THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL FUND FROM ITS INCEPTION (9/30/92) TO PRESENT (6/30/00) COMPARED TO THE MSCI WORLD EX U.S. INDEX
6/30/00 NAV $15.71	Total Return Last 3 mos.	Average Annual Total Return* Through 6/30/00 From Fund Inception 9/30/92
The Oakmark International Fund	7.1%	14.1%
MSCI World ex U.S. Index w/inc.**	–3.5%	12.3%
MSCI EAFE Index w/inc.**	–4.0%	12.0%
Lipper International Fund Index**	–4.7%	13.9%
*Total return includes change in share prices and in each case includes reinvestment of any dividends and capital gain distributions. **Each of the three indexes or averages is an unmanaged group of stocks or funds whose composition is different from the Fund. The MSCI World ex U.S. Index includes 21 country sub-indexes. The MSCI EAFE Index refers to Europe, Asia and the Far East and includes 20 country sub-indexes. The Lipper International Fund Index includes 30 mutual funds that invest in securities whose primary markets are outside the United States. Past performance is no guarantee of future results.

Fellow Shareholders,

For the second quarter of 2000, your Fund has achieved a return of 7.1%. This compares favorably to the declines of the MSCI World ex-US Index which was down 3.5%, and the Lipper International Fund Index, which was down 4.7%.

We are also happy to report that in the first six months of the year the Fund has returned nearly 7% despite negative returns of –4% for the MSCI EAFE Index and the Lipper International Fund Index over the same period.

The past quarter, like the two that preceded it, was marked by great volatility in global share prices. Many overseas funds that continue to have substantial technology and telecom weightings have begun to suffer after reaping the benefits of the one-way upward ride in share prices since August, 1999. Another rough quarter like the one just ended and it is even conceivable that U.S. investors may begin to question whether it is such a good idea for their international exposure to have a near 100% correlation to the performance of the U.S. NASDAQ market.

Weightings

Portfolio weightings in The Oakmark International Fund have always been a function of stock selection. If we overweight or underweight a particular country, industry, or market capitalization size, it is a reflection of the attractive opportunities (or lack thereof) we can find among the diverse number of investment opportunities afforded by the markets.

For example, in the early years of the Fund we had the majority of our assets in large capitalization European companies. The consensus negative short-term macroeconomic outlook as well as the uncertainty of corporate restructuring gains resulted in very cheap share prices, and we were happy to take advantage of the opportunity. Over the past few years, we have found it increasingly difficult to find many good values in large-cap companies because they have traded at significant premiums to their mid-cap and small-cap peers. Our portfolio weighting dwindled substantially in this area.

Fortunately, over the past few quarters, the volatility in share prices, always the friend of long-term investors, has causedthis to change a bit. Money has continued to migrate to stocks in a very narrow segment of the market, the so-called "T-M-T" area of Technology, Media and Telecommunications. For example, the absolute dollar amount of European IPOs in the first half of this year was up 70% from the comparable period last year, and exceeded the amount in the United States. Of the 117 billion Euros that were raised, a good chunk represented T-M-T offerings. The money that supported these IPOs and helped propel the huge leaps in T-M-T share prices came from somewhere. As funds drained out of the other industry sectors, prices of some high quality big caps started to become attractive. We are once again taking advantage of the opportunity the market is currently presenting.

Among the big cap names we have added in the Oakmark International Fund over the past two quarters are: Diageo, Reckitt Benckiser, and Glaxo/Smithkline Beecham in the United Kingdom; BNP-Paribas, Aventis, and Michelin in France; Swiss Reinsurance in Switzerland; and, outside of Europe, Canadian Pacific in Canada, and National Australia Bank Down Under. Their commonality? All trade at significant discounts to our calculation of intrinsic value.

These are all companies that we've wanted to own, but only on our terms—at an attractive price. We owned four of these companies in the past, three under different corporate structures: Diageo (Guinness), Reckitt (Reckitt & Colman), BNP (Paribas), and National Australia Bank.

Looking Forward

We are very optimistic about the portfolio going forward. We have a group of very high quality, cash generative businesses, trading at attractive values.

We appreciate your continued support.

David G. Herro, CFA

Portfolio Manager
dherro@cs.com

Michael J. Welsh, CFA, CPA

Portfolio Manager
102521.2142@compuserve.com

July 3, 2000