THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL FUND FROM ITS INCEPTION (9/30/92) TO PRESENT (12/31/00) COMPARED TO THE MSCI WORLD EX U.S. INDEX26
12/31/00 NAV9 $15.46	Total Return Last 3 months*	Average Annual Total Return10 Through 12/31/00 From Fund Inception 9/30/92
The Oakmark International Fund	7.39%	13.91%
MSCI World ex U.S. Index w/inc.	-3.38%	9.96%
MSCI EAFE Index w/inc.4	-2.68%	9.75%
Lipper International Fund Index27	-4.02%	11.41%
*Not annualized.

Fellow Shareholders,

We are pleased to report that your Fund's performance for both the quarter and for the calendar year ending December 31, 2000 was very good. The Oakmark International Fund was up 7.39% in the past quarter, compared with declines of 3.38% and 4.02% for the MSCI World ex US Index and the Lipper International Fund Index.

For the twelve months ending December 31, 2000, your fund achieved a return of 12.50%, placing it in the top one percent of all international funds ranked by Morningstar.²⁸ We are particularly proud of achieving this positive return in a very difficult market environment. Over the same period, the MSCI World ex US Index and the Lipper International Fund Index declined 13.37% and 14.72%, respectively. Most importantly, your Fund has achieved long-term out-performance since its inception, up 13.91% annually compared to returns of 9.96% and 11.41% for the MSCI World ex US Index and the Lipper International Fund Index.

Review of 2000 Results

With the end of every calendar year we think it is important to detail the ideas which had the biggest positive and negative impacts on the Fund's performance. Since the story is more good than bad let's start with the good. The biggest positive contributor to return was our investment in the Brazilian cellular market through two companies, Telesp Celular and Telemig Celular Participacoe. Both companies were spun-out of Telebras when it was privatized in 1998, and each nearly doubled in 2000. This is the second year in a row that your Fund has greatly benefited from the share price appreciation of these companies, as they were also among the largest positive contributors to NAV in 1999.

Since the beginning of the Telebras break-up process our analyst Chad Clark has been far ahead of "the Street" in tackling the enormously complicated task of sorting out the financial and market situations of each individual company, much to your Fund's benefit. Our position in Telesp was bought out during the year by its new parent Portugal Telecom, but we are still owners of Telemig based on our belief that the current share price still does not yet properly reflect the value of the business.

The single biggest contributor to return for the Fund was Citizen Watch of Japan, which appreciated nearly 60 percent before hitting its sell target in the summer. The performance of Citizen was especially satisfying given that it was located in the worst performing developed market in the world in 2000.

Our investment in two Danish banks, Den Danske Bank and Unidanmark, provided a strong positive contribution. The share prices of both appreciated substantially as the market (and one acquiror) recognized the strength of their domestic franchises and the cheapness of their valuations. Each hit their sell prices during the year and are no longer in the portfolio.

UK-based multinational Diageo made a big positive impact in 2000. Management continues to make very aggressive moves to try and unlock the value of the business. In addition to the on-going restructuring of their cost base, during the course of the year they sold Pillsbury to General Mills and purchased a group of brands from Seagrams at a very sensible price.

Finally, Reckitt Benckiser, Banco Latinoamericano de Exportaciones, Canadian Imperial Bank, Bank of Ireland, and Kone also all made solid positive contributions this year to your Fund's return.

The single biggest negative contributor was UK conglomerate Tomkins, a company that was detailed in last quarter's letter. Already awful sentiment toward the stock worsened during the year with accusations of management impropriety, as of yet unproven. Insulating ourselves from the current negative sentiment, what we are left with is a company trading at a single digit PE, double digit dividend yield, and a huge ongoing share buy-back program.

Another negative contributor was Autoliv, the world leader in the development and manufacturing of automotive safety systems, including seat belts and airbags.

The share price performance has been hurt by negative expectations for the automakers. The current valuation ignores the high quality of their technology, their enviable market positions, and the long term secular growth in their product specialties.

First Pacific, the Hong-Kong listed conglomerate, was also a weak performer. The share price was racked by awful sentiment in its two primary markets, the Philippines and Indonesia. Both of these markets saw heightened political uncertainty during the year and consequently, weaker currencies. Despite these temporary difficulties the company remains an inexpensive collection of quality assets with great franchises (especially their telephone businesses in the Philippines and Indofood in Indonesia) located in very fast growing markets. By investing through First Pacific you get ownership of these undervalued businesses at an additional discount. While stumbling recently, management is very sound and has achieved a decades-long record of growing asset value per share.

Another negative contributor to NAV was Fila, the Italian sportswear manufacturer. To date this has not been a good investment for the Fund, but due to the tremendous effort of top management (especially in the US) this is a much better run organization than it was back in 1996 when the market awarded the company a share price over $100. While our estimate of business value is a fraction of that number, it is a multiple of the current share price, which ended the year at less than $8. The turnaround in the business has been slower than we expected but we are heartened by the positive response of the big retailers toward the company's new product line and its sell-through to consumers.

Looking Forward

While we are excited about the Fund's strong performance, we are even more excited about the overall cheapness of the current portfolio as well as the new opportunities emerging from the current market volatility.

Thank you for your continued confidence.

David G. Herro, CFA

Portfolio Manager
dherro@compuserve.com

Michael J. Welsh, CFA, CPA

Portfolio Manager
102521.2142@compuserve.com

January 9, 2001