* "the planning of real increases--that is, above inflation--is faculty salaries."

* "the continuing success of the Faculty's energy conservation program:"

* the uncertainly of scholarship costs;

* "the successful completion of Harvard's $350 million fundraising campaign; and

* "the new decision to finance construction through tax-exempt borrowing, rather than spending capital resources directly on plant renovation.

Harvard's Financial Vice President Thomas O'Brien said yesterday that the Faculty of Arts and Sciences has "led the way" among Harvard's nine faculties is improving long-range planning. "If inflation stays down and the investment climate stays good," he said, "things will stay quite good."

In addition to its discussion of finances and student aid, Rosovsky's report summarizes briefly the development of the Undergraduate Council, saying the new systems of student governance "will make student participation in governance more effective and rewarding."

Last year, Rosovsky's annual report discussed affirmative action in faculty hiring