01/08/98 100 99,906
4.350% 01/22/98 2,475 2,468,720
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $4,149,186) 4,149,186
-----------
SHARES
------
TEMPORARY INVESTMENTS -- 0.0%
Temporary Investment Fund Inc. - TempCash
(Cost $6,340) 6,340 6,340
-----------
TOTAL INVESTMENTS -- 103.3%
(Cost $21,090,210) 18,718,259
-----------
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (3.3%) (598,782)
-----------
NET ASSETS -- 100.0%
Applicable to 2,108,590 and 11,266 shares of
beneficial interest outstanding of
Institutional Class and Class A, respectively,
$.001 par value (Note 9) $18,119,477
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($18,023,233/2,108,590) $8.55
=====
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE ($96,244/11,266) $8.54
=====
- ----------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
ADR -- American Depository Receipt.
GDR -- Global Depository Receipt.
See Notes to Financial Statements.
80
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
<TABLE>
<CAPTION>
HARRIS INSIGHT FUNDS
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 1997
MONEY MARKET FUNDS FIXED INCOME FUNDS
------------------------------------- -------------------------------------------------
SHORT/ INTERMEDIATE INTERMEDIATE
GOVERNMENT MONEY TAX-EXEMPT INTERMEDIATE BOND GOVERNMENT TAX-EXEMPT
MONEY FUND FUND MONEY FUND FUND FUND FUND(1) FUND
----------- ----------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ............................. $16,927,333 $71,622,201 $23,370,401 $19,061,911 $ 6,506,859 $4,713,832 $ 9,877,263
Dividends ............................ -- -- -- -- -- -- --
Foreign taxes withheld ............... -- -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ---------- -----------
Total investment income ............ 16,927,333 71,622,201 23,370,401 19,061,911 6,506,859 4,713,832 9,877,263
----------- ----------- ----------- ----------- ----------- ---------- -----------
EXPENSES (NOTE 2g):
Investment advisory fee (Note 4) ..... 343,287 1,285,919 676,850 1,950,205 617,981 453,478 1,195,229
Rule 12b-1 fee-Class A (Note 5) ...... 820,868 1,769,965 628,467 11,317 975 45 298
Shareholder services fee (Note 5) .... 55,385 139,215 49,248 1,254 177 85 136
Transfer agency fee (Note 4) ......... 56,485 173,043 104,733 35,774 12,688 9,593 25,265
Administration fee (Note 4) .......... 264,347 1,058,621 554,506 385,023 129,517 96,088 273,834
Custodian fee (Note 4) ............... 35,434 130,079 69,459 34,087 22,580 11,445 20,331
Directors' fees and expenses ......... 10,050 42,024 14,426 9,337 2,746 1,951 2,831
Audit fee ............................ 15,437 63,536 42,301 14,187 4,899 3,639 10,126
Legal fee ............................ 4,291 22,582 6,905 4,888 1,576 1,427 4,393
Amortization of organization
expenses (Note 2f) ................. -- -- -- -- 3,996 3,113 3,996
Reports to shareholders .............. 5,724 28,592 20,135 5,198 2,320 1,370 3,655
Registration fees .................... 59,542 250,881 77,811 22,901 41,282 43,600 19,996
Miscellaneous ........................ 21,119 63,349 43,530 22,086 8,465 7,047 23,038
----------- ----------- ----------- ----------- ----------- ---------- -----------
Total expenses ....................... 1,691,969 5,027,806 2,288,371 2,496,257 849,202 632,881 1,583,128
Less fee waivers and expense
reimbursements (Notes 4,5) ......... (253,226) (770,840) (122,166) (812,087) (277,603) (283,923) (2,062)
----------- ----------- ----------- ----------- ----------- ---------- -----------
Net expenses ....................... 1,438,743 4,256,966 2,166,205 1,684,170 571,599 348,958 1,581,066
----------- ----------- ----------- ----------- ----------- ---------- -----------
NET INVESTMENT INCOME 15,488,590 67,365,235 21,204,196 17,377,741 5,935,260 4,364,874 8,296,197
----------- ----------- ----------- ----------- ----------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS (NOTE 7):
Net realized gain/(loss) from:
Investment transactions ............ -- (1,461,593) (892) 847,581 1,679,588 10,295 1,426,902
Futures contracts .................. -- -- -- -- 768,791 218,955 --
Foreign currency transactions ...... -- -- -- -- -- -- --
Net change in unrealized appreciation/
(depreciation) on:
Investments ........................ -- -- -- 1,232,588 1,600,147 2,004,082 2,461,211
Futures contracts .................. -- -- -- -- 128,125 84,375 --
Foreign currency transactions ...... -- -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS ....................... -- (1,461,593) (892) 2,080,169 4,176,651 2,317,707 3,888,113
----------- ----------- ----------- ----------- ----------- ---------- -----------
INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS ...................... $15,488,590 $65,903,642 $21,203,304 $19,457,910 $10,111,911 $6,682,581 $12,184,310
=========== =========== =========== =========== =========== ========== ===========
<FN>
- ------------------
(1) For the period 03/24/97 (commencement of operations) to 12/31/97.
(2) For the period 10/21/97 (commencement of operations) to 12/31/97.
</FN>
</TABLE>
See Notes to Financial Statements.
82
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS
----------------------- ------------------------------------------------------------------
CONVERTIBLE EQUITY SMALL-CAP SMALL-CAP
TAX-EXEMPT SECURITIES EQUITY INCOME GROWTH OPPORTUNITY VALUE
FUND FUND(1) FUND FUND FUND FUND FUND(1)
----------- ---------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ............................. $ 9,081,429 $1,177,581 $ 819,457 $ 65,655 $ 102,595 $ 1,143,344 $ 187,701
Dividends ............................ -- 1,000,261 16,555,829 928,681 1,181,106 1,589,114 719,942
Foreign taxes withheld ............... -- -- -- -- -- -- --
----------- ---------- ------------ ----------- ----------- ----------- -----------
Total investment income ............ 9,081,429 2,177,842 17,375,286 994,336 1,283,701 2,732,458 907,643
----------- ---------- ------------ ----------- ----------- ----------- -----------
EXPENSES (NOTE 2g):
Investment advisory fee (Note 4) ..... 1,034,844 325,654 5,497,774 265,358 875,635 2,218,918 447,182
Rule 12b-1 fee-Class A (Note 5) ...... 420 41 24,355 1,195 2,319 2,211 32
Shareholder services fee (Note 5) .... 118 22 3,500 253 472 436 51
Transfer agency fee (Note 4) ......... 20,801 6,036 102,637 6,002 13,789 30,899 6,589
Administration fee (Note 4) .......... 238,688 63,999 1,078,273 52,398 134,450 304,109 77,285
Custodian fee (Note 4) ............... 18,063 11,560 85,824 7,027 12,011 36,371 17,868
Directors' fees and expenses ......... 1,728 1,275 16,911 1,242 1,638 6,911 1,440
Audit fee ............................ 8,775 2,430 40,196 1,933 4,967 11,346 2,910
Legal fee ............................ 2,281 949 16,862 822 1,899 3,723 1,114
Amortization of organization
expenses (Note 2f) ................. 3,996 3,113 -- 3,996 3,996 3,996 3,113
Reports to shareholders .............. 3,203 915 15,008 718 2,558 4,382 1,193
Registration fees .................... 27,343 28,282 56,190 19,711 23,546 41,781 31,492
Miscellaneous ........................ 17,178 4,342 36,382 4,003 9,247 17,309 1,817
----------- ---------- ------------ ----------- ----------- ----------- -----------
Total expenses ....................... 1,377,438 448,618 6,973,912 364,658 1,086,527 2,682,392 592,086
Less fee waivers and expense
reimbursements (Notes 4,5) ......... (564) (20,552) -- (10,661) (13,517) (17,029) (38,615)
----------- ---------- ------------ ----------- ----------- ----------- -----------
Net expenses ....................... 1,376,874 428,066 6,973,912 353,997 1,073,010 2,665,363 553,471
----------- ---------- ------------ ----------- ----------- ----------- -----------
NET INVESTMENT INCOME 7,704,555 1,749,776 10,401,374 640,339 210,691 67,095 354,172
----------- ---------- ------------ ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS (NOTE 7):
Net realized gain/(loss) from:
Investment transactions ............ 2,278,252 8,241,307 153,356,372 3,740,201 10,233,556 23,006,974 10,717,007
Futures contracts .................. -- -- -- -- -- -- --
Foreign currency transactions ...... -- -- -- -- -- -- --
Net change in unrealized appreciation/
(depreciation) on:
Investments ........................ 4,314,650 (2,120,819) 83,061,401 5,725,836 16,055,605 27,081,426 4,285,180
Futures contracts .................. -- -- -- -- -- -- --
Foreign currency transactions ...... -- -- -- -- -- -- --
----------- ---------- ------------ ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS ....................... 6,592,902 6,120,488 236,417,773 9,466,037 26,289,161 50,088,400 15,002,187
----------- ---------- ------------ ----------- ----------- ----------- -----------
INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS ...................... $14,297,457 $7,870,264 $246,819,147 $10,106,376 $26,499,852 $50,155,495 $15,356,359
=========== ========== ============ =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
EQUITY FUNDS
----------------------------------------------------
EMERGING
INDEX BALANCED INTERNATIONAL MARKETS
FUND FUND(1) FUND FUND(2)
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ............................. $ 281,870 $ 1,608,000 $ 522,379 $ 50,085
Dividends ............................ 3,998,264 536,447 3,690,362 16,979
Foreign taxes withheld ............... -- -- (347,466) (880)
----------- ----------- ------------ -----------
Total investment income ............ 4,280,134 2,144,447 3,865,275 66,184
----------- ----------- ------------ -----------
EXPENSES (NOTE 2g):
Investment advisory fee (Note 4) ..... 581,658 297,432 1,796,685 37,994
Rule 12b-1 fee-Class A (Note 5) ...... 3,307 84 2,063 24
Shareholder services fee (Note 5) .... 1,115 132 279 20
Transfer agency fee (Note 4) ......... 30,615 6,467 23,701 489
Administration fee (Note 4) .......... 318,288 68,073 248,075 4,309
Custodian fee (Note 4) ............... 50,537 33,918 222,588 9,120
Directors' fees and expenses ......... 6,987 1,337 5,341 65
Audit fee ............................ 11,955 2,588 8,802 152
Legal fee ............................ 4,911 1,006 3,656 54
Amortization of organization
expenses (Note 2f) ................. 3,996 3,113 3,996 --
Reports to shareholders .............. 4,604 993 3,227 88
Registration fees .................... 47,055 31,623 40,524 10,512
Miscellaneous ........................ 26,484 7,237 71,094 745
----------- ----------- ------------ -----------
Total expenses ....................... 1,091,512 454,003 2,430,031 63,572
Less fee waivers and expense
reimbursements (Notes 4,5) ......... (40,100) (18,183) (32,097) (10,336)
----------- ----------- ------------ -----------
Net expenses ....................... 1,051,412 435,820 2,397,934 53,236
----------- ----------- ------------ -----------
NET INVESTMENT INCOME 3,228,722 1,708,627 1,467,341 12,948
----------- ----------- ------------ -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS (NOTE 7):
Net realized gain/(loss) from:
Investment transactions ............ 8,678,286 1,187,938 13,900,026 (1,563)
Futures contracts .................. 776,581 971 -- --
Foreign currency transactions ...... -- -- (29,738) (72,254)
Net change in unrealized appreciation/
(depreciation) on:
Investments ........................ 48,989,593 8,588,734 (23,963,503) (2,371,951)
Futures contracts .................. 56,250 -- -- --
Foreign currency transactions ...... -- -- (66,397) 3,742
----------- ----------- ------------ -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS ....................... 58,500,710 9,777,643 (10,159,612) (2,442,026)
----------- ----------- ------------ -----------
INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS ...................... $61,729,432 $11,486,270 $ (8,692,271) $(2,429,078)
=========== =========== ============ ===========
</TABLE>
See Notes to Financial Statements.
83
<PAGE>
<TABLE>
<CAPTION>
HARRIS INSIGHT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31, 1997
MONEY MARKET FUNDS FIXED INCOME FUNDS
------------------------------------------ ------------------------------------------
SHORT/ INTERMEDIATE
GOVERNMENT MONEY TAX-EXEMPT INTERMEDIATE BOND GOVERNMENT
MONEY FUND FUND MONEY FUND FUND FUND FUND(1)
------------ -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income/
(loss) ................................ $ 15,488,590 $ 67,365,235 $ 21,204,196 $ 17,377,741 $ 5,935,260 $ 4,364,874
Net realized gain/(loss) on
investment transactions,
futures contracts and
foreign currency
transactions .......................... -- (1,461,593) (892) 847,581 2,448,379 229,250
Net change in unrealized
appreciation/(depreciation)
of investment transactions,
futures contracts, and
foreign currency
transactions .......................... -- -- -- 1,232,588 1,728,272 2,088,457
------------ -------------- ------------ ------------ ------------ ------------
Increase/ (decrease) in net
assets from operations ................ 15,488,590 65,903,642 21,203,304 19,457,910 10,111,911 6,682,581
------------ -------------- ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTES 2c AND 2d):
Net investment income:
Institutional Class ................... (2,834,858) (38,816,984 (15,135,955) (17,084,176) (5,907,553) (4,361,069)
Class A ............................... (12,653,732) (28,548,251) (6,070,770) (300,919) (27,351) (3,097)
------------ -------------- ------------ ------------ ------------ ------------
Total distributions from net
investment income ..................... (15,488,590) (67,365,235) (21,206,725) (17,385,095) (5,934,904) (4,364,166)
------------ -------------- ------------ ------------ ------------ ------------
Net realized gains on investments:
Institutional Class ................... -- -- -- -- (2,001,274) (244,277)
Class A ............................... -- -- -- -- (12,735) (1,277)
------------ -------------- ------------ ------------ ------------ ------------
Total distributions from net
realized gains ........................ -- -- -- -- (2,014,009) (245,554)
------------ -------------- ------------ ------------ ------------ ------------
CONTRIBUTION BY AFFILIATE:
(NOTE 11): ........................... -- 1,470,000 -- -- -- --
------------ -------------- ------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Increase/(decrease) in net
assets from capital share
transactions in:
Institutional Class ................... 26,800,699 658,668,867 109,583,316 31,278,423 95,148,737 97,287,068
Class A ............................... 41,520,825 216,587,667 44,224,011 1,451,666 798,651 715,055
------------ -------------- ------------ ------------ ------------ ------------
Increase/(decrease) in net
assets from capital share
transactions .......................... 68,321,524 875,256,534 153,807,327 32,730,089 95,947,388 98,002,123
------------ -------------- ------------ ------------ ------------ ------------
Total increase/(decrease) in
net assets ............................ 68,321,524 875,264,941 153,803,906 34,802,904 98,110,386 100,074,984
NET ASSETS:
Beginning of period ..................... 243,242,336 830,630,322 567,253,097 260,005,358 43,272,522 40
------------ -------------- ------------ ------------ ------------ ------------
End of period ........................... $311,563,860 $1,705,895,263 $721,057,003 $294,808,262 $141,382,908 $100,075,024
============ ============== ============ ============ ============ ============
<FN>
- ------------------
(1) For the period 03/24/97 (commencement of operations) to 12/31/97.
(2) For the period 10/21/97 (commencement of operations) to 12/31/97.
</FN>
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
FIXED INCOME FUNDS EQUITY FUNDS
--------------------------------------- ----------------------------------------
INTERMEDIATE CONVERTIBLE EQUITY
TAX-EXEMPT TAX-EXEMPT SECURITIES EQUITY INCOME GROWTH
FUND FUND FUND(1) FUND FUND FUND
------------ ------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income/
(loss) ................................ $ 8,296,197 $ 7,704,555 $ 1,749,776 $ 10,401,374 $ 640,339 $ 210,691
Net realized gain/(loss) on
investment transactions,
futures contracts and
foreign currency
transactions .......................... 1,426,902 2,278,252 8,241,307 153,356,372 3,740,201 10,233,556
Net change in unrealized
appreciation/(depreciation)
of investment transactions,
futures contracts, and
foreign currency
transactions .......................... 2,461,211 4,314,650 (2,120,819) 83,061,401 5,725,836 16,055,605
------------ ------------ ----------- ------------ ----------- ------------
Increase/ (decrease) in net
assets from operations ................ 12,184,310 14,297,457 7,870,264 246,819,147 10,106,376 26,499,852
------------ ------------ ----------- ------------ ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTES 2c AND 2d):
Net investment income:
Institutional Class ................... (8,289,452) (7,695,657) (1,714,407) (10,313,495) (622,097) (210,244)
Class A ............................... (6,745) (8,898) (1,300) (109,659) (8,911) (129)
------------ ------------ ----------- ------------ ----------- ------------
Total distributions from net
investment income ..................... (8,296,197) (7,704,555) (1,715,707) (10,423,154) (631,008) (210,373)
------------ ------------ ----------- ------------ ----------- ------------
Net realized gains on investments:
Institutional Class ................... (894,786) (2,054,220) (7,153,493) (142,024,885) (3,492,651) (9,352,220)
Class A ............................... (2,642) (5,729) (14,695) (2,485,343) (97,939) (171,130)
------------ ------------ ----------- ------------ ----------- ------------
Total distributions from net
realized gains ........................ (897,428) (2,059,949) (7,168,188) (144,510,228) (3,590,590) (9,523,350)
------------ ------------ ----------- ------------ ----------- ------------
CONTRIBUTION BY AFFILIATE:
(NOTE 11): ........................... -- -- -- -- -- --
------------ ------------ ----------- ------------ ----------- ------------
CAPITAL SHARE TRANSACTIONS:
Increase/(decrease) in net
assets from capital share
transactions in:
Institutional Class ................... (18,665,386) 9,959,353 60,381,036 186,191,498 2,798,145 15,943,321
Class A ............................... 637,652 596,991 101,519 9,419,199 924,318 2,284,070
------------ ------------ ----------- ------------ ----------- ------------
Increase/(decrease) in net
assets from capital share
transactions .......................... (18,027,734) 10,556,344 60,482,555 195,610,697 3,722,463 18,227,391
------------ ------------ ----------- ------------ ----------- ------------
Total increase/(decrease) in
net assets ............................ (15,037,049) 15,089,297 59,468,924 287,496,462 9,607,241 34,993,520
NET ASSETS:
Beginning of period ..................... 208,690,462 165,426,053 40 576,192,032 32,058,131 76,912,957
------------ ------------ ----------- ------------ ----------- ------------
End of period ........................... $193,653,413 $180,515,350 $59,468,964 $863,688,494 $41,665,372 $111,906,477
============ ============ =========== ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
EQUITY FUNDS
---------------------------------------------------------------------------------
SMALL-CAP SMALL-CAP EMERGING
OPPORTUNITY VALUE INDEX BALANCED INTERNATIONAL MARKETS
FUND FUND(1) FUND FUND(1) FUND FUND(2)
------------ ------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income/
(loss) ................................ $ 67,095 $ 354,172 $ 3,228,722 $ 1,708,627 $ 1,467,341 $ 12,948
Net realized gain/(loss) on
investment transactions,
futures contracts and
foreign currency
transactions .......................... 23,006,974 10,717,007 9,454,867 1,188,909 13,870,288 (73,817)
Net change in unrealized
appreciation/(depreciation)
of investment transactions,
futures contracts, and
foreign currency
transactions .......................... 27,081,426 4,285,180 49,045,843 8,588,734 (24,029,900) (2,368,209)
------------ ------------ ------------ ----------- ------------ -----------
Increase/ (decrease) in net
assets from operations ................ 50,155,495 15,356,359 61,729,432 11,486,270 (8,692,271) (2,429,078)
------------ ------------ ------------ ----------- ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTES 2c AND 2d):
Net investment income:
Institutional Class ................... (148,763) (331,341) (3,248,383) (1,683,590) (1,508,126) --
Class A ............................... -- (247) (27,169) (4,659) (4,475) --
------------ ------------ ------------ ----------- ------------ -----------
Total distributions from net
investment income ..................... (148,763) (331,588) (3,275,552) (1,688,249) (1,512,601) --
------------ ------------ ------------ ----------- ------------ -----------
Net realized gains on investments:
Institutional Class ................... (24,392,179) (7,507,524) (8,653,473) -- (16,062,527) --
Class A ............................... (174,710) (18,620) (148,087) -- (119,925) --
------------ ------------ ------------ ----------- ------------ -----------
Total distributions from net
realized gains ........................ (24,566,889) (7,526,144) (8,801,560) -- (16,182,452) --
------------ ------------ ------------ ----------- ------------ -----------
CONTRIBUTION BY AFFILIATE:
(NOTE 11): ........................... -- -- -- -- -- --
------------ ------------ ------------ ----------- ------------ -----------
CAPITAL SHARE TRANSACTIONS:
Increase/(decrease) in net
assets from capital share
transactions in:
Institutional Class ................... 98,594,689 92,299,943 98,704,147 59,623,885 88,567,033 20,438,890
Class A ............................... 2,055,352 309,696 6,677,177 692,983 899,170 109,665
------------ ------------ ------------ ----------- ------------ -----------
Increase/(decrease) in net
assets from capital share
transactions .......................... 100,650,041 92,609,639 105,381,324 60,316,868 89,466,203 20,548,555
------------ ------------ ------------ ----------- ------------ -----------
Total increase/(decrease) in
net assets ............................ 126,089,884 100,108,266 155,033,644 70,114,889 63,078,879 18,119,477
NET ASSETS:
Beginning of period ..................... 150,748,509 40 144,104,100 40 110,344,556 0
------------ ------------ ------------ ----------- ------------ -----------
End of period ........................... $276,838,393 $100,108,306 $299,137,744 $70,114,929 $173,423,435 $18,119,477
============ ============ ============ =========== ============ ===========
</TABLE>
See Notes to Financial Statements.
84 & 85
<PAGE>
<TABLE>
<CAPTION>
HARRIS INSIGHT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31, 1996
MONEY MARKET FUNDS FIXED INCOME FUNDS
------------------------------------------ ---------------------------
SHORT/
GOVERNMENT MONEY TAX-EXEMPT INTERMEDIATE BOND
MONEY FUND FUND MONEY FUND FUND FUND(2)
------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income ................................ $ 12,415,407 $ 40,121,421 $ 19,247,394 $ 13,706,691 $ 1,377,637
Net realized gain/(loss) on investment
transactions, futures contracts and foreign
currency transactions .............................. (72) (2,590) 11,969 (952,341) 250,406
Net change in unrealized appreciation/(depreciation)
of investment transactions, futures contracts,
and foreign currency transactions .................. -- -- -- (3,937,487) 196,171
------------ ------------ ------------ ------------ -----------
Increase in net assets from operations ............... 12,415,335 40,118,831 19,259,363 8,816,863 1,824,214
------------ ------------ ------------ ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTES 2c AND 2d):
Net investment income:
Institutional Class ................................ (1,831,254) (16,876,839) (14,006,346) (12,576,121) (1,376,263)
Class A ............................................ (10,584,153) (23,255,431) (5,241,048) (1,124,909) (1,730)
------------ ------------ ------------ ------------ -----------
Total distributions from net
investment income .................................. (12,415,407) (40,132,270) (19,247,394) (13,701,030) (1,377,993)
------------ ------------ ------------ ------------ -----------
Net realized gains on investments:
Institutional Class ................................ -- -- -- -- (139,009)
Class A ............................................ -- -- -- -- (378)
------------ ------------ ------------ ------------ -----------
Total distributions from net realized gains .......... -- -- -- -- (139,387)
------------ ------------ ------------ ------------ -----------
CAPITAL SHARE TRANSACTIONS :
Increase/(decrease) in net assets from
capital share transactions in:
Institutional Class ................................ 18,802,992 270,581,554 176,249,984 258,641,418 42,834,580
Class A ............................................ (58,353,363) 37,636,908 8,274,685 (45,565,951) 131,068
------------ ------------ ------------ ------------ -----------
Increase/(decrease) in net assets from
capital share transactions ......................... (39,550,371) 308,218,462 184,524,669 213,075,467 42,965,648
------------ ------------ ------------ ------------ -----------
Total increase/(decrease) in net assets .............. (39,550,443) 308,205,023 184,536,638 208,191,300 43,272,482
NET ASSETS:
Beginning of period .................................. 282,792,779 522,425,299 382,716,459 51,814,058 40
------------ ------------ ------------ ------------ -----------
End of period ........................................ $243,242,336 $830,630,322 $567,253,097 $260,005,358 $43,272,522
============ ============ ============ ============ ===========
<FN>
- -------------------
(1) For the period 02/26/96 (commencement of operations) to 12/31/96.
(2) For the period 04/16/96 (commencement of operations) to 12/31/96.
</FN>
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
FIXED INCOME FUNDS EQUITY FUNDS
--------------------------- ------------------------------------------
INTERMEDIATE EQUITY
TAX-EXEMPT TAX-EXEMPT EQUITY INCOME GROWTH
FUND(1) FUND(1) FUND FUND(1) FUND(1)
------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income ................................ $ 7,934,409 $ 6,345,622 $ 7,240,840 $ 616,775 $ 246,149
Net realized gain/(loss) on investment
transactions, futures contracts and foreign
currency transactions .............................. 846,717 3,668,482 95,158,144 2,728,461 6,832,984
Net change in unrealized appreciation/(depreciation)
of investment transactions, futures contracts,
and foreign currency transactions .................. (3,615,528) (5,155,162) (18,411,180) 568,752 4,142,193
------------ ------------ ------------ ----------- -----------
Increase in net assets from operations ............... 5,165,598 4,858,942 83,987,804 3,913,988 11,221,326
------------ ------------ ------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTES 2c AND 2d):
Net investment income:
Institutional Class ................................ (7,932,978) (6,345,578) (6,952,962) (611,754) (249,564)
Class A ............................................ (1,431) (44) (294,553) (3,860) (492)
------------ ------------ ------------ ----------- -----------
Total distributions from net
investment income .................................. (7,934,409) (6,345,622) (7,247,515) (615,614) (250,056)
------------ ------------ ------------ ----------- -----------
Net realized gains on investments:
Institutional Class ................................ (720,399) (3,479,679) (754,414) (2,299,750) (4,338,062)
Class A ............................................ -- (767) (60,143,772) (20,638) (21,411)
------------ ------------ ------------ ----------- -----------
Total distributions from net realized gains .......... (720,399) (3,480,446) (60,898,186) (2,320,388) (4,359,473)
------------ ------------ ------------ ----------- -----------
CAPITAL SHARE TRANSACTIONS :
Increase/(decrease) in net assets from
capital share transactions in:
Institutional Class ................................ 212,178,045 170,354,303 557,058,547 30,791,846 69,917,221
Class A ............................................ 1,527 38,776 (57,964,695) 189,249 383,809
------------ ------------ ------------ ----------- -----------
Increase/(decrease) in net assets from
capital share transactions ......................... 212,179,572 170,393,079 499,093,852 30,981,095 70,301,030
------------ ------------ ------------ ----------- -----------
Total increase/(decrease) in net assets .............. 208,690,362 165,425,953 514,935,955 31,959,081 76,912,827
NET ASSETS:
Beginning of period .................................. 100 100 61,256,077 99,050 130
------------ ------------ ------------ ----------- -----------
End of period ........................................ $208,690,462 $165,426,053 $576,192,032 $32,058,131 $76,912,957
============ ============ ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
EQUITY FUNDS
------------------------------------------
SMALL-CAP INDEX INTERNATIONAL
FUND(1) FUND(1) FUND(1)
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income ................................ $ 519,783 $ 2,072,648 $ 878,941
Net realized gain/(loss) on investment
transactions, futures contracts and foreign
currency transactions .............................. 9,632,120 4,064,627 497,671
Net change in unrealized appreciation/(depreciation)
of investment transactions, futures contracts,
and foreign currency transactions .................. 8,437,066 12,126,424 2,857,490
------------ ------------ ------------
Increase in net assets from operations ............... 18,588,969 18,263,699 4,234,102
------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTES 2c AND 2d):
Net investment income:
Institutional Class ................................ (521,897) (2,071,983) (857,914)
Class A ............................................ (612) (1,087) (1,643)
------------ ------------ ------------
Total distributions from net
investment income .................................. (522,509) (2,073,070) (859,557)
------------ ------------ ------------
Net realized gains on investments:
Institutional Class ................................ (6,804,684) (2,672,444) (475,914)
Class A ............................................ (19,522) (2,645) (2,596)
------------ ------------ ------------
Total distributions from net realized gains .......... (6,824,206) (2,675,089) (478,510)
------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS :
Increase/(decrease) in net assets from
capital share transactions in:
Institutional Class ................................ 139,069,249 130,446,451 106,861,336
Class A ............................................ 436,806 141,909 586,985
------------ ------------ ------------
Increase/(decrease) in net assets from
capital share transactions ......................... 139,506,055 130,588,360 107,448,321
------------ ------------ ------------
Total increase/(decrease) in net assets .............. 150,748,309 144,103,900 110,344,356
NET ASSETS:
Beginning of period .................................. 200 200 200
------------ ------------ ------------
End of period ........................................ $150,748,509 $144,104,100 $110,344,556
============ ============ ============
</TABLE>
See Notes to Financial Statements.
86 & 87
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENTS OF CHANGES -- CAPITAL STOCK ACTIVITY
Since the Money Market Funds have sold and redeemed shares only at a
constant net asset value of $1.00 per share, the number of shares represented by
such sales and redemptions is the same as the amounts shown below for such
transactions.
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
------------------------------------------------------------------------------------------------
GOVERNMENT MONEY FUND MONEY FUND TAX-EXEMPT MONEY FUND
-------------------------------- -------------------------------- ----------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97 12/31/96
--------------- --------------- --------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL CLASS:
Sold ....................... $ 310,077,266 $ 232,771,120 $ 2,935,583,373 $ 993,846,629 $ 814,990,746 $ 902,032,719
Issued as reinvestment of
dividends ................ 290,884 10,764 4,320,343 282,379 22,292 2,813
Redeemed ................... (283,567,451) (213,978,892) (2,281,234,849) (723,547,454) (705,429,722) (725,785,548)
--------------- --------------- --------------- --------------- ------------- -------------
Net increase/(decrease) .... $ 26,800,699 $ 18,802,992 $ 658,668,867 $ 270,581,554 $ 109,583,316 $ 176,249,984
=============== =============== =============== =============== ============= =============
CLASS A :
Sold ....................... $ 1,342,810,468 $ 1,159,556,974 $ 2,398,112,387 $ 2,226,243,194 $ 566,351,447 $ 453,682,137
Issued as reinvestment of
dividends ................ 7,187,840 4,846,048 18,841,382 12,457,401 3,936,135 3,504,283
Redeemed ................... (1,308,477,483) (1,222,756,385) (2,200,366,102) (2,201,063,687) (526,063,571) (448,911,735)
--------------- --------------- --------------- --------------- ------------- -------------
Net increase/(decrease) .... $ 41,520,825 $ (58,353,363) $ 216,587,667 $ 37,636,908 $ 44,224,011 $ 8,274,685
=============== =============== =============== =============== ============= =============
</TABLE>
See Notes to Financial Statements.
88
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
<TABLE>
<CAPTION>
HARRIS INSIGHT FUNDS
STATEMENTS OF CHANGES -- CAPITAL STOCK ACTIVITY (CONTINUED)
FIXED INCOME FUNDS
----------------------------------------------------------------------
SHORT/ INTERMEDIATE
INTERMEDIATE BOND GOVERNMENT
FUND FUND FUND
--------------------------- ------------------------- ------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/97 12/31/96 12/31/97 12/31/96(2) 12/31/97(3)
------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
AMOUNT
- ------
INSTITUTIONAL CLASS:
Sold .................................. $ 52,771,039 $315,836,583 $99,249,501 $43,202,747 $123,309,885
Issued as reinvestment of dividends ... 1,661,326 1,181,698 3,781,384 102,573 4,539,814
Redeemed .............................. (23,153,942) (58,376,863) (7,882,148) (470,740) (30,562,631)
------------ ------------ ----------- ----------- ------------
Net increase/(decrease) ............... $ 31,278,423 $258,641,418 $95,148,737 $42,834,580 $ 97,287,068
============ ============ =========== =========== ============
CLASS A :
Sold .................................. $ 2,236,939 $ 11,894,136 $ 929,922 $ 222,006 $ 710,868
Issued as reinvestment of dividends ... 260,154 637,887 18,847 1,569 4,387
Redeemed .............................. (1,045,427) (58,097,974) (150,118) (92,507) (200)
------------ ------------ ----------- ----------- ------------
Net increase/(decrease) ............... $ 1,451,666 $(45,565,951) $ 798,651 $ 131,068 $ 715,055
============ ============ =========== =========== ============
==================================================================================================================
SHARES
- ------
INSTITUTIONAL CLASS:
Sold .................................. 5,209,406 30,880,397 9,893,541 4,319,808 7,607,489
Issued as reinvestment of dividends ... 163,759 117,417 371,313 10,179 277,370
Redeemed .............................. (2,281,540) (5,793,296) (775,447) (46,602) (1,876,066)
------------ ------------ ----------- ----------- ------------
Net increase/(decrease) ............... 3,091,625 25,204,518 9,489,407 4,283,385 6,008,793
============ ============ =========== =========== ============
CLASS A :
Sold .................................. 219,857 1,167,686 91,724 21,973 43,019
Issued as reinvestment of dividends ... 25,622 62,690 1,851 156 266
Redeemed .............................. (102,616) (5,787,240) (14,738) (9,202) (12)
------------ ------------ ----------- ----------- ------------
Net increase/(decrease) ............... 142,863 (4,556,864) 78,837 12,927 43,273
============ ============ =========== =========== ============
<FN>
- -------------------
(1) For the period 02/26/96 (commencement of operations) to 12/31/96.
(2) For the period 04/16/96 (commencement of operations) to 12/31/96.
(3) For the period 03/24/97 (commencement of operations) to 12/31/97.
</FN>
</TABLE>
See Notes to Financial Statements.
90
<PAGE>
<TABLE>
<CAPTION>
HARRIS INSIGHT FUNDS
STATEMENTS OF CHANGES -- CAPITAL STOCK ACTIVITY (CONTINUED)
FIXED INCOME FUNDS
------------------------------------------------------------------------
INTERMEDIATE CONVERTIBLE
TAX-EXEMPT TAX-EXEMPT SECURITIES
FUND FUND FUND
--------------------------- --------------------------- ------------
YEAR PERIOD YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/97 12/31/96(1) 12/31/97 12/31/96(1) 12/31/97(3)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
AMOUNT
- ------
INSTITUTIONAL CLASS:
Sold .................................. $ 41,062,483 $255,651,844 $ 36,002,208 $190,808,486 $ 62,943,202
Issued as reinvestment of dividends ... 211,439 8,778 357,835 21,152 8,825,043
Redeemed .............................. (59,939,308) (43,482,577) (26,400,690) (20,475,335) (11,387,209)
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ............... $(18,665,386) $212,178,045 $ 9,959,353 $170,354,303 $ 60,381,036
============ ============ ============ ============ ============
CLASS A :
Sold .................................. $ 649,957 $ 179,000 $ 685,982 $ 38,000 $ 166,195
Issued as reinvestment of dividends ... 5,164 -- 7,264 776 7,403
Redeemed .............................. (17,469) (177,473) (96,255) -- (72,079)
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ............... $ 637,652 $ 1,527 $ 596,991 $ 38,776 $ 101,519
============ ============ ============ ============ ============
==================================================================================================================
SHARES
- ------
INSTITUTIONAL CLASS:
Sold .................................. 3,868,924 23,864,232 3,491,829 18,118,214 2,149,501
Issued as reinvestment of dividends ... 19,743 828 34,122 2,055 311,634
Redeemed .............................. (5,656,367) (4,139,865) (2,567,773) (1,987,182) (379,031)
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ............... (1,767,700) 19,725,195 958,178 16,133,087 2,082,104
============ ============ ============ ============ ============
CLASS A :
Sold .................................. 61,099 16,967 65,967 3,639 5,326
Issued as reinvestment of dividends ... 483 -- 693 75 264
Redeemed .............................. (1,652) (16,967) (9,210) -- (2,596)
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ............... 59,930 0 57,450 3,714 2,994
============ ============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
91
<PAGE>
<TABLE>
<CAPTION>
HARRIS INSIGHT FUNDS
STATEMENTS OF CHANGES -- CAPITAL STOCK ACTIVITY (CONTINUED)
EQUITY FUNDS
-------------------------------------------------------------------------------------
EQUITY
EQUITY INCOME GROWTH
FUND FUND FUND
---------------------------- ------------------------- -------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
12/31/97 12/31/96 12/31/97 12/31/96(1) 12/31/97 12/31/96(1)
------------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
- ------
INSTITUTIONAL CLASS:
Sold ................................... $ 228,484,735 $629,627,359 $ 5,765,224 $33,736,818 $18,615,536 $72,754,630
Issued as reinvestment of dividends .... 65,414,766 6,744,978 756,229 137,826 3,513,466 186,112
Redeemed ............................... (107,708,003) (79,313,790) (3,723,308) (3,082,798) (6,185,681) (3,023,521)
------------- ------------ ----------- ----------- ----------- -----------
Net increase/(decrease) ................ $ 186,191,498 $557,058,547 $ 2,798,145 $30,791,846 $15,943,321 $69,917,221
============= ============ =========== =========== =========== ===========
CLASS A:
Sold ................................... $ 8,786,890 $ 18,931,677 $ 942,518 $ 174,475 $ 2,186,449 $ 363,832
Issued as reinvestment of dividends .... 2,388,743 4,041,336 95,931 15,196 135,276 21,898
Redeemed ............................... (1,756,434) (80,937,708) (114,131) (422) (37,655) (1,921)
------------- ------------ ----------- ----------- ----------- -----------
Net increase/(decrease) ................ $ 9,419,199 $(57,964,695) $ 924,318 $ 189,249 $ 2,284,070 $ 383,809
============= ============ =========== =========== =========== ===========
================================================================================================================================
SHARES
- ------
INSTITUTIONAL CLASS:
Sold ................................... 13,779,278 41,238,231 350,240 2,529,504 845,767 4,258,723
Issued as reinvestment of dividends .... 3,736,368 430,491 46,977 9,907 156,313 9,805
Redeemed ............................... (6,023,216) (5,063,358) (233,613) (226,133) (281,676) (175,213)
------------- ------------ ----------- ----------- ----------- -----------
Net increase/(decrease) ................ 11,492,430 36,605,364 163,604 2,313,278 720,404 4,093,315
============= ============ =========== =========== =========== ===========
CLASS A:
Sold ................................... 475,368 1,274,610 55,334 13,218 96,614 20,199
Issued as reinvestment of dividends .... 136,928 283,639 5,980 1,094 6,046 1,154
Redeemed ............................... (98,527) (5,435,092) (6,897) (30) (1,870) (114)
------------- ------------ ----------- ----------- ----------- -----------
Net increase/(decrease) ................ 513,769 (3,876,843) 54,417 14,282 100,790 21,239
============= ============ =========== =========== =========== ===========
<FN>
- ------------------
(1) For the period 02/26/96 (commencement of operations) to 12/31/96.
(2) For the period 03/24/97 (commencement of operations) to 12/31/97.
(3) For the period 10/21/97 (commencement of operations) to 12/31/97.
</FN>
</TABLE>
See Notes to Financial Statements.
92
<PAGE>
<TABLE>
<CAPTION>
HARRIS INSIGHT FUNDS
STATEMENTS OF CHANGES -- CAPITAL STOCK ACTIVITY (CONTINUED)
EQUITY FUNDS
---------------------------------------------------------------------------------------
SMALL-CAP
SMALL-CAP VALUE INDEX BALANCED
FUND FUND FUND FUND
--------------------------- ------------ --------------------------- -----------
YEAR PERIOD PERIOD YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
12/31/97 12/31/96(1) 12/31/97(2) 12/31/97 12/31/96(1) 12/31/97(2)
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
- ------
INSTITUTIONAL CLASS:
Sold ................................... $111,387,891 $147,029,490 $ 94,750,916 $138,059,809 $142,845,246 $66,148,915
Issued as reinvestment of dividends .... 12,908,326 854,418 7,596,815 5,696,160 18,093 1,683,590
Redeemed ............................... (25,701,528) (8,814,659) (10,047,788) (45,051,822) (12,416,888) (8,208,620)
------------ ------------ ------------ ------------ ------------ -----------
Net increase/(decrease) ................ $ 98,594,689 $139,069,249 $ 92,299,943 $ 98,704,147 $130,446,451 $59,623,885
============ ============ ============ ============ ============ ===========
CLASS A:
Sold ................................... $ 2,275,874 $ 423,415 $ 321,431 $ 9,599,426 $ 140,207 $ 688,374
Issued as reinvestment of dividends .... 107,321 17,777 18,639 151,528 3,612 4,659
Redeemed ............................... (327,843) (4,386) (30,374) (3,073,777) (1,910) (50)
------------ ------------ ------------ ------------ ------------ -----------
Net increase/(decrease) ................ $ 2,055,352 $ 436,806 $ 309,696 $ 6,677,177 $ 141,909 $ 692,983
============ ============ ============ ============ ============ ===========
==================================================================================================================================
SHARES
- ------
INSTITUTIONAL CLASS:
Sold ................................... 6,492,340 10,230,022 3,097,109 6,414,886 8,512,544 5,120,712
Issued as reinvestment of dividends .... 756,547 55,551 234,090 246,569 1,010 116,698
Redeemed ............................... (1,438,895) (600,090) (307,896) (2,025,025) (723,332) (588,410)
------------ ------------ ------------ ------------ ------------ -----------
Net increase/(decrease) ................ 5,809,992 9,685,483 3,023,303 4,636,430 7,790,222 4,649,000
============ ============ ============ ============ ============ ===========
CLASS A:
Sold ................................... 125,525 27,633 9,123 428,098 8,047 46,556
Issued as reinvestment of dividends .... 6,308 1,156 574 6,555 194 317
Redeemed ............................... (19,609) (286) (842) (147,519) (117) (3)
------------ ------------ ------------ ------------ ------------ -----------
Net increase/(decrease) ................ 112,224 28,503 8,855 287,134 8,124 46,870
============ ============ ============ ============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
EQUITY FUNDS
-----------------------------------------
EMERGING
INTERNATIONAL MARKETS
FUND FUND
--------------------------- -----------
YEAR PERIOD PERIOD
ENDED ENDED ENDED
12/31/97 12/31/96(1) 12/31/97(3)
------------ ------------ -----------
<S> <C> <C> <C>
AMOUNT
- ------
INSTITUTIONAL CLASS:
Sold ................................... $120,897,024 $123,388,071 $20,438,890
Issued as reinvestment of dividends .... 10,828,865 52,160 --
Redeemed ............................... (43,158,856) (16,578,895) --
------------ ------------ -----------
Net increase/(decrease) ................ $ 88,567,033 $106,861,336 $20,438,890
============ ============ ===========
CLASS A:
Sold ................................... $ 1,215,856 $ 583,595 $ 109,665
Issued as reinvestment of dividends .... 93,876 3,390 --
Redeemed ............................... (410,562) -- --
------------ ------------ -----------
Net increase/(decrease) ................ $ 899,170 $ 586,985 $ 109,665
============ ============ ===========
====================================================================================
SHARES
- ------
INSTITUTIONAL CLASS:
Sold ................................... 8,013,256 8,037,422 2,108,590
Issued as reinvestment of dividends .... 806,437 149,248 --
Redeemed ............................... (3,006,361) (1,086,874) --
------------ ------------ -----------
Net increase/(decrease) ................ 5,813,332 7,099,796 2,108,590
============ ============ ===========
CLASS A:
Sold ................................... 78,331 38,413 11,266
Issued as reinvestment of dividends .... 7,008 221 --
Redeemed ............................... (29,037) -- --
------------ ------------ -----------
Net increase/(decrease) ................ 56,302 38,634 11,266
============ ============ ===========
</TABLE>
See Notes to Financial Statements.
93
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS CLASS A
----------------------------------------- -------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
GOVERNMENT MONEY FUND 12/31/97 12/31/96 12/31/95 12/31/94(4) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- -------- -------- ----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period ........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- --------- -------- -------- -------- -------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income .............. 0.053 0.051 0.056 0.028 0.050 0.049 0.054 0.037 0.026
------- ------- ------- --------- -------- -------- -------- -------- -------
Total from Investment
Operations ....................... 0.053 0.051 0.056 0.028 0.050 0.049 0.054 0.037 0.026
------- ------- ------- --------- -------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
Net Investment Income .............. (0.053) (0.051) (0.056) (0.028) (0.050) (0.049) (0.054) (0.037) (0.026)
------- ------- ------- --------- -------- -------- -------- -------- -------
Total Distributions ................ (0.053) (0.051) (0.056) (0.028) (0.050) (0.049) (0.054) (0.037) (0.026)
------- ------- ------- --------- -------- -------- -------- -------- -------
Net Asset Value, End of Period ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ========= ======== ======== ======== ======== ========
TOTAL RETURN ....................... 5.48% 5.24% 5.79% 2.82%(3) 5.17% 5.00% 5.51% 3.72% 2.62%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) .... $63,970 $37,169 $18,367 $9,617 $247,594 $206,073 $264,426 $229,619 $263,909
Ratios of Expenses to
Average Net Assets (1) ........... 0.23% 0.31% 0.31% 0.29%(2) 0.53% 0.54% 0.57% 0.60% 0.61%
Ratio of Net Investment Income to
Average Net Assets ............... 5.36% 5.12% 5.62% 4.52%(2) 5.05% 4.89% 5.36% 3.62% 2.57%
<FN>
- -----------
(1) Without the voluntary waiver of fees, the expense ratios for the years
ended December 31, 1997, 1996, 1995, and the period ended December 31, 1994
for the Institutional Class shares would have been 0.28%, 0.32%, 0.32%, and
0.31% (annualized), respectively, and for the years ended December 31,
1997, 1996, 1995, 1994 and 1993 for the Class A shares would have been
0.63%, 0.67%, 0.67%, 0.66% and 0.70%, respectively.
(2) Annualized.
(3) Total returns for periods less than one year are not annualized.
(4) Commenced operations on May 16, 1994.
</FN>
</TABLE>
See Notes to Financial Statements.
94
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS CLASS A
----------------------------------------- -------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MONEY FUND 12/31/97 12/31/96 12/31/95 12/31/94(4) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- -------- -------- ----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- ------- ------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income ........... 0.055 0.052 0.057 0.039 0.052 0.050 0.054 0.037 0.027
Realized Loss on Investments .... (0.001) -- -- -- (0.001) -- -- -- --
---------- -------- ------- ------- -------- -------- -------- -------- --------
Total from Investment
Operations .................... 0.054 0.052 0.057 0.039 0.051 0.050 0.054 0.037 0.027
---------- -------- ------- ------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Net Investment Income ........... (0.055) (0.052) (0.057) (0.039) (0.052) (0.050) (0.054) (0.037) (0.027)
---------- -------- ------- ------- -------- -------- -------- -------- --------
Total Distributions ............. (0.055) (0.052) (0.057) (0.039) (0.052) (0.050) (0.054) (0.037) (0.027)
---------- -------- ------- ------- -------- -------- -------- -------- --------
CAPITAL CONTRIBUTION ............ 0.001 -- -- -- 0.001 -- -- -- --
---------- -------- ------- ------- -------- -------- -------- -------- --------
Net Asset Value, End of Period .. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======= ======= ======== ======== ======== ======== ========
TOTAL RETURN .................... 5.66% 5.38% 5.86% 4.08%(3) 5.35% 5.11% 5.58% 3.79% 2.69%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) . $1,028,091 $369,417 $98,837 $31,990 $677,804 $461,213 $423,588 $530,366 $348,984
Ratios of Expenses to
Average Net Assets (1) ........ 0.21% 0.27% 0.29% 0.29%(2) 0.51% 0.52% 0.56% 0.55% 0.57%
Ratio of Net Investment Income to
Average Net Assets ............ 5.54% 5.23% 5.69% 4.79%(2) 5.23% 5.00% 5.42% 3.79% 2.66%
<FN>
- -----------
(1) Without the voluntary waiver of fees, the expense ratios for the years
ended December 31, 1997, 1996, 1995, and the period ended December 31, 1994
for the Institutional Class shares would have been 0.26%, 0.28%, 0.30% and
0.30% (annualized), respectively, and for the years ended December 31,
1997, 1996, 1995, 1994 and 1993 for the Class A shares would have been
0.61%, 0.63%, 0.65%, 0.65% and 0.72%, respectively.
(2) Annualized.
(3) Total returns for periods less than one year are not annualized.
(4) Commenced operations on January 5, 1994.
</FN>
</TABLE>
See Notes to Financial Statements.
95
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS CLASS A
----------------------------------------- -------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
TAX-EXEMPT MONEY FUND 12/31/97 12/31/96 12/31/95 12/31/94(4) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- -------- -------- ----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period ....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income ............. 0.034 0.031 0.035 0.025 0.031 0.029 0.033 0.023 0.020
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total from Investment
Operations ...................... 0.034 0.031 0.035 0.025 0.031 0.029 0.033 0.023 0.020
-------- -------- -------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Net Investment Income ............. (0.034) (0.031) (0.035) (0.025) (0.031) (0.029) (0.033) (0.023) (0.020)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total Distributions ............... (0.034) (0.031) (0.035) (0.025) (0.031) (0.029) (0.033) (0.023) (0.020)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of Period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ========
TOTAL RETURN ...................... 3.47% 3.19% 3.60% 2.56%(3) 3.17% 2.94% 3.31% 2.30% 1.99%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) ... $497,986 $388,404 $212,146 $237,100 $223,071 $178,849 $170,570 $123,501 $168,440
Ratios of Expenses to
Average Net Assets(1) ........... 0.25% 0.29% 0.29% 0.28%(2) 0.54% 0.53% 0.56% 0.54% 0.54%
Ratio of Net Investment Income to
Average Net Assets .............. 3.41% 3.14% 3.52% 2.99%(2) 3.13% 2.89% 3.25% 2.20% 1.97%
<FN>
- -----------
(1) Without the voluntary waiver of fees, the expense ratios for the years
ended December 31, 1997, 1996 and 1995, and the period ended December 31,
1994 for the Institutional Class shares would have been 0.26%, 0.29%, 0.29%
and 0.30% (annualized), respectively, and for the years ended December 31,
1997, 1996, 1995, 1994 and 1993 for the Class A shares would have been
0.61%, 0.64%, 0.65%, 0.65% and 0.71%, respectively.
(2) Annualized.
(3) Total returns for periods less than one year are not annualized.
(4) Commenced operations on January 5, 1994.
</FN>
</TABLE>
See Notes to Financial Statements.
96
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS CLASS A
------------------------ ----------------------------------------------------
FOR THE PERIOD
YEAR 02/26/96(4) YEAR YEAR YEAR YEAR YEAR
ENDED TO ENDED ENDED ENDED ENDED ENDED
SHORT/INTERMEDIATE FUND 12/31/97 12/31/96 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- -------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period ............................ $ 10.14 $ 10.30 $10.14 $10.38 $ 9.66 $ 10.34 $ 10.22
-------- -------- ------ ------ ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income ............... 0.633 0.517 0.608 0.594 0.588 0.559 0.563
Net Realized and Unrealized
Gain/(Loss) on Investments ........ 0.070 (0.160) 0.070 (0.247) 0.720 (0.694) 0.435
-------- -------- ------ ------ ------- ------- -------
Total from Investment Operations .... 0.703 0.357 0.678 0.347 1.308 (0.135) 0.998
-------- -------- ------ ------ ------- ------- -------
LESS DISTRIBUTIONS:
Net Investment Income ............... (0.633) (0.517) (0.608) (0.587) (0.588) (0.545) (0.564)
Net Realized Gains .................. 0.000 0.000 0.000 0.000 0.000 0.000 (0.314)
-------- -------- ------ ------ ------- ------- -------
Total Distributions ................. (0.633) (0.517) (0.608) (0.587) (0.588) (0.545) (0.878)
-------- -------- ------ ------ ------- ------- -------
Net Asset Value, End of Period ...... $ 10.21 $ 10.14 $10.21 $10.14 $ 10.38 $ 9.66 $ 10.34
======== ======== ====== ====== ======= ======= =======
TOTAL RETURN ........................ 7.15% 3.61%(3) 6.89% 3.51% 13.88% (1.29)% 9.91%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) ..... $288,886 $255,573 $5,922 $4,432 $51,814 $44,333 $74,057
Ratios of Expenses to Average
Net Assets(1) ..................... 0.60% 0.60%(2) 0.85% 0.62% 0.60% 0.60% 0.60%
Ratio of Net Investment Income to
Average Net Assets ................ 6.24% 6.06%(2) 5.99% 5.59% 5.91% 5.29% 5.32%
Portfolio Turnover Rate ............. 98.08% 186.02% 98.08% 186.02% 194.94% 140.99% 215.07%
<FN>
- ------------
(1) Without the voluntary waiver of fees, the expense ratios for the year ended
December 31, 1997 and the period ended December 31, 1996 for the
Institutional Class shares would have been 0.89% and 0.90% (annualized),
respectively, and for the years ended December 31, 1997, 1996, 1995, 1994
and 1993 for the Class A shares would have been 1.14%, 0.92%, 0.96%, 0.92%
and 0.94%, respectively.
(2) Annualized.
(3) Total returns for periods less than one year are not annualized.
(4) Date commenced operations.
</FN>
</TABLE>
See Notes to Financial Statements.
97
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INTERMEDIATE
BOND FUND GOVERNMENT FUND
----------------------------------------------------- -------------------------------
INSTITUTIONAL INSTITUTIONAL
CLASS CLASS A CLASS CLASS A
------------------------- ------------------------- -------------- --------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
YEAR 04/16/96(4) YEAR 04/22/96(4) 03/24/97(4) 04/16/97(4)
ENDED TO ENDED TO TO TO
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97 12/31/97
-------- -------------- -------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ... $ 10.07 $ 10.00 $10.07 $ 9.99 $ 16.12 $16.06
-------- ------- ------ ------ ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income .................. 0.628 0.425 0.603 0.402 0.793 0.702
Net Realized and Unrealized Gain/(Loss)
on Investments ....................... 0.284 0.103 0.284 0.113 0.461 0.521
-------- ------- ------ ------ ------- ------
Total from Investment Operations ....... 0.912 0.528 0.887 0.515 1.254 1.223
-------- ------- ------ ------ ------- ------
LESS DISTRIBUTIONS:
Net Investment Income .................. (0.628) (0.425) (0.603) (0.402) (0.793) (0.702)
Net Realized Gains ..................... (0.154) (0.033) (0.154) (0.033) (0.041) (0.041)
-------- ------- ------ ------ ------- ------
Total Distributions .................... (0.782) (0.458) (0.757) (0.435) (0.834) (0.743)
-------- ------- ------ ------ ------- ------
Net Asset Value, End of Period ......... $ 10.20 $ 10.07 $10.20 $10.07 $ 16.54 $16.54
======== ======= ====== ====== ======= ======
TOTAL RETURN ........................... 9.41% 5.40%(3) 9.14% 5.27%(3) 7.96%(3) 7.76%(3)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) ........ $140,447 $43,142 $ 936 $ 130 $99,359 $ 716
Ratios of Expenses to Average
Net Assets(1) ........................ 0.60% 0.60%(2) 0.85% 0.85%(2) 0.50%(2) 0.75%(2)
Ratio of Net Investment Income to
Average Net Assets ................... 6.25% 6.03%(2) 6.00% 5.87%(2) 6.31%(2) 6.06%(2)
Portfolio Turnover Rate ................ 138.30% 116.02% 138.30% 116.02% 84.89%(2) 84.89%(2)
Average Commission Rate(5) ............. -- -- -- -- -- --
<FN>
- ----------------
(1) Without the voluntary waiver of fees, the expense ratios for the year ended
December 31, 1997 and the period ended December 31, 1996 for the
Institutional Class shares of the Bond Fund would have been 0.89% and 0.98%
(annualized), respectively, and for the Class A shares of the Bond Fund
would have been 1.14% and 1.23% (annualized), respectively and for the
period ended December 31, 1997 for the Institutional Class shares and the
Class A shares of the Intermediate Government Fund would have been 0.91%
(annualized) and 1.16% (annualized), respectively, and for the year ended
December 31, 1997 and the period ended December 31, 1996 for the
Institutional Class shares of the Intermediate Tax-Exempt Fund would have
been 0.79% and 0.82% (annualized), respectively, and for the Class A shares
of the Intermediate Tax-Exempt Fund would have been 1.04% and 1.07%
(annualized), respectively, and for the Institutional Class shares of the
Tax-Exempt Fund would have been 0.80% and 0.81% (annualized), respectively,
and for the Class A shares of the Tax-Exempt Fund would have been 1.05% and
1.06% (annualized), respectively, and for the period ended December 31,
1997 for the Institutional Class shares and Class A shares of the
Convertible Securities Fund would have been 0.96% (annualized) and 1.21%
(annualized), respectively.
(2) Annualized.
(3) Total returns for periods less than one year are not annualized.
(4) Date commenced operations.
(5) Computed by dividing the total amount of commission paid by the total
number of shares purchased and sold during the period.
</FN>
</TABLE>
See Notes to Financial Statements.
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INTERMEDIATE
TAX-EXEMPT FUND
-----------------------------------------------------
INSTITUTIONAL
CLASS CLASS A
------------------------- -------------------------
FOR THE PERIOD FOR THE PERIOD
YEAR 02/26/96(4) YEAR 03/13/96(4)
ENDED TO ENDED TO
12/31/97 12/31/96 12/31/97 12/31/96
-------- -------------- -------- --------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ... $ 10.58 $ 10.74 $ 10.58 $ 10.55
-------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income .................. 0.442 0.381 0.327 0.084
Net Realized and Unrealized Gain/(Loss)
on Investments ....................... 0.220 (0.124) 0.220 0.066
-------- -------- -------- -------
Total from Investment Operations ....... 0.662 0.257 0.547 0.150
-------- -------- -------- -------
LESS DISTRIBUTIONS:
Net Investment Income .................. (0.442) (0.381) 0.327) (0.084)
Net Realized Gains ..................... (0.050) (0.036) (0.050) (0.036)
-------- -------- -------- -------
Total Distributions .................... (0.492) (0.417) (0.377) (0.120)
-------- -------- -------- -------
Net Asset Value, End of Period ......... $ 10.75 $ 10.58 $ 10.75 $ 10.58
======== ======== ======== =======
TOTAL RETURN ........................... 6.41% 2.49%(3) 6.14% 1.44%(3)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) ........ $193,009 $208,690 $ 644 --
Ratios of Expenses to Average
Net Assets(1) ........................ 0.79% 0.79%(2) 1.04% 1.04%(2)
Ratio of Net Investment Income to
Average Net Assets ................... 4.16% 4.28%(2) 3.91% 4.33%(2)
Portfolio Turnover Rate ................ 48.72% 57.23% 48.72% 57.23%
Average Commission Rate(5) ............. -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
CONVERTIBLE
TAX-EXEMPT FUND SECURITIES FUND
----------------------------------------------------- -------------------------------
INSTITUTIONAL INSTITUTIONAL
CLASS CLASS A CLASS CLASS A
------------------------- ------------------------- -------------- --------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
YEAR 02/26/96(4) YEAR 10/02/96(4) 03/24/97(4) 03/26/97(4)
ENDED TO ENDED TO TO TO
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97 12/31/97
-------- -------------- -------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ... $ 10.25 $ 10.56 $ 10.25 $ 10.33 $ 29.15 $29.30
-------- -------- ------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income .................. 0.461 0.402 0.435 0.105 0.914 0.690
Net Realized and Unrealized Gain/(Loss)
on Investments ....................... 0.391 (0.094) 0.391 0.136 3.120 3.122
-------- -------- ------- ------- ------- ------
Total from Investment Operations ....... 0.852 0.308 0.826 0.241 4.034 3.812
-------- -------- ------- ------- ------- ------
LESS DISTRIBUTIONS:
Net Investment Income .................. (0.461) (0.402) (0.435) (0.105) (0.897) (0.825)
Net Realized Gains ..................... (0.121) (0.216) (0.121) (0.216) (3.767) (3.767)
-------- -------- ------- ------- ------- ------
Total Distributions .................... (0.582) (0.618) (0.556) (0.321) (4.664) (4.592)
-------- -------- ------- ------- ------- ------
Net Asset Value, End of Period ......... $ 10.52 $ 10.25 $ 10.52 $ 10.25 $ 28.52 $28.52
======== ======== ======= ======= ======= ======
TOTAL RETURN ........................... 8.55% 3.04%(3) 8.28% 2.34%(3) 14.24%(3) 13.39%(3)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) ........ $179,871 $165,388 $ 644 $ 38 $59,384 $ 85
Ratios of Expenses to Average
Net Assets(1) ........................ 0.80% 0.80%(2) 1.05% 1.05%(2) 0.92%(2) 1.17%(2)
Ratio of Net Investment Income to
Average Net Assets ................... 4.47% 4.60%(2) 4.22% 4.35%(2) 3.76%(2) 3.51%(2)
Portfolio Turnover Rate ................ 61.52% 61.60% 61.52% 61.60% 93.24%(2) 93.24%(2)
Average Commission Rate(5) ............. -- -- -- -- $ 0.053 $0.053
</TABLE>
See Notes to Financial Statements.
98 & 99
<PAGE>
<TABLE>
<CAPTION>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INSTITUTIONAL CLASS CLASS A
------------------------- ----------------------------------------------------
FOR THE PERIOD
YEAR 02/26/96(5) YEAR YEAR YEAR YEAR YEAR
ENDED TO ENDED ENDED ENDED ENDED ENDED
12/31/97 12/31/96 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- -------------- -------- -------- -------- -------- --------
EQUITY FUND
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .. $ 15.53 $ 15.30 $ 15.53 $13.99 $ 11.28 $ 12.86 $ 11.57
-------- -------- ------- ------ ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income ................. 0.234 0.189 0.174 0.451 0.229 0.263 0.197
Net Realized and Unrealized
Gain/(Loss) on Investments .......... 5.190 1.898 5.190 2.926 3.827 (0.514) 1.904
-------- -------- ------- ------ ------- ------- -------
Total from Investment Operations ...... 5.424 2.087 5.364 3.377 4.056 (0.251) 2.101
-------- -------- ------- ------ ------- ------- -------
LESS DISTRIBUTIONS:
Net Investment Income ................. (0.235) (0.193) (0.175) (0.173) (0.232) (0.263) (0.204)
Net Realized Gains .................... (3.129) (1.664) (3.129) (1.664) (1.114) (1.066) (0.607)
-------- -------- ------- ------ ------- ------- -------
Total Distributions ................... (3.364) (1.857) (3.304) (1.837) (1.346) (1.329) (0.811)
-------- -------- ------- ------ ------- ------- -------
Net Asset Value, End of Period ........ $ 17.59 $ 15.53 $ 17.59 $15.53 $ 13.99 $ 11.28 $ 12.86
======== ======== ======= ====== ======= ======= =======
TOTAL RETURN .......................... 35.89% 13.66%(3) 35.45% 24.15% 36.26% (2.05)% 18.23%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) ....... $845,829 $568,400 $17,859 $7,792 $61,256 $38,920 $47,241
Ratios of Expenses to
Average Net Assets(1) ............... 0.88% 0.90%(2) 1.13% 0.94% 0.96% 0.90% 0.93%
Ratio of Net Investment Income
to Average Net Assets ............... 1.33% 1.43%(2) 1.08% 1.47% 1.75% 1.94% 1.59%
Portfolio Turnover Rate ............... 81.48% 75.20% 81.48% 75.20% 75.93% 87.83% 57.31%
Average Commission Rate(4) ............ $ 0.054 $ 0.056 $ 0.054 $0.056 -- -- --
<FN>
- ----------------
(1) Without the voluntary waiver of fees, the expense ratios for the years
ended December 31, 1995, 1994, and 1993 for the Class A shares would have
been 0.97%, 0.92%, and 0.96%, respectively.
(2) Annualized.
(3) Total returns for periods of less than one year are not annualized.
(4) Computed by dividing the total amount of commission paid by the total
number of shares purchased and sold during the period.
(5) Date commenced operations.
</FN>
</TABLE>
See Notes to Financial Statements.
100
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
<TABLE>
<CAPTION>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
EQUITY INCOME FUND
-------------------------------------------------------
INSTITUTIONAL
CLASS CLASS A
------------------------- --------------------------
FOR THE PERIOD FOR THE PERIOD
YEAR 02/26/96(5) YEAR 04/18/96(5)
ENDED TO ENDED TO
12/31/97 12/31/96 12/31/97 12/31/96
-------- -------------- -------- --------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ......... $ 13.73 $ 13.34 $13.72 $13.02
-------- ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income ........................ 0.272 0.270 0.237 0.179
Net Realized and Unrealized Gain/(Loss)
on Investments ............................. 4.050 1.387 4.037 1.732
-------- ------- ------ ------
Total from Investment Operations ............. 4.322 1.657 4.274 1.911
-------- ------- ------ ------
LESS DISTRIBUTIONS:
Net Investment Income ........................ (0.268) (0.269) (0.220) (0.213)
Net Realized Gains ........................... (1.464) (0.998) (1.464) (0.998)
-------- ------- ------ ------
Total Distributions .......................... (1.732) (1.267) (1.684) (1.211)
-------- ------- ------ ------
Net Asset Value, End of Period ............... $ 16.32 $ 13.73 $16.31 $13.72
======= ======= ====== ======
TOTAL RETURN ................................. 31.90% 12.46%(3) 31.53% 14.67%(3)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) .............. $40,424 $31,760 $1,241 $ 298
Ratios of Expenses to Average Net Assets(1) .. 0.93% 0.93%(2) 1.18% 1.18%(2)
Ratio of Net Investment Income to
Average Net Assets ......................... 1.69% 2.36%(2) 1.44% 2.11%(2)
Portfolio Turnover Rate ...................... 29.87% 52.77% 29.87% 52.77%
Average Commission Rate(4) ................... $ 0.058 $ 0.059 $0.058 $0.059
<FN>
- ----------------
(1) Without the voluntary waiver of fees, the expense ratios for the year ended
December 31, 1997 and the period ended December 31, 1996 for the
Institutional Class shares of the Equity Income Fund would have been 0.96%
and 0.97% (annualized), respectively, and for the Class A shares of the
Equity Income Fund would have been 1.21% and 1.19% (annualized),
respectively and for the Institutional Class shares of the Growth Fund
would have been 1.11% and 1.14% (annualized), respectively, and for the
Class A shares of the Growth Fund would have been 1.36% and 1.39%
(annualized), respectively, and for the Institutional Class shares of the
Small-Cap Opportunity Fund would have been 1.21% and 1.22% (annualized),
respectively, and for the Class A shares of the Small-Cap Opportunity Fund
would have been 1.46% and 1.47% (annualized) respectively, and for the
period ended December 31, 1997 for the Institutional Class shares of the
Small-Cap Value Fund would have been 1.06% (annualized) and for the Class A
shares of the Small Cap Value Fund would have been 1.31% (annualized).
(2) Annualized.
(3) Total returns for periods less than one year are not annualized.
(4) Computed by dividing the total amount of commission paid by the total
number of shares purchased and sold during the period.
(5) Date commenced operations.
</FN>
</TABLE>
See Notes to Financial Statements.
102
<PAGE>
<TABLE>
<CAPTION>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
GROWTH FUND
-------------------------------------------------------
INSTITUTIONAL
CLASS CLASS A
-------------------------- -------------------------
FOR THE PERIOD FOR THE PERIOD
YEAR 02/26/96(5) YEAR 04/19/96(5)
ENDED TO ENDED TO
12/31/97 12/31/96 12/31/97 12/31/96
-------- -------------- -------- --------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ......... $ 18.69 $ 17.01 $18.69 $16.49
-------- ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income ........................ 0.048 0.062 0.004 0.030
Net Realized and Unrealized Gain/(Loss)
on Investments ............................. 6.026 2.746 6.026 3.273
-------- ------- ------ ------
Total from Investment Operations ............. 6.074 2.808 6.030 3.303
-------- ------- ------ ------
LESS DISTRIBUTIONS:
Net Investment Income ........................ (0.048) (0.063) (0.004) (0.038)
Net Realized Gains ........................... (2.046) (1.065) (2.046) (1.065)
-------- ------- ------ ------
Total Distributions .......................... (2.094) (1.128) (2.050) (1.103)
-------- ------- ------ ------
Net Asset Value, End of Period ............... $ 22.67 $ 18.69 $22.67 $18.69
======== ======= ====== ======
TOTAL RETURN ................................. 32.81% 16.43%(3) 32.54% 19.95%(3)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) .............. $109,140 $76,516 $2,766 $ 397
Ratios of Expenses to Average Net Assets(1) .. 1.10% 1.10%(2) 1.35% 1.35%(2)
Ratio of Net Investment Income to
Average Net Assets ......................... 0.22% 0.42%(2) (0.03)% 0.17%(2)
Portfolio Turnover Rate ...................... 37.02% 35.36% 37.02% 35.36%
Average Commission Rate(4) ................... $ 0.058 $ 0.058 $0.058 $0.058
</TABLE>
<TABLE>
<CAPTION>
SMALL-CAP OPPORTUNITY FUND SMALL-CAP VALUE FUND
--------------------------------------------------- ------------------------------
INSTITUTIONAL INSTITUTIONAL
CLASS CLASS A CLASS CLASS A
------------------------- ------------------------ -------------- --------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
YEAR 02/26/96(5) YEAR 04/19/96(5) 03/24/97(5) 07/10/97(5)
ENDED TO ENDED TO TO TO
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97 12/31/97
-------- -------------- -------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ......... $ 15.52 $ 14.24 $15.51 $14.25 $ 28.29 $32.31
-------- -------- ------ ------ ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income ........................ 0.007 0.057 (0.003) 0.032 0.146 0.028
Net Realized and Unrealized Gain/(Loss)
on Investments ............................. 3.865 1.998 3.823 1.996 7.467 3.462
-------- -------- ------ ------ ------- ------
Total from Investment Operations ............. 3.872 2.055 3.820 2.028 7.613 3.490
-------- -------- ------ ------ ------- ------
LESS DISTRIBUTIONS:
Net Investment Income ........................ (0.012) (0.057) 0.000 (0.050) (0.139) (0.036)
Net Realized Gains ........................... (1.670) (0.718) (1.670) (0.718) (2.744) (2.744)
-------- -------- ------ ------ ------- ------
Total Distributions .......................... (1.682) (0.775) (1.670) (0.768) (2.883) (2.780)
-------- -------- ------ ------ ------- ------
Net Asset Value, End of Period ............... $ 17.71 $ 15.52 $17.66 $15.51 $ 33.02 $33.02
======== ======== ====== ====== ======= ======
TOTAL RETURN ................................. 25.47% 14.49%(3) 25.14% 14.29%(3) 27.11%(3) 10.95%(3)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) .............. $274,353 $150,306 $2,485 $ 443 $99,816 $ 292
Ratios of Expenses to Average Net Assets(1) .. 1.20% 1.20%(2) 1.45% 1.45%(2) 0.99%(2) 1.24%(2)
Ratio of Net Investment Income to
Average Net Assets ......................... 0.03% 0.46%(2) (0.22)% 0.10%(2) 0.63%(2) 0.38%(2)
Portfolio Turnover Rate ...................... 39.63% 46.13% 39.63% 46.13% 91.66%(2) 91.66%(2)
Average Commission Rate(4) ................... $ 0.054 $ 0.058 $0.054 $0.058 $ 0.055 $0.055
</TABLE>
See Notes to Financial Statements.
103
<PAGE>
<TABLE>
<CAPTION>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INDEX FUND BALANCED FUND
---------------------------------------------------- -------------------------------
INSTITUTIONAL INSTITUTIONAL
CLASS CLASS A CLASS CLASS A
------------------------ ------------------------- -------------- --------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
YEAR 02/26/96(5) YEAR 04/19/96(5) 03/24/97(5) 04/16/97(5)
ENDED TO ENDED TO TO TO
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97 12/31/97
-------- -------------- -------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .. $ 18.48 $ 16.72 $18.48 $16.35 $ 12.74 $12.56
-------- -------- ------ ------ ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income ................. 0.278 0.268 0.247 0.188 0.377 0.301
Net Realized and Unrealized Gain(Loss)
on Investments ...................... 5.742 2.104 5.725 2.511 2.185 2.411
-------- -------- ------ ------ ------- ------
Total from Investment Operations ...... 6.020 2.372 5.972 2.699 2.562 2.712
-------- -------- ------ ------ ------- ------
LESS DISTRIBUTIONS:
Net Investment Income ................. (0.281) (0.268) (0.233) (0.225) (0.372) (0.342)
Net Realized Gains .................... (0.709) (0.344) (0.709) (0.344) 0.000 0.000
-------- -------- ------ ------ ------- ------
Total Distributions ................... (0.990) (0.612) (0.942) (0.569) (0.372) (0.342)
-------- -------- ------ ------ ------- ------
Net Asset Value, End of Period ........ $ 23.51 $ 18.48 $23.51 $18.48 $ 14.93 $14.93
======== ======== ====== ====== ======= ======
TOTAL RETURN .......................... 32.78% 14.26%(3) 32.51% 16.56%(3) 20.24%(3) 21.72%(3)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) ....... $292,196 $143,954 $6,942 $ 150 $69,415 $ 700
Ratios of Expenses to
Average Net Assets(1) ............... 0.45% 0.45%(2) 0.70% 0.70%(2) 0.88%(2) 1.13%(2)
Ratio of Net Investment Income to
Average Net Assets .................. 1.39% 1.85%(2) 1.14% 1.60%(2) 3.45%(2) 3.20%(2)
Portfolio Turnover Rate ............... 7.10% 4.71% 7.10% 4.71% 108.29%(2) 108.29%(2)
Average Commission Rate(4) ............ $ 0.020 $ 0.038 $0.020 $0.038 $ 0.058 $0.058
<FN>
- ----------------
(1) Without the voluntary waiver of fees, the expense ratios for the year ended
December 31, 1997 and the period ended December 31, 1996 for the
Institutional Shares of the Index Fund would have been 0.47% and 0.49%
(annualized), respectively, and for the Class A shares of the Index Fund
would have been 0.72% and 0.74% (annualized), respectively and for the
period ending December 31, 1997 for the Institutional Class of the Balanced
Fund would have been 0.92% (annualized) and for the Class A shares of the
Balanced Fund would have been 1.17% (annualized), and for the year ended
December 31, 1997 and the period ended December 31, 1996 for the
Institutional Shares of the International Fund would have been 1.42% and
1.38% (annualized), respectively, and for the Class A shares of the
International Fund would have been 1.67% and 1.63% (annualized),
respectively, and for the period ended December 31, 1997 for the
Institutional Class shares of the Emerging Markets Fund would have been
2.09% (annualized) and for the Class A shares of the Emerging Markets Fund
would have been 2.34% (annualized).
(2) Annualized.
(3) Total returns for periods less than one year are not annualized.
(4) Computed by dividing the total amount of commission paid by the total
number of shares purchased and sold during the period.
(5) Date commenced operations.
</FN>
</TABLE>
See Notes to Financial Statements.
104
<PAGE>
<TABLE>
<CAPTION>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INTERNATIONAL FUND EMERGING MARKETS FUND
-------------------------------------------------------- -------------------------------
INSTITUTIONAL INSTITUTIONAL
CLASS CLASS A CLASS CLASS A
-------------------------- --------------------------- -------------- --------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
YEAR 02/26/96(5) YEAR 03/13/96(5) 10/21/97(5) 10/21/97(5)
ENDED TO ENDED TO TO TO
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97 12/31/97
-------- -------------- -------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .. $ 15.46 $ 15.04 $15.46 $14.69 $ 10.00 $10.00
-------- -------- ------ ------ ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income ................. 0.116 0.128 0.078 0.091 0.006 0.002
Net Realized and Unrealized Gain(Loss)
on Investments ...................... (0.858) 0.485 (0.876) 0.860 (1.456) (1.462)
-------- -------- ------ ------ ------- ------
Total from Investment Operations ...... (0.742) 0.613 (0.798) 0.951 (1.450) (1.460)
-------- -------- ------ ------ ------- ------
LESS DISTRIBUTIONS:
Net Investment Income ................. (0.125) (0.125) (0.069) (0.113) 0.000 0.000
Net Realized Gains .................... (1.263) (0.068) (1.263) (0.068) 0.000 0.000
-------- -------- ------ ------ ------- ------
Total Distributions ................... (1.388) (0.193) (1.332) (0.181) 0.000 0.000
-------- -------- ------ ------ ------- ------
Net Asset Value, End of Period ........ $ 13.33 $ 15.46 $13.33 $15.46 $ 8.55 $ 8.54
======== ======== ====== ====== ======= ======
TOTAL RETURN .......................... (4.87)% 4.08%(3) (5.21)% 6.48%(3) (14.50)%(3) (14.60)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) ....... $172,158 $109,747 $1,265 $ 597 $18,023 $ 96
Ratios of Expenses to
Average Net Assets(1) ............... 1.40% 1.36%(2) 1.65% 1.61%(2) 1.75%(2) 2.00%(2)
Ratio of Net Investment Income to
Average Net Assets .................. 0.82% 0.99%(2) 0.57% 0.35%(2) 0.43%(2) 0.18%(2)
Portfolio Turnover Rate ............... 93.33% 6.72% 93.33% 6.72% 0.00% 0.00%
Average Commission Rate(4) ............ $ 0.006 $ 0.020 $0.006 $0.020 $ 0.003 $0.003
</TABLE>
105
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
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 five investment
portfolios. Harris Insight Funds Trust (the "Trust") was organized as a business
trust under the laws of The Commonwealth of Massachusetts on December 6, 1995 as
an open-end diversified management investment company and presently offers
thirteen investment portfolios. The portfolios of the Company and the Trust
(each a "Fund" and collectively, the "Funds") are as follows:
COMPANY:
EQUITY FUNDS:
Harris Insight Equity Fund (" Equity Fund")
FIXED INCOME FUNDS:
Harris Insight Short/Intermediate Bond Fund ("Short/Intermediate Fund")
MONEY MARKET FUNDS:
Harris Insight Government Money Market Fund ("Government Money Fund")
Harris Insight Money Market Fund ("Money Fund")
Harris Insight Tax-Exempt Money Market Fund ("Tax-Exempt Money Fund")
TRUST:
EQUITY FUNDS:
Harris Insight Equity Income Fund ("Equity Income Fund")
Harris Insight Growth Fund ("Growth Fund")
Harris Insight Small-Cap Opportunity Fund ("Small-Cap Fund")
Harris Insight Small-Cap Value Fund ("Small-Cap Value Fund")
Harris Insight Index Fund ("Index Fund")
Harris Insight International Fund ("International Fund")
Harris Insight Balanced Fund ("Balanced Fund") Harris Insight
Emerging Markets Fund ("Emerging Markets Fund")
FIXED INCOME FUNDS:
Harris Insight Convertible Securities Fund ("Convertible
Securities Fund")
Harris Insight Bond Fund ("Bond Fund")
Harris Insight Intermediate Government Bond Fund ("Intermediate
Government Fund")
Harris Insight Intermediate Tax-Exempt Bond Fund ("Intermediate
Tax-Exempt Fund")
Harris Insight Tax-Exempt Bond Fund ("Tax-Exempt Fund")
The Intermediate Government Fund, Convertible Securities Fund, Balanced
Fund and Small-Cap Value Fund commenced operations on March 24, 1997; the
Emerging Markets Fund commenced operations on October 21, 1997. Each of the
Funds currently offers two classes of shares: Class A Shares and Institutional
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 Shares are subject to
certain service organization/agent fees as described in Note 5. Institutional
Shares are not subject to service organization/agent fees.
106
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies used by the
Funds in the preparation of the financial statements which are in accordance
with generally accepted accounting principles. 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 -- The value of securities (other than bonds and
debt obligations maturing in 60 days or less) of the Funds other than Money
Market Funds is determined based on the last sales price on the principal
exchange on which the securities are traded as of the close of regular trading
on the New York Stock Exchange (which is currently 4:00 P.M., Eastern time). In
the absence of any sale on the valuation date, the securities are valued at the
closing bid price. Securities traded only on the over-the-counter markets are
valued at the closing over-the-counter bid prices. Portfolio securities which
are primarily traded on foreign securities exchanges are generally valued at the
closing values of such securities on their respective exchanges, except when an
occurrence subsequent to the time a value was so established is likely to have
changed such value. In such an event, the fair value of those securities will be
determined through the consideration of other factors by or under the direction
of the Board of Trustees and Board of Directors of the Funds. Bonds maturing in
more than 60 days are valued at the mean of the last bid and asked prices. In
the event that such prices are not readily available, securities are valued at
fair value as determined in good faith by the Board of Trustees or Board of
Directors, as the case may be. Prices used for valuations of securities are
provided by independent pricing services and brokers. Debt obligations with
remaining maturities of 60 days or less are valued at amortized cost when the
Trust's Board of Trustees or the Company's Board of Directors, as the case may
be, has determined that amortized cost valuation represents fair value.
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.
(B) FOREIGN CURRENCY TRANSLATION -- The books and records of the
International Fund and the Emerging Markets Fund are maintained in U.S. dollars.
Foreign currency amounts are translated into U.S. dollars on the following
basis:
(i) market value of investment securities, other assets and
liabilities at the current rate of exchange on the valuation date; and
(ii) purchases and sales of investment securities, income and expenses
at the relevant rates of exchange prevailing on the respective dates of
such transactions.
The International Fund and the Emerging Markets Fund do not isolate that
portion of gains and losses on investments in securities which is due to changes
in the foreign exchange rates from that which is due to changes in the market
prices of such securities. The International Fund and the Emerging Markets Fund
report gains and losses on foreign currency related transactions as realized and
unrealized gains and losses for financial reporting purposes, whereas such gains
and losses, to the extent realized, are treated as ordinary income or loss for
federal income tax purposes.
(C) 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.
107
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
(D) DISTRIBUTIONS -- Each of the Funds declares dividends from net
investment income. The Money Market Funds and the Fixed Income Funds (other than
the Convertible Securities Fund) 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 Convertible Securities Fund and the Equity
Funds (other than Small-Cap Fund, Small-Cap Value Fund, International Fund and
Emerging Markets Fund) are declared and paid quarterly. Dividends from the
Small-Cap Fund, Small-Cap Value Fund and the International Fund are declared and
paid semi-annually. Dividends from the Emerging Markets Fund are declared and
paid annually. Each Fund's net realized capital gains, if any, are distributed
at least annually. Distributions to shareholders are recorded on the ex-dividend
dates.
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
reclassified within the capital accounts to conform to their tax treatment in
the period in which the difference arises.
(E) FUTURES CONTRACTS -- The Funds may seek to hedge all or a portion of
their investments through the use of securities index and other financial
futures contracts. Upon entering into a futures contract, a Fund is required to
deposit an amount ("initial margin") equal to a certain percentage of the
contract value. Subsequent payments ("variation margin") are made or received by
the Funds each day, reflecting the daily change in the value of the contracts
and are recorded as an unrealized gain or loss. When the contract is closed, the
Funds will recognize a realized gain or loss.
Futures contracts are subject to the risk associated with the imperfect
correlation between movements in the price of the futures contract and the price
of the securities being hedged. The risk of imperfect correlation increases with
respect to securities index futures as the composition of the Fund's portfolio
diverges from composition of the index underlying such index futures. In
addition, there is no assurance that a liquid secondary market will exist at the
time the Fund elects to close out a futures position.
(F) ORGANIZATION EXPENSES -- Each Fund's share of the costs incurred in
connection with the organization of the Trust have been deferred and are being
amortized over 60 months from commencement of operations of the respective Fund.
(G) ALLOCATION OF EXPENSES -- Expenses which have not been directly charged
to a specific Fund are generally allocated among the Funds primarily on the
basis of relative net assets. Expenses relating to a particular class of shares
of a Fund are charged to that class. Non-class specific expenses of a Fund are
allocated between the classes of shares of the Fund based upon the relative net
assets of the classes.
(H) DOLLAR ROLLS -- The Funds may enter into mortgage dollar rolls in which
a Fund sells mortgage-backed securities for delivery in the current month,
realizing a gain or loss, and simultaneously contracts to repurchase somewhat
similar (same type, coupon and maturity) securities on a specified future date.
During the roll period the Fund forgoes principal and interest paid on the
securities. The Fund is compensated by the interest earned on the cash proceeds
of the initial sale and by the lower repurchase price at the future date.
(I) 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.
108
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
3. REPURCHASE AGREEMENTS
Certain Funds invest in repurchase agreements. Securities pledged as
collateral for repurchase agreements are held by the custodian bank until
maturity of the repurchase agreements. Provisions of the repurchase agreements
and procedures adopted by the Funds require that the market value of the
collateral, including accrued interest thereon, is sufficient in the event of
default by the counterparty. If the counterparty defaults and the value of the
collateral declines or if the counterparty enters an insolvency proceeding,
realization of the collateral by the Funds may be delayed or limited.
4. ADVISORY, ADMINISTRATION AND DISTRIBUTION ARRANGEMENTS
The Company and the Trust retain Harris Trust and Savings Bank ("Harris
Trust") as investment adviser (the "Adviser") for each Fund, pursuant to an
advisory contract 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 the following annual rates:
Each Money Market Fund 0.14% of the first $100 million of net
assets and 0.10% of net assets over
$100 million
Short/Intermediate Fund 0.70%
Bond Fund 0.65%
Intermediate Government Fund 0.65%
Intermediate Tax-Exempt Fund 0.60%
Tax-Exempt Fund 0.60%
Convertible Securities Fund 0.70%
Equity Fund 0.70%
Equity Income Fund 0.70%
Growth Fund 0.90%
Small-Cap Fund 1.00%
Small-Cap Value Fund 0.80%
Index Fund 0.25%
Balanced Fund 0.60%
International Fund 1.05%
Emerging Markets Fund 1.25%
109
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
Harris Trust may, at its discretion, voluntarily waive all or any portion
of its advisory fee for any Fund. For the year ended December 31, 1997, advisory
fees and waivers for certain Funds were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADVISORY FEE WAIVER ADVISORY FEE
------------ -------- ------------
<S> <C> <C> <C>
Short/Intermediate Fund ........... $1,950,205 $812,087 $1,138,118
Bond Fund ......................... 617,981 277,603 340,378
Intermediate Government Fund ...... 453,478 283,923 169,555
Intermediate Tax-Exempt Fund ...... 1,195,229 2,062 1,193,167
Tax-Exempt Fund ................... 1,034,844 564 1,034,280
Convertible Securities Fund ....... 325,654 20,552 305,102
Equity Income Fund ................ 265,358 10,661 254,697
Growth Fund ....................... 875,635 13,517 862,118
Small-Cap Fund .................... 2,218,918 17,029 2,201,889
Small-Cap Value Fund .............. 447,182 38,615 408,567
Index Fund ........................ 581,658 40,100 541,558
Balanced .......................... 297,432 18,183 279,249
International Fund ................ 1,796,685 32,097 1,764,588
Emerging Markets Fund ............. 37,994 10,336 27,658
</TABLE>
There were no advisory fee waivers for other than the above Funds.
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 Funds, other than the Tax-Exempt Money Fund. HIM, as portfolio
manager, receives a fee directly from Harris Trust, not from the Funds. HIM is a
subsidiary of Harris Trust.
Hansberger Global Investors, Inc. ("Hansberger") entered into Investment
Sub-Advisory Agreements with HIM with respect to the International Fund and the
Emerging Markets Fund. Pursuant to the agreement Hansberger selects and manages
the securities in which these Funds invest. Hansberger, as Sub-Adviser, receives
a fee directly from HIM not from the Funds.
The Company and the Trust have an Administration Agreement with Harris
Trust (the "Administrator"). In its capacity as the Administrator, Harris Trust
generally assists the Funds in all aspects of their administration and
operation. The Administrator has entered into a Sub-Administration Agreement
with Funds Distributor, Inc. ("Funds Distributor" or the "Sub-Administrator"),
pursuant to which the Sub-Administrator performs certain administrative services
for the Funds. The Administrator has also entered into a Sub-Administration and
Accounting Services Agreement with PFPC Inc. ("PFPC" or the "Sub-Administrator
and Accounting Services Agent"). Under these Agreements, the Administrator
compensates the Sub-Administrator and the Sub-Administrator and the Accounting
Services Agent for providing such services. Harris Trust also serves as the
transfer and dividend disbursing agent of the Funds (the "Transfer Agent").
Harris Trust has also entered into a Sub-Transfer Agency Services Agreement with
PFPC (the "Sub-Transfer Agent"), pursuant to which the Sub-Transfer Agent
performs certain transfer agency and dividend disbursing agency services. Harris
Trust compensates the Sub-Transfer Agent for providing such services. PNC Bank,
N.A. serves as the Custodian of the assets of the Funds. As compensation for
their services, Harris Trust, in its capacity as the Administrator and Transfer
Agent, and the Custodian are
110
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
entitled to receive a combined fee based on the aggregate average daily net
assets of the Funds, payable monthly at an annual rate of 0.17% of the first
$300 million of average daily net assets; 0.15% of the next $300 million; and
0.13% of the average net assets in excess of $600 million.
Funds Distributor provides services as distributor (the "Distributor") in
connection with sales of shares of the Funds. For the period ended December 31,
1997, fees for services rendered by the Distributor were paid by the
Administrator. Prior to December 1, 1997, Class A shares of the Funds were sold
with a front-end sales charge. Funds Distributor advised the Funds that for the
period ended December 31, 1997, the aggregate sales charges paid with respect to
Class A shares of the Funds were $16,439, of which it had retained $907 and
reallowed $15,532 to dealer firms. Sales charges retained and reallowed are as
follows:
RETAINED REALLOWED
-------- ---------
Short/Intermediate Fund ............ $ 81 $1,392
Equity Fund ........................ 392 6,761
Equity Income Fund ................. 5 80
Growth Fund ........................ 108 1,800
Small-Cap Fund ..................... 134 2,246
Index Fund ......................... 40 688
International Fund ................. 147 2,565
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, 1997 aggregated approximately
$198,300, an applicable portion of which is included in accrued expenses of each
applicable Fund.
Certain employees of PFPC, Inc. and Funds Distributor are officers of the
Funds. During the period ended December 31, 1997, PFPC, Inc. and Funds
Distributor received in aggregate fees and expenses of $3,590,556 and
$2,662,159, respectively, from the Administrator for services rendered under
various agreements described above. For the period ended December 31, 1997,
Funds Distributor voluntarily waived fees of $114,341 for the Government Money
Fund and $476,735 for the Money Fund.
5. SERVICE PLANS
Effective December 1, 1997, the Company and the Trust adopted a new Service
Plan (the "New Plan") for the Class A Shares of each Fund providing for the
payment of service fees of up to 0.25% (on an annualized basis) of the average
daily net assets attributable to the Fund's Class A Shares. Because the New Plan
does not authorize payments for distribution purposes, that Plan was not adopted
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended. The
prior Service Plans (the "12b-1 Plans"), which had been adopted pursuant to Rule
12b-1, were terminated with respect to the non-Money Market Funds. The existing
12b-1 Plan relating to Class A Shares of the Money Market Funds was amended to
reduce the maximum fees payable by a Money Market Fund for distribution and
other services from 0.35% to 0.10% (on an annualized basis) of the average daily
net assets attributable to the Fund's Class A shares (such fees in addition to
the fees payable under the New Plan).
111
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
Each non-Money Market Fund is permitted to enter into service agreements
with banks and other institutions (each a "Service Agent") pursuant to the New
Plan (and previously was so permitted pursuant to the 12b-1 Plan). A Service
Agent may receive fees with respect to a Fund's Class A shares owned by
shareholders for whom the Service Agent is the dealer or holder of record, or
with whom the Service Agent has a servicing relationship. Harris Trust and Funds
Distributor may act as Service Agents 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
Class A shares. For the periods indicated below, the non-Money Market Funds paid
the following fees pursuant to the New Plan and 12b-1 Plan, including fees paid
to Harris Trust and Funds Distributor:
01/01/97 12/01/97
TO TO
11/30/97 12/31/97
-------- --------
Short/Intermediate Fund ............ $11,317 $1,254
Bond Fund .......................... 975 177
Intermediate Government Fund ....... 45 85
Intermediate Tax-Exempt Fund ....... 298 136
Tax-Exempt Fund .................... 420 118
Convertible Securities Fund ........ 41 22
Equity Fund ........................ 24,355 3,500
Equity Income Fund ................. 1,195 253
Growth Fund ........................ 2,319 472
Small-Cap Fund ..................... 2,211 436
Small-Cap Value Fund ............... 32 51
Index Fund ......................... 3,307 1,115
Balanced Fund ...................... 84 132
International Fund ................. 2,063 279
Emerging Markets Fund .............. 24 20
The Money Market Funds may make payments to Service Agents under the New
Plan. In addition, the Money Market Funds continue to have a 12b-1 Plan. Under
the 12b-1 Plan, each Money Market Fund may enter into service agreements with
banks and other institutions (each a "Service Organization"). A Service
Organization may receive fees with respect to a Money Market Fund's shares to
provide certain shareholder support services and distribution assistance to
holders of Class A shares. For the period from January 1, 1997 through November
30, 1997, 12b-1 fees were $681,983, $1,475,860 and $506,301 (net of voluntary
waivers of $116,731, $238,419 and $102,467) for the Class A shares of Government
Money Fund,Money Fund and Tax-Exempt Money Fund, respectively, all of which were
paid to Harris Trust. For the period from December 1, 1997 through December 31,
1997, shareholder services fees were $55,385, $139,215, and $49,248 and 12b-1
fees were $22,154, $55,686, and $19,699 (with voluntary waivers of $22,154,
$55,686, and $19,699) for the Class A Shares of the Government Money Fund, Money
Fund and Tax-Exempt Money Fund, respectively.
6. PUBLIC OFFERING PRICE
Effective December 1, 1997, the front-end sales charge assessed on Class A
Shares of the Funds has been eliminated. Class A Shares were previously sold
with a maximum front-end sales charge of 4.50%.
112
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
7. INVESTMENT TRANSACTIONS
The cost of investments at December 31, 1997 and the net realized gains and
losses on securities sold for the period then ended for each of the Funds for
federal income tax purposes was not materially different from the amounts
reported for financial reporting purposes.
Purchases and sales of investment securities of the Non-Money Market Funds
(excluding short-term investments and U.S. government securities) during the
period ended December 31, 1997 were as follows:
PURCHASES SALES
------------ ------------
Short/Intermediate Fund ................. $201,538,957 $119,511,814
Bond Fund ............................... 100,971,745 28,521,068
Intermediate Government Fund ............ 8,386,265 --
Intermediate Tax-Exempt Fund ............ 94,169,993 107,940,250
Tax-Exempt Fund ......................... 111,511,731 102,021,344
Convertible Securities Fund ............. 38,547,119 37,721,535
Equity Fund ............................. 674,861,071 622,521,209
Equity Income Fund ...................... 10,862,194 11,573,338
Growth Fund ............................. 41,395,066 34,986,222
Small-Cap Fund .......................... 146,465,158 80,248,118
Small-Cap Value Fund .................... 76,558,748 48,724,696
Index Fund .............................. 112,383,620 15,931,744
Balanced Fund ........................... 41,482,587 28,521,883
International Fund ...................... 164,667,827 150,512,911
Emerging Markets Fund ................... 16,934,684 --
Purchases and sales of U.S. government securities, excluding short-term
securities, of the Non-Money Market Funds during the period ended December 31,
1997 were as follows:
PURCHASES SALES
------------ ------------
Short/Intermediate Fund ................. $111,504,909 $142,505,919
Bond Fund ............................... 112,317,091 93,207,047
Intermediate Government Fund ............ 55,968,151 58,026,381
Balanced Fund ........................... 20,502,992 24,023,713
113
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
At December 31, 1997, gross unrealized appreciation (depreciation) for each
Fund was as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------- ------------- --------------
<S> <C> <C> <C>
Short/Intermediate Fund ....... $ 4,153,440 $ (1,975,669) $ 2,177,771
Bond Fund ..................... 2,608,277 (683,834) 1,924,443
Intermediate Government Fund .. 1,747,990 (173,784) 1,574,206
Intermediate Tax-Exempt Fund .. 5,950,500 (41,041) 5,909,459
Tax-Exempt Bond Fund .......... 9,797,895 -- 9,797,895
Convertible Securities Fund ... 8,584,843 (1,241,093) 7,343,750
Equity Fund ................... 223,239,304 (14,745,847) 208,493,457
Equity Income Fund ............ 14,084,209 (766,176) 13,318,033
Growth Fund ................... 41,816,937 (770,380) 41,046,557
Small-Cap Fund ................ 85,439,353 (10,367,480) 75,071,873
Small-Cap Value Fund .......... 18,958,215 (3,294,437) 15,663,778
Index Fund .................... 108,438,779 (2,736,784) 105,701,995
Balanced Fund ................. 7,995,497 (936,002) 7,059,495
International Fund ............ 19,538,033 (33,539,231) (14,001,198)
Emerging Markets Fund ......... 504,859 (2,873,068) (2,368,209)
</TABLE>
At December 31, 1997, the Short/Intermediate Fund and the International
Fund had available capital loss carryforwards of approximately $2,204,671, and
$2,249,736 that may be used to offset future net capital gains through 2004 and
2005, respectively.
8. IN-KIND TRANSFER OF SECURITIES
On March 24, 1997, the following Funds issued shares of beneficial interest
in a tax-free exchange for portfolio securities at their current value from
collective investment funds managed by Harris Trust. The tax basis of the
securities exchanged for the shares of the Funds was carried over to the
respective Funds. The number of shares issued, the current value on the date of
transfer and the unrealized gain (loss) on securities included in the transfer
are as follows:
NUMBER UNREALIZED
OF SHARES APPRECIATION
ISSUED VALUE (DEPRECIATION)
--------- ------------ -------------
Convertible Securities Fund .. 2,004,512 $ 58,436,583 $ 9,464,569
Intermediate Government Fund . 5,972,896 96,258,619 (514,251)
Small-Cap Value Fund ......... 1,724,299 48,777,614 11,378,598
Balanced Fund ................ 4,447,715 56,647,149 (1,529,239)
International Fund ........... 4,158,157 62,039,734 2,638,944
114
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
9. NET ASSETS
At December 31, 1997, net assets of each Fund consisted of:
<TABLE>
<CAPTION>
GOVERNMENT TAX-EXEMPT
MONEY FUND MONEY FUND MONEY FUND
------------ -------------- ------------
<S> <C> <C> <C>
Capital Stock at Par Value ............................... $ 311,564 $ 1,705,889 $ 721,055
Paid-in Capital .......................................... 311,252,368 1,704,183,557 720,333,576
Undistributed Net Investment Income ...................... -- -- --
Accumulated Net Realized Gain/(Loss) ..................... (72) 5,817 2,372
Unrealized Appreciation/(Depreciation) on
Investment Transactions, Futures Contracts
and Foreign Currency Transactions ..................... -- -- --
------------ -------------- ------------
Net Assets ............................................... $311,563,860 $1,705,895,263 $721,057,003
============ ============== ============
</TABLE>
<TABLE>
<CAPTION>
SHORT/ INTERMEDIATE
INTERMEDIATE GOVERNMENT
FUND BOND FUND FUND
------------ -------------- ------------
<S> <C> <C> <C>
Capital Stock or Beneficial Interest at
Par Value ............................................. $ 28,876 $ 13,864 $ 6,052
Paid-in Capital .......................................... 294,804,690 138,899,212 98,510,362
Undistributed Net Investment Income ...................... 1,596 -- 708
Accumulated Net Realized Gain/(Loss) ..................... (2,204,671) 545,389 (16,304)
Unrealized Appreciation/(Depreciation) on
Investment Transactions, Futures Contracts
and Foreign Currency Transactions ..................... 2,177,771 1,924,443 1,574,206
------------ -------------- ------------
Net Assets ............................................... $294,808,262 $ 141,382,908 $100,075,024
============ ============== ============
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE CONVERTIBLE
TAX-EXEMPT TAX-EXEMPT SECURITIES EQUITY
FUND FUND FUND FUND
------------ -------------- ------------ ------------
<S> <C> <C> <C> <C>
Capital Stock or Beneficial Interest at
Par Value ............................................. $ 18,017 $ 17,151 $ 2,085 $ 49,114
Paid-in Capital .......................................... 187,070,145 170,293,965 51,015,941 612,079,509
Undistributed Net Investment Income ...................... -- -- 34,069 (28,259)
Accumulated Net Realized Gain/(Loss) ..................... 655,792 406,339 1,073,119 43,094,673
Unrealized Appreciation/(Depreciation) on
Investment Transactions, Futures Contracts
and Foreign Currency Transactions ..................... 5,909,459 9,797,895 7,343,750 208,493,457
------------ -------------- ------------ ------------
Net Assets ............................................... $193,653,413 $ 180,515,350 $ 59,468,964 $863,688,494
============ ============== ============ ============
</TABLE>
115
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EQUITY SMALL-CAP
INCOME GROWTH SMALL-CAP VALUE
FUND FUND FUND FUND
----------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Capital Stock or Beneficial Interest at
Par Value ............................................... $ 2,553 $ 4,936 $ 15,636 $ 3,032
Paid-in Capital ............................................ 27,776,610 67,674,856 200,587,279 81,228,049
Undistributed Net Investment Income ........................ 10,492 (3,589) (84,394) 22,584
Accumulated Net Realized Gain/(Loss) ....................... 557,684 3,183,717 1,247,999 3,190,863
Unrealized Appreciation/(Depreciation) on
Investment Transactions, Future Contracts
and Foreign Currency Transactions ....................... 13,318,033 41,046,557 75,071,873 15,663,778
----------- ------------ ------------ ------------
Net Assets ................................................. $41,665,372 $111,906,477 $276,838,393 $100,108,306
=========== ============ ============ ============
EMERGING
INDEX BALANCED INTERNATIONAL MARKETS
FUND FUND FUND FUND
------------ ----------- ------------ -----------
Capital Stock or Beneficial Interest at
Par Value ............................................... $ 12,722 $ 4,696 $ 13,018 $ 2,120
Paid-in Capital ............................................ 191,427,434 61,841,451 189,730,494 20,546,435
Undistributed Net Investment Income ........................ (47,252) 20,378 (69,143) --
Accumulated Net Realized Gain/(Loss) ....................... 2,042,845 1,188,909 (2,249,736) (60,869)
Unrealized Appreciation/(Depreciation) on
Investment Transactions, Future Contracts
and Foreign Currency Transactions ....................... 105,701,995 7,059,495 (14,001,198) (2,368,209)
------------ ----------- ------------ -----------
Net Assets ................................................. $299,137,744 $70,114,929 $173,423,435 $18,119,477
=========== =========== ============ ===========
</TABLE>
10. CONCENTRATION OF RISKS
The Tax-Exempt Money Fund, Intermediate Tax-Exempt Fund and Tax-Exempt Bond
Fund invest primarily in a diversified portfolio of municipal securities,
including municipal bonds and debentures. The Fixed Income Funds and the Money
Market Funds invest in debt instruments. The issuers' abilities to meet their
obligations may be affected by political and economic developments in a specific
state or region or their respective industries.
The International Fund and the Emerging Markets Fund invest in securities
of foreign issuers in various countries. These investments may involve certain
considerations and risks not typically associated with investments in the U.S.,
as a result of, among other factors, the possibility of future political and
economic developments and the level of governmental supervision and regulation
of securities markets in the respective countries.
11. OTHER RELATED PARTY TRANSACTIONS
During 1997, an affiliate of the Adviser purchased a security from the
Money Market Fund at an amount $1,470,000 in excess of the security's fair
value. The Money Market Fund recorded a realized loss on the sale and an
offsetting capital contribution from the affiliate.
116
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
12. SHAREHOLDER MEETING
At a Special Meeting of Shareholders on August 6, 1997, shareholders of the
International Fund were asked to approve a new Investment Sub-Advisory Contract
between Harris Investment Management,Inc. and Hansberger Global Investors, Inc.
A summary of the resulting votes is presented below.
VOTES FOR* VOTES AGAINST* VOTES ABSTAINED*
-------------- ------------- ---------------
11,030,816.235 294.513 0
*This includes shares which Harris Trust and Savings Bank held in nominee
name and with respect to which voting instructions were not received from its
customers, and such shares were voted in proportion to the votes actually
received from beneficial owners by Harris Trust and Savings Bank. Accordingly,
there were no broker non-votes (proxies sent in by brokers and other nominees
which cannot be voted because instructions have not been received from the
beneficial owners).
117
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
THE SHAREHOLDERS, BOARD OF DIRECTORS AND BOARD OF TRUSTEES OF
HARRIS INSIGHT FUNDS
HARRIS INSIGHT FUNDS TRUST
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
Harris Insight Equity Fund, Harris Insight Short/Intermediate Bond Fund, Harris
Insight Government Money Market Fund, Harris Insight Money Market Fund and
Harris Insight Tax-Exempt Money Market Fund (comprising Harris Insight Funds)
and Harris Insight Equity Income Fund, Harris Insight Growth Fund, Harris
Insight Small-Cap Opportunity Fund, Harris Insight Small-Cap Value Fund, Harris
Insight Index Fund, Harris Insight International Fund, Harris Insight Balanced
Fund, Harris Insight Emerging Markets Fund, Harris Insight Convertible
Securities Fund, Harris Insight Bond Fund, Harris Insight Intermediate
Government Bond Fund, Harris Insight Intermediate Tax-Exempt Bond Fund and
Harris Insight Tax-Exempt Bond Fund (comprising Harris Insight Funds Trust)
(hereafter referred to collectively as the "Funds") at December 31, 1997, and
the results of each of their operations, the changes in each of their net assets
and the financial highlights for each of the periods indicated, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' 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, 1997 by
correspondence with the custodians and brokers and the application of
alternative procedures where securities purchased had not been settled, provide
a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania
February 3, 1998
118
<PAGE>
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<PAGE>
HARRIS INSIGHT(REGISTRATION MARK) FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
TELEPHONE: (800) 982-8782
INVESTMENT ADVISER, ADMINISTRATOR,
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
PORTFOLIO MANAGEMENT AGENT
Harris Investment Management, Inc.
190 South LaSalle Street
Chicago, Illinois 60603
SUB-ADMINISTRATOR AND ACCOUNTING
SERVICES AGENT, SUB-TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
PFPC Inc.
103 Bellevue Parkway
Wilmington, Delaware 19809
SUB-ADMINISTRATOR AND DISTRIBUTOR
Funds Distributor, Inc.
60 State Street, Suite 1300
Boston, Massachusetts 02109
CUSTODIAN
PNC Bank, N.A.
Broad & Chestnut Streets
Philadelphia, Pennsylvania 19101
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
BOARD OF DIRECTORS AND BOARD OF TRUSTEES
C. GARY GERST
Chairman of the Board of Directors and Board of Trustees;
Chairman Emeritus, LaSalle Partners, Ltd.
(real estate investment management and consulting).
EDGAR R. FIEDLER
Senior Fellow and Economic Counsellor, The Conference Board; Director, The
Stanley Works, Scudder Institutional Funds, AARP Income Trust, Brazil Fund,
Emerging Mexico Fund, and Scudder Pathway Series.
JOHN W. MCCARTER, JR.
President and Chief Executive Officer, The Field Museum of Natural History
(Chicago); Director and Trustee, LaSalle Partners Funds, Inc.; Former Senior
Vice President and Director, Booz-Allen & Hamilton, Inc. (consulting firm);
Director, W.W. Grainger,Inc. and A.M. Castle, Inc.
ERNEST M. ROTH
Consultant; Director, La Rabida Children's Hospital; Chairman, La Rabida
Children's Foundation; Retired Senior Vice President and Chief Financial
Officer, Commonwealth Edison Company.
OFFICERS
RICHARD W. INGRAM
President, Treasurer and
Chief Financial Officer
CHRISTOPHER J. KELLEY
Vice President and Secretary
MARY A. NELSON
Assistant Treasurer
Thomas J. Ryan
Assistant Treasurer
JOSEPH T. GRAMLICH
Assistant Secretary
KAREN JACOPPO-WOOD
Assistant Secretary
ANDREA M. PASSARELLA
Assistant Secretary
SHARON A. VANDIVER
Assistant Secretary
This report is submitted for the general information of the shareholders of the
Harris Insight Funds. It is not authorized for distribution to prospective
investors unless accompanied or preceded by a prospectus of the Harris Insight
Funds. Please read the prospectus carefully before you invest or send money.
DISTRIBUTOR:
Funds Distributor Inc.
HA1297
