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Longleaf Partners Funds Trust – ‘N-30B-2’ for 3/31/00

On: Tuesday, 4/25/00, at 3:32pm ET · For: 3/31/00 · Accession #: 950144-0-5445 · File #: 811-04923

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/25/00  Longleaf Partners Funds Trust     N-30B-2     3/31/00    1:64K                                    Bowne of Atlanta Inc/FA

Periodic or Interim Report Mailed to Shareholders — Rule 30b-2
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: N-30B-2     Longleaf Partners Funds                               38    108K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Service Directory Trustees and Officers
1	1st Page - Filing Submission
35	Service Directory
37	Trustees and Officers

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LOGO

LONGLEAF PARTNERS FUNDS SM

QUARTERLY REPORT
at March 31, 2000

PARTNERS FUND

INTERNATIONAL FUND

REALTY FUND

SMALL-CAP FUND

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

MANAGED BY:

SOUTHEASTERN ASSET MANAGEMENT, INC.

Memphis, TN

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CONTENTS

[Download Table]

Letter to Shareholders..................................... 1
Longleaf Partners Fund (Partners Fund)
Management Discussion.................................... 7
Performance History* and Portfolio Summary............... 9
Portfolio of Investments................................. 10
Longleaf Partners International Fund (International Fund)
Management Discussion.................................... 12
Performance History* and Portfolio Summary............... 14
Portfolio of Investments................................. 16
Longleaf Partners Realty Fund (Realty Fund)
Management Discussion.................................... 19
Performance History* and Portfolio Summary............... 22
Portfolio of Investments................................. 24
Longleaf Partners Small-Cap Fund (Small-Cap Fund)
Management Discussion.................................... 27
Performance History* and Portfolio Summary............... 29
Portfolio of Investments................................. 30
Service Directory.......................................... 33
Trustees and Officers...................................... 35

* Average annual returns for all Funds and all indices except the Value-Line
Index are shown with all dividends and distributions reinvested; the
Value-Line Index is not available with reinvested dividends. The indices shown
are unmanaged. Past performance is no guarantee of future performance, and the
value of an investment when redeemed may be more or less than the purchase
price.

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LONGLEAF PARTNERS FUNDS
LETTER TO SHAREHOLDERS

TO OUR SHAREHOLDERS:

In the twenty-five year history of Southeastern Asset Management, we have
aggressively pursued additional assets from new and existing clients in the
Partners Fund universe three times -- late 1987, 1990, and October of 1998. We
have otherwise been indifferent to inflows or have closed the Fund when
qualifying investments with the required margins of safety were difficult to
find.

In the current environment where many already discounted stocks are under
further pressure from value managers who are liquidating holdings, Longleaf sees
significant opportunity. For the fourth time in our firm's history we are
encouraging our existing partners to add aggressively to their Longleaf
investments, and we are pursuing new shareholders as well. Many of our
institutional clients have added to their accounts with the gains they have
captured from their technology holdings. We believe that Longleaf's return
opportunities are significant, and the attendant risks are minimal. We are
convinced that partners who invest today will be as satisfied with their
long-term results as those shareholders who invested in late 1987, the fourth
quarter of 1990, and October of 1998.

The Risk
While some use volatility measures such as standard deviation to measure risk,
most thoughtful long-term investors equate risk with the probability of
permanently losing capital. In today's extremely bifurcated market where a
handful of excessively valued companies dominate indices, our holdings have
demonstrable intrinsic values which are materially greater than their share
prices.

Much has been written about the resemblance of today's market to the early
1970's when fifty stocks known as the "Nifty Fifty" ruled that equity
environment. In an article on February 24, 2000 the Wall Street Journal drew a
striking comparison. At the end of 1972 the top 20% highest priced stocks of the
S&P 500 sold for a median P/E of 33.9 while the remaining 80% sold for 12.3X.
The contrast in today's market is more extreme. The top 20% of the S&P 500 sells
for over 70X earnings, and the lower 80% sells for a P/E of less than 15.
Today's "Nifty Fifty" equivalents are Internet related and biotech businesses.
In 1999 the 68 technology stocks in the S&P 500 returned 131% while the
remaining 432 companies were up less than 2%. The first quarter of 2000 has been
a continuation of this polarity.

Historically, those who owned stocks which sold at large premiums to their
underlying business values paid dearly. Shareholders who did not cash in their
gains from the "Nifty Fifty's" run through 1972, or worse, speculators who

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LONGLEAF PARTNERS FUNDS
LETTER TO SHAREHOLDERS

chased the good performance and bought those companies as they approached their
peaks, had dismal results. Within two years many of the "Nifty Fifty" owners had
lost 50-80% of their capital by the time the market bottomed in late 1974. Even
if those shareholders held "America's 50 Best Companies" for the succeeding
decade, the returns were a woefully inadequate 1.1% PER YEAR. The table below
tells the story.

NIFTY FIFTY RETURNS
10 YEAR ANALYSIS
12/31/72 - 12/31/82

[Download Table]

10 YEAR COMPOUNDED
CUMULATIVE ANNUAL
COMPANY RETURN (%) RETURN (%)
------- ---------- ----------

American Express.................... 41.1 3.5
American Home Products.............. 65.1 5.1
American Hospital Supply............ 48.1 4.0
AMP................................. 89.4 6.6
Anheuser-Busch...................... 54.1 4.4
Avon Products....................... (66.1) (10.3)
Baxter International................ 89.3 6.6
Black & Decker...................... (33.0) (3.9)
Bristol Myers....................... 169.2 10.4
Burroughs(4)........................ (9.6) (6.6)
Chesebrough-Pond's.................. 46.3 3.9
Citicorp............................ 31.5 2.8
Coca-Cola........................... 8.2 0.8
Digital Equipment................... 225.3 12.5
Disney (Walt) Company............... (34.2) (4.1)
Dow Chemical........................ 52.1 4.3
Eastman Kodak....................... (16.9) (1.8)
Emery Air Freight................... (20.5) (2.3)
General Electric.................... 100.2 7.2
Gillette............................ 22.1 2.0
Halliburton......................... 84.2 6.3
Heublein(5)......................... 45.5 3.9
Intl Business Machines.............. 77.7 5.9
Intl Flavors & Fragrances........... (17.4) (1.9)
ITT................................. 6.4 0.6
Johnson & Johnson................... 36.5 3.2
Kmart............................... (42.3) (5.3)

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LONGLEAF PARTNERS FUNDS
LETTER TO SHAREHOLDERS

[Download Table]

10 YEAR COMPOUNDED
CUMULATIVE ANNUAL
COMPANY RETURN (%) RETURN (%)
------- ---------- ----------

Lilly (Eli)......................... (2.4) (0.2)
Louisiana Land & Exploration........ (23.0) (2.6)
Lubrizol............................ 13.6 1.3
McDonalds........................... 27.5 2.5
Merck............................... 23.2 2.1
MGIC(5)............................. (35.0) (4.6)
Minnesota Mining & Mfg.............. 24.6 2.2
Penney (J C)........................ (19.0) (2.1)
Pepsico............................. 72.1 5.6
Pfizer.............................. 118.7 8.1
Pharmacia & Upjohn.................. (3.0) (0.3)
Philip Morris....................... 170.0 10.4
Polaroid............................ (74.6) (12.8)
Procter & Gamble.................... 48.7 4.0
Revlon.............................. 13.2 1.2
Schering-Plough..................... (21.2) (2.4)
Schlitz (Jos.) Brewing(5)........... (64.1) (10.3)
Schlumberger........................ 341.5 16.0
Sears Roebuck....................... (16.0) (1.7)
Simplicity Pattern(4)............... (79.1) (14.5)
Squibb.............................. 14.6 1.4
Texas Instruments................... 74.3 5.7
Xerox............................... (64.1) (9.7)
Nifty Fifty (equal-weighted)........ 31.0% 1.1%
S&P 500 Composite................... 91.9% 6.7%

Notes:
(1) Data provided by FactSet using Compustat database.
(2) Returns split-adjusted with dividends reinvested.
(3) Spin-offs become dollar-equivalent dividends reinvested in parent.
(4) Burroughs became UNISYS Corp; Simplicity Pattern became Maxxam Group
(5) Schlitz, MGIC, and Heublein were acquired during 1982. Returns are
annualized for the portions of the year that they traded as
independent entities.

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LONGLEAF PARTNERS FUNDS
LETTER TO SHAREHOLDERS

Following a comfortable consensus of owning everyone's favorite stocks almost
always hurts your financial health in the long run. The market over the
long-term properly prices businesses. Holding overvalued stocks exposes capital
to extreme danger.

The Return Opportunity
At the end of the first quarter, all four Longleaf portfolios are selling at
approximately half of our appraisals of their intrinsic or private market
values. These discounts imply over a 100% return should these businesses reach
our appraisals because the corporate values are building through the retention
and reinvestment of net cash earnings. Even if it takes five years for the
values to get recognized, the return opportunities are substantial.

If we buy a company for half its appraised value, if the value grows 12% per
year through business operations and intelligent capital deployment, and if the
share price rises to reflect corporate worth in the fifth year, we will compound
capital at 29% per year. (If the price approached appraisal more quickly, the
return would be higher; if the process took more than five years, the return
would be less.) The following hypothetical graph, based on these assumptions,
illustrates this process.

(GRAPH)

[Download Table]

Year Year Year Year Year Year
0 1 2 3 4 5
---- ---- ---- ---- ---- ----

Corporate Intrinsic Value/Share................. 40 42 52 56 62 70

29% Compound Annual............................. 20 30 40 50 60 70

Market Price/Share.............................. 20 35 30 47 40 70

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LONGLEAF PARTNERS FUNDS
LETTER TO SHAREHOLDERS

For this compounding to work, we must buy the shares at steep discounts to solid
corporate values, the business values must grow, and over time, the share prices
must properly reflect the values. Patience and a reasonable time horizon are
prerequisites.

Buy at steep discounts: All four Funds recently sold at the lowest
price-to-value ratios in their histories. Said another way, our businesses as a
whole are selling for about half of their intrinsic values. Recent corporate
transactions imply that our appraisals are low, and therefore, the composite
P/Vs actually may be more attractive than our conservative calculations, giving
us a better prospective return. Even if our analytic conclusions are high by 20%
(i.e. the P/V is actually 62.5%), the average annual return in the example is
still 23% over five years.

Value growth: Our example assumes 12% annual growth in value over the five-year
period. This value build-up is a function of a company's profitability and its
management's capital allocation skills. We believe we own businesses which are
sufficiently profitable and have management partners who can properly assess
risks and returns when weighing whether to reinvest in their businesses, make
acquisitions, or repurchase shares.

Price reflecting value: The gap between price and value can close in several
ways: the market rises to reflect value; the company liquidates; mergers or
acquisitions occur; management takes the business private; or aggressive share
repurchase programs arbitrage price towards value. At today's prices we AND our
corporate partners are focused on being good stewards of your capital. In
certain cases where we feel we can be helpful, we have elected to work closely
with managements and their boards to help build value-per-share and/or to get
value recognized. Many companies are liquidating all or part of their assets at
fair value and reviewing how best to deploy or distribute the proceeds. A number
of our holdings are in active merger discussions -- some of our companies are
putting themselves up for sale publicly; some are getting calls from private
buyers; and some are receiving unsolicited offers. LBO activity has also
increased with the decline of share prices. Share repurchases at the companies
we own are being executed at a level that we have never seen, with many of our
holdings reducing their outstanding shares by over 10% in a year's period. We
applaud these buybacks because they increase value-per-share substantially when
executed at such undervalued prices, and because today's repurchases represent
the highest return and lowest risk capital allocation alternative at almost all
of our companies.

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LONGLEAF PARTNERS FUNDS
LETTER TO SHAREHOLDERS

To summarize, your partners at Southeastern have aggressively invested in the
Longleaf Funds. We are convinced our returns from today's price levels will be
exceptional and the concomitant and comparative risks are negligible.

Shareholder Meeting
Our annual gathering of shareholders will be Wednesday, May 10 at 5:30 p.m. at
the Memphis Botanic Garden. We hope to see many of you there. We look forward to
reviewing the opportunities in each of the Longleaf portfolios.

www.longleafpartners.com
We have received numerous visitors at www.longleafpartners.com and appreciate
your interest. An audio replay of the shareholder meeting presentations should
be available on the Web site by the end of May for those of you unable to
attend.

Sincerely,

[Download Table]

/s/ O. Mason Hawkins, CFA /s/ G. Staley Cates, CFA
O. Mason Hawkins, CFA G. Staley Cates, CFA
Chairman & CEO President

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PARTNERS FUND - MANAGEMENT DISCUSSION
by Mason Hawkins, Staley Cates, and John Buford

In a frustrating quarter Longleaf Partners Fund declined 5.4% while the S&P 500
Index rose 2.3%. Although technology stocks faltered in the final days of March,
the quarter's results reflect the contrast between dot.com valuations (NASDAQ up
12.4%) and mainstream businesses (Dow Jones Industrial Average -4.7%).

Four holdings accounted for much of the Fund's decline -- Waste Management,
Tricon, Knight Ridder, and Hilton. We remain confident in our case on Waste
Management (see the previous two quarterly reports for details). The right CEO
is in place, industry fundamentals remain strong, and operating cash flow is on
target, even before the company's systems are fixed well enough to enable Maury
Myers to optimize operations. With all the bad press hovering over the stock,
however, Wall Street will require a couple of good quarters before believing.

The negative sentiment towards Waste Management is similar to that surrounding
Seagram when we bought it in 1997. We paid prices in the low-to-mid $30's for
Seagram in the face of unfavorable views of management. We believed the negative
assessment to be unwarranted, just as we view the current negative opinion of
WMI's management "credibility" due to the prior team as overdone. A year after
that Seagram purchase, although fundamentals remained sound, the stock traded in
the mid $20's, a sizable paper loss. Less than six months later in the spring of
1999 Seagram had appreciated to $65, almost twice our cost, and we sold the
stock at our appraisal.

This comparison is not meant to suggest that we will double our money on WMI in
only six months. It does highlight how volatile stock prices are, how quickly
sentiment can change when justified by fundamentals, and how we attempt to take
advantage of irrational swings between fear and greed. While the bad press is
one theory that has kept WMI at a steeply discounted price, negative PR is not
reason enough for us to walk away from attractive business characteristics and
significant undervaluation.

The Seagram experience also illustrates that big returns do not happen in a
straight line. If returns could be timed or if stocks rose in even increments,
we could wait for favorable price momentum and then jump in. Because the markets
do not accommodate this kind of wishful thinking, we must be early and patient.

Two of the other three "laggards" in the first quarter are operating
exceptionally well. Tricon's stock is weak because of horrible same-store
comparisons that the company will report for the first few months of this year.
However, even with those comps Tricon will report earnings and free cash flow up
over 20% in 2000, after last year's 43% gain in EPS and 22% gain in free cash
flow. Due to this amazing disconnect between business performance of their KFC,
Pizza Hut, and

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PARTNERS FUND - MANAGEMENT DISCUSSION
by Mason Hawkins, Staley Cates, and John Buford

Taco Bell brands, and the stock price, management bought in a whopping 3 million
shares in January alone.

Knight Ridder reported EPS up 20% in 1999 and will post a double digit gain
again this year, and was rewarded with a stock price drop. Like Tricon, KRI is
taking advantage of this drop by buying in substantial shares and thereby adding
even more to existing intrinsic value per share. KRI sells substantially below
our appraisal of around 9X EBITDA. Our confidence in that appraisal was boosted
by Tribune's agreement to pay 11X EBITDA for Times Mirror, which we believe has
lower growth characteristics and a weaker Web presence than Knight Ridder.

Hilton's stock has been weak due to poor performance at its Doubletree segment
and disappointing margins in 1999. The core properties and fee businesses,
however, are doing very well. The trophy hotels such as the Waldorf Astoria and
the Hawaiian Village are insulated from the industry's new supply threats, and
new hotel capacity is a positive rather than a negative for the fee businesses.
Management owns a substantial amount of the company, and Steve Bollenbach is
focused solely on building and recognizing value.

Our 13D filing on Aetna speaks for itself, and this is not the time to comment
further. In due course we will communicate the case in more detail.

While at the end of this quarter we report to you disappointing results, we also
report two things that we strongly believe will outweigh the current
underperformance over the long-term. First and most important, we have never
seen this kind of widespread undervaluation of fine businesses. Our composite
price-to-value ratio is below 50% for the first time ever, compared to a
long-term average in the high 60's. Just getting back to average would provide a
return that more than compensates for the past year, while putting us on a
platform from which we have historically generated high long-term absolute
returns. Second, we have never seen this level of company share repurchase
activity. Almost every company in the Fund is taking advantage of today's fire
sale prices and adding even more value to their shares by taking out sellers at
prices way below fair worth.

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PARTNERS FUND - PERFORMANCE HISTORY
AND PORTFOLIO SUMMARY

AVERAGE ANNUAL RETURNS
FOR THE PERIODS ENDED MARCH 31, 2000

[Download Table]

Value-Line
PARTNERS S&P 500 (Geometric) Inflation
FUND Index Index Plus 10%*
-------- ------- ----------- ---------

Year-to-Date (5.42)% 2.25% (0.55)% 4.16%
One Year (9.02) 17.92 4.74 13.70
Five Years 14.41 26.74 7.98 12.48
Ten Years 15.77 18.82 5.80 12.89
Since Public Offering 4/8/87 14.67 16.29 3.59 13.34

* Inflation Source: Monthly Consumer Price Index for All Urban Consumers (CPI-U)
compiled by the U.S. Bureau of Labor Statistics.

FIVE LARGEST HOLDINGS
(REPRESENT 44.4% OF NET ASSETS)

WASTE MANAGEMENT, INC. (WMI) 13.0%
The world's largest solid waste collection and disposal company with
residential, commercial, and industrial customers throughout North America.

MARRIOTT INTERNATIONAL, INC. (MAR) 10.0%
Owner of many of the strongest brand names in the lodging industry. Operates and
franchises over 300,000 rooms in hotels and resorts under the Marriott, Ritz-
Carlton, Renaissance, Courtyard, and Residence Inn names.

GENERAL MOTORS CORPORATION (GM) 8.7%
Conglomerate that owns a controlling stake in Hughes Electronics, GMAC, and the
international truck and car business.

FEDEX CORPORATION. (FDX) 7.5%
Integrated air-ground transportation company providing time-definite delivery of
packages and documents worldwide.

GEORGIA-PACIFIC CORPORATION--TIMBER GROUP (TGP) 5.2%
Owner of over 4.7 million acres of timberlands located primarily in southern
U.S.

PORTFOLIO CHANGES
JANUARY 1, 2000 THROUGH MARCH 31, 2000

[Download Table]

NEW HOLDINGS ELIMINATIONS
------------ ------------

Diageo plc Boston Properties Inc.
Diageo plc (ADR) Koninklijke Philips
Nabisco Holdings Corp. Electronics N.V.
United Healthcare Corporation

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PARTNERS FUND - PORTFOLIO OF INVESTMENTS
AT MARCH 31, 2000 (UNAUDITED)

[Download Table]

SHARES MARKET VALUE
---------- --------------

Common Stock 98.1%

Beverages 4.4%
15,577,000 Diageo plc (Foreign)......................... $ 117,043,444
694,100 Diageo plc ADR (Foreign)..................... 20,909,763
--------------
137,953,207
--------------
Environmental Services 13.6%
2,890,900 * Allied Waste Industries, Inc................. 18,971,531
30,090,689 Waste Management, Inc........................ 411,866,306
--------------
430,837,837
--------------
Food 0.4%
471,000 Nabisco Holdings Corp........................ 15,160,312

Health Insurance 3.1%
1,768,400 Aetna Inc.................................... 98,477,775

Investment Management 0.9%
1,237,700 * The Pioneer Group, Inc....................... 28,776,525

Lodging 18.7%
1,048,780 * Crestline Capital Corporation................ 18,288,101
19,601,100 Hilton Hotels Corporation.................... 151,908,525
11,700,250 Host Marriott Corporation.................... 103,839,719
10,103,600 Marriott International, Inc.................. 318,263,400
--------------
592,299,745
--------------
Manufacturing 1.9%
4,450,000 * UCAR International, Inc...................... 58,684,375

Multi-Industry 9.4%
1,178,800 Alexander & Baldwin, Inc..................... 24,312,750
3,323,000 General Motors Corporation................... 275,185,938
--------------
299,498,688
--------------
Natural Resources 13.4%
6,474,600 Georgia-Pacific Corporation - Timber Group... 165,911,625
11,201,032 * Pioneer Natural Resources Company............ 119,010,965
2,900,000 Rayonier Inc................................. 141,375,000
--------------
426,297,590
--------------
Property & Casualty Insurance 5.4%
30,534,000 The Nippon Fire & Marine Insurance Company,
Ltd. (Foreign)............................. 75,319,049
20,860,000 The Yasuda Fire & Marine Insurance Company,
Ltd. (Foreign)............................. 94,573,152
--------------
169,892,201
--------------
Publishing 5.0%
3,134,300 Knight Ridder, Inc........................... $ 159,653,406

Real Estate 4.6%
9,681,791 TrizecHahn Corporation (Foreign)............. 145,226,865

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PARTNERS FUND - PORTFOLIO OF INVESTMENTS
AT MARCH 31, 2000 (UNAUDITED)

[Download Table]

SHARES MARKET VALUE
---------- --------------

Restaurants 4.7%
4,768,900 * Tricon Global Restaurants, Inc............... 148,133,956

Transportation 12.6%
7,290,000 Canadian Pacific Limited (Foreign)........... 163,113,750
6,064,600 * FedEx Corporation............................ 236,519,400
--------------
399,633,150
--------------
TOTAL COMMON STOCKS (COST $3,698,066,530).... 3,110,525,632
--------------

[Download Table]

PAR
----------

Short-Term Obligations 1.2%
38,508,000 Repurchase Agreement with State Street Bank,
5.25% due 4-3-00 (Collateralized by U.S.
government securities)..................... 38,508,000
--------------
TOTAL INVESTMENTS (COST $3,736,574,530)(a)................ 99.3% 3,149,033,632
OTHER ASSETS AND LIABILITIES, NET......................... 0.7 23,387,307
----- --------------
NET ASSETS................................................ 100.0% $3,172,420,939
===== ==============
NET ASSET VALUE PER SHARE......................................... $19.38
==============

* Non-income producing security
(a) Also represents aggregate cost for federal income tax purposes.

Note: Companies designated as "Foreign" are headquartered outside the U.S. and
represent 19% of net assets.

OPEN FORWARD CURRENCY CONTRACTS

[Download Table]

Currency Currency Sold and Currency Unrealized
Units Sold Settlement Date Market Value Gain/(Loss)
------------- --------------------------------- ------------ -----------

5,565,000,000 Japanese Yen 6-30-00............. $ 55,120,274 $(3,952,666)
5,400,000,000 Japanese Yen 9-29-00............. 54,376,860 (34,503)
5,500,000,000 Japanese Yen 12-28-00............ 56,321,589 952,180
------------ -----------
$165,818,723 $(3,034,989)
============ ===========

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INTERNATIONAL FUND - MANAGEMENT DISCUSSION
by Mason Hawkins, Staley Cates, and Andrew McDermott

The International Fund ended the first quarter up 2.1% versus a 0.4% decline for
the EAFE Index. International markets continue to track the U.S. market's
infatuation with technology, media, and telecommunications stocks. In the U.K.
and Japan, the focus is even more pronounced than in the U.S. This dichotomy,
which began to reverse in the last weeks of the quarter, allowed us to
substantially reshape the portfolio. We begin the second quarter with stronger
brands, better partners, and greater discounts between price and value than we
ever thought possible.

We bought Diageo, Molson, and Fairfax Holdings during the quarter. Diageo's
brands include the world's most popular collection of spirits (including Johnnie
Walker and Smirnoff), as well as Pillsbury, Burger King, and Guinness. Molson
has over 40% of the Canadian beer market and has been restructured by an
exceptional new management team. Fairfax Holdings' Prem Watsa has a reputation
in the insurance industry matched only by Warren Buffett. Watsa has an
outstanding long-term record as both an investor and an operator, and has
substantially all of his net worth invested in Fairfax. We purchased all three
businesses near their recent lows and at extreme discounts to intrinsic value.

We funded our purchases by selling appreciated holdings and through a process of
painful pruning. Bemrose, the Fund's fourth largest holding at year-end, nearly
tripled on the announcement of its restructuring program. We sold a portion of
our position at attractive prices. During the quarter we liquidated Wassall at
our appraisal prior to its takeover by KKR, and we sold our holding in Nippon
Broadcasting, another stock that tripled while we owned it.

In addition to realizing gains on these investments, we sold two small
positions, Banco Hipotecario and Jarvis Hotels, to concentrate in our best
ideas. We continued to emphasize those Japanese non-life investments with the
best combination of discount from appraisal and intelligent partners by selling
Dai-Tokyo and Yasuda Fire and Marine and increasing our stakes in Nippon Fire
and Nissan Fire. We also liquidated a profitable short position in Anglo
American. We rarely short securities in the Fund and will only do so as a hedge.
We shorted Anglo because we own De Beers whose two assets are its diamond
business and a 40% stake in Anglo. The short sale allowed us to lock in a low
price for De Beers' diamond business.

The same forces that provided us opportunities to buy Diageo, Molson, and
Fairfax contributed to declines in many of the Fund's financial, transportation,
and consumer product stocks. With the exception of Sampo, our insurance
investments declined. Our three transportation related stocks, Canadian Pacific,

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INTERNATIONAL FUND - MANAGEMENT DISCUSSION
by Mason Hawkins, Staley Cates, and Andrew McDermott

Sea Containers, and Wisconsin Central, also fell. Our Japanese fast food
investments, MOS Food Service and KFC Japan, lost ground as did UK grocer
Safeway, despite dramatic improvements under new CEO Carlos Criado-Perez.
Underlying operations have improved and our appraisals have grown at almost all
of these companies, and many of our management partners are accelerating growth
in value-per-share via stock buybacks.

The International Fund's price-to-value ratio remains compelling. Price,
however, is only one of the three determinants of a successful outcome. The
quality of the companies we own is higher, with more competitively entrenched
products and outstanding growth prospects. We also have an unprecedented group
of management partners who understand the importance of building shareholder
value and who act accordingly.

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INTERNATIONAL FUND - PERFORMANCE HISTORY
AND PORTFOLIO SUMMARY

AVERAGE ANNUAL RETURNS
FOR THE PERIODS ENDED MARCH 31, 2000

[Download Table]

INTERNATIONAL EAFE Inflation
FUND Index Plus 10%
------------- ------ ---------

Year-to-Date 2.08% (0.39)% 4.16%
One Year 19.86 23.50 13.70
Since Public Offering 10/26/98 25.51 25.46 13.92

* Inflation Source: Monthly Consumer Price Index for All Urban Consumers (CPI-U)
compiled by the U.S. Bureau of Labor Statistics.

FIVE LARGEST HOLDINGS
(REPRESENT 36.2% OF NET ASSETS)

SAFEWAY PLC 8.0%
Fourth largest U.K. food retailer with valuable locations.

BRIERLEY INVESTMENTS LIMITED 7.6%
A Singapore based holding company which owns controlling stakes in U.K. based
Thistle hotels, Air New Zealand, and Australian building materials maker, James
Hardie. (During the first quarter, Brierley moved its headquarters and primary
listing to Singapore from New Zealand.)

FAIRFAX FINANCIAL HOLDINGS LIMITED 7.0%
Canadian based property/casualty insurer offering both primary insurance and
reinsurance across North America.

SAMPO INSURANCE COMPANY LTD. 6.8%
The largest non-life insurance company in Finland. The company holds a
significant equity portfolio and is expanding into other European non-life
markets, the domestic life business, and banking.

DIAGEO PLC 6.8%
Owner of: premium spirits including Smirnoff, Johnnie Walker, Tanquery, Gordons,
Hennessy, and Baileys; consumer food brands such as Pillsbury, Haagen Dazs, Old
El Paso, and Progresso; the world's leading stout, Guinness; and the Burger King
restaurant franchise.

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INTERNATIONAL FUND - PORTFOLIO SUMMARY

PORTFOLIO CHANGES
JANUARY 1, 2000 THROUGH MARCH 31, 2000

[Download Table]

NEW HOLDINGS ELIMINATIONS
------------ ------------

Diageo plc Banco Hipotecario
Diageo plc (ADR) The Dai-Tokyo Fire and Marine
Fairfax Financial Holdings Limited Insurance Company Ltd.
Molson Inc. -- Class A Jarvis Hotels plc
Nippon Broadcasting System
Wassall PLC
The Yasuda Fire & Marine Insurance
Company, Ltd.

COUNTRY ALLOCATION OF PORTFOLIO
(STOCKS AND FORWARDS)

[Download Table]

Canada................................ 32.7%
United Kingdom........................ 19.0
Japan................................. 18.3
Singapore............................. 7.7
Finland............................... 7.5
United States......................... 5.2
South Africa.......................... 4.9
Bermuda............................... 4.5
New Zealand........................... 0.2
-----
100.0%
=====

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INTERNATIONAL FUND - PORTFOLIO OF INVESTMENTS
AT MARCH 31, 2000 (UNAUDITED)

[Download Table]

SHARES MARKET VALUE
---------- ------------

Common Stock 97.8%
Beverages 10.4%
909,200 Diageo plc (United Kingdom)...................... $ 6,831,604
395,300 Diageo plc ADR (United Kingdom).................. 11,908,412
613,000 Molson Inc. -- Class A (Canada).................. 9,838,063
------------
28,578,079
------------
Food 2.4%
919,000 Ezaki Glico Co., Ltd. (Japan).................... 4,515,924
56,400 Weetabix Limited (United Kingdom)................ 2,204,386
------------
6,720,310
------------
Multi-Industry 12.0%
83,750,000 * Brierley Investments Limited (Singapore)......... 20,808,974
555,000 Sea Containers Limited (Bermuda)................. 12,279,375
------------
33,088,349
------------
Natural Resources 14.4%
575,000 De Beers Consolidated Mines Ltd. (South
Africa)........................................ 13,189,062
3,349,996 Gendis Inc. (Canada)(b).......................... 11,422,014
4,084,000 * Gulf Canada Resources Limited (Canada)........... 15,059,750
------------
39,670,826
------------
Printing 3.1%
1,246,689 Bemrose Corporation plc (United Kingdom)......... 8,353,140

Property & Casualty Insurance 24.6%
156,800 Fairfax Financial Holdings Limited (Canada)...... 19,224,687
7,003,000 The Nippon Fire & Marine Insurance Company, Ltd.
(Japan)........................................ 17,274,491
4,631,000 The Nissan Fire & Marine Insurance Company, Ltd.
(Japan)........................................ 12,371,602
490,000 Sampo Insurance Company Ltd. (Finland)........... 18,755,240
------------
67,626,020
------------
Publishing 4.5%
268,300 Hollinger Inc. (Canada).......................... 1,848,051
967,400 Hollinger International Inc. (United States)..... 10,399,550
------------
12,247,601
------------
Real Estate 5.3%
4,671,600 * O&Y Properties Corporation (Canada).............. 14,480,094

Restaurants 5.7%
448,000 Kentucky Fried Chicken Japan (Japan)............. 4,769,812
1,020,000 MOS Food Service, Inc. (Japan)................... 10,919,509
------------
15,689,321
------------

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INTERNATIONAL FUND - PORTFOLIO OF INVESTMENTS
AT MARCH 31, 2000 (UNAUDITED)

[Download Table]

SHARES MARKET VALUE
---------- ------------

Retail 8.0%
7,240,000 Safeway plc (United Kingdom)..................... $ 21,973,822

Transportation 7.4%
280,000 Canadian Pacific Limited (Canada)................ 6,265,000
1,150,000 * Wisconsin Central Transportation Corporation
(United States)................................ 14,087,500
------------
20,352,500
------------
TOTAL COMMON STOCKS (COST $282,276,750).......... 268,780,062
------------

[Enlarge/Download Table]

PAR
----------
Short-Term Obligations 0.6%

1,498,000 Repurchase Agreement with State Street Bank, 5.25% due
4-3-00 (Collateralized by U.S. government
securities)......................................... 1,498,000
-------------
TOTAL INVESTMENTS (COST $283,774,750)(a)........................... 98.4% 270,278,062
OTHER ASSETS AND LIABILITIES, NET.................................. 1.6 4,458,413
------ -------------
NET ASSETS......................................................... 100.0% $ 274,736,475
====== =============
NET ASSET VALUE PER SHARE.................................................. $12.27

* Non-income producing security
(a) Aggregate cost for federal income tax purposes.
(b) Illiquid security.
Note: Country listed in parenthesis after each company indicates location of
headquarters.

OPEN FORWARD CURRENCY CONTRACTS

[Download Table]

Currency Currency Sold and Currency Unrealized
Units Sold Settlement Date Market Value Gain (Loss)
------------- --------------------------------- ------------ -----------

9,615,000 British Pound 6-30-00............ $ 15,344,926 $ 57,223
10,000,000 British Pound 12-28-00........... 15,983,713 166,287
32,750,000 Canadian Dollar 6-30-00.......... 22,609,072 (399,921)
2,750,000 Canadian Dollar 3-29-01.......... 1,806,669 100,537
15,400,000 European Currency Unit 6-30-00... 14,829,726 1,475,124
75,000,000 Japanese Yen 9-29-00............. 755,234 (16,034)
2,500,000,000 Japanese Yen 12-28-00............ 25,600,722 424,679
2,550,000,000 Japanese Yen 3-29-01............. 26,537,850 (834,796)
28,800,000 New Zealand Dollar 6-30-00....... 14,305,647 216,754
6,400,000 New Zealand Dollar 9-29-00....... 3,178,356 116,364
5,000,000 New Zealand Dollar 12-28-00...... 2,482,666 104,834
------------ ----------
$143,434,581 $1,411,051
============ ==========

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REALTY FUND - MANAGEMENT DISCUSSION
by C.T. Fitzpatrick, Mason Hawkins, and Staley Cates

Longleaf Partners Realty Fund declined 4.4% while the Wilshire Real Estate
Securities Index was up 2.8% and the NAREIT Index posted a 2.2% return during
the first quarter of 2000. Although our disciplined value approach is not
producing satisfactory results currently, Southeastern's process has delivered
superior long-term returns. This approach is the only way we are comfortable
investing and protecting our own capital.

In the first quarter, any slight interest in real estate focused on "blue chip"
REITs and we underperformed. We own some of the finest real estate in the world
at extremely attractive prices, and we are partners with some of the best
management talent in the industry. Our aggregate cash flows and values are
rising steadily, yet many of our companies are selling at lower prices. Despite
being frustrated with the lack of appreciation for our core holdings, we are
ecstatic at the opportunities for rational, long-term investors. To explain our
confidence we highlight a few holdings, which account for almost 40% of the
portfolio.

Hilton: This company was most responsible for the Realty Fund's poor
results in the first quarter. This short-term volatility does not
diminish Hilton's superior long-term compounding ability. In fact,
from this price level, the opportunity is higher. Hilton sells for
less than 5X FFO (a proxy for earnings in real estate companies). The
company is growing at a double-digit rate in a less than robust
environment for hotels. Hilton has some of the best brands in the
industry and is run by a proven, capable, shareholder-oriented
management team.

Forest City: Earnings (FFO) per share were up 12.5% in 1999. 2000
looks even better - the company will complete the massive Times Square
re-development project and should have strong same property cash flow
growth. Recently, Forest City was selected for one of the premier
development opportunities in the country, converting the six square
mile Denver-Stapleton Airport into a "city within a city." The company
sells for 6X FFO.

Catellus: The landlords in San Francisco and Silicon Valley are major
beneficiaries of the "new economy". Catellus is best positioned with
its strategic assets. 1999 earnings (their equivalent to FFO) per
share grew at 25% in 1999 and should increase at a double-digit rate
again in 2000. The company's entitled land portfolio (including 313
acres on the waterfront in downtown San Francisco) has increased in
value in this very desirable, supply-constrained market.

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REALTY FUND - MANAGEMENT DISCUSSION
by C.T. Fitzpatrick, Mason Hawkins, and Staley Cates

Prime Group: FFO per share increased 11.5% in 1999 due to strong same
property results from Chicago office assets. The company sold its
largest single asset for $300/square foot; the stock is selling for
less than $100/square foot. Prime Group has announced plans for 2000
to sell $500 million in assets and repurchase $250 million in stock,
representing approximately 60% of all the outstanding shares and
units.

Two companies which total 4% of assets deserve special mention because they
materially hurt performance in the first quarter. Bay View Capital's stock has
been weak in the wake of the FMAC acquisition. Time will tell whether FMAC will
perform up to expectation or whether our value has been diluted permanently.
Even assuming the latter, BVC's intrinsic value is significantly higher than the
stock price. BVC sells for less than book value, which itself reflects no credit
for the company's San Francisco deposit franchise.

Prime Retail is also extremely inexpensive. Today it sells for approximately 1X
its trailing FFO/share. The company's stock price declined because former
management failed to integrate the 1998 Horizon acquisition effectively. This
failure involved both operating results at the properties and financial
management of the balance sheet. The board of directors has replaced most of
senior management. We are disappointed in the company's results and in our own
assessment of management.

The Realty Fund's return also has been hurt by the market's continued rewarding
of speculative enterprises over current cash flows and quality assets. Consider
the example this quarter at one of our core investments, Beacon Capital
Partners. The company is managed by the widely admired Alan Leventhal and Lionel
Fortin, who have created tremendous value by acquiring 20% of the office space
in the supply constrained Cambridge market before rents spiked. Our partners at
Beacon invested a small amount in a real estate technology company called
Cypress Communications which they subsequently distributed to shareholders. The
stock symbol is CYCO (pronounced "psycho"). CYCO has never made an operating
profit and its 1999 operating losses of $15 million were double its revenue of
$7.4 million. During the first quarter CYCO issued its first public shares to
capitalize on the market's technology mania. Subsequent to the IPO the company
had an equity market capitalization of $1.4 billion. We quickly sold our
overvalued stake in CYCO at a gain of over 350%.

The irony of this transaction is that just prior to the CYCO spin-off, Beacon
traded at $12/share. The market priced CYCO at over $5/share of Beacon, implying
a value of only $7/share for Beacon's remaining profitable assets. The

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REALTY FUND - MANAGEMENT DISCUSSION
by C.T. Fitzpatrick, Mason Hawkins, and Staley Cates

Cambridge properties alone are worth $15/share. The further irony is that
chasing speculative investments like CYCO recently would have rewarded you and
ourselves, even though it would have meant abandoning every principle we hold.
With our own capital permanently invested we prefer to protect our assets by
owning companies with tangible values such as Beacon at greatly discounted
prices.

In the first quarter markets rewarded speculation; sound investments with low
business risk and high cash-on-cash returns were shunned. In this kind of
environment both we and the companies we own will act rationally. We will
concentrate our capital and yours in businesses where the asset and cash flow
values are clearly definable, where the stocks are available at large discounts
to our appraisals, and where we can partner with credible and capable managers.
Many of our companies are repurchasing their stock with proceeds from private
market asset sales at fair prices, thus building intrinsic values. Ultimately,
these values will translate into higher share prices. Because the gap between
our appraisals and current market quotes is unprecedented, Longleaf Partners
Realty's future returns should be significant.

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REALTY FUND - PERFORMANCE HISTORY
AND PORTFOLIO SUMMARY

AVERAGE ANNUAL RETURNS
FOR THE PERIODS ENDED MARCH 31, 2000

[Download Table]

Wilshire
Real Estate
REALTY Securities NAREIT Inflation
FUND Index Index Plus 10%*
------ ----------- ------ ---------

Year-to-Date (4.41)% 2.80% 2.24% 4.16%
One Year (7.47) 3.11 0.76 13.70
Three Years (3.26) (1.11) (2.73) 12.26
Since Public Offering 1/2/96 7.50 7.20 5.45 12.65

* Inflation Source: Monthly Consumer Price Index for All Urban Consumers (CPI-U)
compiled by the U.S. Bureau of Labor Statistics.

FIVE LARGEST HOLDINGS
(REPRESENT 47.6% OF NET ASSETS)

HILTON HOTELS CORPORATION (HLT) 11.3%
Worldwide hotel owner, operator, and franchiser. Owns trophy properties
including the Waldorf Astoria, Palmer House and Hawaiin Village. Manages and/or
franchises the Hilton, Hampton Inn, Embassy Suites, Doubletree, and Homewood
Suites brands.

FOREST CITY ENTERPRISES, INC. (FCE) 10.3%
A diversified, national real estate owner and operator of retail and office
properties, as well as residential units. Forest City is developing several high
profile urban in-fill projects including the Denver Stapleton Airport
re-development, and mixed use projects in both New York's Times Square and San
Francisco.

CATELLUS DEVELOPMENT CORPORATION (CDX) 10.1%
A diversified real estate company that owns, manages and develops industrial
warehouses, offices, apartments and residential communities. CDX has substantial
land holdings throughout the U.S. with a concentration of high profile projects
in California. Catellus' most significant project is a 313 acre mixed use
development at Mission Bay on the waterfront in downtown San Francisco.

EXCEL LEGACY CORPORATION (XLG) 8.9%
A C-corp. focused on development, re-development, and ownership of unique real
estate projects throughout North America. Excel Legacy has numerous urban,
mixed-use retail/entertainment developments primarily located in the western
U.S. including Scottsdale, Palm Springs, Salt Lake City, Anaheim, Denver, and
Newport, KY across the river from Cincinnati.

PRIME GROUP REALTY TRUST (PGE) 7.0%
A REIT that owns over 11 million square feet of central business district and
suburban office space predominately in the Chicago area. Also owns over 5
million square feet of industrial properties and has the right to over 9.6
million square feet of developable space.

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REALTY FUND - PORTFOLIO SUMMARY

PORTFOLIO CHANGES
JANUARY 1, 2000 THROUGH MARCH 31, 2000

[Download Table]

NEW HOLDINGS ELIMINATIONS
------------ ------------

CO Space, Inc. Voting Trust* (Beacon Cypress Communication, Inc.
Capital Partners, Inc.) Voting Trust* (Beacon Capital
Cypress Communications, Inc. Voting Partners, Inc.)
Trust* (Beacon Capital Partners, Inc.) The Pioneer Group, Inc.
Rayonier Inc.

* Acquired through spin-off of existing position (name of original holding).

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REALTY FUND - PORTFOLIO OF INVESTMENTS
AT MARCH 31, 2000 (UNAUDITED)

[Download Table]

SHARES MARKET VALUE
---------- ------------

Common Stock 87.7%
Diversified Realty 25.8%
4,209,800 * Catellus Development Corporation................ $ 58,410,975
2,100,900 * Excel Legacy Corporation........................ 7,090,537
1,864,050 Forest City Enterprises, Inc. - Class A......... 54,756,469
148,600 Forest City Enterprises, Inc. - Class B......... 5,052,400
1,584,500 TrizecHahn Corporation (Foreign)................ 23,767,500
------------
149,077,881
------------
Lodging 20.7%
8,424,744 Hilton Hotels Corporation....................... 65,291,766
3,170,000 Host Marriott Corporation (REIT)................ 28,133,750
832,300 Marriott International, Inc..................... 26,217,450
------------
119,642,966
------------
Mortgage Financing 2.9%
2,250,647 Bay View Capital Corp........................... 16,879,853

Natural Resources/Land 11.9%
650,000 Deltic Timber Corporation....................... 15,396,875
4,465,000 TimberWest Forest Corp. (Foreign)............... 28,448,306
1,840,000 Waste Management, Inc........................... 25,185,000
------------
69,030,181
------------
Office 18.8%
2,060,000 Beacon Capital Partners, Inc. (REIT)(b)......... 28,634,000
833,000 Boston Properties Inc. (REIT)................... 26,499,812
354,800 Cousins Properties Incorporated (REIT).......... 13,061,075
2,810,700 Prime Group Realty Trust (REIT)................. 40,228,144
------------
108,423,031
------------
Retail 7.6%
1,223,800 Getty Realty Corp............................... 13,767,750
1,622,100 * IHOP Corp....................................... 22,709,400
3,371,400 Prime Retail, Inc. (REIT)....................... 7,374,937
------------
43,852,087
------------
TOTAL COMMON STOCKS (COST $633,926,067)......... 506,905,999
------------

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REALTY FUND - PORTFOLIO OF INVESTMENTS
AT MARCH 31, 2000 (UNAUDITED)

[Enlarge/Download Table]

SHARES MARKET VALUE
---------- ------------

Preferred Stock 7.7%
Diversified Realty 7.7%
Excel Legacy Corporation - Series A Liquidating
Preference Convertible (Cost
14,600,000 * $73,000,000)(b)............................... $ 44,347,500
------------
UNITS
----------
Trust Units 1.4%
Lodging 1.3%
Wyndham International, Inc. Voting Trust (Cost
95,172 $9,106,705)(b).................................. 7,613,760
Non-Realty 0.1%
CO Space, Inc. Voting Trust (Cost
465,979 $697,200)(b).................................... 557,760
------------
8,171,520
------------
CONTRACTS
----------
Options 0.8%
Natural Resources/Land 0.8%
Put Options Written
8,461 Newhall Land and Farming Company, expiring
April '01 @ $25 (Premiums received
$2,581,033)..................................... (913,788)
Call Options Purchased
8,461 Newhall Land and Farming Company, expiring
April '01 @ $25 (Cost $3,711,631)............... 5,702,714
------------
4,788,926
------------
PAR
----------
Short-Term Obligations 2.0%
Repurchase Agreement with State Street Bank,
5.25% due 4-3-00 (Collateralized by U.S.
11,287,000 government securities)........................ 11,287,000
------------
TOTAL INVESTMENTS (COST $729,147,570)(a)...................... 99.6% 575,500,945
OTHER ASSETS AND LIABILITIES, NET............................. 0.4 2,287,759
----- ------------
NET ASSETS.................................................... 100.0% $577,788,704
===== ============
NET ASSET VALUE PER SHARE............................................ $12.13

* Non-income producing security
(a) Also represents aggregate cost for federal income tax purposes.
(b) Illiquid, board valued security.

Note: REITs comprise 25% of net assets. Companies designated as "Foreign" are
headquartered outside the U.S. and represent 9% of net assets.

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SMALL-CAP FUND - MANAGEMENT DISCUSSION
by Mason Hawkins, Staley Cates, and John Buford

In the first quarter Longleaf Partners Small-Cap Fund fell 5.0% while the
Russell 2000 fueled primarily by technology stocks, rose an impressive 7.1%.
Most of our decline was caused by four of our holdings.

Our biggest single issue in the quarter was Safety-Kleen. The outside directors
announced they were exploring accounting irregularities and suspended top
company officers. It is a bizarre situation that seems far from being resolved.
Safety-Kleen is the combination of the old Safety-Kleen business (which we
previously owned) that distributes and collects cleaning solvents for small
industrial users, and Laidlaw Environmental which deals in hazardous substances
for large users. We literally do not know how to comment or even fully assess
this situation yet since the company has not detailed the numbers or explained
the problem nor have any of the suspended officers been terminated. We continue
to monitor this closely and as soon as we have any information on which to base
a decision, we will make one.

Bay View Capital's stock has been weak in the wake of the FMAC acquisition. Time
will tell whether FMAC will perform up to expectation or whether our value has
been permanently diluted. Even assuming the latter, BVC's intrinsic value is
significantly higher than the stock price. BVC sells for less than book value,
which reflects no credit for the company's San Francisco deposit franchise.

Wyndham's new management continues to upgrade the chain and report good core
results. The stock suffers from the overall weakness of the lodging group. WYN,
however, is effectively streamlining its business and focusing on its Wyndham
properties. A new, sophisticated ownership group and board hired a new
management team with very large ownership positions, thus aligning all of our
interests. This new board and team originally sparked our interest in Wyndham,
and the stock sells far below bids offered for the company during the
restructuring process.

U.S. Industries declined over Wall Street's general fears about building
products investments. Our appraisal incorporates where we are in the
construction cycle. Substantial insider buying and aggressive corporate
repurchases confirm our assessment of the stock's extreme undervaluation.

Our long-term optimism for the Small-Cap Fund is rooted in the specific building
blocks in this portfolio. Whether partnering with Mark Hansen's team, which has
already made dramatic strides at Fleming, at less than 4X EBITDA, or with the
Smiths' team at Neiman-Marcus at just over half of revenues, our opportunities
are better than they have been in years. As in the Partners Fund, we have never
seen this kind of widespread undervaluation of fine businesses. Our

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SMALL-CAP FUND - MANAGEMENT DISCUSSION
by Mason Hawkins, Staley Cates, and John Buford

composite price-to-value ratio is below 50% for the first time ever, compared to
a long-term average in the high 60's. Just getting back to average would not
only provide a return that more than compensates for the past year, but would
also put us on a platform from which we have historically generated high
long-term absolute returns.

Not surprisingly, the low prices and small capitalizations of our holdings have
begun to attract a great deal of interest both from insiders and from outsiders.
Many of our partners have taken advantage of these discounts by aggressively
repurchasing their stocks. Several managers have sold assets or are exploring
full liquidation to get shareholders paid. Merger and acquisition interest has
risen. We have been approached by third parties to discuss purchasing our stakes
as part of efforts to buy out several companies. To enable us to talk freely
with all interested parties, we converted our 13G filings with the SEC on
Catellus, Gulf Canada, Pioneer Group, VICORP, and Wisconsin Central to 13D's.
The recent activity gives us confidence that values will be realized and our
wait in many cases will not be long.

Besides the enthusiasm for our current holdings, our buy list of new and future
ideas is extensive. Partners who invest additional cash will allow us to
purchase more compelling businesses and improve our future returns.

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SMALL-CAP FUND - PERFORMANCE HISTORY
AND PORTFOLIO SUMMARY

AVERAGE ANNUAL RETURNS
FOR THE PERIODS ENDED MARCH 31, 2000

[Download Table]

Value-Line
SMALL-CAP Russell 2000 (Geometric) Inflation
FUND Index Index Plus 10%*
--------- ------------ ----------- ---------

Year-to-Date (4.95)% 7.08% (0.55)% 4.16%
One Year 1.77 37.29 4.74 13.70
Five Years 16.63 17.24 7.98 12.48
Ten Years(a) 10.64 14.44 5.80 12.89
Since Public Offering 2/21/89(a) 10.96 13.56 5.10 13.23

(a) From public offering through 3/31/91, the Fund was managed by a different
portfolio manager.

* Inflation Source: Monthly Consumer Price Index for All Urban Consumers
(CPI-U) compiled by the U.S. Bureau of Labor Statistics.

FIVE LARGEST HOLDINGS
(REPRESENT 31.8% OF NET ASSETS)

FLEMING COMPANIES, INC. (FLM) 8.1%
A leading food wholesaler which also has a substantial retail business with
Food4Less, Sentry, Rainbow, and Bakers stores.

GULF CANADA RESOURCES LIMITED (GOU) 7.8%
Canadian based exploration and production company with oil and natural gas
assets across the world.

WISCONSIN CENTRAL TRANSPORTATION CORPORATION (WCLX) 5.7%
A railroad holding company that owns lines in the midwest U.S., Ontario, The
United Kingdom, New Zealand, and Australia.

AMETEK, INC. (AME) 5.3%
Manufacturer of electrical motors for vacuums, outdoor equipment, and other
household applications, and of electronic instruments for aerospace, process,
and heavy vehicle industries.

CATELLUS DEVELOPMENT CORPORATION (CDX) 4.9%
A diversified real estate company that owns, manages and develops industrial
warehouses, offices, apartments and residential communities. CDX has substantial
land holdings throughout the U.S. with a concentration of high profile projects
in California. Catellus' most significant project is a 313 acre mixed use
development at Mission Bay on the waterfront in downtown San Francisco.

PORTFOLIO CHANGES
JANUARY 1, 2000 THROUGH MARCH 31, 2000

[Download Table]

NEW HOLDINGS ELIMINATIONS
------------ ------------

None Midas Inc.
Romac International, Inc.

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SMALL-CAP FUND - PORTFOLIO OF INVESTMENTS
AT MARCH 31, 2000 (UNAUDITED)

[Download Table]

SHARES MARKET VALUE
---------- --------------

Common Stock 97.3%
Agriculture 3.3%
1,015,400 * Agribrands International, Inc.................. $ 39,917,913
Beverages 3.0%
2,550,000 Whitman Corporation............................ 35,540,625
Commercial Lighting 6.6%
2,407,500 * Genlyte Group Incorporated..................... 46,946,250
1,692,850 Thomas Industries, Inc......................... 31,740,938
--------------
78,687,188
--------------
Entertainment 0.2%
450,400 * Carmike Cinemas, Inc. -- Class A............... 2,449,050
Environmental Services 0.7%
6,297,600 * Safety-Kleen Corp.............................. 8,265,600
Food -- Wholesale 8.1%
6,444,000 Fleming Companies, Inc......................... 97,062,750
Health Care 1.2%
2,056,500 * Pediatrix Medical Group, Inc................... 14,909,625
Investment Management 2.6%
1,320,000 * The Pioneer Group, Inc......................... 30,690,000
Life Insurance 4.9%
1,825,000 The MONY Group Inc............................. 58,970,312
Lodging 4.2%
2,829,653 Hilton Hotels Corporation...................... 21,929,811
15,450,400 * Wyndham International, Inc..................... 28,969,500
--------------
50,899,311
--------------
Manufacturing 14.5%
3,323,440 AMETEK, Inc.................................... 63,976,220
1,740,000 * The Carbide/Graphite Group, Inc................ 8,265,000
2,390,200 * Scott Technologies, Inc........................ 45,115,025
5,115,000 U.S. Industries, Inc........................... 56,584,687
--------------
173,940,932
--------------
Mortgage Financing 1.9%
3,114,700 Bay View Capital Corp.......................... 23,360,250
Natural Resources 13.1%
845,000 Deltic Timber Corporation...................... 20,015,937
25,289,860 * Gulf Canada Resources Limited (Foreign)........ 93,256,359
6,950,000 TimberWest Forest Corp. (Foreign).............. 44,281,237
--------------
157,553,533
--------------
Pharmaceuticals 2.7%
4,225,700 * Perrigo Company................................ 32,089,121

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SMALL-CAP FUND - PORTFOLIO OF INVESTMENTS
AT MARCH 31, 2000 (UNAUDITED)

[Download Table]

SHARES MARKET VALUE
---------- --------------

Property & Casualty Insurance 7.9%
248,760 * Alleghany Corporation.......................... $ 46,766,880
1,777,400 Hilb, Rogal and Hamilton Company............... 48,545,237
--------------
95,312,117
--------------
Real Estate 10.1%
4,260,000 * Catellus Development Corporation............... 59,107,500
1,135,400 Cousins Properties Incorporated................ 41,796,913
1,443,400 * IHOP Corp...................................... 20,207,600
--------------
121,112,013
--------------
Restaurants 1.7%
982,400 * VICORP Restaurants, Inc........................ 20,507,600

Retail 4.9%
2,130,500 * The Neiman Marcus Group, Inc. -- Class B....... 58,588,750

Transportation 5.7%
5,550,800 * Wisconsin Central Transportation Corporation... 67,997,300
--------------
TOTAL COMMON STOCKS (COST $1,252,327,248).................. 1,167,853,990
--------------

[Enlarge/Download Table]

PAR
----------

Short-Term Obligations 1.4%

17,252,000 Repurchase Agreement with State Street Bank,
5.25% due 4-3-00 (Collateralized by U.S.
government securities)....................... 17,252,000
--------------
TOTAL INVESTMENTS (COST $1,269,579,248)(a)................... 98.7% 1,185,105,990
OTHER ASSETS AND LIABILITIES, NET............................ 1.3 15,078,443
----- --------------
NET ASSETS................................................... 100.0% $1,200,184,433
===== ==============
NET ASSET VALUE PER SHARE........................................... $ 19.20
==============

* Non-income producing security
(a) Also represents aggregate cost for federal income tax purposes.
Note: Companies designated as "Foreign" are headquartered outside the U.S. and
represent 11% of net assets.

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SERVICE DIRECTORY

24-HOUR AUTOMATED INFORMATION OPTION 1
For automated reporting of daily prices, account balances and transaction
activity, 24-hours a day, seven days a week. Please have your Fund number (see
below) and account number ready to access your investment information.

FUND INFORMATION OPTION 2
To request a prospectus, financial report, application or other Fund information
from 7:00 a.m. to 7:00 p.m. Eastern time, Monday through Friday.

SHAREHOLDER INQUIRIES OPTION 3
To request action on your existing account contact the transfer agent, NFDS,
from 9:00 a.m. to 6:00 p.m. Eastern time, Monday through Friday.

[Download Table]

Mail correspondence to: Overnight address:
Longleaf Partners Funds Longleaf Partners Funds
c/o NFDS c/o NFDS
P.O. Box 219929 330 W. 9th Street
Kansas City, MO 64121-9929 Kansas City, MO 64105

SERVICES FOR FINANCIAL ADVISORS (800) 761-2509
Please contact Mary Williamson or Lee Harper for additional information.

PUBLISHED DAILY PRICE QUOTATIONS
Daily net asset value per share of each Fund is reported in mutual fund
quotations tables of major newspapers in alphabetical order under the bold
heading LONGLEAF PARTNERS as follows:

[Download Table]

TRANSFER AGENT
ABBREVIATION SYMBOL CUSIP FUND NUMBER
------------- ------ --------- --------------

Partners LLPFX 543069108 133
Intl LLINX 543069405 136
Realty LLREX 543069306 135
Sm-Cap LLSCX 543069207 134

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TRUSTEES AND OFFICERS

Trustees
O. Mason Hawkins, Chairman
Chadwick H. Carpenter, Jr.
G. Staley Cates
Daniel W. Connell, Jr.
Steven N. Melnyk
C. Barham Ray

Officers
O. Mason Hawkins, Co-Portfolio Manager and Chief Executive Officer

G. Staley Cates, Co-Portfolio Manager and President

John B. Buford, Co-Portfolio Manager of the Partners and Small-Cap Funds
and Vice President - Investments

C. T. Fitzpatrick, Co-Portfolio Manager of the Realty Fund
and Vice-President - Investments
E. Andrew McDermott, Assistant Portfolio Manager of the International Fund
and Vice President - Investments

Charles D. Reaves, Executive Vice President and General Counsel

Julie M. Douglas, Executive Vice President - Operations, Chief Financial
Officer
and Treasurer

Lee B. Harper, Executive Vice President - Marketing

Frank N. Stanley III, Vice President - Investments

Randy D. Holt, Vice President and Secretary

Andrew R. McCarroll, Vice President and Assistant General Counsel

Transfer Agent
National Financial Data Services
Kansas City, Missouri

Custodian
State Street Bank & Trust Company
Boston, Massachusetts

Special Legal Counsel
Dechert Price & Rhodes
Washington D.C.

Independent Public Accountants
PricewaterhouseCoopers LLP
Baltimore, Maryland

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Longleaf Partners Funds(SM)
c/o NFDS
P.O. Box 219929
Kansas City, MO 64121-9929
(800) 445-9469
www.longleafpartners.com

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Dates Referenced Herein

		Referenced-On Page
This ‘N-30B-2’ Filing	Date	First	Last	Other Filings

Filed on:	4/25/00			None on these Dates
For Period End:	3/31/00	1	33
	2/24/00	3
	1/1/00	11	31
				List all Filings

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Filing Submission 0000950144-00-005445 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Longleaf Partners Funds Trust – ‘N-30B-2’ for 3/31/00

On: Tuesday, 4/25/00, at 3:32pm ET · For: 3/31/00 · Accession #: 950144-0-5445 · File #: 811-04923

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Periodic or Interim Report Mailed to Shareholders — Rule 30b-2Filing Table of Contents

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Periodic or Interim Report Mailed to Shareholders — Rule 30b-2
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