Fellow Shareholders,

The Oakmark Global Fund was up 3.2% for the three-month period ending June 30, 2000. This compares to losses of 3.5% for the MSCI World Index and 4.2% for the Lipper Global Fund Index.

The markets around the globe continued their volatile trend which is becoming the normal trading pattern. Investors around the world seem to be moving their money in-and-out of stocks on a minute-by-minute basis, trying to catch the latest and greatest announcement as reported by the various financial news services such as CNBC and CNN. As the information flow for companies has become more accessible, the academicians would argue that stock markets should become more efficient. Nothing could be further from the truth. Stock prices seem to react violently both up and down to earnings announcements (or pre-announcements), Wall Street analyst recommendations, and the press releases that constantly flood the news wires. All of this excess stimulation causes us to sit back and reflect upon the words of great investors who have seen similar fads come and go. In the book "The Intelligent Investor," Benjamin Graham devotes the entire eighth chapter to "The Investor and Market Fluctuations." In that chapter, Benjamin Graham uses an analogy of Mr. Market, which we think is worth sharing.

"Mr. Market"

"Imagine that in some private business you own a small share that cost you $1,000. One of your partners, named Mr. Market, is very obliging indeed. Everyday he tells you what he thinks your interest is worth and furthermore offers to either buy you out or to sell you an additional interest on that basis. Sometimes his idea of value appears plausible and justified by business developments and prospects as you know them. Often, on the other hand, Mr. Market lets his enthusiasm or his fears run away with him, and the value he proposes seems to you a little short of silly.

If you are a prudent investor or a sensible businessman, will you let Mr. Market's daily communication determine your view of the value of a $1,000 interest in the enterprise? Only in the case you agree with him, or in case you want to trade with him. You may be happy to sell out to him when he quotes you a ridiculously high price, and equally happy to buy from him when his price is low. But the rest of the time you will be wiser to form your own ideas of the value of your holdings, based upon full reports from the company about its operations and financial position.

The true investor is in that very position when he owns a listed common stock. He can take advantage of the daily market price or leave it alone, as dictated by his own judgement and inclination. .... Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies."

As the managers of the Fund, we spend our time focusing upon the operating fundamentals of our companies—for in the end these fundamentals will drive the performance of the fund. However, we pay close attention to the volatile price movements in the market and try to take advantage of Mr.Market when prices seem attractive to us. Therefore, during the quarter we added 5 new names to the portfolio at what we believe are very attractive prices. Below is a brief description of each of the new companies:

First Pacific:

First Pacific is an Asian holding company. The company has a long history of creating and adding value to their holdings. Currently, First Pacific is trading at a substantial discount to its easily calculated and quantifiable net asset value (NAV). First Pacific's stock price hit a high of $7.18 (Hong Kong Dollar) in July of 1999 and hit a recent low of $2.18 (Hong Kong Dollar) in May of 2000. We began buying First Pacific in May and believe the company offers a tremendous risk/reward ratio given the large discount between the stock price and the calculated NAV.

H&R Block:

H&R Block is the largest tax preparation service in the United States. During 1999 and early 2000, the management of H&R Block made a series of acquisitions including Olde Brokerage, a mortgage operation, and many financial planning companies. The idea was to expand the H&R Block brand name into other financial services. The stock market had a negative reaction to these various acquisitions and took the stock from a high price of $59.50 in August of 1999 to a recent low price of $27 in June of 2000. While H&R Block's diversification moves may not have been the ideal use of the company's resources, we believe the market has grossly overreacted. The company is currently trading for 10x our 2000 earnings per share estimate, which we consider far too low for such a high quality company.

Syborn International:

Sybron Int'l is one of the largest dental supply and laboratory companies in the United States. On June 27, 2000, Sybron announced they would miss the consensus earnings estimate for the second half of 2000 by $.10 or 7%. The stock market proceeded to take the shares of Sybron down by 43% on the news. We took advantage of this large stock price decline to add this high quality name to the portfolio.

Toys 'R' Us:

See Bill Nygren's excellent review of the merits of owning Toys 'R' Us in the Semi-Annual Report dated March 31, 2000.

Valassis Communications:

Valassis is one of two companies that print and distribute the weekly Free Standing Insert (FSIs) coupon booklets that we receive in weekly U.S. newspapers. Valassis's stock price hit a high of $46.50 in September 1999 and then proceeded to decline to below $30 per share due to concerns about higher paper costs and slowing revenue growth. This price decline afforded us the opportunity to add Valassis to the portfolio. Valassis has hedged their paper costs and revenues are again accelerating, which we believe will propel the stock price higher.

These new additions to the portfolio demonstrate our continued focus on buying and holding the most attractive companies at the best prices. We welcome the recent volatility in the stock markets around the world, since it affords us the opportunity to buy good businesses at very attractive prices. As managers of the Fund, we continue to be excited about the portfolio and its future prospects.

Thank you for your continued confidence and support.

Michael J. Welsh, CFA, CPA

Portfolio Manager
102521.2142@compuserve.com

Greg Jackson

Portfolio Manager
gjackson@oakmark.com

June 30, 2000