Fellow Shareholders,

The Oakmark Global Fund was up 25% for the three-month period ending December 31, 2001. We are pleased with this gain especially when compared to the 9% increase for the MSCI World Index and the 10% increase for the Lipper Global Fund Index.

For the calendar year 2001, The Oakmark Global Fund returned 20% compared to declines of 17% and 16% for the MSCI World Index and the Lipper Global Fund Index respectively. The 20% gain in calendar year 2001 places The Oakmark Global Fund as the #1 performing global fund according to the Lipper Global Fund Index. In addition, with The Oakmark Global Fund's strong performance in calendar years 2000 and 2001, Lipper also ranks our Fund as the #1 performing global fund on a trailing two-year basis and #1 since inception.¹⁸ While we are pleased with our past performance, we look forward to continuing this trend.

Market Disruptions Provide Opportunities

Over time, we have found there are three opportunities in which to buy the highest quality businesses:

1. An overall market decline.
2. A short-term company specific problem, but clearly fixable over a definitive time period.
3. A psychological concern by investors, but no real fundamental issue(s) with the company or industry.

The September 11^th tragedy caused widespread uncertainty and fear throughout the market, causing an overall market decline. When the market experiences aggregate declines, the stock prices of the "better" companies decline alongside all other companies as investors throw the good out with the bad in their rush for the exits. We use these market declines to add to some existing positions and also purchase new holdings in what we believe are "superior" businesses.

ITT Educational Services—Earlier this year, we sold the majority of our position in ITT Educational Services as the stock price achieved our sell target. However, after the September 11th attack, ITT's stock price declined by over 40% from where we had previously been selling shares, providing another buying opportunity. We used the stock price decline to once again make ITT one of the Fund's top ten holdings. ITT's business has four components that in our minds make it a superior business:

1. High barriers to entry due to the heavy regulatory oversight and restrictions placed upon degree granting institutions.
2. Pricing Power—in this era of low inflation, ITT has been able to increase tuition by 5% annually without any meaningful impact on enrollments.
3. Strong demographic trends should benefit enrollments for many years to come.
4. With the downturn in the economy, many working adults are returning to college to receive additional skills and training, which further aids ITT's enrollment trends. Since our recent purchase, ITT's stock price has appreciated over 35%.

Advertising Companies—Two new holdings for the fund are advertising companies, Interpublic Group and Cordiant Communications Group plc. Interpublic Group is the world's largest advertising company based in the United States, while Cordiant is a United Kingdom-based advertising company. These two companies combined comprise approximately 6% of the portfolio. The current advertising market is the worst in over 50 years. The poor advertising climate, combined with the overall market decline after September 11^th, caused major stock price declines in both Interpublic (down over 60% from its high price) and Cordiant (down over 80% from its high price).

We believe advertising is a good business because advertising companies can be viewed as receiving a gross royalty on other companies' sales. Historically, advertising has grown at an average annual growth rate of 8% per year. Given the large number of new products being developed, as well as the many existing brands and products that continually need to be advertised, we see no reason why advertising cannot continue to grow at the historical 8% compounded growth rate. Advertising has been categorized as an early stage cyclical, which means the companies benefit in the early stages of an economic upturn. As investors have begun to contemplate a turnaround in the worldwide economy, the stock prices of both Interpublic and Cordiant have benefited. Since our purchases, Interpublic's stock price has appreciated over 30%, while Cordiant's stock price has appreciated over 45%.

These three examples give you some insight into our thought process during turbulent times. During major market disruptions, we will always strive to upgrade both the quality of the businesses we own as well as raise the overall expected return of the portfolio. Given the current valuations of the Fund's existing holdings, we are quite optimistic about the future prospects. Given our optimistic view, both of us continue to make additional purchases of fund shares.

We thank you for your continued confidence and support and look forward to a long and prosperous future.

Gregory L. Jackson
Portfolio Manager
gjackson@oakmark.com

Michael J. Welsh, CFA, CPA
Portfolio Manager
102521.2142.compuserve.com

January 4, 2002

Global Diversification—December 31, 2001

Schedule of Investments—December 31, 2001