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from Outstanding Investor Digest's July 31, 2000 Edition

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LONGLEAF PARTNERS FUNDS'
MASON HAWKINS, C.T. FITZPATRICK & STALEY CATES

    Mason Hawkins' success as a stockpicker is well known. Equities purchased by Southeastern Asset Management, the advisor to Longleaf Partners Funds, handily outperformed just about any index around during the 20 years ended December 31, 1999 - earning a compound return of 19.5% per year versus 17.9% and 15.6% per year for the Ibbotson S&P 500 and Small Company Indexes, respectively, during that same period. (All performance data was provided by Southeastern Asset Management and Ibbotson.)

    The folks at Southeastern are usually thrilled when they're able to find just a few superior companies with great management trading at 50% of their appraised value. So you can imagine their glee (and ours) when we learned that they're currently finding so many of those securities so cheap that each of their portfolios trade at 55% of value or less.

    The excerpts which follow were selected from the prepared remarks of Hawkins and co-portfolio managers Staley Cates, C.T. Fitzpatrick and Andrew McDermott and their answers to shareholder questions during Longleaf's annual meeting of May 10th, Longleaf Partners Luncheons for Advisors which occurred on June 19th and 28th and a conference call which took place on July 14th.

    Following that feature, we're also pleased to bring you excerpts from a series of conversations we had with Longleaf President and Co-portfolio manager Staley Cates which began on July 21st and continued until shortly before we went to press. In the past, we've never found Hawkins or his associates lacking in the quality or quantity of intriguing ideas or in-depth insights and knowledge. They nonetheless managed to exceed our expectations. We hope you agree.