THE OAKMARK INTERNATIONAL FUND
Report from David G. Herro and
Michael J. Welsh, Portfolio Managers
THE OAKMARK INTERNATIONAL FUNDReport from David G. Herro and
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| THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL FUND FROM ITS INCEPTION (9/30/92) TO PRESENT (3/31/02) COMPARED TO THE MSCI WORLD EX U.S. INDEX19 | ||||
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| Average
Annual Total Returns2 (as of 3/31/02) |
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| Total Return Last 3 Months* |
1-year | 5-year | Since Inception (9/30/92) |
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| Oakmark International Fund | 11.46% | 15.85% | 8.14% | 12.64% |
| MSCI World ex. U.S. | 0.57% | -8.08% | 1.57% | 5.94% |
| MSCI EAFE23 | 0.51% | -8.50% | 1.32% | 5.76% |
| Lipper International Fund Index20 | 2.46% | -4.95% | 2.75% | 7.66% |
| Past performance is no guarantee of future results. Investment return and principal value vary, and you may have a gain or loss when you sell shares. Average annual total return measures annualized change, while total return measures aggregate change. | ||||
| * Not annualized | ||||
The long-term performance of your Fund has been strong, and we are particularly pleased with the resiliency the Fund has shown in down markets. Over the past three years your Fund has returned 13% on an annualized basis, while all of the major international indices are negative. The discount to intrinsic value that we require before investing in a company gives us a margin of safety we believe helps to cushion the blow of down markets.
Portfolio Update
The two most significant geographical shifts in The Oakmark International Fund since the end of 2000 have been a lower weighting in Latin America (declining to 7.5% from 14%) and a higher weighting in Japan (increased to 9% from 2%). We have added a number of high-quality Japanese businesses to the portfolio in the past year including Meitec, Tokyo Broadcasting and, last quarter, Takeda Pharmaceutical. All three of these businesses generate good economic returns, are run by shareholder-oriented management, and trade at significant discounts to our estimate of intrinsic value.
Even with these additions to the Fund, Japan still remains significantly under-represented in your Fund relative to the indices; it still comprises roughly 20% of the EAFE and World ex-U.S. indices. We will continue, as we have over the past ten years, to search for quality companies trading at prices that provide real opportunity.
David G. Herro, CFA
Portfolio Manager
dherro@oakmark.com
Michael J. Welsh, CFA, CPA
Portfolio Manager
102521.2142@compuserve.com
April 4, 2002
| THE OAKMARK INTERNATIONAL FUND |
International Diversification—March 31, 2002
| THE OAKMARK INTERNATIONAL FUND |
Schedule of Investments—March 31, 2002 (Unaudited)
| Name | Description | Shares Held | Market Value |
| Common Stocks—95.4% | |||
| Food & Beverage—8.9% | |||
| Diageo plc (Great Britain) | Beverages, Wines, & | ||
| Spirits Manufacturer | 2,410,000 | $31,504,300 | |
| Lotte Chilsung Beverage | Soft Drinks, Juices, & | ||
| Co., Ltd. (Korea) | Sport Drinks Manufacturer | 55,700 | 29,156,127 |
| Pernod-Ricard SA (France) | Manufactures Wines, Spirits, & | ||
| Fruit Juices | 328,100 | 26,134,914 | |
| Fomento Economico | |||
| Mexicano, S.A. de C.V. | |||
| (Mexico), (b) | Soft Drink & Beer Manufacturer | 549,400 | 25,904,210 |
| 112,699,551 | |||
| Apparel—1.0% | |||
| Fila Holding S.p.A. | |||
| (Italy), (a)(b)(d) | Athletic Footwear & Apparel | 5,894,760 | $12,968,472 |
| Retail—5.3% | |||
| Somerfield plc | |||
| (Great Britain) | Food Retailer | 22,714,000 | $36,953,871 |
| Giordano International | |||
| Limited (Hong Kong) | Pacific Rim Clothing Retailer & | ||
| Manufacturer | 50,401,000 | 30,047,713 | |
| 67,001,584 | |||
| Home Furnishings—3.4% | |||
| Hunter Douglas N.V. | |||
| (Netherlands) | Window Coverings Manufacturer | 1,435,484 | $42,238,532 |
| Other Consumer Goods & Services—0.3% | |||
| Shimano Inc. (Japan) | Bicycle Components Manufacturer | 350,600 | $4,308,651 |
| Bank & Thrifts—10.2% | |||
| Banca Popolare di Verona | |||
| (Italy) | Commercial Banking | 3,493,000 | $39,895,708 |
| Uniao de Bancos | |||
| Brasileiros S.A. | |||
| (Brazil), (c) | Commercial Banking | 939,300 | 22,965,885 |
| BNP Paribas SA (France) | Commercial Banking | 354,000 | 17,843,317 |
| United Overseas Bank | |||
| Limited, Foreign Shares | |||
| (Singapore) | Commercial Banking | 1,426,968 | 11,762,745 |
| Kookmin Bank (Korea) | Commercial Banking | 269,968 | 11,333,755 |
| Banco Latinoamericano | |||
| de Exportaciones, S.A., | |||
| Class E (Panama), (b) | Latin American Trade Bank | 515,400 | 11,313,030 |
| Svenska Handelsbanken | |||
| AB (Sweden) | Commercial Banking | 508,000 | 7,273,236 |
| DePfa Bank plc (Ireland) | Mortgage Bank | 83,000 | 5,563,685 |
| 127,951,361 | |||
| Other Financial—3.8% | |||
| Daiwa Securities Group | |||
| Inc. (Japan) | Stock Broker | 4,076,000 | $24,093,066 |
| Euronext (Netherlands) | Stock Exchange | 1,236,500 | 23,261,764 |
| 47,354,830 | |||
| Hotels & Motels—1.1% | |||
| Mandarin Oriental | |||
| International Limited | |||
| (Singapore) | Hotel Management | 32,381,400 | $13,600,188 |
| Human Resources—2.8% | |||
| Michael Page | |||
| International plc | |||
| (Great Britain) | Recruitment Consultancy Services | 13,386,000 | $35,168,780 |
| Marketing Services—5.6% | |||
| Cordiant | |||
| Communications Group | |||
| plc (Great Britain), (d) | Advertising & Media Services | 29,611,070 | $39,847,036 |
| Aegis Group plc | |||
| (Great Britain) | Media Services | 16,962,000 | 30,131,983 |
| 69,979,019 | |||
| Computer Services—2.9% | |||
| Meitec Corporation | |||
| (Japan) | Software Engineering Services | 1,234,000 | $36,842,761 |
| Telecommunications—4.3% | |||
| Telefonaktiebolaget | |||
| LM Ericsson, Class B | |||
| (Sweden), (a) | Mobile & Wired | ||
| Telecommunications Products | 4,826,100 | $20,380,176 | |
| Panafon Hellenic | |||
| Telecom S.A. (Greece) | Mobile Telecommunications | 2,817,000 | 14,076,429 |
| SK Telecom Co., Ltd. | |||
| (Korea) | Mobile Telecommunications | 39,620 | 8,751,165 |
| Telemig Celular | |||
| Participacoes S.A. | |||
| (Brazil) | Mobile Telecommunications | 2,273,095,600 | 6,357,625 |
| Cable & Wireless plc | |||
| (Great Britain) | Telecommunications | 1,600,000 | 5,120,705 |
| 54,686,100 | |||
| Broadcasting & Cable TV—4.2% | |||
| Tokyo Broadcasting | |||
| System, Inc. (Japan) | Television & Radio Broadcasting | 1,511,000 | $28,537,375 |
| Grupo Televisa S.A. | |||
| (Mexico), (a)(b) | Television Production & | ||
| Broadcasting | 504,000 | 24,449,040 | |
| 52,986,415 | |||
| Publishing—7.1% | |||
| John Fairfax Holdings | |||
| Limited (Australia) | Newspaper Publisher | 14,211,500 | $30,032,515 |
| Wolters Kluwer NV | |||
| (Netherlands) | Reference Material Publisher | 1,418,500 | 29,637,007 |
| Independent News & | |||
| Media PLC (Ireland) | Newspaper Publisher | 15,299,965 | 29,302,648 |
| 88,972,170 | |||
| Pharmaceuticals—4.8% | |||
| GlaxoSmithKline plc | |||
| (Great Britain) | Pharmaceuticals | 1,380,200 | $32,350,572 |
| Takeda Chemical | |||
| Industries, Ltd. (Japan) | Pharmaceuticals & | ||
| Food Supplemenets | 378,000 | 15,304,104 | |
| Novartis AG | |||
| (Switzerland) | Pharmaceuticals | 298,500 | 11,722,039 |
| Aventis S.A. (France) | Pharmaceuticals | 22,300 | 1,537,531 |
| 60,914,246 | |||
| Medical Products—2.0% | |||
| Gambro AB, Class A | |||
| (Sweden) | Manufacturer of Dialysis Products | 4,122,000 | $25,434,632 |
| Automotive—4.1% | |||
| Autoliv, Inc (Sweden) | Automotive Safety Systems | ||
| Manufacturer | 1,163,000 | $27,920,073 | |
| Compagnie Generale | |||
| des Etablissements | |||
| Michelin (France) | Tire Manufacturer | 632,000 | 23,955,170 |
| 51,875,243 | |||
| Aerospace—2.7% | |||
| Rolls-Royce plc | |||
| (Great Britain) | Aviation & Marine Power | 12,546,995 | $33,321,816 |
| Airport Maintenance—0.3% | |||
| Grupo Aeroportuario | |||
| del Sureste S.A. de C.V. | |||
| (Mexico), (a)(b) | Airport Operator | 242,000 | $3,654,200 |
| Instruments—2.8% | |||
| Orbotech, Ltd. (Israel), (a) | Optical Inspection Systems | 1,139,200 | $35,793,664 |
| Machinery & Industrial Processing—2.8% | |||
| Metso Corporation | |||
| (Finland) | Paper & Pulp Machinery | 2,942,100 | $35,601,311 |
| Building Materials & Construction—1.7% | |||
| Kumkang Korea | |||
| Chemical Co., Ltd. | |||
| (Korea) | Building Materials | 180,140 | $21,257,065 |
| Chemicals—5.9% | |||
| Henkel KGaA (Germany) | Chemical Products Manufacturer | 553,700 | $31,572,544 |
| Givaudan (Switzerland), (a) | Fragrance & Flavor Compound | ||
| Manufacturer | 73,200 | 23,465,717 | |
| Akzo Nobel N.V. | |||
| (Netherlands) | Chemical Producer | 425,500 | 19,854,462 |
| 74,892,723 | |||
| Other Industrial Goods & Services—7.4% | |||
| Kone Corporation, | |||
| Class B (Finland) | Elevators | 361,980 | $33,087,780 |
| Enodis plc | |||
| (Great Britain), (d) | Food Processing Equipment | 20,381,200 | 25,685,210 |
| Chargeurs SA | |||
| (France), (d) | Wool, Textile Production | ||
& Trading |
350,067 | 24,837,195 | |
| Enodis plc, Rights | |||
| (Great Britain) | Food Processing Equipment | 12,228,720 | 6,704,275 |
| FKI plc (Great Britain) | Industrial Manufacturing | 1,020,000 | 2,741,557 |
| 93,056,017 | |||
| Total Common Stocks (Cost: $1,116,600,021) | 1,202,559,331 | ||
Par Value |
|||
| Short Term Investments—4.3% | |||
| U.S. Government Bills—1.2% | |||
| United States Treasury Bills, 1.71% - 1.76% | |||
| due 4/4/2002 - 4/18/2002 | $15,000,000 | $14,992,835 | |
| Total U.S. Government Bills (Cost: $14,992,864) | 14,992,835 | ||
| Repurchase Agreements—3.1% | |||
| State Street Repurchase Agreement, 1.75% due 4/1/2002, | |||
| repurchase price $39,131,607 collateralized by | |||
| U.S. Treasury Bonds | $39,124,000 | $39,124,000 | |
| Total Repurchase Agreements (Cost: $39,124,000) | 39,124,000 | ||
| Total Short Term Investments (Cost: $54,116,864) | 54,116,835 | ||
| Total Investments (Cost $1,170,716,885)—99.7% (e) | $1,256,676,166 | ||
| Foreign Currencies (Proceeds $818,576)—0.1% | $813,223 | ||
| Other Assets In Excess Of Other Liabilities—0.2% (f) | 2,582,294 | ||
| Total Net Assets—100% | $1,260,071,683 | ||
| (a) | Non-income producing security. |
| (b) | Represents an American Depository Receipt. |
| (c) | Represents a Global Depository Receipt. |
| (d) | See footnote number five in the Notes to Financial Statements regarding transactions in affiliated issuers. |
| (e) | At March 31, 2002, net unrealized appreciation of $85,953,929, for federal income tax purposes, consisted of gross unrealized appreciation of $212,763,850 and gross unrealized depreciation of $126,809,921. |
| (f) | Includes transaction hedges. |
See accompanying notes to financial statements.
