Harris
Insight(REGISTRATION MARK) Funds
ANNUAL REPORT
DECEMBER 31, 1998
HARRIS
INSIGHT(REGISTRATION MARK) FUNDS (LOGO)
[GRAPHIC OMITTED]
POWERFUL INSIGHT. SOLID INVESTMENTS.(REGISTRATION MARK)
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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LETTER TO SHAREHOLDERS
DEAR SHAREHOLDER:
We are pleased to report to you results for the Harris Insight(REGISTRATION
MARK) Funds for the year ended December 31, 1998.
Within this Annual Report you will find Harris Investment Management's review of
the fixed-income and equity markets during the year, as well as their outlook
for the markets and the economy for the balance of 1999 and beyond. In addition,
summary reports for each of the Harris Insight Funds are also provided, with
information about the major factors which influenced each Fund's performance, as
well as a complete list of portfolio holdings.
HARRIS INSIGHT FUNDS PERFORM
The overall performance of the Harris Insight Fund Family in 1998 was strong. In
particular, performance of a number of the Harris Insight Equity Funds was
especially noteworthy, as the Funds continued their track record of three
consecutive years of positive results.
Contributing to these robust returns was the performance of the stock market in
1998, which confounded investment experts with a stunning performance in spite
of extreme volatility over the course of the year. The Harris Insight Fixed
Income Funds, in turn, benefited from positive performance by all sectors of the
fixed income markets.
In its March 1999 issue, MUTUAL FUNDS MAGAZINE identified some of the Harris
Insight Equity Funds whose 1998 returns exceeded those of their peer group
averages (that is, the average returns of funds with similar investment
objectives that the Funds can be compared against): Retail (Class A) Shares of
the Harris Insight Equity Income, Growth, and Index Funds.
Additional information concerning the investment strategies utilized by Harris
Investment Management to capitalize on the favorable market environments is
contained in each of the individual summary reports for the Harris Insight
Funds.
CONTINUED GROWTH IN FUND ASSETS
Assets in the Harris Insight Funds grew significantly in 1998. At December 31,
1998, total assets in the Fund family stood at $6.8 billion.
Increased distribution of the Harris Insight Funds has been an important
priority for us. Increasing fund assets provides a larger base over which to
spread certain expenses associated with operating mutual funds.
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LETTER TO SHAREHOLDERS
(CONTINUED)
During the course of the year, the Harris Insight Funds were made available
through several major national financial services providers, including Fidelity
Investments(REGISTRATION MARK), Charles Schwab & Co., and Jack White & Company.
For investors on the World Wide Web, the Harris Insight Funds are now offered
through E*Trade(REGISTRATION MARK). We expect the distribution network for our
Funds to continue to expand in the year ahead.
INVESTMATCH PROGRAM NOW AVAILABLE TO SHAREHOLDERS
We are very pleased to announce a new program available to assist investors in
determining a blend of Harris Insight Funds that matches their investment style.
Utilizing a simple questionnaire, the Harris Insight Funds INVESTMATCH program
helps investors find a combination of mutual funds well suited to their
particular risk tolerance and investment objectives. For more information about
INVESTMATCH for you or someone you know, please call 1-800-982-8782.
Whether you are new to our growing Fund family or have been an investor with us
since the Funds' inception, we thank you for the confidence you have placed in
us. We value the relationship we have with you and encourage you to contact us
with any comments or suggestions as to how we may better serve your investing
needs.
Sincerely,
/s/ GEORGE A. RIO
George A. Rio
President, Treasurer and Chief Financial Officer
THE HARRIS INSIGHT FAMILY OF MUTUAL FUNDS
INVESTMENT ADVISER: HARRIS TRUST AND SAVINGS BANK
PORTFOLIO MANAGEMENT AGENT: HARRIS INVESTMENT MANAGEMENT, INC.
DISTRIBUTOR: FUNDS DISTRIBUTOR, INC.
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TABLE OF CONTENTS
LETTER TO SHAREHOLDERS PAGE 1
THE MARKET ENVIRONMENT
Economic Review PAGE 4
Fixed Income Markets Review PAGE 6
Equity Markets Review PAGE 7
PORTFOLIO MANAGEMENT REVIEW
Fund Summaries PAGE 8-24
TAX INFORMATION -- FIXED INCOME AND EQUITY FUNDS PAGE 25
STATEMENT OF NET ASSETS
MONEY MARKET FUNDS:
Government Money Market Fund PAGE 26
Money Market Fund PAGE 27
Tax-Exempt Money Market Fund PAGE 29
FIXED INCOME FUNDS:
Short/Intermediate Bond Fund PAGE 34
Bond Fund PAGE 38
Intermediate Government Bond Fund PAGE 42
Intermediate Tax-Exempt Bond Fund PAGE 44
Tax-Exempt Bond Fund PAGE 48
Convertible Securities Fund PAGE 51
EQUITY FUNDS:
Equity Fund PAGE 54
Equity Income Fund PAGE 56
Growth Fund PAGE 58
Small-Cap Opportunity Fund PAGE 60
Small-Cap Value Fund PAGE 63
Index Fund PAGE 65
Balanced Fund PAGE 71
International Fund PAGE 76
Emerging Markets Fund PAGE 79
STATEMENTS OF OPERATIONS PAGE 82
STATEMENTS OF CHANGES IN NET ASSETS PAGE 84
STATEMENTS OF CHANGES -- CAPITAL STOCK ACTIVITY PAGE 88
FINANCIAL HIGHLIGHTS PAGE 94
NOTES TO FINANCIAL STATEMENTS PAGE 102
REPORT OF INDEPENDENT ACCOUNTANTS PAGE 112
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THE MARKET ENVIRONMENT
ECONOMIC REVIEW
DECEMBER 31, 1998
As we begin 1999, economic growth gives no indication that it is slowing. Fourth
quarter GDP grew at an estimated annual rate of 5.6%, not only an above average
rate but also an acceleration from the third quarter.At present, no recession
appears to loom on the horizon.
ECONOMIC GROWTH SHOULD SLOW AS THE YEAR PROGRESSES
Although the economy is not capacity constrained in terms of plant and
equipment, there is very little stock in the labor pool. The unemployment rate
continues to stay at a low level. This is likely to act like a control on future
growth.
U.S. export markets are likely to slow despite signs that Asian economies are
bottoming. This is because European economies are slowing; in particular, the
U.K., Germany and Brazil are slipping into deep recession. The latter threatens
to engulf not only some of their neighboring economies but also Mexico, the
U.S.'s third largest trading partner.
Finally, the strong rise in the financial markets, in conjunction with robust
job and income growth, has created a substantial wealth effect for consumer
spending. With easy credit conditions existing, as well as lower interest rates,
a potent backdrop for consumer spending has been created. However, interest
rates may be nearing their bottom, credit conditions may become more restrictive
and layoffs are increasing. These factors will all tend to slow the economic
expansion.
LIQUIDITY CONTINUES TO DRIVE THE FINANCIAL MARKETS
At mid-year we noted that liquidity was positively impacting both stock and bond
prices. This factor continued over the second half of 1998, causing stock prices
to move to record levels. With economic uncertainty in many parts of the world,
and earnings growth slowing for all but the largest companies, this liquidity is
flowing into a very narrow segment of the stock and bond markets.
Although it is not certain, it is likely the Federal Reserve Board (Fed) will
begin to drain liquidity from the banking system if Asian economies begin to
improve. This, of course, assumes that conditions in Latin America do not worsen
dramatically. If they do, the Fed would probably continue to ease. However, at
this point, the Fed has definitely moved away from its previous accommodative
policy position.
DEFLATIONARY PRESSURES NEGATIVELY IMPACT THE EARNINGS OUTLOOK
Excess capacity around the world is creating downward pricing pressures on
virtually every type of business. These deflationary pressures are causing
earnings growth to slow as most companies find it impossible to raise prices. As
labor costs begin to rise and if unit demand slows with the economy, investors
can expect earnings growth to slow as well. Thus, in 1999 the U.S. could avoid
an ECONOMIC recession but instead witness a PROFITS recession.
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THE MARKET ENVIRONMENT
ECONOMIC REVIEW
DECEMBER 31, 1998 (CONTINUED)
MARKET VOLATILITY IS RISING
With increased economic and earnings uncertainty, investors are likely to
experience even greater market volatility. Because the market's leadership has
become so narrow, one should not be surprised to see this volatility largely
concentrated in a few issues and sectors.
All in all, 1999 could shape up to be a transition year. The economy should
slow, but not slip into recession; earnings growth will also slow, but much more
dramatically, and security prices will become even more volatile. Growth of all
kinds will be more difficult for investors to find.
DAVID L. MEAD
Vice President and Chief Investment Officer
Harris Trust and Savings Bank
5
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THE MARKET ENVIRONMENT
FIXED INCOME MARKETS REVIEW
DECEMBER 31, 1998
Despite the roller-coaster performance that bond investors were treated to
during 1998, the year provided attractive returns for fixed income investors.
In particular, the total return on a 30-year Treasury bond, at 17.6%, looked
more like the double-digit performance of an equity investment.
Lower-rated bonds outperformed Treasury bonds through the first half of the
year, as investors searched for higher-yielding securities. However, sentiment
reversed sharply in late summer, triggered in part by the devaluation of the
Russian ruble, which in turn heightened fears of an impending global credit
crisis.
This dramatic and far-reaching turn of events sparked a widespread flight to
quality, where investors worldwide sought a safe haven in U.S. government-backed
securities. Investor demand pushed the yield on the 30-year bond to 4.72%, the
lowest rate on long-term debt in more than 30 years.
During the late summer crisis, the prices of non-government bonds were in a
tailspin, as fixed-income investors shunned any bonds with which they associated
risk. This free fall in prices was exacerbated by the collapse of Long Term
Capital Management, a huge hedge fund. The giant hedge fund's problems caused
other hedge funds to dump both mortgage-backed securities and lower-rated "junk"
bonds.
A successive string of three quarter-point interest rate cuts by the Fed during
the fall, which brought the Federal Funds rate down to 4.75%, provided some
liquidity and stability to the non-government sectors of the fixed income
markets, sparking a late-year rally in prices. Nonetheless, 1998 ended as one of
the few years in the last two decades in which Treasury bonds outperformed
higher-yielding corporate and mortgage-backed bonds.
By year-end, the yield on 30-year Treasury bonds stood at 5.09%, down from 5.92%
at the end of 1997 and the lowest level seen since the middle of the 1960s.
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
DECEMBER 31, 1998
Few would have believed that a year that produced market volatility not seen
since 1987 also produced the fourth consecutive year of double-digit gains in
the stock market.
For the year ended December 31, 1998, the broad equity market, as represented by
the Standard & Poor's(REGISTRATION MARK) 500 Stock Index, appreciated 26.67%.
This strong showing belied the domestic and international economic concerns that
dogged the equity markets throughout the course of the year.
For example, as late in the year as August 31, the Dow Jones Industrial
Average (SM) (DJIA) was actually down 4.7% for the year, and almost 20% from its
high.
A number of factors weighed heavily on the markets. The first was heightened
anxiety over the Asian financial crisis, and its ultimate impact on U.S.
corporations and their profits. In addition, many investors had braced
themselves for a significant slowdown in corporate earnings growth, and viewed
any sign of weakness as proof positive that a decline in earnings was well
underway.
Positively, inflation remained well under control despite continued steady
growth in the U.S. economy. Moves by the Fed to lower interest rates during
September, October and November also heartened investors. In particular,
investors viewed the Fed's accommodative stance as a sign that the Fed was
committed to providing stability to the markets.
Supporting the market was massive amounts of liquidity from U.S. mutual fund
buyers and foreign investors. Foreign buyers, in particular, sought a safe haven
in U.S. dollar-denominated securities such as stocks and bonds.
By the fourth quarter, the equity markets came roaring back, with the DJIA
surging to record levels on November 24. The markets largely shrugged off the
political environment in Washington as well as events in the Middle East,
maintaining most of its fourth-quarter gains.
WILLIAM O. LESZINSKE
President and Chief Investment Officer
Harris Investment Management, Inc.
7
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FUND SUMMARY
MONEY MARKET FUNDS
DECEMBER 31, 1998
GOVERNMENT MONEY MARKET FUND
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 exclusively in U.S.
Government securities that have remaining maturities of 397 days or less and
certain repurchase agreements.
INVESTMENT RESULTS: The year began with continued strong performance by this
Fund. A market rally early in the first quarter shifted the front end of the
treasury yield curve down, but by the end of the quarter rising interest rates
provided an opportunity to capture some yield advantage.
Despite purchases made in late April, we continued to hold 60% of the portfolio
in securities maturing within the next month. The severe inversion of the
treasury yield curve made short-duration securities preferable to longer-term
instruments. By the third quarter, these short duration investments comprised
over 80% of the portfolio.
By the fourth quarter, we took advantage of higher yields at the longer end of
the money market yield curve and extended the Fund's average-days-to-maturity.
However, when short-term rates resumed their decline, variable rate issues
replaced a portion of our fixed holdings as we sought to buy higher yielding
instruments.
The Fund's Institutional Shares' cumulative total return for the year was 5.43%
compared to the Fund's Lipper universe which experienced a total return of
5.30%, and the Class A Shares cumulative return was 5.08%. The Retail (Class A)
Shares retained a Lipper ranking within or over the top quartile ranking for the
1-, 3-, 5-, and 10-year periods ended 12/31/98. The newer Institutional Shares
were also a top quartile performer over the three-year period the Fund has been
in existence.
MONEY MARKET FUND
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: Both the Institutional and Class A (Retail) Shares began the
year in the top decile ranking for the trailing twelve months in their
respective Lipper universes. By year end, the Institutional Shares were in the
top 3% and the Class A (Retail) Shares were in the top 12% of their respective
Lipper universes.
Much of the Fund's successful performance was due to timely shifts in the Fund's
average-days-to-maturity. Early in the year, investors were paid an attractive
incremental yield to extend into the longer end of the money market curve (1
year). We were able to lock in higher rates for the Fund during this period. By
mid-year, the curve had flattened and in the third quarter, during the global
credit crisis, the money market curve inverted, with rates on shorter-term
issues exceeding those for similar one-year investments. In this environment the
average maturity of the Fund was
8
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FUND SUMMARY
MONEY MARKET FUNDS
DECEMBER 31, 1998 (CONTINUED)
allowed to decline as there was no yield incentive to extend maturity. The
proceeds from maturing investments were invested in floating-rate obligations to
maintain attractive yields while awaiting an opportunity to extend the
portfolio's maturity at more appealing levels.
During December, we began to reduce our overnight cash exposure and changed the
term structure by rotating holdings into commercial paper maturing in January
and February of 1999. In this way we could capture significantly higher yields
over the year-end, exploit widening yield spreads in the commercial paper sector
and set up the Fund to benefit from the usual January increase in supply.
TAX-EXEMPT MONEY MARKET FUND
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 with 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 fell sharply at
the start of the first quarter of 1998. This was due to the considerable amount
of cash that flowed into the tax-exempt money market from the January 1st
interest and maturity payment date. During the quarter, we increased our
exposure to commercial paper instruments rather than municipal notes, resulting
in favorable Fund performance.
During the second quarter, the tax-exempt money market experienced
supply-and-demand ratio fluctuations, resulting in erratic cash flows into the
Fund. New note issuance came to market at yields 30 basis points less than the
prior year. Mass buying by brokers kept note yields at all-time lows. There was
very little extension in the Fund's duration during this time period.
By the third quarter, however, money market municipal rates stabilized,
increasing the attractiveness of municipals, and the Fund was able to purchase
longer-dated maturities to extend duration while increasing yields. Dealers
offered an increasing supply of non-rated and synthetic notes which we
selectively added only when they were of credit quality comparable to our
approved issuers. During the final quarter, the municipal yield curve flattened
and volatility increased. To handle market gyrations, we reinvested much of the
Fund's proceeds in commercial paper, variable rate securities, and quality
non-rated notes.
The Fund's Institutional Shares cumulative total return for the year was 3.35%
compared to the Fund's Lipper universe which experienced a total return of
3.18%. The Retail (Class A) Shares cumulative total return was 3.02%, compared
to its Lipper universe of 2.92%.
An investment in the Harris Insight Money Market Funds is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
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.
9
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FUND SUMMARY
SHORT/INTERMEDIATE BOND FUND
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, 1998.
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: Over the long term, the Fund has reaped significant added
value from a strategy of overweighting non-Treasury investment grade securities.
In particular, by minimizing its exposure to shorter average maturity U.S.
Treasurys, the Fund, over time, has successfully offered incremental yield
without adding undue risk. However, in 1998, this sector approach proved
detrimental as global events drove investors to the safe haven of U.S.
Treasurys, pushing Treasury yields to their lowest level in decades.
In 1998, investors were faced with a multitude of financial emergencies,
both global and domestic. Along with the near collapse of many Asian economies,
Japan's banking crisis, Russia's default and Brazil's currency crisis, investors
were forced to contend with a liquidity melt-down sparked by the near demise of
the hedge fund industry. In response to these events, demand for quality and
liquidity reached extremely high levels and investors turned their backs on
everything but U.S. Treasurys. Indeed, the degree to which Treasurys
outperformed other asset classes was shocking. Not surprisingly, the Fund's
strategy of minimizing Treasury holdings proved detrimental.
Nonetheless, we viewed the market's excessive demand for safety to be
fleeting and thus took advantage of the rise in incremental yield offered by the
non-Treasury sectors to further enhance our sector strategy. Of the opinion that
the events of 1998 offered a rare opportunity to add quality issues at very
attractive levels, in the fourth quarter, we increased the Fund's holdings in
corporate, mortgage- and asset-backed issues. Going forward into 1999, we look
to benefit from outperformance in these asset types.
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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
Jun. '98 $11,650 $11,472
Dec. '98 $12,208 $11,881
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
Dec. '98 $19,034 $17,057
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR 5 YEAR INCEPTION**
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Institutional Shares 7.01% -- 6.22%
Class A Shares 6.75% 5.83% 7.12%
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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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FUND SUMMARY
BOND FUND
GROWTH OF A $10,000 INVESTMENT IN THE BOND FUND AND THE LEHMAN BROTHERS
AGGREGATE BOND INDEX FROM INCEPTION THROUGH DECEMBER 31, 1998.
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: A combination of increasing financial trouble abroad and
solid growth domestically made 1998 a challenging year for bond fund managers.
The global flight-to-safety drove U.S. Treasurys to the lowest yields ever, with
liquidity on Wall Street virtually limited to the Treasury market during some
periods.
Following Russia's default in the third quarter and the resulting market
turmoil, risk aversion and investor preference for maximum liquidity became the
biggest drivers of the fixed income market's relative performance. The historic
underperformance of certain bond classes during this period provided an
excellent opportunity to employ the Fund's strategy of overweighting higher
yielding sectors (e.g., investment grade corporate, mortgage-and asset-backed
securities) versus the Lehman Brothers Aggregate Bond Index, the Fund's
benchmark.
Although Treasurys were the year's top performers because of their low
credit risk and higher liquidity, we viewed the market's focus on extreme
quality and liquidity as a temporary phenomenon. We took advantage of the rising
yields in both corporate and mortgage-backed securities to boost the Fund's
performance. As these sectors reached their most attractive levels in over a
decade, we increased significantly the Fund's exposure to these asset classes.
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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
Jun. '98 $12,092 $11,945
Dec. '98 $12,645 $12,353
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
Jun. '98 $12,092 $11,885
Dec. '98 $12,645 $12,276
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR INCEPTION**
- --------------------------------------------
Institutional Shares 7.12% 8.10%
Class A Shares 6.86% 7.88%
- --------------------------------------------
* 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.
11
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FUND SUMMARY
INTERMEDIATE GOVERNMENT BOND FUND
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, 1998.
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: 1998 was a volatile year for the fixed income markets as
global economic problems served as a catalyst for U.S. interest rate movements.
Leading off the year, a continuation of Asian "flu", compounded by Japan's
inability to develop an effective stimulus policy, triggered a flight-to-quality
rally resulting in a lowering of Treasury yields. The stress on the markets was
further heightened with the collapse of Russia's economy and fears that Brazil's
would soon follow suit. Culminating market anxiety was the failure of Long Term
Capital Management (LTCM), a highly leveraged hedge fund, during the third
quarter, causing the markets to come to a virtual standstill for approximately
three weeks as dealer liquidity was non-existent.
As a result of global financial events, Treasury yields fell in excess of
100 basis points during the year making them the best performing asset class in
1998. However, the spread sectors (corporates, mortgages, asset-backed and
agency securities) suffered dramatically as all underperformed the treasury
market for the year. In some cases, spreads on securities widened to five
standard deviations from the mean. Therefore, the Fund's strategy to overweight
the spread sectors proved to be detrimental to the Fund's performance in 1998.
However as spreads widened in the non-Treasury sectors late in 1998, we took the
opportunity to add to the overweight positions, which should enhance returns
going forward as spreads tighten.
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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
Dec. '98 $32,764 $31,587 $30,522
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- -----------------------------------------------------------------
Institutional Shares 7.45% 6.11% 8.04% 8.56%
Class A Shares 7.18% 5.84% 7.77% 8.29%
- -----------------------------------------------------------------
* 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.
12
<PAGE>
FUND SUMMARY
INTERMEDIATE TAX-EXEMPT BOND FUND
GROWTH OF A $10,000 INVESTMENT IN THE INTERMEDIATE TAX-EXEMPT BOND FUND AND THE
LEHMAN BROTHERS QUALITY INTERMEDIATE MUNICIPAL BOND INDEX FROM INCEPTION THROUGH
DECEMBER 31, 1998.
PERFORMANCE BENCHMARK: 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.
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: The first two quarters of 1998 saw yields on long triple-A
rated bonds rise 10 basis points due to heavy new issue supply. Municipals
became cheaper relative to Treasury yields. Shorter-maturity securities
outperformed long bonds in a negative market. Quality spread contracted and
investors seeking higher yields pushed the prices of riskier revenue bonds
higher.
As the year progressed, a higher percentage of AAA- and BBB-rated debt
replaced AA-rated bonds. The municipal market saw heavy issuance of new bonds
combined with record low interest rates. We took advantage of this record new
issuance by improving the quality of the Fund's holdings as spreads tightened
and good quality bonds become available: our best performing bonds were
specialty state discount issues. Although the Fund's duration was shortened
slightly, it still remained long compared to the Lehman Brothers Quality
Intermediate Municipal Bond Index, the Fund's benchmark. By the third quarter,
municipals lagged the U.S. Treasury market as investors continued to seek
enhanced yields through liquid government securities.
As good quality bonds became available, we took advantage of tightening
spreads. During the fourth quarter, the Fund continued to emphasize 10-15 year
range quality bonds. We reduced the Fund's exposure to certain BBB-rated
hospital issues that we expect will underperform. The yield on municipals
greatly exceeded that of Treasurys, thus allowing municipal bonds to weather the
rough seas of the volatile Treasury market. The volatility in government issues
yields exceeded that of municipal bonds. The Fund's Institutional Shares ended
the year at 4.94% against the Lipper Intermediate Debt Funds' 5.35% and the
Lehman Brothers Quality Intermediate Municipal Bond Index of 6.00%.
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
INDEX INSTITUTIONAL SHARES CLASS A SHARES
Jan.'86 $10,000 $10,051 $10,048
Dec.'86 $10,000 $10,940 $10,915
Dec.'87 $10,368 $10,920 $10,869
Dec.'88 $11,034 $11,419 $11,338
Dec.'89 $12,101 $12,345 $12,227
Dec.'90 $13,011 $13,128 $12,970
Dec.'91 $14,460 $14,576 $14,364
Dec.'92 $15,517 $15,562 $15,298
Dec.'93 $17,055 $16,892 $16,565
Dec.'94 $16,589 $16,371 $16,013
Dec.'95 $18,878 $18,283 $17,839
Dec.'96 $19,683 $18,843 $18,340
Dec.'97 $21,123 $20,050 $19,465
Dec.'98 $22,390 $21,040 $20,375
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- -----------------------------------------------------------------
Institutional Shares 4.94% 4.49% 6.30% 5.88%
Class A Shares 4.67% 4.23% 6.04% 5.62%
- -----------------------------------------------------------------
* 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.
13
<PAGE>
FUND SUMMARY
TAX-EXEMPT BOND FUND
GROWTH OF A $10,000 INVESTMENT IN THE TAX-EXEMPT BOND FUND AND THE LEHMAN
BROTHERS MUNICIPAL BOND INDEX FROM INCEPTION THROUGH DECEMBER 31, 1998.
PERFORMANCE BENCHMARK: Lehman Brothers Municipal Bond Index -- An index
comprised of 40,342 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: The municipal market was overwhelmed by heavy new issue
supply during the first quarter of 1998 and yields on long triple-A-rated bonds
rose 10 basis points. Given the negative tone of the market, shorter maturity
securities outperformed long bonds during the quarter. The long duration of the
Fund worked well in January but dragged performance down for the balance of the
quarter as tax-exempt issues weakened. As the second quarter progressed, the
Fund's duration was shortened, but remained longer than that of its benchmark,
the Lehman Brothers Municipal Bond Index.
During the third and fourth quarters, the Fund's investment manager
consistently found opportunities to increase its emphasis on quality bonds in
the 15-plus year range. We continued to increase purchases of quality name
issues. At the same time we traded out some BBB issues that we expected would
underperform and continued to reduce exposure to both interest rate risk and
credit risk. This strategy continued to produce positive results, as yields on
government securities trended lower. While municipal bonds were not nearly as
volatile as Treasurys, municipals outperformed Treasurys by a wide margin.
Retail demand for municipals remained strong. This has allowed municipal bonds
to be stable throughout the rough weather of the market. We expect that
municipal issues will continue to outperform the Treasury market as supply
diminishes during the coming year. The Fund is, we believe, properly positioned
with an emphasis on highly liquid specialty issues.
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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
Dec. '98 $35,272 $29,522 $28,493
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- -----------------------------------------------------------------
Institutional Shares 4.88% 4.62% 7.20% 8.03%
Class A Shares 4.62% 4.34% 6.93% 7.76%
- -----------------------------------------------------------------
* 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.
14
<PAGE>
FUND SUMMARY
CONVERTIBLE SECURITIES FUND
GROWTH OF A $10,000 INVESTMENT IN THE CONVERTIBLE SECURITIES FUND AND THE FIRST
BOSTON CONVERTIBLE INDEX FROM INCEPTION THROUGH DECEMBER 31, 1998.
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: The convertible securities market, as measured by the First
Boston Convertibles Index, experienced a "roller-coaster" ride in 1998. In the
first quarter, the market gained a strong 8.21%, Only to retreat by -1.5% In the
second quarter. This retreat approached a rout as the index declined by -12.86%
(Second largest quarterly decline, exceeded only by the fourth quarter of 1987),
in the third quarter before recovering 14.73% In the fourth quarter (the
strongest gain since 1982). After all the ups and downs, the full calendar year
1998 produced a gain of 6.55%, which was well ahead of the 2.26% Total return of
the underlying stocks (into which the index issues are convertible). It should
be remembered that the typical issuers of convertibles are mostly smaller
capitalization companies with correspondingly lower credit ratings. Hence, the
returns of the underlying stocks at 2.26% Was closer to the performance of
small-cap stocks (as measured by the Russell 2000 Index which returned -2.55% In
1998) than to large-cap stocks as represented by the s&p 500 which returned
28.58%. Moreover, small-cap "value" stocks underperformed small-cap "growth"
stocks with the Russell 2000 Value Sub-Index return of -6.54% For the year vs.
The Russell 2000 Growth Sub-Index return of 1.23%. The Convertible Securities
Fund returned -1.80% In 1998, reflecting the fund's tilt toward a smaller
capitalization, value style.
Following the severe third-quarter decline in 1998, the calendar of new
convertible offerings was quite light in the fourth quarter. For this and other
reasons, turnover in the Fund was very light in the fourth quarter. However,
given the year-end recovery, new issuance of convertibles has resumed in early
1999 with terms that are generally more favorable to buyers than in the first
half of 1998. This should enable the Fund to identify attractive replacements
for issues likely to be called.
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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
Dec. '98 $49,491 $43,483 $41,995
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- -----------------------------------------------------------------
Institutional Shares -1.80% 10.26% 9.59% 11.06%
Class A Shares -2.04% 9.98% 9.31% 10.79%
- -----------------------------------------------------------------
* 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.
15
<PAGE>
FUND SUMMARY
EQUITY FUND
GROWTH OF A $10,000 INVESTMENT IN THE EQUITY FUND AND THE S&P 500 STOCK INDEX
FROM INCEPTION THROUGH DECEMBER 31, 1998.
PERFORMANCE BENCHMARK: S&P 500 Stock Index -- An index comprised of an unmanaged
group of 500 widely held common stocks traded 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: The year 1998 was a challenging year to be a value investor.
Throughout the year, larger capitalization growth issues consistently
outperformed larger capitalization value issues. The U.S. stock market (as
measured by the S&P 500(REGISTRATION MARK)) turned in an unprecedented fourth
consecutive year of 20% plus performance. The breadth or narrowness of the
returns was the main story in 1998. Not in 40 years has so much of the market's
advance been so concentrated in just a handful of names. Investment style
divergence (growth vs. value) is the greatest in the last 20 years in favor of
growth.
For the year, returns benefited from individual issue selection and sector
exposure to consumer cyclicals, financials, telephones and transportation.
Growth-oriented sectors like technology and healthcare detracted from
performance primarily due to the Fund's underweighted sector exposure.
Looking forward, we continue to believe that our value-oriented disciplined
investment approach can be beneficial to our clients over longer periods.
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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
Jun. '98 $18,500 $17,295
Dec. '98 $20,209 $17,577
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
Dec. '98 $61,884 $52,904
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- -----------------------------------------------------------------
Institutional Shares 13.80% -- -- 21.82%
Class A Shares 13.42% 20.55% 17.20% 16.59%
- -----------------------------------------------------------------
* 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.
16
<PAGE>
FUND SUMMARY
EQUITY INCOME FUND
GROWTH OF A $10,000 INVESTMENT IN THE EQUITY INCOME FUND AND THE S&P 500 STOCK
INDEX FROM INCEPTION THROUGH DECEMBER 31, 1998.
PERFORMANCE BENCHMARK: S&P 500 Stock Index -- An index comprised of an unmanaged
group of 500 widely held common stocks traded 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: For the year, both of the Fund's classes of shares
outperformed their Lipper benchmark. The Fund's return benefited from individual
issue selection and sector exposure in technology, healthcare, financials and
utilities.
High yielding securities continued to underperform non-dividend payers. The
year 1998 was a record setting for technology stocks which were up 40% relative
to the S&P 500(REGISTRATION MARK) benchmark. Most economically sensitive
sectors, such as basic materials, capital goods, energy and tinancials
underperformed the broad market. Although the Fund's income orientation can
favor value issues, we were able to generate competitive returns even though
value dramatically underperformed growth throughout the year.
Looking forward, issues that can generate strong comparative earnings and
revenue growth will be rewarded by the markets. Our emphasis continues on
value-oriented, larger capitalization and higher dividend paying issues in
aggregate. We believe the Fund is properly positioned given our market outlook.
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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
Dec. '98 $29,383 $26,068 $25,731
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR 5 YEAR INCEPTION**
- ------------------------------------------------------
Institutional Shares 22.97% 21.12% 21.11%
Class A Shares 22.66% 20.81% 20.79%
- ------------------------------------------------------
* 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.
17
<PAGE>
FUND SUMMARY
GROWTH FUND
GROWTH OF A $10,000 INVESTMENT IN THE GROWTH FUND AND THE S&P 500 STOCK INDEX
FROM INCEPTION THROUGH DECEMBER 31, 1998.
PERFORMANCE BENCHMARK: S&P 500 Stock Index -- An index comprised of an unmanaged
group of 500 widely held common stocks traded 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: Following strong investment performance in 1997 relative to
its Lipper peer group, the Fund underperformed that group in the first quarter
of 1998. While certain issues, such as large capitalization companies with
above-average market growth rates and high price-to-earnings ratios, contributed
significantly to the strong performance of the S&P 500 Index(REGISTRATION MARK),
our approach, in contrast, continues to seek value within the large
capitalization growth universe of companies. Moving into the second quarter, the
momentum factors in our multi-factor model contributed importantly to the Fund's
positive performance relative to its Lipper peer group. However, the valuation
factors hurt performance, resulting in a slight underperformance relative to the
S&P 500 Index.
The third quarter began with a strong exposure to the technology sector,
benefiting the Fund's performance while the relatively small representation in
certain consumer staples also produced favorable results. We continued to
position the portfolio for the current difficult environment of investor concern
about market illiquidity and a slowing global economy. With the end of the
fourth quarter, the market continued to favor large capitalization growth
issues, such as those held by the Fund. Specifically, the Fund benefited from an
overweighting in technology, financial and health care sectors and a substantial
underweighting in energy and basic materials. We continue to stress issues with
favorable valuation within the universe of large-capitalization companies.
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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
Dec. '98 $35,708 $33,822 $33,296
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR 5 YEAR INCEPTION**
- ------------------------------------------------------
Institutional Shares 25.03% 23.89% 19.89%
Class A Shares 24.68% 23.60% 19.61%
- ------------------------------------------------------
* 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.
18
<PAGE>
FUND SUMMARY
SMALL-CAP OPPORTUNITY FUND
GROWTH OF A $10,000 INVESTMENT IN THE SMALL-CAP OPPORTUNITY FUND AND THE RUSSELL
2000 SMALL STOCK INDEX FROM INCEPTION THROUGH DECEMBER 31, 1998.
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 $875 billion at the start of 1998.
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 capitalization companies.
INVESTMENT RESULTS: 1998 was the fifth year in a row that smaller capitalization
stocks have lagged the performance of large-cap stocks. In fact, the Russell
2000 Small Stock Index(REGISTRATION MARK), a popular small cap index and the
benchmark for the Fund, actually delivered a negative total return for the year
of -2.54%. Against this environment, we are encouraged that the Fund completed
the year in positive territory with a gain of 1.16% This performance ranked the
Fund solidly in the upper half among its Lipper peer group where more than half
of the group had negative returns for the year. On another positive note, the
Fund took active steps after the third quarter's sharp decline to realize losses
that proved sufficient to offset the gains realized in the first half, thereby
eliminating the need for a capital gains distribution at year end.
Performance for the year was helped by the Fund's holdings in technology
and consumer staples while basic materials, energy, and finance lagged. The
Fund's growth style also added to returns. While forecasting a market turning
point with any certainty is improbable, our analysis indicates the relative
undervaluation of smaller capitalization stocks versus their larger brethren is
sufficient to expect positive relative performance over the next few years. We
continue to remain true to our portfolio strategy.
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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
Dec. '98 $53,183 $67,804 $65,525
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- -----------------------------------------------------------------
Institutional Shares 1.16% 12.89% 14.42% 14.68%
Class A Shares 0.99% 12.63% 14.15% 14.40%
- -----------------------------------------------------------------
* 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.
19
<PAGE>
FUND SUMMARY
SMALL-CAP VALUE FUND
GROWTH OF A $10,000 INVESTMENT IN THE SMALL-CAP VALUE FUND AND THE RUSSELL 2000
SMALL STOCK INDEX FROM INCEPTION THROUGH DECEMBER 31, 1998.
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 $875 billion at the start of 1998.
INVESTMENT OBJECTIVE: The Fund seeks to provide capital appreciation by
investing primarily in equity securities of companies with smaller
capitalizations that the portfolio management agent believes are conservatively
valued in the marketplace.
INVESTMENT RESULTS: It was a disappointing year for small-cap stocks in 1998,
and an even more disappointing year for small-cap value stocks. The Russell
2000, a popular index of small-cap stocks and the benchmark for the Fund,
produced a negative total return of -2.54%. The Russell 2000 Value sub-Index
produced a negative total return of -6.54%. Against this backdrop, the Fund
returned -3.94%. According to Lipper, the majority of small cap funds also had
negative returns for the year even though the majority is thought to employ more
growth-oriented styles.
With the better returns in 1998 coming from the technology, consumer
staples, and health care sectors (all sectors where the Fund was underweighted
due to its value style), we were heartened by the fact that the performance
shortfall was moderate. On a positive note, the Fund took active steps after the
third quarter's sharp decline to realize losses that proved sufficient to offset
the gains realized in the first half, thereby eliminating the need for a capital
gains distribution at year end.
While forecasting the market's turning point with any certainty is
improbable, our analysis indicates the relative undervaluation of smaller
capitalization stocks vs. their larger brethren is sufficient to expect positive
relative performance over the next few years. We continue to remain true to our
portfolio strategy.
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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
Dec. '98 $53,183 $62,809 $60,598
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- -----------------------------------------------------------------
Institutional Shares -3.93% 12.00% 12.29% 14.02%
Class A Shares -4.15% 11.70% 12.00% 13.73%
- -----------------------------------------------------------------
* 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.
20
<PAGE>
FUND SUMMARY
INDEX FUND
GROWTH OF A $10,000 INVESTMENT IN THE INDEX FUND AND THE S&P 500(REGISTRATION
MARK) STOCK INDEX FROM INCEPTION THROUGH DECEMBER 31, 1998.
PERFORMANCE BENCHMARK: S&P 500 Stock Index -- An index comprised of an unmanaged
group of 500 widely held common stocks traded 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: 1998 was the fourth consecutive year of greater than 20%
gains by the S&P 500 Index and another great year for equity investors to have
held an S&P 500 Index fund as the Index (according to some press reports)
outperformed 92% of equity managers. During each quarter of 1998, as well as for
the full year, the Fund outperformed its Lipper peer group.
Since the investment objective of this Fund is to provide the risk and
return characteristics of the S&P 500 Index, the Fund does not overweight or
underweight specific sectors. The Index is constructed and its returns are
calculated without subtracting fees or operational costs. The Fund, an actual
investment portfolio, inescapably incurs some operational and transactional
costs in striving to replicate the Index. Moreover, when the Index rises a
sizeable percentage, as it did in 1998, it is more difficult to match the Index
as the Index calculates its return by assuming dividends are available for
reinvestment immediately on the "ex date", whereas in the real world of
investing, cash dividends are received with a lag of two to six weeks; during
this period the prices of the stocks into which dividends are to be reinvested
are moving away, either on the upside (as in 1998) or on the downside (as in
certain past years).
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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
Dec. '98 $35,708 $33,884 $33,347
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR 5 YEAR INCEPTION**
- ------------------------------------------------------
Institutional Shares 28.22% 23.59% 19.92%
Class A Shares 27.88% 23.30% 19.64%
- ------------------------------------------------------
* 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.
21
<PAGE>
FUND SUMMARY
BALANCED FUND
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, 1998.
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.
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: During the first quarter of 1998, the Fund's exposure to
bonds was increased from 45% to 48% with the expectation that fixed income
issues would perform well relative to equities. Stock prices continued to rise
through the end of the quarter, and the Fund thus underperformed its Lipper peer
group that had a higher exposure to equities. At the end of the second quarter,
the Fund, with its above-average exposure to bonds, as well as to value-oriented
smaller cap issues, outperformed its Lipper peer group while the average
diversified U.S. stock mutual fund declined during the quarter.
For the third quarter, the Fund again outperformed its Lipper peer group.
Holdings in large- and small-cap stocks comprised approximately 48% of the
Fund's holdings while the average balanced fund held approximately 54% of its
assets in equities. Since bonds increased 3.5% while stocks fell in value over
15%, this strategy was a major factor contributing to above-average performance.
For some time, we have believed that estimates of future corporate profits have
been overly optimistic; when those estimates drop to more realistic levels, this
is likely to negatively impact stock prices. Therefore, we continued to maintain
our equity exposure below those of other balanced funds through the end of the
fourth quarter.
In the fourth quarter, stock prices recovered sharply from their October
lows. The Fund's underweighting in stocks caused the Fund's performance to lag
its Lipper peer group average.
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
LB AGGREGATE BOND INDEX-S&P 500 INDEX-INSTITUTIONAL 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
Jun.'98 $11,462 $15,399 $12,871 $13,007
Dec.'98 $11,986 $16,713 $13,059 $13,181
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR INCEPTION**
- --------------------------------------------
Institutional Shares 8.61% 16.22%
Class A Shares 8.29% 17.47%
- --------------------------------------------
* 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.
22
<PAGE>
FUND SUMMARY
INTERNATIONAL FUND
GROWTH OF A $10,000 INVESTMENT IN THE INTERNATIONAL FUND AND THE MSCI EAFE INDEX
FROM INCEPTION THROUGH DECEMBER 31, 1998.
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: Although the Fund produced a strong absolute gain of 12.8%
for Institutional Shares and 12.7% for Retail (Class A) Shares, it
underperformed its Lipper international fund peer group and the MSCI EAFE
benchmark at the end of the first quarter. An important part of our investment
strategy during the quarter involved increasing the Fund's exposure to quality
companies domiciled in Asia and Eastern Europe. The economic turmoil in many of
these countries had a negative impact on stock prices, leading to more
attractive valuations. However, our Asian and Eastern European holdings
continued to experience weakness during the second quarter while the Fund's
European holdings performed quite well. Within Europe, we continued to find
opportunities arising on a stock-by-stock basis, primarily in Northern Europe as
well as in commodity-related sectors.
The Fund's overweighting of stocks of companies domiciled in the Nordic
countries hurt performance in the third quarter due to weakness in these
markets. During the quarter, we continued to focus on developing countries,
primarily in Asia and, to a lesser extent, in Eastern Europe due to depressed
stock valuations and superior long-term earnings growth prospects. Many buying
opportunities among commodity-sensitive stocks emerged during the fourth quarter
as the Commodity Research Bureau's index fell to its lowest level in 21 years.
We viewed the levels of many commodity prices as significantly below fair value
and continued to build meaningful positions in undervalued and/or low cost
commodity producers. The disparity in valuations and resulting investment
opportunities in the marketplace today are possibly the greatest in the last 35
years.
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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
Dec. '98 $28,300 $15,184 $14,752
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR 5 YEAR 10 YEAR INCEPTION**
- -----------------------------------------------------------------
Institutional Shares -4.64% 0.71% 1.87% 3.56%
Class A Shares -4.84% 0.46% 1.61% 3.31%
- ----------------------------------------------------------------
* 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.
23
<PAGE>
FUND SUMMARY
EMERGING MARKETS FUND
GROWTH OF A $10,000 INVESTMENT IN THE EMERGING MARKETS FUND AND THE MSCI
EMERGING MARKETS INDEX FROM INCEPTION THROUGH DECEMBER 31, 1998.
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: In the first quarter of 1998, which was the first full
quarter the Fund was actively managed by Hansberger Global Investors, the Fund
slightly underperformed its Lipper peer group. Emerging markets experienced a
great deal of difficulty during this period and, as an asset class, generally
underperformed their global developed markets counterparts. While the Fund
continued to emphasize investments in companies with attractive valuations,
these companies were often found in geographic regions with potentially higher
volatility, which caused the Fund to continue its retreat in the second quarter.
Our Asia positions focused on companies that could reap benefits from the Asian
currency devaluations which were the catalyst for a full-fledged economic crisis
of global proportions.
We were able to find tremendous long-term value throughout the emerging
markets, yet the Fund continued its dramatic downward trend in the third
quarter. Although there was extreme volatility in these markets, we were able to
buy issues of many of the largest, most liquid companies. These companies,
considered world-class leaders in their industries, traded at a large discount
to most of their global competitors. In Asia, almost all emerging markets
recorded dramatic improvements in performance, while in Latin America market
sentiment was generally negative due to the rejection of political reforms in
Brazil. Therefore, we continued to overweight our holdings in Asia and Emerging
Europe and underweight our holdings in Latin America versus our peers in the
fourth quarter of the year.
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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
Jun. '98 $7,899 $6,540 $6,510
Dec. '98 $7,297 $5,886 $5,850
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIOD ENDED 12/31/98
1 YEAR INCEPTION**
- --------------------------------------------
Institutional Shares -31.16% -35.71%
Class A Shares -31.50% -36.03%
- --------------------------------------------
* 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.
24
<PAGE>
TAX INFORMATION
FIXED INCOME FUNDS
For the year ended December 31, 1998, the following Harris Insight Funds
declared dividends from net realized capital gains:
<TABLE>
<CAPTION>
SHORT-TERM CAPITAL LONG-TERM CAPITAL
GAIN, PER SHARE GAIN, PER SHARE
------------------ ------------------------------------
07/20/98 12/18/98 07/20/98 %(1) 12/18/98 %(1)
-------- -------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bond Fund ......................... $0.0298 $0.0531 $0.0124 100% $0.0075 100%
Short/Intermediate Bond Fund ...... -- -- -- 100% 0.0057 100%
Intermediate Government Bond Fund. 0.0107 0.1109 -- 100% 0.0396 100%
Intermediate Tax-Exempt Bond Fund . 0.0045 0.0181 0.0305 100% 0.0995 100%
Tax-Exempt Bond Fund .............. 0.0042 0.0423 0.0203 100% 0.1225 100%
Convertible Securities Fund ....... -- 0.4774 0.6045 100% 1.6396 100%
<FN>
(1) Percentage of distribution attributable to "20 Percent Rate Gains"
</FN>
</TABLE>
EQUITY FUNDS
For the year ended December 31, 1998, the following Harris Insight Funds
declared dividends from net realized capital gains:
<TABLE>
<CAPTION>
SHORT-TERM CAPITAL LONG-TERM CAPITAL
GAIN, PER SHARE GAIN, PER SHARE
------------------ ------------------------------------
07/20/98 12/18/98 07/20/98 %(1) 12/18/98 %(1)
-------- -------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Equity Fund ....................... $0.0005 $ -- $0.8785 100% $1.9068 100%
Equity Income Fund ................ -- -- 0.1933 100% 0.3507 100%
Growth Fund ....................... -- -- 0.5819 100% 1.4239 100%
Small-Cap Opportunity Fund ........ 0.0023 -- 0.0682 100% -- 100%
Small-Cap Value Fund .............. -- -- 1.0110 100% -- 100%
Index Fund ........................ 0.0056 0.0598 0.1630 100% 1.1794 100%
Balanced Fund ..................... 0.2977 0.3435 -- -- 0.5993 100%
<FN>
(1) Percentage of distribution attributable to "20 Percent Rate Gains"
</FN>
</TABLE>
FOR CORPORATE SHAREHOLDERS ONLY:
The percentage of dividends from net investment income declared for the year
ended December 31, 1998, which qualify for the corporate dividends received
deduction is as follows:
Equity Fund ................................................................100%
Equity Income Fund .........................................................100%
Growth Fund ................................................................100%
Small-Cap Value Fund .......................................................100%
Index Fund .................................................................100%
FOR SHAREHOLDERS OF THE INTERNATIONAL FUND AND THE EMERGING MARKETS FUND:
For the year ended December 31, 1998, the International Fund and the Emerging
Markets Fund distributed $2,248,545 and $48,390, respectively, of foreign source
income on which the International Fund and the Emerging Markets Fund paid
foreign taxes of $385,985 and $19,137, respectively. This information is being
furnished to you pursuant to notice requirements of Section 853(a) and 855(d) of
the Internal Revenue Code, as amended, and the Treasury regulations thereunder.
25
<PAGE>
HARRIS INSIGHT FUNDS
GOVERNMENT MONEY MARKET FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
AGENCY OBLIGATIONS -- 47.4%
FEDERAL HOME LOAN BANK -- 13.2%
4.910% 01/27/99 $ 25,000 $ 24,978,238
5.605% 03/12/99 10,000 9,999,529
5.510% 04/01/99 9,500 9,508,926
5.630% 05/05/99 10,000 9,995,924
------------
54,482,617
------------
FEDERAL HOME LOAN MORTGAGE CORP. -- 20.4%
4.930% 01/29/99 31,300 31,179,982
4.910% 02/12/99 28,000 27,839,607
4.845% 03/17/99 25,000 24,747,656
-----------
83,767,245
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 8.9%
4.930% 01/26/99 4,435 4,419,816
4.940% 02/23/99 3,500 3,496,407
5.540% 04/02/99 10,000 9,995,090
5.650% 04/09/99 14,000 14,019,917
5.820% 08/25/99 4,575 4,581,264
------------
36,512,494
------------
STUDENT LOAN MARKETING ASSOCIATION -- 4.9%
5.400% 02/10/99 20,000 20,001,723
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $194,764,079) 194,764,079
-----------
VARIABLE RATE OBLIGATIONS(DOUBLE DAGGER) -- 46.6%
FEDERAL HOME LOAN BANK -- 22.2%
4.740% 01/04/99* 15,000 14,995,083
4.800% 01/04/99* 30,000 29,983,698
5.040% 01/04/99* 11,000 11,001,242
5.382% 01/05/99* 5,000 4,998,743
5.380% 01/08/99* 10,000 9,996,575
5.347% 01/11/99* 10,000 9,999,231
5.077% 03/01/99* 10,000 9,993,265
-----------
90,967,837
-----------
FEDERAL HOME LOAN MORTGAGE CORP. -- 2.4%
5.414% 01/04/99* 5,000 4,998,647
5.424% 01/26/99 4,950 4,949,804
-----------
9,948,451
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 7.4%
4.696% 01/05/99* 6,000 6,000,000
4.696% 01/05/99* 4,500 4,480,641
5.409% 01/28/99* 20,000 19,990,426
-----------
30,471,067
-----------
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
VARIABLE RATE OBLIGATIONS(DOUBLE DAGGER) (CONTINUED)
STUDENT LOAN MARKETING ASSOCIATION -- 14.6%
4.750% 01/04/99* $ 20,000 $ 19,988,917
5.451% 01/04/99* 10,000 9,994,017
4.858% 01/05/99* 5,000 4,992,554
4.898% 01/05/99* 15,000 15,000,000
5.128% 01/05/99* 10,000 9,998,590
------------
59,974,078
------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $191,361,433) 191,361,433
------------
SHARES
------
TEMPORARY INVESTMENTS -- 5.9%
AIM Short-Term Investment Trust
Treasury Portfolio 13,809,881 13,809,881
Trust for Federal Securities T-Fund 10,397,004 10,397,004
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $24,206,885) 24,206,885
------------
TOTAL INVESTMENTS -- 99.9%
(Cost $410,332,397) 410,332,397
------------
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.1% 547,690
------------
NET ASSETS -- 100.0%
Applicable to 162,284,028 and 248,593,311
shares outstanding of Institutional
Class and Class A, respectively,
$.001 par value; 1.5 billion authorized
shares (Note 7) $410,880,087
============
NET ASSET VALUE, OFFERING 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 12/31/98.
* 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, 1998
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
ASSET-BACKED SECURITIES -- 9.5%
Auto Leasing Investors 1997 A1
5.655% 04/14/99 $16,000 $ 16,000,000
Bishops Gate Residential
Mortgage Trust
5.747% 01/04/99* 15,000 15,000,000
Contimortgage Home Equity
Loan Trust 1998-3 A1
5.512% 09/15/99 10,401 10,401,068
Contimortgage Home Equity
Loan Trust 1998-3 A11
5.512% 09/15/99 27,668 27,668,365
CPS Auto Trust 1998-3 A1
5.638% 08/15/99 8,378 8,377,522
DVI 1998-1 A
5.690% 06/10/99 187 186,716
Leasing Solution Leasing
Trust 1998-1 A1
5.363% 10/20/99 19,909 19,909,293
Syndicated Loan Funding Trust
6.035% 01/15/99* 74,500 74,500,000
Union Acceptance Corp. 1998-D A1
5.363% 12/08/99 12,365 12,364,595
World Financial Properties
5.745% 01/08/99* 32,153 32,152,633
-------------
TOTAL ASSET-BACKED SECURITIES
(Cost $216,560,192) 216,560,192
-------------
CERTIFICATES OF DEPOSIT -- 3.1%
Bankers Trust Co.
4.815% 01/04/99* 25,000 24,997,559
4.860% 01/04/99* 45,000 44,989,667
-------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $69,987,226) 69,987,226
-------------
COMMERCIAL PAPER -- 27.2%
Ciesco, Inc.
5.530% 01/08/99 2,200 2,197,634
CXC, Inc.
5.440% 01/07/99 1,710 1,708,450
Delaware Funding Corp.
5.450% 01/19/99 5,000 4,986,375
Edison Asset Securities, LLC
5.280% 01/08/99 47,386 47,337,350
Enterprise Funding Corp.
5.600% 01/12/99 10,000 9,982,889
Falcon Asset Securities Corp.
5.150% 01/11/99 5,000 4,992,847
5.420% 01/11/99 2,535 2,531,183
General Motors Acceptance Corp.
5.060% 01/13/99 4,635 4,627,182
Moat Funding, LLC
5.300% 01/13/99 18,000 17,968,200
5.300% 01/29/99 20,000 19,917,556
Monte Rosa Capital Corp.
5.550% 01/27/99 14,797 14,737,689
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
COMMERCIAL PAPER (CONTINUED)
Moriarty, Ltd.
5.570% 01/13/99 $80,000 $ 79,851,467
Park Avenue Receivables
5.330% 01/20/99 74,625 74,415,076
PNC Bank Corp.
5.200% 05/24/99 7,829 7,667,288
Quincy Capital Corp.
5.600% 01/19/99 20,107 20,050,700
5.250% 01/25/99 19,508 19,439,722
Receivable Capital Corp.
5.170% 01/13/99 13,063 13,040,488
5.420% 01/13/99 2,215 2,210,998
5.500% 01/13/99 6,309 6,297,433
Republic Industries Funding Corp.
5.520% 01/13/99 60,000 59,889,600
Sheffield Receivables Corp.
5.130% 02/05/99 49,650 49,402,371
5.200% 02/10/99 30,000 29,826,667
Thames Asset Global Securities
5.400% 02/16/99 54,392 54,016,695
5.400% 02/22/99 15,188 15,069,534
5.400% 02/26/99 9,725 9,643,310
Variable Funding Capital Corp.
5.550% 01/12/99 2,200 2,196,269
5.420% 01/19/99 4,750 4,737,128
Windmill Funding Corp.
5.500% 01/28/99 9,525 9,485,709
5.270% 02/01/99 28,000 27,872,934
-------------
TOTAL COMMERCIAL PAPER
(Cost $616,100,744) 616,100,744
-------------
CORPORATE BONDS -- 9.3%
Associates Corp. of North America
6.250% 03/15/99 1,800 1,803,117
7.500% 05/15/99 4,270 4,302,684
6.680% 09/17/99 1,800 1,818,515
6.750% 10/15/99 700 708,480
Bank One Wisconsin
5.550% 02/26/99 63,450 63,441,597
Ford Motor Credit Corp.
8.720% 07/22/99 3,560 3,618,379
7.750% 10/01/99 1,000 1,015,533
General Motors Acceptance Corp.
7.375% 09/09/99 2,000 2,022,239
8.000% 10/01/99 12,292 12,546,840
6.050% 10/04/99 2,500 2,514,965
5.750% 01/05/00 3,500 3,520,962
Heller Financial, Inc.
6.560% 05/20/99 5,000 5,018,371
Household Finance Corp.
5.747% 03/08/99 42,650 42,650,000
8.950% 09/15/99 2,981 3,057,221
Household International Corp.
6.000% 03/15/99 5,000 5,007,050
Lehman Brothers Holdings, Inc.
6.300% 08/11/99 9,000 9,027,063
See Notes to Financial Statements.
27
<PAGE>
HARRIS INSIGHT FUNDS
MONEY MARKET FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
CORPORATE BONDS (CONTINUED)
Liberty Lighthouse US Capital Co.
5.750% 08/09/99 $40,000 $ 40,000,000
Sears, Roebuck Acceptance Corp.
6.540% 05/06/99 8,000 8,020,395
-------------
TOTAL CORPORATE BONDS
(Cost $210,093,411) 210,093,411
-------------
VARIABLE RATE OBLIGATIONS(DOUBLE DAGGER) -- 45.8%
Caterpillar Financial Service Corp.
5.243% 01/07/99* 70,000 69,982,475
Countrywide Home Loans, Inc.
5.468% 01/12/99* 25,000 24,995,286
5.599% 01/14/99* 30,000 30,000,000
5.204% 01/25/99* 25,000 25,000,000
Federal Home Loan Bank
5.040% 01/01/99* 6,000 6,000,671
Federal National Mortgage Association
4.696% 01/05/99* 10,000 10,000,000
First National Bank of Chicago
5.481% 01/04/99* 23,500 23,492,403
Ford Motor Credit Corp.
5.593% 01/19/99 8,500 8,501,284
General American Insurance Co.
5.240% 01/01/99* 80,000 80,000,000
General Electric Amtrak Lease
5.601% 01/04/99* 48,501 48,500,566
Goldman Sachs Group
4.945% 01/04/99* 25,000 25,000,000
5.745% 01/07/99* 5,000 5,000,000
5.348% 01/15/99* 49,000 49,000,000
John Hancock Mutual Life
Insurance Co.
5.664% 01/15/99* 80,000 80,000,000
Kansas Electric Power Co.
5.120% 01/06/99* 9,800 9,800,000
Lehman Brothers Holdings, Inc.
5.611% 01/21/99* 65,000 65,000,000
6.074% 01/27/99* 3,000 3,006,528
5.400% 03/26/99 3,000 3,000,854
Liberty Lighthouse US Capital Co.
5.308% 01/15/99 40,000 40,000,000
Morgan Stanley Dean Witter & Co.
4.800% 01/04/99* 5,600 5,600,144
5.293% 01/15/99 70,000 70,000,260
Pennsylvania Economic Development
Finance Authority
5.100% 01/07/99* 6,000 6,000,000
PHH Corp.
5.641% 01/20/99* 50,000 49,962,499
PNC Bank Corp.
4.830% 01/04/99* 42,900 42,889,370
5.491% 01/04/99* 30,000 29,989,852
Sacramento County, California
Municipal Bond
5.630% 01/06/99* 65,000 65,000,000
Sigma Finance
4.880% 01/04/99* 75,000 75,000,000
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
VARIABLE RATE OBLIGATIONS(DOUBLE DAGGER) (CONTINUED)
Student Loan Marketing Association
4.848% 01/05/99* $10,000 $ 10,000,084
Transamerica Finance Corp.
5.450% 01/22/99* 14,650 14,650,000
Transamerica Funding Agreement
5.219% 01/15/99* 65,000 65,000,000
--------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $1,040,372,276) 1,040,372,276
--------------
SHARES
------
TEMPORARY INVESTMENTS -- 5.0%
Dreyfus Cash Management Plus, Inc.
Class A Shares 130,284 130,284
Goldman Sachs Financial Square
Money Market Portfolio 70,202,353 70,202,353
J.P. Morgan Institutional Prime
Money Market Portfolio 42,629,779 42,629,779
Lehman Prime Money Market Fund
Class A Shares 3 3
--------------
TOTAL TEMPORARY INVESTMENTS
(Cost $112,962,419) 112,962,419
--------------
TOTAL INVESTMENTS -- 99.9%
(Cost $2,266,076,268) 2,266,076,268
--------------
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.1% 3,306,700
--------------
NET ASSETS -- 100.0%
Applicable to 1,391,844,846 and 877,520,050
shares outstanding of Institutional
Class and Class A, respectively, $.001 par value;
3.55 billion authorized shares (Note 7) $2,269,382,968
==============
NET ASSET VALUE, OFFERING 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 12/31/98.
* 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, 1998
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS -- 99.3%
ALABAMA -- 4.2%
Chatom, Alabama, Industrial Development
Board Pollution Control Revenue Bonds
(Alabama Electric Project) PS
3.550% 02/15/99 $ 1,670 $ 1,670,000
Chatom, Alabama, Industrial Development
Board Pollution Control Revenue Bonds
(Alabama Electric Project) TECP
3.400% 02/23/99 5,300 5,300,000
Montgomery, Alabama, Industrial
Development Board Pollution Control
Revenue Bonds (Alabama Electric
Project) TECP
3.100% 01/14/99 27,000 27,000,000
-----------
33,970,000
-----------
ALASKA -- 3.7%
Anchorage, Alaska, Electric Utility Revenue
Bonds Series 1996D VR
4.100% 01/07/99 7,800 7,800,000
Valdez, Alaska, Marine Terminal Revenue
Bonds (Arco Transportation Project)
Series C TECP
3.050% 01/15/99 7,000 7,000,000
3.600% 01/15/99 6,300 6,300,000
3.350% 02/18/99 2,600 2,600,000
3.450% 02/18/99 6,500 6,500,000
-----------
30,200,000
-----------
ARIZONA -- 3.5%
Apache County, Arizona, Industrial
Development Authority Revenue Bonds
(Tucson Electric Power Co.)
Series 1983C VR
4.150% 01/07/99 10,550 10,550,000
Salt River, Arizona, Agricultural
Improvement & Power District
Project TECP
3.000% 01/14/99 10,800 10,800,000
3.550% 01/14/99 7,000 7,000,000
-----------
28,350,000
-----------
CALIFORNIA -- 2.0%
Riverside County, California, School
Financing Authority Series A30-Reg D VR
3.950% 01/07/99 8,000 8,000,000
San Diego County, California Area, Local
Government Certificates of Participation
Series A25-Reg D VR
3.950% 01/07/99 8,000 8,000,000
-----------
16,000,000
-----------
COLORADO -- 0.3%
Platte River Power Authority TECP
3.400% 01/13/99 2,500 2,500,000
-----------
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
CONNECTICUT -- 1.1%
Connecticut State Special Assessment
Unemployment Compensation Advance
Fund Revenue Bonds (Connecticut
Unemployment Project) Series 1993C PS
3.600% 07/01/99 $ 2,000 $ 2,000,000
State of Connecticut ROCS Series 3 VR
4.200% 01/07/99 7,000 7,000,000
-----------
9,000,000
-----------
FLORIDA -- 4.9%
Florida State Board of Education Capital
Outlay Revenue Bonds Series 35 VR
4.200% 01/07/99 5,025 5,025,000
Sunshine State GFC TECP
3.050% 01/15/99 12,330 12,330,000
3.000% 01/19/99 6,000 6,000,000
3.200% 01/19/99 3,000 3,000,000
5.150% 01/19/99 5,700 5,700,000
3.400% 02/16/99 5,000 5,000,000
3.000% 03/10/99 2,500 2,500,000
-----------
39,555,000
-----------
GEORGIA -- 8.4%
Georgia Municipal Electric Authority
Revenue Bonds TECP
3.450% 01/20/99 15,000 15,000,000
3.400% 01/21/99 3,400 3,400,000
3.400% 02/12/99 4,000 4,000,000
3.000% 03/12/99 5,655 5,655,000
Monroe County, Georgia, Development
Authority Pollution Control Revenue
Bonds (Georgia Power Co.) 2nd
Series PS
3.100% 01/29/99 40,000 40,000,000
-----------
68,055,000
-----------
HAWAII -- 2.5%
City & County of Honolulu, Hawaii, TECP
3.050% 01/14/99 20,000 20,000,000
-----------
ILLINOIS -- 9.5%
Chicago, Illinois, Park District TANS
4.300% 09/17/99 2,500 2,512,799
Cook County, Illinois, Revenue Bonds
(Catholic Charities) VR
4.050% 01/07/99 8,300 8,300,000
Illinois Development Finance Authority
Revenue Bonds (Provena Health
Project) Series C VR
4.100% 01/07/99 10,000 10,000,000
See Notes to Financial Statements.
29
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT MONEY MARKET FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
ILLINOIS (CONTINUED)
Illinois Development Finance Authority
Revenue Bonds (Roosevelt University
Project) VR
4.050% 01/07/99 $ 4,500 $ 4,500,000
Illinois Health Facilities Authority
Revenue Bonds (Loyola University)
Series B VR
3.850% 01/07/99 7,800 7,800,000
Illinois State Revenue Bonds Series
38 VR
4.200% 01/07/99 15,000 15,000,000
Illinois State Sales Tax Revenue Bonds
Series 41 VR
4.200% 01/07/99 9,695 9,695,000
Kane, McHenry, Cook & De Kalb Counties,
Illinois, United School District
No. 300 TANS
3.850% 09/30/99 19,000 19,062,016
-----------
76,869,815
-----------
INDIANA -- 3.4%
Indiana Health Facilities Finance Authority
Hospital Revenue Bonds (Charity Group)
Series 1997F VR
3.900% 01/07/99 7,800 7,800,000
Indiana University Revenue Bonds
(Student Fee Project) Series K
5.500% 08/01/99 2,745 2,773,979
Rockport, Indiana, Pollution Control
Revenue Bonds (Indiana & Michigan
Power Co.) Series 1985A VR
4.050% 01/07/99 3,845 3,845,000
Rockport, Indiana, Pollution Control
Revenue Bonds (Indiana & Michigan
Power Co. Project) Series B VR
4.100% 01/07/99 13,000 13,000,000
-----------
27,418,979
-----------
IOWA -- 0.4%
Polk County, Iowa, Hospital Equipment
Authority Revenue Bonds VR
4.000% 01/07/99 3,280 3,280,000
-----------
KANSAS -- 1.5%
Burlington, Kansas, Environmental
Improvement Revenue Bonds (Kansas
City Power & Light) Series B VR
4.100% 01/07/99 11,900 11,900,000
-----------
KENTUCKY -- 1.4%
Kentucky Economic Development Finance
Authority Hospital Facilities Revenue
Bonds (Baptist Healthcare System) VR
4.000% 01/07/99 11,000 11,000,000
-----------
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
LOUISIANA -- 4.1%
Jefferson Parish, Louisiana, Hospital
Service District No. 2 Revenue Bonds
(East Jefferson General Hospital) VR
4.000% 01/07/99 $11,900 $ 11,900,000
West Baton Rouge Parish, Louisiana,
Industrial District No. 3 Revenue Bonds
(Dow Chemical Co. Project) Series B VR
5.150% 01/01/99 17,100 17,100,000
West Baton Rouge Parish, Louisiana, TECP
3.600% 01/29/99 4,000 4,000,000
-----------
33,000,000
-----------
MARYLAND -- 2.9%
Baltimore County, Maryland,
Metropolitan District TECP
3.150% 02/10/99 5,000 5,000,000
Maryland Health & Higher Education
Facilities Series C TECP
3.150% 01/14/99 7,950 7,950,000
Montgomery County, Maryland, TECP
3.200% 01/13/99 11,000 11,000,000
-----------
23,950,000
-----------
MICHIGAN -- 3.2%
Kent County, Michigan, Hospital Finance
Authority Revenue Bonds (Spectrum
Health Project) Series B VR
3.850% 01/07/99 10,000 10,000,000
Michigan State Hospital Finance Authority
Revenue Bonds Series 1997F VR
3.900% 01/07/99 8,500 8,500,000
Michigan Underground Storage Tank
Finance Assurance Authority Revenue
Bonds TECP
3.250% 01/20/99 6,525 6,525,000
3.600% 01/20/99 750 750,000
-----------
25,775,000
-----------
MINNESOTA -- 1.4%
Rochester, Minnesota, Health Care
Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center)
Series C TECP
3.600% 01/13/99 6,750 6,750,000
Rochester, Minnesota, Health Care
Facilities Revenue Bonds Series E TECP
3.500% 01/11/99 4,410 4,410,000
-----------
11,160,000
-----------
MISSISSIPPI -- 3.1%
Claiborne County, Mississippi, Pollution
Control Revenue Bonds TECP
3.050% 01/22/99 1,000 1,000,000
3.350% 01/22/99 6,000 6,000,000
3.350% 02/24/99 6,075 6,075,000
See Notes to Financial Statements.
30
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT MONEY MARKET FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
MISSISSIPPI (CONTINUED)
Mississippi Hospital Equipment
Facilities Authority Revenue Bonds
(North Mississippi Health Services)
Series 1 TECP
3.000% 02/23/99 $12,000 $ 12,000,000
-----------
25,075,000
-----------
MISSOURI -- 1.2%
St. Louis County, Missouri, Industrial
Development Authority Hospital
Revenue Bonds (Charity Obligation
Group) Series E VR
3.900% 01/07/99 9,700 9,700,000
-----------
NEBRASKA -- 2.0%
City of Lincoln, Nebraska, Electric
System TECP
3.450% 02/17/99 5,000 5,000,000
3.400% 02/24/99 1,600 1,600,000
Nebraska Public Power District Electric
System Revenue Bonds Series A TECP
3.250% 01/07/99 10,000 10,000,000
-----------
16,600,000
-----------
NEW YORK -- 1.2%
New York City General Obligation Bonds
Subseries B-4 VR
5.000% 01/01/99 7,030 7,030,000
New York City Municipal Water Finance
Authority Water & Sewer System
Revenue Bonds Series A VR
5.200% 01/01/99 3,100 3,100,000
-----------
10,130,000
-----------
NORTH CAROLINA -- 0.8%
North Carolina Municipal Power Agency
(Catawba Project) Series A TECP
3.350% 01/07/99 6,500 6,500,000
-----------
OHIO -- 0.8%
Cuyahoga County, Ohio, Hospital Revenue
Bonds (Cleveland Clinic Foundation)
Series C VR
4.100% 01/07/99 7,000 7,000,000
-----------
OKLAHOMA -- 4.7%
Muskogee, Oklahoma, Industrial Trust
Pollution Control Revenue Bonds
(Oklahoma Gas & Electric Co.)
Series A VR
4.050% 01/07/99 12,600 12,600,000
Oklahoma City Industrial & Cultural Trust
Revenue Bonds (SSM Health Care) TECP
3.600% 01/12/99 5,000 5,000,000
3.050% 02/11/99 5,000 5,000,000
3.550% 02/11/99 10,000 10,000,000
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
OKLAHOMA (CONTINUED)
Tulsa, Oklahoma, Industrial Authority
Revenue Bonds (University of Tulsa)
Series B VR
4.000% 01/07/9 $ 5,550 $ 5,550,000
-----------
38,150,000
-----------
OREGON -- 0.4%
Oregon State Housing & Community
Service Department Mortgage Revenue
Bonds (Single Family Mortgage Project)
Series C
3.750% 05/13/99 3,000 3,000,000
-----------
PENNSYLVANIA -- 5.5%
Allegheny County, Pennsylvania, Sanitation
Authority Sewer Revenue Bonds VR
4.100% 01/06/99 24,600 24,600,000
Pennsylvania State Higher Education
Facilities Authority Revenue Bonds
(The University of Pennsylvania Health
Services Project) Series B VR
4.050% 01/07/99 20,325 20,325,000
-----------
44,925,000
-----------
SOUTH CAROLINA -- 2.5%
Columbia, South Carolina, Water Works
& Sewer System Revenue Bonds
6.200% 02/01/99 1,595 1,598,136
South Carolina Public Service Authority
Revenue Bonds TECP
3.050% 02/12/99 6,000 6,000,000
York County, South Carolina, Pollution
Control Revenue Bonds (North Carolina
Electric Project) PS
3.300% 03/15/99 12,460 12,460,000
-----------
20,058,136
-----------
TENNESSEE -- 2.2%
Johnson City, Tennessee, Health &
Educational Facilities Board Revenue
Bonds (Tender Acquisition Project)
Series A
3.100% 02/25/99 9,800 9,800,000
Shelby County, Tennessee, TECP
3.350% 01/07/99 8,000 8,000,000
-----------
17,800,000
-----------
TEXAS -- 5.9%
Austin, Texas, Combined Utility Systems
Revenue Bonds Series A TECP
3.100% 02/04/99 8,245 8,245,000
Brazos River Authority, Texas, Pollution
Control Revenue Bonds (Monsanto Co.
Project) VR
4.250% 01/07/99 5,730 5,730,000
See Notes to Financial Statements.
31
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT MONEY MARKET FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
TEXAS (CONTINUED)
Denton, Texas, Independent School
District General Obligation Bonds
Series B PS
3.650% 08/15/99 $ 11,100 $ 11,100,000
Nueces County, Texas, Health Facilities
Development Corp. Revenue Bonds
(Driscoll Children's Foundation
Project) VR
4.050% 01/07/99 7,905 7,905,000
Sabine River, Texas, Industrial
Development Authority Revenue Bonds
(National Rural Utilities Project) PS
3.550% 02/15/99 3,640 3,640,000
Texas Higher Education Authority
Revenue Bonds Series 1985B VR
4.000% 01/07/99 6,260 6,260,000
Texas State General Obligation Bonds
Series A58-Reg D VR
5.350% 01/01/99 5,000 5,000,000
-----------
47,880,000
-----------
UTAH -- 2.9%
Emery County, Utah, Pollution Control
Revenue Bonds (Pacificorp Project) VR
5.150% 01/01/99 6,240 6,240,000
Intermountain Power Agency Power
Supply Revenue Bonds TECP
3.350% 01/07/99 5,000 5,000,000
3.000% 02/09/99 7,100 7,100,000
Intermountain Power Agency Power
Supply Revenue Bonds Series F TECP
3.350% 01/08/99 5,200 5,200,000
-----------
23,540,000
-----------
WASHINGTON -- 3.1%
Seattle, Washington, General Obligation
Bonds (Limited Tax Project) Series B
4.500% 03/01/99 1,500 1,502,120
Washington State General Obligation
Bonds Series 1996B VR
4.050% 01/07/99 15,100 15,100,000
Washington State Public Power Supply
System Nuclear Project No. 1 Refunding
Revenue Bonds Series 1A-1 VR
4.000% 01/07/99 8,700 8,700,000
-----------
25,302,120
-----------
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
WISCONSIN -- 4.6%
Arrowhead, Wisconsin,
United High School TRANS
3.750% 09/27/99 $ 1,400 $ 1,400,987
Belleville, Wisconsin,
School District TRANS
3.740% 11/01/99 1,100 1,101,233
Green Lake, Wisconsin,
School District TRANS
4.000% 08/25/99 1,550 1,551,439
Monona Grove, Wisconsin,
School District TRANS
3.750% 10/22/99 3,400 3,401,294
New London, Wisconsin,
School District TRANS
3.770% 10/01/99 3,800 3,801,082
Penwaukee, Wisconsin,
School District TRANS
3.700% 09/15/99 4,800 4,801,627
Random Lake, Wisconsin,
School District TRANS
3.760% 09/27/99 1,200 1,200,510
Shorewood, Wisconsin,
School District TRANS
3.870% 09/01/99 2,450 2,450,467
Tomahawk, Wisconsin,
School District TRANS
3.710% 10/22/99 2,500 2,502,137
Two Rivers, Wisconsin,
Public School District TRANS
3.850% 09/30/99 1,700 1,701,218
Waterloo, Wisconsin,
School District TRANS
3.900% 10/13/99 1,550 1,551,164
Williams Bay, Wisconsin,
School District TRANS
4.000% 08/24/99 1,400 1,401,295
Wisconsin State Health & Educational
Facilities Authority Revenue Bonds
Series 1997F VR
3.900% 01/07/99 10,800 10,800,000
-----------
37,664,453
-----------
TOTAL MUNICIPAL BONDS
(Cost $805,308,503) 805,308,503
-----------
See Notes to Financial Statements.
32
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT MONEY MARKET FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
TEMPORARY INVESTMENTS -- 0.4%
Federated Tax-Free Obligation Fund 3,150,466 $ 3,150,466
Goldman Sachs Financial Square
Tax-Exempt Money Market Portfolio 257,539 257,539
-----------
TOTAL TEMPORARY INVESTMENTS
(Cost $3,408,005) 3,408,005
------------
TOTAL INVESTMENTS -- 99.7%
(Cost $808,716,508) 808,716,508
------------
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.3% 2,151,368
------------
NET ASSETS -- 100.0%
Applicable to 606,729,624 and 204,111,798
shares outstanding of Institutional
Class and Class A, respectively, $.001
par value; 1.5 billion authorized
shares (Note 7) $810,867,876
============
NET ASSET VALUE, OFFERING 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 12/31/98. Maturity
date is the later of the next interest rate change or exercise of the
demand feature.
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, 1998
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
AGENCY OBLIGATIONS -- 2.8%
AID - Israel Guaranteed Notes
6.050% 08/15/00 $ 520 $ 529,190
Federal Home Loan Bank
7.360% 07/01/04 1,000 1,103,541
Federal Home Loan Mortgage Corp.
7.100% 04/10/07 2,500 2,792,469
Federal National Mortgage Association
8.400% 10/25/04 5,000 5,129,635
-------------
TOTAL AGENCY OBLIGATIONS
(Cost $9,089,314) 9,554,835
-------------
ASSET-BACKED SECURITIES -- 25.7%
AESOP Funding II Series 1997-1,
Class A1
6.220% 10/20/01 5,000 5,082,846
AFC Home Equity Loan Trust
Series 1991-4, Class A
7.750% 12/15/06 53 55,436
AK Bank Series 1998-A, Class 1
7.848% 07/15/05 2,450 2,196,578
Banco Nacional de Mexico, S.A.
Series 1996-A, Class A1
6.250% 12/01/03 5,000 4,975,781
BankAmerica Manufactured Housing
Contract Series 1998-2, Class B1
7.930% 12/10/25 4,300 3,614,016
Bridgestone/Firestone Master Trust
Series 1996-1, Class A
6.170% 07/01/03 4,000 4,047,416
Capita Equipment Receivables Trust
Series 1996-1, Class A4
6.280% 06/15/00 3,500 3,519,119
Case Equipment Loan Trust
Series 1997-A, Class B
6.700% 03/15/04 750 772,439
Charming Shoppes Master Trust
Series 1997-1, Class A
5.885% 04/15/06 2,500 2,492,969
Chemical Credit Card Master Trust I
Series 1996-1, Class A
5.550% 09/15/03 3,000 3,018,730
Citibank Credit Card Master Trust I
Series 1997-2, Class B
6.700% 02/15/04 5,000 5,157,966
Citibank Credit Card Master Trust I
Series 1998-1, Class A
5.750% 01/15/03 2,000 2,021,742
Comed Transitional Funding Trust
Series 1998-1, Class A7
5.740% 12/25/10 5,000 4,989,844
Credit Card Receivable Trust
Series 1998-IA, Class A
6.478% 12/22/04 2,880 2,881,255
First Bankcard Credit Card Master
Trust Private Placement
Series 1997-1, Class A
5.705% 05/15/03 3,000 2,991,562
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
ASSET-BACKED SECURITIES (CONTINUED)
First USA Credit Card Master Trust
Series 1997-6, Class A
6.420% 03/17/05 $ 930 $ 951,314
Ford Credit Auto Loan Master Trust
Series 1995-1, Class A
6.500% 08/15/02 1,000 1,014,678
Goldome Credit Corp. Home Equity
Trust Series 1990-1, Class A
10.000% 07/15/05 85 85,429
Green Tree Financial Corp.
Series 1996-1, Class A2
5.850% 03/15/27 4,250 4,253,510
Green Tree Financial Corp.
Series 1997-4, Class A5
6.880% 02/15/29 5,365 5,505,624
MBNA Corp. Series 1998-C, Class C
6.350% 11/15/05 3,000 3,002,812
Merrill Lynch Home Equity Loan
Series 1994-1, Class A1
5.605% 07/15/22 253 253,340
Metris Master Trust Series 1997-1,
Class A
6.870% 10/20/05 1,725 1,782,067
Onyx Acceptance Grantor Trust,
Series 1998-A, Class A3
5.850% 08/15/02 4,000 4,001,250
Premier Auto Trust Series 1995-4,
Class CTFS
6.200% 09/06/00 4,662 4,750,901
Rental Car Finance Corp.
Series 1997-1, Class A3
6.600% 09/25/07 6,300 6,306,891
SBC Glacier Finance Ltd.
Series 1997-1, Class A
5.404% 09/10/04 3,500 3,423,000
The Money Store Home Equity Trust
Series 1994-B, Class A3
7.100% 11/15/16 1,179 1,192,863
Toyota Auto Lease Trust
Series 1997-A, Class B
6.750% 04/26/04 3,500 3,478,125
-----------
TOTAL ASSET-BACKED SECURITIES
(Cost $88,086,570) 87,819,503
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 20.7%
Asset Securitization Corp.
Series 1997-D4, Class PS1 IO
1.018% 04/14/29 67,687 4,600,585
Chase Mortgage Finance Corp.
Series 1993-0, Class A5
6.600% 12/25/09 3,223 3,292,608
Citicorp Mortgage Securities, Inc.
Series 1993-13, Class A4
6.042% 11/25/08 4,745 4,757,188
Citicorp Mortgage Securities, Inc.
Series 1993-13, Class A5
6.659% 11/25/08 1,595 1,542,112
See Notes to Financial Statements.
34
<PAGE>
HARRIS INSIGHT FUNDS
SHORT/INTERMEDIATE BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
Citicorp Mortgage Securities, Inc.
Series 1993-13, Class A6
8.500% 11/25/08 $ 960 $ 983,636
Countrywide Funding Corp.
Series 1994-5, Class A7F
5.862% 03/25/09 2,915 2,900,483
Countrywide Funding Corp.
Series 1994-5, Class A7S
6.608% 03/25/09 1,097 1,060,045
Countrywide Funding Corp.
Series 1994-5, Class A7T
9.000% 03/25/09 696 725,509
DLJ Commercial Mortgage Corp.
Series 1998-CF2, Class S IO
0.851% 11/12/31 52,820 3,103,163
DLJ Mortgage Acceptance Corp.
Series 1995-Q1, Class A1-S IO
1.953% 03/25/25 191 34,005
DLJ Mortgage Acceptance Corp.
Series 1996-M, Class A1
8.344% 11/28/11 5,661 5,821,952
DLJ Mortgage Acceptance Corp.
Series 1997-CF2, Class CP IO
1.363% 11/15/04 51,000 3,410,625
Federal National Mortgage Association
Series 116, Class 2 IO
9.000% 12/25/21 5,864 1,260,095
Federal National Mortgage Association
Series 1990-32, Class E
9.000% 12/25/04 4,548 4,601,565
Federal National Mortgage Association
Series 1993-183, Class M
6.500% 07/25/23 2,000 2,067,927
Federal National Mortgage Association
Series 1994-85, Class E
6.000% 11/25/06 1,300 1,307,156
Federal National Mortgage Association
Series 1996-M4, Class A
7.750% 03/17/17 1,761 1,812,718
Federal National Mortgage Association
Series 1997-20 IO
1.840% 03/25/27 25,458 859,197
Federal National Mortgage Association
Series 1997-70, Class PE PO
6.370% 04/25/22 5,523 4,641,951
Federal National Mortgage Association
Series 1998-T1, Class A
6.795% 12/28/28 3,070 3,102,322
Norwest Asset Securities Corp.
Series 1997-10, Class A6
6.750% 08/25/27 2,615 2,624,806
PNC Mortgage Securities Corp.
Series 1996-2, Class A4
6.600% 02/25/11 4,534 4,608,033
PNC Mortgage Securities Corp.
Series 1997-5, Class A8
6.750% 10/25/27 6,000 6,040,312
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
Residential Funding Mortgage Security I
Series 1996-S4, Class A13
7.250% 02/25/26 $ 5,329 $ 5,486,809
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $71,570,218) 70,644,802
-----------
MORTGAGE-BACKED SECURITIES -- 5.1%
Federal Home Loan Mortgage Corp.
7.500% 05/01/27 651 670,166
Federal National Mortgage Association
Pool #303724
6.000% 01/01/11 5,684 5,753,270
Federal National Mortgage Association
Pool #305189
9.000% 01/01/25 22 23,918
Federal National Mortgage Association
Pool #305555
9.000% 01/01/25 244 260,284
Federal National Mortgage Association
Pool #306031
9.000% 02/01/25 384 408,408
Federal National Mortgage Association
Pool #306674
9.000% 03/01/25 215 228,884
Federal National Mortgage Association
Pool #317306
9.000% 07/01/25 141 150,314
Federal National Mortgage Association
Pool #338001
9.000% 10/01/25 10 11,024
Government National Mortgage
Association
7.000% 01/15/29 2,400 2,456,250
Government National Mortgage
Association Pool #8747
7.000% 11/20/25 102 104,277
Government National Mortgage
Association Pool #326150
7.000% 09/15/23 197 202,955
Government National Mortgage
Association Pool #333668
7.000% 07/15/23 535 550,631
Government National Mortgage
Association Pool #345039
7.000% 09/15/23 642 660,762
Government National Mortgage
Association Pool #345536
7.000% 01/15/24 438 450,580
Government National Mortgage
Association Pool #351638
7.000% 06/15/23 623 641,842
Government National Mortgage
Association Pool #377553
7.000% 07/15/25 596 612,618
Government National Mortgage
Association Pool #383330
7.000% 07/15/25 939 965,150
See Notes to Financial Statements.
35
<PAGE>
HARRIS INSIGHT FUNDS
SHORT/INTERMEDIATE BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
MORTGAGE-BACKED SECURITIES (CONTINUED)
Government National Mortgage
Association Pool #391901
7.000% 07/15/25 $ 595 $ 611,401
Government National Mortgage
Association Pool #397755
7.000% 05/15/24 616 633,191
Government National Mortgage
Association Pool #406568
7.000% 07/15/25 758 778,839
Government National Mortgage
Association Pool #407660
7.000% 07/15/25 668 686,208
Government National Mortgage
Association Pool #780023
7.000% 09/15/24 675 691,543
------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $16,912,936) 17,552,515
------------
CORPORATE BONDS -- 26.2%
ELECTRIC -- 0.7%
Consolidated Edison Co., Inc.
6.625% 07/01/05 2,150 2,295,125
------------
FINANCE - BANK -- 5.0%
Bank One Corp
7.250% 08/15/04 3,320 3,627,100
BankAmerica Corp.
7.500% 10/15/02 2,320 2,465,000
Mercantile Bancorp
7.050% 06/15/04 3,300 3,514,500
NationsBank Corp.
6.500% 08/15/03 2,310 2,416,837
Sanwa Business Credit Corp.
5.279% 03/13/00 5,000 4,993,500
------------
17,016,937
------------
FINANCE - NON-BANK -- 7.1%
American Express Credit Corp.
6.125% 11/15/01 440 452,100
Associates Corp. of North America
5.750% 10/15/03 190 192,137
Associates Corp. of North America
Euro Bond
6.875% 06/20/02 1,775 1,828,250
Beneficial Corp.
8.400% 05/15/08 20 23,800
Beneficial Finance Corp. MTN
9.130% 07/25/01 1,000 1,080,000
Case Credit Corp.
5.930% 02/26/01 4,000 3,985,000
Hartford Life, Inc.
7.100% 06/15/07 3,725 4,018,344
Household Finance Corp.
8.550% 10/15/04 3,000 3,071,250
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
CORPORATE BONDS (CONTINUED)
FINANCE - NON-BANK (CONTINUED)
Lehman Brothers Holdings, Inc.
7.375% 05/15/04 $ 4,540 $ 4,698,900
Salomon Smith Barney Holdings, Inc.
5.875% 02/01/01 3,885 3,914,137
SunAmerica, Inc.
5.600% 07/31/97 1,050 914,812
------------
24,178,730
------------
INDUSTRIAL -- 8.1%
Browning - Ferris Industries, Inc.
6.100% 01/15/03 1,000 1,020,000
Cox Communications, Inc.
6.690% 09/20/04 3,275 3,422,375
Ford Motor Co.
9.000% 09/15/01 4,000 4,370,000
Heinz (H.J.) Co. Euro
7.500% 04/26/00 1,000 1,028,750
James River Corp.
6.700% 11/15/03 4,000 4,125,000
Monsanto Co.
5.750% 12/01/05 2,240 2,226,000
5.875% 12/01/08 1,725 1,725,000
Raytheon Co.
6.750% 08/15/07 3,765 3,972,075
Sears, Roebuck & Co. MTN
8.390% 02/14/02 800 865,000
Sears, Roebuck Acceptance Corp.
6.020% 02/20/03 1,400 1,424,500
Walt Disney Co.
6.375% 03/30/01 2,785 2,865,069
WMX Technologies, Inc.
6.250% 10/15/00 700 709,625
------------
27,753,394
------------
OIL -- 0.9%
Atlantic Richfield Co.
9.125% 03/01/11 100 127,125
Petro Mexicanos Finance, Ltd.
5.720% 11/15/03 2,925 2,925,000
------------
3,052,125
------------
OTHER UTILITIES -- 0.4%
KN Energy, Inc.
6.450% 03/01/03 1,530 1,535,737
------------
TELEPHONES -- 3.0%
Airtouch Communications, Inc. Notes
6.650% 05/01/08 3,000 3,187,500
US West, Inc.
6.625% 09/15/05 3,165 3,358,856
Worldcom, Inc.
6.400% 08/15/05 3,705 3,843,937
------------
10,390,293
------------
See Notes to Financial Statements.
36
<PAGE>
HARRIS INSIGHT FUNDS
SHORT/INTERMEDIATE BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
CORPORATE BONDS (CONTINUED)
TRANSPORTATION -- 1.0%
Norfolk Southern Corp.
7.350% 05/15/07 $ 3,000 $ 3,300,000
------------
TOTAL CORPORATE BONDS
(Cost $86,957,851) 89,522,341
------------
SUPRANATIONAL BONDS -- 0.9%
African Development Bank
(Cost $3,082,237)
7.750% 12/15/01 3,000 3,195,000
------------
YANKEE BONDS -- 3.5%
Banco Santiago S.A.
7.000% 07/18/07 3,730 3,114,550
Cable & Wireless Communications Notes
6.625% 03/06/05 955 962,162
Empresa Nacional Electric
7.750% 07/15/08 2,400 2,277,000
Export-Import Bank Korea
6.500% 11/15/06 2,185 1,969,231
Korea Development Bank
7.375% 09/17/04 1,415 1,291,188
Korea Electric Power Global
6.375% 12/01/03 1,455 1,254,938
Racers QHEL Series 1997, Class A-1
9.499% 05/15/17 1,115 1,122,471
------------
TOTAL YANKEE BONDS
(Cost $13,089,052) 11,991,540
------------
U.S. TREASURY OBLIGATIONS -- 15.0%
U.S. TREASURY BILLS* -- 0.1%
3.920% 04/15/99 100 98,841
4.430% 05/27/99 250 245,650
------------
344,491
------------
U.S. TREASURY NOTES -- 13.4%
6.750% 04/30/00 2,000 2,053,015
6.375% 05/15/00 4,440 4,541,394
5.500% 12/31/00 1,200 1,220,525
6.500% 08/31/01 9,075 9,500,195
6.375% 09/30/01 500 522,269
7.500% 11/15/01 1,650 1,776,350
5.875% 11/30/01 790 817,051
6.625% 04/30/02 1,215 1,287,176
6.500% 05/31/02 15,860 16,762,786
5.750% 10/31/02 1,500 1,555,974
6.500% 05/15/05 1,200 1,315,433
7.000% 07/15/06 3,900 4,452,643
------------
45,804,811
------------
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
U.S. TREASURY OBLIGATIONS (CONTINUED)
U.S. TREASURY STRIPS -- 1.5%
0.000% 02/15/03 $ 6,000 $ 4,958,158
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $50,388,204) 51,107,460
------------
SHARES
------
TEMPORARY INVESTMENTS -- 0.2%
Goldman Sachs Financial Square
Money Market Portfolio 105,452 105,452
Goldman Sachs Institutional
Liquid Assets Money Market
Portfolio 387,309 387,309
J.P. Morgan Institutional Prime
Money Market Portfolio 42,784 42,784
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $535,545) 535,545
------------
TOTAL INVESTMENTS -- 100.1%
(Cost $339,711,927) 341,923,541
------------
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.1%) (250,840)
------------
NET ASSETS -- 100.0%
Applicable to 32,717,683 and 452,247
shares outstanding of Institutional
Class and Class A, respectively,
$.001 par value; 200,000,000
authorized shares (Note 7) $341,672,701
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($337,014,450/32,717,683) $10.30
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE ($4,658,251/452,247) $10.30
======
- --------
(DAGGER) See Note 2a to the Financial Statements.
* Securities pledged as collateral for futures contracts.
MTN -- Medium Term Note.
IO -- Interest Only Security.
PO -- Principal Only Security; interest rate is effective yield.
NUMBER OF UNREALIZED
CONTRACTS DEPRECIATION
--------- ------------
Futures Contracts -- Long Position
U.S. Treasury Notes, March 1999 178 $(9,734)
=== ========
See Notes to Financial Statements.
37
<PAGE>
HARRIS INSIGHT FUNDS
BOND FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
ASSET-BACKED SECURITIES -- 22.2%
AESOP Funding II Series 1997-1,
Class A1
6.220% 10/20/01 $ 2,000 $ 2,033,138
AK Bank Series 1998-A, Class 1
7.848% 07/15/05 1,300 1,165,531
Banco Nacional de Mexico, S.A.
Series 1996-A, Class A1
6.250% 12/01/03 2,000 1,990,312
BankAmerica Manufactured
Housing Contract Series 1998-2,
Class B1
7.930% 11/10/28 2,284 1,919,631
Bridgestone/Firestone Master Trust
Series 1996-1, Class A
6.170% 07/01/03 2,080 2,104,656
Capita Equipment Receivables Trust
Series 1996-1, Class A4
6.280% 06/15/00 500 502,731
Case Equipment Loan Trust
Series 1997-A, Class B
6.700% 03/15/04 750 772,439
Charming Shoppes Master Trust
Series 1997-1, Class A
5.885% 04/15/06 2,500 2,492,969
Chemical Credit Card Master Trust
Series 1995-2, Class A
6.230% 06/15/03 610 620,421
Citibank Credit Card Master Trust I
Series 1997-2, Class B
6.700% 02/15/04 1,000 1,031,593
Citibank Credit Card Master Trust I
Series 1998-1, Class A
5.750% 01/15/03 2,250 2,274,460
Comed Transitional Funding Trust
Series 1998-1, Class A7
5.740% 12/25/10 2,615 2,609,688
First Bankcard Credit Card Master
Trust Private Placement
Series 1997-1, Class A
5.705% 05/15/03 1,000 997,187
First Plus Home Loan Trust
Series 1997-3, Class A6
7.080% 07/10/17 1,125 1,210,089
First USA Credit Card Master Trust
Series 1997-6, Class A
6.420% 03/17/05 150 153,438
Green Tree Financial Corp.
Series 1997-4, Class A5
6.880% 02/15/29 2,000 2,052,423
Green Tree Financial Corp.
Series 1997-7, Class A8
6.860% 08/15/29 3,399 3,439,625
Household Credit Card Master Trust I
Series 1995-1, Class A
5.448% 12/15/02 780 782,184
MBNA Corp. Series 1998-C, Class C
6.350% 11/15/05 1,250 1,251,172
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
ASSET-BACKED SECURITIES (CONTINUED)
Metris Master Trust Series 1997-1, Class A
6.870% 10/20/05 $ 3,350 $ 3,460,826
Rental Car Funding Corp.
Series 1997-1, Class A3
6.600% 09/25/07 3,447 3,450,770
SBC Glacier Finance Ltd.
Series 1997-1, Class A
5.404% 09/10/04 1,500 1,467,000
Standard Credit Card Master Trust
Series 1994-3, Class B
7.000% 04/07/01 400 401,459
Team Fleet Financing Corp.
Series 1997-1, Class A
7.350% 05/15/03 1,250 1,303,525
The Money Store Home Equity Trust
Series 1994-B, Class A3
7.100% 11/15/16 421 426,023
Toyota Auto Lease Trust
Series 1997-A, Class B
6.750% 04/26/04 1,500 1,490,625
--------------
TOTAL ASSET-BACKED SECURITIES
(Cost $41,457,214) 41,403,915
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 31.8%
Asset Securitization Corp.
Series 1997-D4, Class PS1 IO
1.018% 04/14/29 16,176 1,099,473
Chase Commercial Mortgage Securities
Corp Series 1997-1, Class A1
7.270% 07/19/04 1,543 1,609,199
Chase Mortgage Finance Corp.
Series 1993-0, Class A5
6.600% 12/25/09 806 823,152
Citicorp Mortgage Securities, Inc.
Series 1993-13, Class A4
6.042% 11/25/08 2,478 2,484,646
Citicorp Mortgage Securities, Inc.
Series 1993-13, Class A5
6.659% 11/25/08 833 805,434
Citicorp Mortgage Securities, Inc.
Series 1993-13, Class A6
8.500% 11/25/08 502 513,747
Countrywide Funding Corp.
Series 1994-11, Class A12
9.913% 05/25/24 307 315,513
DLJ Commercial Mortgage Corp.
Series 1998-CF2, Class S IO
0.851% 11/12/31 28,510 1,674,967
DLJ Mortgage Acceptance Corp.
Series 1996-M, Class A1
8.372% 11/28/11 755 776,260
DLJ Mortgage Acceptance Corp.
Series 1998-A, Class A2
7.049% 05/25/28 2,131 2,140,478
Federal Home Loan Mortgage Corp.
Series 1735, Class L
6.500% 06/15/24 3,158 3,182,808
See Notes to Financial Statements.
38
<PAGE>
HARRIS INSIGHT FUNDS
BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
Federal Home Loan Mortgage Corp.
Series 1848, Class PG
7.000% 05/15/26 $ 4,773 $ 4,855,573
Federal Home Loan Mortgage Corp.
Series 1865, Class PE
7.000% 07/15/26 750 770,694
Federal Home Loan Mortgage Corp.
Series 1871, Class H
7.000% 11/15/12 1,000 1,037,517
Federal Home Loan Mortgage Corp.
Series 2021, Class PQ
6.000% 09/15/23 5,696 5,696,007
Federal National Mortgage Association
Series 110, Class 2 IO
9.000% 11/25/19 1,852 404,887
Federal National Mortgage Association
Series 145, Class 1 PO
10.839% 06/25/22 1,891 1,612,253
Federal National Mortgage Association
Series 1992-216, Class ZB
7.000% 12/25/22 593 593,856
Federal National Mortgage Association
Series 1993-167, Class SL
7.000% 01/25/22 2,200 2,183,500
Federal National Mortgage Association
Series 1993-210, Class S
10.094% 11/25/23 1,145 1,126,823
Federal National Mortgage Association
Series 1993-220, Class SE
6.365% 11/25/13 4,311 4,181,940
Federal National Mortgage Association
Series 1994-30, Class H
6.250% 11/25/22 2,550 2,600,485
Federal National Mortgage Association
Series 1996-53, Class PE
6.500% 11/18/10 2,375 2,447,464
Federal National Mortgage Association
Series 1997-20 IO
1.840% 03/25/27 12,878 434,617
GE Capital Mortgage Services, Inc.
Series 1994-10, Class A23
6.500% 03/25/24 2,579 2,574,693
GE Capital Mortgage Services, Inc.
Series 1997-5, Class A2
7.500% 06/25/27 2,000 2,016,562
Merrill Lynch Mortgage Investors, Inc.
Series 1998-C2, Class A1
6.220% 02/15/30 1,112 1,117,539
Norwest Asset Securities Corp.
Series 1997-10, Class A6
6.750% 08/25/27 2,100 2,107,875
PNC Mortgage Securities Corp.
Series 1997-5, Class A8
6.750% 10/25/27 2,188 2,202,308
Residential Asset Securitization Trust
Series 1997-A8, Class A3
7.000% 10/25/27 1,069 1,078,392
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
Residential Funding Mortgage Security I
Series 1993-S20, Class A11
7.250% 06/25/08 $ 1,901 $ 1,976,080
Residential Funding Mortgage Security I
Series 1996-S4, Class A13
7.250% 02/25/26 2,664 2,743,404
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $58,169,646) 59,188,146
------------
MORTGAGE-BACKED SECURITIES -- 5.1%
Federal National Mortgage Association
Pool #305555
9.000% 01/01/25 250 265,964
Federal National Mortgage Association
Pool #359740
7.000% 10/01/26 224 229,170
Federal National Mortgage Association
Pool #364248
7.000% 01/01/27 318 325,100
Federal National Mortgage Association
Pool #364731
7.000% 12/01/26 246 252,215
Government National Mortgage Association
7.000% 01/15/29 1,890 1,934,297
Government National Mortgage Association
Pool #780167
7.000% 12/15/24 6,244 6,397,801
------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $9,294,174) 9,404,547
------------
CONVERTIBLE CORPORATE BONDS -- 1.0%
Bell Atlantic Financial Services
(Cost $1,750,000)
4.250% 09/15/05 1,750 1,811,250
------------
CORPORATE BONDS -- 21.2%
ELECTRIC -- 0.6%
Public Service Electric & Gas Co.
6.500% 05/01/04 1,000 1,061,250
------------
FINANCE - BANK -- 1.5%
BankBoston Corp.
6.375% 04/15/08 2,185 2,187,731
Mellon Financial Co.
6.300% 06/01/00 500 508,125
------------
2,695,856
------------
FINANCE - NON-BANK -- 3.7%
American General Institutional
Capital Securities Series A
7.570% 12/01/45 590 642,362
Associates Corp. of North America
Euro Bond
6.875% 06/20/02 355 365,650
Commercial Credit Co.
7.750% 03/01/05 210 230,475
Lehman Brothers Holdings, Inc.
8.800% 03/01/15 630 694,575
See Notes to Financial Statements.
39
<PAGE>
HARRIS INSIGHT FUNDS
BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
CORPORATE BONDS (CONTINUED)
FINANCE - NON-BANK (CONTINUED)
PaineWebber Group, Inc.
6.750% 02/01/06 $ 1,000 $ 1,016,250
Salomon Smith Barney Holdings, Inc.
5.875% 02/01/01 200 201,500
6.500% 10/15/02 200 205,000
SunAmerica, Inc.
5.600% 07/31/97 480 418,200
U.S. West Capital Funding, Inc.
6.875% 07/15/28 1,740 1,835,700
Xerox Credit Corp. Euro Bond
5.400% 09/11/00 1,300 1,303,250
------------
6,912,962
------------
INDUSTRIAL -- 12.2%
A.H. Belo Corp.
7.250% 09/15/27 1,500 1,550,625
Air Products & Chemicals, Inc.
6.862% 10/25/03 2,250 2,390,625
Archer-Daniels-Midland Co.
6.750% 12/15/27 620 671,925
Boston University
7.625% 07/15/97 410 467,912
Cox Communications, Inc.
6.690% 09/20/04 1,800 1,881,000
Ford Motor Co.
7.400% 11/01/46 1,055 1,178,962
General Motors Corp.
6.750% 05/01/28 830 861,125
Hertz Corp.
6.500% 04/01/00 500 505,000
Honeywell, Inc.
7.350% 05/15/00 200 206,000
International Business Machines Corp.
6.500% 01/15/28 1,720 1,812,450
James River Corp.
6.700% 11/15/03 2,000 2,062,500
Monsanto Co.
5.750% 12/01/05 1,130 1,122,937
5.875% 12/01/08 870 870,000
Nordstrom, Inc.
6.950% 03/15/28 585 609,862
Procter & Gamble Co. Euro Bond
9.625% 01/14/01 400 436,000
Sears, Roebuck Acceptance Corp.
6.020% 02/20/03 1,350 1,373,625
Tyco International Group
7.000% 06/15/28 1,730 1,755,950
Wal-Mart Stores, Inc.
9.100% 07/15/00 100 105,875
Wal-Mart Stores, Inc. Euro Bond
6.750% 05/24/02 125 129,453
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
CORPORATE BONDS (CONTINUED)
INDUSTRIAL (CONTINUED)
Walt Disney Co.
6.375% 03/30/01 $ 500 $ 514,375
Xerox Capital Trust I
8.000% 02/01/27 810 893,025
Xerox Corp. Euro Bond
5.750% 07/21/00 1,310 1,319,825
--------------
22,719,051
--------------
OIL -- 0.7%
Petro Mexicanos Finance, Ltd.
5.720% 11/15/03 1,365 1,365,000
--------------
OTHER UTILITIES -- 0.1%
KN Energy, Inc.
6.450% 03/01/03 130 130,488
--------------
TELEPHONES -- 1.5%
Airtouch Communications, Inc. Notes
6.650% 05/01/08 450 478,125
BellSouth Telecommunications, Inc.
7.625% 05/15/35 215 236,231
New England Telephone &
Telegraph Co.
7.875% 11/15/29 1,720 2,104,850
--------------
2,819,206
--------------
TRANSPORTATION -- 0.9%
CSX Corp.
7.250% 05/01/27 1,610 1,738,800
--------------
TOTAL CORPORATE BONDS
(Cost $38,396,070) 39,442,613
--------------
SUPRANATIONAL BONDS -- 1.1%
African Development Bank
(Cost $2,054,825)
7.750% 12/15/01 2,000 2,130,000
--------------
YANKEE BONDS -- 4.9%
Banco Santiago S.A.
7.000% 07/18/07 1,610 1,344,350
Cable & Wireless Communications Notes
6.625% 03/06/05 465 468,488
Empresa Nacional Electric
7.750% 07/15/08 1,700 1,612,875
Export-Import Bank Korea
6.500% 11/15/06 240 216,300
Hydro-Quebec
8.050% 07/07/24 220 267,575
Korea Development Bank
7.375% 09/17/04 1,045 953,563
See Notes to Financial Statements.
40
<PAGE>
HARRIS INSIGHT FUNDS
BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
YANKEE BONDS (CONTINUED)
Korea Electric Power Global
6.375% 12/01/03 $ 605 $ 521,813
Racers QHEL Series 1997, Class A-1
9.499% 05/15/17 1,050 1,057,035
Sony Corp.
6.125% 03/04/03 2,210 2,262,488
United Utilities P.L.C.
6.450% 04/01/08 500 511,250
-----------
TOTAL YANKEE BONDS
(Cost $9,601,914) 9,215,737
-----------
U.S. TREASURY OBLIGATIONS -- 7.4%
U.S. TREASURY BILLS* -- 0.2%
4.330% 03/25/99 250 247,589
3.920% 04/15/99 200 197,683
-----------
445,272
-----------
U.S. TREASURY BONDS -- 2.5%
8.750% 08/15/20 3,250 4,623,215
-----------
U.S. TREASURY NOTES -- 4.7%
6.375% 05/15/00 1,000 1,022,837
6.500% 05/31/01 500 521,360
6.500% 08/31/01 2,635 2,758,459
7.500% 11/15/01 510 549,054
7.000% 07/15/06 3,395 3,876,083
-----------
8,727,793
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $13,623,365) 13,796,280
-----------
MUNICIPAL BONDS -- 0.8%
Massachusetts State Turnpike Authority
Metropolitan Highway System
Revenue Bonds Series A
(Cost $1,549,779)
5.000% 01/01/37 1,600 1,558,000
-----------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
TEMPORARY INVESTMENTS -- 4.9%
Goldman Sachs Financial Square
Money Market Portfolio 4,335,860 $ 4,335,860
Goldman Sachs Institutional Liquid
Assets Money Market Portfolio 4,814,252 4,814,252
J.P. Morgan Institutional Prime
Money Market Portfolio 26,926 26,926
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $9,177,038) 9,177,038
------------
TOTAL INVESTMENTS -- 100.4%
(Cost $185,074,025) 187,127,526
------------
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.4%) (730,089)
------------
NET ASSETS -- 100.0%
Applicable to 18,031,428 and 251,699
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 7) $186,397,437
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($183,831,362/18,031,428) $10.20
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE ($2,566,075/251,699) $10.20
======
- --------
(DAGGER) See Note 2a to the Financial Statements.
* Securities pledged as collateral for futures contracts.
IO -- Interest Only Security.
PO -- Principal Only Security; interest rate is effective yield.
NUMBER OF UNREALIZED
CONTRACTS DEPRECIATION
--------- ------------
Futures Contracts - Long Position
U.S. Treasury Notes, March 1999 135 $(7,383)
=== ========
See Notes to Financial Statements.
41
<PAGE>
HARRIS INSIGHT FUNDS
INTERMEDIATE GOVERNMENT BOND FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
AGENCY OBLIGATIONS -- 40.3%
AID - Israel Guaranteed Notes
6.050% 08/15/00 $1,590 $ 1,618,101
Banco Vivienda del Peru
9.980% 08/01/08 3,400 4,016,145
Federal Farm Credit Bank
7.170% 04/25/02 3,500 3,724,210
Federal Home Loan Bank
5.625% 03/19/01 3,500 3,557,348
5.655% 07/10/01 3,500 3,562,655
4.860% 10/05/01 3,500 3,497,078
Federal Home Loan Mortgage Corp.
4.750% 12/14/01 3,000 2,994,224
7.010% 07/11/07 850 898,051
Federal National Mortgage Association
4.625% 10/15/01 925 920,535
5.900% 10/10/02 3,300 3,399,386
5.750% 06/15/05 2,000 2,073,936
Honduras Aid
13.000% 06/01/01 1,037 1,114,985
Private Export Funding Corp.
7.030% 10/31/03 1,650 1,794,375
Rowan Cos., Inc.
6.150% 07/01/10 4,388 4,477,954
Small Business Administration
Participation Certificates,
Series 1995-20J, Class 1
6.850% 10/01/15 3,127 3,248,238
Small Business Administration
Participation Certificates,
Series 1997-10C, Class 1
6.950% 05/01/07 1,412 1,482,482
------------
TOTAL AGENCY OBLIGATIONS
(Cost $41,513,654) 42,379,703
------------
ASSET-BACKED SECURITIES -- 9.0%
BankBoston Marine Asset Backed
Trust Series 1997-2, Class A3
6.320% 03/15/06 1,460 1,461,474
Citibank Credit Card Master Trust I
Series 1998-1, Class A
5.750% 01/15/03 1,455 1,470,817
Citibank Credit Card Master Trust I
Series 1998-6, Class A
5.850% 04/10/03 400 404,864
Contimortgage Home Equity Loan
Trust Series 1998-2 A5
6.280% 09/15/16 2,500 2,515,234
Green Tree Home Equity Loan Trust
Series 1998-A, Class A5 IO
8.000% 06/15/29 10,000 1,562,500
Metris Master Trust Series 1997-1,
Class A
6.870% 10/20/05 2,000 2,066,165
------------
TOTAL ASSET-BACKED SECURITIES
(Cost $9,424,081) 9,481,054
------------
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 15.1%
DLJ Mortgage Acceptance Corp.
Series 1998-A, Class A2
7.049% 05/25/28 $1,727 $ 1,734,224
Federal National Mortgage Association
Series 1990-96, Class E
9.670% 01/25/17 341 344,941
Federal National Mortgage Association
Series 1993-167, Class SL
6.923% 01/25/22 1,390 1,379,575
Federal National Mortgage Association
Series 1996-M4, Class A
7.750% 03/17/17 755 776,879
Federal National Mortgage Association
Series 1997-20 IO
1.840% 03/25/27 8,684 293,091
Federal National Mortgage Association
Series 1997-M2, Class A
7.350% 09/17/03 2,841 2,927,760
Federal National Mortgage Association
Series 1997-M5, Class C
6.740% 08/25/07 3,000 3,283,754
Federal National Mortgage Association
Series 1998-M2, Class CP1 IO
0.946% 02/25/02 51,375 1,356,621
Federal National Mortgage Association
Series 1998-T1, Class A
6.795% 12/28/28 2,486 2,512,836
Residential Funding Mortgage Security I
Series 1996-S4, Class A13
7.250% 02/25/26 1,211 1,247,002
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $15,853,017) 15,856,683
------------
MORTGAGE-BACKED SECURITIES -- 20.5%
Federal Home Loan Mortgage Corp.
Pool #W10002
6.775% 11/01/03 3,070 3,218,703
Federal Home Loan Mortgage Corp.
Pool #865008
8.454% 02/01/18 41 42,637
Federal National Mortgage Association
Pool #8217
11.000% 12/01/15 1,228 1,371,724
Federal National Mortgage Association
Pool #73738
6.825% 11/01/01 3,730 3,853,781
Federal National Mortgage Association
Pool #73755
6.890% 01/01/02 2,866 2,944,301
Federal National Mortgage Association
Pool #303724
6.000% 01/01/11 2,938 2,973,600
Federal National Mortgage Association
Pool #375255
6.920% 07/01/04 988 1,033,892
See Notes to Financial Statements.
42
<PAGE>
HARRIS INSIGHT FUNDS
INTERMEDIATE GOVERNMENT BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
MORTGAGE-BACKED SECURITIES (CONTINUED)
Government National Mortgage
Association Pool #8720
7.000% 10/20/25 $ 260 $ 264,881
Government National Mortgage
Association Pool #162989
9.000% 05/15/16 14 14,781
Government National Mortgage
Association Pool #227125
9.000% 07/15/17 85 91,294
Government National Mortgage
Association Pool #346458
8.000% 03/15/23 196 204,533
Government National Mortgage
Association Pool #352110
7.000% 08/15/23 2,732 2,810,952
Government National Mortgage
Association Pool #780389
9.000% 08/15/09 2,587 2,800,885
------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $20,813,825) 21,625,964
------------
U.S. TREASURY OBLIGATIONS -- 12.4%
U.S. TREASURY BILLS*-- 0.3%
4.330% 03/25/99 250 247,589
------------
U.S. TREASURY BONDS -- 11.1%
8.875% 08/15/17 2,659 3,747,042
8.750% 08/15/20 5,250 7,468,270
6.750% 08/15/26 400 479,625
------------
11,694,937
------------
U.S. TREASURY NOTES -- 1.0%
7.000% 07/15/06 955 1,090,327
------------
TOTAL U S. TREASURY OBLIGATIONS
(Cost $12,488,906) 13,032,853
------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
TEMPORARY INVESTMENTS -- 1.5%
Goldman Sachs Financial Square
Treasury Obligation Portfolio
(Cost $1,605,252) 1,605,252 $ 1,605,252
------------
TOTAL INVESTMENTS -- 98.8%
(Cost $101,698,735) 103,981,509
------------
OTHER ASSETS IN EXCESS OF LIABILITIES-- 1.2% 1,306,807
------------
NET ASSETS -- 100.0%
Applicable to 6,211,208 and 128,036
shares of beneficial interest
outstanding of Institutional Class
and Class A, respectively,
$.001 par value (Note 7) $105,288,316
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE ($103,161,791/6,211,208) $16.61
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER CLASS A SHARE
($2,126,525/128,036) $16.61
======
- --------
(DAGGER) See Note 2a to the Financial Statements.
* Security pledged as collateral for futures contracts.
IO - Interest Only Security.
NUMBER OF UNREALIZED
CONTRACTS DEPRECIATION
--------- ------------
Futures Contracts -- Long Position
U.S. Treasury Notes, March 1999 65 $(3,555)
=== ========
See Notes to Financial Statements.
43
<PAGE>
HARRIS INSIGHT FUNDS
INTERMEDIATE TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS -- 99.7%
ARIZONA -- 3.5%
Salt River Project, Arizona, Agriculture
& Improvement District Revenue
Bonds Series B
6.500% 01/01/04 $6,050 $ 6,760,875
University of Arizona Revenue Bonds
6.450% 06/01/07 1,000 1,095,000
--------------
7,855,875
--------------
CALIFORNIA -- 6.1%
Central Coast Water Authority, California
Revenue Bonds (State Water Project
Regional Facilities)
6.500% 10/01/14 6,000 6,697,500
Metropolitan Water District, Southern
California Waterworks Revenue
Bonds Series C
5.250% 07/01/15 4,000 4,155,000
Redding, California, Joint Powers
Financing Authority Electric System
Revenue Bonds Series A
5.250% 06/01/15 3,000 3,108,750
--------------
13,961,250
--------------
COLORADO -- 1.5%
Denver, Colorado, City & County Airport
Revenue Bonds Series A
7.500% 11/15/06 3,000 3,453,750
--------------
CONNECTICUT -- 1.4%
Connecticut State Clean Water
Revenue Bonds
5.250% 03/01/15 3,000 3,105,000
--------------
DELAWARE -- 1.7%
Delaware State General Obligation
Bonds
6.125% 04/01/01 3,700 3,898,875
--------------
FLORIDA -- 7.1%
Broward County, Florida, School
Board Certificates of Participation
Revenue Bonds Series C
5.750% 07/01/05 4,615 5,047,656
Florida State Department of
Transportation-Right of Way General
Obligation Bond Series B
5.000% 07/01/15 5,105 5,200,719
Gainesville, Florida, Utilities System
Revenue Bonds Series A
5.750% 10/01/07 1,500 1,668,750
Inland Protection Financing Corp.,
Florida, Special Obligation Revenue
Bonds
5.000% 07/01/02 4,000 4,160,000
--------------
16,077,125
--------------
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
ILLINOIS -- 6.6%
Chicago, Illinois, Metropolitan Water
Reclamation District-Greater Chicago
Capital Improvement General
Obligation Bonds
6.050% 12/01/09 $1,000 $ 1,152,500
Illinois Development Finance Authority
School District PG-Rockford School
205 Revenue Bonds
6.550% 02/01/09 1,000 1,173,750
Illinois State Toll Highway Authority
Revenue Bonds Series A
5.500% 01/01/13 10,000 10,875,000
Lake & McHenry Counties, Illinois,
Community United School District No. 118
General Obligation Bonds
0.000% 02/01/11 1,280 724,800
Palatine, Illinois, Tax Increment Revenue
Bonds (Dundee Road Redevelopment
Projects)
5.250% 01/01/17 1,000 1,013,750
--------------
14,939,800
--------------
INDIANA -- 4.8%
Anderson, Indiana, Economic
Development Revenue Bonds
(Anderson University Project)
5.000% 10/01/07 1,010 988,537
5.000% 10/01/08 1,015 992,162
Indiana Health Facility Financing
Authority Hospital Revenue Bonds
(Clarian Health Partners) Series A
6.000% 02/15/05 4,000 4,365,000
Indiana Municipal Power Agency,
Power Supply System Revenue
Bonds Series B
6.000% 01/01/11 3,000 3,386,250
Purdue University, Indiana, Higher
Education Revenue Bonds Series P
5.250% 07/01/12 1,000 1,068,750
--------------
10,800,699
--------------
KANSAS -- 1.3%
Kansas State Department of
Transportation Highway Revenue
Bonds
7.250% 03/01/04 2,555 2,951,025
--------------
LOUISIANA -- 2.7%
Louisiana State General Obligation
Bonds
7.750% 08/01/06 5,000 6,143,750
--------------
MASSACHUSETTS -- 5.0%
Malden, Massachusetts, General
Obligation Bonds
5.000% 10/01/11 2,020 2,098,275
See Notes to Financial Statements.
44
<PAGE>
HARRIS INSIGHT FUNDS
INTERMEDIATE TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
MASSACHUSETTS (CONTINUED)
Massachusetts Bay, Massachusetts
Transportation Authority Revenue
Bonds Series C
5.500% 03/01/09 $5,000 $ 5,500,000
Massachusetts State Grant Anticipation
Notes Revenue Bonds Series B
5.000% 12/15/08 1,000 1,062,500
Massachusetts State Health &
Educational Facilities Authority
Revenue Bonds (Northeastern
University) Series D
7.125% 10/01/10 1,500 1,606,875
Southbridge, Massachusetts,
General Obligation Bonds
6.375% 01/01/12 1,000 1,085,000
--------------
11,352,650
--------------
MICHIGAN -- 6.2%
Chippewa County, Michigan, Hospital
Finance Revenue Bonds (Chippewa
County War Memorial Hospital)
Series A
5.000% 11/01/04 1,075 1,100,531
Chippewa County, Michigan, Hospital
Finance Revenue Bonds (Chippewa
County War Memorial Hospital)
Series B
5.000% 11/01/04 2,140 2,190,825
Detroit, Michigan, Water Supply
System Revenue Bonds Series A
5.300% 07/01/09 1,000 1,076,250
Fenton, Michigan, Area Public Schools
General Obligation Bonds
4.600% 05/01/12 1,000 992,500
Michigan State Building Authority
Revenue Bonds Series II
6.750% 10/01/07 3,000 3,300,000
Michigan State General Obligation
Bonds (Environmental Protection
Program)
5.000% 11/01/17 1,000 1,005,000
Michigan State Hospital Finance
Authority Revenue Bonds (Chelsea
Community Hospital)
5.000% 05/15/12 3,630 3,539,250
Oakland University, Michigan,
Revenue Bonds
5.000% 05/15/10 750 785,625
--------------
13,989,981
--------------
MINNESOTA -- 1.2%
Minneapolis, Minnesota, Special
School District No. 1, Certificates
of Participation Revenue Bonds
Series B
5.000% 02/01/12 2,600 2,665,000
--------------
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
MISSISSIPPI -- 2.3%
Mississippi Development Bank,
Municipal Facility Authority Revenue
Bonds (Natural Gas Project)
4.125% 01/01/06 $2,000 $ 1,987,500
Mississippi River Bridge Authority
Revenue Bonds
6.750% 11/01/12 3,000 3,292,500
--------------
5,280,000
--------------
MISSOURI -- 1.5%
Kansas City, Missouri, General
Obligation Bonds (Streetlight
Project) Series B
5.000% 02/01/14 1,990 2,029,800
Mehlville, Missouri, School District
No. R-9, General Obligation Bonds
4.300% 02/15/09 1,500 1,490,625
--------------
3,520,425
--------------
MONTANA -- 2.2%
Forsyth, Montana, Pollution Control
Revenue Bonds (Portland General
Electric Co. Project) Series A 1983
4.600% 05/01/33 5,000 5,075,000
--------------
NEBRASKA -- 1.8%
American Public Energy Agency,
Gas Supply Revenue Bonds
(Nebraska Public Gas Agency)
Series C
3.700% 09/01/01 3,080 3,080,000
Omaha, Nebraska, General Obligation
Bonds
5.125% 12/01/99 1,070 1,089,784
--------------
4,169,784
--------------
NEW JERSEY -- 3.2%
New Jersey State Highway Authority,
Garden State Parkway General
Revenue Bonds
6.200% 01/01/10 5,000 5,737,500
North Jersey District Water Supply
Revenue Bonds (Wanaque North
Project) Series B
6.500% 11/15/11 1,460 1,584,100
--------------
7,321,600
--------------
NEW MEXICO -- 0.6%
New Mexico State Highway Commission
Sub Lien Tax Revenue Bonds Series B
4.500% 06/15/01 1,350 1,371,938
--------------
NEW YORK -- 10.2%
Long Island Power Authority, New York
Electric System Revenue Bonds
5.000% 04/01/08 2,000 2,122,500
See Notes to Financial Statements.
45
<PAGE>
HARRIS INSIGHT FUNDS
INTERMEDIATE TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
NEW YORK (CONTINUED)
New York City General Obligation Bonds
Series A-1
6.250% 08/01/05 $2,475 $ 2,784,375
New York City General Obligation Bonds
Series H
6.000% 08/01/10 3,000 3,348,750
New York City Municipal Water Finance
Authority Water & Sewer System
Revenue Bonds Series A VR
5.200% 01/01/99 6,000 6,000,000
New York State General Obligation Bonds
Series B
6.375% 08/15/00 3,750 3,918,750
New York State Thruway Authority
Highway & Bridge Revenue Bonds
Series C
5.000% 04/01/04 3,140 3,312,700
Westchester County, New York,
General Obligation Bonds Series D
4.625% 11/15/10 1,600 1,640,000
--------------
23,127,075
--------------
NORTH CAROLINA -- 0.3%
Dare County, North Carolina, Utility
Systems Revenue Bonds Series B
4.300% 06/01/09 620 620,000
--------------
OHIO -- 8.0%
Butler County, Ohio, Hospital Facility
Revenue Bonds (Middletown
Regulatory Hospital Project)
6.750% 11/15/10 2,250 2,452,500
Franklin County, Ohio, Revenue Bonds
Series A
5.000% 10/01/16 2,875 2,821,094
Franklin County, Ohio, Revenue Bonds
Series B
4.000% 10/01/02 1,315 1,310,069
4.000% 10/01/03 1,000 993,750
4.000% 10/01/04 1,420 1,409,350
Greater Cleveland Regional Transportation
Authority General Obligation Bonds
Series R
4.500% 12/01/13 4,500 4,370,625
University of Toledo, Ohio, General
Receipts Revenue Bonds Series A
5.750% 12/01/08 2,000 2,147,500
Warren, Ohio, Hospital Revenue Bonds
(Warren General Hospital Project)
Series B
7.300% 11/15/14 2,325 2,720,250
--------------
18,225,138
--------------
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA -- 2.1%
Pennsylvania State General Obligation
Bonds
5.000% 08/01/06 $4,525 $ 4,790,844
--------------
SOUTH CAROLINA -- 1.2%
South Carolina State Capital Improvement
General Obligation Bonds Series V
6.500% 02/01/00 2,635 2,693,154
--------------
TENNESSEE -- 3.1%
Kingsport, Tennessee, General Obligation
Bonds
4.500% 09/01/05 1,000 1,026,250
Tennessee State General Obligation
Bonds
5.000% 05/01/08 5,700 5,985,000
--------------
7,011,250
--------------
TEXAS -- 3.9%
Bexar County, Texas, Detention
Facilities General Obligation Bonds
7.250% 06/15/04 1,000 1,162,500
Garland, Texas, General Obligation Bonds
5.500% 02/15/06 1,000 1,085,000
North Forest, Texas, Independent School
District General Obligation Bonds
5.500% 08/15/07 1,320 1,443,750
University of Texas Revenue Bonds
5.000% 07/01/16 3,000 3,026,250
West Central Texas Municipal Water
District Revenue Bonds, Water
Transmission Line Contract
6.750% 11/01/03 2,000 2,252,500
--------------
8,970,000
--------------
UTAH -- 3.1%
Jordan, Utah, School District General
Obligation Bonds
5.000% 06/15/01 1,670 1,722,188
Utah State General Obligation Bonds
6.000% 07/01/01 5,000 5,287,500
--------------
7,009,688
--------------
VIRGINIA -- 2.9%
Norfolk, Virginia, Water Revenue Bonds
4.750% 11/01/14 2,000 1,987,500
5.000% 11/01/15 1,000 1,005,000
Virginia College Building Authority,
Educational Facilities Revenue Bonds
(Marymount University Project)
4.400% 07/01/10 1,500 1,483,125
5.000% 07/01/14 2,000 2,017,500
--------------
6,493,125
--------------
See Notes to Financial Statements.
46
<PAGE>
HARRIS INSIGHT FUNDS
INTERMEDIATE TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
WASHINGTON -- 2.6%
King County, Washington, Public Hospital
District No. 2, General Obligation Bonds
5.125% 12/01/11 $2,485 $ 2,603,038
Washington State Motor Vehicle Fuel
Tax General Obligation Bonds Series F
5.300% 07/01/13 1,000 1,042,500
Washington State Public Power Supply
System Nuclear Project No. 2
Revenue Bonds
5.750% 07/01/09 2,000 2,205,000
--------------
5,850,538
--------------
WISCONSIN -- 1.6%
Hartford, Wisconsin, Sewer System
Revenue Bonds
4.750% 04/01/03 1,225 1,234,188
Wisconsin State Transportation
Revenue Bonds Series A
7.500% 07/01/04 2,000 2,337,500
--------------
3,571,688
-----------
TOTAL MUNICIPAL BONDS
(Cost $221,124,305) 226,296,027
-----------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
TEMPORARY INVESTMENTS -- 0.4%
Federated Tax-Free Obligation Fund 447,889 $ 447,889
Goldman Sachs Financial Square
Tax-Exempt Money Market Portfolio 356,893 356,893
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $804,782) 804,782
------------
TOTAL INVESTMENTS -- 100.1%
(Cost $221,929,087) 227,100,809
------------
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.1%) (113,695)
------------
NET ASSETS -- 100.0%
Applicable to 21,131,488 and 84,108
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 7) $226,987,114
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($226,087,241/21,131,488) $10.70
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE ($899,873/84,108) $10.70
======
- --------
(DAGGER) See Note 2a to the Financial Statements.
VR -- Variable rate demand note; interest rate in effect on 12/31/98. Maturity
date is the later of the next interest rate change or excercise of the
demand feature.
See Notes to Financial Statements.
47
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS -- 98.9%
ARIZONA -- 3.3%
Maricopa County, Arizona, Hospital
Revenue Bonds
6.125% 04/01/18 $1,250 $ 1,351,562
Maricopa County, Arizona, Industrial
Development Authority Multi-Family
Housing Revenue Bonds (Advantage
Electric Projects) Series A
6.500% 07/01/16 1,900 2,232,500
Show Low, Arizona, Industrial
Development Authority Hospital
Revenue Bonds (Navapache
Regional Medical Center) Series A
5.500% 12/01/17 2,000 2,065,000
--------------
5,649,062
--------------
CALIFORNIA -- 3.9%
Central Coast Water Authority,
California Revenue Bonds (State
Water Project Regional Facilities)
6.500% 10/01/14 5,900 6,585,875
--------------
COLORADO -- 1.9%
Colorado Springs, Colorado, Utilities
Revenue Bonds Unrefunded Balance
Series A
6.500% 11/15/15 1,000 1,083,750
Denver, Colorado, City & County Airport
Revenue Bonds Series B
5.000% 11/15/25 2,200 2,175,250
--------------
3,259,000
--------------
CONNECTICUT -- 3.9%
Connecticut State General Obligation
Bonds Series B
6.000% 11/15/01 2,725 2,905,531
Connecticut State Health & Educational
Facilities Authority Revenue Bonds
(Sacred Heart University) Series E
4.750% 07/01/14 2,260 2,228,925
5.000% 07/01/28 1,500 1,466,250
--------------
6,600,706
--------------
DISTRICT OF COLUMBIA -- 1.7%
District of Columbia Revenue Bonds
(Georgetown University) Series C
4.950% 04/01/10 2,845 2,958,800
--------------
FLORIDA -- 4.5%
Florida State Board of Education Lottery
Revenue Bonds Series A
5.000% 07/01/14 1,370 1,400,825
Gainesville, Florida, Utilities System
Revenue Bonds Series A
5.200% 10/01/22 4,990 5,033,662
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
FLORIDA (CONTINUED)
Orlando, Florida, Utilities Commission
Water & Electric Revenue Bonds
Series D
6.750% 10/01/17 $1,000 $ 1,220,000
--------------
7,654,487
--------------
GEORGIA -- 4.3%
Atlanta, Georgia, Airport Facilities
Revenue Bonds
6.000% 01/01/07 2,000 2,247,500
Georgia State General Obligation Bonds
Series C
7.250% 07/01/02 1,500 1,674,375
Metropolitan Atlanta Rapid
Transportation Authority, Georgia
Sales Tax Revenue Bonds Series N
6.200% 07/01/10 2,890 3,309,050
--------------
7,230,925
--------------
HAWAII -- 1.3%
Honolulu, Hawaii, City & County
Wastewater System Revenue Bonds
0.000% 07/01/12 2,500 1,312,500
0.000% 07/01/13 2,000 987,500
--------------
2,300,000
--------------
ILLINOIS -- 11.5%
De Kalb & Kane Counties, Illinois,
Community United School District
No. 427 General Obligation Bonds
5.500% 01/01/11 1,325 1,437,625
5.550% 01/01/12 1,125 1,223,437
Illinois Development Finance Authority
Revenue Bonds Aurora East School
District No. 131 (Local Government Project)
0.000% 12/01/11 3,715 2,038,606
0.000% 12/01/14 3,340 1,519,700
Illinois Development Finance Authority
Revenue Bonds (School District
No. U46 Project)
9.000% 01/01/07 3,250 4,253,438
Illinois Development Finance Authority
Revenue Bonds (School District PG -
Rockford School No. 205)
6.650% 02/01/11 4,000 4,755,000
Illinois Educational Facilities Authority
Revenue Bonds (Shedd Aquarium
Society)
5.400% 07/01/14 1,000 1,048,750
Illinois State Sales Tax Revenue Bonds
Series V
6.375% 06/15/20 1,000 1,111,250
See Notes to Financial Statements.
48
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
ILLINOIS (CONTINUED)
Illinois State Toll Highway Authority
Revenue Bonds Series A
5.500% 01/01/13 $2,000 $ 2,175,000
--------------
19,562,806
--------------
INDIANA -- 4.3%
Indiana Municipal Power Agency, Power
Supply System Revenue Bonds
Series B
6.000% 01/01/11 6,455 7,286,081
--------------
KENTUCKY -- 1.2%
Kentucky Economic Development Finance
Authority Hospital Facilities Revenue
Bonds (Pikeville United Methodist
Hospital)
5.700% 02/01/28 2,000 2,112,500
--------------
MASSACHUSETTS -- 2.8%
Massachusetts State Health & Educational
Facilities Authority Revenue Bonds
(Brandeis University) Series I
5.250% 10/01/12 2,900 3,066,750
Springfield, Massachusetts, General
Obligation Bonds
5.000% 11/15/18 1,700 1,693,625
--------------
4,760,375
--------------
MICHIGAN -- 15.7%
Detroit, Michigan, Water Supply System
Revenue Bonds
6.500% 07/01/15 1,000 1,198,750
East Grand Rapids, Michigan, Public
School District General Obligation
Bonds
5.000% 05/01/16 1,250 1,253,125
Hamilton, Michigan, Community School
District General Obligation Bonds
5.000% 05/01/24 1,500 1,471,875
Kent County, Michigan, Refuse Disposal
Systems General Obligation Bonds
Series A
5.000% 11/01/06 4,105 4,356,431
Michigan State Hospital Finance
Authority Revenue Bonds (Chelsea
Community Hospital)
5.375% 05/15/19 3,000 2,951,250
Michigan State Trunk Line Revenue
Bonds Series A
5.250% 11/15/04 1,400 1,494,500
Oakland County, Michigan, Economic
Development Corp. Limited Obligation
Revenue Bonds (Cranbrook Educational
Community) Series C
6.900% 11/01/14 2,725 3,181,438
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
Pinckney, Michigan, Community Schools
General Obligation Bonds
5.500% 05/01/27 $6,500 $ 6,719,375
Plymouth-Canton, Michigan, Community
School District General Obligation
Bonds Series C
6.500% 05/01/16 1,000 1,090,000
Royal Oak, Michigan, Hospital Finance
Authority Revenue Bonds (William
Beaumont Hospital)
5.500% 01/01/18 2,825 2,923,875
--------------
26,640,619
--------------
MISSISSIPPI -- 1.9%
Mississippi River Bridge Authority
Revenue Bonds
6.750% 11/01/12 3,000 3,292,500
--------------
MONTANA -- 3.0%
Forsyth, Montana, Pollution Control
Revenue Bonds (Portland General
Electric Co. Project) Series A
4.600% 05/01/33 5,000 5,075,000
--------------
NEBRASKA -- 0.4%
American Public Energy Agency,
Gas Supply Revenue Bonds
(Nebraska Public Gas Agency
Project) Series C
4.300% 03/01/11 650 630,500
--------------
NEW JERSEY -- 1.3%
New Jersey State Highway Authority,
Garden State Parkway General
Revenue Bonds
6.200% 01/01/10 2,000 2,295,000
--------------
NEW YORK -- 10.3%
Long Island Power Authority, New York
Electric System Revenue Bonds
5.125% 04/01/12 1,000 1,043,750
Metropolitan Transit Authority, New York
Transportation Facilities Revenue
Bonds Series C
5.125% 07/01/13 3,000 3,105,000
New York City General Obligation
Bonds Series H
6.000% 08/01/13 3,500 3,863,125
New York City General Obligation
Bonds Subseries B-4 VR
5.000% 01/01/99 500 500,000
New York City Municipal Water Finance
Authority, Water & Sewer System
Revenue Bonds Series A
5.625% 06/15/19 3,000 3,142,500
See Notes to Financial Statements.
49
<PAGE>
HARRIS INSIGHT FUNDS
TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
NEW YORK (CONTINUED)
New York State Housing Finance
Agency Revenue Bonds (Nursing
Home & Health Care Project)
Series A
5.000% 11/01/15 $2,500 $ 2,515,625
Port Authority of New York & New
Jersey Consolidated Series One
Hundred Revenue Bonds
5.625% 10/15/17 3,175 3,309,938
--------------
17,479,938
--------------
NORTH CAROLINA -- 1.5%
University of North Carolina System
Pooled Revenue Bonds Series B
5.250% 10/01/12 2,400 2,535,000
--------------
OHIO -- 0.6%
Ohio State Higher Educational Facilities
Community Revenue Bonds (Denison
University Project)
5.350% 11/01/10 1,000 1,056,250
--------------
TENNESSEE -- 2.6%
Tennessee State General Obligation Bonds
5.500% 05/01/27 4,180 4,389,000
--------------
TEXAS -- 4.6%
Dallas, Texas, General Obligation Bonds
6.000% 02/15/03 2,320 2,517,200
Grapevine, Texas, Colleyville Independent
School District General Obligation Bonds
0.000% 08/15/13 1,000 493,750
Harris County, Texas, Criminal Justice
Center General Obligation Bonds
5.500% 10/01/12 2,540 2,695,575
North Texas Health Facilities Development
Corp Revenue Bonds (United
Regulatory Health Care System
Income Project)
5.000% 09/01/09 1,000 1,051,250
5.000% 09/01/10 1,000 1,043,750
--------------
7,801,525
--------------
VERMONT -- 1.6%
Vermont Educational & Health Buildings
Financing Agency Revenue Bonds
(Middlebury College Project)
5.500% 11/01/16 2,550 2,655,188
--------------
VIRGINIA -- 2.9%
Norfolk, Virginia, Water Revenue Bonds
5.875% 11/01/15 2,400 2,619,000
Richmond, Virginia, General Obligation
Bonds Series B
6.500% 07/15/02 2,160 2,359,800
--------------
4,978,800
--------------
- --------------------------------------------------------------------------------
ANNUALIZED PAR
YIELD/RATE MATURITY (000) VALUE(DAGGER)
---------- -------- ----- -------------
MUNICIPAL BONDS (CONTINUED)
WASHINGTON -- 4.7%
King County, Washington, Public Hospital
General Obligation Bonds
District No. 002
5.250% 12/01/18 $2,740 $ 2,784,525
Washington State Public Power Supply
System Nuclear Project No. 1
Revenue Bonds Series B
5.700% 07/01/10 1,000 1,068,750
Washington State Public Power Supply
System Nuclear Project No. 3
Revenue Bonds Series A
5.250% 07/01/17 4,000 4,070,000
-------------
7,923,275
-------------
WISCONSIN -- 3.2%
Wisconsin State General Obligation
Bonds Series 3
5.250% 11/01/10 5,000 5,406,250
-------------
TOTAL MUNICIPAL BONDS
(Cost $160,085,077) 168,119,462
-------------
SHARES
------
TEMPORARY INVESTMENTS -- 2.6%
Federated Tax-Free Obligation Fund 34,853 34,853
Goldman Sachs Financial Square
Tax-Exempt Money Market Portfolio 4,368,374 4,368,374
-------------
TOTAL TEMPORARY INVESTMENTS
(Cost $4,403,227) 4,403,227
-------------
TOTAL INVESTMENTS -- 101.5%
(Cost $164,488,304) 172,522,689
-------------
LIABILITIES IN EXCESS OF OTHER ASSETS-- (1.5%) (2,553,201)
-------------
NET ASSETS -- 100.0%
Applicable to 16,270,586 and 87,525
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 7) $169,969,488
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($169,060,007/16,270,586) $10.39
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE ($909,481/87,525) $10.39
======
- --------
(DAGGER) See Note 2a to the Financial Statements.
VR -- Variable rate demand note; interest rate in effect on 12/31/98. Maturity
date is the later of the next interest rate change or exercise of the
demand feature.
See Notes to Financial Statements.
50
<PAGE>
HARRIS INSIGHT FUNDS
CONVERTIBLE SECURITIES FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK -- 6.7%
BANKS -- 1.0%
First Union Corp. 8,074 $ 491,000
-----------
BUSINESS SERVICES -- 0.0%
Olsten Corp. 1 7
-----------
DRUGS -- 0.5%
Dura Pharmaceuticals, Inc.* 17,500 263,594
-----------
ELECTRONICS -- 0.0%
Sensormatic Electronics Corp.* 1,389 0
-----------
HOTELS & RESTAURANTS -- 1.4%
Hilton Hotels Corp. 35,972 687,964
-----------
MISCELLANEOUS FINANCE -- 0.5%
Healthcare Financial Partners, Inc.* 12,500 250,000
-----------
TELEPHONES -- 0.0%
Intermedia Communications, Inc. 234 0
-----------
THRIFT INSTITUTIONS -- 3.3%
Washington Mutual, Inc. 43,249 1,651,571
-----------
TOTAL COMMON STOCK
(Cost $2,671,811) 3,344,136
-----------
CONVERTIBLE PREFERRED STOCK -- 46.4%
AUTO RELATED -- 0.5%
Fleetwood Capital Trust, 6.000%, 02/15/28,
Series 144A 5,000 233,125
-----------
BANKS -- 3.0%
CNB Capital Trust I, 6.000%, 06/30/28 40,000 1,122,500
National Australia Bank, Ltd., 7.875%,
Series UNIT 13,500 376,312
-----------
1,498,812
-----------
BUSINESS SERVICES -- 0.4%
Central Parking Finance Trust, 7.875%,
Series 144A 10,000 196,250
-----------
CHEMICALS -- 1.8%
Corning Delaware LP, 6.000% 12,950 906,500
-----------
CONSTRUCTION -- 2.3%
Kaufman & Broad Home Corp.,
8.250%, 08/16/01 45,000 405,000
Owens Corning Capital, 6.500%, 05/10/25,
Series 144A 14,700 729,487
-----------
1,134,487
-----------
CONTAINERS -- 2.1%
Owens - Illinois, Inc., 4.750% 15,000 637,500
Sealed Air Corp., $2.00, 04/01/18, Series A 7,500 389,062
-----------
1,026,562
-----------
DRUGS -- 0.4%
DECS Trust III, Inc., 8.750%, 02/15/01 17,000 206,125
-----------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
CONVERTIBLE PREFERRED STOCK (CONTINUED)
ELECTRIC & GAS -- 4.1%
Houston Industries, Inc., 7.000%, 07/01/00 14,000 $ 1,489,250
Texas Utilities Co., 9.250%, 08/16/01 10,000 563,750
-----------
2,053,000
-----------
ELECTRONICS -- 0.8%
Merrill Lynch & Co., Inc., 7.875%, 02/01/01,
Series "CBR" STRYPES 4,750 261,250
Sensormatic Electronics Corp., 6.500%,
Series 144A* 10,000 130,000
-----------
391,250
-----------
FOOD & BEVERAGES -- 3.7%
Ralston Purina Co., 7.000%, 08/01/00 31,250 1,632,812
Suiza Capital Trust II, 5.500%, 04/01/28,
Series 144A* 5,000 216,875
-----------
1,849,687
-----------
FOREST PRODUCTS & PAPER -- 0.5%
International Paper Capital Trust, 5.250% 5,000 240,625
-----------
HEALTH CARE SERVICES -- 0.8%
Hybridon, Inc., 6.500%, 04/01/04, Series A 2,925 131,625
Laboratory Corp. of America,
8.500%, 06/30/12, Series A 5,000 210,000
Medpartners, Inc., 6.500%, 08/31/00 5,000 38,437
-----------
380,062
-----------
HOTELS & RESTAURANTS -- 1.8%
Felcor Lodging Trust, Inc., $1.95, Series A 15,000 285,000
Innkeepers USA Trust, 8.625%, Series A 30,000 592,500
-----------
877,500
-----------
INSURANCE -- 4.9%
Aetna, Inc., 6.250%, 07/19/00, Class C 2,000 152,125
American General, 6.000%, 05/31/25,
Series A 9,800 955,500
American Heritage Life Investment Corp.,
8.500%, 08/15/00 2,500 166,562
Conseco Finance Trust IV, 7.000%, 02/16/01,
Series F 15,000 578,437
Philadelphia Consolidated Holding Corp.,
7.000%, 05/16/01 30,000 288,750
St. Paul Capital, Inc., 6.000%, 05/31/25 4,900 316,050
-----------
2,457,424
-----------
LEISURE -- 0.5%
Mattel, Inc., $.4125, 07/01/00, Series C 24,000 234,000
-----------
MACHINERY & EQUIPMENT -- 1.0%
Breed Technologies, Inc. Capital Trust,
6.500%, 11/15/27, Series 144A 15,000 341,250
Cooper Industries, Inc., 6.000%, 01/01/99 18,500 180,375
-----------
521,625
-----------
See Notes to Financial Statements.
51
<PAGE>
HARRIS INSIGHT FUNDS
CONVERTIBLE SECURITIES FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
CONVERTIBLE PREFERRED STOCK (CONTINUED)
MEDIA -- 4.8%
Chancellor Media Corp., $3.00 5,000 $ 465,625
Merrill Lynch & Co., Inc., 6.000%, 06/01/99,
Series "COX" STRYPES 10,000 571,250
Merrill Lynch & Co., Inc., 6.250%, 07/01/01,
Series "I.G.L." STRYPES 16,800 399,000
Sinclair Broadcasting Group, Inc., 6.000% 9,500 478,562
Triathlon Broadcasting Co., 9.000%, 06/30/00 48,500 448,625
-----------
2,363,062
-----------
MISCELLANEOUS FINANCE -- 5.9%
Archstone Communities Trust, $1.75,
Series A 31,700 847,975
Crescent Real Estate Equities Co., 6.750%,
Series A 10,000 163,750
Equity Residential Properties Trust, 7.250%,
Series G 20,000 410,000
Merrill Lynch & Co., Inc., 7.250%, 06/15/99,
Series "SAI" STRYPES 5,000 372,500
Reckson Associates Realty Corp., 7.625%,
Series A 13,000 274,625
Rouse Co., $3.00, Series B 15,000 650,625
U.S. Restaurant Properties, Inc., 7.720%,
Series A 10,000 229,375
-----------
2,948,850
-----------
OFFICE EQUIPMENT -- 1.0%
Microsoft Corp., $2.196, 12/15/99, Series A 5,000 488,750
-----------
OIL & GAS -- 1.2%
Weatherford International, Inc.,
5.000%, 11/01/27, Series 144A 20,000 617,500
-----------
RAILROADS -- 0.9%
Union Pacific Capital Trust,
6.250%, 04/01/28, Series 144A 10,000 462,500
-----------
RETAIL -- 1.1%
Dollar General STRYPES Trust,
8.500%, 05/15/01 15,000 534,375
-----------
TELEPHONES -- 2.9%
Intermedia Communications, Inc., 7.000%,
Series 144A 20,000 280,000
IXC Communications, Inc., 7.250%, 03/31/07,
Series 144A 2,041 316,355
Qualcomm Financial Trust, 5.750%, 03/01/12 5,000 220,000
Salomon Smith Barney Holdings, Inc.,
6.250%, 02/01/01, Series CSN 9,800 649,250
-----------
1,465,605
-----------
TOTAL CONVERTIBLE PREFERRED STOCK
(Cost $23,890,096) 23,087,676
-----------
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
CONVERTIBLE CORPORATE BONDS -- 44.0%
AUTO RELATED -- 1.0%
Pep Boys - Manny, Moe & Jack
4.000% 09/01/99 $ 500 $ 493,750
--------------
BANKS -- 0.9%
Bankatlantic Bancorp, Inc.
5.625% 12/01/07 500 427,500
--------------
BUSINESS SERVICES -- 6.0%
Bell Atlantic Financial Services
4.250% 09/15/05 2,500 2,587,500
Berkshire Hathaway, Inc.
1.000% 12/02/01 250 383,125
--------------
2,970,625
--------------
CONSTRUCTION -- 2.5%
Lennar Corp.
0.000% 07/29/18 2,100 934,500
Parker Drilling Corp.
5.500% 08/01/04 550 334,813
--------------
1,269,313
--------------
DRUGS -- 3.5%
Alpharma, Inc.
5.750% 04/01/05 1,000 1,363,750
Atrix Laboratories, Inc.
7.000% 12/01/04 500 357,500
--------------
1,721,250
--------------
ELECTRICAL -- 0.5%
Brightpoint Lyons, Inc.
0.000% 03/11/18 750 271,875
--------------
ELECTRONICS -- 10.2%
Activision, Inc.
6.750% 01/01/05 500 439,375
Atmel Corp.
0.000% 04/15/18 1,000 295,000
C-Cube Microsystems, Inc.
5.875% 11/01/05 550 572,000
Candescent Technologies Corp.,
Series 144A
7.000% 05/01/03 300 265,500
Gilat Satellite Networks
6.500% 06/03/04 500 653,125
Kent Electronics Corp.
4.500% 09/01/04 475 369,906
Mascotech, Inc.
4.500% 12/15/03 500 396,250
MRV Communications, Inc.
5.000% 06/15/03 1,000 465,000
Quantum Corp.
7.000% 08/01/04 225 217,688
Technomatix Technologies, Ltd.
5.250% 08/15/04 630 448,875
VLSI Technology, Inc.
8.250% 10/01/05 250 235,000
See Notes to Financial Statements.
52
<PAGE>
HARRIS INSIGHT FUNDS
CONVERTIBLE SECURITIES FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
CONVERTIBLE CORPORATE BONDS (CONTINUED)
ELECTRONICS (CONTINUED)
World Access, Inc.
4.500% 10/01/02 $ 500 $ 419,375
Xilinx, Inc.
5.250% 11/01/02 250 325,938
--------------
5,103,032
--------------
HEALTH CARE SERVICES -- 2.4%
Alza Corp.
5.000% 05/01/06 490 706,825
Concentra Managed Care, Inc.
4.500% 03/15/03 300 230,250
NCS Healthcare, Inc.
5.750% 08/15/04 250 237,813
--------------
1,174,888
--------------
HOTELS & RESTAURANTS -- 0.1%
Capstar Hotel Corp.
4.750% 10/15/04 100 71,500
--------------
INSURANCE -- 2.9%
American International Group, Inc.
2.250% 07/30/04 975 1,248,000
Loews Corp.
3.125% 09/15/07 250 198,125
--------------
1,446,125
--------------
LEISURE -- 0.6%
Family Golf Centers, Inc.
5.750% 10/15/04 300 276,750
--------------
MACHINERY & EQUIPMENT -- 0.5%
Credence Systems Corp.
5.250% 09/15/02 225 154,125
Halter Marine Group, Inc., Series 144A
4.500% 09/15/04 200 113,000
--------------
267,125
--------------
MEDIA -- 1.3%
Omnicom Group, Inc.
4.250% 01/03/07 330 627,413
--------------
POLLUTION CONTROL -- 2.7%
U.S. Filter Corp.
4.500% 12/15/01 750 707,813
Waste Management, Inc.
4.000% 02/01/02 500 614,375
--------------
1,322,188
--------------
RETAIL -- 4.4%
Costco Cos., Inc.
0.000% 08/19/17 1,000 852,500
Home Depot, Inc.
3.250% 10/01/01 100 263,250
Rite Aid Corp.
5.250% 09/15/02 250 364,063
Rite Aid Corp. Series 144A
5.250% 09/15/02 500 728,125
--------------
2,207,938
--------------
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
CONVERTIBLE CORPORATE BONDS (CONTINUED)
TELEPHONES -- 4.5%
Clear Channel Communications, Inc.
2.625% 04/01/03 $ 500 $ 543,125
Tel-Save Holdings, Inc.
5.000% 12/15/04 500 446,875
Tele-Communications International, Inc.
4.500% 02/15/06 100 104,125
Telefonica Europe BV
2.000% 07/15/02 500 742,500
U.S. Cellular Corp.
0.000% 06/13/15 1,000 417,500
--------------
2,254,125
--------------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $21,623,600) 21,905,397
- --------------------------------------------------------------------------------
SHARES
------
RIGHTS AND WARRANTS -- 0.0%
Hybridon, Inc. 17,206 4,302
Healthcare Financial Partners, Inc.
Series 144A 5,000 0
-----------
TOTAL RIGHTS AND WARRANTS
(Cost $0) 4,302
-----------
TEMPORARY INVESTMENTS -- 3.2%
Dreyfus Cash Management Plus #719 625,419 625,419
Goldman Sachs Financial Square
Money Market Portfolio 624,958 624,958
J.P. Morgan Institutional Prime Money
Market Portfolio 347,018 347,018
-----------
TOTAL TEMPORARY INVESTMENTS
(Cost $1,597,395) 1,597,395
-----------
TOTAL INVESTMENTS -- 100.3%
(Cost $49,782,902) 49,938,906
-----------
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.3%) (133,648)
-----------
NET ASSETS -- 100.0%
Applicable to 2,045,959 and 16,937
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 7) $49,805,258
===========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE ($49,396,325/2,045,959) $24.14
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER CLASS A SHARE
($408,933/16,937) $24.14
======
- --------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
STRYPES -- Structured Yield Product Exchangeable for Stock.
See Notes to Financial Statements.
53
<PAGE>
HARRIS INSIGHT FUNDS
EQUITY FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK -- 97.1%
AEROSPACE -- 4.0%
Cordant Technologies, Inc. 190,150 $ 7,130,625
Litton Industries, Inc.* 327,075 21,341,644
Lockheed Martin Corp. 74,200 6,288,450
--------------
34,760,719
--------------
AIR TRANSPORT -- 2.5%
AMR Corp.* 254,100 15,087,187
Delta Air Lines, Inc. 125,500 6,526,000
--------------
21,613,187
--------------
ALCOHOLIC BEVERAGES & TOBACCO-- 1.4%
Philip Morris Cos., Inc. 177,000 9,469,500
Universal Corp. 88,600 3,112,075
--------------
12,581,575
--------------
APPAREL, TEXTILES -- 3.2%
Shaw Industries, Inc. 805,200 19,526,100
VF Corp. 186,000 8,718,750
--------------
28,244,850
--------------
AUTOS -- 4.6%
DaimlerChrysler A.G 68,430 6,573,557
Ford Motor Co. 497,900 29,220,506
General Motors Corp. 58,900 4,215,031
--------------
40,009,094
--------------
BANKS -- 3.5%
Chase Manhattan Corp. 286,160 19,476,765
Southtrust Corp. 291,650 10,754,594
--------------
30,231,359
--------------
BUSINESS SERVICES -- 2.2%
Computer Sciences Corp.* 97,400 6,276,212
Viad Corp. 424,200 12,885,075
--------------
19,161,287
--------------
CONSTRUCTION -- 2.7%
Centex Corp. 440,200 19,836,512
Fleetwood Enterprises, Inc. 106,900 3,714,775
--------------
23,551,287
--------------
DRUGS -- 7.6%
Amgen, Inc.* 54,800 5,726,600
Bergen Brunswig Corp. Class A 458,400 15,986,700
Bristol-Myers Squibb Co. 132,900 17,783,681
McKesson Corp. 219,700 17,370,031
Mylan Laboratories, Inc. 131,900 4,154,850
PharMerica, Inc.* 780,495 4,682,970
--------------
65,704,832
--------------
ELECTRIC & GAS -- 5.5%
Columbia Energy Group 147,700 8,529,675
Energy East Corp. 468,900 26,492,850
Houston Industries, Inc. 396,700 12,743,987
--------------
47,766,512
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
ELECTRONICS -- 0.8%
Intel Corp. 62,700 $ 7,429,950
--------------
FOOD & BEVERAGES -- 2.4%
Dean Foods Co. 143,000 5,836,187
IBP, Inc. 137,900 4,016,337
Smithfield Foods, Inc.* 316,300 10,675,125
--------------
20,527,649
--------------
HEALTH CARE SERVICES -- 3.8%
AmeriSource Health Corp. Class A* 67,700 4,400,500
Arterial Vascular Engineering, Inc.* 106,000 5,545,125
Beverly Enterprises, Inc.* 52,200 352,350
HBO & Co. 531,800 15,256,012
Wellpoint Health Networks, Inc.* 90,300 7,856,100
--------------
33,410,087
--------------
HOTELS & RESTAURANTS -- 2.7%
Darden Restaurants, Inc. 617,625 11,117,250
Outback Steakhouse, Inc.* 303,200 12,052,200
--------------
23,169,450
--------------
INSURANCE -- 7.5%
Allstate Corp. 386,700 14,936,288
Cigna Corp. 326,150 25,215,472
Conseco, Inc. 131,300 4,012,856
Equitable Cos., Inc. 366,000 21,182,250
--------------
65,346,866
--------------
MACHINERY & EQUIPMENT -- 1.3%
ITT Industries, Inc. 116,900 4,646,775
Trinity Industries, Inc. 165,600 6,375,600
--------------
11,022,375
--------------
MEDIA -- 0.9%
Omnicom Group, Inc. 140,300 8,137,400
--------------
MISCELLANEOUS FINANCE -- 3.4%
Countrywide Credit Industries, Inc. 173,300 8,697,494
Federal National Mortgage Association 53,600 3,966,400
Lehman Brothers Holdings, Inc. 85,000 3,745,313
Morgan Stanley Dean Witter & Co. 114,500 8,129,500
PaineWebber Group, Inc. 133,600 5,160,300
--------------
29,699,007
--------------
OFFICE EQUIPMENT -- 11.1%
Comdisco, Inc. 196,000 3,307,500
Compaq Computer Corp. 161,600 6,777,100
Dell Computer, Inc.* 201,300 14,732,644
Gateway 2000, Inc.* 140,450 7,189,284
Harris Corp. 135,650 4,968,181
International Business Machines Corp. 155,100 28,654,725
Ingram Micro, Inc. Class A* 109,600 3,822,300
Lexmark International Group, Inc. Class A* 202,100 20,311,050
Tech Data Corp.* 176,300 7,074,038
--------------
96,836,822
--------------
See Notes to Financial Statements.
54
<PAGE>
HARRIS INSIGHT FUNDS
EQUITY FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
OIL & GAS -- 5.4%
Coastal Corp. 581,100 $ 20,302,181
Exxon Corp. 118,700 8,679,938
Sunoco, Inc. 448,300 16,166,819
Ultramar Diamond Shamrock Corp. 72,000 1,746,000
--------------
46,894,938
--------------
RETAIL -- 5.1%
BJ's Wholesale Club, Inc.* 218,600 10,123,913
Dayton Hudson Corp. 271,900 14,750,575
Ross Stores, Inc. 158,700 6,238,894
Tandy Corp. 149,400 6,153,413
TJX Cos., Inc. 240,000 6,960,000
--------------
44,226,795
--------------
RETAIL - FOOD -- 4.2%
Kroger Co.* 313,900 18,990,950
Safeway, Inc.* 286,500 17,458,594
--------------
36,449,544
--------------
TELEPHONES -- 9.6%
AT&T Corp. 488,200 36,737,050
Bell Atlantic Corp. 208,600 11,055,800
GTE Corp. 204,500 13,790,969
SBC Communications, Inc. 119,824 6,425,562
Telefonos de Mexico S.A. ADR 65,475 3,187,814
US West, Inc. 189,000 12,214,125
--------------
83,411,320
--------------
THRIFT INSTITUTIONS -- 1.7%
Charter One Financial, Inc. 165,000 4,568,438
Dime Bancorp, Inc. 386,800 10,226,025
--------------
14,794,463
--------------
TOTAL COMMON STOCK
(Cost $649,686,796) 844,981,368
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
TEMPORARY INVESTMENTS -- 3.1%
Dreyfus Cash Management Plus #719 9,295,667 $9,295,667
Goldman Sachs Financial Square
Money Market Portfolio 7,905,205 7,905,205
J.P. Morgan Institutional Prime
Money Market Portfolio 10,086,691 10,086,691
--------------
TOTAL TEMPORARY INVESTMENTS
(Cost $27,287,563) 27,287,563
--------------
TOTAL INVESTMENTS -- 100.2%
(Cost $676,974,359) 872,268,931
--------------
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.2%) (2,100,118)
--------------
NET ASSETS -- 100.0%
Applicable to 49,403,754 and 1,706,482
shares outstanding of Institutional
Class and Class A, respectively,
$.001 par value; 200,000,000 authorized
shares (Note 7) $870,168,813
==============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($841,118,781/49,403,754) $ 17.03
==============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE
($29,050,032/1,706,482) $ 17.02
==============
- --------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
ADR -- American Despository Receipt.
See Notes to Financial Statements.
55
<PAGE>
HARRIS INSIGHT FUNDS
EQUITY INCOME FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK -- 92.4%
AEROSPACE -- 2.8%
Cordant Technologies, Inc. 6,700 $ 251,250
Northrop Grumman Holdings Corp. 6,900 504,562
Textron, Inc. 2,900 220,219
United Technologies Corp. 7,800 848,250
--------------
1,824,281
--------------
AIR TRANSPORT -- 2.7%
AMR Corp.* 17,000 1,009,375
Delta Air Lines, Inc. 6,100 317,200
UAL Corp.* 8,000 477,500
--------------
1,804,075
--------------
ALCOHOLIC BEVERAGES & TOBACCO-- 2.2%
Philip Morris Cos., Inc. 26,700 1,428,450
--------------
APPAREL, TEXTILES -- 0.8%
VF Corp. 11,400 534,375
--------------
AUTOS -- 3.7%
DaimlerChrysler A.G 5,985 574,934
Ford Motor Co. 32,200 1,889,737
--------------
2,464,671
--------------
BANKS -- 8.7%
Bank One Corp. 16,367 835,740
Chase Manhattan Corp. 28,600 1,946,587
Fleet Financial Group, Inc. 30,700 1,371,906
Keycorp 19,100 611,200
Mellon Bank Corp. 14,200 976,250
--------------
5,741,683
--------------
BUSINESS SERVICES -- 0.2%
Deluxe Corp. 4,200 153,562
--------------
CHEMICALS -- 0.5%
Dow Chemical Co. 3,300 300,094
--------------
CONSTRUCTION -- 2.1%
Armstrong World Industries, Inc. 5,100 307,594
Centex Corp. 23,500 1,058,969
--------------
1,366,563
--------------
DRUGS -- 8.2%
American Home Products Corp. 4,900 275,931
Bristol-Myers Squibb Co. 18,200 2,435,387
McKesson Corp. 7,300 577,156
Pfizer, Inc. 8,700 1,091,306
Schering Plough Corp. 4,400 243,100
Warner-Lambert Co. 10,500 789,469
--------------
5,412,349
--------------
ELECTRIC & GAS -- 6.0%
DTE Energy Co. 17,400 746,025
Energy East Corp. 8,500 480,250
Entergy Corp. 17,200 535,350
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
ELECTRIC & GAS (CONTINUED)
GPU, Inc. 9,900 $ 437,456
KeySpan Energy 6,160 190,960
New Century Energies, Inc. 7,500 365,625
PECO Energy Co. 8,000 333,000
Sempra Energy 16,877 428,254
Unicom Corp. 11,200 431,900
--------------
3,948,820
--------------
ELECTRICAL -- 0.6%
General Electric Co. 2,200 224,537
Honeywell, Inc. 2,100 158,156
--------------
382,693
--------------
ELECTRONICS -- 1.5%
Lucent Technologies, Inc. 8,700 957,000
--------------
FOREST PRODUCTS & PAPER -- 0.3%
Georgia Pacific Timber Group 7,800 185,737
--------------
HEALTH CARE SERVICES -- 1.2%
Arterial Vascular Engineering, Inc.* 14,900 779,456
--------------
INSURANCE -- 5.0%
Cigna Corp. 24,900 1,925,081
Conseco, Inc. 20,400 623,475
Lincoln National Corp. 3,300 269,981
Providian Financial Corp. 6,650 498,750
--------------
3,317,287
--------------
MACHINERY & EQUIPMENT -- 0.4%
Deere & Co. 7,900 261,687
--------------
METALS -- 1.5%
Phelps Dodge Corp. 3,000 152,625
USX-U.S. Steel Group, Inc. 36,300 834,900
--------------
987,525
--------------
MISCELLANEOUS FINANCE -- 4.0%
Associates First Capital Corp. Class A 16,058 680,458
Capital One Financial Corp. 7,400 851,000
Merrill Lynch & Co., Inc. 7,800 520,650
SLM Holding Corp. 12,300 590,400
--------------
2,642,508
--------------
OFFICE EQUIPMENT -- 12.8%
Compaq Computer Corp. 17,600 738,100
Dell Computer, Inc.* 32,200 2,356,638
International Business Machines Corp. 7,800 1,441,050
Lexmark International Group, Inc. Class A* 10,400 1,045,200
Microsoft Corp.* 16,000 2,217,000
Sun Microsystems, Inc.* 6,100 521,931
Xerox Corp. 1,300 153,400
--------------
8,473,319
--------------
See Notes to Financial Statements.
56
<PAGE>
HARRIS INSIGHT FUNDS
EQUITY INCOME FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
OIL & GAS -- 7.3%
Atlantic Richfield Co. 7,200 $ 469,800
Exxon Corp. 28,300 2,069,438
Phillips Petroleum Co. 17,100 728,888
Sunoco, Inc. 30,355 1,094,677
Texaco, Inc. 8,700 460,013
--------------
4,822,816
--------------
RETAIL -- 7.0%
BJ's Wholesale Club, Inc.* 10,400 481,650
Dayton Hudson Corp. 25,500 1,383,375
Family Dollar Stores, Inc. 23,300 512,600
Gap, Inc. 16,450 925,313
Lowe's Cos., Inc. 13,600 696,150
Wal-Mart Stores, Inc. 7,300 594,494
--------------
4,593,582
--------------
RETAIL - FOOD -- 0.9%
Safeway, Inc.* 10,300 627,656
--------------
TELEPHONES -- 10.6%
Ameritech Corp. 11,700 741,488
AT&T Corp. 22,000 1,655,500
BCE, Inc. 15,100 572,857
Bell Atlantic Corp. 27,996 1,483,788
British Telecommunications P.L.C. ADR 3,400 515,738
GTE Corp. 11,000 741,813
US West, Inc. 19,700 1,273,113
--------------
6,984,297
--------------
THRIFT INSTITUTIONS -- 1.4%
Washington Mutual, Inc. 24,850 948,959
--------------
TOTAL COMMON STOCK
(Cost $39,358,213) 60,943,445
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
TEMPORARY INVESTMENTS -- 7.3%
Dreyfus Cash Management Plus #719 1,543,931 $1,543,931
Goldman Sachs Financial Square
Money Market Portfolio 1,691,699 1,691,699
J.P. Morgan Institutional Prime
Money Market Portfolio 1,540,694 1,540,694
-----------
TOTAL TEMPORARY INVESTMENTS
(Cost $4,776,324) 4,776,324
-----------
TOTAL INVESTMENTS -- 99.7%
(Cost $44,134,537) 65,719,769
-----------
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.3% 211,745
-----------
NET ASSETS -- 100.0%
Applicable to 3,228,638 and 193,526
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 7) $65,931,514
===========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE ($62,203,427/3,228,638) $19.27
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER CLASS A SHARE
($3,728,087/193,526) $19.26
======
- --------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
ADR -- American Depository Receipt.
See Notes to Financial Statements.
57
<PAGE>
HARRIS INSIGHT FUNDS
GROWTH FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK -- 98.1%
AEROSPACE -- 2.1%
Textron, Inc. 20,000 $ 1,518,750
United Technologies Corp. 15,000 1,631,250
-----------
3,150,000
-----------
AIR TRANSPORT -- 1.8%
Southwest Airlines Co. 123,750 2,776,641
-----------
ALCOHOLIC BEVERAGES & TOBACCO-- 1.9%
Philip Morris Cos., Inc. 55,000 2,942,500
-----------
APPAREL, TEXTILES -- 1.3%
Jones Apparel Group, Inc.* 35,000 772,187
Warnaco Group, Inc. (The) Class A 50,000 1,262,500
-----------
2,034,687
-----------
BANKS -- 4.1%
BankBoston Corp. 24,200 942,287
Citigroup, Inc. 44,999 2,227,451
Southtrust Corp. 37,500 1,382,812
State Street Corp. 25,000 1,739,062
-----------
6,291,612
-----------
BUSINESS SERVICES -- 1.3%
Computer Sciences Corp.* 20,000 1,288,750
Sterling Software, Inc.* 26,000 703,625
-----------
1,992,375
-----------
COSMETICS & SOAP -- 1.9%
Clorox Co. 17,000 1,985,812
Procter & Gamble Co. 10,000 913,125
-----------
2,898,937
-----------
DRUGS -- 15.2%
Abbott Laboratories, Inc. 40,664 1,992,536
American Home Products Corp. 25,000 1,407,812
Amgen, Inc.* 20,000 2,090,000
Bristol-Myers Squibb Co. 27,000 3,612,937
McKesson Corp. 35,000 2,767,187
Merck & Co., Inc. 6,000 886,125
Pfizer, Inc. 35,000 4,390,313
Schering Plough Corp. 110,000 6,077,500
-----------
23,224,410
-----------
ELECTRICAL -- 1.8%
General Electric Co. 27,000 2,755,688
-----------
ELECTRONICS -- 6.5%
Intel Corp. 25,000 2,962,500
Lucent Technologies, Inc. 34,278 3,770,580
Sundstrand Corp. 40,000 2,075,000
Tellabs, Inc.* 15,000 1,028,438
-----------
9,836,518
-----------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
FOOD & BEVERAGES -- 4.6%
Dean Foods Co. 50,000 $ 2,040,625
Quaker Oats Co. 45,000 2,677,500
Smithfield Foods, Inc.* 30,000 1,012,500
Whitman Corp. 50,000 1,268,750
--------------
6,999,375
--------------
HEALTH CARE SERVICES -- 2.6%
AmeriSource Health Corp. Class A* 15,000 975,000
Arterial Vascular Engineering, Inc.* 30,000 1,569,375
Medtronic, Inc. 18,000 1,336,500
--------------
3,880,875
--------------
INSURANCE -- 6.7%
AMBAC Financial Group, Inc. 55,000 3,310,313
American International Group, Inc. 15,072 1,456,332
Mercury General Corp. 20,000 876,250
Reliastar Financial Corp. 45,000 2,075,625
SunAmerica, Inc. 30,000 2,433,750
--------------
10,152,270
--------------
MACHINERY & EQUIPMENT -- 1.9%
Aeroquip Vickers, Inc. 25,000 748,438
Applied Materials, Inc.* 22,000 939,125
ITT Industries, Inc. 31,854 1,266,196
--------------
2,953,759
--------------
MISCELLANEOUS FINANCE -- 6.5%
Bear Stearns Cos., Inc. 22,000 822,250
Countrywide Credit Industries, Inc. 24,275 1,218,302
Federal National Mortgage Association 57,000 4,218,000
Morgan Stanley Dean Witter & Co. 40,000 2,840,000
SLM Holding Corp. 16,750 804,000
--------------
9,902,552
--------------
OFFICE EQUIPMENT -- 16.1%
BMC Software, Inc.* 34,000 1,515,125
Cisco Systems, Inc.* 27,750 2,575,547
Compaq Computer Corp. 21,500 901,656
Dell Computer, Inc.* 24,000 1,756,500
Gateway 2000, Inc.* 25,000 1,279,688
Hewlett Packard Co. 15,000 1,024,688
International Business Machines Corp. 13,000 2,401,750
Lexmark International Group, Inc.
Class A* 30,000 3,015,000
Microsoft Corp.* 42,000 5,819,625
Sun Microsystems, Inc.* 20,000 1,711,250
Tech Data Corp.* 25,000 1,003,125
Xerox Corp. 12,500 1,475,000
--------------
24,478,954
--------------
OIL & GAS -- 2.3%
Coastal Corp. 100,000 3,493,750
--------------
See Notes to Financial Statements.
58
<PAGE>
HARRIS INSIGHT FUNDS
GROWTH FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
RETAIL -- 7.0%
Dayton Hudson Corp. 56,000 $ 3,038,000
Family Dollar Stores, Inc. 50,000 1,100,000
Federated Department Stores, Inc.* 50,000 2,178,125
Sears, Roebuck & Co. 35,000 1,487,500
TJX Cos., Inc. 101,000 2,929,000
--------------
10,732,625
--------------
RETAIL - FOOD -- 3.3%
Safeway, Inc.* 81,600 4,972,500
--------------
TELEPHONES -- 7.2%
Ameritech Corp. 50,000 3,168,750
AT&T Corp. 65,000 4,891,250
GTE Corp. 20,000 1,348,750
SBC Communications, Inc. 30,000 1,608,750
--------------
11,017,500
--------------
THRIFT INSTITUTIONS -- 1.1%
Washington Mutual, Inc. 45,000 1,718,437
--------------
TRUCKING -- 0.9%
Ryder System, Inc. 50,000 1,300,000
--------------
TOTAL COMMON STOCK
(Cost $88,587,862) 149,505,965
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
TEMPORARY INVESTMENTS -- 1.7%
Dreyfus Cash Management Plus #719 725,665 $ 725,665
Goldman Sachs Financial Square
Money Market Portfolio 715,150 715,150
J.P. Morgan Institutional Prime Money
Market Portfolio 1,163,093 1,163,093
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $2,603,908) 2,603,908
------------
TOTAL INVESTMENTS -- 99.8%
(Cost $91,191,770) 152,109,873
------------
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.2% 309,928
------------
NET ASSETS -- 100.0%
Applicable to 5,513,697 and 292,597
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 7) $152,419,801
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE ($144,759,362/5,513,697) $26.25
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER CLASS A SHARE
($7,660,439/292,597) $26.18
======
- --------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
See Notes to Financial Statements.
59
<PAGE>
HARRIS INSIGHT FUNDS
SMALL-CAP OPPORTUNITY FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK -- 97.1%
AEROSPACE -- 2.6%
Cordant Technologies, Inc. 81,900 $ 3,071,250
Esterline Technologies Corp.* 25,600 556,800
Kellstrom Industries, Inc.* 19,500 558,187
Midwest Express Holdings, Inc.* 134,100 3,528,506
--------------
7,714,743
--------------
AIR TRANSPORT -- 1.4%
Circle International Group, Inc. 46,100 933,525
Comair Holdings, Inc. 51,200 1,718,400
Expeditors International of Washington, Inc. 35,800 1,503,600
--------------
4,155,525
--------------
APPAREL, TEXTILES -- 1.7%
Fossil, Inc.* 37,650 1,073,025
Mohawk Industries, Inc.* 41,000 1,724,562
Nautica Enterprises, Inc.* 41,000 607,312
Oshkosh B'Gosh, Inc. Class A 13,950 280,744
Quiksilver, Inc.* 48,100 1,443,000
--------------
5,128,643
--------------
AUTO RELATED -- 0.7%
Coach USA, Inc.* 51,200 1,776,000
McGrath Rent Corp. 15,400 331,100
--------------
2,107,100
--------------
AUTOS -- 0.3%
Monaco Coach Corp.* 30,700 813,550
--------------
BANKS -- 9.1%
Centura Banks, Inc. 20,500 1,524,687
City National Corp. 10,200 424,575
Commerce Bancshares, Inc. 86,424 3,651,414
Compass Bancshares, Inc. 25,600 969,600
Corus Bankshares, Inc. 6,700 214,400
Doral Financial Corp. 174,700 3,865,237
Everen Capital Corp. 120,750 2,747,062
Keystone Financial, Inc. 10,200 376,762
NBT Bancorp, Inc. 12,549 293,333
North Fork Bancorp, Inc. 92,100 2,204,644
Old Kent Financial Corp. 112,845 5,247,290
Provident Bankshares Corp. 53,800 1,338,275
Southtrust Corp. 26,700 984,562
U.S. Bancorp, Inc. 30,700 606,325
Westamerica Bancorp 34,100 1,253,175
Western Bancorp 25,600 745,600
Zions Bancorp 15,400 960,575
--------------
27,407,516
--------------
BUSINESS SERVICES -- 9.5%
ACNielsen Corp.* 50,200 1,418,150
AHL Services, Inc.* 51,200 1,590,400
American Management Systems, Inc.* 35,800 1,432,000
Best Software, Inc.* 15,400 365,750
C.H. Robinson Worldwide, Inc. 41,000 1,060,875
Ciber, Inc.* 102,400 2,860,800
Complete Business Solutions, Inc.* 41,000 1,383,750
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
BUSINESS SERVICES (CONTINUED)
Computer Task Group, Inc. 10,200 $ 276,675
Corrections Corp. of America* 41,000 722,625
Day Runner, Inc.* 30,700 437,475
Deltek Systems, Inc.* 25,600 422,400
Factset Research Systems, Inc.* 13,300 821,275
G. & K. Services, Inc. Class A 29,300 1,552,900
Gartner Group, Inc. Class A* 41,000 871,250
International Network Services* 25,600 1,699,200
Keane, Inc.* 37,900 1,513,631
Mastech Corp.* 41,000 1,158,250
Merrill Corp. 65,500 1,260,875
Metamor Worldwide, Inc.* 74,700 1,848,825
Metzler Group, Inc.* 18,400 894,700
National Computer Systems, Inc. 51,200 1,881,600
NationsRent, Inc.* 92,100 529,575
On Assignment, Inc.* 25,600 865,600
Robert Half International, Inc.* 15,400 688,187
Schawk, Inc. 16,400 227,550
Shared Medical Systems Corp. 18,400 917,700
--------------
28,702,018
--------------
CHEMICALS -- 0.9%
MacDermid, Inc. 22,500 880,312
Tredegar Industries, Inc. 20,000 450,000
Valspar Corp. 35,800 1,335,787
--------------
2,666,099
--------------
CONSTRUCTION -- 7.4%
Centex Construction Products, Inc. 28,200 1,145,625
Champion Enterprises, Inc.* 51,200 1,401,600
D.R. Horton, Inc. 89,600 2,060,800
Dycom Industries, Inc. 38,900 2,222,163
Elcor Corp. 31,700 1,024,306
Fleetwood Enterprises, Inc. 15,325 532,544
Florida Rock Industries, Inc. 25,600 793,600
Granite Construction, Inc. 83,200 2,792,400
Insituform Technologies, Inc. Class A* 51,200 739,200
Kaufman & Broad Home Corp. 202,700 5,827,625
Lennar Corp. 51,200 1,292,800
LNR Property Corp. Class B 50,000 996,875
M.D.C. Holdings, Inc. 25,600 547,200
Toll Brothers, Inc.* 41,000 925,062
--------------
22,301,800
--------------
COSMETICS & SOAP -- 0.4%
Alberto-Culver Co. Class A 51,200 1,286,400
--------------
DRUGS -- 4.2%
Bindley Western Industries, Inc. 52,533 2,587,250
K V Pharmaceutical Co. Class A* 49,000 1,013,687
K V Pharmaceutical Co. Class B* 9,000 186,187
McKesson Corp. 76,800 6,072,000
Medco Research, Inc.* 69,600 1,809,600
Shire Pharmaceuticals Group P.L.C. ADR* 56,300 1,104,888
--------------
12,773,612
--------------
See Notes to Financial Statements.
60
<PAGE>
HARRIS INSIGHT FUNDS
SMALL-CAP OPPORTUNITY FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
ELECTRIC & GAS -- 0.7%
Minnesota Power, Inc. 25,600 $ 1,126,400
Piedmont Natural Gas Co., Inc. 30,700 1,109,038
--------------
2,235,438
--------------
ELECTRICAL -- 0.4%
MDU Resources Group, Inc. 30,700 807,794
Thomas Industries, Inc. 27,100 531,838
--------------
1,339,632
--------------
ELECTRONICS -- 11.5%
Apex PC Solutions, Inc.* 51,200 1,465,600
Applied Micro Circuits Corp.* 18,400 623,300
C&D Technologies, Inc. 44,400 1,221,000
Cognex Corp.* 35,800 711,525
General Cable Corp. 107,500 2,203,750
Mercury Interactive Corp.* 15,400 972,125
Metro Information Services, Inc.* 41,000 1,209,500
Micrel, Inc.* 71,700 3,943,500
Plantronics, Inc.* 19,500 1,677,000
PMC-Sierra, Inc.* 102,400 6,451,200
Rambus, Inc.* 9,200 887,800
RF Micro Devices, Inc.* 104,400 4,795,875
Sanmina Corp.* 23,000 1,431,750
Terayon Communications Systems, Inc.* 32,400 1,186,650
Vitesse Semiconductors Corp.* 133,100 6,056,050
--------------
34,836,625
--------------
ENERGY SERVICES -- 0.4%
Calpine Corp.* 46,500 1,174,125
--------------
FOOD & BEVERAGES -- 3.3%
Dean Foods Co. 91,100 3,718,019
Delta & Pine Land Co. 51,533 1,906,721
Earthgrains Co. 58,400 1,806,750
Flowers Industries, Inc. 23,000 550,563
Pilgrim's Pride Corp. Class B 26,600 530,338
Suiza Foods Corp.* 30,700 1,563,781
--------------
10,076,172
--------------
FOREST PRODUCTS & PAPER -- 0.9%
Buckeye Technologies, Inc.* 51,200 764,800
Wausau-Mosinee Paper Corp. 110,993 1,963,189
--------------
2,727,989
--------------
HEALTH CARE SERVICES -- 6.2%
AmeriSource Health Corp. Class A* 10,200 663,000
Cooper Cos., Inc.* 10,200 211,013
Express Scripts, Inc. Class A* 28,700 1,897,788
Hanger Orthopedic Group, Inc.* 48,100 1,082,250
Hooper Holmes, Inc. 41,000 1,189,000
Kendle International, Inc.* 48,600 1,136,025
Mentor Corp. 63,600 1,486,650
Renal Care Group, Inc.* 94,200 2,731,800
Safeskin Corp.* 104,400 2,512,125
Total Renal Care Holdings, Inc.* 68,266 2,018,114
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
HEALTH CARE SERVICES (CONTINUED)
Universal Health Services, Inc. Class B* 61,400 $ 3,185,125
Ventana Medical Systems, Inc.* 25,600 550,400
--------------
18,663,290
--------------
HOTELS & RESTAURANTS -- 0.8%
CKE Restaurants, Inc. 52,802 1,554,359
Ruby Tuesday, Inc. 41,000 871,250
--------------
2,425,609
--------------
HOUSEHOLD GOODS -- 2.7%
Blyth Industries, Inc.* 23,000 718,750
Ethan Allen Interiors, Inc. 41,000 1,681,000
First Brands Corp. 54,700 2,157,231
La-Z-Boy, Inc. 102,400 1,824,000
LADD Furniture, Inc.* 51,200 825,600
Oneida, Ltd. 21,875 324,023
Pillowtex Corp. 20,500 548,375
--------------
8,078,979
--------------
INSURANCE -- 3.7%
First American Financial Corp. 95,200 3,058,300
Hartford Life, Inc. Class A 51,200 2,982,400
Horace Mann Educators Corp. 17,900 510,150
Medical Assurance, Inc.* 28,160 931,040
Old Republic International Corp. 153,600 3,456,000
Stewart Information Services Corp. 4,100 237,800
--------------
11,175,690
--------------
MACHINERY & EQUIPMENT -- 3.0%
ADC Telecommunications, Inc.* 106,100 3,660,450
Crane Co. 31,075 938,077
Graco, Inc. 20,500 604,750
Griffon Corp.* 51,200 544,000
IDEX Corp. 47,600 1,166,200
Scotsman Industries, Inc. 15,400 316,663
SPS Technologies, Inc.* 20,500 1,160,813
Terex Corp.* 22,500 642,656
--------------
9,033,609
--------------
MEDIA -- 3.8%
Central Newspapers, Inc. Class A 10,200 728,663
Outdoor Systems, Inc.* 86,375 2,591,250
Pulitzer Publishing Co. 10,200 883,575
United Video Satellite Group, Inc.
Class A* 138,200 3,230,425
Univision Communications, Inc. Class A* 51,200 1,852,800
Westwood One, Inc.* 24,100 735,050
Wiley (John) & Sons, Inc. Class A 27,100 1,309,269
--------------
11,331,032
--------------
METALS -- 1.3%
Precision Castparts Corp. 61,400 2,716,950
Reliance Steel & Aluminum Corp. 42,000 1,160,250
--------------
3,877,200
--------------
See Notes to Financial Statements.
61
<PAGE>
HARRIS INSIGHT FUNDS
SMALL-CAP OPPORTUNITY FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
MISCELLANEOUS FINANCE -- 1.8%
Americredit Corp.* 137,200 $ 1,895,075
Eaton Vance Corp. 53,200 1,110,550
Investment Technology Group, Inc.* 16,400 1,016,800
Metris Cos., Inc. 11,442 570,670
Morgan Keegan, Inc. 43,000 808,938
--------------
5,402,033
--------------
OFFICE EQUIPMENT -- 5.3%
Bea Systems, Inc.* 182,300 2,221,781
Comdisco, Inc. 115,200 1,944,000
Comverse Technology, Inc.* 20,500 1,454,219
Dialogic Corp.* 15,400 301,263
H.T.E., Inc.* 46,100 259,313
Henry (Jack) & Associates, Inc. 56,300 2,800,925
IMRglobal Corp.* 40,275 1,185,595
Mapics, Inc.* 25,600 422,400
MTS Systems Corp. 86,800 1,150,100
Network Appliance, Inc. * 63,800 2,855,050
Safeguard Scientific, Inc.* 20,500 562,469
Sterling Commerce, Inc.* 16,400 738,000
--------------
15,895,115
--------------
OIL & GAS -- 0.4%
North Carolina Natural Gas, Inc. 38,400 1,274,400
--------------
POLLUTION CONTROL -- 0.4%
Catalytica, Inc.* 25,600 462,400
URS Corp.* 34,300 801,763
--------------
1,264,163
--------------
RETAIL -- 8.4%
99 Cents Only Stores* 40,150 1,972,369
AnnTaylor Stores Corp.* 38,400 1,514,400
Buckle, Inc.* 15,400 369,600
Copart, Inc.* 41,000 1,337,625
CVS Corp. 70,172 3,859,460
Fingerhut Cos., Inc. 35,800 552,663
Fred's, Inc. Class A 51,200 761,600
Goody's Family Clothing, Inc.* 92,100 921,000
Linens 'N Things, Inc.* 163,800 6,490,575
Men's Wearhouse, Inc.* 102,400 3,200,000
Neiman-Marcus Group, Inc.* 48,100 1,199,494
Pacific Sunwear of California, Inc.* 56,300 921,913
Regis Corp. 52,700 2,104,706
--------------
25,205,405
--------------
RETAIL - FOOD -- 0.8%
Foodmaker, Inc.* 81,900 1,806,919
Ruddick Corp. 30,100 692,300
--------------
2,499,219
--------------
TELEPHONES -- 0.9%
Qwest Communications International, Inc.* 41,813 2,088,037
STAR Telecommunications, Inc.* 51,200 624,000
--------------
2,712,037
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
THRIFT INSTITUTIONS -- 2.0%
Anchor Bancorp Wisconsin, Inc. 51,200 $ 1,203,200
Andover Bancorp, Inc. 46,100 1,567,400
Charter One Financial, Inc. 75,951 2,102,893
Dime Bancorp, Inc. 21,500 568,406
MAF Bancorp, Inc. 23,000 606,625
--------------
6,048,524
--------------
TRUCKING -- 0.2%
Hunt (J.B.) Transport Services, Inc. 25,600 587,200
--------------
TOTAL COMMON STOCK
(Cost $213,216,778) 292,920,492
--------------
COUPON PAR
RATE MATURITY (000)
------ -------- -----
AGENCY OBLIGATIONS -- 2.3%
Federal Home Loan Bank
Discount Notes
5.200% 01/04/99 $ 5,000 4,997,834
Student Loan Marketing Association
5.200% 01/04/99 2,000 1,999,133
------------
TOTAL AGENCY OBLIGATIONS
(Cost $6,996,967) 6,996,967
------------
SHARES
------
TEMPORARY INVESTMENTS -- 2.7%
Dreyfus Cash Management Plus #719 2,788,481 2,788,481
Goldman Sachs Financial Square
Money Market Portfolio 2,827,293 2,827,293
J.P. Morgan Institutional Prime
Money Market Portfolio 2,692,163 2,692,163
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $8,307,937) 8,307,937
------------
TOTAL INVESTMENTS -- 102.1%
(Cost $228,521,682) 308,225,396
------------
LIABILITIES IN EXCESS OF OTHER ASSETS-- (2.1%) (6,474,287)
------------
NET ASSETS -- 100.0%
Applicable to 16,619,455 and 283,188
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 7) $301,751,109
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE ($296,718,820/16,619,455) $17.85
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER CLASS A SHARE
($5,032,289/283,188) $17.77
======
- --------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
ADR -- American Depository Receipt.
See Notes to Financial Statements.
62
<PAGE>
HARRIS INSIGHT FUNDS
SMALL-CAP VALUE FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK -- 96.1%
AEROSPACE -- 4.7%
Alliant Techsystems, Inc.* 31,800 $ 2,621,512
Esterline Technologies Corp.* 190,600 4,145,550
--------------
6,767,062
--------------
AIR TRANSPORT -- 1.8%
Continental Airlines, Inc. Class B* 38,900 1,303,150
Offshore Logistics, Inc.* 103,200 1,212,600
--------------
2,515,750
--------------
ALCOHOLIC BEVERAGES & TOBACCO -- 2.6%
Universal Corp. 105,600 3,709,200
--------------
APPAREL, TEXTILES -- 1.3%
Dan River, Inc. Class A* 77,500 910,625
Oxford Industries, Inc. 33,800 954,850
--------------
1,865,475
--------------
AUTO RELATED -- 0.5%
Rent-Way, Inc.* 27,400 666,163
--------------
AUTOS -- 2.2%
Navistar International Corp.* 109,200 3,112,200
--------------
BANKS -- 9.6%
Compass Bancshares, Inc. 58,650 2,221,369
Doral Financial Corp. 96,300 2,130,637
Everen Capital Corp. 65,900 1,499,225
Flagstar Bancorp, Inc. 99,000 2,586,375
GBC Bancorp 111,700 2,848,350
One Valley Bancorp 19,675 646,816
Provident Bankshares Corp. 52,600 1,308,425
UST Corp. 27,900 655,650
--------------
13,896,847
--------------
BUSINESS SERVICES -- 6.4%
Aviall, Inc.* 202,600 2,380,550
Bowne & Co., Inc. 74,800 1,337,050
Franklin Covey Co.* 39,400 659,950
InaCom Corp.* 86,000 1,279,250
Kelly Services, Inc. Class A 85,200 2,641,200
Selective Insurance Group, Inc. 42,200 854,550
--------------
9,152,550
--------------
CASINOS -- 2.3%
Anchor Gaming* 57,600 3,247,200
--------------
CHEMICALS -- 1.7%
Albemarle Corp. 54,200 1,287,250
Cytec Industries, Inc.* 56,700 1,204,875
--------------
2,492,125
--------------
CONSTRUCTION -- 8.3%
Centex Corp. 99,300 4,474,706
Fleetwood Enterprises, Inc. 69,400 2,411,650
Vulcan Materials Co. 14,100 1,855,031
Webb Corp. 118,800 3,274,425
--------------
12,015,812
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
CONTAINERS -- 0.4%
Libbey, Inc. 21,600 $ 625,050
--------------
DRUGS -- 2.2%
Bindley Western Industries, Inc. 36,500 1,797,625
Jones Pharma, Inc. 38,500 1,402,844
--------------
3,200,469
--------------
ELECTRIC & GAS -- 7.1%
Central Hudson Gas & Electric Corp. 44,000 1,969,000
Cleco Corp. 27,400 940,162
Eastern Utilities Associates 93,200 2,632,900
Interstate Energy Corp. 30,566 985,753
OGE Energy Corp. 20,500 594,500
Piedmont Natural Gas Co., Inc. 27,000 975,375
Public Service Co. of New Mexico 103,600 2,117,325
--------------
10,215,015
--------------
ELECTRICAL -- 1.9%
General Semiconductor, Inc.* 232,100 1,900,319
Gulf Island Fabrication, Inc.* 116,800 905,200
--------------
2,805,519
--------------
ELECTRONICS -- 5.3%
C&D Technologies, Inc. 39,000 1,072,500
CHS Electronics, Inc.* 133,100 2,254,381
CIENA, Corp.* 57,700 840,256
NeoMagic Corp.* 158,600 3,499,112
--------------
7,666,249
--------------
ENERGY SERVICES -- 2.0%
Calpine Corp.* 86,000 2,171,500
Seitel, Inc.* 55,700 692,769
--------------
2,864,269
--------------
FOREST PRODUCTS & PAPER -- 0.7%
Buckeye Technologies, Inc.* 70,300 1,050,106
--------------
HEALTH CARE SERVICES -- 6.1%
Datascope Corp.* 74,700 1,708,762
Dexter Corp. 32,000 1,006,000
Hanger Orthopedic Group, Inc.* 33,000 742,500
Lincare Holdings, Inc.* 99,100 4,013,550
Thermoquest Corp.* 102,100 1,320,919
--------------
8,791,731
--------------
HOTELS & RESTAURANTS -- 0.6%
Red Roof Inns, Inc.* 50,000 843,750
--------------
INSURANCE -- 10.0%
Chartwell Re Corp. 35,300 838,375
Fidelity National Financial, Inc. 45,100 1,375,550
First American Financial Corp. 113,750 3,654,219
Gallagher (Arthur J.) & Co. 89,000 3,927,125
LandAmerica Financial Group, Inc. 24,800 1,384,150
Old Republic International Corp. 140,955 3,171,488
--------------
14,350,907
--------------
See Notes to Financial Statements.
63
<PAGE>
HARRIS INSIGHT FUNDS
SMALL-CAP VALUE FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
MACHINERY & EQUIPMENT -- 4.4%
Commercial Intertech Corp. 100,800 $ 1,304,100
DT Industries, Inc. 61,900 959,450
Gardner Denver Machinery, Inc.* 196,000 2,891,000
Gleason Corp. 68,825 1,247,453
--------------
6,402,003
--------------
MEDIA -- 1.8%
Meredith Corp. 68,300 2,586,863
--------------
METALS -- 2.6%
Cleveland Cliffs, Inc. 20,100 810,281
Inland Steel Industries, Inc. 87,700 1,479,938
Reliance Steel & Aluminum Corp. 51,700 1,428,213
--------------
3,718,432
--------------
OFFICE EQUIPMENT -- 0.9%
Storage Technology Corp.* 37,300 1,326,481
--------------
OIL & GAS -- 1.5%
Atwood Oceanics, Inc.* 52,000 884,000
Washington Gas Light Corp. 47,600 1,291,150
--------------
2,175,150
--------------
RAILROADS -- 1.0%
Varlen Corp. 62,900 1,446,700
--------------
RETAIL -- 6.2%
Ames Department Stores, Inc.* 179,700 4,829,438
Footstar, Inc.* 119,500 2,987,500
Pacific Sunwear of California, Inc.* 72,200 1,182,275
--------------
8,999,213
--------------
TOTAL COMMON STOCK
(Cost $127,330,744) 138,508,291
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
TEMPORARY INVESTMENTS -- 4.5%
Dreyfus Cash Management Plus #719 2,233,804 $ 2,233,804
Goldman Sachs Financial Square
Money Market Portfolio 2,128,586 2,128,586
J.P. Morgan Institutional Prime
Money Market Portfolio 2,130,739 2,130,739
------------
TOTAL TEMPORARY INVESTMENTS
(Cost $6,493,129) 6,493,129
------------
TOTAL INVESTMENTS -- 100.6%
(Cost $133,823,873) 145,001,420
------------
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.6%) (835,711)
------------
NET ASSETS -- 100.0%
Applicable to 4,676,176 and 20,882
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 7) $144,165,709
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE ($143,524,846/4,676,176) $30.69
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER CLASS A SHARE
($640,863/20,882) $30.69
======
- --------
(DAGGER) See Note 2a to Financial Statements.
* Non-income producing security.
See Notes to Financial Statements.
64
<PAGE>
HARRIS INSIGHT FUNDS
INDEX FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK -- 96.2%
AEROSPACE -- 1.5%
Allegheny Teledyne, Inc. 6,395 $ 130,698
Allied Signal, Inc. 20,500 908,406
B.F. Goodrich Co. 2,100 75,337
Boeing Co. 36,092 1,177,501
E.G. & G., Inc. 1,900 52,844
General Dynamics Corp. 4,600 269,675
Lockheed Martin Corp. 7,171 607,742
Northrop Grumman Holdings Corp. 2,600 190,125
Raytheon Co. Class A 1,842 95,208
Raytheon Co. Class B 10,500 559,125
Rockwell International Corp. 7,200 349,650
Textron, Inc. 6,100 463,219
United Technologies Corp. 8,600 935,250
--------------
5,814,780
--------------
AIR TRANSPORT -- 0.3%
AMR Corp.* 6,800 403,750
Delta Air Lines, Inc. 5,400 280,800
Southwest Airlines Co. 12,825 287,761
U.S. Airways Group, Inc.* 3,600 187,200
--------------
1,159,511
--------------
ALCOHOLIC BEVERAGES & TOBACCO-- 2.0%
Anheuser-Busch Cos., Inc. 17,500 1,148,437
Brown-Forman Corp. 2,700 204,356
Coors Adolph Co. 1,200 67,725
Fortune Brands, Inc. 6,100 192,912
Philip Morris Cos., Inc. 88,300 4,724,050
RJR Nabisco Holdings Corp. 11,300 335,469
Seagram Co., Ltd. 13,000 494,000
UST, Inc. 6,800 237,150
--------------
7,404,099
--------------
APPAREL, TEXTILES -- 0.2%
Fruit of the Loom, Inc. Class A* 2,700 37,294
Liz Claiborne, Inc. 2,500 78,906
Nike, Inc. Class B 10,700 434,019
Reebok International, Ltd.* 2,200 32,725
Russell Corp. 1,600 32,500
Springs Industries, Inc. Class A 800 33,150
VF Corp. 4,500 210,937
--------------
859,531
--------------
AUTO RELATED -- 0.3%
Cooper Tire & Rubber Co. 2,300 47,006
Dana Corp. 5,858 239,446
Eaton Corp. 2,600 183,787
Genuine Parts Co. 6,625 221,523
Goodyear Tire & Rubber Co. 6,100 307,669
T.R.W., Inc. 4,400 247,225
--------------
1,246,656
--------------
AUTOS -- 1.2%
Ford Motor Co. 43,900 2,576,381
General Motors Corp. 23,800 1,703,187
Navistar International Corp.* 2,700 76,950
--------------
4,356,518
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
BANKS -- 8.0%
Bank of New York Co., Inc. 27,400 $ 1,102,850
Bank One Corp. 42,705 2,180,624
BankAmerica Corp. 62,877 3,780,480
BankBoston Corp. 10,600 412,737
Bankers Trust Corp. 3,600 307,575
BB&T Corp. 10,600 427,312
Chase Manhattan Corp. 31,268 2,128,178
Citigroup, Inc. 83,192 4,118,004
Comerica, Inc. 5,850 398,897
Fifth Third Bancorp 9,750 695,297
First Union Corp. 35,226 2,142,181
Firstar Corp. 4,000 373,000
Fleet Financial Group, Inc. 20,610 921,009
Huntington Bancshares, Inc. 7,810 234,788
J.P. Morgan & Co., Inc. 6,500 682,906
Keycorp 16,012 512,384
MBNA Corp. 27,655 689,647
Mellon Bank Corp. 9,300 639,375
Mercantile Bancorp., Inc. 5,600 258,300
National City Corp. 12,000 870,000
Northern Trust Corp. 4,100 357,725
PNC Bank Corp. 11,100 600,787
Regions Financial Corp. 7,800 314,438
Republic New York Corp. 4,000 182,250
State Street Corp. 5,900 410,419
Summit Bancorp 6,500 283,969
Suntrust Banks, Inc. 7,700 589,050
Synovus Financial Corp. 9,750 237,656
Union Planters Corp. 4,200 190,313
U.S. Bancorp 26,984 957,932
Wachovia Corp. 7,500 655,781
Wells Fargo Co. 58,830 2,349,523
--------------
30,005,387
--------------
BUSINESS SERVICES -- 2.1%
Ascend Communications, Inc.* 7,900 519,425
Automatic Data Processing, Inc. 10,800 866,025
Cendant Corp.* 30,049 572,809
Ceridian Corp.* 2,600 181,512
Computer Sciences Corp.* 5,800 373,737
Deluxe Corp. 3,200 117,000
Dun & Bradstreet Corp. 6,300 198,844
Ecolab, Inc. 5,000 180,937
Electronic Data Systems Corp. 17,900 899,475
FDX Corp.* 5,080 452,120
First Data Corp. 15,800 500,662
H & R Block, Inc. 3,800 171,000
Ikon Office Solutions, Inc. 4,900 41,956
Interpublic Group of Cos., Inc. 4,950 394,762
Moore Corp., Ltd. 3,500 38,500
National Service Industries, Inc. 1,700 64,600
Oracle Corp.* 36,187 1,560,564
Paychex, Inc. 5,900 303,481
PeopleSoft, Inc.* 8,400 158,550
Service Corp. International 9,300 353,981
Shared Medical Systems Corp. 900 44,887
--------------
7,994,827
--------------
See Notes to Financial Statements.
65
<PAGE>
HARRIS INSIGHT FUNDS
INDEX FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
CASINOS -- 0.0%
Harrah's Entertainment, Inc.* 4,050 $ 63,534
Mirage Resorts, Inc.* 6,900 103,069
--------------
166,603
--------------
CHEMICALS -- 2.0%
Air Products & Chemicals, Inc. 8,000 320,000
Avery Dennison Corp. 3,800 171,237
Corning, Inc. 8,500 382,500
Dow Chemical Co. 8,300 754,781
E.I. du Pont de Nemours & Co. 41,200 2,186,175
Eastman Chemical Co. 2,900 129,775
F.M.C. Corp.* 1,300 72,800
Great Lakes Chemical Corp. 2,200 88,000
Hercules, Inc. 3,700 101,287
Minnesota Mining & Manufacturing Co. 14,900 1,059,762
Monsanto Co. 21,700 1,030,750
Morton International, Inc. 4,900 120,050
Nalco Chemical Co. 2,500 77,500
P.P.G. Industries, Inc. 6,600 384,450
Praxair, Inc. 5,800 204,450
Rohm & Haas Co. 6,900 207,862
Sealed Air Corp.* 1,447 73,887
Sigma Aldrich Corp. 3,900 114,075
Union Carbide Corp. 4,500 191,250
W.R. Grace & Co.* 2,700 42,356
--------------
7,712,947
--------------
CONSTRUCTION -- 0.3%
Armstrong World Industries, Inc. 1,500 90,469
Centex Corp. 2,200 99,137
Fleetwood Enterprises, Inc. 1,200 41,700
Fluor Corp. 3,000 127,687
Foster Wheeler Corp. 1,600 21,100
Kaufman & Broad Home Corp. 1,000 28,750
Masco Corp. 12,200 350,750
Owens Corning, Inc. 2,100 74,419
Pulte Corp. 1,600 44,500
Sherwin Williams Co. 6,300 185,062
--------------
1,063,574
--------------
CONTAINERS -- 0.1%
Ball Corp. 900 41,175
Bemis Co., Inc. 1,900 72,081
Crown Cork & Seal Co., Inc. 5,100 157,144
Owens-Illinois, Inc.* 5,500 168,437
--------------
438,837
--------------
COSMETICS & SOAP -- 2.3%
Alberto-Culver Co. Class B 2,300 61,381
Avon Products, Inc. 9,600 424,800
Clorox Co. 3,800 443,887
Colgate-Palmolive Co. 10,800 1,003,050
Gillette Co. 41,000 1,980,812
International Flavors & Fragrances, Inc. 4,000 176,750
Procter & Gamble Co. 48,800 4,456,050
--------------
8,546,730
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
DRUGS -- 10.2%
Abbott Laboratories, Inc. 55,700 $ 2,729,300
Allergan, Inc. 2,400 155,400
Alza Corp.* 3,100 161,975
American Home Products Corp. 47,900 2,697,369
Amgen, Inc.* 9,600 1,003,200
Bristol-Myers Squibb Co. 36,200 4,844,012
Cardinal Health, Inc. 7,350 557,681
Eli Lilly & Co. 40,500 3,599,437
Johnson & Johnson 49,100 4,118,262
Mallinckrodt, Inc. 2,700 83,194
Merck & Co., Inc. 43,300 6,394,869
Pfizer, Inc. 47,500 5,958,281
Pharmacia & Upjohn, Inc. 18,480 1,046,430
Schering Plough Corp. 53,400 2,950,350
Warner-Lambert Co. 29,800 2,240,587
--------------
38,540,347
--------------
ELECTRIC & GAS -- 2.6%
AES Corp. 6,400 303,200
Ameren Corp. 5,000 213,437
American Electric Power Co. 7,000 329,437
Baltimore Gas & Electric Co. 5,400 166,725
Carolina Power & Light Co. 5,500 258,844
Central & South West Corp. 7,800 214,012
Cinergy Corp. 5,836 200,612
Columbia Energy Group 3,150 181,913
Consolidated Edison, Inc. 8,700 460,012
Consolidated Natural Gas Co. 3,500 189,000
Dominion Resources, Inc. 6,850 320,237
DTE Energy Co. 5,400 231,525
Duke Energy Corp. 13,061 836,720
Eastern Enterprises 800 35,000
Edison International 12,900 359,587
Entergy Corp. 9,000 280,125
F.P.L. Group, Inc. 6,700 412,887
FirstEnergy Corp. 8,500 276,781
GPU, Inc. 4,500 198,844
Houston Industries, Inc. 10,493 337,088
New Century Energies, Inc. 4,200 204,750
Niagara Mohawk Power Corp.* 5,800 93,525
Nicor, Inc. 1,900 80,275
Northern States Power Co. 5,400 149,850
Oneok, Inc. 1,100 39,737
P.P.& L. Resources, Inc. 6,100 170,037
Pacific Gas & Electric Co. 13,800 434,700
Pacificorp 10,900 229,581
PECO Energy Co. 8,200 341,325
Peoples Energy Corp. 1,400 55,825
Public Service Enterprise Group, Inc. 8,600 344,000
Sempra Energy 8,761 222,310
Sonat, Inc. 4,100 110,956
Southern Co. 25,000 726,562
Texas Utilities Co. 10,207 476,539
Unicom Corp. 8,000 308,500
--------------
9,794,458
--------------
See Notes to Financial Statements.
66
<PAGE>
HARRIS INSIGHT FUNDS
INDEX FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
ELECTRICAL -- 3.8%
Cooper Industries, Inc. 4,500 $ 214,594
Emerson Electric Co. 16,100 1,007,256
General Electric Co. 118,300 12,073,994
General Instrument Corp.* 5,400 183,262
Grainger W.W., Inc. 3,600 149,850
Honeywell, Inc. 4,700 353,969
Johnson Controls, Inc. 3,100 182,900
--------------
14,165,825
--------------
ELECTRONICS -- 5.2%
A.M.P., Inc. 8,096 421,498
Advanced Micro Devices, Inc.* 5,200 150,475
America Online, Inc. 10,500 1,519,875
Andrew Corp.* 3,287 54,235
Compuware Corp.* 3,200 249,800
Intel Corp. 61,200 7,252,200
KLA Tencor Corp.* 3,300 143,137
LSI Logic Corp.* 5,200 83,850
Lucent Technologies, Inc. 47,972 5,276,920
Micron Technology, Inc.* 7,800 394,387
Motorola, Inc. 21,700 1,325,056
National Semiconductor Corp.* 5,600 75,600
Parametric Technology Corp.* 9,400 152,750
Perkin Elmer Corp. 1,700 165,856
Scientific Atlanta, Inc. 3,100 70,719
Solectron Corp.* 4,200 390,337
Tektronix, Inc. 1,950 58,622
Tellabs, Inc.* 6,700 459,369
Texas Instruments, Inc. 14,200 1,214,987
Thomas & Betts Corp. 2,000 86,625
--------------
19,546,298
--------------
ENERGY SERVICES -- 0.4%
Baker Hughes, Inc. 11,870 209,951
Halliburton Co. 16,200 479,925
Helmerich & Payne, Inc. 2,000 38,750
Rowan Cos., Inc.* 3,400 34,000
Schlumberger, Ltd. 19,800 913,275
--------------
1,675,901
--------------
FOOD & BEVERAGES -- 4.6%
Archer-Daniels-Midland Co. 21,580 370,906
Bestfoods, Inc. 10,500 559,125
Campbell Soup Co. 16,300 896,500
Coca-Cola Co. 89,700 5,998,687
Coca-Cola Enterprises, Inc. 14,700 525,525
Conagra, Inc. 17,400 548,100
General Mills, Inc. 5,600 435,400
Heinz H.J. Co. 13,300 753,112
Hershey Foods Corp. 5,200 323,375
Kellogg Co. 15,000 511,875
Pepsico, Inc. 53,600 2,194,250
Pioneer Hi-Bred International, Inc. 9,000 243,000
Quaker Oats Co. 5,100 303,450
Ralston Purina Group 11,700 378,787
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
FOOD & BEVERAGES (CONTINUED)
Sara Lee Corp. 34,000 $ 958,375
Unilever N.V 23,300 1,932,444
Wm. Wrigley Jr., Co. 4,200 376,162
--------------
17,309,073
--------------
FOREST PRODUCTS & PAPER -- 0.9%
Boise Cascade Corp. 1,900 58,900
Champion International Corp. 3,500 141,750
Fort James Corp. 7,600 304,000
Georgia Pacific Corp. 3,400 199,112
International Paper Co. 11,107 497,732
Kimberly-Clark Corp. 20,228 1,102,426
Louisiana-Pacific Corp. 4,000 73,250
Mead Corp. 3,900 114,319
Potlatch Corp. 900 33,187
Temple Inland, Inc. 2,100 124,556
Union Camp Corp. 2,600 175,500
Westvaco Corp. 4,000 107,250
Weyerhaeuser Co. 7,400 376,012
Willamette Industries, Inc. 4,100 137,350
--------------
3,445,344
--------------
HEALTH CARE SERVICES -- 1.7%
Bausch & Lomb, Inc. 2,000 120,000
Baxter International, Inc. 10,300 662,419
Becton, Dickinson & Co. 9,000 384,188
Biomet, Inc. 4,300 172,806
Boston Scientific Corp.* 14,200 380,738
C.R. Bard, Inc. 2,100 103,950
Columbia/HCA Healthcare Corp. 23,582 583,655
Guidant Corp. 5,500 606,375
HBO & Co. 15,200 436,050
HCR Manor Care, Inc.* 3,950 116,031
Healthsouth Corp.* 14,500 223,844
Humana, Inc.* 6,000 106,875
IMS Health, Inc. 6,000 452,625
Medtronic, Inc. 17,100 1,269,675
Millipore Corp. 1,600 45,500
St. Jude Medical, Inc.* 3,100 85,831
Tenet Healthcare Corp.* 11,300 296,625
United Healthcare Corp. 7,000 301,438
--------------
6,348,625
--------------
HOTELS & RESTAURANTS -- 0.8%
Darden Restaurants, Inc. 5,400 97,200
Hilton Hotels Corp. 9,200 175,950
Marriott International, Inc. Class A 9,400 272,600
McDonald's Corp. 24,800 1,900,300
Tricon Global Restaurants, Inc.* 5,630 282,204
Wendy's International, Inc. 5,100 111,244
--------------
2,839,498
--------------
See Notes to Financial Statements.
67
<PAGE>
HARRIS INSIGHT FUNDS
INDEX FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
HOUSEHOLD GOODS -- 0.3%
Black & Decker Corp. 3,700 $ 207,431
Maytag Corp. 3,500 217,875
Newell Co. 5,900 243,375
Rubbermaid, Inc. 5,900 185,481
Tupperware Corp. 2,500 41,094
Whirlpool Corp. 2,900 160,588
--------------
1,055,844
--------------
INSURANCE -- 3.5%
Aetna, Inc. 5,453 428,742
Allstate Corp. 30,140 1,164,158
American General Corp. 9,296 725,088
American International Group, Inc. 38,268 3,697,646
Aon Corp. 6,100 337,788
Chubb Corp. 6,200 402,225
Cigna Corp. 7,700 595,306
Cincinnati Financial Corp. 6,000 219,750
Conseco, Inc. 11,382 347,862
Hartford Financial Services Group, Inc. 8,600 471,925
Jefferson-Pilot Corp. 3,900 292,500
Lincoln National Corp. 3,700 302,706
Loews Corp. 4,200 412,650
Marsh & McLennan Cos., Inc. 9,350 546,391
MBIA, Inc. 3,600 236,025
MGIC Investment Corp. 4,200 167,213
Progressive Corp. 2,600 440,375
Provident Cos., Inc. 4,900 203,350
Providian Financial Corp. 5,250 393,750
Safeco Corp. 5,200 223,275
St. Paul Cos., Inc. 8,368 290,788
SunAmerica, Inc. 7,100 575,988
Torchmark Corp. 5,200 183,625
Transamerica Corp. 2,300 265,650
UNUM Corp. 5,100 297,713
--------------
13,222,489
--------------
LEISURE -- 0.3%
Brunswick Corp. 3,900 96,525
Carnival Corp. 10,800 518,400
Hasbro, Inc. 4,650 167,981
Jostens, Inc. 1,100 28,806
Mattel, Inc. 10,737 244,938
--------------
1,056,650
--------------
MACHINERY & EQUIPMENT -- 1.6%
Aeroquip Vickers, Inc. 800 23,950
Applied Materials, Inc.* 13,400 572,013
Briggs & Stratton Corp. 1,000 49,875
Case Corp. 2,800 61,075
Caterpillar, Inc. 13,500 621,000
Crane Co. 2,850 86,034
Danaher Corp. 4,500 244,406
Deere & Co. 9,100 301,438
Dover Corp. 8,200 300,325
Harnischfeger Industries, Inc. 1,800 18,338
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
MACHINERY & EQUIPMENT (CONTINUED)
Illinois Tool Works, Inc. 9,100 $ 527,800
Ingersoll Rand Co. 6,100 286,319
ITT Industries, Inc. 4,400 174,900
McDermott International, Inc. 2,200 54,313
Milacron, Inc. 1,600 30,800
Nacco Industries, Inc. 300 27,600
Pall Corp. 4,733 119,804
Parker-Hannifin Corp. 4,025 131,819
Raychem Corp. 3,200 103,400
Snap-On, Inc. 2,200 76,588
Stanley Works, Inc. 3,300 91,575
Tenneco, Inc. 6,300 214,594
Thermo Electron Corp.* 5,600 94,850
Timken Co. 2,500 47,188
Tyco International, Ltd. 23,045 1,738,457
--------------
5,998,461
--------------
MEDIA -- 3.4%
CBS Corp. 26,000 851,500
Clear Channel Communications, Inc.* 9,000 490,500
Comcast Corp. Class A 4,800 275,400
Comcast Corp. Special Class A Non-Voting 8,600 504,713
Dow Jones & Co., Inc. 3,500 168,438
Gannett Co., Inc. 10,300 681,731
King World Productions, Inc.* 2,200 64,763
Knight-Ridder, Inc. 2,900 148,263
McGraw-Hill Cos., Inc. 3,700 376,938
Mediaone Group* 22,100 1,038,700
Meredith Corp. 1,900 71,963
New York Times Co. 7,000 242,813
Omnicom Group, Inc. 6,200 359,600
R.R. Donnelley & Sons, Inc. 5,300 232,206
Tele-Communications, Inc. Class A* 18,652 1,031,689
Time Warner, Inc. 43,600 2,705,925
Times Mirror Co. 3,300 184,800
Tribune Co. 4,500 297,000
Viacom, Inc. Class A* 560 41,195
Viacom, Inc. Class B* 11,843 876,382
Walt Disney Co. 74,100 2,223,000
--------------
12,867,519
--------------
METALS -- 0.6%
Alcan Aluminium, Ltd. 8,400 227,325
Aluminum Co. of America 6,800 507,025
Asarco, Inc. 1,700 25,606
Barrick Gold Corp. 14,100 274,950
Battle Mountain Gold Co. 9,000 37,125
Bethlehem Steel Corp.* 4,500 37,688
Cyprus AMAX Minerals Co. 3,650 36,500
Engelhard Corp. 5,287 103,097
Freeport-McMoran Copper & Gold, Inc. 7,100 74,106
Homestake Mining Co. 5,800 53,288
Inco, Ltd. 6,600 69,713
Newmont Mining Corp. 5,774 104,293
Nucor Corp. 3,400 147,050
Phelps Dodge Corp. 2,200 111,925
Placer Dome, Inc. 9,400 108,100
See Notes to Financial Statements.
68
<PAGE>
HARRIS INSIGHT FUNDS
INDEX FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
METALS (CONTINUED)
Reynolds Metals Co. 2,700 $ 142,256
USX-U.S. Steel Group, Inc. 3,300 75,900
Worthington Industries, Inc. 3,850 48,125
--------------
2,184,072
--------------
MISCELLANEOUS FINANCE -- 3.6%
American Express Co. 16,600 1,697,350
Associates First Capital Corp. Class A 25,482 1,079,800
Bear Stearns Cos., Inc. 4,200 156,975
Berkshire Hathaway, Inc. 294 690,900
Capital One Financial Corp. 2,400 276,000
Charles Schwab Corp. 14,625 821,742
Countrywide Credit Industries, Inc. 4,100 205,769
Equifax, Inc. 5,500 188,031
Federal Home Loan Mortgage Corp. 24,900 1,604,494
Federal National Mortgage Association 37,700 2,789,800
Franklin Resources, Inc. 9,300 297,600
Household International, Inc. 17,833 706,633
Lehman Brothers Holdings, Inc. 3,700 163,031
Merrill Lynch & Co., Inc. 12,700 847,725
Morgan Stanley Dean Witter & Co. 21,669 1,538,499
SLM Holding Corp. 6,200 297,600
--------------
13,361,949
--------------
OFFICE EQUIPMENT -- 10.8%
3Com Corp.* 12,800 573,600
Adobe Systems, Inc. 2,500 116,875
Apple Computer, Inc.* 5,000 204,688
Autodesk, Inc. 1,900 80,988
BMC Software, Inc.* 7,000 311,938
Cabletron Systems, Inc.* 6,100 51,088
Cisco Systems, Inc.* 56,700 5,262,469
Compaq Computer Corp. 60,121 2,521,324
Computer Associates International, Inc. 20,162 859,405
Data General Corp.* 1,700 27,944
Dell Computer, Inc.* 46,100 3,373,944
EMC Corp.* 18,000 1,530,000
Gateway 2000, Inc.* 5,600 286,650
Harris Corp. 2,900 106,213
Hewlett Packard Co. 37,900 2,589,044
International Business Machines Corp. 34,000 6,281,500
Microsoft Corp.* 89,800 12,442,913
Novell, Inc.* 12,800 232,000
Pitney Bowes, Inc. 10,100 667,231
Seagate Technology, Inc.* 9,000 272,250
Silicon Graphics, Inc.* 6,954 89,533
Sun Microsystems, Inc.* 13,800 1,180,763
Unisys Corp.* 9,300 320,269
Xerox Corp. 12,000 1,416,000
--------------
40,798,629
--------------
OIL & GAS -- 5.3%
Amerada Hess Corp. 3,500 174,125
Anadarko Petroleum Corp. 4,400 135,850
Apache Corp. 3,300 83,531
Ashland, Inc. 2,900 140,288
Atlantic Richfield Co. 11,800 769,950
Burlington Resources, Inc. 6,482 232,137
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
OIL & GAS (CONTINUED)
Chevron Corp. 23,800 $ 1,973,913
Coastal Corp. 7,800 272,513
Enron Corp. 11,900 679,044
Exxon Corp. 88,700 6,486,188
Kerr-McGee Corp. 1,800 68,850
Mobil Corp. 28,700 2,500,488
Occidental Petroleum Corp. 12,500 210,938
Oryx Energy Co.* 4,100 55,094
Phillips Petroleum Co. 9,400 400,675
Royal Dutch Petroleum Co. 78,100 3,739,038
Sunoco, Inc. 2,655 95,746
Texaco, Inc. 19,500 1,031,063
Unocal Corp. 9,100 265,606
USX-Marathon Group, Inc. 10,600 319,325
Williams Cos., Inc. 14,900 464,694
--------------
20,099,056
--------------
PHOTOGRAPHIC -- 0.2%
Eastman Kodak Co. 12,000 864,000
Polaroid Corp. 1,800 33,638
--------------
897,638
--------------
POLLUTION CONTROL -- 0.3%
Browning-Ferris Industries, Inc. 6,700 190,531
Laidlaw, Inc. 12,500 125,781
Waste Management, Inc. 20,675 963,972
--------------
1,280,284
--------------
RAILROADS -- 0.5%
Burlington Northern Santa Fe Corp. 17,193 580,264
CSX Corp. 8,300 344,450
Norfolk Southern Corp. 13,900 440,456
Union Pacific Corp. 9,100 410,069
Union Pacific Resources Group, Inc. 9,351 84,743
--------------
1,859,982
--------------
RETAIL -- 5.6%
American Greetings Corp. Class A 2,600 106,763
Autozone, Inc.* 5,600 184,450
Circuit City Stores, Inc. 3,600 179,775
Consolidated Stores Corp.* 4,000 80,750
Costco Cos., Inc.* 7,821 564,578
CVS Corp. 14,000 770,000
Dayton Hudson Corp. 16,000 868,000
Dillard's, Inc. Class A 4,000 113,500
Dollar General Corp.* 6,625 156,516
Federated Department Stores, Inc.* 7,700 335,431
Fred Meyer, Inc.* 5,600 337,400
Gap, Inc. 21,675 1,219,219
Harcourt General, Inc. 2,800 148,925
Home Depot, Inc. 53,198 3,255,053
K Mart Corp.* 18,000 275,625
Kohls Corp.* 5,700 350,194
Limited, Inc. 8,313 242,116
Longs Drug Stores, Inc. 1,400 52,500
Lowe's Cos., Inc. 12,800 655,200
May Department Stores Co. 8,400 507,150
Nordstrom, Inc. 5,600 194,250
See Notes to Financial Statements.
69
<PAGE>
HARRIS INSIGHT FUNDS
INDEX FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
RETAIL (CONTINUED)
Penney, J.C. Co. 9,100 $ 426,563
Pep Boys-Manny, Moe & Jack 2,400 37,650
Rite Aid Corp. 9,400 465,888
Sears, Roebuck & Co. 14,300 607,750
Staples, Inc. 10,400 454,350
Tandy Corp. 3,800 156,513
TJX Cos., Inc. 11,800 342,200
Toys "R" Us, Inc.* 10,500 177,188
Wal-Mart Stores, Inc. 81,800 6,661,588
Walgreen Co. 18,000 1,054,125
--------------
20,981,210
--------------
RETAIL - FOOD -- 0.9%
Albertson's, Inc. 8,900 566,819
American Stores Co. 9,900 365,681
Great Atlantic & Pacific Tea Co., Inc. 1,100 32,588
Kroger Co.* 9,300 562,650
Safeway, Inc.* 16,700 1,017,656
Supervalu, Inc. 4,400 123,200
Sysco Corp. 12,500 342,969
Winn-Dixie Stores, Inc. 5,400 242,325
--------------
3,253,888
--------------
TELEPHONES -- 8.4%
AirTouch Communications, Inc.* 20,900 1,507,413
Alltel Corp. 10,100 604,106
Ameritech Corp. 40,100 2,541,338
AT&T Corp. 65,942 4,962,136
Bell Atlantic Corp. 56,804 3,010,612
BellSouth Corp. 72,200 3,600,975
Frontier Corp. 6,000 204,000
GTE Corp. 35,100 2,367,056
MCI Worldcom, Inc.* 64,119 4,600,538
Nextel Communications, Inc. Class A* 9,700 229,163
Northern Telecom, Ltd. 23,780 1,191,973
SBC Communications, Inc. 71,208 3,818,529
Sprint Corp. (FON Group) 15,400 1,295,525
Sprint Corp. (PCS Group) 15,100 349,188
US West, Inc. 18,311 1,183,348
--------------
31,465,900
--------------
THRIFT INSTITUTIONS -- 0.3%
Golden West Financial Corp. 2,100 192,544
Washington Mutual, Inc. 21,093 805,489
--------------
998,033
--------------
TRUCKING -- 0.1%
Cummins Engine Co., Inc. 1,600 56,800
Paccar, Inc. 3,090 126,304
Ryder System, Inc. 3,000 78,000
--------------
261,104
--------------
TOTAL COMMON STOCK
(Cost $195,391,464) 362,078,077
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
CONVERTIBLE PREFERRED STOCK -- 0.0%
CONTAINERS -- 0.0%
Sealed Air Corp., $2.00, 04/01/18,
Series A
(Cost $42,011) 1,282 $ 66,504
--------------
RIGHTS &WARRANTS -- 0.0%
U.S. Surgical Corp.
(Cost $0) 22 0
--------------
COUPON PAR
RATE MATURITY (000)
------ -------- -----
U.S. TREASURY OBLIGATIONS -- 0.3%
U.S. Treasury Bills**
(Cost $972,197)
5.198% 07/22/99 $1,000 975,623
-----------
SHARES
------
TEMPORARY INVESTMENTS -- 3.6%
Dreyfus Cash Management Plus #719 4,520,745 4,520,745
Goldman Sachs Financial Square
Money Market Portfolio 4,542,707 4,542,707
J.P. Morgan Institutional Prime
Money Market Portfolio 4,597,410 4,597,410
-----------
TOTAL TEMPORARY INVESTMENTS
(Cost $13,660,862) 13,660,862
-----------
TOTAL INVESTMENTS -- 100.1%
(Cost $210,066,534) 376,781,066
-----------
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.1%) (486,404)
-----------
NET ASSETS -- 100.0%
Applicable to 12,789,949 and 484,270
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 7) $376,294,662
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL CLASS SHARE
($362,567,897/12,789,949) $28.35
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER CLASS A SHARE ($13,726,765/484,270) $28.35
======
- --------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
** Security pledged as collateral for futures contracts.
NUMBER OF UNREALIZED
CONTRACTS DEPRECIATION
--------- ------------
Futures Contracts -- Long Position
S&P 500 Index, March 1999 45 $501,875
==== ========
See Notes to Financial Statements.
70
<PAGE>
HARRIS INSIGHT FUNDS
BALANCED FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK -- 52.9%
AEROSPACE -- 2.3%
Alliant Techsystems, Inc.* 1,100 $ 90,681
Cordant Technologies, Inc. 6,300 236,250
Esterline Technologies Corp.* 7,300 158,775
Litton Industries, Inc.* 9,700 632,925
Lockheed Martin Corp. 2,400 203,400
--------------
1,322,031
--------------
AIR TRANSPORT -- 1.3%
AMR Corp.* 8,100 480,937
Continental Airlines, Inc. Class B* 1,200 40,200
Delta Air Lines, Inc. 3,900 202,800
Offshore Logistics, Inc.* 3,200 37,600
--------------
761,537
--------------
ALCOHOLIC BEVERAGES & TOBACCO-- 0.9%
Philip Morris Cos., Inc. 5,000 267,500
Universal Corp. 7,600 266,950
--------------
534,450
--------------
APPAREL, TEXTILES -- 1.5%
Dan River, Inc. Class A* 900 10,575
Oxford Industries, Inc. 800 22,600
Shaw Industries, Inc. 24,800 601,400
VF Corp. 5,400 253,125
--------------
887,700
--------------
AUTO RELATED -- 0.0%
Rent-Way, Inc.* 1,000 24,312
--------------
AUTOS -- 2.2%
DaimlerChrysler A.G 2,116 203,268
Ford Motor Co. 15,200 892,050
General Motors Corp. 1,700 121,656
Navistar International Corp.* 2,600 74,100
--------------
1,291,074
--------------
BANKS -- 2.3%
Chase Manhattan Corp. 8,100 551,306
Compass Bancshares, Inc. 2,100 79,537
Doral Financial Corp. 2,800 61,950
Everen Capital Corp. 2,200 50,050
Flagstar Bancorp, Inc. 3,000 78,375
GBC Bancorp 4,000 102,000
One Valley Bancorp 750 24,656
Provident Bankshares Corp. 1,600 39,800
Southtrust Corp. 8,900 328,187
UST Corp. 500 11,750
--------------
1,327,611
--------------
BUSINESS SERVICES -- 1.6%
Aviall, Inc.* 7,100 83,425
Bowne & Co., Inc. 2,600 46,475
Computer Sciences Corp.* 3,300 212,644
Franklin Covey Co.* 1,500 25,125
InaCom Corp.* 3,000 44,625
Kelly Services, Inc. Class A 3,000 93,000
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
BUSINESS SERVICES (CONTINUED)
Selective Insurance Group, Inc. 1,600 $ 32,400
Viad Corp. 13,200 400,950
--------------
938,644
--------------
CASINOS -- 0.2%
Anchor Gaming* 2,100 118,387
--------------
CHEMICALS -- 0.1%
Albemarle Corp. 1,700 40,375
Cytec Industries, Inc.* 2,000 42,500
--------------
82,875
--------------
CONSTRUCTION -- 2.0%
Centex Corp. 17,100 770,569
Fleetwood Enterprises, Inc. 5,800 201,550
Vulcan Materials Co. 500 65,781
Webb Corp. 4,000 110,250
--------------
1,148,150
--------------
CONTAINERS -- 0.0%
Libbey, Inc. 700 20,256
--------------
DRUGS -- 3.7%
Amgen, Inc.* 1,700 177,650
Bergen Brunswig Corp. Class A 14,800 516,150
Bindley Western Industries, Inc. 800 39,400
Bristol-Myers Squibb Co. 3,900 521,869
Jones Pharma, Inc. 1,100 40,081
McKesson Corp. 6,800 537,625
Mylan Laboratories, Inc. 4,100 129,150
PharMerica, Inc.* 29,300 175,800
--------------
2,137,725
--------------
ELECTRIC & GAS -- 3.1%
Central Hudson Gas & Electric Corp. 1,500 67,125
Cleco Corp. 1,100 37,744
Columbia Energy Group 4,500 259,875
Eastern Utilities Associates 3,700 104,525
Energy East Corp. 14,400 813,600
Houston Industries, Inc. 12,200 391,925
Interstate Energy Corp. 1,482 47,794
Public Service Co. of New Mexico 4,000 81,750
--------------
1,804,338
--------------
ELECTRICAL -- 0.2%
General Semiconductor, Inc.* 8,000 65,500
Gulf Island Fabrication, Inc.* 3,700 28,675
--------------
94,175
--------------
ELECTRONICS -- 0.8%
C&D Technologies, Inc. 1,300 35,750
CHS Electronics, Inc.* 4,500 76,219
CIENA, Corp.* 1,800 26,212
Intel Corp. 2,000 237,000
NeoMagic Corp.* 4,900 108,106
--------------
483,287
--------------
See Notes to Financial Statements.
71
<PAGE>
HARRIS INSIGHT FUNDS
BALANCED FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
ENERGY SERVICES -- 0.2%
Calpine Corp.* 3,000 $ 75,750
Seitel, Inc.* 2,200 27,362
--------------
103,112
--------------
FOOD & BEVERAGES -- 1.1%
Dean Foods Co. 4,400 179,575
IBP, Inc. 4,000 116,500
Smithfield Foods, Inc.* 9,300 313,875
--------------
609,950
--------------
FOREST PRODUCTS & PAPER -- 0.1%
Buckeye Technologies, Inc.* 2,100 31,369
--------------
HEALTH CARE SERVICES -- 2.4%
AmeriSource Health Corp. Class A* 2,300 149,500
Arterial Vascular Engineering, Inc.* 3,400 177,862
Datascope Corp.* 2,600 59,475
Dexter Corp. 1,200 37,725
Hanger Orthopedic Group, Inc.* 1,500 33,750
HBO & Co. 16,400 470,475
Lincare Holdings, Inc.* 3,600 145,800
Thermoquest Corp.* 3,200 41,400
Wellpoint Health Networks, Inc.* 3,200 278,400
--------------
1,394,387
--------------
HOTELS & RESTAURANTS -- 1.2%
Darden Restaurants, Inc. 18,975 341,550
Outback Steakhouse, Inc.* 8,800 349,800
Red Roof Inns, Inc.* 1,900 32,062
--------------
723,412
--------------
INSURANCE -- 4.4%
Allstate Corp. 11,900 459,637
Chartwell Re Corp. 1,300 30,875
Cigna Corp. 10,100 780,856
Conseco, Inc. 4,000 122,250
Equitable Cos., Inc. 11,000 636,625
Fidelity National Financial, Inc. 1,320 40,260
First American Financial Corp. 4,900 157,412
Gallagher (Arthur J.) & Co. 3,700 163,263
LandAmerica Financial Group, Inc. 800 44,650
Old Republic International Corp. 6,250 140,625
--------------
2,576,453
--------------
MACHINERY & EQUIPMENT -- 1.0%
Commercial Intertech Corp. 3,500 45,281
DT Industries, Inc. 2,000 31,000
Gardner Denver Machinery, Inc.* 6,800 100,300
Gleason Corp. 2,475 44,859
ITT Industries, Inc. 3,700 147,075
Trinity Industries, Inc. 4,900 188,650
--------------
557,165
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
MEDIA -- 0.6%
Meredith Corp. 2,000 $ 75,750
Omnicom Group, Inc. 4,400 255,200
--------------
330,950
--------------
METALS -- 0.2%
Cleveland Cliffs, Inc. 700 28,219
Inland Steel Industries, Inc. 2,800 47,250
Reliance Steel & Aluminum Corp. 1,800 49,725
--------------
125,194
--------------
MISCELLANEOUS FINANCE -- 1.8%
Countrywide Credit Industries, Inc. 5,400 271,013
Federal National Mortgage Association 1,700 125,800
Lehman Brothers Holdings, Inc. 5,700 251,156
Morgan Stanley Dean Witter & Co. 3,400 241,400
PaineWebber Group, Inc. 4,200 162,225
--------------
1,051,594
--------------
OFFICE EQUIPMENT -- 5.1%
Comdisco, Inc. 5,900 99,563
Compaq Computer Corp. 4,800 201,300
Dell Computer, Inc.* 6,200 453,763
Gateway 2000, Inc.* 4,400 225,225
Harris Corp. 3,850 141,006
Ingram Micro, Inc. Class A* 3,700 129,038
International Business Machines Corp. 4,900 905,275
Lexmark International Group, Inc. Class A* 5,800 582,900
Storage Technology Corp.* 1,400 49,788
Tech Data Corp.* 5,300 212,663
--------------
3,000,521
--------------
OIL & GAS -- 2.7%
Atwood Oceanics, Inc.* 1,500 25,500
Coastal Corp. 18,000 628,875
Exxon Corp. 3,600 263,250
Sunoco, Inc. 14,300 515,694
Ultramar Diamond Shamrock Corp. 4,700 113,975
Washington Gas Light Corp. 1,900 51,538
--------------
1,598,832
--------------
RAILROADS -- 0.1%
Varlen Corp. 2,150 49,450
--------------
RETAIL -- 2.8%
Ames Department Stores, Inc.* 5,500 147,813
BJ's Wholesale Club, Inc.* 6,050 280,191
Dayton Hudson Corp. 8,800 477,400
Footstar, Inc.* 4,400 110,000
Pacific Sunwear of California, Inc.* 2,200 36,025
Ross Stores, Inc. 4,700 184,769
Tandy Corp. 4,600 189,463
TJX Cos., Inc. 6,500 188,500
--------------
1,614,161
--------------
See Notes to Financial Statements.
72
<PAGE>
HARRIS INSIGHT FUNDS
BALANCED FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
RETAIL - FOOD -- 1.9%
Kroger Co.* 9,600 $ 580,800
Safeway, Inc.* 8,700 530,156
--------------
1,110,956
--------------
TELEPHONES -- 4.4%
AT&T Corp. 14,825 1,115,581
Bell Atlantic Corp. 6,400 339,200
GTE Corp. 6,300 424,856
SBC Communications, Inc. 3,737 200,397
Telefonos de Mexico S.A. ADR 2,000 97,375
US West, Inc. 6,200 400,675
--------------
2,578,084
--------------
THRIFT INSTITUTIONS -- 0.7%
Charter One Financial, Inc. 5,100 141,206
Dime Bancorp, Inc. 10,600 280,238
--------------
421,444
--------------
TOTAL COMMON STOCK
(Cost $24,940,324) 30,853,586
--------------
COUPON PAR
RATE MATURITY (000)
------ -------- -----
ASSET-BACKED SECURITIES -- 7.0%
AK Bank Series 1998-A, Class 1
7.848% 07/15/05 $ 250 224,141
Banco Nacional de Mexico, S.A.
Series 1996-A, Class A1
6.250% 12/01/03 375 373,184
BankAmerica Manufactured Housing
Contract Series 1998-2, Class B1
7.930% 12/10/25 425 357,199
Case Equipment Loan Trust
Series 1997-A, Class B
6.700% 03/15/04 500 514,959
First Plus Home Loan Trust
Series 1997-3, Class A6
7.080% 07/10/17 285 306,556
Green Tree Financial Corp.
Series 1997-4, Class A5
6.880% 02/15/29 650 667,037
Rental Car Finance Corp.
Series 1997-1, Class A3
6.600% 09/25/07 1,000 1,001,094
Team Fleet Financing Corp.
Series 1997-1, Class A
7.350% 05/15/03 375 391,057
World Omni Automobile Lease
Series 1997-A, Class A4
6.900% 06/25/03 274 286,457
--------------
TOTAL ASSET-BACKED SECURITIES
(Cost $4,126,245) 4,121,684
--------------
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 13.7%
Asset Securitization Corp.
Series 1997-D4, Class PS1 IO
1.018% 04/14/29 $ 6,278 $ 426,721
Asset Securitization Corp.
Series 1997-D5, Class PS1 IO
1.385% 02/14/41 2,960 304,974
DLJ Mortgage Acceptance Corp.
Series 1998-A, Class A2
7.049% 05/25/28 513 515,462
Federal Home Loan Mortgage Corp.
Series 1897, Class G
7.250% 03/15/22 695 709,784
Federal National Mortgage Association
Series 110, Class 2 IO
9.000% 11/25/19 617 134,962
Federal National Mortgage Association
Series 145, Class 1 PO
10.161% 06/25/22 630 537,418
Federal National Mortgage Association
Series 1993-167, Class SL
7.000% 01/25/22 473 468,956
Federal National Mortgage Association
Series 1996-53, Class PE
6.500% 11/18/10 800 824,409
Federal National Mortgage Association
Series 1997-20 IO
1.840% 03/25/27 3,123 105,392
Federal National Mortgage Association
Series 1997-84, Class PL IO
6.500% 02/25/09 2,815 420,491
Federal National Mortgage Association
Series G97-1, Class K
6.750% 02/18/04 1,000 1,015,738
Federal National Mortgage Association
Series X-13, Class G
6.500% 08/25/22 845 868,238
GE Capital Mortgage Services, Inc.
Series 1994-10, Class A23
6.500% 03/25/24 673 672,244
Norwest Asset Securities Corp.
Series 1997-10, Class A6
6.750% 08/25/27 475 476,781
Residential Funding Mortgage
Security I Series 1996-S4, Class A13
7.250% 02/25/26 484 498,801
--------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $7,856,121) 7,980,371
--------------
MORTGAGE-BACKED SECURITIES -- 7.8%
Federal National Mortgage Association
6.500% 01/15/29 875 880,742
Federal National Mortgage Association
Pool #250888
7.000% 04/01/12 1,472 1,509,489
Federal National Mortgage Association
Pool #345739
7.500% 03/01/27 69 70,536
See Notes to Financial Statements.
73
<PAGE>
HARRIS INSIGHT FUNDS
BALANCED FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
MORTGAGE-BACKED SECURITIES (CONTINUED)
Federal National Mortgage Association
Pool #363317
7.500% 11/01/26 $ 21 $ 21,836
Federal National Mortgage Association
Pool #368941
7.500% 12/01/26 490 504,333
Federal National Mortgage Association
Pool #371323
7.500% 03/01/27 321 330,769
Government National Mortgage
Association
7.000% 01/15/29 560 573,125
Government National Mortgage
Association Pool #354675
6.500% 10/15/23 641 651,783
--------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $4,451,987) 4,542,613
--------------
CORPORATE BONDS -- 9.7%
ELECTRIC -- 0.9%
Public Service Co. of Colorado
6.600% 02/01/01 500 512,500
--------------
FINANCE - BANK -- 0.6%
BankBoston Corp.
6.375% 04/15/08 365 365,456
--------------
FINANCE - NON-BANK -- 1.8%
American General Institutional Capital
Securities Series A
7.570% 12/01/45 90 97,988
Associates Corp. of North America
Euro Bond
6.875% 06/20/02 190 195,700
Lehman Brothers Holdings, Inc.
8.800% 03/01/15 250 275,625
Xerox Credit Corp. Euro Bond
5.400% 09/11/00 500 501,250
--------------
1,070,563
--------------
INDUSTRIAL -- 3.6%
Air Products & Chemicals, Inc.
6.862% 10/25/03 535 568,438
Archer-Daniels-Midland Co.
6.750% 12/15/27 150 162,563
Boston University
7.625% 07/15/97 120 136,950
Ford Motor Co.
7.400% 11/01/46 210 234,675
General Motors Corp.
6.750% 05/01/28 300 311,250
James River Corp.
6.700% 11/15/03 300 309,375
Nordstrom, Inc.
6.950% 03/15/28 140 145,950
Xerox Capital Trust I
8.000% 02/01/27 190 209,475
--------------
2,078,676
--------------
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
CORPORATE BONDS (CONTINUED)
OTHER UTILITIES -- 0.5%
KN Energy, Inc.
6.450% 03/01/03 $ 310 $ 311,163
--------------
TELEPHONES -- 1.3%
Airtouch Communications, Inc. Notes
6.650% 05/01/08 410 435,625
MCI Worldcom, Inc.
6.125% 04/15/02 310 313,488
--------------
749,113
--------------
TRANSPORTATION -- 1.0%
CSX Corp.
7.250% 05/01/27 535 577,800
--------------
TOTAL CORPORATE BONDS
(Cost $5,482,633) 5,665,271
--------------
SUPRANATIONAL BONDS -- 1.4%
African Development Bank
(Cost $784,595)
7.750% 12/15/01 770 820,050
--------------
YANKEE BONDS -- 3.9%
Cable & Wireless Communications
Notes
6.625% 03/06/05 80 80,600
Empresa Nacional Electric
7.750% 07/15/08 300 284,625
Export-Import Bank Korea
6.500% 11/15/06 325 292,906
Hydro-Quebec
8.050% 07/07/24 545 662,856
Korea Development Bank
7.375% 09/17/04 90 82,125
Korea Electric Power Global
6.375% 12/01/03 150 129,375
Racers QHEL Series 1997, Class A-1
9.499% 05/15/17 430 432,881
United Utilities P.L.C.
6.450% 04/01/08 300 306,750
--------------
TOTAL YANKEE BONDS
(Cost $2,244,519) 2,272,118
--------------
U.S. TREASURY OBLIGATIONS -- 2.0%
U.S. TREASURY BILLS**-- 0.4%
4.330% 03/25/99 250 247,589
--------------
U.S. TREASURY BONDS -- 0.7%
8.875% 08/15/17 286 403,029
--------------
See Notes to Financial Statements.
74
<PAGE>
HARRIS INSIGHT FUNDS
BALANCED FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
U.S. TREASURY OBLIGATIONS (CONTINUED)
U.S. TREASURY NOTES -- 0.9%
7.000% 07/15/06 $ 424 $ 484,082
6.500% 10/15/06 25 27,815
--------------
511,897
--------------
TOTAL U S. TREASURY OBLIGATIONS
(Cost $1,134,368) 1,162,515
--------------
MUNICIPAL BONDS -- 0.3%
Massachusetts State Turnpike Authority
Metropolitan Highway System
Revenue Bonds Series A
(Cost $164,664)
5.000% 01/01/37 170 165,538
--------------
SHARES
------
TEMPORARY INVESTMENTS -- 2.3%
Dreyfus Cash Management Plus #719 418,977 418,977
Goldman Sachs Financial Square
Money Market Portfolio 394,052 394,052
J.P. Morgan Institutional Prime
Money Market Portfolio 558,911 558,911
--------------
TOTAL TEMPORARY INVESTMENTS
(Cost $1,371,940) 1,371,940
--------------
TOTAL INVESTMENTS -- 101.0%
(Cost $52,557,396) 58,955,686
--------------
VALUE(DAGGER)
-------------
LIABILITIES IN EXCESS OF OTHER ASSETS-- (1.0%) $ (600,515)
-----------
NET ASSETS -- 100.0%
Applicable to 3,879,121 and 161,233
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 7) $58,355,171
===========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE ($56,026,722/3,879,121) $14.44
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER CLASS A SHARE
($2,328,449/161,233) $14.44
======
- --------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
** Security pledged as collateral for futures contracts.
ADR -- American Depository Receipt.
IO -- Interest Only Security.
PO -- Principal Only Security; interest rate is effective yield.
NUMBER OF UNREALIZED
CONTRACTS DEPRECIATION
--------- ------------
Futures Contracts -- Long Position
U.S. Treasury Notes, March 1999 19 $(1,039)
==== ========
See Notes to Financial Statements.
75
<PAGE>
HARRIS INSIGHT FUNDS
INTERNATIONAL FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK -- 93.8%
ARGENTINA -- 0.8%
Telefonica de Argentina S.A. ADR 55,000 $ 1,536,562
--------------
AUSTRALIA -- 2.3%
Broken Hill Proprietary Co., Ltd. 237,500 1,750,848
National Australia Bank, Ltd. 186,112 2,808,187
--------------
4,559,035
--------------
AUSTRIA -- 2.3%
Bank Austria A.G 28,500 1,450,044
Boehler-Uddeholm A.G 31,900 1,485,556
VA Technologie A.G 18,500 1,604,020
--------------
4,539,620
--------------
BRAZIL -- 1.5%
Aracruz Celulose S.A. ADR 142,000 1,136,000
Telecomunicacoes Brasileiras S.A. ADR* 11,000 799,562
Uniao de Bancos Brasileiros S.A. GDR 68,000 981,750
--------------
2,917,312
--------------
CANADA -- 3.0%
Loewen Group, Inc. 77,500 653,906
Methanex Corp.* 360,000 1,875,073
Moore Corp., Ltd. 168,500 1,853,500
Noranda Forest, Inc. 387,000 1,524,376
--------------
5,906,855
--------------
CHILE -- 0.6%
Cia. de Telecomunicaciones de Chile
S.A. ADR 54,000 1,117,125
--------------
CHINA -- 0.5%
Shandong Huaneng Power Co., Ltd. ADR 221,000 1,008,313
--------------
COLOMBIA -- 0.2%
Bancolombia S.A. ADR 90,000 421,875
--------------
CZECH REPUBLIC -- 1.4%
Czech Power Co.* 66,000 1,483,731
Komercni Banka A.S. GDR* 301,300 1,205,140
--------------
2,688,871
--------------
DENMARK -- 1.8%
Forsikringsselskabet Codan 10,600 1,232,490
Unidanmark A.S.-A 25,300 2,285,779
--------------
3,518,269
--------------
ECUADOR -- 0.9%
Pliva DD GDR 104,000 1,716,582
--------------
FINLAND -- 1.6%
Fortum Corp.* 91,400 559,597
Kemira Oyj 150,900 1,087,801
Merita, Ltd.-A 240,000 1,526,280
--------------
3,173,678
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
FRANCE -- 7.0%
Bail Investissement 15,380 $ 2,241,192
Banque Nationale de Paris 30,094 2,479,276
Elf Aquitaine S.A 17,000 1,965,983
Fimalac S.A 13,225 1,576,769
Rhone-Poulenc S.A 50,000 2,574,288
Scor S.A 43,900 2,903,871
--------------
13,741,379
--------------
GERMANY -- 2.5%
BASF A.G 34,000 1,297,313
Bilfinger & Berger Bau A.G 79,000 1,755,007
Viag A.G 3,200 1,892,502
--------------
4,944,822
--------------
HONG KONG -- 6.0%
Hong Kong Telecommunications, Ltd. 846,000 1,479,704
HSBC Holdings P.L.C 72,800 1,813,652
Hutchison Whampoa, Ltd. 396,000 2,798,625
Jardine Matheson Holdings, Ltd. 915,867 2,362,937
Swire Pacific, Ltd.-A 475,000 2,127,592
Techtronic Industries Co. 6,556,000 1,167,840
--------------
11,750,350
--------------
INDIA -- 0.4%
State Bank of India, Ltd. GDR 85,000 707,200
--------------
INDONESIA -- 0.5%
PT Indosat 710,000 931,064
--------------
ISRAEL -- 0.5%
Koor Industries, Ltd. ADR 56,000 976,500
--------------
ITALY -- 2.0%
Assicurazioni Generali 40,460 1,693,100
Banca Commerciale Italiana 310,000 2,143,257
--------------
3,836,357
--------------
JAPAN -- 7.9%
Aoyama Trading Co., Ltd. 72,000 2,017,082
Daito Trust Construction Co., Ltd. 255,000 2,213,231
Daiwa House Industry Co., Ltd. 81,000 863,882
Daiwa Securities Co., Ltd. 290,000 992,406
Dowa Fire & Marine Insurance Co. 493,000 1,835,693
Kyudenko Co., Ltd. 347,000 2,350,319
Kyushu Electric Power Co., Inc. 90 1,715
Marubeni Corp. 1,025,000 1,762,908
Nippon Fire & Marine Insurance 421,000 1,552,671
Yamanouchi Pharmaceutical Co., Ltd. 60,000 1,936,228
--------------
15,526,135
--------------
KOREA -- 2.1%
Korea Fund, Inc.* 452,000 4,181,000
--------------
See Notes to Financial Statements.
76
<PAGE>
HARRIS INSIGHT FUNDS
INTERNATIONAL FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
MALAYSIA** -- 1.3%
Malakoff BHD 1,075,000 $ 1,762,016
Malayan Banking BHD 264,000 374,374
O.Y.L. Industries BHD 279,000 488,134
--------------
2,624,524
--------------
MEXICO -- 1.6%
Panamerican Beverages, Inc. 40,000 872,500
Telefonos de Mexico S.A. ADR 47,000 2,288,313
--------------
3,160,813
--------------
NETHERLANDS -- 4.4%
Eriks Holdings N.V 18,300 1,170,158
European Vinyls Corp. International N.V 159,000 1,262,396
Koninklijke Ahrend Groep N.V 49,350 1,128,123
Koninklijke KPN N.V 60,000 3,005,323
Unilever N.V 24,224 2,071,729
--------------
8,637,729
--------------
NEW ZEALAND -- 2.9%
Air New Zealand, Ltd. 1,240,000 1,952,026
Carter Holt Harvey, Ltd. 1,957,000 1,757,468
Fletcher Challenge Energy, Ltd. 1,020,000 1,939,771
--------------
5,649,265
--------------
NORWAY -- 2.5%
Bergesen D.Y. A.S.A. - B 87,400 1,009,508
Odfjell A.S.A 98,000 746,053
Saga Petroleum A.S.A 207,000 1,888,299
Union Bank of Norway 65,000 1,262,673
--------------
4,906,533
--------------
PAKISTAN -- 0.3%
Pakistan Telecommunications, Ltd. GDR 15,000 582,906
--------------
PERU -- 0.2%
Banco Wiese ADR 245,000 459,375
--------------
PHILIPPINES -- 1.4%
Philippine Long Distance Telephone Co. 38,000 976,893
Philippine National Bank* 1,154,200 1,780,310
--------------
2,757,203
--------------
POLAND -- 0.3%
Mostostal Export S.A. ADR 555,000 585,081
--------------
PORTUGAL -- 0.7%
Electricidade de Portugal S.A. ADR 30,000 1,336,875
--------------
RUSSIA -- 0.7%
Lukoil Holding ADR 38,000 589,049
Rostelecom ADR* 180,000 753,750
--------------
1,342,799
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
SINGAPORE -- 3.3%
Asia Pulp & Paper Co., Ltd. ADR* 205,000 $ 1,678,438
City Developments, Ltd. 537,000 2,327,056
United Overseas Bank, Ltd. 374,000 2,402,725
--------------
6,408,219
--------------
SLOVAKIA -- 0.6%
Nafta A.S 30,000 260,700
Slovakofarma A.S. GDR* 157,000 500,877
Vychodoslovenske Zeleziarne A.S 89,000 432,627
--------------
1,194,204
--------------
SLOVENIA -- 0.4%
SKB Banka GDR 123,000 882,525
--------------
SOUTH AFRICA -- 1.1%
Anglogold, Ltd. 25,659 999,732
Standard Bank Investment Corp., Ltd. 350,000 1,070,951
--------------
2,070,683
--------------
SPAIN -- 5.9%
Banco Bilbao Vizcaya S.A 129,620 2,035,442
Construcciones y Auxiliar de
Ferrocarriles S.A 47,410 1,455,513
Iberdrola S.A 172,774 3,237,425
Repsol S.A 41,302 2,206,601
Telefonica de Espana 57,271 2,550,474
--------------
11,485,455
--------------
SWEDEN -- 2.7%
ABB AB-B 112,500 1,193,628
Assidoman AB 59,000 931,708
Astra AB-A 92,000 1,878,468
Getinge Industries AB-B 92,000 1,384,732
--------------
5,388,536
--------------
SWITZERLAND -- 2.4%
ABB A.G 720 843,988
Forbo Holdings A.G 4,300 1,878,440
Nestle S.A 895 1,948,372
--------------
4,670,800
--------------
THAILAND -- 2.2%
Thai Farmers Bank Public Co., Ltd.* 1,000,000 1,761,439
Thailand International Fund 230 2,527,700
--------------
4,289,139
--------------
UNITED KINGDOM -- 13.1%
BICC Group P.L.C 1,317,458 1,545,360
British Telecommunications P.L.C 121,367 1,828,491
BTR P.L.C 482,819 996,116
Cable & Wireless P.L.C 179,000 2,200,905
Enterprise Oil P.L.C.* 60,800 295,892
See Notes to Financial Statements.
77
<PAGE>
HARRIS INSIGHT FUNDS
INTERNATIONAL FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
UNITED KINGDOM (CONTINUED)
Fairview Holdings P.L.C.* 319,843 $ 468,300
Glaxo Wellcome P.L.C 77,694 2,673,263
Hillsdown Holdings P.L.C 1 1
HSBC Holdings P.L.C 51,601 1,304,985
National Power P.L.C 226,380 1,951,064
Nycomed Amersham P.L.C 330,500 2,282,040
Rolls-Royce P.L.C 638,726 2,646,170
Royal Bank of Scotland Group P.L.C 129,037 2,061,053
Sainsbury (J.) P.L.C 234,732 1,881,472
Terranova Foods P.L.C.* 367,094 677,959
Tesco P.L.C 515,806 1,469,673
United Utilities P.L.C 103,482 1,434,213
--------------
25,716,957
--------------
TOTAL COMMON STOCK
(Cost $201,573,464) 183,848,525
--------------
PREFERRED STOCK -- 1.3%
GERMANY -- 0.7%
Moebel Walther A.G 40,400 1,370,503
--------------
NETHERLANDS -- 0.6%
Ballast Nedam N.V 39,000 1,267,671
--------------
TOTAL PREFERRED STOCK
(Cost $3,280,372) 2,638,174
--------------
CURRENCY -- 0.0%
Italian Lira
(Cost $3) 4,206 3
--------------
RIGHTS AND WARRANTS -- 0.0%
Telefonica S.A.
(Cost $0) 57,271 50,929
--------------
- --------------------------------------------------------------------------------
COUPON PAR
RATE MATURITY (000) VALUE(DAGGER)
------ -------- ----- -------------
U.S. TREASURY OBLIGATIONS -- 8.5%
U.S. Treasury Bills
3.900% 01/21/99 $11,806 $ 11,780,420
4.300% 01/21/99 4,832 4,820,457
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $16,600,877) 16,600,877
-----------
SHARES
------
TEMPORARY INVESTMENTS -- 0.0%
Temporary Investment Fund, Inc. -
TempCash
(Cost $3,081) 3,081 3,081
-----------
TOTAL INVESTMENTS -- 103.6%
(Cost $221,457,797) 203,141,589
-----------
LIABILITIES IN EXCESS OF OTHER ASSETS-- (3.6%) (7,037,268)
-----------
NET ASSETS -- 100.0%
Applicable to 15,494,042 and 132,102
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 7) $196,104,321
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE ($194,446,890/15,494,042) $12.55
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER CLASS A SHARE
($1,657,431/132,102) $12.55
======
- --------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
**Effective September 1998, the Malaysian government fixed the ringgit exchange
rate at 3.8 per $1 and suspended investors' ability to convert proceeds from
the sale of Malaysian securities into foreign currency proceeds for one year
from initial purchase, or September 1, 1998, whichever is later. Accordingly,
the fund considers Malaysian security holdings to be illiquid and has
established a fair value of 5.43 ringgits per USdollar for the determination
of the dollar value of Malaysian holdings.
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, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK -- 97.5%
ARGENTINA -- 3.6%
Perez Companc S.A.-B 55,000 $ 232,860
Telefonica de Argentina S.A. ADR 7,600 212,325
YPF S.A. ADR 8,500 237,469
--------------
682,654
--------------
BRAZIL -- 5.2%
Aracruz Celulose S.A. ADR 35,000 280,000
Companhia Vale do Rio Doce ADR 9,000 115,461
Petroleo Brasileiro S.A. ADR 19,700 223,382
Telecomunicacoes Brasileiras S.A. ADR* 3,100 225,331
Uniao de Bancos Brasileiros S.A. GDR 10,200 147,262
--------------
991,436
--------------
CHILE -- 2.3%
Administradora de Fondos de Pensiones
Provida S.A. ADR 12,000 159,750
Cia. de Telecomunicaciones de Chile
S.A. ADR 13,463 278,516
--------------
438,266
--------------
CHINA -- 1.8%
Huaneng Power International, Inc. ADR* 15,000 217,500
Shandong Huaneng Power Co., Ltd. ADR 28,000 127,750
--------------
345,250
--------------
CZECH REPUBLIC -- 2.6%
Deza Valasske Mezirici A.S 5,400 96,203
Komercni Banka A.S. GDR* 30,400 121,594
SPT Telecom A.S.* 18,000 275,004
--------------
492,801
--------------
ECUADOR -- 1.6%
Pliva DD GDR 18,000 297,101
--------------
GREECE -- 2.4%
Hellenic Telecommunication
Organization S.A 17,000 452,254
--------------
HONG KONG -- 11.5%
Cafe De Coral Holdings, Ltd. 686,000 214,734
Guangnan Holdings, Ltd. 600,000 137,859
Hong Kong Telecommunications, Ltd. 100,000 174,906
HSBC Holdings P.L.C 10,400 259,093
Hutchison Whampoa, Ltd. 46,000 325,093
Jardine Matheson Holdings, Ltd. 128,801 332,307
Pacific Ports Co., Ltd. 766,000 75,146
Shanghai Petrochemical Co., Ltd. 2,000,000 180,715
Smartone Telecommunications
Holdings, Ltd. 70,000 194,268
Swire Pacific, Ltd.-A 24,000 107,499
Techtronic Industries Co. 1,090,000 194,165
--------------
2,195,785
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
HUNGARY -- 3.9%
BorsodChem Rt. 12,500 $ 325,145
EGIS Rt. 12,800 291,330
Pick Szeged Rt. 3,024 128,523
--------------
744,998
--------------
INDIA -- 7.2%
Bajaj Auto, Ltd. GDR 11,000 171,930
BSES, Ltd. GDR 16,500 164,708
Gujarat Ambuja Cement GDR 42,000 257,069
Mahanagar Telephone Nigam, Ltd. GDR* 25,000 305,000
State Bank of India, Ltd. GDR 18,000 149,760
Tata Engineering & Locomotive GDR 85,000 326,034
--------------
1,374,501
--------------
INDONESIA -- 1.5%
PT Indosat ADR 17,000 207,187
PT Kalbe Farma* 1,535,000 77,235
--------------
284,422
--------------
ISRAEL -- 1.0%
Koor Industries, Ltd. ADR 11,000 191,813
--------------
KOREA -- 8.4%
Kookmin Bank GDR 45,000 364,500
Pohang Iron & Steel Co., Ltd. ADR 23,200 391,500
Samsung Electronics Co., Ltd. GDR 11,876 460,195
SK Telecom Co., Ltd. ADR 37,636 383,419
--------------
1,599,614
--------------
MALAYSIA** -- 4.7%
Malakoff BHD 90,000 147,518
Malayan Banking BHD 116,000 164,498
O.Y.L. Industries BHD 111,200 194,554
Road Builder (M) Holdings BHD 473,000 318,826
Technology Resources Industries BHD 200,000 72,930
--------------
898,326
--------------
MEXICO -- 8.2%
Cemex S.A. de C.V. - CPO 127,860 273,440
Cifra S.A. de C.V. - V ADR* 14,000 169,873
Grupo Casa Autrey S.A. de C.V 288,000 180,551
Grupo Industrial Durango S.A. ADR* 30,600 168,300
Grupo Mexico S.A. - B 103,000 242,666
Telefonos de Mexico S.A. ADR 4,600 223,963
Transportacion Maritima Mexicana S.A
de C.V. ADR* 37,000 168,813
Tubos de Acero de Mexico S.A. ADR* 22,000 141,625
--------------
1,569,231
--------------
PERU -- 1.3%
Banco Wiese ADR 45,000 84,375
Southern Peru Copper Corp., Ltd. 17,100 161,381
--------------
245,756
--------------
See Notes to Financial Statements.
79
<PAGE>
HARRIS INSIGHT FUNDS
EMERGING MARKETS
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
PHILIPPINES -- 4.3%
Digital Telecommunications Philippines,
Inc.* 11,800,000 $ 288,183
Metropolitan Bank & Trust Co. 48,240 347,239
Philippine Long Distance Telephone
Co. ADR 7,000 181,563
--------------
816,985
--------------
POLAND -- 1.9%
Mostostal Export S.A. ADR 150,000 158,130
Telekomunikacja Polska S.A. GDR* 41,000 210,125
--------------
368,255
--------------
RUSSIA -- 3.7%
Gazprom ADR 20,400 172,788
Lukoil Holding ADR 13,400 207,717
Nizhegorodsvyazinform ADR* 20,000 19,138
Rostelecom ADR* 40,000 167,500
Surgutneftegaz ADR 44,700 144,162
--------------
711,305
--------------
SINGAPORE -- 6.7%
Asia Pulp & Paper Co., Ltd. ADR* 40,000 327,500
City Developments, Ltd. 82,000 355,342
Development Bank of Singapore, Ltd. 30,000 270,916
United Overseas Bank, Ltd. 52,000 334,069
--------------
1,287,827
--------------
SLOVAKIA -- 3.6%
Drotovna A.S.* 14,481 58,988
Nafta A.S 3,000 26,070
Slovakofarma A.S. GDR* 74,200 236,720
Slovenske Energeticke Stroja* 18,328 60,224
Slovnaft A.S 9,200 164,893
Vychodoslovenske Zeleziarne A.S 30,000 145,829
--------------
692,724
--------------
SLOVENIA -- 0.6%
SKB Banka GDR 16,600 119,105
--------------
SOUTH AFRICA -- 1.4%
Sasol, Ltd. 40,000 151,293
Standard Bank Investment Corp., Ltd. 40,000 122,394
--------------
273,687
--------------
THAILAND -- 4.8%
Advanced Information Service Public Co.,
Ltd. 36,000 210,052
Bangkok Bank Public Co., Ltd.* 178,000 367,425
Precious Shipping Public Co., Ltd.* 235,000 48,508
Thai Farmers Bank Public Co., Ltd.* 170,000 299,445
--------------
925,430
--------------
- --------------------------------------------------------------------------------
SHARES VALUE(DAGGER)
------ -------------
COMMON STOCK (CONTINUED)
TURKEY -- 0.8%
Yapi Ve Kredi Bankasi A.S. 14,098,800 $ 163,165
--------------
VENEZUELA -- 2.5%
Compania Anonima Nacional Telefonos de
Venezuela ADR 7,900 140,719
Mavesa S.A. ADR 46,700 175,125
Siderurgica Venezolana Sivensa
S.A.C.A. ADR 37,966 171,842
--------------
487,686
--------------
TOTAL COMMON STOCK
(Cost $22,920,178) 18,650,377
--------------
COUPON PAR
RATE MATURITY (000)
------ -------- -----
U.S. TREASURY OBLIGATIONS -- 2.3%
U.S. Treasury Bills
3.900% 01/21/99 $380 379,177
4.500% 01/21/99 60 59,850
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $439,027) 439,027
-----------
SHARES
------
TEMPORARY INVESTMENTS -- 0.0%
Temporary Investment Fund, Inc. -
TempCash
(Cost $4,628) 4,628 4,628
-----------
TOTAL INVESTMENTS -- 99.8%
(Cost $23,363,833) 19,094,032
-----------
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.2% 39,696
-----------
NET ASSETS -- 100.0%
Applicable to 3,249,810 and 10,587
shares of beneficial interest outstanding
of Institutional Class and Class A,
respectively, $.001 par value (Note 7) $19,133,728
===========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE ($19,071,758/3,249,810) $5.87
=====
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER CLASS A SHARE
($61,970/10,587) $5.85
=====
- --------
(DAGGER) See Note 2a to the Financial Statements.
* Non-income producing security.
**Effective September 1998, the Malaysian government fixed the ringgit exchange
rate at 3.8 per $1 and suspended investors' ability to convert proceeds from
the sale of Malaysian securities into foreign currency proceeds for one year
from initial purchase, or September 1, 1998, whichever is later. Accordingly,
the fund considers Malaysian security holdings to be illiquid and has
established a fair value of 5.43 ringgits per USdollar for the determination
of the dollar value of Malaysian holdings.
ADR -- American Depository Receipt.
GDR -- Global Depository Receipt.
See Notes to Financial Statements.
80
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MONEY MARKET FUNDS FIXED INCOME FUNDS EQUITY FUNDS
---------------------------------------- ----------------------------------------------------
SHORT/ INTERMEDIATE INTERMEDIATE
GOVERNMENT MONEY TAX-EXEMPT INTERMEDIATE BOND GOVERNMENT TAX-EXEMPT
MONEY FUND FUND MONEY FUND FUND FUND FUND FUND
----------- ------------ ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ....................... $21,498,921 $106,600,128 $30,273,412 $21,301,571 $11,061,344 $6,631,778 $9,295,873
Dividends ...................... -- -- -- -- -- -- --
Foreign taxes withheld ......... -- -- -- -- -- -- --
----------- ------------ ----------- ----------- ----------- ---------- ----------
Total investment income ...... 21,498,921 106,600,128 30,273,412 21,301,571 11,061,344 6,631,778 9,295,873
----------- ------------ ----------- ----------- ----------- ---------- ----------
EXPENSES (NOTE 2G):
Investment advisory fee
(Note 4) ..................... 432,078 1,926,556 897,439 2,309,905 1,107,053 682,626 1,193,836
Rule 12b-1 fee-Class A
(Note 5) ..................... 269,727 722,607 209,326 -- -- -- --
Shareholder services fee
(Note 5) ..................... 693,619 1,854,774 540,978 13,511 4,708 3,236 2,042
Transfer agency fee
(Note 4) ..................... 53,394 254,316 100,549 37,962 26,995 34,731 21,173
Administration fee
(Note 4) ..................... 332,164 1,627,203 739,379 477,736 245,966 152,049 287,718
Custodian fee (Note 4) ......... 40,681 181,891 92,278 38,018 32,532 19,871 20,217
Directors' fees and
expenses ..................... 8,724 41,990 19,106 7,356 3,792 2,343 2,938
Audit fee ...................... 14,339 88,131 30,433 13,683 7,978 5,137 7,725
Legal fee ...................... 2,928 9,211 4,257 1,625 1,585 513 746
Amortization of organization
expenses (Note 2f) ........... -- -- -- -- 3,996 4,015 3,996
Reports to shareholders ........ 20,042 83,986 30,736 13,286 5,465 3,976 7,922
Registration fees .............. 29,098 176,084 41,846 38,660 37,177 42,337 20,705
Miscellaneous .................. 15,609 64,679 29,694 27,590 19,720 7,885 22,539
----------- ------------ ----------- ----------- ----------- ---------- ----------
Total expenses ............... 1,912,403 7,031,428 2,736,021 2,979,332 1,496,967 958,719 1,591,557
----------- ------------ ----------- ----------- ----------- ---------- ----------
Less fee waivers and expense
reimbursements (Notes 4,5) ... (205,375) (902,237) (67,711) (985,902) (470,364) (430,386) (1,920)
----------- ------------ ----------- ----------- ----------- ---------- ----------
Net expenses ................. 1,707,028 6,129,191 2,668,310 1,993,430 1,026,603 528,333 1,589,637
----------- ------------ ----------- ----------- ----------- ---------- ----------
NET INVESTMENT INCOME/
(LOSS) ..................... 19,791,893 100,470,937 27,605,102 19,308,141 10,034,741 6,103,445 7,706,236
----------- ------------ ----------- ----------- ----------- ---------- ----------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS
(NOTE 6):
Net realized gain/(loss) from:
Investment transactions ...... 2,820 12,255 24,082 2,699,499 1,774,012 664,488 2,440,207
Futures contracts ............ -- -- -- 208,911 (345,847) 262,701 --
Foreign currency transactions -- -- -- -- -- -- --
Net change in unrealized
appreciation/ (depreciation)
on:
Investments .................. -- -- -- 33,843 257,183 792,943 (737,737)
Futures contracts ............ -- -- -- (9,734) (135,508) (87,930) --
Foreign currency transactions -- -- -- -- -- -- --
----------- ------------ ----------- ----------- ----------- ---------- ----------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS ..... 2,820 12,255 24,082 2,932,519 1,549,840 1,632,202 1,702,470
----------- ------------ ----------- ----------- ----------- ---------- ----------
INCREASE/(DECREASE) IN NET
ASSETS FROM OPERATIONS ......... $19,794,713 $100,483,192 $27,629,184 $22,240,660 $11,584,581 $7,735,647 $9,408,706
=========== ============ =========== =========== =========== ========== ==========
</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 FUND FUND FUND FUND FUND
---------- ----------- ------------ ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ....................... $8,835,146 $ 873,380 $ 748,196 $ 170,837 $ 173,873 $ 739,030 $ 425,680
Dividends ...................... -- 1,715,880 12,802,542 958,856 1,347,847 1,894,274 1,294,617
Foreign taxes withheld ......... -- -- -- -- -- -- --
---------- ----------- ------------ ----------- ----------- ---------- -----------
Total investment income ...... 8,835,146 2,589,260 13,550,738 1,129,693 1,521,720 2,633,304 1,720,297
---------- ----------- ------------ ----------- ----------- ---------- -----------
EXPENSES (NOTE 2G):
Investment advisory fee
(Note 4) ..................... 1,058,237 364,871 6,213,809 360,398 1,191,917 2,858,643 887,045
Rule 12b-1 fee-Class A
(Note 5) ..................... -- -- -- -- -- -- --
Shareholder services fee
(Note 5) ..................... 2,017 723 61,176 5,813 12,155 9,453 1,353
Transfer agency fee
(Note 4) ..................... 19,014 12,090 112,593 8,104 17,857 35,667 17,499
Administration fee
(Note 4) ..................... 255,614 75,640 1,288,430 74,396 191,807 414,180 160,268
Custodian fee (Note 4) ......... 18,477 13,981 86,816 10,978 18,436 39,778 27,335
Directors' fees and
expenses ..................... 3,139 765 20,106 1,145 2,947 6,377 2,463
Audit fee ...................... 7,270 2,732 37,475 2,146 6,190 10,203 6,643
Legal fee ...................... 1,687 617 4,410 387 1,009 2,265 437
Amortization of organization
expenses (Note 2f) ........... 3,996 4,015 -- 3,996 3,996 3,996 4,015
Reports to shareholders ........ 5,167 1,452 33,013 1,469 3,755 11,675 4,056
Registration fees .............. 19,825 41,850 30,069 26,525 26,612 48,565 43,188
Miscellaneous .................. 15,916 10,404 37,062 6,231 7,517 23,885 13,553
---------- ----------- ------------ ----------- ----------- ---------- -----------
Total expenses ............... 1,410,359 529,140 7,924,959 501,588 1,484,198 3,464,687 1,167,855
---------- ----------- ------------ ----------- ----------- ---------- -----------
Less fee waivers and expense
reimbursements (Notes 4,5) ... (7,788) (48,872) -- (16,960) (15,256) (24,863) (69,402)
---------- ----------- ------------ ----------- ----------- ---------- -----------
Net expenses ................. 1,402,571 480,268 7,924,959 484,628 1,468,942 3,439,824 1,098,453
---------- ----------- ------------ ----------- ----------- ---------- -----------
NET INVESTMENT INCOME/
(LOSS) ..................... 7,432,575 2,108,992 5,625,779 645,065 52,778 (806,520) 621,844
---------- ----------- ------------ ----------- ----------- ---------- -----------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS
(NOTE 6): Net realized
gain/(loss) from:
Investment transactions ...... 2,660,619 3,966,042 120,355,079 1,997,487 10,398,983 (2,724,319) 1,262,177
Futures contracts ............ -- -- -- -- -- -- --
Foreign currency transactions -- -- -- -- -- -- --
Net change in unrealized
appreciation/ (depreciation)
on:
Investments .................. (1,763,510) (7,187,746 (13,198,885) 8,267,199 19,871,546 4,631,841 (4,486,231)
Futures contracts ............ -- -- -- -- -- -- --
Foreign currency transactions -- -- -- -- -- -- --
---------- ----------- ------------ ----------- ----------- ---------- -----------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS ..... 897,109 (3,221,704) 107,156,194 10,264,686 30,270,529 1,907,522 (3,224,054)
---------- ----------- ------------ ----------- ----------- ---------- -----------
INCREASE/(DECREASE) IN NET
ASSETS FROM OPERATIONS ......... $8,329,684 $(1,112,712) $112,781,973 $10,909,751 $30,323,307 $1,101,002 $(2,602,210)
========== =========== ============ =========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------
EMERGING
INDEX BALANCED INTERNATIONAL MARKETS
FUND FUND FUND FUND
----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ....................... $ 576,428 $2,113,595 $ 532,493 $ 79,450
Dividends ...................... 4,711,312 457,413 5,322,038 476,312
Foreign taxes withheld ......... -- -- (385,985) (19,137)
----------- ---------- ----------- -----------
Total investment income ...... 5,287,740 2,571,008 5,468,546 536,625
----------- ---------- ----------- -----------
EXPENSES (NOTE 2G):
Investment advisory fee
(Note 4) ..................... 818,579 382,132 1,932,241 238,897
Rule 12b-1 fee-Class A
(Note 5) ..................... -- -- -- --
Shareholder services fee
(Note 5) ..................... 23,829 4,337 4,928 230
Transfer agency fee
(Note 4) ..................... 50,944 46,438 24,704 2,444
Administration fee
(Note 4) ..................... 474,653 92,442 280,560 28,633
Custodian fee (Note 4) ......... 62,270 37,432 137,258 75,284
Directors' fees and
expenses ..................... 6,292 1,024 4,102 427
Audit fee ...................... 14,760 3,199 8,571 1,216
Legal fee ...................... 1,025 113 1,442 154
Amortization of organization
expenses (Note 2f) ........... 3,996 4,015 3,996 --
Reports to shareholders ........ 10,250 2,971 7,759 2,431
Registration fees .............. 26,807 40,665 31,400 35,874
Miscellaneous .................. 27,631 15,804 24,049 11,817
----------- ---------- ----------- -----------
Total expenses ............... 1,521,036 630,572 2,461,010 397,407
----------- ---------- ----------- -----------
Less fee waivers and expense
reimbursements (Notes 4,5) ... (23,765) (65,775) -- (62,722)
----------- ---------- ----------- -----------
Net expenses ................. 1,497,271 564,797 2,461,010 334,685
----------- ---------- ----------- -----------
NET INVESTMENT INCOME/
(LOSS) ..................... 3,790,469 2,006,211 3,007,536 201,940
----------- ---------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS
(NOTE 6): Net realized
gain/(loss) from:
Investment transactions ...... 15,001,036 3,883,305 (7,737,339) (5,354,437)
Futures contracts ............ 2,575,687 (94,563) -- --
Foreign currency transactions -- -- (412,790) (66,549)
Net change in unrealized
appreciation/ (depreciation)
on:
Investments .................. 61,044,237 (661,205) (4,369,838) (1,897,850)
Futures contracts ............ 470,175 (1,039) -- --
Foreign currency transactions -- -- 157,149 (3,572)
----------- ---------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS ..... 79,091,135 3,126,498 (12,362,818) (7,322,408)
----------- ---------- ----------- -----------
INCREASE/(DECREASE) IN NET
ASSETS FROM OPERATIONS ......... $82,881,604 $5,132,709 $(9,355,282) $(7,120,468)
=========== ========== =========== ===========
</TABLE>
See Notes to Financial Statements.
83
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MONEY MARKET FUNDS FIXED INCOME FUNDS
----------------------------------------- -------------------------------------------------------
SHORT/ INTERMEDIATE INTERMEDIATE
GOVERNMENT MONEY TAX-EXEMPT INTERMEDIATE BOND GOVERNMENT TAX-EXEMPT
MONEY FUND FUND MONEY FUND FUND FUND FUND FUND
------------ -------------- ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income/
(loss) .......................$ 19,791,893 $ 100,470,937 $ 27,605,102 $ 19,308,141 $ 10,034,741 $ 6,103,445 $ 7,706,236
Net realized gain/(loss) on
investment transactions,
futures contracts and
foreign currency
transactions ................. 2,820 12,255 24,082 2,908,410 1,428,165 927,189 2,440,207
Net change in unrealized
appreciation/(depreciation)
of investment transactions,
futures contracts, and
foreign currency
transactions ................. -- -- -- 24,109 121,675 705,013 (737,737)
------------ -------------- ------------ ------------ ------------ ------------ ------------
Increase/(decrease) in net
assets from operations ....... 19,794,713 100,483,192 27,629,184 22,240,660 11,584,581 7,735,647 9,408,706
------------ -------------- ------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTES 2C AND 2D):
Net investment income:
Institutional Class .......... (6,041,082) (62,505,055) (21,145,766) (19,005,088) (9,928,728) (6,033,054) (7,676,693)
Class A ...................... (13,750,811) (37,965,882) (6,459,336) (304,649) (106,013) (71,099) (29,543)
------------ -------------- ------------ ------------ ------------ ------------ ------------
Total distributions from net
investment income ............ (19,791,893) (100,470,937) (27,605,102) (19,309,737) (10,034,741) (6,104,153) (7,706,236)
------------ -------------- ------------ ------------ ------------ ------------ ------------
Net realized gains on
investments:
Institutional Class .......... -- -- -- (187,644) (1,788,220) (988,975) (2,830,031)
Class A ...................... -- -- -- (2,526) (24,732) (19,423) (11,893)
------------ -------------- ------------ ------------ ------------ ------------ ------------
Total distributions from net
realized gains ............... -- -- -- (190,170) (1,812,952) (1,008,398) (2,841,924)
------------ -------------- ------------ ------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Increase/(decrease) in net
assets from capital share
transactions in:
Institutional Class .......... 98,313,647 363,757,602 108,749,809 45,429,042 43,637,130 3,180,402 34,213,507
Class A ...................... 999,760 199,717,848 (18,963,018) (1,305,356) 1,640,511 1,409,794 259,648
------------ -------------- ------------ ------------ ------------ ------------ ------------
Increase/(decrease) in net
assets from capital share
transactions ................. 99,313,407 563,475,450 89,786,791 44,123,686 45,277,641 4,590,196 34,473,155
------------ -------------- ------------ ------------ ------------ ------------ ------------
Total increase/(decrease) in
net assets ................... 99,316,227 563,487,705 89,810,873 46,864,439 45,014,529 5,213,292 33,333,701
NET ASSETS:
Beginning of period ............ 311,563,860 1,705,895,263 721,057,003 294,808,262 141,382,908 100,075,024 193,653,413
------------ -------------- ------------ ------------ ------------ ------------ ------------
End of period ..................$410,880,087 $2,269,382,968 $810,867,876 $341,672,701 $186,397,437 $105,288,316 $226,987,114
============ ============== ============ ============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
EQUITY FUNDS
------------------------- ---------------------------------------------------------------------
CONVERTIBLE EQUITY SMALL-CAP SMALL-CAP
TAX-EXEMPT SECURITIES EQUITY INCOME GROWTH OPPORTUNITY VALUE
FUND FUND FUND FUND FUND FUND FUND
------------ ----------- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income/
(loss) .......................$ 7,432,575 $ 2,108,992 $ 5,625,779 $ 645,065 $ 52,778 $ (806,520) $ 621,844
Net realized gain/(loss) on
investment transactions,
futures contracts and
foreign currency
transactions ................. 2,660,619 3,966,042 120,355,079 1,997,487 10,398,983 (2,724,319) 1,262,177
Net change in unrealized
appreciation/(depreciation)
of investment transactions,
futures contracts, and
foreign currency
transactions ................. (1,763,510) (7,187,746) (13,198,885) 8,267,199 19,871,546 4,631,841 (4,486,231)
------------ ----------- ------------ ----------- ------------ ------------ ------------
Increase/(decrease) in net
assets from operations ....... 8,329,684 (1,112,712 112,781,973 10,909,751 30,323,307 1,101,002 (2,602,210)
------------ ----------- ------------ ----------- ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTES 2C AND 2D):
Net investment income:
Institutional Class .......... (7,400,695) (2,120,236) (5,466,932) (609,709) (46,318) -- (641,087)
Class A ...................... (31,880) (12,532) (88,622) (24,897) -- -- (1,439)
------------ ----------- ------------ ----------- ------------ ------------ ------------
Total distributions from net
investment income ............ (7,432,575) (2,132,768) (5,555,554) (634,606) (46,318) -- (642,526)
------------ ----------- ------------ ----------- ------------ ------------ ------------
Net realized gains on
investments:
Institutional Class .......... (3,079,610) (5,044,777) (130,433,776) (1,589,832) (10,660,807) (1,166,482) (3,192,531)
Class A ...................... (16,541) (39,249) (4,124,381) (93,017) (532,486) (17,416) (16,897)
------------ ----------- ------------ ----------- ------------ ------------ ------------
Total distributions from net
realized gains ............... (3,096,151) (5,084,026 (134,558,157) (1,682,849) (11,193,293) (1,183,898) (3,209,428)
------------ ----------- ------------ ----------- ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Increase/(decrease) in net
assets from capital share
transactions in:
Institutional Class .......... (8,622,818) (1,721,894) 22,196,934 13,554,788 17,124,303 22,929,255 50,070,733
Class A ...................... 275,998 387,694 11,615,123 2,119,058 4,305,325 2,066,357 440,834
------------ ----------- ------------ ----------- ------------ ------------ ------------
Increase/(decrease) in net
assets from capital share
transactions ................. (8,346,820) (1,334,200) 33,812,057 15,673,846 21,429,628 24,995,612 50,511,567
------------ ----------- ------------ ----------- ------------ ------------ ------------
Total increase/(decrease) in
net assets ................... (10,545,862) (9,663,706) 6,480,319 24,266,142 40,513,324 24,912,716 44,057,403
NET ASSETS:
Beginning of period ............ 180,515,350 59,468,964 863,688,494 41,665,372 111,906,477 276,838,393 100,108,306
------------ ----------- ------------ ----------- ------------ ------------ ------------
End of period ..................$169,969,488 $49,805,258 $870,168,813 $65,931,514 $152,419,801 $301,751,109 $144,165,709
============ =========== ============ =========== ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
EQUITY FUNDS
-------------------------------------------------------
EMERGING
INDEX BALANCED INTERNATIONAL MARKETS
FUND FUND FUND FUND
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income/
(loss) ....................... $ 3,790,469 $ 2,006,211 $ 3,007,536 $ 201,940
Net realized gain/(loss) on
investment transactions,
futures contracts and
foreign currency
transactions ................. 17,576,723 3,788,742 (8,150,129) (5,420,986)
Net change in unrealized
appreciation/(depreciation)
of investment transactions,
futures contracts, and
foreign currency
transactions ................. 61,514,412 (662,244) (4,212,689) (1,901,422)
------------ ----------- ------------ -----------
Increase/(decrease) in net
assets from operations ....... 82,881,604 5,132,709 (9,355,282) (7,120,468)
------------ ----------- ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTES 2C AND 2D):
Net investment income:
Institutional Class .......... (3,691,322) (1,966,524) (2,471,063) (49,109)
Class A ...................... (89,257) (56,479) (33,387) --
------------ ----------- ------------ -----------
Total distributions from net
investment income ............ (3,780,579) (2,023,003) (2,504,450) (49,109)
------------ ----------- ------------ -----------
Net realized gains on
investments:
Institutional Class .......... (17,251,334) (4,564,004) -- --
Class A ...................... (625,478) (174,321) -- --
------------ ----------- ------------ -----------
Total distributions from net
realized gains ............... (17,876,812) (4,738,325) -- --
------------ ----------- ------------ -----------
CAPITAL SHARE TRANSACTIONS:
Increase/(decrease) in net
assets from capital share
transactions in:
Institutional Class .......... 10,993,666 (11,873,103) 34,176,338 8,164,295
Class A ...................... 4,939,039 1,741,964 364,280 19,533
------------ ----------- ------------ -----------
Increase/(decrease) in net
assets from capital share
transactions ................. 15,932,705 (10,131,139) 34,540,618 8,183,828
------------ ----------- ------------ -----------
Total increase/(decrease) in
net assets ................... 77,156,918 (11,759,758) 22,680,886 1,014,251
NET ASSETS:
Beginning of period ............ 299,137,744 70,114,929 173,423,435 18,119,477
------------ ----------- ------------ -----------
End of period ..................$376,294,662 $58,355,171 $196,104,321 $19,133,728
============ =========== ============ ===========
</TABLE>
84&85
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MONEY MARKET FUNDS FIXED INCOME FUNDS
----------------------------------------- ------------------------------------------------------
SHORT/ INTERMEDIATE INTERMEDIATE
GOVERNMENT MONEY TAX-EXEMPT INTERMEDIATE BOND GOVERNMENT TAX-EXEMPT
MONEY FUND FUND MONEY FUND FUND FUND FUND(1) FUND
------------ -------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income/
(loss) ....................$ 15,488,590 $ 67,365,235 $ 21,204,196 $ 17,377,741 $ 5,935,260 $ 4,364,874 $ 8,296,197
Net realized gain/(loss) on
investment transactions,
futures contracts and
foreign currency
transactions .............. -- (1,461,593) (892) 847,581 2,448,379 229,250 1,426,902
Net change in unrealized
appreciation/(depreciation)
of investment transactions,
futures contracts, and
foreign currency
transactions .............. -- -- -- 1,232,588 1,728,272 2,088,457 2,461,211
------------ -------------- ------------ ------------ ------------ ------------ ------------
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
------------ -------------- ------------ ------------ ------------ ------------ ------------
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) (8,289,452)
Class A ................... (12,653,732) (28,548,251) (6,070,770) (300,919) (27,351) (3,097) (6,745)
------------ -------------- ------------ ------------ ------------ ------------ ------------
Total distributions from net
investment income ......... (15,488,590) (67,365,235) (21,206,725) (17,385,095) (5,934,904) (4,364,166) (8,296,197)
------------ -------------- ------------ ------------ ------------ ------------ ------------
Net realized gains on
investments:
Institutional Class ....... -- -- -- -- (2,001,274) (244,277) (894,786)
Class A ................... -- -- -- -- (12,735) (1,277) (2,642)
------------ -------------- ------------ ------------ ------------ ------------ ------------
Total distributions from net
realized gains ............ -- -- -- -- (2,014,009) (245,554) (897,428)
------------ -------------- ------------ ------------ ------------ ------------ ------------
CONTRIBUTION BY AFFILIATE
(NOTE 9): ................. -- 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 (18,665,386)
Class A ................... 41,520,825 216,587,667 44,224,011 1,451,666 798,651 715,055 637,652
------------ -------------- ------------ ------------ ------------ ------------ ------------
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 (18,027,734)
------------ -------------- ------------ ------------ ------------ ------------ ------------
Total increase/(decrease)
in net assets ............. 68,321,524 875,264,941 153,803,906 34,802,904 98,110,386 100,074,984 (15,037,049)
NET ASSETS:
Beginning of period ......... 243,242,336 830,630,322 567,253,097 260,005,358 43,272,522 40 208,690,462
------------ -------------- ------------ ------------ ------------ ------------ ------------
End of period ...............$311,563,860 $1,705,895,263 $721,057,003 $294,808,262 $141,382,908 $100,075,024 $193,653,413
============ ============== ============ ============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
EQUITY FUNDS
------------------------- -------------------------------------------------------------------
CONVERTIBLE EQUITY SMALL-CAP SMALL-CAP
TAX-EXEMPT SECURITIES EQUITY INCOME GROWTH OPPORTUNITY VALUE
FUND FUND(1) FUND FUND FUND FUND FUND(1)
------------ ----------- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income/
(loss) ....................$ 7,704,555 $ 1,749,776 $ 10,401,374 $ 640,339 $ 210,691 $ 67,095 $ 354,172
Net realized gain/(loss) on
investment transactions,
futures contracts and
foreign currency
transactions .............. 2,278,252 8,241,307 153,356,372 3,740,201 10,233,556 23,006,974 10,717,007
Net change in unrealized
appreciation/(depreciation)
of investment transactions,
futures contracts, and
foreign currency
transactions .............. 4,314,650 (2,120,819) 83,061,401 5,725,836 16,055,605 27,081,426 4,285,180
------------ ----------- ------------ ----------- ------------ ------------ ------------
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
------------ ----------- ------------ ----------- ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTES 2C AND 2D):
Net investment income:
Institutional Class ....... (7,695,657) (1,714,407) (10,313,495) (622,097) (210,244) (148,763) (331,341)
Class A ................... (8,898) (1,300) (109,659) (8,911) (129) -- (247)
------------ ----------- ------------ ----------- ------------ ------------ ------------
Total distributions from net
investment income ......... (7,704,555) (1,715,707) (10,423,154) (631,008) (210,373) (148,763) (331,588)
------------ ----------- ------------ ----------- ------------ ------------ ------------
Net realized gains on
investments:
Institutional Class ....... (2,054,220) (7,153,493) (142,024,885) (3,492,651) (9,352,220) (24,392,179) (7,507,524)
Class A ................... (5,729) (14,695) (2,485,343) (97,939) (171,130) (174,710) (18,620)
------------ ----------- ------------ ----------- ------------ ------------ ------------
Total distributions from net
realized gains ............ (2,059,949) (7,168,188) (144,510,228) (3,590,590) (9,523,350) (24,566,889) (7,526,144)
------------ ----------- ------------ ----------- ------------ ------------ ------------
CONTRIBUTION BY AFFILIATE
(NOTE 9): ................. -- -- -- -- -- -- --
------------ ----------- ------------ ----------- ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Increase/(decrease) in net
assets from capital share
transactions in:
Institutional Class ....... 9,959,353 60,381,036 186,191,498 2,798,145 15,943,321 98,594,689 92,299,943
Class A ................... 596,991 101,519 9,419,199 924,318 2,284,070 2,055,352 309,696
------------ ----------- ------------ ----------- ------------ ------------ ------------
Increase/(decrease) in net
assets from capital share
transactions .............. 10,556,344 60,482,555 195,610,697 3,722,463 18,227,391 100,650,041 92,609,639
------------ ----------- ------------ ----------- ------------ ------------ ------------
Total increase/(decrease)
in net assets ............. 15,089,297 59,468,924 287,496,462 9,607,241 34,993,520 126,089,884 100,108,266
NET ASSETS:
Beginning of period ......... 165,426,053 40 576,192,032 32,058,131 76,912,957 150,748,509 40
------------ ----------- ------------ ----------- ------------ ------------ ------------
End of period ...............$180,515,350 $59,468,964 $863,688,494 $41,665,372 $111,906,477 $276,838,393 $100,108,306
============ =========== ============ =========== ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------
EMERGING
INDEX BALANCED INTERNATIONAL MARKETS
FUND FUND(1) FUND FUND(2)
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income/
(loss) ....................$ 3,228,722 $ 1,708,627 $ 1,467,341 $ 12,948
Net realized gain/(loss) on
investment transactions,
futures contracts and
foreign currency
transactions .............. 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 .............. 49,045,843 8,588,734 (24,029,900) (2,368,209)
------------ ----------- ------------ -----------
Increase/(decrease) in net
assets from operations .... 61,729,432 11,486,270 (8,692,271) (2,429,078)
------------ ----------- ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTES 2C AND 2D):
Net investment income:
Institutional Class ....... (3,248,383) (1,683,590) (1,508,126) --
Class A ................... (27,169) (4,659) (4,475) --
------------ ----------- ------------ -----------
Total distributions from net
investment income ......... (3,275,552) (1,688,249) (1,512,601) --
------------ ----------- ------------ -----------
Net realized gains on
investments:
Institutional Class ....... (8,653,473) -- (16,062,527) --
Class A ................... (148,087) -- (119,925) --
------------ ----------- ------------ -----------
Total distributions from net
realized gains ............ (8,801,560) -- (16,182,452) --
------------ ----------- ------------ -----------
CONTRIBUTION BY AFFILIATE
(NOTE 9): ................. -- -- -- --
------------ ----------- ------------ -----------
CAPITAL SHARE TRANSACTIONS:
Increase/(decrease) in net
assets from capital share
transactions in:
Institutional Class ....... 98,704,147 59,623,885 88,567,033 20,438,890
Class A ................... 6,677,177 692,983 899,170 109,665
------------ ----------- ------------ -----------
Increase/(decrease) in net
assets from capital share
transactions .............. 105,381,324 60,316,868 89,466,203 20,548,555
------------ ----------- ------------ -----------
Total increase/(decrease)
in net assets ............. 155,033,644 70,114,889 63,078,879 18,119,477
NET ASSETS:
Beginning of period ......... 144,104,100 40 110,344,556 --
------------ ----------- ------------ -----------
End of period ...............$299,137,744 $70,114,929 $173,423,435 $18,119,477
============ =========== ============ ===========
<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.
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 $1.00 per share, the number of shares represented by
such sales and redemptions is the same as the amounts shown below for such
transactions.
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
----------------------------------------------------------------------------------------------------
GOVERNMENT MONEY FUND MONEY FUND TAX-EXEMPT MONEY FUND
------------------------------- -------------------------------- --------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97
--------------- --------------- --------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL CLASS:
Sold ........................$ 474,602,020 $ 310,077,266 $ 6,077,554,330 $ 2,935,583,373 $ 1,224,139,829 $ 814,990,746
Issued as reinvestment of
dividends ................. 681,351 290,884 4,855,945 4,320,343 38,515 22,292
Redeemed .................... (376,969,724) (283,567,451) (5,718,652,673) (2,281,234,849) (1,115,428,535) (705,429,722)
--------------- --------------- --------------- --------------- ---------------- -------------
Net increase/(decrease) .....$ 98,313,647 $ 26,800,699 $ 363,757,602 $ 658,668,867 $ 108,749,809 $ 109,583,316
=============== =============== =============== =============== ================ =============
CLASS A:
Sold ........................$ 1,792,833,704 $ 1,342,810,468 $ 3,255,287,012 $ 2,398,112,387 $ 421,214,364 $ 566,351,447
Issued as reinvestment of
dividends ................. 9,532,140 7,187,840 28,923,116 18,841,382 4,957,489 3,936,135
Redeemed .................... (1,801,366,084) (1,308,477,483) (3,084,492,280) (2,200,366,102) (445,134,871) (526,063,571)
--------------- --------------- --------------- --------------- ---------------- -------------
Net increase/(decrease) .....$ 999,760 $ 41,520,825 $ 199,717,848 $ 216,587,667 $ (18,963,018) $ 44,224,011
=============== =============== =============== =============== ================ =============
</TABLE>
See Notes to Financial Statements.
88
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENTS OF CHANGES -- CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
-------------------------------------------------------------------------------
SHORT/ INTERMEDIATE
INTERMEDIATE BOND GOVERNMENT
FUND FUND FUND
-------------------------- ------------------------ --------------------------
YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97(1)
------------ ------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
- ------
INSTITUTIONAL CLASS:
Sold ...................$ 98,262,177 $ 52,771,039 $62,185,154 $99,249,501 $ 29,218,220 $123,309,885
Issued as reinvestment
of dividends ......... 2,067,037 1,661,326 5,589,291 3,781,384 6,595,979 4,539,814
Redeemed ............... (54,900,172) (23,153,942) (24,137,315) (7,882,148) (32,633,797) (30,562,631)
------------ ------------ ----------- ----------- ------------ ------------
Net increase/(decrease) $ 45,429,042 $ 31,278,423 $43,637,130 $95,148,737 $ 3,180,402 $ 97,287,068
============ ============ =========== =========== ============ ============
CLASS A:
Sold ...................$ 3,387,231 $ 2,236,939 $ 2,490,267 $ 929,922 $ 1,369,151 $ 710,868
Issued as reinvestment
of dividends ......... 232,605 260,154 75,997 18,847 87,003 4,387
Redeemed ............... (4,925,192) (1,045,427) (925,753) (150,118) (46,360) (200)
------------ ------------ ----------- ----------- ------------ ------------
Net increase/(decrease) $ (1,305,356)$ 1,451,666 $ 1,640,511 $ 798,651 $ 1,409,794 $ 715,055
============ ============ =========== =========== ============ ============
- -------------------------------------------------------------------------------------------------------
SHARES
- ------
INSTITUTIONAL CLASS:
Sold ................... 9,550,792 5,209,406 6,064,826 9,893,541 1,760,474 7,607,489
Issued as reinvestment
of dividends ......... 200,903 163,759 545,444 371,313 396,620 277,370
Redeemed ............... (5,330,155) (2,281,540) (2,351,634) (775,447) (1,954,680) (1,876,066)
------------ ------------ ----------- ----------- ------------ ------------
Net increase/(decrease) 4,421,540 3,091,625 4,258,636 9,489,407 202,414 6,008,793
============ ============ =========== =========== ============ ============
CLASS A:
Sold ................... 329,377 219,857 242,849 91,724 82,328 43,019
Issued as reinvestment
of dividends ......... 22,636 25,622 7,413 1,851 5,220 266
Redeemed ............... (479,744) (102,616) (90,329) (14,738) (2,786) (12)
------------ ------------ ----------- ----------- ------------ ------------
Net increase/(decrease) (127,731) 142,863 159,933 78,837 84,762 43,273
============ ============ =========== =========== ============ ============
</TABLE>
See Notes to Financial Statements.
<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 YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97(1)
----------- ------------ ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
- ------
INSTITUTIONAL CLASS:
Sold ................... $70,456,250 $ 41,062,483 $ 18,982,201 $ 36,002,208 $ 5,672,247 $62,943,202
Issued as reinvestment
of dividends ......... 544,842 211,439 543,487 357,835 7,118,875 8,825,043
Redeemed ............... (36,787,585) (59,939,308) (28,148,506) (26,400,690) (14,513,016) (11,387,209)
----------- ------------ ------------- ------------ ------------ ------------
Net increase/(decrease) $34,213,507 $(18,665,386) $ (8,622,818) $ 9,959,353 $(1,721,894) $60,381,036
=========== ============ ============= ============ ============ ============
CLASS A:
Sold ................... $ 1,323,118 $ 649,957 $ 1,163,477 $ 685,982 $ 414,463 $ 166,195
Issued as reinvestment
of dividends ......... 26,278 5,164 22,861 7,264 44,309 7,403
Redeemed ............... (1,089,748) (17,469) (910,340) (96,255) (71,078) (72,079)
----------- ------------ ------------- ------------ ------------ ------------
Net increase/(decrease) $ 259,648 $ 637,652 $ 275,998 $ 596,991 $ 387,694 $ 101,519
=========== ============ ============= ============ ============ ============
- --------------------------------------------------------------------------------------------------------------
SHARES
- ------
INSTITUTIONAL CLASS:
Sold ................... 6,548,230 3,868,924 1,802,796 3,491,829 203,052 2,149,501
Issued as reinvestment
of dividends ......... 50,759 19,743 51,949 34,122 283,550 311,634
Redeemed ............... (3,425,001) (5,656,367) (2,675,429) (2,567,773) (522,748) (379,031)
----------- ------------ ------------- ------------ ------------ ------------
Net increase/(decrease) 3,173,988 (1,767,700) (820,684) 958,178 (36,146) 2,082,104
=========== ============ ============= ============ ============ ============
CLASS A:
Sold ................... 123,047 61,099 110,353 65,967 14,664 5,326
Issued as reinvestment
of dividends ......... 2,446 483 2,177 693 1,808 264
Redeemed ............... (101,319) (1,652) (86,174) (9,210) (2,530) (2,596)
----------- ------------ ------------- ------------ ------------ ------------
Net increase/(decrease) 24,174 59,930 26,356 57,450 13,942 2,994
=========== ============ ============= ============ ============ ============
<FN>
- -------------
(1) For the period 03/24/97 (commencement of operations) to 12/31/97.
</FN>
</TABLE>
See Notes to Financial Statements.
90&91
<PAGE>
HARRIS INSIGHT FUNDS
STATEMENTS OF CHANGES -- CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
EQUITY FUNDS
----------------------------------------------------------------------------------------------
EQUITY SMALL-CAP
EQUITY INCOME GROWTH OPPORTUNITY
FUND FUND FUND FUND
-------------------------- ------------------------ ------------------------- ------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/98 12/31/97 12/31/98 12/31/97 12/31/98 12/31/97 12/31/98
------------- ------------- ----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
AMOUNT
- ------
INSTITUTIONAL CLASS:
Sold ..................... $ 107,058,873 $ 228,484,735 $16,273,336 $ 5,765,224 $ 24,726,605 $18,615,536 $ 70,401,482
Issued as reinvestment of
dividends ................ 59,860,296 65,414,766 456,240 756,229 4,407,089 3,513,466 644,720
Redeemed ................. (144,722,235) (107,708,003) (3,174,788) (3,723,308) (12,009,391) (6,185,681) (48,116,947
------------- ------------- ----------- ----------- ------------ ----------- ------------
Net increase/(decrease) .. $ 22,196,934 $ 186,191,498 $13,554,788 $ 2,798,145 $ 17,124,303 $15,943,321 $ 22,929,255
============= ============= =========== =========== ============ =========== ============
CLASS A:
Sold ..................... $ 47,707,142 $ 8,786,890 $ 2,658,901 $ 942,518 $ 20,830,182 $ 2,186,449 $ 46,956,439
Issued as reinvestment of
dividends ................ 3,481,957 2,388,743 106,802 95,931 428,210 135,276 11,681
Redeemed ................. (39,573,976) (1,756,434) (646,645) (114,131) (16,953,067) (37,655) (44,901,763)
------------- ------------- ----------- ----------- ------------ ----------- ------------
Net increase/(decrease) .. $ 11,615,123 $ 9,419,199 $ 2,119,058 $ 924,318 $ 4,305,325 $ 2,284,070 $ 2,066,357
============= ============= =========== =========== ============ =========== ============
- --------------------------------------------------------------------------------------------------------------------------
SHARES
- ------
INSTITUTIONAL CLASS:
Sold ..................... 6,026,791 13,779,278 904,751 350,240 1,017,596 845,767 4,046,918
Issued as reinvestment of
dividends ................ 3,488,559 3,736,368 24,434 46,977 171,897 156,313 33,302
Redeemed ................. (8,209,390) (6,023,216) (177,434) (233,613) (489,520) (281,676) (2,956,250)
------------- ------------- ----------- ----------- ------------ ----------- ------------
Net increase/(decrease) .. 1,305,960 11,492,430 751,751 163,604 699,973 720,404 1,123,970
============= ============= =========== =========== ============ =========== ============
CLASS A:
Sold ..................... 2,692,062 475,368 148,486 55,334 837,319 96,614 2,880,683
Issued as reinvestment of
dividends ................ 203,732 136,928 5,753 5,980 16,757 6,046 606
Redeemed ................. (2,204,864) (98,527) (36,833) (6,897) (683,516) (1,870) (2,738,838)
------------- ------------- ----------- ----------- ------------ ----------- ------------
Net increase/(decrease) .. 690,930 513,769 117,406 54,417 170,560 100,790 142,451
============= ============= =========== =========== ============ =========== ============
</TABLE>
See Notes to Financial Statements.
HARRIS INSIGHT FUNDS
STATEMENTS OF CHANGES -- CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
EQUITY FUNDS
------------ -----------------------------------------------------------------------------------
SMALL-CAP
VALUE INDEX BALANCED
FUND FUND FUND
------------ -------------------------- -------------------------- --------------------------
YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/97 12/31/98 12/31/97(1) 12/31/98 12/31/97 12/31/98 12/31/97(1)
------------ ------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
AMOUNT
- ------
INSTITUTIONAL CLASS:
Sold ..................... $111,387,891 $ 65,891,159 $ 94,750,916 $ 56,739,210 $138,059,809 $ 8,051,050 $66,148,915
Issued as reinvestment of
dividends ................ 12,908,326 3,337,416 7,596,815 11,324,663 5,696,160 6,530,108 1,683,590
Redeemed ................. (25,701,528) (19,157,842) (10,047,788) (57,070,207) (45,051,822) (26,454,261) (8,208,620)
------------ ------------ ------------ ------------ ------------ ------------ -----------
Net increase/(decrease) .. $ 98,594,689 $ 50,070,733 $ 92,299,943 $ 10,993,666 $ 98,704,147 $(11,873,103) $59,623,885
============ ============ ============ ============ ============ ============ ===========
CLASS A:
Sold ..................... $ 2,275,874 $ 697,922 $ 321,431 $ 8,005,096 $ 9,599,426 $ 1,756,331 $ 688,374
Issued as reinvestment of
dividends ................ 107,321 18,194 18,639 575,857 151,528 230,800 4,659
Redeemed ................. (327,843) (275,282) (30,374) (3,641,914) (3,073,777) (245,167) (50)
------------ ------------ ------------ ------------ ------------ ------------ -----------
Net increase/(decrease) .. $ 2,055,352 $ 440,834 $ 309,696 $ 4,939,039 $ 6,677,177 $ 1,741,964 $ 692,983
============ ============ ============ ============ ============ ============ ===========
- ----------------------------------------------------------------------------------------------------------------------------
SHARES
- ------
INSTITUTIONAL CLASS:
Sold ..................... 6,492,340 2,156,720 3,097,109 2,172,445 6,414,886 527,780 5,120,712
Issued as reinvestment of
dividends ................ 756,547 97,119 234,090 413,390 246,569 446,869 116,698
Redeemed ................. (1,438,895) (600,967) (307,896) (2,222,548) (2,025,025) (1,744,530) (588,410)
------------ ------------ ------------ ------------ ------------ ------------ -----------
Net increase/(decrease) .. 5,809,992 1,652,872 3,023,303 363,287 4,636,430 (769,881) 4,649,000
============ ============ ============ ============ ============ ============ ===========
CLASS A:
Sold ..................... 125,525 20,368 9,123 310,345 428,098 115,400 46,556
Issued as reinvestment of
dividends ................ 6,308 526 574 21,022 6,555 15,932 317
Redeemed ................. (19,609) (8,868) (842) (142,365) (147,519) (16,971) (3)
------------ ------------ ------------ ------------ ------------ ------------ -----------
Net increase/(decrease) .. 112,224 12,026 8,855 189,002 287,134 114,361 46,870
============ ============ ============ ============ ============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------
EMERGING
INTERNATIONAL MARKETS
FUND FUND
-------------------------- ------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
12/31/98 12/31/97 12/31/98 12/31/97(2)
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
AMOUNT
- ------
INSTITUTIONAL CLASS:
Sold ..................... $100,158,674 $120,897,024 $ 9,517,265 $20,438,890
Issued as reinvestment of
dividends ................ 1,121,898 10,828,865 44,300 --
Redeemed ................. (67,104,234) (43,158,856) (1,397,270) --
------------ ------------ ----------- -----------
Net increase/(decrease) .. $ 34,176,338 $ 88,567,033 $ 8,164,295 $20,438,890
============ ============ =========== ===========
CLASS A:
Sold ..................... $ 23,331,527 $ 1,215,856 $ 103,114 $ 109,665
Issued as reinvestment of
dividends ................ 27,871 93,876 -- --
Redeemed ................. (22,995,118) (410,562) (83,581) --
------------ ------------ ----------- -----------
Net increase/(decrease) .. $ 364,280 $ 899,170 $ 19,533 $ 109,665
============ ============ =========== ===========
- -------------------------------------------------------------------------------
SHARES
- ------
INSTITUTIONAL CLASS:
Sold ..................... 7,821,444 8,013,256 1,372,793 2,108,590
Issued as reinvestment of
dividends ................ 90,989 806,437 7,745 --
Redeemed ................. (5,331,529) (3,006,361) (239,318) --
------------ ------------ ----------- -----------
Net increase/(decrease) .. 2,580,904 5,813,332 1,141,220 2,108,590
============ ============ =========== ===========
CLASS A:
Sold ..................... 1,842,292 78,331 13,464 11,266
Issued as reinvestment of
dividends ................ 2,260 7,008 -- --
Redeemed ................. (1,807,396) (29,037) (14,143) --
------------ ------------ ----------- -----------
Net increase/(decrease) .. 37,156 56,302 (679) 11,266
============ ============ =========== ===========
<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.
92&93
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
NET NET
ASSET DISTRIBUTIONS ASSET
VALUE NET REALIZED FROM NET VALUE
BEGINNING INVESTMENT LOSS ON INVESTMENT CAPITAL END OF
OF PERIOD INCOME INVESTMENTS INCOME CONTRIBUTIONS PERIOD
===========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
- ---------------------
GOVERNMENT MONEY FUND
- ---------------------
INSTITUTIONAL CLASS
12/31/98 $1.00 $0.053 $ -- $(0.053) $ -- $1.00
12/31/97 1.00 0.053 -- (0.053) -- 1.00
12/31/96 1.00 0.051 -- (0.051) -- 1.00
12/31/95 1.00 0.056 -- (0.056) -- 1.00
05/16/94(3) to 12/31/94 1.00 0.028 -- (0.028) -- 1.00
CLASS A
12/31/98 $1.00 $0.050 $ -- $(0.050) $ -- $1.00
12/31/97 1.00 0.050 -- (0.050) -- 1.00
12/31/96 1.00 0.049 -- (0.049) -- 1.00
12/31/95 1.00 0.054 -- (0.054) -- 1.00
12/31/94 1.00 0.037 -- (0.037) -- 1.00
- ----------
MONEY FUND
- ----------
INSTITUTIONAL CLASS
12/31/98 $1.00 $0.055 $ -- $(0.055) $ -- $1.00
12/31/97 1.00 0.055 0.001) (0.055) 0.001 1.00
12/31/96 1.00 0.052 -- (0.052) -- 1.00
12/31/95 1.00 0.057 -- (0.057) -- 1.00
01/05/94(3) to 12/31/94 1.00 0.039 -- (0.039) -- 1.00
CLASS A
12/31/98 $1.00 $0.051 $ -- $(0.051) $ -- $1.00
12/31/97 1.00 0.052 (0.001) (0.052) 0.001 1.00
12/31/96 1.00 0.050 -- (0.050) -- 1.00
12/31/95 1.00 0.054 -- (0.054) -- 1.00
12/31/94 1.00 0.037 -- (0.037) -- 1.00
- ---------------------
TAX-EXEMPT MONEY FUND
- ---------------------
INSTITUTIONAL CLASS
12/31/98 $1.00 $0.033 $ -- $(0.033) $ -- $1.00
12/31/97 1.00 0.034 -- (0.034) -- 1.00
12/31/96 1.00 0.031 -- (0.031) -- 1.00
12/31/95 1.00 0.035 -- (0.035) -- 1.00
01/05/94(3) to 12/31/94 1.00 0.025 -- (0.025) -- 1.00
CLASS A
12/31/98 $1.00 $0.030 $ -- $(0.030) $ -- $1.00
12/31/97 1.00 0.031 -- (0.031) -- 1.00
12/31/96 1.00 0.029 -- (0.029) -- 1.00
12/31/95 1.00 0.033 -- (0.033) -- 1.00
12/31/94 1.00 0.023 -- (0.023) -- 1.00
</TABLE>
See Notes to Financial Statements.
94
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
NET RATIO OF EXPENSES
ASSETS RATIO OF TO AVERAGE RATIO OF NET
END OF EXPENSES TO NET ASSETS INVESTMENT INCOM
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET
RETURN (000) ASSETS WAIVERS) ASSETS
==========================================================================================================
<S> <C> <C> <C> <C> <C>
- ---------------------
GOVERNMENT MONEY FUND
---------------------
INSTITUTIONAL CLASS
12/31/98 5.43% $ 162,285 0.19% 0.24% 5.27%
12/31/97 5.48 63,970 0.23 0.28 5.36
12/31/96 5.24 37,169 0.31 0.32 5.12
12/31/95 5.79 18,367 0.31 0.32 5.62
05/16/94(3) to 12/31/94 2.82(2) 9,617 0.29(1) 0.31(1) 4.52(1)
CLASS A
12/31/98 5.08% $ 248,595 0.54% 0.59% 4.96%
12/31/97 5.17 247,594 0.53 0.63 5.05
12/31/96 5.00 206,073 0.54 0.67 4.89
12/31/95 5.51 264,426 0.57 0.67 5.36
12/31/94 3.72 229,619 0.60 0.66 3.62
----------
MONEY FUND
----------
INSTITUTIONAL CLASS
12/31/98 5.61% $1,391,856 0.19% 0.24% 5.46%
12/31/97 5.66 1,028,091 0.21 0.26 5.54
12/31/96 5.38 369,417 0.27 0.28 5.23
12/31/95 5.86 98,837 0.29 0.30 5.69
01/05/94(3) to 12/31/94 4.08(2) 31,990 0.29(1) 0.30(1) 4.79(1)
CLASS A
12/31/98 5.25% $ 877,527 0.53% 0.59% 5.12%
12/31/97 5.35 677,804 0.51 0.61 5.23
12/31/96 5.11 461,213 0.52 0.63 5.00
12/31/95 5.58 423,588 0.56 0.65 5.42
12/31/94 3.79 530,366 0.55 0.65 3.79
---------------------
TAX-EXEMPT MONEY FUND
---------------------
INSTITUTIONAL CLASS
12/31/98 3.35% $ 606,754 0.23% 0.23% 3.30%
12/31/97 3.47 497,986 0.25 0.26 3.41
12/31/96 3.19 388,404 0.29 0.29 3.14
12/31/95 3.60 212,146 0.29 0.29 3.52
01/05/94(3) to 12/31/94 2.56(2) 237,100 0.28(1) 0.30(1) 2.99(1)
CLASS A
12/31/98 3.02% $ 204,114 0.55% 0.58% 2.99%
12/31/97 3.17 223,071 0.54 0.61 3.13
12/31/96 2.94 178,849 0.53 0.64 2.89
12/31/95 3.31 170,570 0.56 0.65 3.25
12/31/94 2.30 123,501 0.54 0.65 2.20
</TABLE>
See Notes to Financial Statements.
95
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
NET NET NET
ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET UNREALIZED FROM NET FROM NET VALUE
BEGINNING INVESTMENT GAIN/(LOSS) INVESTMENT REALIZED END OF
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS PERIOD
===========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
- -----------------------
SHORT/INTERMEDIATE FUND
- -----------------------
INSTITUTIONAL CLASS
12/31/98 $10.21 $0.603 $ 0.096 $(0.603) $(0.006) $10.30
12/31/97 10.14 0.633 0.070 (0.633) -- 10.21
02/26/96(3) to 12/31/96 10.30 0.517 (0.160) (0.517) -- 10.14
CLASS A
12/31/98 $10.21 $0.577 $ 0.096 $(0.577) $(0.006) $10.30
12/31/97 10.14 0.608 0.070 (0.608) -- 10.21
12/31/96 10.38 0.594 (0.247) (0.587) -- 10.14
12/31/95 9.66 0.588 0.720 (0.588) -- 10.38
12/31/94 10.34 0.559 (0.694) (0.545) -- 9.66
- ---------
BOND FUND
- ---------
INSTITUTIONAL CLASS
12/31/98 $10.20 $0.604 $ 0.103 $(0.604) $(0.103) $10.20
12/31/97 10.07 0.628 0.284 (0.628) (0.154) 10.20
04/16/96(3) to 12/31/96 10.00 0.425 0.103 (0.425) (0.033) 10.07
CLASS A
12/31/98 $10.20 $0.579 $ 0.103 $(0.579) $(0.103) $10.20
12/31/97 10.07 0.603 0.284 (0.603) (0.154) 10.20
04/22/96(3) to 12/31/96 9.99 0.402 0.113 (0.402) (0.033) 10.07
- ----------------------------
INTERMEDIATE GOVERNMENT FUND
- ----------------------------
INSTITUTIONAL CLASS
12/31/98 $16.54 $0.967 $ 0.231 $(0.967) $(0.161) $16.61
03/24/97(3) to 12/31/97 16.12 0.793 0.461 (0.793) (0.041) 16.54
CLASS A
12/31/98 $16.54 $0.925 $ 0.231 $(0.925) $(0.161) $16.61
04/16/97(3) to 12/31/97 16.06 0.702 0.521 (0.702) (0.041) 16.54
- ----------------------------
INTERMEDIATE TAX-EXEMPT FUND
- ----------------------------
INSTITUTIONAL CLASS
12/31/98 $10.75 $0.417 $ 0.103 $(0.417) $(0.153) $10.70
12/31/97 10.58 0.442 0.220 (0.442) (0.050) 10.75
02/26/96(3) to 12/31/96 10.74 0.381 (0.124) (0.381) (0.036) 10.58
CLASS A
12/31/98 $10.75 $0.390 $ 0.103 $(0.390) $(0.153) $10.70
12/31/97 10.58 0.327 0.220 (0.327) (0.050) 10.75
03/13/96(3) to 12/31/96 10.55 0.084 0.066 (0.084) (0.036) 10.58
- ---------------
TAX-EXEMPT FUND
- ---------------
INSTITUTIONAL CLASS
12/31/98 $10.52 $0.444 $ 0.059 $(0.444) $(0.189) $10.39
12/31/97 10.25 0.461 0.391 (0.461) (0.121) 10.52
02/26/96(3) to 12/31/96 10.56 0.402 (0.094) (0.402) (0.216) 10.25
CLASS A
12/31/98 $10.52 $0.418 $ 0.059 $(0.418) $(0.189) $10.39
12/31/97 10.25 0.435 0.391 (0.435) (0.121) 10.52
10/02/96(3) to 12/31/96 10.33 0.105 0.136 (0.105) (0.216) 10.25
</TABLE>
See Notes to Financial Statements.
96
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
NET RATIO OF EXPENSES
ASSETS RATIO OF TO AVERAGE RATIO OF NET
END OF EXPENSES TO NET ASSETS INVESTMENT INCOME PORTFOLIO
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET TURNOVER
RETURN (000) ASSETS WAIVERS) ASSETS RATE
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
- -----------------------
SHORT/INTERMEDIATE FUND
- -----------------------
INSTITUTIONAL CLASS
12/31/98 7.01% $337,015 0.60% 0.90% 5.85% 66.06%
12/31/97 7.15 288,886 0.60 0.89 6.24 98.08
02/26/96(3) to 12/31/96 3.61(2) 255,573 0.60(1) 0.90(1) 6.06(1) 186.02
CLASS A
12/31/98 6.75% $ 4,658 0.85% 1.15% 5.60% 66.06%
12/31/97 6.89 5,922 0.85 1.14 5.99 98.08
12/31/96 3.51 4,432 0.62 0.92 5.59 186.02
12/31/95 13.88 51,814 0.60 0.96 5.91 194.94
12/31/94 (1.29) 44,333 0.60 0.92 5.29 140.99
- ---------
BOND FUND
- ---------
INSTITUTIONAL CLASS
12/31/98 7.12% $183,831 0.60% 0.88% 5.89% 64.93%
12/31/97 9.41 140,447 0.60 0.89 6.25 138.30
04/16/96(3) to 12/31/96 5.40(2) 43,142 0.60(1) 0.98(1) 6.03(1) 116.02
CLASS A
12/31/98 6.86% $ 2,566 0.85% 1.13% 5.64% 64.93%
12/31/97 9.14 936 0.85 1.14 6.00 138.30
04/22/96(3) to 12/31/96 5.27(2) 130 0.85(1) 1.23(1) 5.87(1) 116.02
- ----------------------------
INTERMEDIATE GOVERNMENT FUND
- ----------------------------
INSTITUTIONAL CLASS
12/31/98 7.45% $103,162 0.50% 0.91% 5.82% 99.63%
03/24/97(3) to 12/31/97 7.96(2) 99,359 0.50(1) 0.91(1) 6.31(1) 84.89(1)
CLASS A
12/31/98 7.18% $ 2,126 0.75% 1.16% 5.57% 99.63%
04/16/97(3) to 12/31/97 7.76(2) 716 0.75(1) 1.16(1) 6.06(1) 84.89(1)
- ----------------------------
INTERMEDIATE TAX-EXEMPT FUND
- ----------------------------
INSTITUTIONAL CLASS
12/31/98 4.94% $226,087 0.80% 0.80% 3.87% 90.92%
12/31/97 6.41 193,009 0.79 0.79 4.16 48.72
02/26/96(3) to 12/31/96 2.49(2) 208,690 0.79(1) 0.82(1) 4.28(1) 57.23
CLASS A
12/31/98 4.67% $ 900 1.05% 1.05% 3.62% 90.92%
12/31/97 6.14 644 1.04 1.04 3.91 48.72
03/13/96(3) to 12/31/96 1.44(2) -- 1.04(1) 1.07(1) 4.33(1) 57.23
- ---------------
TAX-EXEMPT FUND
- ---------------
INSTITUTIONAL CLASS
12/31/98 4.88% $169,060 0.79% 0.80% 4.22% 87.61%
12/31/97 8.55 179,871 0.80 0.80 4.47 61.52
02/26/96(3) to 12/31/96 3.04(2) 165,388 0.80(1) 0.81(1) 4.60(1) 61.60
CLASS A
12/31/98 4.62% $ 909 1.04% 1.05% 3.97% 87.61%
12/31/97 8.28 644 1.05 1.05 4.22 61.52
10/02/96(3) to 12/31/96 2.34(2) 38 1.05(1) 1.06(1) 4.35(1) 61.60
</TABLE>
See Notes to Financial Statements.
97
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHTOUT EACH PERIOD)
<TABLE>
<CAPTION>
NET NET NET
ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET UNREALIZED FROM NET FROM NET VALUE
BEGINNING INVESTMENT GAIN/(LOSS) INVESTMENT REALIZED END OF
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS PERIOD
===========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------
CONVERTIBLE SECURITIES FUND
- ---------------------------
INSTITUTIONAL CLASS
12/31/98 $28.52 $1.130 $(1.647) $(1.141) $(2.722) $24.14
03/24/97(3) to 12/31/97 29.15 0.914 3.120 (0.897) (3.767) 28.52
CLASS A
12/31/98 $28.52 $1.106 $(1.691) $(1.073) $(2.722) $24.14
03/26/97(3) to 12/31/97 29.30 0.690 3.122 (0.825) (3.767) 28.52
- -----------
EQUITY FUND
- -----------
INSTITUTIONAL CLASS
12/31/98 $17.59 $0.116 $2.224 $(0.114) $(2.786) $17.03
12/31/97 15.53 0.234 5.190 (0.235) (3.129) 17.59
02/26/96(3) to 12/31/96 15.30 0.189 1.898 (0.193) (1.664) 15.53
CLASS A
12/31/98 $17.59 $0.066 $2.213 $(0.063) $(2.786) $17.02
12/31/97 15.53 0.174 5.190 (0.175) (3.129) 17.59
12/31/96 13.99 0.451 2.926 (0.173) (1.664) 15.53
12/31/95 11.28 0.229 3.827 (0.232) (1.114) 13.99
12/31/94 12.86 0.263 (0.514) (0.263) (1.066) 11.28
- ------------------
EQUITY INCOME FUND
- ------------------
INSTITUTIONAL CLASS
12/31/98 $16.32 $0.218 $3.492 $(0.216) $(0.544) $19.27
12/31/97 13.73 0.272 4.050 (0.268) (1.464) 16.32
02/26/96(3) to 12/31/96 13.34 0.270 1.387 (0.269) (0.998) 13.73
CLASS A
12/31/98 $16.31 $0.171 $3.490 $(0.167) $(0.544) $19.26
12/31/97 13.72 0.237 4.037 (0.220) (1.464) 16.31
04/18/96(3) to 12/31/96 13.02 0.179 1.732 (0.213) (0.998) 13.72
- -----------
GROWTH FUND
- -----------
INSTITUTIONAL CLASS
12/31/98 $22.67 $0.012 $5.583 $(0.009) $(2.006) $26.25
12/31/97 18.69 0.048 6.026 (0.048) (2.046) 22.67
02/26/96(3) to 12/31/96 17.01 0.062 2.746 (0.063) (1.065) 18.69
CLASS A
12/31/98 $22.67 $(0.030) $5.546 $ -- $(2.006) $26.18
12/31/97 18.69 0.004 6.026 (0.004) (2.046) 22.67
04/19/96(3) to 12/31/96 16.49 0.030 3.273 (0.038) (1.065) 18.69
- --------------------------
SMALL-CAP OPPORTUNITY FUND
- --------------------------
INSTITUTIONAL CLASS
12/31/98 $17.71 $(0.047) $0.258 $ -- $(0.071) $17.85
12/31/97 15.52 0.007 3.865 (0.012) (1.670) 17.71
02/26/96(3) to 12/31/96 14.24 0.057 1.998 (0.057) (0.718) 15.52
CLASS A
12/31/98 $17.66 $(0.060) $0.241 $ -- $(0.071) $17.77
12/31/97 15.51 (0.003) 3.823 -- (1.670) 17.66
04/19/96(3) to 12/31/96 14.25 0.032 1.996 (0.050) (0.718) 15.51
</TABLE>
See Notes to Financial Statements.
98
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHTOUT EACH PERIOD)
<TABLE>
<CAPTION>
NET RATIO OF EXPENSES
ASSETS RATIO OF TO AVERAGE RATIO OF NET
END OF EXPENSES TO NET ASSETS INVESTMENT INCOME PORTFOLIO
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET TURNOVER
RETURN (000) ASSETS WAIVERS) ASSETS RATE
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------
CONVERTIBLE SECURITIES FUND
- ---------------------------
INSTITUTIONAL CLASS
12/31/98 (1.80)% $ 49,396 0.92% 1.01% 4.05% 48.73%
03/24/97(3) to 12/31/97 14.24(2) 59,384 0.92(1) 0.96(1) 3.76(1) 93.24(1)
CLASS A
12/31/98 (2.04)% $ 409 1.17% 1.26% 3.80% 48.73%
03/26/97(3) to 12/31/97 13.39(2) 85 1.17(1) 1.21(1) 3.51(1) 93.24(1)
- -----------
EQUITY FUND
- -----------
INSTITUTIONAL CLASS
12/31/98 13.80% $841,119 0.89% 0.89% 0.64% 76.92%
12/31/97 35.89 845,829 0.88 0.88 1.33 81.48
02/26/96(3) to 12/31/96 13.66(2) 568,400 0.90(1) 0.90(1) 1.43(1) 75.20
CLASS A
12/31/98 13.42% $ 29,050 1.14% 1.14% 0.39% 76.92%
12/31/97 35.45 17,859 1.13 1.13 1.08 81.48
12/31/96 24.15 7,792 0.94 0.94 1.47 75.20
12/31/95 36.26 61,256 0.96 0.97 1.75 75.93
12/31/94 (2.05) 38,920 0.90 0.92 1.94 87.83
- ------------------
EQUITY INCOME FUND
- ------------------
INSTITUTIONAL CLASS
12/31/98 22.97% $ 62,204 0.93% 0.96% 1.26% 21.60%
12/31/97 31.90 40,424 0.93 0.96 1.69 29.87
02/26/96(3) to 12/31/96 12.46(2) 31,760 0.93(1) 0.97(1) 2.36(1) 52.77
CLASS A
12/31/98 22.66% $ 3,728 1.18% 1.21% 1.01% 21.60%
12/31/97 31.53 1,241 1.18 1.21 1.44 29.87
04/18/96(3) to 12/31/96 14.67(2) 298 1.18(1) 1.19(1) 2.11(1) 52.77
- -----------
GROWTH FUND
- -----------
INSTITUTIONAL CLASS
12/31/98 25.03% $144,759 1.10% 1.11% 0.05% 34.96%
12/31/97 32.81 109,140 1.10 1.11 0.22 37.02
02/26/96(3) to 12/31/96 16.43(2) 76,516 1.10(1) 1.14(1) 0.42(1) 35.36
CLASS A
12/31/98 24.68% $ 7,661 1.35% 1.36% (0.20)% 34.96%
12/31/97 32.54 2,766 1.35 1.36 (0.03) 37.02
04/19/96(3) to 12/31/96 19.95(2) 397 1.35(1) 1.39(1) 0.17(1) 35.36
- --------------------------
SMALL-CAP OPPORTUNITY FUND
- --------------------------
INSTITUTIONAL CLASS
12/31/98 1.16% $296,719 1.20% 1.21% (0.28)% 51.49%
12/31/97 25.47 274,353 1.20 1.21 0.03 39.63
02/26/96(3) to 12/31/96 14.49(2) 150,306 1.20(1) 1.22(1) 0.46(1) 46.13
CLASS A
12/31/98 0.99% $ 5,032 1.45% 1.46% (0.53)% 51.49%
12/31/97 25.14 2,485 1.45 1.46 (0.22) 39.63
04/19/96(3) to 12/31/96 14.29(2) 443 1.45(1) 1.47(1) 0.10(1) 46.13
</TABLE>
See Notes to Financial Statements.
99
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
NET NET NET
ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET UNREALIZED FROM NET FROM NET VALUE
BEGINNING INVESTMENT GAIN/(LOSS) INVESTMENT REALIZED END OF
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS PERIOD
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
- --------------------
SMALL-CAP VALUE FUND
- --------------------
INSTITUTIONAL CLASS
12/31/98 $33.02 $0.132 $(1.312) $(0.139) $(1.011) $30.69
03/24/97(3) to 12/31/97 28.29 0.146 7.467 (0.139) (2.744) 33.02
CLASS A
12/31/98 $33.02 $0.093 $(1.342) $(0.070) $(1.011) $30.69
07/10/97(3) to 12/31/97 32.31 0.028 3.462 (0.036) (2.744) 33.02
- ----------
INDEX FUND
- ----------
INSTITUTIONAL CLASS
12/31/98 $23.51 $0.304 $6.247 $(0.303) $(1.408) $28.35
12/31/97 18.48 0.278 5.742 (0.281) (0.709) 23.51
02/26/96(3) to 12/31/96 16.72 0.268 2.104 (0.268) (0.344) 18.48
CLASS A
12/31/98 $23.51 $0.236 $6.244 $(0.232) $(1.408) $28.35
12/31/97 18.48 0.247 5.725 (0.233) (0.709) 23.51
04/19/96(3) to 12/31/96 16.35 0.188 2.511 (0.225) (0.344) 18.48
- -------------
BALANCED FUND
- -------------
INSTITUTIONAL CLASS
12/31/98 $14.93 $0.492 $0.753 $(0.494) $(1.241) $14.44
03/24/97(3) to 12/31/97 12.74 0.377 2.185 (0.372) -- 14.93
CLASS A
12/31/98 $14.93 $0.440 $0.759 $(0.448) $(1.241) $14.44
04/16/97(3) to 12/31/97 12.56 0.301 2.411 (0.342) -- 14.93
- ------------------
INTERNATIONAL FUND
- ------------------
INSTITUTIONAL CLASS
12/31/98 $13.33 $0.166 $(0.787) $(0.159) $ -- $12.55
12/31/97 15.46 0.116 (0.858) (0.125) (1.263) 13.33
02/26/96(3) to 12/31/96 15.04 0.128 0.485 (0.125) (0.068) 15.46
CLASS A
12/31/98 $13.33 $0.140 $(0.787) $(0.133) $ -- $12.55
12/31/97 15.46 0.078 (0.876) (0.069) (1.263) 13.33
03/13/96(3) to 12/31/96 14.69 0.091 0.860 (0.113) (0.068) 15.46
- ---------------------
EMERGING MARKETS FUND
- ---------------------
INSTITUTIONAL CLASS
12/31/98 $ 8.55 $0.023 $(2.688) $(0.015) $ -- $ 5.87
10/21/97(3) to 12/31/97 10.00 0.006 (1.456) -- -- 8.55
CLASS A
12/31/98 $ 8.54 $0.008 $(2.698) $ -- $ -- $ 5.85
10/21/97(3) to 12/31/97 10.00 0.002 (1.462) -- -- 8.54
<FN>
(1) Annualized.
(2) Total returns for periods of less than one year are not annualized.
(3) Date commenced operations.
</FN>
</TABLE>
See Notes to Financial Statements.
100
<PAGE>
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
NET RATIO OF EXPENSES
ASSETS RATIO OF TO AVERAGE RATIO OF NET
END OF EXPENSES TO NET ASSETS INVESTMENT INCOME PORTFOLIO
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET TURNOVER
RETURN (000) ASSETS WAIVERS) ASSETS RATE
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
- --------------------
SMALL-CAP VALUE FUND
- --------------------
INSTITUTIONAL CLASS
12/31/98 (3.93)% $143,525 0.99% 1.05% 0.56% 76.44%
03/24/97(3) to 12/31/97 27.11(2) 99,816 0.99(1) 1.06(1) 0.63(1) 91.66(1)
CLASS A
12/31/98 (4.15)% $ 641 1.24% 1.30% 0.31% 76.44%
07/10/97(3) to 12/31/97 10.95(2) 292 1.24(1) 1.31(1) 0.38(1) 91.66(1)
- ----------
INDEX FUND
- ----------
INSTITUTIONAL CLASS
12/31/98 28.22% $362,568 0.45% 0.46% 1.16% 5.59%
12/31/97 32.78 292,196 0.45 0.47 1.39 7.10
02/26/96(3) to 12/31/96 14.26(2) 143,954 0.45(1) 0.49(1) 1.85(1) 4.71
CLASS A
12/31/98 27.88% $ 13,727 0.70% 0.71% 0.91% 5.59%
12/31/97 32.51 6,942 0.70 0.72 1.14 7.10
04/19/96(3) to 12/31/96 16.56(2) 150 0.70(1) 0.74(1) 1.60(1) 4.71
- -------------
BALANCED FUND
- -------------
INSTITUTIONAL CLASS
12/31/98 8.61% $ 56,027 0.88% 0.98% 3.16% 70.93%
03/24/97(3) to 12/31/97 20.24(2) 69,415 0.88(1) 0.92(1) 3.45(1) 108.29(1)
CLASS A
12/31/98 8.29% $ 2,328 1.13% 1.23% 2.91% 70.93%
04/16/97(3) to 12/31/97 21.72(2) 700 1.13(1) 1.17(1) 3.20(1) 108.29(1)
- ------------------
INTERNATIONAL FUND
- ------------------
INSTITUTIONAL CLASS
12/31/98 (4.64)% $194,447 1.33% 1.33% 1.64% 45.82%
12/31/97 (4.87) 172,158 1.40 1.42 0.82 93.33
02/26/96(3) to 12/31/96 4.08(2) 109,747 1.36(1) 1.38(1) 0.99(1) 6.72
CLASS A
12/31/98 (4.84)% $ 1,657 1.58% 1.58% 1.39% 45.82%
12/31/97 (5.21) 1,265 1.65 1.67 0.57 93.33
03/13/96(3) to 12/31/96 6.48(2) 597 1.61(1) 1.63(1) 0.35(1) 6.72
- ---------------------
EMERGING MARKETS FUND
- ---------------------
INSTITUTIONAL CLASS
12/31/98 (31.16)% $ 19,072 1.75% 2.08% 1.06% 34.55%
10/21/97(3) to 12/31/97 (14.50)(2) 18,023 1.75(1) 2.09(1) 0.43(1) --
CLASS A
12/31/98 (31.50)% $ 62 2.00% 2.33% 0.81% 34.55%
10/21/97(3) to 12/31/97 (14.60)(2) 96 2.00(1) 2.34(1) 0.18(1) --
</TABLE>
See Notes to Financial Statements.
101
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ORGANIZATION
HT Insight Funds, Inc., doing business as Harris Insight Funds (the
"Company"), was incorporated in Maryland on September 16, 1987. The Company is
an open-end management investment company and currently offers five diversified
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. The Trust is an open-end management investment company and currently
offers thirteen diversified 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 Opportunity
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")
Each of the Funds currently offers two classes of shares: Class A shares
and Institutional shares. Each of the Funds (other than Index Fund and the Money
Market Funds) also may offer a third class, Advisor shares, that has not yet
commenced operations. 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.
102
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
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 or Board of Directors of the Funds, as the case may be.
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. Note: The Boards have adopted valuation procedures specifying amortized
cost for fixed income securities within 60 days of maturity.
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.
103
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
(D) DISTRIBUTIONS -- Each of the Funds declares dividends from net
investment income. Dividends from the Money Market Funds and the Fixed Income
Funds (other than the Convertible Securities Fund) are declared daily and paid
monthly. Dividends from the Convertible Securities Fund and Equity Funds (other
than Small-Cap Opportunity Fund, Growth Fund, Small-Cap Value Fund,
International Fund and Emerging Markets Fund) are declared and paid quarterly.
Dividends from the Growth Fund are declared and paid semi-annually. Dividends
from the Small-Cap Opportunity Fund, Small-Cap Value Fund, International Fund
and 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 its organization has been deferred and is 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.
104
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
3. REPURCHASE AGREEMENTS
Certain Funds invest in repurchase agreements. Securities pledged as
collateral for repurchase agreements are held by a 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 Opportunity 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%
105
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
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, 1998, advisory
fees and waivers for certain Funds were as follows:
GROSS NET
ADVISORY FEE WAIVER ADVISORY FEE
------------ -------- ------------
Short/Intermediate Fund ........$2,309,905 $985,902 $1,324,003
Bond Fund ...................... 1,107,053 470,364 636,689
Intermediate Government Fund ... 682,626 430,386 252,240
Intermediate Tax-Exempt Fund ... 1,193,836 1,920 1,191,916
Tax-Exempt Fund ................ 1,058,237 7,788 1,050,449
Convertible Securities Fund .... 364,871 48,872 315,999
Equity Income Fund ............. 360,398 16,960 343,438
Growth Fund .................... 1,191,917 15,256 1,176,661
Small-Cap Opportunity Fund ..... 2,858,643 24,863 2,833,780
Small-Cap Value Fund ........... 887,045 69,402 817,643
Index Fund ..................... 818,579 23,765 794,814
Balanced Fund .................. 382,132 65,775 316,357
Emerging Markets Fund .......... 238,897 62,722 176,175
There were no advisory fee waivers for the other Funds.
Harris Trust has entered into Portfolio Management Agreements with Harris
Investment Management, Inc. ("HIM"or the "Portfolio Management Agent") 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 receives a fee directly from Harris Trust, not from
the Funds. HIM and Harris Trust are subsidiaries of Harris Bankcorp, Inc.
Hansberger Global Investors, Inc. ("Hansberger") has entered into
Investment Sub-Advisory Agreements with HIM with respect to the International
Fund and the Emerging Markets Fund. Pursuant to these agreements, Hansberger
selects and manages the securities in which these Funds invest. Hansberger, as
Sub-Adviser, receives a fee directly from HIM and not from the Funds.
The Company and the Trust have Administration Agreements 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 two agreements, the Administrator
compensates the Sub-Administrator and the Sub-Administrator and 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 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.
(the "Custodian") 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 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.
106
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
Funds Distributor provides services as distributor (the "Distributor") in
connection with sales of shares of the Funds. For the year ended December 31,
1998, fees for services rendered by the Distributor were paid by the
Administrator.
The Company has a compensation arrangement under which payment of
directors' fees may be deferred by a director. Interest is accrued on the
deferred balances and is included in directors' fees and expenses. On December
31, 1998, the accumulated balance of deferred directors' fees and interest
thereon relating to all Funds comprising the Company was approximately $208,100,
a 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 year ended December 31, 1998, PFPC, Inc. and Funds Distributor
received aggregate fees and expenses of $4,427,883 and $3,555,767, respectively,
from the Administrator for services rendered under various agreements described
above. For the year ended December 31, 1998, Funds Distributor voluntarily
waived fees of $179,879 for the Government Money Fund and $865,316 for the Money
Fund.
5. SERVICE PLANS
The Company and the Trust have adopted a Service Plan (the "Plan") for the
Class A shares of each Fund. Under the Plan, each Fund may pay banks and other
institutions ("Service Organizations") for shareholder support services that
they provide, at a rate of up to 0.25% (on an annualized basis) of the average
daily net asset value of the Fund's Class A shares.
Under a separate Service Plan adopted by the Money Market Funds pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "12b-1 Plan"), those
Funds may make payments to Service Organizations for shareholder support
services and also may bear the costs connected with distribution and other
services, at a rate of up to 0.10% (on an annualized basis) of the average daily
net asset value of each Fund's Class A shares.
For the year ended December 31, 1998, the non-Money Market Funds paid the
following shareholder service fees pursuant to the Plan, including fees paid to
Harris Trust and Funds Distributor:
Short/Intermediate Fund ......................... $13,511
Bond Fund ....................................... 4,708
Intermediate Government Fund .................... 3,236
Intermediate Tax-Exempt Fund .................... 2,042
Tax-Exempt Fund ................................. 2,017
Convertible Securities Fund ..................... 723
Equity Fund ..................................... 61,176
Equity Income Fund .............................. 5,813
Growth Fund ..................................... 12,155
Small-Cap Opportunity Fund ...................... 9,453
Small-Cap Value Fund ............................ 1,353
Index Fund ...................................... 23,829
Balanced Fund ................................... 4,337
International Fund .............................. 4,928
Emerging Markets Fund ........................... 230
For the year ended December 31, 1998, shareholder service fees paid by the
Money Market Funds under the Plan were $693,619, $1,854,774, and $540,978 and
fees paid under the 12b-1 Plan were $244,231, $685,686, and $141,615 (net of
voluntary waivers of $25,496, $36,921, and $67,711) for the Class A shares of
the Government Money Fund, Money Fund, and Tax-Exempt Money Fund, respectively.
107
<PAGE>
HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
6. INVESTMENT TRANSACTIONS
The cost of investments at December 31, 1998 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
year ended December 31, 1998 were as follows:
PURCHASES SALES
------------ -------------
Short/Intermediate Fund ............... $151,738,094 $102,522,294
Bond Fund ............................. 80,657,705 48,435,526
Intermediate Government Fund .......... 16,256,959 8,351,324
Intermediate Tax-Exempt Fund .......... 210,447,058 177,215,063
Tax-Exempt Fund ....................... 151,014,978 160,080,022
Convertible Securities Fund ........... 24,444,209 30,292,466
Equity Fund ........................... 666,739,136 775,536,374
Equity Income Fund .................... 21,140,595 10,443,793
Growth Fund ........................... 56,018,721 45,057,084
Small-Cap Opportunity Fund ............ 168,873,950 141,088,142
Small-Cap Value Fund .................. 133,507,355 79,726,960
Index Fund ............................ 17,644,274 27,692,578
Balanced Fund ......................... 31,587,628 42,573,079
International Fund .................... 107,663,251 78,862,245
Emerging Markets Fund ................. 17,333,457 5,985,979
Purchases and sales of U.S. government securities, excluding short-term
securities, of the non-Money Market Funds during the year ended December 31,
1998 were as follows:
PURCHASES SALES
------------ -------------
Short/Intermediate Fund ............... $128,625,888 $112,436,129
Bond Fund ............................. 72,731,516 57,520,225
Intermediate Government Fund .......... 101,871,762 92,425,349
Balanced Fund ......................... 12,993,991 16,151,797
108
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HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
At December 31, 1998, gross unrealized appreciation (depreciation) for each
non-Money Market Fund was as follows:
NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------ -------------- --------------
Short/Intermediate Fund ..... $ 6,406,500 $ (4,204,620) $ 2,201,880
Bond Fund ................... 3,998,876 (1,952,758) 2,046,118
Intermediate Government Fund 2,752,697 (473,478) 2,279,219
Intermediate Tax-Exempt Fund 5,258,887 (87,165) 5,171,722
Tax-Exempt Fund ............. 8,093,284 (58,899) 8,034,385
Convertible Securities Fund . 6,472,044 (6,316,040) 156,004
Equity Fund ................. 213,859,636 (18,565,064) 195,294,572
Equity Income Fund .......... 22,551,613 (966,381) 21,585,232
Growth Fund ................. 63,431,192 (2,513,089) 60,918,103
Small-Cap Opportunity Fund .. 94,654,420 (14,950,706) 79,703,714
Small-Cap Value Fund ........ 19,739,521 (8,561,974) 11,177,547
Index Fund .................. 172,036,827 (4,820,420) 167,216,407
Balanced Fund ............... 7,910,928 (1,513,677) 6,397,251
International Fund .......... 23,832,895 (42,046,782) (18,213,887)
Emerging Markets Fund ....... 1,663,236 (5,932,867) (4,269,631)
At December 31, 1998, the Small-Cap Opportunity Fund, the International
Fund, and the Emerging Markets Fund had available capital loss carryforwards of
approximately $486,884, $3,597,142 and $5,011,976, respectively, that may be
used to offset future net capital gains through 2005 and 2006.
In accordance with Statement of Position 93-2 "DETERMINATION, DISCLOSURE,
AND FINANCIAL STATEMENT PRESENTATION OF INCOME,CAPITAL GAIN AND RETURN OF
CAPITAL DISTRIBUTION BY INVESTMENT COMPANIES", the Small-Cap Opportunity Fund
reclassified $806,520 from undistributed net investment income to paid-in
capital. This reclassification has no effect on net assets or net asset value
per share.
7. COMPOSITION OF NET ASSETS
At December 31, 1998, net assets of each Fund consisted of:
GOVERNMENT TAX-EXEMPT
MONEY FUND MONEY FUND MONEY FUND
---------- ---------- ----------
Capital Stock at Par Value ...$ 410,877 $ 2,269,365 $ 810,842
Paid-in Capital .............. 410,466,462 2,267,095,531 810,030,580
Undistributed Net
Investment Income .......... -- -- --
Accumulated Net Realized
Gain/(Loss) ................ 2,748 18,072 26,454
Unrealized Appreciation/
(Depreciation) on
Investment Transactions,
Futures Contracts
and Foreign Currency
Transactions ............... -- -- --
------------ -------------- ------------
Net Assets ...................$410,880,087 $2,269,382,968 $810,867,876
============ ============== ============
109
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HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
SHORT/ INTERMEDIATE
INTERMEDIATE GOVERNMENT
FUND BOND FUND FUND
------------ ------------ ------------
Capital Stock or Beneficial
Interest at Par Value ... $ 33,170 $ 18,283 $ 6,339
Paid-in Capital ........... 338,924,082 184,172,434 103,100,271
Undistributed Net
Investment Income ....... -- -- --
Accumulated Net Realized
Gain/(Loss) ............. 513,569 160,602 (97,513)
Unrealized Appreciation/
(Depreciation) on
Investment Transactions,
Futures Contracts and
Foreign Currency
Transactions ........... 2,201,880 2,046,118 2,279,219
------------ ------------ ------------
Net Assets ................ $341,672,701 $186,397,437 $105,288,316
============ ============ ============
INTERMEDIATE CONVERTIBLE
TAX-EXEMPT TAX-EXEMPT SECURITIES EQUITY
FUND FUND FUND FUND
----------- ------------- ------------ -------------
Capital Stock or Beneficial
Interest at Par Value ...$ 21,216 $ 16,357 $ 2,063 $ 51,111
Paid-in Capital ........... 221,540,101 161,947,939 49,681,763 645,889,569
Undistributed Net
Investment Income ....... -- -- 10,293 70,225
Accumulated Net
Realized
Gain/(Loss) ............. 254,075 (29,193) (44,865) 28,863,336
Unrealized Appreciation/
(Depreciation) on
Investment Transactions,
Futures Contracts and
Foreign Currency
Transactions ............ 5,171,722 8,034,385 156,004 195,294,572
------------ ------------ ------------ ------------
Net Assets ................$226,987,114 $169,969,488 $49,805,258 $870,168,813
============ ============ =========== ============
EQUITY SMALL-CAP SMALL-CAP
INCOME GROWTH OPPORTUNITY VALUE
FUND FUND FUND FUND
----------- ------------- ------------ -------------
Capital Stock or Beneficial
Interest at Par Value ... $ 3,422 $ 5,806 $ 16,903 $ 4,697
Paid-in Capital ........... 43,449,587 89,103,614 224,775,104 131,737,951
Undistributed Net
Investment Income ....... 18,807 6,460 -- 1,902
Accumulated Net Realized
Gain/(Loss) ............. 874,466 2,385,818 (2,744,612) 1,243,612
Unrealized Appreciation/
(Depreciation) on
Investment Transactions,
Futures Contracts and
Foreign Currency
Transactions ............ 21,585,232 60,918,103 79,703,714 11,177,547
----------- ------------ ------------ ------------
Net Assets ................ $65,931,514 $152,419,801 $301,751,109 $144,165,709
=========== ============ ============ ============
110
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HARRIS INSIGHT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
EMERGING
INDEX BALANCED INTERNATIONAL MARKETS
FUND FUND FUND FUND
----------- ------------- ------------ -------------
Capital Stock or Beneficial
Interest at Par Value $ 13,274 $ 4,041 $ 15,636 $ 3,261
Paid-in Capital 207,359,587 51,710,967 224,268,494 28,729,122
Undistributed Net
Investment Income 9,890 3,586 21,153 26,976
Accumulated Net Realized
Gain/(Loss) 1,695,504 239,326 (9,987,075) (5,356,000)
Unrealized Appreciation/
(Depreciation) on
Investment Transactions,
Futures Contracts
and Foreign Currency
Transactions 167,216,407 6,397,251 (18,213,887) (4,269,631)
------------ ----------- ------------ -----------
Net Assets $376,294,662 $58,355,171 $196,104,321 $19,133,728
============ =========== ============ ===========
8. CONCENTRATION OF RISKS
The Tax-Exempt Money Fund, Intermediate Tax-Exempt Fund and Tax-Exempt Bond
Fund invest primarily in diversified portfolios 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.
Each of the International Fund and the Emerging Markets Fund invests 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.
9. 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.
111
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO 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, 1998, the
results of each of their operations for the year then ended, the changes in each
of their net assets for each of the two years in the period then ended and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1998 by
correspondence with the custodians, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 8, 1999
112
<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 60690
INVESTMENT SUB-ADVISER
Hansberger Global Investors, Inc.
515 East Las Olas Boulevard, Suite 1300
Fort Lauderdale, Florida 33301
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
PricewaterhouseCoopers 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); and Director, Nonlinear Dynamics, Inc. and Evanston Northwestern
Healthcare.
EDGAR R. FIEDLER
Senior Fellow and Economic Counsellor, The Conference Board; and Board Member,
The Stanley Works, Scudder Institutional Funds, AARP Income Trust, Brazil Fund,
Emerging Mexico Fund, Scudder Pathway Series, and PEG Capital Management.
JOHN W. MCCARTER, JR.
President and Chief Executive Officer, The Field Museum of Natural History
(Chicago); Board Member, LaSalle Partners Funds, Inc.; Former Senior Vice
President and Director, Booz-Allen & Hamilton, Inc. (consulting firm); and Board
Member, W.W. Grainger, Inc., A.M. Castle, Inc., and Pittway Corp.
ERNEST M. ROTH
Consultant; Board Member, La Rabida Children's Hospital;
Chairman, La Rabida Children's Foundation; and Retired Senior Vice President and
Chief Financial Officer, Commonwealth Edison Company.
PAULA WOLFF
President, Governors State University; Chair, University of Chicago Hospitals;
and Board Member, Ariel Capital Management, Inc.
OFFICERS
GEORGE A.RIO
President, Treasurer and
Chief Financial Officer
CHRISTOPHER J. KELLEY
Vice President and Secretary
MARY A. NELSON
Assistant Treasurer
THOMAS J. RYAN
Assistant Treasurer
KAREN JACOPPO-WOOD
Assistant Secretary
<PAGE>
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.
INVESTMENT ADVISER:
Harris Trust and Savings Bank
PORTFOLIO MANAGEMENT AGENT:
Harris Investment Management, Inc.
DISTRIBUTOR:
Funds Distributor, Inc.
HIF 1350AR 2/99
