THE OAKMARK INTERNATIONAL SMALL CAP FUND
Report
from David G. Herro and
Michael J. Welsh, Portfolio Managers
THE OAKMARK INTERNATIONAL SMALL CAP FUNDReport
from David G. Herro and |
|
| THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL SMALL CAP FUND FROM ITS INCEPTION (11/1/95) TO PRESENT (3/31/04) AS COMPARED TO THE MSCI WORLD EX U.S. INDEX19 | ||||
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| Annual Average Total Returns | ||||
| (as of 03/31/04) | ||||
| Total Return Last 3 Months* |
1-year | 5-year | Since Inception (11/1/95) |
|
| Oakmark International Small Cap Fund (Class I) | 6.54% | 85.03% | 14.37% | 11.85% |
| MSCI World ex. U.S. | 4.24% | 57.16% | 0.98% | 4.75% |
| Lipper International Small Cap Average21 | 8.90% | 76.32% | 10.10% | 11.72% |
| 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. | ||||
| The performance data quoted represents past performance. Past performance does not guarantee future results. | ||||
| The fund's high performance may not be repeated. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Average annual total return measures annualized change, while total return measures aggregate change. To obtain current month end performance data, call 1-800-OAKMARK or visit www.oakmark.com. | ||||
| * Not annualized | ||||
The Oakmark International Small Cap Fund gained 7% for the quarter, slightly more than the relevant index. For the past twelve months, your Fund is up 85%.
The strongest performers for the quarter included most of our Japanese holdings, especially brokerage firm Ichiyoshi Securities, ophthalmic (eye) specialist Santen Pharmaceutical, and the entertainment software firm Square Enix. Ichiyoshi's share price was buoyed by strong equity markets, and the company announced they would significantly increase dividend payouts. Santen recently announced a North American distribution alliance with Johnson & Johnson. Because Santen's superior anti-infective product has strong growth potential in the U.S., the alliance should provide the necessary distribution scale and know-how to penetrate the market.
Stock selection in France also positively affected the Fund's returns for the quarter. LISI and Carbone Lorraine showed particularly strong share price performance.
Another strong performer was UK-based retailer Carpetright plc., which continues to demonstrate the strength of its business model. The company generated strong cash flows despite a difficult operating environment in 2003.
The most significant detractors from quarterly performance were capital equipment manufacturer Alfa Laval (Sweden), financial services provider Julius Baer Holding (Switzerland), and Baycorp Advantage (Australia). The declines in these stock prices were minor on an absolute basis.
We continue to like the quality and price attractiveness of the portfolio. Thank you for your continued confidence.
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| David G. Herro, CFA Portfolio Manager dherro@oakmark.com |
Michael J. Welsh, CFA, CPA Portfolio Manager mwelsh@oakmark.com |
| THE OAKMARK INTERNATIONAL SMALL CAP FUND |
International Diversification—March 31, 2004 (Unaudited)
| THE OAKMARK INTERNATIONAL SMALL CAP FUND |
Schedule of Investments—March 31, 2004 (Unaudited)
| Name | Description | Shares Held | Market Value |
| Common Stocks—96.1% | |||
| Food & Beverage—5.9% | |||
| Campari Group (Italy) | Soft Drinks, Wines, & Spirits Producer | 290,500 | $13,097,876 |
| Baron de Ley, S.A. (Spain) (a) | Wines & Spirits Manufacturer | 162,285 | 7,109,313 |
| Geest plc (Great Britain) | Fresh Produce Distributor | 717,600 | 6,453,998 |
| Hite Brewery Co., Ltd. (Korea) | Brewer | 68,000 | 4,943,832 |
| Alaska Milk Corporation (Philippines) (b) | Milk Producer | 49,394,000 | 2,593,899 |
| Kook Soon Dang Brewery Co., Ltd. (Korea) | Wine & Spirits Manufacturer | 122,676 | 2,371,951 |
| Grupo Continental, S.A. (Mexico) | Soft Drink Manufacturer | 1,152,600 | 2,226,496 |
| 38,797,365 | |||
| Household Products—0.7% | |||
| Societe BIC SA (France) | Consumer & Office Supplies | 101,800 | $4,321,815 |
| Other Consumer Goods & Services—1.8% | |||
| Vitec Group plc (Great Britain) | Photo Equipment & Supplies | 1,365,684 | $8,876,842 |
| Royal Doulton plc (Great Britain) (a)(b) | Tableware & Giftware | 22,373,000 | 3,403,512 |
| 12,280,354 | |||
| Broadcasting & Publishing—2.0% | |||
| Tamedia AG (Switzerland) | TV Broadcasting & Publishing | 161,983 | $13,432,487 |
| Building Materials & Construction—1.3% | |||
| Fletcher Building Limited (New Zealand) | Building Materials Manufacturer | 2,952,800 | $8,730,195 |
| Human Resources—1.8% | |||
| DIS Deutscher Industrie Service AG (Germany) | Recruitment Consultancy Services | 510,249 | $11,710,091 |
| Information Services—3.4% | |||
| Baycorp Advantage Limited (Australia) (a)(b) | Credit Reference Services | 11,540,500 | $22,519,987 |
| Marketing Services—3.0% | |||
| Asatsu-DK, Inc. (Japan) | Advertising Services Provider | 459,700 | $14,326,365 |
| LG Ad Inc. (Korea) | Advertising & Marketing Services | 312,880 | 5,214,667 |
| 19,541,032 | |||
| Motorcycles—1.5% | |||
| Ducati Motor Holding S.p.A. (Italy) (a)(b) | Motorcycle Manufacturer | 6,083,600 | $9,821,860 |
| Publishing—1.8% | |||
| Recoletos Grupo de Comunicacion, S.A. (Spain) | Publisher | 761,000 | $5,965,177 |
| Matichon Public Company Limited, Foreign Shares (Thailand) (b) | Newspaper Publisher | 2,039,500 | 5,716,524 |
| 11,681,701 | |||
| Recreation & Entertainment—2.7% | |||
| Square Enix Co., Ltd. (Japan) | Entertainment Software | 436,800 | $13,026,303 |
| Konami Sports Corporation (Japan) | Fitness Centers | 245,000 | 4,358,009 |
| 17,384,312 | |||
| Retail—9.4% | |||
| D.F.S. Furniture Company plc (Great Britain) | Furniture Retailer & Manufacturer | 3,122,000 | $24,811,859 |
| Carpetright plc (Great Britain) | Carpet Retailer | 1,067,400 | 19,810,257 |
| Bulgari S.p.A. (Italy) | Jewelry Manufacturer & Retailer | 1,889,300 | 17,183,174 |
| 61,805,290 | |||
| Bank & Thrifts—1.8% | |||
| Jyske Bank A/S (Denmark) (a) | Commercial Banking | 222,400 | $11,836,826 |
| Financial Services—2.2% | |||
| Julius Baer Holding Ltd., Zurich (Switzerland) | Asset Management | 49,090 | $14,189,654 |
| Other Financial—2.1% | |||
| Ichiyoshi Securities Co., Ltd. (Japan) | Stock Broker | 1,959,000 | $13,713,094 |
| Medical Products—6.0% | |||
| Ansell Limited (Australia) | Protective Rubber & Plastics Products | 4,265,150 | $23,402,206 |
| Coloplast A/S, Class B (Denmark) | Healthcare Products & Services Provider | 101,500 | 9,428,595 |
| Hogy Medical Co., Ltd. (Japan) | Medical Supplies Manufacturer | 79,800 | 3,627,099 |
| Golden Meditech Company Limited (China) | Medical Instruments & Supplies | 7,751,000 | 3,381,741 |
| 39,839,641 | |||
| Pharmaceuticals—2.9% | |||
| Santen Pharmaceutical Co., Ltd. (Japan) | Pharmaceuticals | 1,147,000 | $19,137,748 |
| Telecommunications—0.8% | |||
| Asia Satellite Telecommunications Holdings Limited (Hong Kong) | Satellite Operator | 2,818,500 | $5,045,404 |
| Computer Services—3.4% | |||
| Morse plc (Great Britain) | Business & Technology Solutions | 5,187,300 | $13,152,043 |
| Alten (France) (a) | Systems Consulting & Engineering | 298,141 | 4,828,107 |
| Sopra Group (France) | Computer Engineering | 111,930 | 4,738,100 |
| 22,718,250 | |||
| Computer Systems—2.2% | |||
| Lectra (France) (a) | Manufacturing Process Systems | 1,663,000 | $14,427,153 |
| Office Equipment—4.3% | |||
| Neopost SA (France) | Mailroom Equipment Supplier | 526,300 | $28,379,518 |
| Airport Maintenance—7.0% | |||
| Kobenhavns Lufthavne A/S (Copenhagen Airports A/S - CPH) (Denmark) | Airport Management & Operations | 184,100 | $23,461,339 |
| Grupo Aeroportuario del Sureste S.A. de C.V. (Mexico) (b)(c) | Airport Operator | 1,076,600 | 22,447,110 |
| 45,908,449 | |||
| Diversified Conglomerates—6.1% | |||
| Financiere Marc de Lacharriere SA (Fimalac) (France) | Diversified Operations | 386,364 | $15,480,334 |
| Pargesa Holding AG (Switzerland) | Diversified Operations | 5,374 | 14,939,567 |
| Tae Young Corp. (Korea) | Heavy Construction | 283,560 | 9,675,276 |
| Financiere Marc de Lacharriere SA (Fimalac), Warrants (France) (a) | Diversified Operations | 31,866 | 133,323 |
| 40,228,500 | |||
| Environmental Products & Services—0.3% | |||
| Munters AB (Sweden) | Cooling & Moisture Control Systems | 77,400 | $1,908,982 |
| Instruments—1.2% | |||
| Vaisala Oyj, Class A (Finland) | Atmospheric Observation Equipment | 312,900 | $7,816,294 |
| Machinery & Industrial Processing—6.2% | |||
| Pfeiffer Vacuum Technology AG (Germany) | Vacuum Pump Manufacturer | 423,840 | $15,338,971 |
| Alfa Laval (Sweden) | Filtration & Separation Equipment | 1,061,100 | 13,999,980 |
| Carbone Lorraine SA (France) | Electrical Systems Manufacturer | 210,000 | 9,147,909 |
| Andritz AG (Austria) | General Industrial Machinery | 48,000 | 2,222,669 |
| 40,709,529 | |||
| Other Industrial Goods & Services—6.0% | |||
| Schindler Holding AG (Switzerland) | Elevator & Escalator Manufacturer | 76,150 | $24,266,723 |
| LISI (France) | Industrial Fastener Manufacturer | 241,813 | 11,902,520 |
| Kone Oyj, Class B (Finland) | Elevators | 54,300 | 3,242,051 |
| 39,411,294 | |||
| Production Equipment—3.3% | |||
| Interpump Group S.p.A. (Italy) (b) | Pump & Piston Manufacturer | 4,604,900 | $20,223,952 |
| NSC Groupe (France) | Textile Equipment Manufacturer | 12,316 | 1,060,882 |
| 21,284,834 | |||
| Transportation Services—1.6% | |||
| Mainfreight Limited (New Zealand) (b) | Logistics Services | 8,935,381 | $10,614,982 |
| Chemicals—3.4% | |||
| Gurit-Heberlein AG (Switzerland) | Chemical Producer | 29,850 | $22,395,751 |
| Total Common Stocks (Cost: $440,341,671) | 631,592,392 | ||
| Par Value | |||
| Short Term Investments—3.4% | |||
| U.S. Government Bills—1.5% | |||
| United States Treasury Bills, 0.935% - 0.95% due 4/8/2004 - 4/22/2004 | $10,000,000 | $9,996,350 | |
| Total U.S. Government Bills (Cost: $9,996,350) | 9,996,350 | ||
| Repurchase Agreements—1.9% | |||
| IBT Repurchase Agreement,
0.91% dated 3/31/2004 due 4/1/2004, repurchase price $10,000,253 collateralized by U.S. Government Agency Securities with an aggregate market value plus accrued interest of $10,500,000 |
$10,000,000 | $10,000,000 | |
| IBT Repurchase Agreement,
0.76% dated 3/31/2004 due 4/1/2004, repurchase price $2,744,770 collateralized by a U.S. Government Agency Security with a market value plus accrued interest of $2,881,948 |
2,744,712 | 2,744,712 | |
| Total Repurchase Agreements (Cost: $12,744,712) | 12,744,712 | ||
| Total Short Term Investments (Cost: $22,741,062) | 22,741,062 | ||
| Total Investments (Cost $463,082,733)—99.5% | $654,333,454 | ||
| Foreign Currencies (Cost $328,629)—0.1% | 331,818 | ||
| Other Assets In Excess Of Other Liabilities—0.4% | 2,679,842 | ||
| Total Net Assets—100% | $657,345,114 | ||
| (a) | Non-income producing security. |
| (b) | See footnote number five in the Notes to Financial Statements regarding transactions in securities of affiliated issuers. |
| (c) | Represents an American Depository Receipt. |
See accompanying notes to financial statements.