THE OAKMARK INTERNATIONAL FUND
Report from David G. Herro and
Michael J. Welsh, Portfolio Managers
THE OAKMARK INTERNATIONAL FUNDReport from David G. Herro and
|
|
| THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL FUND FROM ITS INCEPTION (9/30/92) TO PRESENT (9/30/03) COMPARED TO THE MSCI WORLD EX U.S. INDEX21 | |||||
 |
|||||
| Annual Average Total Returns1 | |||||
| (as of 9/30/03) | |||||
| Total Return Last 3 Months* |
1-year | 5-year | 10-year | Since Inception (9/30/92) |
|
| Oakmark International Fund | 7.70% | 29.97% | 13.21% | 8.53% | 10.62% |
| MSCI World ex. U.S. | 8.08% | 26.95% | 1.03% | 3.23% | 5.09% |
| MSCI EAFE22 | 8.13% | 26.01% | 0.55% | 2.92% | 4.86% |
| Lipper International Fund Index23 | 7.89% | 25.63% | 2.14% | 4.89% | 6.49% |
| The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. | |||||
| 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 Oakmark International Fund was up 8% for the quarter ending September 30, 2003. This performance was in line with relevant indices for both the quarter and for the calendar year to date. Most importantly, your Fund is up 11% annualized since inception in September, 1992, comparing very favorably to the indices and our peer group. It's hard to believe we've had yet another anniversary—our 11th. It seems like we just celebrated Oakmark International's 10th birthday a few months ago!
The strong price recovery in global stocks that began in March continued through the 3rd quarter. The rise in share prices has been broad-based, with most regions of the world participating.
The Fund benefited this quarter from strong stock selection relative to underlying market performance, especially in the United Kingdom and in Sweden. In the UK, the share price of Enodis plc, the food and refrigeration equipment manufacturer, rebounded very strongly as the market reacted to a strengthening in demand for their products. Michael Page International plc, the recruitment consultant, also saw a very strong increase in its share price, as did LM Ericsson, the Swedish telecommunications equipment giant. Ericsson was the single biggest contributor to the Fund's NAV24 for the quarter as its share price continued its strong recent performance from the lows of March.
Overall, the performance of the Fund for the quarter was in line with the various indices despite being significantly underweight in Japan. This is worth noting, as Japan was the single strongest performer of all developed markets. Because it has a significant weighting in all non-US indices it's performance has a big impact.
Looking Forward
Given the quality of the holdings and the attractive valuation of the portfolio, we remain optimistic about potential price appreciation. Thank you for your continued confidence.
 |
 |
| David G. Herro, CFA Portfolio Manager dherro@oakmark.com |
Michael J. Welsh, CFA, CPA Portfolio Manager mwelsh@oakmark.com |
| THE OAKMARK INTERNATIONAL FUND |
International Diversification—September 30, 2003
| THE OAKMARK INTERNATIONAL FUND |
Schedule of Investments—September 30, 2003
| Name | Description | Shares Held | Market Value |
| Common Stocks—95.1% | |||
| Food & Beverage—14.2% | |||
| Diageo plc (Great Britain) | Beverages, Wines, & Spirits Manufacturer | 9,655,900 | $104,492,027 |
| Nestle SA (Switzerland) | Food & Beverage Manufacturer | 392,300 | 90,451,937 |
| Cadbury Schweppes plc (Great Britain) | Beverage & Confectionary Manufacturer | 11,515,500 | 70,874,053 |
| Pernod-Ricard SA (France) | Manufactures Wines, Spirits, & Fruit Juices | 615,425 | 58,302,180 |
| Lotte Chilsung Beverage Co., Ltd. (Korea) (c) | Soft Drinks, Juices & Sports Drinks Manufacturer | 83,400 | 39,591,705 |
| Fomento Economico Mexicano S.A. de C.V. (Mexico) (b) | Soft Drink & Beer Manufacturer | 979,700 | 37,375,555 |
| 401,087,457 | |||
| Household Products—3.1% | |||
| Henkel KGaA (Germany) | Consumer Chemical Products Manufacturer | 1,355,350 | $86,862,687 |
| Other Consumer Goods & Services—1.6% | |||
| Swatch Group AG, Bearer Shares (Switzerland) | Watch Manufacturer | 457,900 | $43,513,762 |
| Swatch Group AG, Registered Shares (Switzerland) | Watch Manufacturer | 24,700 | 474,119 |
| 43,987,881 | |||
| Automobiles—2.2% | |||
| Bayerische Motoren Werke (BMW) AG (Germany) | Luxury Automobile Manufacturer | 1,620,100 | $61,259,808 |
| Automotive—1.9% | |||
| Compagnie Generale des Etablissements Michelin (France) | Tire Manufacturer | 1,454,500 | $54,116,756 |
| Broadcasting & Programming—2.4% | |||
| Grupo Televisa S.A. (Mexico) (b) | Television Production & Broadcasting | 1,841,200 | $67,369,508 |
| Human Resources—2.1% | |||
| Michael Page International plc (Great Britain) (c) | Recruitment Consultancy Services | 23,736,600 | $58,988,739 |
| Marketing Services—3.8% | |||
| Publicis Groupe (France) | Advertising & Media Services | 2,286,100 | $62,814,244 |
| Aegis Group plc (Great Britain) | Media Services | 30,524,200 | 44,524,681 |
| 107,338,925 | |||
| Publishing—4.3% | |||
| John Fairfax Holdings Limited (Australia) | Newspaper Publisher | 32,814,100 | $71,652,951 |
| Reed Elsevier plc (Great Britain) | Publisher | 5,943,100 | 46,506,405 |
| 118,159,356 | |||
| Recreation & Entertainment—0.9% | |||
| Nintendo Company, Ltd. (Japan) | Video Game Manufacturer | 284,800 | $23,916,454 |
| Retail—3.1% | |||
| Signet Group plc (Great Britain) | Jewelry Retailer | 28,446,100 | $49,768,465 |
| Giordano International Limited (Hong Kong) (c) | Pacific Rim Clothing Retailer & Manufacturer | 82,924,300 | 37,744,455 |
| 87,512,920 | |||
| Bank & Thrifts—11.0% | |||
| Sanpaolo IMI S.p.A. (Italy) | Banking Services | 6,565,300 | $65,294,592 |
| Bank of Ireland (Ireland) | Commercial Banking | 5,347,000 | 63,925,871 |
| BNP Paribas SA (France) | Commercial Banking | 1,156,000 | 56,709,921 |
| United Overseas Bank Limited, Foreign Shares (Singapore) | Commercial Banking | 6,178,368 | 47,876,323 |
| Banco Popolare di Verona e Novara Scrl (Italy) | Commercial Banking | 2,938,400 | 41,419,772 |
| Svenska Handelsbanken AB (Sweden) | Commercial Banking | 1,498,800 | 25,437,816 |
| Kookmin Bank (Korea) | Commercial Banking | 231,168 | 7,577,302 |
| 308,241,597 | |||
| Financial Services—1.8% | |||
| Credit Suisse Group (Switzerland) | Investment Services & Insurance | 1,552,900 | $49,680,101 |
| Other Financial—7.6% | |||
| Daiwa Securities Group Inc. (Japan) | Stock Broker | 11,688,000 | $79,171,362 |
| Euronext (Netherlands) | Stock Exchange | 3,221,600 | 78,495,500 |
| Deutsche Boerse AG (Germany) | Electronic Trading Systems | 1,105,200 | 56,407,142 |
| 214,074,004 | |||
| Pharmaceuticals—11.4% | |||
| GlaxoSmithKline plc (Great Britain) | Pharmaceuticals | 4,799,700 | $99,971,123 |
| Aventis S.A. (France) | Pharmaceuticals | 1,738,800 | 90,264,390 |
| Takeda Chemical Industries, Ltd. (Japan) | Pharmaceuticals & Food Supplements | 2,314,000 | 84,496,501 |
| Novartis AG (Switzerland) | Pharmaceuticals | 1,170,700 | 45,297,975 |
| 320,029,989 | |||
| Telecommunications—2.7% | |||
| SK Telecom Co., Ltd. (Korea) | Mobile Telecommunications | 473,600 | $75,766,117 |
| Telecommunications Equipment—1.4% | |||
| Telefonaktiebolaget LM Ericsson, Class B (Sweden) (a) | Mobile & Wired Telecommunications Products | 26,012,000 | $37,936,964 |
| Computer Services—2.1% | |||
| Meitec Corporation (Japan)(c) | Software Engineering Services | 1,613,200 | $59,340,750 |
| Airport Maintenance—0.1% | |||
| Grupo Aeroportuario del Sureste S.A. de C.V. (Mexico) (b)(c) | Airport Operator | 242,000 | $3,557,400 |
| Diversified Conglomerates—3.4% | |||
| Vivendi Universal SA (France) (a) | Multimedia | 4,702,700 | $83,293,282 |
| LVMH Moet Hennessy Louis Vuitton SA (France) | Diversified Luxury Goods | 159,600 | 9,921,708 |
| Haw Par Corporation Limited (Singapore) | Healthcare & Leisure Products | 58,338 | 144,390 |
| 93,359,380 | |||
| Instruments—1.5% | |||
| Orbotech, Ltd. (Israel) (a)(c) | Optical Inspection Systems | 2,041,200 | $41,722,128 |
| Machinery & Industrial Processing—1.4% | |||
| Metso Corporation (Finland) | Paper & Pulp Machinery | 3,863,000 | $38,576,662 |
| Other Industrial Goods & Services—2.5% | |||
| Enodis plc (Great Britain) (a)(c) | Food Processing Equipment | 33,585,320 | $39,080,214 |
| Chargeurs SA (France) (c) | Wool, Textile Production & Trading | 1,050,201 | 30,593,668 |
| 69,673,882 | |||
| Transportation Services—2.1% | |||
| Associated British Ports Holdings plc (Great Britain) | Port Operator | 8,497,299 | $58,371,811 |
| Chemicals—6.5% | |||
| Akzo Nobel N.V. (Netherlands) | Chemical Producer | 2,576,500 | $80,370,678 |
| Givaudan (Switzerland) | Fragrance & Flavor Compound Manufacturer | 182,700 | 77,332,601 |
| Lonza Group AG, Registered Shares (Switzerland) | Industrial Organic Chemicals | 492,900 | 23,102,646 |
| 180,805,925 | |||
| Total Common Stocks (Cost: $2,310,623,395) | 2,661,737,201 | ||
| Par Value | |||
| Short Term Investments—4.7% | |||
| U.S. Government Bills—1.4% | |||
| United States Treasury Bills, 0.845%-0.875% due 10/2/2003 - 10/9/2003 |
$40,000,000 | $39,995,759 | |
| Total U.S. Government Bills (Cost: $39,995,759) | 39,995,759 | ||
| Repurchase Agreements—3.3% | |||
| IBT Repurchase Agreement, 0.95% due 10/1/2003, repurchase price $90,502,388 collateralized by U.S. Government Agency Securities | $90,500,000 | $90,500,000 | |
| IBT Repurchase Agreement, 0.75% due 10/1/2003, repurchase price $2,247,122 collateralized by a U.S. Government Agency Security | 2,247,075 | 2,247,075 | |
| Total Repurchase Agreements (Cost: $92,747,075) | 92,747,075 | ||
| Total Short Term Investments (Cost: $132,742,834) | 132,742,834 | ||
| Total Investments (Cost $2,443,366,229)—99.8% | $2,794,480,035 | ||
| Other Assets In Excess Of Other Liabilities—0.2% | 5,365,101 | ||
| Total Net Assets—100% | $2,799,845,136 | ||
| (a) | Non-income producing security. |
| (b) | Represents an American Depository Receipt. |
| (c) | See footnote number five in the Notes to Financial Statements regarding transactions in securities of affiliated issuers. |
See accompanying notes to financial statements.