AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 1, 2002

FILE NO. 33-5852
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

FORM N-14
------------------------

<Table>

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
[ ]
PRE-EFFECTIVE AMENDMENT NO. __
POST-EFFECTIVE AMENDMENT NO. __
[ ]
</Table>

HARBOR FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

ONE SEAGATE, TOLEDO, OHIO 43666
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(419) 247-1940
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

<Table>

DAVID G. VAN HOOSER ERNEST V. KLEIN, ESQ.
HARBOR FUND HALE AND DORR LLP
ONE SEAGATE 60 STATE STREET
TOLEDO, OHIO 43666 BOSTON, MASSACHUSETTS 02109
</Table>

(NAME AND ADDRESS OF AGENTS FOR SERVICE)

------------------------

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933:

No filing fee is due because an indefinite number of shares has previously been
registered pursuant to Rule 24f-2 under the Investment Company Act of 1940.

This Registration Statement relates to shares previously registered on form N-1A
(file Nos. 33-5852 and 811-4676).

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: NOVEMBER 1, 2002

It is proposed that this filing will become effective on September 9, 2002
pursuant to Rule 488.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PROXY STATEMENT
AND PROSPECTUS

[HARBOR FUND LOGO]

SEPTEMBER 9, 2002

----------------------------------------
HARBOR INTERNATIONAL FUND II
HARBOR SMALL CAP GROWTH FUND

The Securities and Exchange
Commission has not approved nor
disapproved shares of Harbor
International Fund or Harbor Growth
Fund nor determined whether this
prospectus is accurate or complete.
Any statement to the contrary is a
crime.

A MESSAGE FROM THE CHAIRMAN

Dear Shareholder:

The Board of Trustees of Harbor Fund has approved two mergers of existing funds
that have very similar strategies. The Board of Trustees has approved the merger
of Harbor International Fund II into Harbor International Fund. Also, the Board
of Trustees approved the merger of Harbor Small Cap Growth Fund into Harbor
Growth Fund which will be renamed the Harbor Small Cap Growth Fund. Both mergers
are subject to shareholder approval.

The mergers will eliminate any significant overlap in investment strategies
within the Harbor Fund family of mutual funds. The simplified fund lineup should
also reduce expense ratios for the Harbor International Fund and the renamed
Harbor Small Cap Growth Fund following the mergers.

Shareholders in the International Fund II and Harbor Small Cap Growth Fund will
be contacted in the next four to six weeks and asked to vote on the proposed
mergers. If approved by shareholders, both mergers will be effective on October
31, 2002.

Shareholders of Harbor International Fund II will be asked to approve a merger
into Harbor International Fund. Both funds have been managed in very similar
value-oriented styles and own many of the same stocks. Harbor International Fund
II began operations in 1996 during a period when Harbor International Fund was
closed to new investors. Harbor International Fund was reopened to new investors
in May 2000.

Hakan Castegren of Northern Cross Investments Limited, the current subadviser of
both international funds, will continue to manage the surviving Harbor
International Fund.

Shareholders of Harbor Small Cap Growth Fund will be asked to approve a merger
into Harbor Growth Fund. The surviving fund will be renamed Harbor Small Cap
Growth Fund and will be managed by William Muggia of Westfield Capital
Management Company LLC, the current subadviser on the existing Harbor Small Cap
Growth Fund. Both funds invest in smaller capitalization stocks with favorable
prospects for long-term growth. Harbor Small Cap Growth Fund's holdings have
been diversified more broadly than those of Harbor Growth Fund, which have
become more concentrated in the technology sector.

The Board of Trustees believes strongly that these mergers are in the best
interest of Harbor Fund shareholders. If you have any questions regarding the
mergers and the change in the Harbor Fund lineup, please contact Harbor Fund at
1-800-422-1050 or visit our website at www.harborfund.com.

[DAVID G. VAN HOOSER SIG]

David G. Van Hooser
Chairman

- --------------------------------------------------------------------------------

HARBOR INTERNATIONAL FUND II
AND
HARBOR SMALL CAP GROWTH FUND
(EACH A SERIES OF HARBOR FUND)
ONE SEAGATE
TOLEDO, OHIO 43666
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
SCHEDULED FOR OCTOBER 22, 2002

- --------------------------------------------------------------------------------

THIS IS THE FORMAL AGENDA FOR A SPECIAL MEETING OF SHAREHOLDERS OF YOUR MUTUAL
FUND. IT TELLS YOU WHAT MATTERS WILL BE VOTED ON AND, IN CASE YOU WANT TO ATTEND
THIS MEETING IN PERSON, THE TIME AND PLACE OF THE MEETING.

To the shareholders of Harbor International Fund II ("HIF2") and Harbor Small
Cap Growth Fund ("HSCGF"):

A special meeting of HIF2 and HSCGF shareholders will be held at One SeaGate,
Toledo, Ohio 43666 on Tuesday, October 22, 2002 at 9:00 a.m., Eastern Time. The
following matters will be voted on at the meeting:

<Table>
<Caption>
PROPOSAL FUND
- --------------------------------------------------------------- ----------------------------

1. A proposal to approve an Agreement and Plan of Merger Harbor International Fund II
between HIF2 and Harbor International Fund ("HIF"). Under
this Agreement HIF2 and HIF would combine their assets
into a single fund -- HIF -- with the shareholders of HIF2
becoming shareholders of HIF. HIF would assume HIF2's
liabilities and HIF2 Fund would be dissolved. Northern
Cross Investments Limited would continue to serve as
subadviser to HIF following the merger. YOUR BOARD OF
TRUSTEES RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.

2. A proposal to approve an Agreement and Plan of Merger Harbor Small Cap Growth Fund
between HSCGF and Harbor Growth Fund ("HGF"). Under this
Agreement HSCGF and HGF would combine their assets into a
single fund -- HGF -- with the shareholders of HSCGF
becoming shareholders of HGF. HGF would assume HSCGF's
liabilities and HSCGF Fund would be dissolved. Westfield
Capital Management Company LLC, the current subadviser to
HSCGF, would become subadviser to HGF replacing the
existing subadviser and HGF would change its name to
Harbor Small Cap Growth Fund. YOUR BOARD OF TRUSTEES
RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.

3. Any other business that may properly come before the Each Fund
meeting.
</Table>

Shareholders of record of each fund as of the close of business on August 23,
2002 are entitled to vote on their fund's respective proposal at the meeting and
any related follow-up meetings regarding their fund.

WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THE
ENCLOSED PROXY CARD. IF SHAREHOLDERS DO NOT RETURN THEIR PROXIES IN SUFFICIENT
NUMBERS, HIF2 AND HSCGF WILL INCUR ADDITIONAL COSTS TO SOLICIT PROXIES.

By Order of the Board of Trustees,

Karen B. Wasil, Secretary

Toledo, Ohio
September 9, 2002

- --------------------------------------------------------------------------------

PROXY STATEMENT OF:
HARBOR INTERNATIONAL FUND II
AND
HARBOR SMALL CAP GROWTH FUND
(EACH A SERIES OF HARBOR FUND)
---------------------------------------------------------

PROSPECTUS FOR
INSTITUTIONAL SHARES OF:
HARBOR INTERNATIONAL FUND
AND
HARBOR GROWTH FUND
(EACH A SERIES OF HARBOR FUND)

- --------------------------------------------------------------------------------

This proxy statement and prospectus contains information you should know before
voting on the proposed mergers of Harbor International Fund II, One SeaGate,
Toledo, Ohio 43666 ("HIF2") into Harbor International Fund, One SeaGate, Toledo,
Ohio 43666 ("HIF") and of Harbor Small Cap Growth Fund, One SeaGate, Toledo,
Ohio 43666 ("HSCGF") into Harbor Growth Fund, One SeaGate, Toledo, Ohio 43666
("HGF"). Please read it carefully and retain it for future reference.

This combined proxy statement and prospectus is also intended to provide
shareholders of HIF2 with the information about the change in subadvisers for
their fund that would otherwise need to be provided to them in the form of an
information statement.

HIF and HIF2 are each an open-end mutual fund investing in equity securities of
foreign companies, including those located in emerging market countries. The
investment objective of both HIF and HIF2 is long-term total return, principally
from growth of capital.

HGF and HSCGF are each an open-end mutual fund investing in equity securities of
smaller domestic companies. The investment objective of both HGF and HSCGF is
long-term growth of capital.

HOW THE MERGERS WILL WORK

- - HIF2 will transfer all of its assets to HIF. HIF will assume HIF2's
liabilities.

- - HSCGF will transfer all of its assets to HGF. HGF will assume HSCGF's
liabilities.

- - HIF will issue Institutional shares to HIF2 in an amount equal to the value
of the assets it receives, less the liabilities it assumes, in the merger.
These Institutional shares will be distributed to HIF2's shareholders in
proportion to their holdings in HIF2 on the merger date.

- - HGF will issue Institutional shares to HSCGF in an amount equal to the value
of the assets it receives, less the liabilities it assumes, in the merger.
These Institutional shares will be distributed to HSCGF's shareholders in
proportion to their holdings in HSCGF on the merger date.

- - The mergers will be tax-free for federal income tax purposes.

- - HIF2 will be liquidated and terminated and you will be a shareholder of HIF
Institutional class.

- - HSCGF will be liquidated and terminated and you will be a shareholder of HGF
Institutional class.

- - Immediately following the merger, Westfield Capital Management Company LLC
("Westfield"), the current subadviser to HSCGF, will become the subadviser to
HGF and HGF will change its name to "Harbor Small Cap Growth Fund". It is
expected that Westfield will manage HGF's assets following the merger in
substantially the same manner as it manages the assets of HSCGF currently.

An investment in HIF or HGF is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

<Table>
<Caption>
- --------------------------------------------------------------------------------------------
WHERE TO GET MORE INFORMATION

- --------------------------------------------------------------------------------------------
Harbor Fund Prospectus dated March 1, 2002. Provided in the same envelope as this proxy
It contains additional information about statement and prospectus and incorporated by
each fund. reference into this proxy statement and
prospectus.
- --------------------------------------------------------------------------------------------
Harbor Fund's annual and semi-annual reports Provided in the same envelope as this proxy
to shareholders. statement and prospectus and incorporated by
reference into this proxy statement and
prospectus. It is also on file with the
Securities and Exchange Commission ("SEC")
and available at no charge by calling
1-800-422-1050, visiting our web site at
www.harborfund.com, or writing to us at the
address shown below.
- --------------------------------------------------------------------------------------------
Harbor Fund's statement of additional Incorporated by reference into this proxy
information dated March 1, 2002. It contains statement and prospectus. The SEC now has a
additional information about each fund. web site at http://www.sec.gov that contains
free access to these documents. These
documents are also available for a fee from
the Public Reference Room of the SEC. Call
1-202-942-8090 for information on the
operation of the Public Reference Room.
- --------------------------------------------------------------------------------------------
To ask questions about this proxy statement Call our toll-free telephone number:
and prospectus. 1-800-422-1050 or write to us at Harbor Fund,
One SeaGate, Toledo, Ohio 43666.
- --------------------------------------------------------------------------------------------
</Table>

The date of this proxy statement and prospectus is September 9, 2002.

- --------------------------------------------------------------------------------

TABLE OF CONTENTS

- --------------------------------------------------------------------------------

<Table>
<Caption>
PAGE
----

INTRODUCTION 4
SUMMARY 5
PROPOSAL 1 5
The Merger 10
Capitalization 12
Boards' Evaluation and Recommendation 13
Voting Rights and Required Vote 13
INFORMATION REGARDING CHANGE IN PORTFOLIO MANAGER 13
Information Concerning Northern Cross Investments Limited 13
Management of Similar Funds 13
Terms of the Prior and New Subadvisory Agreements 14
Other Provisions Under the Prior and New Subadvisory
Agreements 15
Miscellaneous 15
Information Concerning Harbor Capital Advisors, Inc. 15
Terms of the Advisory Agreement 16
PROPOSAL 2 17
The Merger 22
Capitalization 26
Boards' Evaluation and Recommendation 26
Voting Rights and Required Vote 26
INFORMATION CONCERNING THE MEETING 27
OWNERSHIP OF SHARES OF THE FUNDS 29
EXPERTS 30
AVAILABLE INFORMATION 30
</Table>

- --------------------------------------------------------------------------------

EXHIBITS

- --------------------------------------------------------------------------------

A. Agreement and Plan of Reorganization between Harbor International Fund and
Harbor International Fund II (attached to this proxy statement and
prospectus)

B. Agreement and Plan of Reorganization between Harbor Growth Fund and Harbor
Small Cap Growth Fund (attached to this proxy statement and prospectus)

C. Form of subadvisory agreement between Northern Cross Investments Limited,
Harbor Capital Advisors, and Harbor International Fund II

D. Annual report to shareholders dated October 31, 2001 and semi-annual report
to shareholders dated April 30, 2002 of Harbor Fund

E. Prospectus dated March 1, 2002 of Harbor Fund

- --------------------------------------------------------------------------------

INTRODUCTION

- --------------------------------------------------------------------------------

This proxy statement and prospectus is being used by the board of trustees of
HIF2 and HSCGF to solicit proxies to be voted at a special meeting of
shareholders of HIF2 and HSCGF. This meeting will be held at One SeaGate,
Toledo, Ohio 43666 on Tuesday, October 22, 2002 at 9:00 a.m., Eastern Time. The
purpose of the meeting is to consider: (1) a proposal to approve an Agreement
and Plan of Merger providing for the merger of HIF2 with HIF; and (2) a proposal
to approve an Agreement and Plan

of Merger providing for the merger of HSCGF with HGF. This proxy statement and
prospectus is being mailed to HIF2 and HSCGF shareholders on or about September
9, 2002.

WHO IS ELIGIBLE TO VOTE?

HIF2 and HSCGF shareholders of record on August 23, 2002 are entitled to attend
and vote at the meeting or any adjourned meeting. Each share of HIF2 and HSCGF
outstanding on August 23, 2002 is entitled to one vote. Shares represented by
properly executed proxies, unless revoked before or at the meeting, will be
voted according to shareholders' instructions. If you sign a proxy card, but do
not fill in a vote, your shares will be voted to approve the Agreement and Plan
of Merger. If any other business comes before the meeting, your shares will be
voted at the discretion of the persons named as proxies.

- --------------------------------------------------------------------------------

SUMMARY

- --------------------------------------------------------------------------------

The following is a summary. More complete information appears later in this
proxy statement. You should read the entire proxy statement and the enclosed
exhibits carefully because they contain details that are not in the summary. The
materials in the exhibits and the statement of additional information dated
March 1, 2002 for each fund are hereby incorporated by reference into this proxy
statement and prospectus.

- --------------------------------------------------------------------------------

PROPOSAL 1
TO APPROVE AN AGREEMENT AND PLAN OF MERGER BETWEEN
HARBOR INTERNATIONAL FUND II AND HARBOR INTERNATIONAL FUND

- --------------------------------------------------------------------------------

COMPARISON OF HIF TO HIF2

- -----------------------------------------------------------------------------------------------------
HIF HIF2
- -----------------------------------------------------------------------------------------------------

GENERAL A diversified series of Harbor Fund. Harbor Fund is an open-end
investment company organized as a Delaware business trust.
- -----------------------------------------------------------------------------------------------------
INVESTMENT STRUCTURE HIF invests directly in HIF2 invests directly in
securities, as described below. securities, as described below.
- -----------------------------------------------------------------------------------------------------
NET ASSETS AS OF AUGUST 23,
2002
- -----------------------------------------------------------------------------------------------------
INVESTMENT ADVISER AND Harbor Capital Advisors, Inc. ("Harbor Capital") is HIF's and
SUBADVISER HIF2's investment adviser. Northern Cross Investments Limited
("Northern Cross") is the subadviser to HIF and HIF 2.
- -----------------------------------------------------------------------------------------------------
CONTROL OF INVESTMENT ADVISER Harbor Capital is a wholly owned subsidiary of Robeco Groep N.V.
AND SUBADVISERS Founded in 1929, Robeco Groep N.V. is one of the world's oldest
asset management organizations.

Northern Cross, incorporated on September 29, 1992 as a Bermuda
corporation, is located at Clarendon House, 2 Church Street,
Hamilton, Bermuda HMDX. Hakan Castegren is the sole shareholder.
- -----------------------------------------------------------------------------------------------------
</Table>

PRINCIPAL STRATEGIES In general, each fund stays fully invested in stocks and does not
try to time the market. The subadviser uses an analysis of economic
and market data, as well as its knowledge of each country's
culture, to determine country and industry allocations. Before
selecting a country for investment, the subadviser analyzes the
stability of a country's currency and its political, social and
economic culture.

Subject to these allocations, the subadviser uses a value oriented,
bottom up approach, researching and evaluating individual
companies, to select stocks for the respective fund's portfolio.
This research includes visiting companies around the world and
meeting with company management. The subadviser has contact with a
worldwide network of senior brokers and analysts.
-------------------------------------------------------------------
In selecting stocks for each fund's portfolio, the subadviser also
looks for companies with the following characteristics:

- Businesses that the subadviser believes offer value

- Low price/earnings multiples relative to other stocks in each
country/ industry

- Above average, long term earnings expectation not reflected in
the price
- -----------------------------------------------------------------------------------------------------
OTHER INVESTMENTS Each fund may invest up to 15% of its net assets in illiquid
Illiquid securities securities.
- -----------------------------------------------------------------------------------------------------
Investment companies Each fund may invest in other investment companies to the extent
permitted by the Investment Company Act of 1940.
- -----------------------------------------------------------------------------------------------------
Derivatives - Each fund may, for temporary defensive or hedging purposes,
purchase options on foreign currencies, enter into forward
foreign currency exchange contracts and contracts for the future
delivery of foreign currencies, and purchase options on such
futures contracts.

- Each fund may buy and sell options contracts, financial futures
contracts and options on futures contracts.

- Each fund may purchase and sell options and futures based on
securities, indices, or currencies, including options and futures
traded on foreign exchanges and options not traded on any
exchange.

- Each fund may write covered put and call options and purchase put
and call options to enhance total return, as a substitute for the
purchase or sale of securities or currency, or to protect against
declines in the value of portfolio securities and against
increases in the cost of securities to be acquired.

- Neither fund is authorized to enter into futures contracts on
currencies or engage in options transactions with respect to
futures contracts for speculative purposes.

- To seek to increase total return or hedge against changes in
interest rates, securities prices or currency exchange rates,
each fund may purchase and sell various kinds of futures
contracts, and purchase and write call and put options on these
futures contracts. Each fund may also enter into closing purchase
and sale transactions with respect to any of these contracts and
options.
- -----------------------------------------------------------------------------------------------------
</Table>

PORTFOLIO MANAGERS Hakan Castegren of Northern Cross has managed HIF since its
inception in 1987 and has managed HIF2 since August 1, 2002. Mr.
Castegren is the president of Northern Cross and was previously
associated with Boston Overseas Investors as a portfolio manager.
- -----------------------------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- -----------------------------------------------------------------------------------------------------
INVESTMENT OBJECTIVES Long-term total return, principally from growth of capital.
- -----------------------------------------------------------------------------------------------------
PRINCIPAL STYLE International large cap value oriented stocks.
CHARACTERISTICS
- -----------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENTS The funds invest primarily in equity securities, principally common
stocks, preferred stocks, rights and depositary receipts, of
foreign companies, including those located in emerging market
countries.

Under normal circumstances, the funds must invest in a minimum of
three countries. In the past, the funds have invested in as many as
20 or more countries at a time.

The funds focus on companies located in Europe, the Pacific Basin
and emerging industrialized countries whose economies and political
regimes appear more stable and are believed to provide some
protection to foreign shareholders.

Companies in the fund's portfolio generally have market
capitalizations in excess of $1 billion.

The subadviser chooses approximately 70-90 stocks for the portfolio
from a select universe of stocks.
- -----------------------------------------------------------------------------------------------------
Equity securities Equity securities include exchange-traded and over-the-counter
common and preferred stocks, warrants, rights, investment grade
convertible securities, depositary receipts and shares, trust
certificates, limited partnership interests, shares of other
investment companies, real estate investment trusts and equity
participations.
- -----------------------------------------------------------------------------------------------------
Derivatives HIF may not engage in options HIF2 may also purchase options
transactions on currencies for on foreign currencies to seek to
speculative purposes. increase the total return of the
fund, provided that the
aggregate premium of the options
purchased represent no more than
5% of the fund's net assets.

HIF2 may not write options on
currencies for speculative
purposes.
- -----------------------------------------------------------------------------------------------------
Forward Commitments and Each fund may purchase securities on a when-issued basis or
When-Issued Securities purchase or sell securities on a forward commitment basis including
TBA (to be announced) purchase and sale commitments.
- -----------------------------------------------------------------------------------------------------
Repurchase Agreements Each fund may enter into repurchase agreements.
- -----------------------------------------------------------------------------------------------------
</Table>

Foreign Currency Transactions Each fund may purchase securities denominated in foreign
currencies.
- -----------------------------------------------------------------------------------------------------
TEMPORARY DEFENSIVE POSITIONS Each fund may depart from its principal investment strategies in
order to take a temporary defensive position by investing up to
100% of its assets in equity securities of U.S. issuers or in
investment grade corporate debt securities rated Baa or higher by
Moody's or BBB by S&P.
- -----------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT RISKS
- -----------------------------------------------------------------------------------------------------
GENERAL You could lose money on your investment in either fund. There is no
guarantee that either fund will achieve its investment objective.
- -----------------------------------------------------------------------------------------------------
STOCK MARKET RISK Stocks do fluctuate in price and the value of your investment in
the funds may go down. This means that you could lose money on your
investment in the funds or the funds may not perform as well as
other possible investments if any of the following occurs:

- A drop in foreign stock markets.

- The market favors growth stocks over value stocks.

- An adverse event, such as an unfavorable earnings report,
depresses the value of a particular company's stock.

- The subadviser's judgment about the attractiveness, value and
potential appreciation of particular companies' stocks proves to
be incorrect.
- -----------------------------------------------------------------------------------------------------
FOREIGN COUNTRY RISKS Investing in securities of foreign companies creates a greater risk
that the funds' share price will fluctuate more than if the funds
invested in domestic issuers. Prices of foreign securities may go
down if any of the following occurs:

- Unfavorable foreign government actions, political, economic or
market instability or the absence of accurate information about
foreign companies.

- A decline in the value of foreign currencies relative to the U.S.
dollar will reduce the unhedged value of securities denominated
in those currencies.

- Foreign securities are sometimes less liquid and harder to value
than securities of U.S. issuers.

These risks are more severe for securities of issuers in emerging
market countries such as Eastern Europe, Latin America and the
Pacific Basin.

Foreign brokerage and custodian fees may be higher than in the U.S.
- -----------------------------------------------------------------------------------------------------
Derivatives used for hedging may not fully offset the underlying
DERIVATIVES RISKS positions. Derivatives transactions may not have the intended
effects and may result in losses or missed opportunities.
Derivatives that involve leverage may magnify losses from adverse
market developments. In addition, there is the risk that a
counterparty will fail to honor a contract's terms, which would
deprive a fund of the hedging and other benefits of the contract.
Some derivatives, especially those not traded on an exchange, may
become illiquid and difficult to value accurately.
- -----------------------------------------------------------------------------------------------------
</Table>

<Table>
<Caption>
----------------------------------------------------------------------------------------------------
BUYING, EXCHANGING AND REDEEMING SHARES
----------------------------------------------------------------------------------------------------

NET ASSET VALUE Each fund calculates its net asset value per share (NAV) at the
close of regular trading on the New York Stock Exchange (NYSE)
(normally 4:00 p.m. Eastern time) on each business day. Each fund's
portfolio securities are valued either based on market quotations
or, if market quotations are unavailable, at fair value, which
involves estimating a security's value based on information other
than market quotations.
----------------------------------------------------------------------------------------------------
CLASSES OF SHARES HIF currently offers only one HIF2 currently offers only one
class of shares. Effective class of shares. Effective
October 1, 2002, HIF will be October 1, 2002, these shares
offering three classes of will be referred to as
shares: Institutional shares, Institutional shares.
Retirement shares, and Investor
shares. Only Institutional
shares are being offered to HIF2
shareholders in this proxy
statement and prospectus.
----------------------------------------------------------------------------------------------------
RULE 12B-1 AND SERVICE FEES HIF and HIF2 current and Institutional shares are not subject to any
Rule 12b-1 or service fee.
----------------------------------------------------------------------------------------------------
BUYING AND SELLING SHARES Investors may purchase and redeem shares through brokers or directly
from Harbor Fund.
----------------------------------------------------------------------------------------------------
Minimum Investment Amounts $500 minimum subsequent investments
$1,000 minimum initial investment
----------------------------------------------------------------------------------------------------
Exchanging Shares You may exchange your shares for shares of the same class of another
Harbor Fund.
----------------------------------------------------------------------------------------------------
</Table>

HIF will waive the minimum investment amount for any HIF2 account that, after
the merger, contains less than the minimum investment amount required for HIF.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
Institutional shares of HIF or Institutional shares of HIF2. The table also
shows pro forma expenses of Institutional shares of HIF following the proposed
merger.

<Table>
<Caption>
--------------------------------------------------------------------------------------------------
HIF HIF2
HIF INSTITUTIONAL INSTITUTIONAL
FOR THE PERIOD ENDED APRIL 30, 2002 (PRO FORMA) SHARES SHARES

--------------------------------------------------------------------------------------------------
SHAREHOLDER FEES None None None
(fees paid directly from your investment)
ANNUAL FUND OPERATING EXPENSES
(expenses deducted from fund assets)
Management fees 0.75% 0.75% 0.75%
Distribution and service (12b-1) fees None None None
Other expenses 0.11% 0.17% 0.26%
----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 0.86% 0.92% 1.01%
===== ===== =====
--------------------------------------------------------------------------------------------------
</Table>

THE MERGER

TERMS OF THE MERGER

The funds' trustees have approved an Agreement and Plan of Reorganization, a
copy of which is attached as Exhibit A. The Agreement provides for a merger on
the following terms:

- - The merger is scheduled to occur at 5:00 p.m., Eastern Time, on October 31,
2002, but may occur on any later date before December 31, 2002.

- - In the merger, HIF2 will transfer all of its assets to HIF, and in exchange
HIF will assume HIF2's liabilities and issue shares as described below.

- - HIF will issue Institutional shares to HIF2 in an amount equal to the value of
the assets received by HIF, less the liabilities assumed by HIF, in the
transaction. These shares will immediately be distributed by HIF2 to HIF2's
shareholders in proportion to their holdings in HIF2 on the merger date. As a
result, shareholders of HIF2 will become Institutional shareholders of HIF.

- - The net asset value of both funds will be computed as of 4:00 p.m., Eastern
Time, on the merger date.

- - After the merger is over, HIF2 will cease to exist.

- - The following diagram shows how the merger will be carried out.

[DIAGRAM]

<Table>

HIF2 TRANSFERS ITS HIF RECEIVES HIF HIF2 RECEIVES HIF2
ASSETS AND ASSETS FROM AND INSTITUTIONAL THESE SHARES AND SHAREHOLDERS
LIABILITIES TO HIF ASSUMES SHARES ARE DISTRIBUTES THE RECEIVE HIF
LIABILITIES OF ISSUED SHARES TO ITS INSTITUTIONAL
HIF2 SHAREHOLDERS SHARES
</Table>

TAX STATUS OF THE MERGER

The merger will be tax-free for federal income tax purposes and will not take
place unless HIF2 and HIF receive from the law firm of Hale and Dorr LLP, a
satisfactory opinion that the transaction constitutes a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986 (the "Code")
as such:

- - No gain or loss will be recognized by HIF2 upon (1) the transfer of all of its
assets to HIF as described above or (2) the distribution by HIF2 of HIF
Institutional shares to HIF2's shareholders;

- - No gain or loss will be recognized by HIF upon the receipt of HIF2's assets
solely in exchange for the issuance of HIF Institutional shares to HIF2 and
the assumption of all of HIF2's liabilities by HIF;

- - The basis of the assets of HIF2 acquired by HIF will be, in each instance, the
same as the basis of those assets in the hands of HIF2 immediately before the
transfer;

- - The tax holding period of the assets of HIF2 in the hands of HIF will include
HIF2's tax holding period for those assets;

- - The shareholders of HIF2 will not recognize gain or loss upon the exchange of
all their shares of HIF2 solely for HIF Institutional shares as part of the
transaction;

- - The basis of HIF Institutional shares received by HIF2's shareholders in the
transaction will be the same as the basis of the shares of HIF2 surrendered in
exchange; and

Shareholders should consult their tax adviser for the particular tax
consequences to them resulting from the merger, including the applicability of
any state, local, or foreign tax laws.
10

- - The tax holding period of the HIF Institutional shares received by HIF2's
shareholders will include, for each shareholder, the tax holding period of the
shares of HIF2 surrendered in exchange, provided that the HIF Institutional
shares were held as capital assets on the date of the exchange.

REASONS FOR THE PROPOSED MERGER

The board of trustees of HIF2 believes that the proposed merger will be
advantageous to the shareholders of HIF2 for several reasons. The board of
trustees considered the following matters, among others, in approving the merger
in a meeting held on June 13-14, 2002.

Overlapping Investment Strategy and Market Niche. HIF2 and HIF both have
essentially identical investment objectives, investing primarily in the equity
securities of foreign companies, including those located in emerging market
countries. Due to the reopening of HIF on May 15, 2000, both funds are now
available to new investors. It is believed that offering each fund may hinder
the other fund's potential for asset growth because each dual offering may be
confusing to investors. Therefore, the trustees concluded that it is not
advantageous to operate and market HIF2 separately from HIF.

Investment Performance. HIF shares received in the merger will provide HIF2's
shareholders with substantially the same investment advantages as they currently
have at a comparable level of risk. The HIF2 board of trustees also considered
the performance history of each fund, which is shown in the table below. The
trustees noted that HIF has outperformed HIF2 since the fund's inception, so
that the merger would result in one fund with a significant asset base and
strong prior performance.

<Table>
<Caption>
-----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
-----------------------------------------------------------------------------------------------
HIF HIF2
INSTITUTIONAL SHARES INSTITUTIONAL SHARES
(INCEPTION 12/29/1987) (INCEPTION 06/01/1996)

-----------------------------------------------------------------------------------------------
1 year ended 06/30/2002 1.65% -7.31%
5 years ended 06/30/2002 3.24% 0.26%
10 years ended 06/30/2002 10.74% N/A
Inception through 06/30/2002 13.35% 4.72%
Year to date (06/30/2002) 6.07% -2.17%
-----------------------------------------------------------------------------------------------
</Table>

Possibility of Reduced Expenses. A combined fund offers economies of scale and
may lead to the spreading of fixed costs over a larger asset base which is
advantageous, particularly for HIF2 and its shareholders. Both funds incur
substantial costs for accounting, legal, transfer agency services, insurance,
and custodial and administrative services. As shown in the fee table in the
Summary, the overall expense ratio of HIF Institutional shares is lower than
those of HIF2.

Additional Benefits of HIF. The board of trustees of HIF considered that the
merger presents an excellent opportunity for HIF to acquire investment assets
without the obligation to pay commissions or other transaction costs that are
normally associated with the purchase of portfolio securities. This is
particularly true when both Funds hold overlapping portfolio securities. This
opportunity provides an economic benefit to HIF and its shareholders.

Benefits to Advisers and Other Service Providers. The board of trustees of both
funds considered that the funds' adviser and distributor may also benefit from
the merger. For example, the adviser might realize time savings from a
consolidated portfolio management effort and from the need to prepare fewer
prospectuses, reports and regulatory filings. The trustees believe, however,
that these savings will not amount to a significant economic benefit.

ADDITIONAL TERMS OF AGREEMENT AND PLAN OF MERGER

Conditions to Closing the Merger. The obligation of HIF2 to consummate the
merger is subject to the satisfaction of certain conditions, including the
performance by HIF of all its obligations under the Agreement and the receipt of
an officers' certificate and an opinion of counsel from HIF (see Agreement,
paragraph 7).

The obligation of HIF to consummate the merger is subject to the satisfaction of
certain conditions, including HIF2's performance of all of its obligations under
the Agreement and the receipt of certain financial and tax information, an
officers' certificate and an opinion of counsel from HIF2 (see Agreement,
paragraph 6).

The obligations of both funds are subject to the approval of the Agreement by
the necessary vote of the outstanding shares of HIF2, in accordance with the
provisions of HIF2's declaration of trust and by-laws. The funds' obligations
are also subject to several other conditions, including the receipt of all
consents, orders and permits necessary to consummate the merger and the receipt
of a favorable opinion of counsel to each fund as to the federal income tax
consequences of the merger. (see Agreement, paragraph 8).

Termination of Agreement. HIF2 or HIF may mutually agree to terminate the
Agreement (even if the shareholders of HIF2 have already approved it) at any
time before the merger date. Either fund may also terminate the Agreement if the
other fund has breached any representation, warranty or agreement contained in
the Agreement or if any condition to closing the merger cannot or will not be
met.

Expenses of the Merger. Each fund shall bear its own expenses in connection
with the merger. These liquidation and termination fees are expected to be
approximately $91,000.

CAPITALIZATION

The following table sets forth the capitalization of each fund as of April 30,
2002, and the pro forma combined capitalization of both funds as if the merger
had occurred on that date. The table reflects pro forma exchange ratios of
approximately 0.352 HIF Institutional shares being issued for each share of
HIF2. If the merger is consummated, the actual exchange ratios on the merger
date may vary from the exchange ratios indicated due to changes in any of the
following:

- - The market value of the portfolio securities of both HIF and HIF2 between
April 30, 2002 and the merger date.

- - Changes in the amount of undistributed net investment income and net realized
capital gains of HIF and HIF2 during that period resulting from income and
distributions.

- - Changes in the accrued liabilities of HIF and HIF2 during the same period.

<Table>
<Caption>
HIF
CAPITALIZATION AS OF APRIL 30, 2002 HIF2 HIF PRO FORMA COMBINED(1)
----------------------------------- ------- ---------- ---------------------

Net Assets (000s) $74,204 $3,869,129 $3,944,418
Net Asset Value Per Share $11.09 $31.49 $31.49
Shares Outstanding (000s) 6,692 122,869 125,259
</Table>

- -------------------------

(1) If the merger had taken place on April 30, 2002, HIF2 would have received
2,356 Institutional shares (000s) of HIF, which would have been available for
distribution to the shareholders of HIF2.

It is impossible to predict how many Institutional shares of HIF will actually
be received and distributed by HIF2 on the merger date. The table should not be
relied upon to determine the amount of HIF Institutional shares that will
actually be received and distributed.

BOARDS' EVALUATION AND RECOMMENDATION

For the reasons described above, the board of trustees of HIF2, including the
trustees who are not "interested persons" of either fund or any of their
advisers ("independent trustees"), approved the merger at a meeting held on June
13-14, 2002. In particular, the board determined that the merger was in the best
interests of HIF2 and that the interests of HIF2's shareholders would not be
diluted as a result of the merger. Similarly, the board of trustees of HIF,
including the independent trustees, approved the merger at a meeting held on
June 13-14, 2002. The board also determined that the merger was in the best
interests of HIF and that the interests of HIF's shareholders would not be
diluted as a result of the merger.

THE BOARD OF TRUSTEES OF HIF2 RECOMMENDS THAT THE SHAREHOLDERS OF HIF2 VOTE FOR
THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF MERGER.

VOTING RIGHTS AND REQUIRED VOTE

Each share of HIF2 outstanding on the record date is entitled to one vote. As
provided under the Investment Company Act, approval of the merger will require
the vote of a majority of the voting securities of HIF2 present in person or by
proxy at the shareholder meeting at which a quorum is present with respect to
HIF2.

If the required approval of shareholders is not obtained, HIF2 will continue to
engage in business as a separate mutual fund and the board of trustees will
consider what further action may be appropriate.

- --------------------------------------------------------------------------------

INFORMATION REGARDING CHANGE IN PORTFOLIO MANAGER

- --------------------------------------------------------------------------------

INFORMATION CONCERNING NORTHERN CROSS INVESTMENTS LIMITED ("NORTHERN CROSS")

Northern Cross, a registered investment adviser under the Advisers Act since
1993, currently serves as the subadviser to HIF2 pursuant to the new subadvisory
agreement dated August 1, 2002. Northern Cross, incorporated on September 29,
1992 as a Bermuda corporation, is located at Clarendon House, 2 Church Street,
Hamilton, Bermuda HMDX. Northern Cross focuses on identifying value oriented,
non-US equity securities of companies that have long-term positive prospects and
managed approximately $5.2 billion in assets as of June 30, 2002.

Hakan Castegren is the sole shareholder and President, Nicolas G. Trollope is
the Vice President, Clarance G. Hall is the Secretary and Graham Collis is the
Director.

MANAGEMENT OF SIMILAR FUNDS

The following table lists each fund currently managed or subadvised by Northern
Cross with an investment objective that is similar to the Harbor International
Fund II, as well as the size of each fund and the fee rate payable to Northern
Cross.

<Table>
<Caption>
---------------------------------------------------------------------------------------------------
FUND ASSETS FEE RATE
FUND (AS OF JUNE 30, 2002) (AS A PERCENTAGE OF DAILY NET ASSETS)
---------------------------------------------------------------------------------------------------

Harbor International Fund $3.96 billion 0.55% on the first $1 billion
0.50% on the next $1 billion
0.45% on the next $1 billion
0.40% thereafter
---------------------------------------------------------------------------------------------------
</Table>

TERMS OF THE PRIOR AND NEW SUBADVISORY AGREEMENTS

The new subadvisory agreement is substantially similar to the prior subadvisory
agreement with Summit except for the dates of execution, effectiveness and
termination and rates of subadvisory fees payable. The form of new subadvisory
agreement is attached hereto as Exhibit C and the following discussion of the
terms of the new subadvisory agreement is qualified in its entirety by reference
to Exhibit C.

Subadvisory Services. The subadvisory services to be provided by Northern Cross
under the new subadvisory agreement are identical to those provided by Summit
under the prior subadvisory agreement. Pursuant to the terms of the new
subadvisory agreement, Northern Cross will be authorized to buy and sell
securities for that portion of the Fund's portfolio which Harbor Capital
allocates to Northern Cross and to designate brokers to carry out such
transactions. Northern Cross may not make any purchase in which the cost would
exceed the Fund's available liquid assets and may not make any purchase which
would violate any fundamental policy or restriction in the Fund's prospectus or
statement of additional information as then in effect. Northern Cross will also
keep certain of the records required by the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the Investment Advisers Act of 1940
(the "Advisers Act") to be maintained on behalf of the Fund, and assist Harbor
Capital in maintaining the Fund's compliance with the requirements of the
Investment Company Act. Northern Cross will also provide in-person reports on
the Fund's performance to the Trustees on a regular basis.

Subadvisory Fees. For its services, Northern Cross would be entitled to a
subadvisory fee from Harbor Capital. The Fund has no responsibility to pay any
fee to Northern Cross. Harbor Capital would pay Northern Cross a fee at an
annual rate based upon the assets in the Fund allocated to Northern Cross,
expressed as a percentage of the Fund's average daily net assets. The fee is
computed and accrued monthly and paid quarterly in arrears. For purposes of
determining the amount of assets allocated to a Northern Cross and whether a fee
rate breakpoint has been reached, both the prior and the new subadvisory
agreements take into account the assets of the Harbor Group Trust for Defined
Benefit Plans which have been allocated to the subadviser.

Under the prior subadvisory agreements, Harbor Capital, out of its own assets,
paid a subadvisory fee to Summit at the following rates:

<Table>
<Caption>
NET ASSET VALUE ANNUAL RATE
--------------- -----------

First $1.5 billion 0.50%
Next $1 billion 0.45%
Amounts over $2.5 billion 0.40%
</Table>

Under the new subadvisory agreement, Harbor Capital, out of its own assets,
would pay a subadvisory fee to Northern Cross at the following rates:

<Table>
<Caption>
NET ASSET VALUE ANNUAL RATE
--------------- -----------

First $1 billion 0.55%
Next $1 billion 0.50%
Next $1 billion 0.45%
Amounts over $3 billion 0.40%
</Table>

The following table shows the amount of subadvisory fees paid to Summit for the
period November 1, 2000 through October 31, 2001, the advisory fees that would
have been paid to Northern Cross had the

new subadvisory agreement been in effect during that year, and the percentage
difference between those amounts:

<Table>
<Caption>
-------------------------------------------------------------------------------
AMOUNT OF SUBADVISORY
FEES THAT WOULD HAVE DIFFERENCE AS A
BEEN PAID UNDER THE PERCENTAGE OF THE
AGGREGATE AMOUNT OF NEW SUBADVISORY AGGREGATE AMOUNT PAID
SUBADVISORY FEES PAID TO SUMMIT AGREEMENT TO SUMMIT
------------------------------- --------------------- ---------------------
-------------------------------------------------------------------------------

$516,915 $477,746 7.76%
-------------------------------------------------------------------------------
</Table>

Implementation of the new subadvisory agreement has not resulted in any change
in rate of advisory fees payable by the Fund's shareholders to Harbor Capital
under the investment advisory agreement.

OTHER PROVISIONS UNDER THE PRIOR AND NEW SUBADVISORY AGREEMENTS

Standard of Care. Under the new subadvisory agreement, Northern Cross shall not
be liable for any error of judgment, mistake of law or for any loss sustained in
connection with the provision of subadvisory services pursuant to the agreement;
but nothing contained in the subadvisory agreement shall protect Northern Cross
against any liability to Harbor Capital, the Fund or its shareholders by reason
of willful misfeasance, bad faith or gross negligence on the part of Northern
Cross in the performance of its duties, or by reason of its reckless disregard
of its obligations and duties under the subadvisory agreement. The prior
subadvisory agreements included the same provisions.

Subadviser's Authority. The new subadvisory agreement provides that Northern
Cross shall have full discretion to act for the Fund in connection with the
purchase and sale of portfolio securities for that portion of the Fund's
portfolio allocated to it, subject only to the declaration of trust, by-laws,
currently effective registration statements under the Investment Company Act and
the Securities Act of 1933, investment objectives, policies and restrictions of
the Fund in effect from time to time, and specific policies and instructions
established from time to time by the Trustees. The prior subadvisory agreements
included the same provisions.

Payment of Expenses. Northern Cross bears its own costs of providing
subadvisory services under the new subadvisory agreement. The prior subadvisory
agreements included the same provision.

MISCELLANEOUS

The new subadvisory agreement will remain in effect, unless earlier terminated,
until August 1, 2004, and from year to year thereafter, provided that the
agreement is specifically approved at least annually in the manner prescribed in
the Investment Company Act and the rules and regulations thereunder, subject
however, to such exemptions as may be granted by the Commission by any rule,
regulation or order. The new subadvisory agreement may, on 30 days' written
notice, be terminated at any time without penalties charged to the Fund, by the
Board of Trustees, by vote of a majority of the outstanding voting securities of
the Fund, by the Adviser, or by Northern Cross. The new subadvisory agreement
will terminate immediately upon the assignment of the investment advisory
agreement between the Adviser and the Fund.

INFORMATION CONCERNING HARBOR CAPITAL ADVISORS, INC.

Harbor Capital serves as the investment adviser to all fourteen series of the
Trust, including HIF2. Harbor Capital is a Delaware corporation and is
registered as an investment adviser with the Securities and Exchange Commission.
Harbor Capital also serves as the investment adviser to separate accounts for
the Harbor Capital Group Trust for Defined Benefit Plans. Harbor Capital is
located at One SeaGate, Toledo, Ohio 43666. Harbor Capital manages approximately
$14.3 billion in assets as of June 30, 2002, with the vast majority of those
assets in the Trust.

Harbor Capital is wholly owned by Robeco Harbor Holding, Inc., a holding company
whose offices are located at One SeaGate, Toledo, OH 43666. Robeco Harbor
Holding, Inc. is a wholly owned subsidiary of the Robeco Groep, N.V., which is a
Dutch limited liability company located at Coolsingel 120, 3011 AG Rotterdam,
The Netherlands.

The principal executive officers and directors of Harbor Capital and their
principal occupations are listed in the table below. The business address of
each person is One SeaGate, Toledo, Ohio 43666.

<Table>
<Caption>
--------------------------------------------------------------------------------------------
NAME AND POSITION WITH THE TRUST PRINCIPAL OCCUPATION
--------------------------------------------------------------------------------------------

David G. Van Hooser Director and Chairman of the Board, Harbor
Chairman of the Board and Trustee Capital; Director, HCA Securities; and
Director, Harbor Transfer.
James M. Williams Director and President, Harbor Capital;
President Director and President, HCA Securities;
Director, Harbor Transfer.
Constance L. Souders Senior Vice President, Secretary, Director
Vice President and Treasurer of Administration and Director, Harbor
Capital; President and Director, Harbor
Transfer; and Vice President, Secretary and
Director, HCA Securities.
Karen B. Wasil Assistant Secretary and Regulatory and Legal
Secretary Compliance Manager, Harbor Capital; and
Secretary, Harbor Transfer;
--------------------------------------------------------------------------------------------
</Table>

TERMS OF THE ADVISORY AGREEMENT

Harbor Capital is responsible for the overall management of HIF2 pursuant to a
separate advisory agreement between HIF2 and Harbor Capital. Under the terms of
the advisory agreement, Harbor Capital furnishes HIF2 with investment research,
advice and supervision and an investment program for HIF2 consistent with the
investment objectives and policies of HIF2. The advisory agreement expressly
provides that Harbor Capital may engage a subadviser to make the daily
investment decisions for HIF2. Harbor Capital will retain the responsibility
under the agreement to both oversee the subadviser which it selects and to
recommend to the Trust's Board of Trustees the hiring, termination and
replacement of the subadviser. Harbor Capital also overseas the management of
HIF2 by its subadviser and administers HIF2's business affairs and, in
connection therewith, furnishes HIF2 with office facilities and is responsible
for clerical, record keeping and bookkeeping service and for the financial and
accounting records required to be maintained by HIF2, other than those
maintained by HIF2's custodian and shareholder servicing agent. For its services
under the advisory agreement, Harbor Capital receives a fee, paid monthly, equal
to the sum of 0.75% per annum of the average daily net assets of HIF2. For the
fiscal year ended October 31, 2001, HIF2 paid approximately $682,000 to Harbor
Capital as compensation for advisory services.

- --------------------------------------------------------------------------------

PROPOSAL 2
TO APPROVE AN AGREEMENT AND PLAN OF MERGER BETWEEN
HARBOR SMALL CAP GROWTH FUND AND HARBOR GROWTH FUND

- --------------------------------------------------------------------------------

COMPARISON OF HGF TO HSCGF

<Table>
<Caption>
----------------------------------------------------------------------------------------------------
HGF HSCGF
----------------------------------------------------------------------------------------------------

GENERAL A diversified series of Harbor Fund. Harbor Fund is an open-end
management investment company organized as a Delaware business
trust.
----------------------------------------------------------------------------------------------------
INVESTMENT STRUCTURE HGF invests directly in HSCGF invests directly in
securities, as described below. securities, as described below.
----------------------------------------------------------------------------------------------------
NET ASSETS AS OF AUGUST 23,
2002
----------------------------------------------------------------------------------------------------
INVESTMENT ADVISER AND Harbor Capital Advisors, Inc. ("Harbor Capital") is HSCGF's and
SUBADVISER HGF's investment adviser.

--------------------------------------------------------------------
Emerging Growth Advisors, Inc. Westfield Capital Management
("Emerging Growth") is the Company LLC ("Westfield") is the
subadviser to HGF. subadviser to HSCGF.
----------------------------------------------------------------------------------------------------
CONTROL OF INVESTMENT Harbor Capital is a wholly owned subsidiary of Robeco Groep N.V.
ADVISER AND SUBADVISERS Founded in 1929, Robeco Groep N.V. is one of the world's oldest
asset management organizations.

--------------------------------------------------------------------
Emerging Growth, a Delaware "S" In October 1997, Westfield
corporation is located at 401 E. merged with Boston Private
Pratt Street, Suite 211, Investment Management, Inc, a
Baltimore, MD 21202. Peter wholly-owned subsidiary of
Welles is the sole shareholder. Boston Private Financial
Holdings, Inc. (publicly traded
over-the-counter under BPFH and
parent company to Boston Private
Bank & Trust Company). Westfield
operates as an autonomous
investment management unit.
----------------------------------------------------------------------------------------------------
</Table>

PORTFOLIO MANAGERS Peter Welles of Emerging Growth William Muggia of Westfield has
has managed HGF since May 1997. managed HSCGF since its
Mr. Welles has been the inception in 2000. Mr. Muggia is
president of Emerging Growth the president, chief investment
since 1993 and before that was a officer, and a member of the
general partner of Emerging board of directors of Westfield.
Growth Partners, L.P. Prior to joining Westfield in
1994, he worked in the
Technology Investment Banking
Group at Alex, Brown & Sons.
----------------------------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
----------------------------------------------------------------------------------------------------
INVESTMENT OBJECTIVES Long-term growth of capital.
----------------------------------------------------------------------------------------------------
PRINCIPAL STYLE Small to mid cap growth stocks Small cap growth stocks
CHARACTERISTICS with high volatility. demonstrating consistent or
accelerating earnings growth.
----------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENTS HGF invests in equity HSCGF invests in equity
securities, principally common securities, principally common
stocks, preferred stocks, rights stocks, preferred stocks, rights
and depositary receipts, of and depositary receipts, of
companies with estimated companies with market
revenues of $500 million or less capitalizations in the
at the time of initial approximate range of $100
investment. million to $1.5 billion at the
time of initial investment.
Under normal circumstances, the
fund intends to invest Under normal circumstances, the
substantially all, but must fund intends to invest
invest at least 65% of its net substantially all, but must
assets in a diversified invest at least 80% of its net
portfolio of equity securities. assets, plus borrowings for
investment purposes, in a
The fund expects to invest in diversified portfolio of small
approximately 40-60 companies. cap equity securities.
The fund invests primarily in
both small and mid cap companies The fund expects to invest in
with market capitalization that about 50 companies.
range from $100 million to $10
billion.

----------------------------------------------------------------------------------------------------
Equity securities Equity securities include exchange-traded and over-the-counter
common and preferred stocks, warrants, rights, investment grade
convertible securities, depositary receipts and shares, trust
certificates, limited partnership interests, shares of other
investment companies, real estate investment trusts and equity
participations.
----------------------------------------------------------------------------------------------------
</Table>

PRINCIPAL STRATEGIES In general, HGF stays fully In general, HSCGF stays fully
invested in stocks and does not invested in stocks and does not
try to time the market. The try to time the market. The
subadviser uses a bottom up subadviser uses a bottom up
approach, researching and approach by, first, identifying
evaluating individual companies, companies that meet strict
for potential investment in the fundamental criteria and then
fund's portfolio. Individual performing a qualitative review
stock selection will determine on each identified company to
industries in which the fund select those companies for
invests. The subadviser's investment in the fund's
research includes initial portfolio. This means that
personal interviews and individual stock selections
continuing contacts with top primarily determine the fund's
management of a company. sector weightings. The
In selecting stocks for the subadviser's research also
fund's portfolio, the subadviser includes initial personal
looks for companies with the interviews and continuing
following characteristics: contacts with company
- Capable and accessible management.
management committed to above
average earnings growth In selecting stocks for the
- Dominant, unrecognized or fund's portfolio, the subadviser
innovative products or looks for companies with the
services with long-term growth following characteristics:
potential - Accelerating earnings momentum
- Favorable potential financial - Strong earnings growth
strength and growth rates - Strong balance sheet
- Attractive valuation as
measured by price/earnings
to growth ratio
In addition, the subadviser
prefers companies with the
following qualitative
characteristics:
- Superior company management
- Significant insider ownership
- Unique market position and
broad market opportunities
- Solid financial controls and
accounting
----------------------------------------------------------------------------------------------------
OTHER INVESTMENTS
Illiquid Securities Each fund may invest up to 15% of its net assets in illiquid
securities.

----------------------------------------------------------------------------------------------------
Foreign Securities Each fund may invest in foreign securities in the form of ADRs,
EDRs, GDRs, IDRs, and other securities representing ownership of
securities of foreign issuers.

----------------------------------------------------------------------------------------------------
Short Selling Each fund may engage in short sales of up to 25% of its total
assets.

----------------------------------------------------------------------------------------------------
Investment Companies Each fund may invest in other investment companies to the extent
permitted by the Investment Company Act of 1940.

----------------------------------------------------------------------------------------------------
</Table>

Derivatives - Each fund may, for temporary defensive or hedging purposes,
purchase options on foreign currencies, enter into forward foreign
currency exchange contracts and contracts for the future delivery
of foreign currencies, and purchase options on such futures
contracts.
- Each fund may buy and sell options contracts, financial futures
contracts and options on futures contracts.
- Each fund may purchase and sell options and futures based on
securities, indices, or currencies, including options and futures
traded on foreign exchanges and options not traded on any
exchange.
- Each fund may write covered put and call options and purchase put
and call options to enhance total return, as a substitute for the
purchase or sale of securities or currency, or to protect against
declines in the value of portfolio securities and against
increases in the cost of securities to be acquired.
- To seek to increase total return or hedge against changes in
interest rates, securities prices or currency exchange rates, each
fund may purchase and sell various kinds of futures contracts, and
purchase and write call and put options on these futures
contracts. Each fund may also enter into closing purchase and sale
transactions with respect to any of these contracts and options.

----------------------------------------------------------------------------------------------------
Forward Commitments and Each fund may purchase securities on a when-issued basis or purchase
When-Issued Securities or sell securities on a forward commitment basis including TBA (to
be announced) purchase and sale commitments.

----------------------------------------------------------------------------------------------------
Repurchase Agreements Each fund may enter into repurchase agreements.

----------------------------------------------------------------------------------------------------
Foreign Currency Each fund may purchase securities denominated in foreign currencies.
Transactions

----------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT RISKS

----------------------------------------------------------------------------------------------------
GENERAL You could lose money on your investment in either fund. There is no
guarantee that either fund will achieve its investment objective.

----------------------------------------------------------------------------------------------------
STOCK MARKET RISK Stocks do fluctuate in price and the value of your investment in the
funds may go down. This means that you could lose money on your
investment in the funds or the funds may not perform as well as
other possible investments if any of the following occurs:
- A drop in the stock markets.
- The market favors value stocks over growth stocks.
- An adverse event, such as an unfavorable earnings report,
depresses the value of a particular company's stock.
- The subadviser's judgment about the attractiveness, value and
potential appreciation of particular companies' stocks proves to
be incorrect.
- The market favors larger cap stocks over smaller cap stocks.

----------------------------------------------------------------------------------------------------
</Table>

SMALL COMPANIES The funds' performance may be more volatile because it invests
primarily in smaller cap stocks. Small companies may have limited
product lines, markets and financial resources. They may also have
shorter operating histories and more volatile businesses. Smaller
cap stocks tend to trade in a wider price range than larger cap
stocks. In addition, it may be harder to sell these stocks,
particularly in large blocks, which can reduce their selling price.

----------------------------------------------------------------------------------------------------
LIMITED # OF HOLDINGS Because the fund typically Because the fund typically
invests in approximately 40-60 invests in about 50 companies,
companies, an adverse event an adverse event affecting a
affecting a particular company particular company may hurt the
may hurt the fund's performance fund's performance more than if
more than if it had invested in it had invested in a larger
a larger number of companies. number of companies.

----------------------------------------------------------------------------------------------------
DERIVATIVES RISKS Derivatives used for hedging may not fully offset the underlying
positions. Derivative transactions may not have the intended effects
and may result in losses or missed opportunities. Derivatives that
involve leverage may magnify losses from adverse market
developments. In addition, there is the risk that a counterparty
will fail to honor a contract's terms, which would deprive a fund of
the hedging and other benefits of the contract. Some derivatives,
especially those not traded on an exchange, may become illiquid and
difficult to value accurately.

----------------------------------------------------------------------------------------------------
BUYING, EXCHANGING AND REDEEMING SHARES

----------------------------------------------------------------------------------------------------
NET ASSET VALUE Each fund calculates its net asset value per share (NAV) at the
close of regular trading on the New York Stock Exchange (NYSE)
(normally 4:00 p.m. Eastern time) on each business day. Each fund's
portfolio securities are valued either based on market quotations or
if market quotations are unavailable, at fair value, which involves
estimating a security's value based on information other than market
quotations.

----------------------------------------------------------------------------------------------------
CLASSES OF SHARES HGF currently offers only one HSCGF currently offers only one
class of shares. Effective class of shares. Effective
October 1, 2002, HGF will be October 1, 2002, these shares
offering three classes of will be referred to as
shares: Institutional shares, Institutional shares.
Retirement shares, and Investor
shares. Only Institutional
shares are being offered to
HSCGF shareholders in this proxy
statement and prospectus.
----------------------------------------------------------------------------------------------------
RULE 12B-1 AND SERVICE FEES HGF and HSCGF current and Institutional shares are not subject to
any Rule 12b-1 or service fee.

----------------------------------------------------------------------------------------------------
BUYING AND SELLING SHARES Investors may purchase and redeem shares through brokers or directly
from Harbor Fund.

----------------------------------------------------------------------------------------------------
Minimum Investment Amounts $500 minimum subsequent investments
$1,000 minimum initial investment

----------------------------------------------------------------------------------------------------
Exchanging Shares You may exchange your shares for shares of the same class of another
Harbor Fund.

----------------------------------------------------------------------------------------------------
</Table>

HGF will waive the minimum investment amount for any HSCGF account that, after
the merger, contains less than the minimum investment amount required for HGF.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional shares of HGF or Institutional shares of HSCGF. The table also
shows pro forma expenses of Institutional shares of HGF following the proposed
merger.

<Table>
<Caption>
--------------------------------------------------------------------------------------------------
HGF HSCGF
HGF INSTITUTIONAL INSTITUTIONAL
FOR THE PERIOD ENDED APRIL 30, 2002 (PRO FORMA) SHARES SHARES
--------------------------------------------------------------------------------------------------

SHAREHOLDER FEES None None None
(fees paid directly from your investment)

ANNUAL FUND OPERATING EXPENSES
(expenses deducted from fund assets)

Management fees 0.75% 0.75% 0.75%

Distribution and service (12b-1) fees None None None

Other expenses 0.17% 0.22% 0.32%
----- ----- -----

TOTAL ANNUAL FUND OPERATING EXPENSES 0.93% 0.99% 1.07%
===== ===== =====

--------------------------------------------------------------------------------------------------
</Table>

THE MERGER
TERMS OF THE MERGER
The funds' trustees have approved an Agreement and Plan of Reorganization, a
copy of which is attached as Exhibit B. The Agreement provides for a merger on
the following terms:

- - The merger is scheduled to occur at 5:00 p.m., Eastern Time, on October 31,
2002, but may occur on any later date before December 31, 2002.

- - In the merger, HSCGF will transfer all of its assets to HGF, and in exchange
HGF will assume HSCGF's liabilities and issue shares as described below.

- - HGF will issue Institutional shares to HSCGF in an amount equal to the value
of the assets received by HSCGF, less the liabilities assumed by HGF, in the
transaction. These shares will immediately be distributed by HSCGF to HSCGF's
shareholders in proportion to their holdings in HSCGF on the merger date. As a
result, shareholders of HSCGF will become Institutional shareholders of HGF.

- - The net asset value of both funds will be computed as of 4:00 p.m., Eastern
Time, on the merger date.

- - Immediately following the merger, Westfield Capital Management LLC
("Westfield"), the current subadviser to HSCGF, will become the subadviser to
HGF replacing the existing subadviser and HGF will change its name to "Harbor
Small Cap Growth Fund". It is expected that Westfield will manage HGF's assets
following the merger in substantially the same manner as it manages the assets
of HSCGF currently.

- - The current HSCGF will then cease to exist.

The following diagram shows how the merger will be carried out.

[DIAGRAM]

<Table>

WESTFIELD
APPOINTED
SUBADVISOR TO
HGF RECEIVES HGF CHANGES
HSCGF THESE SHARES HGF AND HGF
HGF RECEIVES AND SHAREHOLDERS CHANGES
TRANSFERS ITS ASSETS FROM HSCGF DISTRIBUTES RECEIVE ITS NAME TO
ASSETS AND AND ASSUMES INSTITUTIONAL THE HSCFG HARBOR SMALL
LIABILITIES TO LIABILITIES OF SHARES ARE SHARES TO ITS INSTITUTIONAL CAP GROWTH
HSCGF HGF ISSUED SHAREHOLDERS SHARES FUND
</Table>

TAX STATUS OF THE MERGER

The merger will be tax-free for federal income tax purposes and will not take
place unless HSCGF and HGF receive from the law firm of Hale and Dorr LLP, a
satisfactory opinion that the transaction constitutes a reorganization within
the meaning of Section 368(a) of the Code as such:

- - No gain or loss will be recognized by HSCGF upon (1) the transfer of all of
its assets to HGF as described above or (2) the distribution by HSCGF of HGF
Institutional shares to HSCGF's shareholders;

- - No gain or loss will be recognized by HGF upon the receipt of HSCGF's assets
solely in exchange for the issuance of HGF Institutional shares to HSCGF and
the assumption of all of HSCGF's liabilities by HGF;

- - The basis of the assets of HSCGF acquired by HGF will be, in each instance,
the same as the basis of those assets in the hands of HSCGF immediately before
the transfer;

- - The tax holding period of the assets of HSCGF in the hands of HGF will include
HSCGF's tax holding period for those assets;

- - The shareholders of HSCGF will not recognize gain or loss upon the exchange of
all their shares of HSCGF solely for HGF Institutional shares as part of the
transaction;

- - The basis of HGF Institutional shares received by HSCGF's shareholders in the
transaction will be the same as the basis of the shares of HSCGF surrendered
in exchange; and

- - The tax holding period of the HGF Institutional shares received by HSCGF's
shareholders will include, for each shareholder, the tax holding period of the
shares of HSCGF surrendered in exchange, provided that the HGF Institutional
shares were held as capital assets on the date of the exchange.

Shareholders should consult their tax adviser for the particular tax
consequences to them resulting from the merger, including the applicability of
any state, local, or foreign tax laws.

EFFECT OF THE MERGER ON HGF

It is important that shareholders of HSCGF understand how the merger would
affect the character of HGF because shareholders of HSCGF will become
shareholders of HGF following the merger. Immediately following the merger, the
subadviser of HGF will be replaced with Westfield so that HGF will then have the
same adviser, Harbor Capital, and subadviser, Westfield, as HSCGF currently has.
In addition, it is expected that Westfield will manage the assets of HGF after
the merger in substantially the same manner using the same investment strategies
and according to the same investment policies as Westfield currently does in
managing the assets of HSCGF. Further, the name of HGF will be changed to Harbor
Small Cap Growth Fund. Thus, while HGF will be the legal survivor of the merger,
it will be almost identical to HSCGF after the merger, although the fund will
have more assets.

Accordingly, shareholders of HSCGF should understand that in approving the
merger they will not become shareholders of HGF in its current form. Instead,
the shareholders of HSCGF will become shareholders of a fund that is anticipated
to look and act exactly like their current fund, only it will be a different
legal entity.
23

The reason that the merger is structured in this manner is to ensure that the
merger will be tax-free for federal income tax purposes. In order for the merger
to be tax-free for federal income tax purposes, the surviving fund must satisfy
a number of requirements, including the continuity of business enterprise
requirement. When the merger is structured with HGF as the legal survivor,
Westfield would have the flexibility to manage the surviving fund's assets after
the merger without any constraints on the management of assets imposed by the
continuity of business enterprise requirement with respect to the retention of
the former assets of HGF. If the merger were structured with HSCGF as the legal
survivor instead of HGF, Westfield could be constrained in its management of the
assets of the surviving fund, in particular with respect to its ability to
dispose of former assets of HGF. The board of trustees of Harbor Fund determined
that it would be in the best interests of the surviving fund's shareholders that
Westfield be given as much flexibility in managing the assets of the fund
(within the context of the surviving fund's investment objective, policies and
restrictions) as possible.

REASONS FOR THE PROPOSED MERGER

The board of trustees of Harbor Fund believes that the proposed merger will be
advantageous to the shareholders of HSCGF and HGF for several reasons. The board
of trustees considered the following matters, among others, in approving the
merger in a meeting held on July 29, 2002.

Possibility of Reduced Expenses. A combined fund offers economies of scale and
may lead to better control over expenses than is currently possible. Both funds,
as of the date of the merger, are expected to be approximately equal in net
assets. Each fund also incurs substantial costs for accounting, legal, transfer
agency services, insurance, and custodial and administrative services.
Currently, the overall expense ratio of HGF Institutional shares is lower than
that of HSCGF. It is anticipated, however, that if the merger takes place, the
total expense ratio of HGF will drop to approximately 0.93%, which would make
the total expense ratio of HGF Institutional shares after the merger,
approximately 0.14% lower than that of HSCGF.

Diversification. The trustees concluded that combining assets under management
into one larger fund would provide greater aggregate portfolio diversification
opportunities among industry sectors, which may lower the risk of loss to each
of HSCGF's and HGF's investors.

Substantially the Same Investment Advantages. HGF Institutional shares received
in the merger by HSCGF shareholders will have substantially the same investment
characteristics and advantages as HSCGF shareholders currently have. Immediately
after the merger, Westfield will be appointed subadviser to HGF replacing its
current subadviser. The investment policies and strategies of HGF will be
amended to mirror HSCGF's current investment policies and strategies and HGF's
name will be changed to "Harbor Small Cap Growth Fund". It is expected that
Westfield will manage the assets of HGF after the merger in substantially the
same manner as it currently manages the assets of HSCGF.

Investment Performance. The board of trustees considered the performance
history of each fund, which is shown in the table below. The trustees noted that
HSCGF has a shorter operating history than does HGF, but that it has
outperformed HGF since its inception. The trustees also reviewed and considered
the consistently strong long-term performance of HSCGF's subadviser, Westfield,
prior to the inception of HSCGF. The trustees also were impressed that HSCGF has
generated strong relative performance during a period which has proven to be
unusually difficult for growth-oriented funds. For these reasons, the trustees
determined that Westfield should replace the existing subadviser to HGF
immediately after the merger and that the investment strategies and policies of
HGF be reformulated to reflect the strategies and policies of HSCGF. Because the
investment characteristics of HGF after the merger will most closely resemble
HSCGF's investment characteristics, HSCGF is expected to be the accounting
survivor of the combination.

Additional Benefits to Surviving Fund. In addition to the reduction in
expenses, the board of trustees considered that the merger presents an excellent
opportunity for HGF to acquire investment assets without the obligation to pay
commissions or other transaction costs that are normally associated with the
purchase of portfolio securities. The board of trustees also considered the fact
that HGF
24

shareholders would have the opportunity to remain shareholders of a fund which
the board believes may become a more attractive investment opportunity following
the merger as a result of the reformulation of the fund and the appointment of
Westfield as subadviser.

Benefits to Advisers and Other Service Providers. The board of trustees
considered that the funds' adviser and distributor may also benefit from the
merger. For example, the adviser might realize time savings from a consolidated
portfolio management effort and from the need to prepare fewer prospectuses,
reports and regulatory filings. The trustees believe, however, that these
savings will not amount to a significant economic benefit.

<Table>
<Caption>
-----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
-----------------------------------------------------------------------------------------------
HGF HSCGF
INSTITUTIONAL SHARES INSTITUTIONAL SHARES
(INCEPTION 11/19/1986) (INCEPTION 11/01/2000)

-----------------------------------------------------------------------------------------------
1 year ended 06/30/2002 -43.90% -7.92%
5 years ended 06/30/2002 -0.71% N/A
10 years ended 06/30/2002 5.84% N/A
Inception through 06/30/2002 7.69% 0.66%
Year to date (06/30/2002) -35.21% -5.60%
-----------------------------------------------------------------------------------------------
</Table>

ADDITIONAL TERMS OF AGREEMENT AND PLAN OF MERGER

Conditions to Closing the Merger. The obligation of HSCGF to consummate the
merger is subject to the satisfaction of certain conditions, including the
performance by HGF of all its obligations under the Agreement and the receipt of
an officers' certificate and an opinion of counsel from HGF (see Agreement,
paragraph 7).

The obligation of HGF to consummate the merger is subject to the satisfaction of
certain conditions, including HSCGF's performance of all of its obligations
under the Agreement and the receipt of certain financial and tax information, an
officers' certificate and an opinion of counsel from HSCGF (see Agreement,
paragraph 6).

The obligations of both funds are subject to the approval of the Agreement by
the necessary vote of the outstanding shares of HSCGF, in accordance with the
provisions of HSCGF's declaration of trust and by-laws. The funds' obligations
are also subject to several other conditions, including the receipt of all
consents, orders and permits necessary to consummate the merger and the receipt
of a favorable opinion of counsel to each fund as to the federal income tax
consequences of the merger. (see Agreement, paragraph 8).

Termination of Agreement. HSCGF or HGF may mutually agree to terminate the
Agreement (even if the shareholders of HSCGF have already approved it) at any
time before the merger date. Either fund may also terminate the Agreement if the
other fund has breached any representation, warranty or agreement contained in
the Agreement or if any condition to closing the merger cannot or will not be
met.

Expenses of the Merger. Each fund shall bear its own expenses in connection
with the merger. These liquidation and termination fees are expected to be
approximately $47,000.

CAPITALIZATION

The following table sets forth the capitalization of each fund as of April 30,
2002, and the pro forma combined capitalization of both funds as if the merger
had occurred on that date. The table reflects pro forma exchange ratios of
approximately 1.034 HGF Institutional shares being issued for each share of
HSCGF. If the merger is consummated, the actual exchange ratios on the merger
date may vary from the exchange ratios indicated due to changes in any of the
following:

- - The market value of the portfolio securities of both HSCGF and HGF between
April 30, 2002 and the merger date.

- - Changes in the amount of undistributed net investment income and net realized
capital gains of HSCGF and HGF during that period resulting from income and
distributions.

- - Changes in the accrued liabilities of HSCGF and HGF during the same period.

<Table>
<Caption>
HGF
CAPITALIZATION AS OF APRIL 30, 2002 HSCGF HGF PRO FORMA COMBINED(1)
----------------------------------- ------- -------- ---------------------

Net Assets (000s) $49,207 $118,680 $167,981
Net Asset Value Per Share $10.94 $10.58 $10.58
Shares Outstanding (000s) 4,499 11,215 15,877
</Table>

- -------------------------

(1) If the merger had taken place on April 30, 2002, HSCGF would have received
4,652 Institutional shares (000s) of HGF, which would have been available for
distribution to the shareholders of HSCGF.

It is impossible to predict how many Institutional shares of HGF will actually
be received and distributed by HSCGF on the merger date. The table should not be
relied upon to determine the amount of HGF Institutional shares that will
actually be received and distributed.

BOARDS' EVALUATION AND RECOMMENDATION

For the reasons described above, the board of trustees of HSCGF, including the
trustees who are not "interested persons" of either fund or any of their
advisers ("independent trustees"), approved the merger at a meeting held on July
29, 2002. In particular, the board determined that the merger was in the best
interests of HSCGF and that the interests of HSCGF's shareholders would not be
diluted as a result of the merger. Similarly, the board of trustees of HGF,
including the independent trustees, approved the merger at a meeting held on
July 29, 2002. The board also determined that the merger was in the best
interests of HGF and that the interests of HGF's shareholders would not be
diluted as a result of the merger.

THE BOARD OF TRUSTEES OF HSCGF RECOMMENDS THAT THE SHAREHOLDERS OF HSCGF VOTE
FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF MERGER.

VOTING RIGHTS AND REQUIRED VOTE

Each share of HSCGF outstanding on the record date is entitled to one vote. As
provided under the Investment Company Act, approval of the merger will require
the vote of a majority of the voting securities of HSCGF present in person or by
proxy at the shareholder meeting at which a quorum is present with respect to
HSCGF.

If the required approval of shareholders is not obtained, HSCGF will continue to
engage in business as a separate mutual fund and the board of trustees will
consider what further action may be appropriate.

- --------------------------------------------------------------------------------

INFORMATION CONCERNING THE MEETING

- --------------------------------------------------------------------------------

OUTSTANDING SHARES AND QUORUM

As of August 23, 2002, shares of HIF2 were outstanding and
shares of HSCGF were outstanding. Only shareholders of record of
each fund on August 23, 2002 (the "record date") are entitled to notice of and
to vote at the meeting. One-third of the outstanding shares of each fund that
are entitled to vote will be considered a quorum for the transaction of
business.

SHAREHOLDER PROPOSALS

The funds are not required to hold annual meetings of shareholders and do not
currently intend to hold an annual meeting of shareholders in 2002. Shareholder
proposals to be presented at the next meeting of shareholders of a fund,
whenever held, must be received at the funds' offices, One SeaGate, Toledo, Ohio
43666, at a reasonable time prior to the Trustees' solicitation of proxies for
the meeting. The submission by a shareholder of a proposal for inclusion in a
proxy statement does not guarantee that it will be included. Shareholder
proposals are subject to certain regulations under the federal securities laws.

PROXIES, QUORUM AND VOTING AT THE MEETING

Shareholders may use the enclosed proxy card if they are unable to attend the
meeting in person or wish to have their shares voted by a proxy even if they do
attend the meeting. Any shareholder that has given his or her proxy to someone
has the power to revoke that proxy at any time prior to its exercise by
executing a superseding proxy or by submitting a notice of revocation to the
secretary of Harbor Fund. In addition, although mere attendance at the meeting
will not revoke a proxy, a shareholder present at the meeting may withdraw his
or her proxy and vote in person. All properly executed and unrevoked proxies
received in time for the meeting will be voted in accordance with the
instructions contained in the proxies. If no instruction is given, the persons
named as proxies will vote the shares represented thereby in favor of the
proposals 1 and 2 described above and will use their best judgment to vote on
such other business as may properly come before the meeting or any adjournment
thereof. The funds may also arrange to have votes recorded by telephone, the
Internet or other electronic means.

Telephonic Voting. Harbor Fund shareholders may call 1-800-690-6903 toll free
to authorize the proxy holders to vote their shares. Shareholders will need to
enter the 12-digit control number set forth on their proxy card and then will be
prompted to answer a series of simple questions. The telephonic procedures are
designed to authenticate shareholders identity, to allow shareholders to vote
their shares and to confirm that their instructions have been properly recorded.
These telephonic voting procedures are not available to Harbor Fund shareholders
who own shares in "street name" through a broker.

Internet Voting. Harbor Fund shareholders may submit an "electronic" proxy over
the Internet in lieu of returning an executed proxy card. In order to use this
voting feature, shareholders should go to the web site WWW.PROXYVOTE.COM and
enter the 12-digit control number set forth on the shareholder's proxy card.
Shareholders will be prompted to follow a simple set of instructions which will
appear on the web site.

With respect to each fund, a majority of the shares entitled to vote, present in
person or represented by proxy, constitutes a quorum for the transaction of
business with respect to any proposal (unless otherwise noted in this proxy
statement). In the event that, at the time any session of the meeting for a fund
is called to order, a quorum is not present in person or by proxy, the persons
named as proxies may vote those proxies which have been received to adjourn the
meeting with respect to that fund to a later date. In the event that a quorum is
present but sufficient votes in favor of any of the proposals, have

not been received, the persons named as proxies may propose one or more
adjournments of the meeting with respect to that fund to permit further
solicitation of proxies with respect to such proposal. Any such adjournment will
require the affirmative vote of more than one half of the shares of the
applicable fund present in person or by proxy at the session of the meeting to
be adjourned. The persons named as proxies will vote those proxies which they
are entitled to vote in favor of any such proposal in favor of such an
adjournment and will vote those proxies required to be voted against any such
proposal against any such adjournment. A shareholder vote may be taken on one or
more of the proposals in this proxy statement prior to such adjournment if
sufficient votes for its approval have been received and it is otherwise
appropriate. Such vote will be considered final regardless of whether the
Meeting is adjourned to permit additional solicitation with respect to any other
proposal.

Shares of each fund represented in person or by proxy, including shares which
abstain or do not vote with respect to a proposal, will be counted for purposes
of determining whether there is a quorum at the meeting. Accordingly, an
abstention from voting has the same effect as a vote against proposals 1 and 2.
However, if a broker or nominee holding shares in "street name" indicates on the
Proxy Card that it does not have discretionary authority to vote on a proposal,
those shares will not be considered present and entitled to vote on that
proposal. Thus, a "broker non-vote" has no effect on the voting in determining
whether a proposal has been adopted by a majority of a fund's shares present at
the meeting, if more than 33 1/3 % of the outstanding shares (excluding the
"broker non-votes") of that fund are present or represented.

The meeting is scheduled as a joint meeting of the funds' shareholders because
the shareholders of each fund are expected to consider and vote on similar
matters. The board of trustees has determined that the use of a joint proxy
statement is in the best interest of the shareholders of each fund. In the event
that a shareholder of any fund present at the meeting objects to the holding of
a joint meeting and moves for an adjournment of the meeting of such fund to a
time immediately after the meeting so that such fund's meeting may be held
separately, the persons named as proxies will vote in favor of the adjournment.
Shareholders of each fund will vote separately on each proposal relating to
their fund and, except as otherwise noted in this proxy statement, an
unfavorable vote on a proposal by the shareholders of one fund will not affect
the implementation of such proposal approved by the shareholders of another
fund.

OTHER BUSINESS

While the Meeting has been called to transact any business that may properly
come before it, the only matters that the trustees intend to present are those
matters stated in the attached Notice of a Special Meeting of Shareholders.
However, if any additional matters properly come before the meeting, and on all
matters incidental to the conduct of the meeting, it is the intention of the
persons named in the enclosed proxy to vote the proxy in accordance with their
judgment on such matters unless instructed to the contrary.

METHOD OF SOLICITATION AND EXPENSES

The cost of preparing, assembling and mailing this proxy statement, prospectus
and the attached Notice of a Special Meeting of Shareholders and the
accompanying proxy card, as well as the costs associated with the proxy
solicitation, will be borne pro rata by HIF2 and HSCGF based upon their relative
asset sizes. In addition to soliciting proxies by mail and via the Internet,
Harbor Capital may have one or more of the funds' officers, representatives or
compensated third-party agents, aid in the solicitation of proxies by personal
interview or telephone and telegraph and may request brokerage houses and other
custodians, nominees and fiduciaries to forward proxy soliciting material to the
beneficial owners of the shares held of record by such persons. Harbor Capital
has retained D.F. King to assist in the solicitation of proxies. The estimated
cost for D.F. King's proxy solicitation services are approximately $25,000.
Shareholders who have not voted their proxies in a timely manner may receive a
telephone call from D.F. King in an effort to urge them to vote.

Shareholders would be called at the phone number Harbor Capital has in its
records for their accounts, and would be asked for their social security number
or other identifying information. The shareholders would then be given an
opportunity to authorize proxies to vote their shares at the meeting in
accordance with their instructions. To ensure that the shareholders'
instructions have been recorded correctly, they would also receive a
confirmation of their instructions in the mail. In the case of automated
telephone and Internet voting, shareholders would be required to provide their
social security number or other identifying information and would receive a
confirmation of their instructions. A special toll-free number will be available
in case the information contained in the confirmation is incorrect. The voting
procedures used in connection with such voting methods are designed to
authenticate shareholders' identities, to allow shareholders to authorize the
voting of their shares in accordance with their instructions and to confirm that
their instructions have been properly recorded. If these procedures were subject
to a successful legal challenge, such votes would not be counted at the meeting.
The funds are unaware of any such challenge at this time.

Persons holding shares as nominees will be reimbursed by HIF2 or HSCGF, as
applicable and upon request, for the reasonable expenses of mailing soliciting
materials to the principals of the accounts.

- --------------------------------------------------------------------------------

OWNERSHIP OF SHARES OF THE FUNDS

- --------------------------------------------------------------------------------

To the knowledge of the funds, as of August 23, 2002, the following persons
owned, of record or beneficially, 5% or more of the outstanding shares of HIF2,
HIF, HSCGF and HGF (before the merger) and would own, (after the merger), 5% or
more of the shares of the HIF or HGF.

<Table>
<Caption>
HIF HIF HGF HGF
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
HIF2 SHARES SHARES HSCGF SHARES SHARES
INSTITUTIONAL BEFORE AFTER INSTITUTIONAL BEFORE AFTER
NAME OF OWNER SHARES MERGER MERGER SHARES MERGER MERGER
- ------------------------------------------------------------------------------------------------------------------------------

Archbishop Iakovos Leadership
One Hundred Endowment Fund,
Inc.
George Kokalis TTEE
Constantine G Caras TTEE
8 East 79th St
New York, NY 10021
Charles Schwab & Co., Inc.
Omnibus Account Registration
101 Montgomery Street
San Francisco, CA 94101-4122
Greek Orthodox Archdiocese of
America Pension Fund
George D Chelpon &
Costas Sitaris TTEEs
8 East 79th St
New York, NY 10021
HCR Manor Care 401(k)
HCR Master Retirement Trust
KeyBank NA
Fairview Luth FDN
P.O. Box 94871
Cleveland, OH 44101-4871
</Table>

National Financial
c/o Mutual Funds
P.O. Box 3908
Church Street Station
New York, NY 1008-3908
Northern Trust Co.
Liberty Mutual Employees
TRST Thrift Incentive Plan DV
P.O. Box 92956
Chicago, IL 60675
Owens-Illinois 401(k) Trust
Saxon & Co.
Sarah Scaife
P.O. Box 7780 1888
Philadelphia, PA 19182
[Identify separately any control persons (25% or greater)].
</Table>

As of August 23, 2002 the trustees and officers of Harbor Fund each as a group,
owned in the aggregate X%, X%, X%, and X% of the outstanding shares of
beneficial interest of HIF2, HIF, HSCGF, and HGF, respectively.

- --------------------------------------------------------------------------------

EXPERTS

- --------------------------------------------------------------------------------

The financial statements and the financial highlights of HIF2, HIF, HSCGF and
HGF as of October 31, 2001 and for the period then ended are incorporated by
reference into this proxy statement and prospectus. These financial statements
and financial highlights for each of HIF2, HIF, HSCGF and HGF have been audited
by Ernst & Young LLP, independent auditors for each fund, as stated in the
report appearing in the Annual Report to shareholders which is incorporated by
reference in the statement of additional information. These financial statements
and financial highlights are included in reliance upon the reports given upon
the authority of such firm as an expert in accounting and auditing.

- --------------------------------------------------------------------------------

AVAILABLE INFORMATION

- --------------------------------------------------------------------------------

Each fund is subject to the informational requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 and files reports,
proxy statements and other information with the SEC. These reports, proxy
statements and other information filed by the funds can be inspected and copied
(at prescribed rates) at the public reference facilities of the SEC at 450 Fifth
Street, N.W., Washington, D.C., and at the following regional offices: Chicago
(500 West Madison Street, Suite 1400, Chicago, Illinois); and New York (7 World
Trade Center, Suite 1300, New York, New York). Copies of such material can also
be obtained by mail from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, copies
of these documents may be viewed on-screen or downloaded from the SEC's Internet
site at http://www.sec.gov.

- --------------------------------------------------------------------------------

EXHIBIT A

- --------------------------------------------------------------------------------

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this
__________ day of ________ , 2002, by and between Harbor International Fund
(the "Acquiring Fund") and Harbor International Fund II (the "Acquired Fund"),
each a series of Harbor Fund, a Delaware business trust (the "Trust") and each
with their principal place of business at One SeaGate, Toledo Ohio 43666. The
Acquiring Fund and the Acquired Fund are sometimes referred to collectively
herein as the "Funds" and individually as a "Fund."

This Agreement is intended to be and is adopted as a plan of
"reorganization," as such term is used in Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). The reorganization will consist of the
transfer of all of the assets of the Acquired Fund to the Acquiring Fund in
exchange solely for the issuance of shares of beneficial interest of the
Institutional Class of the Acquiring Fund (the "Acquiring Fund Shares") to the
Acquired Fund and the assumption by the Acquiring Fund of all of the liabilities
of the Acquired Fund, followed by the distribution by the Acquired Fund, on or
promptly after the Closing Date hereinafter referred to, of the Acquiring Fund
Shares to the shareholders of the Acquired Fund in liquidation and termination
of the Acquired Fund as provided herein, all upon the terms and conditions set
forth in this Agreement.

In consideration of the premises of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:

1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ISSUANCE OF ACQUIRING FUND SHARES, LIQUIDATION OF THE
ACQUIRED FUND

1.1 The Acquired Fund will transfer all of its assets (consisting,
without limitation, of portfolio securities and instruments,
dividends and interest receivables, cash and other assets), as set
forth in the statement of assets and liabilities referred to in
Paragraph 7.2 hereof (the "Statement of Assets and Liabilities"),
to the Acquiring Fund free and clear of all liens and encumbrances,
except as otherwise provided herein, in exchange for (i) the
assumption by the Acquiring Fund of the known and unknown
liabilities of the Acquired Fund, including the liabilities set
forth in the Statement of Assets and Liabilities (the "Acquired
Fund Liabilities"), which shall be assigned and transferred to the
Acquiring Fund by the Acquired Fund and assumed by the Acquiring
Fund, and (ii) delivery by the Acquiring Fund to the Acquired Fund,
for distribution pro rata by the Acquired Fund to its shareholders
in proportion to their respective ownership of shares of beneficial
interest of the Acquired Fund, as of the close of business on
October 31, 2002 (the "Closing Date"), of a number of the Acquiring
Fund Shares having an aggregate net asset value equal to the value
of the assets, less such liabilities (herein referred to as the
"net value of the assets") assumed, assigned and delivered, all
determined as provided in Paragraph 2.1 hereof and as of a date and
time as specified therein. Such transactions shall take place at
the closing provided for in Paragraph 3.1 hereof (the "Closing").
All computations shall be provided by State Street Bank and Trust
Company ("State Street") as pricing agent for the Acquiring Fund
and the Acquired Fund.

1.2 The Acquired Fund has provided the Acquiring Fund with a list of
the current securities holdings of the Acquired Fund as of the date
of execution of this Agreement. The Acquired Fund reserves the
right to sell any of these securities (except to the extent sales
may be limited by representations made in connection with issuance
of the tax opinion provided for in paragraph 8.5 hereof) but will
not, without the prior approval of the Acquiring Fund,

A-1

acquire any additional securities other than securities of the type
in which the Acquiring Fund is permitted to invest.

1.3 The Acquiring Fund and the Acquired Fund shall each bear its own
expenses in connection with the transactions contemplated by this
Agreement.

1.4 On or as soon after the Closing Date as is conveniently practicable
(the "Liquidation Date"), the Acquired Fund will liquidate and
distribute pro rata to shareholders of record (the "Acquired Fund
shareholders"), determined as of the close of regular trading on
the New York Stock Exchange on the Closing Date, the Acquiring Fund
Shares received by the Acquired Fund pursuant to Paragraph 1.1
hereof. Such liquidation and distribution will be accomplished by
the transfer of the Acquiring Fund Shares then credited to the
account of the Acquired Fund on the books of the Acquiring Fund, to
open accounts on the share records of the Acquiring Fund in the
names of the Acquired Fund shareholders and representing the
respective pro rata number of Acquiring Fund Shares due such
shareholders. The Acquiring Fund will not issue certificates
representing Acquiring Fund Shares in connection with such
exchange.

1.5 Any transfer taxes payable upon issuance of Acquiring Fund Shares
in a name other than the registered holder of the Acquired Fund
Shares on the books of the Acquired Fund as of that time shall, as
a condition of such issuance and transfer, be paid by the person to
whom such Acquiring Fund Shares are to be issued and transferred.

1.6 The existence of the Acquired Fund shall be terminated as promptly
as practicable following the Liquidation Date.

1.7 Any reporting responsibility of the Acquired Fund, including, but
not limited to, the responsibility for filing of regulatory
reports, tax returns, or other documents with the Securities and
Exchange Commission (the "Commission"), any state securities
commissions, and any federal, state or local tax authorities or any
other relevant regulatory authority, is and shall remain the
responsibility of the Acquired Fund.

2. VALUATION

2.1 The net asset values of the Acquiring Fund Shares and the net
values of the assets and liabilities of the Acquired Fund to be
transferred shall, in each case, be determined as of the close of
regular trading on the New York Stock Exchange (normally 4:00 p.m.
Eastern time) on the Closing Date. The net asset values of the
Acquiring Fund Shares shall be computed by State Street in the
manner set forth in the Acquiring Fund's Declaration of Trust as
amended and restated (the "Declaration"), or By-Laws and the
Acquiring Fund's then-current prospectus and statement of
additional information and shall be computed in each case to not
fewer than four decimal places. The net values of the assets of the
Acquired Fund to be transferred shall be computed by State Street
by calculating the value of the assets transferred by the Acquired
Fund and by subtracting therefrom the amount of the liabilities
assigned and transferred to and assumed by the Acquiring Fund on
the Closing Date, said assets and liabilities to be valued in the
manner set forth in the Acquired Fund's then current prospectus and
statement of additional information and shall be computed in each
case to not fewer than four decimal places.

2.2 The number of Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's
assets shall be determined by dividing the value of the Acquired
Fund's assets less the liabilities assumed by the Acquiring Fund,
by the Acquiring Fund's net asset value per share, all as
determined in accordance with Paragraph 2.1 hereof.

2.3 All computations of value shall be made by State Street in
accordance with its regular practice as pricing agent for the
Funds.
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3. CLOSING AND CLOSING DATE

3.1 The Closing Date shall be __________ 2002 or such other date on or
before December 31, 2002 as the parties may agree. The Closing
shall be held as of 5:00 p.m. at the offices of the Funds, One
SeaGate, Toledo Ohio 43666, or at such other time and/or place as
the parties may agree.

3.2 Portfolio securities that are not held in book-entry form in the
name of State Street Bank & Trust Company (the "Custodian") as
record holder for the Acquired Fund shall be presented by the
Acquired Fund to the Custodian for examination no later than three
business days preceding the Closing Date. Portfolio securities
which are not held in book-entry form shall be delivered by the
Acquired Fund to the Custodian for the account of the Acquiring
Fund on the Closing Date, duly endorsed in proper form for
transfer, in such condition as to constitute good delivery thereof
in accordance with the custom of brokers, and shall be accompanied
by a check or wire transfer for the appropriate purchase price
thereof. Portfolio securities held of record by the Custodian in
book-entry form on behalf of the Acquired Fund shall be delivered
to the Acquiring Fund by the Custodian by recording the transfer of
beneficial ownership thereof on its records. The cash delivered
shall be in the form of currency or by the Custodian crediting the
Acquiring Fund's account maintained with the Custodian with
immediately available funds.

3.3 In the event that on the Closing Date (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be
restricted or (b) trading or the reporting of trading on said
Exchange or elsewhere shall be disrupted so that accurate appraisal
of the value of the net assets of the Acquiring Fund or the
Acquired Fund is impracticable, the Closing Date shall be postponed
until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored; provided
that if trading shall not be fully resumed and reporting restored
on or before December 31, 2002, this Agreement may be terminated by
the Acquiring Fund or by the Acquired Fund upon the giving of
written notice to the other party.

3.4 The Acquired Fund shall deliver at the Closing a list of the names,
addresses, federal taxpayer identification numbers and backup
withholding and nonresident alien withholding status of the
Acquired Fund shareholders and the number of outstanding shares of
beneficial interest of the Acquired Fund owned by each such
shareholder, all as of the close of business on the Closing Date,
certified by its Treasurer, Secretary or other authorized officer
(the "Shareholder List"). The Acquiring Fund shall issue and
deliver to the Acquired Fund a confirmation evidencing the
Acquiring Fund Shares to be credited on the Closing Date, or
provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Shares have been credited to the Acquired Fund's
account on the books of the Acquiring Fund. At the Closing, each
party shall deliver to the other such bills of sale, checks,
assignments, stock certificates, receipts or other documents as
such other party or its counsel may reasonably request.

4. REPRESENTATIONS AND WARRANTIES

4.1 The Trust on behalf of the Acquired Fund represents, warrants and
covenants to the Acquiring Fund as follows:

(a) The Trust is a business trust duly organized, validly existing
and in good standing under the laws of the State of Delaware
and has the power to own all of its properties and assets and
to carry out the Agreement. Neither the Trust nor the Acquired
Fund is required to qualify to do business in any jurisdiction
in which it is not so qualified or where failure to qualify
would subject it to any material liability or disability. The
Trust has all necessary federal, state and local
authorizations to own

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all of its properties and assets and to carry on its business
as now being conducted;

(b) The Trust is a registered investment company classified as a
management company and its registration with the Commission as
an investment company under the Investment Company Act of
1940, as amended (the "1940 Act"), is in full force and
effect. The Acquired Fund is a diversified series of the
Trust;

(c) The Trust and the Acquired Fund are not, and the execution,
delivery and performance of their obligations under this
Agreement will not result, in violation of any provision of
the Trust's Declaration of Trust, as amended, or By-Laws or of
any agreement, indenture, instrument, contract, lease or other
undertaking to which either the Trust or the Acquired Fund is
a party or by which it is bound;

(d) Except as otherwise disclosed in writing and accepted by the
Acquiring Fund, no material litigation or administrative
proceeding or investigation of or before any court or
governmental body is currently pending or threatened against
the Trust or the Acquired Fund or any of the Acquired Fund's
properties or assets. The Trust knows of no facts which might
form the basis for the institution of such proceedings, and
neither the Trust nor the Acquired Fund is a party to or
subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely
affects the Acquired Fund's business or its ability to
consummate the transactions herein contemplated;

(e) Neither the Trust nor the Acquired Fund has any material
contract or other commitments (other than this Agreement or
agreements for the purchase of securities entered into in the
ordinary course of business and consistent with its
obligations under this Agreement) which will not be terminated
without liability to the Trust or the Acquired Fund at or
prior to the Closing Date;

(f) The audited statement of assets and liabilities, including the
schedule of investments, of the Acquired Fund as of October
31, 2001 and the related statement of operations (copies of
which have been furnished to the Acquiring Fund) present
fairly in all material respects the financial condition of the
Acquired Fund as of October 31, 2001 and the results of its
operations for the period then ended in accordance with
generally accepted accounting principles consistently applied,
and there were no known actual or contingent liabilities of
the Acquired Fund as of the respective dates thereof not
disclosed therein;

(g) Since October 31, 2001, there has not been any material
adverse change in the Acquired Fund's financial condition,
assets, liabilities, or business other than changes occurring
in the ordinary course of business, or any incurrence by the
Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquiring Fund;

(h) At the date hereof and by the Closing Date, all federal, state
and other tax returns and reports, including information
returns and payee statements, of the Acquired Fund required by
law to have been filed or furnished by such dates shall have
been filed or furnished, and all federal, state and other
taxes, interest and penalties shall have been paid so far as
due, or provision shall have been made for the payment
thereof, and to the best of the Acquired Fund's knowledge no
such return is currently under audit and no assessment has
been asserted with respect to such returns or reports;

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(i) The Acquired Fund has qualified as a regulated investment
company for each taxable year of its operation and the
Acquired Fund will qualify as such as of the Closing Date with
respect to its taxable year ending on the Closing Date;

(j) The authorized capital of the Trust consists of an unlimited
number of shares of beneficial interest, with a par value of
$0.01. All issued and outstanding shares of beneficial
interest of the Acquired Fund are, and at the Closing Date
will be, duly and validly issued and outstanding, fully paid
and nonassessable by the Trust. All of the issued and
outstanding shares of beneficial interest of the Acquired Fund
will, at the time of Closing, be held by the persons and in
the amounts set forth in the Shareholder List submitted to the
Acquiring Fund pursuant to Paragraph 3.4 hereof. The Acquired
Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of its shares of
beneficial interest, nor is there outstanding any security
convertible into any of its shares of beneficial interest;

(k) At the Closing Date, the Trust on behalf of the Acquired Fund
will have good and marketable title to the assets to be
transferred to the Acquiring Fund pursuant to Paragraph 1.1
hereof, and full right, power and authority to sell, assign,
transfer and deliver such assets hereunder, and upon delivery
and payment for such assets, the trust on behalf of the
Acquiring Fund will acquire good and marketable title thereto
subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the
Securities Act of 1933, as amended (the "1933 Act");

(l) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of
the Trust on behalf of the Acquired Fund, and this Agreement
constitutes a valid and binding obligation of the Acquired
Fund enforceable in accordance with its terms;

(m) The information to be furnished by the Acquired Fund to the
Acquiring Fund for use in applications for orders,
registration statements, proxy materials and other documents
which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall
comply in all material respects with federal securities and
other laws and regulations thereunder applicable thereto;

(n) The proxy statement of the Acquired Fund (the "Proxy
Statement") to be included in the Registration Statement
referred to in Paragraph 4.2(c) hereof (other than written
information furnished by the Acquiring Fund for inclusion
therein, as covered by the Acquiring Fund's warranty in
Paragraph 4.2(m) hereof), on the effective date of the
Registration Statement and on the Closing Date, shall not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which such statements were made, not
misleading;

(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the
Acquired Fund of the transactions contemplated by this
Agreement;

(p) All of the issued and outstanding shares of beneficial
interest of the Trust on behalf of the Acquired Fund have been
offered for sale and sold in conformity with all applicable
federal and state securities laws;

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therein or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading;

(r) The Acquired Fund Tax Representation Certificate to be
delivered by the Acquired Fund to the Acquiring Fund at
Closing pursuant to Section 7.5 (the "Acquired Fund Tax
Representation Certificate") will not on the Closing Date
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein
not misleading.

4.2 THE TRUST ON BEHALF OF THE ACQUIRING FUND REPRESENTS, WARRANTS AND
COVENANTS TO THE ACQUIRED FUND AS FOLLOWS:

(a) The Trust is a business trust duly organized, validly existing
and in good standing under the laws of the State of Delaware
and has the power to own all of its properties and assets and
to carry out the Agreement. Neither the Trust nor the
Acquiring Fund is required to qualify to do business in any
jurisdiction in which it is not so qualified or where failure
to qualify would subject it to any material liability or
disability. The Trust has all necessary federal, state and
local authorizations to own all of its properties and assets
and to carry on its business as now being conducted;

(b) The Trust is a registered investment company classified as a
management company and its registration with the Commission as
an investment company under the 1940 Act is in full force and
effect. The Acquiring Fund is a diversified series of the
Trust;

(c) The prospectus (the "Acquiring Fund Prospectus") and statement
of additional information of the Acquiring Fund, each dated
March 1, 2002, and any amendments or supplements thereto on or
prior to the Closing Date, and the Registration Statement on
Form N-14 filed in connection with this Agreement (the
"Registration Statement") (other than written information
furnished by the Acquired Fund for inclusion therein, as
covered by the Acquired Fund's warranty in Paragraph 4.1(m)
hereof) will conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and
the rules and regulations of the Commission thereunder, the
Acquiring Fund Prospectus does not include any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading and, other than written
information furnished by the Acquired Fund for inclusion
therein, as covered by the Acquired Fund's warranty in
Paragraph 4.1(n) hereof, the Registration Statement shall not,
on its effective date and on Closing Date, contain any untrue
statement of material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading;

(d) At the Closing Date, the Trust on behalf of the Acquiring Fund
will have good and marketable title to the assets of the
Acquiring Fund;

(e) The Trust and the Acquiring Fund are not, and the execution,
delivery and performance of their obligations under this
Agreement will not result in a violation of any provisions of
the Trust's Declaration of Trust, as amended, or By-Laws or of
any agreement, indenture, instrument, contract, lease or other
undertaking to which the Trust or the Acquiring Fund is a
party or by which the Trust or the Acquiring Fund is bound;

(f) Except as otherwise disclosed in writing and accepted by the
Acquired Fund, no material litigation or administrative
proceeding or investigation of or before any
A-6

court or governmental body is currently pending or threatened
against the Trust or the Acquiring Fund or any of the
Acquiring Fund's properties or assets. The Trust knows of no
facts which might form the basis for the institution of such
proceedings, and neither the Trust nor the Acquiring Fund is a
party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially
and adversely affects the Acquiring Fund's business or its
ability to consummate the transactions herein contemplated;

(g) The audited statement of assets and liabilities, including the
schedule of investments, of the Acquiring Fund as of October
31, 2001 and the related statement of operations (copies of
which have been furnished to the Acquired Fund) present fairly
in all material respects the financial condition of the
Acquiring Fund as of October 31, 2001 and the results of its
operations for the period then ended in accordance with
accounting principles generally accepted in the United States
consistently applied, and there were no known actual or
contingent liabilities of the Acquiring Fund as of the
respective dates thereof not disclosed therein;

(h) Since October 31, 2001, there has not been any material
adverse change in the Acquiring Fund's financial condition,
assets, liabilities or business other than changes occurring
in the ordinary course of business, or any incurrence by the
Trust on behalf of the Acquiring Fund of indebtedness maturing
more than one year from the date such indebtedness was
incurred, except as disclosed to and accepted by the Acquired
Fund;

(i) The Acquiring Fund has qualified as a regulated investment
company for each taxable year of its operation and the
Acquiring Fund will qualify as such as of the Closing Date;

(j) The authorized capital of the Trust consists of an unlimited
number of shares of beneficial interest, with a par value per
share of $0.01. All issued and outstanding shares of
beneficial interest of the Acquiring Fund are, and at the
Closing Date will be, duly and validly issued and outstanding,
fully paid and nonassessable by the Trust. The Acquiring Fund
does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of its shares of
beneficial interest, nor is there outstanding any security
convertible into any of its shares of beneficial interest;

(k) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of
the Trust on behalf of the Acquiring Fund, and this Agreement
constitutes a valid and binding obligation of the Acquiring
Fund enforceable in accordance with its terms;

(l) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund pursuant to the terms of this Agreement, when so
issued and delivered, will be duly and validly issued shares
of beneficial interest of the Acquiring Fund and will be fully
paid and nonassessable by the Trust;

(m) The information to be furnished by the Acquiring Fund for use
in applications for orders, registration statements, proxy
materials and other documents which may be necessary in
connection with the transactions contemplated hereby shall be
accurate and complete and shall comply in all material
respects with federal securities and other laws and
regulations applicable thereto;

(n) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the
Acquiring Fund of the transactions contemplated by the
Agreement, except for the registration of the Acquiring Fund
Shares under the 1933 Act and the 1940 Act; and
A-7

(o) The Acquiring Fund Tax Representation Certificate to be
delivered by the Acquiring Fund to the Acquired Fund at
Closing pursuant to Section 6.3 (the "Acquiring Fund Tax
Representation Certificate") will not on the Closing Date
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements
therein not misleading.

5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND

5.1 Except as expressly contemplated herein to the contrary, the Trust
on behalf of the Acquired Fund and the Trust on behalf of the
Acquiring Fund, will operate their respective businesses in the
ordinary course between the date hereof and the Closing Date, it
being understood that such ordinary course of business will include
customary dividends and distributions and any other distributions
necessary or desirable to avoid federal income or excise taxes.

5.2 The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired by the Acquired Fund for
the purpose of making any distribution thereof other than in
accordance with the terms of this Agreement.

5.3 The Acquired Fund will provide such information within its
possession or reasonably obtainable as the Trust on behalf of the
Acquiring Fund requests concerning the beneficial ownership of the
Acquired Fund's shares of beneficial interest.

5.4 Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund each shall take, or cause to be taken, all
action, and do or cause to be done, all things reasonably
necessary, proper or advisable to consummate the transactions
contemplated by this Agreement.

5.5 The Acquired Fund shall furnish to the Trust on behalf of the
Acquiring Fund on the Closing Date the Statement of Assets and
Liabilities of the Acquired Fund as of the Closing Date, which
statement shall be prepared in accordance with generally accepted
accounting principles consistently applied and shall be certified
by the Acquired Fund's Treasurer or Assistant Treasurer. As
promptly as practicable but in any case within 60 days after the
Closing Date, the Acquired Fund shall furnish to the Acquiring
Fund, in such form as is reasonably satisfactory to the Trust, a
statement of the earnings and profits of the Acquired Fund for
federal income tax purposes and of any capital loss carryovers and
other items that will be carried over to the Acquiring Fund as a
result of Section 381 of the Code, and which statement will be
certified by the President, Treasurer or Secretary of the Acquired
Fund.

5.6 The Trust on behalf of the Acquiring Fund will prepare and file
with the Commission the Registration Statement in compliance with
the 1933 Act and the 1940 Act in connection with the issuance of
the Acquiring Fund Shares as contemplated herein.

5.7 The Acquired Fund will prepare an Proxy Statement, to be included
in the Registration Statement in compliance with the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and
the 1940 Act and the rules and regulations thereunder
(collectively, the "Acts").

5.8 Neither the Acquired Fund nor the Acquiring Fund shall take any
action that is inconsistent with the representations set forth in,
with respect to the Acquired Fund, the Acquired Fund Tax
Representation Certificate, and with respect to the Acquiring Fund,
the Acquiring Fund Tax Representation Certificate, to the extent
such action would prevent the reorganization from qualifying as a
"reorganization" under Section 368(a) of the Code.

A-8

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND

The obligations of the Acquired Fund to complete the transactions provided
for herein shall be, at its election, subject to the performance by the
Trust on behalf of the Acquiring Fund of all the obligations to be
performed by the Acquiring Fund hereunder on or before the Closing Date,
and, in addition thereto, the following further conditions:

6.1 All representations and warranties of the Trust on behalf of the
Acquiring Fund contained in this Agreement shall be true and
correct in all material respects as of the date hereof and, except
as they may be affected by the transactions contemplated by this
Agreement, as of the Closing Date with the same force and effect as
if made on and as of the Closing Date;

6.2 The Trust on behalf of the Acquiring Fund shall have delivered to
the Acquired Fund a certificate executed in its name by the Trust's
President or Vice President and its Treasurer or Secretary, in form
and substance satisfactory to the Acquired Fund and dated as of the
Closing Date, to the effect that the representations and warranties
of the Trust on behalf of the Acquiring Fund made in this Agreement
are true and correct at and as of the Closing Date, except as they
may be affected by the transactions contemplated by this Agreement,
and as to such other matters as the Acquired Fund shall reasonably
request; and

6.3 The Acquiring Fund shall have delivered at closing to the Acquired
Fund and to Hale and Dorr LLP an Acquiring Fund Tax Representation
Certificate, satisfactory to the Acquired Fund, substantially in
the form attached to this Agreement as Annex A concerning certain
tax-related matters with respect to the Acquiring Fund.

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST ON BEHALF OF THE
ACQUIRING FUND

The obligations of the Trust on behalf of the Acquiring Fund to complete
the transactions provided for herein shall be, at its election, subject to
the performance by the Trust on behalf of the Acquired Fund of all the
obligations to be performed by the Acquired Fund hereunder on or before
the Closing Date and, in addition thereto, the following conditions:

7.1 All representations and warranties of the Trust on behalf of the
Acquired Fund contained in this Agreement shall be true and correct
in all material respects as of the date hereof and, except as they
may be affected by the transactions contemplated by this Agreement,
as of the Closing Date with the same force and effect as if made on
and as of the Closing Date;

7.2 The Trust on behalf of the Acquired Fund shall have delivered to
the Acquiring Fund the Statement of Assets and Liabilities of the
Acquired Fund, together with a list of its portfolio securities
showing the federal income tax bases and holding periods of such
securities, as of the Closing Date, certified by the Treasurer or
Assistant Treasurer of the Acquired Fund;

7.3 The Acquired Fund shall have delivered to the Trust on behalf of
the Acquiring Fund on the Closing Date a certificate executed in
the name of the Acquired Fund by a President or Vice President and
a Treasurer or Secretary of the Acquired Fund, in form and
substance satisfactory to the Acquiring Fund and dated as of the
Closing Date, to the effect that the representations and warranties
of the Acquired Fund in this Agreement are true and correct at and
as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and as to such other
matters as the Trust on behalf of the Acquiring Fund shall
reasonably request;

7.4 At or prior to the Closing Date, the Acquired Fund's investment
adviser, or an affiliate thereof, shall have made all payments, or
applied all credits, to the Acquired Fund required by any
applicable contractual expense limitation; and

A-9

7.5 The Acquired Fund shall have delivered at closing to the Acquiring
Fund and to Hale and Dorr LLP an Acquired Fund Tax Representation
Certificate, satisfactory to the Acquiring Fund, substantially in
the form attached to this Agreement as Annex B concerning certain
tax-related matters with respect to the Acquired Fund.

8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND AND THE
TRUST ON BEHALF OF THE ACQUIRING FUND

The obligations hereunder of the Trust on behalf of the Acquiring Fund and
of the Trust on behalf of the Acquired Fund are each subject to the
further conditions that on or before the Closing Date:

8.1 On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain changes or other relief
in connection with, this Agreement or the transactions contemplated
herein;

8.2 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities
(including those of the Commission and their "no-action" positions)
deemed necessary by the Acquired Fund or the Trust to permit
consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order or permit would not involve a
risk of a material adverse effect on the assets or properties of
the Acquiring Fund or the Acquired Fund, provided that either party
hereto may waive any such conditions for itself;

8.3 The Registration Statement shall have become effective under the
1933 Act and the 1940 Act and no stop orders suspending the
effectiveness thereof shall have been issued and, to the best
knowledge of the parties hereto, no investigation or proceeding for
that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act or the 1940 Act;

8.4 The Acquired Fund shall have distributed to its shareholders, in a
distribution or distributions qualifying for the deduction for
dividends paid under Section 561 of the Code, all of its investment
company taxable income (as defined in Section 852(b)(2) of the Code
determined without regard to Section 852(b)(2)(D) of the Code) for
its taxable year ending on the Closing Date, all of the excess of
(i) its interest income excludable from gross income under Section
103(a) of the Code over (ii) its deductions disallowed under
Sections 265 and 171(a)(2) of the Code for its taxable year ending
on the Closing Date, and all of its net capital gain (as such term
is used in Sections 852(b)(3)(A) and (C) of the Code), after
reduction by any available capital loss carryforward, for its
taxable year ending on the Closing Date; and

8.5 The parties shall have received an opinion of Hale and Dorr LLP,
satisfactory to the Acquired Fund and the Trust on behalf of the
Acquiring Fund, substantially to the effect that for federal income
tax purposes the acquisition by the Acquiring Fund of all of the
assets of the Acquired Fund solely in exchange for the issuance of
Acquiring Fund Shares to the Acquired Fund and the assumption of
all of the Acquired Fund Liabilities by the Acquiring Fund,
followed by the distribution by the Acquired Fund, in liquidation
of the Acquired Fund, of Acquiring Fund Shares to the shareholders
of the Acquired Fund in exchange for their shares of beneficial
interest of the Acquired Fund and the termination of the Acquired
Fund, will constitute a "reorganization" within the meaning of
Section 368(a) of the Code. In rendering such opinions, counsel
shall be entitled to rely upon, among other things, reasonable
assumptions as well as representations of the Acquiring Fund and
the Acquired Fund including the representations contained in the
Tax Representation Certificates referred to in Section 6.3 and
Section 7.5.

A-10

Notwithstanding anything herein to the contrary, neither the Acquired Fund
nor the Acquiring Fund may waive the conditions set forth in this
Paragraph 8.5.

9. BROKERAGE FEES AND EXPENSES

9.1 The Trust on behalf of the Acquiring Fund and the Trust on behalf
of the Acquired Fund each represent and warrant to the other that
there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.

9.2 The Acquiring Fund and the Acquired Fund shall each be liable
solely for its own expenses incurred in connection with entering
into and carrying out the provisions of this Agreement whether or
not the transactions contemplated hereby are consummated.

10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES

10.1 The Trust on behalf of the Acquiring Fund and the Trust on behalf of
the Acquired Fund agree that neither party has made any
representation, warranty or covenant not set forth herein or
referred to in Paragraph 4 hereof and that this Agreement
constitutes the entire agreement between the parties.

10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in
connection herewith shall survive the consummation of the
transactions contemplated hereunder.

11. TERMINATION

11.1 This Agreement may be terminated by the mutual agreement of the
Trust on behalf of the Acquiring Fund and the Acquired Fund. In
addition, either party may at its option terminate this Agreement at
or prior to the Closing Date:

(a) because of a material breach by the other of any
representation, warranty, covenant or agreement contained
herein to be performed at or prior to the Closing Date;

(b) because of a condition herein expressed to be precedent to the
obligations of the terminating party which has not been met
and which reasonably appears will not or cannot be met;

(c) by resolution of the Trust's Board of Trustees if
circumstances should develop that, in the good faith opinion
of such Board, make proceeding with the Agreement not in the
best interests of the Acquiring Fund's shareholders; or

(d) by resolution of the Acquired Fund's Board of Trustees if
circumstances should develop that, in the good faith opinion
of such Board, make proceeding with the Agreement not in the
best interests of the Acquired Fund's shareholders.

11.2 In the event of any such termination, there shall be no liability
for damages on the part of the Trust, the Acquiring Fund, or the
Acquired Fund, or the Trustees or officers of the Trust or the
Acquired Fund, but each party shall bear the expenses incurred by it
incidental to the preparation and carrying out of this Agreement.

12. AMENDMENTS

This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon by the authorized officers of the Trust and
the Acquired Fund. No such amendment may have the effect of changing the
provisions regarding the method for determining the number of Acquiring
Fund Shares to be received by the Acquired Fund shareholders under this
Agreement to the detriment of such shareholders without their further
approval; provided that

A-11

nothing contained in this Article twelve shall be construed to prohibit
the parties from amending this Agreement to change the Closing Date.

13. NOTICES

Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
overnight delivery, facsimile or certified mail addressed to the Acquiring
Fund or to the Acquired Fund, each at One SeaGate. Toledo Ohio 43666,
Attention: Karen B. Wasil, and, in either case, with copies to Hale and
Dorr LLP, 60 State Street, Boston, Massachusetts 02109, Attention: Charles
F. McCain, Esq.

14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT

14.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

14.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.

14.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.

14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the prior written
consent of the other party. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or
by reason of this Agreement.

14.5 All persons dealing with the Trust on behalf of the Acquiring Fund
or Trust on behalf of the Acquired Fund must look solely to the
property of the Acquiring Fund or the Acquired Fund, respectively,
for the enforcement of any claims against the Acquiring Fund or the
Acquired Fund as the Trustees, officers, agents and shareholders of
the Trust on behalf of either Fund assume no personal liability for
obligations entered into on behalf of the Trust on behalf of the
Acquiring Fund or Trust on behalf of the Acquired Fund,
respectively. None of the other series of the Trust shall be
responsible for any obligations assumed by on or behalf of the
either Fund under this Agreement.

A-12

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first set forth above by its President or Vice President
and attested by its Secretary.

HARBOR FUND on behalf of
HARBOR INTERNATIONAL FUND

By:
------------------------------------
James M. Williams, President

HARBOR FUND on behalf of
HARBOR INTERNATIONAL FUND II

By:
------------------------------------
Constance L. Souders, Vice President

Attest:

HARBOR FUND

By:
--------------------------------------------------------
Karen B. Wasil, Secretary

A-13

ANNEX A

---------------------------------------------------------------

TAX REPRESENTATION CERTIFICATE OF

HARBOR INTERNATIONAL FUND

This certificate is being delivered in connection with the transaction to be
effected pursuant to the Agreement and Plan of Reorganization made as of
, 2002 between Harbor International Fund ("Acquiring Fund") and Harbor
International Fund II ("Acquired Fund"), each a series of Harbor Fund (the
"Trust"), (the "Agreement"). Pursuant to the Agreement, Acquiring Fund will
acquire all of the assets of Acquired Fund in exchange solely for (i) the
assumption by Acquiring Fund of certain liabilities of Acquired Fund (the
"Acquired Fund Liabilities") and (ii) the issuance of shares of beneficial
interest of the Institutional Class of Acquiring Fund (the "Acquiring Fund
Shares") to Acquired Fund, followed by the distribution by Acquired Fund, in
liquidation of Acquired Fund, of the Acquiring Fund Shares to the shareholders
of Acquired Fund and the termination of Acquired Fund (the foregoing together
constituting the "transaction").

The undersigned officer of the Trust, after consulting with its counsel and
auditors regarding the meaning of and factual support for the following
representations, on behalf of Acquiring Fund, hereby certifies and represents
that the following statements are true, complete and correct and will be true,
complete and correct on the date of the transaction and thereafter as relevant.
Unless otherwise indicated, all capitalized terms used but not defined herein
shall have the meaning ascribed to them in the Agreement.

1. Acquiring Fund is a series of the Trust, a business trust established under
the laws of the State of Delaware.

2. Neither Acquiring Fund nor any person treated as related to Acquiring Fund
under Treasury Regulation Section 1.368-1(e)(3) or by virtue of being a
partnership of which Acquiring Fund or a related person is a partner (a
"Related Person") has any plan or intention to redeem or otherwise reacquire
any of the Acquiring Fund Shares received by shareholders of Acquired Fund
in the transaction except in the ordinary course of Acquiring Fund's
business in connection with its legal obligation under Section 22(e) of the
Investment Company Act of 1940, as amended, as a registered open-end
investment company to redeem its own shares (which obligation is not in
connection with, modified in connection with, or in any way related to the
transaction).

3. After the transaction, Acquiring Fund will continue the historic business of
Acquired Fund or will use all or a significant portion of the historic
assets acquired from Acquired Fund in the ordinary course of a business. For
this purpose, Acquiring Fund shall be treated as conducting the business and
holding the assets of certain related entities, as described in Treasury
Regulation Section 1.368-1(d)(4).

4. Acquiring Fund has no plan or intention to sell or otherwise dispose of any
assets of Acquired Fund acquired in the transaction, except for dispositions
made in the ordinary course of its business or to maintain its qualification
as a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), and except for transfers of assets to
certain related entities, as described in Section 368(a)(2)(C) of the
Internal Revenue Code of 1986, as amended (the "Code") or Treasury
Regulation Section 1.368-2(k)(1).

5. Each of Acquiring Fund and Acquired Fund will pay its own expenses related
to the transaction. The shareholders of Acquiring Fund and Acquired Fund
will bear their respective expenses, if any, in connection with the
transaction.

6. There is no indebtedness between Acquiring Fund and Acquired Fund.

7. Acquiring Fund has elected to be treated as a regulated investment company
under Subchapter M of the Code, has qualified as a regulated investment
company for each taxable year since inception,

A-14

qualifies as such as of the date of the transaction, and intends to qualify
as such after the transaction.

8. Acquiring Fund meets the requirements of a regulated investment company as
defined in Section 368(a)(2)(F) of the Code.

9. Acquiring Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.

10. Acquiring Fund does not now and has never owned, directly or indirectly, any
shares of Acquired Fund.

11. Acquiring Fund will not pay cash in lieu of fractional shares in connection
with the transaction.

12. As of the date of the transaction, the fair market value of the Acquiring
Fund Shares issued to Acquired Fund in exchange for the assets of Acquired
Fund will be approximately equal to the fair market value of the assets of
Acquired Fund received by Acquiring Fund, minus the Acquired Fund
Liabilities assumed by Acquiring Fund. Acquiring Fund will not furnish any
consideration in connection with the acquisition of Acquired Fund's assets
other than the assumption of these Acquired Fund Liabilities and the
issuance of these Acquiring Fund Shares.

13. Acquired Fund shareholders will not be in control (within the meaning of
Sections 368(a)(2)(H)(i) and 304(c) of the Code, which provide that control
means the ownership of shares possessing at least 50% of the total combined
voting power of all classes of shares that are entitled to vote or at least
50% of the total value of shares of all classes) of Acquiring Fund after the
transaction.

14. The principal business purposes of the transaction are to combine the assets
of Acquiring Fund and Acquired Fund in order to capitalize on potential
economies of scale in expenses, including the costs of accounting, legal,
transfer agency, insurance, custodial, and administrative services, and to
increase diversification.

15. No Acquired Fund shareholder is acting as agent for Acquiring Fund in
connection with the transaction or approval thereof. Acquiring Fund will not
reimburse any Acquired Fund shareholder for Acquired Fund shares such
shareholder may have purchased or for other obligations such shareholder may
have incurred.

The undersigned officer of the Trust is authorized to make all of the
representations set forth herein, and the undersigned is authorized to execute
this certificate on behalf of the Trust for the Harbor International Fund. The
undersigned recognizes that Hale and Dorr LLP will rely upon the foregoing
representations in evaluating the United States federal income tax consequences
of the transaction. If, prior to the date of the transaction, any of the
representations set forth herein ceases to be accurate in any material respect,
the undersigned agrees to deliver to Hale and Dorr LLP immediately a written
notice to that effect.

HARBOR FUND on behalf of
HARBOR INTERNATIONAL FUND II

By:
--------------------------------------
James M. Williams, President

Dated:
- ------------------------------, 2002

A-15

ANNEX B

---------------------------------------------------------------

TAX REPRESENTATION CERTIFICATE OF

HARBOR INTERNATIONAL FUND II

This certificate is being delivered in connection with the transaction to be
effective pursuant to the Agreement and Plan of Reorganization made as of
, 2002 between Harbor International Fund ("Acquiring Fund") and Harbor
International Fund II ("Acquired Fund"), each a series of Harbor Fund (the
"Trust"), (the "Agreement"). Pursuant to the Agreement, Acquiring Fund will
acquire all of the assets of Acquired Fund in exchange solely for (i) the
assumption by Acquiring Fund of certain liabilities of Acquired Fund (the
"Acquired Fund Liabilities") and (ii) the issuance of shares of beneficial
interest of the Institutional Class of Acquiring Fund (the "Acquiring Fund
Shares") to Acquired Fund, followed by the distribution by Acquired Fund, in
liquidation of Acquired Fund, of the Acquiring Fund Shares to the shareholders
of Acquired Fund and the termination of Acquired Fund (the foregoing together
constituting the "transaction").

The undersigned officer of the Trust, after consulting with its counsel and
auditors regarding the meaning of and factual support for the following
representations, on behalf of Acquired Fund, hereby certifies and represents
that the following statements are true, complete and correct and will be true,
complete and correct on the date of the transaction and thereafter as relevant.
Unless otherwise indicated, all capitalized terms used but not defined herein
shall have the meaning ascribed to them in the Agreement.

1. Acquired Fund is a series of the Trust, a business trust established under
the laws of the State of Delaware.

2. As of the date of the transaction, the fair market value of the Acquiring
Fund Shares received by each shareholder that holds shares of Acquired Fund
(the "Acquired Fund Shares") will be approximately equal to the fair market
value of the Acquired Fund Shares surrendered by such shareholder, and the
aggregate consideration received by Acquired Fund shareholders in exchange
for their Acquired Fund Shares will be approximately equal to the fair
market value of all of the outstanding Acquired Fund Shares immediately
prior to the transaction. No property other than Acquiring Fund Shares will
be distributed to shareholders of Acquired Fund in exchange for their
Acquired Fund Shares, nor will any such shareholder receive cash or other
property as part of the transaction.

3. There is no plan or intention on the part of any shareholder of Acquired
Fund that owns beneficially 5% or more of the Acquired Fund Shares and, to
the best knowledge of management of Acquired Fund, there is no plan or
intention on the part of the remaining shareholders of Acquired Fund, in
connection with the transaction, to engage in any transaction with Acquired
Fund, Acquiring Fund, or any person treated as related to Acquired Fund or
Acquiring Fund under Treasury Regulation Section 1.368-1(e)(3) or by virtue
of being a partnership of which Acquired Fund, Acquiring Fund, or a related
person is a partner involving the sale, redemption, exchange, transfer,
pledge, or other disposition resulting in a direct or indirect transfer of
the risks of ownership (a "Sale") of any of the Acquired Fund Shares or any
of the Acquiring Fund Shares to be received in the transaction that,
considering all Sales, would reduce the aggregate ownership of the Acquiring
Fund Shares by former Acquired Fund shareholders to a number of shares
having a value, as of the date of the transaction, of less than fifty
percent (50%) of the value of all of the formerly outstanding Acquired Fund
Shares as of the same date. All Sales involving shares of Acquired Fund and
Acquiring Fund held by Acquired Fund shareholders that have occurred or will
occur in connection with the transaction are taken into account for purposes
of this representation. No such Sale that is in connection with the
transaction has, to the best knowledge of management of Acquired Fund,
occurred on or prior to the date of the transaction.

A-16

4. Acquired Fund assets transferred to Acquiring Fund will comprise at least
ninety percent (90%) of the fair market value of the net assets and at least
seventy percent (70%) of the fair market value of the gross assets held by
Acquired Fund immediately prior to the transaction. For purposes of this
representation, amounts used by Acquired Fund to pay expenses of the
transaction and all redemptions and distributions (except for redemptions in
the ordinary course of business upon demand of a shareholder that Acquired
Fund is required to make as an open-end investment company pursuant to
Section 22(e) of the Investment Company Act of 1940, as amended, and
regular, normal dividends) made by Acquired Fund immediately preceding the
transaction are taken into account as assets of Acquired Fund held
immediately prior to the transaction.

5. As of the date of the transaction, the fair market value of the Acquiring
Fund Shares issued to Acquired Fund in exchange for the assets of Acquired
Fund will be approximately equal to the fair market value of the assets of
Acquired Fund received by Acquiring Fund, minus the Acquired Fund
Liabilities assumed by Acquiring Fund. Acquiring Fund will not furnish any
consideration in connection with the acquisition of Acquired Fund's assets
other than the assumption of these Acquired Fund Liabilities and the
issuance of these Acquiring Fund Shares.

6. The Acquired Fund Liabilities assumed by Acquiring Fund plus the
liabilities, if any, to which the transferred assets are subject were
incurred by Acquired Fund in the ordinary course of its business.

7. The fair market value of the Acquired Fund assets transferred to Acquiring
Fund will equal or exceed the sum of the Acquired Fund Liabilities assumed
by Acquiring Fund plus the amount of liabilities, if any, to which the
transferred assets are subject.

8. Substantially all of the Acquired Fund assets transferred to Acquiring Fund
will be Acquired Fund's historic business assets, i.e., assets not acquired
by Acquired Fund as part of or in contemplation of the transaction.

9. Acquired Fund will distribute to its shareholders the Acquiring Fund Shares
it receives, and its other properties, if any, pursuant to the transaction
and will be liquidated promptly thereafter.

10. Each of Acquiring Fund and Acquired Fund will pay its own expenses related
to the transaction. The shareholders of Acquiring Fund and Acquired Fund
will bear their respective expenses, if any, in connection with the
transaction.

11. There is no indebtedness between Acquiring Fund and Acquired Fund.

12. Acquired Fund has elected to be treated as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), has qualified as a regulated investment company for each taxable
year since inception, and qualifies as such for its taxable year ending on
the closing date of the transaction.

13. Acquired Fund meets the requirements of a regulated investment company as
defined in Section 368(a)(2)(F) of the Code.

14. Acquired Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.

15. Acquired Fund shareholders will not be in control (within the meaning of
Sections 368(a)(2)(H)(i) and 304(c) of the Code, which provide that control
means the ownership of shares possessing at least 50% of the total combined
voting power of all classes of shares that are entitled to vote or at least
50% of the total value of shares of all classes) of Acquiring Fund after the
transaction.

16. Acquired Fund shareholders will not have dissenters' or appraisal rights in
the transaction.

17. The principal business purposes of the transaction are to combine the assets
of Acquiring Fund and Acquired Fund in order to capitalize on potential
economies of scale in expenses, including the

A-17

costs of accounting, legal, transfer agency, insurance, custodial, and
administrative services, and to increase diversification.

The undersigned officer of the Trust is authorized to make all of the
representations set forth herein, and the undersigned is authorized to execute
this certificate on behalf of the Trust for the Harbor International Fund II.
The undersigned recognizes that Hale and Dorr LLP will rely upon the foregoing
representations in evaluating the United States federal income tax consequences
of the transaction. If, prior to the date of the transaction, any of the
representations set forth herein ceases to be accurate in any material respect,
the undersigned agrees to deliver to Hale and Dorr LLP immediately a written
notice to that effect.

HARBOR FUND on behalf of
HARBOR INTERNATIONAL FUND II
By:
--------------------------------------
James M. Williams, President

Dated:
- ------------------------------, 2002

A-18

- --------------------------------------------------------------------------------

EXHIBIT B

- --------------------------------------------------------------------------------

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this
day of , 2002, by and between Harbor Growth Fund (the "Acquiring
Fund") and Harbor Small Cap Growth Fund (the "Acquired Fund"), each a series of
Harbor Fund, a Delaware business trust (the "Trust") and each with their
principal place of business at One SeaGate, Toledo Ohio 43666. The Acquiring
Fund and the Acquired Fund are sometimes referred to collectively herein as the
"Funds" and individually as a "Fund."

In consideration of the premises of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:

1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ISSUANCE OF ACQUIRING FUND SHARES, LIQUIDATION OF THE
ACQUIRED FUND

B-1

acquire any additional securities other than securities of the type
in which the Acquiring Fund is permitted to invest.

1.3 The Acquiring Fund and the Acquired Fund shall each bear its own
expenses in connection with the transactions contemplated by this
Agreement.

1.6 The existence of the Acquired Fund shall be terminated as promptly
as practicable following the Liquidation Date.

1.8 Immediately after the Closing Date, the Acquiring Fund shall engage
Westfield Capital Management LLC, the current subadviser to the
Acquired Fund, to serve as subadviser to the Acquiring Fund.
Further, the investment strategies and policies of the Acquiring
Fund shall be amended to mirror the current investment strategies
and policies of the Acquired Fund. Finally, the Acquiring Fund
shall change its name to Harbor Small Cap Growth Fund.

2. VALUATION

B-2

2.3 All computations of value shall be made by State Street in
accordance with its regular practice as pricing agent for the
Funds.

3. CLOSING AND CLOSING DATE

3.1 The Closing Date shall be 2002 or such other date on
or before December 31, 2002 as the parties may agree. The Closing
shall be held as of 5:00 p.m. at the offices of the Funds, One
SeaGate, Toledo Ohio 43666, or at such other time and/or place as
the parties may agree.

B-3

4. REPRESENTATIONS AND WARRANTIES

4.1 The Trust on behalf of the Acquired Fund represents, warrants and
covenants to the Acquiring Fund as follows:

B-4

B-5

(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the
Acquired Fund of the transactions contemplated by this
Agreement;

(q) The prospectus of the Acquired Fund, dated March 1, 2002 (the
"Acquired Fund Prospectus"), furnished to the Acquiring Fund,
does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;

4.2 The Trust on behalf of the Acquiring Fund represents, warrants and
covenants to the Acquired Fund as follows:

(a) The Trust is a business trust duly organized, validly existing
and in good standing under the laws of the State of Delaware
and has the power to own all of its properties and assets and
to carry out the Agreement. Neither the Trust nor the
Acquiring Fund is required to qualify to do business in any
jurisdiction in which it is not so qualified or where failure
to qualify would subject it to any material liability or
disability. The Trust has all necessary federal, state and
local authorizations to own all of its properties and assets
and to carry on its business as now being conducted;

(c) The prospectus (the "Acquiring Fund Prospectus") and statement
of additional information of the Acquiring Fund, each dated
March 1, 2002, and any amendments or supplements thereto on or
prior to the Closing Date, and the Registration Statement on
Form N-14 filed in connection with this Agreement (the
"Registration Statement") (other than written information
furnished by the Acquired Fund for inclusion therein, as
covered by the Acquired Fund's warranty in Paragraph 4.1(n)
hereof) will conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and
the rules and regulations of the Commission thereunder, the
Acquiring Fund Prospectus does not include any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading and, other than written
information furnished by the Acquired Fund for inclusion
therein, as covered by the Acquired Fund's warranty in
Paragraph 4.1(n) hereof, the Registration Statement shall not,
on its effective date and on Closing Date, contain any untrue
statement of material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading;

B-6

(d) At the Closing Date, the Trust on behalf of the Acquiring Fund
will have good and marketable title to the assets of the
Acquiring Fund;

(f) Except as otherwise disclosed in writing and accepted by the
Acquired Fund, no material litigation or administrative
proceeding or investigation of or before any court or
governmental body is currently pending or threatened against
the Trust or the Acquiring Fund or any of the Acquiring Fund's
properties or assets. The Trust knows of no facts which might
form the basis for the institution of such proceedings, and
neither the Trust nor the Acquiring Fund is a party to or
subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely
affects the Acquiring Fund's business or its ability to
consummate the transactions herein contemplated;

(i) The Acquiring Fund has qualified as a regulated investment
company for each taxable year of its operation and the
Acquiring Fund will qualify as such as of the Closing Date;

(l) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund pursuant to the terms of this Agreement, when so
issued and delivered, will be duly
B-7

and validly issued shares of beneficial interest of the
Acquiring Fund and will be fully paid and nonassessable by the
Trust;

5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND

B-8

5.7 The Acquired Fund will prepare a Proxy Statement, to be included in
the Registration Statement in compliance with the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and
the 1940 Act and the rules and regulations thereunder
(collectively, the "Acts").

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST ON BEHALF OF THE
ACQUIRING FUND

B-9

8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND AND THE
TRUST ON BEHALF OF THE ACQUIRING FUND

The obligations hereunder of the Trust on behalf of the Acquiring Fund and
of the Trust on behalf of the Acquired Fund are each subject to the
further conditions that on or before the Closing Date:

assets of the Acquired Fund solely in exchange for the issuance of
Acquiring Fund Shares to the Acquired Fund and the assumption of
all of the Acquired Fund Liabilities by the Acquiring Fund,
followed by the distribution by the Acquired Fund, in liquidation
of the Acquired Fund, of Acquiring Fund Shares to the shareholders
of the Acquired Fund in exchange for their shares of beneficial
interest of the Acquired Fund and the termination of the Acquired
Fund, will constitute a "reorganization" within the meaning of
Section 368(a) of the Code. In rendering such opinions, counsel
shall be entitled to rely upon, among other things, reasonable
assumptions as well as representations of the Acquiring Fund and
the Acquired Fund including the representations contained in the
Tax Representation Certificates referred to in Section 6.3 and
Section 7.5.

Notwithstanding anything herein to the contrary, neither the Acquired Fund
nor the Trust may waive the conditions set forth in this Paragraph 8.5.

9. BROKERAGE FEES AND EXPENSES

10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES

10.1 The Trust on behalf of the Acquiring Fund and the Trust on behalf
of the Acquired Fund agree that neither party has made any
representation, warranty or covenant not set forth herein or
referred to in Paragraph 4 hereof and that this Agreement
constitutes the entire agreement between the parties.

11. TERMINATION

(a) because of a material breach by the other of any
representation, warranty, covenant or agreement contained
herein to be performed at or prior to the Closing Date;

(b) because of a condition herein expressed to be precedent to
the obligations of the terminating party which has not been
met and which reasonably appears will not or cannot be met;

B-11

12. AMENDMENTS

13. NOTICES

14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT

14.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

14.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.

14.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.

B-12

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed as of the date first set forth above by its President or Vice
President and attested by its Secretary.

HARBOR FUND on behalf of
HARBOR GROWTH FUND

By:
------------------------------------
James M. Williams, President

HARBOR FUND on behalf of
HARBOR SMALL CAP GROWTH FUND

By:
------------------------------------
Constance L. Souders, Vice President

Attest:

HARBOR FUND

By:
--------------------------------------------------------
Karen B. Wasil, Secretary

B-13

ANNEX A

---------------------------------------------------------------

TAX REPRESENTATION CERTIFICATE OF

HARBOR GROWTH FUND

This certificate is being delivered in connection with the transaction to be
effected pursuant to the Agreement and Plan of Reorganization made as of
, 2002 between Harbor Growth Fund ("Acquiring Fund") and Harbor
Small Cap Growth Fund ("Acquired Fund"), each a series of Harbor Fund (the
"Trust"), (the "Agreement"). Pursuant to the Agreement, Acquiring Fund will
acquire all of the assets of Acquired Fund in exchange solely for (i) the
assumption by Acquiring Fund of certain liabilities of Acquired Fund (the
"Acquired Fund Liabilities") and (ii) the issuance of shares of beneficial
interest of the Institutional Class of Acquiring Fund (the "Acquiring Fund
Shares") to Acquired Fund, followed by the distribution by Acquired Fund, in
liquidation of Acquired Fund, of the Acquiring Fund Shares to the shareholders
of Acquired Fund and the termination of Acquired Fund (the foregoing together
constituting the "transaction").

1. Acquiring Fund is a series of the Trust, a business trust established under
the laws of the State of Delaware.

6. There is no indebtedness between Acquiring Fund and Acquired Fund.

7. Acquiring Fund has elected to be treated as a regulated investment company
under Subchapter M of the Code, has qualified as a regulated investment
company for each taxable year since inception, qualifies as such as of the
date of the transaction, and intends to qualify as such after the
transaction.

B-14

8. Acquiring Fund meets the requirements of a regulated investment company as
defined in Section 368(a)(2)(F) of the Code.

9. Acquiring Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.

10. Acquiring Fund does not now and has never owned, directly or indirectly, any
shares of Acquired Fund.

11. Acquiring Fund will not pay cash in lieu of fractional shares in connection
with the transaction.

13. Acquired Fund shareholders will be in control (within the meaning of
Sections 368(a)(2)(H)(i) and 304(c) of the Code, which provide that control
means the ownership of shares possessing at least 50% of the total combined
voting power of all classes of shares that are entitled to vote or at least
50% of the total value of shares of all classes) of Acquiring Fund after the
transaction.

14. At the time of the transaction, Acquiring Fund does not have any outstanding
warrants, options, convertible securities or any other type of right
pursuant to which any person could acquire shares of Acquiring Fund that, if
exercised or converted, would affect the Acquired Fund shareholders'
acquisition or retention of control (as defined in Section 368(a)(2)(H) and
304(c) of the Code) of Acquiring Fund by the shareholders of the Acquired
Fund.

15. The principal business purposes of the transaction are to combine the assets
of Acquiring Fund and Acquired Fund in order to capitalize on potential
economies of scale in expenses, including the costs of accounting, legal,
transfer agency, insurance, custodial, and administrative services, and to
increase diversification.

16. No Acquired Fund shareholder is acting as agent for Acquiring Fund in
connection with the transaction or approval thereof. Acquiring Fund will not
reimburse any Acquired Fund shareholder for Acquired Fund shares such
shareholder may have purchased or for other obligations such shareholder may
have incurred.

The undersigned officer of the Trust is authorized to make all of the
representations set forth herein, and the undersigned is authorized to execute
this certificate on behalf of the Trust for the Harbor Growth Fund. The
undersigned recognizes that Hale and Dorr LLP will rely upon the foregoing
representations in evaluating the United States federal income tax consequences
of the transaction. If, prior to the date of the transaction, any of the
representations set forth herein ceases to be accurate in any material respect,
the undersigned agrees to deliver to Hale and Dorr LLP immediately a written
notice to that effect.

HARBOR FUND on behalf of
HARBOR GROWTH FUND

By:
--------------------------------------
James M. Williams, President

Dated:
- ------------------------------, 2002

B-15

ANNEX B

---------------------------------------------------------------

TAX REPRESENTATION CERTIFICATE OF

HARBOR SMALL CAP GROWTH FUND

This certificate is being delivered in connection with the transaction to be
effective pursuant to the Agreement and Plan of Reorganization made as of
, 2002 between Harbor Growth Fund ("Acquiring Fund") and Harbor
Small Cap Growth Fund ("Acquired Fund"), each a series of Harbor Fund (the
"Trust"), (the "Agreement"). Pursuant to the Agreement, Acquiring Fund will
acquire all of the assets of Acquired Fund in exchange solely for (i) the
assumption by Acquiring Fund of certain liabilities of Acquired Fund (the
"Acquired Fund Liabilities") and (ii) the issuance of shares of beneficial
interest of the Institutional Class of Acquiring Fund (the "Acquiring Fund
Shares") to Acquired Fund, followed by the distribution by Acquired Fund, in
liquidation of Acquired Fund, of the Acquiring Fund Shares to the shareholders
of Acquired Fund and the termination of Acquired Fund (the foregoing together
constituting the "transaction").

The undersigned officer of the Trust, after consulting with its counsel and
auditors regarding the meaning of and factual support for the following
representations, on behalf of Acquired Fund, hereby certifies and represents
that the following statements are true, complete and correct and will be true,
complete and correct on the date of the transaction and thereafter as relevant.
Unless otherwise indicated, all capitalized terms used but not defined herein
shall have the meaning ascribed to them in the Agreement.

1. Acquired Fund is a series of the Trust, a business trust established under
the laws of the State of Delaware.

B-16

9. Acquired Fund will distribute to its shareholders the Acquiring Fund Shares
it receives, and its other properties, if any, pursuant to the transaction
and will be liquidated promptly thereafter.

11. There is no indebtedness between Acquiring Fund and Acquired Fund.

13. Acquired Fund meets the requirements of a regulated investment company as
defined in Section 368(a)(2)(F) of the Code.

14. Acquired Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.

15. Acquired Fund shareholders will be in control (within the meaning of
Sections 368(a)(2)(H)(i) and 304(c) of the Code, which provide that control
means the ownership of shares possessing at least 50% of the total combined
voting power of all classes of shares that are entitled to vote or at least
50% of the total value of shares of all classes) of Acquiring Fund after the
transaction.

16. Acquired Fund shareholders will not have dissenters' or appraisal rights in
the transaction.

17. The total adjusted basis of the Acquired Fund assets transferred to
Acquiring Fund will equal or exceed the liabilities assumed by Acquiring
Fund (as determined under Section 357(d) of the Code).

B-17

18. The principal business purposes of the transaction are to combine the assets
of Acquiring Fund and Acquired Fund in order to capitalize on potential
economies of scale in expenses, including the costs of accounting, legal,
transfer agency, insurance, custodial, and administrative services, and to
increase diversification.

The undersigned officer of the Trust is authorized to make all of the
representations set forth herein, and the undersigned is authorized to execute
this certificate on behalf of the Trust for the Harbor Small Cap Growth Fund.
The undersigned recognizes that Hale and Dorr LLP will rely upon the foregoing
representations in evaluating the United States federal income tax consequences
of the transaction. If, prior to the date of the transaction, any of the
representations set forth herein ceases to be accurate in any material respect,
the undersigned agrees to deliver to Hale and Dorr LLP immediately a written
notice to that effect.

HARBOR FUND on behalf of
HARBOR SMALL CAP GROWTH FUND

By:
--------------------------------------
James M. Williams, President

Dated:
- ------------------------------, 2002

B-18

- --------------------------------------------------------------------------------

EXHIBIT C

- --------------------------------------------------------------------------------

FORM OF INVESTMENT ADVISORY AGREEMENT FOR SUBADVISER
(HARBOR INTERNATIONAL FUND II)

Dear Sirs:

Harbor Capital Advisors, Inc. (the "Adviser"), a Delaware corporation,
with its principal offices at One SeaGate, Toledo, Ohio 43666, is the investment
adviser to Harbor Fund (the "Trust") on behalf of Harbor International Fund (the
"Fund"). The Trust has been organized under the laws of Delaware to engage in
the business of an investment company. The shares of beneficial interest of the
Trust ("Shares") are divided into multiple series including the Fund, as
established pursuant to a written instrument executed by the Trustees of the
Trust. The Trust is an open-end, management investment company registered under
the Investment Company Act of 1940, as amended (the "Investment Company Act").
Pursuant to authority granted the Adviser by the Trust's Trustees, the Adviser
has selected you to act as a sub-investment adviser of the Fund and to provide
certain other services, as more fully set forth below. You are willing to act as
such a sub-investment adviser and to perform such services under the terms and
conditions hereinafter set forth, and you represent and warrant that you are an
investment adviser registered under the Investment Advisers Act of 1940, as
amended. Accordingly, the Adviser and the Trust on behalf of the Fund agree with
you as follows:

1. DELIVERY OF FUND DOCUMENTS. The Adviser has furnished you with copies,
properly certified or authenticated, of each of the following:

(a) Declaration of Trust of the Trust, filed with the Delaware
Secretary of State, dated June 8, 1993, as amended and restated
from time to time (the "Declaration of Trust").

(b) By-Laws of the Trust as in effect on the date hereof (the
"By-Laws").

(c) Resolutions of the Trustees selecting the Adviser as investment
adviser and you as sub-investment adviser and approving the form of
this Agreement.

The Adviser will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, including future resolutions of the Trustees approving the
continuance of the items listed in (c) above.

2. ADVISORY SERVICES. You will regularly provide the Fund with advice
concerning the investment management of that portion of the Fund's assets
that are allocated to you, which advice shall be consistent with the
investment objectives and policies of the Fund as set forth in the Fund's
Prospectus and Statement of Additional Information and any investment
guidelines or other instructions received in writing from the Adviser. The
Board of Trustees or the Adviser may, from time to time, make additions to
and withdrawals from the assets of the Fund allocated to you. You will
determine what securities shall be purchased for such portion of the
Fund's assets, what securities shall be held or sold by such portion of
the Fund's assets, and what portion of such assets shall be held
uninvested, subject always to the provisions of the Trust's Declaration of
Trust and By-Laws and the Investment Company Act and to the investment
objectives, policies and restrictions (including, without limitation, the
requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") for qualification as a regulated investment company)
of the Fund, as each of the same shall be from time to time in effect as
set forth in the Fund's Prospectus and Statement of Additional
Information, or any investment guidelines or other instructions received
in writing from the Adviser, and subject, further, to such policies and
instructions as the Board of Trustees may from time to time establish and
deliver to you. In

C-1

accordance with paragraph 5, you or your agent shall arrange for the
placing of all orders for the purchase and sale of portfolio securities
with brokers or dealers selected by you for that portion of the Fund's
assets for which you serve as sub-investment adviser.

The Adviser shall provide you with written statements of the Declaration of
Trust; the By-Laws; the Fund's investment objectives and policies; the
Prospectus and Statement of Additional Information and instructions, as in
effect from time to time; and you shall have no responsibility for actions
taken in reliance on any such documents. You will conform your conduct to,
and will ensure that your management of the portion of the Fund's assets
allocated to you complies with, the Investment Company Act and all rules
and regulations thereunder, the requirements for qualification of the Fund
as a regulated investment company under Subchapter M of the Code, all other
applicable federal and state laws and regulations, and with the provisions
of the Fund's Registration Statement as amended or supplemented under the
Securities Act of 1933, as amended, and the Investment Company Act.

In the performance of your duties hereunder, you are and shall be an
independent contractor and unless otherwise expressly provided herein or
otherwise authorized in writing, shall have no authority to act for or
represent the Trust or the Fund in any way or otherwise be deemed to be an
agent of the Trust or the Fund or of the Adviser. You will make your
officers and employees available to meet with the Trust's officers and
Trustees at least quarterly on due notice to review the investments and
investment program of the Fund in light of current and prospective economic
and market conditions.

Nothing in this Agreement shall limit or restrict the right of any of your
directors, officers and employees who may also be a trustee, officer or
employee of the Trust to engage in any other business or to devote his or
her time and attention in part to the management or other aspects of any
business, whether of a similar or a dissimilar nature, nor limit or
restrict your right to engage in any other business or to render service of
any kind to any other corporation, firm, individual or association.

3. ALLOCATION OF CHARGES AND EXPENSES. You will bear your own costs of
providing services hereunder. Other than as herein specifically indicated,
you will not be required to pay any expenses of the Fund.

4. COMPENSATION OF THE SUBADVISER. For all investment management services to
be rendered hereunder, the Adviser will pay a fee, as set forth in
Schedule A attached hereto, quarterly in April, July, October and January,
based on a percentage of the average of the actual net assets of the Fund
at the close of the last business day of each month within the quarter.
Determination of the net asset value of the Fund is computed daily by the
Fund's custodian, and is consistent with the provisions of Rule 22c-1
under the Investment Company Act. Your fee will be based on the average of
the net assets of the Fund, computed in the manner specified in the Fund's
Prospectus and Statement of Additional Information for the computation of
the net assets of the Fund by the Fund's custodian, on the last business
day of each month within the quarter. If determination of the value of net
assets is suspended for the last business day of the month, then for the
purposes of this paragraph 4, the value of the net assets of the Fund as
last determined shall be deemed to be the value of the net assets. If the
Fund's custodian determines the value of the net assets of the Fund's
portfolio more than once on any day, the last such determination thereof
on that day shall be deemed to be the sole determination thereof on that
day for the purposes of this paragraph 4.

You will offer to the Adviser any more favorable asset based fee agreements
that are provided to other investment clients. Such offer shall be made as
soon as it is practicable after a more favorable asset based fee agreement
is provided for any other investment clients.

C-2

Your services to the Fund pursuant to this Agreement are not to be deemed
to be exclusive and it is understood that you may render investment
advice, management and other services to others.

5. AVOIDANCE OF INCONSISTENT POSITION AND BROKERAGE. In connection with
purchases or sales of portfolio securities for the account of the Fund,
neither you nor any of your directors, officers or employees will act as a
principal or agent or receive any compensation in connection with the
purchase or sale of investment securities by the Fund, other than the
compensation provided for in this Agreement. You or your agent shall
arrange for the placing of all orders for the purchase and sale of
portfolio securities for the Fund's account with brokers or dealers
selected by you. In the selection of such brokers or dealers and the
placing of such orders, you are directed at all times to seek for the Fund
the most favorable execution and net price available. It is also
understood that it is desirable for the Fund that you have access to
supplemental investment and market research and security and economic
analyses provided by certain brokers who may execute brokerage
transactions at a higher cost to the Fund than may result when allocating
brokerage to other brokers on the basis of seeking the most favorable
price and efficient execution. Therefore, you are authorized to place
orders for the purchase and sale of securities for the Fund with such
certain brokers, subject to review by the Board of Trustees from time to
time with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to you
in connection with your services to other clients. If any occasion should
arise in which you give any advice to clients of yours concerning the
Shares of the Fund, you will act solely as investment counsel for such
clients and not in any way on behalf of the Fund.

You will advise the Trust's custodian and the Adviser on a prompt basis of
each purchase and sale of a portfolio security specifying the name of the
issuer, the description and amount or number of shares of the security
purchased, the market price, commission and gross or net price, trade
date, settlement date and identity of the effecting broker or dealer and
such other information as may be reasonably required. From time to time as
the Board of Trustees or the Adviser may reasonably request, you will
furnish to the Trust's officers and to each of its Trustees reports on
portfolio transactions and reports on issues of securities held in the
portfolio, all in such detail as the Trust or the Adviser may reasonably
request.

On occasions when you deem the purchase or sale of a security to be in the
best interest of the Fund as well as other of your clients, you, to the
extent permitted by applicable laws and regulations, may, but shall be
under no obligation to, aggregate the securities to be sold or purchased
in order to obtain the most favorable price or lower brokerage commissions
and efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
shall be made by you in the manner you consider to be the most equitable
and consistent with your fiduciary obligations to the Fund and to such
other clients.

6. LIMITATION OF LIABILITY OF SUBADVISER. You will not be liable for any loss
sustained by reason of the adoption of any investment policy or the
purchase, sale or retention of any security on your recommendation,
whether or not such recommendation shall have been based upon your own
investigation and research or upon investigation and research made by any
other individual, firm or corporation, if such recommendation shall have
been made, and such other individual, firm or corporation shall have been
selected without gross negligence and in good faith; but nothing herein
contained will be construed to protect you against any liability to the
Adviser, the Trust, the Fund or its shareholders by reason of your gross
negligence or bad faith or willful misfeasance in the performance of your
duties or by reason of your reckless disregard of your obligations and
duties under this Agreement.

The Adviser shall indemnify you for any damages and related expenses
incurred by you as a result of the performance of your duties hereunder,
unless the same shall result from behavior

C-3

found by a final judicial determination to constitute willful misfeasance,
bad faith, gross negligence or a reckless disregard of your obligations,
as specified above.

You shall keep the Fund's books and records to be maintained by you and
shall timely furnish to the Adviser all information relating to your
services hereunder needed by the Adviser to keep the other books and
records of the Fund required by Rule 31a-1 under the Investment Company
Act. You agree that all records which you maintain for the Fund are the
property of the Fund and you shall surrender promptly and without any
charge to the Fund any of such records required to be maintained by you.

7. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain in
force until August 1, 2004 and from year to year thereafter, but only so
long as such continuance, and the continuance of the Adviser as investment
adviser of the Fund, is specifically approved at least annually by the
vote of a majority of the Trustees who are not interested persons of you
or the Adviser or the Trust, cast in person at a meeting called for the
purpose of voting on such approval and by a vote of the Board of Trustees
or of a majority of the outstanding voting securities of the Fund. The
aforesaid requirement that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner consistent with
the Investment Company Act and the rules and regulations thereunder. This
Agreement may, on 60 days' written notice, be terminated at any time
without the payment of any penalty, by the Board of Trustees, by vote of a
majority of the outstanding voting securities of the Fund, by the Adviser,
or by you. This Agreement shall automatically terminate in the event of
its assignment or the assignment of the investment advisory agreement
between the Adviser and the Trust, on behalf of the Fund. In interpreting
the provisions of this Agreement, the definitions contained in Section
2(a) of the Investment Company Act (particularly the definitions of
"interested person", "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject,
however, to such exemptions as may be granted by the Securities and
Exchange Commission by any rule, regulations or order.

8. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought, and no material
amendment of this Agreement shall be effective until approved by vote of
the holders of a majority of the outstanding voting securities of the Fund
and by the Board of Trustees, including a majority of the Trustees who are
not interested persons of the Adviser or you or of the Trust, cast in
person at a meeting called for the purpose of voting on such approval,
subject however, to such exemptions as may be granted by the Securities
and Exchange Commission by any rule, regulation or order.

It shall be your responsibility to furnish to the Board of Trustees such
information as may reasonably be necessary in order for the Trustees to
evaluate this Agreement or any proposed amendments thereto for the
purposes of casting a vote pursuant to paragraphs 7 or 8 hereof.

9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.

10. MISCELLANEOUS. It is understood and expressly stipulated that neither the
holders of Shares of the Trust or the Fund nor the Trustees shall be
personally liable hereunder. The name "Harbor Fund" is the designation of
the Trustees for the time being under the Declaration of Trust and all
persons dealing with the Trust or the Fund must look solely to the
property of the Trust or the Fund for the enforcement of any claims
against the Trust or the Fund as neither the Trustees, officers, agents
or shareholders assume any personal liability for obligations entered
into on behalf of the Trust or the Fund. No series of the Trust shall be
liable for any claims against any other series or assets of the Trust.

C-4

The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same instrument.

If you are in agreement with the foregoing, please sign the form of acceptance
on the accompanying counterpart of this letter and return one such counterpart
to the Fund and the other such counterpart to the Adviser, whereupon this letter
shall become a binding contract.

HARBOR FUND on behalf of
HARBOR INTERNATIONAL FUND II

By:
------------------------------------
James M. Williams, President

HARBOR CAPITAL ADVISORS, INC.

By:
------------------------------------
Constance L. Souders, Senior Vice
President

The foregoing Agreement is hereby accepted as of the date thereof.

NORTHERN CROSS INVESTMENTS LIMITED

By:
------------------------------------
Hakan Castegren, President

C-5

ANNUAL REPORT

[HARBOR FUND LOGO]
OCTOBER 31, 2001

-----------------------------------------

HARBOR FUND

HARBOR FUND
ANNUAL REPORT OVERVIEW
Harbor Fund completed its most recent fiscal year on October 31, 2001. The total
annual return is shown below for each of the twelve portfolios. All performance
figures included in this report are total returns and assume the reinvestment of
dividends and capital gains. The section entitled Long-Term Historic Returns
reflects the 30-year returns for unmanaged indices, which are included as an
indication of longer-term potential associated with taking different levels of
market risk. You may not make a direct investment in an index.

<Table>
<Caption>
TOTAL RETURN
FOR YEAR ENDED
HARBOR FUNDS IN DESCENDING ORDER OF MARKET RISK 10/31/2001
- ----------------------------------------------- --------------

Harbor Mid Cap Growth Fund.................................. -43.60%
Harbor Growth Fund.......................................... -53.96
Harbor Small Cap Growth Fund................................ -2.80
Harbor International Growth Fund............................ -45.53
Harbor Global Equity Fund................................... -26.10(a)
Harbor Capital Appreciation Fund............................ -35.23
Harbor International Fund II................................ -25.22
Harbor International Fund................................... -16.40
Harbor Large Cap Value Fund................................. -3.20
Harbor Bond Fund............................................ 15.35
Harbor Short Duration Fund.................................. 7.73
Harbor Money Market Fund.................................... 4.83
</Table>

<Table>
<Caption>
COMMONLY USED MARKET INDICES
- ----------------------------

Morgan Stanley Capital International Europe, Australasia,
and Far East (EAFE); international equity................. -25.09%
Morgan Stanley Capital International Europe, Australasia,
and Far East Growth (EAFE Growth); international equity... -30.82
Morgan Stanley Capital International World Index (MSCI
World); global equity..................................... -25.58
Standard & Poor's 500 (S&P 500); domestic equity............ -24.90
Russell Midcap(R) Growth; domestic equity................... -42.78
Russell 2000(R) Growth; domestic equity..................... -31.50
Russell 1000(R) Value; domestic equity...................... -11.86
Lehman Brothers Aggregate (LB AGG); domestic bonds.......... 14.56
Salomon Treasury 1 YR CMI................................... 8.46
90-Day U.S. Treasury Bills (T-Bills); domestic short-term... 4.48
</Table>

<Table>
<Caption>
30 YEARS
1971-2000
LONG-TERM HISTORIC RETURNS ANNUAL RATES
- -------------------------- ------------

EAFE........................................................ 12.30%
MSCI World.................................................. 11.42
S&P 500..................................................... 13.21
Domestic Bonds (intermediate and long)(1)................... 8.81
T-Bills..................................................... 7.06
Consumer Price Index........................................ 5.04
</Table>

<Table>
<Caption>
MORNINGSTAR
HARBOR FUND EXPENSE RATIOS(2) 1997 1998 1999 2000 2001 MEDIAN(3)
- ----------------------------- ---- ---- ---- ---- ---- -----------

Harbor Mid Cap Growth Fund....................... N/A% N/A% N/A% N/A% 1.20% 1.00%
Harbor Growth Fund............................... 1.12 1.00 0.90 0.87 0.95 1.00
Harbor Small Cap Growth Fund..................... N/A N/A N/A N/A 1.20 1.17
Harbor International Growth Fund................. 1.02 0.96 0.91 0.89 0.89 1.24
Harbor Global Equity Fund........................ N/A N/A N/A N/A 1.20(a,b) 1.06
Harbor Capital Appreciation Fund................. 0.70 0.68 0.66 0.64 0.66 0.95
Harbor International Fund II..................... 0.98 1.15 0.92 0.92 0.89 1.11
Harbor International Fund........................ 0.97 0.94 0.92 0.92 0.91 1.11
Harbor Large Cap Value Fund...................... 0.83 0.79 0.76 0.80 0.77 0.90
Harbor Bond Fund................................. 0.67 0.65 0.60 0.60 0.56 0.64
Harbor Short Duration Fund....................... 0.36 0.36 0.28 0.28 0.27 0.50
Harbor Money Market Fund......................... 0.62 0.57 0.46 0.47 0.38 0.73
</Table>

------------------

1 LB AGG not available for 30 year period; blended historic data used to
approximate total Bond Market Return.

2 Harbor Fund expense ratios are for operating expenses only and are
shown net of all expense offsets (see Financial Highlights pgs. 48-51).

3 Includes all no-load funds with at least five years of performance
history in the September 30, 2001 Morningstar Universe with the same
investment style as the comparable Harbor Fund portfolio.

a For the period February 1, 2001 (inception) through October 31, 2001.

b Annualized figure.

DEAR SHAREHOLDER:

The fiscal year ended October 31, 2001 was one of the worst on record for equity
markets. Continuing the trends that had started in the previous fiscal year,
equity markets around the world suffered steep declines as investors reacted to
struggling economies in the United States and abroad and to growing concerns
throughout the year about weak corporate earnings. These concerns were well
founded. Corporate earnings for companies in the Standard & Poor's 500 stock
index are estimated to be down about 20% this year, one of the worst year over
year earnings performances in the last 50 years. The tragic events of September
11 brought additional concerns to equity markets, which fell sharply after the
attacks before recovering toward the end of the fiscal year.

Consistent with this economic backdrop, major domestic and international
stock indices posted sharply negative total returns for the period. These
included: the Standard & Poor's 500-stock index, down 24.90%; the NASDAQ
composite, down 49.84%; and the Morgan Stanley Capital International (MSCI)
Europe, Australasia, and Far East (EAFE) Index, down 25.09%. Growth stocks were
hit hard, especially in the technology sector, as business investment declined
sharply and investors remained concerned about weak demand, high inventories,
and excess capacity. Value-oriented stocks performed comparatively better but
also posted negative returns.

Beginning in January 2001, the Federal Reserve moved aggressively to
stimulate the economy, reducing the Federal Funds rate during the October 31
fiscal year by an aggregate of 400 basis points (4 percentage points). Following
a cut of 50 basis points on October 2, the rate stood at 2.50%. Additional
reductions of 50 basis points on November 6, and 25 basis points on December 11,
the Federal Reserve's 10th and 11th cuts of calendar year 2001, trimmed the rate
to 1.75%, its lowest level in 40 years.

The weak economic climate and the Federal Reserve's aggressive rate-cutting
campaign created a positive environment for debt securities. The Lehman Brothers
Aggregate index of investment-grade taxable U.S. bonds posted a total return of
14.56% for the fiscal year. That represented a performance gap of almost 40
percentage points for the fiscal year between the bond index and the Standard &
Poor's 500-stock index.

Under these very challenging conditions, the three Harbor fixed income
funds all generated positive returns, while the nine equity funds all finished
in negative territory. The best performance was by the Harbor Bond Fund with a
total return of 15.35% for the fiscal year.

Five of the Harbor Funds--Small Cap Growth, International, Large Cap Value,
Bond and Money Market--outperformed their respective target indices. Three
funds--Mid Cap Growth, International Fund II and Short Duration--approximated
the total returns of their respective indices. The unmanaged indices reflect no
operating or transaction costs, while the total returns of the Funds are net of
such costs.

INVESTMENT FUNDAMENTALS

The events of the past year once again serve to emphasize the importance of
diversification and asset allocation for long term investors. In an environment
in which all of the equity funds had negative returns, the fixed income funds
all posted positive returns, providing diversified portfolios with some
stability in an otherwise difficult year.

In developing an asset allocation strategy, investors should determine the
mix of investments--stocks, bonds, and cash--that best matches their goals and
tolerance for risk. Having made those key decisions, investors will be well
positioned to deal with the sharp fluctuations that inevitably affect financial
markets from time to time--and to stick with their plan during these turbulent
periods.

Despite the uncertain outlook for the near future, the economic and
financial systems in the United States and most developed countries are
fundamentally strong. Lower interest rates initiated by the Federal Reserve and
the fiscal stimulus anticipated from proposed government programs, should
eventually help the United States economy. The timing of such a recovery,
however, is something that none of us can predict. Timing such market moves is
impossible. Sticking to an asset allocation strategy helps investors participate
in any positive changes that occur across various asset classes.

Investors can further improve their chances for success by implementing a
systematic investing plan. Of course, systematic investing does not assure a
profit and does not protect against loss in declining markets. It does, however,
allow investors to dollar-cost average by buying more shares when prices are
lower and fewer shares when prices are higher. Harbor's Automatic Investment
Plan enables investors to make systematic additions to their investments on a
monthly or quarterly basis. Because dollar-cost averaging involves continuous
investment in securities regardless of fluctuating prices, investors should
consider their financial ability to continue purchases through periods of low
price levels.

Along with asset allocation and systematic investment, another important
factor in improving long-term returns is cost control. This is a fundamental
element of our approach at Harbor Fund. As illustrated in the table at the
bottom of page 1, our focus on cost control results in expense ratios that, year
after year, are typically below those of similar fund types. Compounded over
long periods, these cost advantages can provide investors with a valuable edge
in building wealth to achieve their long-term goals.

DEAR SHAREHOLDER--CONTINUED

NEW FUNDS AND MANAGERS

To broaden the range of investment styles and objectives available to its
shareholders, Harbor Fund launched three new equity funds--Mid Cap Growth, Small
Cap Growth and Global Equity--in the last fiscal year. In addition, the Harbor
Value Fund was renamed the Harbor Large Cap Value Fund, reflecting a slight
change in its focus to concentrate on companies with market capitalizations of
$5 billion or more. A new portfolio manager was hired to manage the Harbor Large
Cap Value Fund's assets consistent with this modest change in focus.

These additions and changes to our fund lineup are part of a continuing
commitment to provide shareholders with access to the services of leading asset
managers. Consistent with this commitment, Harbor Fund launched the new Harbor
Small Cap Value Fund on December 14, 2001. In addition, Harbor Fund changed
managers on the Harbor International Growth Fund, effective December 1, 2001.

On behalf of all of us in the Harbor family, we thank you for your
investment in Harbor Fund. We remain committed to providing investment products
that we believe have the potential to be attractive long-term investment
alternatives with low expense levels designed to help our shareholders achieve
their financial goals.

<Table>

/s/ David G. Van Hooser /s/ James M. Williams
David G. Van Hooser James M. Williams
Chairman President
</Table>

HARBOR FUND

The following performance figures are annualized for each Fund. The date of
inception for Harbor Mid Cap Growth Fund and Harbor Small Cap Growth Fund was
November 1, 2000; Harbor Growth Fund was November 19, 1986; Harbor International
Growth Fund was November 1, 1993; Harbor Global Equity Fund was February 1,
2001; Harbor International Fund II was June 1, 1996; Harbor Short Duration Fund
was January 1, 1992; and all other Funds started December 29, 1987. The
comparative market indices reflect no operating or transaction costs; however,
the Funds' total returns are net of these costs. Performance data quoted

<Table>

10/31/2001 $5.64
HARBOR MID CAP GROWTH FUND NET ASSET VALUE: 10/31/2000 N/A
</Table>

<Table>

- ------------------------------------------------------------------------------------
Total Return for Periods Ended 10/31/2001
- ------------------------------------------------------------------------------------
Fund/Index 1 year 5 years Since
Inception
- ------------------------------------------------------------------------------------
Harbor Mid Cap Growth Fund -43.60% N/A -43.60%
- ------------------------------------------------------------------------------------
Russell Midcap(R) Growth -42.78% 6.87% -42.78%
- ------------------------------------------------------------------------------------
</Table>

In a very difficult environment for growth stocks, the Harbor Mid Cap Growth
Fund virtually matched the performance of its target index. The Fund began
operations on November 1, 2000.
- A slowing economy and declining corporate profits drove the U.S. equity
market dramatically lower for the 12-month period ended October 31, 2001.
Growth stocks, particularly technology and technology-related companies,
experienced significant price declines. To make matters worse, the faltering
economy, already on the verge of recession, was temporarily staggered by the
tragic events of September 11.
- Investments in the technology sector were the biggest detractor from the
Fund's performance, as tech stocks, as a group, declined by more than 70%.
However, investments in the health care, consumer discretionary, and energy
sectors added value on a relative basis.
- Strong stock selection and a slightly overweighted position in the health
care sector, which declined less than other areas, added value during the
period. Stock selection in the consumer discretionary sector also helped to
offset losses in the technology sector. Finally, the portfolio was
overweighted significantly in the energy sector, which delivered good
relative performance.
[HARBOR MID CAP GROWTH FUND GRAPH]

<Table>
<Caption>
MID CAP GROWTH RUSSELL MIDCAP(R) GROWTH
-------------- ------------------------

10/31/01 5640.00 5721.88
</Table>

<Table>

10/31/2001 $10.19
HARBOR GROWTH FUND NET ASSET VALUE: 10/31/2000 $24.23
</Table>

<Table>

- ------------------------------------------------------------------------------------
Total Return for Periods Ended 10/31/2001
- ------------------------------------------------------------------------------------
Fund/Index 1 year 5 years 10 years
- ------------------------------------------------------------------------------------
Harbor Growth Fund -53.96% 5.12% 7.11%
- ------------------------------------------------------------------------------------
Russell Midcap(R) Growth -42.78% 6.87% 10.58%
- ------------------------------------------------------------------------------------
S&P 500 -24.90% 10.04% 12.76%
- ------------------------------------------------------------------------------------
</Table>

In an extremely weak market for growth stocks, the Harbor Growth Fund
underperformed the Russell Midcap(R) Growth index for the 12 months ended
October 31, 2001.
- The Fund's performance relative to the index was hurt by its overweighting in
the information technology sector and by its underweighting in the more
defensive consumer discretionary and health care sectors.
- A steep decline in the level of investment in information technology resulted
in disappointing earnings for many companies during the first half of the
fiscal year. This had an adverse impact on the Fund, which focuses on
technology-oriented businesses offering products and services designed to
enhance productivity.
- Stock prices in the information technology sector remained under pressure in
the second half of the fiscal year, reflecting investor concerns about
weakness in the sector and in the broader economy.
[HARBOR GROWTH FUND GRAPH]

<Table>
<Caption>
RUSSELL MIDCAP(R)
GROWTH S&P 500 GROWTH
------ ------- -----------------

10/31/92 9252.47 10995.50 11004.60
10/31/93 11673.50 12638.60 13050.90
10/31/94 10705.60 13127.30 13382.80
10/31/95 13481.00 16598.20 16627.00
10/31/96 15481.50 20597.40 19611.30
10/31/97 18366.80 27212.00 24438.10
10/31/98 16763.00 33195.80 25032.40
10/31/99 29587.90 41717.50 34460.40
10/31/00 43175.80 44258.70 47788.00
10/31/01 19876.50 33236.60 27343.70
</Table>

The S&P 500 contains equities with large market
capitalization without regard to style. The Russell
Midcap(R) Growth index contains equities with smaller
market capitalization and a growth style. Therefore, the
Russell Midcap(R) Growth provides a more accurate
representation in comparison to the Harbor Growth Fund.

HARBOR FUND--CONTINUED

represents past performance and is not predictive of future performance. The
returns shown in the graphs and tables do not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares. Actual return and principal value on an investment will fluctuate, and
the shares, when redeemed, may be worth more or less than their original cost.
For information on the risks associated with these Funds, please refer to the
Harbor Fund prospectus.

<Table>

10/31/2001 $9.72
HARBOR SMALL CAP GROWTH FUND NET ASSET VALUE: 10/31/2000 N/A
</Table>

<Table>

- ------------------------------------------------------------------------------------
Total Return for Periods Ended 10/31/2001
- ------------------------------------------------------------------------------------
Fund/Index 1 year 5 years Since
Inception
- ------------------------------------------------------------------------------------
Harbor Small Cap Growth Fund -2.80% N/A -2.80%
- ------------------------------------------------------------------------------------
Russell 2000(R) Growth -31.50% 0.96% -31.50%
- ------------------------------------------------------------------------------------
</Table>

In its first full year of operation, the Harbor Small Cap Growth Fund
outperformed its target index by more than 28 percentage points. The fund was
launched on November 1, 2000.
- In an especially weak climate for small capitalization and aggressive growth
stocks, the Fund utilized its disciplined investment style to manage risk.
This process is designed to identify companies with relatively low
price/earnings ratios compared with their projected growth rates. During the
fiscal year, the Fund focused particularly on companies with the ability to
grow earnings despite a slowing economy.
- As expected, interest rates declined significantly in 2001, and the Fund's
overweighted position in the financial sector contributed positively to
performance throughout the fiscal year. Selected health care service
providers achieved strong earnings numbers despite the slowing economy, which
also contributed to the Fund's performance.
- An overweighted position and favorable stock selection in the energy sector
added value. Due to near-term weakness, the Fund reduced its exposure in the
energy sector in the second half of the fiscal year. Longer term, however,
the Fund believes that the sector's supply/demand outlook is strong and that
energy will benefit when the economy turns.
- Due to concerns about overcapacity in the technology sector, the portfolio
remained significantly underweighted in that group. This contributed to its
strong performance compared to the index.
- Near the end of the fiscal year, the Fund began to add selectively in the
technology and consumer sectors, where several stocks had declined to
valuation levels that met its buy criteria. These companies are expected to
benefit disproportionately from an economic upturn due to significant
stimulus from government spending and lower interest rates.
[HARBOR SMALL CAP GROWTH FUND GRAPH]

<Table>
<Caption>
SMALL CAP GROWTH RUSSELL 2000(R) GROWTH
---------------- ----------------------

10/31/01 9720.00 6849.76
</Table>

<Table>

10/31/2001 $8.44
HARBOR INTERNATIONAL GROWTH FUND NET ASSET VALUE: 10/31/2000 $17.56
</Table>

<Table>

- ------------------------------------------------------------------------------------
Total Return for Periods Ended 10/31/2001
- ------------------------------------------------------------------------------------
Fund/Index 1 year 5 years Since
Inception
- ------------------------------------------------------------------------------------
Harbor International Growth Fund -45.53% -6.06% 1.67%
- ------------------------------------------------------------------------------------
EAFE Growth -30.82% -2.54% -0.02%
- ------------------------------------------------------------------------------------
EAFE -25.09% 0.53% 2.77%
- ------------------------------------------------------------------------------------
</Table>

The Harbor International Growth Fund posted a negative total return and
underperformed the EAFE Growth index for the year ended October 31, 2001,
reflecting widespread weakness in international equity markets. Since its
inception on November 1, 1993, the Fund outperformed the EAFE Growth index. The
Board of Trustees of Harbor Fund voted to replace the Fund's subadviser,
Jennison Associates LLC (Jennison) with a new subadviser effective December 1,
2001. The new subadviser, Mastholm Asset Management LLC (Mastholm) began
managing the Fund's portfolio on December 1, 2001 pursuant to a revised
investment strategy reflecting Mastholm's investment approach. The discussion
of the Fund's performance reflects only periods during which Jennison served as
subadviser to the Fund.
- Relatively heavy portfolio weightings in information technology and
telecommunications stocks, consistent with the fund's growth-oriented
investment style, detracted from its absolute performance and from its total
return relative to the EAFE growth index.
- During the course of the fiscal year, the fund increased its holdings of
stocks of health care companies, which offered clearer near-term earnings
visibility than companies in most other sectors. At the same time, it reduced
its holdings in the information technology and telecommunications sectors.

[HARBOR INTERNATIONAL GROWTH FUND GRAPH]

<Table>
<Caption>
INTERNATIONAL
GROWTH EAFE EAFE GROWTH
------------- ---- -----------

10/31/94 11536.20 11009.40 10319.90
10/31/95 12208.20 10968.50 10456.60
10/31/96 15609.50 12117.00 11354.20
10/31/97 16878.50 12678.00 11622.20
10/31/98 19741.10 13900.80 12948.50
10/31/99 21295.70 17102.60 15580.50
10/31/00 20958.50 16607.50 14435.30
10/31/01 11416.90 12439.90 9985.64
</Table>

The EAFE index contains both growth and value style
equities. The EAFE Growth index contains only the growth
portion of the EAFE index. Therefore, the EAFE Growth
index provides a more accurate representation in
comparison to the Harbor International Growth Fund.

HARBOR FUND--CONTINUED

<Table>

10/31/2001 $7.39
HARBOR GLOBAL EQUITY FUND NET ASSET VALUE: 10/31/2000 N/A
</Table>

<Table>

- ------------------------------------------------------------------------------------
Total Return for Periods Ended 10/31/2001
- ------------------------------------------------------------------------------------
Fund/Index 1 year 5 years Since
Inception
- ------------------------------------------------------------------------------------
Harbor Global Equity Fund N/A N/A -26.10%
- ------------------------------------------------------------------------------------
MSCI World -25.58% 4.81% -23.51%
- ------------------------------------------------------------------------------------
</Table>

The Harbor Global Equity Fund slightly underperformed the MSCI World index
during the nine months since its inception on February 1, 2001.
During the initial nine-month reporting period since the Fund's inception, the
worldwide economic slowdown worsened. As the outlook for global economic growth
and corporate profitability continued to deteriorate, stock prices were
pressured lower. The U.S. Federal Reserve implemented an aggressive series of
interest rate cuts, followed by more modest cuts from European central banks,
in efforts to stave off recession. However, the downward trend in economic
activity and corporate earnings was aggravated as a result of the September
terrorist attacks in the U.S.
- The Fund continued to underweight technology stocks for most of the period,
which benefited Fund performance. The outlook for technology stocks remains
somewhat murky, as the sector's problems are structural as well as cyclical.
However, as the Fund has found specific technology companies with
sufficiently attractive fundamentals and valuations, they have been added to
the portfolio.
- In recent months, consumer discretionary stocks became an area of greater
focus for the Fund. For most of the period, these stocks proved to be
relatively resilient even though business conditions were less than optimal.
However, this sector was one of the hardest hit following the events of
September 11. Therefore, the Fund's overweight position in this sector
detracted from performance for the period ended October 31.
- Geographically, the Fund benefited from an overweight allocation to
continental Europe and from its exposure to developing markets. Offsetting
these benefits, however, was the performance of the Fund's holdings in Asia.
[HARBOR GLOBAL EQUITY FUND GRAPH]

<Table>
<Caption>
GLOBAL EQUITY MSCI WORLD
------------- ----------

10/31/01 7390.00 7648.62
</Table>

<Table>

10/31/2001 $26.40
HARBOR CAPITAL APPRECIATION FUND NET ASSET VALUE: 10/31/2000 $48.16
</Table>

<Table>

- ------------------------------------------------------------------------------------
Total Return for Periods Ended 10/31/2001
- ------------------------------------------------------------------------------------
Fund/Index 1 year 5 years 10 years
- ------------------------------------------------------------------------------------
Harbor Capital Appreciation Fund -35.23% 11.15% 14.42%
- ------------------------------------------------------------------------------------
S&P 500 -24.90% 10.04% 12.76%
- ------------------------------------------------------------------------------------
</Table>

The Harbor Capital Appreciation Fund underperformed the S&P 500 index for the
12 months ended October 31, 2001, reflecting a very difficult environment for
equity securities in general and especially for growth stocks.
- From a longer-term perspective, despite the very challenging conditions of
the past 12 months, the Fund continued to outperform the index for the most
recent five-year and 10-year periods.
- The Fund's performance relative to the index was hurt by its overweighting in
the information technology sector, especially in the first half of the fiscal
year.
- During the fiscal year, the Fund lowered its exposure in the information
technology and telecommunications sectors, where stock prices remained under
pressure as investors reacted to disappointing results and a lack of
visibility in future earnings performance. At the same time, it increased its
positions in industries such as financial services and health care, which
historically have been somewhat more defensive holdings while still offering
moderate growth potential.
[HARBOR CAPITAL APPRECIATION FUND GRAPH]

<Table>
<Caption>
CAPITAL APPRECIATION S&P 500
-------------------- -------

10/31/92 11441.50 10995.50

10/31/93 13748.10 12638.60

10/31/94 14745.00 13127.30

10/31/95 20012.90 16598.20

10/31/96 22659.10 20597.40

10/31/97 30754.30 27212.00

10/31/98 35589.80 33195.80

10/31/99 52882.20 41717.50

10/31/00 59363.20 44258.70

10/31/01 38448.70 33236.60
</Table>

HARBOR FUND--CONTINUED

<Table>

10/31/2001 $10.00
HARBOR INTERNATIONAL FUND II NET ASSET VALUE: 10/31/2000 $14.28
</Table>

<Table>

- ------------------------------------------------------------------------------------
Total Return for Periods Ended 10/31/2001
- ------------------------------------------------------------------------------------
Fund/Index 1 year 5 years Since
Inception
- ------------------------------------------------------------------------------------
Harbor International Fund II -25.22% 2.96% 3.60%
- ------------------------------------------------------------------------------------
EAFE -25.09% 0.53% 0.38%
- ------------------------------------------------------------------------------------
</Table>

The Harbor International Fund II virtually matched the performance of the EAFE
index for the 12 months ended October 31, 2001. The Fund outperformed the index
for the latest five-year period and since its inception on June 1, 1996.
- The Fund's performance for the fiscal year was helped by its investments in
France and the United Kingdom. Total returns of its holdings in those
countries exceeded those of the EAFE indices in France by 14.9% and the
United Kingdom by 5.8%.
- Negative performance against country benchmarks was registered in Japan
(-10.6%), Switzerland (-10.3%), and Sweden (-8.3%).
- The Fund's portfolio was helped by increases of 6% in the value of the euro
and 10% in the value of the Swiss franc compared with the U.S. dollar. This
was offset partially by an 11% decrease in the value of the Japanese yen. The
British pound was flat.
- Both the Fund and the index suffered double-digit declines in September 2001,
as world markets reacted to the terrorist attacks in the U.S. The Fund was
down 14.0% in the month while the index declined by 10.1%.
[HARBOR INTERNATIONAL FUND II GRAPH]

<Table>
<Caption>
INTERNATIONAL II EAFE
---------------- ----

10/31/96 10470.00 9940.89

10/31/97 12212.40 10401.10

10/31/98 11970.30 11404.30

10/31/99 14887.00 14031.10

10/31/00 16198.90 13624.90

10/31/01 12112.80 10205.80
</Table>

<Table>

10/31/2001 $28.65
HARBOR INTERNATIONAL FUND NET ASSET VALUE: 10/31/2000 $38.85
</Table>

<Table>

Favorable stock selection enabled the Harbor International Fund to outperform
the EAFE index by more than eight percentage points for the fiscal year ended
October 31, 2001. The Fund also continued to outperform the index by wide
margins for the latest five-year and 10-year periods.
- Solid performances by automobile, aluminum, tire, and glass companies enabled
the Fund's position in France to significantly outperform the index in that
country. Investments in tobacco stocks helped the Fund to outperform the EAFE
country indices in the United Kingdom and Sweden.
- On the negative side, total returns of the Fund's holdings in Japanese and
Swiss stocks were below those of their respective EAFE country indices.
- The Fund's portfolio was helped by increases of 6% in the value of the euro
and 10% in the value of the Swiss franc compared with the U.S. dollar. This
was offset partially by an 11% decrease in the value of the Japanese yen. The
British pound was flat.
- September 2001 was a significantly negative month for both the Fund (-10.4%)
and the EAFE index (-10.1%), as world markets reacted to the terrorist
attacks in the U.S.
[HARBOR INTERNATIONAL FUND GRAPH]

<Table>
<Caption>
INTERNATIONAL EAFE
------------- ----

10/31/92 9597.70 8678.27

10/31/93 13389.50 11928.90

10/31/94 15875.60 13133.00

10/31/95 16679.50 13084.20

10/31/96 19710.80 14454.30

10/31/97 23507.30 15123.50

10/31/98 25146.30 16582.20

10/31/99 29836.90 20401.60

10/31/00 30951.60 19810.90

10/31/01 25876.80 14839.50
</Table>

HARBOR FUND--CONTINUED

<Table>

10/31/2001 $13.01
HARBOR LARGE CAP VALUE FUND NET ASSET VALUE: 10/31/2000 $13.88
</Table>

<Table>

- ------------------------------------------------------------------------------------
Total Return for Periods Ended 10/31/2001
- ------------------------------------------------------------------------------------
Fund/Index 1 year 5 years 10 years
- ------------------------------------------------------------------------------------
Harbor Large Cap Value Fund -3.20% 9.84% 11.58%
- ------------------------------------------------------------------------------------
Russell 1000(R) Value -11.86% 10.63% 13.57%
- ------------------------------------------------------------------------------------
S&P 500 -24.90% 10.04% 12.76%
- ------------------------------------------------------------------------------------
</Table>

The Harbor Large Cap Value Fund (formerly Harbor Value Fund) outperformed major
stock indices by wide margins during a period of significant downward pressure
on stock prices. The Fund's total return for the year ended October 31, 2001
exceeded that of the Russell 1000(R) Value index by more than eight percentage
points and that of the S&P 500 index by more than 21 percentage points.
- Effective September 20, 2001, the Fund's name was changed from Harbor Value
Fund to Harbor Large Cap Value Fund. At the same time, Armstrong Shaw
Associates Inc. assumed responsibility for management of the Fund.
- While maintaining its objective of long-term total return with a
value-oriented approach, the Fund implemented several changes in its
investment strategies effective September 20, 2001. The Fund is now 100%
actively managed, investing in 25 to 40 companies, typically with market
capitalizations of $5 billion or more. Previously the Fund was 70% actively
managed and 30% passively managed, with investments in more than 200
companies, primarily with market capitalizations of $500 million or more.
- With its value-oriented investment style, the Fund benefited from a shift
into more traditional defensive holdings, as investors reacted to
disappointing results in the information technology sector.
- Favorable stock selection in the materials, consumer discretionary, and
financials sectors contributed to the Fund's superior performance compared to
the Russell 1000(R) Value index. An overweighting in the materials sector and
an underweighting in information technology also contributed to the Fund's
favorable comparison to the index.

[HARBOR LARGE CAP VALUE FUND GRAPH]

<Table>
<Caption>
LARGE CAP VALUE S&P 500 RUSSELL 1000(R) VALUE
--------------- ------- ---------------------

10/31/92 10705.70 10995.50 11066.90
10/31/93 11988.90 12638.60 13850.60
10/31/94 12564.20 13127.30 13957.10
10/31/95 15205.20 16598.20 17401.60
10/31/96 18714.90 20597.40 21531.70
10/31/97 24531.50 27212.00 28677.10
10/31/98 26172.80 33195.80 32928.60
10/31/99 29993.70 41717.50 38370.60
10/31/00 30914.70 44258.70 40487.00
10/31/01 29925.20 33236.60 35684.40
</Table>

The S&P 500 contains equities with large market
capitalization without regard to style. The Russell
1000(R) Value index contains equities with large market
capitalization and a value style. Therefore, the Russell
1000(R) Value provides a more accurate representation in
comparison to the Harbor Large Cap Value Fund.

<Table>

10/31/2001 $12.05
HARBOR BOND FUND NET ASSET VALUE: 10/31/2000 $11.00
</Table>

<Table>

During a time of severe economic and stock market weakness, the Harbor Bond
Fund provided a source of stability for investors, posting a total return of
15.35% for the 12 months ended October 31, 2001. The Fund outperformed the
Lehman Brothers Aggregate Index for the fiscal year and for the five-year and
10-year periods ended October 31, 2001.
- The Fund reached a milestone in September as its net assets exceeded $1
billion for the first time. Net assets at October 31, 2001, were $1.04
billion, an increase of 44.5% in the 12-month period. The increase reflects
both investment performance and new shareholder investments.
- The Fund's portfolio was conservatively positioned in expectation of an
extended period of economic weakness and continued monetary easing by the
Federal Reserve. This posture served the Fund well both before and after the
terrorist attacks of September 11.
- The Fund continued to overweight its allocation to mortgage-backed
securities, a strategy that enabled it to gain incremental yield. Performance
also was enhanced by a continuation of the Fund's strategy to be underweight
in corporate debt securities.
- Falling interest rates provided a positive environment for debt securities,
as the Federal Reserve reduced the Federal Funds rate by an aggregate of 400
basis points during the year ended October 31, 2001. The rate fell from 6.5%
to 2.5% during that period.
- In January 2001, the Harbor Bond Fund's manager, William Gross of Pacific
Investment Management Company, was named by Morningstar as its Fixed Income
Manager of the Year. It was the second time in the past three years that he
has received this recognition.

[HARBOR BOND FUND GRAPH]

<Table>
<Caption>
BOND LB AGG
---- ------

10/31/92 11214.40 10983.40
10/31/93 12782.20 12287.10
10/31/94 12380.30 11836.10
10/31/95 14183.20 13688.20
10/31/96 15255.50 14488.60
10/31/97 16622.80 15777.00
10/31/98 18340.50 17249.90
10/31/99 18497.20 17341.80
10/31/00 19783.20 18608.10
10/31/01 22820.50 21317.20
</Table>

HARBOR FUND--CONTINUED

<Table>

10/31/2001 $8.69
HARBOR SHORT DURATION FUND NET ASSET VALUE: 10/31/2000 $8.51
</Table>

<Table>

- ------------------------------------------------------------------------------------
Total Return for Periods Ended 10/31/2001
- ------------------------------------------------------------------------------------
Fund/Index 1 year 5 years Since
Inception
- ------------------------------------------------------------------------------------
Harbor Short Duration Fund 7.73% 5.97% 5.62%
- ------------------------------------------------------------------------------------
Salomon Treasury 1 YR CMI 8.46% 6.18% 5.59%
- ------------------------------------------------------------------------------------
</Table>

The 12 months ended October 31, 2001 rewarded fixed income investors as the
steep decline in interest rates increased total return. The Harbor Short
Duration Fund returned 7.73% during the period.
- The Federal Reserve loosened monetary policy throughout 2001 and, subsequent
to the events of September 11, implemented an even more aggressive easing in
response to weakening economic conditions. From January 1 through October 31,
the Federal Funds rate was reduced by an aggregate of 4 percentage points.
- The weighted average maturity of obligations held by the Fund was shorter
than that of the Salomon Treasury Constant Maturity index for the 12 months
ended October 31, 2001. This was the principal reason for the difference
between the Fund's total return and that of the index.
- The Fund virtually matched the index for the latest five-year period and for
the period since the Fund's inception on January 1, 1992. The target index
bears no operating or transaction costs, while the Fund's total returns are
net of such costs.
- The Fund outperformed the average of its peer group, the Morningstar universe
of taxable high quality, short duration fixed income funds, by 0.11% for the
12-month period. This was due principally to its holding of selected higher
yielding, AAA-rated, asset-backed obligations. In addition, the weighted
average maturity of securities in the Fund's portfolio was somewhat longer
than that of the peer group average.
[HARBOR SHORT DURATION FUND GRAPH]

<Table>
<Caption>
SHORT DURATION SALOMON TREASURY 1 YR CMI
-------------- -------------------------

10/31/92 10371.80 10417.90
10/31/93 10909.20 10825.60
10/31/94 11185.40 11135.80
10/31/95 11948.70 11930.00
10/31/96 12814.00 12650.20
10/31/97 13515.60 13428.20
10/31/98 14435.60 14289.00
10/31/99 14967.20 14882.00
10/31/00 15897.30 15743.50
10/31/01 17126.90 17075.20
</Table>

As of June 2001, the 1-YR Gvt index has been discontinued
by Ibbotson Associates. The Salomon Treasury 1 YR CMI
index has been selected as the replacement index. The
Salomon Treasury 1 YR CMI index provides an accurate
representation in comparison to the Harbor Short Duration
Fund.

<Table>

10/31/2001 $1.00
HARBOR MONEY MARKET FUND NET ASSET VALUE: 10/31/2000 $1.00
</Table>

<Table>

- ------------------------------------------------------------------------------------
Total Return for Periods Ended 10/31/2001
- ------------------------------------------------------------------------------------
Fund/Index 1 year 5 years 10 years
- ------------------------------------------------------------------------------------
Harbor Money Market Fund 4.83% 5.19% 4.65%
- ------------------------------------------------------------------------------------
T-Bills 4.48% 5.10% 4.74%
- ------------------------------------------------------------------------------------
Current Yield for Periods Ended 09/30/2001
- --------------------------------------------------------------------------------
Harbor Money Market Fund* 7 Days: 2.88% 30 Days: 3.05%
- --------------------------------------------------------------------------------
</Table>

The Harbor Money Market Fund outperformed its target, the 90-day Treasury bill,
for the 12 months ended October 31, 2001.
- Yields generally fell during the period as the Federal Reserve continued to
loosen monetary policy. The Federal Funds rate fell from 6.5% to 2.5% during
the year ended October 31, 2001, reflecting this aggressive effort to combat
the recessionary economic environment.
- In anticipation of the Federal Reserve easing that subsequently began in
January 2001, the Fund's strategy at the beginning of the fiscal year was to
invest in longer-duration securities. This benefited the Fund's return by
enabling it to lock in the higher yields existing at the time.
- By the end of the fiscal year the maturities of the securities held by the
Fund were substantially lower. This reflected a shift in strategy as rates
for shorter-term securities were virtually the same as those for one-year
securities and the potential for significant further rate cuts had
diminished.
- Compared to the average of its peer group, the Morningstar universe of
taxable money market funds, the Fund returned an additional 60 basis points
(six-tenths of a percentage point). This was due largely to the Fund's lower
expense ratio and a weighted average maturity that was longer than that of
the peer group average.
An investment in the Harbor Money Market Fund is not insured or guaranteed by
the FDIC or any other government agency. Although the Fund seeks to preserve
the value of your investment at $1.00 per share, it is possible to lose money
by investing in the Fund.
[HARBOR MONEY MARKET FUND GRAPH]

<Table>
<Caption>
MONEY MARKET T-BILLS
------------ -------

10/31/92 10366.90 10387.00
10/31/93 10645.20 10707.70
10/31/94 11020.70 11124.00
10/31/95 11644.50 11766.50
10/31/96 12236.60 12391.40
10/31/97 12861.70 13046.90
10/31/98 13530.40 13718.40
10/31/99 14182.90 14360.90
10/31/00 15031.80 15212.80
10/31/01 15758.00 15893.80
</Table>

- ------------
* Reflects the Adviser's agreement not to impose all or a portion of its
advisory fees. Without such waivers the current 7-day and 30-day yields would
have been 2.76% and 2.93%, respectively. The current yield more closely
reflects the current earnings of the Harbor Money Market Fund than the total
return.

REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees of
Harbor Fund

We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of the Harbor Fund (the Trust) (comprising,
respectively, the Harbor Mid Cap Growth Fund, Harbor Growth Fund, Harbor Small
Cap Growth Fund, Harbor International Growth Fund, Harbor Global Equity Fund,
Harbor Capital Appreciation Fund, Harbor International Fund II, Harbor
International Fund, Harbor Large Cap Value Fund (formerly Harbor Value Fund),
Harbor Bond Fund, Harbor Short Duration Fund, and Harbor Money Market Fund) as
of October 31, 2001, and the related statements of operations for the year then
ended, and the statements of changes in net assets and financial highlights for
each of the two years in the period then ended. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the three
years in the period ended October 31, 1999 were audited by other auditors, whose
report dated December 14, 1999, expressed an unqualified opinion on those
statements.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of October 31, 2001 by correspondence with
the custodian and brokers, or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting Harbor Fund at October 31, 2001, the
results of their operations for the year then ended and the changes in their net
assets and financial highlights for each of the two years in the period then
ended, in conformity with accounting principles generally accepted in the United
States.

[ERNST & YOUNG LLP]
Boston, Massachusetts
December 14, 2001

HARBOR MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS--OCTOBER 31, 2001

COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash and short-term investment of 0.1%)

<Table>

Commercial Services & Supplies
0.6
Media
0.8
Wireless Telecommunication Services
0.9
Computers & Peripherals
1.1
Air Freight & Couriers
1.3
Airlines
1.3
Electric Utilities
1.5
Health Care Providers & Services
1.7
Insurance
3.4
Textiles & Apparel
3.5
Electronic Equipment & Instruments
3.9
Pharmaceuticals
4.2
Software
4.6
Communications Equipment
8.8
Specialty Retail
9.0
Energy Equipment & Services
11.8
Semiconductor Equipment & Products
20.5
Biotechnology
21.0
</Table>

<Table>
<Caption>
COMMON STOCKS--99.9%
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

AIR FREIGHT & COURIERS--1.3%
2,900 Expeditors International of Washington Inc. ...... $ 131
------
AIRLINES--1.3%
6,900 SKYWEST Inc. ..................................... 126
------
BIOTECHNOLOGY--21.0%
6,200 Abgenix Inc.*..................................... 185
2,000 Alkermes Inc.*.................................... 51
8,500 Celgene Corp.*.................................... 280
4,200 Cephalon Inc.*.................................... 265
3,900 Genzyme Corp.*.................................... 210
4,300 Gilead Sciences Inc.*............................. 270
3,800 Invitrogen Corp.*................................. 233
7,700 Medarex Inc.*..................................... 159
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

5,800 Medimmune Inc.*................................... $ 228
3,700 OSI Pharmaceuticals Inc.*......................... 169
------
2,050
------
COMMERCIAL SERVICES & SUPPLIES--0.6%
3,800 CheckFree Corp.*.................................. 54
------
COMMUNICATIONS EQUIPMENT--8.8%
5,600 Brocade Communication Systems Inc.*............... 138
6,000 CIENA Corp.*...................................... 98
12,100 Enterasys Networks Inc.*.......................... 96
11,600 Finisar Corp.*.................................... 91
5,900 Harris Corp. ..................................... 202
2,500 Juniper Networks Inc.*............................ 56
3,300 Oni Systems Inc.*................................. 16
10,400 Powerwave Technologies Inc.*...................... 159
------
856
------
COMPUTERS & PERIPHERALS--1.1%
3,000 NCR Corp.*........................................ 106
------
ELECTRIC UTILITIES--1.5%
5,700 Calpine Corp.*.................................... 141
------
ELECTRONIC EQUIPMENT & INSTRUMENTS--3.9%
2,000 Celestica Inc.*................................... 69
3,800 Intersil Holding Corp. Cl. A*..................... 124
6,100 Sanmina Corp.*.................................... 92
4,600 SCI Systems Inc.*................................. 93
------
378
------
ENERGY EQUIPMENT & SERVICES--11.8%
6,300 BJ Services Co.*.................................. 161
2,400 Cooper Cameron Corp.*............................. 94
6,900 Global Industries Ltd.*........................... 49
6,400 Grant Prideco Inc.*............................... 58
3,500 Nabors Industries Inc.*........................... 108
5,700 National-Oilwell Inc.*............................ 106
6,000 Patterson-UTI Energy Inc.*........................ 108
5,100 Precision Drilling Corp.*......................... 129
7,500 Pride International Inc.*......................... 96
4,750 Transocean Sedco Forex Inc. ...................... 143
3,000 Weatherford International Inc.*................... 103
------
1,155
------
HEALTH CARE PROVIDERS & SERVICES--1.7%
12,600 Caremark Rx Inc.*................................. 169
------
INSURANCE--3.4%
8,310 Fidelity National Financial Inc. ................. 191
8,500 First American Corp. ............................. 142
------
333
------
MEDIA--0.8%
4,400 USA Networks Inc.*................................ 81
------
PHARMACEUTICALS--4.2%
1,700 Barr Laboratories Inc.*........................... 124
6,500 Sicor Inc.*....................................... 122
3,500 Watson Pharmaceuticals Inc.*...................... 167
------
413
------
SEMICONDUCTOR EQUIPMENT & PRODUCTS--20.5%
8,800 Applied Micro Circuits Corp*...................... 97
12,900 Atmel Corp.*...................................... 103
3,200 Cree Inc.*........................................ 57
6,800 Cypress Semiconductor Corp.*...................... 134
4,200 Elantec Semiconductor Inc.*....................... 137
3,600 Integrated Device Technology Inc.*................ 100
</Table>

HARBOR MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

900 KLA-Tencor Corp.*................................. $ 37
8,000 Lattice Semiconductor Corp.*...................... 140
7,300 LSI Logic Corp.*.................................. 124
3,400 Micrel Inc.*...................................... 86
5,100 Microchip Technology Inc.*........................ 159
3,200 National Semiconductor Corp.*..................... 83
3,700 Novellus Systems Inc.*............................ 122
3,800 QLogic Corp.*..................................... 150
5,500 RF Micro Devices Inc.*............................ 112
3,300 Semtech Corp.*.................................... 125
3,700 Teradyne Inc.*.................................... 85
3,900 TriQuint Semiconductor Inc.*...................... 69
8,100 Vitesse Semiconductor Corp.*...................... 76
------
1,996
------
SOFTWARE--4.6%
5,900 Citrix Systems Inc.*.............................. 138
1,000 Electronic Arts Inc.*............................. 51
1,100 NVIDIA Corp.*..................................... 48
6,600 Smartforce plc ADR(1)*............................ 109
3,700 Veritas Software Corp.*........................... 105
------
451
------
SPECIALTY RETAIL--9.0%
7,900 Abercrombie & Fitch Co. Cl. A*.................... 149
8,000 Bed Bath & Beyond Inc.*........................... 201
4,200 CDW Computer Centers Inc.*........................ 193
14,600 Foot Locker Inc.*................................. 212
5,200 Tiffany & Co. .................................... 122
------
877
------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

TEXTILES & APPAREL--3.5%
5,800 Jones Apparel Group Inc.*......................... $ 160
8,100 Polo Ralph Lauren Corp. Cl. A*.................... 178
------
338
------
WIRELESS TELECOMMUNICATION SERVICES--0.9%
7,300 Crown Castle International Corp.*................. 85
------
TOTAL COMMON STOCKS
(Cost $11,963)............................................... 9,740
------

<Caption>
SHORT-TERM INVESTMENT--1.7%
(Cost $165)
PRINCIPAL
AMOUNT
(000S)
- -----------------------------------------------------------------------

REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust dated October 31, 2001 due November 1,
2001 at 1.00% collateralized by a U.S. Treasury
Bill 5.50% August 15, 2028, par value of $165
(repurchase proceeds of $165 when closed on
$ 165 November 1, 2001)............................... 165
------
TOTAL INVESTMENTS--101.6%
(Cost $12,128)............................................... 9,905
CASH AND OTHER ASSETS, LESS LIABILITIES--(1.6%)................ (153)
------
TOTAL NET ASSETS--100.0%....................................... $9,752
======
</Table>

- ------------

1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.
12

HARBOR GROWTH FUND
PORTFOLIO OF INVESTMENTS--OCTOBER 31, 2001

COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash, convertible bond and short-term investments of 9.3%)

<Table>

Auto Components
0.4
Hotels Restaurants & Leisure
1.1
Wireless Telecommunication Services
1.2
Electric Utilities
1.3
Machinery
1.7
Multiline Retail
4.1
Health Care Providers & Services
4.4
Computers & Peripherals
5.3
Health Care Equipment & Supplies
5.8
Pharmaceuticals
6.5
Internet Software & Services
8.0
Electronic Equipment & Instruments
8.1
Communications Equipment
8.4
Commercial Services & Supplies
8.6
Semiconductor Equipment & Products
9.6
Software
16.2
</Table>

<Table>
<Caption>
COMMON STOCKS--90.7%
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

AUTO COMPONENTS--0.4%
70,000 Tower Automotive Inc.*.......................... $ 428
--------
COMMERCIAL SERVICES & SUPPLIES--8.6%
140,000 DiamondCluster International Inc. Cl. A*........ 1,442
450,000 ProsoftTraining.com*............................ 198
200,000 QRS Corp.*...................................... 1,940
200,000 Renaissance Learning Inc.*...................... 6,542
--------
10,122
--------
COMMUNICATIONS EQUIPMENT--8.4%
290,000 Aspect Communications Corp.*.................... 650
210,000 Comverse Technology Inc.*....................... 3,950
150,000 JDS Uniphase Corp.*............................. 1,199
190,000 Proxim Inc.*.................................... 1,286
440,000 Symmetricom Inc.*............................... 2,464
350,000 Verilink Corp.*................................. 353
--------
9,902
--------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

COMPUTERS & PERIPHERALS--5.3%
175,000 EMC Corp.*...................................... $ 2,156
7,361 McDATA Corp. Cl. A*............................. 108
300,000 Network Appliance Inc.*......................... 3,990
--------
6,254
--------
ELECTRIC UTILITIES--1.3%
110,800 AES Corp.*...................................... 1,535
--------
ELECTRONIC EQUIPMENT & INSTRUMENTS--8.1%
280,000 Checkpoint Systems Inc.*........................ 2,929
280,000 LoJack Corp.*................................... 1,498
415,000 Pinnacle Systems Inc.*.......................... 1,789
230,000 Planar Systems Inc.*............................ 3,344
--------
9,560
--------
HEALTH CARE EQUIPMENT & SUPPLIES--5.8%
250,000 Kensey Nash Corp.*.............................. 4,687
130,000 Molecular Devices Corp.*........................ 2,105
--------
6,792
--------
HEALTH CARE PROVIDERS & SERVICES--4.4%
130,000 Health Management Associates Inc. Cl. A*........ 2,534
105,000 Orthodontic Centers of America Inc.*............ 2,649
--------
5,183
--------
HOTELS RESTAURANTS & LEISURE--1.1%
60,000 Carnival Corp. ................................. 1,307
--------
INTERNET SOFTWARE & SERVICES--8.0%
200,000 Accrue Software Inc.*........................... 78
100,000 Netegrity Inc.*................................. 1,174
200,000 Secure Computing Corp.*......................... 3,270
130,000 Sonicwall Inc.*................................. 1,846
150,000 Stellent Inc.*.................................. 3,075
--------
9,443
--------
MACHINERY--1.7%
200,000 Flow International Corp.*....................... 1,958
--------
MULTILINE RETAIL--4.1%
67,500 Dollar Tree Stores Inc.*........................ 1,517
100,000 TJX Cos. Inc. .................................. 3,380
--------
4,897
--------
PHARMACEUTICALS--6.5%
85,517 Elan Corp. plc ADR(1)*.......................... 3,904
150,000 K-V Pharmaceutical Co. Cl. A*................... 3,790
--------
7,694
--------
SEMICONDUCTOR EQUIPMENT & PRODUCTS--9.6%
200,000 ATMI Inc.*...................................... 3,812
97,725 Maxim Integrated Products Inc.*................. 4,471
172,605 TriQuint Semiconductor Inc.*.................... 3,052
--------
11,335
--------
SOFTWARE--16.2%
23,800 Ansoft Corp.*................................... 424
220,000 Documentum Inc.*................................ 3,249
150,000 Innoveda Inc.*.................................. 183
500,000 Legato Systems Inc.*............................ 4,195
270,000 MRO Software Inc.*.............................. 3,564
160,000 SERENA Software Inc.*........................... 2,586
50,000 Symantec Corp.*................................. 2,749
150,000 Wind River Systems Inc.*........................ 2,151
--------
19,101
--------
</Table>

HARBOR GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

WIRELESS TELECOMMUNICATION SERVICES--1.2%
180,000 Nextel Communications Inc. Cl. A*............... $ 1,431
--------
TOTAL COMMON STOCKS
(Cost $145,014)............................................ 106,942
--------

<Caption>
CONVERTIBLE BOND--1.1%
(Cost $2,716)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

SystemOne Technologies Inc.
$ 2,714 8.250%--02/23/2003 PIK(2)..................... 1,357
--------
<Caption>
SHORT-TERM INVESTMENTS--8.4%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

COMMERCIAL PAPER
American Express Credit Corp. Yrs 1&2
$ 2,335 2.380%--11/01/2001............................ $ 2,335
1,610 2.460%--11/02/2001............................ 1,610
--------
3,945
--------
Chevron USA Inc. Yrs 1&2
2,884 2.440%--11/06/2001............................ 2,884
General Electric Capital Corp.
3,103 2.480%--11/05/2001............................ 3,103
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $9,932).............................................. 9,932
--------
TOTAL INVESTMENTS--100.2%
(Cost $157,662)............................................ 118,231
CASH AND OTHER ASSETS, LESS LIABILITIES--(0.2%).............. (280)
--------
TOTAL NET ASSETS--100.0%..................................... $117,951
========
</Table>

- ------------

1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.

2 PIK--Payment-in-kind security.

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.
14

HARBOR SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS--OCTOBER 31, 2001

COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash and short-term investment of 19.1%)

<Table>

Communications Equipment
1.2
Internet Software & Services
1.3
Software
1.3
Electronic Equipment & Instruments
1.4
Metals & Mining
1.4
Diversified Financials
1.5
Pharmaceuticals
1.8
Oil & Gas
2.0
Semiconductor Equipment & Products
3.2
Specialty Retail
3.5
Hotels Restaurants & Leisure
4.1
Banks
4.2
Health Care Equipment & Supplies
4.9
Insurance
5.7
Biotechnology
5.8
Energy Equipment & Services
8.3
Media
9.3
Commercial Services & Supplies
9.6
Health Care Providers & Services
10.4
</Table>

<Table>
<Caption>
COMMON STOCKS--80.9%
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

BANKS--4.2%
12,400 Greater Bay Bancorp.............................. $ 283
8,700 Southwest Bancorporation of Texas Inc.*.......... 250
6,800 UCBH Holdings Inc. .............................. 197
-------
730
-------
BIOTECHNOLOGY--5.8%
7,600 Albany Molecular Research Inc.*.................. 211
9,700 Celgene Corp.*................................... 319
36,400 Regeneration Technologies Inc.*.................. 396
10,600 Sequenom Inc.*................................... 79
-------
1,005
-------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

COMMERCIAL SERVICES & SUPPLIES--9.6%
3,600 Administaff Inc.*................................ $ 81
8,800 Career Education Corp.*.......................... 229
7,400 DeVry Inc.*...................................... 199
10,700 Digitalthink Inc.*............................... 89
6,400 National Data Corp. ............................. 225
15,000 Republic Services Inc. Cl. A..................... 246
4,700 Stericycle Inc.*................................. 226
12,400 Waste Connections Inc.*.......................... 362
-------
1,657
-------
COMMUNICATIONS EQUIPMENT--1.2%
11,300 Advanced Fibre Communications Inc.*.............. 211
-------
DIVERSIFIED FINANCIALS--1.5%
10,000 Indymac Bancorp Inc.*............................ 257
-------
ELECTRONIC EQUIPMENT & INSTRUMENTS--1.4%
20,500 Therma-Wave Inc.*................................ 249
-------
ENERGY EQUIPMENT & SERVICES--8.3%
13,900 Helmerich & Payne Inc. .......................... 422
5,100 SEACOR Smit Inc.*................................ 202
36,800 Superior Energy Services Inc.*................... 291
15,900 Varco International Inc.*........................ 238
14,300 W-H Energy Services Inc.*........................ 288
-------
1,441
-------
HEALTH CARE EQUIPMENT & SUPPLIES--4.9%
25,500 Alliance Imaging Inc. ........................... 312
10,000 Meridian Medical Technologies Inc.*.............. 219
11,000 Wilson Greatbatch Technologies Inc.*............. 316
-------
847
-------
HEALTH CARE PROVIDERS & SERVICES--10.4%
15,100 Manor Care Inc.*................................. 353
45,000 PSS World Medical Inc.*.......................... 406
25,100 Quintiles Transnational Corp.*................... 398
18,000 Select Medical Corp.*............................ 315
18,800 UroCor Inc.*..................................... 335
-------
1,807
-------
HOTELS RESTAURANTS & LEISURE--4.1%
9,000 CEC Entertainment Inc.*.......................... 349
17,300 Extended Stay America Inc.*...................... 234
10,400 Six Flags Operations Inc.*....................... 123
-------
706
-------
INSURANCE--5.7%
4,600 Everest Reinsurance Holdings Inc. ............... 308
8,000 Philadelphia Consolidated Holdings Corp. ........ 314
3,800 RenaissanceRe Holdings Ltd. ..................... 367
-------
989
-------
INTERNET SOFTWARE & SERVICES--1.3%
14,000 Forrester Research Inc.*......................... 226
-------
MEDIA--9.3%
30,000 Boron, LePore & Associates Inc.*................. 386
27,400 Entravision Communications Corp.*................ 290
8,200 Information Holdings Inc.*....................... 180
14,700 Insight Communications Co. Inc. Cl. A*........... 301
13,300 Mediacom Communications Corp. Cl. A*............. 178
38,000 Sinclair Broadcast Group Inc. Cl. A*............. 280
-------
1,615
-------
METALS & MINING--1.4%
11,300 Arch Coal Inc. .................................. 249
-------
</Table>

HARBOR SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

OIL & GAS--2.0%
45,500 Chesapeake Energy Corp.*......................... $ 330
-------
PHARMACEUTICALS--1.8%
21,200 Salix Pharmaceuticals Ltd.*...................... 304
-------
SEMICONDUCTOR EQUIPMENT & PRODUCTS--3.2%
8,200 Alpha Industries Inc.*........................... 191
12,000 Varian Semiconductor Equipment Associates
Inc.*.......................................... 360
-------
551
-------
SOFTWARE--1.3%
13,900 Smartforce plc ADR(1)*........................... 229
-------
SPECIALTY RETAIL--3.5%
6,900 Cost Plus Inc.*.................................. 134
14,000 Guitar Center Inc.*.............................. 193
10,800 Williams-Sonoma Inc.*............................ 280
-------
607
-------
TOTAL COMMON STOCKS
(Cost $13,955).............................................. 14,010
-------

<Caption>
SHORT-TERM INVESTMENT--19.6%
(Cost $3,398)

<Caption>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust dated October 31, 2001 due November 1,
2001 at 1.00% collateralized by a U.S. Treasury
Bill 5.50% August 15, 2028, par value of $3,330
(repurchase proceeds of $3,398 when closed on
$3,398 November 1, 2001).............................. $ 3,398
-------
TOTAL INVESTMENTS--100.5%
(Cost $17,353).............................................. 17,408
CASH AND OTHER ASSETS, LESS LIABILITIES--(0.5%)............... (91)
-------
TOTAL NET ASSETS--100.0%...................................... $17,317
=======
</Table>

- ------------

1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.
16

HARBOR INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS--OCTOBER 31, 2001

INVESTMENT HOLDINGS BY COUNTRY (% OF NET ASSETS)
(Excludes net cash and short-term investments of 11.6%)

<Table>

Singapore (SGP)
1.0
Finland (FIN)
1.8
Denmark (DEN)
2.1
Japan (JP)
2.7
Spain (SP)
4.3
Switzerland (SWS)
4.9
Australia (AUS)
5.2
Netherlands (NET)
6.8
Germany (GER)
7.4
Hong Kong (HK)
7.8
France (FR)
15.6
United Kingdom (UK)
28.8
</Table>

<Table>
<Caption>
COMMON STOCKS--88.4%
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

AUTOMOBILES--2.8%
43,462 Porsche AG Pfd. (GER)......................... $ 12,119
--------
BANKS--6.7%
1,063,389 Banco Bilbao Vizcaya Argentaria SA (SP)....... 11,889
758,852 DBS Group Holdings Ltd. (SGP)................. 4,329
548,226 Royal Bank of Scotland Group plc (UK)......... 13,101
--------
29,319
--------
BEVERAGES--2.6%
1,157,194 Diageo plc (UK)............................... 11,541
--------
BIOTECHNOLOGY--4.9%
27,261 Serono SA Cl. B (SWS)......................... 21,521
--------
COMMERCIAL SERVICES & SUPPLIES--7.0%
4,124,091 Brambles Industries Ltd. (AUS)................ 22,590
1,266,422 The Capita Group plc (UK)..................... 8,003
--------
30,593
--------
COMMUNICATIONS EQUIPMENT--1.8%
375,590 Nokia Oyj Series A (FIN)...................... 7,848
--------
DISTRIBUTORS--4.3%
19,858,200 Li & Fung Ltd. (HK)........................... 18,967
--------
DIVERSIFIED TELECOMMUNICATION SERVICES--2.9%
3,092,304 COLT Telecom Group plc (UK)................... 5,278
595,500 Telefonica SA (SP)*........................... 7,145
--------
12,423
--------
ELECTRIC UTILITIES--0.9%
1,217,066 International Power plc (UK).................. 3,907
--------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

ELECTRICAL EQUIPMENT--3.4%
17,217,200 Johnson Electric Holdings Ltd. (HK)........... $ 15,010
--------
FOOD & DRUG RETAILING--2.8%
434,418 Koninklijke Ahold NV (NET).................... 12,215
--------
HOUSEHOLD PRODUCTS--2.5%
793,929 Reckitt Benckiser plc (UK).................... 11,072
--------
INSURANCE--0.4%
Muenchener Ruckversicherungs-Ges
5,900 AG--Registered (GER)........................ 1,558
--------
IT CONSULTING & SERVICES--5.4%
199,804 Altran Technologies (FR)...................... 9,165
1,334,836 Logica plc (UK)............................... 14,427
--------
23,592
--------
MEDIA--12.2%
1,366,042 Pearson plc (UK).............................. 16,332
2,403,503 Reed International plc (UK)................... 19,658
Verenigde Nederlandse Uitgeversbedrijven NV
597,871 (NET)....................................... 17,423
--------
53,413
--------
OIL & GAS--3.8%
119,180 Total Fina Elf SA (FR)........................ 16,723
--------
PHARMACEUTICALS--11.8%
281,475 Aventis SA (FR)............................... 20,697
228,991 Novo Nordisk AS Series B (DEN)................ 9,279
328,014 Sanofi Synthelabo (FR)........................ 21,611
--------
51,587
--------
SOFTWARE--4.3%
179,668 SAP AG (GER).................................. 18,584
--------
WIRELESS TELECOMMUNICATION SERVICES--7.9%
885 NTT DoCoMo Inc. (JP).......................... 11,988
9,738,252 Vodafone Group plc (UK)....................... 22,493
--------
34,481
--------
TOTAL COMMON STOCKS
(Cost $481,724)........................................... 386,473
--------

<Caption>
SHORT-TERM INVESTMENTS--10.1%
PRINCIPAL
AMOUNT
(000S)
- ----------------------------------------------------------------------

COMMERCIAL PAPER
American Express Credit Corp.
$ 21,000 2.580%--11/01/2001.......................... 21,000
Chevron USA Inc. Yrs 1&2
2,164 2.500%--11/01/2001.......................... 2,164
General Electric Capital Corp.
21,000 2.560%--11/01/2001.......................... 21,000
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $44,164)............................................ 44,164
--------
TOTAL INVESTMENTS--98.5%
(Cost $525,888)........................................... 430,637
CASH AND OTHER ASSETS, LESS LIABILITIES--1.5%............... 6,564
--------
TOTAL NET ASSETS--100.0%.................................... $437,201
========
</Table>

- ------------

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.

HARBOR GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS--OCTOBER 31, 2001

INVESTMENT HOLDINGS BY COUNTRY (% OF NET ASSETS)
(Excludes net cash and short-term investment of 8.4%)

<Table>

Israel (IL)
0.2
Portugal (PORT)
0.3
Spain (SP)
0.3
Finland (FIN)
0.4
South Korea (S. KOR)
0.4
Singapore (SGP)
0.5
Taiwan (TWN)
0.5
Belgium (BEL)
0.6
Brazil (BR)
0.6
Canada (CAN)
0.6
Hong Kong (HK)
0.6
Denmark (DEN)
0.7
Ireland (IE)
0.9
Mexico (MEX)
1.0
Italy (IT)
1.4
Switzerland (SWS)
2.4
Germany (GER)
2.9
Netherlands (NET)
3.6
France (FR)
4.5
Japan (JP)
5.3
United Kingdom (UK)
10.2
United States (US)
53.7
</Table>

<Table>
<Caption>
COMMON STOCKS--91.6%
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

AEROSPACE & DEFENSE--1.0%
Embraer-Empresa Bras de Aeronautica Pfd. ADR
1,200 (BR)(1)......................................... $ 21
600 General Dynamics Corp. (US)....................... 49
------
70
------
AIR FREIGHT & COURIERS--0.3%
1,000 Yamato Transport Co. Ltd. (JP).................... 19
------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

AUTOMOBILES--1.8%
600 Bayerische Motoren Werke AG (GER)................. $ 18
900 Ford Motor Co. (US)............................... 14
1,000 Honda Motor Co. Ltd. (JP)......................... 36
9,000 Nissan Motor Co. (JP)............................. 40
400 Peugeot SA (FR)................................... 16
------
124
------
BANKS--7.8%
2,200 Allied Irish Banks plc (IE)....................... 21
1,400 Bank of America Corp. (US)........................ 83
2,900 Bank of Ireland (IE).............................. 26
500 BNP Paribas (FR).................................. 42
2,500 Dexia (BEL)....................................... 38
700 HSBC Holdings plc ADR (UK)(1)..................... 38
3,300 HSBC Holdings plc (UK)............................ 36
10,200 IntesaBCI SpA (IT)................................ 24
40 Julius Baer Holding Ltd. (SWS).................... 12
1,300 Royal Bank of Canada (CAN)........................ 39
2,100 Royal Bank of Scotland Group plc (UK)............. 50
2,800 Standard Chartered plc (UK)....................... 28
600 UBS AG ADR (SWS)(1)............................... 28
660 UBS AG--Registered (SWS).......................... 31
1,100 Uniao de Bancos Brasileiro SA (BR)................ 17
450 Washington Mutual Inc. (US)....................... 14
------
527
------
BEVERAGES--0.6%
800 Pepsico Inc. (US)................................. 39
------
BIOTECHNOLOGY--1.2%
1,400 Amgen Inc. (US)*.................................. 80
------
BUILDING PRODUCTS--0.2%
300 American Standard Cos. Inc. (US)*................. 17
------
CHEMICALS--2.1%
1,800 Akzo Nobel NV ADR (NET)(1)........................ 74
200 Akzo Nobel NV (NET)............................... 8
1,200 Praxair Inc. (US)................................. 57
------
139
------
COMMERCIAL SERVICES & SUPPLIES--0.6%
600 First Data Corp. (US)............................. 41
------
COMMUNICATIONS EQUIPMENT--1.1%
1,600 Cisco Systems Inc. (US)........................... 27
1,200 Nokia Oyj ADR (FIN)(1)............................ 25
400 QUALCOMM Inc. (US)................................ 20
------
72
------
COMPUTERS & PERIPHERALS--2.2%
900 EMC Corp. (US)*................................... 11
1,000 International Business Machines Corp. (US)........ 108
3,000 NEC Corp. (JP).................................... 27
------
146
------
CONSTRUCTION & ENGINEERING--0.2%
300 Fluor Corp. New (US).............................. 11
------
CONSTRUCTION MATERIALS--0.7%
150 Holcim SA--Bearer (SWS)........................... 29
250 Lafarge SA--Bearer (FR)........................... 22
------
51
------
DIVERSIFIED FINANCIALS--6.7%
600 American Express Co. (US)......................... 18
1,000 AMVESCAP plc ADR (UK)(1).......................... 24
2,400 AMVESCAP plc (UK)................................. 29
</Table>

HARBOR GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

4,000 Citigroup Inc. (US)............................... $ 182
4,000 Daiwa Securities Group Inc. (JP).................. 26
400 Goldman Sachs Group Inc. (US)..................... 31
1,600 ING Groep NV ADR (NET)(1)......................... 40
800 ING Groep NV (NET)................................ 20
300 Merrill Lynch & Co. Inc. (US)..................... 13
3,000 Nomura Securities Co. Ltd. (JP)................... 39
6,000 Sumitomo Trust & Banking Co. Ltd. (JP)............ 33
------
455
------
DIVERSIFIED TELECOMMUNICATION SERVICES--3.1%
500 Korea Telecom Corp. ADR (S. KOR)(1)............... 10
2,700 Portugal Telecom SGPS SA--Registered (PORT)....... 21
1,500 SBC Communications Inc. (US)...................... 57
1,000 Telefonos de Mexico SA de CV ADR (MEX)(1)......... 34
1,200 Verizon Communications (US)....................... 60
2,300 WorldCom Inc. (US)................................ 31
------
213
------
ELECTRIC UTILITIES--1.3%
700 Calpine Corp. (US)................................ 17
900 Duke Energy Corp. (US)............................ 35
400 E. On AG (DEN).................................... 21
600 Reliant Energy Inc. (US).......................... 17
------
90
------
ENERGY EQUIPMENT & SERVICES--1.0%
1,100 Baker Hughes Inc. (US)............................ 39
600 Schlumberger Ltd. (US)............................ 29
------
68
------
FOOD & DRUG RETAILING--1.2%
612 Koninklijke Ahold NV ADR (NET)(1)................. 17
2,200 Koninklijke Ahold NV (NET)........................ 62
------
79
------
FOOD PRODUCTS--0.9%
600 Nestle SA ADR (SWS)(1)............................ 31
160 Nestle SA--Registered (SWS)....................... 33
------
64
------
GAS UTILITIES--1.2%
1,400 Kinder Morgan Inc. (US)........................... 69
600 Sempra Energy (US)................................ 14
------
83
------
HEALTH CARE PROVIDERS & SERVICES--0.6%
200 Cardinal Health Inc. (US)......................... 13
400 Fresenius Medical Care AG (DEN)................... 25
------
38
------
HOTELS RESTAURANTS & LEISURE--2.8%
1,790 Carnival Corp. (US)............................... 39
10,400 Compass Group plc (UK)............................ 76
12,500 Hilton Group plc (UK)............................. 32
5,800 P&O Princess Cruises plc (UK)..................... 21
2,100 Six Continents plc (UK)........................... 19
------
187
------
HOUSEHOLD DURABLES--0.5%
1,900 Sega Corp. (JP)................................... 37
------
HOUSEHOLD PRODUCTS--0.8%
700 Procter & Gamble Co. (US)......................... 52
------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

INDUSTRIAL CONGLOMERATES--3.4%
4,600 General Electric Co. (US)......................... $ 167
4,000 Hitachi Ltd. (JP)................................. 27
700 Tyco International Ltd. (US)...................... 34
------
228
------
INSURANCE--5.8%
800 Aegon NV (NET).................................... 20
700 AFLAC Inc. (US)................................... 17
100 Allianz AG--Registered (GER)...................... 24
800 Allstate Corp. (US)............................... 25
900 American International Group Inc. (US)............ 71
1,500 Assicurazioni Generali SpA (IT)................... 41
1,300 Hartford Financial Services Group Inc. (US)....... 70
800 Lincoln National Corp. (US)....................... 34
Muenchener Ruckversicherungs-Ges AG--Registered
250 (GER)........................................... 66
2,100 Riunione Adriatica di Sicurta SpA (IT)............ 25
------
393
------
INTERNET SOFTWARE & SERVICES--0.2%
500 Check Point Software Technologies Ltd. (IL)*...... 15
------
IT CONSULTING & SERVICES--1.2%
1,200 Accenture Ltd. Cl. A (US)......................... 21
900 Electronic Data Systems Corp. (US)................ 58
100 Tietoenator Ojy (FIN)............................. 2
------
81
------
MACHINERY--0.9%
600 Caterpillar Inc. (US)............................. 27
10,000 Mitsubishi Heavy Industries Ltd. (JP)............. 34
------
61
------
MEDIA--6.2%
2,600 AOL Time Warner Inc. (US)*........................ 81
1,000 Clear Channel Communications Inc. (US)*........... 38
800 Comcast Corp. Cl. A (US).......................... 29
900 Disney (Walt) Co. (US)............................ 17
1,100 Grupo Televisa SA de CV ADR (MEX)(1).............. 33
1,300 Liberty Media Corp. Series A (US)................. 15
900 Mediaset SpA (IT)................................. 6
800 New York Times Co. Cl. A (US)..................... 33
400 Omnicom Group Inc. (US)........................... 31
1,300 Pearson plc ADR (UK)(1)........................... 16
200 Reed International plc ADR (UK)(1)................ 7
4,200 Reed International plc (UK)....................... 34
900 Sogecable SA (SP)................................. 20
700 Viacom Inc. Cl. B (US)............................ 26
500 Vivendi Universal SA ADR (FR)(1).................. 23
200 Vivendi Universal SA (FR)......................... 9
------
418
------
METALS & MINING--3.1%
3,000 Alcoa Inc. (US)................................... 97
1,300 Johnson Matthey Public Ltd. Co. (UK).............. 17
800 Nucor Corp. (US).................................. 33
300 Pechiney SA ADR (FR)(1)........................... 7
200 Pechiney SA (FR).................................. 9
1,000 Pohang Iron & Steel Co. Ltd. ADR (S. KOR)(1)*..... 17
1,000 Rio Tinto plc--Registered (UK).................... 16
500 The Shaw Group Inc. (US).......................... 14
------
210
------
</Table>

HARBOR GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

MULTILINE RETAIL--2.6%
5,818 Kingfisher plc (UK)............................... $ 27
2,100 Target Corp. (US)................................. 65
1,600 Wal-Mart Stores Inc. (US)......................... 82
------
174
------
MULTI-UTILITIES--0.8%
1,300 Suez (FR)......................................... 41
400 Vivendi Environnement (FR)........................ 15
------
56
------
OIL & GAS--5.4%
600 BP plc ADR (UK)(1)................................ 29
4,000 BP plc (UK)....................................... 32
4,000 Exxon Mobil Corp. (US)............................ 158
600 Total Fina Elf SA ADR (FR)(1)..................... 42
400 Total Fina Elf SA Cl. B (FR)...................... 56
1,600 Unocal Corp. (US)................................. 51
------
368
------
PHARMACEUTICALS--9.5%
400 Abbott Laboratories (US).......................... 21
1,200 American Home Products Corp. (US)................. 67
300 Aventis SA (FR)................................... 22
300 Elan Corp. plc ADR (IE)(1)*....................... 14
700 Eli Lilly & Co. (US).............................. 54
1,400 GlaxoSmithKline plc ADR (UK)(1)................... 75
1,700 Johnson & Johnson (US)............................ 98
1,100 Merck & Co. Inc. (US)............................. 70
3,600 Pfizer Inc. (US).................................. 151
400 Pharmacia Corp. (US).............................. 16
1,100 Schering AG (GER)................................. 57
------
645
------
ROAD & RAIL--1.1%
1,100 CSX Inc. (US)..................................... 37
700 Union Pacific Corp. (US).......................... 36
------
73
------
SEMICONDUCTOR EQUIPMENT & PRODUCTS--2.7%
300 Applied Materials Inc. (US)*...................... 10
1,900 Flextronics International Ltd. (SGP)*............. 38
1,000 Micron Technology Inc. (US)*...................... 23
Taiwan Semiconductor Manufacturing Co. Ltd. ADR
2,800 (TWN)(1)*....................................... 36
2,600 Texas Instruments Inc. (US)....................... 73
------
180
------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

SOFTWARE--2.7%
2,600 Microsoft Corp. (US)*............................. $ 151
300 SAP AG (GER)...................................... 31
------
182
------
SPECIALTY RETAIL--1.1%
100 Fast Retailing Co. Ltd. (JP)...................... 12
500 Gap Inc. (US)..................................... 7
1,400 Home Depot Inc. (US).............................. 54
------
73
------
TOBACCO--2.7%
3,900 Philip Morris Cos. Inc. (US)...................... 183
------
WIRELESS TELECOMMUNICATION SERVICES--2.3%
1,900 China Mobile (Hong Kong) Ltd. ADR (HK)(1)*........ 29
4,000 China Mobile (Hong Kong) Ltd. (HK)*............... 12
2 NTT DoCoMo Inc. (JP).............................. 27
1,100 Vodafone Group plc ADR (UK)(1).................... 25
27,000 Vodafone Group plc (UK)........................... 62
------
155
------
TOTAL COMMON STOCKS
(Cost $7,069)................................................ 6,197
------

<Caption>
SHORT-TERM INVESTMENT--8.7%
(Cost $587)
PRINCIPAL
AMOUNT
(000S)
- -----------------------------------------------------------------------

REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust dated October 31, 2001 due November 1,
2001 at 1.00% collateralized by a U.S. Treasury
Bill 5.50% August 15, 2028, par value of $575
(repurchase proceeds of $587 when closed on
$ 587 November 1, 2001)............................... 587
------
TOTAL INVESTMENTS--100.3%
(Cost $7,656)................................................ 6,784
CASH AND OTHER ASSETS, LESS LIABILITIES--(0.3%)................ (19)
------
TOTAL NET ASSETS--100.0%....................................... $6,765
======
</Table>

- ------------

1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.
20

HARBOR CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS--OCTOBER 31, 2001

COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash and short-term investments of 1.0%)

<Table>

Hotels Restaurants & Leisure
0.6
Commercial Services & Supplies
0.8
Personal Products
0.9
Banks
1.5
Health Care Equipment & Supplies
1.5
Aerospace & Defense
1.8
Beverages
3.2
Wireless Telecommunication Services
3.3
Specialty Retail
3.6
Communications Equipment
3.7
Energy Equipment & Services
4.3
Software
4.6
Semiconductor Equipment & Products
4.8
Multiline Retail
5.0
Biotechnology
5.1
Computers & Peripherals
6.1
Insurance
6.1
Industrial Conglomerates
6.4
Media
9.4
Diversified Financials
12.4
Pharmaceuticals
13.9
</Table>

<Table>
<Caption>
COMMON STOCKS--99.0%
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

AEROSPACE & DEFENSE--1.8%
761,100 Lockheed Martin Corp. ...................... $ 37,119
726,100 Northrop Grumman Corp. ..................... 72,574
----------
109,693
----------
BANKS--1.5%
2,665,400 Bank One Corp. ............................. 88,465
----------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

BEVERAGES--3.2%
4,005,200 Pepsico Inc. ............................... $ 195,093
----------
BIOTECHNOLOGY--5.1%
2,446,900 Amgen Inc.*................................. 139,033
2,089,900 Genentech Inc.*............................. 109,197
1,261,000 Sepracor Inc. .............................. 59,822
----------
308,052
----------
COMMERCIAL SERVICES & SUPPLIES--0.8%
1,811,000 Concord EFS Inc. ........................... 49,567
----------
COMMUNICATIONS EQUIPMENT--3.7%
6,659,600 Cisco Systems Inc.*......................... 112,680
5,250,500 Nokia Oyj ADR(1)*........................... 107,688
----------
220,368
----------
COMPUTERS & PERIPHERALS--6.1%
4,563,100 Dell Computer Corp.*........................ 109,423
2,679,700 Hewlett-Packard Co. ........................ 45,099
1,643,100 International Business Machines Corp. ...... 177,570
3,752,400 Sun Microsystems Inc.*...................... 38,087
----------
370,179
----------
DIVERSIFIED FINANCIALS--12.4%
547,400 American Express Co. ....................... 16,110
5,432,766 Citigroup Inc. ............................. 247,300
428,200 Federal Home Loan Mortgage Corp. ........... 29,041
353,600 Federal National Mortgage Association....... 28,627
1,002,200 Goldman Sachs Group Inc. ................... 78,332
1,745,300 Household International Inc. ............... 91,279
2,651,000 MBNA Corp. ................................. 73,194
1,087,900 Merrill Lynch & Co. Inc. ................... 47,552
1,471,240 Morgan Stanley Dean Witter & Co. ........... 71,973
Standard & Poor Depository Receipts Trust
567,300 Series 1*................................. 60,066
----------
743,474
----------
ENERGY EQUIPMENT & SERVICES--4.3%
4,006,400 Halliburton Co. ............................ 98,918
3,247,200 Schlumberger Ltd. .......................... 157,229
----------
256,147
----------
HEALTH CARE EQUIPMENT & SUPPLIES--1.5%
1,888,600 Baxter International Inc. .................. 91,352
----------
HOTELS RESTAURANTS & LEISURE--0.6%
1,217,300 Marriott International Inc. Cl. A........... 38,138
----------
INDUSTRIAL CONGLOMERATES--6.4%
4,262,500 General Electric Co. ....................... 155,198
709,900 Minnesota Mining & Manufacturing Co. ....... 74,099
3,147,100 Tyco International Ltd. .................... 154,648
----------
383,945
----------
INSURANCE--6.1%
2,783,925 American International Group Inc. .......... 218,817
1,101,700 Hartford Financial Services Group Inc. ..... 59,492
1,020,400 XL Capital Ltd. ............................ 88,632
----------
366,941
----------
MEDIA--9.4%
2,543,550 AOL Time Warner Inc.*....................... 79,384
1,041,900 Cablevision Systems Corp. Cl. A*............ 35,685
8,830,400 Liberty Media Corp. Series A*............... 103,227
989,900 New York Times Co. Cl. A.................... 40,833
1,535,400 Omnicom Group............................... 117,888
1,585,700 Univision Communications Inc. CI. A......... 39,642
4,142,740 Viacom Inc. CI. B*.......................... 151,251
----------
567,910
----------
</Table>

HARBOR CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

MULTILINE RETAIL--5.0%
636,100 BJ's Wholesale Club Inc. ................... $ 32,295
2,757,700 Kohls Corp.*................................ 153,356
2,279,600 Wal-Mart Stores Inc. ....................... 117,171
----------
302,822
----------
PERSONAL PRODUCTS--0.9%
1,707,100 Gillette Co. ............................... 53,074
----------
PHARMACEUTICALS--13.9%
2,498,100 Abbott Laboratories......................... 132,349
3,061,900 American Home Products Corp. ............... 170,946
818,100 Aventis SA ADR(1)........................... 59,844
3,010,900 Johnson & Johnson........................... 174,361
4,139,350 Pfizer Inc. ................................ 173,439
3,089,978 Pharmacia Corp. ............................ 125,206
----------
836,145
----------
SEMICONDUCTOR EQUIPMENT & PRODUCTS--4.8%
796,500 Applied Materials Inc.*..................... 27,169
3,696,400 Intel Corp. ................................ 90,266
776,200 KLA-Tencor Corp.*........................... 31,716
687,800 Novellus Systems Inc. ...................... 22,718
770,300 STMicroelectronics NV ADR(1)................ 21,545
3,456,400 Texas Instruments Inc. ..................... 96,745
----------
290,159
----------
SOFTWARE--4.6%
3,731,400 Microsoft Corp.*............................ 216,981
4,124,100 Oracle Corp. ............................... 55,923
253,200 SAP AG ADR(1)............................... 6,507
----------
279,411
----------
SPECIALTY RETAIL--3.6%
3,690,050 Home Depot Inc. ............................ 141,071
3,118,400 Tiffany & Co. .............................. 72,939
----------
214,010
----------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

WIRELESS TELECOMMUNICATION SERVICES--3.3%
2,088,100 AT&T Wireless Services Inc.*................ $ 30,152
3,400,400 Sprint Corp. Series 1*...................... 75,829
4,046,672 Vodafone Group plc ADR(1)*.................. 93,559
----------
199,540
----------
TOTAL COMMON STOCKS
(Cost $6,087,599)........................................ 5,964,485
----------

<Caption>
SHORT-TERM INVESTMENTS--1.3%
PRINCIPAL
AMOUNT
(000S)
- -----------------------------------------------------------------------

COMMERCIAL PAPER
American Express Credit Corp.
$ 26,539 2.580%--11/01/2001........................ 26,539
Chevron USA Inc. Yrs 1&2
50,000 2.500%--11/01/2001........................ 50,000
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $76,539)........................................... 76,539
----------
TOTAL INVESTMENTS--100.3%
(Cost $6,164,138)........................................ 6,041,024
CASH AND OTHER ASSETS, LESS LIABILITIES--(0.3%)............ (20,925)
----------
TOTAL NET ASSETS--100.0%................................... $6,020,099
==========
</Table>

- ------------

1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.
22

HARBOR INTERNATIONAL FUND II
PORTFOLIO OF INVESTMENTS--OCTOBER 31, 2001

INVESTMENT HOLDINGS BY COUNTRY (% OF NET ASSETS)
(Excludes net cash of 0.4%)

<Table>

China (CHN)
1.0
Brazil (BR)
1.3
Portugal (PORT)
1.5
Singapore (SGP)
1.7
Israel (IL)
1.9
Australia (AUS)
2.1
Japan (JP)
4.4
Finland (FIN)
5.0
Germany (GER)
5.2
Italy (IT)
6.2
Netherlands (NET)
6.8
Sweden (SW)
6.8
Hong Kong (HK)
7.7
Switzerland (SWS)
10.4
United Kingdom (UK)
11.6
France (FR)
26.0
</Table>

<Table>
<Caption>
COMMON STOCKS--99.6%
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

AUTO COMPONENTS--2.0%
50,267 Michelin Cl. B--Registered (FR)................. $ 1,552
-------
AUTOMOBILES--2.3%
43,474 Peugeot SA (FR)................................. 1,765
-------
BANKS--20.1%
103,230 ABN AMRO Holdings NV (NET)...................... 1,575
55,090 BNP Paribas (FR)................................ 4,578
33,526 Deutsche Bank AG--Registered (GER).............. 1,863
693,930 IntesaBCI SpA (IT).............................. 1,623
125,667 San Paolo IMI SpA (IT).......................... 1,319
130,155 Standard Chartered plc (UK)..................... 1,299
40,392 UBS AG--Registered (SWS)........................ 1,876
United Overseas Bank Ltd. (Alien Market)
238,000 (SGP)......................................... 1,332
-------
15,465
-------
BUILDING PRODUCTS--1.3%
7,181 Compagnie de Saint-Gobain (FR).................. 998
-------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

CHEMICALS--1.7%
44,881 Bayer AG (GER).................................. $ 1,332
5 Givaudan SA (SWS)............................... 2
-------
1,334
-------
COMMUNICATIONS EQUIPMENT--8.4%
42,700 Alcatel Series A (FR)........................... 644
50,000 Ericsson (LM) Tel Ab Cl. B ADR (SW)(1).......... 213
951,657 Ericsson (LM) Tel Ab Series B (SW).............. 4,122
99,574 NICE Systems Ltd. ADR (IL)(1)*.................. 1,489
-------
6,468
-------
DIVERSIFIED FINANCIALS--5.2%
97,394 ING Groep NV (NET).............................. 2,427
386,000 Swire Pacific Ltd. Cl. A (HK)................... 1,608
-------
4,035
-------
HOTELS RESTAURANTS & LEISURE--2.7%
64,935 Accor SA (FR)................................... 2,037
-------
HOUSEHOLD DURABLES--2.8%
56,300 Sony Corp. (JP)................................. 2,127
-------
INSURANCE--8.5%
67,322 Assicurazioni Generali SpA (IT)................. 1,844
99,628 AXA UAP (FR).................................... 2,178
7,200 Swiss Reinsurance Co. (SWS)..................... 740
7,959 Zurich Financial Services Group (SWS)........... 1,820
-------
6,582
-------
IT CONSULTING & SERVICES--1.3%
9,000 Cap Gemini SA (FR).............................. 506
23,338 Tietoenator Oyj (FIN)........................... 523
-------
1,029
-------
MACHINERY--3.5%
20,430 Heidelberger Druckmaschinen AG (GER)............ 801
20,198 Kone Oyj Series B (FIN)......................... 1,381
31,870 Saurer AG (SWS)................................. 526
-------
2,708
-------
MEDIA--1.6%
44,881 News Corp. Ltd. ADR (AUS)(1).................... 1,235
-------
METALS & MINING--7.8%
628,335 Billiton plc (UK)............................... 2,670
897,622 Corus Group plc (UK)............................ 720
42,637 Pechiney SA (FR)................................ 1,956
63,000 Usinor SA (FR).................................. 663
-------
6,009
-------
OIL & GAS--5.3%
177,165 BP plc. (UK).................................... 1,428
5,000,000 China Petroleum & Chemical Corp. (CHN).......... 776
50,057 Petrol Brasileiro SA Pfd. (BR).................. 961
6,567 Total Fina Elf SA Cl. B (FR).................... 921
-------
4,086
-------
PAPER & FOREST PRODUCTS--3.6%
38,896 Svenska Cellulosa Ab Series B (SW).............. 879
58,991 UPM-Kymmene Corp. (FIN)......................... 1,915
-------
2,794
-------
PHARMACEUTICALS--5.5%
17,098 Aventis SA (FR)................................. 1,257
37,837 GlaxoSmithKline plc (UK)........................ 1,017
41,680 Novartis AG--Registered (SWS)................... 1,559
550,000 Novogen Ltd. (AUS)*............................. 360
-------
4,193
-------
</Table>

HARBOR INTERNATIONAL FUND II
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

REAL ESTATE--4.0%
202,000 Cheung Kong Holdings Ltd. (HK).................. $ 1,709
409,000 Henderson Land Development Co. Ltd. (HK)........ 1,314
-------
3,023
-------
SEMICONDUCTOR EQUIPMENT & PRODUCTS--1.6%
87,000 ASM Lithography Holding NV (NET)*............... 1,252
-------
TEXTILES & APPAREL--2.0%
Compagnie Financiere Richemont AG--Bearer
763 (SWS)......................................... 1,516
-------
TRANSPORTATION INFRASTRUCTURE--1.3%
1,471,679 Eurotunnel SA Units (FR)*....................... 1,032
-------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

WIRELESS TELECOMMUNICATION SERVICES--7.1%
87,069 China Mobile (Hong Kong) Ltd. ADR (HK)(1)*...... $ 1,325
94 NTT DoCoMo Inc. (JP)............................ 1,273
161,572 Telecel Comunicacoes Pessoais SA (PORT)......... 1,134
76,298 Vodafone Group plc ADR (UK)(1).................. 1,764
-------
5,496
-------
TOTAL COMMON STOCKS
(Cost $95,613)............................................. 76,736
-------
TOTAL INVESTMENTS--99.6%
(Cost $95,613)............................................. 76,736
CASH AND OTHER ASSETS, LESS LIABILITIES--0.4%................ 307
-------
TOTAL NET ASSETS--100.0%..................................... $77,043
=======
</Table>

- ------------

1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.
24

HARBOR INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS--OCTOBER 31, 2001

INVESTMENT HOLDINGS BY COUNTRY (% OF NET ASSETS)
(Excludes net cash, convertible bond and short-term investments of 5.9%)

<Table>

China (CHN)
0.4
Norway (NOR)
0.9
Spain (SP)
1.1
Hong Kong (HK)
1.5
Australia (AUS)
1.9
Finland (FIN)
2.1
Germany (GER)
2.1
Portugal (PORT)
2.1
Denmark (DEN)
2.6
Singapore (SGP)
2.6
Brazil (BR)
2.8
Italy (IT)
4.7
Japan (JP)
5.5
Netherlands (NET)
6.9
Sweden (SW)
6.9
Switzerland (SWS)
13.5
France (FR)
16.7
United Kingdom (UK)
19.8
</Table>

<Table>
<Caption>
COMMON STOCKS--94.1%
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

AUTO COMPONENTS--1.6%
Compagnie Financiere Michelin--Bearer
83,200 (SWS)..................................... $ 22,640
1,062,278 Michelin--Registered (FR)................... 32,801
----------
55,441
----------
AUTOMOBILES--2.1%
1,782,226 Peugeot SA (FR)............................. 72,376
----------
BANKS--16.9%
4,511,062 ABN Amro Holdings NV (NET).................. 68,815
520,315 Banco Commercial Portugues ADR (PORT)(1).... 10,310
Banco Commercial Portugues--Registered
15,924,416 (PORT).................................... 63,022
684,200 Bankinter SA--Registered (SP)............... 20,616
633,883 BNP Paribas (FR)............................ 52,681
662,100 Credit Suisse Group--Registered (SWS)....... 24,171
752,774 Deutsche Bank AG--Registered (GER).......... 41,837
19,892,026 IntesaBCI SpA (IT).......................... 46,519
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

8,365,000 Oversea-Chinese Banking Corp. Ltd. (SGP).... $ 48,179
4,986,733 San Paolo IMI SpA (IT)...................... 52,344
5,539,900 Standard Chartered plc (UK)................. 55,289
1,401,936 UBS AG--Registered (SWS).................... 65,112
United Overseas Bank Ltd. (Alien Market)
7,488,842 (SGP)..................................... 41,900
----------
590,795
----------
BEVERAGES--2.2%
7,839,318 Diageo plc (UK)............................. 78,180
----------
BUILDING PRODUCTS--1.1%
273,400 Compagnie de Saint-Gobain (FR).............. 37,993
----------
CHEMICALS--0.9%
1,068,619 Bayer AG (GER).............................. 31,719
----------
COMMUNICATIONS EQUIPMENT--2.7%
2,421,800 Ericsson (LM) Tel Ab Cl. B ADR (SW)(1)...... 10,341
19,043,743 Ericsson (LM) Tel Ab Series B (SW).......... 82,481
----------
92,822
----------
CONSTRUCTION & ENGINEERING--0.3%
2,020,425 Skanska Ab Series B (SW).................... 10,796
----------
DIVERSIFIED FINANCIALS--2.9%
3,197,938 ING Groep NV (NET).......................... 79,676
4,962,000 Swire Pacific Ltd. Cl. A (HK)............... 20,675
----------
100,351
----------
DIVERSIFIED TELECOMMUNICATION SERVICES--0.5%
1,549,373 Telefonica SA (SP)*......................... 18,590
----------
FOOD PRODUCTS--2.7%
448,000 Nestle SA--Registered (SWS)................. 92,871
----------
GAS UTILITIES--0.7%
11,393,662 Lattice Group (UK).......................... 25,614
----------
HOTELS RESTAURANTS & LEISURE--1.3%
1,425,565 Accor SA (FR)............................... 44,711
----------
HOUSEHOLD DURABLES--2.3%
909,391 Hunter Douglas NV (NET)..................... 20,653
1,591,200 Sony Corp. (JP)............................. 60,119
----------
80,772
----------
INDUSTRIAL CONGLOMERATES--4.0%
25,258,100 Billiton plc ADR (UK)(1).................... 106,017
862,300 Norsk Hydro ASA (NOR)....................... 32,846
----------
138,863
----------
INSURANCE--5.0%
2,398,978 Assicurazioni Generali SpA (IT)............. 65,704
2,256,272 AXA SA (FR)................................. 49,314
206,200 Swiss Reinsurance Co. (SWS)................. 21,184
173,855 Zurich Financial Services Group (SWS)....... 39,761
----------
175,963
----------
LEISURE EQUIPMENT & PRODUCTS--1.1%
1,158,000 Fuji Photo Film Co. (JP).................... 38,176
----------
MEDIA--1.8%
2,347,919 News Corp. Ltd. ADR (AUS)(1)................ 64,615
----------
METALS & MINING--6.1%
4,748,740 Anglo American plc ADR (UK)(1).............. 61,354
1,399,163 Pechiney SA Series A (FR)................... 64,182
2,137,827 Rio Tinto--Registered (UK).................. 34,659
5,014,200 Usinor SA (FR).............................. 52,767
----------
212,962
----------
</Table>

HARBOR INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

OFFICE ELECTRONICS--2.7%
3,240,000 Canon Inc. (JP)............................. $ 94,124
----------
OIL & GAS--12.4%
11,393,662 BG Group plc (UK)........................... 43,075
14,432,381 BP plc (UK)................................. 116,361
94,000,000 China Petroleum & Chemical Corp. (CHN)...... 14,582
5,069,443 Petrol Brasileiro SA Pfd. (BR).............. 97,374
1,434,000 Royal Dutch Petroleum Co. ADR (NET)(1)...... 72,431
630,677 Total Fina Elf SA (FR)...................... 88,493
----------
432,316
----------
PAPER & FOREST PRODUCTS--3.8%
1,405,900 Holmen Ab Series B (SW)..................... 30,182
1,230,704 Svenska Cellulosa Ab Series B (SW).......... 27,806
2,257,809 UPM-Kymmene Corp. (FIN)..................... 73,311
----------
131,299
----------
PHARMACEUTICALS--7.2%
875,483 Aventis SA (FR)............................. 64,374
2,612,760 Novartis AG--Registered (SWS)............... 97,701
2,225,900 Novo Nordisk A/S Series B (DEN)............. 90,199
----------
252,274
----------
TEXTILES & APPAREL--3.1%
Compagnie Financiere Richemont AG--Bearer
55,387 (SWS)..................................... 110,076
----------
TOBACCO--7.2%
8,141,947 British American Tobacco plc (UK)........... 70,967
8,006,162 Imperial Tobacco Group plc (UK)............. 99,965
15,718,474 Swedish Match Ab (SW)....................... 81,047
----------
251,979
----------
TRANSPORTATION INFRASTRUCTURE--0.6%
31,779,732 Eurotunnel SA Units (FR)*................... 22,296
Eurotunnel SA Warrants (FR)*
19,000,000 Expire 12/31/2001......................... 171
19,000,000 Expire 10/30/2003......................... 342
----------
22,809
----------
WIRELESS TELECOMMUNICATION SERVICES--0.9%
10,725,000 China Mobile (Hong Kong) Ltd. (HK)*......... 32,519
----------
TOTAL COMMON STOCKS
(Cost $2,456,699)........................................ 3,291,006
----------

<Caption>
CONVERTIBLE BOND--0.9%
(Cost $29,700)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Liberty Group Ltd. (S. AFR)
$ 30,000 6.500%--09/30/2004........................ $ 30,807
----------

<Caption>
SHORT-TERM INVESTMENTS--4.7%

COMMERCIAL PAPER
American Express Credit Corp. Yrs 1&2
19,223 2.461%--11/02/2001........................ 19,223
23,377 2.320%--11/13/2001........................ 23,377
----------
42,600
----------
Citicorp
21,356 2.450%--11/06/2001........................ 21,356
15,746 2.330%--11/08/2001........................ 15,746
----------
37,102
----------
Exxon Asset Management Co.
22,946 2.330%--11/07/2001........................ 22,946
General Electric Capital Corp.
16,970 2.450%--11/05/2001........................ 16,970
Prudential Funding Corp.
25,385 2.430%--11/01/2001........................ 25,385
21,240 2.330%--11/09/2001........................ 21,240
----------
46,625
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $166,243).......................................... 166,243
----------
TOTAL INVESTMENTS--99.7%
(Cost $2,652,642)........................................ 3,488,056
CASH AND OTHER ASSETS, LESS LIABILITIES--0.3%.............. 9,301
----------
TOTAL NET ASSETS--100.0%................................... $3,497,357
==========
</Table>

- ------------

1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.
26

HARBOR LARGE CAP VALUE FUND
PORTFOLIO OF INVESTMENTS--OCTOBER 31, 2001

COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash and short-term investments of 10.6%)

<Table>

Health Care Providers & Services
1.6
Banks
1.8
Food & Drug Retailing
1.9
Electric Utilities
2.0
Hotels Restaurants & Leisure
2.0
IT Consulting & Services
2.1
Industrial Conglomerates
2.4
Road & Rail
2.5
Communications Equipment
2.6
Diversified Telecommunication Services
2.6
Household Durables
3.0
Chemicals
3.1
Electrical Equipment
3.2
Computers & Peripherals
3.6
Insurance
5.2
Pharmaceuticals
5.3
Specialty Retail
6.0
Oil & Gas
7.0
Media
8.8
Commercial Services & Supplies
9.0
Diversified Financials
13.7
</Table>

<Table>
<Caption>
COMMON STOCKS--89.4%
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

BANKS--1.8%
69,721 FleetBoston Financial Corp...................... $ 2,291
--------
CHEMICALS--3.1%
99,199 E.l. Du Pont De Nemours & Co.................... 3,967
--------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

COMMERCIAL SERVICES & SUPPLIES--9.0%
361,000 Cendant Corp.*.................................. $ 4,679
116,900 IMS Health Inc. ................................ 2,498
122,000 Pitney Bowes Inc. .............................. 4,472
--------
11,649
--------
COMMUNICATIONS EQUIPMENT--2.6%
385,800 Avaya Inc. ..................................... 3,445
--------
COMPUTERS & PERIPHERALS--3.6%
43,900 International Business Machines Corp. .......... 4,744
--------
DIVERSIFIED FINANCIALS--13.7%
88,500 American Express Co. ........................... 2,605
106,812 Citigroup Inc. ................................. 4,862
76,800 Federal Home Loan Mortgage Corp. ............... 5,209
146,114 J.P. Morgan Chase & Co. ........................ 5,167
--------
17,843
--------
DIVERSIFIED TELECOMMUNICATION SERVICES--2.6%
168,400 Sprint Corp. ................................... 3,368
--------
ELECTRIC UTILITIES--2.0%
63,400 Exelon Corp. ................................... 2,667
--------
ELECTRICAL EQUIPMENT--3.2%
84,100 Emerson Electric Co. ........................... 4,123
--------
FOOD & DRUG RETAILING--1.9%
58,000 Safeway Inc.* .................................. 2,416
--------
HEALTH CARE PROVIDERS & SERVICES--1.6%
90,100 Oxford Health Plans Inc. ....................... 2,123
--------
HOTELS RESTAURANTS & LEISURE--2.0%
51,700 Tricon Global Restaurants Inc. ................. 2,615
--------
HOUSEHOLD DURABLES--3.0%
66,700 Whirlpool Corp. ................................ 3,937
--------
INDUSTRIAL CONGLOMERATES--2.4%
98,400 Textron Inc. ................................... 3,114
--------
INSURANCE--5.2%
810 American International Group Inc. .............. 64
55,765 Chubb Corp. .................................... 3,809
83,500 John Hancock Financial Services Inc. ........... 2,846
--------
6,719
--------
IT CONSULTING & SERVICES--2.1%
42,400 Electronic Data Systems Corp. .................. 2,729
--------
MEDIA--8.8%
124,400 Comcast Corp. Cl. A............................. 4,458
39,800 Gannett Inc. ................................... 2,515
384,000 Liberty Media Corp. Series A.................... 4,489
--------
11,462
--------
OIL & GAS--7.0%
125,900 Devon Energy Corp. ............................. 4,822
74,900 Kerr-McGee Corp. ............................... 4,314
--------
9,136
--------
PHARMACEUTICALS--5.3%
77,000 American Home Products Corp. ................... 4,299
70,300 Schering-Plough Corp. .......................... 2,614
--------
6,913
--------
ROAD & RAIL--2.5%
82,000 Canadian National Railway Co. .................. 3,247
--------
</Table>

HARBOR LARGE CAP VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- -----------------------------------------------------------------------

SPECIALTY RETAIL--6.0%
157,900 RadioShack Corp. ............................... $ 3,946
265,700 Staples Inc.* .................................. 3,874
--------
7,820
--------
TOTAL COMMON STOCKS
(Cost $111,378)............................................ 116,328
--------

<Caption>
SHORT-TERM INVESTMENTS--9.8%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust dated October 31, 2001 due November 1,
2001 at 1.00% collateralized by a U.S.
Treasury Bill 5.50% August 15, 2028, par value
of $11,810 (repurchase proceeds of $12,063
when closed on November 1, 2001).............. $ 12,063
$ 12,063
U.S. TREASURY BILLS
U.S. Treasury Bills
650 3.380%--11/15/2001............................ 649
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $12,712)............................................. 12,712
--------
TOTAL INVESTMENTS--99.2%
(Cost $124,090)............................................ 129,040
CASH AND OTHER ASSETS, LESS LIABILITIES--0.8%................ 989
--------
TOTAL NET ASSETS--100.0%..................................... $130,029
========
</Table>

- ------------

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.
28

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--OCTOBER 31, 2001

TOTAL INVESTMENTS (% OF NET ASSETS)
(Excludes excess of liabilities over other assets and short-term investments of
- -26.2%)

<Table>

Municipal Bonds
0.5
Foreign Government Obligations
3.4
U.S. Government Obligations
7.8
Asset-Backed Securities
8.7
Collateralized Mortgage Obligations
24.2
Corporate Bonds & Notes
30.5
Mortgage Pass-Through
51.1
</Table>

<Table>
<Caption>
ASSET-BACKED SECURITIES--8.7%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Asset Backed Securities Corp.
Series 1999 Cl. 4A
$ 2,258 2.833%--06/21/2029(2,3,4)................. $ 2,266
Series 2001 Cl. A1
7,810 2.785%--06/15/2031(2,3)................... 7,821
----------
10,087
----------
Bayview Financial Acquisition Trust
12,689 2.700%--07/25/2031(1,2,3,4)............... 12,650
Conseco Private Label Master Note Trust
Series 2001-A Cl. A
3,100 2.805%--12/15/2008(2,4)................... 3,105
Credit Suisse First Boston Mortgage
Securities Corp.
Series 2000-HE1 Cl. A2
14,557 2.785%--12/15/2030(2,3,4)................. 14,574
New York City Tax Lien
Series 2000-AA Cl. C
12,327 8.110%--11/10/2008(1,4)................... 13,008
Option One Mortgage Trust
Series 2001-3 Cl. A
7,312 2.545%--06/25/2031(2,3)................... 7,320
Providian Gateway Master Trust
Series 2000-B Cl. A
16,800 2.805%--03/16/2009(1,2)................... 16,839
Salomon Brothers Mortgage Services VII Inc.
Series 1999-AQ2 Cl. A1
4,660 2.945%--11/15/2029(2,3,4)................. 4,681
SLM Student Loan Trust
Series 1997-2 Cl. A1
902 3.553%--10/25/2005(2,4)................... 909
Series 1997-3 Cl. A1
2,765 3.613%--04/25/2006(2,4)................... 2,761
Series 1995-1 Cl. A2
4,440 3.763%--10/25/2007 (2,4).................. 4,439
----------
8,109
----------
TOTAL ASSET-BACKED SECURITIES
(Cost $89,749)........................................... 90,373
----------

<Caption>
CORPORATE BONDS & NOTES--30.5%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Allete
$ 1,500 3.240%--10/20/2003(2)..................... $ 1,503
American Airlines
Pass Through Certificate
Series 2001-2 Cl. A1
2,500 6.978%--04/01/2011(1)..................... 2,728
AOL Time Warner Inc.
450 7.975%--08/15/2004(4)..................... 497
Banesto Delaware Inc.
3,000 8.250%--07/28/2002(4)..................... 3,110
Bank One Corp. MTN(5)
10,000 3.190%--03/11/2002(2,4)................... 10,017
10,000 2.700%--06/26/2002(2,4)................... 10,011
----------
20,028
----------
Banponce Corp.
2,000 6.750%--12/15/2005(4)..................... 2,071
Bear Stearns Cos. Inc. MTN(5)
9,800 3.850%--12/01/2003(2,4)................... 9,809
British Telecom plc
1,400 8.125%--12/15/2010........................ 1,602
Cincinnati Financial Corp.
5,000 6.900%--05/15/2028(4)..................... 4,824
CIT Group Inc. MTN(5)
8,800 2.931%--04/07/2003(2,4)................... 8,833
Citicorp
10,625 7.125%--03/15/2004(4)..................... 11,489
Cleveland Electric Illuminating Co. Series B
2,000 9.500%--05/15/2005(4)..................... 2,055
ConAgra Foods Inc.
10,000 4.220%--09/10/2003(2,4)................... 10,016
Credit Suisse First Boston
10,000 6.500%--05/01/2008(1,4)................... 10,607
DaimlerChrysler North America Holding
10,000 2.545%--01/18/2002(2,4)................... 9,985
3,000 3.920%--12/16/2002(2)..................... 2,984
----------
12,969
----------
DaimlerChrysler North America Holding MTN(5)
5,000 7.750%--05/27/2003(4)..................... 5,241
8,700 2.730%--08/01/2003(2)..................... 8,545
----------
13,786
----------
Disney (Walt) Co.
16,200 4.500%--09/15/2004(4)..................... 16,408
DTE Energy Co. Series B
10,000 7.110%--11/15/2003(1,2,4)................. 10,452
First Union Corp.
3,500 3.460%--03/31/2005(2)..................... 3,513
Ford Capital BV
6,100 9.875%--05/15/2002........................ 6,312
Ford Motor Credit Co. MTN(5)
4,100 3.733%--06/02/2003(2)..................... 4,035
20,000 3.255%--06/20/2003(2,4)................... 19,672
----------
23,707
----------
France Telecom SA
2,000 4.406%--03/14/2003(1,2)................... 2,002
7,100 7.200%--03/01/2006(1,3)................... 7,588
----------
9,590
----------
</Table>

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
CORPORATE BONDS & NOTES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Fred Meyer Inc.
$ 5,000 7.150%--03/01/2003(4)..................... $ 5,246
Gemstone Investors Ltd.
2,100 7.710%--10/31/2004(1)..................... 2,112
General Motors Acceptance Corp.
5,900 6.750%--03/15/2003........................ 6,184
5,000 5.750%--11/10/2003(4)..................... 5,089
----------
11,273
----------
General Motors Acceptance Corp. MTN(5)
6,400 2.540%--08/04/2003(2)..................... 6,305
3,000 5.550%--09/15/2003(2,4)................... 3,049
10,000 3.110%--01/20/2004(2,4)................... 9,890
2,100 3.453%--03/22/2004(2)..................... 2,077
3,100 4.338%--05/10/2004(2)..................... 3,048
1,400 2.740%--07/21/2004(2)..................... 1,357
----------
25,726
----------
Gulf States Utilities Co.
400 8.210%--01/01/2002........................ 402
Indymac ARM Trust
Series 2001-H2 Cl. A
2,200 6.490%--09/25/2031........................ 2,302
Kroger Co.
1,100 4.310%--08/16/2012(2)..................... 1,101
Merrill Lynch & Co. Inc. MTN(5)
2,300 3.848%--05/21/2004(2)..................... 2,303
Mexico Credit Link
5,000 10.558%--02/22/2002(2,4).................. 5,095
Morgan Stanley Dean Witter & Co. MTN(5)
3,800 3.889%--05/14/2004(2)..................... 3,790
Occidental Petroleum Corp.
5,000 6.400%--04/01/2003(2,4)................... 5,206
Old Kent Bank
10,000 7.750%--08/15/2010(2,4)................... 10,837
Salomon Smith Barney Holdings
5,346 3.650%--02/14/2002(4)..................... 5,372
Sprint Capital Corp.
5,300 6.000%--01/15/2007(1)..................... 5,274
Toledo Edison Co.
2,000 8.700%--09/01/2002........................ 2,063
TRW Inc.
3,500 6.625%--06/01/2004(1)..................... 3,617
TXU Electric Co.
19,000 4.390%--06/15/2003........................ 19,025
United Airlines
Pass Thru Certificate
Series 1993 Cl. C2
3,000 9.060%--06/17/2015(4)..................... 2,669
Wachovia Corp.
2,600 4.950%--11/01/2006........................ 2,595
Westdeutsche Landesbank NY
13,200 6.050%--01/15/2009(4)..................... 13,891
----------
TOTAL CORPORATE BONDS & NOTES
(Cost $311,025).......................................... 315,808
----------

<Caption>
COLLATERALIZED MORTGAGE OBLIGATIONS--24.2%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Bear Stearns ARM Trust
Series 2000-2 Cl. A1
$ 2,028 6.584%--11/25/2030........................ $ 2,063
Series 2000-1 Cl. A1
1,161 7.480%--12/25/2030........................ 1,181
Series 2000-1 Cl. 2A
1,603 7.492%--12/25/2030........................ 1,642
----------
4,886
----------
Chase Mortgage Finance Corp. REMIC(6)
Series 1993-N Cl. A9
3,000 6.750%--11/25/2024(4)..................... 3,079
Collateralized Mortgage Securities Corp.
Series F Cl. 4
84 11.450%--11/01/2015....................... 85
Collateralized Mortgage Securities Corp.
REMIC(6)
Series 1988-4 Cl. B
89 8.750%--04/20/2019(4)..................... 94
Countrywide Home Loans
Pass Thru Certificates
Series 1997-6 Cl. A1
10,000 7.250%--11/25/2027(4)..................... 10,366
Series 2000-2 Cl. A2
359 7.750%--04/25/2030........................ 362
Series 2000-8 Cl. A2
757 7.750%--01/25/2031........................ 776
----------
11,504
----------
Drexel Burnham Lambert CMO Trust REMIC(6)
Series H Cl. 4
4,413 8.500%--04/01/2017(4)..................... 4,547
E*TRADE Bank ARM Trust
Series 2001-1 Cl. A1
15,363 7.111%--09/25/2031(4)..................... 15,622
Federal Home Loan Mortgage Corp.
11,880 3.175%--03/15/2025(2,4)................... 11,911
21,446 7.000%--10/15/2030(4)..................... 22,212
10,895 2.975%--11/15/2030(2,4)................... 10,921
----------
45,044
----------
Federal Home Loan Mortgage Corp. REMIC(6)
740 9.000%--12/15/2020(4)..................... 787
3,115 8.000%--08/15/2022........................ 3,397
4,145 6.500%--02/15/2023(4,7)................... 400
5,000 6.000%--08/15/2026(4)..................... 5,152
----------
9,736
----------
Federal National Mortgage Association
REMIC(6)
Series 1993-129 Cl. J
213 6.500%--02/25/2007(4,7)................... 5
Series 1993-29 Cl. B
675 6.500%--12/25/2020(4)..................... 676
Series 1997-55 Cl. ZA
8,212 7.000%--04/18/2027(4)..................... 8,432
----------
9,113
----------
First Horizon Asset Securities Inc.
Series 2001-7 Cl. A1
3,200 6.750%--11/25/2031........................ 3,276
</Table>

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COLLATERALIZED MORTGAGE OBLIGATIONS--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

First Nationwide Trust
Series 2001-3 Cl. A1
$ 997 6.750%--08/21/2031........................ $ 1,031
Series 2001-4 Cl. 4A1
4,707 4.210%--09/25/2031(2)..................... 4,721
----------
5,752
----------
GE Capital Mortgage Services Inc.
Series 1994-6 Cl. A3
3,620 6.500%--12/25/2022........................ 3,686
GE Capital Mortgage Services Inc. REMIC(6)
Series 1998-17 Cl. A3
9,670 6.750%--10/25/2028(4)..................... 10,082
GMAC Commercial Mortgage Trust I
Series 1999-D Cl. A
13,970 3.368%--09/20/2004(1,4,8)................. 13,952
Kidder Peabody Acceptance Corp. REMIC(6)
Series 1994-2 Cl. 1A2
227 8.107%--09/25/2024(2,4)................... 234
Merrill Lynch Mortgage Investors Inc.
Series 2000 Cl. A
10,123 2.763%--01/20/2030(2,3,4)................. 10,130
Morgan Stanley Dean Witter Capital I
Series 2001 Cl. A
6,279 2.831%--07/11/2011(1,2)................... 6,279
Norwest Asset Securities Corp. REMIC(6)
Pass Thru Certificates
Series 1997-19 Cl. A8
6,200 7.250%--12/25/2027(4)..................... 6,550
Series 1998-12 Cl. A9
5,000 6.750%--06/25/2028(4)..................... 5,178
----------
11,728
----------
PNC Mortgage Securities Corp. REMIC(6)
Pass Thru Certificate
Series 1999-4 Cl. 1A8
9,800 6.290%--06/25/2029........................ 10,163
Prudential Home Mortgage Securities Co.
REMIC(6)
Series 1993-29 Cl. A8
3,941 6.750%--08/25/2008(4)..................... 3,998
Residential Asset Securitization Trust
Pass Thru Certificates
Series 1998-A13 Cl. 1A3
6,931 6.500%--12/25/2028(4)..................... 7,092
Series 2000-A2 Cl. NB1
1,510 8.000%--04/25/2030(4)..................... 1,528
----------
8,620
----------
Residential Funding Mortgage Securities I
Inc.
Series 1997-S8 Cl. A9
6,817 7.500%--06/25/2027(4)..................... 6,988
Salomon Brothers Mortgage Services VII Inc.
Pass Thru Certificates
Series 1999 Cl. A
9,363 2.820%--09/25/2029(2,3)................... 9,403
Series 2000 Cl. A
853 7.600%--08/25/2030........................ 857
----------
10,260
----------
Sasco Floating Rate Mortgage Trust
Series 1999 Cl. B
4,008 3.063%--11/20/2001(1,2)................... 4,011
</Table>

<Table>
<Caption>
COLLATERALIZED MORTGAGE OBLIGATIONS--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Sears Mortgage Securities Corp.
Series 92 Cl. A
$ 277 1.000%--10/25/2022(1,2,4)................. $ 280
Small Business Administration
Series 2000-P10 Cl.1
1,990 7.449%--08/01/2010........................ 2,239
Series 2001-20A Cl. 1
4,317 6.290%--01/01/2021........................ 4,513
----------
6,752
----------
Structured Asset Securities Corp.
Pass Through Certificate
Series 2001 Cl. 2A1
3,284 6.500%--09/25/2031........................ 3,338
Structured Asset Mortgage Investments Inc.
REMIC(6)
Series 1998-9 Cl. 1A3
5,000 6.250%--11/25/2028........................ 5,078
Washington Mutual
Series 2000-1 Cl. A
291 2.804%--07/26/2003(1,2)................... 291
Wells Fargo Mortgage Backed Securities Trust
Series 2000-14 Cl. A5
9,298 7.500%--01/25/2031........................ 9,587
Series 2001-25 Cl. IIA
12,795 6.660%--10/25/2031........................ 13,079
----------
22,666
----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $247,020).......................................... 251,274
----------

<Caption>
FOREIGN GOVERNMENT OBLIGATIONS--3.4%

Federal Republic of Brazil
1,224 5.438%--04/15/2006(2)..................... 1,081
4,680 7.375%--04/15/2006(2)..................... 3,838
----------
4,919
----------
Federal Republic of Germany
E 3,400 6.000%--01/05/2006........................ 3,326
500 4.500%--07/04/2009........................ 440
----------
3,766
----------
Republic of Panama
$ 5,000 9.625%--02/08/2011........................ 5,055
1,733 4.750%--07/17/2014(2)..................... 1,497
2,829 4.000%--07/17/2016(2)..................... 2,168
----------
8,720
----------
United Mexican States
1,112 1.000%--03/25/2005(2)..................... 1,045
15,000 9.750%--04/06/2005........................ 16,684
----------
17,729
----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $35,461)........................................... 35,134
----------

<Caption>
MORTGAGE PASS-THROUGH--51.1%

Federal Home Loan Mortgage Corp.
30 8.000%--06/01/2011........................ 31
22 8.500%--02/01/2017(4)..................... 23
448 7.005%--06/01/2024(2,4)................... 463
8,985 5.930%--08/15/2032(2,4)................... 8,819
----------
9,336
----------
</Table>

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
MORTGAGE PASS-THROUGH--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Federal Home Loan Mortgage Corp. TBA(8)
November Delivery
$ 6,000 6.000%--11/14/2031........................ $ 5,963
Federal Housing Authority Project
221 Grey 98-4
7,496 7.430%--10/01/2020(4)..................... 7,682
221D4 Banco-5
586 7.400%--02/01/2021........................ 598
221D4 Banco-15
173 7.450%--05/01/2021........................ 177
223C Reilly-52
279 5.150%--06/01/2018........................ 279
----------
8,736
----------
Federal National Mortgage Association
41 9.000%--03/01/2005(4)..................... 44
675 9.000%--11/01/2009(4)..................... 735
6 8.500%--12/01/2009........................ 6
17 9.500%--04/01/2011........................ 19
18,148 6.071%--10/01/2040(4)..................... 18,613
----------
19,417
----------
Federal National Mortgage Association I
TBA(8)
November Delivery
11,000 6.000%--11/19/2016........................ 11,253
Government National Mortgage Association
476 7.000%--02/15/2028........................ 498
190 6.000%--11/15/2028........................ 194
5,054 6.000%--01/15/2029........................ 5,144
48 7.500%--01/15/2029........................ 51
8,017 6.000%--02/15/2029........................ 8,158
335 7.500%--02/15/2029........................ 352
4,782 6.000%--03/15/2029........................ 4,867
4,059 6.000%--04/15/2029........................ 4,130
2,255 6.000%--05/15/2029........................ 2,293
522 6.000%--06/15/2029........................ 530
5,327 6.000%--07/15/2029........................ 5,422
112 6.000%--08/15/2029........................ 114
684 7.500%--08/15/2029........................ 720
2,296 6.000%--09/15/2029........................ 2,336
608 7.500%--09/15/2029........................ 641
92 6.000%--10/15/2029........................ 94
2,068 7.500%--10/15/2029........................ 2,179
80 6.000%--11/15/2029........................ 82
124 7.500%--11/15/2029........................ 130
307 7.000%--12/15/2029........................ 321
488 7.500%--12/15/2029........................ 513
423 7.500%--01/15/2030........................ 444
61 7.500%--02/15/2030........................ 65
205 7.500%--04/15/2030........................ 216
23 7.500%--07/15/2030........................ 24
944 7.500%--08/15/2030........................ 993
364 6.000%--10/15/2030........................ 371
838 7.500%--10/15/2030........................ 882
193 7.500%--11/15/2030........................ 203
391 7.500%--12/15/2030........................ 412
1,677 7.500%--01/15/2031........................ 1,765
217 7.000%--02/15/2031........................ 227
</Table>

<Table>
<Caption>
MORTGAGE PASS-THROUGH--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

$ 3,849 7.500%--02/15/2031........................ $ 4,049
383 7.500%--03/15/2031........................ 402
190 6.000%--07/15/2031........................ 193
----------
49,015
----------
Government National Mortgage Association I
TBA(8)
November Delivery
20,500 6.000%--11/20/2031........................ 20,840
95,500 6.500%--11/20/2031........................ 98,634
132,000 7.000%--11/20/2031........................ 137,566
----------
257,040
----------
Government National Mortgage Association I
TBA(8)
December Delivery
85,000 7.000%--12/20/2031........................ 88,320
Government National Mortgage Association II
781 6.375%--03/20/2017(4)..................... 798
373 6.750%--08/15/2017........................ 398
1,503 6.750%--08/20/2022(4)..................... 1,561
907 6.750%--09/20/2023(4)..................... 942
263 6.375%--05/20/2024(4)..................... 270
30 6.750%--07/20/2024........................ 31
2,010 6.750%--09/20/2024(4)..................... 2,086
250 7.625%--12/20/2024(4)..................... 260
786 6.375%--01/20/2025(4)..................... 804
695 6.375%--02/20/2025(4)..................... 711
440 7.625%--10/20/2025........................ 459
1,257 7.625%--11/20/2025(4)..................... 1,310
316 7.625%--12/20/2026(4)..................... 329
2,373 6.750%--07/20/2027........................ 2,461
6,567 7.000%--11/20/2029........................ 6,744
----------
19,164
----------
Government National Mortgage Association II
TBA(8)
November Delivery
13,000 6.000%--11/20/2031........................ 13,171
20,600 6.500%--11/20/2031........................ 21,199
8,000 7.000%--11/20/2031........................ 8,333
----------
42,703
----------
PNC Mortgage Securities Corp. REMIC(6)
Series 1998-14 Cl. 3A3
17,589 6.500%--02/25/2029(4)..................... 18,129
----------
TOTAL MORTGAGE PASS-THROUGH
(Cost $521,675).......................................... 529,076
----------

<Caption>
MUNICIPAL BONDS--0.5%

Massachusetts State Water Resources
Authority
Series B
2,600 4.750%--12/01/2021........................ 2,521
North Carolina State Education Authority
Series 2000 Cl. G
2,700 3.650%--06/01/2009(2)..................... 2,702
----------
TOTAL MUNICIPAL BONDS
(Cost $5,115)............................................ 5,223
----------
</Table>

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
MUNICIPAL BONDS--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

<Caption>
U.S. GOVERNMENT OBLIGATIONS--7.8%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

U.S. Treasury Bonds
$ 2,028 3.625%--04/15/2028(9)..................... $ 2,177
5,800 5.250%--11/15/2028........................ 5,960
15,648 3.875%--04/15/2029(4,9)................... 17,541
----------
25,678
----------
U.S. Treasury Notes
2,660 3.625%--07/15/2002(4,9)................... 2,710
4,705 3.375%--01/15/2007(4,9)................... 4,869
4,724 3.625%--01/15/2008(9)..................... 4,937
39,288 3.875%--01/15/2009(9)..................... 41,694
1,224 3.500%--01/15/2011(9)..................... 1,273
----------
55,483
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $77,251)........................................... 81,161
----------

<Caption>
OPTIONS--0.0%
NO. OF
CONTRACTS
- -----------------------------------------------------------------------

Eurodollar Futures Contracts
6,062 Expire 12/2001.......................... 25
8,250 Expire 06/2002.......................... 38
----------
TOTAL OPTIONS
(Cost $115).............................................. 63
----------

<Caption>
SHORT-TERM INVESTMENTS--11.8%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

COMMERCIAL PAPER
AT&T Corp
$ 4,900 4.525%--08/06/2002........................ $ 4,900
CDC Commercial Paper Corp
50,000 2.600%--11/01/2001........................ 50,000
Federal Home Loan Mortgage Corp
695 0.010%--01/10/2002(4)..................... 692
Federal National Mortgage Association
6,100 0.010%--11/01/2001........................ 6,100
6,600 0.010%--12/20/2001........................ 6,567
----------
12,667
----------
Swedbank Forenings Yrs 1&2
7,700 3.100%--12/26/2001........................ 7,663
UBS Finance Inc. Yrs 1&2
42,300 2.650%--11/01/2001........................ 42,300
1,900 3.550%--12/19/2001........................ 1,891
----------
44,191
----------
TOTAL COMMERCIAL PAPER..................................... 120,113
----------
U.S. TREASURY BILLS
U.S. Treasury Bills
1,905 0.010%--02/07/2002(4)..................... 1,894
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $122,007).......................................... 122,007
----------
TOTAL INVESTMENTS--138.0%
(Cost $1,409,418)........................................ 1,430,119
CASH AND OTHER ASSETS, LESS LIABILITIES--(38.0%)........... (393,567)
----------
TOTAL NET ASSETS--100.0%................................... $1,036,552
==========
</Table>

------------------------------------------------------------

FUTURES CONTRACTS WHICH WERE OPEN AT OCTOBER 31, 2001 ARE AS FOLLOWS:

<Table>
<Caption>
UNREALIZED
AGGREGATE APPRECIATION/
NUMBER OF FACE VALUE (DEPRECIATION)
DESCRIPTION CONTRACTS (000S) EXPIRATION DATE (000S)
- ----------- --------- ---------- --------------- --------------

U.S. Treasury Bonds--20 Yr. (Buy)........................ 1,154 $1,154,000 Dec-01 $6,894
U.S. Treasury Notes--10 Yr. (Sell)....................... 76 76,000 Dec-01 (234)
U.S. Treasury Notes--5 Yr. (Sell)........................ 59 59,000 Dec-01 (156)
Municipal Bond Index Futures (Buy)....................... 2 2,000 Dec-01 5
Federal Republic of Germany Bonds--10 Yr. (Buy).......... 464 E 464,000 Dec-01 916
------
$7,425
======
</Table>

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

WRITTEN OPTIONS WHICH WERE OPEN AT OCTOBER 31, 2001 ARE AS FOLLOWS:

<Table>
<Caption>
NUMBER OF
SHARES/ STRIKE VALUE
DESCRIPTION CONTRACTS PRICE EXPIRATION DATE (000S)
- ----------- --------- ------ --------------- ------

U.S. Treasury Notes--10 Yr. Futures (Call)............ 759 $109.00 Nov-01 $(2,016)
U.S. Treasury Notes--10 Yr. Futures (Call)............ 600 111.00 Nov-01 (684)
U.S. Treasury Notes--10 Yr. Futures (Call)............ 1,773 108.00 Nov-01 (111)
Euro Futures (Put).................................... 4,600,000 0.082 Nov-01 --
Euro Futures (Put).................................... 1,800,000 0.082 Dec-01 --
Eurodollar Futures (Put).............................. 89 95.00 Dec-01 (1)
Eurodollar Futures (Put).............................. 109 96.00 Dec-01 (1)
U.S. Treasury Notes--10 Yr. Futures (Call)............ 113 112.00 Feb-02 (150)
U.S. Treasury Notes--10 Yr. Futures (Call)............ 131 111.00 Feb-02 (221)
Eurodollar Futures (Put).............................. 168 95.50 Jun-02 (4)
Eurodollar Futures (Put).............................. 387 96.00 Jun-02 (19)
Eurodollar Futures (Put).............................. 5,371 95.75 Jun-02 (201)
Swap Options--3 Mo. Libor (Call)...................... 21,100,000 5.97 Oct-04 (1,052)
Swap Options--3 Mo. Libor (Put)....................... 21,100,000 5.97 Oct-04 (793)
Swap Options--3 Mo. Libor (Call)...................... 5,500,000 6.00 Oct-04 (205)
Swap Options--3 Mo. Libor (Put)....................... 5,500,000 6.00 Oct-04 (279)
-------
Written options outstanding, at value (Premiums
received of $7,416)................................. $(5,737)
=======
</Table>

TBA SALE COMMITMENTS WHICH WERE OPEN AT OCTOBER 31, 2001 ARE AS FOLLOWS:

<Table>
<Caption>
PRINCIPAL
AMOUNT COUPON VALUE
DESCRIPTION (000S) RATE DELIVERY DATE (000S)
- ----------- --------- ------ ------------- ------

Federal Home Loan Mortgage Corp....................... $ 6,000 6.00% Nov-01 $ 5,963
Government National Mortgage Assoc. II................ 85,000 7.00% Nov-01 88,525
-------
TBA Sale Commitments at Value (Proceeds receivable
$93,787)............................................ $94,488
=======
</Table>

FIXED INCOME INVESTMENTS SOLD SHORT AT OCTOBER 31, 2001 ARE AS FOLLOWS:

<Table>
<Caption>
VALUE
PAR SECURITY (000S)
- --- -------- ------

Federal Republic of Germany Bonds...........................
E 500,000 $ 440
United States Treasury Notes................................
$5,800,000 6,070
------
TOTAL FIXED INCOME INVESTMENT SOLD SHORT
(Proceeds $6,455)........................................... $6,510
======
</Table>

FORWARD CURRENCY CONTRACTS WHICH WERE OPEN AT OCTOBER 31, 2001 ARE AS FOLLOWS:

<Table>
<Caption>
UNREALIZED
AGGREGATE APPRECIATION/
MARKET VALUE FACE VALUE (DEPRECIATION)
CURRENCY (000S) (000S) DELIVERY DATE (000S)
- -------- ------------ ---------- ------------- --------------

Japanese Yen (Sell)................................... $24,560 $24,845 Dec-01 $ 285
Eurodollar (Buy)...................................... 21,881 22,361 Jan-02 (480)
-----
$(195)
=====
</Table>

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

SWAP AGREEMENTS AT OCTOBER 31, 2001 ARE AS FOLLOWS:

<Table>
<Caption>
UNREALIZED
APPRECIATION/
PAR VALUE (DEPRECIATION)
(000S) DESCRIPTION COUNTER PARTY (000S)
- --------- ----------- ------------------------------- --------------

Y521,000 To make or receive semi-annual payments through 1/1/2011 Morgan Stanley Capital Services $ (189)
based on the difference between (A) the 10 year fixed
interest rate of 1.805% over (B) the 10 year floating rate
adjusted every six months based upon the JPY-LIBOR-BBA.
360,000 To make or receive semi-annual payments through 1/1/2011 Morgan Stanley Capital Services (121)
based on the difference between (A) the 10 year fixed
interest rate of 1.771% over (B) the 10 year floating rate
adjusted every six months based upon the JPY-LIBOR-BBA.
L32,100 To make or receive semi-annual payments through 3/15/2003 Morgan Stanley Capital Services 633
based on the difference between (A) the 10 year fixed
interest rate of 5.250% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
17,800 To make or receive semi-annual payments through 9/17/2003 Morgan Stanley Capital Services 191
based on the difference between (A) the 10 year fixed
interest rate of 5.500% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
5,800 To make or receive semi-annual payments through 3/2/2004 Lehman Brothers 142
based on the difference between (A) the 10 year fixed
interest rate of 5.500% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
10,900 To make or receive semi-annual payments through 3/2/2004 Goldman Sachs Capital Markets 268
based on the difference between (A) the 10 year fixed New York
interest rate of 5.500% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
12,500 To make or receive semi-annual payments through 3/15/2004 Goldman Sachs Capital Markets 400
based on the difference between (A) the 10 year fixed New York
interest rate of 5.500% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
14,700 To make or receive semi-annual payments through 3/15/2004 Morgan Stanley Capital Services 295
based on the difference between (A) the 10 year fixed
interest rate of 5.500% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
8,300 To make or receive semi-annual payments through 3/15/2004 J.P. Morgan Securities 112
based on the difference between (A) the 10 year fixed
interest rate of 5.250% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
14,700 To make or receive semi-annual payments through 3/15/2004 Chase Manhattan (185)
based on the difference between (A) the 10 year fixed
interest rate of 5.250% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
2,200 To make or receive semi-annual payments through 6/17/2004 Morgan Stanley Capital Services 37
based on the difference between (A) the 10 year fixed
interest rate of 5.500% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
6,400 To make or receive semi-annual payments through 6/17/2004 Goldman Sachs Capital Markets 124
based on the difference between (A) the 10 year fixed New York
interest rate of 5.500% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
3,700 To make or receive semi-annual payments through 3/15/2006 J.P. Morgan Securities 71
based on the difference between (A) the 10 year fixed
interest rate of 5.250% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
5,500 To make or receive semi-annual payments through 3/15/2006 Goldman Sachs Capital Markets 137
based on the difference between (A) the 10 year fixed New York
interest rate of 5.250% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
3,700 To make or receive semi-annual payments through 3/19/2006 Goldman Sachs Capital Markets 80
based on the difference between (A) the 10 year fixed New York
interest rate of 5.250% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
15,900 To make or receive semi-annual payments through 3/19/2006 J.P. Morgan Securities 206
based on the difference between (A) the 10 year fixed
interest rate of 5.250% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
4,200 To make or receive semi-annual payments through 6/15/2006 Morgan Stanley Capital Services 138
based on the difference between (A) the 10 year fixed
interest rate of 5.500% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
26,350 To make or receive semi-annual payments through 6/15/2006 Morgan Stanley Capital Services 867
based on the difference between (A) the 10 year fixed
interest rate of 5.500% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
$11,900 To make or receive semi-annual payments through 12/17/2006 Bank of America 836
based on the difference between (A) the 10 year fixed
interest rate of 6.000% over (B) the 10 year floating rate
adjusted every six months based upon the USD-LIBOR-BBA.
19,500 To make or receive semi-annual payments through 12/17/2006 Goldman Sachs Capital Markets 964
based on the difference between (A) the 10 year fixed New York
interest rate of 6.000% over (B) the 10 year floating rate
adjusted every six months based upon the USD-LIBOR-BBA.
116,500 To make or receive semi-annual payments through 12/18/2006 Morgan Stanley Capital Services 6,616
based on the difference between (A) the 10 year fixed -------
interest rate of 6.000% over (B) the 10 year floating rate $11,622
adjusted every six months based upon the USD-LIBOR-BBA. =======
</Table>

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

- ------------

1 Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
2001, these securities were valued at $111,690 or 10.78% of net assets.

2 Variable rate security. The stated rate represents the rate in effect at
October 31, 2001.

3 Step Coupon security. The stated rate represents the rate in effect at
October 31, 2001.

4 At October 31, 2001, securities held by the Fund were pledged to cover
margin requirements for open futures contracts, written options on futures
contracts, short sales and TBAs. (See Note 2 to the Financial Statements.)
The securities pledged had an aggregate market value of $521,335.

5 MTN after the name of a security stands for Medium Term Note.

6 REMICs are CMOs which can hold mortgages secured by any type of real
property and issue multiple-class securities backed by those mortgages.

7 Interest only (IO) securities represent the right to receive the monthly
interest payments on an underlying pool of mortgage loans. These are subject
to the risk of accelerated principal paydowns. The amount represents the
notional amount on which current interest is calculated.

8 TBAs are mortgage-backed securities traded under delayed delivery
commitments, settling after October 31, 2001. Although the unit price for
the trades has been established, the principal value has not been finalized.
However, the amount of the commitments will not fluctuate more than 2% from
the principal amount. Income on TBAs is not earned until settlement date.
(See Note 2 to the Financial Statements).

9 Treasury inflation-protected securities (TIPS) are securities in which the
principal amount is adjusted for inflation and interest payments are applied
to the inflation-adjusted principal.

E Euro.

Y Japanese Yen.

L British Pound.

The accompanying notes are an integral part of the financial statements.
36

HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--OCTOBER 31, 2001

TOTAL INVESTMENTS (% OF NET ASSETS)
(Excludes net cash and short-term investments of 20.8%)

<Table>

U.S. Government Obligations
4.6
Collateralized Mortgage Obligations
9.3
Asset-Backed Securities
65.3
</Table>

<Table>
<Caption>
ASSET-BACKED SECURITIES--65.3%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

Aerco Ltd.
Series 2A Cl. A3
$ 4,000 2.985%--07/15/2025(1,2)...................... $ 4,002
Arcadia Automobile Receivables Trust
Series 1998-B Cl. A5
5,500 6.060%--06/15/2006(2)........................ 5,673
Associates Automobile Receivable Trust
Series 2000-1 Cl. A3
2,500 7.300%--01/15/2004........................... 2,589
Beneficial Home Equity Loan Trust
Series 1996-1 Cl. A
604 2.556%--04/28/2026(1,2)...................... 604
Campobello Master Trust
Series 1999-1A Cl. B
3,000 3.080%--12/15/2006(1,2,3).................... 3,004
Chase Funding Loan Acquisition Trust
Series 2001-C2 Cl. IA2
4,000 5.673%--05/25/2022(2)........................ 4,138
Chase Manhattan Auto Owner Trust
Series 1999-A Cl. A4
700 3.800%--05/15/2008........................... 700
CIT Marine Trust
Series 1999-A Cl. A2
1,599 5.800%--04/15/2010(2)........................ 1,633
CIT RV Trust
Series 1999-A Cl. A3
3,300 5.960%--04/15/2011(2)........................ 3,421
CNH Equipment Trust
Series 2000-B Cl. A2
684 6.870%--02/15/2004(2)........................ 689
Contimortgage Home Equity Loan Trust
Pass Thru Certificates
Series 1998-3 Cl. A10
35 5.840%--05/15/2016(2)........................ 36
COPEL Capital Funding LLC
Series 1999-A Cl. A4
4,220 5.800%--04/15/2003(2)........................ 4,278
DaimlerChrysler Auto Trust
Series 2001-C Cl. A3
3,000 4.210%--07/06/2005........................... 3,067
Discover Card Master Trust
Series 1999-4 Cl. A
2,000 5.650%--11/16/2004........................... 2,038
Series 2000-9 Cl. A
2,000 6.350%--07/15/2008........................... 2,161
--------
4,199
--------
</Table>

<Table>
<Caption>
ASSET-BACKED SECURITIES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

Federal Home Loan Mortgage Corp.
Series T-31 Cl. A3
$ 1,750 6.276%--11/25/2016........................... $ 1,829
Felco Funding II LLC.
Series 2000-1 Cl. A3
4,000 7.585%--06/15/2004(2,3)...................... 4,159
First North American National Bank
Series 1997-2 Cl. B
3,000 2.995%--03/15/2006(2)........................ 3,009
Harley Davidson Motorcycle Trust
Series 2001-2 Cl. A1
1,400 3.770%--04/17/2006........................... 1,419
Honda Auto Receivables Owner Trust
Series 2001-1 Cl. A2
3,000 5.150%--06/18/2003(2)........................ 3,037
Household Automotive Trust
Series 2000-3 Cl. A2
2,866 6.960%--10/17/2003(2)........................ 2,902
Ikon Receivables LLC
Series 1999-1 Cl. A4
3,375 6.230%--05/15/2005........................... 3,488
MMCA Automobile Trust
Series 2001-3 Cl. A2
2,000 2.711%--05/17/2004(1)........................ 2,003
Morgan Stanley Dean Witter Capital I
Series 2001 Cl. A2
1,800 2.770%--02/25/2032(1)........................ 1,800
Navistar Financial Owner Trust
Series 2001-B Cl. A4
2,500 4.370%--11/17/2008........................... 2,500
Newcourt Equipment Trust Securities
Series 1999-1 Cl. A4
3,600 7.180%--11/20/2005(2)........................ 3,835
PECO Energy Transition Trust
Series 2000-A Cl. A2
2,000 7.300%--09/01/2004........................... 2,057
Premier Auto Trust
Series 1999-3 Cl. A4
2,600 6.430%--03/08/2004........................... 2,702
Residential Asset Securities Corp.
Series 2001 Cl. A
3,000 5.345%--10/25/2020........................... 3,081
Saxon Asset Securities Trust
Series 2001-1 Cl. AF4
2,000 6.310%--03/25/2026........................... 2,094
Series 1999-2 Cl. MV2
1,500 3.611%--05/25/2029(1,2)...................... 1,504
--------
3,598
--------
Standard Credit Card Master Trust
Series 1995-1 Cl. A
2,000 8.250%--01/07/2007........................... 2,263
Toyota Auto Receivables Owner Trust
Series 2000-A Cl. A2
443 7.120%--12/15/2002(2)........................ 444
--------
TOTAL ASSET-BACKED SECURITIES
(Cost $80,308)............................................ 82,159
--------
</Table>

HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
ASSET-BACKED SECURITIES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

<Caption>
COLLATERALIZED MORTGAGE OBLIGATIONS--9.3%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

CIT Equipment Collateral
Series 2001-A Cl. A2
$ 2,500 3.730%--03/22/2004........................... $ 2,530
Credit Suisse First Boston Mortgage Securities
Corp.
Pass Thru Certificates
3,000 3.004%--08/25/2031(3)........................ 3,000
Federal National Mortgage Association
864 6.000%--08/15/2018........................... 876
Federal National Mortgage Association REMIC(4)
Series 1996-70 Cl. PD
250 6.250%--07/25/2018(2)........................ 249
Norwest Asset Securities Corp.
Pass Thru Certificates
Series 1999-16 Cl. A1
833 6.000%--06/25/2029(2)........................ 831
Salomon Brothers Mortgage Securities VII
Series 2001-C1 Cl. A1
2,881 5.137%--12/18/2035........................... 2,968
Structured Asset Securities Corp.
Series 2001-4A Cl. A2
1,301 5.500%--03/25/2031(2)........................ 1,302
--------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $11,615)............................................ 11,756
--------

<Caption>
U.S. GOVERNMENT OBLIGATIONS--4.6%
(Cost $5,800)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

U.S. Treasury Notes
$ 5,800 2.750%--09/30/2003........................... $ 5,839
--------

<Caption>
SHORT-TERM INVESTMENTS--25.1%

REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust dated October 31, 2001 due November 1,
2001 at 2.50% collateralized by a U.S.
Treasury Note 6.750% May 15, 2005, par value
of $27,755 (repurchase proceeds of $31,154
31,152 when closed on November 1, 2001)............. 31,152
--------
U.S. TREASURY BILLS
U.S. Treasury Bills
500 2.240%--03/28/2002(2)........................ 496
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $31,647)............................................ 31,648
--------
TOTAL INVESTMENTS--104.3%
(Cost $129,370)........................................... 131,402
CASH AND OTHER ASSETS, LESS LIABILITIES--(4.3%)............. (5,443)
--------
TOTAL NET ASSETS--100.0%.................................... $125,959
========
</Table>

------------------------------------------------------------

FUTURES CONTRACTS WHICH WERE OPEN AT OCTOBER 31, 2001 ARE AS FOLLOWS:

<Table>
<Caption>
AGGREGATE UNREALIZED
NUMBER OF FACE VALUE APPRECIATION
DESCRIPTION CONTRACTS (000S) EXPIRATION DATE (000S)
- ----------- --------- ---------- --------------- ------------

U.S. Treasury Note--2 Yr. (Buy)............................ 16 $3,200 Dec-01 $24
</Table>

- ------------

1 Floating rate security. The stated rate represents the rate in effect at
October 31, 2001.

2 At October 31, 2001, securities held by the Fund were pledged to cover
margin requirements for open futures contracts. (See Note 2 to the Financial
Statements.) The securities pledged had an aggregate market value of
$49,246.

3 Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
2001, these securities were valued at $10,163 or 8.07% of net assets.

4 REMICs are CMOs which can hold mortgages secured by any type of real
property and issue multiple-class securities backed by those mortgages.

The accompanying notes are an integral part of the financial statements.
38

HARBOR MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS--OCTOBER 31, 2001

TOTAL INVESTMENTS (% OF NET ASSETS)
(Excludes net cash of 0.3%)

<Table>

Repurchase Agreement
13.5
Bank Obligations
23.5
Commercial Paper
62.7
</Table>

<Table>
<Caption>
BANK OBLIGATIONS--23.5%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

ABN Amro North America
$ 6,000 2.770%--12/20/2001............................ $ 6,004
Bank of Montreal
7,000 2.360%--12/10/2001............................ 7,000
Barclays Bank plc
2,000 4.290%--04/25/2002............................ 1,999
Canadian Imperial Bank
6,000 2.500%--12/07/2001............................ 6,001
Chase Manhattan Bank
6,500 2.450%--11/16/2001............................ 6,500
CommerzBank AG
800 5.040%--02/26/2002............................ 802
LandesBank Hessen Thuringen
2,000 5.450%--01/08/2002............................ 2,000
Morgan Stanley Group Inc.
2,250 6.375%--08/01/2002............................ 2,292
Toronto Dominion Bank
7,000 2.460%--11/09/2001............................ 7,000
--------
TOTAL BANK OBLIGATIONS
(Cost $39,598)............................................. 39,598
--------

<Caption>
COMMERCIAL PAPER--62.7%

ANZ Delaware Inc.
6,000 2.445%--12/21/2001............................ 5,980
Banque Et Caisse D'Epargne
6,000 2.460%--12/27/2001............................ 5,977
Barclays US Funding Corp.
4,000 2.473%--11/02/2001............................ 4,000
BCI Funding Corp.
6,500 2.470%--12/20/2001............................ 6,478
Credit Agricole Indosuez Inc. Yrs 3&4
6,000 2.270%--04/02/2002............................ 5,943
Danske Bank A/S
6,000 3.550%--11/01/2001............................ 6,000
</Table>

<Table>
<Caption>
COMMERCIAL PAPER--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Dresdner Bank AG
$ 5,950 2.358%--12/05/2001............................ $ 5,937
General Electric Capital Corp.
6,000 3.386%--02/25/2002............................ 5,936
ING America Insurance
6,000 3.380%--11/19/2001............................ 5,990
Koch Industries Inc.
6,000 2.630%--11/01/2001............................ 6,000
Lloyds TSB Group plc
5,500 3.800%--11/19/2001............................ 5,489
Paccar Financial Corp.
2,000 4.350%--12/14/2001............................ 1,990
Province De Quebec Yrs 3&4
5,165 3.340%--11/30/2001............................ 5,151
San Paolo U.S. Finance Co.
5,000 4.055%--12/03/2001............................ 4,982
Sigma Finance Inc. Yrs 1&2
6,000 3.590%--12/12/2001............................ 5,975
Societe Generale North America Inc.
6,000 2.280%--01/14/2002............................ 5,972
State Street Corp.
7,000 2.500%--11/01/2001............................ 7,000
UBS Finance Inc. Yrs 3&4
6,000 2.650%--11/01/2001............................ 6,000
WestpacTrust Securities NZ Ltd.
3,576 2.400%--11/27/2001............................ 3,570
1,600 2.220%--12/03/2001............................ 1,597
--------
5,167
--------
TOTAL COMMERCIAL PAPER
(Cost $105,967)............................................ 105,967
--------

<Caption>
REPURCHASE AGREEMENT--13.5%
(Cost $22,834)

Repurchase Agreement with State Street Bank &
Trust dated October 31, 2001 due November 1,
2001 at 2.50% collateralized by a U.S.
Treasury Bills 8.875% August 15, 2017, par
value of $16,315 (repurchase proceeds of
22,834 $22,836 when closed on November 1, 2001).... 22,834
--------
TOTAL INVESTMENTS--99.7%
(Cost $168,399)(1)......................................... 168,399
CASH AND OTHER ASSETS, LESS LIABILITIES--0.3%................ 435
--------
TOTAL NET ASSETS--100.0%..................................... $168,834
========
</Table>

- ------------

1 The aggregate identified cost on a tax basis is the same.

The accompanying notes are an integral part of the financial statements.
39

HARBOR FUND
STATEMENT OF ASSETS AND LIABILITIES--OCTOBER 31, 2001

(All amounts in Thousands, except per share amounts)

<Table>
<Caption>
HARBOR HARBOR
MID CAP HARBOR SMALL CAP
GROWTH GROWTH GROWTH
- ------------------------------------------------------------------------------------------------

ASSETS
INVESTMENTS, AT IDENTIFIED COST*............................ $12,128 $157,662 $17,353
================================================================================================
Investments, at value....................................... $ 9,740 $118,231 $14,010
Repurchase agreements....................................... 165 -- 3,398
Cash........................................................ -- -- --
Foreign currency, at value (cost: $0; $0; $0; $0; $1; $0;
$0; $0; $0; $1,786; $0; $0)............................... -- -- --
Receivables for:
Investments sold.......................................... 59 -- 49
Capital shares sold....................................... 7 85 5
Dividends................................................. -- -- --
Interest.................................................. -- 44 --
Swap agreements (cost: $0, $0, $0, $0, $0, $0, $0, $0, $0,
$2,252, $0, $0)........................................ -- -- --
Variation margin on futures contracts..................... -- -- --
Withholding tax receivable.................................. -- -- --
Other assets................................................ 1 19 1
- ------------------------------------------------------------------------------------------------
TOTAL ASSETS......................................... 9,972 118,379 17,463
LIABILITIES
Payables for:
Investments purchased..................................... 103 -- 108
Capital shares reacquired................................. 100 277 9
Dividends to shareholders................................. -- -- --
Investments sold short, at value (proceeds $0; $0; $0; $0;
$0; $0; $0; $0; $0; $6,455; $0; $0).................... -- -- --
Written options, at value (premiums received $0; $0; $0;
$0; $0; $0; $0; $0; $0; $7,416; $0; $0)................ -- -- --
Interest on swap agreements............................... -- -- --
Open forward currency contracts........................... -- -- --
Accrued expenses:
Adviser's fees............................................ 4 146 7
Trustees' fees............................................ -- 1 --
Transfer agent's fees..................................... 11 3 12
Other..................................................... 2 1 10
TBA sale commitments at value (proceeds receivable $0; $0;
$0; $0; $0; $0; $0; $0; $0; $93,787; $0; $0)........... -- -- --
- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES.................................... 220 428 146
NET ASSETS.................................................. $ 9,752 $117,951 $17,317
================================================================================================
Net assets consist of:
Paid-in capital........................................... $14,223 $168,404 $17,872
Undistributed/(overdistributed) net investment income..... -- -- --
Accumulated net realized gain/(loss)...................... (2,248) (11,022) (610)
Unrealized appreciation/(depreciation) of investments,
swap agreements, written options, foreign currency,
investments sold short and translation of assets and
liabilities in foreign currencies...................... (2,223) (39,431) 55
Unrealized appreciation of futures and forward
contracts.............................................. -- -- --
- ------------------------------------------------------------------------------------------------
$ 9,752 $117,951 $17,317
================================================================================================
Shares of beneficial interest............................... 1,728 11,573 1,782
Net asset value, offering and redemption price per share.... $ 5.64 $ 10.19 $ 9.72
</Table>

- ------------

* Including repurchase agreements and short-term investments.

The accompanying notes are an integral part of the financial statements.
40

<Table>
<Caption>
HARBOR HARBOR HARBOR HARBOR HARBOR
INTERNATIONAL HARBOR CAPITAL HARBOR HARBOR LARGE CAP HARBOR SHORT MONEY
GROWTH GLOBAL EQUITY APPRECIATION INTERNATIONAL II INTERNATIONAL VALUE BOND DURATION MARKET
- ----------------------------------------------------------------------------------------------------------------------------------

$525,888 $7,656 $6,164,138 $95,613 $2,652,642 $124,090 $1,409,418 $129,370 $168,399
==================================================================================================================================
$430,637 $6,197 $6,041,024 $76,736 $3,488,056 $116,977 $1,430,119 $100,250 $145,565
-- 587 -- -- -- 12,063 -- 31,152 22,834
-- 1 1 -- -- 1,087 30,014 1 2
-- 1 -- -- -- -- 1,786 -- --

11,442 69 15,294 4,294 -- -- 149,090 -- --
40 15 2,581 6 579 154 474 435 310
357 7 1,903 12 3,322 21 -- -- --
3 -- 5 -- 245 -- 7,353 371 273
-- -- -- -- -- -- 13,874 -- --
-- -- -- -- -- -- 2,443 3 --
585 2 4 233 8,906 1 -- -- --
6 1 16 3 16 25 20 20 18
- ----------------------------------------------------------------------------------------------------------------------------------
443,070 6,880 6,060,828 81,284 3,501,124 130,328 1,635,173 132,232 169,002

5,015 94 18,361 1,705 -- -- 464,891 6,200 --
146 -- 19,372 19 549 218 26,183 48 117
-- -- -- -- -- -- 6 6 12
-- -- -- -- -- -- 6,510 -- --
-- -- -- -- -- -- 5,737 -- --
-- -- -- -- -- -- 151 -- --
-- -- -- -- -- -- 195 -- --

246 3 2,953 42 2,316 72 406 17 21
3 -- 25 -- 15 -- 3 -- --
8 4 12 1 9 -- -- -- 16
451 14 6 2,474 878 9 51 2 2
-- -- -- -- -- -- 94,488 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
5,869 115 40,729 4,241 3,767 299 598,621 6,273 168
$437,201 $6,765 $6,020,099 $77,043 $3,497,357 $130,029 $1,036,552 $125,959 $168,834
==================================================================================================================================

$923,107 $8,656 $8,011,607 $97,913 $2,526,606 $138,505 $ 971,769 $145,871 $168,834
68 5 9,072 708 32,074 56 6,200 (85) --
(390,694) (1,024) (1,877,466) (2,699) 103,429 (13,482) 17,904 (21,883) --

(95,280) (872) (123,114) (18,879) 835,248 4,950 33,449 2,032 --
-- -- -- -- -- -- 7,230 24 --
- ----------------------------------------------------------------------------------------------------------------------------------
$437,201 $6,765 $6,020,099 $77,043 $3,497,357 $130,029 $1,036,552 $125,959 $168,834
==================================================================================================================================
51,821 915 228,019 7,703 122,051 9,997 86,008 14,491 168,834
$ 8.44 $ 7.39 $ 26.40 $ 10.00 $ 28.65 $ 13.01 $ 12.05 $ 8.69 $ 1.00
</Table>

HARBOR FUND
STATEMENT OF OPERATIONS--YEAR ENDED OCTOBER 31, 2001
(All amounts in Thousands)

<Table>
<Caption>
HARBOR HARBOR HARBOR
MID CAP HARBOR SMALL CAP INTERNATIONAL
GROWTH GROWTH GROWTH GROWTH
- ---------------------------------------------------------------------------------------------------------------------------------

INVESTMENT INCOME:
Dividends........................................... $ 8 $ 52 $ 15 $ 8,023
Interest............................................ 17 1,318 37 1,214
Foreign taxes withheld.............................. -- -- -- (899)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME............................. 25 1,370 52 8,338
OPERATING EXPENSES:
Investment advisory fees............................ 67 1,333 73 5,850
Shareholder communications.......................... 3 41 4 83
Custodian fees...................................... 21 25 21 522
Transfer agent fees................................. 14 210 15 384
Professional fees................................... 4 7 6 34
Trustees' fees and expenses......................... -- 4 -- 14
Registration fees................................... 12 46 14 27
Amortization of organization costs.................. -- -- -- --
Insurance........................................... -- 3 -- 6
Miscellaneous....................................... 4 8 4 16
- ---------------------------------------------------------------------------------------------------------------------------------
Total operating expenses......................... 125 1,677 137 6,936
Advisory fee waived................................. (18) -- (20) --
Other expense reimbursements and reductions......... -- (2) -- (18)
- ---------------------------------------------------------------------------------------------------------------------------------
Net operating expenses........................... 107 1,675 117 6,918
Dividend expense on investments sold short.......... -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME/(LOSS).......................... (82) (305) (65) 1,420
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENT
TRANSACTIONS:
Net realized gain/(loss) on:
Investments...................................... (2,248) (11,022) (610) (370,483)
Foreign currency transactions.................... -- -- -- (620)
Investments sold short........................... -- -- -- --
Swap agreements.................................. -- -- -- --
Futures contracts................................ -- -- -- --
Written options.................................. -- -- -- --
Change in net unrealized appreciation/(depreciation)
on:
Investments, foreign currency, written options
and investments sold short..................... (2,223) (133,296) 55 (110,322)
Swap agreements.................................. -- -- -- --
Futures contracts................................ -- -- -- --
Forward currency contracts....................... -- -- -- --
Translation of assets and liabilities in foreign
currencies..................................... -- -- -- 104
- ---------------------------------------------------------------------------------------------------------------------------------
Net gain/(loss) on investment transactions.......... (4,471) (144,318) (555) (481,321)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS....................................... $(4,553) $(144,623) $(620) $(479,901)
=================================================================================================================================
</Table>

The accompanying notes are an integral part of the financial statements.
42

<Table>
<Caption>
HARBOR HARBOR HARBOR HARBOR HARBOR
GLOBAL CAPITAL HARBOR HARBOR LARGE CAP HARBOR SHORT MONEY
EQUITY APPRECIATION INTERNATIONAL II INTERNATIONAL VALUE BOND DURATION MARKET
- ----------------------------------------------------------------------------------------------------

$ 71 $ 47,795 $ 1,926 $ 103,176 $ 2,962 $ -- $ -- $ --
14 10,650 58 10,150 606 54,228 5,923 7,165
(4) (453) (226) (13,537) (12) -- -- --
- ----------------------------------------------------------------------------------------------------
81 57,992 1,758 99,789 3,556 54,228 5,923 7,165

37 43,124 783 37,347 834 6,252 421 430
1 628 16 359 15 80 4 27
17 408 95 2,925 96 186 15 42
4 2,214 87 1,551 86 330 17 181
-- 239 4 145 5 22 5 4
-- 113 2 68 2 12 2 1
8 603 31 7 28 46 27 31
-- -- 3 -- -- -- -- --
-- 12 3 12 2 5 2 2
2 78 9 1 7 12 7 7
- ----------------------------------------------------------------------------------------------------
69 47,419 1,033 42,415 1,075 6,945 500 725
(10) -- (101) (2,576) -- (1,960) (210) (172)
-- (53) (1) (16) (1) (8) (8) (6)
- ----------------------------------------------------------------------------------------------------
59 47,366 931 39,823 1,074 4,977 282 547
-- -- -- -- 196 -- -- --
- ----------------------------------------------------------------------------------------------------
22 10,626 827 59,966 2,286 49,251 5,641 6,618

(1,047) (1,807,374) (2,314) 207,985 (6,076) 23,103 361 2
6 -- (23) (38,972) -- (1,267) -- --
-- -- -- -- (564) (1,119) -- --
-- -- -- -- -- (2,252) -- --
-- -- -- -- (3,990) 4,215 130 --
-- -- -- -- -- 2,699 9 --

(872) (1,461,985) (27,020) (1,037,366) 2,779 32,115 1,818 --
-- -- -- -- -- 14,660 -- --
-- -- -- -- 693 6,888 4 --
-- -- -- -- -- (195) -- --
-- -- 27 940 -- 645 -- --
- ----------------------------------------------------------------------------------------------------
(1,913) (3,269,359) (29,330) (867,413) (7,158) 79,492 2,322 2
- ----------------------------------------------------------------------------------------------------
$(1,891) $(3,258,733) $(28,503) $ (807,447) $(4,872) $128,743 $7,963 $6,620
====================================================================================================
</Table>

HARBOR FUND
STATEMENT OF CHANGES IN NET ASSETS
(All amounts in Thousands)

<Table>
<Caption>
HARBOR HARBOR
MID CAP GROWTH GROWTH
-------------- -------------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
2000 2000 1999
THROUGH THROUGH THROUGH
OCTOBER 31, OCTOBER 31, OCTOBER 31,
2001 2001 2000
- --------------------------------------------------------------------------------------------------------------------

INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment income/(loss)............................ $ (82) $ (305) $ 46
Net realized gain/(loss) on investments, foreign
currency transactions, investments sold short, swap
agreements, futures contracts and written options...... (2,248) (11,022) 20,777
Net unrealized appreciation/(depreciation) of
investments, written options, investments sold short,
swap agreements, futures contracts, forward foreign
currency contracts and translation of assets and
liabilities in foreign currencies...................... (2,223) (133,296) 40,500
- --------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS.............................................. (4,553) (144,623) 61,323
- --------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income................................... -- (82) --
Net realized gain on investments........................ -- (17,428) (10,441)
- --------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS..................... -- (17,510) (10,441)
- --------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares........................ 16,950 58,621 153,456
Net asset value of shares issued in connection with
reinvestment of:
Dividends from net investment income.................. -- 81 --
Distributions from net realized gain on investments... -- 17,198 10,293
Cost of shares reacquired............................... (2,645) (71,415) (84,281)
- --------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) DERIVED FROM CAPITAL
TRANSACTIONS........................................... 14,305 4,485 79,468
- --------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets................... 9,752 (157,648) 130,350
NET ASSETS:
Beginning of period....................................... -- 275,599 145,249
- --------------------------------------------------------------------------------------------------------------------
END OF PERIOD *........................................... $ 9,752 $ 117,951 $275,599
====================================================================================================================
NUMBER OF CAPITAL SHARES:
Sold...................................................... 2,099 3,837 6,092
Reinvested in payment of investment income dividends...... -- 5 --
Reinvested in payment of capital gain distributions....... -- 1,040 475
Reacquired................................................ (371) (4,682) (3,484)
- --------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in shares outstanding............. 1,728 200 3,083
Outstanding:
Beginning of period..................................... -- 11,373 8,290
- --------------------------------------------------------------------------------------------------------------------
End of period........................................... 1,728 11,573 11,373
====================================================================================================================
* Includes undistributed/(over-distributed) net investment
income of:............................................... $ -- $ -- $ 39
</Table>

The accompanying notes are an integral part of the financial statements.
44

<Table>
<Caption>
HARBOR HARBOR HARBOR HARBOR
SMALL CAP GROWTH INTERNATIONAL GROWTH GLOBAL EQUITY CAPITAL APPRECIATION
---------------- ------------------------- ------------- -------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, FEBRUARY 1, NOVEMBER 1, NOVEMBER 1,
2000 2000 1999 2001 2000 1999
THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2001 2001 2000 2001 2001 2000
- --------------------------------------------------------------------------------------------

$ (65) $ 1,420 $ 1,511 $ 22 $ 10,626 $ (5,764)
(610) (371,103) 146,960 (1,041) (1,807,374) 1,254,783
55 (110,218) (142,213) (872) (1,461,985) (601,183)
- --------------------------------------------------------------------------------------------
(620) (479,901) 6,258 (1,891) (3,258,733) 647,836
- --------------------------------------------------------------------------------------------
-- (293) (9,899) -- -- --
-- (121,187) (98,795) -- (1,154,660) (660,216)
- --------------------------------------------------------------------------------------------
-- (121,480) (108,694) -- (1,154,660) (660,216)
- --------------------------------------------------------------------------------------------
19,457 428,940 597,417 10,092 2,165,435 3,522,668
-- 258 8,659 -- -- --
-- 118,213 94,385 -- 1,114,970 619,790
(1,520) (755,911) (733,456) (1,436) (1,947,230) (1,514,562)
- --------------------------------------------------------------------------------------------
17,937 (208,500) (32,995) 8,656 1,333,175 2,627,896
- --------------------------------------------------------------------------------------------
17,317 (809,881) (135,431) 6,765 (3,080,218) 2,615,516
-- 1,247,082 1,382,513 -- 9,100,317 6,484,801
- --------------------------------------------------------------------------------------------
$17,317 $ 437,201 $1,247,082 $6,765 $ 6,020,099 $ 9,100,317
============================================================================================
1,935 35,196 29,877 1,091 66,131 67,564
-- 19 409 -- -- --
-- 8,635 4,459 -- 32,784 12,613
(153) (63,042) (36,012) (176) (59,853) (29,438)
- --------------------------------------------------------------------------------------------
1,782 (19,192) (1,267) 915 39,062 50,739
-- 71,013 72,280 -- 188,957 138,218
- --------------------------------------------------------------------------------------------
1,782 51,821 71,013 915 228,019 188,957
============================================================================================
$ -- $ 68 $ 218 $ 5 $ 9,072 $ --
</Table>

HARBOR FUND
STATEMENT OF CHANGES IN NET ASSETS--CONTINUED

(All amounts in Thousands)

<Table>
<Caption>
HARBOR HARBOR
INTERNATIONAL II INTERNATIONAL
------------------------------- -------------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
2000 1999 2000 1999
THROUGH THROUGH THROUGH THROUGH
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2001 2000 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------

INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment income/(loss)........................ $ 827 $ 1,079 $ 59,966 $ 74,458
Net realized gain/(loss) on investments, foreign
currency transactions, investments sold short,
swap agreements, futures contracts and written
options........................................... (2,337) 9,593 169,013 524,664
Net unrealized appreciation/(depreciation) of
investments, written options, investments sold
short, swap agreements, futures contracts, forward
foreign currency contracts and translation of
assets and liabilities in foreign currencies...... (26,993) (2,036) (1,036,426) (368,363)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS.......................................... (28,503) 8,636 (807,447) 230,759
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income............................... (1,265) (1,349) (86,391) (84,210)
Net realized gain on investments.................... (6,349) (4,991) (462,932) (371,384)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS................. (7,614) (6,340) (549,323) (455,594)
- ---------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares.................... 37,828 102,142 743,213 487,519
Net asset value of shares issued in connection with
reinvestment of:
Dividends from net investment income.............. 1,208 1,258 77,031 71,586
Distributions from net realized gain on
investments.................................... 6,191 4,739 442,276 344,123
Cost of shares reacquired........................... (58,893) (98,400) (1,238,668) (1,209,142)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) DERIVED FROM CAPITAL
TRANSACTIONS...................................... (13,666) 9,739 23,852 (305,914)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets............... (49,783) 12,035 (1,332,918) (530,749)
NET ASSETS:
Beginning of period................................... 126,826 114,791 4,830,275 5,361,024
- ---------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD*........................................ $ 77,043 $126,826 $ 3,497,357 $ 4,830,275
=================================================================================================================================
NUMBER OF CAPITAL SHARES:
Sold.................................................. 3,006 6,768 22,827 12,029
Reinvested in payment of investment income
dividends........................................... 91 87 2,288 1,770
Reinvested in payment of capital gain distributions... 468 326 13,140 8,510
Reacquired............................................ (4,742) (6,598) (40,524) (29,830)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in shares outstanding......... (1,177) 583 (2,269) (7,521)
Outstanding:
Beginning of period................................. 8,880 8,297 124,320 131,841
- ---------------------------------------------------------------------------------------------------------------------------------
End of period....................................... 7,703 8,880 122,051 124,320
=================================================================================================================================
* Includes undistributed/(over-distributed) net
investment income of:................................ $ 708 $ 13 $ 32,074 $ 50,361
</Table>

The accompanying notes are an integral part of the financial statements.
46

<Table>
<Caption>
HARBOR HARBOR HARBOR HARBOR
LARGE CAP VALUE BOND SHORT DURATION MONEY MARKET
------------------------- ------------------------- ------------------------- -------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
2000 1999 2000 1999 2000 1999 2000 1999
THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2001 2000 2001 2000 2001 2000 2001 2000
- -----------------------------------------------------------------------------------------------------------------

$ 2,286 $ 2,982 $ 49,251 $ 39,061 $ 5,641 $ 10,863 $ 6,618 $ 5,804
(10,630) 2,728 25,379 3,583 500 (1,552) 2 7
3,472 (1,752) 54,113 (13) 1,822 976 -- --
- -----------------------------------------------------------------------------------------------------------------
(4,872) 3,958 128,743 42,631 7,963 10,287 6,620 5,811
- -----------------------------------------------------------------------------------------------------------------
(2,421) (3,157) (40,763) (33,143) (5,800) (11,343) (6,618) (5,811)
(1,898) (15,960) (4,887) -- -- -- (2) --
- -----------------------------------------------------------------------------------------------------------------
(4,319) (19,117) (45,650) (33,143) (5,800) (11,343) (6,620) (5,811)
- -----------------------------------------------------------------------------------------------------------------
38,924 38,950 470,485 255,323 275,635 311,299 302,450 126,557
2,324 3,063 37,555 28,899 5,729 11,254 6,353 5,577
1,836 15,544 3,414 -- -- -- -- --
(51,479) (52,165) (275,250) (203,635) (282,600) (447,907) (245,862) (123,506)
- -----------------------------------------------------------------------------------------------------------------
(8,395) 5,392 236,204 80,587 (1,236) (125,354) 62,941 8,628
- -----------------------------------------------------------------------------------------------------------------
(17,586) (9,767) 319,297 90,075 927 (126,410) 62,941 8,628
147,615 157,382 717,255 627,180 125,032 251,442 105,893 97,265
- -----------------------------------------------------------------------------------------------------------------
$130,029 $147,615 $1,036,552 $ 717,255 $ 125,959 $ 125,032 $ 168,834 $ 105,893
=================================================================================================================
5,391 2,919 41,186 23,549 31,974 36,609 302,450 126,557
133 231 3,296 2,682 665 1,326 6,353 5,577
178 1,179 303 -- -- -- -- --
(6,337) (3,916) (23,976) (18,861) (32,842) (52,625) (245,862) (123,506)
- -----------------------------------------------------------------------------------------------------------------
(635) 413 20,809 7,370 (203) (14,690) 62,941 8,628
10,632 10,219 65,199 57,829 14,694 29,384 105,893 97,265
- -----------------------------------------------------------------------------------------------------------------
9,997 10,632 86,008 65,199 14,491 14,694 168,834 105,893
=================================================================================================================
$ 56 $ 47 $ 6,200 $ 2,316 $ (85) $ 61 $ -- $ --
</Table>

HARBOR FUND FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS
---------------------------------------------
NET REALIZED AND
UNREALIZED GAINS/(LOSSES)
ON INVESTMENTS, FUTURES
CONTRACTS, WRITTEN
NET ASSET OPTIONS, SWAP AGREEMENTS,
VALUE NET INVESTMENTS SOLD SHORT TOTAL FROM
BEGINNING INVESTMENT AND FOREIGN CURRENCY INVESTMENT
YEAR/PERIOD ENDED OF PERIOD INCOME/(LOSS) CONTRACTS OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------

HARBOR MID CAP GROWTH FUND
October 31, 2001(1)....................... $10.00 $ -- $ (4.36) $ (4.36)
- ----------------------------------------------------------------------------------------------------------------------
HARBOR GROWTH FUND
October 31, 2001.......................... $24.23 $ -- $(12.48) $(12.48)
October 31, 2000.......................... 17.52 -- 7.90 7.90
October 31, 1999.......................... 10.81 (.07) 7.85 7.78
October 31, 1998.......................... 14.20 (.04) (1.07) (1.11)
October 31, 1997(2)....................... 16.00 -- 2.30 2.30
- ----------------------------------------------------------------------------------------------------------------------
HARBOR SMALL CAP GROWTH FUND
October 31, 2001(1)....................... $10.00 $ -- $ (.28) $ (.28)
- ----------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL GROWTH FUND
October 31, 2001.......................... $17.56 $ -- $ (7.30) $ (7.30)
October 31, 2000.......................... 19.13 .01 (.06) (.05)
October 31, 1999.......................... 18.07 .14 1.30 1.44
October 31, 1998.......................... 16.15 .11 2.52 2.63
October 31, 1997.......................... 15.35 .12 1.12 1.24
- ----------------------------------------------------------------------------------------------------------------------
HARBOR GLOBAL EQUITY FUND
October 31, 2001(3)....................... $10.00 $ -- $ (2.61) $ (2.61)
- ----------------------------------------------------------------------------------------------------------------------
HARBOR CAPITAL APPRECIATION FUND
October 31, 2001.......................... $48.16 $ .04 $(15.63) $(15.59)
October 31, 2000.......................... 46.92 -- 5.84 5.84
October 31, 1999.......................... 33.51 (.02) 15.78 15.76
October 31, 1998.......................... 34.01 .07 4.35 4.42
October 31, 1997.......................... 25.88 .06 8.95 9.01
- ----------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND II
October 31, 2001.......................... $14.28 $ .24(c) $ (3.62) $ (3.38)
October 31, 2000.......................... 13.83 .01(c) 1.23 1.24
October 31, 1999.......................... 11.26 .18(c) 2.54 2.72
October 31, 1998.......................... 12.14 .12(c) (.37) (.25)
October 31, 1997.......................... 10.47 .10(c) 1.63 1.73
- ----------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND
October 31, 2001.......................... $38.85 $ .57(c) $ (6.27) $ (5.70)
October 31, 2000.......................... 40.66 .48(c) 1.22 1.70
October 31, 1999.......................... 36.97 .67(c) 5.90 6.57
October 31, 1998.......................... 35.84 .51(c) 1.92 2.43
October 31, 1997.......................... 31.21 .41(c) 5.44 5.85
- ----------------------------------------------------------------------------------------------------------------------

LESS DISTRIBUTIONS
------------------------------
DIVIDENDS DISTRIBUTIONS
FROM NET FROM NET
INVESTMENT REALIZED TOTAL
YEAR/PERIOD ENDED INCOME CAPITAL GAINS(5) DISTRIBUTIONS

HARBOR MID CAP GROWTH FUND
October 31, 2001(1)....................... $ -- $ -- $ --
- ---------------------------------------------------------------------------------------------------------
HARBOR GROWTH FUND
October 31, 2001.......................... $(.01) $(1.55) $(1.56)
October 31, 2000.......................... -- (1.19) (1.19)
October 31, 1999.......................... -- (1.07) (1.07)
October 31, 1998.......................... -- (2.28) (2.28)
October 31, 1997(2)....................... -- (4.10) (4.10)
- ----------------------------------------------------------------------------------------------------------------------
HARBOR SMALL CAP GROWTH FUND
October 31, 2001(1)....................... $ -- $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL GROWTH FUND
October 31, 2001.......................... $ -- $(1.82) $(1.82)
October 31, 2000.......................... (.14) (1.38) (1.52)
October 31, 1999.......................... (.11) (.27) (.38)
October 31, 1998.......................... (.12) (.59) (.71)
October 31, 1997.......................... (.08) (.36) (.44)
- ----------------------------------------------------------------------------------------------------------------------
HARBOR GLOBAL EQUITY FUND
October 31, 2001(3)....................... $ -- $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------
HARBOR CAPITAL APPRECIATION FUND
October 31, 2001.......................... $ -- $(6.17) $(6.17)
October 31, 2000.......................... -- (4.60) (4.60)
October 31, 1999.......................... (.07) (2.28) (2.35)
October 31, 1998.......................... (.07) (4.85) (4.92)
October 31, 1997.......................... (.02) (.86) (.88)
- ----------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND II
October 31, 2001.......................... $(.15) $ (.75) $ (.90)
October 31, 2000.......................... (.17) (.62) (.79)
October 31, 1999.......................... (.15) -- (.15)
October 31, 1998.......................... (.10) (.53) (.63)
October 31, 1997.......................... (.02) (.04) (.06)
- ----------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND
October 31, 2001.......................... $(.71) $(3.79) $(4.50)
October 31, 2000.......................... (.65) (2.86) (3.51)
October 31, 1999.......................... (.58) (2.30) (2.88)
October 31, 1998.......................... (.40) (.90) (1.30)
October 31, 1997.......................... (.42) (.80) (1.22)
- ----------------------------------------------------------------------------------------------------------------------
</Table>

See page 50 for notes to the Financial Highlights.

The accompanying notes are an integral part of the financial statements.
48

RATIO OF RATIO OF
RATIO OF ADVISER OR OPERATING RATIO OF
NET ASSET OPERATING SUBADVISER FEES EXPENSES NET OF INTEREST/DIVIDEND
VALUE NET ASSETS EXPENSES NOT IMPOSED ALL OFFSETS TO EXPENSE
END TOTAL END OF PERIOD TO AVERAGE TO AVERAGE AVERAGE TO AVERAGE
OF PERIOD RETURN (000S) NET ASSETS (%)(6) NET ASSETS (%) NET ASSETS (%) NET ASSETS (%)
- -------------------------------------------------------------------------------------------------------------------------------

$ 5.64 (43.60)%(e) $ 9,752 1.20%(c) .20% 1.20% --%
- -------------------------------------------------------------------------------------------------------------------------------
$10.19 (53.96)% $ 117,951 .95% --% .95% --%
24.23 45.92 275,599 .88 -- .87 --
17.52 76.51 145,249 .90 -- .90 --
10.81 (8.73) 88,030 1.00 -- 1.00 --
14.20 18.64 104,568 1.12 -- 1.12 --
- -------------------------------------------------------------------------------------------------------------------------------
$ 9.72 (2.80)%(e) $ 17,317 1.20%(c) .20% 1.20% --%
- -------------------------------------------------------------------------------------------------------------------------------
$ 8.44 (45.53)% $ 437,201 .89% --% .89% --%
17.56 (1.58) 1,247,082 .89 -- .89 --
19.13 7.87 1,382,513 .91 -- .91 --
18.07 16.96 1,178,252 .96 -- .96 --
16.15 8.13 918,950 1.02 -- 1.02 --
- -------------------------------------------------------------------------------------------------------------------------------
$ 7.39 (26.10)%(b,e) $ 6,765 1.20%(a,c) .20%(a) 1.20%(a) --%
- -------------------------------------------------------------------------------------------------------------------------------
$26.40 (35.23)% $6,020,099 .66% --% .66% --%
48.16 12.26 9,100,317 .64 -- .64 --
46.92 48.59 6,484,801 .66 -- .66 --
33.51 15.72 3,833,598 .68 -- .68 --
34.01 35.73 2,798,404 .70 -- .70 --
- -------------------------------------------------------------------------------------------------------------------------------
$10.00 (25.22)%(e) $ 77,043 .89%(c) .10% .89% --%
14.28 8.81(e) 126,826 .93(c) .10 .92 --
13.83 24.37(e) 114,791 .92(c) .10 .92 --
11.26 (1.98)(e) 112,669 1.15(c) .10 1.15 --
12.14 16.64(e) 134,957 .99(c) .20 .98 --
- -------------------------------------------------------------------------------------------------------------------------------
$28.65 (16.40)%(e) $3,497,357 .91%(c) .06% .91% --%
38.85 3.74(e) 4,830,275 .92(c) .06 .92 --
40.66 18.54(e) 5,361,024 .92(c) .06 .92 --
36.97 6.97(e) 5,088,401 .94(c) .06 .94 --
35.84 19.26(e) 5,090,048 .97(c) .05 .97 --
- -------------------------------------------------------------------------------------------------------------------------------

RATIO OF
NET INVESTMENT
INCOME/(LOSS)
TO AVERAGE PORTFOLIO
NET ASSETS (%) TURNOVER (%)
- -------------------------------------------------------------------------------------------------------------------------------

(.92)%(c) 61%
- -------------------------------------------------------------------------------------------------------------------------------
(.17)% 9%
.02 13
(.54) 13
(.30) 23
(.47) 147
- -------------------------------------------------------------------------------------------------------------------------------
(.67)%(c) 56%
- -------------------------------------------------------------------------------------------------------------------------------
.18% 63%
.10 103
.78 48
.62 85
.91 76
- -------------------------------------------------------------------------------------------------------------------------------
.45%(a,c) 143%(b)
- -------------------------------------------------------------------------------------------------------------------------------
.15% 89%
(.07) 86
(.05) 68
.24 70
.23 73
- -------------------------------------------------------------------------------------------------------------------------------
.79%(c) 33%
.85(c) 65
1.36(c) 52
.86(c) 70
1.33(c) 58
- -------------------------------------------------------------------------------------------------------------------------------
1.36%(c) 7%
1.40(c) 10
1.65(c) 4
1.27(c) 14
1.20(c) 6
- -------------------------------------------------------------------------------------------------------------------------------
</Table>

HARBOR FUND FINANCIAL HIGHLIGHTS--CONTINUED

SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS
--------------------------------------------
NET REALIZED AND
UNREALIZED GAINS/(LOSSES)
ON INVESTMENTS, FUTURES
CONTRACTS, WRITTEN
NET ASSET OPTIONS, SWAP AGREEMENTS,
VALUE NET INVESTMENTS SOLD SHORT TOTAL FROM
BEGINNING INVESTMENT AND FOREIGN CURRENCY INVESTMENT
YEAR/PERIOD ENDED OF PERIOD INCOME/(LOSS) CONTRACTS OPERATIONS
- -------------------------------------------------------------------------------------------------------------------

HARBOR LARGE CAP VALUE FUND
October 31, 2001(4)..................... $13.88 $.24 $ (.68) $ (.44)
October 31, 2000........................ 15.40 .27 .08 .35
October 31, 1999........................ 15.21 .27 1.80 2.07
October 31, 1998........................ 18.17 .27 .79 1.06
October 31, 1997........................ 16.04 .34 4.13 4.47
- -------------------------------------------------------------------------------------------------------------------
HARBOR BOND FUND
October 31, 2001........................ $11.00 $.56(c) $ 1.08 $ 1.64
October 31, 2000........................ 10.85 .57(c) .15 .72
October 31, 1999........................ 11.82 .58(c) (.49) .09
October 31, 1998........................ 11.57 .61(c) .53 1.14
October 31, 1997........................ 11.28 .68(c) .30 .98
- -------------------------------------------------------------------------------------------------------------------
HARBOR SHORT DURATION FUND
October 31, 2001........................ $ 8.51 $.45(c) $ .19 $ .64
October 31, 2000........................ 8.56 .55(c) (.04) .51
October 31, 1999........................ 8.69 .46(c) (.15) .31
October 31, 1998........................ 8.66 .48(c) .09 .57
October 31, 1997........................ 8.79 .45(c,d) .01 .46
- -------------------------------------------------------------------------------------------------------------------
HARBOR MONEY MARKET FUND
October 31, 2001........................ $ 1.00 $.05(c) $ -- $ .05
October 31, 2000........................ 1.00 .06(c) -- .06
October 31, 1999........................ 1.00 .05(c) -- .05
October 31, 1998........................ 1.00 .05(c) -- .05
October 31, 1997........................ 1.00 .02(c) -- .02
- -------------------------------------------------------------------------------------------------------------------

LESS DISTRIBUTIONS
-----------------------------------------------
DIVIDENDS DISTRIBUTIONS
FROM NET FROM NET
INVESTMENT REALIZED TOTAL
YEAR/PERIOD ENDED INCOME CAPITAL GAINS(5) DISTRIBUTIONS

HARBOR LARGE CAP VALUE FUND
October 31, 2001(4)..................... $(.24) $ (.19) $(.43)
October 31, 2000........................ (.30) (1.57) (1.87)
October 31, 1999........................ (.25) (1.63) (1.88)
October 31, 1998........................ (.28) (3.74) (4.02)
October 31, 1997........................ (.34) (2.00) (2.34)
- -------------------------------------------------------------------------------------------------------
HARBOR BOND FUND
October 31, 2001........................ $(.52) $ (.07) $(.59)
October 31, 2000........................ (.57) -- (.57)
October 31, 1999........................ (.55) (.51) (1.06)
October 31, 1998........................ (.66) (.23) (.89)
October 31, 1997........................ (.69) -- (.69)
- -------------------------------------------------------------------------------------------------------------------
HARBOR SHORT DURATION FUND
October 31, 2001........................ $(.46) $ -- $(.46)
October 31, 2000........................ (.56) -- (.56)
October 31, 1999........................ (.44) -- (.44)
October 31, 1998........................ (.54) -- (.54)
October 31, 1997........................ (.59) -- (.59)
- -------------------------------------------------------------------------------------------------------------------
HARBOR MONEY MARKET FUND
October 31, 2001........................ $(.05) $ -- $(.05)
October 31, 2000........................ (.06) -- (.06)
October 31, 1999........................ (.05) -- (.05)
October 31, 1998........................ (.05) -- (.05)
October 31, 1997........................ (.02) -- (.02)
- -------------------------------------------------------------------------------------------------------------------
</Table>

1 Commenced operations on November 1, 2000.

2 Effective May 2, 1997, Harbor Growth Fund appointed Emerging Growth Advisors,
Inc. as its Subadviser.

3 For the period February 1, 2001 (inception) through October 31, 2001.

4 Effective September 20, 2001, Harbor Value Fund changed its name to Harbor
Large Cap Value Fund and appointed Armstrong Shaw Associates as its
Subadviser.

5 Includes both short-term and long-term capital gains.

6 Percentage does not reflect reduction for credit balance arrangements.

a Annualized.

b Unannualized.

c Reflects the Adviser's or Subadviser's agreement not to impose all or a
portion of its management fees.

d Based on monthly average of shares outstanding during the fiscal year.

e The total returns would have been lower had certain expenses not been waived
during the periods shown.

f Dividend expense from investments sold short.

g Interest expense from investments sold short.

The accompanying notes are an integral part of the financial statements.
50

RATIO OF RATIO OF
RATIO OF ADVISER OR OPERATING RATIO OF
NET ASSET OPERATING SUBADVISER FEES EXPENSES NET OF INTEREST/DIVIDEND
VALUE NET ASSETS EXPENSES NOT IMPOSED ALL OFFSETS TO EXPENSE
END TOTAL END OF PERIOD TO AVERAGE TO AVERAGE AVERAGE TO AVERAGE
OF PERIOD RETURN (000S) NET ASSETS (%)(6) NET ASSETS(%) NET ASSETS(%) NET ASSETS (%)
- --------------------------------------------------------------------------------------------------------------------------

$13.01 (3.20)% $ 130,029 .77% --% .77% .14%(a,f)
13.88 3.07 147,615 .80 -- .80 .16(f)
15.40 14.60 157,382 .76 -- .76 --
15.21 6.69 170,468 .79 -- .79 --
18.17 31.08 161,359 .83 -- .83 --
- --------------------------------------------------------------------------------------------------------------------------
$12.05 15.35%(e) $1,036,552 .56%(c) .22% .56% --%
11.00 6.95(e) 717,255 .60(c) .21 .60 --
10.85 0.85(e) 627,180 .61(c) .21 .60 --
11.82 10.33(e) 473,021 .65(c) .22 .65 --
11.57 8.96(e) 362,594 .67(c) .23 .67 --
- --------------------------------------------------------------------------------------------------------------------------
$ 8.69 7.73%(e) $ 125,959 .28%(c) .20% .27% --%
8.51 6.21(e) 125,032 .29(c) .20 .28 --
8.56 3.68(e) 251,442 .28(c) .20 .28 --
8.69 6.81(e) 217,244 .36(c) .20 .36 --
8.66 5.48(e) 162,476 .38(c) .20 .36 .64(g)
- --------------------------------------------------------------------------------------------------------------------------
$ 1.00 4.83%(e) $ 168,834 .38%(c) .12% .38% --%
1.00 5.99(e) 105,893 .48(c) .12 .47 --
1.00 4.82(e) 97,265 .46(c) .12 .46 --
1.00 5.20(e) 100,276 .57(c) .12 .57 --
1.00 5.11(e) 73,540 .63(c) .12 .62 --
- --------------------------------------------------------------------------------------------------------------------------

1.64% 194%
2.05 106
1.65 110
1.67 114
1.98 146
- --------------------------------------------------------------------------------------------------------------------------
5.50%(c) 531%
6.16(c) 494
5.35(c) 271
5.41(c) 278
6.04(c) 252
- --------------------------------------------------------------------------------------------------------------------------
5.35%(c) 246%
6.00(c) 478
5.36(c) 578
5.51(c) 727
5.14(c) 1,519
- --------------------------------------------------------------------------------------------------------------------------
4.60%(c) N/A
5.88(c) N/A
4.73(c) N/A
5.08(c) N/A
4.97(c) N/A
- --------------------------------------------------------------------------------------------------------------------------
</Table>

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2001

(Currency in Thousands)

NOTE 1--ORGANIZATIONAL MATTERS

Harbor Fund (the "Trust") is registered under the Investment Company Act of
1940, as amended, as an open-ended investment company, consisting of a series of
twelve diversified investment portfolios (each series a "Fund", collectively,
the "Funds"), each of which is represented by a separate series of shares of
beneficial interest and having an unlimited number of shares authorized. As of
October 31, 2001, the Trust consisted of the following funds: Harbor Mid Cap
Growth Fund, Harbor Growth Fund, Harbor Small Cap Growth Fund, Harbor
International Growth Fund, Harbor Global Equity Fund, Harbor Capital
Appreciation Fund, Harbor International Fund II, Harbor International Fund,
Harbor Large Cap Value Fund (formerly Harbor Value Fund), Harbor Bond Fund,
Harbor Short Duration Fund and Harbor Money Market Fund.

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements. The preparation of
financial statements in accordance with accounting principles generally accepted
in the United States requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements.

SECURITY VALUATION

Equity securities are valued at the last sale price on an exchange or the
National Association of Securities Dealers Automated Quotation ("NASDAQ") system
or, in the case of unlisted securities or listed securities for which there were
no sales on the valuation day, the mean between the closing bid and asked price.
Securities listed or traded on foreign exchanges are valued at the last sale
price on that exchange on the valuation day, or if no sale occurs, at the
official bid price (both the last sale price and official bid price are
determined as of the close of the London Foreign Exchange).

Except for Harbor Money Market Fund, debt securities, other than short-term
securities with a remaining maturity of less than sixty days, are valued at
prices furnished by a pricing service, or as otherwise described below, selected
by the Adviser, which determines valuation for normal institutional-size trading
units of such securities using market information, transactions for comparable
securities and various relationships between securities which are generally
recognized by institutional traders. Short-term securities with a remaining
maturity of less than sixty days are stated at amortized cost which approximates
value.

Securities, for which there are no such prices or for which prices are
deemed by the Adviser or Subadviser not to be representative of market values,
are valued at their fair value as determined in good faith under consistently
applied procedures established by and under the supervision of the Board of
Trustees. The actual calculation of fair market value may be done by others
including the Adviser and Subadviser.

Securities of the Harbor Money Market Fund are valued utilizing the
amortized cost method as set forth in Rule 2a-7 under the Investment Company Act
of 1940, as amended, and the Fund's Rule 2a-7 procedures.

FUTURES CONTRACTS

To seek to increase total return or hedge against changes in interest
rates, securities prices or currency exchange rates, each Fund (except Harbor
Money Market Fund), may purchase and sell various kinds of futures contracts,
and purchase and write call and put options on these futures contracts. Harbor
Large Cap Value Fund is not authorized to enter into currency futures contracts
and options on such contracts. Harbor International Growth Fund, Harbor
International Fund II and Harbor International Fund are not authorized to enter
into futures contracts on currencies or engage in options transactions with
respect to futures contracts for speculative purposes. Futures contracts tend to
increase or decrease the Fund's exposure to the underlying instrument or hedge
other fund investments. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts or if the counterparties do not perform under the contracts' terms.
The maximum potential loss on a long futures contract is the U.S. dollar value
of the notional amount at the time the contract is opened. The potential loss on
a short futures contract is unlimited. Open futures contracts are valued based
on the last sale price on the exchange on which such futures are principally
traded. See Portfolio of Investments for open futures contracts held as of
October 31, 2001.

A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract, a
Fund is required to pledge to the broker an amount of cash, U.S. government
securities or other liquid securities equal to the minimum "initial margin"
requirements of the exchange. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin," and are

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands)

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

recorded by the Fund as unrealized gains or losses. When the contract is closed
or expired, the Fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at the
time it was closed.

OPTIONS

When a Fund purchases an option, the premium paid by the Fund is included
in the Fund's Statement of Assets and Liabilities as an investment and
subsequently "marked-to-market" to reflect the option's current market value.
Purchased options are valued at the last sale price on the market on which they
are principally traded. If the purchased option expires, the Fund realizes a
loss in the amount of the premium. If the Fund enters into a closing sale
transaction, it realizes a gain or loss, depending on whether the proceeds from
the sale are greater or less than the cost of the option. If the Fund exercises
a call option, the cost of the securities acquired by exercising the call is
increased by the premium paid to buy the call. If the Fund exercises a put
option, it realizes a gain or loss from the sale of the underlying security and
the proceeds from such sale are decreased by the premium originally paid. The
risk associated with purchasing options is limited to the premium originally
paid.

When a Fund writes an option, the premium received by the Fund is presented
in the Fund's Statement of Assets and Liabilities as an asset and an equivalent
liability. The amount of the liability is subsequently "marked-to-market" to
reflect the current market value of the option written. Written options are
valued at the last sale price or, in the absence of a sale, the last offering
price on the market on which they are principally traded. If an option expires
on its stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or loss if the cost of a closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received. If a written put option is exercised, the amount of the premium
originally received reduces the cost of the security which the Fund purchases
upon exercise of the option.

The risk in writing a call option is that the Fund relinquishes the
opportunity to profit if the market price of the underlying security increases
and the option is exercised. In writing a put option, the Fund assumes the risk
of incurring a loss if the market price of the underlying security decreases and
the option is exercised. In addition, there is a risk the Fund may not be able
to enter into a closing transaction because of an illiquid secondary market, or
if the counterparties do not perform under the contracts' terms. See Note 3 for
all outstanding written options as of October 31, 2001.

SWAP AGREEMENTS

To the extent permitted under their respective investment policies, Harbor
Bond Fund and Harbor Short Duration Fund may invest in swap agreements which
involve the exchange of cash payments based on the specified terms and
conditions of such agreements. A swap is an agreement to exchange the return
generated by one investment for the return generated by another instrument. The
value of each swap is determined by the counterparty to the swap agreement using
a methodology which discounts the expected future cash receipts or disbursements
related to the swap. The Fund may also enter into interest rate swap agreements
which involve the exchange by the Fund with another party of their respective
commitments to pay or receive interest, (e.g., an exchange of floating rate
payments for fixed rate payments with respect to a notional amount of
principal). Interest rate swaps are "marked-to-market" daily. Net market value
is reported as an asset or a liability in the Statement of Assets and
Liabilities. The cash paid or received on a swap is recognized as income or
expense when such a payment is paid or received.

Entering into swap agreements involves, to varying degrees, elements of
credit risk, market risk, and interest rate risk in excess of the amount
recognized in the Statement of Assets and Liabilities. Such risks involve the
possibility that there is not a liquid market for these agreements, that the
counterparty to the agreements may default on its obligation to perform and that
there may be unfavorable changes in market conditions or interest rates.

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands)

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

TBA/WHEN-ISSUED PURCHASE COMMITMENTS

Harbor Bond Fund may enter into TBA (to be announced) and when-issued
purchase commitments to purchase securities for a fixed unit price at a future
date beyond customary settlement time. Although the unit price for a TBA has
been established, the principal value has not been finalized. However, the
amount of the commitment will not fluctuate more than 2.0% from the principal
amount. The price of a when-issued security and the date when the security will
be delivered and paid for are fixed at the time the transaction is negotiated.

The Fund holds, and maintains until the settlement date, cash or liquid
securities in an amount sufficient to meet the purchase price. TBA and
when-issued purchase commitments may be considered securities in themselves, and
involve a risk of loss if the value of the security to be purchased declines
prior to the settlement date, which risk is in addition to the risk of decline
in the value of the Fund's other assets. Risks may also arise upon entering into
these contracts from the potential inability of counterparties to meet the terms
of their contracts. Unsettled TBA and when-issued purchase commitments are
valued at the current market value of the underlying securities, generally
according to the procedures described under "Security Valuation" above.

Although the Fund will generally enter into TBA and when-issued purchase
commitments with the intention of acquiring securities for its portfolio, a Fund
may dispose of a commitment prior to settlement if the Fund's Subadviser deems
it appropriate to do so.

TBA SALE COMMITMENTS

Harbor Bond Fund may enter into TBA sale commitments to hedge portfolio
positions or to sell mortgage-backed securities owned under delayed delivery
arrangements. Proceeds of TBA sale commitments are not received until the
contractual settlement date.

Unsettled TBA sale commitments are valued at the current market value of
the underlying securities, generally according to the procedures described under
"Security Valuation" above. The contract is "marked-to-market" daily and the
change in market value is recorded by the Fund as an unrealized gain and loss.
If the TBA sale commitment is closed through the acquisition of an offsetting
purchase commitment, the Fund realizes a gain or loss on the commitment without
regard to any unrealized gain or loss on the underlying security. If the Fund
delivers securities under the commitment, the Fund realizes a gain or loss from
the sale of the securities based upon the unit price established at the date on
which the commitment was entered.

SHORT SALES

Each Fund, except Harbor International Growth Fund, Harbor International
Fund, Harbor International Fund II and Harbor Money Market Fund, may engage in
short-selling which obligates the Fund to replace the security borrowed by
purchasing it at the market price at the time of replacement. Until the security
is replaced, the Fund is required to pay to the lender any accrued interest or
dividends and may be required to pay a premium. The Fund would realize a gain if
the security declines in price between the date of the short sale and the date
on which the Fund replaces the borrowed security. The Fund would incur a loss as
a result of the short sale if the price of the security increases between those
dates. Until the Fund replaces the borrowed security, it will maintain a
segregated account of cash or liquid securities with its custodian sufficient to
cover its short position. Short sales involve the risk of an unlimited increase
in the market price of a security.

FOREIGN FORWARD CURRENCY CONTRACTS

Consistent with its investment policies, each Fund (excluding the Money
Market Fund) may enter into forward foreign currency contracts to facilitate
transactions in foreign securities or as a hedge against either specific
transactions or portfolio positions. A foreign forward currency contract is an
agreement between two parties to buy and sell currencies at a set price on a
future date. The U.S. dollar value of the contracts is determined using forward
currency exchange rates supplied by a pricing service. The contract is
"marked-to-market" daily and the change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value on the open and
close date. Losses may arise from changes in the value of the foreign currency
or if the counterparties do not perform under the contract's terms. The maximum
potential loss from such contracts is the aggregate face value in U.S. dollars
at the time the contract was opened; however, management of the Fund believes
the likelihood of such loss is remote.

FOREIGN CURRENCY TRANSLATIONS

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands)

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

translated into U.S. dollars at the current exchange rate on the respective
dates of the transaction. Income and withholding taxes are translated at the
prevailing exchange rate when accrued or incurred.

Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign forward
currency contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions, and
the difference between the amount of investment income accrued and tax reclaims
receivable and the U.S. dollar amount actually received. The effects of changes
in foreign currency exchange rates on investments in securities are not isolated
in the Statement of Operations from the effects of changes in market prices of
these securities. Such fluctuations are included with the net realized and
unrealized gain or loss on investments.

REPURCHASE AGREEMENTS

Each Fund may enter into repurchase agreements with certain banks and
broker dealers whereby the Fund acquires a security for cash and obtains a
simultaneous commitment from the seller to repurchase the security at an agreed
upon price and date. The Trust's custodian takes possession through the federal
book-entry system of securities collateralizing repurchase agreements. The value
of the underlying assets at the time of purchase is required to be at least
equal to the repurchase price to protect the Fund in the event of default by the
seller.

SECURITIES TRANSACTIONS

Securities transactions are accounted for on the trade date (the date the
order to buy or sell is executed). Realized gains or losses on security
transactions are determined on the basis of identified cost for both federal
income tax and financial reporting purposes.

INVESTMENT INCOME

Dividends declared are accrued on the ex-dividend date. For Harbor
International Growth Fund, Harbor Global Equity Fund, Harbor International Fund
II and Harbor International Fund, certain dividends are recorded after the
ex-dividend date, but as soon as the Fund is notified of such dividends.
Interest income is accrued daily as earned. Discounts and premiums on fixed
income securities purchased are amortized over the life of the respective
securities using the effective yield method.

DISTRIBUTION TO SHAREHOLDERS

Distributions are recorded on the ex-dividend date.

INCOME RECOGNITION

In December 2000, the American Institute of Certified Public Accountants
("AICPA") issued a revised version of the AICPA Audit and Accounting Guide for
Investment Companies (the "Guide"). The Guide, which is effective for annual
financial statements issued for fiscal years beginning after December 15, 2000,
will require investment companies to amortize premiums and discounts on fixed
income securities. The Trust currently amortizes premiums and discounts on fixed
income securities. Accordingly, the adoption of the Guide will have no
significant effect on the Trust's financial statements.

EXPENSES

Expenses incurred by the Trust with respect to any two or more Funds are
allocated in proportion to the net assets or the number of shareholders of each
Fund, except where allocations of direct expense to each Fund can be otherwise
fairly made.

FEDERAL TAXES

Each Fund is treated as a separate entity for federal tax purposes. Each
Fund's policy is to meet the requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies and to distribute to
its shareholders all of its taxable income within the prescribed time. It is
also the intention of each Fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code.
Therefore, no provision has been made for federal taxes on income, capital gains
or unrealized appreciation of securities held or excise tax on income and
capital gains.

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands)

NOTE 3--INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments, other than short-term securities, for
each Fund for the year ended October 31, 2001 were as follows:

<Table>
<Caption>
PURCHASES SALES
------------------------ ------------------------
U.S. U.S.
FUND GOVERNMENT OTHER GOVERNMENT OTHER
- ---- ---------- ----- ---------- -----

Harbor Mid Cap Growth Fund.................................. $ -- $ 19,488 $ -- $ 5,277
Harbor Growth Fund.......................................... -- 20,836 -- 16,132
Harbor Small Cap Growth Fund................................ -- 19,862 -- 5,298
Harbor International Growth Fund............................ -- 477,115 -- 30,336
Harbor Global Equity Fund................................... -- 16,740 -- 8,646
Harbor Capital Appreciation Fund............................ -- 6,501,018 -- 6,218,918
Harbor International Fund II................................ -- 34,271 -- 51,396
Harbor International Fund................................... -- 292,133 -- 822,499
Harbor Large Cap Value Fund................................. -- 48,915 -- 67,889
Harbor Bond Fund............................................ 5,730,912 827,619 5,616,880 613,737
Harbor Short Duration Fund.................................. 163,304 89,382 161,169 67,727
</Table>

The Funds may be subject to taxes imposed by countries in which it invests.
Such taxes are generally based on income and/or capital gains earned or
repatriated. Taxes are accrued and applied to net investment income, net
realized gains and unrealized appreciation as such income and/or gains are
earned.

REDEMPTION IN-KIND TRANSACTIONS

For the year ended October 31, 2001, Harbor Capital Appreciation Fund,
Harbor International Fund II, Harbor International Fund, and Harbor Large Cap
Value Fund realized gains of $10,560, $396, $66,094 and $741, respectively, from
in-kind redemptions of Fund shares.

WRITTEN OPTIONS

Transactions in written options for the year ended October 31, 2001 are
summarized as follows:

<Table>
<Caption>
OPTIONS WRITTEN OPTIONS WRITTEN
----------------------- -------------------------
EURODOLLAR FUTURES EURO FUTURES
----------------------- -------------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
CONTRACTS FACE VALUE CONTRACTS FACE VALUE
--------- ---------- --------- ----------

HARBOR BOND FUND
Options outstanding at beginning of year.................. 574 E$ 1,436 -- E --
Options opened............................................ 7,226 18,065 28,300,000 28,300
Options closed/expired.................................... (1,676) (4,191) (21,900,000) (21,900)
------ -------- ----------- --------
Open at 10/31/2001........................................ 6,124 E$15,310 6,400,000 E 6,400
====== ======== =========== ========
</Table>

<Table>
<Caption>
OPTIONS WRITTEN OPTIONS WRITTEN
----------------------- -----------------------
JAPANESE YEN FUTURES U.S. TREASURY FUTURES
----------------------- -----------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
CONTRACTS FACE VALUE CONTRACTS FACE VALUE
--------- ---------- --------- ----------

Options outstanding at beginning of year.................. 8 Y 8,000 513 $ 513
Options opened............................................ -- -- 7,956 7,956
Options closed/expired.................................... (8) (8,000) (5,093) (5,093)
-- ------- ------ -------
Open at 10/31/2001........................................ -- Y -- 3,376 $ 3,376
== ======= ====== =======
</Table>

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands)

NOTE 3--INVESTMENT PORTFOLIO TRANSACTIONS--CONTINUED

<Table>
<Caption>
OPTIONS WRITTEN OPTIONS WRITTEN
-------------------------- ------------------------
SWAP OPTIONS-JAPANESE YEN SWAP OPTIONS-U.S.
-------------------------- ------------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
CONTRACTS FACE VALUE CONTRACTS FACE VALUE
--------- ---------- --------- ----------

HARBOR BOND FUND
Options outstanding at beginning of year.................. 400,000,000 Y 400,000 -- $ --
Options opened............................................ 200,000,000 200,000 53,200,000 53,200
Options closed/expired.................................... (600,000,000) (600,000) -- --
------------ --------- ---------- -------
Open at 10/31/2001........................................ -- Y -- 53,200,000 $53,200
============ ========= ========== =======
</Table>

<Table>
<Caption>
OPTIONS WRITTEN
-----------------------
EURODOLLAR FUTURES
-----------------------
NUMBER OF AGGREGATE
CONTRACTS FACE VALUE
--------- ----------

HARBOR SHORT DURATION FUND
Options outstanding at beginning of year.................. 450 E$ 1,125
Options opened............................................ 280 700
Options closed/expired.................................... (730) (1,825)
---- --------
Open at 10/31/2001........................................ -- E$ --
==== ========
</Table>

- ------------

E Euro.

E$ Eurodollar.

Y Japanese Yen.

NOTE 4--FEES AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISER

Harbor Capital Advisors, Inc. ("Harbor Capital"), an indirect wholly-owned
subsidiary of Robeco Groep, N.V., is the Trust's investment adviser and is also
responsible for administrative and other services. Prior to June 8, 2001, Harbor
Capital was an indirect wholly-owned subsidiary of Owens-Illinois, Inc. Separate
advisory agreements for each Fund were in effect during the year ended October
31, 2001. The agreements provide for fees based on an annual percentage rate of
average daily net assets as follows:

<Table>
<Caption>
ANNUAL
PERCENTAGE FEES
FUND RATE EARNED
---- ---------- ------

Harbor Mid Cap Growth Fund.................................. 0.75% $ 67
Harbor Growth Fund.......................................... 0.75 1,333
Harbor Small Cap Growth Fund................................ 0.75 73
Harbor International Growth Fund............................ 0.75 5,850
Harbor Global Equity Fund................................... 0.75 37
Harbor Capital Appreciation Fund............................ 0.60 43,124
Harbor International Fund II................................ 0.75 783
Harbor International Fund................................... 0.85 37,347
Harbor Large Cap Value Fund................................. 0.60 834
Harbor Bond Fund............................................ 0.70 6,252
Harbor Short Duration Fund.................................. 0.40 421
Harbor Money Market Fund.................................... 0.30 430
</Table>

Harbor Capital has from time to time agreed not to impose all or a portion
of its advisory fees and bear a portion of the expenses incurred in the
operation of certain Funds in order to limit Fund expenses. During the year
ended October 31, 2001, Harbor Capital agreed not to impose advisory fees of
$18, $20, $10, $101, $2,576, $1,960, $210 and $172 relating to Harbor Mid Cap
Growth Fund, Harbor Small Cap Growth Fund, Harbor Global Equity Fund, Harbor
International Fund II, Harbor International Fund, Harbor Bond Fund, Harbor Short
Duration Fund and Harbor Money Market Fund, respectively.

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands)

NOTE 4--FEES AND OTHER TRANSACTIONS WITH AFFILIATES--CONTINUED

The Trust reimburses Harbor Capital for certain legal expenses incurred by
Harbor Capital with respect to the Trust. Such amounts aggregated $50 for the
year ended October 31, 2001.

DISTRIBUTOR

HCA Securities, Inc. ("HCA Securities"), a wholly-owned subsidiary of
Harbor Capital is the distributor for Harbor Fund shares. Harbor Fund does not
reimburse the distributor for expenses.

SHAREHOLDERS

On October 31, 2001, Harbor Capital, HCA Securities and Harbor Transfer,
Inc. held the following shares of beneficial interest in the Funds:

<Table>
<Caption>
HARBOR CAPITAL,
HCA SECURITIES AND
FUND HARBOR TRANSFER
- ---- ------------------

Harbor Mid Cap Growth Fund.................................. 306,370
Harbor Growth Fund.......................................... 42,372
Harbor Small Cap Growth Fund................................ 201,853
Harbor International Growth Fund............................ 48,028
Harbor Global Equity Fund................................... 505,201
Harbor Capital Appreciation Fund............................ 4,085
Harbor International Fund II................................ 246,105
Harbor International Fund................................... 1,347
Harbor Large Cap Value Fund................................. 12,421
Harbor Bond Fund............................................ 19,840
Harbor Short Duration Fund.................................. 11,804
Harbor Money Market Fund.................................... 23,054,803
</Table>

TRANSFER AGENT

Harbor Transfer, Inc., a wholly-owned subsidiary of Harbor Capital is the
shareholder servicing agent for the Funds. Fees incurred for these transfer
agent services for the year ended October 31, 2001 totaled $5,093.

"NON-INTERESTED" TRUSTEES

The fees and expenses of the non-interested Trustees allocated to each Fund
are shown on each Fund's Statement of Operations. Trustees' fees and expenses
for all Funds aggregated $218 for the year ended October 31, 2001.

CUSTODIAN

Payments to the custodian have been reduced by balance credits applied to
each portfolio for the year ended October 31, 2001. For the Harbor Mid Cap
Growth Fund, Harbor Growth Fund, Harbor Small Cap Growth Fund, Harbor
International Growth Fund, Harbor Global Equity Fund, Harbor Capital
Appreciation Fund, Harbor International Fund II, Harbor International Fund,
Harbor Large Cap Value Fund, Harbor Bond Fund, Harbor Short Duration Fund, and
Harbor Money Market Fund the reduction amounted to $0, $2, $0, $18, $0, $53, $1,
$16, $1, $8, $8 and $6, respectively. The Funds could have invested a portion of
the assets utilized in connection with balance credit arrangements in an income
producing asset if the Funds had not entered into such arrangements.

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands)

NOTE 5--TAX INFORMATION

The amount and character of income and net realized gains to be distributed
are determined in accordance with income tax rules and regulations, which may
differ from generally accepted accounting principles. These differences are
attributable to permanent book and tax accounting differences. Reclassifications
are made to the Funds' capital accounts to reflect income and net realized gains
available for distribution (or available capital loss carryovers) under income
tax rules and regulations. The calculation of net investment income or loss per
share in the Financial Highlights exclude the following amounts reclassified for
the year ended October 31, 2001:

<Table>
<Caption>
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT NET REALIZED
FUND INCOME/(LOSS) GAIN/(LOSS) PAID-IN CAPITAL
---- -------------- ------------ ---------------

Harbor Mid Cap Growth Fund.................................. $ 82 $ -- $ (82)
Harbor Growth Fund.......................................... 348 10 (358)
Harbor Small Cap Growth Fund................................ 65 -- (65)
Harbor International Growth Fund............................ (1,277) 1,094 183
Harbor Global Equity Fund................................... (17) 17 --
Harbor Capital Appreciation Fund............................ (1,554) (10,496) 12,050
Harbor International Fund II................................ 1,133 (363) (770)
Harbor International Fund................................... 8,138 (65,549) 57,411
Harbor Large Cap Value Fund................................. 144 (885) 741
Harbor Bond Fund............................................ (4,604) 1,033 3,571
Harbor Short Duration Fund.................................. 13 3,523 (3,536)
Harbor Money Market Fund.................................... (2) 2 --
</Table>

At October 31, 2001, Harbor Mid Cap Growth Fund had capital loss
carryforwards of approximately $2,096, which may be available to offset future
realized capital gains, if any, and will expire on October 31, 2009.

At October 31, 2001, Harbor Growth Fund had capital loss carryforwards of
approximately $11,022, which may be available to offset future realized capital
gains, if any, and will expire on October 31, 2009.

At October 31, 2001, Harbor Small Cap Growth Fund had capital loss
carryforwards of approximately $606, which may be available to offset future
realized capital gains, if any, and will expire on October 31, 2009.

At October 31, 2001, Harbor International Growth Fund had capital loss
carryforwards of approximately $371,462, which may be available to offset future
realized capital gains, if any, and will expire on October 31, 2009.

At October 31, 2001, Harbor Global Equity Fund had capital loss
carryforwards of approximately $956, which may be available to offset future
realized capital gains, if any, and will expire on October 31, 2009.

At October 31, 2001, Harbor Capital Appreciation Fund had capital loss
carryforwards of approximately $1,535,346, which may be available to offset
future realized capital gains, if any, and will expire on October 31, 2009.

At October 31, 2001, Harbor International Fund II had capital loss
carryforwards of approximately $2,577, which may be available to offset future
realized capital gains, if any, and will expire on October 31, 2009.

At October 31, 2001, Harbor Large Cap Value Fund had capital loss
carryforwards of approximately $12,600, which may be available to offset future
realized capital gains, if any, and will expire on October 31, 2009.

At October 31, 2001 Harbor Short Duration Fund had capital loss
carryforwards of approximately $20,813, which may be available to offset future
realized capital gains, if any; $13,538, $1,182, $2,216, $2,223 and $1,654 will
expire on October 31, 2002, October 31, 2004, October 31, 2005, October 31, 2007
and October 31, 2008, respectively.

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands, except per share amounts)

NOTE 5--TAX INFORMATION--CONTINUED

The identified cost for federal income tax purposes of investments owned by
each Fund (including earned discount on corporate short-term notes and
commercial paper) and their respective gross unrealized appreciation and
depreciation at October 31, 2001, along with long-term capital gains and the
amount of long-term capital gains per share paid during the year ended October
31, 2001 were as follows:

<Table>
<Caption>
LONG-TERM
GROSS UNREALIZED NET UNREALIZED CAPITAL GAINS
------------------------------ APPRECIATION/ ---------------------------
FUND IDENTIFIED COST APPRECIATION (DEPRECIATION) (DEPRECIATION) ($000S) ($ PER SHARE)
---- --------------- ------------ -------------- -------------- ------- -------------

Harbor Mid Cap Growth
Fund..................... $ 12,280 $ 410 $ (2,785) $ (2,375) $ -- $ --
Harbor Growth Fund......... 157,662 22,353 (61,784) (39,431) 17,418 1.558
Harbor Small Cap Growth
Fund..................... 17,357 1,335 (1,284) 51 -- --
Harbor International Growth
Fund..................... 545,120 15,560 (130,044) (114,484) 60,958 0.916
Harbor Global Equity
Fund..................... 7,724 86 (1,026) (940) -- --
Harbor Capital Appreciation
Fund..................... 6,506,258 520,862 (986,096) (465,234) 1,154,575 6.174
Harbor International Fund
II....................... 95,734 3,689 (22,687) (18,998) 2,278 0.268
Harbor International
Fund..................... 2,655,192 1,130,728 (297,864) 832,864 460,322 3.771
Harbor Large Cap Value
Fund..................... 124,972 8,266 (4,198) 4,068 -- --
Harbor Bond Fund........... 1,409,444 25,079 (4,404) 20,675 4,888 0.072
Harbor Short Duration
Fund..................... 129,370 2,265 (233) 2,032 -- --
</Table>

Harbor Large Cap Value Fund designates 88.24% of its distributions from
investment company taxable income for the fiscal year as qualifying for the
dividends received deduction for corporate shareholders.

The Form 1099 you receive in January, 2002 for each of the Funds will show
the tax status of all distributions paid to your account in calendar year 2001.

NOTE 6--SUBSEQUENT EVENT

Mastholm Asset Management, LLC has been appointed as subadviser of the
Harbor International Growth Fund, effective December 1, 2001. Theodore J. Tyson,
Joseph P. Jordan and Douglas R. Allen are co-managing the Fund.

Harbor International Growth Fund will continue to have an investment goal
of long-term growth of capital by investing in stocks of foreign companies with
potential for sustainable growth. The portfolio typically will include 35 to 45
securities, each with a minimum market capitalization of approximately $10
billion at the time of initial investment.

HARBOR FUND
ADDITIONAL INFORMATION--(UNAUDITED)

TRUSTEES AND OFFICERS

Information pertaining to the Trustees and officers of Harbor is set forth
below. The statement of additional information (SAI) includes additional
information about the Funds Trustees and is available without charge, upon
request, by calling 1-800-422-1050 or can be downloaded from our website at
www.harborfund.com.
<Table>
<Caption>
NUMBER OF
TERM OF PORTFOLIOS IN
OFFICE AND FUND COMPLEX
NAME, ADDRESS AND (AGE) LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY
POSITION(S) WITH FUND TIME SERVED(1) DURING PAST FIVE YEARS(2) TRUSTEE

- -------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES
- -------------------------------------------------------------------------------------------------------------------------
Howard P. Colhoun (66) General Partner, Emerging Growth Partners, L.P. (investing 12
Trustee Since 1986 in small companies) (1982-1996); Director, Storage U.S.A.
14114 Mantua Mill Road (1995-Present); and Vice President and Director of Mutual
Gylndon, MD 21071 Funds, T. Rowe Price Associates, Inc. (prior to 1982).
John P. Gould (63) Director of Unext.com (1999-Present); President, Cardean 12
Trustee Since 1994 University (1999- 2001); Steven G. Rothmeier Professor
332 S. Michigan Avenue (1996-Present) and Distinguished Service Professor of
13th Floor Economics, Graduate School of Business, University of
Chicago, IL 60604 Chicago (1984-Present, on faculty since 1965); Trustee of
Milwaukee Mutual (1997-Present); and Principal and Executive
Vice President of Lexecon Inc. (1994-Present).
Rodger F. Smith (60) Partner, Greenwich Associates (a business strategy, 12
Trustee Since 1987 consulting and research firm) (1975-Present); and Director
Office Park Eight of Arlington Capital Management (C.I.) Limited
Greenwich, CT 06830 (1992-Present).
- -------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
- -------------------------------------------------------------------------------------------------------------------------
David G. Van Hooser (55) Director and Chairman of the Board, Harbor Capital Advisors, 12
Chairman and Trustee Since 2000 Inc. (2000-Present); Director, HCA Securities, Inc.
One SeaGate (2000-Present); Director, Harbor Transfer, Inc.
Toledo, OH 43666 (2000-Present); Senior Vice President and Chief Financial
Officer, Owens-Illinois, Inc. (1998-2001); and Senior Vice
President and Director of Corporate Strategy,
Owens-Illinois, Inc. (1996-1998).
- -------------------------------------------------------------------------------------------------------------------------
INTERESTED PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
- -------------------------------------------------------------------------------------------------------------------------
James M. Williams (54) Director and President (2000-Present) Harbor Capital N/A
President Since 2000 Advisors, Inc.; Director and President (2000-Present) HCA
One SeaGate Securities, Inc.; Director (2000-Present) Harbor Transfer,
Toledo, OH 43666 Inc.; and Pension Asset Manager (1989-1999) Ford Motor
Company.
Constance L. Souders (51) Senior Vice President, (1991-Present), Director of N/A
Vice President Since 1999 Administration (1997- Present), Director and Secretary
Treasurer Since 1992 (1988-Present), Treasurer (1988-2000), Vice President
One SeaGate (1988-1991) and Director of Accounting and Fiduciary
Toledo, OH 43666 Operations (1992-1996), Harbor Capital Advisors, Inc.;
President (2000-Present), Director (1991-Present) and Vice
President, Secretary, and Treasurer (1992-2000), Harbor
Transfer, Inc.; and Vice President and Secretary
(2000-Present) and Director (1989-Present), HCA Securities,
Inc.
Karen B. Wasil (49) Assistant Secretary (1997-Present), Director (1999-2000) and N/A
Secretary Since 1999 Regulatory and Legal Compliance Manager (1995-Present),
One SeaGate Harbor Capital Advisors, Inc.; Secretary (2000-Present)
Toledo, OH 43666 Director (1999-2000), Harbor Transfer, Inc.; and Director
(1999-2000), HCA Securities, Inc.

NAME, ADDRESS AND (AGE) OTHER DIRECTORSHIPS
POSITION(S) WITH FUND HELD BY TRUSTEE

- ----------------------------
DISINTERESTED TRUSTEES
- ----------------------------
Howard P. Colhoun (66) N/A
Trustee
14114 Mantua Mill Road
Gylndon, MD 21071
John P. Gould (63) Trustee of Dimensional
Trustee Fund Advisors, Inc., 28
332 S. Michigan Avenue series (1986-Present);
13th Floor Trustee and Chairman
Chicago, IL 60604 Pegasus Funds
(1996-1999); Trustee of
First Prairie Funds
(1985-1996); and Trustee
of Woodward Funds
(1996).
Rodger F. Smith (60) N/A
Trustee
Office Park Eight
Greenwich, CT 06830
- ----------------------------
INTERESTED TRUSTEE
- ----------------------------
David G. Van Hooser (55) N/A
Chairman and Trustee
One SeaGate
Toledo, OH 43666
- ----------------------------
INTERESTED PRINCIPAL
OFFICERS WHO ARE NOT
TRUSTEES
- ----------------------------
James M. Williams (54) N/A
President
One SeaGate
Toledo, OH 43666
Constance L. Souders (51) N/A
Vice President
Treasurer
One SeaGate
Toledo, OH 43666
Karen B. Wasil (49) N/A
Secretary
One SeaGate
Toledo, OH 43666
</Table>

- -------------------------
(1) Each Trustee serves for an indefinite term, until his successor is elected.
Each officer is elected annually.
(2) On June 7, 2001, a wholly-owned subsidiary of Robeco Groep N.V. acquired
substantially all of the assets and assumed substantially all of the
liabilities of the predecessor adviser to Harbor Fund, also named "Harbor
Capital Advisors, Inc." That wholly owned subsidiary of Robeco Groep N.V.
assumed the name "Harbor Capital Advisors, Inc." as part of the acquisition.
Another subsidiary of Robeco Groep N.V. acquired substantially all of the
assets and assumed substantially all of liabilities of Harbor Transfer, Inc.
and assumed the name "Harbor Transfer, Inc." On September 20, 2001, a
wholly-owned subsidiary of Robeco Groep, N.V. acquired substantially all of
the assets and assumed substantially all of the liabilities of HCA
Securities, Inc. and assumed the name "HCA Securities, Inc." Accordingly,
for periods prior to June 7, 2001 with respect to Harbor Capital Advisors,
Inc. and Harbor Transfer, Inc. and for periods prior to September 20, 2001
with respect to HCA Securities, Inc., employment with Harbor Capital
Advisors, Inc., Harbor Transfer, Inc. and HCA Securities, Inc. refers to
employment with the predecessor entities.

HARBOR FUND
ADDITIONAL INFORMATION--(UNAUDITED)--CONTINUED

SPECIAL MEETING OF SHAREHOLDERS

On June 7, 2001, a special meeting of shareholders of Harbor Fund was held for
the purpose of voting on the following matters. Mr. David G. Van Hooser was
elected as a Trustee--Mr. Howard P. Colhoun, Mr. John P. Gould and Mr. Rodger F.
Smith will continue to serve as Trustees.
<Table>
<Caption>
FUND PROPOSAL 1 PROPOSAL 2
- ----------------------------------------------------------------------------------------------------------
The approval of new Subadvisory
The approval of a new Advisory Agreements between each Fund,
Agreement between each Fund and Harbor Capital Advisors, Inc. and
Harbor Capital Advisors, Inc. each Fund's Subadviser

Harbor Fund
FOR N/A N/A
WITHHELD N/A N/A
Harbor Mid Cap Growth Fund
FOR 790,171 790,238
AGAINST 1,240 1,173
ABSTAIN 36,159 36,159
Harbor Growth Fund
FOR 8,461,356 8,457,320
AGAINST 126,422 126,358
ABSTAIN 35,062 39,163
Harbor Small Cap Growth Fund
FOR 545,415 545,465
AGAINST 3,188 3,139
ABSTAIN 2,199 2,199
Harbor International Growth
Fund
FOR 43,226,275 43,221,546
AGAINST 326,819 329,401
ABSTAIN 544,880 547,027
Harbor Global Equity Fund
FOR 507,933 507,933
AGAINST 1,101 1,101
ABSTAIN 0 0
Harbor Capital Appreciation
Fund
FOR 154,502,645 154,477,947
AGAINST 1,775,623 1,777,191
ABSTAIN 1,870,754 1,893,884
Harbor International Fund II
FOR 5,569,202 5,562,812
AGAINST 65,717 70,180
ABSTAIN 640,917 642,844
Harbor International Fund
FOR 82,849,925 82,847,627
AGAINST 1,924,948 1,891,464
ABSTAIN 18,472,734 18,508,516
Harbor Value Fund
FOR 7,569,194 7,574,791
AGAINST 51,967 53,852
ABSTAIN 63,751 56,269
Harbor Bond Fund
FOR 51,370,926 51,374,641
AGAINST 672,261 699,235
ABSTAIN 996,302 965,613
Harbor Short Duration Fund
FOR 11,823,734 11,822,266
AGAINST 40,343 39,627
ABSTAIN 26,084 28,268
Harbor Money Market Fund
FOR 93,152,666 93,255,371
AGAINST 2,767,810 2,719,203
ABSTAIN 1,154,438 1,100,340

<Caption>
FUND PROPOSAL 3
- ------------------------------- ---------------------------------
The election of Mr. Van Hooser
as a Trustee

Harbor Fund
FOR 446,871,551
WITHHELD 45,098,618
Harbor Mid Cap Growth Fund
FOR N/A
AGAINST N/A
ABSTAIN N/A
Harbor Growth Fund
FOR N/A
AGAINST N/A
ABSTAIN N/A
Harbor Small Cap Growth Fund
FOR N/A
AGAINST N/A
ABSTAIN N/A
Harbor International Growth
Fund
FOR N/A
AGAINST N/A
ABSTAIN N/A
Harbor Global Equity Fund
FOR N/A
AGAINST N/A
ABSTAIN N/A
Harbor Capital Appreciation
Fund
FOR N/A
AGAINST N/A
ABSTAIN N/A
Harbor International Fund II
FOR N/A
AGAINST N/A
ABSTAIN N/A
Harbor International Fund
FOR N/A
AGAINST N/A
ABSTAIN N/A
Harbor Value Fund
FOR N/A
AGAINST N/A
ABSTAIN N/A
Harbor Bond Fund
FOR N/A
AGAINST N/A
ABSTAIN N/A
Harbor Short Duration Fund
FOR N/A
AGAINST N/A
ABSTAIN N/A
Harbor Money Market Fund
FOR N/A
AGAINST N/A
ABSTAIN N/A
</Table>

(This document must be preceded or accompanied by a Prospectus.)

NOTES

<Table>

TRUSTEES AND OFFICERS SHAREHOLDER SERVICING AGENT
DAVID G. VAN HOOSER Chairman and Trustee HARBOR TRANSFER, INC.
P.O. Box 10048
HOWARD P. COLHOUN Trustee Toledo, Ohio 43699-0048
1-800-422-1050
JOHN P. GOULD Trustee
CUSTODIAN
RODGER F. SMITH Trustee
STATE STREET BANK AND TRUST COMPANY
JAMES M. WILLIAMS President P.O. Box 1713
Boston, MA 02105
CONSTANCE L. SOUDERS Vice President and Treasurer
INDEPENDENT AUDITORS
KAREN B. WASIL Secretary
ERNST & YOUNG LLP
INVESTMENT ADVISER 200 Clarendon Street
Boston, MA 02116
HARBOR CAPITAL ADVISORS, INC.
One SeaGate LEGAL COUNSEL
Toledo, OH 43666
DISTRIBUTOR AND PRINCIPAL UNDERWRITER HALE AND DORR LLP
60 State Street
HCA SECURITIES, INC. Boston, MA 02109
One SeaGate
Toledo, OH 43666
(419) 247-2477
</Table>

[HARBOR FUND LOGO]
One SeaGate
Toledo, Ohio 43666
1-800-422-1050
www.harborfund.com

12/2001/290,000 [RECYCLED PAPER LOGO]
recycled paper

SEMI-ANNUAL REPORT

[HARBOR FUND LOGO]

APRIL 30, 2002

- -----------------------------------------
HARBOR FUND

TABLE OF CONTENTS

<Table>

SEMI-ANNUAL REPORT OVERVIEW 2

LETTER TO SHAREHOLDERS 4
HARBOR DOMESTIC EQUITY FUNDS
MANAGERS' COMMENTARY
Harbor Capital Appreciation Fund 6
Harbor Mid Cap Growth Fund 6
Harbor Growth Fund 7
Harbor Small Cap Growth Fund 7
Harbor Large Cap Value Fund 8
Harbor Mid Cap Value Fund 8
Harbor Small Cap Value Fund 9
PORTFOLIO OF INVESTMENTS
Harbor Capital Appreciation Fund 10
Harbor Mid Cap Growth Fund 12
Harbor Growth Fund 14
Harbor Small Cap Growth Fund 16
Harbor Large Cap Value Fund 18
Harbor Mid Cap Value Fund 20
Harbor Small Cap Value Fund 22

STATEMENT OF ASSETS AND LIABILITIES 24

STATEMENT OF OPERATIONS 25

STATEMENT OF CHANGES IN NET ASSETS 26

FINANCIAL HIGHLIGHTS 28
HARBOR INTERNATIONAL EQUITY FUNDS
MANAGERS' COMMENTARY
Harbor International Fund 30
Harbor International Fund II 30
Harbor International Growth Fund 31
Harbor Global Equity Fund 31
PORTFOLIO OF INVESTMENTS
Harbor International Fund 32
Harbor International Fund II 34
Harbor International Growth Fund 36
Harbor Global Equity Fund 38

STATEMENT OF ASSETS AND LIABILITIES 42

STATEMENT OF OPERATIONS 43

STATEMENT OF CHANGES IN NET ASSETS 44

FINANCIAL HIGHLIGHTS 46
HARBOR FIXED INCOME FUNDS
MANAGERS' COMMENTARY
Harbor Bond Fund 48
Harbor Short Duration Fund 48
Harbor Money Market Fund 49
PORTFOLIO OF INVESTMENTS
Harbor Bond Fund 50
Harbor Short Duration Fund 57
Harbor Money Market Fund 59

STATEMENT OF ASSETS AND LIABILITIES 60

STATEMENT OF OPERATIONS 61

STATEMENT OF CHANGES IN NET ASSETS 62
FINANCIAL HIGHLIGHTS 64
NOTES TO FINANCIAL STATEMENTS 66
</Table>

DOMESTIC EQUITY
INTERNATIONAL EQUITY
FIXED INCOME

HARBOR FUND
SEMI-ANNUAL REPORT OVERVIEW

The first half of Harbor Fund's fiscal year ended April 30, 2002. Performance
for this six-month period is shown below for each of the 14 portfolios. All
performance figures included in this report are total returns and assume the
reinvestment of dividends and capital gains. The section entitled Long-Term
Historic Total Returns reflects the 30-year returns for unmanaged indices, which
are included as an indication of longer-term potential associated with taking
different levels of market risk. You may not make a direct investment in an
index.

<Table>
<Caption>
UNANNUALIZED
6 MONTHS
ENDED
HARBOR FUND TOTAL RETURNS 04/30/2002
- ------------------------- ------------

HARBOR DOMESTIC EQUITY FUNDS
Harbor Capital Appreciation Fund.......................... 0.63%
Harbor Mid Cap Growth Fund................................ 2.30
Harbor Growth Fund........................................ 3.83
Harbor Small Cap Growth Fund.............................. 12.55
Harbor Large Cap Value Fund............................... 13.18
Harbor Mid Cap Value Fund................................. 6.70(a)
Harbor Small Cap Value Fund............................... 16.10(b)
HARBOR INTERNATIONAL EQUITY FUNDS
Harbor International Fund................................. 14.22%
Harbor International Fund II.............................. 11.90
Harbor International Growth Fund.......................... -2.00
Harbor Global Equity Fund................................. 3.87
HARBOR FIXED INCOME FUNDS
Harbor Bond Fund.......................................... 1.19%
Harbor Short Duration Fund................................ 1.19
Harbor Money Market Fund.................................. 0.86
</Table>

<Table>
<Caption>
COMMONLY USED MARKET INDICES TOTAL RETURNS
- ------------------------------------------

Morgan Stanley Capital International Europe, Australasia,
and Far East (EAFE); international equity................. 5.53%
Morgan Stanley Capital International Europe, Australasia,
and Far East Growth (EAFE Growth); international equity... 5.80
Morgan Stanley Capital International World Index (MSCI
World); global equity..................................... 3.29
Standard & Poor's 500 (S&P 500); domestic equity............ 2.31
Russell Midcap(R) Growth; domestic equity................... 6.97
Russell 2000(R) Growth; domestic equity..................... 10.40
Russell Midcap(R) Value; domestic equity.................... 20.16
Russell 2000(R) Value; domestic equity...................... 29.03
Russell 1000(R) Value; domestic equity...................... 8.87
Lehman Brothers Aggregate (LB AGG); domestic bonds.......... -0.01
Salomon Treasury 1 YR CMI; domestic bonds................... 1.25
90-Day U.S. Treasury Bills (T-Bills); domestic short-term... 0.90
</Table>

<Table>
<Caption>
30 YEARS
1972-2001
LONG-TERM HISTORIC TOTAL RETURNS ANNUAL RATES
- -------------------------------- ------------

EAFE........................................................ 10.44%
MSCI World.................................................. 10.12
S&P 500..................................................... 12.24
Domestic Bonds (intermediate and long)(1)................... 8.77
T-Bills..................................................... 7.04
Consumer Price Index........................................ 4.98
</Table>

HARBOR FUND
SEMI-ANNUAL REPORT OVERVIEW--CONTINUED

<Table>
<Caption>
EXPENSE RATIOS(2)
MORNINGSTAR
1998 1999 2000 2001 2002(C) MEDIAN(3)
---- ---- ---- ---- ------- -----------

HARBOR DOMESTIC EQUITY FUNDS
Harbor Capital Appreciation Fund.......... 0.68% 0.66% 0.64% 0.66% 0.68% 0.96%
Harbor Mid Cap Growth Fund................ N/A N/A N/A 1.20 1.20 1.15
Harbor Growth Fund........................ 1.00 0.90 0.87 0.95 0.99 1.15
Harbor Small Cap Growth Fund.............. N/A N/A N/A 1.20 0.96 1.20
Harbor Large Cap Value Fund............... 0.79 0.76 0.80 0.77 0.77 0.91
Harbor Mid Cap Value Fund................. N/A N/A N/A N/A 1.20(a) 1.11
Harbor Small Cap Value Fund............... N/A N/A N/A N/A 1.20(b) 1.19
HARBOR INTERNATIONAL EQUITY FUNDS
Harbor International Fund................. 0.94% 0.92% 0.92% 0.91% 0.88% 1.18%
Harbor International Fund II.............. 1.15 0.92 0.92 0.89 0.91 1.18
Harbor International Growth Fund.......... 0.96 0.91 0.89 0.89 0.93 1.27
Harbor Global Equity Fund................. N/A N/A N/A 1.20 1.20 1.25
HARBOR FIXED INCOME FUNDS
Harbor Bond Fund.......................... 0.65% 0.60% 0.60% 0.56% 0.57% 0.61%
Harbor Short Duration Fund................ 0.36 0.28 0.28 0.27 0.30 0.51
Harbor Money Market Fund.................. 0.57 0.46 0.47 0.38 0.36 0.74
</Table>

------------------

1 LB AGG not available for 30 year period; blended historic data used to
approximate total Bond Market Return.

2 Harbor Fund expense ratios are for operating expenses only and are
shown net of all expense offsets (see Financial Highlights).

3 Includes all no-load funds with at least five years of performance
history in the March 31, 2002 Morningstar Universe with the same
investment style as the comparable Harbor Fund portfolio.

a For the period March 1, 2002 (inception) through April 30, 2002.

b For the period December 14, 2001 (inception) through April 30, 2002.

c Annualized figures for the six-month period ended April 30, 2002.

DEAR SHAREHOLDER:

Financial markets were choppy in the six months ended April 30, 2002, the
first half of Harbor Fund's fiscal year.

Equity markets had mounted a strong recovery in the closing months of 2001
from lows that had been reached in the wake of the terrorist attacks of
September 11. In the early part of 2002, however, stocks gave back some of those
gains, as investors reacted to a variety of concerns. These included uncertainty
about the strength and pace of the economic recovery, questions about corporate
governance and corporate accounting practices and the Middle East crisis.

Also exerting downward pressure on stock prices was continued weakness in
corporate profits. First quarter 2002 earnings for companies in the Standard &
Poor's 500 stock index were estimated to be down by more than 10% on a
year-over-year basis. This followed a decrease in full-year 2001 earnings of 20%
to 30%, based on estimates by various analysts.

After numerous reductions throughout 2001 brought the Federal Funds rate to
a 40-year low of 1.75%, the Federal Reserve in March 2002 announced that the
risk of economic weakness was believed to be equally balanced with that of
inflation. This announcement signaled a potential turning point in Fed policy,
raising the possibility of monetary tightening later in the year.

In this environment, most major equity indices ended in positive territory
for the six-month period, while investment-grade taxable bonds were essentially
unchanged. Small capitalization stocks generally did better than large caps,
while value-oriented stocks outperformed growth.

<Table>
<Caption>
RETURNS FOR PERIODS ENDED 04/30/2002 6 MONTHS 1 YEAR 5 YEARS 10 YEARS
- ------------------------------------ -------- ------ ------- --------

S&P 500 (large cap stocks).................................. 2.31% -12.63% 7.55% 12.23%
Russell 2000(R) (small cap stocks).......................... 20.03 6.68 9.66 11.63
Wilshire 5000 (total U.S. stock market)..................... 5.23 -3.97 7.75 11.82
EAFE (foreign stocks)....................................... 5.53 -13.88 1.34 5.86
LB Aggregate (taxable investment grade bonds)............... -0.01 7.84 7.66 7.51
90-day T-bills (proxy for money market returns)............. 0.90 2.64 4.75 4.62
</Table>

HARBOR FUND

Eight of the eleven Harbor equity funds and all three of the Harbor fixed
income funds posted positive returns for the six-month period. The best
performers included:

- Harbor International Fund, up 14.22%, and Harbor International Fund II,
up 11.90%, compared with the 5.53% increase by their benchmark, the EAFE
index.

- Harbor Large Cap Value Fund, up 13.18%, compared with an increase of
8.87% by its benchmark, the Russell 1000(R) Value index.

- Harbor Small Cap Growth Fund, up 12.55%, compared with a return of 10.40%
by its benchmark, the Russell 2000(R) Growth index.

In addition, two new Harbor equity funds posted strong positive returns for
the brief periods since their inceptions. Harbor Small Cap Value Fund was up
16.10% from its inception on December 14, 2001, and Harbor Mid Cap Value Fund
was up 6.70% in the two months following its inception on March 1, 2002.

LONG-TERM PERSPECTIVE

The generally positive performance by equities for the fiscal first
half-year represented a welcome reversal from the significant declines suffered
in calendar year 2001. While equities generally performed better in the fiscal
first-half, bonds' flat performance contrasted with double-digit gains in the
2001 calendar year.

An important reminder from this swift reversal in relative performance is
that it is virtually impossible to consistently predict near-term movements in
the financial markets. Long-term historical total returns (shown on page 1) are
well documented and tend to reflect the fundamental risk/reward relationships
represented by major asset classes. These long-term performance figures do not
predict where stock or bond prices will go tomorrow. Yet they do provide
valuable information for long-term investors.

Such investors aim to achieve superior returns not by trying to out-guess
the market or by chasing the latest hot-performing fund, but by taking advantage
of the powerful long-term benefits of asset allocation. With an effective asset
allocation strategy, individuals can diversify their assets among a mix of
investments--stocks, bonds, and money market securities--that reflect their
financial goals and tolerance for risk.

DEAR SHAREHOLDER--CONTINUED

Of course, even a well-executed asset allocation strategy cannot assure a
profitable return under all circumstances. Nor does it provide complete
protection against loss in declining markets. But it can help investors insulate
themselves from overreacting to swift changes in the markets which can often
result in poor investment results. By maintaining a balanced asset allocation
strategy, investors can reduce their exposure to sudden drops in certain market
segments while positioning themselves to participate in recoveries by asset
classes that may be temporarily out of favor.

Sound investment strategies, even when grounded on solid assumptions and
supported by historical performance, are not always easy to follow in everyday
practice. This is especially true during turbulent market periods. Continuing
shifts in market sentiment are reflected in ongoing fluctuations in relative
performance among asset classes: stocks vs. bonds, small cap vs. large cap,
growth vs. value, and international vs. domestic.

For many years, for example, international stocks routinely were included
in most well-diversified portfolios. Because U.S. equities performed so well
during much of the 1990s, however, some investors reduced or even eliminated
their holdings in foreign stocks. In calendar year 2001, however, international
stocks outperformed many major U.S. stock indices. This trend has continued into
2002. As noted above, Harbor International Fund and Harbor International Fund II
were among the best-performing funds in the Harbor family for the most recent
fiscal half year.

NEW FUNDS

Harbor Fund expanded its lineup of domestic equity funds with the addition
of two new value-oriented stock funds. Harbor Small Cap Value Fund was launched
December 14, 2001, and Harbor Mid Cap Value Fund began operations on March 1,
2002. These new funds complement Harbor's established value product--Harbor
Large Cap Value Fund.

Since November 1, 2000, Harbor Fund has launched five new equity funds as
part of our commitment to provide shareholders with access to the services of
leading asset managers. These recently added funds also are designed to support
the portfolio diversification strategies of our shareholders by further
broadening the range of investment styles and objectives available to investors.

By entrusting your assets to us, you have demonstrated a confidence in
Harbor Fund that is deeply appreciated by all of us in the Harbor family. We
know that we must continue to earn your confidence on a daily basis and we are
committed to doing so.

<Table>

/s/ David G. Van Hooser /s/ James M. Williams
David G. Van Hooser James M. Williams
Chairman President
</Table>

HARBOR DOMESTIC EQUITY FUNDS
MANAGERS' COMMENTARY

The following performance figures are annualized for each Fund except for the
six-month total return calculations. Unless otherwise stated, all comments
pertain to the fiscal half year ended April 30, 2002. The comparative market
indices reflect no operating or transaction costs, however the Funds' total
returns are net of these costs. Performance data quoted represents past
performance and is not predictive of future performance. The returns shown in
the graphs and tables do not reflect the deduction of taxes that a shareholder
would

<Table>

HARBOR CAPITAL APPRECIATION FUND 04/30/2002 $26.53
INCEPTION DATE--DECEMBER 29, 1987 NET ASSET VALUE: 10/31/2001 $26.40
</Table>

[HARBOR CAPITAL APPRECIATION FUND GRAPH]

<Table>
<Caption>
CAPITAL APPRECIATION S&P 500
-------------------- -------

10000.00 10000.00
4/30/93 11151.70 10923.50
4/30/94 12499.20 11504.60
4/30/95 15253.50 13514.10
4/30/96 20076.10 17597.10
4/30/97 23262.60 22019.90
4/30/98 34542.00 31062.50
4/30/99 44224.00 37840.90
4/30/00 60339.70 41674.10
4/30/01 44107.00 36268.00
4/30/02 35931.20 31689.10
</Table>

<Table>

- --------------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2002
- --------------------------------------------------------------------------------
Fund/Index 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
Harbor Capital Appreciation Fund 0.63% -18.54% 9.08% 13.64%
- --------------------------------------------------------------------------------
S&P 500 2.31% -12.63% 7.55% 12.23%
- --------------------------------------------------------------------------------
</Table>

Harbor Capital Appreciation Fund underperformed the S&P 500 index for the past
6-month and 1-year periods. From a longer term perspective, the Fund's total
returns exceeded those of the index for the latest 5-year and 10-year periods.
- - Favorable stock selection among media, retail and other consumer discretionary
stocks had the largest positive impact on the Fund's absolute and relative
performance for the 6-month period. The Fund was significantly overweighted in
the consumer discretionary sector relative to the index and its holdings in
that sector outperformed those in the index.
- - The index performance was reduced by negative returns in the telecommunication
services and utilities sectors. This improved the relative performance of the
Fund, which had no exposure in those areas. In addition, the Fund's
information technology holdings performed better than those in the index.
- - Financial services stocks in the portfolio underperformed those in the index
for the 6-month period. This was the biggest detractor from relative
performance. Health care stock prices declined during the period. This
detracted from both absolute and relative performance, as the Fund was
slightly overweighted in this sector compared with the index.
- - The Fund's largest sector positions as of April 30, 2002, were in information
technology, consumer discretionary, health care, and financial services.
Sector weightings are a secondary consideration for the manager, who utilizes
a bottom-up selection process to identify stocks with attractive valuations
and above-average prospects for growth.

<Table>

HARBOR MID CAP GROWTH FUND 04/30/2002 $5.77
INCEPTION DATE--NOVEMBER 1, 2000 NET ASSET VALUE: 10/31/2001 $5.64
</Table>

[HARBOR MID CAP GROWTH FUND GRAPH]

<Table>
<Caption>
MID CAP GROWTH RUSSELL MIDCAP(R) GROWTH
-------------- ------------------------

10000.00 10000.00
4/30/01 7830.00 7201.10
4/30/02 5770.00 6120.46
</Table>

<Table>

- --------------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2002
- --------------------------------------------------------------------------------
Fund/Index 6 Months 1 Year 5 Years Since
Inception
- --------------------------------------------------------------------------------
Harbor Mid Cap Growth Fund 2.30% -26.31% N/A -30.69%
- --------------------------------------------------------------------------------
Russell Midcap(R) Growth 6.97% -15.01% 7.73% -27.91%
- --------------------------------------------------------------------------------
</Table>

For the six months ended April 30, 2002, Harbor Mid Cap Growth Fund posted a
total return of 2.30%. By comparison, the Russell Midcap(R) Growth index
returned 6.97% for the period.
- - U.S. equities staged a strong recovery in the fourth quarter of 2001,
following the post-attack lows set on September 21. Smaller capitalization
issues posted the strongest returns and growth stocks, which had suffered the
brunt of the decline in 2001, reversed course and led the market out of the
downturn. Following the large gains in the fourth quarter, the broad market
produced lackluster results in the first quarter of 2002. Although the economy
showed signs of recovery, the Enron/Andersen scandal and concerns of an
escalating crisis in the Middle East put downward pressure on stock prices.
Value stocks outperformed growth stocks in every size segment, as investors
shied away from high growth areas, particularly technology and health care.
- - The Fund's investments in consumer discretionary stocks added value for the
period. With a gain of 32% over the six months, this was the portfolio's top-
performing sector. In addition, the Fund was overweighted in energy stocks,
which gained more than 30% during the period.
- - Gains in these areas, however, were diminished by investments in the
technology and health care sectors. Investments in health care were the
largest detractor from performance, as these stocks experienced significant
price declines. Although the Fund's technology stocks outperformed those in
the benchmark, the overweighted position in a declining sector reduced
portfolio returns.
- - At April 30, the Fund's investments were focused on companies expected to
benefit from continued economic recovery in 2002. The Fund continued to be
significantly overweighted in the technology sector, with health care and
consumer stocks also playing significant roles in the portfolio. In addition,
the portfolio continued to be overweighted in the energy sector, which the
manager expects to benefit from a supply/demand imbalance.

DOMESTIC EQUITY

HARBOR DOMESTIC EQUITY FUNDS
MANAGERS' COMMENTARY--CONTINUED

pay on fund distributions or the redemption of fund shares. Actual return and
principal value on an investment will fluctuate, and the shares, when redeemed,
may be worth more or less than their original cost. For information on the risks
associated with these Funds, please refer to the Harbor Fund prospectus. The
performance of funds investing primarily in small and mid cap companies may be
more volatile than funds which invest primarily in stocks of large cap
companies.

<Table>

HARBOR GROWTH FUND 04/30/2002 $10.58
INCEPTION DATE--NOVEMBER 19, 1986 NET ASSET VALUE: 10/31/2001 $10.19
</Table>

[HARBOR GROWTH FUND GRAPH]

<Table>
<Caption>
GROWTH RUSSELL MIDCAP(R) GROWTH
------ ------------------------

10000.00 10000.00
4/30/93 10186.30 11061.00
4/30/94 11121.80 12286.70
4/30/95 11612.40 13896.40
4/30/96 16456.80 18592.40
4/30/97 15322.90 19321.60
4/30/98 21614.40 27212.70
4/30/99 20645.90 30567.80
4/30/00 44223.80 46776.30
4/30/01 29279.70 32990.70
4/30/02 21693.20 28039.90
</Table>

<Table>

- --------------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2002
- --------------------------------------------------------------------------------
Fund/Index 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
Harbor Growth Fund 3.83% -25.91% 7.20% 8.05%
- --------------------------------------------------------------------------------
Russell Midcap(R) Growth 6.97% -15.01% 7.73% 10.86%
- --------------------------------------------------------------------------------
</Table>

The Fund and its benchmark, the Russell Midcap(R) Growth index, posted positive
single-digit total returns for the six months ended April 30, 2002.
- - Growth stocks made a strong recovery in the fourth quarter of 2001. Some of
those gains were relinquished in the first four months of 2002, however, as a
result of investor concerns about the pace and timing of an economic recovery.
- - The Fund's manager has a continuing focus on companies with favorable
long-term growth prospects, including those in information technology, health
care, and other industries. The Fund's sector weightings are the result of
individual stock selections by the manager.
- - Information technology stocks in the portfolio slightly outperformed those in
the index and made a positive contribution to the Fund's performance for the
six months. The Fund's best-performing technology holdings were companies in
the semiconductor and electronic equipment industries.
- - Health care stocks lost ground during the six-month period, but those held by
the Fund performed better than those in the index. Price declines among health
care stocks contributed to the Fund's relative performance, as the portfolio
was underweighted in that area.
- - Consumer discretionary stocks turned in a strong performance for the six-month
period. This contributed favorably to the Fund's absolute performance, as its
consumer discretionary holdings outpaced those in the index. However, the Fund
was underweighted in the consumer discretionary sector compared with the
index, which detracted from its relative performance.

<Table>

HARBOR SMALL CAP GROWTH FUND 04/30/2002 $10.94
INCEPTION DATE--NOVEMBER 1, 2000 NET ASSET VALUE: 10/31/2001 $9.72
</Table>

[HARBOR SMALL CAP GROWTH FUND GRAPH]

<Table>
<Caption>
SMALL CAP GROWTH RUSSELL 2000(R) GROWTH
---------------- ----------------------

10000.00 10000.00
4/30/01 10220.00 8266.24
4/30/02 10940.00 7561.83
</Table>

<Table>

- --------------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2002
- --------------------------------------------------------------------------------
Fund/Index 6 Months 1 Year 5 Years Since
Inception
- --------------------------------------------------------------------------------
Harbor Small Cap Growth Fund 12.55% 7.05% N/A 6.17%
- --------------------------------------------------------------------------------
Russell 2000(R) Growth 10.40% -8.52% 4.55% -17.00%
- --------------------------------------------------------------------------------
</Table>

Harbor Small Cap Growth Fund delivered a double-digit total return for the six
months ended April 30, 2002. The Fund has outperformed the Russell 2000(R)
Growth index for the latest 6-month and 1-year periods since its inception on
November 1, 2000.
- - Energy, financial services and consumer discretionary stocks were major
contributors to the Fund's performance. Holdings in all three of these sectors
contributed returns in excess of 20% for the 6-month period. Sector breakdowns
in the portfolio evolved as a result of the manager's bottom-up stock
selection process.
- - The energy weighting in the portfolio added both absolute and relative value,
as an increase in commodity prices, reduction in rig counts, and heightened
tensions in the Middle East pushed stock prices higher. The Fund was
overweighted in the energy sector compared with the index, and its energy
holdings outperformed those in the index.
- - The Fund was overweighted in financial services stocks compared with the
index. This enhanced the Fund's relative performance as its investments in
selected regional banks and other financial services stocks performed well.
The biggest detractor to relative performance was the consumer discretionary
sector. The Fund's holdings in this sector performed well but not as well as
those in the index.
- - Health care stocks were the largest contributor to the Fund's relative
performance, delivering positive returns for the period versus a negative
return for the health care sector of the index. The Fund's health care
investments are focused on companies that the manager believes can best
capitalize on demographic trends such as the aging of the population. The Fund
is overweighted in health care services companies, which have been benefiting
from volume growth and favorable reimbursement trends.
- - Information technology was the only sector in which the Fund's holdings lost
ground for the period. However, the Fund was sharply underweighted in this
sector compared with the index, reflecting the manager's view that the market
was continuing to overvalue many information technology stocks. This
underweighting helped the Fund outperform the index.

DOMESTIC EQUITY

HARBOR DOMESTIC EQUITY FUNDS
MANAGERS' COMMENTARY--CONTINUED

<Table>

HARBOR LARGE CAP VALUE FUND 04/30/2002 $14.70
INCEPTION DATE--DECEMBER 29, 1987 NET ASSET VALUE: 10/31/2001 $13.01
</Table>

[HARBOR LARGE CAP VALUE FUND GRAPH]

<Table>
<Caption>
LARGE CAP VALUE RUSSELL 1000(R) VALUE
--------------- ---------------------

10000.00 10000.00
4/30/93 10572.70 11680.50
4/30/94 11008.80 12534.90
4/30/95 12838.00 14109.90
4/30/96 16466.40 18329.10
4/30/97 19503.90 22464.40
4/30/98 26987.30 31939.90
4/30/99 29220.80 36439.90
4/30/00 27465.30 35026.30
4/30/01 30656.00 37276.80
4/30/02 31674.60 35819.80
</Table>

<Table>

- --------------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2002
- --------------------------------------------------------------------------------
Fund/Index 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
Harbor Large Cap Value Fund 13.18% 3.32% 10.18% 12.22%
- --------------------------------------------------------------------------------
Russell 1000(R) Value 8.87% -3.91% 9.78% 13.61%
- --------------------------------------------------------------------------------
</Table>

Harbor Large Cap Value Fund outperformed its benchmark, the Russell 1000(R)
Value index, by more than four percentage points for the six months ended April
30, 2002.
- - Favorable stock selection and sector weightings both contributed to the Fund's
positive performance for the six-month period. A bottom-up selection process
is utilized to identify companies that the manager believes are trading at
prices significantly below their intrinsic value. Sector weightings result
primarily from these individual stock selections.
- - Industrial and health care stocks made major positive contributions to the
Fund's absolute and relative performance for the period. The Fund was
overweighted in both sectors and its industrial and health care holdings
significantly outperformed those in the index.
- - Information technology stocks made a strong contribution to relative
performance. The Fund's holdings in that sector posted a gain for the period
while those in the index had negative returns.
- - The Fund's relative performance was augmented by favorable stock selection in
the energy sector and by its underweight exposure in telecommunication
services, which was one of the worst-performing sectors during the period.
- - Consumer discretionary and financial services stocks contributed positive
returns but underperformed those sectors in the index. This was the biggest
detractor from relative performance.
- - The Fund's name was changed from Harbor Value Fund to Harbor Large Cap Value
Fund effective September 20, 2001. At the same time, Armstrong Shaw Associates
Inc. assumed responsibility for management of the Fund.

<Table>

HARBOR MID CAP VALUE FUND 04/30/2002 $10.67
INCEPTION DATE--MARCH 1, 2002 NET ASSET VALUE: 03/01/2002 $10.00
</Table>

[HARBOR MID CAP VALUE FUND GRAPH]

<Table>
<Caption>
MID CAP VALUE RUSSELL MIDCAP(R) VALUE
------------- -----------------------

10000.00 10000.00
10570.00 10511.10
10670.00 10504.20
</Table>

<Table>

- --------------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2002
- --------------------------------------------------------------------------------
Fund/Index 6 Months 1 Year 5 Years Since
Inception
- --------------------------------------------------------------------------------
Harbor Mid Cap Value Fund N/A N/A N/A 6.70%
- --------------------------------------------------------------------------------
Russell Midcap(R) Value 20.16% 8.41% 12.21% 5.04%
- --------------------------------------------------------------------------------
</Table>

In its first two months of operation, Harbor Mid Cap Value Fund posted a total
return of 6.70%. During the period from the Fund's inception on March 1, 2002
through April 30, 2002, the mid cap sector of the market performed well.
Value-oriented stocks performed particularly well, as indicated by the Fund's
benchmark, the Russell Midcap(R) Value index, which posted a total return of
5.04% during this two-month period. The Fund outperformed the benchmark by more
than one percentage point.
- - From the beginning of 2002, various macroeconomic reports indicated that the
U.S. economy probably had bottomed and was beginning a period of recovery. In
that environment, the Fund benefited most from favorable stock selection
within the industrial cyclical and consumer cyclical sectors. The more
defensive groups, such as utilities and consumer staples, contributed least to
the Fund's performance.
- - Compared to the Russell Midcap(R) Value index, the Fund's portfolio was
overweighted in several economically sensitive sectors, including capital
goods, energy, retail, and technology. The portfolio was underweighted in the
more defensive consumer staples and utilities sectors.
- - The Fund's principal objective is long-term total return. The portfolio is
constructed utilizing a bottom-up approach that employs fundamental and
qualitative criteria.

DOMESTIC EQUITY

HARBOR DOMESTIC EQUITY FUNDS
MANAGERS' COMMENTARY--CONTINUED

<Table>

HARBOR SMALL CAP VALUE FUND 04/30/2002 $11.61
INCEPTION DATE--DECEMBER 14, 2001 NET ASSET VALUE: 12/14/2001 $10.00
</Table>

[HARBOR SMALL CAP VALUE FUND GRAPH]

<Table>
<Caption>
SMALL CAP GROWTH RUSSELL 2000(R) GROWTH
---------------- ----------------------

10000.00 10000.00
Dec 10730.00 10612.30
Jan 10390.00 10753.10
Feb 10600.00 10818.60
Mar 11480.00 11628.80
Apr 11610.00 12038.10
</Table>

<Table>

- --------------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2002
- --------------------------------------------------------------------------------
Fund/Index 6 Months 1 Year 5 Years Since
Inception
- --------------------------------------------------------------------------------
Harbor Small Cap Value Fund N/A N/A N/A 16.10%
- --------------------------------------------------------------------------------
Russell 2000(R) Value 29.03% 22.43% 13.77% 17.31%
- --------------------------------------------------------------------------------
</Table>

Harbor Small Cap Value Fund posted a strong total return for the period from its
inception on December 14, 2001 through April 30, 2002. It slightly
underperformed its benchmark, the Russell 2000(R) Value index, over this time.
- - The Fund maintained an overweighted position in health care securities during
the reporting period, which contributed to the slight underperformance. The
manager expects health care companies to perform well in either a stagnant or
improving economic environment, due to strong growth in secular demand.
- - The Fund benefited from its underweighted position in technology stocks
relative to the index. The technology companies that were represented in the
portfolio performed better than the sector average. Although prospects for
economic recovery improved during the period, companies had not resumed making
meaningful capital investments in their businesses. Given the relatively high
valuations in many technology stocks, the Fund remained very selective in this
area.

DOMESTIC EQUITY

HARBOR CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2002 (UNAUDITED)

COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash and short-term investments of 3.9%)

<Table>

Paper & Forest Products 0.1

Internet & Catalog Retail 0.5

Personal Products 0.9

Aerospace & Defense 1.2

Hotels Restaurants & Leisure 1.2

Banks 1.3

Health Care Equipment & Supplies 1.7

Automobiles 1.8

Communications Equipment 2.8

Industrial Conglomerates 2.8

Beverages 3.0

Energy Equipment & Services 3.1

Biotechnology 3.8

Computers & Peripherals 5.3

Software 5.3

Insurance 6.7

Multiline Retail 8.1

Semiconductor Equipment & Products 8.2

Specialty Retail 8.3

Media 9.7

Diversified Financials 9.9

Pharmaceuticals 10.4

</Table>

<Table>
<Caption>
COMMON STOCKS--96.1%
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

AEROSPACE & DEFENSE--1.2%
626,900 Northrop Grumman Corp. ...................... $ 75,642
----------
AUTOMOBILES--1.8%
1,221,400 Harley-Davidson Inc. ........................ 64,722
116,599 Porsche AG Pfd (1)*.......................... 52,024
----------
116,746
----------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

BANKS--1.3%
2,014,800 Bank One Corp. .............................. $ 82,345
----------
BEVERAGES--3.0%
3,671,100 Pepsico Inc. ................................ 190,530
----------
BIOTECHNOLOGY--3.8%
1,978,300 Amgen Inc.*.................................. 104,612
2,217,700 Genentech Inc.*.............................. 78,728
1,221,900 Medimmune Inc.*.............................. 40,811
1,531,500 Sepracor Inc.*............................... 19,389
----------
243,540
----------
COMMUNICATIONS EQUIPMENT--2.8%
7,963,600 Cisco Systems Inc.*.......................... 116,667
3,829,900 Nokia Oyj ADR (2)*........................... 62,274
----------
178,941
----------
COMPUTERS & PERIPHERALS--5.3%
4,430,600 Dell Computer Corp.*......................... 116,702
1,672,500 EMC Corp.*................................... 15,287
5,064,800 Hewlett-Packard Co. ......................... 86,608
865,800 International Business Machines Corp. ....... 72,519
5,153,300 Sun Microsystems Inc.*....................... 42,154
----------
333,270
----------
DIVERSIFIED FINANCIALS--9.9%
1,509,900 American Express Co. ........................ 61,921
273,200 Capital One Financial Corp.*................. 16,362
4,812,866 Citigroup Inc. .............................. 208,397
2,030,800 Concord EFS Inc.*............................ 66,184
1,357,900 Goldman Sachs Group Inc. .................... 106,935
2,443,500 MBNA Corp. .................................. 86,622
1,978,000 Merrill Lynch & Co. Inc. .................... 82,957
----------
629,378
----------
ENERGY EQUIPMENT & SERVICES--3.1%
3,571,600 Schlumberger Ltd. ........................... 195,545
----------
HEALTH CARE EQUIPMENT & SUPPLIES--1.7%
1,849,800 Baxter International Inc. ................... 105,254
----------
HOTELS RESTAURANTS & LEISURE--1.2%
1,515,000 Marriott International Inc. Cl. A............ 66,569
396,700 Starbucks Corp.*............................. 9,053
----------
75,622
----------
INDUSTRIAL CONGLOMERATES--2.8%
644,300 3M Co........................................ 81,053
3,064,200 General Electric Co. ........................ 96,676
----------
177,729
----------
INSURANCE--6.7%
3,357,025 American International Group Inc. ........... 232,038
1,389,700 Hartford Financial Services Group Inc. ...... 96,306
1,002,400 XL Capital Ltd. Cl. A........................ 94,576
----------
422,920
----------
INTERNET & CATALOG RETAIL--0.5%
603,800 ebay Inc.*................................... 32,062
----------
MEDIA--9.7%
8,602,100 Liberty Media Corp. Series A*................ 92,042
1,688,900 New York Times Co. Cl. A..................... 78,635
1,508,300 Omnicom Group Inc. .......................... 131,584
1,974,700 Univision Communications Inc. CI. A*......... 78,909
1,292,700 USA Networks Inc.*........................... 38,665
4,187,840 Viacom Inc. CI. B*........................... 197,247
----------
617,082
----------
</Table>

DOMESTIC EQUITY

HARBOR CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

MULTILINE RETAIL--8.1%
779,200 Costco Wholesale Corp. ...................... $ 31,324
2,967,100 Kohls Corp.*................................. 218,675
1,509,900 Target Corp. ................................ 65,907
3,542,200 Wal-Mart Stores Inc. ........................ 197,867
----------
513,773
----------
PAPER & FOREST PRODUCTS--0.1%
169,900 International Paper Co. ..................... 6,967
----------
PERSONAL PRODUCTS--0.9%
1,677,100 Gillette Co. ................................ 59,503
----------
PHARMACEUTICALS--10.4%
2,097,500 Abbott Laboratories.......................... 113,160
3,118,800 Johnson & Johnson............................ 199,167
3,562,450 Pfizer Inc. ................................. 129,495
2,097,278 Pharmacia Corp. ............................. 86,471
2,269,800 Wyeth........................................ 129,379
----------
657,672
----------
SEMICONDUCTOR EQUIPMENT & PRODUCTS--8.2%
1,349,200 Applied Materials Inc.*...................... 32,813
1,840,500 ARM Holdings plc ADR (2)*.................... 17,853
769,900 ASML Holding NV--Registered.................. 17,192
495,600 Broadcom Corp. Cl. A*........................ 17,098
6,992,100 Intel Corp. ................................. 200,044
230,200 KLA-Tencor Corp.*............................ 13,575
835,500 Maxim Integrated Products Inc.*.............. 41,608
393,500 Novellus Systems Inc.*....................... 18,652
1,649,700 STMicroelectronics NV--Registered............ 50,794
3,671,900 Texas Instruments Inc. ...................... 113,572
----------
523,201
----------
SOFTWARE--5.3%
723,200 Adobe Systems Inc. .......................... 28,899
4,329,300 Microsoft Corp.*............................. 226,249
3,454,900 Oracle Corp.*................................ 34,687
1,383,100 SAP AG ADR (2)*.............................. 45,089
----------
334,924
----------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

SPECIALTY RETAIL--8.3%
2,919,800 Bed Bath & Beyond Inc.*...................... $ 108,529
4,240,450 Home Depot Inc. ............................. 196,630
2,207,300 Lowe's Cos. Inc. ............................ 93,347
3,238,400 Tiffany & Co. ............................... 128,726
----------
527,232
----------
TOTAL COMMON STOCKS
(Cost $5,824,999)....................................... 6,099,878
----------

<Caption>
SHORT-TERM INVESTMENTS--3.9%
PRINCIPAL
AMOUNT
(000S)
- ----------------------------------------------------------------------

COMMERCIAL PAPER
American Express Credit Corp.
$ 200,000 1.800%--05/01/2002......................... 200,000
General Electric Capital Corp.
50,701 1.800%--05/01/2002......................... 50,701
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $250,701)......................................... 250,701
----------
TOTAL INVESTMENTS--100.0%
(Cost $6,075,700)....................................... 6,350,579
CASH AND OTHER ASSETS, LESS LIABILITIES--(0.0%)........... (506)
----------
TOTAL NET ASSETS--100.0%.................................. $6,350,073
==========
</Table>

- ------------

1 Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30, 2002,
these securities were valued at $52,024 or 0.82% of net assets.

2 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.

DOMESTIC EQUITY

HARBOR MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2002 (UNAUDITED)

COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash and short-term investment of 1.2%)

<Table>

Beverages 0.6

Multi-Utilities 0.7

Electronic Equipment & Instruments 0.8

Airlines 1.0

Auto Components 1.0

Pharmaceuticals 1.0

Road & Rail 1.2

Insurance 1.3

Internet Software & Services 1.4

Commercial Services & Supplies 2.5

Hotels Restaurants & Leisure 2.5

Software 3.8

IT Consulting & Services 4.0

Textiles & Apparel 4.8

Communications Equipment 5.9

Specialty Retail 8.1

Health Care Providers & Services 8.2

Biotechnology 14.0

Energy Equipment & Services 15.0

Semiconductor Equipment & Products 21.0

</Table>

<Table>
<Caption>
COMMON STOCKS--98.8%
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

AIRLINES--1.0%
5,800 SKYWEST Inc. ................................... $ 133
-------
AUTO COMPONENTS--1.0%
4,200 Gentex Corp. ................................... 133
-------
BEVERAGES--0.6%
1,200 Constellation Brands Inc. Cl. A................. 72
-------
BIOTECHNOLOGY--14.0%
7,700 Abgenix Inc.*................................... 109
9,400 Celgene Corp.*.................................. 186
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

BIOTECHNOLOGY--CONTINUED
5,500 Cephalon Inc.*.................................. $ 323
4,800 Genzyme Corp.*.................................. 196
9,200 Gilead Sciences Inc.*........................... 286
6,100 Invitrogen Corp.*............................... 212
10,900 Medarex Inc.*................................... 111
6,400 Medimmune Inc.*................................. 214
4,700 OSI Pharmaceuticals Inc.*....................... 150
-------
1,787
-------
COMMERCIAL SERVICES & SUPPLIES--2.5%
14,000 Ceridian Corp.*................................. 312
-------
COMMUNICATIONS EQUIPMENT--5.9%
7,200 Brocade Communication Systems Inc.*............. 184
6,700 CIENA Corp.*.................................... 50
14,700 Finisar Corp.*.................................. 94
7,300 Harris Corp. ................................... 264
4,100 Polycom Inc.*................................... 85
5,700 Powerwave Technologies Inc.*.................... 68
-------
745
-------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.8%
3,500 Celestica Inc.*................................. 97
-------
ENERGY EQUIPMENT & SERVICES--15.0%
7,900 BJ Services Co.*................................ 290
11,600 Global Industries Ltd.*......................... 112
9,700 Grant Prideco Inc.*............................. 155
5,900 Nabors Industries Inc.*......................... 269
7,300 National-Oilwell Inc.*.......................... 194
6,900 Patterson-UTI Energy Inc.*...................... 221
8,300 Precision Drilling Corp.*....................... 278
6,250 Transocean Sedco Forex Inc. .................... 222
3,300 Weatherford International Inc.*................. 165
-------
1,906
-------
HEALTH CARE PROVIDERS & SERVICES--8.2%
8,400 AdvancePCS*..................................... 284
11,200 Caremark Rx Inc.*............................... 241
10,700 Omnicare Inc. .................................. 286
33,700 WebMD Corp.*.................................... 233
-------
1,044
-------
HOTELS RESTAURANTS & LEISURE--2.5%
4,100 Outback Steakhouse Inc.*........................ 144
7,700 Starbucks Corp.*................................ 176
-------
320
-------
INSURANCE--1.3%
3,100 Partnerre Ltd. ................................. 167
-------
INTERNET SOFTWARE & SERVICES--1.4%
12,100 Yahoo! Inc.*.................................... 179
-------
IT CONSULTING & SERVICES--4.0%
5,900 Computer Sciences Corp.*........................ 265
13,600 KPMG Consulting Inc.*........................... 238
-------
503
-------
MULTI-UTILITIES--0.7%
7,900 Calpine Corp.*.................................. 87
-------
PHARMACEUTICALS--1.0%
2,000 Barr Laboratories Inc.*......................... 133
-------
ROAD & RAIL--1.2%
7,700 Swift Transportation Co. Inc.*.................. 150
-------
</Table>

DOMESTIC EQUITY

HARBOR MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

SEMICONDUCTOR EQUIPMENT & PRODUCTS--21.0%
10,200 Applied Micro Circuits Corp.*................... $ 69
21,900 Atmel Corp.*.................................... 197
8,300 Cypress Semiconductor Corp.*.................... 185
5,000 Elantec Semiconductor Inc.*..................... 207
4,200 Integrated Device Technology Inc.*.............. 118
5,200 Intersil Holding Corp. Cl. A*................... 140
4,800 Lam Research Corp.*............................. 123
6,200 Lattice Semiconductor Corp.*.................... 73
10,600 LSI Logic Corp.*................................ 136
3,900 Marvell Technology Group Ltd.*.................. 140
2,400 Micrel Inc.*.................................... 53
5,600 Microchip Technology Inc.*...................... 249
3,500 National Semiconductor Corp.*................... 110
4,100 Novellus Systems Inc.*.......................... 194
3,300 QLogic Corp.*................................... 151
9,600 RF Micro Devices Inc.*.......................... 167
4,300 Semtech Corp.*.................................. 137
4,800 Teradyne Inc.*.................................. 158
10,100 Vitesse Semiconductor Corp.*.................... 60
-------
2,667
-------
SOFTWARE--3.8%
2,200 Electronic Arts Inc.*........................... 130
3,600 Intuit Inc.*.................................... 141
8,100 Tibco Software Inc.*............................ 68
5,300 Veritas Software Corp.*......................... 150
-------
489
-------
SPECIALTY RETAIL--8.1%
10,000 Abercrombie & Fitch Co. Cl. A*.................. 300
8,800 Bed Bath & Beyond Inc.*......................... 327
10,300 Foot Locker Inc.*............................... 162
6,100 Tiffany & Co. .................................. 242
-------
1,031
-------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

TEXTILES & APPAREL--4.8%
7,800 Jones Apparel Group Inc.*....................... $ 304
10,600 Polo Ralph Lauren Corp. Cl. A*.................. 305
-------
609
-------
TOTAL COMMON STOCKS
(Cost $13,624)............................................. 12,564
-------

<Caption>
SHORT-TERM INVESTMENT--9.2%
(Cost $1,177)
PRINCIPAL
AMOUNT
(000S)
- ----------------------------------------------------------------------

REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust dated April 30, 2002 due May 1, 2002 at
0.65% collateralized by a U.S. Treasury Bill
12.0% August 15, 2013, par value of
$860 (repurchase proceeds of $1,177 when
$1,177 closed on May 1, 2002)........................ 1,177
-------
TOTAL INVESTMENTS--108.0%
(Cost $14,801)............................................. 13,741
CASH AND OTHER ASSETS, LESS LIABILITIES--(8.0%).............. (1,015)
-------
TOTAL NET ASSETS--100.0%..................................... $12,726
=======
</Table>

- ------------

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.

DOMESTIC EQUITY

HARBOR GROWTH FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2002 (UNAUDITED)

COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash, convertible bond and short-term investments of 5.7%)

<Table>

Electric Utilities 0.8

Wireless Telecommunication Services 0.8

Hotels Restaurants & Leisure 1.7

Commercial Services & Supplies 1.8

Machinery 1.8

Internet Software & Services 2.9

Computers & Peripherals 4.4

Pharmaceuticals 4.5

Health Care Providers & Services 4.7

Multiline Retail 5.8

Health Care Equipment & Supplies 6.3

Communications Equipment 6.8

Semiconductor Equipment & Products 9.0

Electronic Equipment & Instruments 14.3

Software 28.7

</Table>

<Table>
<Caption>
COMMON STOCKS--94.3%
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

COMMERCIAL SERVICES & SUPPLIES--1.8%
140,000 DiamondCluster International Inc. Cl. A*....... $ 1,764
450,000 ProsoftTraining.com*........................... 351
--------
2,115
--------
COMMUNICATIONS EQUIPMENT--6.8%
290,000 Aspect Communications Corp.*................... 1,389
210,000 Comverse Technology Inc.*...................... 2,526
400,000 Proxim Corp. Cl. A*............................ 1,220
440,000 Symmetricom Inc.*.............................. 2,816
335,000 Verilink Corp.*................................ 137
--------
8,088
--------
COMPUTERS & PERIPHERALS--4.4%
300,000 Network Appliance Inc.*........................ 5,235
--------
ELECTRIC UTILITIES--0.8%
110,800 AES Corp.*..................................... 889
--------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

ELECTRONIC EQUIPMENT & INSTRUMENTS--14.3%
280,000 Checkpoint Systems Inc.*....................... $ 4,830
60,000 ClearOne Communications Inc.*.................. 983
280,000 LoJack Corp. *................................. 1,540
415,000 Pinnacle Systems Inc.*......................... 3,860
230,000 Planar Systems Inc.*........................... 5,725
--------
16,938
--------
HEALTH CARE EQUIPMENT & SUPPLIES--6.3%
250,000 Kensey Nash Corp.*............................. 4,812
150,000 Molecular Devices Corp. *...................... 2,678
--------
7,490
--------
HEALTH CARE PROVIDERS & SERVICES--4.7%
130,000 Health Management Associates Inc. Cl. A*....... 2,774
105,000 Orthodontic Centers of America Inc.*........... 2,798
--------
5,572
--------
HOTELS RESTAURANTS & LEISURE--1.7%
60,000 Carnival Corp. ................................ 1,999
--------
INTERNET SOFTWARE & SERVICES--2.9%
200,000 Netegrity Inc.*................................ 1,530
130,000 Sonicwall Inc.*................................ 965
170,000 Stellent Inc.*................................. 896
--------
3,391
--------
MACHINERY--1.8%
200,000 Flow International Corp.*...................... 2,120
--------
MULTILINE RETAIL--5.8%
67,500 Dollar Tree Stores Inc.*....................... 2,574
100,000 The TJX Cos. Inc. ............................. 4,358
--------
6,932
--------
PHARMACEUTICALS--4.5%
85,517 Elan Corp. plc ADR(1)*......................... 1,016
150,000 K-V Pharmaceutical Co. Cl. A*.................. 4,313
--------
5,329
--------
SEMICONDUCTOR EQUIPMENT & PRODUCTS--9.0%
180,000 ATMI Inc.*..................................... 5,490
70,000 Maxim Integrated Products Inc.*................ 3,486
172,605 TriQuint Semiconductor Inc.*................... 1,750
--------
10,726
--------
SOFTWARE--28.7%
150,000 Ansoft Corp.*.................................. 1,696
200,000 Documentum Inc.*............................... 3,884
150,000 Innoveda Inc.*................................. 583
500,000 Legato Systems Inc. *.......................... 3,450
265,600 MRO Software Inc.*............................. 3,841
100,000 Precis Inc.*................................... 1,455
200,000 QRS Corp.*..................................... 2,240
200,000 Renaissance Learning Inc.*..................... 6,914
200,000 Secure Computing Corp.*........................ 2,514
160,000 SERENA Software Inc.*.......................... 2,200
100,000 Symantec Corp.*................................ 3,541
160,000 Wind River Systems Inc.*....................... 1,742
--------
34,060
--------
WIRELESS TELECOMMUNICATION SERVICES--0.8%
180,000 Nextel Communications Inc. Cl. A*.............. 992
--------
TOTAL COMMON STOCKS
(Cost $142,296)........................................... 111,876
--------
</Table>

DOMESTIC EQUITY

HARBOR GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
CONVERTIBLE BOND--1.2%
(Cost $2,827)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

SystemOne Technologies Inc.
$ 2,826 8.250%--02/23/2003 PIK(2).................... $ 1,413
--------

<Caption>
SHORT-TERM INVESTMENTS--4.5%

COMMERCIAL PAPER
Exxon Asset Management Co.
1,816 1.750%--05/02/2002........................... 1,816
General Electric Capital Corp.
2,388 1.680%--05/01/2002........................... 2,388
Prudential Funding Corp.
1,192 1.700%--05/03/2002........................... 1,192
--------
</Table>

<Table>
<Caption>
SHORT-TERM INVESTMENTS--CONTINUED
VALUE
(000S)
- ----------------------------------------------------------------------

TOTAL SHORT-TERM INVESTMENTS
(Cost $5,396)............................................. $ 5,396
--------
TOTAL INVESTMENTS--100.0%
(Cost $150,519)........................................... 118,685
CASH AND OTHER ASSETS, LESS LIABILITIES--(0.0)%............. (5)
--------
TOTAL NET ASSETS--100.0%.................................... $118,680
========
</Table>

- ------------

1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.

2 PIK--Payment-in-kind security.

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.

DOMESTIC EQUITY

HARBOR SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2002 (UNAUDITED)

COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash and short-term investment of 18.7%)

<Table>

Biotechnology 0.7

Pharmaceuticals 0.7

Communications Equipment 1.2

Internet Software & Services 1.4

Oil & Gas 1.4

Metals & Mining 1.6

Aerospace & Defense 1.8

Media 2.5

Airlines 3.0

Health Care Equipment & Supplies 3.0

Hotels Restaurants & Leisure 3.3

Software 4.1

Specialty Retail 4.5

Semiconductor Equipment & Products 5.7

Insurance 5.8

Energy Equipment & Services 7.1

Banks 9.8

Commercial Services & Supplies 10.1

Health Care Providers & Services 13.6

</Table>

<Table>
<Caption>
COMMON STOCKS--81.3%
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

AEROSPACE & DEFENSE--1.8%
34,100 Armor Holdings Inc.*............................ $ 864
-------
AIRLINES--3.0%
24,900 Atlantic Coast Airlines Holdings Inc.*.......... 544
24,700 ExpressJet Holdings Inc.*....................... 354
25,700 SKYWEST Inc. ................................... 590
-------
1,488
-------
BANKS--9.8%
24,600 East West Bancorp Inc. ......................... 881
18,400 Greater Bay Bancorp............................. 616
19,000 Indymac Bancorp Inc.*........................... 480
45,600 Silicon Valley Bancshares ...................... 1,457
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

BANKS--CONTINUED
19,700 Southwest Bancorporation of Texas Inc.*......... $ 690
17,800 UCBH Holdings Inc. ............................. 702
-------
4,826
-------
BIOTECHNOLOGY--0.7%
15,000 Albany Molecular Research Inc.*................. 364
-------
COMMERCIAL SERVICES & SUPPLIES--10.1%
20,000 Career Education Corp.*......................... 899
31,400 DeVry Inc.*..................................... 832
20,400 NDCHealth Corp. ................................ 656
45,000 Republic Services Inc. Cl. A*................... 891
10,300 Stericycle Inc.*................................ 696
2,600 Sylvan Learning Systems Inc.*................... 72
26,400 Waste Connections Inc.*......................... 932
-------
4,978
-------
COMMUNICATIONS EQUIPMENT--1.2%
34,300 Advanced Fibre Communications Inc.*............. 608
-------
ENERGY EQUIPMENT & SERVICES--7.1%
23,900 Helmerich & Payne Inc. ......................... 985
20,100 SEACOR Smit Inc.*............................... 967
59,000 Superior Energy Services Inc.*.................. 658
34,300 W-H Energy Services Inc.*....................... 883
-------
3,493
-------
HEALTH CARE EQUIPMENT & SUPPLIES--3.0%
87,000 Interpore International Inc.*................... 818
14,300 Wilson Greatbatch Technologies Inc.*............ 375
13,300 Wright Medical Group Inc.*...................... 252
-------
1,445
-------
HEALTH CARE PROVIDERS & SERVICES--13.6%
60,500 Alliance Imaging Inc.*.......................... 792
10,900 Boron, LePore & Associates Inc.*................ 130
34,200 Community Health Systems Inc.*.................. 992
34,500 Cross Country Inc.*............................. 1,044
31,700 Manor Care Inc.* ............................... 813
75,000 PSS World Medical Inc.*......................... 742
52,900 Quintiles Transnational Corp.*.................. 751
26,800 RehabCare Group Inc.*........................... 714
45,000 Select Medical Corp.*........................... 677
5,000 Specialty Laboratories Inc. .................... 44
-------
6,699
-------
HOTELS RESTAURANTS & LEISURE--3.3%
19,000 CEC Entertainment Inc.*......................... 878
45,300 Extended Stay America Inc.*..................... 756
-------
1,634
-------
INSURANCE--5.8%
30,300 Converium Holding AG ADR(1)..................... 830
10,600 Everest Reinsurance Holdings Inc. .............. 720
17,300 Philadelphia Consolidated Holdings Corp. ....... 739
5,000 RenaissanceRe Holdings Ltd. .................... 586
-------
2,875
-------
INTERNET SOFTWARE & SERVICES--1.4%
37,400 FreeMarkets Inc.*............................... 664
-------
MEDIA--2.5%
45,400 Entravision Communications Corp.*............... 658
8,200 Information Holdings Inc.*...................... 256
19,700 Insight Communications Co. Inc. Cl. A*.......... 306
1,100 Mediacom Communications Corp. Cl. A*............ 11
-------
1,231
-------
</Table>

DOMESTIC EQUITY

HARBOR SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

METALS & MINING--1.6%
36,300 Arch Coal Inc. ................................. $ 806
-------
OIL & GAS--1.4%
79,500 Chesapeake Energy Corp.*........................ 680
-------
PHARMACEUTICALS--0.7%
21,700 Salix Pharmaceuticals Ltd.*..................... 322
-------
SEMICONDUCTOR EQUIPMENT & PRODUCTS--5.7%
20,100 Brooks Automation Inc.*......................... 717
31,900 LTX Corp.*...................................... 677
33,500 Therma-Wave Inc.*............................... 474
Varian Semiconductor Equipment Associates
20,000 Inc.*......................................... 934
-------
2,802
-------
SOFTWARE--4.1%
46,200 Borland Software Corp.*......................... 504
24,000 Renaissance Learning Inc.*...................... 830
20,000 THQ Inc.*....................................... 701
-------
2,035
-------
SPECIALTY RETAIL--4.5%
26,900 Cost Plus Inc.*................................. 792
39,900 Guitar Center Inc.*............................. 788
11,100 Williams-Sonoma Inc.*........................... 639
-------
2,219
-------
TOTAL COMMON STOCKS
(Cost $36,423)............................................. 40,033
-------

<Caption>
SHORT-TERM INVESTMENT--13.5%
(Cost $6,620)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust dated April 30, 2002 due May 1, 2002 at
0.65% collateralized by a U.S. Treasury Bill
12.0% August 15, 2013, par value of $4,815
(repurchase proceeds of $6,620 when closed on
$6,620 May 1, 2002).................................. $ 6,620
-------
TOTAL INVESTMENTS--94.8%
(Cost $43,043)............................................. 46,653
CASH AND OTHER ASSETS, LESS LIABILITIES--5.2%................ 2,554
-------
TOTAL NET ASSETS--100.0%..................................... $49,207
=======
</Table>

- ------------

1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.

DOMESTIC EQUITY

HARBOR LARGE CAP VALUE FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2002 (UNAUDITED)

COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash and short-term investment of 5.6%)

<Table>

Software 1.6

Banks 1.9

Hotels Restaurants & Leisure 2.2

Gas Utilities 2.5

Chemicals 2.7

Specialty Retail 2.8

Household Durables 2.9

Electrical Equipment 3.0

Electric Utilities 3.2

Industrial Conglomerates 3.9

IT Consulting & Services 4.2

Pharmaceuticals 4.8

Food & Drug Retailing 5.1

Health Care Providers & Services 6.2

Oil & Gas 7.2

Media 8.2

Commercial Services & Supplies 8.6

Insurance 10.0

Diversified Financials 13.4

</Table>

<Table>
<Caption>
COMMON STOCKS--94.4%
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

BANKS--1.9%
91,221 FleetBoston Financial Corp. ................... $ 3,220
--------
CHEMICALS--2.7%
106,999 E.I. Du Pont De Nemours & Co. ................. 4,761
--------
COMMERCIAL SERVICES & SUPPLIES--8.6%
334,100 Cendant Corp.*................................. 6,010
212,900 IMS Health Inc. ............................... 4,388
110,300 Pitney Bowes Inc. ............................. 4,644
--------
15,042
--------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

DIVERSIFIED FINANCIALS--13.4%
88,500 American Express Co. .......................... $ 3,629
140,012 Citigroup Inc. ................................ 6,063
102,800 Federal Home Loan Mortgage Corp. .............. 6,718
195,014 J.P. Morgan Chase & Co. ....................... 6,845
--------
23,255
--------
ELECTRIC UTILITIES--3.2%
101,100 Exelon Corp. .................................. 5,490
--------
ELECTRICAL EQUIPMENT--3.0%
98,000 Emerson Electric Co. .......................... 5,232
--------
FOOD & DRUG RETAILING--5.1%
112,500 CVS Corp. ..................................... 3,767
119,900 Safeway Inc.*.................................. 5,030
--------
8,797
--------
GAS UTILITIES--2.5%
108,400 El Paso Corp. ................................. 4,336
--------
HEALTH CARE PROVIDERS & SERVICES--6.2%
117,700 HCA Inc. ...................................... 5,625
111,500 Oxford Health Plans Inc. ...................... 5,147
--------
10,772
--------
HOTELS RESTAURANTS & LEISURE--2.2%
60,300 Tricon Global Restaurants Inc. ................ 3,803
--------
HOUSEHOLD DURABLES--2.9%
66,700 Whirlpool Corp. ............................... 4,999
--------
INDUSTRIAL CONGLOMERATES--3.9%
137,600 Textron Inc. .................................. 6,767
--------
INSURANCE--10.0%
98,000 Allstate Corp. ................................ 3,895
71,965 Chubb Corp. ................................... 5,520
112,000 John Hancock Financial Services Inc. .......... 4,323
52,000 MGIC Investment Corp. ......................... 3,711
--------
17,449
--------
IT CONSULTING & SERVICES--4.2%
134,700 Electronic Data Systems Corp. ................. 7,309
--------
MEDIA--8.2%
191,300 Comcast Corp. Cl. A............................ 5,117
45,100 Gannett Inc. .................................. 3,306
550,400 Liberty Media Corp. Series A*.................. 5,889
--------
14,312
--------
OIL & GAS--7.2%
145,500 Devon Energy Corp. ............................ 7,175
88,300 Kerr-McGee Corp. .............................. 5,280
--------
12,455
--------
PHARMACEUTICALS--4.8%
94,300 Merck & Co Inc. ............................... 5,124
120,700 Schering-Plough Corp. ......................... 3,295
--------
8,419
--------
SOFTWARE--1.6%
125,500 Amdocs Ltd.* .................................. 2,727
--------
SPECIALTY RETAIL--2.8%
157,900 RadioShack Corp. .............................. 4,926
--------
TOTAL COMMON STOCKS
(Cost $146,508)........................................... 164,071
--------
</Table>

DOMESTIC EQUITY

HARBOR LARGE CAP VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
SHORT-TERM INVESTMENT--8.5%
(Cost $14,735)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust dated April 30, 2002 due May 1, 2002 at
0.65% collateralized by a U.S. Treasury Note
6.875% May 15, 2006, par value of $13,340
(repurchase proceeds of $14,735 when closed
$14,735 on May 1, 2002).............................. $ 14,735
--------
TOTAL INVESTMENTS--102.9%
(Cost $161,243)........................................... 178,806
CASH AND OTHER ASSETS, LESS LIABILITIES--(2.9%)............. (4,996)
--------
TOTAL NET ASSETS--100.0%.................................... $173,810
========
</Table>

- ------------

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.

DOMESTIC EQUITY

HARBOR MID CAP VALUE FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2002 (UNAUDITED)

COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash and short-term investment of 7.7%)

<Table>

Food Products 1.8

Electrical Equipment 2.0

Communications Equipment 2.3

Media 2.3

Health Care Equipment & Supplies 2.4

Electronic Equipment & Instruments 2.5

Multi-Utilities 2.9

Road & Rail 3.1

Leisure Equipment & Products 3.2

Oil & Gas 3.6

Health Care Providers & Services 3.9

Energy Equipment & Services 4.0

Metals & Mining 4.0

Specialty Retail 5.3

Electric Utilities 5.9

Commercial Services & Supplies 6.0

Hotels Restaurants & Leisure 6.5

Semiconductor Equipment & Products 6.6

Banks 6.9

Machinery 7.3

Diversified Financials 9.8

</Table>

<Table>
<Caption>
COMMON STOCKS--92.3%
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

BANKS--6.9%
3,800 Banknorth Group Inc. ............................ $ 100
3,200 Charter One Financial Inc. ...................... 113
------
213
------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

COMMERCIAL SERVICES & SUPPLIES--6.0%
4,200 Republic Services Inc. Cl. A*.................... $ 83
3,300 Viad Corp. ...................................... 101
------
184
------
COMMUNICATIONS EQUIPMENT--2.3%
4,300 Andrew Corp.*.................................... 71
------
DIVERSIFIED FINANCIALS--9.8%
1,600 Ambac Financial Group Inc. ...................... 101
3,700 Principal Financial Group*....................... 103
4,600 Stilwell Financial Inc. ......................... 98
------
302
------
ELECTRIC UTILITIES--5.9%
2,800 FirstEnergy Corp. ............................... 93
2,000 Pinnacle West Capital Corp. ..................... 88
------
181
------
ELECTRICAL EQUIPMENT--2.0%
1,400 Cooper Industries Inc. .......................... 61
------
ELECTRONIC EQUIPMENT & INSTRUMENTS--2.5%
3,800 Jabil Circuit Inc.*.............................. 78
------
ENERGY EQUIPMENT & SERVICES--4.0%
3,600 ENSCO International Inc. ........................ 122
------
FOOD PRODUCTS--1.8%
2,300 Interstate Bakeries Corp. ....................... 57
------
HEALTH CARE EQUIPMENT & SUPPLIES--2.4%
1,900 DENTSPLY International Inc. ..................... 75
------
HEALTH CARE PROVIDERS & SERVICES--3.9%
7,900 HealthSouth Corp.*............................... 119
------
HOTELS RESTAURANTS & LEISURE--6.5%
2,800 Outback Steakhouse Inc.*......................... 98
8,200 Park Place Entertainment Corp.*.................. 101
------
199
------
LEISURE EQUIPMENT & PRODUCTS--3.2%
1,300 Polaris Industries Inc. ......................... 98
------
MACHINERY--7.3%
3,900 Kaydon Corp. .................................... 111
1,600 PACCAR Inc. ..................................... 114
------
225
------
MEDIA--2.3%
4,600 Insight Communications Co. Inc. Cl. A*........... 72
------
METALS & MINING--4.0%
2,100 Nucor Corp. ..................................... 123
------
MULTI-UTILITIES--2.9%
8,000 Calpine Corp.*................................... 88
------
OIL & GAS--3.6%
2,600 EOG Resources Inc. .............................. 111
------
ROAD & RAIL--3.1%
5,366 Werner Enterprises Inc. ......................... 95
------
SEMICONDUCTOR EQUIPMENT & PRODUCTS--6.6%
7,900 Lattice Semiconductor Corp.*..................... 94
2,300 Novellus Systems Inc.*........................... 109
------
203
------
</Table>

DOMESTIC EQUITY

HARBOR MID CAP VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

SPECIALTY RETAIL--5.3%
1,400 Payless ShoeSource Inc.*......................... $ 82
2,000 Ross Stores Inc. ................................ 81
------
163
------
TOTAL COMMON STOCKS
(Cost $2,693)............................................... 2,840
------
<Caption>
SHORT-TERM INVESTMENT--17.8%
(Cost $548)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust dated April 30, 2002 due May 1, 2002 at
0.65% collateralized by a U.S. Treasury Bill
12.0% August 15, 2013, par value of $400
(repurchase proceeds of $548 when closed on May
$ 548 1, 2002)....................................... $ 548
------
TOTAL INVESTMENTS--110.1%
(Cost $3,241)............................................... 3,388
CASH AND OTHER ASSETS, LESS LIABILITIES--(10.1%).............. (312)
------
TOTAL NET ASSETS--100.0%...................................... $3,076
======
</Table>

- ------------

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.

DOMESTIC EQUITY

HARBOR SMALL CAP VALUE FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2002 (UNAUDITED)

COMMON STOCK HOLDINGS (% OF NET ASSETS)
(Excludes net cash and short-term investment of 2.3%)

<Table>

Aerospace & Defense 1.0

Building Products 1.3

Wireless Telecommunication Services 1.7

Auto Components 1.8

Gas Utilities 1.9

Real Estate 1.9

Electric Utilities 2.1

Electronic Equipment & Instruments 2.1

Media 2.8

Chemicals 3.2

Multiline Retail 3.7

Pharmaceuticals 4.0

Software 4.2

Hotels Restaurants & Leisure 4.8

Health Care Equipment & Supplies 5.6

Insurance 5.8

Banks 6.0

Oil & Gas 6.7

Commercial Services & Supplies 7.1

Diversified Financials 9.0

Household Durables 9.1

Health Care Providers & Services 11.9
</Table>

<Table>
<Caption>
COMMON STOCKS--97.7%
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

AEROSPACE & DEFENSE--1.0%
2,800 United Defense Industries Inc.*.................. $ 76
------
AUTO COMPONENTS--1.8%
5,900 Federal Signal Corp. ............................ 136
------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

BANKS--6.0%
2,400 Astoria Financial Corp. ......................... $ 77
10,000 BankUnited Financial Corp.*...................... 160
2,400 Commerce Bancorp Inc. ........................... 118
1,800 Golden State Bancorp Inc. ....................... 59
1,200 Hibernia Corp. Cl. A............................. 24
------
438
------
BUILDING PRODUCTS--1.3%
5,200 Watsco Inc. ..................................... 94
------
CHEMICALS--3.2%
2,700 The Scotts Co. Cl. A*............................ 129
2,300 Valspar Corp. ................................... 106
------
235
------
COMMERCIAL SERVICES & SUPPLIES--7.1%
5,100 Allied Waste Industries Inc.*.................... 62
4,700 Global Payments Inc. ............................ 181
4,100 Kelly Services Inc. Cl. A ....................... 119
2,900 NDCHealth Corp. ................................. 93
3,500 Republic Services Inc. Cl. A*.................... 69
------
524
------
DIVERSIFIED FINANCIALS--9.0%
5,000 AmeriCredit Corp.*............................... 194
3,200 Eaton Vance Corp. ............................... 117
3,800 Jefferies Group Inc. ............................ 177
5,100 Raymond James Financial Inc. .................... 171
------
659
------
ELECTRIC UTILITIES--2.1%
5,300 PNM Resources Inc. .............................. 154
------
ELECTRONIC EQUIPMENT & INSTRUMENTS--2.1%
1,600 FLIR Systems Inc.*............................... 64
6,200 Pioneer-Standard Electronics Inc. ............... 91
------
155
------
GAS UTILITIES--1.9%
6,200 ONEOK Inc. ...................................... 136
------
HEALTH CARE EQUIPMENT & SUPPLIES--5.6%
4,600 Diagnostic Products Corp. ....................... 221
3,600 The Cooper Cos. Inc. ............................ 191
------
412
------
HEALTH CARE PROVIDERS & SERVICES--11.9%
10,400 Covance Inc.*.................................... 209
2,900 Lincare Holdings Inc.*........................... 91
2,600 Orthodontic Centers of America Inc.*............. 69
5,500 Pediatrix Medical Group Inc.*.................... 258
6,200 Pharmaceutical Product Development Inc.*......... 156
5,600 Quintiles Transnational Corp.*................... 79
1,300 Service Corp. International*..................... 5
1,300 Stewart Enterprises Inc. Cl. A*.................. 8
------
875
------
HOTELS RESTAURANTS & LEISURE--4.8%
2,900 Brinker International Inc.*...................... 100
2,000 CEC Entertainment Inc.*.......................... 92
1,800 Outback Steakhouse Inc.*......................... 63
5,900 WMS Industries Inc.*............................. 95
------
350
------
HOUSEHOLD DURABLES--9.1%
4,850 D.R. Horton Inc. ................................ 125
200 Furniture Brands International Inc.*............. 8
4,200 Harman International Industries Inc. ............ 248
</Table>

DOMESTIC EQUITY

HARBOR SMALL CAP VALUE FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

HOUSEHOLD DURABLES--CONTINUED
7,800 Hovnanian Enterprises Inc. Cl. A*................ $ 237
1,600 Snap-on Inc. .................................... 51
------
669
------
INSURANCE--5.8%
3,900 Commerce Group Inc. ............................. 157
4,100 Philadelphia Consolidated Holding Corp.*......... 175
2,900 Protective Life Corp. ........................... 92
------
424
------
MEDIA--2.8%
15,500 Sinclair Broadcast Group Inc. Cl. A*............. 207
------
MULTILINE RETAIL--3.7%
7,050 Fred's Inc. Cl. A................................ 274
------
OIL & GAS--6.7%
8,600 Pioneer Natural Resources Co.* 206
5,300 Swift Energy Co.*................................ 101
8,900 XTO Energy Inc. ................................. 182
------
489
------
PHARMACEUTICALS--4.0%
1,600 Barr Laboratories Inc.*.......................... 107
6,000 KV Pharmaceutical Co.*........................... 190
------
297
------
REAL ESTATE--1.9%
1,600 Alexandria Real Estate Equities Inc. ............ 73
2,000 SL Green Realty Corp. ........................... 70
------
143
------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

SOFTWARE--4.2%
3,600 Cerner Corp.*.................................... $ 191
8,700 Verity Inc.*..................................... 116
------
307
------
WIRELESS TELECOMMUNICATION SERVICES--1.7%
24,400 American Tower Corp. Cl. A*...................... 122
------
TOTAL COMMON STOCKS
(Cost $6,579)............................................... 7,176
------

<Caption>
SHORT-TERM INVESTMENT--13.2%
(Cost $966)
PRINCIPAL
AMOUNT
(000S)
- ----------------------------------------------------------------------

REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust dated April 30, 2002 due May 1, 2002 at
0.65% collateralized by a U.S. Treasury Bill
12.0% August 15, 2013, par value of $705
(repurchase proceeds of $966 when closed on May
$ 966 1, 2002)....................................... 966
------
TOTAL INVESTMENTS--110.9%
(Cost $7,545)............................................... 8,142
CASH AND OTHER ASSETS, LESS LIABILITIES--(10.9%).............. (799)
------
TOTAL NET ASSETS--100.0%...................................... $7,343
======
</Table>

- ------------

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.

DOMESTIC EQUITY

HARBOR DOMESTIC EQUITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES--APRIL 30, 2002 (UNAUDITED)

(All amounts in Thousands, except per share amounts)

<Table>
<Caption>
HARBOR HARBOR HARBOR HARBOR HARBOR HARBOR
CAPITAL MID CAP HARBOR SMALL CAP LARGE CAP MID CAP SMALL CAP
APPRECIATION GROWTH GROWTH GROWTH VALUE VALUE VALUE
- ---------------------------------------------------------------------------------------------------------------------------------

ASSETS
INVESTMENTS, AT IDENTIFIED
COST*..................... $ 6,075,700 $14,801 $150,519 $43,043 $161,243 $3,241 $7,545
=================================================================================================================================
Investments, at value....... $ 6,350,579 $12,564 $118,685 $40,033 $164,071 $2,840 $7,176
Repurchase agreements....... -- 1,177 -- 6,620 14,735 548 966
Cash........................ -- -- 1 1 1,099 -- --
Receivables for:
Investments sold.......... 51,325 33 221 315 -- 38 --
Capital shares sold....... 7,638 47 466 4,750 349 -- 28
Dividends................. 1,892 -- -- 2 20 2 3
Interest.................. 13 -- 45 -- -- -- --
Withholding tax
receivable................ 7 -- -- -- 1 -- --
Other assets................ 125 1 13 1 9 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS......... 6,411,579 13,822 119,431 51,722 180,284 3,428 8,173
LIABILITIES
Payables for:
Investments purchased..... 52,337 996 499 2,430 6,243 349 794
Capital shares
reacquired............. 5,820 42 92 12 139 -- 24
Accrued expenses:
Management fees........... 3,110 6 145 25 90 1 3
Trustees' fees............ 15 -- 1 -- -- -- --
Transfer agent fees....... 168 20 8 21 -- -- 2
Other..................... 56 32 6 27 2 2 7
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES.... 61,506 1,096 751 2,515 6,474 352 830
NET ASSETS.................. $ 6,350,073 $12,726 $118,680 $49,207 $173,810 $3,076 $7,343
=================================================================================================================================
Net assets consist of:
Paid-in capital........... $ 8,335,995 $17,137 $164,457 $46,493 $165,481 $2,930 $6,742
Undistributed/(overdistributed)
net
investment income...... 3,919 (66) (324) (113) 292 (2) (8)
Accumulated net realized
gain/(loss)............ (2,264,720) (3,285) (13,619) (783) (9,526) 1 12
Unrealized
appreciation/(depreciation)
of investments......... 274,879 (1,060) (31,834) 3,610 17,563 147 597
- ---------------------------------------------------------------------------------------------------------------------------------
$ 6,350,073 $12,726 $118,680 $49,207 $173,810 $3,076 $7,343
=================================================================================================================================
Shares of beneficial
interest.................. 239,318 2,205 11,215 4,499 11,820 288 633
Net asset value, offering
and redemption
price per share........... $ 26.53 $ 5.77 $ 10.58 $ 10.94 $ 14.70 $10.67 $11.61
</Table>

- ------------

* Including repurchase agreements and short-term investments.

The accompanying notes are an integral part of the financial statements.

DOMESTIC EQUITY

HARBOR DOMESTIC EQUITY FUNDS
STATEMENT OF OPERATIONS--SIX MONTHS ENDED APRIL 30, 2002 (UNAUDITED)

(All amounts in Thousands)

<Table>
<Caption>
HARBOR HARBOR HARBOR HARBOR HARBOR HARBOR
CAPITAL MID CAP HARBOR SMALL CAP LARGE CAP MID CAP SMALL CAP
APPRECIATION GROWTH GROWTH GROWTH VALUE VALUE(1) VALUE(2)
- ---------------------------------------------------------------------------------------------------------------------------------

INVESTMENT INCOME:
Dividends................. $ 24,951 $ 3 $ 22 $ 18 $ 1,061 $ 2 $ 10
Interest.................. 1,821 2 309 13 34 1 1
Foreign taxes withheld.... (239) -- -- -- (1) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME... 26,533 5 331 31 1,094 3 11
OPERATING EXPENSES:
Management fees........... 19,970 44 494 112 465 3 12
Shareholder
communications......... 268 1 16 2 28 -- --
Custodian fees............ 103 16 13 9 17 1 4
Transfer agent fees....... 1,895 11 110 15 55 -- 1
Professional fees......... 140 1 3 1 13 1 2
Trustees' fees and
expenses............... 54 -- 1 -- 1 -- --
Registration fees......... 149 6 13 18 12 1 3
Miscellaneous............. 37 3 5 4 5 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total operating
expenses............. 22,616 82 655 161 596 6 22
Management fees waived.... -- (11) -- (17) -- (1) (3)
- ---------------------------------------------------------------------------------------------------------------------------------
Net operating
expenses............. 22,616 71 655 144 596 5 19
- ---------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT
INCOME/(LOSS)............. 3,917 (66) (324) (113) 498 (2) (8)
REALIZED AND UNREALIZED
GAIN/(LOSS) ON
INVESTMENT TRANSACTIONS:
Net realized gain/(loss)
on:
Investments............ (387,335) (1,037) (2,597) (173) 3,956 1 12
Foreign currency
transactions......... 81 -- -- -- -- -- --
Change in net unrealized
appreciation of:
Investments............ 397,993 1,163 7,597 3,555 12,613 147 597
- ---------------------------------------------------------------------------------------------------------------------------------
Net gain on investment
transactions........... 10,739 126 5,000 3,382 16,569 148 609
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING
FROM OPERATIONS........ $ 14,656 $ 60 $ 4,676 $3,269 $17,067 $146 $601
=================================================================================================================================
</Table>

1 For the period March 1, 2002 (inception) through April 30, 2002.

2 For the period December 14, 2001 (inception) through April 30, 2002.

DOMESTIC EQUITY

HARBOR DOMESTIC EQUITY FUNDS
STATEMENT OF CHANGES IN NET ASSETS
(All amounts in Thousands)

<Table>
<Caption>
HARBOR HARBOR
CAPITAL APPRECIATION MID CAP GROWTH
-------------------------- --------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
2001 2000 2001 2000
THROUGH THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2002 2001 2002 2001
- ---------------------------------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED)

INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment income/(loss)........................... $ 3,917 $ 10,626 $ (66) $ (82)
Net realized gain/(loss) on investments and foreign
currency transactions................................ (387,254) (1,807,374) (1,037) (2,248)
Net unrealized appreciation/(depreciation) of
investments.......................................... 397,993 (1,461,985) 1,163 (2,223)
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................. 14,656 (3,258,733) 60 (4,553)
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income.................................. (9,070) -- -- --
Net realized gain on investments....................... -- (1,154,660) -- --
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS.................... (9,070) (1,154,660) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares....................... 1,295,267 2,165,435 4,973 16,950
Net asset value of shares issued in connection with
reinvestment of:
Dividends from net investment income................. 8,354 -- -- --
Distributions from net realized gain on
investments....................................... -- 1,114,970 -- --
Cost of shares reacquired.............................. (979,233) (1,947,230) (2,059) (2,645)
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) DERIVED FROM CAPITAL
TRANSACTIONS......................................... 324,388 1,333,175 2,914 14,305
- ---------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets.................. 329,974 (3,080,218) 2,974 9,752
NET ASSETS:
Beginning of period....................................... 6,020,099 9,100,317 9,752 --
- ---------------------------------------------------------------------------------------------------------------------------
END OF PERIOD*............................................ $6,350,073 $ 6,020,099 $12,726 $ 9,752
===========================================================================================================================
NUMBER OF CAPITAL SHARES:
Sold...................................................... 45,505 66,131 815 2,099
Reinvested in payment of investment income dividends...... 284 -- -- --
Reinvested in payment of capital gain distributions....... -- 32,784 -- --
Reacquired................................................ (34,490) (59,853) (338) (371)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in shares outstanding............. 11,299 39,062 477 1,728
Outstanding:
Beginning of period.................................... 228,019 188,957 1,728 --
- ---------------------------------------------------------------------------------------------------------------------------
End of period.......................................... 239,318 228,019 2,205 1,728
===========================================================================================================================
* Includes undistributed/(over-distributed) net investment
income of:................................................ $ 3,919 $ 9,072 $ (66) $ --
</Table>

The accompanying notes are an integral part of the financial statements.

DOMESTIC EQUITY

<Table>
<Caption>
HARBOR HARBOR HARBOR
GROWTH SMALL CAP GROWTH LARGE CAP VALUE
----------------------------- ----------------------------- -----------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
2001 2000 2001 2000 2001 2000
THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2002 2001 2002 2001 2002 2001
- -------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)

$ (324) $ (305) $ (113) $ (65) $ 498 $ 2,286
(2,597) (11,022) (173) (610) 3,956 (10,630)
7,597 (133,296) 3,555 55 12,613 3,472
- -------------------------------------------------------------------------------------------------
4,676 (144,623) 3,269 (620) 17,067 (4,872)
- -------------------------------------------------------------------------------------------------
-- (82) -- -- (262) (2,421)
-- (17,428) -- -- -- (1,898)
- -------------------------------------------------------------------------------------------------
-- (17,510) -- -- (262) (4,319)
- -------------------------------------------------------------------------------------------------
17,628 58,621 31,095 19,457 46,734 38,924
-- 81 -- -- 252 2,324
-- 17,198 -- -- -- 1,836
(21,575) (71,415) (2,474) (1,520) (20,010) (51,479)
- -------------------------------------------------------------------------------------------------
(3,947) 4,485 28,621 17,937 26,976 (8,395)
- -------------------------------------------------------------------------------------------------
729 (157,648) 31,890 17,317 43,781 (17,586)
117,951 275,599 17,317 -- 130,029 147,615
- -------------------------------------------------------------------------------------------------
$118,680 $ 117,951 $49,207 $17,317 $173,810 $130,029
=================================================================================================
1,510 3,837 2,949 1,935 3,216 5,391
-- 5 -- -- 18 133
-- 1,040 -- -- -- 178
(1,868) (4,682) (232) (153) (1,411) (6,337)
- -------------------------------------------------------------------------------------------------
(358) 200 2,717 1,782 1,823 (635)
11,573 11,373 1,782 -- 9,997 10,632
- -------------------------------------------------------------------------------------------------
11,215 11,573 4,499 1,782 11,820 9,997
=================================================================================================
$ (324) $ -- $ (113) $ -- $ 292 $ 56

<Caption>
HARBOR HARBOR
MID CAP VALUE SMALL CAP VALUE
- ------------- ---------------
MARCH 1, DECEMBER 14,
2002 2001
THROUGH THROUGH
APRIL 30, APRIL 30,
2002 2002
- -----------------------------------
(UNAUDITED) (UNAUDITED)

$ (2) $ (8)
1 12
147 597
- -----------------------------------
146 601
- -----------------------------------
-- --
-- --
- -----------------------------------
-- --
- -----------------------------------
2,931 6,812
-- --
-- --
(1) (70)
- -----------------------------------
2,930 6,742
- -----------------------------------
3,076 7,343
-- --
- -----------------------------------
$3,076 $7,343
===================================
288 639
-- --
-- --
-- (6)
- -----------------------------------
288 633
-- --
- -----------------------------------
288 633
===================================
$ (2) $ (8)
</Table>

DOMESTIC EQUITY

HARBOR DOMESTIC EQUITY FUNDS FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------------
NET REALIZED AND
NET ASSET UNREALIZED GAINS/(LOSSES)
VALUE NET ON INVESTMENTS AND TOTAL FROM
BEGINNING INVESTMENT FOREIGN CURRENCY INVESTMENT
YEAR/PERIOD ENDED OF PERIOD INCOME/(LOSS) CONTRACTS OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------

HARBOR CAPITAL APPRECIATION FUND
April 30, 2002 (Unaudited)..................... $26.40 $ .02 $ .15 $ .17
October 31, 2001............................... 48.16 .04 (15.63) (15.59)
October 31, 2000............................... 46.92 -- 5.84 5.84
October 31, 1999............................... 33.51 (.02) 15.78 15.76
October 31, 1998............................... 34.01 .07 4.35 4.42
October 31, 1997............................... 25.88 .06 8.95 9.01
- ------------------------------------------------------------------------------------------------------------------------
HARBOR MID CAP GROWTH FUND(1)
April 30, 2002 (Unaudited)..................... $ 5.64 $(.03)(c) $ .16 $ .13
October 31, 2001............................... 10.00 -- (4.36) (4.36)
- ------------------------------------------------------------------------------------------------------------------------
HARBOR GROWTH FUND
April 30, 2002 (Unaudited)..................... $10.19 $(.03) $ .42 $ .39
October 31, 2001............................... 24.23 -- (12.48) (12.48)
October 31, 2000............................... 17.52 -- 7.90 7.90
October 31, 1999............................... 10.81 (.07) 7.85 7.78
October 31, 1998............................... 14.20 (.04) (1.07) (1.11)
October 31, 1997(2)............................ 16.00 -- 2.30 2.30
- ------------------------------------------------------------------------------------------------------------------------
HARBOR SMALL CAP GROWTH FUND(1)
April 30, 2002 (Unaudited)..................... $ 9.72 $(.03)(c) $ 1.25 $ 1.22
October 31, 2001............................... 10.00 -- (.28) (.28)
- ------------------------------------------------------------------------------------------------------------------------
HARBOR LARGE CAP VALUE FUND
April 30, 2002 (Unaudited)..................... $13.01 $ .04 $ 1.67 $ 1.71
October 31, 2001(3)............................ 13.88 .24 (.68) (.44)
October 31, 2000............................... 15.40 .27 .08 .35
October 31, 1999............................... 15.21 .27 1.80 2.07
October 31, 1998............................... 18.17 .27 .79 1.06
October 31, 1997............................... 16.04 .34 4.13 4.47
- ------------------------------------------------------------------------------------------------------------------------
HARBOR MID CAP VALUE FUND
April 30, 2002 (Unaudited)(4).................. $10.00 $ -- $ .67 $ .67
- ------------------------------------------------------------------------------------------------------------------------
HARBOR SMALL CAP VALUE FUND
April 30, 2002 (Unaudited)(5).................. $10.00 $(.01)(c) $ 1.62 $ 1.61
- ------------------------------------------------------------------------------------------------------------------------

LESS DISTRIBUTIONS
------------------------------------
DIVIDENDS FROM DISTRIBUTIONS FROM
NET INVESTMENT NET REALIZED
YEAR/PERIOD ENDED INCOME CAPITAL GAINS(6)
- ------------------------------------------------------

HARBOR CAPITAL APPRECIATION FUND
April 30, 2002 (Unaudited)..................... $(.04) $ --
October 31, 2001............................... -- (6.17)
October 31, 2000............................... -- (4.60)
October 31, 1999............................... (.07) (2.28)
October 31, 1998............................... (.07) (4.85)
October 31, 1997............................... (.02) (.86)
- --------------------------------------------------------------------------------------------------------
HARBOR MID CAP GROWTH FUND(1)
April 30, 2002 (Unaudited)..................... $ -- $ --
October 31, 2001............................... -- --
- ------------------------------------------------------------------------------------------------------------------------
HARBOR GROWTH FUND
April 30, 2002 (Unaudited)..................... $ -- $ --
October 31, 2001............................... (.01) (1.55)
October 31, 2000............................... -- (1.19)
October 31, 1999............................... -- (1.07)
October 31, 1998............................... -- (2.28)
October 31, 1997(2)............................ -- (4.10)
- ------------------------------------------------------------------------------------------------------------------------
HARBOR SMALL CAP GROWTH FUND(1)
April 30, 2002 (Unaudited)..................... $ -- $ --
October 31, 2001............................... -- --
- ------------------------------------------------------------------------------------------------------------------------
HARBOR LARGE CAP VALUE FUND
April 30, 2002 (Unaudited)..................... $(.02) $ --
October 31, 2001(3)............................ (.24) (.19)
October 31, 2000............................... (.30) (1.57)
October 31, 1999............................... (.25) (1.63)
October 31, 1998............................... (.28) (3.74)
October 31, 1997............................... (.34) (2.00)
- ------------------------------------------------------------------------------------------------------------------------
HARBOR MID CAP VALUE FUND
April 30, 2002 (Unaudited)(4).................. $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------
HARBOR SMALL CAP VALUE FUND
April 30, 2002 (Unaudited)(5).................. $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------
</Table>

1 Commenced operations on November 1, 2000.

2 Effective May 2, 1997, Harbor Growth Fund appointed Emerging Growth Advisors,
Inc. as its Subadviser.

3 Effective September 20, 2001, Harbor Value Fund changed its name to Harbor
Large Cap Value Fund and appointed Armstrong Shaw Associates as its
Subadviser.

4 For the period March 1, 2002 (inception) through April 30, 2002.

5 For the period December 14, 2001 (inception) through April 30, 2002.

6 Includes both short-term and long-term capital gains.

7 Percentage does not reflect reduction for credit balance arrangements.

a Annualized.

b Unannualized.

c Reflects the Adviser's waiver of a portion of its management fees.

d The total returns would have been lower had certain expenses not been waived
during the periods shown.

e Dividend expense from investments sold short.

The accompanying notes are an integral part of the financial statements.

DOMESTIC EQUITY

RATIO OF RATIO OF
NET ASSET NET ASSETS OPERATING MANAGEMENT FEES
VALUE END OF EXPENSES NOT IMPOSED
TOTAL END OF TOTAL PERIOD TO AVERAGE TO AVERAGE
DISTRIBUTIONS PERIOD RETURN (000S) NET ASSETS(%)(7) NET ASSETS(%)
- -------------------------------------------------------------------------------------------------------------

$ (.04) $26.53 .63%(b) $6,350,073 .68%(a) --%
(6.17) 26.40 (35.23) 6,020,099 .66 --
(4.60) 48.16 12.26 9,100,317 .64 --
(2.35) 46.92 48.59 6,484,801 .66 --
(4.92) 33.51 15.72 3,833,598 .68 --
(.88) 34.01 35.73 2,798,404 .70 --
- -------------------------------------------------------------------------------------------------------------
$ -- $ 5.77 2.30%(b,d) $ 12,726 1.20%(a,c) .20%(a)
-- 5.64 (43.60)(d) 9,752 1.20(c) .20
- -------------------------------------------------------------------------------------------------------------
$ -- $10.58 3.83%(b) $ 118,680 .99%(a) --%
(1.56) 10.19 (53.96) 117,951 .95 --
(1.19) 24.23 45.92 275,599 .88 --
(1.07) 17.52 76.51 145,249 .90 --
(2.28) 10.81 (8.73) 88,030 1.00 --
(4.10) 14.20 18.64 104,568 1.12 --
- -------------------------------------------------------------------------------------------------------------
$ -- $10.94 12.55%(b,d) $ 49,207 .96%(a,c) .11%(a)
-- 9.72 (2.80)(d) 17,317 1.20(c) .20
- -------------------------------------------------------------------------------------------------------------
$ (.02) $14.70 13.18%(b) $ 173,810 .77%(a) --%
(.43) 13.01 (3.20) 130,029 .77 --
(1.87) 13.88 3.07 147,615 .80 --
(1.88) 15.40 14.60 157,382 .76 --
(4.02) 15.21 6.69 170,468 .79 --
(2.34) 18.17 31.08 161,359 .83 --
- -------------------------------------------------------------------------------------------------------------
$ -- $10.67 6.70%(b,d) $ 3,076 1.20%(a,c) .20%(a)
- -------------------------------------------------------------------------------------------------------------
$ -- $11.61 16.10%(b,d) $ 7,343 1.20%(a,c) .20%(a)
- -------------------------------------------------------------------------------------------------------------

RATIO OF RATIO OF NET
OPERATING EXPENSES RATIO OF INVESTMENT
NET OF ALL OFFSETS INTEREST/DIVIDEND INCOME/(LOSS)
TO AVERAGE EXPENSE TO AVERAGE TO AVERAGE PORTFOLIO
NET ASSETS(%) NET ASSETS(%) NET ASSETS(%) TURNOVER(%)

.68%(a) --% .12%(a) 31%(b)
.66 -- .15 89
.64 -- (.07) 86
.66 -- (.05) 68
.68 -- .24 70
.70 -- .23 73
- ----------------------------------------------------------------------------------------------
1.20%(a) --% (1.12)%(a,c) 36%(b)
1.20 -- (.92)(c) 61
- -----------------------------------------------------------------------------------------------------------
.99%(a) --% (.49)%(a) 5%(b)
.95 -- (.17) 9
.87 -- .02 13
.90 -- (.54) 13
1.00 -- (.30) 23
1.12 -- (.47) 147
- -------------------------------------------------------------------------------------------------------------
.96%(a) --% (.75)%(a,c) 26%(b)
1.20 -- (.67)(c) 56
- -------------------------------------------------------------------------------------------------------------
.77%(a) --% .64%(a) 21%(b)
.77 .14(e) 1.64 194
.80 .16(e) 2.05 106
.76 -- 1.65 110
.79 -- 1.67 114
.83 -- 1.98 146
- -------------------------------------------------------------------------------------------------------------
1.20%(a) --% (.49)%(a,c) 4%(b)
- -------------------------------------------------------------------------------------------------------------
1.20%(a) --% (.50)%(a,c) 5%(b)
- -------------------------------------------------------------------------------------------------------------
</Table>

DOMESTIC EQUITY

HARBOR INTERNATIONAL EQUITY FUNDS
MANAGERS' COMMENTARY

<Table>

HARBOR INTERNATIONAL FUND 04/30/2002 $31.49
INCEPTION DATE--DECEMBER 29, 1987 NET ASSET VALUE: 10/31/2001 $28.65
</Table>

[HARBOR INTERNATIONAL FUND GRAPH]

<Table>
<Caption>
INTERNATIONAL EAFE
------------- ----

10000.00 10000.00
4/30/93 10491.60 12161.80
4/30/94 13361.50 14185.30
4/30/95 14759.30 14977.80
4/30/96 17541.60 16686.00
4/30/97 20658.20 16537.70
4/30/98 26478.40 19665.80
4/30/99 27366.20 21533.10
4/30/00 29077.60 24524.70
4/30/01 27907.00 20527.50
4/30/02 27631.20 17678.50
</Table>

<Table>

Favorable stock selection across a broad spectrum of industrial sectors enabled
Harbor International Fund to outpace its benchmark, the EAFE index, by more than
eight percentage points for the six months ended April 30, 2002. The Fund also
outperformed the index by substantial margins for the 1-year, 5-year, and
10-year periods.
- - Strong returns by basic industry stocks were an important contributor to the
Fund's performance. The manager expects this group to continue to benefit from
cost reduction initiatives and industry consolidations.
- - The Fund gradually reduced its exposure to the financial services sector,
reflecting the manager's view that several companies in the portfolio were
facing shrinking margins. The Fund's holdings in that sector delivered
double-digit percentage returns for the six-month period and outperformed
those in the index.
- - Health care and information technology were the only two major industry
sectors in which the Fund's returns were below those of the index. The Fund
was underweighted in those sectors, which had a combined negative return for
the period for both the Fund and the index.
- - European stocks represented approximately 78% of the Fund's net assets as of
April 30, 2002. The Fund's largest single country exposure was in the United
Kingdom. The Fund was overweighted in France relative to the index and its
holdings there substantially outperformed those in the index.
- - The Fund continued to be substantially underweighted in Japan. However, its
holdings in Japan delivered returns averaging almost 30% for the period.

<Table>

HARBOR INTERNATIONAL FUND II 04/30/2002 $11.09
INCEPTION DATE--JUNE 1, 1996 NET ASSET VALUE: 10/31/2001 $10.00
</Table>

[HARBOR INTERNATIONAL FUND II GRAPH]

<Table>
<Caption>
HARBOR INTERNATIONAL II EAFE
----------------------- ----

10000.00 10000.00
4/30/97 11578.60 10096.90
4/30/98 13820.10 12006.80
4/30/99 14090.40 13146.80
4/30/00 16913.50 14973.30
4/30/01 15443.80 12532.90
4/30/02 13554.40 10793.40
</Table>

<Table>

- --------------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2002
- --------------------------------------------------------------------------------
Fund/Index 6 Months 1 Year 5 Years Since
Inception
- --------------------------------------------------------------------------------
Harbor International Fund II 11.90% -12.23% 3.20% 5.27%
- --------------------------------------------------------------------------------
EAFE 5.53% -13.88% 1.34% 1.30%
- --------------------------------------------------------------------------------
</Table>

Harbor International Fund II substantially outperformed its benchmark, the EAFE
index, for the six months ended April 30, 2002. The Fund also outperformed the
index for the latest 1-year and 5-year periods and since its inception on June
1, 1996.
- - Investments in the basic materials industries, such as metals and paper, were
key contributors to the Fund's absolute and relative performance for the
latest six months. The manager believes that consolidations within such
industries are making it easier for the remaining companies to manage capacity
and achieve improved profit margins. The Fund increased its exposure to the
materials sector to approximately 23% of the net assets at the end of the
period, compared with approximately 6% for the index.
- - Financial services stocks were an important contributor to the Fund's
performance, as its holdings in that sector outpaced those in the index. The
manager sold shares in several banks and insurance companies, using the
proceeds to increase holdings in basic materials companies. This reduced the
Fund's financial services exposure to about 25% of the net assets at the end
of the period, about equal to the index.
- - The Fund achieved higher returns than the index in every major industry sector
except information technology. Holdings in information technology and
telecommunications stocks were the two major detractors from the Fund's
six-month performance.
- - The Fund's largest country exposures as of the end of the period were France
and the United Kingdom. The Fund's holdings in both countries achieved
significantly better returns than those in the index.
- - The manager has limited the Fund's exposure to Japanese stocks, reflecting
concerns about the persistence of unfavorable economic conditions in Japan.
The Fund's holdings in Japan, representing about 6% of its portfolio at the
end of the period, achieved a combined return of approximately 28% for the six
months.

INTERNATIONAL EQUITY

HARBOR INTERNATIONAL EQUITY FUNDS
MANAGERS' COMMENTARY--CONTINUED

pay on fund distributions or the redemption of fund shares. Actual return and
principal value on an investment will fluctuate, and the shares, when redeemed,
may be worth more or less than their original cost. Because the funds invest
primarily in securities of foreign companies, there is a greater risk that the
funds' share prices will fluctuate more than if the funds invested in domestic
issuers. For information on the risks associated with these Funds, please refer
to the Harbor Fund prospectus.

<Table>

HARBOR INTERNATIONAL GROWTH FUND 04/30/2002 $8.27
INCEPTION DATE--NOVEMBER 1, 1993 NET ASSET VALUE: 10/31/2001 $8.44
</Table>

[HARBOR INTERNATIONAL GROWTH FUND GRAPH]

<Table>
<Caption>
INTERNATIONAL GROWTH EAFE GROWTH
-------------------- -----------

10000.00 10000.00
4/30/94 10405.60 10090.00
4/30/95 10643.50 10651.50
4/30/96 14592.60 11709.60
4/30/97 16470.90 11374.10
4/30/98 21074.00 13401.40
4/30/99 21184.30 14294.60
4/30/00 24395.90 17611.40
4/30/01 16530.20 12498.80
4/30/02 11188.80 10585.50
</Table>

<Table>

- --------------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2002
- --------------------------------------------------------------------------------
Fund/Index 6 Months 1 Year 5 Years Since
Inception
- --------------------------------------------------------------------------------
Harbor International Growth Fund -2.00% -32.31% -7.44% 1.33%
- --------------------------------------------------------------------------------
EAFE Growth 5.80% -15.31% -1.43% 0.67%
- --------------------------------------------------------------------------------
</Table>

Harbor International Growth Fund underperformed the EAFE Growth index for the
six-month period ending April 30, 2002. Mastholm Asset Management LLC (Mastholm)
became the new subadviser of the Fund effective December 1, 2001 and completed
its transition of the portfolio in January 2002.
- - The largest detriment to the Fund's performance during the period was an
investment in Elan Corporation, a pharmaceutical company based in Ireland. The
stock came under pressure and was sold by the Fund after the company disclosed
information concerning off-balance-sheet partnerships.
- - The Fund was underweighted in technology and telecommunications stocks. These
sectors performed well early in the period despite poor earnings growth and
the absence of clear prospects for near-term improvement. The manager
concentrates the Fund's investments in companies with improving earnings and
has identified a few companies in these areas with improving fundamentals.
These areas came under pressure in March and April, due principally to
larger-than-expected losses. This resulted in improving relative performance
for the Fund later in the period.
- - Japanese stocks performed well during the first four months of the calendar
year. However, the Fund's portfolio is underweighted in Japan relative to the
EAFE Growth index because of the persistence of uncertain economic, political,
and market conditions in that country. The Fund had approximately 17% of its
net assets invested in Japan at the end of April.

<Table>

HARBOR GLOBAL EQUITY FUND 04/30/2002 $7.67
INCEPTION DATE--FEBRUARY 1, 2001 NET ASSET VALUE: 10/31/2001 $7.39
</Table>

[HARBOR GLOBAL EQUITY FUND GRAPH]

<Table>
<Caption>
GLOBAL EQUITY MSCI WORLD
------------- ----------

10000.00 10000.00
4/30/01 8920.00 9181.32
4/30/02 7675.76 7909.98
</Table>

<Table>

- --------------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2002
- --------------------------------------------------------------------------------
Fund/Index 6 Months 1 Year 5 Years Since
Inception
- --------------------------------------------------------------------------------
Harbor Global Equity Fund 3.87% -13.95% N/A -19.07%
- --------------------------------------------------------------------------------
MSCI World 3.29% -13.85% 3.98% -17.10%
- --------------------------------------------------------------------------------
</Table>

Harbor Global Equity Fund slightly outperformed the MSCI World index during the
six-month period ended April 30, 2002.
- - Global equity markets continued to rally during the last two months of 2001,
after reaching a low for the year in mid-September. Over the first four months
of 2002, however, global equity markets gave back some of those gains despite
evidence that a global economic recovery was underway. Investors remained
concerned about the pace of an earnings recovery for corporations.
- - An overweighted position in consumer discretionary stocks benefited the Fund's
performance over the period. Holdings in this sector are diversified and
include automakers, hotels, retailers, home builders and media companies. A
shift in the Fund's portfolio to companies that are more economically
sensitive has been gradual, given continued uncertainty about the timing and
strength of a recovery. The Fund focuses on companies that display both strong
competitive advantages and improving business fundamentals.
- - The Fund also benefited from exposure to emerging markets, where the manager
was able to identify industry-leading companies that were trading at
attractive valuations relative to their global industry peers. In particular,
selected emerging markets companies in the auto, financial services, media,
and telecommunications industries were strong performers.
- - An underweighted position in the industrials sector detracted from performance
over the six-month period. While many multinational industrials are
conglomerates, the manager prefers to focus on companies that are part of a
specific industry.

INTERNATIONAL EQUITY

HARBOR INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2002 (UNAUDITED)

INVESTMENT HOLDINGS BY COUNTRY (% OF NET ASSETS)
(Excludes net cash and short-term investments of 5.3%)

<Table>

Spain (SP) 0.5

China (CHN) 0.9

Norway (NOR) 1.1

South Africa (S. AFR) 1.4

Singapore (SGP) 1.5

Australia (AUS) 1.6

Denmark (DEN) 1.7

Hong Kong (HK) 1.7

Germany (GER) 1.9

Brazil (BR) 3.5

Finland (FIN) 3.6

Italy (IT) 3.6

Japan (JP) 6.4

Sweden (SW) 6.4

Netherlands (NET) 6.7

Switzerland (SWS) 12.9

France (FR) 17.4

United Kingdom (UK) 21.9

</Table>

<Table>
<Caption>
COMMON STOCKS--94.7%
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

AUTO COMPONENTS--1.8%
Compagnie Financiere Michelin--Bearer
83,200 (SWS).................................... $ 28,218
1,062,278 Michelin--Registered (FR).................. 41,131
----------
69,349
----------
AUTOMOBILES--2.3%
1,782,226 Peugeot SA (FR)............................ 88,585
----------
BANKS--13.3%
4,511,062 ABN Amro Holding NV (NET).................. 89,364
684,200 Bankinter SA--Registered (SP).............. 21,766
1,267,766 BNP Paribas (FR)........................... 66,210
562,774 Deutsche Bank AG--Registered (GER)......... 37,297
14,917,026 IntesaBci SpA (IT)......................... 48,221
4,986,733 San Paolo IMI SpA (IT)..................... 55,545
5,539,900 Standard Chartered plc (UK)................ 68,187
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

BANKS--CONTINUED
1,401,936 UBS AG--Registered (SWS)................... $ 67,518
United Overseas Bank Ltd. (Alien Market)
7,488,842 (SGP).................................... 59,499
----------
513,607
----------
BEVERAGES--2.8%
8,076,537 Diageo plc (UK)............................ 107,173
----------
BUILDING PRODUCTS--1.2%
273,400 Compagnie de Saint-Gobain (FR)............. 46,775
----------
CHEMICALS--2.3%
1,068,619 Bayer AG (GER)............................. 34,997
3,500,000 The BOC Group plc (UK)..................... 53,020
----------
88,017
----------
COMMUNICATIONS EQUIPMENT--1.4%
2,421,800 Ericsson (LM) Tel Ab Cl. B ADR (SW)(1)*.... 6,030
19,043,743 Ericsson (LM) Tel Ab Series B (SW)*........ 47,748
----------
53,778
----------
DIVERSIFIED FINANCIALS--2.4%
2,452,938 ING Groep NV (NET)......................... 64,716
4,962,000 Swire Pacific Ltd. Cl. A (HK).............. 29,776
----------
94,492
----------
FOOD PRODUCTS--2.7%
448,000 Nestle SA--Registered (SWS)................ 105,808
----------
HOTELS RESTAURANTS & LEISURE--1.5%
1,425,565 Accor SA (FR).............................. 57,585
----------
HOUSEHOLD DURABLES--3.0%
909,391 Hunter Douglas NV (NET).................... 30,298
1,591,200 Sony Corp. (JP)............................ 85,472
----------
115,770
----------
INSURANCE--3.7%
1,398,978 Assicurazioni Generali SpA (IT)............ 33,785
2,256,272 AXA SA (FR)................................ 47,846
226,820 Swiss Reinsurance Co. (SWS)................ 22,869
173,855 Zurich Financial Services Group (SWS)...... 40,418
----------
144,918
----------
LEISURE EQUIPMENT & PRODUCTS--1.0%
1,158,000 Fuji Photo Film Co. (JP)................... 36,780
----------
MEDIA--1.6%
2,347,919 News Corp. Ltd. ADR (AUS)(1)............... 61,938
----------
METALS & MINING--12.6%
4,748,740 Anglo American plc ADR (UK)(1)............. 74,318
2,000,000 AngloGold Ltd. ADR (S. AFR)(1)............. 53,600
5,014,200 Arcelor (FR)*.............................. 69,080
12,629,050 BHP Billiton plc ADR (UK)(1)............... 136,820
1,750,000 Companhia Vale do Rio Doce Pfd. (BR)....... 47,057
1,399,163 Pechiney SA Series A (FR).................. 67,655
2,180,183 Rio Tinto plc--Registered (UK)............. 40,490
----------
489,020
----------
OFFICE ELECTRONICS--3.2%
3,240,000 Canon Inc. (JP)............................ 124,096
----------
OIL & GAS--13.3%
11,393,662 BG Group plc (UK).......................... 50,867
14,635,576 BP plc (UK)................................ 124,818
214,000,000 China Petroleum & Chemical Corp. (CHN)..... 34,299
862,300 Norsk Hydro ASA (NOR)...................... 42,422
</Table>

INTERNATIONAL EQUITY

HARBOR INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

OIL & GAS--CONTINUED
Petroleo Brasileiro SA-PETROBRAS Pfd.
3,899,443 (BR)..................................... $ 90,687
Royal Dutch Petroleum Co.--Registered
1,434,000 (NET).................................... 74,941
630,677 Total Fina Elf SA (FR)..................... 95,519
----------
513,553
----------
PAPER & FOREST PRODUCTS--6.1%
1,405,900 Holmen Ab Series B (SW).................... 34,157
4,900,000 Stora Enso Ojy (FIN)....................... 62,143
1,780,704 Svenska Cellulosa Ab Series B (SW)......... 60,395
2,257,809 UPM-Kymmene Corp. (FIN).................... 78,882
----------
235,577
----------
PHARMACEUTICALS--6.1%
875,483 Aventis SA (FR)............................ 62,160
2,612,760 Novartis AG--Registered (SWS).............. 109,479
2,225,900 Novo Nordisk A/S Series B (DEN)............ 65,230
----------
236,869
----------
SPECIALTY RETAIL--3.2%
Compagnie Financiere Richemont AG--Bearer
5,538,700 (SWS).................................... 125,519
----------
TOBACCO--7.5%
8,141,947 British American Tobacco plc (UK).......... 83,254
7,803,107 Imperial Tobacco Group plc (UK)............ 109,861
12,436,474 Swedish Match Ab (SW)...................... 97,896
----------
291,011
----------
TRANSPORTATION INFRASTRUCTURE--0.8%
31,779,732 Eurotunnel SA Units (FR)*.................. 29,188
Eurotunnel SA Warrants (FR)*
19,000,000 Expire 10/30/2003........................ 513
----------
29,701
----------
WIRELESS TELECOMMUNICATION SERVICES--0.9%
10,725,000 China Mobile (Hong Kong) Ltd. (HK)*........ 35,136
----------
TOTAL COMMON STOCKS
(Cost $2,435,652)....................................... 3,665,057
----------

<Caption>
SHORT-TERM INVESTMENTS--4.6%

<Caption>
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

COMMERCIAL PAPER
American Express Credit Corp. Yrs 1&2
$ 25,119 1.700%--05/01/2002....................... $ 25,119

Citicorp
6,246 1.680%--05/01/2002....................... 6,246
25,000 1.680%--05/03/2002....................... 25,000
----------
31,246
----------
Exxon Project Investment Yrs 3&4
35,291 1.750%--05/01/2002....................... 35,291

General Electric Capital Corp.
30,000 1.800%--05/01/2002....................... 30,000
30,000 1.700%--05/02/2002....................... 30,000
----------
60,000
----------
Prudential Funding Corp.
26,446 1.730%--05/06/2002....................... 26,446
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $178,102)......................................... 178,102
----------
TOTAL INVESTMENTS--99.3%
(Cost $2,613,754)....................................... 3,843,159
CASH AND OTHER ASSETS, LESS LIABILITIES--0.7%............. 25,970
----------
TOTAL NET ASSETS--100.0%.................................. $3,869,129
==========
</Table>

- ------------

1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.

INTERNATIONAL EQUITY

HARBOR INTERNATIONAL FUND II
PORTFOLIO OF INVESTMENTS--APRIL 30, 2002 (UNAUDITED)

INVESTMENT HOLDINGS BY COUNTRY (% OF NET ASSETS)
(Excludes net cash and short-term investment of 2.3%)

<Table>

China (CHN) 1.0

Denmark (DEN) 1.2

Singapore (SGP) 1.5

Israel (IL) 1.7

South Africa (S. AFR) 1.7

Germany (GER) 2.1

Australia (AUS) 2.6

Hong Kong (HK) 3.1

Italy (IT) 3.2

Brazil (BR) 3.3

Netherlands (NET) 5.8

Japan (JP) 6.0

Finland (FIN) 6.2

Sweden (SW) 7.2

Switzerland (SWS) 11.1

United Kingdom (UK) 17.8

France (FR) 22.2
</Table>

<Table>
<Caption>
COMMON STOCKS--97.7%
VALUE
SHARES (000S)
- ---------------------------------------------------------------------

AUTO COMPONENTS--2.3%
43,467 Michelin--Registered (FR)...................... $ 1,683
-------
AUTOMOBILES--2.3%
34,474 Peugeot SA (FR)................................ 1,714
-------
BANKS--15.1%
98,230 ABN Amro Holding NV (NET)...................... 1,946
56,200 BNP Paribas (FR)............................... 2,935
11,826 Deutsche Bank AG--Registered (GER)............. 784
119,367 San Paolo IMI SpA (IT)......................... 1,330
123,655 Standard Chartered plc (UK).................... 1,522
32,252 UBS AG--Registered (SWS)....................... 1,553
United Overseas Bank Ltd. (Alien Market)
146,000 (SGP)........................................ 1,160
-------
11,230
-------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ---------------------------------------------------------------------

BEVERAGES--1.6%
90,000 Diageo plc (UK)................................ $ 1,194
-------
BIOTECHNOLOGY--1.1%
550,000 Novogen Ltd. (AUS)*............................ 813
-------
BUILDING PRODUCTS--1.6%
6,781 Compagnie de Saint-Gobain (FR)................. 1,160
-------
CHEMICALS--2.6%
22,881 Bayer AG (GER)................................. 749
77,000 The BOC Group plc (UK)......................... 1,166
-------
1,915
-------
COMMUNICATIONS EQUIPMENT--5.0%
966,657 Ericsson (LM) Tel Ab Series B (SW)*............ 2,424
100,574 NICE Systems Ltd. ADR (IL)(1)*................. 1,260
-------
3,684
-------
DIVERSIFIED FINANCIALS--3.8%
48,894 ING Groep NV (NET)............................. 1,290
261,000 Swire Pacific Ltd. Cl. A (HK).................. 1,566
-------
2,856
-------
FOOD PRODUCTS--1.6%
5,000 Nestle SA--Registered (SWS).................... 1,181
-------
HOTELS RESTAURANTS & LEISURE--1.6%
28,935 Accor SA (FR).................................. 1,169
-------
HOUSEHOLD DURABLES--4.5%
62,100 Sony Corp. (JP)................................ 3,336
-------
INSURANCE--6.0%
41,922 Assicurazioni Generali SpA (IT)................ 1,012
64,628 AXA UAP (FR)................................... 1,370
11,000 Swiss Reinsurance Co. (SWS).................... 1,109
4,209 Zurich Financial Services Group (SWS).......... 979
-------
4,470
-------
MACHINERY--1.9%
15,198 Kone Oyj Series B (FIN)........................ 1,438
-------
MEDIA--1.5%
42,681 News Corp. Ltd. ADR (AUS)(1)................... 1,126
-------
METALS & MINING--14.2%
75,000 Anglo American plc (UK)........................ 1,182
47,000 AngloGold Ltd. ADR (S. AFR)(1)................. 1,260
99,500 Arcelor (FR)*.................................. 1,371
549,335 BHP Billiton plc (UK).......................... 2,937
100,000 Boliden Ab (SW)................................ 408
40,000 Companhia Vale do Rio Doce Pfd. (BR)........... 1,076
34,000 Pechiney SA (FR)............................... 1,644
35,000 Rio Tinto plc--Registered (UK)................. 650
-------
10,528
-------
OFFICE ELECTRONICS--1.5%
30,000 Canon Inc. (JP)................................ 1,149
-------
OIL & GAS--7.6%
170,598 BP plc. (UK)................................... 1,455
4,750,000 China Petroleum & Chemical Corp. (CHN)......... 761
59,557 Petrol Brasileiro SA Pfd. (BR)................. 1,385
20,000 Royal Dutch Petroleum Co.--Registered (NET).... 1,045
6,567 Total Fina Elf SA (FR)......................... 995
-------
5,641
-------
</Table>

INTERNATIONAL EQUITY

HARBOR INTERNATIONAL FUND II
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ---------------------------------------------------------------------

PAPER & FOREST PRODUCTS--6.1%
97,000 Stora Enso Ojy Series R (FIN).................. $ 1,230
38,896 Svenska Cellulosa Ab Series B (SW)............. 1,319
55,991 UPM-Kymmene Corp. (FIN)........................ 1,956
-------
4,505
-------
PHARMACEUTICALS--5.1%
16,098 Aventis SA (FR)................................ 1,143
292 GlaxoSmithKline plc (UK)....................... 7
41,930 Novartis AG--Registered (SWS).................. 1,757
30,000 Novo Nordisk A/S Series B (DEN)................ 879
-------
3,786
-------
SPECIALTY RETAIL--2.2%
Compagnie Financiere Richemont AG--Bearer
72,300 (SWS)........................................ 1,638
-------
TOBACCO--4.4%
125,000 British American Tobacco plc (UK).............. 1,278
56,000 Imperial Tobacco Group plc (UK)................ 788
150,000 Swedish Match Ab (SW).......................... 1,181
-------
3,247
-------
TRANSPORTATION INFRASTRUCTURE--1.7%
1,401,679 Eurotunnel SA Units (FR)*...................... 1,287
-------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ---------------------------------------------------------------------

WIRELESS TELECOMMUNICATION SERVICES--2.4%
45,069 China Mobile (Hong Kong) Ltd. ADR (HK)(1)*..... $ 749
64,298 Vodafone Group plc ADR (UK)(1)*................ 1,042
-------
1,791
-------
TOTAL COMMON STOCKS
(Cost $72,938)............................................ 72,541
-------

<Caption>
SHORT-TERM INVESTMENT--1.5%
(Cost $1,084)
PRINCIPAL
AMOUNT
(000S)
- ---------------------------------------------------------------------

General Electric Capital Corp.
$ 1,084 1.800%--05/01/2002........................... 1,084
-------
TOTAL INVESTMENTS--99.2%
(Cost $74,022)............................................ 73,625
CASH AND OTHER ASSETS, LESS LIABILITIES--0.8%............... 579
-------
TOTAL NET ASSETS--100.0%.................................... $74,204
=======
</Table>

- ------------

1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.

* Non-income producing security.
The accompanying notes are an integral part of the financial statements.

INTERNATIONAL EQUITY

HARBOR INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2002 (UNAUDITED)

INVESTMENT HOLDINGS BY COUNTRY (% OF NET ASSETS)
(Excludes net cash and short-term investment of 2.7%)

<Table>

Switzerland (SWS) 1.0

Belgium (BEL) 1.2

Netherlands (NET) 1.4

Norway (NOR) 1.9

Spain (SP) 2.0

Italy (IT) 3.2

Sweden (SW) 3.6

Hong Kong (HK) 6.0

South Korea (S. KOR) 6.6

Germany (GER) 7.5

Canada (CAN) 7.7

United Kingdom (UK) 13.2

Japan (JP) 16.7

France (FR) 25.3

</Table>

<Table>
<Caption>
COMMON STOCKS--97.3%
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

AUTOMOBILES--7.7%
2,195,600 Nissan Motor Co. Ltd. (JP)................... $ 16,887
270,200 Renault SA (FR).............................. 12,518
--------
29,405
--------
BANKS--11.7%
263,900 ABN Amro Holding NV (NET).................... 5,228
93,000 Banco Popular Espanol SA (SP)................ 3,811
165,800 BNP Paribas (FR)............................. 8,659
897,000 IntesaBci SpA (IT)........................... 2,900
740,300 Lloyds TSB Group plc (UK).................... 8,508
668,000 Nordea Ab (SW)............................... 3,798
Skandinaviska Enskilda Banken (publ) Series A
409,300 (SW)....................................... 3,918
347,500 Standard Chartered plc (UK).................. 4,277
81,600 UBS AG--Registered (SWS)..................... 3,930
--------
45,029
--------
BEVERAGES--5.8%
288,000 Asahi Breweries Ltd. (JP).................... 2,652
158,100 Interbrew SA (BEL)........................... 4,702
111,200 Pernod Ricard (FR)........................... 10,263
486,400 Scottish & Newcastle plc (UK)................ 4,449
--------
22,066
--------
COMMERCIAL SERVICES & SUPPLIES--1.7%
526,000 Dai Nippon Printing Co. Ltd. (JP)............ 6,625
--------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

DIVERSIFIED FINANCIALS--2.2%
14,200 Shohkoh Fund & Co. Ltd. (JP)................. $ 1,747
90,000 Takefuji Corp. (JP).......................... 6,502
--------
8,249
--------
DIVERSIFIED TELECOMMUNICATION SERVICES--3.3%
563,000 KT Corp. ADR (S. KOR)(1)..................... 12,752
--------
ELECTRIC UTILITIES--6.1%
1,570,900 Enel SpA (IT)................................ 9,322
2,679,500 Hong Kong Electric Holdings Ltd. (HK)........ 10,170
213,100 Union Fenosa SA (SP)......................... 3,755
--------
23,247
--------
ELECTRICAL EQUIPMENT--2.7%
215,800 Schneider Electric SA (FR)................... 10,406
--------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.6%
29,700 Hoya Corp. (JP).............................. 2,210
--------
ENERGY EQUIPMENT & SERVICES--2.0%
7,517,300 Kvaerner ASA Series A (NOR)*................. 7,468
--------
FOOD & DRUG RETAILING--3.7%
146,400 Familymart Co. Ltd. (JP)..................... 3,089
1,105,800 Tesco plc (UK)............................... 4,236
89,500 Weston George Ltd. (CAN)..................... 6,778
--------
14,103
--------
FOOD PRODUCTS--0.6%
325,200 Cadbury Schweppes plc (UK)................... 2,466
--------
GAS UTILITIES--4.6%
5,727,900 Centrica plc (UK)............................ 17,625
--------
HOUSEHOLD DURABLES--2.6%
361,300 Electrolux Ab (SW)........................... 6,004
28,800 Nintendo Co. Ltd. (JP)....................... 4,036
--------
10,040
--------
INSURANCE--2.4%
Muenchener Ruckversicherungs-Ges
37,700 AG--Registered (GER)....................... 9,336
--------
MEDIA--5.6%
807,000 British Sky Broadcasting Group plc (UK)...... 9,028
407,600 Publicis Groupe SA (FR)...................... 12,442
--------
21,470
--------
MULTILINE RETAIL--1.6%
126,000 Ito-Yokado Co. Ltd. (JP)..................... 6,209
--------
OFFICE ELECTRONICS--1.1%
232,000 Ricoh Co. Ltd. (JP).......................... 4,326
--------
OIL & GAS--10.4%
9,624,800 CNOOC Ltd. (HK).............................. 12,773
432,000 Talisman Energy Inc. (CAN)................... 18,460
56,200 Total Fina Elf SA (FR)....................... 8,512
--------
39,745
--------
PHARMACEUTICALS--13.7%
256,775 Aventis SA (FR).............................. 18,231
339,000 Daiichi Pharmaceutical Co. Ltd. (JP)......... 6,611
127,800 Sanofi Synthelabo (FR)....................... 8,176
322,400 Schering AG (GER)............................ 19,639
--------
52,657
--------
ROAD & RAIL--1.1%
89,300 Canadian National Railway Co. (CAN).......... 4,237
--------
</Table>

INTERNATIONAL EQUITY

HARBOR INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

SEMICONDUCTOR EQUIPMENT & PRODUCTS--3.2%
42,000 Samsung Electronics Co. Ltd. (S. KOR)........ $ 12,447
--------
TEXTILES & APPAREL--2.1%
154,000 LVMH Moet Hennessy Louis Vuitton (FR)........ 8,050
--------
TOBACCO--0.8%
502 Japan Tobacco Inc. (JP)...................... 3,044
--------
TOTAL COMMON STOCKS
(Cost $356,540)........................................... 373,212
--------

<Caption>
SHORT-TERM INVESTMENT--4.7%
(Cost $18,057)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust dated April 30, 2002 due May 1, 2002
at 0.65% collateralized by a U.S. Treasury
Bill 12.0% August 15, 2013, par value of
$13,125 (repurchase proceeds of $18,057
$ 18,057 when closed on May 1, 2002)................ $ 18,057
--------
TOTAL INVESTMENTS--102.0%
(Cost $374,597)........................................... 391,269
CASH AND OTHER ASSETS, LESS LIABILITIES--(2.0%)............. (7,525)
--------
TOTAL NET ASSETS--100.0%.................................... $383,744
========
</Table>

- ------------

1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.

INTERNATIONAL EQUITY

HARBOR GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2002 (UNAUDITED)

INVESTMENT HOLDINGS BY COUNTRY (% OF NET ASSETS)
(Excludes net cash and short-term investment of 4.8%)

<Table>

Spain (SP) 0.2

Sweden (SW) 0.2

Israel (IL) 0.3

Brazil (BR) 0.4

Finland (FIN) 0.5

Hong Kong (HK) 0.5

Portugal (PORT) 0.5

Taiwan (TWN) 0.5

Australia (AUS) 0.6

Belgium (BEL) 0.6

Singapore (SGP) 0.6

Ireland (IE) 1.0

Italy (IT) 1.0

Canada (CAN) 1.2

Mexico (MEX) 1.3

South Korea (S. KOR) 1.6

Netherlands (NET) 1.8

Germany (GER) 2.3

Switzerland (SWS) 3.6

France (FR) 5.0

Japan (JP) 7.1

United Kingdom (UK) 10.2

United States (US) 54.2

</Table>

<Table>
<Caption>
COMMON STOCKS--95.2%
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

AEROSPACE & DEFENSE--1.4%
9,000 BAE Systems plc (UK)............................. $ 46
650 General Dynamics Corp. (US)...................... 63
------
109
------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

AIR FREIGHT & COURIERS--1.2%
700 Fedex Corp. (US)................................. $ 36
1,800 TNT Post Groep NV (NET).......................... 39
1,000 Yamato Transport Co. Ltd. (JP)................... 17
------
92
------
AIRLINES--1.5%
2,700 AMR Corp. (US)*.................................. 58
1,300 Continental Airlines Inc. Cl. B (US)............. 34
10,000 Qantas Airways Ltd. (AUS)........................ 24
------
116
------
AUTO COMPONENTS--0.3%
American Axle & Manufacturing Holdings Inc.
600 (US)........................................... 20
------
AUTOMOBILES--3.5%
650 Bayerische Motoren Werke AG (GER)................ 26
300 General Motors Corp. (US)........................ 19
1,000 Honda Motor Co. Ltd. (JP)........................ 45
600 Hyundai Motor Co. (S. KOR)....................... 22
300 Magna International Inc. Cl. A (CAN)............. 22
14,000 Nissan Motor Co. Ltd. (JP)....................... 108
400 Peugeot SA (FR).................................. 20
------
262
------
BANKS--9.2%
2,050 Bank of America Corp. (US)....................... 149
3,100 Bank of Ireland (IE)............................. 36
5,200 Barclays Bank plc (UK)........................... 45
1,100 BNP Paribas (FR)................................. 57
1,500 Credit Suisse Group--Registered (SWS)............ 53
2,700 Dexia (BEL)...................................... 44
3,550 HSBC Holdings plc (UK)........................... 42
948 Kookmin Bank ADR (S. KOR)(1)..................... 44
1,400 Royal Bank of Canada (CAN)....................... 49
1,100 Royal Bank of Scotland Group plc (UK)............ 32
3,000 Standard Chartered plc (UK)...................... 37
600 UBS AG ADR (SWS)(1).............................. 29
710 UBS AG--Registered (SWS)......................... 34
Unibanco-Uniao de Bancos Brasileiros SA GDR
1,200 (BR)(2)........................................ 29
450 Washington Mutual Inc. (US)...................... 17
------
697
------
BEVERAGES--1.5%
1,200 Coca Cola Co. (US)............................... 67
900 Pepsico Inc. (US)................................ 47
------
114
------
BIOTECHNOLOGY--1.0%
1,500 Amgen Inc. (US)*................................. 79
------
CHEMICALS--1.1%
200 Akzo Nobel NV (NET).............................. 9
1,300 Praxair Inc. (US)................................ 74
------
83
------
COMMERCIAL SERVICES & SUPPLIES--1.2%
3,700 Brambles Industries Ltd. (AUS)................... 20
650 First Data Corp. (US)............................ 52
7,700 Hays plc (UK).................................... 19
------
91
------
COMMUNICATIONS EQUIPMENT--1.2%
3,700 Cisco Systems Inc. (US).......................... 54
1,300 Nokia Oyj ADR (FIN)(1)........................... 21
400 QUALCOMM Inc. (US)............................... 12
------
87
------
</Table>

INTERNATIONAL EQUITY

HARBOR GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

COMPUTERS & PERIPHERALS--0.8%
700 International Business Machines Corp. (US)....... $ 59
------
CONSTRUCTION MATERIALS--1.3%
2,200 CRH plc (IE)..................................... 38
160 Holcim SA--Bearer (SWS).......................... 37
250 Lafarge SA--Bearer (FR).......................... 24
------
99
------
DIVERSIFIED FINANCIALS--5.8%
2,400 AMVESCAP plc (UK)................................ 25
4,300 Citigroup Inc. (US).............................. 186
4,000 Daiwa Securities Group Inc. (JP)................. 27
550 Federal National Mortgage Association (US)....... 43
400 Goldman Sachs Group Inc. (US).................... 31
1,700 ING Groep NV ADR (NET)(1)........................ 45
900 ING Groep NV (NET)............................... 24
300 Merrill Lynch & Co. Inc. (US).................... 13
3,000 Nomura Holdings Inc. (JP)........................ 42
------
436
------
DIVERSIFIED TELECOMMUNICATION SERVICES--2.3%
550 KT Corp. ADR (S. KOR)(1)......................... 12
5,250 Portugal Telecom SGPS SA--Registered (PORT)...... 38
1,600 SBC Communications Inc. (US)..................... 50
1,100 Telefonos de Mexico SA de CV ADR (MEX)(1)........ 42
700 Verizon Communications (US)...................... 28
------
170
------
ELECTRIC UTILITIES--0.3%
400 E. On AG (GER)................................... 21
------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.6%
3,050 Flextronics International Ltd. (SGP)*............ 42
------
ENERGY EQUIPMENT & SERVICES--1.4%
1,000 Baker Hughes Inc. (US)........................... 38
610 Kinder Morgan Management LLC (US)................ 22
300 Technip-Coflexip (FR)............................ 42
------
102
------
FOOD PRODUCTS--1.0%
700 Nestle SA ADR (SWS)(1)........................... 41
160 Nestle SA--Registered (SWS)...................... 38
------
79
------
GAS UTILITIES--0.9%
1,100 Kinder Morgan Inc. (US).......................... 53
650 Sempra Energy (US)............................... 17
------
70
------
HEALTH CARE EQUIPMENT & SUPPLIES--0.7%
5,400 Smith & Nephew plc (UK).......................... 31
1,600 Terumo Corp. (JP)................................ 24
------
55
------
HEALTH CARE PROVIDERS & SERVICES--1.3%
300 Anthem Inc. (US)................................. 20
400 Fresenius Medical Care AG (GER).................. 24
1,200 HCA Inc. (US).................................... 57
------
101
------
HOTELS RESTAURANTS & LEISURE--3.3%
1,940 Carnival Corp. (US).............................. 65
11,200 Compass Group plc (UK)........................... 70
13,450 Hilton Group plc (UK)............................ 50
2,600 Hilton Hotels Corp. (US)......................... 43
2,300 Six Continents plc (UK).......................... 25
------
253
------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

HOUSEHOLD DURABLES--2.5%
1,100 Electrolux Ab (SW)............................... $ 18
800 KB Home (US)..................................... 40
700 Lennar Corp. (US)................................ 39
2,500 Sega Corp. (JP).................................. 56
1,200 Thomson Multimedia (FR).......................... 33
------
186
------
HOUSEHOLD PRODUCTS--1.2%
1,000 Kao Corp. (JP)................................... 20
750 Procter & Gamble Co. (US)........................ 68
------
88
------
INDUSTRIAL CONGLOMERATES--2.4%
200 3M Co. (US)...................................... 25
4,950 General Electric Co. (US)........................ 156
------
181
------
INSURANCE--7.1%
800 ACE Ltd. (US).................................... 35
900 Aegon NV (NET)................................... 21
110 Allianz AG--Registered (GER)..................... 26
1,000 American International Group Inc. (US)........... 69
3,100 CGNU plc (UK).................................... 32
1,100 Hartford Financial Services Group Inc. (US)...... 76
1,000 John Hancock Financial Services Inc. (US)........ 39
900 Lincoln National Corp. (US)...................... 43
750 Manulife Financial Corp. (CAN)................... 22
3 Millea Holdings (JP)............................. 23
Muenchener Ruckversicherungs-Ges AG--Registered
160 (GER).......................................... 40
2,300 Riunione Adriatica di Sicurta SpA (IT)........... 30
400 Swiss Reinsurance Co. (SWS)...................... 40
400 XL Capital Ltd. Cl. A (US)....................... 38
------
534
------
INTERNET SOFTWARE & SERVICES--0.1%
550 Check Point Software Technologies Ltd. (IL)*..... 10
------
IT CONSULTING & SERVICES--1.1%
1,300 Accenture Ltd. Cl. A (US)........................ 28
650 Electronic Data Systems Corp. (US)............... 35
750 Tietoenator Ojy (FIN)............................ 19
------
82
------
MEDIA--6.1%
2,800 AOL Time Warner Inc. (US)*....................... 53
1,100 Clear Channel Communications Inc. (US)*.......... 52
1,000 Disney (Walt) Co. (US)........................... 23
1,200 Grupo Televisa SA de CV ADR (MEX)(1)............. 54
5,200 Mediaset SpA (IT)................................ 44
900 New York Times Co. Cl. A (US).................... 42
80 Nippon Television Network Corp (JP).............. 19
600 Omnicom Group Inc. (US).......................... 52
1,400 Pearson plc ADR (UK)(1).......................... 17
200 Reed Elsevier Group plc ADR (UK)(1).............. 8
4,500 Reed Elsevier Group plc (UK)..................... 44
750 Sogecable SA (SP)................................ 15
750 Viacom Inc. Cl. B (US)*.......................... 35
------
458
------
METALS & MINING--2.4%
2,000 Alcoa Inc. (US).................................. 68
900 Nucor Corp. (US)................................. 53
300 Pechiney SA ADR (FR)(1).......................... 7
200 Pechiney SA (FR)................................. 10
</Table>

INTERNATIONAL EQUITY

HARBOR GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

METALS & MINING--CONTINUED
800 Posco ADR (S. KOR)(1)............................ $ 20
1,100 Rio Tinto plc--Registered (UK)................... 20
------
178
------
MULTILINE RETAIL--4.1%
400 Ito-Yokado Co. Ltd. ADR (JP)(1).................. 20
1,000 Ito-Yokado Co. Ltd. (JP)......................... 49
6,268 Kingfisher plc (UK).............................. 35
3,000 Next plc (UK).................................... 45
1,500 Target Corp. (US)................................ 65
1,700 Wal-Mart Stores Inc. (US)........................ 95
------
309
------
MULTI-UTILITIES--0.6%
400 Duke Energy Corp. (US)........................... 15
700 Suez (FR)........................................ 21
400 Vivendi Environnement (FR)....................... 13
------
49
------
OFFICE ELECTRONICS--0.3%
1,000 Ricoh Co. Ltd. (JP).............................. 19
------
OIL & GAS--4.6%
4,300 BP plc (UK)...................................... 37
3,450 Exxon Mobil Corp. (US)........................... 139
650 Total Fina Elf SA ADR (FR)(1).................... 49
400 Total Fina Elf SA (FR)........................... 60
1,700 Unocal Corp. (US)................................ 63
------
348
------
PHARMACEUTICALS--8.2%
300 Aventis SA (FR).................................. 21
750 Eli Lilly & Co. (US)............................. 50
1,500 GlaxoSmithKline plc ADR (UK)(1).................. 72
1,800 Johnson & Johnson (US)........................... 115
400 Merck & Co. Inc. (US)............................ 22
3,900 Pfizer Inc. (US)................................. 142
400 Pharmacia Corp. (US)............................. 16
300 Sanofi-Synthelabo (FR)........................... 19
550 Schering AG (GER)................................ 33
1,000 Takeda Chemical Industries Ltd. (JP)............. 44
Teva Pharmaceutical Industries Ltd. ADR
300 (IL)(1)........................................ 17
1,200 Wyeth (US)....................................... 68
------
619
------
SEMICONDUCTOR EQUIPMENT & PRODUCTS--2.9%
1,700 Intel Corp. (US)................................. 49
1,100 Micron Technology Inc. (US)*..................... 26
70 Samsung Electronics Co. Ltd. (S. KOR)............ 21
Taiwan Semiconductor Manufacturing Co. Ltd. ADR
1,950 (TWN)(1)*...................................... 35
2,800 Texas Instruments Inc. (US)...................... 87
------
218
------
</Table>

<Table>
<Caption>
COMMON STOCKS--CONTINUED
VALUE
SHARES (000S)
- ----------------------------------------------------------------------

SOFTWARE--2.3%
2,800 Microsoft Corp. (US)*............................ $ 146
1,000 Siebel Systems Inc. (US)......................... 24
------
170
------
SPECIALTY RETAIL--3.2%
1,100 Best Buy Co Inc. (US)*........................... 82
1,500 Home Depot Inc. (US)............................. 70
1,100 Lowe's Cos. Inc. (US)............................ 46
2,300 Staples Inc. (US)*............................... 46
------
244
------
TOBACCO--2.0%
2,800 Philip Morris Cos. Inc. (US)..................... 152
------
WIRELESS TELECOMMUNICATION SERVICES--1.3%
2,100 China Mobile (Hong Kong) Ltd. ADR (HK)(1)*....... 35
10 NTT DoCoMo Inc. (JP)............................. 25
25,150 Vodafone Group plc (UK).......................... 41
------
101
------
TOTAL COMMON STOCKS
(Cost $7,439)............................................... 7,183
------

<Caption>
SHORT-TERM INVESTMENT--4.6%
(Cost $348)
PRINCIPAL
AMOUNT
(000S)
- ----------------------------------------------------------------------

REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust dated April 30, 2002 due May 1, 2002 at
0.65% collateralized by a U.S. Treasury Bill
12.0% August 15, 2013, par value of
$255 (repurchase proceeds of $348 when closed
on
$ 348 May 1, 2002)................................... 348
------
TOTAL INVESTMENTS--99.8%
(Cost $7,787)............................................... 7,531
CASH AND OTHER ASSETS, LESS LIABILITIES--0.2%................. 17
------
TOTAL NET ASSETS--100.0%...................................... $7,548
======
</Table>

- ------------

1 ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.

2 GDR after the name of a foreign holding stands for Global Depositary Receipts
representing ownership of foreign securities. GDRs are issued by either U.S.
or non-U.S. banking organizations.

* Non-income producing security.

The accompanying notes are an integral part of the financial statements.

INTERNATIONAL EQUITY

[THIS PAGE INTENTIONALLY LEFT BLANK]

INTERNATIONAL EQUITY

HARBOR INTERNATIONAL EQUITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES--APRIL 30, 2002 (UNAUDITED)

(All amounts in Thousands, except per share amounts)

<Table>
<Caption>
HARBOR HARBOR HARBOR HARBOR
INTERNATIONAL INTERNATIONAL II INTERNATIONAL GROWTH GLOBAL EQUITY
- ---------------------------------------------------------------------------------------------------------------------------------

ASSETS
INVESTMENTS, AT IDENTIFIED COST*............ $2,613,754 $ 74,022 $ 374,597 $ 7,787
=================================================================================================================================
Investments, at value....................... $3,843,159 $ 73,625 $ 373,212 $ 7,183
Repurchase agreements....................... -- -- 18,057 348
Cash........................................ 1 -- 1 20
Foreign currency, at value (cost: $9,051;
$82; $2,355; $21)......................... 9,120 83 2,373 21
Receivables for:
Investments sold.......................... -- -- 42,107 24
Capital shares sold....................... 5,427 204 734 46
Dividends................................. 10,250 128 1,443 15
Interest.................................. 35 -- -- --
Withholding tax receivable.................. 8,477 238 591 2
Other assets................................ 7 1 3 --
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS......................... 3,876,476 74,279 438,521 7,659
LIABILITIES
Payables for:
Investments purchased..................... -- -- 35,799 67
Capital shares reacquired................. 3,630 18 18,614 14
Accrued expenses:
Management fees........................... 2,270 39 213 3
Trustees' fees............................ 11 -- 2 --
Transfer agent fees....................... 35 3 26 2
Other..................................... 1,401 15 123 25
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES.................... 7,347 75 54,777 111
NET ASSETS.................................. $3,869,129 $ 74,204 $ 383,744 $ 7,548
=================================================================================================================================
Net assets consist of:
Paid-in capital........................... $2,547,228 $ 86,757 $ 874,138 $ 9,197
Undistributed net investment income....... 19,562 130 401 --
Accumulated net realized gain/(loss)...... 72,940 (12,286) (507,497) (1,393)
Unrealized appreciation/(depreciation) of
investments and translation of assets
and liabilities in foreign
currencies............................. 1,229,399 (397) 16,702 (256)
- ---------------------------------------------------------------------------------------------------------------------------------
$3,869,129 $ 74,204 $ 383,744 $ 7,548
=================================================================================================================================
Shares of beneficial interest............... 122,869 6,692 46,385 985
Net asset value, offering and redemption
price per share........................... $ 31.49 $ 11.09 $ 8.27 $ 7.67
</Table>

- ------------

* Including repurchase agreements and short-term investments.

The accompanying notes are an integral part of the financial statements.

INTERNATIONAL EQUITY

HARBOR INTERNATIONAL EQUITY FUNDS
STATEMENT OF OPERATIONS--SIX MONTHS ENDED APRIL 30, 2002 (UNAUDITED)

(All amounts in Thousands)

INVESTMENT INCOME:
Dividends............................... $ 38,335 $ 540 $ 2,378 $ 49
Interest................................ 1,839 9 118 --
Foreign taxes withheld.................. (4,429) (60) (267) (4)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME................. 35,745 489 2,229 45
OPERATING EXPENSES:
Management fees......................... 15,277 296 1,480 27
Shareholder communications.............. 118 6 32 --
Custodian fees.......................... 478 28 79 16
Transfer agent fees..................... 861 48 199 3
Professional fees....................... 84 2 11 --
Trustees' fees and expenses............. 32 1 4 --
Registration fees....................... 18 13 17 2
Miscellaneous........................... 25 4 7 3
- ---------------------------------------------------------------------------------------------------------------------------------
Total operating expenses............. 16,893 398 1,829 51
Management fees waived.................. (708) (39) -- (7)
- ---------------------------------------------------------------------------------------------------------------------------------
Net operating expenses.................. 16,185 359 1,829 44
- ---------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME..................... 19,560 130 400 1
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENT TRANSACTIONS:
Net realized gain/(loss) on:
Investments.......................... 75,423 (9,619) (118,272) (371)
Foreign currency transactions........ 63 32 1,469 2
Change in net unrealized appreciation
of:
Investments.......................... 394,059 18,480 111,942 616
Translation of assets and liabilities
in foreign currencies.............. 92 2 40 --
- ---------------------------------------------------------------------------------------------------------------------------------
Net gain/(loss) on investment
transactions......................... 469,637 8,895 (4,821) 247
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............ $489,197 $ 9,025 $ (4,421) $ 248
=================================================================================================================================
</Table>

The accompanying notes are an integral part of the financial statements.

INTERNATIONAL EQUITY

HARBOR INTERNATIONAL EQUITY FUNDS
STATEMENT OF CHANGES IN NET ASSETS
(All amounts in Thousands)

<Table>
<Caption>
HARBOR
INTERNATIONAL
-------------------------------
NOVEMBER 1, NOVEMBER 1,
2001 2000
THROUGH THROUGH
APRIL 30, OCTOBER 31,
2002 2001
- -----------------------------------------------------------------------------------------------
(UNAUDITED)

INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment income.................................. $ 19,560 $ 59,966
Net realized gain/(loss) on investments and foreign
currency
transactions......................................... 75,486 169,013
Net unrealized appreciation/(depreciation) of
investments
and translation of assets and liabilities in foreign
currencies............................................ 394,151 (1,036,426)
- -----------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................. 489,197 (807,447)
- -----------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income.................................. (32,072) (86,391)
Net realized gain on investments....................... (105,975) (462,932)
- -----------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS.................... (138,047) (549,323)
- -----------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares....................... 410,175 743,213
Net asset value of shares issued in
connection with reinvestment of:
Dividends from net investment income................. 28,205 77,031
Distributions from net realized gain on
investments......................................... 100,690 442,276
Cost of shares reacquired.............................. (518,448) (1,238,668)
- -----------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) DERIVED FROM CAPITAL
TRANSACTIONS.......................................... 20,622 23,852
- -----------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets.................. 371,772 (1,332,918)
NET ASSETS:
Beginning of period....................................... 3,497,357 4,830,275
- -----------------------------------------------------------------------------------------------
END OF PERIOD*............................................ $3,869,129 $ 3,497,357
===============================================================================================
NUMBER OF CAPITAL SHARES:
Sold...................................................... 13,547 22,827
Reinvested in payment of investment income dividends...... 963 2,288
Reinvested in payment of capital gain distributions....... 3,432 13,140
Reacquired................................................ (17,124) (40,524)
- -----------------------------------------------------------------------------------------------
Net increase/(decrease) in shares outstanding............. 818 (2,269)
Outstanding:
Beginning of period.................................... 122,051 124,320
- -----------------------------------------------------------------------------------------------
End of period.......................................... 122,869 122,051
===============================================================================================
* Includes undistributed net investment income of:.......... $ 19,562 $ 32,074
</Table>

The accompanying notes are an integral part of the financial statements.

INTERNATIONAL EQUITY

<Table>
<Caption>
HARBOR HARBOR HARBOR
INTERNATIONAL II INTERNATIONAL GROWTH GLOBAL EQUITY
------------------------------- ------------------------------- -------------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, FEBRUARY 1,
2001 2000 2001 2000 2001 2001
THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2002 2001 2002 2001 2002 2001
- -------------------------------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)

$ 130 $ 827 $ 400 $ 1,420 $ 1 $ 22
(9,587) (2,337) (116,803) (371,103) (369) (1,041)
18,482 (26,993) 111,982 (110,218) 616 (872)
- -------------------------------------------------------------------------------------------------------------------------
9,025 (28,503) (4,421) (479,901) 248 (1,891)
- -------------------------------------------------------------------------------------------------------------------------
(708) (1,265) (67) (293) (6) --
-- (6,349) -- (121,187) -- --
- -------------------------------------------------------------------------------------------------------------------------
(708) (7,614) (67) (121,480) (6) --
- -------------------------------------------------------------------------------------------------------------------------
21,680 37,828 131,981 428,940 1,045 10,092
678 1,208 61 258 6 --
-- 6,191 -- 118,213 -- --
(33,514) (58,893) (181,011) (755,911) (510) (1,436)
- -------------------------------------------------------------------------------------------------------------------------
(11,156) (13,666) (48,969) (208,500) 541 8,656
- -------------------------------------------------------------------------------------------------------------------------
(2,839) (49,783) (53,457) (809,881) 783 6,765
77,043 126,826 437,201 1,247,082 6,765 --
- -------------------------------------------------------------------------------------------------------------------------
$ 74,204 $ 77,043 $ 383,744 $ 437,201 $7,548 $ 6,765
=========================================================================================================================
1,972 3,006 15,770 35,196 134 1,091
62 91 7 19 1 --
-- 468 -- 8,635 -- --
(3,045) (4,742) (21,213) (63,042) (65) (176)
- -------------------------------------------------------------------------------------------------------------------------
(1,011) (1,177) (5,436) (19,192) 70 915
7,703 8,880 51,821 71,013 915 --
- -------------------------------------------------------------------------------------------------------------------------
6,692 7,703 46,385 51,821 985 915
=========================================================================================================================
$ 130 $ 708 $ 401 $ 68 $ -- $ 5
</Table>

INTERNATIONAL EQUITY

HARBOR INTERNATIONAL EQUITY FUNDS FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------------
NET REALIZED AND
NET ASSET UNREALIZED GAINS/(LOSSES)
VALUE NET ON INVESTMENTS, TOTAL FROM
BEGINNING INVESTMENT AND FOREIGN CURRENCY INVESTMENT
YEAR/PERIOD ENDED OF PERIOD INCOME CONTRACTS OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------

HARBOR INTERNATIONAL FUND
April 30, 2002 (Unaudited)..................... $28.65 $.16(c) $ 3.83 $ 3.99
October 31, 2001............................... 38.85 .57(c) (6.27) (5.70)
October 31, 2000............................... 40.66 .48(c) 1.22 1.70
October 31, 1999............................... 36.97 .67(c) 5.90 6.57
October 31, 1998............................... 35.84 .51(c) 1.92 2.43
October 31, 1997............................... 31.21 .41(c) 5.44 5.85
- ------------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND II
April 30, 2002 (Unaudited)..................... $10.00 $.03(c) $ 1.16 $ 1.19
October 31, 2001............................... 14.28 .24(c) (3.62) (3.38)
October 31, 2000............................... 13.83 .01(c) 1.23 1.24
October 31, 1999............................... 11.26 .18(c) 2.54 2.72
October 31, 1998............................... 12.14 .12(c) (.37) (.25)
October 31, 1997............................... 10.47 .10(c) 1.63 1.73
- ------------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL GROWTH FUND
April 30, 2002 (Unaudited)(1).................. $ 8.44 $ -- $ (.17) $ (.17)
October 31, 2001............................... 17.56 -- (7.30) (7.30)
October 31, 2000............................... 19.13 .01 (.06) (.05)
October 31, 1999............................... 18.07 .14 1.30 1.44
October 31, 1998............................... 16.15 .11 2.52 2.63
October 31, 1997............................... 15.35 .12 1.12 1.24
- ------------------------------------------------------------------------------------------------------------------------
HARBOR GLOBAL EQUITY FUND
April 30, 2002 (Unaudited)..................... $ 7.39 $ -- $ .29 $ .29
October 31, 2001(2)............................ 10.00 -- (2.61) (2.61)
- ------------------------------------------------------------------------------------------------------------------------

LESS DISTRIBUTIONS
------------------------------------
DIVIDENDS FROM DISTRIBUTIONS FROM
NET INVESTMENT NET REALIZED
YEAR/PERIOD ENDED INCOME CAPITAL GAINS(3)

HARBOR INTERNATIONAL FUND
April 30, 2002 (Unaudited)..................... $(.27) $ (.88)
October 31, 2001............................... (.71) (3.79)
October 31, 2000............................... (.65) (2.86)
October 31, 1999............................... (.58) (2.30)
October 31, 1998............................... (.40) (.90)
October 31, 1997............................... (.42) (.80)
- --------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND II
April 30, 2002 (Unaudited)..................... $(.10) $ --
October 31, 2001............................... (.15) (.75)
October 31, 2000............................... (.17) (.62)
October 31, 1999............................... (.15) --
October 31, 1998............................... (.10) (.53)
October 31, 1997............................... (.02) (.04)
- ------------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL GROWTH FUND
April 30, 2002 (Unaudited)(1).................. $ -- $ --
October 31, 2001............................... -- (1.82)
October 31, 2000............................... (.14) (1.38)
October 31, 1999............................... (.11) (.27)
October 31, 1998............................... (.12) (.59)
October 31, 1997............................... (.08) (.36)
- ------------------------------------------------------------------------------------------------------------------------
HARBOR GLOBAL EQUITY FUND
April 30, 2002 (Unaudited)..................... $(.01) $ --
October 31, 2001(2)............................ -- --
- ------------------------------------------------------------------------------------------------------------------------
</Table>

1 Effective December 1, 2001, Harbor International Growth Fund appointed
Mastholm Asset Management, LLC as its Subadviser.

2 For the period February 1, 2001 (inception) through October 31, 2001.

3 Includes both short-term and long-term capital gains.

4 Percentage does not reflect reduction for credit balance arrangements.

a Annualized.

b Unannualized.

c Reflects the Adviser's waiver of a portion of its management fees.

d The total returns would have been lower had certain expenses not been waived
during the periods shown.

The accompanying notes are an integral part of the financial statements.

INTERNATIONAL EQUITY

RATIO OF RATIO OF RATIO OF
NET ASSET NET ASSETS OPERATING MANAGEMENT FEES OPERATING EXPENSES
VALUE END OF EXPENSES NOT IMPOSED NET OF ALL OFFSETS
TOTAL END OF TOTAL PERIOD TO AVERAGE TO AVERAGE TO AVERAGE
DISTRIBUTIONS PERIOD RETURN (000S) NET ASSETS (%)(4) NET ASSETS (%) NET ASSETS (%)
- -----------------------------------------------------------------------------------------------------------------------

$(1.15) $31.49 14.22%(b,d) $3,869,129 .88%(a,c) .04%(a) .88%(a)
(4.50) 28.65 (16.40)(d) 3,497,357 .91(c) .06 .91
(3.51) 38.85 3.74(d) 4,830,275 .92(c) .06 .92
(2.88) 40.66 18.54(d) 5,361,024 .92(c) .06 .92
(1.30) 36.97 6.97(d) 5,088,401 .94(c) .06 .94
(1.22) 35.84 19.26(d) 5,090,048 .97(c) .05 .97
- -----------------------------------------------------------------------------------------------------------------------
$ (.10) $11.09 11.90%(b,d) $ 74,204 .91%(a,c) .10%(a) .91%(a)
(.90) 10.00 (25.22)(d) 77,043 .89(c) .10 .89
(.79) 14.28 8.81(d) 126,826 .93(c) .10 .92
(.15) 13.83 24.37(d) 114,791 .92(c) .10 .92
(.63) 11.26 (1.98)(d) 112,669 1.15(c) .10 1.15
(.06) 12.14 16.64(d) 134,957 .99(c) .20 .98
- -----------------------------------------------------------------------------------------------------------------------
$ -- $ 8.27 (2.00)%(b) $ 383,744 .93%(a) --% .93%(a)
(1.82) 8.44 (45.53) 437,201 .89 -- .89
(1.52) 17.56 (1.58) 1,247,082 .89 -- .89
(.38) 19.13 7.87 1,382,513 .91 -- .91
(.71) 18.07 16.96 1,178,252 .96 -- .96
(.44) 16.15 8.13 918,950 1.02 -- 1.02
- -----------------------------------------------------------------------------------------------------------------------
$ (.01) $ 7.67 3.87%(b,d) $ 7,548 1.20%(a,c) .20%(a) 1.20%(a)
-- 7.39 (26.10)(b,d) 6,765 1.20(a,c) .20(a) 1.20(a)
- -----------------------------------------------------------------------------------------------------------------------

RATIO OF NET
INVESTMENT
INCOME
TO AVERAGE PORTFOLIO
NET ASSETS (%) TURNOVER (%)
- --- ------------------------------------

1.06%(a,c) 7%(b)
1.36(c) 7
1.40(c) 10
1.65(c) 4
1.27(c) 14
1.20(c) 6
- --------------------------------------------------------
.33%(a,c) 24%(b)
.79(c) 33
.85(c) 65
1.36(c) 52
.86(c) 70
1.33(c) 58
- ----------------------------------------------------------------------
.20%(a) 184%(b)
.18 63
.10 103
.78 48
.62 85
.91 76
- ------------------------------------------------------------------------------------
.02%(a,c) 16%(b)
.45(a,c) 143(b)
- --------------------------------------------------------------------------------------------------
</Table>

INTERNATIONAL EQUITY

HARBOR FIXED INCOME FUNDS
MANAGERS' COMMENTARY

<Table>

HARBOR BOND FUND 04/30/2002 $11.66
INCEPTION DATE--DECEMBER 29, 1987 NET ASSET VALUE: 10/31/2001 $12.05
</Table>

[HARBOR BOND FUND GRAPH]

<Table>
<Caption>
BOND LB AGG
---- ------

10000.00 10000.00
4/30/93 11606.50 11326.10
4/30/94 11822.80 11422.70
4/30/95 12585.90 12258.00
4/30/96 13804.30 13317.60
4/30/97 14920.40 14261.10
4/30/98 16501.00 15817.00
4/30/99 17850.30 16809.30
4/30/00 17991.90 17021.10
4/30/01 20070.10 19129.20
4/30/02 22151.80 20628.60
</Table>

<Table>

Harbor Bond Fund outperformed the Lehman Brothers Aggregate index for the
six-month period ended April 30, 2002, as well as the latest 1-year, 5-year, and
10-year periods.
- - Falling interest rates provided a positive environment for debt securities in
2001 as the Federal Reserve reduced the Federal Funds rate a total of 11 times
to a 40-year low of 1.75%. The last two of those reductions, totaling 75 basis
points, took place in November and December, the first two months of the
Fund's fiscal half-year. Amid signs of weak economic recovery in the first few
months of 2002, the Federal Reserve commented that risks of economic weakness
and inflation appeared to have become equally balanced. Consequently, it
declined either to reduce rates further or to initiate tightening.
- - Given the uncertain pace and strength of economic recovery, the Fund's
portfolio continued to be conservatively positioned. With an average credit
rating of AA+, the Fund manager continued to place a high priority on credit
quality. In addition, the manager gradually decreased the portfolio's average
duration to a level that was neutral to the index, as the market reflected the
possibility of Federal Reserve tightening later in the year if the economy
should show signs of increasing strength.
- - The Fund continued to be overweighted in mortgage-backed securities, a
strategy that was successful in capturing incremental yield while maintaining
a high level of credit quality in the portfolio. In addition to providing
higher yields, these securities continued to benefit from relatively low
volatility and their appeal to investors concerned about corporate credit and
accounting-related issues.
- - The Fund's corporate sector exposure remained underweighted relative to the
index, although the manager continued to add slowly to holdings in high
quality corporate issues. This asset class typically has performed well in
post-recessionary periods.
- - Among international debt securities, the Fund trimmed its relatively small
holdings in developed countries, reflecting a perception of better
opportunities in the United States. At the same time, it added to a small
position, amounting to approximately 4% of the net assets, in higher quality
securities from emerging markets.

<Table>

HARBOR SHORT DURATION FUND 04/30/2002 $8.63
INCEPTION DATE--JANUARY 1, 1992 NET ASSET VALUE: 10/31/2001 $8.69
</Table>

[HARBOR SHORT DURATION FUND GRAPH]

<Table>
<Caption>
SHORT DURATION SALOMON TREASURY 1 YR CMI
-------------- -------------------------

10000.00 10000.00
4/30/93 10581.30 10502.50
4/30/94 10843.70 10762.00
4/30/95 11455.40 11372.90
4/30/96 12096.30 12082.30
4/30/97 13004.10 12808.20
4/30/98 13805.00 13611.90
4/30/99 14572.00 14355.40
4/30/00 15223.60 15012.40
4/30/01 16455.20 16246.10
4/30/02 17218.40 17058.10
</Table>

<Table>

- --------------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2002
- --------------------------------------------------------------------------------
Fund/Index 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
Harbor Short Duration Fund 1.19% 4.64% 5.77% 5.58%
- --------------------------------------------------------------------------------
Salomon Treasury 1 YR CMI 1.25% 5.00% 5.90% 5.49%
- --------------------------------------------------------------------------------
</Table>

Harbor Short Duration Fund's total return of 1.19% was just below that of
one-year maturity Treasury notes during the period.
- - Yields on short-duration Treasury securities rose modestly during the
six-month period ending April 30, 2002. Although the Federal Reserve lowered
official rates on two occasions, investors anticipated that interest rates
eventually would increase as economic recovery unfolds.
- - The Fund remained predominately invested in a diversified combination of
asset-backed securities.
- - Asset-backed securities underperformed Treasuries during the later part of
2001 but subsequently recovered as yield spreads narrowed across all sectors.
- - The Fund held a combination of securities maturing in less than three months
and others maturing beyond one year. This strategy was in anticipation of a
flatter yield curve during the early stages of economic recovery.

FIXED INCOME

HARBOR FIXED INCOME FUNDS
MANAGERS' COMMENTARY--CONTINUED

<Table>

HARBOR MONEY MARKET FUND 04/30/2002 $1.00
INCEPTION DATE--DECEMBER 29, 1987 NET ASSET VALUE: 10/31/2001 $1.00
</Table>

[HARBOR MONEY MARKET FUND GRAPH]

<Table>
<Caption>
MONEY MARKET T-BILLS
------------ -------

10000.00 10000.00
4/30/93 10298.50 10327.60
4/30/94 10587.30 10654.90
4/30/95 11105.40 11200.40
4/30/96 11705.00 11822.30
4/30/97 12292.70 12450.00
4/30/98 12935.70 13109.50
4/30/99 13577.90 13736.20
4/30/00 14285.80 14450.80
4/30/01 15170.20 15300.20
4/30/02 15584.30 15703.40
</Table>

<Table>

- --------------------------------------------------------------------------------
Total Return for Periods Ended 04/30/2002
- --------------------------------------------------------------------------------
Fund/Index 6 Months 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
Harbor Money Market Fund 0.86% 2.73% 4.86% 4.54%
- --------------------------------------------------------------------------------
T-Bills 0.90% 2.64% 4.75% 4.62%
- --------------------------------------------------------------------------------
Current Yield for Periods Ended 03/31/2002
- --------------------------------------------------------------------------------
Harbor Money Market Fund* 7 Days: 1.53% 30 Days: 1.52%
- --------------------------------------------------------------------------------
</Table>

Harbor Money Market Fund's total return of 0.86% was just below that of 90-day
Treasury bills.
- - Short-term interest rates declined on balance during the six months ending
April 30, 2002. The Federal Reserve lowered official rates on two occasions
late in 2001. Thereafter, short-term yields rose only slightly from their lows
in January 2002.
- - The portfolio's average maturity ranged between one and two months in
anticipation of an eventual rise in rates.
- - Holdings consisted primarily of high-grade commercial paper and certificates
of deposit.
An investment in Harbor Money Market Fund is not insured or guaranteed by the
FDIC or any other government agency. Although the Fund seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose money by
investing in the Fund.

- ------------

* Reflects the Adviser's agreement not to impose a portion of its management
fees. Without such waivers the 7-day and 30-day current yields would have
been 1.41% and 1.40%, respectively. The current yield more closely reflects
the current earnings of the Harbor Money Market Fund than the total return.

FIXED INCOME

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2002 (UNAUDITED)

TOTAL INVESTMENTS (% OF NET ASSETS)
(Excludes excess of liabilities over other assets and short-term investments of
- -26.0%)

<Table>

U.S. Government Obligations 1.4

Municipal Bonds 1.9

Asset-Backed Securities 6.1

Foreign Government Obligations 12.7

Collateralized Mortgage Obligations 20.7

Corporate Bonds & Notes 32.6

Mortgage Pass-Through 50.6

</Table>

<Table>
<Caption>
ASSET-BACKED SECURITIES--6.1%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Asset Backed Securities Corp Home Equity Loan
Trust
Series 1999-LB1 Cl. A4A
$ 1,115 2.228%--06/21/2029(1)....................... $ 1,117
Bayview Financial Acquisition Trust
Series 2001-BA Cl. A
10,670 2.130%--07/25/2031(1,2)..................... 10,726
Conseco Private Label Credit Card Master Note
Trust
Series 2001-A Cl. A
3,100 2.140%--12/15/2008(1)....................... 3,108
CS First Boston Mortgage Securities Corp.
Series 2000-HE1 Cl. A2
10,867 2.120%--12/15/2030(1)....................... 10,868
New York City Tax Lien
Series 2000-AA Cl. C
9,574 8.110%--11/10/2008(1,2)..................... 10,103
North Carolina State Education Authority
Series 2000 Cl. G
2,583 2.071%--06/01/2009.......................... 2,589
Providian Gateway Master Trust
Series 2000-B Cl. A
16,800 2.140%--03/16/2009(1,2)..................... 16,839
Salomon Brothers Mortgage Securities VII Inc.
Series 1999-NC4 Cl. A
3,612 2.250%--09/25/2029(1,3)..................... 3,623
Series 1999-AQ2 Cl. A1
3,011 2.280%--11/15/2029(1)....................... 3,022
----------
6,645
----------
SLM Student Loan Trust
Series 1997-2 Cl. A1
395 2.300%--10/25/2005(1)....................... 399
Series 1997-3 Cl. A1
1,371 2.360%--04/25/2006(1)....................... 1,373
Series 1995-1 Cl. A2
3,567 2.510%--10/25/2007(1)....................... 3,580
----------
5,352
----------
TOTAL ASSET-BACKED SECURITIES
(Cost $66,772)........................................... 67,347
----------

<Caption>
CORPORATE BONDS & NOTES--32.6%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Allete Inc.
$ 1,500 2.799%--10/20/2003(3)....................... $ 1,493
American Airlines Inc.
Pass Thru Certificates
Series 2001-2 Cl. A1
2,493 6.978%--04/01/2011(2)....................... 2,572
AOL Time Warner Inc.
450 7.975%--08/15/2004(1)....................... 477
6,400 7.625%--04/15/2031(1,2)..................... 5,990
----------
6,467
----------
Banesto Delaware Inc.
3,000 8.250%--07/28/2002(1)....................... 3,037
Banponce Corp.
2,000 6.750%--12/15/2005(1)....................... 2,053
Bear Stearns Cos. Inc. MTN(4)
9,800 2.200%--12/01/2003(1,3)..................... 9,813
British Telecommunications plc
1,400 8.375%--12/15/2010(5,6)..................... 1,536
Cincinnati Financial Corp.
5,000 6.900%--05/15/2028(1)....................... 4,774
CIT Group Inc. MTN(4)
8,800 2.463%--04/07/2003(1)....................... 8,638
Citicorp
10,625 7.125%--03/15/2004(1)....................... 11,263
Citigroup Inc.
2,000 6.000%--02/21/2012(3)....................... 1,980
Cleveland Electric Illuminating Co. Series B
2,000 9.500%--05/15/2005(1)....................... 2,001
ConAgra Foods Inc.
10,000 2.621%--09/10/2003(1,3)..................... 10,014
Credit Suisse First Boston
10,000 6.500%--05/01/2008(1,2)..................... 10,393
DaimlerChrysler North America Holding
3,000 2.760%--12/16/2002(3)....................... 3,005
2,000 8.500%--01/18/2031.......................... 2,227
----------
5,232
----------
DaimlerChrysler North America Holding MTN(4)
5,000 7.750%--05/27/2003(1)....................... 5,186
8,700 2.413%--08/01/2003(1,3)..................... 8,673
----------
13,859
----------
DTE Energy Co. Series B
10,000 7.110%--11/15/2003(1,2,6)................... 10,153
First Union Corp.
3,500 2.360%--03/31/2005.......................... 3,511
Ford Capital BV
6,100 9.875%--05/15/2002.......................... 6,113
Ford Motor Credit Co. MTN(4)
4,100 2.170%--06/02/2003.......................... 4,053
20,000 2.300%--06/20/2003(1)....................... 19,765
----------
23,818
----------
France Telecom SA
2,000 3.750%--03/14/2003(3)....................... 2,006
7,100 7.700%--03/01/2006(5)....................... 7,244
6,900 9.000%--03/01/2031(1)....................... 7,254
----------
16,504
----------
Fred Meyer Inc.
5,000 7.150%--03/01/2003(1)....................... 5,152
</Table>

FIXED INCOME

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
CORPORATE BONDS & NOTES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Gemstone Investors Ltd.
$ 2,100 7.710%--10/31/2004(2)....................... $ 2,119
General Motors Acceptance Corp.
5,900 6.750%--03/15/2003.......................... 6,035
5,000 5.750%--11/10/2003(1)....................... 5,105
1,100 8.000%--11/01/2031.......................... 1,157
----------
12,297
----------
General Motors Acceptance Corp. MTN(4)
6,400 2.250%--08/04/2003(3)....................... 6,354
3,000 5.550%--09/15/2003(1)....................... 3,056
10,000 2.669%--01/20/2004(1,3)..................... 9,955
2,100 2.844%--03/22/2004(3)....................... 2,096
3,100 2.600%--05/10/2004(3)....................... 3,080
1,400 2.299%--07/21/2004(3)....................... 1,380
----------
25,921
----------
Kroger Co.
1,100 2.660%--08/16/2012(3)....................... 1,100
Morgan Stanley Dean Witter & Co.
1,505 7.201%--09/15/2011(2,6)..................... 1,514
National Rural Utilities MTN(4)
15,000 8.000%--03/01/2032(1)....................... 16,165
Occidental Petroleum Corp.
5,000 6.400%--04/01/2003(1,6)..................... 5,091
Old Kent Bank
10,000 7.750%--08/15/2010(1,6)..................... 10,642
Sprint Capital Corp.
5,300 6.000%--01/15/2007.......................... 4,853
16,900 8.750%--03/15/2032(1,2)..................... 16,160
----------
21,013
----------
TEPPCO Partners LP
3,000 7.625%--02/15/2012.......................... 3,039
Toledo Edison Co.
2,000 8.700%--09/01/2002.......................... 2,029
TRW Inc.
3,500 6.625%--06/01/2004.......................... 3,584
TXU Electric Co.
19,000 2.600%--06/15/2003(1,2,3)................... 19,029
United Airlines Inc.
Pass Thru Certificates
Series 1993 Cl. C2
3,000 9.060%--06/17/2015(1)....................... 2,479
Verizon
10,500 5.650%--11/15/2011(1)....................... 9,551
Wachovia Corp.
2,600 4.950%--11/01/2006.......................... 2,579
Walt Disney Co.
16,200 4.500%--09/15/2004(1)....................... 16,224
Westdeutsche Landesbank
13,200 6.050%--01/15/2009(1)....................... 13,364
Weyerhaeuser Co.
10,000 6.750%--03/15/2012(2)....................... 10,111
Williams Cos. Inc.
21,057 7.875%--09/01/2021.......................... 20,216
----------
TOTAL CORPORATE BONDS & NOTES
(Cost $359,331).......................................... 358,443
----------

<Caption>
COLLATERALIZED MORTGAGE OBLIGATIONS--20.7%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Bear Stearns Adjustable Rate Mortgage Trust
Series 2000-2 Cl. A1
$ 1,553 5.175%--11/25/2030.......................... $ 1,599
Series 2000-1 Cl. 1A
431 7.465%--12/25/2030.......................... 437
Series 2000-1 Cl. 2A
648 7.492%--12/25/2030.......................... 657
Series 2001-8
4,355 6.691%--11/25/2031(1,6)..................... 4,375
----------
7,068
----------
Chase Mortgage Finance Corp.
Series 1993-N Cl. A9
3,000 6.750%--11/25/2024(1)....................... 3,006
Collateralized Mortgage Securities Corp.
Series F Cl. 4
72 11.450%--11/01/2015......................... 73
Collateralized Mortgage Securities Corp.
REMIC(7)
Series 1988-4 Cl. B
73 8.750%--04/20/2019(1)....................... 76
Countrywide Home Loans
Pass Thru Certificates
Series 1997-6 Cl. A10
6,538 7.250%--11/25/2027(1)....................... 6,729
Series 2000-8 Cl. A2
47 7.750%--01/25/2031.......................... 47
----------
6,776
----------
Drexel Burnham Lambert CMO Trust
Series H Cl. 4
3,650 8.500%--04/01/2017(1)....................... 3,660
E*Trade Bank Mortgage Backed Securities
Series 2001-1 Cl. A1
8,096 7.079%--09/25/2031(1)....................... 8,095
Federal Home Loan Mortgage Corp.
3,242 8.000%--08/15/2022.......................... 3,524
3,399 6.500%--02/15/2023(1,8)..................... 429
3,539 2.510%--03/15/2025(1,4)..................... 3,549
5,000 6.000%--08/15/2026(1)....................... 5,026
22,207 7.000%--10/15/2030(1)....................... 22,077
7,332 2.310%--11/15/2030(1,3)..................... 7,370
----------
41,975
----------
Federal Home Loan Mortgage Corp. REMIC(7)
595 9.000%--12/15/2020(1)....................... 634
Federal National Mortgage Association REMIC(7)
Series 1997-55 Cl. ZA
8,504 7.000%--04/18/2027(1)....................... 8,818
FHLMC Structured Pass Through Securities
7,621 4.989%--08/15/2032(1)....................... 7,565
First Horizon Asset Securities Inc.
Pass Thru Certificates
Series 2001-7 Cl. A1
2,753 6.750%--11/25/2031.......................... 2,805
First Nationwide Trust
Series 2001-3 Cl. 1A1
976 6.750%--08/21/2031.......................... 996
Series 2001-4 Cl. 4A1
3,497 2.400%--09/25/2031(1,3)..................... 3,506
----------
4,502
----------
GE Capital Mortgage Services Inc.
Series 1994-6 Cl. A3
3,620 6.500%--12/25/2022.......................... 3,591
</Table>

FIXED INCOME

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
COLLATERALIZED MORTGAGE OBLIGATIONS--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

GE Capital Mortgage Services Inc. REMIC(7)
Series 1998-17 Cl. A3
$ 9,608 6.750%--10/25/2028(1)....................... $ 9,847
GMACCM Mortgage Trust I
Series 1999-D Cl. A
12,299 2.581%--09/20/2004(1,2)..................... 12,283
Indymac ARM Trust
Series 2001-H2 Cl. A2
1,963 6.430%--01/25/2032.......................... 2,016
Merrill Lynch Mortgage Investors Inc.
Series 2000-FF Cl. A
5,159 2.158%--01/20/2030(1,3)..................... 5,158
Morgan Stanley Dean Witter Capital I
Series 2001 Cl. A
6,231 2.160%--07/11/2011(2)....................... 6,186
Norwest Asset Securities Corp.
Pass Thru Certificates
Series 1997-19 Cl. A8
5,166 7.250%--12/25/2027(1)....................... 5,362
Series 1998-12 Cl. A9
5,000 6.750%--06/25/2028(1)....................... 5,129
----------
10,491
----------
PNC Mortgage Securities Corp.
Pass Thru Certificates
Series 1998-14 Cl. 3A3
17,589 6.500%--02/25/2029(1)....................... 17,827
Series 1999-4 Cl. 1A8
9,800 6.200%--06/25/2029(1)....................... 10,073
----------
27,900
----------
Prudential Home Mortgage Securities Co.
REMIC(7)
Series 1993-29 Cl. A8
2,603 6.750%--08/25/2008(10)...................... 2,637
Residential Asset Securitization Trust
Pass Thru Certificates
Series 1998-A13 Cl. 1A3
6,931 6.500%--12/25/2028(1)....................... 7,067
Series 2000-A2 Cl. NB1
315 8.000%--04/25/2030(1)....................... 317
----------
7,384
----------
Residential Funding Mortgage Securities I Inc.
Series 1997-S8 Cl. A9
3,854 7.500%--06/25/2027(1)....................... 3,931
Salomon Brothers Mortgage Securities VII Inc.
Pass Thru Certificates
Series 2000-BOA1 Cl. A
276 7.601%--12/25/2030.......................... 280
Sears Mortgage Securities Corp.
Series 1992-PR1 Cl. A
226 8.365%--10/25/2022(1,2)..................... 242
Small Business Administration
Series 2000-P10 Cl. 1
1,948 7.449%--08/01/2010.......................... 2,120
Series 2001-20A Cl. 1
4,184 6.290%--01/01/2021.......................... 4,282
----------
6,402
----------
</Table>

<Table>
<Caption>
COLLATERALIZED MORTGAGE OBLIGATIONS--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Structured Asset Mortgage Investments Inc.
Pass Thru Certificates
Series 1998-9 Cl. 1A3
$ 5,000 6.250%--11/25/2028.......................... $ 4,966
Structured Asset Securities Corp.
Pass Thru Certificates
Series 2001-15A Cl. 2A1
2,751 6.500%--09/25/2031.......................... 2,788
Series 2001-21A Cl. 1A1
4,813 6.250%--01/25/2032.......................... 4,952
Series 2002-1A Cl. 4A
3,768 6.311%--02/25/2032.......................... 3,793
----------
11,533
----------
Wells Fargo Mortgage Backed Securities Trust
Series 2000-14 Cl. A5
9,652 7.500%--01/25/2031.......................... 9,736
Series 2001-25 Cl. IIA
8,427 6.577%--10/25/2031(1)....................... 8,460
----------
18,196
----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $225,869).......................................... 228,096
----------

<Caption>
FOREIGN GOVERNMENT OBLIGATIONS--12.7%

Federal Republic of Germany
E100,000 4.750%--12/13/2002.......................... 90,684
Federative Republic of Brazil
$ 5,120 3.063%--04/15/2006(3)....................... 4,598
5,300 11.500%--03/12/2008......................... 5,022
165 3.125%--04/15/2009(3)....................... 135
6,526 8.000%--04/15/2014.......................... 5,154
----------
14,909
----------
Republic of Panama
5,000 9.625%--02/08/2011.......................... 5,212
2,824 4.750%--07/17/2014(6)....................... 2,581
1,432 2.625%--07/17/2016(3)....................... 1,208
----------
9,001
----------
Republic of Peru
1,200 9.125%--02/21/2012(2)....................... 1,161
Republic of South Africa
1,600 7.375%--04/25/2012.......................... 1,594
United Mexican States
953 3.140%--03/25/2005(3)....................... 927
400 9.875%--02/01/2010.......................... 462
100 11.375%--09/15/2016......................... 129
1,000 6.250%--12/31/2019.......................... 951
3,400 8.300%--08/15/2031.......................... 3,471
----------
5,940
----------
United Mexican States MTN(4)
15,000 8.500%--02/01/2006.......................... 16,305
----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $136,638).......................................... 139,594
----------
</Table>

FIXED INCOME

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
MORTGAGE PASS-THROUGH--50.6%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Federal Home Loan Mortgage Corp.
$ 25 8.000%--06/01/2011.......................... $ 26
21 8.500%--02/01/2017(1)....................... 22
385 6.326%--06/01/2024(1)....................... 399
----------
447
----------
Federal Housing Authority Project
221 Grey 98-4
7,393 7.430%--10/01/2020(1)....................... 7,431
221D4 Banco-5
542 7.400%--02/01/2021.......................... 542
221D4 Banco-15
131 7.450%--05/01/2021.......................... 131
223C Reilly-52
270 5.150%--06/01/2018.......................... 263
----------
8,367
----------
Federal National Mortgage Association
30 9.000%--03/01/2005(1)....................... 32
566 9.000%--11/01/2009(1)....................... 612
354 6.000%--03/01/2016.......................... 359
2,521 6.000%--04/01/2016.......................... 2,557
10,414 6.000%--05/01/2016.......................... 10,563
6,984 6.000%--06/01/2016.......................... 7,083
18,747 6.000%--07/01/2016.......................... 19,014
7,287 6.000%--08/01/2016.......................... 7,393
8,307 6.000%--09/01/2016.......................... 8,425
9,124 6.000%--10/01/2016.......................... 9,255
5,514 6.000%--11/01/2016.......................... 5,591
4,350 6.000%--12/01/2016.......................... 4,413
6,651 6.000%--01/01/2017.......................... 6,744
21,498 6.000%--02/01/2017.......................... 21,679
10,105 6.000%--03/01/2017.......................... 10,245
39,565 6.000%--04/01/2017.......................... 40,404
12,683 6.000%--05/01/2017.......................... 12,861
14,828 4.660%--10/01/2040(1)....................... 15,085
----------
182,315
----------
Federal National Mortgage Association TBA(9)
May Delivery
3,000 5.500%--05/16/2017.......................... 2,978
36,500 6.000%--05/16/2017.......................... 36,478
----------
39,456
----------
Federal National Mortgage Association TBA(9)
June Delivery
27,500 6.000%--06/18/2017.......................... 27,758
Government National Mortgage Association
173 6.000%--11/15/2028.......................... 172
4,616 6.000%--01/15/2029.......................... 4,588
7,423 6.000%--02/15/2029.......................... 7,381
4,343 6.000%--03/15/2029.......................... 4,321
3,735 6.000%--04/15/2029.......................... 3,715
2,212 6.000%--05/15/2029.......................... 2,200
486 6.000%--06/15/2029.......................... 484
4,953 6.000%--07/15/2029.......................... 4,931
109 6.000%--08/15/2029.......................... 108
2,171 6.000%--09/15/2029.......................... 2,159
61 6.000%--10/15/2029.......................... 61
80 6.000%--11/15/2029.......................... 79
246 6.000%--10/15/2030.......................... 244
179 6.000%--07/15/2031.......................... 178
3,376 6.500%--10/15/2031.......................... 3,425
7,464 6.500%--11/15/2031.......................... 7,575
16,604 4.500%--02/20/2032.......................... 16,695
----------
58,316
----------
</Table>

<Table>
<Caption>
MORTGAGE PASS-THROUGH--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Government National Mortgage Association II
$ 686 6.375%--03/20/2017(1)....................... $ 700
366 6.750%--08/15/2017.......................... 383
1,206 6.750%--08/20/2022(1)....................... 1,248
719 6.750%--09/20/2023(1)....................... 744
236 6.375%--05/20/2024(1)....................... 243
24 6.750%--07/20/2024.......................... 25
1,620 6.750%--09/20/2024(1)....................... 1,676
248 6.625%--12/20/2024(1)....................... 257
654 6.375%--01/20/2025(1)....................... 668
384 6.375%--02/20/2025(1)....................... 392
118 6.625%--10/20/2025.......................... 122
208 6.625%--10/20/2025(1)....................... 215
955 6.625%--11/20/2025(1)....................... 989
234 6.625%--12/20/2026(1)....................... 242
1,824 6.750%--07/20/2027.......................... 1,882
4,384 6.000%--11/20/2029(1)....................... 4,495
----------
14,281
----------
Government National Mortgage Association I
TBA(9)
May Delivery
20,500 6.000%--05/21/2032.......................... 20,289
171,000 6.500%--05/21/2032.......................... 172,652
----------
192,941
----------
Government National Mortgage Association II
TBA(9)
May Delivery
13,000 6.000%--05/21/2032.......................... 12,842
9,600 6.500%--05/21/2032.......................... 9,600
----------
22,442
----------
Government National Mortgage Association II
TBA(9)
June Delivery
9,600 6.500%--06/21/2032.......................... 9,672
----------
TOTAL MORTGAGE PASS-THROUGH
(Cost $552,672).......................................... 555,995
----------

<Caption>
MUNICIPAL BONDS--1.9%

Charlotte-Mecklenberg Hospital Authority
1,000 5.000%--01/15/2031.......................... 954
Georgia State
10,800 5.000%--05/01/2016.......................... 11,091
Indianapolis Local Public Improvement Bond
Bank
5,363 8.360%--07/01/2022.......................... 5,214
Massachusetts State Water Resources Authority
2,600 4.750%--12/01/2021.......................... 2,466
New Jersey Transportation Trust Fund Authority
1,400 5.000%--12/15/2021.......................... 1,398
----------
TOTAL MUNICIPAL BONDS
(Cost $20,965)........................................... 21,123
----------
</Table>

FIXED INCOME

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
MUNICIPAL BONDS--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

<Caption>
U.S. GOVERNMENT OBLIGATIONS--1.4%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

U.S. Treasury Bonds
$ 6,800 6.250%--08/15/2023.......................... $ 7,222
U.S. Treasury Notes
2,886 3.625%--07/15/2002(1,10).................... 2,931
4,601 3.375%--01/15/2007(1,10).................... 4,773
----------
7,704
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $15,300)........................................... 14,926
----------
<Caption>
OPTIONS--0.0%
NO. OF
CONTRACTS
- -----------------------------------------------------------------------

Eurodollar Futures Contracts
14,500 Expire 06/2002.............................. 54
613 Expire 09/2002.............................. 2
----------
56
----------
U.S. Treasury Bonds Futures Contracts
24 Expire 08/2002.............................. 30
----------
TOTAL OPTIONS
(Cost $121).............................................. 86
----------

<Caption>
SHORT-TERM INVESTMENTS--6.9%
PRINCIPAL
AMOUNT
(000S)
- -----------------------------------------------------------------------

COMMERCIAL PAPER
Federal Home Loan Mortgage Corp.
600 0.010%--05/07/2002(1)....................... 600
9,700 0.010%--09/12/2002.......................... 9,625
----------
10,225
----------
</Table>

<Table>
<Caption>
SHORT-TERM INVESTMENTS--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- -----------------------------------------------------------------------

Federal National Mortgage Association
$ 1,170 0.010%--05/08/2002(1)....................... $ 1,170
14,100 0.010%--08/28/2002.......................... 14,011
----------
15,181
----------
National Australia Funding Inc.
8,700 1.750%--05/16/2002.......................... 8,694
UBS Finance Inc. Yrs 3&4
37,200 1.760%--05/02/2002.......................... 37,198
----------
TOTAL COMMERCIAL PAPER..................................... 71,298
----------
U.S. TREASURY BILLS
U.S. Treasury Bills
880 0.010%--05/02/2002.......................... 880
50 1.690%--05/02/2002.......................... 50
105 1.725%--05/02/2002.......................... 105
114 1.745%--08/15/2002.......................... 114
----------
1,149
----------
REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust dated April 30, 2002 due May 1, 2002
at 1.55% collateralized by a U.S. Treasury
Bill 0.0% June 20, 2002, par value of $3,080
(repurchase proceeds of $3,008 when closed
3,008 on May 1, 2002)............................. 3,008
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $75,455)........................................... 75,455
----------
TOTAL INVESTMENTS--132.9%
(Cost $1,453,123)........................................ 1,461,065
CASH AND OTHER ASSETS, LESS LIABILITIES--(32.9%)........... (361,784)
----------
TOTAL NET ASSETS--100.0%................................... $1,099,281
==========
</Table>

------------------------------------------------------------

FUTURES CONTRACTS WHICH WERE OPEN AT APRIL 30, 2002 ARE AS FOLLOWS:

Municipal Bond Index Futures (Buy).................... 9 $ 9 Jun-02 $ 23
U.S. Treasury Bonds--20 Yr. (Buy)..................... 276 27,600 Jun-02 452
U.S. Treasury Notes--10 Yr. (Sell).................... 541 54,100 Jun-02 (1,403)
U.S. Treasury Notes--5 Yr. (Sell)..................... 143 14,300 Jun-02 (236)
Eurodollar Futures (Buy).............................. 34 8,500 Sep-02 40
Eurodollar Futures (Buy).............................. 3 750 Mar-03 5
Eurodollar Futures (Buy).............................. 3 750 Jun-03 4
Eurodollar Futures (Buy).............................. 3 750 Sep-03 3
Germany Federal Republic Bonds--10 Yr. (Buy).......... 144 E14,400 Jun-02 (20)
Germany Federal Republic Bonds--5 Yr. (Buy)........... 428 42,800 Jun-02 310
--------------
$ (822)
==============
</Table>

FIXED INCOME

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

TBA SALE COMMITMENTS WHICH WERE OPEN AT APRIL 30, 2002 ARE AS FOLLOWS:

<Table>
<Caption>
PRINCIPAL
AMOUNT COUPON DELIVERY VALUE
DESCRIPTION (000S) RATE DATE (000S)
- ----------- --------- ------ -------- ------

Federal National Mortgage Assoc....................... $27,500 6.00% May-02 $ 27,360
Government National Mortgage Assoc. I................. 83,000 6.50% May-02 83,443
Government National Mortgage Assoc. II................ 9,600 6.50% May-02 9,600
--------------
TBA sale commitments at value (proceeds receivable
$121,302)........................................... $120,403
==============
</Table>

WRITTEN OPTIONS WHICH WERE OPEN AT APRIL 30, 2002 ARE AS FOLLOWS:

<Table>
<Caption>
NUMBER OF
SHARES/ STRIKE VALUE
DESCRIPTION CONTRACTS PRICE EXPIRATION DATE (000S)
- ----------- --------- ------ --------------- ------

U.S. Treasury Notes-10 Yr. Futures (Call)............. 288 $107.00 May-02 $ (72)
U.S. Treasury Notes-10 Yr. Futures (Put).............. 801 100.00 May-02 (13)
Eurodollar Futures (Put).............................. 4,911 95.75 Jun-02 (31)
Eurodollar Futures (Put).............................. 168 95.50 Jun-02 (1)
Eurodollar Futures (Put).............................. 91 97.00 Jun-02 (1)
Eurodollar Futures (Put).............................. 387 96.00 Jun-02 (2)
Eurodollar Futures (Put).............................. 91 96.50 Sep-02 (4)
Eurodollar Futures (Put).............................. 256 97.25 Sep-02 (80)
Eurodollar Futures (Put).............................. 130 96.75 Sep-02 (10)
Eurodollar Futures (Put).............................. 1,268 96.50 Dec-02 (594)
Swap Options-3 Mo. LIBOR (Call)....................... 21,100,000 5.97 Oct-04 (590)
Swap Options-3 Mo. LIBOR (Put)........................ 21,100,000 5.97 Oct-04 (1,016)
Swap Options-3 Mo. LIBOR (Call)....................... 5,500,000 6.00 Oct-19 (158)
Swap Options-3 Mo. LIBOR (Put)........................ 5,500,000 6.00 Oct-19 (262)
Interest Rate Swap (Call)............................. 2,000,000 5.85 Aug-23 (21)
--------------
Written options at value (premiums received of
$7,365)............................................. $(2,855)
==============
</Table>

FORWARD CURRENCY CONTRACTS WHICH WERE OPEN AT APRIL 30, 2002 ARE AS FOLLOWS:

<Table>
<Caption>
UNREALIZED
AGGREGATE APPRECIATION/
MARKET VALUE FACE VALUE (DEPRECIATION)
DESCRIPTION (000S) (000S) DELIVERY DATE (000S)
- ----------- ------------ ---------- ------------- --------------

Pound Sterling (Sell)................................. $ 319 L 219 May-02 $ (8)
Euro (Sell)........................................... 10,639 E 11,851 Jul-02 (221)
Japanese Yen (Sell)................................... 5,180 Y663,061 Jul-02 (157)
Japanese Yen (Buy).................................... 2,357 301,639 Jul-02 46
Japanese Yen (Buy).................................... 3,150 403,232 Jul-02 69
--------------
$(271)
==============
</Table>

FIXED INCOME

HARBOR BOND FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

SWAP AGREEMENTS WHICH WERE OPEN AT APRIL 30, 2002 ARE AS FOLLOWS:

<Table>
<Caption>
UNREALIZED
PAR APPRECIATION
VALUE (DEPRECIATION)
(000S) DESCRIPTION COUNTER PARTY (000S)
------ ----------- ------------- --------------

E 9,100 To make or receive semi-annual payments through 03/15/2017 Goldman Sachs Capital Markets $ (11)
based on the difference between (A) the 10 year fixed New York
interest rate of 6.000% over (B) the 10 year floating rate
adjusted every six months based upon the EUR-
EURIBOR-Telerate.
4,500 To make or receive semi-annual payments through 03/15/2032 J.P. Morgan Securities --
based on the difference between (A) the 10 year fixed
interest rate of 6.000% over (B) the 10 year floating rate
adjusted every six months based upon the EUR-
EURIBOR-Telerate.
Y521,000 To make or receive semi-annual payments through 01/1/2011 Morgan Stanley Capital Services (205)
based on the difference between (A) the 10 year fixed
interest rate of 1.805% over (B) the 10 year floating rate
adjusted every six months based upon the JPY-LIBOR-BBA.
360,000 To make or receive semi-annual payments through 01/1/2011 Morgan Stanley Capital Services (134)
based on the difference between (A) the 10 year fixed
interest rate of 1.771% over (B) the 10 year floating rate
adjusted every six months based upon the JPY-LIBOR-BBA.
L 6,400 To make or receive semi-annual payments through 06/17/2004 Goldman Sachs Capital Markets 67
based on the difference between (A) the 10 year fixed New York
interest rate of 5.500% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
2,200 To make or receive semi-annual payments through 06/17/2004 Morgan Stanley Capital Services 17
based on the difference between (A) the 10 year fixed
interest rate of 5.500% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
1,600 To make or receive semi-annual payments through 09/15/2012 UBS Warburg 1
based on the difference between (A) the 10 year fixed
interest rate of 5.000% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
800 To make or receive semi-annual payments through 03/15/2017 J.P. Morgan Securities 1
based on the difference between (A) the 10 year fixed
interest rate of 5.000% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
4,100 To make or receive semi-annual payments through 03/15/2017 Goldman Sachs Capital Markets 26
based on the difference between (A) the 10 year fixed New York
interest rate of 5.000% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
2,400 To make or receive semi-annual payments through 03/15/2032 J.P. Morgan Securities 17
based on the difference between (A) the 10 year fixed
interest rate of 5.000% over (B) the 10 year floating rate
adjusted every six months based upon the GBP-LIBOR-BBA.
$ 29,200 To make or receive semi-annual payments through 06/17/2007 Goldman Sachs Capital Markets 25
based on the difference between (A) the 10 year fixed New York
interest rate of 6.000% over (B) the 10 year floating rate
adjusted every six months based upon the USD-LIBOR-BBA.
42,400 To make or receive semi-annual payments through 06/17/2007 Bank of America 1,513
based on the difference between (A) the 10 year fixed
interest rate of 6.000% over (B) the 10 year floating rate
adjusted every six months based upon the USD-LIBOR-BBA.

--------------
$1,317
==============
</Table>

- ------------

1 At April 30, 2002, securities held by the Fund were pledged to cover margin
requirements for open future contracts and written options on futures
contracts (see Note 2 to the Financial Statements). The securities pledged
had an aggregate market value of $534,503.

2 Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April, 2002,
these securities were valued at $135,581 or 12.33% of net assets.

3 Floating rate security. The stated rate represents the rate in effect at
April 30, 2002.

4 MTN after the name of a security stands for Medium Term Note.

5 Step Coupon security. The rate will step 1.07% per month until the coupon
reaches 15%.

6 Variable rate security. The stated rate represents the rate in effect at
April 30, 2002.

7 REMICs are CMOs which can hold mortgages secured by any type of real
property and issue multiple-class securities backed by those mortgages.

8 Interest only (IO) securities represent the right to receive the monthly
interest payments on an underlying pool of mortgage loans. These are subject
to the risk of accelerated principal paydowns. The amount represents the
notional amount on which current interest is calculated.

9 TBA's are mortgage-backed securities traded under delayed delivery
commitments, settling after April 30, 2002. Although the unit price for the
trades has been established, the principal value has not been finalized.
However, the amount of the commitments will not fluctuate more than 2% from
the principal amount. Income on TBA's is not earned until settlement date
(see Note 2 to the Financial Statements).

10 Treasury inflation-protected securities (TIPS) are securities in which the
principal amount is adjusted for inflation and interest payments are applied
to the inflation-adjusted principal.

E Euro.

L British Pound.

Y Japanese Yen.

The accompanying notes are an integral part of the financial statements.

FIXED INCOME

HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2002 (UNAUDITED)

TOTAL INVESTMENTS (% OF NET ASSETS)
(Excludes net cash and short-term investment of 0.1%)

<Table>

Corporate Bonds & Notes 2.0

Collateralized Mortgage Obligations 5.0

Asset-Backed Securities 92.9
</Table>

<Table>
<Caption>
ASSET-BACKED SECURITIES--92.9%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

ABSC Long Beach Home Equity Loan Trust
Series 2000-LB1 Cl. AV
$2,575 2.118%--08/21/2030(1,2)...................... $ 2,579
ACE Securities Corp.
Pass Thru Certificates
Series 2001-HE1 Cl. A
2,289 2.228%--11/20/2031(1,2)...................... 2,296
Aerco Ltd.
Series 2A Cl. A3
4,000 2.320%--07/15/2025(1,2)...................... 3,885
AmeriCredit Automobile Receivables Trust
Series 2001-1 Cl. A3
3,000 5.130%--11/06/2005(2)........................ 3,074
Ameriquest Mortgage Securities Inc.
Pass Thru Certificates
Series 2002-1 Cl. AF3
2,200 5.120%--05/25/2032........................... 2,231
Associates Automobile Receivables Trust
Series 2000-1 Cl. A3
1,808 7.300%--01/15/2004(2)........................ 1,851
CDC Mortgage Capital Trust
Series 2002-HE1 Cl. A
1,800 2.153%--01/25/2033(1).......................... 1,800
Centex Home Equity
Series 2002-B Cl. AF2
2,250 4.487%--05/25/2020........................... 2,271
Chase Funding Loan Acquisition Trust
Series 2001-C2 Cl. IA2
4,000 5.673%--05/25/2022........................... 4,093
CIT Equipment Collateral
Series 2001-A Cl. A2
2,359 3.730%--03/22/2004(2)........................ 2,377
Citibank Credit Card Issuance Trust
Series 2001-B2 Cl. B2
2,000 2.391%--12/10/2008(1)........................ 2,013
Citibank Credit Card Master Trust I
Series 1999-7 Cl. A
2,500 6.650%--11/15/2006........................... 2,658
CIT Marine Trust
Series 1999-A Cl. A2
1,083 5.800%--04/15/2010(2)........................ 1,109
CNH Equipment Trust
Series 2001-B Cl. A3
2,000 2.170%--03/15/2006(1)........................ 2,002
Conseco Finance
Series 2000-C Cl. A
1,259 2.230%--12/15/2029(1,2)...................... 1,263
</Table>

<Table>
<Caption>
ASSET-BACKED SECURITIES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

Contimortgage Home Equity Trust
Pass Thru Certificates
Series 1998-3 Cl. A10
$ 8 5.840%--05/15/2016(2)........................ $ 9
Countrywide Home Equity Loan Trust
Series 2002-B Cl. A1
1,486 2.110%--04/15/2028(1)........................ 1,499
CS First Boston Mortgage Securities Corp.
Pass Thru Certificates
Series 2001-HS27 Cl. A
1,204 2.500%--08/25/2031(1,3)...................... 1,196
DaimlerChrysler Auto Trust
Series 2001-C Cl. A3
3,000 4.210%--07/06/2005(2)........................ 3,046
Discover Card Master Trust I
Series 2000-9 Cl. A
2,000 6.350%--07/15/2008(2)........................ 2,115
Felco Funding II LLC.
Series 2000-1 Cl. A3
3,171 7.585%--06/15/2004(2,3)...................... 3,245
First North American National Bank
Series 1997-2 Cl. B
3,000 2.330%--03/15/2006(1,2)...................... 3,007
Ford Credit Auto Owner Trust
Series 2002-A Cl. A4A
2,400 4.360%--09/15/2006........................... 2,416
Harley-Davidson Motorcycle Trust
Series 2001-2 Cl. A1
992 3.770%--04/17/2006........................... 1,002
HFC Home Equity Loan Asset Backed Certificates
Series 2002-1 Cl. A
1,936 2.270%--12/22/2031(1)........................ 1,942
Honda Auto Receivables Owner Trust
Series 2001-1 Cl. A2
1,046 5.150%--06/18/2003(2)........................ 1,052
Series 2002-1 Cl. A2
2,500 2.550%--04/15/2004........................... 2,505
--------
3,557
--------
Ikon Receivables LLC
Series 1999-1 Cl. A4
3,375 6.230%--05/15/2005(2)........................ 3,444
Long Beach Mortgage Loan Trust
Series 2002-1 Cl. 2A2
1,500 3.500%--05/25/2032........................... 1,492
MMCA Automobile Trust
Series 2002-1 Cl. A2
2,000 3.030%--01/17/2005........................... 2,011
National City Auto Receivables Trust
Series 2002-A Cl. A4
700 4.830%--08/15/2009........................... 709
Navistar Financial Corp Owner Trust
Series 2001-B Cl. A4
2,500 4.370%--11/17/2008(2)........................ 2,514
Nissan Auto Receivables Owner Trust
Series 2002-A Cl. A2
4,000 2.670%--07/15/2004(2)........................ 4,010
Option One Mortgage Loan Trust
Series 2002-1 Cl. A
3,447 2.140%--02/25/2032(1,2)...................... 3,450
</Table>

FIXED INCOME

HARBOR SHORT DURATION FUND
PORTFOLIO OF INVESTMENTS--CONTINUED

<Table>
<Caption>
ASSET-BACKED SECURITIES--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

PECO Energy Transition Trust
Series 2000-A Cl. A2
$ 985 7.300%--09/01/2004........................... $ 1,002
Premier Auto Trust
Series 1999-3 Cl. A4
2,569 6.430%--03/08/2004(2)........................ 2,623
Public Service New Hampshire Funding LLC
Series 2001-1 Cl. A2
2,500 5.730%--11/01/2010(2)........................ 2,589
Residential Asset Securities Corp.
Series 2001-KS1 Cl. AI3
3,000 5.854%--02/25/2026(2)........................ 3,081
Saxon Asset Securities Trust
Series 2001-1 Cl. AF4
2,000 6.310%--03/25/2026........................... 2,069
Series 1999-2 Cl. MV2
1,500 2.800%--05/25/2029(1,2)...................... 1,505
--------
3,574
--------
SSB RV Trust
Series 2001-1 Cl. A2
1,686 2.890%--12/15/2008........................... 1,693
Standard Credit Card Master Trust
Series 1995-1 Cl. A
2,000 8.250%--01/07/2007........................... 2,207
Structured Asset Securities Corp.
Series 2002-1A Cl. 2A1
1,916 4.022%--02/25/2032(1)........................ 1,941
--------
TOTAL ASSET-BACKED SECURITIES
(Cost $94,243)............................................ 94,876
--------
<Caption>
COLLATERALIZED MORTGAGE OBLIGATIONS--5.0%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

Federal Home Loan Mortgage Corp.
Series 1620 Cl. A
$ 364 6.000%--08/15/2018........................... $ 366
FHLMC Structured Pass Through Securities
Series T-30 Cl. A5
2,000 7.610%--12/25/2030........................... 2,120
Salomon Brothers Mortgage Securities VII
Series 2001-C1 Cl. A1
2,611 5.137%--12/18/2035(2)........................ 2,662
--------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $5,080)............................................. 5,148
--------

<Caption>
CORPORATE BONDS & NOTES--2.0%
(Cost $2,000)

VW Credit Inc. MTN 4
2,000 2.229%--01/21/2005(1)........................ 1,997
--------

<Caption>
SHORT-TERM INVESTMENT--0.0%
(Cost $44)

REPURCHASE AGREEMENT
Repurchase Agreement with State Street Bank &
Trust dated April 30, 2002 due May 1, 2002 at
1.75% collateralized by a U.S. Treasury Bill
7.250% August 15, 2022, par value of $40
(repurchase proceeds of $44 when closed on
44 May 1, 2002)................................. 44
--------
TOTAL INVESTMENTS--99.9%
(Cost $101,367)........................................... 102,065
CASH AND OTHER ASSETS, LESS LIABILITIES--0.1%............... 119
--------
TOTAL NET ASSETS--100.0%.................................... $102,184
========
</Table>

- ------------

1 Floating rate security. The stated rate represents the rate in effect at
April 30, 2002.

2 At April 30, 2002, securities held by the Fund were pledged to cover margin
requirements for open future contracts (see Note 2 to the Financial
Statements). The securities pledged had an aggregate market value of $60,879.

3 Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30, 2002,
these securities were valued at $4,441 or 4.35% of net assets.

4 MTN after the name of a security stands for Medium Term Note.

The accompanying notes are an integral part of the financial statements.

FIXED INCOME

HARBOR MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS--APRIL 30, 2002 (UNAUDITED)

TOTAL INVESTMENTS (% OF NET ASSETS)
(Excludes net cash of -0.2%)

<Table>

Repurchase Agreement
10.3
Bank Obligations
12.0
Commercial Paper
77.9
</Table>

<Table>
<Caption>
BANK OBLIGATIONS--12.0%
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

Bank of Montreal
$ 7,000 1.750%--05/22/2002........................... $ 7,000
BZW
4,000 2.130%--05/28/2002........................... 4,000
Morgan Stanley Group Inc.
2,250 6.375%--08/01/2002........................... 2,264
Societe Generale
7,000 1.820%--07/22/2002........................... 7,000
--------
TOTAL BANK OBLIGATIONS
(Cost $20,264)............................................ 20,264
--------
<Caption>
COMMERCIAL PAPER--77.9%

Abbey National plc
7,000 1.780%--06/13/2002........................... 6,985
ANZ Inc.
7,000 1.770%--05/13/2002........................... 6,996
Bank of Scotland Treasury Service
7,000 1.780%--05/10/2002........................... 6,997
BMW Capital Corp.
7,000 1.900%--05/01/2002........................... 7,000
CBA Finance Inc. Yrs 3&4
6,000 2.030%--05/20/2002........................... 5,994
Credit Agricole Indosuez Inc.
7,000 1.810%--05/07/2002........................... 7,000
Danske Bank A/S
6,500 1.800%--05/06/2002........................... 6,498
</Table>

<Table>
<Caption>
COMMERCIAL PAPER--CONTINUED
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------------------------------------------------------------

Den Norske Bank ASA Yrs. 1&2
$ 7,000 1.820%--05/21/2002........................... $ 6,993
Deutsche Bank AG
7,000 1.840%--05/21/2002........................... 7,000
Dresdner Bank AG
7,000 1.800%--05/09/2002........................... 6,997
Gillette Co.
7,000 1.870%--05/01/2002........................... 7,000
ING US Funding LLC
7,000 1.800%--05/15/2002........................... 6,995
J.P. Morgan Chase & Co.
7,000 1.940%--07/03/2002........................... 6,976
Lloyds TSB Group plc
7,000 2.001%--09/19/2002........................... 6,946
Royal Bank of Canada
7,000 1.840%--07/31/2002........................... 7,000
Svenska Handelsbanken Ab
7,000 1.850%--05/13/2002........................... 6,996
Toronto Dominion Bank
7,000 1.800%--05/14/2002........................... 7,000
UBS Finance Inc. Yrs 1&2
7,000 1.900%--05/01/2002........................... 7,000
Well Fargo Bank
7,000 1.790%--05/07/2002........................... 7,000
--------
TOTAL COMMERCIAL PAPER
(Cost $131,373)........................................... 131,373
--------
REPURCHASE AGREEMENT--10.3%
(Cost $17,305)
Repurchase Agreement with State Street Bank &
Trust dated April 30, 2002 due May 1, 2002 at
1.75% collateralized by a U.S. Treasury Bills
9.125% May 15, 2009, par value of $15,285
(repurchase proceeds of $17,306 when closed
17,305 on May 1, 2002).............................. 17,305
--------
TOTAL INVESTMENTS--100.2%
(Cost $168,942)(1)........................................ 168,942
CASH AND OTHER ASSETS, LESS LIABILITIES--(0.2%)............. (246)
--------
TOTAL NET ASSETS--100.0%.................................... $168,696
========
</Table>

- ------------

1 The aggregate identified cost on a tax basis is the same.

The accompanying notes are an integral part of the financial statements.

FIXED INCOME

HARBOR FIXED INCOME FUNDS
STATEMENT OF ASSETS AND LIABILITIES--APRIL 30, 2002 (UNAUDITED)

(All amounts in Thousands, except per share amounts)

<Table>
<Caption>
HARBOR HARBOR HARBOR
BOND SHORT DURATION MONEY MARKET
- --------------------------------------------------------------------------------------------------------------------

ASSETS
INVESTMENTS, AT IDENTIFIED COST*............................ $1,453,123 $101,367 $168,942
====================================================================================================================
Investments, at value....................................... $1,458,057 $102,021 $151,637
Repurchase agreements....................................... 3,008 44 17,305
Cash........................................................ -- -- 1
Foreign currency, at value (cost: $2,194; $0; $0)........... 2,233 -- --
Receivables for:
Investments sold.......................................... 161,672 -- --
Capital shares sold....................................... 1,021 92 139
Interest.................................................. 10,119 403 208
Swap agreements, at value (cost: $1,444, $0, $0).......... 2,761 -- --
Variation margin on futures contracts..................... 114 -- --
Other assets................................................ 3 13 14
- --------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS......................................... 1,638,988 102,573 169,304
LIABILITIES
Payables for:
Investments purchased..................................... 413,640 -- --
Capital shares reacquired................................. 2,040 368 559
Dividends to shareholders................................. -- -- 2
Written options, at value (premiums received $7,365; $0;
$0).................................................... 2,855 -- --
Open forward currency contracts........................... 271 -- --
Variation margin on futures contracts..................... 62 -- --
Accrued expenses:
Management fees........................................... 412 17 20
Trustees' fees............................................ 3 1 --
Transfer agent fees....................................... 3 -- 16
Other..................................................... 18 3 11
TBA sale commitments at value (proceeds receivable
$121,302; $0; $0)...................................... 120,403 -- --
- --------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES.................................... 539,707 389 608
NET ASSETS.................................................. $1,099,281 $102,184 $168,696
====================================================================================================================
Net assets consist of:
Paid-in capital........................................... $1,067,741 $123,066 $168,696
Undistributed/(overdistributed) net investment income..... 6,979 (115) --
Accumulated net realized gain/(loss)...................... 12,726 (21,465) --
Unrealized appreciation of investments and translation of
assets and liabilities in foreign currencies........... 12,928 698 --
Unrealized (depreciation) of futures and forward
contracts.............................................. (1,093) -- --
- --------------------------------------------------------------------------------------------------------------------
$1,099,281 $102,184 $168,696
====================================================================================================================
Shares of beneficial interest............................... 94,293 11,845 168,696
Net asset value, offering and redemption price per share.... $ 11.66 $ 8.63 $ 1.00
</Table>

- ------------

* Including repurchase agreements and short-term investments.

The accompanying notes are an integral part of the financial statements.

FIXED INCOME

HARBOR FIXED INCOME FUNDS
STATEMENT OF OPERATIONS--SIX MONTHS ENDED APRIL 30, 2002 (UNAUDITED)

(All amounts in Thousands)

<Table>
<Caption>
HARBOR HARBOR HARBOR
BOND SHORT DURATION MONEY MARKET
- --------------------------------------------------------------------------------------------------------------------

INVESTMENT INCOME:
Dividends................................................. $ -- $ -- $ --
Interest.................................................. 26,797 2,447 1,829
Foreign taxes withheld.................................... -- -- --
- --------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME................................... 26,797 2,447 1,829
OPERATING EXPENSES:
Management fees........................................... 3,249 225 263
Shareholder communications................................ 40 2 13
Custodian fees............................................ 46 24 17
Transfer agent fees....................................... 289 13 95
Professional fees......................................... 26 2 4
Trustees' fees and expenses............................... 9 1 2
Registration fees......................................... 39 12 20
Miscellaneous............................................. 11 5 5
- --------------------------------------------------------------------------------------------------------------------
Total operating expenses............................... 3,709 284 419
Management fees waived.................................... (771) (102) (105)
- --------------------------------------------------------------------------------------------------------------------
Net operating expenses................................. 2,938 182 314
- --------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME....................................... 23,859 2,265 1,515
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENT
TRANSACTIONS:
Net realized gain/(loss) on:
Investments............................................ 594 424 --
Foreign currency transactions.......................... 1,635 -- --
Swap agreements........................................ 9,652 -- --
Futures contracts...................................... 2,043 (6) --
Written options........................................ 3,664 -- --
Change in net unrealized (depreciation) of:
Investments............................................ (8,408) (1,334) --
Swap agreements........................................ (10,305) -- --
Futures contracts...................................... (8,247) (24) --
Forward currency contracts............................. (76) -- --
Translation of assets and liabilities in foreign
currencies............................................ (1,808) -- --
- --------------------------------------------------------------------------------------------------------------------
Net (loss) on investment transactions..................... (11,256) (940) --
- --------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...... $ 12,603 $ 1,325 $1,515
====================================================================================================================
</Table>

The accompanying notes are an integral part of the financial statements.

FIXED INCOME

HARBOR FIXED INCOME FUNDS
STATEMENT OF CHANGES IN NET ASSETS
(All amounts in Thousands)

- ----------------------------------------------------------------

INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment income..................................
Net realized gain on investments, foreign currency
transactions, swap agreements, futures contracts and
written options.......................................
Net unrealized appreciation/(depreciation) of
investments and translation of assets and liabilities
in foreign currencies.................................
- ----------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......
- ----------------------------------------------------------------
Distributions to shareholders:
Net investment income..................................
Net realized gain on investments.......................
- ----------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS....................
- ----------------------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares.......................
Net asset value of shares issued in connection with
reinvestment of:
Dividends from net investment income.................
Distributions from net realized gain on
investments.........................................
Cost of shares reacquired..............................
- ----------------------------------------------------------------
NET INCREASE/(DECREASE) DERIVED FROM CAPITAL
TRANSACTIONS..........................................
- ----------------------------------------------------------------
Net increase/(decrease) in net assets..................
NET ASSETS:
Beginning of period.......................................
- ----------------------------------------------------------------
END OF PERIOD *...........................................
================================================================
NUMBER OF CAPITAL SHARES:
Sold......................................................
Reinvested in payment of investment income dividends......
Reinvested in payment of capital gain distributions.......
Reacquired................................................
- ----------------------------------------------------------------
Net increase/(decrease) in shares outstanding.............
Outstanding:
Beginning of period....................................
- ----------------------------------------------------------------
End of period..........................................
================================================================
* Includes undistributed/(over-distributed) net investment
income of:................................................
</Table>

The accompanying notes are an integral part of the financial statements.

FIXED INCOME

<Table>
<Caption>
HARBOR HARBOR HARBOR
BOND SHORT DURATION MONEY MARKET
------------------------------- ------------------------------- -------------------------------
NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1, NOVEMBER 1,
2001 2000 2001 2000 2001 2000
THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2002 2001 2002 2001 2002 2001
- -------------------------------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)

$ 23,859 $ 49,251 $ 2,265 $ 5,641 $ 1,515 $ 6,618
17,588 25,379 418 500 -- 2
(28,844) 54,113 (1,358) 1,822 -- --
- -------------------------------------------------------------------------------------------------------------------------
12,603 128,743 1,325 7,963 1,515 6,620
- -------------------------------------------------------------------------------------------------------------------------
(23,080) (40,763) (2,295) (5,800) (1,515) (6,618)
(22,766) (4,887) -- -- -- (2)
- -------------------------------------------------------------------------------------------------------------------------
(45,846) (45,650) (2,295) (5,800) (1,515) (6,620)
- -------------------------------------------------------------------------------------------------------------------------
238,928 470,485 86,345 275,635 95,057 302,450
20,471 37,555 2,266 5,729 1,500 6,353
21,071 3,414 -- -- -- --
(184,498) (275,250) (111,416) (282,600) (96,695) (245,862)
- -------------------------------------------------------------------------------------------------------------------------
95,972 236,204 (22,805) (1,236) (138) 62,941
- -------------------------------------------------------------------------------------------------------------------------
62,729 319,297 (23,775) 927 (138) 62,941
1,036,552 717,255 125,959 125,032 168,834 105,893
- -------------------------------------------------------------------------------------------------------------------------
$1,099,281 $1,036,552 $102,184 $125,959 $168,696 $ 168,834
=========================================================================================================================
20,455 41,186 9,976 31,974 95,057 302,450
3,648 3,296 262 665 1,500 6,353
-- 303 -- -- -- --
(15,818) (23,976) (12,884) (32,842) (96,695) (245,862)
- -------------------------------------------------------------------------------------------------------------------------
8,285 20,809 (2,646) (203) (138) 62,941
86,008 65,199 14,491 14,694 168,834 105,893
- -------------------------------------------------------------------------------------------------------------------------
94,293 86,008 11,845 14,491 168,696 168,834
=========================================================================================================================
$ 6,979 $ 6,200 $ (115) $ (85) $ -- $ --
</Table>

FIXED INCOME

HARBOR FIXED INCOME FUNDS FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIODS PRESENTED
<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------------
NET REALIZED AND
UNREALIZED GAINS/(LOSSES)
NET ASSET ON INVESTMENTS, FUTURES
VALUE NET CONTRACTS, OPTIONS, SWAP TOTAL FROM
BEGINNING INVESTMENT AGREEMENTS AND FOREIGN INVESTMENT
YEAR/PERIOD ENDED OF PERIOD INCOME CURRENCY CONTRACTS OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------

HARBOR BOND FUND
April 30, 2002 (Unaudited).......................... $12.05 $.26(c) $ (.13) $ .13
October 31, 2001.................................... 11.00 .56(c) 1.08 1.64
October 31, 2000.................................... 10.85 .57(c) .15 .72
October 31, 1999.................................... 11.82 .58(c) (.49) .09
October 31, 1998.................................... 11.57 .61(c) .53 1.14
October 31, 1997.................................... 11.28 .68(c) .30 .98
- -----------------------------------------------------------------------------------------------------------------------------
HARBOR SHORT DURATION FUND
April 30, 2002 (Unaudited).......................... $ 8.69 $.16(c) $ (.06) $ .10
October 31, 2001.................................... 8.51 .45(c) .19 .64
October 31, 2000.................................... 8.56 .55(c) (.04) .51
October 31, 1999.................................... 8.69 .46(c) (.15) .31
October 31, 1998.................................... 8.66 .48(c) .09 .57
October 31, 1997.................................... 8.79 .45(c,d) .01 .46
- -----------------------------------------------------------------------------------------------------------------------------
HARBOR MONEY MARKET FUND
April 30, 2002 (Unaudited).......................... $ 1.00 $.01(c) $ -- $ .01
October 31, 2001.................................... 1.00 .05(c) -- .05
October 31, 2000.................................... 1.00 .06(c) -- .06
October 31, 1999.................................... 1.00 .05(c) -- .05
October 31, 1998.................................... 1.00 .05(c) -- .05
October 31, 1997.................................... 1.00 .02(c) -- .02
- -----------------------------------------------------------------------------------------------------------------------------

LESS DISTRIBUTIONS
------------------------------
DIVIDENDS DISTRIBUTIONS
FROM NET FROM NET
INVESTMENT REALIZED
YEAR/PERIOD ENDED INCOME CAPITAL GAINS(1)

HARBOR BOND FUND
April 30, 2002 (Unaudited).......................... $(.26) $(.26)
October 31, 2001.................................... (.52) (.07)
October 31, 2000.................................... (.57) --
October 31, 1999.................................... (.55) (.51)
October 31, 1998.................................... (.66) (.23)
October 31, 1997.................................... (.69) --
- -----------------------------------------------------------------------------------------------------
HARBOR SHORT DURATION FUND
April 30, 2002 (Unaudited).......................... $(.16) $ --
October 31, 2001.................................... (.46) --
October 31, 2000.................................... (.56) --
October 31, 1999.................................... (.44) --
October 31, 1998.................................... (.54) --
October 31, 1997.................................... (.59) --
- -----------------------------------------------------------------------------------------------------------------------
HARBOR MONEY MARKET FUND
April 30, 2002 (Unaudited).......................... $(.01) $ --
October 31, 2001.................................... (.05) --
October 31, 2000.................................... (.06) --
October 31, 1999.................................... (.05) --
October 31, 1998.................................... (.05) --
October 31, 1997.................................... (.02) --
- -----------------------------------------------------------------------------------------------------------------------------
</Table>

1 Includes both short-term and long-term capital gains.

2 Percentage does not reflect reduction for credit balance arrangements.

a Annualized.

b Unannualized.

c Reflects the Adviser's waiver of a portion of its management fees.

d Based on monthly average of shares outstanding during the fiscal year.

e The total returns would have been lower had certain expenses not been waived
during the periods shown.

f Interest expense from investments sold short.

The accompanying notes are an integral part of the financial statements.

FIXED INCOME

RATIO OF
RATIO OF RATIO OF OPERATING
NET ASSET OPERATING MANAGEMENT FEES EXPENSES NET OF
VALUE NET ASSETS EXPENSES NOT IMPOSED ALL OFFSETS TO
TOTAL END TOTAL END OF PERIOD TO AVERAGE TO AVERAGE AVERAGE
DISTRIBUTIONS OF PERIOD RETURN (000S) NET ASSETS (%)(2) NET ASSETS (%) NET ASSETS (%)
- ----------------------------------------------------------------------------------------------------------------------------

$ (.52) $11.66 1.19%(b,e) $1,099,281 .57%(a,c) .15%(a) .57%(a)
(.59) 12.05 15.35(e) 1,036,552 .56(c) .22 .56
(.57) 11.00 6.95(e) 717,255 .60(c) .21 .60
(1.06) 10.85 .85(e) 627,180 .61(c) .21 .60
(.89) 11.82 10.33(e) 473,021 .65(c) .22 .65
(.69) 11.57 8.96(e) 362,594 .67(c) .23 .67
- ----------------------------------------------------------------------------------------------------------------------------
$ (.16) $ 8.63 1.19%(b,e) $ 102,184 .30%(a,c) .17%(a) .30%(a)
(.46) 8.69 7.73(e) 125,959 .28(c) .20 .27
(.56) 8.51 6.21(e) 125,032 .29(c) .20 .28
(.44) 8.56 3.68(e) 251,442 .28(c) .20 28
(.54) 8.69 6.81(e) 217,244 .36(c) .20 .36
(.59) 8.66 5.48(e) 162,476 .38(c) .20 .36
- ----------------------------------------------------------------------------------------------------------------------------
$ (.01) $ 1.00 .86%(b,e) $ 168,696 .36%(a,c) .12%(a) .36%(a)
(.05) 1.00 4.83(e) 168,834 .38(c) .12 .38
(.06) 1.00 5.99(e) 105,893 .48(c) .12 .47
(.05) 1.00 4.82(e) 97,265 .46(c) .12 .46
(.05) 1.00 5.20(e) 100,276 .57(c) .12 .57
(.02) 1.00 5.11(e) 73,540 .63(c) .12 .62
- ----------------------------------------------------------------------------------------------------------------------------

RATIO OF RATIO OF
INTEREST/DIVIDEND NET INVESTMENT
EXPENSE INCOME
TO AVERAGE TO AVERAGE PORTFOLIO
NET ASSETS (%) NET ASSETS (%) TURNOVER (%)
- ----------------------------------------------------------------------------------------------------------------------------

--% 4.62%(a,c) 196%(b)
-- 5.50(c) 531
-- 6.16(c) 494
-- 5.35(c) 271
-- 5.41(c) 278
-- 6.04(c) 252
- ----------------------------------------------------------------------------------------------------------------------------
--% 3.70%(a,c) 80%(b)
-- 5.35(c) 246
-- 6.00(c) 478
-- 5.36(c) 578
-- 5.51(c) 727
.64(f) 5.14(c) 1,519
- ----------------------------------------------------------------------------------------------------------------------------
--% 1.72%(a,c) N/A
-- 4.60(c) N/A
-- 5.88(c) N/A
-- 4.73(c) N/A
-- 5.08(c) N/A
-- 4.97(c) N/A
- ----------------------------------------------------------------------------------------------------------------------------
</Table>

FIXED INCOME

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2002 (UNAUDITED)

(Currency in Thousands)

NOTE 1--ORGANIZATIONAL MATTERS

Harbor Fund (the "Trust") is registered under the Investment Company Act of
1940, as amended, as an open-ended investment company, consisting of seven
domestic equity series: Harbor Capital Appreciation Fund, Harbor Mid Cap Growth
Fund, Harbor Growth Fund, Harbor Small Cap Growth Fund, Harbor Large Cap Value
Fund, Harbor Mid Cap Value Fund and Harbor Small Cap Value Fund; four
international equity series: Harbor International Fund, Harbor International
Fund II, Harbor International Growth Fund and Harbor Global Equity Fund; and
three fixed income series: Harbor Bond Fund, Harbor Short Duration Fund and
Harbor Money Market Fund (individually or collectively referred to as a "Fund"
or the "Funds").

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES

SECURITY VALUATION

Equity securities are valued at the last sale price on a national exchange
or the National Association of Securities Dealers Automated Quotation ("NASDAQ")
system or, in the case of unlisted securities or listed securities for which
there were no sales on the valuation day, the mean between the closing bid and
asked price. Securities listed or traded on foreign exchanges are valued at the
last sale price on a national exchange on the valuation day, or if no sale
occurs, at the official bid price (both the last sale price and official bid
price are determined as of the close of the London Foreign Exchange).

Except for Harbor Money Market Fund, debt securities, other than short-term
securities with a remaining maturity of less than sixty days, are valued at
prices furnished by a pricing service, or as otherwise described below, selected
by Harbor Capital Advisors, Inc. (the "Adviser"), which determines valuation for
normal institutional-size trading units of such securities using market
information, transactions for comparable securities and various relationships
between securities which are generally recognized by institutional traders.
Short-term securities with a remaining maturity of less than sixty days are
stated at amortized cost which approximates value.

FUTURES CONTRACTS

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands)

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

margin," and are recorded by the Fund as unrealized gains or losses. When the
contract is closed or expired, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed.

OPTIONS

Consistent with its investment policies, each Fund (excluding the Harbor
Money Market Fund) may use option contracts to manage its exposure to the stock
and bond markets and to fluctuations in interest rates and currency values.
Harbor Large Cap Value Fund is not authorized to engage in options transactions
on currency. Harbor International Fund and Harbor International Growth Fund are
not authorized to engage in options transactions on currencies for speculative
purposes. Harbor International Fund II is not authorized to write options on
currencies for speculative purposes. Option contracts tend to increase or
decrease the Fund's exposure to the underlying instrument or hedge other fund
investments.

SWAP AGREEMENTS

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands)

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

TBA/WHEN-ISSUED PURCHASE COMMITMENTS

TBA SALE COMMITMENTS

SHORT SALES

FOREIGN FORWARD CURRENCY CONTRACTS

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands)

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

FOREIGN CURRENCY TRANSLATIONS

The accounting records of the Funds are maintained in U.S. dollars.
Investment securities and other assets and liabilities denominated in a foreign
currency are translated into U.S. dollars based on the current exchange rates at
period end. Purchases and sales of securities are translated into U.S. dollars
at the current exchange rate on the respective dates of the transaction. Income
and withholding taxes are translated at the prevailing exchange rate when
accrued or incurred.

REPURCHASE AGREEMENTS

SECURITIES TRANSACTIONS

INVESTMENT INCOME

DISTRIBUTION TO SHAREHOLDERS

Distributions are recorded on the ex-dividend date.

INCOME RECOGNITION

Effective November 1, 2001, the Trust adopted the provisions of the
American Institute of Certified Public Accountants Audit and Accounting Guide
for Investment Companies, as revised, and is amortizing premiums and discounts
on debt securities. The Trust formerly amortized premiums and discounts on debt
securities. Accordingly, the adoption of the Guide has had no significant effect
on the Trust's financial statements.

EXPENSES

FEDERAL TAXES

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands)

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

under Section 4982 of the Internal Revenue Code. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized appreciation
of securities held or excise tax on income and capital gains.

NOTE 3--INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments, other than short-term securities, for
each Fund for the period ended April 30, 2002 were as follows:

<Table>
<Caption>
PURCHASES SALES
------------------------ ------------------------
U.S. U.S.
GOVERNMENT OTHER GOVERNMENT OTHER
---------- ----- ---------- -----

HARBOR DOMESTIC EQUITY FUNDS
Harbor Capital Appreciation Fund.......................... $ -- $2,297,173 $ -- $2,006,069
Harbor Mid Cap Growth Fund................................ -- 6,872 -- 4,174
Harbor Growth Fund........................................ -- 6,566 -- 6,574
Harbor Small Cap Growth Fund.............................. -- 29,796 -- 7,155
Harbor Large Cap Value Fund............................... -- 61,172 -- 29,965
HARBOR INTERNATIONAL EQUITY FUNDS
Harbor International Fund................................. -- 254,697 -- 400,260
Harbor International Fund II.............................. -- 17,892 -- 31,137
Harbor International Growth Fund.......................... -- 687,590 -- 697,017
Harbor Global Equity Fund................................. -- 2,494 -- 1,133
HARBOR FIXED INCOME FUNDS
Harbor Bond Fund.......................................... 2,254,706 360,944 2,270,360 212,744
Harbor Short Duration Fund................................ 40,989 56,188 46,941 36,569
</Table>

REDEMPTION IN-KIND TRANSACTIONS

For the six-month period ended April 30, 2002, Harbor Capital Appreciation
Fund realized gains of $41,723 from in-kind redemptions of Fund shares.

WRITTEN OPTIONS

Transactions in written options for the six-month period ended April 30,
2002 are summarized as follows:

<Table>
<Caption>
OPTIONS WRITTEN OPTIONS WRITTEN
-------------------------- ------------------------
EURODOLLAR FUTURES EURO FUTURES
-------------------------- ------------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
CONTRACTS FACE VALUE CONTRACTS FACE VALUE
--------- ---------- --------- ----------

HARBOR BOND FUND
Options outstanding at beginning of year.................. 6,124 E$ 15,310 6,400,000 E 6,400
Options opened............................................ 1,836 4,590 1,574,803 1,575
Options closed/expired.................................... (658) (1,645) (7,974,803) (7,975)
------------ --------- ---------- -------
Open at 04/30/2002........................................ 7,302 E$ 18,255 -- E --
============ ========= ========== =======
</Table>

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands)

NOTE 3--INVESTMENT PORTFOLIO TRANSACTIONS--CONTINUED

<Table>
<Caption>
OPTIONS WRITTEN OPTIONS WRITTEN
-------------------------- ------------------------
JAPANESE YEN FUTURES U.S. TREASURY FUTURES
-------------------------- ------------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
CONTRACTS FACE VALUE CONTRACTS FACE VALUE
--------- ---------- --------- ----------

HARBOR BOND FUND
Options outstanding at beginning of year.................. -- Y -- 3,376 $ 3,376
Options opened............................................ 193,125,000 193,125 3,224 3,224
Options closed/expired.................................... (193,125,000) (193,125) (5,511) (5,511)
------------ --------- ---------- -------
Open at 04/30/2002........................................ -- Y -- 1,089 $ 1,089
============ ========= ========== =======
</Table>

<Table>
<Caption>
OPTIONS WRITTEN
-------------------------- OPTIONS WRITTEN
INTEREST RATE ------------------------
SWAP OPTIONS SWAP OPTIONS--U.S.
-------------------------- ------------------------
NUMBER OF AGGREGATE NUMBER OF AGGREGATE
CONTRACTS FACE VALUE CONTRACTS FACE VALUE
--------- ---------- --------- ----------

Options outstanding at beginning of year.................. -- $ -- 53,200,000 $53,200
Options opened............................................ 2,000,000 2,000 -- --
Options closed/expired.................................... -- -- -- --
------------ --------- ---------- -------
Open at 04/30/2002........................................ 2,000,000 $ 2,000 53,200,000 $53,200
============ ========= ========== =======
</Table>

- ------------

E Euro.

E$ Eurodollar.

Y Japanese Yen.

NOTE 4--FEES AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISER

Harbor Capital Advisors, Inc. ("Harbor Capital"), an indirect wholly-owned
subsidiary of Robeco Groep, N.V., is the Trust's investment adviser and is also
responsible for administrative and other services. Separate advisory agreements
for each Fund were in effect during the six-month period ended April 30, 2002.
The agreements provide for fees based on an annual percentage rate of average
daily net assets as follows:

<Table>
<Caption>
ANNUAL
PERCENTAGE FEES
RATE EARNED
---------- ------

HARBOR DOMESTIC EQUITY FUNDS
Harbor Capital Appreciation Fund.......................... 0.60% $19,970
Harbor Mid Cap Growth Fund................................ 0.75 44
Harbor Growth Fund........................................ 0.75 494
Harbor Small Cap Growth Fund.............................. 0.75 112
Harbor Large Cap Value Fund............................... 0.60 465
Harbor Mid Cap Value Fund................................. 0.55 3
Harbor Small Cap Value Fund............................... 0.55 12
HARBOR INTERNATIONAL EQUITY FUNDS
Harbor International Fund................................. 0.75(a) 15,277
Harbor International Fund II.............................. 0.75 296
Harbor International Growth Fund.......................... 0.75 1,480
Harbor Global Equity Fund................................. 0.75 27
HARBOR FIXED INCOME FUNDS
Harbor Bond Fund.......................................... 0.50(b) 3,249
Harbor Short Duration Fund................................ 0.30(c) 225
Harbor Money Market Fund.................................. 0.30 263
</Table>

- ------------

a For the period November 1, 2001 through March 31, 2002, the annual percentage
rate was 0.85%.

b For the period November 1, 2001 through February 28, 2002, the annual
percentage rate was 0.70%.

c For the period November 1, 2001 through February 28, 2002, the annual
percentage rate was 0.40%.

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands)

NOTE 4--FEES AND OTHER TRANSACTIONS WITH AFFILIATES--CONTINUED

Harbor Capital has from time to time agreed not to impose a portion of its
management fees and bear a portion of the expenses incurred in the operation of
certain Funds in order to limit Fund expenses. During the six-month period ended
April 30, 2002, Harbor Capital agreed not to impose management fees of $11, $17,
$1, $3, $708, $39, $7, $771, $102 and $105 relating to Harbor Mid Cap Growth
Fund, Harbor Small Cap Growth Fund, Harbor Mid Cap Value Fund, Harbor Small Cap
Value Fund, Harbor International Fund, Harbor International Fund II, Harbor
Global Equity Fund, Harbor Bond Fund, Harbor Short Duration Fund and Harbor
Money Market Fund, respectively.

The Trust reimburses Harbor Capital for certain legal expenses incurred by
Harbor Capital with respect to the Trust. Such amounts aggregated $25 for the
six-month period ended April 30, 2002.

DISTRIBUTOR

HCA Securities, Inc. ("HCA Securities"), a wholly-owned subsidiary of
Harbor Capital, is the distributor for Harbor Fund shares. Harbor Fund does not
reimburse the distributor for expenses.

SHAREHOLDERS

On April 30, 2002, Harbor Capital, HCA Securities and Harbor Transfer, Inc.
held the following shares of beneficial interest in the Funds:

<Table>
<Caption>
HARBOR CAPITAL,
HCA SECURITIES AND
HARBOR TRANSFER
HARBOR DOMESTIC EQUITY FUNDS ------------------

Harbor Capital Appreciation Fund.......................... 4,280
Harbor Mid Cap Growth Fund................................ 306,556
Harbor Growth Fund........................................ 42,422
Harbor Small Cap Growth Fund.............................. 201,734
Harbor Large Cap Value Fund............................... 11,577
Harbor Mid Cap Value Fund................................. 200,000
Harbor Small Cap Value Fund............................... 200,000
HARBOR INTERNATIONAL EQUITY FUNDS
Harbor International Fund................................. 1,291
Harbor International Fund II.............................. 248,099
Harbor International Growth Fund.......................... 48,375
Harbor Global Equity Fund................................. 505,652
HARBOR FIXED INCOME FUNDS
Harbor Bond Fund.......................................... 21,608
Harbor Short Duration Fund................................ 12,516
Harbor Money Market Fund.................................. 30,696,864
</Table>

TRANSFER AGENT

Harbor Transfer, Inc., a wholly-owned subsidiary of Harbor Capital, is the
shareholder servicing agent for the Funds. Fees incurred for these transfer
agent services for the six-month period ended April 30, 2002 totaled $3,595.

"NON-INTERESTED" TRUSTEES

HARBOR FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED

(Currency in Thousands)

NOTE 5--TAX INFORMATION

<Table>
<Caption>
GROSS UNREALIZED NET UNREALIZED
------------------------------ APPRECIATION/
IDENTIFIED COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
--------------- ------------ -------------- --------------

HARBOR DOMESTIC EQUITY FUNDS
Harbor Capital Appreciation Fund........................ $6,075,700 $ 731,864 $(456,985) $ 274,879
Harbor Mid Cap Growth Fund.............................. 14,801 1,011 (2,071) (1,060)
Harbor Growth Fund...................................... 150,519 27,383 (59,217) (31,834)
Harbor Small Cap Growth Fund............................ 43,043 5,000 (1,390) 3,610
Harbor Large Cap Value Fund............................. 161,243 21,962 (4,399) 17,563
Harbor Mid Cap Value Fund............................... 3,241 204 (57) 147
Harbor Small Cap Value Fund............................. 7,545 720 (123) 597
HARBOR INTERNATIONAL EQUITY FUNDS
Harbor International Fund............................... 2,613,754 1,384,549 (155,144) 1,229,405
Harbor International Fund II............................ 74,022 9,192 (9,589) (397)
Harbor International Growth Fund........................ 374,597 21,880 (5,208) 16,672
Harbor Global Equity Fund............................... 7,787 473 (729) (256)
HARBOR FIXED INCOME FUNDS
Harbor Bond Fund........................................ 1,453,123 17,547 (9,605) 7,942
Harbor Short Duration Fund.............................. 101,367 853 (155) 698
</Table>

NOTE 6--ADDITIONAL INFORMATION

(This document must be preceded or accompanied by a Prospectus.)
73

<Table>

TRUSTEES AND OFFICERS SHAREHOLDER SERVICING AGENT

DAVID G. VAN HOOSER Chairman and Trustee HARBOR TRANSFER, INC.
P.O. Box 10048
HOWARD P. COLHOUN Trustee Toledo, Ohio 43699-0048
1-800-422-1050
JOHN P. GOULD Trustee
CUSTODIAN
RODGER F. SMITH Trustee
STATE STREET BANK AND TRUST COMPANY
JAMES M. WILLIAMS President P.O. Box 1713
Boston, MA 02105
CONSTANCE L. SOUDERS Vice President and Treasurer
INDEPENDENT AUDITORS
KAREN B. WASIL Secretary
ERNST & YOUNG LLP
INVESTMENT ADVISER 200 Clarendon Street
Boston, MA 02116
HARBOR CAPITAL ADVISORS, INC.
One SeaGate LEGAL COUNSEL
Toledo, OH 43666
HALE AND DORR LLP
DISTRIBUTOR AND PRINCIPAL UNDERWRITER 60 State Street
Boston, MA 02109
HCA SECURITIES, INC.
One SeaGate
Toledo, OH 43666
(419) 247-2477
</Table>

[HARBOR FUND LOGO]
One SeaGate
Toledo, Ohio 43666
1-800-422-1050
www.harborfund.com

06/2002/295,000 [RECYCLED PAPER LOGO]
recycled paper

PROSPECTUS

[HARBOR FUND LOGO]

MARCH 1, 2002

-------------------------------------------------------------------------------
HARBOR FUND

The Securities and Exchange
Commission has not approved any
fund's shares as an investment or
determined whether this prospectus
is accurate or complete. Anyone who
tells you otherwise is committing a
crime.

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

<Table>

OVERVIEW OF FUNDS 1

RISK/RETURN SUMMARY

DOMESTIC EQUITY
Harbor Capital Appreciation Fund 2
Harbor Mid Cap Growth Fund 4
Harbor Growth Fund 6
Harbor Small Cap Growth Fund 8
Harbor Large Cap Value Fund 10
Harbor Mid Cap Value Fund 12
Harbor Small Cap Value Fund 14

INTERNATIONAL EQUITY
Harbor International Fund 16
Harbor International Fund II 18
Harbor International Growth Fund 20
Harbor Global Equity Fund 22

FIXED INCOME
Harbor Bond Fund 24
Harbor Short Duration Fund 26
Harbor Money Market Fund 28

THE FUNDS' INVESTMENTS

Additional Information About the Funds' Principal
Investments 30
Information About the Funds' Other Investments 31

THE ADVISER AND SUBADVISERS 32

YOUR HARBOR FUND ACCOUNT

How to Purchase Shares of Harbor Fund 42
How to Exchange Shares of Harbor Fund 44
How to Sell Shares of Harbor Fund 45

SHAREHOLDER AND ACCOUNT POLICIES

Share Price 46
Valuation of Shares 46
Paying for Shares by Check 46
Redemptions in Kind 46
Accounts with Small Balances 46
Signature Guarantees 46
Statements and Reports 46
Dividends, Distributions and Taxes 47

INVESTOR SERVICES

www.harborfund.com 48
AccessHarbor 48
Harbor Navigator 48
Tele Transactions 48
Dividend Exchange Plan 48
Transfer on Death Registration 48
Checkwriting for Money Market Fund 49
Automatic Investment Plan 49
Automatic Exchange Plan 49
Automatic Withdrawal Plan 49
Retirement Accounts 49
Householding 49

FINANCIAL HIGHLIGHTS 50

HARBOR FUND DETAILS 54

HARBOR'S PRIVACY STATEMENT 55

FOR MORE INFORMATION Back Cover
</Table>

OVERVIEW OF FUNDS
- --------------------------------------------------------------------------------

THE FUNDS' INVESTMENT STYLES

Each Harbor fund has its own investment style. A portfolio of equity securities
provides a certain style based on the stocks' growth or value characteristics
and their market capitalizations. A portfolio of fixed income securities
provides a certain style based on quality and duration. These maps show you each
Harbor fund's investment style.

[DOMESTIC EQUITY GRAPH] [INTERNATIONAL EQUITY GRAPH] [FIXED INCOME GRAPH]
*HGEF holds
both
domestic
and
International
securities

Legend:
HCAF Harbor Capital Appreciation Fund

HMCGF Harbor Mid Cap Growth Fund

HGF Harbor Growth Fund

HSCGF Harbor Small Cap Growth Fund

HLCVF Harbor Large Cap Value Fund

HMCVF Harbor Mid Cap Value Fund

HSCVF Harbor Small Cap Value Fund

HIF Harbor International Fund

HIF2 Harbor International Fund II
HIGF Harbor International Growth Fund

HGEF Harbor Global Equity Fund

HBF Harbor Bond Fund

HSDF Harbor Short Duration Fund

HMMF Harbor Money Market Fund

- --------------------------------------------------------------------------------

WHO MAY WANT TO INVEST IN THE HARBOR FUNDS

The Harbor equity funds may be an appropriate investment for investors:
- - With a long-term time horizon and no need for current income.
- - Willing to tolerate more risk than fixed income investments.
- - Willing to assume the risk of changes in the value of common stocks and, in
the case of the international and global equity funds, the risks of investing
in foreign markets.

The Harbor fixed income funds may be an appropriate investment for investors:
- - Looking to allocate a portion of their assets to fixed income securities.
- - Looking for an investment with a lower risk than equity funds.
- - Seeking current income.
- - Willing to assume the risk of changing interest rates and other factors, such
as duration, credit quality and prepayment risk, that affect the value of
bonds.

- --------------------------------------------------------------------------------

WHAT IS THE ROLE OF HARBOR CAPITAL ADVISORS

Harbor Capital Advisors, Inc., a registered investment adviser, is the sponsor
of the Harbor family of 14 no-load mutual funds, each with different risk and
potential return characteristics. A subsidiary of Robeco Groep N.V., Harbor
Capital Advisors selects and oversees subadvisers who are responsible for
managing the assets of each fund.

- --------------------------------------------------------------------------------

YOU SHOULD KNOW

An investment in the funds is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

Harbor Fund's trustees may change a fund's investment goal without shareholder
approval. Pursuant to an exemptive order granted by the SEC, shareholders are
not required to vote to approve a new or amended subadvisory agreement.

RISK/RETURN SUMMARY -- DOMESTIC EQUITY

HARBOR CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INVESTMENT GOAL

Long-term growth of capital.

PRINCIPAL STYLE CHARACTERISTICS
Mid to large cap growth stocks with more volatility than the market.

PORTFOLIO MANAGER
SPIROS SEGALAS
Jennison Associates LLC

466 Lexington Avenue

New York, NY 10017

Sig Segalas has managed the fund since 1990. He has been the president of
Jennison since 1993 and the chief investment officer since 1973. He is a
director and founding member of Jennison.

- --------------------------------------------------------------------------------

PRINCIPAL STRATEGIES AND INVESTMENTS

The fund invests primarily in equity securities, principally common stocks,
preferred stocks, rights and depositary receipts, of U.S. companies with market
capitalizations of at least $1 billion and above average prospects for growth.

In selecting stocks for the fund's portfolio, the subadviser looks for companies
with the following financial characteristics:
- - Superior absolute and relative earnings growth
- - Superior sales growth, improving sales momentum and high levels of unit growth
- - High or improving profitability
- - Strong balance sheets

In addition, the subadviser looks for companies that have actually achieved or
exceeded expected earnings results and are attractively valued relative to their
growth prospects.

The subadviser focuses on stocks of companies that have distinct attributes such
as:
- - Strong market position with a defensible franchise
- - Unique marketing competence
- - Strong research and development leading to superior new product flow
- - Capable and disciplined management

The subadviser prefers companies that are in the early stages of demonstrating
the above financial and other characteristics.

Stocks of mid and large cap companies in the fund's portfolio are expected to
maintain or achieve above average earnings growth. The fund may invest up to 20%
of its assets in the securities of foreign issuers, including issuers located or
doing business in emerging markets.

- --------------------------------------------------------------------------------

FUND PERFORMANCE
(for the periods ended December 31)

The bar chart and table indicate the risks of investing in the fund. The bar
chart shows changes in the performance of the fund from year-to-year for the
past ten years.

[FUND PERFORMANCE GRAPH]

<Table>
<Caption>
FUND PERFORMANCE
----------------

'92 9.98
'93 12.12
'94 3.37
'95 37.82
'96 19.85
'97 31.46
'98 36.80
'99 45.81
'00 -17.00
'01 -17.74
</Table>

FUND'S BEST AND WORST CALENDAR QUARTERS
(for the past 10 years)

<Table>
<Caption>
Total Return Quarter/Year
- ---------------------------------------------------------------

Best 30.01% 4th/1998

Worst -19.53% 3rd/2001
- ---------------------------------------------------------------
</Table>

AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 2001)

The table shows how the fund's average annual returns for different calendar
periods compare to those of a widely recognized, unmanaged index of U.S. common
stock prices. After-tax returns shown in the table are calculated using the
historical highest individual federal marginal income tax rates and do not
reflect the impact of state and local taxes. Actual after-tax returns depend on
an investor's tax situation and may differ from those shown. The after-tax
returns shown are not relevant to investors who hold their fund shares through
tax-deferred arrangements such as 401(k) plans or individual retirement
accounts. The fund's past performance before and after taxes, is not necessarily
an indication of how the fund will perform in the future.

<Table>
<Caption>
One Five Ten
Year Years Years
- -----------------------------------------------------

CAPITAL APPRECIATION
FUND
Return Before Taxes -17.74% 12.35% 14.19%
Return After Taxes on
Distributions -17.78% 10.08% 12.25%
Return After Taxes on
Distributions and Sale
of Fund Shares -10.80% 10.09% 11.71%
- -----------------------------------------------------
COMPARATIVE INDEX
S&P 500
(reflects no deduction
for fees, expenses or
taxes) -11.88% 10.70% 12.94%
- -----------------------------------------------------
- -----------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- DOMESTIC EQUITY

HARBOR CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------

PRINCIPAL RISKS

Stocks do fluctuate in price and the value of your investment in the fund may go
down. This means that you could lose money on your investment in the fund or the
fund may not perform as well as other possible investments if any of the
following occurs:
- - A drop in U.S. or foreign stock markets.
- - The market favors small cap stocks over medium and large cap stocks, or value
over growth stocks.
- - An adverse event, such as an unfavorable earnings report, depresses the value
of a particular company's stock.
- - The subadviser's judgments about the attractiveness, value and potential
appreciation of particular companies' stocks prove to be incorrect.
- - Prices of the fund's foreign securities go down because of unfavorable changes
in foreign currency exchange rates, foreign government actions, political
instability or the more limited availability of accurate information about
foreign issuers. These risks are more severe for issuers in emerging market
countries.

The fund's performance may be more volatile because it may invest in mid cap
stocks. Mid cap companies may have more limited product lines, markets and
financial resources than larger cap companies. They may also have shorter
operating histories and more volatile businesses. Mid cap stocks tend to trade
in a wider price range than large cap stocks. In addition, it may be harder to
sell these stocks, particularly in large blocks, which can reduce their selling
price.

- --------------------------------------------------------------------------------

FEES AND EXPENSES
(based on year ended October 31, 2001)

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

<Table>

- -------------------------------------------------

SHAREHOLDER FEES None
(fees paid directly from your
investment)

ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund
assets)
Management fees 0.60%
Rule 12b-1 distribution fees None
Other expenses(1) 0.06%
-----
Total annual fund operating expenses 0.66%
- -------------------------------------------------
</Table>

(1) Such as transfer agency, custody, professional and registration fees.

EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

The example assumes that:
- - You invest $10,000 in the fund for the time periods indicated;
- - You redeem at the end of each period;
- - Your investment has a 5% return each year; and
- - The fund's operating expenses remain the same.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

<Table>
<Caption>
One Three Five Ten
Year Years Years Years
- ---------------------------------------------------------------------

Capital Appreciation
Fund $68 $213 $374 $851
- ---------------------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- DOMESTIC EQUITY

HARBOR MID CAP GROWTH FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INVESTMENT GOAL
Long-term growth of capital.

PRINCIPAL STYLE CHARACTERISTICS

Mid cap growth stocks demonstrating potential for extraordinary earnings growth.

PORTFOLIO MANAGERS

WILLIAM JEFFERY

KENNETH MCCAIN
DAVID BARATTA
Wall Street Associates

1200 Prospect Street
Suite 100
La Jolla, CA 92037

William Jeffery, Kenneth McCain, and David Baratta have co-managed the fund
since its inception in 2000. Mr. Jeffery serves as president and chairman of the
board of directors of Wall Street Associates. Mr. McCain is a member of Wall
Street's board of directors. Both were previously employed at California First
Capital Management. Mr. Baratta joined the firm in 1999 and was previously
employed at Morgan Grenfell, Inc.
- --------------------------------------------------------------------------------

PRINCIPAL STRATEGIES AND INVESTMENTS

The fund invests in equity securities, principally common stocks, preferred
stocks, rights and depositary receipts, of companies with market capitalizations
in the approximate range of $1 billion to $10 billion at the time of initial
investment.

In general, the fund stays fully invested in stocks and does not try to time the
market. The subadviser uses a bottom up approach, employing fundamental and
qualitative criteria to identify individual companies for potential investment
by the fund's portfolio. The subadviser's research also includes initial
personal interviews and continuing contacts with management of a company. The
subadviser has contact with a broad network of national and regional analysts
and brokers specializing in smaller, growth companies.

In selecting stocks for the fund's portfolio, the subadviser looks for companies
with the following characteristics:
- - Superior earnings growth
- - High probability for positive earnings
- - Strong balance sheet
- - Attractive valuation as measured by price/earnings to growth ratio

The subadviser believes that these characteristics are the result of distinct
attributes, which it looks for in potential investments, such as:
- - Capable and accessible management
- - High barriers to entry and resistance to recessionary forces
- - Company offers related products and services
- - Innovative business concept

- --------------------------------------------------------------------------------

FUND PERFORMANCE
(for the periods ended December 31)

The bar chart and table indicate the risks of investing in the fund. The bar
chart shows changes in the performance of the fund from year-to-year since its
founding.
[FUND PERFORMANCE GRAPH]

<Table>
<Caption>
FUND PERFORMANCE
----------------

'01 -25.62
</Table>

FUND'S BEST AND WORST CALENDAR QUARTERS
(for the past 10 years)

<Table>
<Caption>
Total Return Quarter/Year
- -----------------------------------------------------

Best 30.25% 4th/2001

Worst -34.77% 3rd/2001
- -----------------------------------------------------
</Table>

AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 2001)

<Table>
<Caption>
Since
One Five Inception
Year Years (11/01/2000)
- -----------------------------------------------------------

MID CAP GROWTH FUND
Return Before Taxes -25.62% N/A -32.43%
Return After Taxes on
Distributions -25.62% N/A -32.43%
Return After Taxes on
Distributions and Sale of
Fund Shares -15.60% N/A -25.76%
- -----------------------------------------------------------
COMPARATIVE INDEX
Russell Midcap(R) Growth
(reflects no deduction
for fees, expenses or
taxes) -20.15% N/A -30.16%
- -----------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- DOMESTIC EQUITY

HARBOR MID CAP GROWTH FUND
- --------------------------------------------------------------------------------

PRINCIPAL RISKS

Because the fund invests primarily in stocks of mid cap companies, the fund's
performance may be more volatile than a fund which invests primarily in stocks
of large cap companies. Mid cap companies may have more limited product lines,
markets and financial resources than larger cap companies. They may also have
shorter operating histories and more volatile businesses. Mid cap stocks tend to
trade in a wider price range than large cap stocks. In addition, it may be
harder to sell these stocks, particularly in large blocks, which can reduce
their selling price.

- --------------------------------------------------------------------------------

FEES AND EXPENSES
(based on year ended October 31, 2001)
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

<Table>

- -------------------------------------------------
SHAREHOLDER FEES None
(fees paid directly from your
investment)
ANNUAL FUND OPERATING EXPENSES(1)
(expenses that are deducted from fund
assets)
Management fees 0.75%
Rule 12b-1 distribution fees None
Other expenses(2) 0.65%
-----
Total annual fund operating expenses 1.40%
- -------------------------------------------------
</Table>

(1) Because the adviser has voluntarily agreed to limit the fund's management
fees and operating expenses the fund's actual expenses were:

<Table>

Management fees 0.55%
Other expenses 0.65%
-----
Total annual fund operating
expenses 1.20%
</Table>

(2) Such as transfer agency, custody, professional and registration fees.

EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

This example assumes that:
- - You invest $10,000 in the fund for the time periods indicated;
- - You redeem at the end of each period;
- - Your investment has a 5% return each year; and
- - The fund's operating expenses remain the same.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

<Table>
<Caption>
One Three Five Ten
Year Years Years Years
- -----------------------------------------------------------------

Mid Cap Growth Fund $144 $452 $793 $1,805
- -----------------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- DOMESTIC EQUITY

HARBOR GROWTH FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INVESTMENT GOAL
Long-term growth of capital.

PRINCIPAL STYLE CHARACTERISTICS
Small to mid cap growth stocks with high volatility.

PORTFOLIO MANAGER
PETER WELLES
Emerging Growth
Advisors, Inc.

401 E. Pratt Street,
Suite 211
Baltimore, MD 21202

Pete Welles has managed the fund since 1997. He has been president of Emerging
Growth Advisors since 1993. Before that he was a general partner of Emerging
Growth Partners, L.P.
- --------------------------------------------------------------------------------

PRINCIPAL STRATEGIES AND INVESTMENTS

The fund invests primarily in equity securities, principally common stocks,
preferred stocks, rights and depositary receipts, of companies with estimated
revenues of $500 million or less at the time of initial investment.

In general, the fund stays fully invested in stocks and does not try to time the
market. The subadviser uses a bottom up approach, researching and evaluating
individual companies, for potential investment in the fund's portfolio.
Individual stock selection will determine industries in which the fund invests.
The subadviser's research includes initial personal interviews and continuing
contacts with top management of a company.

In selecting stocks for the fund's portfolio, the subadviser looks for companies
with the following characteristics:
- - Capable and accessible management committed to above average earnings growth
- - Dominant, unrecognized or innovative products or services with long-term
growth potential

- - Favorable potential financial strength and growth rates

Under normal circumstances, the fund intends to invest substantially all, but
must invest at least 65%, of its net assets in a diversified portfolio of equity
securities. The fund expects to invest in approximately 40-60 companies. The
fund invests primarily in both small and mid cap companies with market
capitalization that range from $100 million to $10 billion. The fund may also
engage in short sales, which is the sale by the fund of a borrowed security, of
up to 25% of its assets to take advantage of anticipated declines in stock
prices or to protect a profit in a portfolio security. Because the fund is
obligated to replace the borrowed security, the fund will benefit from the short
sale if the price of the security declines before it is replaced.

- --------------------------------------------------------------------------------

FUND PERFORMANCE
(for the periods ended December 31)

The bar chart and table indicate the risks of investing in the fund. The bar
chart shows changes in the performance of the fund from year-to-year for the
past ten years.

[FUND PERFORMANCE GRAPH]

<Table>
<Caption>
FUND PERFORMANCE
----------------

'92 -6.34
'93 18.40
'94 -11.42
'95 38.18
'96 11.05
'97 20.87
'98 11.39
'99 95.39
'00 -13.00
'01 -31.56
</Table>

FUND'S BEST AND WORST CALENDAR QUARTERS
(for the past 10 years)

<Table>
<Caption>
Total Return Quarter/Year

- ------------------------------------------------

Best 53.74% 4th/1999

Worst -36.51% 3rd/2001
- ------------------------------------------------
</Table>

The fund has changed its benchmark index from the S&P 500 index to the Russell
Midcap(R) Growth index because the S&P 500 contains equities with large market
capitalization without regard to style. The Russell Midcap(R) Growth index
contains equities with smaller market capitalization and a growth style, making
the Russell Midcap(R) Growth index a more accurate comparison for the fund.

AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 2001)

<Table>
<Caption>
One Five Ten
Year Years Years
- ---------------------------------------------------------

GROWTH FUND
Return Before Taxes -31.56% 9.39% 8.97%
Return After Taxes on
Distributions -31.56% 7.35% 6.35%
Return After Taxes on
Distributions and Sale of
Fund Shares -19.22% 7.39% 6.53%
- ---------------------------------------------------------
COMPARATIVE INDEX
Russell Midcap(R) Growth
(reflects no deduction for
fees, expenses or taxes) -20.15% 9.02% 11.10%
S&P 500
(reflects no deduction for
fees, expenses or taxes) -11.88% 10.70% 12.94%
- ---------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- DOMESTIC EQUITY

HARBOR GROWTH FUND
- --------------------------------------------------------------------------------

PRINCIPAL RISKS

- - The market favors value stocks or large cap stocks over growth stocks or small
cap stocks.

- - An adverse event, such as an unfavorable earnings report, depresses the value
of a particular company's stock.
- - The subadviser's judgments about the attractiveness, value and potential
appreciation of particular companies' stocks prove to be incorrect.
- - The prices of securities sold short increases, causing the fund to pay more to
replace the borrowed securities than the fund received on the sale of the
securities.

The fund's performance may be more volatile because it invests primarily in
small to mid cap stocks. Smaller companies may have limited product lines,
markets and financial resources. They may also have shorter operating histories
and more volatile businesses. Small and mid cap stocks tend to trade in a wider
price range than large cap stocks. In addition, it may be harder to sell these
stocks, particularly in large blocks, which can reduce their selling price.

Because the fund typically invests in approximately 40-60 companies, an adverse
event affecting a particular company may hurt the fund's performance more than
if it had invested in a larger number of companies.

- --------------------------------------------------------------------------------

FEES AND EXPENSES
(based on year ended October 31, 2001)

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

<Table>

- -------------------------------------------------

SHAREHOLDER FEES None
(fees paid directly from your
investment)

ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund
assets)
Management fees 0.75%
Rule 12b-1 distribution fees None
Other expenses(1) 0.20%
-----
Total annual fund operating expenses 0.95%
- -------------------------------------------------
</Table>

(1) Such as transfer agency, custody, professional and registration fees.

EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

<Table>
<Caption>
One Three Five Ten
Year Years Years Years
- ---------------------------------------------------------------------

Growth Fund $97 $307 $538 $1,225
- ---------------------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- DOMESTIC EQUITY

HARBOR SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INVESTMENT GOAL

Long-term growth of capital.

PRINCIPAL STYLE CHARACTERISTICS
Small cap growth stocks demonstrating consistent or accelerating earnings
growth.

PORTFOLIO MANAGER
WILLIAM MUGGIA
Westfield Capital Management Company

LLC

One Financial Center
23rd Floor

Boston, MA 02111

William Muggia has managed the fund since its inception in 2000. He is
president, chief investment officer, and a member of the board of directors of
Westfield Capital Management. Prior to joining Westfield in 1994, he worked in
the Technology Investment Banking Group at Alex. Brown & Sons.

- --------------------------------------------------------------------------------

PRINCIPAL STRATEGIES AND INVESTMENTS

The fund invests in equity securities, principally common stocks, preferred
stocks, rights and depositary receipts, of companies with market capitalizations
in the approximate range of $100 million to $1.5 billion at the time of initial
investment.

In general, the fund stays fully invested in stocks and does not try to time the
market. The subadviser uses a bottom up approach by, first, identifying
companies that meet strict fundamental criteria and then performing a
qualitative review on each identified company to select those companies for
investment in the fund's portfolio. This means that individual stock selections
primarily determine the fund's sector weightings. The subadviser's research also
includes initial personal interviews and continuing contacts with company
management.

In selecting stocks for the fund's portfolio, the subadviser looks for companies
with the following characteristics:
- - Accelerating earnings momentum
- - Strong earnings growth
- - Strong balance sheet
- - Attractive valuation as measured by price/earnings to growth ratio

In addition, the subadviser prefers companies with the following qualitative
characteristics:
- - Superior company management
- - Significant insider ownership
- - Unique market position and broad market opportunities
- - Solid financial controls and accounting

- --------------------------------------------------------------------------------

FUND PERFORMANCE
(for the periods ended December 31)

The bar chart and table indicate the risks of investing in the fund. The bar
chart shows changes in the performance of the fund from year-to-year since its
founding.

[FUND PERFORMANCE GRAPH]

<Table>
<Caption>
FUND PERFORMANCE
----------------

'01 2.29
</Table>

FUND'S BEST AND WORST CALENDAR QUARTERS
(for the past 10 years)

<Table>
<Caption>
Total Return Quarter/Year
- -----------------------------------------------------

Best 19.22% 2nd/2001

Worst -15.76% 3rd/2001
- -----------------------------------------------------
</Table>

AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 2001)

<Table>
<Caption>
Since
One Five Inception
Year Years (11/01/2000)
- ------------------------------------------------------------

SMALL CAP GROWTH FUND
Return Before Taxes 2.29% N/A 6.06%
Return After Taxes on
Distributions 2.29% N/A 6.06%
Return After Taxes on
Distributions and Sale of
Fund Shares 1.40% N/A 4.85%
- ------------------------------------------------------------
COMPARATIVE INDEX
Russell 2000(R) Growth
(reflects no deduction for
fees, expenses or taxes) -9.23% N/A -18.44%
- ------------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- DOMESTIC EQUITY

HARBOR SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------

PRINCIPAL RISKS

The fund's performance may be more volatile because it invests primarily in
small cap stocks. Smaller companies may have limited product lines, markets and
financial resources. They may also have shorter operating histories and more
volatile businesses. Small cap stocks tend to trade in a wider price range than
larger cap stocks. In addition, it may be harder to sell these stocks,
particularly in large blocks, which can reduce their selling price.

Because the fund typically invests in about 50 companies, an adverse event
affecting a particular company may hurt the fund's performance more than if it
had invested in a larger number of companies.

- --------------------------------------------------------------------------------

FEES AND EXPENSES
(based on year ended October 31, 2001)
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

<Table>

- -------------------------------------------------

SHAREHOLDER FEES None
(fees paid directly from your
investment)

ANNUAL FUND OPERATING EXPENSES(1)
(expenses that are deducted from fund
assets)
Management fees 0.75%
Rule 12b-1 distribution fees None
Other expenses(2) 0.65%
-----
Total annual fund operating expenses 1.40%
- -------------------------------------------------
</Table>

(1) Because the adviser has voluntarily agreed to limit the fund's management
fees and operating expenses, the fund's actual expenses were:

<Table>

Management fees 0.55%
Other expenses 0.65%
-----
Total annual fund operating
expenses 1.20%
</Table>

(2) Such as transfer agency, custody, professional and registration fees.

EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

<Table>
<Caption>
One Three Five Ten
Year Years Years Years
- -----------------------------------------------------------------

Small Cap Growth Fund $144 $452 $793 $1,805
- -----------------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- DOMESTIC EQUITY

HARBOR LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INVESTMENT GOAL
Long-term total return.

PRINCIPAL STYLE CHARACTERISTICS
Large cap value stocks.

PORTFOLIO MANAGER
JEFFREY SHAW
Armstrong Shaw
Associates, Inc.

45 Grove Street
New Canaan, CT 06840

Jeffrey Shaw has managed the fund since September 20, 2001. He is the chief
investment officer of Armstrong Shaw and has served as its chairman since 1999
and as its president since 1989.

On September 20, 2001, the fund changed its name from "Harbor Value Fund" to
"Harbor Large Cap Value Fund".

- --------------------------------------------------------------------------------

PRINCIPAL STRATEGIES AND INVESTMENTS

In selecting stocks for the fund's portfolio, the subadviser looks for companies
with the following characteristics:
- - Earnings per share growth greater than 10%
- - Return on equity that is 15% or better

- - Relative price earnings multiple less than the S&P 500 index

- - Selling at a substantial discount to its intrinsic value

In addition, the subadviser prefers companies with the following qualitative
characteristics:

- - Dominant brand names

- - Low cost provider or niche player
- - Strong management with a successful track record

- --------------------------------------------------------------------------------

FUND PERFORMANCE
(for the periods ended December 31)

The bar chart and table indicate the risks of investing in the fund. The bar
chart shows changes in the performance of the fund from year-to-year for the
past ten years.

[FUND PERFORMANCE GRAPH]

<Table>
<Caption>
FUND PERFORMANCE
----------------

'92 7.46
'93 8.38
'94 0.70
'95 35.37
'96 20.02
'97 31.20
'98 6.92
'99 7.58
'00 7.16
'01 4.10
</Table>

FUND'S BEST AND WORST CALENDAR QUARTERS
(for the past 10 years)

<Table>
<Caption>
Total Return Quarter/Year
- ----------------------------------------------------

Best 15.24% 4th/1998

Worst -13.68% 3rd/1998
- ----------------------------------------------------
</Table>

The fund changed its benchmark index from the S&P 500 index to the Russell
1000(R) Value index because the S&P 500 contains equities with large market
capitalization without regard to style. The Russell 1000(R) Value index contains
equities with large market capitalization and a value style, making the Russell
1000(R) Value index a more accurate comparison for the fund.

AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 2001)

<Table>
<Caption>
One Five Ten
Year Years Years
- ---------------------------------------------------------

LARGE CAP VALUE FUND
Return Before Taxes 4.10% 10.98% 12.36%
Return After Taxes on
Distributions 3.50% 6.99% 8.37%
Return After Taxes on
Distributions and Sale of
Fund Shares 2.47% 7.06% 8.25%
- ---------------------------------------------------------
COMPARATIVE INDEX
Russell 1000(R) Value
(reflects no deduction for
fees, expenses or taxes) -5.59% 11.13% 14.16%
S&P 500
(reflects no deduction for
fees, expenses or taxes) -11.88% 10.70% 12.94%
- ---------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- DOMESTIC EQUITY

HARBOR LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------

PRINCIPAL RISKS

Because the fund typically invests in about 25 to 40 companies, an adverse event
affecting a particular company may hurt the fund's performance more than if it
had invested in a larger number of companies.

- --------------------------------------------------------------------------------

FEES AND EXPENSES
(based on year ended October 31, 2001)
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

<Table>

- -------------------------------------------------
SHAREHOLDER FEES None
(fees paid directly from your
investment)
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund
assets)
Management fees 0.60%
Rule 12b-1 distribution fees None
Other expenses(1) 0.17%
-----
Total annual fund operating expenses 0.77%
- -------------------------------------------------
</Table>

(1) Such as transfer agency, custody, professional and registration fees.

EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

<Table>
<Caption>
One Three Five Ten
Year Years Years Years

- ---------------------------------------------------------------------

Large Cap Value Fund $79 $249 $436 $993
- ---------------------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- DOMESTIC EQUITY

HARBOR MID CAP VALUE FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INVESTMENT GOAL
Long-term total return.
PRINCIPAL STYLE CHARACTERISTICS
Mid cap value stocks of companies with improving fundamentals and priced at a
discount to their peers.

PORTFOLIO MANAGER

TIMOTHY G. DALTON, JR.

KENNETH J. GREINER

BRUCE H. GELLER

PETER A. GULLI

Dalton, Greiner, Hartman, Maher & Co.

565 Fifth Avenue
Suite 2101

New York, NY 10017

Tim Dalton, Ken Greiner, Bruce Geller and Peter Gulli have co-managed the fund
since its inception in 2002. Mr. Dalton has been the Chairman of DGHM since
1990. Mr. Greiner has been the president of DGHM since 1990. Mr. Geller is an
executive vice president and has been with DGHM since 1992. Mr. Gulli is a vice
president and has been at DGHM since 1999.

- --------------------------------------------------------------------------------

PRINCIPAL STRATEGIES AND INVESTMENTS

The fund invests primarily in equity securities, principally common stocks,
preferred stocks, rights and depositary receipts, of companies with market
capitalizations in the approximate range of $1 billion to $10 billion at the
time of initial investment.

In general, the fund stays fully invested in stocks and does not try to time the
market. The subadviser uses a bottom up approach, employing fundamental and
qualitative criteria to identify individual companies for potential investment
in the fund's portfolio. The fund's sector weightings are a result of, and
secondary to, individual stock selections. The subadviser's research also
includes initial personal interviews and continuing contacts with top management
of a company and the company's competitors and suppliers.

In selecting stocks for the fund's portfolio, the subadviser looks for companies
with the following characteristics:
- - Attractive valuation with above average profitability
- - Strong balance sheet
- - Free cash flow generation
- - Stable to improving industry fundamentals

In addition, the subadviser prefers companies with the following qualitative
characteristics:
- - Market leader: high/improving market share
- - Proven management with the talent to manage a larger company
- - Large insider ownership/insiders buying

The fund intends to invest substantially all, but must invest at least 80%, of
its net assets, plus borrowings for investment purposes, in a diversified
portfolio of equity securities of mid cap companies. The investment strategy of
investing at least 80% of its net assets in mid cap equity securities may not be
changed unless the fund provides 60 days advance notice to its shareholders. The
fund expects to invest in approximately 30 to 40 companies.

- --------------------------------------------------------------------------------
FUND PERFORMANCE

Because the fund is newly organized and does not yet have a performance history,
the bar chart and total return tables are not provided. See page 36 for
historical subadviser composite performance information for accounts with
substantially similar investment objectives, policies and strategies.

- --------------------------------------------------------------------------------
PRINCIPAL RISKS

Because the fund invests primarily in stocks of mid cap companies, the fund's
performance may be more volatile than a fund which invests primarily in stocks
of large cap companies. Mid cap companies may have more limited product lines,
markets and financial resources than large cap companies. They may also have
shorter operating histories and more volatile businesses. Mid cap stocks tend to
trade in a wider price range than larger cap stocks. In addition, it may be
harder to sell these stocks, particularly in large blocks, which can reduce
their selling price.

Because the fund typically invests in about 30 to 40 companies, an adverse event
affecting a particular company may hurt the fund's performance more than if it
had invested in a larger number of companies.

RISK/RETURN SUMMARY -- DOMESTIC EQUITY

HARBOR MID CAP VALUE FUND
- --------------------------------------------------------------------------------

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

<Table>

- -------------------------------------------------

SHAREHOLDER FEES None
(fees paid directly from your
investment)

ANNUAL FUND OPERATING EXPENSES(1)
(expenses that are deducted from fund
assets)
Management fees 0.75%
Rule 12b-1 distribution fees None
Other expenses(2) 0.72%
-----
Total annual fund operating expenses 1.47%
- -------------------------------------------------
</Table>

(1) Because the adviser has voluntarily agreed to limit the fund's operating
expenses for the current year, the fund's actual expenses are estimated to
be:

<Table>

Management fees 0.55%
Other expenses 0.65%
-----
Total annual fund operating
expenses 1.20%
</Table>

(2) Such as transfer agency, custody, professional and registration fees. Such
fees are based on estimated amounts for the current fiscal year ending
October 31, 2002.

EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

<Table>
<Caption>
One Three Five Ten
Year Years Years Years
- ---------------------------------------------------------

Mid Cap Value Fund $151 $475 $833 $1,895
- ---------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- DOMESTIC EQUITY

HARBOR SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INVESTMENT GOAL
Long-term total return
PRINCIPAL STYLE CHARACTERISTICS
Small cap value stocks.
PORTFOLIO MANAGER

PAUL E. VIERA
EARNEST Partners LLC

75 Fourteenth Street
Suite 2300
Atlanta, GA 30309

Paul E. Viera has managed the fund since its inception in 2001. Mr. Viera is the
chief executive officer and founder of EARNEST Partners. Prior to founding
EARNEST Partners, he was a global partner at INVESCO and a senior member of its
investment committee.
- --------------------------------------------------------------------------------

PRINCIPAL STRATEGIES AND INVESTMENTS

The fund invests primarily in equity securities, principally common stocks,
preferred stocks, rights and depositary receipts, of companies selected from the
Russell 2000(R) universe with market capitalizations in the approximate range of
$250 million to $2.5 billion at the time of initial investment.

In general, the fund stays fully invested in stocks and does not try to time the
market. The subadviser employs a value based investment style by seeking to
identify companies with stocks trading at prices below what the subadviser
believes are their intrinsic values. The subadviser uses a bottom up approach,
employing fundamental and qualitative criteria to identify individual companies
for potential investment in the fund's portfolio. The subadviser utilizes
relationships with key analysts and industry experts to obtain unbiased and
unique research perspectives. The subadviser uses a statistical approach
designed to measure and control the prospect of substantially underperforming
the benchmark to seek to limit company specific risk in the fund's portfolio.

Under normal circumstances, the fund intends to invest substantially all, but
must invest a least 80%, of its net assets, plus borrowings for investment
purposes, in a diversified portfolio of equity securities of small cap
companies. The investment strategy of investing at least 80% of its net assets
in small cap equity securities may not be changed unless the fund provides 60
days advance notice to its shareholders. The fund expects to invest in
approximately 60 companies. The fund's sector weightings are a result of, and
secondary to, individual stock selections.

- --------------------------------------------------------------------------------
FUND PERFORMANCE

Because the fund is newly organized and does not yet have a performance history,
the bar chart and total return tables are not provided. See page 37 for
historical subadviser composite performance information for accounts with
substantially similar investment objectives, policies and strategies.

- --------------------------------------------------------------------------------
PRINCIPAL RISKS

Because the fund typically invests in approximately 60 companies, an adverse
event affecting a particular company may hurt the fund's performance more than
if it had invested in a larger number of companies.

RISK/RETURN SUMMARY -- DOMESTIC EQUITY

HARBOR SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

<Table>

- -------------------------------------------------

SHAREHOLDER FEES None
(fees paid directly from your
investment)

(1) Because the adviser has voluntarily agreed to limit the fund's operating
expenses for the current year, the fund's actual expenses are estimated to
be:

<Table>

Management fees 0.55%
Other expenses 0.65%
-----
Total annual fund operating
expenses 1.20%
</Table>

(2) Such as transfer agency, custody, professional and registration fees. Such
fees are based on estimated amounts for the current fiscal year ending
October 31, 2002.

EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

<Table>
<Caption>
One Three Five Ten
Year Years Years Years
- ---------------------------------------------------------

Small Cap Value Fund $151 $475 $833 $1,895
- ---------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- INTERNATIONAL EQUITY

HARBOR INTERNATIONAL FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INVESTMENT GOAL
Long-term total return, principally from growth of capital.
PRINCIPAL STYLE CHARACTERISTICS
International large cap value oriented stocks.
PORTFOLIO MANAGER
HAKAN CASTEGREN
Northern Cross Investments Limited
Clarendon House
2 Church Street
Hamilton, Bermuda HMDX

Hakan Castegren has managed the fund's portfolio since it started in 1987. Hakan
is the president of Northern Cross and was previously associated with Boston
Overseas Investors as a portfolio manager.
- --------------------------------------------------------------------------------

PRINCIPAL STRATEGIES AND INVESTMENTS

The fund invests primarily in equity securities, principally common stocks,
preferred stocks, rights and depositary receipts, of foreign companies,
including those located in emerging market countries. Companies in the fund's
portfolio generally have market capitalizations in excess of $1 billion.

In general, the fund stays fully invested in stocks and does not try to time the
market. The subadviser uses an analysis of economic and market data, as well as
its knowledge of each country's culture, to determine country and industry
allocations. Before selecting a country for investment, the subadviser analyzes
the stability of a country's currency and its political, social and economic
culture.

Subject to these allocations, the subadviser uses a value oriented, bottom up
approach, researching and evaluating individual companies, to select stocks for
the fund's portfolio. This research includes visiting companies around the world
and meeting with company management. The subadviser has contact with a worldwide
network of senior brokers and analysts.

In selecting stocks for the fund's portfolio, the subadviser also looks for
companies with the following characteristics:
- - Businesses that the subadviser believes offers value
- - Low price/earnings multiples relative to other stocks in each country/industry
- - Above average, long term earnings expectation not reflected in the price

The subadviser chooses approximately 70-90 stocks for the portfolio from a
select universe of stocks.

Under normal circumstances, the fund must invest in a minimum of three
countries. In the past, the fund has invested in as many as 20 or more countries
at a time.

The fund focuses on companies located in Europe, the Pacific Basin and emerging
industrialized countries whose economies and political regimes appear more
stable and are believed to provide some protection to foreign shareholders.

- --------------------------------------------------------------------------------

FUND PERFORMANCE
(for the periods ended December 31)

The bar chart and table indicate the risks of investing in the fund. The bar
chart shows changes in the performance of the fund from year-to-year for the
past ten years.

[FUND PERFORMANCE GRAPH]

<Table>
<Caption>
FUND PERFORMANCE
----------------

'92 -0.09
'93 45.42
'94 5.43
'95 16.06
'96 20.12
'97 15.49
'98 10.36
'99 23.89
'00 -4.97
'01 -12.25
</Table>

FUND'S BEST AND WORST CALENDAR QUARTERS
(for the past 10 years)

<Table>
<Caption>
Total Return Quarter/Year
- ---------------------------------------------------------------

Best 18.28% 4th/1998

Worst -16.64% 3rd/1998
- ---------------------------------------------------------------
</Table>

AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 2001)

The table shows how the fund's average annual returns for different calendar
periods compare to those of a widely recognized, unmanaged index of
international common stock prices. The fund's past performance does not
necessarily indicate how the fund will perform in the future. After-tax returns
shown in the table are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on an investor's tax situation and
may differ from those shown. The after-tax returns shown are not relevant to
investors who hold their fund shares through tax-deferred arrangements such as
401(k) plans or individual retirement accounts. The fund's past performance
before and after taxes, is not necessarily an indication of how the fund will
perform in the future.

<Table>
<Caption>
One Five Ten
Year Years Years
- -----------------------------------------------------

INTERNATIONAL FUND
Return Before Taxes -12.25% 5.66% 10.89%
Return After Taxes on
Distributions -12.87% 4.02% 9.62%
Return After Taxes on
Distributions and Sale of
Fund Shares -6.79% 4.49% 9.06%
- -----------------------------------------------------
COMPARATIVE INDEX
EAFE(1)
(reflects no deduction
for fees, expenses or
taxes) -21.44% 0.89% 4.46%
- -----------------------------------------------------
</Table>

(1) Morgan Stanley Capital International Europe, Australasia, Far East

RISK/RETURN SUMMARY -- INTERNATIONAL EQUITY

HARBOR INTERNATIONAL FUND
- --------------------------------------------------------------------------------

PRINCIPAL RISKS

The fund invests primarily in securities of foreign companies. Because of this,
there is a greater risk that the fund's share price will fluctuate more than if
the fund invested in domestic issuers. Prices of foreign securities may go down
if any of the following occurs:
- - Unfavorable foreign government actions, political, economic or market
instability or the absence of accurate information about foreign companies.
- - A decline in the value of foreign currencies relative to the U.S. dollar will
reduce the unhedged value of securities denominated in those currencies.
- - Foreign securities are sometimes less liquid and harder to value than
securities of U.S. issuers.

These risks are more severe for securities of issuers in emerging market
countries such as Eastern Europe, Latin America and the Pacific Basin.

Foreign brokerage and custodian fees may be higher than in the U.S.

- --------------------------------------------------------------------------------

FEES AND EXPENSES
(based on year ended October 31, 2001)

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

<Table>

- -------------------------------------------------

SHAREHOLDER FEES None
(fees paid directly from your
investment)

ANNUAL FUND OPERATING EXPENSES(1)
(expenses that are deducted from fund
assets)
Management fees 0.85%
Rule 12b-1 distribution fees None
Other expenses(2) 0.12%
-----
Total annual fund operating expenses 0.97%
- -------------------------------------------------
</Table>

(1) Because the adviser has voluntarily agreed to reduce the fund's management
fees, the fund's actual expenses were:

<Table>

Management fees 0.79%
Total annual fund operating
expenses 0.91%
</Table>

(2) Such as transfer agency, custody, professional and registration fees.

EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

<Table>
<Caption>
One Three Five Ten
Year Years Years Years
- ----------------------------------------------------------------------

International Fund $ 99 $313 $549 $1,251
- ----------------------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- INTERNATIONAL EQUITY

HARBOR INTERNATIONAL FUND II
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INVESTMENT GOAL
Long-term total return, principally from growth of capital.
PRINCIPAL STYLE CHARACTERISTICS
International mid to large cap value oriented stocks.
PORTFOLIO MANAGER
JAMES LATORRE
Summit International Investments, Inc.
125 Summer Street
Boston, MA 02110

Jim LaTorre has managed the fund since it started in 1996. Jim has been the
president of Summit since 1996 and before that was a vice president at Boston
Investor Services, Inc., an investment advisory firm.
- --------------------------------------------------------------------------------

PRINCIPAL STRATEGIES AND INVESTMENTS

The fund invests primarily in equity securities, principally common stocks,
preferred stocks, rights and depositary receipts, of foreign companies,
including those located in emerging market countries. Most securities have a
market capitalization of $1 billion or more, but the fund may invest in
companies with market capitalization of less than $1 billion.

In selecting stocks for the fund's portfolio, the subadviser also looks for
companies with the following characteristics:
- - Businesses that the subadviser understands
- - Potential to improve margins
- - Stock prices that appear to undervalue companies' assets or franchise values
- - Above average, long term earnings expectation not reflected in the stock price

Under normal circumstances, the fund must invest in a minimum of three
countries. In the past, the fund has invested in as many as 20 or more countries
at a time.
The fund focuses on companies located in Europe, the Pacific Basin and emerging
industrialized countries whose economies and political regimes appear more
stable and are believed to provide some protection to foreign shareholders.
The subadviser chooses approximately 50-75 stocks for the portfolio from a
select universe of stocks.

The fund may invest up to 10% of assets in fixed income securities of foreign
corporate and government issuers and supranational organizations.

- --------------------------------------------------------------------------------

FUND PERFORMANCE
(for the periods ended December 31)
The bar chart and table indicate the risks of investing in the fund. The bar
chart shows changes in the performance of the fund from year-to-year since its
founding.
[FUND PERFORMANCE GRAPH]

<Table>
<Caption>
FUND PERFORMANCE
----------------

'97 9.70
'98 7.98
'99 30.84
'00 -3.72
'01 -18.29
</Table>

FUND'S BEST AND WORST CALENDAR QUARTERS
(for the past 10 years)

<Table>
<Caption>
Total Return Quarter/Year

- ------------------------------------------------

Best 25.13% 4th/1998

Worst -19.34% 3rd/2001
- ------------------------------------------------
</Table>

AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 2001)
The table shows how the fund's average annual returns for different calendar
periods compare to those of a widely recognized, unmanaged index of
international common stock prices. After-tax returns shown in the table are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes. Actual after-tax
returns depend on an investor's tax situation and may differ from those shown.
The after-tax returns shown are not relevant to investors who hold their fund
shares through tax-deferred arrangements such as 401(k) plans or individual
retirement accounts. The fund's past performance before and after taxes, is not
necessarily an indication of how the fund will perform in the future.

<Table>
<Caption>
Since
One Five Inception
Year Years (06/01/1996)
- -----------------------------------------------------------

INTERNATIONAL FUND II
Return Before Taxes -18.29% 4.05% 5.56%
Return After Taxes on
Distributions -18.43% 2.90% 4.48%
Return After Taxes on
Distributions and Sale of
Fund Shares -11.00% 2.97% 4.24%
- -----------------------------------------------------------
COMPARATIVE INDEX
EAFE(1) (reflects no
deduction for fees,
expenses or taxes) -21.44% 0.89% 1.17%
- -----------------------------------------------------------
</Table>

(1) Morgan Stanley Capital International Europe, Australasia, Far East

RISK/RETURN SUMMARY -- INTERNATIONAL EQUITY

HARBOR INTERNATIONAL FUND II
- --------------------------------------------------------------------------------

PRINCIPAL RISKS

These risks are more severe for securities of issuers in emerging market
countries such as Eastern Europe, Latin America and the Pacific Basin.

Foreign brokerage and custodian fees may be higher than in the U.S.

- --------------------------------------------------------------------------------

FEES AND EXPENSES
(based on year ended October 31, 2001)

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

<Table>

- -------------------------------------------------

SHAREHOLDER FEES None
(fees paid directly from your
investment)

ANNUAL FUND OPERATING EXPENSES(1)
(expenses that are deducted from fund
assets)
Management fees 0.75%
Rule 12b-1 distribution fees None
Other expenses(2) 0.24%
-----
Total annual fund operating expenses 0.99%
- -------------------------------------------------
</Table>

(1) Because the adviser has voluntarily agreed to reduce the fund's management
fees, the fund's actual expenses were:

<Table>

Management fees 0.65%
Total annual fund operating
expenses 0.89%
</Table>

(2) Such as transfer agency, custody, professional and registration fees.

EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

<Table>
<Caption>
One Three Five Ten
Year Years Years Years

- ---------------------------------------------------------------------

International Fund II $101 $320 $561 $1,276
- ---------------------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- INTERNATIONAL EQUITY

HARBOR INTERNATIONAL GROWTH FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INVESTMENT GOAL
Long-term growth of capital.
PRINCIPAL STYLE CHARACTERISTICS

Foreign mid to large cap stocks demonstrating accelerating earnings growth.

PORTFOLIO MANAGERS
THEODORE TYSON
JOSEPH JORDAN
DOUGLAS ALLEN
Mastholm Asset Management LLC
10500 NE 8th Street
Suite 1725
Bellevue, WA 98004
Theodore Tyson, Joseph Jordan and Douglas Allen have co-managed the fund since
December 1, 2001. Mr. Tyson has served as the chief investment officer, managing
director and portfolio manager of Mastholm since 1997. Mr. Jordan has served as
a director and portfolio manager of Mastholm since 1997. Mr. Allen has served as
a director and portfolio manager of Mastholm since 1999.
- --------------------------------------------------------------------------------

PRINCIPAL STRATEGIES AND INVESTMENTS

The fund invests primarily in equity securities, principally common stocks,
preferred stocks, rights and depositary receipts, of foreign companies with a
minimum market capitalization of about $10 billion at the time of initial
investment. Under normal circumstances, the fund must invest in a minimum of
three countries.

In general, the fund stays fully invested in stocks and does not try to time the
market. The subadviser uses a bottom up approach to construct the fund's
portfolio. The fund's sector, country, and currency weightings are a result of,
and secondary to, individual stock selections.

In selecting stocks for the fund's portfolio, the subadviser generally looks for
companies with the following characteristics:
- - Clarity of accounting and confirmation of earnings acceleration
- - Operating results higher than analyst expectations
- - Wide divergence of analyst expectations
- - Stock price below historical average range

- - Trading volume that meets the subadviser's minimum liquidity guidelines

The subadviser's research includes visiting companies and their competitors,
suppliers, and vendors. The subadviser's research is aided by relationships with
over 20 brokerage firms worldwide. The fund expects to invest in approximately
35-45 companies. However, the subadviser intends to limit emerging markets
exposure to 10% at cost.

- --------------------------------------------------------------------------------

<Table>
<Caption>
FUND PERFORMANCE
----------------

'94 -7.71
'95 24.29
'96 32.04
'97 3.57
'98 23.49
'99 20.19
'00 -25.50
'01 -38.54
</Table>

FUND'S BEST AND WORST CALENDAR QUARTERS
(for the past 10 years)

<Table>
<Caption>
Total Return Quarter/Year
- ---------------------------------------------------------------

Best 25.74% 4th/1999

Worst -25.54% 1st/2001
- ---------------------------------------------------------------
</Table>

The fund has changed its benchmark index from the EAFE index to the EAFE Growth
index because the EAFE index contains both growth and value style equities. The
EAFE Growth index contains only the growth portion of the EAFE index, making the
EAFE Growth index a more accurate comparison for the fund.

AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 2001)

<Table>
<Caption>
Since
One Five Inception
Year Years (11/01/1993)
- ---------------------------------------------------------

INTERNATIONAL GROWTH FUND
Return Before Taxes -38.54% -6.78% 2.20%
Return After Taxes on
Distributions -38.46% -7.93% 1.27%
Return After Taxes on
Distributions and Sale
of Fund Shares -23.39% -5.01% 1.94%
- ---------------------------------------------------------
COMPARATIVE INDEX
EAFE(1) Growth (reflects
no deduction for fees,
expenses or taxes) -24.58% -1.66% 0.69%
EAFE(1) (reflects no
deduction for fees,
expenses or taxes) -21.44% 0.89% 3.27%
- ---------------------------------------------------------
</Table>

(1) Morgan Stanley Capital International Europe, Australasia, Far East

RISK/RETURN SUMMARY -- INTERNATIONAL EQUITY

HARBOR INTERNATIONAL GROWTH FUND
- --------------------------------------------------------------------------------

PRINCIPAL RISKS

Because the fund typically invests in approximately 35 to 45 companies, an
adverse event affecting a particular company may hurt the fund's performance
more than if it had invested in a larger number of companies.

The fund invests primarily in securities of foreign companies. Because of this,
there is a greater risk that the fund's share price will fluctuate more than if
the fund invested in domestic issuers. Prices of foreign securities may go down
if any of the following occur:
- - Unfavorable foreign government actions, such as excessive taxation or currency
controls; political, economic or market instability; or the absence of
accurate information about foreign companies due in part to different
financial accounting and regulatory standards.
- - A decline in the value of foreign currencies relative to the U.S. dollar will
reduce the unhedged value of securities denominated in those currencies.
- - Foreign securities are sometimes less liquid and harder to value than
securities of U.S. issuers.
These risks are more severe for securities of issuers in emerging market
countries.
Foreign brokerage and custodian fees may be higher than in the U.S.

- --------------------------------------------------------------------------------

FEES AND EXPENSES
(based on year ended October 31, 2001)

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

<Table>

- -------------------------------------------------

SHAREHOLDER FEES None
(fees paid directly from your
investment)

ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund
assets)
Management fees 0.75%
Rule 12b-1 distribution fees None
Other expenses(1) 0.14%
-----
Total annual fund operating expenses 0.89%
- -------------------------------------------------
</Table>

(1) Such as transfer agency, custody, professional and registration fees.

EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

<Table>
<Caption>
One Three Five Ten
Year Years Years Years
- ---------------------------------------------------------------------

International Growth
Fund $91 $288 $504 $1,147
- ---------------------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- INTERNATIONAL EQUITY

HARBOR GLOBAL EQUITY FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INVESTMENT GOAL
Long-term growth of capital.

PRINCIPAL STYLE CHARACTERISTICS
Foreign and domestic mid to large cap stocks.

PORTFOLIO MANAGERS
DAN JAWORSKI
PABLO SALAS
JON SORENSEN
BPI Global Asset Management LLP

1900 Summit
Tower Blvd
Suite 450

Orlando, FL 32810

Dan Jaworski, Pablo Salas and Jon Sorensen have managed the fund since its
inception in 2001. Mr. Jaworski is chief investment officer, managing director
and a co-founder of BPI Global Asset Management LLP. Mr. Salas is a portfolio
manager, managing director and a co-founder of BPI Global Asset Management LLP.
Mr. Sorensen is a portfolio manager with BPI Global Asset Management LLP.

- --------------------------------------------------------------------------------

PRINCIPAL STRATEGIES AND INVESTMENTS

The fund invests in equity securities, principally common stocks, preferred
stocks, rights and depositary receipts, or other similar securities representing
ownership of foreign and domestic securities of companies, with a capitalization
of at least $500 million at the time of initial investment.

In general, the fund stays fully invested in stocks and does not try to time the
market. The subadviser uses a bottom up approach, researching and evaluating
individual companies, to manage the fund's portfolio. The subadviser's research
focuses on identifying the best companies to own within a sector or industry
that compete or have a competitive advantage on a global basis. The fund's
sector and country weightings are a result of, and secondary to, individual
stock selections. This research also includes visits to companies and
discussions with company management.

In selecting stocks for the fund's portfolio, the subadviser looks for companies
with the following characteristics:
- - Superior management whose interests are aligned with shareholders
- - Above-average return on equity
- - Above-average profit margins and adequate free cash flow
- - Strong capital structure with low leverage

- - Relatively low price to earnings, price to book, and price to free cash flow
ratios

The subadviser looks for companies that are undervalued relative to their global
industry peer group and that possess sustainable competitive advantages. The
fund's maximum exposure to any one company is limited by the subadviser's
judgment as to the liquidity of the company's stock.

Under normal circumstances, the fund intends to invest substantially all, but
must invest at least 80%, of its net assets, plus borrowings for investment
purposes, in a diversified portfolio of equity securities. The investment
strategy of investing at least 80% of its net assets in equity securities may
not be changed unless the fund provides 60 days advance notice to its
shareholders. The fund expects to invest in approximately 120-180 companies.
However, the subadviser intends to limit emerging markets exposure to
approximately 10% and individual emerging countries exposure to approximately 5%
of the fund's assets. The subadviser also intends to limit the fund's
investments in any one sector to a percentage of assets which is equal to or
less than twice the weight of that sector in the Morgan Stanley Capital
International World index measured at the time of initial investment. The fund
may invest in foreign securities in the form of depository receipts or other
similar securities representing ownership of foreign securities.

- --------------------------------------------------------------------------------
FUND PERFORMANCE

Because the fund is newly organized and does not yet have a performance history,
the bar chart and total return tables are not provided. See page 39 for
historical subadviser composite performance information for accounts with
substantially similar investment objectives, policies and strategies.

- --------------------------------------------------------------------------------
PRINCIPAL RISKS

The fund invests in securities of foreign and domestic companies. Because of
this, there is a risk that the fund's share price may fluctuate more than if the
fund invested solely in securities of domestic issuers. Prices of foreign
securities may go down if any of the following occurs:
- - Unfavorable foreign government actions, political, economic or market
instability or the absence of accurate information about foreign companies.
- - A decline in the value of foreign currencies relative to the U.S. dollar will
reduce the unhedged value of securities denominated in those currencies.
- - Foreign securities are sometimes less liquid and harder to value than
securities of U.S. issuers.

The risks are more severe for securities of issuers in emerging market countries
such as Eastern Europe, Latin America, South America and the Pacific Basin.

Foreign brokerage and custodian fees may be higher than in the U.S.

RISK/RETURN SUMMARY -- INTERNATIONAL EQUITY

HARBOR GLOBAL EQUITY FUND
- --------------------------------------------------------------------------------

FEES AND EXPENSES
(based on 9 month period ended October 31, 2001)

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

<Table>

- -------------------------------------------------

SHAREHOLDER FEES None
(fees paid directly from your
investment)

(1) Because the adviser has voluntarily agreed to limit the fund's management
fees and operating expenses, the fund's actual expenses were:

<Table>

Management fees 0.55%
Other expenses 0.65%
-----
Total annual fund operating
expenses 1.20%
</Table>

(2) Such as transfer agency, custody, professional and registration fees.

EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

<Table>
<Caption>
One Three Five Ten
Year Years Years Years
- -----------------------------------------------------------------

Global Equity Fund $144 $452 $793 $1,805
- -----------------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- FIXED INCOME

HARBOR BOND FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INVESTMENT GOAL
Total return.

PRINCIPAL STYLE CHARACTERISTICS
Intermediate bonds with overall portfolio rated high quality.

PORTFOLIO MANAGER
WILLIAM GROSS
Pacific Investment Management Company

840 Newport Center Dr.
P.O. Box 6430
Newport Beach, CA 92658-6430

Bill Gross has managed the fund since it started in 1987. He has been a managing
director of PIMCO and its predecessor since 1982.
- --------------------------------------------------------------------------------

PRINCIPAL STRATEGIES AND INVESTMENTS

The fund invests primarily in bonds of corporate and governmental issuers
located in the U.S. and foreign countries, including emerging markets.

Total return includes dividends, realized and unrealized capital gains and
changes in net asset value.

The subadviser relies on its own proprietary research and analysis to manage the
fund's portfolio. The subadviser uses a top down strategy to focus on broad
factors and monetary conditions. These include:
- - Long-term social, political and demographic trends
- - Cyclical business and economic conditions
- - Current market conditions

The subadviser selects securities that appear to be most undervalued relative to
their risk and potential return characteristics. In analyzing the relative
attractiveness of sectors, the subadviser considers the narrowing or widening of
yields compared with yields for government and other sectors.

The fund intends to invest substantially all, but must invest at least 80%, of
its net assets, plus borrowings for investment purposes, in a diversified
portfolio of all types of bonds. These include mortgage-related securities and
asset-backed securities. At least 60% of its assets will be invested in
securities of U.S. issuers and at least 80% of its assets will be U.S.
dollar-denominated. No more than 25% of its assets will be invested in a single
country other than the U.S. The investment strategy of investing at least 80% of
its net assets in bonds may not be changed unless the fund provides 60 days
advance notice to its shareholders.

CREDIT QUALITY. The fund will not invest in securities rated lower than B. The
fund's average weighted portfolio quality is at least A. The fund invests
primarily in investment grade securities, but may invest up to 15% of its assets
in below investment grade domestic and foreign securities, commonly referred to
as high yield or junk bonds.

DURATION. The fund's duration is equal to that of the bond market plus or minus
1.5 years. The duration of the bond market as of December 31, 2001 was 4.5
years. Duration is an approximate measure of the sensitivity of the market value
of the fund's holdings to changes in interest rates. If the fund's duration is
longer than the market's, the fund would experience a greater change in the
value of its assets when interest rates are rising or falling than would the
market as a whole.

- --------------------------------------------------------------------------------

<Table>
<Caption>
FUND PERFORMANCE
----------------

'92 9.11
'93 12.41
'94 -3.76
'95 19.15
'96 4.94
'97 9.39
'98 9.56
'99 -0.32
'00 11.34
'01 9.03
</Table>

FUND'S BEST AND WORST CALENDAR QUARTERS
(for the past 10 years)

<Table>
<Caption>
Total Return Quarter/Year
- ----------------------------------------------------

Best 5.83% 3rd/2001

Worst -3.13% 1st/1994
- ----------------------------------------------------
</Table>

AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 2001)

The table shows how the fund's average annual returns for different calendar
periods compare to those of a widely recognized, unmanaged index of U.S. fixed
income securities. After-tax returns shown in the table are calculated using the
historical highest individual federal marginal income tax rates and do not
reflect the impact of state and local taxes. Actual after-tax returns depend on
an investor's tax situation and may differ from those shown. The after-tax
returns shown are not relevant to investors who hold their fund shares through
tax-deferred arrangements such as 401(k) plans or individual retirement
accounts. The fund's past performance before and after taxes, is not necessarily
an indication of how the fund will perform in the future.

<Table>
<Caption>
One Five Ten
Year Years Years
- -----------------------------------------------------

BOND FUND
Return Before Taxes 9.03% 7.72% 7.91%
Return After Taxes on
Distributions 6.12% 4.91% 5.03%
Return After Taxes on
Distributions and Sale of
Fund Shares 5.46% 4.84% 4.97%
- -----------------------------------------------------
COMPARATIVE INDEX
Lehman Brothers
Aggregate -- U.S.
(reflects no deduction for
fees, expenses or taxes) 8.44% 7.43% 7.23%
- -----------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- FIXED INCOME

HARBOR BOND FUND
- --------------------------------------------------------------------------------

PRINCIPAL RISKS

Although fixed income securities generally are considered to be less volatile
than stocks, they do fluctuate in price in response to changes in interest rates
and the value of your investment may go down. This means that you could lose
money or the fund may not perform as well as other possible investments if any
of the following occurs:
- - Interest rates go up, which will make the prices of fixed income securities go
down and reduce the value of the fund's portfolio.
- - The issuer of a security owned by the fund defaults on its obligation to pay
principal and/or interest or has its credit rating downgraded. This risk is
higher for below investment grade bonds.
- - When interest rates are declining, the issuer of a pass-through security, such
as a mortgage-backed or an asset-backed security, may exercise its option to
prepay principal earlier than scheduled, forcing the fund to reinvest in lower
yielding securities. This is known as call or prepayment risk.
- - When interest rates are rising, the average life of securities backed by
callable debt obligations is extended because of slower than expected
principal payments. This will lock in a below-market interest rate, increase
the security's duration and reduce the value of the security. This is known as
extension risk.
- - The subadviser's judgment about the attractiveness, relative value or
potential appreciation of a particular sector, security or hedging strategy
proves to be incorrect.
- - Prices of foreign securities go down because of unfavorable foreign government
actions, political, economic or market instability or the absence of accurate
information about foreign issuers. Also, a decline in the value of foreign
currencies relative to the U.S. dollar will reduce the unhedged value of
securities denominated in those currencies. Foreign securities are sometimes
less liquid and harder to value than securities of U.S. issuers. These risks
are more severe for securities of issuers in emerging market countries.
- - Changes in the value of futures contracts do not correspond closely to changes
in the fund's portfolio, which may not accurately hedge the fund's exposure.
- - The price of securities sold short increases, causing the fund to pay more to
replace the borrowed securities than the fund received on the sale of the
securities.

There is a greater risk that the fund will lose money due to prepayment and
extension risks because the fund invests heavily at times in mortgage-related
securities. Mortgage derivatives in the fund's portfolio may have especially
volatile prices because of imbedded leverage or unusual interest rate reset
terms.

- --------------------------------------------------------------------------------

FEES AND EXPENSES
(based on year ended October 31, 2001)

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

<Table>

- -------------------------------------------------

SHAREHOLDER FEES None
(fees paid directly from your
investment)

ANNUAL FUND OPERATING EXPENSES(1)
(expenses that are deducted from fund
assets)
Management fees 0.70%
Rule 12b-1 distribution fees None
Other expenses(2) 0.08%
-----
Total annual fund operating expenses 0.78%
- -------------------------------------------------
</Table>

(1) Because the adviser has voluntarily agreed to reduce the fund's management
fees, the fund's actual expenses were:

<Table>

Management fees 0.48%
Total annual fund operating
expenses 0.56%
</Table>

(2) Such as transfer agency, custody, professional and registration fees.

EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

<Table>
<Caption>
One Three Five Ten
Year Years Years Years

- ----------------------------------------------------------------------

Bond Fund $80 $252 $442 $1,006
- ----------------------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- FIXED INCOME

HARBOR SHORT DURATION FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INVESTMENT GOAL
Total return that is consistent with preservation of capital.

PRINCIPAL STYLE CHARACTERISTICS
High quality short-term bonds.

PORTFOLIO MANAGER

DAVID MARMON
Fischer Francis Trees
& Watts, Inc.

200 Park Ave.
New York, NY 10166

FFTW has been the fund's subadviser since it started in 1992. David Marmon has
managed the fund since 2000. He has been a managing director of FFTW since 1996
and prior to 1996 was a portfolio manager at FFTW.
- --------------------------------------------------------------------------------

PRINCIPAL STRATEGIES AND INVESTMENTS

The fund invests primarily in short-term (up to 3 years maturity) high quality
fixed income securities of corporate and governmental issuers located in the
U.S. and foreign countries.

The subadviser seeks to maximize portfolio return and minimize volatility by:
- - Adjusting the issuer sector allocations, such as U.S. treasuries, corporates,
U.S. government agencies, etc.
- - Managing the key variables such as duration and credit quality
- - Selectively using currency and interest rate management techniques to hedge
interest rate and foreign currency risks associated with portfolio holdings

The fund intends to invest substantially all, but must invest at least 80%, of
its net assets, plus borrowings for investment purposes, in a diversified
portfolio of all types of fixed income securities. These include bonds,
mortgage-related securities and asset-backed securities. At least 60% of its net
assets will be invested in securities of U.S. issuers and 80% of its net assets
will be U.S. dollar denominated. No more than 25% of its net assets will be
invested in a single country other than the U.S. The investment strategy of
investing at least 80% of its net assets in fixed income securities may not be
changed unless the fund provides 60 days advance notice to its shareholders.

The fund uses derivative securities such as mortgage-backed securities and
derivative contracts such as options and futures to take investment positions
that more precisely reflect the subadviser's expectations of how a security in
the fund's portfolio may perform. The fund may engage in short selling, which is
the sale by the fund of a borrowed security. Because the fund is obligated to
replace the borrowed security, the fund will benefit from the short sale if the
price of the security declines before it is replaced.
CREDIT QUALITY. The fund invests primarily in high quality securities, but may
invest in medium grade securities. The fund will not invest in securities rated
lower than A. The fund's average weighted portfolio quality is generally AA or
higher.

DURATION. The fund's average duration is approximately one year and will not
vary from one year by more than two years. Duration is an approximate measure of
the sensitivity of the market value of the fund's holdings to changes in
interest rates. If the fund's duration is longer than the market's, the fund
would experience a greater change in the value of its assets when interest rates
are rising or falling than would the market as a whole.

- --------------------------------------------------------------------------------

<Table>
<Caption>
FUND PERFORMANCE
----------------

'92 4.65
'93 4.45
'94 2.74
'95 7.44
'96 6.31
'97 6.29
'98 6.36
'99 3.76
'00 7.41
'01 6.05
</Table>

FUND'S BEST AND WORST CALENDAR QUARTERS
(for the past 10 years)

<Table>
<Caption>
Total Return Quarter/Year
- -------------------------------------------------------

Best 2.45% 2nd/1995

Worst 0.05% 1st/1994
- -------------------------------------------------------
</Table>

AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 2001)
The table shows how the fund's average annual returns for different calendar
periods compare to those of one year government bonds. After-tax returns shown
in the table are calculated using the historical highest individual federal
marginal income tax rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend on an investor's tax situation and may
differ from those shown. The after-tax returns shown are not relevant to
investors who hold their fund shares through tax-deferred arrangements such as
401(k) plans or individual retirement accounts. The fund's past performance
before and after taxes, is not necessarily an indication of how the fund will
perform in the future.

<Table>
<Caption>
One Five Ten
Year Years Years
- -------------------------------------------------------

SHORT DURATION FUND
Return Before Taxes 6.05% 5.97% 5.54%
Return After Taxes on
Distributions 4.02% 3.59% 2.79%
Return After Taxes on
Distributions and Sale of
Fund Shares 3.66% 3.58% 3.01%
- -------------------------------------------------------
COMPARATIVE INDEX
Salomon Treasury 1 YR CMI
(reflects no deduction for
fees, expenses or taxes) 7.07% 6.08% 5.54%
- -------------------------------------------------------
</Table>

As of June 2001, the 1-YR Gvt index was discontinued by Ibbotson Associates. The
Salomon Treasury 1 YR CMI index has been selected as the replacement index and
provides an accurate representation in comparison to the Harbor Short Duration
Fund.

RISK/RETURN SUMMARY -- FIXED INCOME

HARBOR SHORT DURATION FUND
- --------------------------------------------------------------------------------

PRINCIPAL RISKS

Although fixed income securities generally are considered to be less volatile
than stocks, they do fluctuate in price in response to changes in interest rates
and the value of your investment may go down. This means that you could lose
money if any of the following occurs:
- - Interest rates go up, which will make the prices of fixed income securities go
down and reduce the value of the fund's portfolio.
- - The issuer of a security owned by the fund defaults on its obligation to pay
principal and/or interest or has its credit rating downgraded.
- - When interest rates are declining, the issuer of a security may exercise its
option to prepay principal earlier than scheduled, forcing the fund to
reinvest in lower yielding securities. This is known as call or prepayment
risk.
- - When interest rates are rising, the average life of securities backed by debt
obligations is extended because of slower than expected principal payments.
This will lock in a below-market interest rate, increase the security's
duration and reduce the value of the security. This is known as extension
risk.
- - The subadviser's judgment about the attractiveness, relative value or
potential appreciation of a particular sector, security or hedging strategy
proves to be incorrect.
- - Prices of foreign securities go down because of unfavorable foreign government
actions, political, economic or market instability or the absence of
accurate information about foreign issuers. Also, a decline in the value of
foreign currencies relative to the U.S. dollar will reduce the unhedged value
of securities denominated in those currencies. Foreign securities are
sometimes less liquid and harder to value than securities of U.S. issuers.
- - The price of securities sold short increases, causing the fund to pay more to
replace the borrowed securities than the fund received on the sale of the
securities.
- - Changes in the value of futures contracts do not correspond closely to changes
in the fund's portfolio, which may not accurately hedge the fund's exposure.

There is a greater risk that the fund will lose money due to prepayment and
extension risks because the fund invests heavily at times in asset-backed and
mortgage-related securities. Mortgage derivatives in the fund's portfolio may
have especially volatile prices because of imbedded leverage or unusual interest
rate reset terms.

The fund may engage in active and frequent trading to achieve its principal
investment strategies. This may lead to the realization and distribution to
shareholders of higher capital gains, which would increase the shareholder's tax
liability. Frequent trading also increases transaction costs, which could
detract from the fund's performance.

- --------------------------------------------------------------------------------

FEES AND EXPENSES
(based on year ended October 31, 2001)

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

<Table>

- -------------------------------------------------

SHAREHOLDER FEES None
(fees paid directly from your
investment)

ANNUAL FUND OPERATING EXPENSES(1)
(expenses that are deducted from fund
assets)
Management fees 0.40%
Rule 12b-1 distribution fees None
Other expenses(2) 0.08%
-----
Total annual fund operating expenses 0.48%
- -------------------------------------------------
</Table>

(1) Because the adviser has voluntarily agreed to reduce the fund's management
fees, the fund's actual expenses were:

<Table>

Management fees 0.20%
Total annual fund operating
expenses 0.28%
</Table>

(2) Such as transfer agency, custody, professional and registration fees.

EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

<Table>
<Caption>
One Three Five Ten
Year Years Years Years

- ---------------------------------------------------------------------

Short Duration Fund $49 $155 $272 $619
- ---------------------------------------------------------------------
</Table>

RISK/RETURN SUMMARY -- FIXED INCOME

HARBOR MONEY MARKET FUND
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INVESTMENT GOAL
Current income. The fund intends to maintain a stable share price of $1.
PRINCIPAL STYLE CHARACTERISTICS
Very short-term high quality money market instruments.
PORTFOLIO MANAGER

DAVID MARMON
Fischer Francis Trees &
Watts, Inc.

200 Park Ave.
New York, NY 10166

FFTW has been the fund's subadviser since it started in 1987.
David Marmon has managed the fund since 2000. He has been a managing director of
FFTW since 1996 and prior to 1996 was a portfolio manager at FFTW.
- --------------------------------------------------------------------------------

PRINCIPAL STRATEGIES AND INVESTMENTS

The fund invests in U.S. dollar denominated money market securities. These may
include obligations issued by:
- - U.S. and foreign banks
- - Corporate issuers
- - U.S. government and its agencies and instrumentalities
- - U.S. states and municipalities
- - Foreign governments
- - Multinational organizations such as the World Bank

The subadviser selects securities for the fund's portfolio by:
- - Allocating assets and actively trading among issuer sectors, such as U.S.
treasuries, corporate issuers, U.S. government agencies, etc., while focusing
on sectors that appear to have the greatest near-term return potential.
- - Focusing on securities that appear to offer the best relative value based on
an analysis of their credit quality and interest rate sensitivity.

The fund may invest in all types of money market securities, including
commercial paper, certificates of deposit, bankers' acceptances, mortgage-backed
and asset-backed securities, repurchase agreements and other short-term debt
securities.

MINIMUM CREDIT QUALITY. Ratings for at least 95% of the fund's investments are
in the rating agencies' highest short-term rating category or of equivalent
quality for unrated securities.

MAXIMUM MATURITY. Average dollar weighted portfolio maturity of 90 days or less.
Maturity of 397 days or less for individual securities.

- --------------------------------------------------------------------------------

FUND PERFORMANCE
(for the periods ended December 31)

The bar chart and table indicate the risks of investing in the fund. The bar
chart shows changes in the performance of the fund from year-to-year for the
past ten years.
[FUND PERFORMANCE GRAPH]

<Table>
<Caption>
FUND PERFORMANCE
----------------

'92 3.21
'93 2.76
'94 3.91
'95 5.71
'96 5.02
'97 5.16
'98 5.13
'99 4.89
'00 6.17
'01 4.09
</Table>

FUND'S BEST AND WORST CALENDAR QUARTERS
(for the past 10 years)

<Table>
<Caption>
Total Return Quarter/Year

- ---------------------------------------------------

Best 1.63% 4th/2000

Worst 0.55% 4th/2001
- ---------------------------------------------------
</Table>

AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 2001)

The table shows how the fund's average annual returns for different calendar
periods compare to those of 90-day Treasury bills. The fund's past performance
does not necessarily indicate how the fund will perform in the future.

<Table>
<Caption>
One Five Ten
Year Years Years

- ------------------------------------------

Money Market Fund 4.09% 5.09% 4.60%

90-Day Treasury
Bills 3.76% 4.99% 4.69%
- ------------------------------------------
</Table>

<Table>
<Caption>
Current Yield for Period Ended December 31, 2001*

- -------------------------------------------------
Money Market Fund 7 Days: 1.64%
- -------------------------------------------------
</Table>

*Call 1-800-422-1050 for the fund's current 7-day yield.

RISK/RETURN SUMMARY -- FIXED INCOME

HARBOR MONEY MARKET FUND
- --------------------------------------------------------------------------------

PRINCIPAL RISKS

The fund may not perform as well as other possible investments if any of the
following occurs:
- - The issuer or guarantor of a security owned by the fund defaults on its
payment obligations, becomes insolvent or has its credit rating downgraded by
a rating agency.
- - There is a sudden or sharp increase in interest rates.
- - The value of the fund's foreign securities goes down because of unfavorable
foreign government actions, political instability or the more limited
availability of accurate information about foreign issuers.
- - The subadviser's judgment about the relative values of securities selected for
the fund's portfolio proves to be incorrect.
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.

- --------------------------------------------------------------------------------

FEES AND EXPENSES
(based on year ended October 31, 2001)

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

<Table>

- -------------------------------------------------
SHAREHOLDER FEES None
(fees paid directly from your
investment)

ANNUAL FUND OPERATING EXPENSES(1)
(expenses that are deducted from fund
assets)
Management fees 0.30%
Rule 12b-1 distribution fees None
Other expenses(2) 0.20%
-----
Total annual fund operating expenses 0.50%
- -------------------------------------------------
</Table>

(1) Because the adviser has voluntarily agreed to reduce the fund's management
fees, the fund's actual expenses were:

<Table>

Management fees 0.18%
Total annual fund operating
expenses 0.38%
</Table>

(2) Such as transfer agency, custody, professional and registration fees.

EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

<Table>
<Caption>
One Three Five Ten
Year Years Years Years

- ---------------------------------------------------------------------

Money Market Fund $51 $162 $283 $645
- ---------------------------------------------------------------------
</Table>

THE FUNDS' INVESTMENTS
ADDITIONAL INFORMATION ABOUT THE FUNDS' PRINCIPAL INVESTMENTS
- --------------------------------------------------------------------------------

EQUITY INVESTMENTS
The equity funds may invest in all types of equity securities.

Equity securities include exchange-traded and over-the-counter common and
preferred stocks, warrants, rights, investment grade convertible securities,
depositary receipts and shares, trust certificates, limited partnership
interests, shares of other investment companies, real estate investment trusts
and equity participations.

- --------------------------------------------------------------------------------

FIXED INCOME INVESTMENTS
Harbor Bond Fund and Harbor Short Duration Fund may invest in all types of fixed
income securities.
Harbor Money Market Fund invests exclusively in U.S. dollar-denominated money
market securities.

Fixed income investments include bonds, notes (including structured notes),
mortgage-related securities, asset-backed securities, convertible securities,
Eurodollar and Yankee dollar instruments, preferred stocks and money market
instruments.

Fixed income securities may be issued by U.S. and foreign corporations or
entities; U.S. and foreign banks; the U.S. government, its agencies,
authorities, instrumentalities or sponsored enterprises; state and municipal
governments; supranational organizations; and foreign governments and their
political subdivisions.

These securities may have all types of interest rate payment and reset terms,
including fixed rate, adjustable rate, zero coupon, contingent, deferred,
payment in kind and auction rate features.

Money market securities include commercial paper, certificates of deposit,
bankers' acceptances, repurchase agreements and other short-term debt
securities.

- --------------------------------------------------------------------------------
MORTGAGE-RELATED AND ASSET-BACKED SECURITIES

Mortgage-related securities may be issued by private companies or by agencies of
the U.S. government. Mortgage-related securities represent direct or indirect
participations in, or are collateralized by and payable from, mortgage loans
secured by real property.

Harbor Bond Fund and Harbor Short Duration Fund may use mortgage dollar rolls to
finance the purchase of additional investments. Dollar rolls expose a fund to
the risk that it will lose money if the additional investments do not produce
enough income to cover the fund's dollar roll obligations.

For mortgage derivatives and structured securities that have imbedded leverage
features, small changes in interest or prepayment rates may cause large and
sudden price movements. Mortgage derivatives can also become illiquid and hard
to value in declining markets.

Asset-backed securities represent participations in, or are secured by and
payable from, assets such as installment sales or loan contracts, leases, credit
card receivables and other categories of receivables.

Mortgage-related and asset-backed securities are especially sensitive to
prepayment and extension risk. At times, Harbor Bond Fund and Harbor Short
Duration Fund invest a large percentage of assets in mortgage-backed and
asset-backed securities.

Harbor Money Market Fund invests in mortgage-related securities that meet its
quality, liquidity and maturity standards and that do not contain imbedded
leverage.

- --------------------------------------------------------------------------------
CREDIT QUALITY

Securities are investment grade if:
- - They are rated in one of the top four long-term rating categories of a
nationally recognized statistical rating organization.
- - They have received a comparable short-term or other rating.
- - They are unrated securities that the subadviser believes to be of comparable
quality to rated investment-grade securities.

If a security receives different ratings, a fund will treat the security as
being rated in the highest rating category. A fund may choose not to sell
securities that are downgraded after their purchase below the fund's minimum
acceptable credit rating. Each fund's credit standards also apply to
counterparties to over-the-counter derivative contracts.

THE FUNDS' INVESTMENTS
INFORMATION ABOUT THE FUNDS' OTHER INVESTMENTS
- --------------------------------------------------------------------------------

DERIVATIVE CONTRACTS

Each fund, other than Harbor Money Market Fund, may, but is not required to, use
derivative contracts for any of the following purposes:
- - To hedge against adverse changes in the market value of securities held by or
to be bought for the fund. These changes may be caused by changing interest
rates, stock market prices or currency exchange rates.
- - As a substitute for purchasing or selling securities or foreign currencies.
- - To manage the duration of a fund's fixed income portfolio.
- - In non-hedging situations, to attempt to profit from anticipated market
developments.

A derivative contract will obligate or entitle a fund to deliver or receive an
asset or a cash payment that is based on the change in value of a designated
security, index or currency.

Examples of derivative contracts are futures contracts, options, forward
contracts, swaps, caps, collars and floors.

Even a small investment in derivative contracts can have a big impact on a fund
portfolio's interest rate, stock market and currency exposure. Therefore, using
derivatives can disproportionately increase a fund's portfolio losses and reduce
opportunities for gains when interest rates, stock prices or currency rates are
changing. A fund may not fully benefit from or may lose money on derivatives if
changes in their value do not correspond accurately to changes in the value of
the fund's portfolio holdings. If a fund uses derivatives, it manages its
derivative position by segregating enough cash or liquid securities that when
combined with the value of the position will equal the value of the asset it
represents.

Counterparties to over-the-counter derivative contracts present the same types
of credit risk as issuers of fixed income securities. Derivatives can also make
the fund's portfolio less liquid and harder to value, especially in declining
markets.

- --------------------------------------------------------------------------------

TEMPORARY DEFENSIVE POSITIONS

In response to adverse market, economic or political conditions, each fund may
depart from its principal investment strategies by taking large temporary
defensive positions in cash or investment-grade debt securities.

The international funds may invest without limit in equity securities of U.S.
issuers and investment grade notes and bonds.

If a fund takes a temporary defensive position, it may be unable to achieve its
investment goal.

- --------------------------------------------------------------------------------

PORTFOLIO TURNOVER

Each fund may engage in active and frequent trading to achieve its principal
investment strategies. This may lead to the realization and distribution to
shareholders of higher capital gains, which would increase the shareholders' tax
liability. Frequent trading also increases transaction costs, which could
detract from a fund's performance. For the fiscal year ended October 31, 2001,
the portfolio turnover rates for Harbor Large Cap Value Fund, Harbor Global
Equity Fund, Harbor Bond Fund and Harbor Short Duration Fund were 194%, 143%,
531% and 246%, respectively. The portfolio turnover rates for Harbor Mid Cap
Value Fund and Harbor Small Cap Value Fund are each expected to be approximately
100% during the current fiscal year. A portfolio turnover rate of over 100% is
higher than the rate experienced by many other investment companies and is a
result of an actively managed portfolio. Although the higher turnover rate
creates expenses for these funds, the subadvisers believe that the portfolio
transactions are in the best interests of shareholders. Major shareholders of
Harbor Short Duration Fund use it as a liquidity reserve and, therefore, there
is frequent purchase and sales activity.

THE ADVISER AND SUBADVISERS
- --------------------------------------------------------------------------------

THE ADVISER

Harbor Capital Advisors, Inc. is the investment adviser and provides management
services to Harbor Fund.

Harbor Capital Advisors, Inc., located at One SeaGate, Toledo, Ohio, is a wholly
owned subsidiary of Robeco Groep N.V. Founded in 1929, Robeco Groep N.V. is one
of the world's oldest asset management organizations. As of December 31, 2001,
Robeco Groep N.V. through its investment management subsidiaries, had
approximately $93.3 billion in assets under management.

The combined assets of Harbor Fund and the pension plans managed by Harbor
Capital Advisors were approximately $15.1 billion as of December 31, 2001.

Subject to the approval of the Harbor Fund board of trustees, Harbor Capital
Advisors, as the investment adviser, establishes and modifies whenever necessary
the investment strategies of each fund. Harbor Capital Advisors is also
responsible for overseeing each subadviser and recommending the selection,
termination and replacement of subadvisers. The adviser evaluates and allocates
each funds' assets.

The adviser also:
- - Attempts to ensure quality control in the investment process with the
objective of adding value compared with returns of an appropriate risk and
return benchmark.
- - Closely monitors and measures risk and return results against appropriate
benchmarks and recommends whether subadvisers should be retained or changed.
- - Focuses on strict cost control.

In order to more effectively manage the funds, Harbor Fund and Harbor Capital
Advisors have been granted an order from the SEC permitting the adviser, subject
to the approval of the Harbor Fund board of trustees, to select subadvisers to
serve as portfolio managers for the Harbor funds, and to enter into new
subadvisory agreements and to materially modify existing subadvisory agreements
without obtaining shareholder approval.

In addition to its investment management services to the funds, the adviser
administers each fund's business affairs. For the year ended October 31, 2001,
as shown below, each fund paid the adviser an advisory fee for these services.
The adviser has

also agreed to voluntarily waive a portion of the advisory fee for certain funds
for the fiscal year ending October 31, 2002. This agreement is temporary and may
be terminated or changed at any time. The adviser pays a subadvisory fee to each
subadviser out of its own assets. No fund is responsible for paying any portion
of the subadvisory fee to the subadviser.

ANNUAL ADVISORY FEE RATES
(as a percentage of the fund's average net assets)

<Table>
<Caption>
Actual Contractual
Advisory Advisory
Fee Paid Fee
- -------------------------------------------------------

DOMESTIC EQUITY

Harbor Capital
Appreciation Fund 0.60% 0.60%

Harbor Mid Cap Growth Fund 0.55 0.75

Harbor Growth Fund 0.75 0.75

Harbor Small Cap Growth
Fund 0.55 0.75

Harbor Large Cap Value
Fund 0.60 0.60

Harbor Mid Cap Value
Fund(1) N/A 0.75

Harbor Small Cap Value
Fund(2) N/A 0.75
INTERNATIONAL EQUITY

Harbor International Fund 0.79 0.85

Harbor International Fund
II 0.65 0.75

Harbor International
Growth Fund 0.75 0.75

Harbor Global Equity Fund 0.55 0.75

FIXED INCOME

Harbor Bond Fund 0.48 0.70

Harbor Short Duration Fund 0.20 0.40

Harbor Money Market Fund 0.18 0.30

- -------------------------------------------------------
</Table>

(1)Inception date 03/01/2002

(2) Inception date 12/14/2001

Each subadviser also subadvises a substantial portion of the pension plan assets
managed by Harbor Capital Advisors and has adopted procedures to reasonably
ensure fair asset allocation between the respective fund and the pension plan.
The objectives and investment styles of each of the Harbor funds (except Harbor
Money Market Fund) match those segments of the pension plan subadvised by the
subadvisers. This allows Harbor Fund to utilize research and other information
on a cost effective basis. Money managers are interviewed at least annually to
collect and update data about their organizations and performance.

THE ADVISER AND SUBADVISERS
- --------------------------------------------------------------------------------

WALL STREET
ASSOCIATES
COMPOSITE
PERFORMANCE
INFORMATION

The following table presents the past performance of a composite of certain
accounts managed by Wall Street Associates. The Wall Street Associates Mid Cap
Growth composite is comprised of all fee paying accounts under discretionary
management by Wall Street Associates that have substantially similar investment
objectives, policies and strategies as the Harbor Mid Cap Growth Fund. Wall
Street Associates has prepared and presented the historical performance shown
for the composite in compliance with the Performance Presentation Standards of
the Association for Investment Management and Research (AIMR-PPS), the U.S. and
Canadian version of the Global Investment Performance Standards (GIPS). AIMR has
not been involved in the preparation or review of this report. The AIMR method
for computing historical performance differs from the Securities and Exchange
Commission's method. Because the gross performance data shown in the table does
not reflect the deduction of investment advisory fees paid by the accounts
comprising the composite and certain other expenses which would be applicable to
mutual funds, the net performance data may be more relevant to potential
investors in the fund in their analysis of the historical experience of Wall
Street Associates in managing all mid cap growth portfolios with investment
objectives, policies and strategies substantially similar to those of the Harbor
Mid Cap Growth Fund. To calculate the performance of the composite net of
advisory fees and expenses, the actual annual fund operating expenses payable by
the Harbor Mid Cap Growth Fund were used.

The historical performance of the Mid Cap Growth composite is not that of any of
the Harbor Funds, including Harbor Mid Cap Growth Fund, and is not necessarily
indicative of any fund's future results. The Harbor Mid Cap Growth Fund
commenced operations on November 1, 2000. Harbor Mid Cap Growth Fund's actual
performance may vary significantly from the past performance of this composite.
While the accounts comprising the composite incurs inflows and outflows of cash
from clients, there can be no assurance that the continuous offering of a fund's
shares and a fund's obligation to redeem its shares will not adversely impact
the fund's performance. Also, the accounts comprising the composite are not
subject to certain investment limitations, diversification requirements and
other restrictions imposed by the Investment Company Act of 1940 and the
Internal Revenue Code. If applicable, these limitations, requirements and
restrictions may have adversely affected the performance results of the
composite.

THE ADVISER AND SUBADVISERS
- --------------------------------------------------------------------------------

WESTFIELD
CAPITAL
MANAGEMENT
COMPOSITE
PERFORMANCE
INFORMATION

The following table presents the past performance of a composite of certain
accounts managed by Westfield Capital Management Company, Inc. The Westfield
Capital Management Small Cap Growth composite is comprised of all fee paying
accounts under discretionary management by Westfield Capital Management that
have substantially similar investment objectives, policies and strategies as the
Harbor Small Cap Growth Fund. Westfield Capital Management has prepared and
presented the historical performance shown for the composite in compliance with
the Performance Presentation Standards of the Association for Investment
Management and Research (AIMR-PPS), the U.S. and Canadian version of the Global
Investment Performance Standards (GIPS). AIMR has not been involved in the
preparation or review of this report. The AIMR method for computing historical
performance differs from the Securities and Exchange Commission's method.
Because the gross performance data shown in the table does not reflect the
deduction of investment advisory fees paid by the accounts comprising the
composite and certain other expenses which would be applicable to mutual funds,
the net performance data may be more relevant to potential investors in the fund
in their analysis of the historical experience of Westfield Capital Management
in managing all small cap growth portfolios, with investment objectives,
policies and strategies substantially similar to those of the Harbor Small Cap
Growth Fund. To calculate the performance of the composite net of advisory fees
and expenses, the actual annual fund operating expenses payable by the Harbor
Small Cap Growth Fund were used.

The historical performance of the Small Cap Growth composite is not that of any
of the Harbor Funds, including Harbor Small Cap Growth Fund and is not
necessarily indicative of any fund's future results. The Harbor Small Cap Growth
Fund commenced operations November 1, 2000. Harbor Small Cap Growth Fund's
actual performance may vary significantly from the past performance of the
composite. While the accounts comprising the composite incurs inflows and
outflows of cash from clients, there can be no assurance that the continuous
offering of a fund's shares and a fund's obligation to redeem its shares will
not adversely impact the fund's performance. Also, the accounts comprising the
composite are not subject to certain investment limitations, diversification
requirements and other restrictions imposed by the Investment Company Act of
1940 and the Internal Revenue Code. If applicable, these limitations,
requirements and restrictions may have adversely affected the performance
results of the composite.

- --------------------------------------------------------------------------------
WESTFIELD CAPITAL MANAGEMENT SMALL CAP GROWTH COMPOSITE PERFORMANCE

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31, 2001:
--------------------------------------------------------------------
SINCE INCEPTION
SMALL CAP GROWTH COMPOSITE* 3 YEARS 5 YEARS 10 YEARS JULY 1, 1989
--------------------------- ------- ------- -------- ---------------

Composite net of all advisory fees and expenses 22.17% 20.30% 16.29% 19.14%
Composite gross of advisory fees 23.82 21.94 17.88 20.76
Russell 2000(R) Growth index 0.25 2.87 7.19 8.03
</Table>

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31:
------------------------------------------------------------
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----

Composite net of all advisory
fees and expenses 12.84% 12.70% -3.39% 30.28% 12.13% 22.69%
Composite gross of advisory fees 14.39 14.24 -2.02 31.99 13.67 24.34
Russell 2000(R) Growth index 7.77 13.36 -2.43 31.04 11.26 12.95

<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31:
---------------------------------------
1998 1999 2000 2001
---- ---- ---- ----

Composite net of all advisory
fees and expenses 12.64% 74.07% 15.74% -9.50%
Composite gross of advisory fees 14.20 76.22 17.32 -8.17
Russell 2000(R) Growth index 1.23 43.09 -22.43 -9.23
</Table>

- -------------------------

Because the adviser has agreed to limit the fund's total operating expenses for
the current year to 1.20%, the performance of the composite net of advisory fees
and expenses after giving effect to the expense limitation would have been:

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31, 2001:
---------------------------------------------------------------------
SINCE INCEPTION
3 YEARS 5 YEARS 10 YEARS JULY 1, 1989
------- ------- -------- ---------------

Composite net after expense limitation 22.41% 20.54% 16.52% 19.37%
</Table>

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31:
--------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ---- ---- ---- ---- ----

Composite net after expense
limitation 13.06% 12.92% -3.20% 30.52% 12.35% 22.92% 12.87% 74.38% 15.97% -9.31%
</Table>

* The Small Cap Growth composite includes all fee paying discretionary accounts
managed by Westfield Capital Management which have substantially similar
investment objectives, policies and strategies as the Harbor Small Cap Growth
Fund. As of December 31, 2001, the Small Cap Growth composite was composed of
147 accounts, totaling approximately $1.8 billion.

THE ADVISER AND SUBADVISERS
- --------------------------------------------------------------------------------

ARMSTRONG SHAW
COMPOSITE
PERFORMANCE
INFORMATION

The following table presents the past performance of a composite of certain
accounts managed by Armstrong Shaw Associates, Inc. ("Armstrong Shaw"). The
Armstrong Shaw Large Cap Value composite is comprised of all fee paying accounts
under discretionary management by Armstrong Shaw that have substantially similar
investment objectives, policies and strategies as the Harbor Large Cap Value
Fund. Armstrong Shaw has prepared and presented the historical performance shown
for the composite in compliance with the Performance Presentation Standards of
the Association for Investment Management and Research (AIMR-PPS), the U.S. and
Canadian version of the Global Investment Performance Standards (GIPS). AIMR has
not been involved in the preparation or review of this report. The AIMR method
for computing historical performance differs from the Securities and Exchange
Commission's method. Because the gross performance data shown in the table does
not reflect the deduction of investment advisory fees paid by the accounts
comprising the composite and certain other expenses which would be applicable to
mutual funds, the net performance data may be more relevant to potential
investors in the fund in their analysis of the historical experience of
Armstrong Shaw in managing all large cap value portfolios with investment
objectives, policies and strategies substantially similar to those of the Harbor
Large Cap Value Fund. To calculate the performance of the composites net of
advisory fees and expenses, the actual annual fund operating expenses payable by
the Harbor Large Cap Value Fund were used.

The historical performance of the Large Cap Value composite is not that of any
of the Harbor Funds, including Harbor Large Cap Value Fund, and is not
necessarily indicative of any fund's future results. Harbor Large Cap Value
Fund's actual performance may vary significantly from the past performance of
this composite. While the account comprising the composite incurs inflows and
outflows of cash from clients, there can be no assurance that the continuous
offering of a fund's shares and a fund's obligation to redeem its shares will
not adversely impact the fund's performance. Also, the account comprising the
composite is not subject to certain investment limitations, diversification
requirements and other restrictions imposed by the Investment Company Act of
1940 and the Internal Revenue Code. If applicable, these limitations,
requirements and restrictions may have adversely affected the performance
results of the composite.

- --------------------------------------------------------------------------------
ARMSTRONG SHAW LARGE CAP VALUE COMPOSITE PERFORMANCE

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31, 2001:
---------------------------------------------------------------------
SINCE INCEPTION
LARGE CAP VALUE COMPOSITE* 3 YEARS 5 YEARS 10 YEARS JANUARY 1, 1988
-------------------------- ------- ------- -------- ---------------

Composite net of all advisory fees and expenses 10.89% 17.60% 16.99% 15.77%
Composite gross of advisory fees 11.73 18.49 17.94 16.18
Russell 1000(R) Value index 2.74 11.13 14.16 14.48
</Table>

Composite net of all advisory fees
and expenses 11.23% 13.29% 0.04% 39.53% 21.38% 33.52%
Composite gross of advisory fees 12.14 14.26 1.09 40.69 22.35 34.55
Russell 1000(R) Value index 13.81 18.12 -1.99 38.35 21.64 35.18

<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31:
-------------------------------------
1998 1999 2000 2001
---- ---- ---- ----

Composite net of all advisory fees
and expenses 23.53% 16.31% 7.41% 9.02%
Composite gross of advisory fees 24.46 17.16 8.26 9.82
Russell 1000(R) Value index 15.63 7.35 7.01 -5.59
</Table>

- -------------------------

* The Large Cap Value composite includes all fee paying discretionary accounts
managed by Armstrong Shaw which have substantially similar investment
objectives, policies and strategies as the Harbor Large Cap Value Fund. As of
December 31, 2001, the Large Cap Value composite was composed of 77 accounts,
totaling approximately $2.2 billion.

THE ADVISER AND SUBADVISERS
- --------------------------------------------------------------------------------

DALTON,
GREINER,
HARTMAN,
MAHER & CO.
COMPOSITE
PERFORMANCE
INFORMATION

The following table presents the past performance of a composite of certain
accounts managed by Dalton, Greiner, Hartman, Maher & Co. ("DGHM"). The DGHM Mid
Cap Value composite is comprised of all fee paying accounts under discretionary
management by DGHM that have substantially similar investment objectives,
policies and strategies as the Harbor Mid Cap Value Fund. DGHM has prepared and
presented the historical performance shown for the composite in compliance with
the Performance Presentation Standards of the Association for Investment
Management and Research (AIMR-PPS), the U.S. and Canadian version of the Global
Investment Performance Standards (GIPS). AIMR has not been involved in the
preparation or review of this report. The AIMR method for computing historical
performance differs from the Securities and Exchange Commission's method.
Because the gross performance data shown in the table does not reflect the
deduction of investment advisory fees paid by the accounts comprising the
composite and certain other expenses which would be applicable to mutual funds,
the net performance data may be more relevant to potential investors in the fund
in their analysis of the historical experience of DGHM in managing all mid cap
value portfolios, with investment objectives, policies and strategies
substantially similar to those of the Harbor Mid Cap Value Fund. To calculate
the performance of the composite net of advisory fees and expenses, the
estimated annual fund operating expenses payable by the Harbor Mid Cap Value
Fund were used.

The historical performance of the Mid Cap Value composite is not that of any of
the Harbor funds, including Harbor Mid Cap Value Fund and is not necessarily
indicative of any fund's future results. The Harbor Mid Cap Value Fund commenced
operations on March 1, 2002, and does not yet have a full year of its own
performance record. Harbor Mid Cap Value Fund's actual performance may vary
significantly from the past performance of the composite. While the accounts
comprising the composite incurs inflows and outflows of cash from clients, there
can be no assurance that the continuous offering of a fund's shares and a fund's
obligation to redeem its shares will not adversely impact the fund's
performance. Also, the accounts comprising the composite are not subject to
certain investment limitations, diversification requirements and other
restrictions imposed by the Investment Company Act of 1940 and the Internal
Revenue Code. If applicable, these limitations, requirements and restrictions
may have adversely affected the performance results of the composite.

- --------------------------------------------------------------------------------
DGHM MID CAP VALUE COMPOSITE PERFORMANCE

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31, 2001:
--------------------------------------------------------------------
SINCE INCEPTION
MID CAP VALUE COMPOSITE* 3 YEARS 5 YEARS 10 YEARS JANUARY 1, 1987
------------------------ ------- ------- -------- ---------------

Composite net of all advisory fees and
expenses 22.63% 17.22% 16.09% 14.85%
Composite gross of advisory fees 24.36 18.89 17.75 16.49
Russell Midcap(R) Value index 6.80 11.46 14.41 13.47
</Table>

Composite net of all advisory fees and
expenses 22.61% 23.34% -5.70% 15.78% 21.66% 27.75% -6.07% 17.50% 40.08% 12.04%
Composite gross of advisory fees 24.33 25.07 -4.29 17.43 23.37 29.53 -4.65 19.18 41.99 13.67
Russell Midcap(R) Value index 21.68 15.62 -2.13 34.93 20.26 34.37 5.08 -0.11 19.18 2.33
</Table>

- -------------------------

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31, 2001:
--------------------------------------------------------------------
SINCE INCEPTION
3 YEARS 5 YEARS 10 YEARS JANUARY 1, 1987
------- ------- -------- ---------------

Composite net after expense limitation 22.95% 17.52% 16.39% 15.15%
</Table>

Composite net after expense limitation 22.92% 23.66% -5.44% 16.08% 21.97% 28.07% -5.81% 17.80% 40.43% 12.34%
</Table>

* The Mid Cap Value composite includes all fee paying discretionary accounts
managed by DGHM which have substantially similar investment objectives,
policies and strategies as the Harbor Mid Cap Value Fund. As of December 31,
2001, the Mid Cap Value composite was composed of 10 accounts totaling
approximately $80 million.

THE ADVISER AND SUBADVISERS
- --------------------------------------------------------------------------------

EARNEST
PARTNERS
COMPOSITE
PERFORMANCE
INFORMATION

The following table presents the past performance of a composite of certain
accounts managed by EARNEST Partners LLC. The EARNEST Partners Small Cap Value
composite is comprised of all fee paying accounts under discretionary management
by EARNEST Partners that have substantially similar investment objectives,
policies and strategies as the Harbor Small Cap Value Fund. EARNEST Partners has
prepared and presented the historical performance shown for the composite in
compliance with the Performance Presentation Standards of the Association for
Investment Management and Research (AIMR-PPS), the U.S. and Canadian version of
the Global Investment Performance Standards (GIPS). AIMR has not been involved
in the preparation or review of this report. The AIMR method for computing
historical performance differs from the Securities and Exchange Commission's
method. Because the gross performance data shown in the table does not reflect
the deduction of investment advisory fees paid by the accounts comprising the
composite and certain other expenses which would be applicable to mutual funds,
the net performance data may be more relevant to potential investors in the fund
in their analysis of the historical experience of EARNEST Partners in managing
all small cap value portfolios, with investment objectives, policies and
strategies substantially similar to those of the Harbor Small Cap Value Fund. To
calculate the performance of the composite net of advisory fees and expenses,
the estimated annual fund operating expenses payable by the Harbor Small Cap
Value Fund were used.

The historical performance of the Small Cap Value composite is not that of any
of the Harbor funds, including Harbor Small Cap Value Fund and is not
necessarily indicative of any fund's future results. The Harbor Small Cap Value
Fund commenced operations on December 14, 2001, and does not yet have a full
year of its own performance record. Harbor Small Cap Value Fund's actual
performance may vary significantly from the past performance of the composite.
While the accounts comprising the composite incurs inflows and outflows of cash
from clients, there can be no assurance that the continuous offering of a fund's
shares and a fund's obligation to redeem its shares will not adversely impact
the fund's performance. Also, the accounts comprising the composite are not
subject to certain investment limitations, diversification requirements and
other restrictions imposed by the Investment Company Act of 1940 and the
Internal Revenue Code. If applicable, these limitations, requirements and
restrictions may have adversely affected the performance results of the
composite.

- --------------------------------------------------------------------------------
EARNEST PARTNERS SMALL CAP VALUE COMPOSITE PERFORMANCE

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31, 2001:
---------------------------------------------------------------------
SINCE INCEPTION
SMALL CAP VALUE COMPOSITE* 1 YEAR 2 YEARS 3 YEARS JANUARY 1, 1999
-------------------------- ------ ------- ------- ---------------

Composite net of all advisory fees
and expenses 13.70% 24.72% 21.62% 21.62%
Composite gross of advisory fees 15.34 26.48 23.34 23.34
Russell 2000(R) Value index 14.03 18.34 11.33 11.33
</Table>

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31:
-----------------------------------------------------------------
1999 2000 2001
---- ---- ----

Composite net of all advisory fees and expenses 15.64% 36.82% 13.70%
Composite gross of advisory fees 17.29 38.69 15.34
Russell 2000(R) Value index -1.49 22.83 14.03
</Table>

- -------------------------

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31, 2001:
---------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 2 YEARS 3 YEARS JANUARY 1, 1999
------ ------- ------- ---------------

Composite net after expense limitation 14.00% 25.05% 21.93% 21.93%
</Table>

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31:
---------------------------------------------------------------
1999 2000 2001
---- ---- ----

Composite net after expense limitation 15.94% 37.16% 14.00%
</Table>

* The Small Cap Value composite includes all fee paying discretionary accounts
managed by EARNEST Partners which have substantially similar investment
objectives, policies and strategies as the Harbor Small Cap Value Fund. As of
December 31, 2001, the Small Cap Value composite was composed of 4 accounts,
totaling approximately $182 million.

THE ADVISER AND SUBADVISERS
- --------------------------------------------------------------------------------

MASTHOLM
ASSET
MANAGEMENT
COMPOSITE
PERFORMANCE
INFORMATION

The following table presents the past performance of a composite of certain
accounts managed by Mastholm Asset Management LLC ("Mastholm"). The Mastholm
International Growth composite is comprised of all fee paying accounts under
discretionary management by Mastholm that have substantially similar investment
objectives, policies and strategies as the Harbor International Growth Fund.
Mastholm Asset Management has prepared and presented the historical performance
shown for the composite in compliance with the Performance Presentation
Standards of the Association for Investment Management and Research (AIMR-PPS),
the U.S. and Canadian version of the Global Investment Performance Standards
(GIPS). AIMR has not been involved in the preparation or review of this report.
The AIMR method for computing historical performance differs from the Securities
and Exchange Commission's method. Because the gross performance data shown in
the table does not reflect the deduction of investment advisory fees paid by the
accounts comprising the composite and certain other expenses which would be
applicable to mutual funds, the net performance data may be more relevant to
potential investors in the fund in their analysis of the historical experience
of Mastholm in managing all international growth equity portfolios with
investment objectives, policies and strategies substantially similar to those of
the Harbor International Growth Fund. To calculate the performance of the
composites net of advisory fees and expenses, the actual annual fund operating
expenses payable by the Harbor International Growth Fund were used.

The historical performance of the Mastholm International Growth composite is not
that of any of the Harbor Funds, including Harbor International Growth Fund, and
is not necessarily indicative of any fund's future results. Harbor International
Growth Fund's actual performance may vary significantly from the past
performance of this composite. While the account comprising the composite incurs
inflows and outflows of cash from clients, there can be no assurance that the
continuous offering of a fund's shares and a fund's obligation to redeem its
shares will not adversely impact the fund's performance. Also, the account
comprising the composite is not subject to certain investment limitations,
diversification requirements and other restrictions imposed by the Investment
Company Act of 1940 and the Internal Revenue Code. If applicable, these
limitations, requirements and restrictions may have adversely affected the
performance results of the composite.

- --------------------------------------------------------------------------------
MASTHOLM INTERNATIONAL GROWTH COMPOSITE PERFORMANCE

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31, 2001:
---------------------------------------------------------------------
SINCE INCEPTION
INTERNATIONAL GROWTH COMPOSITE* 2 YEARS 3 YEARS JULY 1, 1997
------------------------------- ------- ------- ---------------

Composite net of all advisory fees
and expenses -12.09% 4.44% 4.53%
Composite gross of advisory fees -11.27 5.38 5.50
EAFE Growth index -24.55 -9.67 -4.05
</Table>

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31:
----------------------------------------------------------------
1998 1999 2000 2001
---- ---- ---- ----

Composite net of all advisory fees and expenses 10.34% 47.41% 2.17% -24.36%
Composite gross of advisory fees 11.38 48.63 3.08 -23.63
EAFE Growth index 22.21 29.46 -24.51 -24.58
</Table>

- -------------------------

* The International Growth composite includes all fee paying discretionary
accounts managed by Mastholm which have substantially similar investment
objectives, policies and strategies as the Harbor International Growth Fund.
As of December 31, 2001, the International Growth composite was composed of 18
accounts, totaling approximately $2.7 billion.

THE ADVISER AND SUBADVISERS
- --------------------------------------------------------------------------------

BPI GLOBAL
ASSET
MANAGEMENT
COMPOSITE
PERFORMANCE
INFORMATION

The following table presents the past performance of a composite of certain
accounts managed by BPI Global Asset Management LLP. The BPI Global Asset
Management Global Equity composite is comprised of all fee paying accounts under
discretionary management by BPI Global Asset Management that have substantially
similar investment objectives, policies and strategies as the Harbor Global
Equity Fund. BPI Global Asset Management has prepared and presented the
historical performance shown for the composite in compliance with the
Performance Presentation Standards of the Association for Investment Management
and Research (AIMR-PPS), the U.S. Canadian version of the Global Investment
Performance Standards (GIPS). AIMR has not been involved in the preparation or
review of this report. The AIMR method for computing historical performance
differs from the Securities and Exchange Commission's method. Because the gross
performance data shown in the table does not reflect the deduction of investment
advisory fees paid by the accounts comprising the composite and certain other
expenses which would be applicable to mutual funds, the net performance data may
be more relevant to potential investors in the fund in their analysis of the
historical experience of BPI Global Asset Management in managing all global
equity portfolios with investment objectives, policies and strategies
substantially similar to those of the Harbor Global Equity Fund. To calculate
the performance of the composites net of advisory fees and expenses, the actual
fund operating expenses for the 9 month period ended October 31, 2001 payable by
the Harbor Global Equity Fund were used.

The historical performance of the Global Equity composite is not that of any of
the Harbor Funds, including Harbor Global Equity Fund, and is not necessarily
indicative of any fund's future results. The Harbor Global Equity Fund commenced
operations on February 1, 2001, and does not yet have a full year of its own
performance. Harbor Global Equity Fund's actual performance may vary
significantly from the past performance of this composite. While the account
comprising the composite incurs inflows and outflows of cash from clients, there
can be no assurance that the continuous offering of a fund's shares and a fund's
obligation to redeem its shares will not adversely impact the fund's
performance. Also, the account comprising the composite is not subject to
certain investment limitations, diversification requirements and other
restrictions imposed by the Investment Company Act of 1940 and the Internal
Revenue Code. If applicable, these limitations, requirements and restrictions
may have adversely affected the performance results of the composite.

- --------------------------------------------------------------------------------
BPI GLOBAL ASSET MANAGEMENT GLOBAL EQUITY COMPOSITE PERFORMANCE

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31, 2001:
----------------------------------------------------------------------
SINCE INCEPTION
GLOBAL EQUITY COMPOSITE* 2 YEARS 3 YEARS APRIL 1, 1997
------------------------ ------- ------- ---------------

Composite net of all advisory fees and
expenses -20.89% -1.55% 6.72%
Composite gross of advisory fees -19.59 -0.01 8.36
MSCI World index -15.02 -3.37 5.59
</Table>

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31:
----------------------------------------------------------------
1997** 1998 1999 2000 2001
------ ---- ---- ---- ----

Composite net of all advisory fees and expenses 14.38% 24.79% 52.48% -15.87% -25.62%
Composite gross of advisory fees 15.65 26.64 54.62 -14.50 -24.37
MSCI World index 15.76 24.34 24.93 -13.18 -16.82
</Table>

- -------------------------

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31, 2001:
----------------------------------------------------------------------
SINCE INCEPTION
2 YEARS 3 YEARS APRIL 1, 1997
------- ------- ---------------

Composite net after expense limitation -20.60% -1.21% 7.08%
</Table>

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED DECEMBER 31:
----------------------------------------------------------------
1997** 1998 1999 2000 2001
------ ---- ---- ---- ----

Composite net after expense limitation 14.66% 25.20% 52.95% -15.57% -25.34%
</Table>

* The Global Equity composite includes all fee paying discretionary accounts
managed by BPI Global Asset Management which have substantially similar
investment objectives, policies and strategies as the Harbor Global Equity
Fund. As of December 31, 2001, the Global Equity composite was composed of 5
accounts, totaling approximately $967 million.

** Unannualized, since inception, April 1, 1997.

THE ADVISER AND SUBADVISERS
- --------------------------------------------------------------------------------

THE SUBADVISERS
AND FUND MANAGERS

Each fund's investments are selected by one or more subadvisers. The following
table describes each fund's portfolio manager(s), the subadviser that employs
the manager and the manager's business experience.

<Table>
<Caption>
PORTFOLIO MANAGER MANAGER BUSINESS EXPERIENCE
FUND AND SUBADVISER SINCE (PAST FIVE YEARS)

- ---------------------------------------------------------------------------------------------------------------------------------
HARBOR DOMESTIC CAPITAL SPIROS SEGALAS 1990 President (since 1993), Chief
EQUITY FUNDS APPRECIATION Jennison Associates LLC Investment Officer (since
466 Lexington Avenue 1973); and Director and
New York, NY 10017 Founding Member of Jennison
(since 1969).
----------------------------------------------------------------------------------------------------
MID CAP WILLIAM JEFFERY 2000 President, Chairman of the
GROWTH Wall Street Associates Board of Directors, Portfolio
1200 Prospect Street, Suite 100 Manager and Founding Partner,
LaJolla, CA 92037 Wall Street Associates (since
1987).

KENNETH MCCAIN 2000 Director, Portfolio Manager and
Wall Street Associates Founding Partner, Wall Street
Associates (since 1987).

DAVID BARATTA 2000 Portfolio Manager, Wall Street
Wall Street Associates Associates (since 1999); and
Portfolio Manager, Morgan
Grenfell, Inc. (1994-1999).
----------------------------------------------------------------------------------------------------
GROWTH PETER WELLES 1997 President of Emerging Growth
Emerging Growth Advisors, Inc. Advisors, Inc. (since 1993)
401 E. Pratt Street, Suite 211
Baltimore, MD 21202
----------------------------------------------------------------------------------------------------
SMALL CAP WILLIAM MUGGIA 2000 Director, President, Chief
GROWTH Westfield Capital Management Investment Officer and
Company, LLC Portfolio Manager, Westfield
One Financial Center, 23rd Floor Capital Management (since
Boston, MA 02111 1994); Corporate Finance
Division, Alex. Brown & Sons
(1992-1994).
----------------------------------------------------------------------------------------------------
LARGE CAP JEFFREY SHAW 2001 Chairman (since 1999),
VALUE Armstrong Shaw Associates, Inc. President (since 1989) and
45 Grove Street Chief Investment Officer of
New Canaan, CT 06840 Armstrong Shaw Associates, Inc.

----------------------------------------------------------------------------------------------------
MID CAP VALUE TIMOTHY G. DALTON, JR. 2002 Chairman (since 1990) and
Dalton, Greiner, Hartman, Portfolio Manager (since 1987)
Maher & Co. at DGHM.
565 Fifth Avenue
Suite 2101
New York, NY 10017
KENNETH J. GREINER 2002 CEO (since 2001), Portfolio
Dalton, Greiner, Hartman, Manager (since 1987) and
Maher & Co. President (1990- 2000) at DGHM.
BRUCE H. GELLER 2002 Executive Vice President (since
Dalton, Greiner, Hartman, 1999) and Portfolio Manager
Maher & Co. (since 1992) at DGHM.
PETER A. GULLI 2002 Vice President and Portfolio
Dalton, Greiner, Hartman, Manager (since 1999) at DGHM
Maher & Co. and Vice President and Equity
Analyst (1994-1999) at Chase
Manhattan Bank.
----------------------------------------------------------------------------------------------------
SMALL CAP PAUL E. VIERA 2001 CEO, Portfolio Manager, and
VALUE EARNEST Partners LLC founder of EARNEST Partners
75 Fourteenth Street (since 1998); Global Partner
Suite 2300 and senior member of Investment
Atlanta, GA 30309 Committee at INVESCO
(1991-1998).

</Table>

THE ADVISER AND SUBADVISERS
- --------------------------------------------------------------------------------

<Table>
<Caption>
PORTFOLIO MANAGER MANAGER BUSINESS EXPERIENCE
FUND AND SUBADVISER SINCE (PAST FIVE YEARS)

- ---------------------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL INTERNATIONAL HAKAN CASTEGREN 1987 President, Northern Cross
EQUITY FUNDS Northern Cross Investments Limited (since 1993); and President,
Clarendon House Boston Overseas Investors, Inc.
2 Church Street (1990-1993).
Hamilton, Bermuda HMDX
----------------------------------------------------------------------------------------------------
INTERNATIONAL JAMES LATORRE 1996 President, Summit (since 1996);
II Summit International Investments, Vice President, Boston Investor
Inc. Services, Inc. (1993-1997); and
125 Summer Street Vice President, Boston Overseas
Boston, MA 02110 Investors, Inc. (1992-1993).
----------------------------------------------------------------------------------------------------
INTERNATIONAL THEODORE TYSON 2001 Managing Director, Chief
GROWTH Mastholm Asset Management LLC Investment Officer and
10500 NE 8th Street Portfolio Manager of Mastholm
Suite 1725 Asset Management LLC (since
Bellevue, WA 98004 1997).

JOSEPH JORDAN 2001 Director and Portfolio Manager
Mastholm Asset Management of Mastholm (since 1997).
DOUGLAS ALLEN 2001 Director and Portfolio Manager
Mastholm Asset Management of Mastholm (since 1999);
International Investment
Analyst, American Century
Investors (1995-1999).
----------------------------------------------------------------------------------------------------
GLOBAL EQUITY DAN JAWORSKI 2001 Chief Investment Officer,
BPI Global Asset Management LLP Managing Director and
1900 Summit Tower Blvd, Suite 450 Co-Founder, BPI Global Asset
Orlando, FL 32810 Management LLP (since 1997);
and Managing Director of
International Portfolio
Management and Research, STI
Capital Management (SunTrust,
Inc.) (1995-1997).

PABLO SALAS 2001 Portfolio Manager, Managing
BPI Global Asset Management LLP Director and Co-Founder, BPI
Global Asset Management LLP
(since 1997); and Portfolio
Manager, STI Capital Management
(SunTrust, Inc.) (1996-1997).

JON SORENSON 2001 Portfolio Manager, BPI Global
BPI Global Asset Management LLP Asset Management LLP (since
1998); and Research Analyst,
STI Capital Management
(SunTrust, Inc.) (1990-1998)
- ---------------------------------------------------------------------------------------------------------------------------------
HARBOR FIXED INCOME FUNDS BOND WILLIAM GROSS 1987 Managing Director, PIMCO (Del.
Pacific Investment Management Co. G.P.) (since 1994); and
840 Newport Center Drive Managing Director, PIMCO
P.O. Box 6430 (1982-1994).
Newport Beach, CA 92658-6430
----------------------------------------------------------------------------------------------------
SHORT DURATION DAVID MARMON 2000 Managing Director, FFTW (since
Fischer Francis Trees & Watts, Inc. 1996) and Portfolio Manager,
200 Park Avenue FFTW (1990-1996).
New York, NY 10166
----------------------------------------------------------------------------------------------------
MONEY MARKET DAVID MARMON 2000 Managing Director, FFTW (since
Fischer Francis Trees & Watts, Inc. 1996) and Portfolio Manager,
FFTW (1990-1996).
</Table>

YOUR HARBOR FUND ACCOUNT
- --------------------------------------------------------------------------------

HOW TO PURCHASE SHARES OF HARBOR FUND
If you are investing in an IRA call 1-800-422-1050 or visit our web site at
www.harborfund.com for the appropriate application and information.

Harbor Fund will not accept cash, third-party checks, credit card convenience
checks or checks drawn on banks outside the U.S.

Harbor Fund does not issue share certificates.

Harbor Fund reserves the right to verify the accuracy of the submitted banking
information prior to activation.

All orders to purchase shares received in good order by Harbor Fund or its agent
before the close of regular trading on the New York Stock Exchange ("NYSE"),
usually 4:00 p.m. eastern time, will receive that day's share price. Orders
received in good order after the close of the NYSE will receive the next day's
share price. All purchase orders are subject to acceptance by Harbor Fund.
Neither Harbor Fund nor the shareholder servicing agent is responsible for any
misdirected or lost mail.

- --------------------------------------------------------------------------------

<Table>

BY MAIL OPEN A NEW ACCOUNT ADD TO AN EXISTING ACCOUNT
MINIMUM INVESTMENT $1,000 (regular account) $100 (regular account)
FIRST CLASS MAIL TO: $500 (IRAs, UGMA, UTMA, profit- $100 (IRAs, UGMA, UTMA, profit-
Harbor Transfer, Inc. sharing, savings or pension sharing, savings or pension
P.O. Box 10048 plans and Systematic Investment plans and Systematic Investment
Toledo, OH 43699-0048 Plans) Plans)
EXPRESS OR Complete and sign the Complete the stub at the bottom
REGISTERED MAIL TO: appropriate new account of the most recent
Harbor Transfer, Inc. application. If you are an confirmation.
One SeaGate institution, include a
13th Floor certified copy of a corporate Make your check payable to:
Toledo, OH 43666 resolution identifying "Harbor Fund"
authorized signers.
Make your check payable to:
"Harbor Fund"
-------------------------------------------------------------------------------------------

BY WIRE OPEN A NEW ACCOUNT ADD TO AN EXISTING ACCOUNT
MINIMUM INVESTMENT $5,000 $500
WIRE TO: Send the completed account Instruct your bank to wire the
State Street Bank and application to Harbor Transfer amount of the additional
Trust Company at the address above. investment to State Street Bank
Boston, MA and Trust Company.
ABA#: 0110 0002 8 Instruct your bank to wire the
Acct: DDA #3018-065-7 purchase amount to State Street Call the shareholder servicing
Supply fund name, Bank and Trust Company, after agent at 1-800-422-1050 for
account registration your account had been additional instructions if you
and account number established. are sending a wire of $100,000
or more.
Call the shareholder servicing
agent at 1-800-422-1050 for
additional instructions if you
are sending a wire of $100,000
or more.
-------------------------------------------------------------------------------------------

BY TELEPHONE ADD TO AN EXISTING ACCOUNT
MINIMUM INVESTMENT $100
MAXIMUM INVESTMENT $10,000
CALL HARBOR TRANSFER You must have banking instructions already established on your
AT: 1-800-422-1050 account. If banking instructions were not established at the time
you opened your account, call the shareholder servicing agent at
1-800-422-1050 to request an Account Maintenance form to add this
feature to your account or you may download the form from our
website at www.harborfund.com.
</Table>

YOUR HARBOR FUND ACCOUNT
- --------------------------------------------------------------------------------
<Table>

HOW TO PURCHASE SHARES OF ACCESSHARBOR ADD TO AN EXISTING ACCOUNT
HARBOR FUND
MINIMUM INVESTMENT $100
MAXIMUM INVESTMENT $10,000

VISIT OUR WEBSITE AT: You must have banking instructions already established on your
www.accessharbor.com account. If banking instructions were not established at the time
you opened your account, call the shareholder servicing agent at
1-800-422-1050 to request an Account Maintenance form to add this
feature to your account or you may download the form from our
website at www.harborfund.com.
-------------------------------------------------------------------------------------------

If you invest through a financial intermediary, please read that
THROUGH A FINANCIAL firm's program materials carefully to learn of any special rules
INTERMEDIARY OR that may apply. For example, special terms may apply to additional
BROKER service features, fees, or other policies. Contact your financial
intermediary or broker-dealer to find out about its procedures and
fees for processing orders to purchase shares. Purchase orders
received in good order by your financial intermediary or dealer or
dealer's agent before the close of the NYSE, usually 4:00 p.m.
eastern time, on any business day receive that day's share price.
Your financial intermediary or dealer is responsible for promptly
transmitting properly completed orders to the shareholder
servicing agent.
</Table>

YOUR HARBOR FUND ACCOUNT
- --------------------------------------------------------------------------------

HOW TO EXCHANGE SHARES OF HARBOR FUND
An exchange is a redemption of shares from one fund and a purchase of shares in
another.

Exchanges are taxable transactions and you may realize a gain or a loss.

You may exchange among funds if both accounts have the same name, address and
account number. Exchanges must meet the applicable minimum investment amounts
for each fund and each account must have at least $1,000 after the exchange. You
should consider the differences in investment objectives and expenses of a fund
before making an exchange.

All orders to exchange shares received in good order by Harbor Fund or its agent
before the close of regular trading on the NYSE, usually 4:00 p.m. eastern time,
will receive that day's share price. Orders received in good order after the
close of the NYSE will receive the next day's share price.

Harbor Fund will refuse exchanges by any person or group if it believes that a
fund would be unable to invest the money effectively or would otherwise be
adversely affected. Because excessive account transactions can disrupt the
management of a fund and increase fund costs for all shareholders, Harbor Fund
may temporarily or permanently terminate the exchange privilege of any investor
without prior notice who makes more than four exchanges out of the same fund per
calendar year. Accounts under common ownership or control will be counted
together for purposes of the four exchange limit.

Harbor Fund may change or terminate the exchange privilege on 60 days' prior
notice.

- --------------------------------------------------------------------------------

<Table>

BY MAIL Mail a written exchange request to the shareholder servicing
FIRST CLASS MAIL TO: agent. State the name of both funds, the number of shares or
Harbor Transfer, Inc. dollar amount to be exchanged and the account numbers for
P.O. Box 10048 both funds. Sign the request exactly as the name or names
Toledo, OH 43699-0048 (if more than one name) appear on the account registration.
EXPRESS OR Neither Harbor Fund nor the shareholder servicing agent is
REGISTERED MAIL TO: responsible for any misdirected or lost mail.
Harbor Transfer, Inc.
One SeaGate
13th Floor
Toledo, OH 43666
-------------------------------------------------------------------------------------

BY TELEPHONE If the account has telephone exchange privileges, call the
shareholder servicing agent. Identification will be required
CALL HARBOR TRANSFER and all telephone transactions are recorded.
AT:
1-800-422-1050 If you are unable to reach the shareholder servicing agent
by telephone (for example, during unusual market activity),
send the exchange request by mail or via AccessHarbor.
-------------------------------------------------------------------------------------

ACCESSHARBOR If the account has internet exchange privileges, visit our
web site at www.accessharbor.com. If you are unable to
VISIT OUR WEB SITE access our site, (for example during unusual market
AT: activity), you may call the shareholder servicing agent or
www.accessharbor.com send the exchange request by mail.
-------------------------------------------------------------------------------------

THROUGH A FINANCIAL If you invest through a financial intermediary, please read
INTERMEDIARY OR that firm's program materials carefully to learn of any
BROKER special rules that may apply. For example, special terms may
apply to additional service features, fees, or other
policies. Contact your financial intermediary or
broker-dealer to find out about its procedures and fees for
processing orders to exchange shares. Exchanges received in
good order by your financial intermediary or dealer or
dealer's agent before the close of the NYSE, usually 4:00
p.m. eastern time, on any business day receive that day's
share price. Your financial intermediary or dealer is
responsible for promptly transmitting properly completed
orders to the shareholder servicing agent.
</Table>

YOUR HARBOR FUND ACCOUNT
- --------------------------------------------------------------------------------

HOW TO SELL SHARES OF HARBOR FUND

Redemptions are taxable transactions and you may realize a gain or a loss.
Certain shareholders may be subject to backup withholding.

Neither Harbor Fund nor the shareholder servicing agent is obligated, under any
circumstances, to pay interest on redemption proceeds.

Redemption proceeds not cashed within 180 days will be reinvested to the account
in which it was redeemed at the then current NAV.

All orders to sell shares received in good order by Harbor Fund or its agent
before the close of regular trading on the NYSE, usually 4:00 p.m. eastern time,
will receive that day's share price. Orders received in good order after the
close of the NYSE will receive the next day's share price. Each fund has the
right to suspend redemptions of shares and to postpone payment of proceeds for
up to seven days, as permitted by law. Proceeds of the redemption (reduced by
the amount of any tax withholding, if applicable) will be mailed by check
payable to the shareholder of record at the address of record, wired or sent via
ACH to the current banking instructions already on file.

- --------------------------------------------------------------------------------

<Table>

BY MAIL Mail a written redemption request to the shareholder
FIRST CLASS MAIL TO: servicing agent. State the name of the fund, the number of
Harbor Transfer, Inc. shares or dollar amount to be sold and the account number.
P.O. Box 10048 Sign the request exactly as the name or names (if more than
Toledo, OH 43699-0048 one name) appear on the account registration.
EXPRESS OR IRA redemption requests must be made in writing, including
REGISTERED MAIL TO: tax withholding information. If withholding information is
Harbor Transfer, Inc. not specified, Harbor Fund will withhold 10%. Call the
One SeaGate shareholder servicing agent or visit our web site at
13th Floor www.harborfund.com for an IRA Request for Distribution form.
Toledo, OH 43666
Signature guarantees may be required. See "Shareholder and
Account Policies" for more information.
Neither Harbor Fund nor the shareholder servicing agent is
responsible for any misdirected or lost mail.
-------------------------------------------------------------------------------------

BY TELEPHONE If the account has telephone redemption privileges, call the
shareholder servicing agent. Identification will be required
CALL HARBOR TRANSFER and all telephone transactions are recorded.
AT:
1-800-422-1050 If you are unable to reach the shareholder servicing agent
by telephone (for example, during unusual market activity),
send the redemption request by mail or via AccessHarbor.
You may not sell shares in an IRA account by telephone. Call
the shareholder servicing agent for an IRA Request for
Distribution form.
Telephone redemptions are limited to $100,000 per account
per day.
-------------------------------------------------------------------------------------

ACCESSHARBOR If the account has internet redemption privileges, visit our
web site at www.accessharbor.com. If you are unable to
VISIT OUR WEB SITE access our site, (for example during unusual market
AT: activity), you may call the shareholder servicing agent or
www.accessharbor.com send the redemption request by mail.
You may not sell shares in an IRA account or UTMA/UGMA
account on-line. Call the shareholder servicing agent to
request an IRA Request for Distribution form or to request a
redemption from your UTMA/UGMA account.
Internet redemptions are limited to $100,000 per account,
per day.
-------------------------------------------------------------------------------------

THROUGH A FINANCIAL If you invest through a financial intermediary, please read
INTERMEDIARY OR that firm's program materials carefully to learn of any
BROKER special rules that may apply. For example, special terms may
apply to additional service features, fees, or other
policies. Contact your financial intermediary or
broker-dealer to find out about its procedures and fees for
processing orders to sell shares. Redemption orders received
in good order by your financial intermediary or dealer or
dealer's agent before the close of the NYSE, usually 4:00
p.m. eastern time, on any business day receive that day's
share price. Your financial intermediary or dealer is
responsible for promptly transmitting properly completed
orders to the shareholder servicing agent.
</Table>

SHAREHOLDER AND ACCOUNT POLICIES
- --------------------------------------------------------------------------------

TRANSACTION AND ACCOUNT POLICIES

SHARE PRICE
Each fund calculates its net asset value (NAV or share price) at the close of
regular trading on the NYSE on each business day that Harbor Fund is open for
business. A business day is a weekday that is not a holiday listed in the
statement of additional information. If the Exchange closes early, the funds
calculate NAV at that time. Each fund's shares are purchased and redeemed at the
NAV next determined after your purchase or redemption order is received by the
shareholder service agent in good order.

Harbor Fund may allow certain brokers, dealers or institutional investors to
purchase shares for next day settlement.

VALUATION OF SHARES
Harbor Money Market Fund values its securities at amortized cost. Each other
fund values the securities in its portfolio on the basis of market quotations
and valuations provided by independent pricing services. If quotations are not
readily available, or the value of a security has been materially affected by
events occurring after the closing of a foreign exchange, each fund values its
assets by a method that the trustees believe accurately reflects fair value. A
fund that uses fair value to price securities may value those securities higher
or lower than another fund that uses market quotations to price the same
securities.

International markets may be open, and trading may take place on days when U.S.
markets are closed. For this reason, the value of foreign securities owned by a
fund could change on days when you cannot buy or sell shares.

PAYING FOR SHARES BY CHECK
If you purchase fund shares by check:
- - No third-party checks, credit card convenience checks or checks drawn on banks
outside the U.S. are accepted.

- - You may not exchange the shares for up to 10 days to make sure that the check
has cleared.

- - You may sell the shares, but the proceeds may not be mailed for up to 10
business days to make sure that the check has cleared.

- - The shareholder servicing agent will cancel your purchase and deduct $25 from
your account if the check does not clear for any reason. You may also be
prohibited from future purchases.

You can avoid the 10-day holding period by purchasing shares via ACH, wire,
postal money order, U.S. treasury check or Federal Reserve check.

REDEMPTIONS IN KIND
A fund may make payment for shares wholly or in part by distributing portfolio
securities (instead of cash) to the shareholder. The redeeming shareholder must
pay transaction costs to sell these securities.

ACCOUNTS WITH SMALL BALANCES
If your account balance falls below $1,000 ($500 for IRAs, UGMA, UTMA,
profit-sharing, savings or pension plans) due to redemptions, the shareholder
servicing agent may ask that the account be increased to $1,000 ($500) within 60
days. If the account balance is not increased, the shareholder servicing agent
reserves the right to redeem the account at NAV and send the proceeds to the
shareholder.

SIGNATURE GUARANTEES
Signature guarantees are designed to help protect you and Harbor Fund from
fraud.

A signature guarantee is required if you:
- - Redeem more than $100,000;
- - Redeem within the first 15 days after your address of record is changed;
- - Request that proceeds be sent to an address or bank, other than the one of
record; or
- - Request that a check for redemption proceeds be made payable to a person other
than the registered shareholder.

Harbor Fund reserves the right to require a signature guarantee under other
circumstances.

You may obtain a signature guarantee for a nominal fee from most banks,
broker-dealers, credit unions, any securities exchange or association, clearing
agencies, savings associations or trust companies.

A NOTARY PUBLIC STAMP OR SEAL CANNOT BE SUBSTITUTED FOR A SIGNATURE GUARANTEE.

STATEMENTS AND REPORTS

You will receive a confirmation statement after each transaction affecting your
account, however, shareholders participating in an automatic investment program
will receive quarterly confirmations of all transactions. Dividend information
will be confirmed quarterly. You should verify the accuracy of your confirmation
statements immediately after you receive them and contact the shareholder
servicing agent regarding any errors or discrepancies.

The funds produce financial reports, which include a list of each of the fund's
portfolio holdings, semi-annually and update their prospectus annually.

SHAREHOLDER AND ACCOUNT POLICIES
- --------------------------------------------------------------------------------

EACH FUND
DISTRIBUTES
SUBSTANTIALLY
ALL OF ITS INCOME
AND GAINS

DIVIDENDS, DISTRIBUTIONS AND TAXES
Each fund will distribute all or substantially all of its net investment income
and realized capital gains, if any, each year. Each fund declares and pays any
dividends from net investment income and capital gains at least annually, in
December. Money Market Fund declares any dividends from net investment income
daily and pays the dividends monthly. Money Market Fund distributes any capital
gains annually, in December. Each fund may also pay dividends and capital gain
distributions at other times if necessary to avoid federal income or excise tax.
Capital Appreciation Fund, Mid Cap Growth Fund, Growth Fund, Small Cap Growth
Fund, Mid Cap Value Fund, Small Cap Value Fund, International Growth Fund and
Global Equity Fund expect distributions to be primarily from capital gain. Large
Cap Value Fund, International Fund, International Fund II and Bond Fund expects
distributions to be from both capital gain and income. Short Duration Fund and
Money Market Fund expect distributions to be from income.

Dividends from net investment income and short-term capital gain are taxable as
ordinary income and distributions of net long-term capital gain are taxable as
long-term capital gains, which may be taxable at different rates, depending on
the source and the length of time the fund holds its assets. Dividends and
distributions are taxable, whether you receive it in cash or reinvest in
additional fund shares.

Generally, you should avoid investing in a fund shortly before an anticipated
dividend or capital gain distribution. Otherwise, you may pay taxes on dividends
or distributions that are economically equivalent to a partial return of your
investment whether you reinvest the distribution or receive it in cash. Every
January the funds will send you information about the fund's dividends and
distributions during the previous calendar year.

If you do not provide Harbor Fund with your social security number or other
taxpayer identification number along with certifications required by the
Internal Revenue Service, you may be subject to a backup withholding tax of 30%
from your dividends and capital gain distributions, redemptions and any other
payments to you.

Unless otherwise instructed, each fund will send dividends and capital gain
distributions elected to be received as cash to the address of record. Your
distribution option will automatically be converted to having all dividends and
other distributions reinvested in additional shares if either of the following
occur:
- - Postal or other delivery service is unable to deliver checks to the address of
record; or
- - Dividends and capital gain distributions are not cashed within sixty (60)
days.

Neither Harbor Fund nor Harbor Transfer has any obligation, under any
circumstances, to pay interest on dividends or capital gain distributions sent
to a shareholder.

For Harbor Money Market Fund, all dividends and/or capital gain distributions of
$25 or less will be automatically reinvested.

You should consult your tax adviser about particular federal, state and local
taxes that may apply to you.

NORMAL DIVIDEND DISTRIBUTION SCHEDULE

<Table>
<Caption>
FUND ANNUALLY SEMI-ANNUALLY QUARTERLY MONTHLY
- -----------------------------------------------------------------------------------------------

DOMESTIC EQUITY
Harbor Capital Appreciation
Fund X
Harbor Mid Cap Growth Fund X
Harbor Growth Fund X
Harbor Small Cap Growth Fund X
Harbor Large Cap Value Fund X
Harbor Mid Cap Value Fund X
Harbor Small Cap Value Fund X
INTERNATIONAL EQUITY
Harbor International Fund X
Harbor International Fund II X
Harbor International Growth
Fund X
Harbor Global Equity Fund X
FIXED INCOME
Harbor Bond Fund X
Harbor Short Duration Fund X
Harbor Money Market Fund X
- -----------------------------------------------------------------------------------------------
</Table>

INVESTOR SERVICES
- --------------------------------------------------------------------------------

HARBOR FUND PROVIDES A VARIETY OF SERVICES TO MANAGE YOUR ACCOUNT

WWW.HARBORFUND.COM
A variety of information, forms and applications are available at
www.harborfund.com.

ACCESSHARBOR
AccessHarbor allows you the ability to access your account information and
conduct transactions via the internet, 24 hours a day. For transactions
conducted through the Internet, Harbor recommends use of an Internet browser
with 128-bit encryption.

In order to engage in transactions via AccessHarbor, you must authorize us to
transmit account information online and accept online instructions (go to
www.AccessHarbor.com and follow the procedures accordingly).

Payment for purchase of shares through AccessHarbor may be made only through an
ACH debit of your bank account. Redemptions will be paid by check or ACH
transfer only to the address or bank account of record. Only bank accounts held
at domestic financial institutions that are ACH members can be used for
transactions through AccessHarbor.

There is a limit of $10,000 on purchase and $100,000 on redemption transactions
through AccessHarbor. Transactions through AccessHarbor are subject to the same
minimums as other transaction methods.

Neither Harbor Fund nor its agents will be responsible for any losses resulting
from unauthorized or fraudulent transactions through AccessHarbor when
procedures designed for engaging in such transactions are followed.

HARBOR NAVIGATOR
You may call the Harbor Navigator at 1-800-422-1050, 24 hours a day, for
information about your account or to request forms and applications. Procedures
designed to confirm that instructions communicated by telephone are genuine,
including requiring certain identifying information prior to acting upon
instructions, recording all telephone instructions and sending written
confirmation of telephone instructions are used by the shareholder servicing
agent. Neither Harbor Fund nor its agents will be responsible for any losses
resulting from unauthorized or fraudulent transactions by telephone when
procedures designed for engaging in such transactions are followed.

TELE TRANSACTIONS
Tele transactions allows you the ability to purchase, exchange or redeem shares
from your account via the telephone, during normal business hours.

You may select this feature when completing your new account application.

Harbor Fund reserves the right to verify the accuracy of the submitted banking
information prior to activation. The verification may take up to 15 days.

There is a limit of $10,000 on purchase and $100,000 on redemption transactions
via the telephone. Tele transactions are subject to the same minimums as other
transaction methods.

You may not exchange the shares for up to 3 business days to make sure that the
funds from your account have cleared.

You may sell the shares, but the proceeds may not be mailed for up to 3 business
days to make sure that the funds from your account have cleared.

If your automatic clearing house (ACH) transaction does not clear, your purchase
will be cancelled and $25 will be deducted from your account. You may also be
prohibited from future purchases.

If you already have a Harbor Fund account, call the shareholder servicing agent
at 1-800-422-1050 to request an Account Maintenance form to add this feature or
you may download the form from our website at www.harborfund.com.

DIVIDEND EXCHANGE PLAN
You may invest dividends and capital gain distributions from one fund in shares
of another fund. Shares are purchased on the dividend payment date at the
dividend payment date price which is later than the ex-dividend date. Purchases
are credited to your account on the dividend payment date.

TRANSFER ON DEATH REGISTRATION
You may indicate on the account application to whom the account will be
transferred on your death.

TOD registration is available only for accounts registered in an individual name
or as joint tenants with rights of survivorship. TOD registration is NOT
available for IRA, UGMA/UTMA, or institutional accounts. TOD registration
requires the name(s) of the beneficiary(ies) to be listed on the account
registration followed by "TOD, Subject to STA TOD Rules". Harbor Fund reserves
the right to use the term "beneficiaries" in an account registration rather than
list each named beneficiary. However, the shareholder MUST provide the name,
address, social security number and birth date of each beneficiary. Per stirpes
designation will not be accepted.

To add TOD registration to an existing account, call the shareholder servicing
agent at 1-800-422-1050 to request the Transfer on Death Registration

INVESTOR SERVICES
- --------------------------------------------------------------------------------

form and instructions or you may download the form from our web site at
www.harborfund.com.

CHECKWRITING FOR MONEY MARKET FUND

You must have a Money Market Fund account established prior to adding this
service. Call the shareholder servicing agent at 1-800-422-1050 to request a
signature card to add the checkwriting feature. There is no check writing
privilege for IRA accounts.

Individual checks must be for $500 or more. You may not close a Money Market
Fund account by writing a check.

AUTOMATIC INVESTMENT PLAN
You may select this feature when completing the account application. There must
be a minimum balance of $500 in a fund before automatic investing is permitted.
The minimum for each additional automatic investment is $100.

You may not exchange the shares for up to 3 days to make sure that the funds
from your account have cleared.

You may sell the shares, but the proceeds may not be mailed for up to 3 business
days to make sure that the funds from your account have cleared.

If your automatic clearing house (ACH) transaction does not clear, your purchase
will be cancelled and $25 will be deducted from your account. You may also be
prohibited from future purchases.

By using the automatic investment or exchange plans, you are purchasing shares
of a Fund on a scheduled basis without regard to fluctuations in net asset value
per share. Over time, your average cost per share may be lower than if you tried
to time the market. While regular investment plans do not guarantee a profit and
will not protect you against loss in a declining market, they can be an
excellent way to invest for retirement, a home, educational expenses, and other
long-term financial goals.

If you already have a Harbor Fund account, call the shareholder servicing agent
at 1-800-422-1050 to request an Automatic Options form to add this feature or
you may download the form from our web site at www.harborfund.com.

AUTOMATIC EXCHANGE PLAN

You may automatically exchange between Harbor funds either monthly or quarterly.
The minimum exchange amount is $100. The fund exchanged out of must have a
balance of at least $5,000 and the fund exchanged into must have a balance of at
least $500. You must remain in the plan for a minimum of six exchanges.
Exchanges are taxable transactions and you may realize a gain or loss.

AUTOMATIC WITHDRAWAL PLAN
You may make monthly or quarterly redemptions from any fund with a minimum
balance of $10,000.

You may direct Harbor Fund to withdraw a specific number of shares or dollars
(minimum of $100).

If automatic withdrawals continuously exceed reinvested dividends and capital
gain distributions, the account will eventually be depleted. Withdrawals are
redemptions of shares and therefore are taxable transactions for you. You should
consult your tax adviser.

Harbor Fund may amend or terminate the Automatic Withdrawal Plan without notice
to participating shareholders.

RETIREMENT ACCOUNTS

For information on establishing retirement accounts, please call 1-800-422-1050.

- - Traditional IRA - an individual retirement account. Your contributions may or
may not be deductible depending on your circumstances. Rollovers are not
deductible. Assets can grow tax-free and distributions are taxable as income.
- - Roth IRA - an individual retirement account. Your contributions are
non-deductible. Assets grow tax-free and qualified distributions are also
tax-free.
- - SEP IRA - an individual retirement account funded by employer contributions.
Assets grow tax-free and distributions are taxable as income.

- - Other Retirement Plans - A Harbor Fund may be used as an investment in many
other kinds of employer-sponsored retirement plans. All of these accounts need
to be established by the trustee of the plan.

HOUSEHOLDING
The fund may mail one copy of the funds' prospectus, financial reports and
proxies to each household. If you wish to revoke your consent to this practice,
you may do so by contacting the shareholder servicing agent at 1-800-422-1050 or
by writing to Harbor Transfer, Inc., P.O. Box 10048, Toledo, OH 43699-0048.
Harbor will begin mailing prospectuses, financial reports and proxies to you
individually within 30 days after receiving your revocation. Consent is
considered valid until revoked.

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The financial highlights table is intended to help you understand the funds'
financial performance for the past five years, or less if a fund has a shorter
operating history. Certain information reflects financial results for a single
fund share. Total returns represent the rate that a shareholder would have
earned/lost on an investment in a fund (assuming reinvestment of all dividends
and distributions). The information for the most recent fiscal year ended
October 31, 2001, has been audited by Ernst & Young LLP, independent

<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS
---------------------------------------------
NET REALIZED AND
UNREALIZED GAINS/(LOSSES)
ON INVESTMENTS, FUTURES
CONTRACTS, WRITTEN
NET ASSET OPTIONS, SWAP AGREEMENTS,
VALUE NET INVESTMENTS SOLD SHORT TOTAL FROM
BEGINNING INVESTMENT AND FOREIGN CURRENCY INVESTMENT
YEAR/PERIOD ENDED OF PERIOD INCOME/(LOSS) CONTRACTS OPERATIONS

DOMESTIC EQUITY
HARBOR CAPITAL APPRECIATION FUND
October 31, 2001.......................... $48.16 $ .04 $(15.63) $(15.59)
October 31, 2000.......................... 46.92 -- 5.84 5.84
October 31, 1999.......................... 33.51 (.02) 15.78 15.76
October 31, 1998.......................... 34.01 .07 4.35 4.42
October 31, 1997.......................... 25.88 .06 8.95 9.01
- ----------------------------------------------------------------------------------------------------------------------
HARBOR MID CAP GROWTH FUND
October 31, 2001(1)....................... $10.00 $ -- $ (4.36) $ (4.36)
- ----------------------------------------------------------------------------------------------------------------------
HARBOR GROWTH FUND
October 31, 2001.......................... $24.23 $ -- $(12.48) $(12.48)
October 31, 2000.......................... 17.52 -- 7.90 7.90
October 31, 1999.......................... 10.81 (.07) 7.85 7.78
October 31, 1998.......................... 14.20 (.04) (1.07) (1.11)
October 31, 1997(2)....................... 16.00 -- 2.30 2.30
- ----------------------------------------------------------------------------------------------------------------------
HARBOR SMALL CAP GROWTH FUND
October 31, 2001(1)....................... $10.00 $ -- $ (.28) $ (.28)
- ----------------------------------------------------------------------------------------------------------------------
HARBOR LARGE CAP VALUE FUND
October 31, 2001(3)....................... $13.88 $ .24 $ (.68) $ (.44)
October 31, 2000.......................... 15.40 .27 .08 .35
October 31, 1999.......................... 15.21 .27 1.80 2.07
October 31, 1998.......................... 18.17 .27 .79 1.06
October 31, 1997.......................... 16.04 .34 4.13 4.47

INTERNATIONAL EQUITY
HARBOR INTERNATIONAL FUND
October 31, 2001.......................... $38.85 $ .57(c) $ (6.27) $ (5.70)
October 31, 2000.......................... 40.66 .48(c) 1.22 1.70
October 31, 1999.......................... 36.97 .67(c) 5.90 6.57
October 31, 1998.......................... 35.84 .51(c) 1.92 2.43
October 31, 1997.......................... 31.21 .41(c) 5.44 5.85
- ----------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND II
October 31, 2001.......................... $14.28 $ .24(c) $ (3.62) $ (3.38)
October 31, 2000.......................... 13.83 .01(c) 1.23 1.24
October 31, 1999.......................... 11.26 .18(c) 2.54 2.72
October 31, 1998.......................... 12.14 .12(c) (.37) (.25)
October 31, 1997.......................... 10.47 .10(c) 1.63 1.73
- ----------------------------------------------------------------------------------------------------------------------

LESS DISTRIBUTIONS
------------------------------
DIVIDENDS DISTRIBUTIONS
FROM NET FROM NET
INVESTMENT REALIZED TOTAL
YEAR/PERIOD ENDED INCOME CAPITAL GAINS(5) DISTRIBUTIONS

DOMESTIC EQUITY
HARBOR CAPITAL APPRECIATION FUND
October 31, 2001.......................... $ -- $(6.17) $(6.17)
October 31, 2000.......................... -- (4.60) (4.60)
October 31, 1999.......................... (.07) (2.28) (2.35)
October 31, 1998.......................... (.07) (4.85) (4.92)
October 31, 1997.......................... (.02) (.86) (.88)
- ----------------------------------------------------------------------------------------------------------------------
HARBOR MID CAP GROWTH FUND
October 31, 2001(1)....................... $ -- $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------
HARBOR GROWTH FUND
October 31, 2001.......................... $ (.01) $(1.55) $(1.56)
October 31, 2000.......................... -- (1.19) (1.19)
October 31, 1999.......................... -- (1.07) (1.07)
October 31, 1998.......................... -- (2.28) (2.28)
October 31, 1997(2)....................... -- (4.10) (4.10)
- ----------------------------------------------------------------------------------------------------------------------
HARBOR SMALL CAP GROWTH FUND
October 31, 2001(1)....................... $ -- $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------
HARBOR LARGE CAP VALUE FUND
October 31, 2001(3)....................... $ (.24) $ (.19) $ (.43)
October 31, 2000.......................... (.30) (1.57) (1.87)
October 31, 1999.......................... (.25) (1.63) (1.88)
October 31, 1998.......................... (.28) (3.74) (4.02)
October 31, 1997.......................... (.34) (2.00) (2.34)
INTERNATIONAL EQUITY
HARBOR INTERNATIONAL FUND
October 31, 2001.......................... $ (.71) $(3.79) $(4.50)
October 31, 2000.......................... (.65) (2.86) (3.51)
October 31, 1999.......................... (.58) (2.30) (2.88)
October 31, 1998.......................... (.40) (.90) (1.30)
October 31, 1997.......................... (.42) (.80) (1.22)
- ----------------------------------------------------------------------------------------------------------------------
HARBOR INTERNATIONAL FUND II
October 31, 2001.......................... $ (.15) $ (.75) $ (.90)
October 31, 2000.......................... (.17) (.62) (.79)
October 31, 1999.......................... (.15) -- (.15)
October 31, 1998.......................... (.10) (.53) (.63)
October 31, 1997.......................... (.02) (.04) (.06)
- ----------------------------------------------------------------------------------------------------------------------
</Table>

See page 52 for notes to the Financial Highlights.

- --------------------------------------------------------------------------------

auditors, whose report, along with the funds' financial statements, are included
in the funds' annual report (available upon request). The information for years
1997-1999 has been audited by PricewaterhouseCoopers LLP. No financial
highlights exist for Harbor Mid Cap Value Fund or Harbor Small Cap Value Fund,
which commenced operations on March 1, 2002 and December 14, 2001, respectively.

$26.40 (35.23)% $6,020,099 .66% --% .66% --%
48.16 12.26 9,100,317 .64 -- .64 --
46.92 48.59 6,484,801 .66 -- .66 --
33.51 15.72 3,833,598 .68 -- .68 --
34.01 35.73 2,798,404 .70 -- .70 --
- -------------------------------------------------------------------------------------------------------------------------------
$ 5.64 (43.60)%(e) $ 9,752 1.20%(c) .20% 1.20% --%
- -------------------------------------------------------------------------------------------------------------------------------
$10.19 (53.96)% $ 117,951 .95% --% .95% --%
24.23 45.92 275,599 .88 -- .87 --
17.52 76.51 145,249 .90 -- .90 --
10.81 (8.73) 88,030 1.00 -- 1.00 --
14.20 18.64 104,568 1.12 -- 1.12 --
- -------------------------------------------------------------------------------------------------------------------------------
$ 9.72 (2.80)%(e) $ 17,317 1.20%(c) .20% 1.20% --%
- -------------------------------------------------------------------------------------------------------------------------------
$13.01 (3.20)% $ 130,059 .77% --% .77% .14%(a,f)
13.88 3.07 147,615 .80 -- .80 .16(f)
15.40 14.60 157,382 .76 -- .76 --
15.21 6.69 170,468 .79 -- .79 --
18.17 31.08 161,359 .83 -- .83 --

$28.65 (16.40)%(e) $3,497,357 .91%(c) .06% .91% --%
38.85 3.74(e) 4,830,275 .92(c) .06 .92 --
40.66 18.54(e) 5,361,024 .92(c) .06 .92 --
36.97 6.97(e) 5,088,401 .94(c) .06 .94 --
35.84 19.26(e) 5,090,048 .97(c) .05 .97 --
- -------------------------------------------------------------------------------------------------------------------------------
$10.00 (25.22)%(e) $ 77,043 .89%(c) .10% .89% --%
14.28 8.81(e) 126,826 .93(c) .10 .92 --
13.83 24.37(e) 114,791 .92(c) .10 .92 --
11.26 (1.98)(e) 112,669 1.15(c) .10 1.15 --
12.14 16.64(e) 134,957 .99(c) .20 .98 --
- -------------------------------------------------------------------------------------------------------------------------------

RATIO OF
NET INVESTMENT
INCOME/(LOSS)
TO AVERAGE PORTFOLIO
NET ASSETS (%) TURNOVER (%)

.15% 89%
(.07) 86
(.05) 68
.24 70
.23 73
- -------------------------------------------------------------------------------------------------------------------------------
(.92)%(c) 61%
- -------------------------------------------------------------------------------------------------------------------------------
(.17)% 9%
.02 13
(.54) 13
(.30) 23
(.47) 147
- -------------------------------------------------------------------------------------------------------------------------------
(.67)%(c) 56%
- -------------------------------------------------------------------------------------------------------------------------------
1.64% 194%
2.05 106
1.65 110
1.67 114
1.98 146
1.36%(c) 7%
1.40(c) 10
1.65(c) 4
1.27(c) 14
1.20(c) 6
- -------------------------------------------------------------------------------------------------------------------------------
.79%(c) 33%
.85(c) 65
1.36(c) 52
.86(c) 70
1.33(c) 58
- -------------------------------------------------------------------------------------------------------------------------------
</Table>

FINANCIAL HIGHLIGHTS -- CONTINUED
- --------------------------------------------------------------------------------

<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS
--------------------------------------------
NET REALIZED AND
UNREALIZED GAINS/(LOSSES)
ON INVESTMENTS,
FUTURES CONTRACTS, WRITTEN
NET ASSET OPTIONS, SWAP AGREEMENTS,
VALUE NET INVESTMENTS SOLD SHORT TOTAL FROM
BEGINNING INVESTMENT AND FOREIGN CURRENCY INVESTMENT
YEAR/PERIOD ENDED OF PERIOD INCOME/(LOSS) CONTRACTS OPERATIONS

INTERNATIONAL EQUITY -- CONTINUED
HARBOR INTERNATIONAL GROWTH FUND
October 31, 2001........................ $17.56 $ -- $(7.30) $(7.30)
October 31, 2000........................ 19.13 .01 (.06) (.05)
October 31, 1999........................ 18.07 .14 1.30 1.44
October 31, 1998........................ 16.15 .11 2.52 2.63
October 31, 1997........................ 15.35 .12 1.12 1.24
- -------------------------------------------------------------------------------------------------------------------
HARBOR GLOBAL EQUITY FUND
October 31, 2001(4)..................... $10.00 $ -- $(2.61) $(2.61)

FIXED INCOME
HARBOR BOND FUND
October 31, 2001........................ $11.00 $.56(c) $ 1.08 $ 1.64
October 31, 2000........................ 10.85 .57(c) .15 .72
October 31, 1999........................ 11.82 .58(c) (.49) .09
October 31, 1998........................ 11.57 .61(c) .53 1.14
October 31, 1997........................ 11.28 .68(c) .30 .98
- -------------------------------------------------------------------------------------------------------------------
HARBOR SHORT DURATION FUND
October 31, 2001........................ $ 8.51 $.45(c) $ .19 $ .64
October 31, 2000........................ 8.56 .55(c) (.04) .51
October 31, 1999........................ 8.69 .46(c) (.15) .31
October 31, 1998........................ 8.66 .48(c) .09 .57
October 31, 1997........................ 8.79 .45(c,d) .01 .46
- -------------------------------------------------------------------------------------------------------------------
HARBOR MONEY MARKET FUND
October 31, 2001........................ $ 1.00 $.05(c) $ -- $ .05
October 31, 2000........................ 1.00 .06(c) -- .06
October 31, 1999........................ 1.00 .05(c) -- .05
October 31, 1998........................ 1.00 .05(c) -- .05
October 31, 1997........................ 1.00 .02(c) -- .02
- -------------------------------------------------------------------------------------------------------------------

LESS DISTRIBUTIONS
------------------------------
DIVIDENDS DISTRIBUTIONS
FROM NET FROM NET
INVESTMENT REALIZED TOTAL
YEAR/PERIOD ENDED INCOME CAPITAL GAINS(5) DISTRIBUTIONS

INTERNATIONAL EQUITY -- CONTINUED
HARBOR INTERNATIONAL GROWTH FUND
October 31, 2001........................ $ -- $(1.82) $(1.82)
October 31, 2000........................ (.14) (1.38) (1.52)
October 31, 1999........................ (.11) (.27) (.38)
October 31, 1998........................ (.12) (.59) (.71)
October 31, 1997........................ (.08) (.36) (.44)
- -------------------------------------------------------------------------------------------------------------------
HARBOR GLOBAL EQUITY FUND
October 31, 2001(4)..................... $ -- $ -- $ --
FIXED INCOME
HARBOR BOND FUND
October 31, 2001........................ $(.52) $ (.07) $ (.59)
October 31, 2000........................ (.57) -- (.57)
October 31, 1999........................ (.55) (.51) (1.06)
October 31, 1998........................ (.66) (.23) (.89)
October 31, 1997........................ (.69) -- (.69)
- -------------------------------------------------------------------------------------------------------------------
HARBOR SHORT DURATION FUND
October 31, 2001........................ $(.46) $ -- $ (.46)
October 31, 2000........................ (.56) -- (.56)
October 31, 1999........................ (.44) -- (.44)
October 31, 1998........................ (.54) -- (.54)
October 31, 1997........................ (.59) -- (.59)
- -------------------------------------------------------------------------------------------------------------------
HARBOR MONEY MARKET FUND
October 31, 2001........................ $(.05) $ -- $ (.05)
October 31, 2000........................ (.06) -- (.06)
October 31, 1999........................ (.05) -- (.05)
October 31, 1998........................ (.05) -- (.05)
October 31, 1997........................ (.02) -- (.02)
- -------------------------------------------------------------------------------------------------------------------
</Table>

1 Commenced operations on November 1, 2000.

2 Effective May 2, 1997, Harbor Growth Fund appointed Emerging Growth Advisors,
Inc. as its Subadviser.

3 Effective September 20, 2001, Harbor Value Fund changed its name to Harbor
Large Cap Value Fund and appointed Armstrong Shaw Associates as its
Subadviser.

4 For the period February 1, 2001 (inception) through October 31, 2001.

5 Includes both short-term and long-term capital gains.

6 Percentage does not reflect reduction for credit balance arrangements.

a Annualized.

b Unannualized.

c Reflects the Adviser's or Subadviser's agreement not to impose all or a
portion of its management fees.

d Based on monthly average of shares outstanding during the fiscal year.

e The total returns would have been lower had certain expenses not been waived
during the periods shown.

f Dividend expense from investments sold short.

g Interest expense from investments sold short.

- --------------------------------------------------------------------------------

$ 8.44 (45.53)% $ 437,201 .89% --% .89% --%
17.56 (1.58) 1,247,082 .89 -- .89 --
19.13 7.87 1,382,513 .91 -- .91 --
18.07 16.96 1,178,252 .96 -- .96 --
16.15 8.13 918,950 1.02 -- 1.02 --
- --------------------------------------------------------------------------------------------------------------------------
$ 7.39 (26.10)%(b,e) $ 6,765 1.20%(a,c) .20%(a) 1.20%(a) --%

$12.05 15.35%(e) $1,036,552 .56%(c) .22% .56% --%
11.00 6.95(e) 717,255 .60(c) .21 .60 --
10.85 0.85(e) 627,180 .61(c) .21 .60 --
11.82 10.33(e) 473,021 .65(c) .22 .65 --
11.57 8.96(e) 362,594 .67(c) .23 .67 --
- --------------------------------------------------------------------------------------------------------------------------
$ 8.69 7.73%(e) $ 125,959 .28%(c) .20% .27% --%
8.51 6.21(e) 125,032 .29(c) .20 .28 --
8.56 3.68(e) 251,442 .28(c) .20 .28 --
8.69 6.81(e) 217,244 .36(c) .20 .36 --
8.66 5.48(e) 162,476 .38(c) .20 .36 .64(g)
- --------------------------------------------------------------------------------------------------------------------------
$ 1.00 4.83%(e) $ 168,834 .38%(c) .12% .38% --%
1.00 5.99(e) 105,893 .48(c) .12 .47 --
1.00 4.82(e) 97,265 .46(c) .12 .46 --
1.00 5.20(e) 100,276 .57(c) .12 .57 --
1.00 5.11(e) 73,540 .63(c) .12 .62 --
- --------------------------------------------------------------------------------------------------------------------------

RATIO OF
NET INVESTMENT
INCOME/(LOSS)
TO AVERAGE PORTFOLIO
NET ASSETS (%) TURNOVER (%)

.18% 63%
.10 103
.78 48
.62 85
.91 76
- --------------------------------------------------------------------------------------------------------------------------
.45%(a,c) 143%(b)
5.50%(c) 531%
6.16(c) 494
5.35(c) 271
5.41(c) 278
6.04(c) 252
- --------------------------------------------------------------------------------------------------------------------------
5.35%(c) 246%
6.00(c) 478
5.36(c) 578
5.51(c) 727
5.14(c) 1,519
- --------------------------------------------------------------------------------------------------------------------------
4.60%(c) N/A
5.88(c) N/A
4.73(c) N/A
5.08(c) N/A
4.97(c) N/A
- --------------------------------------------------------------------------------------------------------------------------
</Table>

HARBOR FUND DETAILS
- --------------------------------------------------------------------------------

SUMMARY OF INFORMATION ABOUT HARBOR FUND PURCHASES, EXCHANGES AND REDEMPTIONS

The following table summarizes some of the important information set forth under
the heading "Your Harbor Fund Account."

<Table>

MINIMUM INITIAL INVESTMENT
AND SUBSEQUENT ACCOUNT BALANCE $1,000

MINIMUM SUBSEQUENT INVESTMENT $100

TELEPHONE TRANSACTIONS $100 minimum investment or exchange
$10,000 maximum investment or exchange
$100,000 maximum redemption

INTERNET TRANSACTIONS $100 minimum investment
$10,000 maximum investment
Unlimited exchanges
$100,000 maximum redemption

IRA, UGMA AND UTMA ACCOUNTS $500 minimum initial investment and subsequent account
balance
$100 minimum subsequent investment

AUTOMATIC INVESTMENT PLAN $500 minimum initial investment
$100 minimum subsequent investment per month or
quarter

AUTOMATIC WITHDRAWAL PLAN $10,000 minimum initial balance to begin plan

AUTOMATIC EXCHANGE PLAN $5,000 minimum initial balance to begin exchange out
$500 minimum initial balance to begin exchange in
$100 minimum subsequent exchange per month or quarter
Minimum requirement of six exchanges
</Table>

- --------------------------------------------------------------------------------

HARBOR FUND

TICKER SYMBOLS

AND CUSIP NUMBERS
Share prices are available on our web site at www.harborfund.com or by calling
1-800-422-1050 after 7:00 p.m. eastern time.

<Table>
<Caption>
FUND TICKER SYMBOL CUSIP NUMBER
--------------------------------------------------------------------

DOMESTIC EQUITY
Harbor Capital Appreciation Fund HACAX 411511504
Harbor Mid Cap Growth Fund HAMGX 411511876
Harbor Growth Fund HAGWX 411511207
Harbor Small Cap Growth Fund HASGX 411511868
Harbor Large Cap Value Fund HAVLX 411511603
Harbor Mid Cap Value Fund (Not Available) 411511835
Harbor Small Cap Value Fund HASCX 411511843
INTERNATIONAL EQUITY
Harbor International Fund HAINX 411511306
Harbor International Fund II HAIIX 411511884
Harbor International Growth Fund HAIGX 411511801
Harbor Global Equity Fund HAGEX 411511850
FIXED INCOME
Harbor Bond Fund HABDX 411511108
Harbor Short Duration Fund HASDX 411511702
Harbor Money Market Fund HARXX 411511405
</Table>

- --------------------------------------------------------------------------------

UPDATES AVAILABLE

For updates on the Harbor funds following the end of each calendar quarter,
please visit our web site at WWW.HARBORFUND.COM.

HARBOR'S PRIVACY STATEMENT
- --------------------------------------------------------------------------------

WE RECOMMEND THAT YOU READ AND RETAIN THIS NOTICE FOR YOUR PERSONAL FILES.

The following privacy statement is issued by HARBOR FUND and each series of
Harbor Fund and its affiliates, Harbor Capital Advisors. Inc., Harbor Transfer,
Inc. and HCA Securities, Inc.

- --------------------------------------------------------------------------------

PERSONAL INFORMATION

It is our policy to respect the privacy of current and former shareholders and
to protect personal information entrusted to us. We do not sell your personal
information to anyone.

In the course of providing products and services, we collect non-public personal
information about you from the following sources: applications, forms, our
website (including any information captured through our use of "cookies") and
transactions with us, our affiliates or other parties.

The non-public personal information collected may include name, address, e-mail
address, telephone/fax numbers, account number, social security or taxpayer
identification number, investment activity, and bank account information.

When you visit our website, we may collect technical and navigational
information, such as computer browser type, Internet protocol address, pages
visited and average time spent on our website. We may use this information to
alert you to software compatibility issues, or to improve our web design and
functionality. We use "cookies" and similar files that may be placed on your
hard drive for security purposes, to facilitate site navigation and to
personalize the appearance of our site.

- --------------------------------------------------------------------------------

INFORMATION SHARING

We do not share non-public personal information about our current or former
shareholders with any non-affiliated parties, except as permitted by law or
regulation. In the normal course of servicing our shareholders, information we
collect may be shared with companies that perform support services on our behalf
or to other firms that assist us in providing you with products and services,
such as custodians, transfer agents, broker-dealers and marketing service firms
as well as with other financial institutions. We may also share information with
affiliates that are engaged in a variety of financial services in order to
better service your account.

- --------------------------------------------------------------------------------

ACCESS TO INFORMATION

Access to non-public personal information is limited to employees, agents or
other parties who need to know that information to perform their jobs, such as
servicing your accounts, resolving problems or informing you of new products or
services.

- --------------------------------------------------------------------------------

SECURITY

We maintain physical, electronic and procedural safeguards to protect your
nonpublic personal information.

For customers accessing information through our website, various forms of
Internet security such as data encryption firewall barriers, user names and
passwords, and other tools are used. For additional information regarding our
security measures, visit the terms and conditions of use on our website at
WWW.HARBORFUND.COM.

FOR MORE INFORMATION ABOUT HARBOR FUND
- --------------------------------------------------------------------------------

FOR MORE INFORMATION ABOUT HARBOR FUND, THESE DOCUMENTS ARE AVAILABLE

ANNUAL/SEMI-ANNUAL REPORTS

Additional information about the funds' investments is available in the Harbor
Fund annual and semi-annual reports to shareholders. The Harbor Fund annual
report contains a discussion of the market conditions and investment strategies
that significantly affected each fund's performance during its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI provides more detailed information about the funds and is incorporated
into this prospectus by reference.

Free copies of the annual and semiannual reports, the SAI, and other information
and answers to questions about the funds are available at WWW.HARBORFUND.COM or
by contacting the shareholder servicing agent at:

HARBOR TRANSFER, INC.
P.O. Box 10048
Toledo, OH 43699-0048
1-800-422-1050

Investors can review the Harbor Fund reports and SAI at the Public Reference
Room of the Securities and Exchange Commission. Call 1-202-942-8090 for
information on the operation of the Public Reference Room. Investors may get
text-only copies:

- - For a fee, by writing the
Public Reference Room of the Commission
Washington, D.C. 20549-0102

- - For a fee, by sending an e-mail or electronic request to the Public Reference
Room of the Commission at PUBLICINFO@SEC.GOV.

- - Free from the Commission's internet web site at HTTP://WWW.SEC.GOV

This prospectus is not an offer to sell securities in places other than the
United States and its territories.

Investment Company Act File No. 811-4676

- --------------------------------------------------------------------------------

TRUSTEES AND OFFICERS

<Table>

DAVID G. VAN HOOSER Chairman and Trustee
HOWARD P. COLHOUN Trustee
JOHN P. GOULD Trustee
RODGER F. SMITH Trustee
JAMES M. WILLIAMS President
CONSTANCE L.
SOUDERS Vice President and
Treasurer
KAREN B. WASIL Secretary
</Table>

INVESTMENT ADVISER
HARBOR CAPITAL ADVISORS, INC.
One SeaGate
Toledo, Ohio 43666

DISTRIBUTOR AND PRINCIPAL UNDERWRITER
HCA SECURITIES, INC.
One SeaGate
Toledo, OH 43666
419-247-2477

SHAREHOLDER SERVICING AGENT
HARBOR TRANSFER, INC.
P.O. Box 10048
Toledo, OH 43699-0048
1-800-422-1050

CUSTODIAN
STATE STREET BANK AND TRUST COMPANY
P.O. Box 1713
Boston, MA 02105

INDEPENDENT AUDITORS
ERNST & YOUNG LLP
200 Clarendon Street
Boston, MA 02116

LEGAL COUNSEL
HALE AND DORR LLP
60 State Street

Boston, MA 02109

[HARBOR FUND LOGO]
One SeaGate
Toledo, Ohio 43666
1-800-422-1050
www.harborfund.com

2/2002/548,450 [RECYCLED LOGO] Printed on recycled paper.

- --------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION
FOR
INSTITUTIONAL SHARES OF:
HARBOR INTERNATIONAL FUND
AND
HARBOR GROWTH FUND
(EACH A SERIES OF HARBOR FUND)

- --------------------------------------------------------------------------------

This statement of additional information is not a prospectus, but expands upon
and supplements the information contained in the combined proxy statement and
prospectus of Harbor International Fund II ("HIF2") and Harbor Small Cap Growth
Fund ("HSCGF") and Harbor International Fund ("HIF") and Harbor Growth Fund
("HGF"), dated September 9, 2002. This statement of additional information
should be read in conjunction with the combined proxy statement and prospectus.

Additional copies of the combined proxy statement and prospectus may be obtained
by calling our toll-free telephone number at 1-800-422-1050 or by writing to
Harbor Fund, One SeaGate, Toledo, Ohio 43666.

This statement of additional information is accompanied by and incorporates by
reference the statement of additional information dated March 1, 2002 of Harbor
Fund on behalf of HIF and HGF.

The Harbor Fund annual report to shareholders dated October 31, 2001, is also
incorporated by reference herein.

ADDITIONAL INFORMATION ABOUT
HIF AND HGF

The following table shows where in the Harbor Fund statement of additional
information (SAI) you can find additional information about HIF and HGF.

<Table>
<Caption>
-----------------------------------------------------------------------------------------------------------
TYPE OF HEADINGS IN COMBINED SAI OF BOTH FUNDS
INFORMATION HIF HGF
-----------------------------------------------------------------------------------------------------------

FUND HISTORY ORGANIZATION AND CAPITALIZATION
General
Shareholder and Trustee Liability
-----------------------------------------------------------------------------------------------------------
</Table>

DESCRIPTION OF EACH FUND AND ADDITIONAL POLICIES AND INVESTMENT TECHNIQUES DOMESTIC EQUITY FUNDS
ITS INVESTMENTS AND RISKS Harbor Small Cap Growth Fund
INVESTMENT POLICIES
Common Stocks
Preferred Stocks
Convertible Securities
Restricted Securities
Fixed Income Securities
Derivative Instruments
Risks Associated With Specific Types of Derivative Debt Securities
Variable and Floating Rate Securities
U.S. Government Securities
Cash Equivalents
Mortgage-Backed Securities
Guaranteed Mortgage Pass-Through Securities
Multiple-Class Pass-Through Securities and Collateralized Mortgage
Obligations
Stripped Mortgage-Backed Securities
Risk Factors Associated with Mortgage-Backed Securities
Asset-Backed Securities
Mortgage "Dollar Roll" Transactions
Small to Mid Companies
Foreign Securities
Brady Bonds
Sovereign Debt Obligations
Borrowing
Reverse Repurchase Agreements
Lending of Portfolio Securities
Short Sales
Forward Commitments and When-Issued Securities
Repurchase Agreements
Options and Futures Transactions
Options on Securities, Securities Indices And Currency
Futures Contracts and Options on Futures Contracts
Other Considerations
Foreign Currency Transactions
Currency Swaps, Mortgage Swaps and Interest Rate Swaps, Caps, Floors
and Collar
INVESTMENT RESTRICTIONS
-----------------------------------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS, TRUSTEES AND OFFICERS
INCLUDING THE BOARD OF Trustee Compensation Table
TRUSTEES, OFFICER AND TRUSTEE Material Relationships of the Disinterested Trustees
COMPENSATION
-----------------------------------------------------------------------------------------------------------
CONTROL PERSONS, PRINCIPAL TRUSTEES AND OFFICERS
HOLDERS OF SECURITIES AND ORGANIZATION AND CAPITALIZATION
MANAGEMENT OWNERSHIP
-----------------------------------------------------------------------------------------------------------
</Table>

INVESTMENT ADVISORY AND OTHER THE ADVISER, SUBADVISER, DISTRIBUTOR AND SHAREHOLDER SERVICING AGENT
SERVICES The Adviser
The Subadvisers
Other Information
Distributor and Shareholder Servicing Agent
Code of Ethics
CUSTODIAN
-----------------------------------------------------------------------------------------------------------
BROKERAGE ALLOCATION AND OTHER PORTFOLIO TRANSACTIONS
PRACTICES
-----------------------------------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST ORGANIZATION AND CAPITALIZATION
-----------------------------------------------------------------------------------------------------------
PURCHASE, REDEMPTION AND SHAREHOLDER AND ACCOUNT POLICIES
PRICING OF SHARES Redemptions in Kind
Distributions
Distribution Options
NET ASSET VALUE
-----------------------------------------------------------------------------------------------------------
TAXATION OF THE FUNDS TAX INFORMATION
-----------------------------------------------------------------------------------------------------------
CALCULATION OF PERFORMANCE DATA PERFORMANCE AND YIELD INFORMATION
Performance Comparisons
-----------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS
This section incorporates by reference the Harbor Fund annual report
dated October 31, 2001.
-----------------------------------------------------------------------------------------------------------
</Table>

FINANCIAL HIGHLIGHTS

The financial highlights table for HIF and HGF, which is intended to help you
understand HIF and HSCGF's financial performance for the past five years, is
included in the Harbor Fund prospectus dated March 1, 2002. That prospectus is
included herewith and incorporated herein by reference. The pro forma financial
statements set forth below for HIF and HIF2 and for HGF and HSCGF are not
audited. These pro forma financial statements also present information for HIF
and HGF assuming the reorganization had been consummated as of the end of the
12-month period ended of April 30, 2002.

- --------------------------------------------------------------------------------

HARBOR INTERNATIONAL FUND II AND HARBOR INTERNATIONAL FUND

PRO FORMA COMBINING OF ASSETS AND LIABILITIES -- APRIL 30, 2002 (UNAUDITED)
(All amounts shown in Thousands, except per share amounts)

- --------------------------------------------------------------------------------

<Table>
<Caption>
HARBOR HARBOR PRO FORMA PRO FORMA
INTERNATIONAL II INTERNATIONAL ADJUSTMENTS COMBINED
- -------------------------------------------------------------------------------------- ----------

ASSETS
INVESTMENTS, AT IDENTIFIED COST*...... $ 74,022 $2,613,754 $ -- $2,687,776
- -------------------------------------------------------------------------------------- ----------
Investments, at value................. $ 73,625 $3,843,159 $ -- $3,916,784
Cash.................................. -- 1 -- 1
Foreign currency, at value (cost: $82;
$9,051; $0; $9,133)................. 83 9,120 -- 9,203
Receivables for:...................... --
Capital shares sold................. 204 5,427 -- 5,631
Dividends........................... 128 10,250 -- 10,378
Interest............................ -- 35 -- 35
Withholding tax receivable............ 238 8,477 -- 8,715
Other assets.......................... 1 7 -- 8
- -------------------------------------------------------------------------------------- ----------
TOTAL ASSETS.......................... 74,279 3,876,476 -- 3,950,755
- -------------------------------------------------------------------------------------- ----------
LIABILITIES
Payables for:
Capital shares reacquired........... 18 3,630 -- 3,648
Accrued expenses:..................... --
Management fees..................... 39 2,270 (1,687) 622
Trustee fees........................ -- 11 -- 11
Transfer agent fees................. 3 35 528 566
Other............................... 15 1,401 74 1,490
- -------------------------------------------------------------------------------------- ----------
TOTAL LIABILITIES..................... 75 7,347 (1,085) 6,337
- -------------------------------------------------------------------------------------- ----------

NET ASSETS............................ $ 74,204 $3,869,129 $ 1,085 $3,944,418
- -------------------------------------------------------------------------------------- ----------
Net assets consist of:
Paid-in capital..................... $ 86,757 $2,547,228 $ -- $2,633,985
Undistributed net investment
income........................... 130 19,562 1,085 20,777
Accumulated net realized
gain/(loss)...................... (12,286) 72,940 -- 60,654
Unrealized appreciation/
(depreciation) of investments
and translation of assets and
liabilities in foreign
currencies....................... (397) 1,229,399 -- 1,229,002
- -------------------------------------------------------------------------------------- ----------
$ 74,204 $3,869,129 $ 1,085 $3,944,418
- -------------------------------------------------------------------------------------- ----------
Shares of beneficial interest......... 6,692 122,869 (4,302)(a) 125,259
Net asset value, offering and
redemption price per share.......... $ 11.09 $ 31.49 $ -- $ 31.49
</Table>

- -------------------------
* Including short-term investments.
(a) Reflects net effect of combining existing Harbor International Fund II into
Harbor International Fund.

(The accompanying notes are an integral part of the financial statements.)
4

- --------------------------------------------------------------------------------

HARBOR INTERNATIONAL FUND II AND HARBOR INTERNATIONAL FUND

PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED APRIL 30, 2002 (UNAUDITED)
(All amounts in Thousands)

- --------------------------------------------------------------------------------

INVESTMENT INCOME:
Dividends......................... $ 1,617 $ 86,642 $ -- $ 88,259
Interest.......................... 30 7,608 -- 7,638
Foreign taxes withheld............ (149) (9,306) -- (9,455)
- ------------------------------------------------------------------------------------- ---------
TOTAL INVESTMENT INCOME........ 1,498 84,944 -- 86,442
OPERATING EXPENSES:
Management fees................... 638 32,975 (3,556)(a) 30,057
Shareholder communications........ 11 286 67(b) 364
Custodian fees.................... 70 1,769 (3)(c) 1,836
Transfer agent fees............... 81 1,495 528(a) 2,104
Professional fees................. 4 149 24(b) 177
Trustees' fees and expenses....... 2 69 -- 71
Registration fees................. 30 13 (12)(c) 31
Amortization of organization
costs.......................... 2 -- (2)(d) --
Insurance......................... 2 7 -- 9
Miscellaneous..................... 10 3 -- 13
- ------------------------------------------------------------------------------------- ---------
Total operating expenses....... 850 36,766 (2,954) 34,662
Management fees waived............ (83) (1,786) 1,869(a) --
- ------------------------------------------------------------------------------------- ---------
Net operating expenses......... 767 34,980 (1,085) 34,662
- ------------------------------------------------------------------------------------- ---------
NET INVESTMENT INCOME/(LOSS)........ 731 49,964 1,085 51,780
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENT TRANSACTIONS:
Net realized gain/(loss) on:
Investments.................... (12,001) 176,994 -- 164,993
Foreign currency
transactions................. 2 (678) -- (676)
Change in net unrealized
appreciation of:
Investments.................... (1,706) (373,652) -- (375,358)
Translation of assets and
liabilities in foreign
currencies................... 20 848 -- 868
- ------------------------------------------------------------------------------------- ---------
Net gain on investment
transactions................... (13,685) (196,488) -- (210,173)
- ------------------------------------------------------------------------------------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...... $(12,954) $(146,524) $ 1,085 $(158,393)
- ------------------------------------------------------------------------------------- ---------
</Table>

(a) Reflects adjustment to contractual rate of acquiring fund.
(b) Reflects increased expenses related to fund merger.
(c) Reflects expected savings of duplicative costs arising from the merger.
(d) Not applicable.

(The accompanying notes are an integral part of the financial statements.)
5

- --------------------------------------------------------------------------------

HARBOR INTERNATIONAL FUND II
HARBOR INTERNATIONAL FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS (UNAUDITED)
APRIL 30, 2002

- --------------------------------------------------------------------------------

<Table>
<Caption>
SHARES MARKET VALUE (000S)
- ------------------------------------------- -------------------------------------------------------
HARBOR HARBOR HARBOR HARBOR
INTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL PRO FORMA
FUND II FUND PRO FORMA DESCRIPTION FUND II FUND ADJUSTMENT PRO FORMA
- ------------- ------------- ----------- ------------------------- ------------- ------------- ---------- ----------

COMMON STOCKS
AUTO COMPONENTS
Compagnie Financiere
Michelin -- Bearer
-- 83,200 83,200 (SWS).................. $ -- $ 28,218 $ -- $ 28,218
Michelin -- Registered
43,467 1,062,278 1,105,745 (FR)................... 1,683 41,131 -- 42,814
------------- ------------- ---------- ----------
1,683 69,349 -- 71,032
------------- ------------- ---------- ----------
AUTOMOBILES
34,474 1,782,226 1,816,700 Peugeot SA (FR).......... 1,714 88,585 -- 90,299
------------- ------------- ---------- ----------
BANKS
ABN Amro Holding NV
98,230 4,511,062 4,609,292 (NET).................. 1,946 89,364 -- 91,310
Bankinter
SA -- Registered
-- 684,200 684,200 (SP)................... -- 21,766 -- 21,766
56,200 1,267,766 1,323,966 BNP Paribas (FR)......... 2,935 66,210 -- 69,145
Deutsche Bank AG --
11,826 562,774 574,600 Registered (GER)....... 784 37,297 -- 38,081
-- 14,917,026 14,917,026 IntesaBci SpA (IT)....... -- 48,221 -- 48,221
119,367 4,986,733 5,106,100 San Paolo IMI SpA (IT)... 1,330 55,545 -- 56,875
Standard Chartered plc
123,655 5,539,900 5,663,555 (UK)................... 1,522 68,187 -- 69,709
UBS AG -- Registered
32,252 1,401,936 1,434,188 (SWS).................. 1,553 67,518 -- 69,071
United Overseas Bank Ltd.
146,000 7,488,842 7,634,842 (Alien Market) (SGP)... 1,160 59,499 -- 60,659
------------- ------------- ---------- ----------
11,230 513,607 -- 524,837
------------- ------------- ---------- ----------
BEVERAGES
90,000 8,076,537 8,166,537 Diageo plc (UK).......... 1,194 107,173 -- 108,367
------------- ------------- ---------- ----------
BIOTECHNOLOGY
550,000 -- 550,000 Novogen Ltd. (AUS)*...... 813 -- -- 813
------------- ------------- ---------- ----------
BUILDING PRODUCTS
Compagnie de Saint-
6,781 273,400 280,181 Gobain (FR)............ 1,160 46,775 -- 47,935
------------- ------------- ---------- ----------
CHEMICALS
22,881 1,068,619 1,091,500 Bayer AG (GER)........... 749 34,997 -- 35,746
77,000 3,500,000 5,577,000 The BOC Group plc (UK)... 1,166 53,020 -- 54,186
------------- ------------- ---------- ----------
1,915 88,017 -- 89,932
------------- ------------- ---------- ----------
</Table>

COMMON STOCKS -- CONTINUED
COMMUNICATIONS EQUIPMENT
Ericsson (LM) Tel Ab Cl.
-- 2,421,800 2,421,800 B ADR (SW)(1)*......... $ -- $ 6,030 $ -- $ 6,030
Ericsson (LM) Tel Ab
966,657 19,043,743 20,010,400 Series B (SW)*......... 2,424 47,748 -- 50,172
NICE Systems Ltd. ADR
100,574 -- 100,574 (IL)(1)*............... 1,260 -- -- 1,260
------------- ------------- ---------- ----------
3,684 53,778 -- 57,462
------------- ------------- ---------- ----------
DIVERSIFIED FINANCIALS
48,894 2,452,938 2,501,832 ING Groep NV (NET)....... 1,290 64,716 -- 66,006
Swire Pacific Ltd. Cl. A
261,000 4,962,000 5,223,000 (HK)................... 1,566 29,776 -- 31,342
------------- ------------- ---------- ----------
2,856 94,492 -- 97,348
------------- ------------- ---------- ----------
FOOD PRODUCTS
Nestle SA -- Registered
5,000 448,000 453,000 (SWS).................. 1,181 105,808 -- 106,989
------------- ------------- ---------- ----------
HOTELS RESTAURANTS &
LEISURE
28,935 1,425,565 1,454,500 Accor SA (FR)............ 1,169 57,585 -- 58,754
------------- ------------- ---------- ----------
HOUSEHOLD DURABLES
-- 909,391 909,391 Hunter Douglas NV (NET).. -- 30,298 -- 30,298
62,100 1,591,200 1,653,300 Sony Corp. (JP).......... 3,336 85,472 -- 88,808
------------- ------------- ---------- ----------
3,336 115,770 -- 119,106
------------- ------------- ---------- ----------
INSURANCE
Assicurazioni Generali
41,922 1,398,978 1,440,900 SpA (IT)............... 1,012 33,785 -- 34,797
64,628 2,256,272 2,320,900 AXA SA (FR).............. 1,370 47,846 -- 49,216
Swiss Reinsurance Co.
11,000 226,820 237,820 (SWS).................. 1,109 22,869 -- 23,978
Zurich Financial Services
4,209 173,855 178,064 Group (SWS)............ 979 40,418 -- 41,397
------------- ------------- ---------- ----------
4,470 144,918 -- 149,388
------------- ------------- ---------- ----------
LEISURE EQUIPMENT &
PRODUCTS
Fuji Photo Film Co.
-- 1,158,000 1,158,000 (JP)................... -- 36,780 -- 36,780
------------- ------------- ---------- ----------
MACHINERY
Kone Oyj Series B
15,198 -- 15,198 (FIN).................. 1,438 -- -- 1,438
------------- ------------- ---------- ----------
MEDIA
News Corp. Ltd. ADR
42,681 2,347,919 2,390,600 (AUS)(1)............... 1,126 61,938 -- 63,064
------------- ------------- ---------- ----------
</Table>

COMMON STOCKS -- CONTINUED
METALS & MINING
Anglo American plc ADR
-- 4,748,740 4,748,740 (UK)(1)................ $ -- $ 74,318 $ -- $ 74,318
Anglo American plc
75,000 -- 75,000 (UK)................... 1,182 -- -- 1,182
AngloGold Ltd. ADR (S.
47,000 2,000,000 2,047,000 AFR)(1)................ 1,260 53,600 -- 54,860
99,500 5,014,200 5,113,700 Arcelor (FR)*............ 1,371 69,080 -- 70,451
BHP Billiton plc ADR
549,335 12,629,050 13,178,385 (UK)(1)................ 2,937 136,820 -- 139,757
100,000 -- 100,000 Boliden Ab (SW).......... 408 -- -- 408
Companhia Vale do Rio
40,000 1,750,000 1,790,000 Doce Pfd. (BR)......... 1,076 47,057 -- 48,133
34,000 1,399,163 1,433,163 Pechiney SA (FR)......... 1,644 67,655 -- 69,299
Rio Tinto
plc -- Registered
35,000 2,180,183 2,215,183 (UK)................... 650 40,490 -- 41,140
------------- ------------- ---------- ----------
10,528 489,020 -- 499,548
------------- ------------- ---------- ----------
OFFICE ELECTRONICS
30,000 3,240,000 3,270,000 Canon Inc. (JP).......... 1,149 124,096 -- 125,245
------------- ------------- ---------- ----------
OIL & GAS
-- 11,393,662 11,393,662 BG Group plc (UK)........ -- 50,867 -- 50,867
170,598 14,635,576 14,806,174 BP plc (UK).............. 1,455 124,818 -- 126,273
China Petroleum &
4,750,000 214,000,000 218,750,000 Chemical Corp. (CHN)... 761 34,299 -- 35,060
-- 862,300 862,300 Norsk Hydro ASA (NOR).... -- 42,422 -- 42,422
Petrol Brasileiro SA-
59,557 3,899,443 3,959,000 PETROBRAS Pfd. (BR).... 1,385 90,687 -- 92,072
Royal Dutch Petroleum
Co. -- Registered
20,000 1,434,000 1,454,000 (NET).................. 1,045 74,941 -- 75,986
6,567 630,677 637,244 Total Fina Elf SA (FR)... 995 95,519 -- 96,514
------------- ------------- ---------- ----------
5,641 513,553 -- 519,194
------------- ------------- ---------- ----------
PAPER & FOREST PRODUCTS
Holmen Ab Series
-- 1,405,900 1,405,900 B (SW)................. -- 34,157 -- 34,157
97,000 4,900,000 4,997,000 Stora Enso Ojy (FIN)..... 1,230 62,143 -- 63,373
Svenska Cellulosa Ab
38,896 1,780,704 1,819,600 Series B (SW).......... 1,319 60,395 -- 61,714
UPM-Kymmene Corp.
55,991 2,257,809 2,313,800 (FIN).................. 1,956 78,882 -- 80,838
------------- ------------- ---------- ----------
4,505 235,577 -- 240,082
------------- ------------- ---------- ----------
PHARMACEUTICALS
16,098 875,483 891,581 Aventis SA (FR).......... 1,143 62,160 -- 63,303
GlaxoSmithKline plc
292 -- 292 (UK)................... 7 -- -- 7
Novartis AG -- Registered
41,930 2,612,760 2,654,690 (SWS).................. 1,757 109,479 -- 111,236
Novo Nordisk A/S Series B
30,000 2,225,900 2,255,900 (DEN).................. 879 65,230 -- 66,109
------------- ------------- ---------- ----------
3,786 236,869 -- 240,655
------------- ------------- ---------- ----------
SPECIALTY RETAIL
Compagnie Financiere
Richemont AG -- Bearer
72,300 5,538,700 5,611,000 (SWS).................. 1,638 125,519 -- 127,157
------------- ------------- ---------- ----------
</Table>

COMMON STOCKS -- CONTINUED
TOBACCO
British American Tobacco
125,000 8,141,947 8,266,947 plc (UK)............... $ 1,278 $ 83,254 $ -- $ 84,532
Imperial Tobacco Group
56,000 7,803,107 7,859,107 plc (UK)............... 788 109,861 -- 110,649
150,000 12,436,474 12,586,474 Swedish Match Ab (SW).... 1,181 97,896 -- 99,077
------------- ------------- ---------- ----------
3,247 291,011 -- 294,258
------------- ------------- ---------- ----------
TRANSPORTATION
INFRASTRUCTURE
Eurotunnel SA Units
1,401,679 31,779,732 33,181,411 (FR)*.................. 1,287 29,188 -- 30,475
Eurotunnel SA Warrants
(FR)*
-- 19,000,000 19,000,000 Expire 10/30/2003........ -- 513 -- 513
------------- ------------- ---------- ----------
1,287 29,701 -- 30,988
------------- ------------- ---------- ----------
WIRELESS
TELECOMMUNICATION
SERVICES
China Mobile (Hong Kong)
45,069 -- 45,069 Ltd. ADR (HK)*......... 749 -- -- 749
China Mobile (Hong Kong)
-- 10,725,000 10,725,000 Ltd. (HK)*............. -- 35,136 -- 35,136
Vodafone Group plc ADR
64,298 -- 64,298 (UK)(1)................ 1,042 -- -- 1,042
------------- ------------- ---------- ----------
1,791 35,136 -- 36,927
------------- ------------- ---------- ----------
TOTAL COMMON STOCKS
(COST HIF2 and HIF $72,938 and $2,435,652, respectively,
pro forma total $2,508,590)........................................ 72,541 3,665,057 -- 3,737,598
------------- ------------- ---------- ----------
<Caption>
PRINCIPAL AMOUNT (000S) MARKET VALUE (000S)
- ------------------------------------------- -------------------------------------------------------
HARBOR HARBOR HARBOR HARBOR
INTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL PRO FORMA
FUND II FUND PRO FORMA DESCRIPTION FUND II FUND ADJUSTMENT PRO FORMA
- ------------- ------------- ----------- ------------------------- ------------- ------------- ---------- ----------

SHORT-TERM INVESTMENTS
COMMERCIAL PAPER
American Express Credit
Corp. Yrs 1&2
$ -- $25,119 $25,119 1.700% -- 05/01/2002..... $ -- $ 25,119 $ -- $ 25,119
Citicorp
-- 6,246 6,246 1.680% -- 05/01/2002..... -- 6,246 -- 6,246
-- 25,000 25,000 1.680% -- 05/03/2002..... -- 25,000 -- 25,000
------------- ------------- ---------- ----------
-- 31,246 -- 31,246
------------- ------------- ---------- ----------
Exxon Project Investment
Yrs 3&4
-- 35,291 35,291 1.750% -- 05/01/2002..... -- 35,291 -- 35,291
General Electric Capital
Corp.
1,084 30,000 31,084 1.800% -- 05/01/2002..... 1,084 30,000 -- 31,084
-- 30,000 30,000 1.700% -- 05/02/2002..... -- 30,000 -- 30,000
------------- ------------- ---------- ----------
1,084 60,000 -- 61,084
------------- ------------- ---------- ----------
</Table>

<Table>
<Caption>
PRINCIPAL AMOUNT (000S) MARKET VALUE (000S)
- ------------------------------------------- -------------------------------------------------------
HARBOR HARBOR HARBOR HARBOR
INTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL PRO FORMA
FUND II FUND PRO FORMA DESCRIPTION FUND II FUND ADJUSTMENT PRO FORMA
- ------------- ------------- ----------- ------------------------- ------------- ------------- ---------- ----------

SHORT-TERM INVESTMENTS -- CONTINUED
Prudential Funding Corp.
$ -- $ 26,446 $ 26,446 1.730% -- 05/06/2002..... $ -- $ 26,446 $ -- $ 26,446
------------- ------------- ---------- ----------
TOTAL SHORT-TERM INVESTMENTS
(COST HIF and HIF2 $178,102 and $1,084, respectively, pro forma
total $179,186).................................................... 1,084 178,102 -- 179,186
------------- ------------- ---------- ----------
TOTAL INVESTMENTS
(COST HIF2 and HIF $74,022 and $2,613,754, respectively, pro
forma total $2,687,776)............................................ 73,625 3,843,159 -- 3,916,784
CASH AND OTHER ASSETS LESS LIABILITIES................................. 579 25,970 1,085 27,634
------------- ------------- ---------- ----------
TOTAL NET ASSETS....................................................... $74,204 $3,869,129 $1,085 $3,944,418
============= ============= ========== ==========
</Table>

- -------------------------
(1) ADR after the name of a foreign holding stands for American Depositary
Receipts representing ownership of foreign securities. ADRs are issued by
U.S. banking institutions.
* Non-income producing security.

(The accompanying notes are an integral part of the financial statements.)
10

- --------------------------------------------------------------------------------

HARBOR SMALL CAP GROWTH FUND AND HARBOR GROWTH FUND

PRO FORMA COMBINING OF ASSETS AND LIABILITIES -- APRIL 30, 2002 (UNAUDITED)
(All amounts in Thousands, except per share amounts)

- --------------------------------------------------------------------------------

<Table>
<Caption>
HARBOR
SMALL CAP HARBOR PRO FORMA PRO FORMA
GROWTH GROWTH ADJUSTMENTS COMBINED
- --------------------------------------------------------------------------------- ---------

ASSETS
INVESTMENTS, AT IDENTIFIED COST*............ $43,043 $150,519 $ -- $193,562
- --------------------------------------------------------------------------------- ---------
Investments, at value....................... $40,033 $118,685 $ -- $158,718
Repurchase agreements....................... 6,620 -- -- 6,620
Cash........................................ 1 1 -- 2
Receivables for:
Investments sold.......................... 315 221 -- 536
Capital shares sold....................... 4,750 466 -- 5,216
Dividends................................. 2 -- -- 2
Interest.................................. -- 45 -- 45
Other assets................................ 1 13 -- 14
- --------------------------------------------------------------------------------- ---------
TOTAL ASSETS................................ 51,722 119,431 -- 171,153
- --------------------------------------------------------------------------------- ---------
LIABILITIES
Payables for:
Investments purchased..................... 2,430 499 -- 2,929
Capital shares reacquired................. 12 92 -- 104
Accrued expenses:
Management fees........................... 25 145 30 200
Trustee fees.............................. -- 1 -- 1
Transfer agent fees....................... 21 8 (142) (113)
Other..................................... 27 6 18 51
- --------------------------------------------------------------------------------- ---------
TOTAL LIABILITIES........................... 2,515 751 (94) 3,172
- --------------------------------------------------------------------------------- ---------

NET ASSETS.................................. $49,207 $118,680 $ 94 $167,981
- --------------------------------------------------------------------------------- ---------
Net assets consist of:
Paid-in capital........................... $46,493 $164,457 $ -- $210,950
Undistributed/(overdistributed) net
investment income...................... (113) (324) 94 (343)
Accumulated net realized gain/(loss)...... (783) (13,619) -- (14,402)
Unrealized appreciation/(depreciation) of
investments............................ 3,610 (31,834) -- (28,224)
- --------------------------------------------------------------------------------- ---------
$49,207 $118,680 $ 94 $167,981
- --------------------------------------------------------------------------------- ---------
Shares of beneficial interest............... 4,499 11,215 163(a) 15,877
Net asset value, offering and redemption
price per share........................... $ 10.94 $ 10.58 $ -- $ 10.58
</Table>

- -------------------------
* Including repurchase agreements and short-term investments.
(a) Reflects net effect of combining existing Harbor Small Cap Growth Fund into
Harbor Growth Fund.

(The accompanying notes are an integral part of the financial statements.)
11

- --------------------------------------------------------------------------------

HARBOR SMALL CAP GROWTH FUND AND HARBOR GROWTH FUND

PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED APRIL 30, 2002 (UNAUDITED)
(All amounts in Thousands)

- --------------------------------------------------------------------------------

<Table>
<Caption>
HARBOR
SMALL CAP HARBOR PRO FORMA PRO FORMA
GROWTH GROWTH ADJUSTMENTS COMBINED
- ---------------------------------------------------------------------------------- ---------

INVESTMENT INCOME:
Dividends............................... $ 27 $ 44 $ -- $ 71
Interest................................ 30 636 -- 666
- ---------------------------------------------------------------------------------- ---------
TOTAL INVESTMENT INCOME.............. 57 680 -- 737

OPERATING EXPENSES:
Management fees......................... 163 1,047 (1)(a) 1,209
Shareholder communications.............. 5 32 23(b) 60
Custodian fees.......................... 24 25 (5)(c) 44
Transfer agent fees..................... 25 202 (142)(a) 85
Professional fees....................... 5 5 24(b) 34
Trustees' fees and expenses............. -- 3 -- 3
Registration fees....................... 28 35 (24)(c) 39
Insurance............................... -- 2 -- 2
Miscellaneous........................... 7 9 -- 16
- ---------------------------------------------------------------------------------- ---------
Total operating expenses........... 257 1,360 (125) 1,492
Management fees waived.................. (31) -- 31(a) --
- ---------------------------------------------------------------------------------- ---------
Net operating expenses............... 226 1,360 (94) 1,492
- ---------------------------------------------------------------------------------- ---------
NET INVESTMENT INCOME/(LOSS).............. (169) (680) 94 (755)
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENT TRANSACTIONS:
Net realized gain/(loss) on:
Investments.......................... (530) (9,527) -- (10,057)
Change in net unrealized appreciation
of:
Investments.......................... 3,105 (32,548) -- (29,443)
- ---------------------------------------------------------------------------------- ---------
Net gain on investment transactions..... 2,575 (42,075) -- (39,500)
- ---------------------------------------------------------------------------------- ---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $2,406 $(42,755) $ 94 $(40,255)
- ---------------------------------------------------------------------------------- ---------
</Table>

(a) Reflects adjustment to contractual rate of acquiring fund.
(b) Reflects increased expenses related to fund merger.
(c) Reflects expected savings of duplicative costs arising from the merger.

(The accompanying notes are an integral part of the financial statements.)
12

- --------------------------------------------------------------------------------

HARBOR GROWTH FUND
HARBOR SMALL CAP GROWTH FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS (UNAUDITED)
APRIL 30, 2002

- --------------------------------------------------------------------------------

<Table>
<Caption>
SHARES MARKET VALUE (000S)
- ------------------------------------------- -------------------------------------------------------
HARBOR HARBOR
SMALL CAP HARBOR SMALL CAP HARBOR
GROWTH GROWTH GROWTH GROWTH PRO FORMA
FUND FUND PRO FORMA DESCRIPTION FUND FUND ADJUSTMENT PRO FORMA
- ------------- ------------- ----------- ------------------------- ------------- ------------- ---------- ----------

COMMON STOCKS
AEROSPACE & DEFENSE
34,100 -- 34,100 Armor Holdings Inc.*..... $ 864 $ -- $ -- $ 864
------------- ------------- ---------- ----------
AIRLINES
Atlantic Coast Airlines
24,900 -- 24,900 Holdings Inc.*......... 544 -- -- 544
ExpressJet
24,700 -- 24,700 Holdings Inc.*......... 354 -- -- 354
25,700 -- 25,700 SKYWEST Inc.............. 590 -- -- 590
------------- ------------- ---------- ----------
1,488 -- -- 1,488
------------- ------------- ---------- ----------
BANKS
24,600 -- 24,600 East West Bancorp Inc.... 881 -- -- 881
18,400 -- 18,400 Greater Bay Bancorp...... 616 -- -- 616
19,000 -- 19,000 Indymac Bancorp Inc.*.... 480 -- -- 480
Silicon Valley
45,600 -- 45,600 Bancshares............. 1,457 -- -- 1,457
Southwest Bancorporation
19,700 -- 19,700 of Texas Inc.*......... 690 -- -- 690
17,800 -- 17,800 UCBH Holdings Inc........ 702 -- -- 702
------------- ------------- ---------- ----------
4,826 -- -- 4,826
------------- ------------- ---------- ----------
BIOTECHNOLOGY
Albany Molecular Research
15,000 -- 15,000 Inc.*.................. 364 -- -- 364
------------- ------------- ---------- ----------
COMMERCIAL SERVICES &
SUPPLIES
Career Education
20,000 -- 20,000 Corp.*................. 899 -- -- 899
31,400 -- 31,400 DeVry Inc.*.............. 832 -- -- 832
DiamondCluster
International Inc.
-- 140,000 140,000 Cl. A*................. -- 1,764 1,764
20,400 -- 20,400 NDCHealth Corp........... 656 -- -- 656
-- 450,000 450,000 ProsoftTraining.com*..... -- 351 -- 351
Republic Services Inc.
45,000 -- 45,000 Cl. A*................. 891 -- -- 891
10,300 -- 10,300 Stericycle Inc.*......... 696 -- -- 696
Sylvan Learning Systems
2,600 -- 2,600 Inc.*.................. 72 -- -- 72
Waste Connections
26,400 -- 26,400 Inc.*.................. 932 -- -- 932
------------- ------------- ---------- ----------
4,978 2,115 -- 7,093
------------- ------------- ---------- ----------
</Table>

<Table>
<Caption>
SHARES MARKET VALUE (000S)
- ------------------------------------------- -------------------------------------------------------
HARBOR HARBOR
SMALL CAP HARBOR SMALL CAP HARBOR
GROWTH GROWTH GROWTH GROWTH PRO FORMA
FUND FUND PRO FORMA DESCRIPTION FUND FUND ADJUSTMENT PRO FORMA
- ------------- ------------- ----------- ------------------------- ------------- ------------- ---------- ----------

COMMON STOCKS -- CONTINUED
COMMUNICATIONS EQUIPMENT
Advanced Fibre
34,300 -- 34,300 Communications Inc.*... 608 -- -- 608
Aspect Communications
-- 290,000 290,000 Corp.*................. -- 1,389 -- 1,389
Comverse Technology
-- 210,000 210,000 Inc.*.................. -- 2,526 -- 2,526
-- 400,000 400,000 Proxim Corp. Cl. A*...... -- 1,220 -- 1,220
-- 440,000 440,000 Symmetricom Inc.*........ -- 2,816 -- 2,816
-- 335,000 335,000 Verilink Corp.*.......... -- 137 -- 137
------------- ------------- ---------- ----------
608 8,088 -- 8,696
------------- ------------- ---------- ----------
COMPUTERS & PERIPHERALS
Network Appliance
-- 300,000 300,000 Inc.*.................. -- 5,235 -- 5,235
------------- ------------- ---------- ----------
ELECTRIC UTILITIES
-- 110,800 110,800 AES Corp.*............... -- 889 -- 889
------------- ------------- ---------- ----------
ELECTRONIC EQUIPMENT & INSTRUMENTS
Checkpoint Systems
-- 280,000 280,000 Inc.*.................. -- 4,830 -- 4,830
ClearOne Communications
-- 60,000 60,000 Inc.*.................. -- 983 -- 983
-- 280,000 280,000 LoJack Corp.*............ -- 1,540 -- 1,540
-- 415,000 415,000 Pinnacle Systems Inc.*... -- 3,860 -- 3,860
-- 230,000 230,000 Planar Systems Inc.*..... -- 5,725 -- 5,725
------------- ------------- ---------- ----------
-- 16,938 -- 16,938
------------- ------------- ---------- ----------
ENERGY EQUIPMENT & SERVICES
23,900 -- 23,900 Helmerich & Payne Inc.... 985 -- -- 985
20,100 -- 20,100 SEACOR Smit Inc.*........ 967 -- -- 967
Superior Energy Services
59,000 -- 59,000 Inc.*.................. 658 -- -- 658
W-H Energy Services
34,300 -- 34,300 Inc.*.................. 883 -- -- 883
------------- ------------- ---------- ----------
3,493 -- -- 3,493
------------- ------------- ---------- ----------
HEALTH CARE EQUIPMENT & SUPPLIES
Interpore International
87,000 -- 87,000 Inc.*.................. 818 -- -- 818
-- 250,000 250,000 Kensey Nash Corp.*....... -- 4,812 -- 4,812
Molecular Devices
-- 150,000 150,000 Corp.*................. -- 2,678 -- 2,678
Wilson Greatbatch
14,300 -- 14,300 Technologies Inc.*..... 375 -- -- 375
Wright Medical Group
13,300 -- 13,300 Inc.*.................. 252 -- -- 252
------------- ------------- ---------- ----------
1,445 7,490 -- 8,935
------------- ------------- ---------- ----------
</Table>

<Table>
<Caption>
SHARES MARKET VALUE (000S)
- ------------------------------------------- -------------------------------------------------------
HARBOR HARBOR
SMALL CAP HARBOR SMALL CAP HARBOR
GROWTH GROWTH GROWTH GROWTH PRO FORMA
FUND FUND PRO FORMA DESCRIPTION FUND FUND ADJUSTMENT PRO FORMA
- ------------- ------------- ----------- ------------------------- ------------- ------------- ---------- ----------

COMMON STOCKS -- CONTINUED
HEALTH CARE PROVIDERS & SERVICES
60,500 -- 60,500 Alliance Imaging Inc.*... 792 -- -- 792
Boron, LePore &
10,900 -- 10,900 Associates Inc.*....... 130 -- -- 130
Community Health Systems
34,200 -- 34,200 Inc.*.................. 992 -- -- 992
34,500 -- 34,500 Cross Country Inc.*...... 1,044 -- -- 1,044
Health Management
Associates Inc. Cl.
-- 130,000 130,000 A*..................... -- 2,774 2,774
31,700 -- 31,700 Manor Care Inc.*......... 813 -- -- 813
Orthodontic Centers of
-- 105,000 105,000 America Inc.*.......... -- 2,798 -- 2,798
PSS World Medical
75,000 -- 75,000 Inc.*.................. 742 -- -- 742
Quintiles Transnational
52,900 -- 52,900 Corp.*................. 751 -- -- 751
26,800 -- 26,800 RehabCare Group Inc.*.... 714 -- -- 714
45,000 -- 45,000 Select Medical Corp.*.... 677 -- -- 677
Specialty Laboratories
5,000 -- 5,000 Inc.................... 44 -- -- 44
------------- ------------- ---------- ----------
6,699 5,572 -- 12,271
------------- ------------- ---------- ----------
HOTELS RESTAURANTS & LEISURE
-- 60,000 60,000 Carnival Corp............ -- 1,999 1,999
CEC Entertainment
19,000 -- 19,000 Inc.*.................. 878 -- -- 878
Extended Stay America
45,300 -- 45,300 Inc.*.................. 756 -- -- 756
------------- ------------- ---------- ----------
1,634 1,999 -- 3,633
------------- ------------- ---------- ----------
INSURANCE
Converium Holding AG
30,300 -- 30,300 ADR(1)................. 830 -- -- 830
Everest Reinsurance
10,600 -- 10,600 Holdings Inc........... 720 -- -- 720
Philadelphia Consolidated
17,300 -- 17,300 Holdings Corp.......... 739 -- -- 739
RenaissanceRe Holdings
5,000 -- 5,000 Ltd.................... 586 -- -- 586
------------- ------------- ---------- ----------
2,875 -- -- 2,875
------------- ------------- ---------- ----------
INTERNET SOFTWARE & SERVICES
37,400 -- 37,400 FreeMarkets Inc.......... 664 -- -- 664
-- 200,000 200,000 Netegrity Inc.*.......... -- 1,530 -- 1,530
-- 130,000 130,000 Sonicwall Inc.*.......... -- 965 -- 965
-- 170,000 170,000 Stellent Inc.*........... -- 896 -- 896
------------- ------------- ---------- ----------
664 3,391 -- 4,055
------------- ------------- ---------- ----------
MACHINERY
Flow International
-- 200,000 200,000 Corp.*................. -- 2,120 2,120
------------- ------------- ---------- ----------
</Table>

<Table>
<Caption>
SHARES MARKET VALUE (000S)
- ------------------------------------------- -------------------------------------------------------
HARBOR HARBOR
SMALL CAP HARBOR SMALL CAP HARBOR
GROWTH GROWTH GROWTH GROWTH PRO FORMA
FUND FUND PRO FORMA DESCRIPTION FUND FUND ADJUSTMENT PRO FORMA
- ------------- ------------- ----------- ------------------------- ------------- ------------- ---------- ----------

COMMON STOCKS -- CONTINUED
MEDIA
Entravision
45,400 -- 45,400 Communications Corp.*.. 658 -- -- 658
Information Holdings
8,200 -- 8,200 Inc.*.................. 256 -- -- 256
Insight Communications
19,700 -- 19,700 Co. Inc. Cl. A*........ 306 -- -- 306
Mediacom Communications
1,100 -- 1,100 Corp. Cl. A*........... 11 -- -- 11
------------- ------------- ---------- ----------
1,231 -- -- 1,231
------------- ------------- ---------- ----------
METALS & MINING
36,300 -- 36,300 Arch Coal Inc............ 806 -- -- 806
------------- ------------- ---------- ----------
MULTILINE RETAIL
Dollar Tree Stores
-- 67,500 67,500 Inc.*.................. -- 2,574 -- 2,574
-- 100,000 100,000 TJX Cos. Inc............. -- 4,358 -- 4,358
------------- ------------- ---------- ----------
-- 6,932 -- 6,932
------------- ------------- ---------- ----------
OIL & GAS
Chesapeake Energy
79,500 -- 79,500 Corp.*................. 680 -- -- 680
------------- ------------- ---------- ----------
PHARMACEUTICALS
-- 85,517 85,517 Elan Corp. plc ADR(1)*... -- 1,016 -- 1,016
K-V Pharmaceutical Co.
-- 150,000 150,000 Cl. A*................. -- 4,313 -- 4,313
Salix Pharmaceuticals
21,700 -- 21,700 Ltd.*.................. 322 -- -- 322
------------- ------------- ---------- ----------
322 5,329 -- 5,651
------------- ------------- ---------- ----------
SEMICONDUCTOR EQUIPMENT & PRODUCTS
-- 180,000 180,000 ATMI Inc.*............... -- 5,490 -- 5,490
Brooks Automation
20,100 -- 20,100 Inc.*.................. 717 -- -- 717
31,900 -- 31,900 LTX Corp.*............... 677 -- -- 677
Maxim Integrated Products
-- 70,000 70,000 Inc.*.................. -- 3,486 -- 3,486
33,500 -- 33,500 Therma-Wave Inc.*........ 474 -- -- 474
TriQuint Semiconductor
-- 172,605 172,605 Inc.*.................. -- 1,750 -- 1,750
Varian Semiconductor
Equipment Associates
20,000 -- 20,000 Inc.*.................. 934 -- -- 934
------------- ------------- ---------- ----------
2,802 10,726 -- 13,528
------------- ------------- ---------- ----------
</Table>

<Table>
<Caption>
SHARES MARKET VALUE (000S)
- ------------------------------------------- -------------------------------------------------------
HARBOR HARBOR
SMALL CAP HARBOR SMALL CAP HARBOR
GROWTH GROWTH GROWTH GROWTH PRO FORMA
FUND FUND PRO FORMA DESCRIPTION FUND FUND ADJUSTMENT PRO FORMA
- ------------- ------------- ----------- ------------------------- ------------- ------------- ---------- ----------

COMMON STOCKS -- CONTINUED
SOFTWARE
-- 150,000 150,000 Ansoft Corp.*............ $ -- $ 1,696 $ -- $ 1,696
Borland Software
46,200 -- 46,200 Corp.*................. 504 -- -- 504
-- 200,000 200,000 Documentum Inc.*......... -- 3,884 -- 3,884
-- 150,000 150,000 Innoveda Inc.*........... -- 583 -- 583
-- 500,000 500,000 Legato Systems Inc.*..... -- 3,450 -- 3,450
-- 265,600 265,600 MRO Software Inc.*....... -- 3,841 -- 3,841
-- 100,000 100,000 Precis Inc.*............. -- 1,455 -- 1,455
-- 200,000 200,000 QRS Corp.*............... -- 2,240 -- 2,240
Renaissance Learning
24,000 200,000 224,000 Inc.*.................. 830 6,914 -- 7,744
Secure Computing
-- 200,000 200,000 Corp.*................. -- 2,514 -- 2,514
-- 160,000 160,000 SERENA Software Inc.*.... -- 2,200 -- 2,200
-- 100,000 100,000 Symantec Corp.*.......... -- 3,541 -- 3,541
20,000 -- 20,000 THQ Inc.*................ 701 -- -- 701
Wind River Systems
-- 160,000 160,000 Inc.*.................. -- 1,742 1,742
------------- ------------- ---------- ----------
2,035 34,060 -- 36,095
------------- ------------- ---------- ----------
SPECIALTY RETAIL
26,900 -- 26,900 Cost Plus Inc.*.......... 792 -- -- 792
39,900 -- 39,900 Guitar Center Inc.*...... 788 -- -- 788
11,100 -- 11,100 Williams-Sonoma Inc.*.... 639 -- -- 639
------------- ------------- ---------- ----------
2,219 -- -- 2,219
------------- ------------- ---------- ----------
WIRELESS
TELECOMMUNICATION
SERVICES
Nextel Communications
-- 180,000 180,000 Inc. Cl. A*............ -- 992 -- 992
------------- ------------- ---------- ----------
TOTAL COMMON STOCKS
(COST HSCGF and HGF $36,423 and $142,296, respectively,
pro forma total $178,719).......................................... 40,033 111,876 -- 151,909
------------- ------------- ---------- ----------
<Caption>
PRINCIPAL AMOUNT (000S) MARKET VALUE (000S)
- ------------------------------------------- -------------------------------------------------------
HARBOR HARBOR
SMALL CAP HARBOR SMALL CAP HARBOR
GROWTH GROWTH GROWTH GROWTH PRO FORMA
FUND FUND PRO FORMA DESCRIPTION FUND FUND ADJUSTMENT PRO FORMA
- ------------- ------------- ----------- ------------------------- ------------- ------------- ---------- ----------

CONVERTIBLE BOND
(COST HSCGF and HGF $0 and $2,827, respectively,
pro forma total $2,827)
SystemOne Technologies
Inc.
8.250% -- 02/23/2003
$ -- $ 2,826 $ 2,826 PIK(2)................. $ -- $ 1,413 $ -- $ 1,413
------------- ------------- ---------- ----------
</Table>

<Table>
<Caption>
PRINCIPAL AMOUNT (000S) MARKET VALUE (000S)
- ------------------------------------------- -------------------------------------------------------
HARBOR HARBOR
SMALL CAP HARBOR SMALL CAP HARBOR
GROWTH GROWTH GROWTH GROWTH PRO FORMA
FUND FUND PRO FORMA DESCRIPTION FUND FUND ADJUSTMENT PRO FORMA
- ------------- ------------- ----------- ------------------------- ------------- ------------- ---------- ----------

SHORT-TERM INVESTMENTS
COMMERCIAL PAPER
Exxon Asset Management
Co.
$ -- $ 1,816 $ 1,816 1.750% -- 05/02/2002..... $ -- $ 1,816 $ -- $ 1,816
General Electric Capital
Corp.
-- 2,388 2,388 1.680% -- 05/01/2002..... -- 2,388 -- 2,388
Prudential Funding Corp.
-- 1,192 1,192 1.700% -- 05/03/2002..... -- 1,192 -- 1,192
------------- ------------- ---------- ----------
REPURCHASE AGREEMENT
Repurchase Agreement with
State Street Bank &
Trust dated April 30,
2002 due May 1, 2002 at
0.65% collateralized by
a U.S. Treasury Bill
12.0% August 15, 2013,
par value of $4,815
(repurchase proceeds of
$6,620 when closed on
6,620 -- 6,620 May 1, 2002)........... 6,620 -- -- 6,620
------------- ------------- ---------- ----------
TOTAL SHORT-TERM INVESTMENTS
(COST HSCGF and HGF $6,620 and $5,396, respectively, pro forma
total $12,016)..................................................... 6,620 5,396 -- 12,016
------------- ------------- ---------- ----------
TOTAL INVESTMENTS
(COST HSCGF and HGF $43,043 and $150,519, respectively,
pro forma total $193,562).......................................... 46,653 118,685 -- 165,338
CASH AND OTHER ASSETS, LESS LIABILITIES................................ 2,554 (5) 94 2,643
------------- ------------- ---------- ----------
TOTAL NET ASSETS....................................................... $49,207 $ 118,680 $ 94 $ 167,981
============= ============= ========== ==========
</Table>

(The accompanying notes are an integral part of the financial statements.)
18

- --------------------------------------------------------------------------------

NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED)

- --------------------------------------------------------------------------------

1. BASIS OF COMBINATION

Harbor Fund, a Delaware business trust (the "Trust"), is registered under the
Investment Company Act of 1940, as amended, (the "1940 Act") as a no-load,
open-end management investment company. As of April 30, 2002, the Trust offered
fourteen managed investment portfolios. The unaudited Pro Forma Combining
Portfolio of Investments and the unaudited Pro Forma Statement of Assets and
Liabilities assume the exchange described in the next paragraph occurred as of
April 30, 2002 and the unaudited Pro Forma Combining Statement of Operations
assumes the exchange occurred as of May 1, 2001. These statements have been
derived from books and records utilized in calculating the net asset value of
each fund at April 30, 2002 and for the 12-month period then ended.

The pro forma statements give effect to the proposed transfer of substantially
all of the assets and stated liabilities of the Harbor International Fund II and
Harbor Small Cap Growth Fund in exchange for shares of the Harbor International
Fund and Harbor Growth Fund, respectively. Under generally accepted accounting
principles, the historical cost of investment securities will be carried forward
to the surviving entity and the results of operations of the Harbor
International Fund II and Harbor Small Cap Growth Fund for pre-combination
periods will not be restated. The pro forma statements reflect the expenses of
each fund in carrying out its obligations under the proposed Agreement and Plan
of Reorganization. Harbor International Fund II and Harbor Small Cap Growth Fund
will each distribute all of its ordinary income and capital gains, if any, prior
to the respective Fund merging.

The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.

For the 12-month period ended April 30, 2002, the Harbor International Fund and
Harbor Growth Fund's investment advisory fees were computed based on the annual
rate of 0.75% and 0.75%, respectively, of its average daily net assets.

2. SECURITY VALUATION

The underlying funds are valued at the last sale price on an exchange or the
National Association of Securities Dealers Automated Quotation ("NASDAQ") system
or, in the case of unlisted securities or listed securities for which there were
no sales on the valuation day, the mean between the closing bid and asked price.
Securities listed or traded on foreign exchanges are valued at the last sale
price on that exchange on the valuation day, or if no sale occurs, at the
official bid price (both the last sale price and official bid price are
determined as of the close of the London Foreign Exchange).

Debt securities, other than short-term securities with a remaining maturity of
less than sixty days, are valued at prices furnished by a pricing service, or as
otherwise described below, selected by the Adviser, which determines valuation
for normal institutional-size trading units of such securities using market
information, transactions for comparable securities and various relationships
between securities which are generally recognized by institutional traders.
Short-term securities with a remaining maturity of less than sixty days are
stated at amortized cost which approximates value. Open futures contracts are
valued based on the last sale price on the exchange on which such futures are
principally traded.

Securities for which there are no such prices or for which prices are deemed by
the Adviser or Subadviser not to be representative of market values, are valued
at their fair value as determined in good faith under consistently applied
procedures established by and under the supervision of the Board of Trustees.
The actual calculation of fair market value may be done by others including the
Adviser and Subadviser.

3. CAPITAL SHARES

The pro forma net asset value per share assumes the issuance of additional
shares of the Harbor International Fund that would have been issued at April 30,
2002 in connection with the proposed merger. The pro forma number of shares
outstanding of 125,259 consists of 2,489 shares assumed issued in the merger
plus 122,869 shares of the Harbor International Fund at April 30, 2002.

The pro forma net asset value per share assumes the issuance of additional
shares of the Harbor Small Cap Growth Fund that would have been issued at April
30, 2002 in connection with the proposed merger. The pro forma number of shares
outstanding of 15,877 consists of 4,662 shares assumed issued in the merger plus
11,215 shares of the Harbor Growth Fund at April 30, 2002.

4. PRO FORMA ADJUSTMENTS AND PRO FORMA COMBINED COLUMNS

The pro forma adjustments and pro forma combined columns of the statement of
operations reflect the adjustments necessary to show expenses at the rates which
would have been in effect if the Harbor International Fund II were included in
the Harbor International Fund for the period May 1, 2001 to April 30, 2002.
Investment advisory and administrative fees in the pro forma combined column are
calculated at the rates in effect for the Harbor International Fund based upon
the combined net assets of the Harbor International Fund II and Harbor
International Fund.

The pro forma adjustments and pro forma combined columns of the statement of
operations reflect the adjustments necessary to show expenses at the rates which
would have been in effect if the Harbor Small Cap Growth Fund were included in
the Harbor Growth Fund for the period May 1, 2001 to April 30, 2002. Investment
advisory and administrative fees in the pro forma combined column are calculated
at the rates in effect for the Harbor Growth Fund based upon the combined net
assets of the Harbor Small Cap Growth Fund and Harbor Growth Fund.

The pro forma Statement of Assets and Liabilities and Schedule of Investments
give effect to the proposed transfer of such assets as if the merger had
occurred at April 30, 2002.

5. COSTS OF MERGER

Merger expenses incurred by the Harbor Funds will be paid by the respective
Fund. Merger expenses include, without limitation: (a) expenses associated with
the preparation and filing of this Prospectus/ Proxy Statement; (b) postage; (c)
printing; (d) accounting fees; (e) legal fees incurred by each Fund; (f)
solicitation costs; and (g) brokerage cost of any necessary rebalancing of the
Funds' investment portfolios.

6. FEDERAL INCOME TAXES

Each Fund is treated as a separate entity for federal tax purposes. Each Fund's
policy is to meet the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute to its shareholders all of its
taxable income within the prescribed time. It is also the intention of each Fund
to distribute an amount sufficient to avoid imposition of any excise tax under
Section 4982 of the Internal Revenue Code. Therefore, no provision has been made
for federal taxes on income, capital gains or unrealized appreciation of
securities held or excise tax on income and capital gains.

PART C:
OTHER INFORMATION

ITEM 15. INDEMNIFICATION.

The Registrant maintains directors and officers insurance which, subject to the
terms, conditions and deductibles of the policy, covers Trustees and officers of
the Registrant while acting in their capacities as such. The issuer of the
policy is the Chubb Custom Insurance Company, Chubb Group of Insurance
Companies.

Insofar as indemnification for liability arising under the Securities Act of
1933 ("1933 Act") may be permitted to trustees, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the successful defense of
any action, suit or proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.

ITEM 16. EXHIBITS.

(1) Declaration of Trust is incorporated by reference to Exhibit a(1) of
Post-Effective Amendment No. 22 to the Form N-1A Registration Statement as filed
with the SEC on February 27, 1997 ("Post-Effective Amendment No. 22").

(2) By-Laws are incorporated by reference to Exhibit b of the Post-Effective
Amendment No. 22.

(3) Not Applicable.

(4)(a) Form of Agreement and Plan of Reorganization between Harbor International
Fund and Harbor International Fund II is filed herewith as Exhibit A to Part A
of this Registration Statement.

(4)(b) Form of Agreement and Plan of Reorganization between Harbor Growth Fund
and Harbor Small Cap Growth Fund is filed herewith as Exhibit B to Part A of
this Registration Statement.

(5) Not Applicable.

(6)(a) Form of Investment Advisory Agreement with Harbor Capital Advisors, Inc.
on behalf of Harbor Small Cap Growth Fund is incorporated by reference to
Exhibit d(3) of Post-Effective Amendment No. 32 to the Form N-1A Registration
Statement filed with the SEC on April 20, 2001 ("Post-Effective Amendment No.
32").

(6)(b) Form of Investment Advisory Agreement with Harbor Capital Advisors, Inc.
on behalf of Harbor International Fund is filed herewith.

(6)(c) Form of Subadvisory Agreement with Emerging Growth Advisors, Inc. on
behalf of Harbor Growth Fund is incorporated by reference to Exhibit d(14) of
Post-Effective Amendment No. 32.

(6)(d) Form of Subadvisory Agreement with Westfield Capital Management Company,
Inc. on behalf of Harbor Small Cap Growth Fund is incorporated by reference to
Exhibit d(15) of Post-Effective Amendment No. 32.

(6)(e) Form of Subadvisory Agreement with Northern Cross Investments Limited on
behalf of Harbor International Fund is incorporated by reference to Exhibit
d(20) of Post-Effective Amendment No. 32.

(6)(f) Form of Subadvisory Agreement with Northern Cross Investments Limited on
behalf of Harbor International Fund II is filed herewith as Exhibit C to Part A
of this Registration Statement.

C-1

(6)(g) Form of Subadvisory Agreement with Westfield Capital Management Company,
Inc. on behalf of Harbor Growth Fund is filed herewith.

(7) Form of Distribution Agreement with HCA Securities, Inc. is incorporated by
reference to Exhibit (e) of Post-Effective Amendment No. 36 to the Form N-1A
Registration Statement filed with the SEC on June 20, 2002 ("Post-Effective
Amendment No. 36").

(8) Not Applicable.

(9)(a) Custodian Agreement with State Street Bank and Trust Company is
incorporated by reference to Exhibit (g) of Post-Effective Amendment No. 24 to
the Form N-1A Registration Statement filed with the SEC on February 26, 1998
("Post-Effective Amendment No. 24").

9(b) Fee Schedule to Custodian Agreement with State Street Bank and Trust
Company is incorporated by reference to Exhibit g(1) of Post-Effective Amendment
No. 34 to the Form N-1A Registration Statement filed with the SEC on December 3,
2001 ("Post-Effective Amendment No. 34").

(10) Not Applicable.

(11) Opinion of Hale and Dorr LLP concerning legality of shares of Harbor
International Fund shares and Harbor Growth Fund shares is filed herewith.

(12)(a) Form of opinion of Hale and Dorr LLP concerning the tax matters and
consequences to shareholders of the HGF and HSCGF merger discussed in the
prospectus is filed herewith.

(12)(b) Form of opinion of Hale and Dorr LLP concerning the tax matters and
consequences to shareholders of the HIF and HIF2 merger discussed in the
prospectus is filed herewith.

(13)(a) Form of Transfer Agent and Service Agreement with Harbor Transfer, Inc.
is incorporated by reference to Exhibit h of Post-Effective Amendment No. 32.

(13)(b) Fee Schedule to Transfer Agent and Service Agreement with Harbor
Transfer, Inc. is incorporated by reference to Exhibit h(1) of Post-Effective
Amendment No. 34.

(14) Consent of Independent Auditors filed herewith.

(15) Not Applicable.

(16) Power of attorney is incorporated by reference to Exhibit o of
Post-Effective Amendment No. 30 to the Form N-1A Registration Statement filed
with the SEC on November 16, 2000.

ITEM 17. UNDERTAKINGS.

(1) The undersigned Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is part of this
registration statement by any person or party which is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act [17 CFR
230.145c], the reoffering prospectus will contain the information called for by
the applicable registration form for the reofferings by persons who may be
deemed underwriters, in addition to the information called for by the other
items of the applicable form.

(2) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to the registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each post-effective amendment
shall be deemed to be a new registration statement for the securities offered
therein, and the offering of the securities at that time shall be deemed to be
the initial bona fide offering of them.

(3) The undersigned Registrant agrees that it will file electronically via EDGAR
an executed copy of the forms of opinion of Hale and Dorr LLP filed herewith as
Exhibits 12(a) and 12(b) on or after the closing date for each reorganization
which is described in the Form N-14 filed herewith.

C-2

SIGNATURES

As required by the Securities Act of 1933, this registration statement has been
signed on behalf of the registrant, in the City of Toledo, and State of Ohio, on
the 1st day of August, 2002.

HARBOR FUND

By: /s/ JAMES M. WILLIAMS
------------------------------------
James M. Williams
President

As required by the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities and on the dates indicated.

<Table>
<Caption>
SIGNATURES TITLE DATE
---------- ----- ----

/s/ DAVID G. VAN HOOSER* Chairman and Trustee August 1, 2002
- -------------------------------------

/s/ JAMES M. WILLIAMS President (Principal Executive August 1, 2002
- ------------------------------------- Officer)

/s/ CONSTANCE L. SOUDERS Vice President and Treasurer August 1, 2002
- ------------------------------------- (Principal Financial and Account
Officer)

/s/ JOHN P. GOULD* Trustee August 1, 2002
- -------------------------------------

/s/ HOWARD P. COLHOUN* Trustee August 1, 2002
- -------------------------------------

/s/ RODGER F. SMITH* Trustee August 1, 2002
- -------------------------------------
</Table>

- -------------------------

* Executed by James M. Williams pursuant to a power of attorney filed with
Post-Effective Amendment No. 30.

C-3

INDEX TO EXHIBITS

<Table>
<Caption>
NO. EXHIBIT
--- -------

(6)(b) Form of Investment Advisory Agreement with Harbor Capital
Advisors, Inc. on behalf of Harbor International Fund
(6)(g) Form of Subadvisory Agreement with Westfield Capital
Management Company, Inc. on behalf of Harbor Growth Fund
(11) Opinion of Hale and Dorr LLP concerning legality of shares
of Harbor International Fund and Harbor Growth Fund
(12)(a) Form of opinion of Hale and Dorr LLP concerning tax matters
and consequences to shareholders of the HGF and HSCGF merger
(12)(b) Form of opinion of Hale and Dorr LLP concerning tax matters
and consequences to shareholders of the HIF and HIF2 merger
(14) Consent of Independent Auditors
</Table>

C-4

YOUR VOTE IS IMPORTANT
[HARBOR FUND LOGO] TO VOTE BY TELEPHONE TO VOTE BY INTERNET TO VOTE BY MAIL
1) Read the Proxy Statement 1) Read the Proxy Statement 1) Read the Proxy Statement.
and have the Proxy card on and have the Proxy card on 2) Check the appropriate box
reverse at hand. reverse at hand. on the reverse side.
2) Call 1-800-690-6903. 2) Go to Website 3) Sign and date the Proxy card.
3) Enter the 14-digit number WWW.PROXYWEB.COM 4) Return the Proxy card in
at left and follow the 3) Enter the 14-digit number the envelope provided.
simple instructions. at left and follow the
simple instructions.

*** CONTROL NUMBER: 999 999 999 999 99 ***

PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
HARBOR INTERNATIONAL FUND II SPECIAL MEETING OF SHAREHOLDERS OCTOBER 22, 2002

This proxy is solicited on behalf of the Board of Trustees of Harbor Fund (the "Trust") for the Special Meeting of Shareholders (the
"Meeting") and relates to the proposal with respect to the Trust and to Harbor International Fund II (the "Fund"), a series of the
Trust. The undersigned hereby appoints David G. Van Hooser, James M. Williams, Constance L. Souders and Karen B. Wasil, and each of
them, proxies for the undersigned, with full power of substitution and revocation to represent the undersigned and to vote on behalf
of the undersigned all shares of the Fund which the undersigned is entitled to vote at the Meeting to be held at 9:00 a.m., Eastern
time, on October 22, 2002 at One SeaGate, 16th Floor, Toledo, Ohio 43666, and any adjournment thereof.

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS INSTRUCTED. UNLESS INDICATED TO THE CONTRARY, THIS PROXY SHALL BE DEEMED TO
GRANT AUTHORITY TO VOTE "FOR" ALL PROPOSALS RELATING TO THE TRUST AND TO THE FUND WITH DISCRETIONARY AUTHORITY TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF. THE UNDERSIGNED HEREBY REVOKES ANY PROXY
PREVIOUSLY GIVEN.

PLEASE SIGN, DATE AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE IF YOU ARE NOT
VOTING BY TELEPHONE OR INTERNET.

Date
--------------------------------

--------------------------------------------

--------------------------------------------
Signature(s) PLEASE SIGN WITHIN THE BOX

PLEASE SIGN EXACTLY AS NAME(S) APPEARS TO
THE LEFT. IF SHARES ARE HELD IN THE NAME OF
JOINT OWNERS, EACH SHOULD SIGN.
ATTORNEYS-IN-FACT, EXECUTORS,
ADMINISTRATORS, TRUSTEES, GUARDIANS ETC.
SHOULD SO INDICATE. IF SHAREHOLDER IS A
CORPORATION OR PARTNERSHIP, PLEASE SIGN IN
FULL CORPORATE OR PARTNERSHIP NAME BY
AUTHORIZED PERSON.

018

PLEASE FILL IN BOX(ES) AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL. /X/
PLEASE DO NOT USE FINE POINT PENS.

HARBOR INTERNATIONAL FUND II

Unless otherwise specified in the boxes provided, your vote will be cast FOR the
numbered item below.

The Board of Trustees of Harbor Fund recommends that you vote FOR the proposal
set forth below.

VOTE ON THE PROPOSAL

FOR AGAINST ABSTAIN
1. Approval of Agreement and Plan of Merger between / / / / / /
Harbor International Fund II and Harbor
International Fund.

018

*** CONTROL NUMBER: 999 999 999 999 99 ***

PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
HARBOR SMALL CAP GROWTH FUND SPECIAL MEETING OF SHAREHOLDERS OCTOBER 22, 2002

This proxy is solicited on behalf of the Board of Trustees of Harbor Fund (the "Trust") for the Special Meeting of Shareholders (the
"Meeting") and relates to the proposal with respect to the Trust and to Harbor Small Cap Growth Fund (the "Fund"), a series of the
Trust. The undersigned hereby appoints David G. Van Hooser, James M. Williams, Constance L. Souders and Karen B. Wasil, and each of
them, proxies for the undersigned, with full power of substitution and revocation to represent the undersigned and to vote on behalf
of the undersigned all shares of the Fund which the undersigned is entitled to vote at the Meeting to be held at 9:00 a.m., Eastern
time, on October 22, 2002 at One SeaGate, 16th Floor, Toledo, Ohio 43666, and any adjournment thereof.

PLEASE SIGN, DATE AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE IF YOU ARE NOT
VOTING BY TELEPHONE OR INTERNET.

Date
--------------------------------

--------------------------------------------

--------------------------------------------
Signature(s) PLEASE SIGN WITHIN THE BOX

020

PLEASE FILL IN BOX(ES) AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL. /X/
PLEASE DO NOT USE FINE POINT PENS.

HARBOR SMALL CAP GROWTH FUND

Unless otherwise specified in the boxes provided, your vote will be cast FOR the
numbered item below.

The Board of Trustees of Harbor Fund recommends that you vote FOR the proposal
set forth below.

VOTE ON THE PROPOSAL

FOR AGAINST ABSTAIN
1. Approval of Agreement and Plan of Merger between / / / / / /
Harbor Small Cap Growth Fund and Harbor Growth
Fund.

020

IMPORTANT NOTICE

Although we recommend that you read the Proxy Statement carefully, for your
convenience, we have provided a brief overview of the proposals to be voted
upon.

QUESTIONS & ANSWERS

Q: WHY AM I RECEIVING THIS PROXY STATEMENT?

A: This proxy statement is being provided to shareholders of Harbor
International Fund II (HIF2) and Harbor Small Cap Growth Fund (HSCGF). These
shareholders are being asked to vote upon proposals under which 1) HIF2 would
be merged into Harbor International Fund (HIF) and 2) HSCGF would be merged
into Harbor Growth Fund (HGF), respectively.

Q: WHAT WILL BE THE NAMES OF THE TWO FUNDS THAT CONTINUE FOLLOWING THE MERGERS?

A: The Fund surviving from the merger of HIF2 into HIF will be Harbor
International Fund. The Fund surviving from the merger of HSCGF into HGF will
be renamed Harbor Small Cap Growth Fund.

Q: WHO WILL MANAGE HARBOR INTERNATIONAL FUND?

A: Northern Cross Investments Limited, currently subadviser of both HIF and
HIF2, will continue to subadvise Harbor International Fund (HIF), the
surviving international fund. Hakan Castegren, president of Northern Cross
Investments, has managed HIF since the Fund's inception in 1987 and assumed
additional responsibility for management of HIF2 effective August 1, 2002.

Q: WHO WILL MANAGE THE RENAMED HARBOR SMALL CAP GROWTH FUND FOLLOWING THE
MERGER?

A: Westfield Capital Management Company LLC, currently subadviser of HSCGF,
would become subadviser for the HGF, which will be renamed Harbor Small Cap
Growth Fund. William Muggia, president and chief investment officer of
Westfield Capital Management Company, has managed HSCGF since the Fund's
inception on November 1, 2000.

Q: WHAT ARE THE SIMILARITIES AND DIFFERENCES, IF ANY, BETWEEN THE INVESTMENT
MANAGEMENT STYLES FOR THE TWO INTERNATIONAL FUNDS?

A: HIF and HIF2 have been managed in very similar value-oriented styles and have
many of the same portfolio holdings. HIF2 began operations in 1996, during a
period when HIF was closed to new investors. HIF subsequently was reopened to
new investors in May 2000.

Q: WHAT ARE THE SIMILARITIES AND DIFFERENCES, IF ANY, BETWEEN THE INVESTMENT
MANAGEMENT STYLES FOR THE TWO GROWTH FUNDS?

A: HSCGF and HGF both invest in smaller capitalization companies with favorable
prospects for long-term growth. HSCGF's holdings typically have been more
broadly diversified than those of HGF, which have been more concentrated in
the technology sector. Sector weightings of the two funds are a result of
individual stock selections by the managers, both of whom employ bottom-up
stock selection processes.

Q: WILL EITHER OF THESE PROPOSED MERGERS RESULT IN AN INCREASE IN THE RATE OF
ANY OF THE FUNDS' INVESTMENT ADVISORY FEES?

A: No. THERE WILL BE NO CHANGE IN THE RATE OF ANY OF THE FUNDS' INVESTMENT
ADVISORY FEES AS A RESULT OF THE PROPOSED MERGERS. In addition, the proposed
mergers are expected to result in economies of scale and may lead to the
spreading of fixed costs over a larger asset base. It is anticipated that if
the proposed merger of HIF2 and HIF takes place, the expense ratio of the
surviving Harbor International Fund should be lower than the comparable share
class expense ratio of either HIF2 or HIF. Similarly, it is anticipated that
if the proposed

merger of HSCGF and HGF takes place, the expense ratio of the renamed Harbor
Small Cap Growth Fund should be lower than the comparable share class expense
ratio of either HSCGF or HGF.

Q: WILL MY VOTE MAKE A DIFFERENCE?

A: Your vote is important and needed to ensure that the proposals can be acted
upon. Additionally, your immediate response on the enclosed Proxy Card(s) or
vote by telephone or Internet will help save the costs of any further proxy
solicitation for a shareholder vote. We encourage shareholders to participate
in the governance of their Fund(s).

Q: HOW DO THE TRUSTEES OF MY FUND SUGGEST THAT I VOTE?

A: After careful consideration, the Trustees of your Fund, including the
Independent Trustees who comprise a majority of each Fund's Board of
Trustees, unanimously recommend that you vote "FOR" each of the proposals.

Q: WHOM DO I CALL IF I HAVE QUESTIONS?

A: Please call D.F. King at 1-800-xxx-xxxx.

Q: HOW DO I VOTE?

A: You may vote by any of the following methods:

- You may use the enclosed postage-paid envelope and mail in your Proxy Card.

- Telephone -- Call 1-800-690-6903 and enter the 12-digit control number set
forth on your Proxy Card.

- Internet -- Go to WWW.PROXYVOTE.COM and enter the 12-digit control number
set forth on your Proxy Card.