THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL FUND FROM ITS INCEPTION (9/30/92) TO PRESENT (3/31/01) COMPARED TO THE MSCI WORLD EX U.S. INDEX20
3/31/01 NAV2 $14.11	Total Return Last 3 months*	Average Annual Total Return3 Through 03/31/01 From Fund Inception 9/30/92
The Oakmark International Fund	-8.73%	12.27%
MSCI World ex U.S. Index w/inc.	-14.03%	7.72%
MSCI EAFE Index w/inc.21	-13.73%	7.57%
Lipper International Fund Index22	-13.05%	9.25%
*Not annualized.

Fellow Shareholders,

Your Fund declined 8.7% for the quarter ending March 31, 2001 comparing favorably to the MSCI World ex U.S. Index, which was down 14.0% and the Lipper International Fund Index, which was down 13.1%. More importantly, since inception, your Fund has returned an annual average of 12.3%, again comparing very favorably to returns of 7.7% and 9.3% for the MSCI World ex U.S. Index and the Lipper International Fund Index, respectively.

Global equity markets across the globe had a rough time in the first quarter. Fears of economic slowdown in the U.S. and the popping of the global tech bubble have taken their toll on investor confidence. However, we remain enthusiastic about the Fund's prospects.

Why we are Bullish

The Oakmark International Fund is a value international fund. After a few years of being considered old fashioned and out of date, the markets now appear to be rediscovering investing fundamentals. As you have read on these pages year after year, we believe that a company's worth is solely dependent on the cash flow that its assets generate and how the excess cash is deployed. This type of intuitive thinking was ignored at the end of the 90's as investors sought ways to connect technological innovations with share prices in the stock market. As this occurred, people forgot that the purpose of a business enterprise was to make money and judged an investment opportunity not by its profit potential but by the sexiness of its business and the ascent of its stock chart. Thankfully, this type of thinking has come to a crashing halt. Investors are now going back to basics, which will benefit the Fund as quality, growing, well-managed, undervalued businesses, the type we strive to own, continue to receive investor attention.

The second major factor that causes us to be so bullish is the rate of positive structural change in overseas markets, combined with low stock market prices for attractive businesses. "Structural change" includes but is not limited to policies that are advantageous to owners of capital. Whether it is tax and pension reform in Europe, shareholders rights' legislation in Brazil, a strong, clean corporate governance movement in South Korea or the break-up of cross-company shareholdings in Japan and Germany, the momentum towards better treatment of shareholders is moving in our favor. With the exception of Japan, most major countries are moving at a good pace to institute liberalized policies with anticipated favorable consequences for holders of stocks.

The combination of the return to fundamentals with the opportunities available in the overseas markets, lead us to believe this is an especially good time to be value investors in foreign stocks.

And then there is Japan....

For many years we have under-weighted Japan in the Fund. When this Fund first started in 1992, Japan accounted for over 40% of the MS EAFE index and most of our peers had close to 40% in Japan and we either had a low or zero weighting. Now Japan represents slightly above 20% of the index and we still have difficulty finding worthwhile companies in which to invest. Though, Japan now represents close to 7% of Fund assets, keep in mind that it is the second largest economy in the world. It is such a large market, we have two analysts, Rob Taylor and N. David Samra, spending a substantial amount of time analyzing Japanese prospects. Yet, we still can't find a lot of stocks to buy. The number one reason for this remains the same: it is still incredibly hard to find Japanese companies that are truly run for the benefit of their owners. Such things as maintaining face, refusing to lay off surplus labor, poor capital allocation, bad general expense management, and a general lack of interest in generating proper returns from their assets continue to plague Japanese companies. Because of this, the majority of companies over time destroy value rather than create it. We will pay NO PRICE for companies that behave in this way. We will keep watching closely for signs of change, but until legitimate movement occurs, it's probably a market which will remain underrepresented in the Fund.

Last Words

Though, as of this writing, global equity markets are in a bit of turmoil, we are convinced that we have a lot to offer our fellow shareholders. As value investors with strong past performance, we are enthusiastic about our medium and long-term prospects. As markets go through these periods, it is important to do what we do: stay focused on the prospects and the valuation of our underlying investments. As time passes and the storm fades away, one will look back and realize that this was an advantageous time to be putting money to work in foreign markets.

David G. Herro, CFA

Portfolio Manager
dherro@compuserve.com

Michael J. Welsh, CFA, CPA

Portfolio Manager
102521.2142@compuserve.com

April 5, 2001