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Harbor International has prospered for years through global turmoil.

Hakan Castegren has seen it all since he launched Harbor International Fund in 1987: the Soviet Union's collapse, the eclipse of Japan, the Asian financial crisis, the rise of the European Union. Throughout this turbulent time, the fund manager has nimbly moved his portfolio into and out of stocks worldwide, making smart contrarian bets.

The $4.6 billion fund scores an A from us in both up and down markets. In the past ten years, it has racked up an annual 9.8% return. That is not quite even with the S&P 500, but widely beats EAFE's 2.7%. Harbor International has gained a respectable 10.5% annually since inception and thus far in 2003 has turned in a nice 19%.

The Harbor fund has done all this while charging just $1.32 per $100, a good bit below the $1.73 average for international funds.

"Harbor" sounds cosmopolitan enough--would that be on the Thames, perhaps, or Tokyo Bay? Well, no. It turns out that the fund's parent is in Toledo, Ohio, and the harbor in question is on Lake Erie. But Swedish-born Castegren is in Bermuda and research chief James LaTorre is in Boston.

Castegren, 69, began his career as an analyst in Europe, and then came to the U.S. in the 1970s to manage money for the Wallenberg Group and later for Lazard Frères. After tiring of commuting and urban life, he moved from Boston to Bermuda a decade ago. LaTorre, 43, a Merrill Lynch analyst in the 1980s, was hired to do Harbor's research in 1992. Both men now head their own firms (Castegren, Northern Cross; LaTorre, Summit International), which Harbor pays to run its main foreign fund. The two men meet twice a year but are in daily contact.

Harbor International has been through a lot of iterations over the years. From 1996 to 2002 the fund was closed to new investors, but a knockoff, called Harbor International II, was created for new investors--and managed by LaTorre. Then last year the two funds were merged, with separate share classes for institutions and individuals. Some things don't change, like the fund's adherence to large stocks (average market cap: $17.7 billion) and to value (the portfolio's average stock trades at a fairly low 22 times trailing earnings).

These days, the fund is riding the still-strong (despite a recent pullback) euro and is 63% invested in European stocks, such as Swiss drugmaker Novartis and Italian bank Banca Intesa. Castegren and LaTorre have avoided the expensive practice of hedging for currency risk, which used to mean against a strong dollar. They are reaping the benefits of that tactic now. "The strong dollar used to handicap our fund," says LaTorre, who expects the dollar's current recovery won't be strong enough to let it overtake the euro any time soon.

LaTorre looks for stocks in companies that control significant portions of market share in industries that aren't easily joined by competitors. One example is Eurotunnel, which serves as an underwater train route between England and France. Having restructured its way out of a financial bind, Eurotunnel only need worry about ferries and airplanes, which offer slower (ferries) and more tedious (both) passages.

In Asia, the fund has Chinese oil outfits, because the government ensures they have few rivals. Then there's long-moribund Japan, which many investors treat like three-day-old sushi. It is home to Harbor's second-largest holding, Canon. LaTorre sees a big future for digital cameras and likes the fact that Canon makes photo-quality printers and sells the ink to run them.

Portfolio theorists will tell you that you should have 10% to 30% of your stock portfolio abroad. This fund is one good way to reach beyond our borders.