THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL FUND FROM ITS INCEPTION (9/30/92) TO PRESENT (9/30/00) COMPARED TO THE MSCI WORLD EX U.S. INDEX
9/30/00 NAV $15.40	Total Return Last 3 mos.	Average Annual Total Return* Through 9/30/00 From Fund Inception 9/30/92
The Oakmark International Fund	-2.0%	13.4%
MSCI World ex U.S. Index w/inc.**	-7.6%	10.8%
MSCI EAFE Index w/inc.**	-8.1%	10.5%
Lipper International Fund Index**	-7.3%	12.4%
*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 fiscal year 2000, The Oakmark International Fund produced a return of 14.3%. This compares very favorably to the MSCI EAFE Index, which was up 3.2%. Although the Fund was down 2.0% for the fourth quarter of the fiscal year, this compares favorably to the return of the MSCI EAFE Index that was -8.1% for the same quarter.

Most importantly, since Oakmark International's inception eight years ago, it has averaged a 13.4% annual return. This exceeds the MSCI EAFE Index return of 10.5% and the Lipper International Fund Index return of 12.4%. Though we are pleased with these returns, there is room for improvement. Given the state of the portfolio today and boundless opportunities, we hope to build upon the return in the years to follow.

Winners of the 4th Quarter

Our top performer of the quarter was one of last year's worst performers, Somerfield Plc. Somerfield is a UK based grocery store, which we know very well. Though the company has made some mistakes in the past, we are quite certain that the market has greatly overreacted in terms of the Somerfield share price. The share price does not reflect the company's business strengths and does not factor in the impact of a new, very experienced and competent management. Again, we believe patience is a virtue in the investment business and are pleased that our patience has generally benefited our shareholders (Cordiant, Chargeurs, Telmex, etc). Another 4th quarter winner, South Korean building materials company Kumkang, was up almost 15% in the last quarter. This was achieved in an extremely weak equity environment in South Korea.

And some Losers

Enodis Plc, a British-based maker of food preparation equipment, was hit as a few areas of their business showed some weakness. However, we are quite confident that, on whole, the business is extremely strong. It is a global leader in its industry and will benefit from growth in the restaurant business as well as its wide product line which provides marketing and distribution synergies. Tomkins Plc, an engineering group which itself is being re-engineered, also disappointed us over the last three months although it has posted only good news. This one is a real puzzler: it has sold its lower profit businesses, managed its cyclical yet profitable businesses well, has bought back over 10% of its company, has lots of cash on its balance sheet, has grown its dividend 15% a year for the last 15 years and trades at 6 times earnings with a 11% yield! Although a downturn in the growth of the US economy would not be good for Tomkins, we believe the current price seems irrational.

Wither the Euro???

The Euro, the new European currency unit, has been extremely weak versus the dollar, thus negatively impacting return of international equity funds like ours. As a refresher, the Euro was introduced with great fanfare 21 months ago at a price of E1.15. At this writing, it sits at E.87, a decline of around 25%. It's ironic that when it was introduced and rising, the pundits, as one would expect, were all over it claiming that E1.25 was a reasonable level. Today, -25% later, the same people are saying that the Euro is dead. What is the truth???

You may recall from past quarterly reports how we have explained that long-term currency movements are ultimately derived from a nation's (or an area's) competitiveness. As desired goods and services are produced from a currency region, the demand for these goods and services will increase, as will the demand for their underlying currency. This is also true for longer-term investment in a particular region. If investors think a region is competitive, they will invest there for the long term. Remember back in the days of a very weak dollar (mid 90's), we argued that continued weakness was unsustainable because the US was the most competitive nation in the world. As the dollar dropped, foreign companies continued to buy US companies, land, equipment, etc. Even BMW and Mercedes now produce vehicles in the US!

Today, it seems markets have again overreacted. Europe, which has done so much to become globally competitive, is not being rewarded for these efforts in the global currency markets. Whether one speaks of micro, on the plant floor changes, or macro, national economic changes, it is evident that Europe and its companies are truly changing for the better. As an example, Germany has made monumental changes in the areas of taxation and social welfare. France is attempting to do the same. Spain is reforming its labor markets. And, hostile takeovers are starting to happen. Who would have thought that a British phone company, Vodafone, would ever be allowed to take over a German national champion like Mannesman?

These positive events, coupled with the current low price of the Euro, should represent investment opportunity over the medium and longer term.

Future Outlook

With the continued deflation of the technology stock bubble and the bargain basement prices of the stocks in our portfolio, we remain very enthusiastic about future prospects. Whether it be as extreme an example as exists in Tomkins or just the great values we are finding in financial services, consumer non-durables and in the many well-managed, very profitable companies across the industrial and geographic spectrum, we believe that future prospects are very promising. Again, going into our ninth year, we thank all of our shareholders for your trust and support.

David G. Herro, CFA

Portfolio Manager
dherro@compuserve.com

Michael J. Welsh, CFA, CPA

Portfolio Manager
102521.2142@compuserve.com

October 6, 2000