THE OAKMARK INTERNATIONAL SMALL CAP FUND Report from David G. Herro and Michael J. Welsh, Portfolio Managers

THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL SMALL CAP FUND FROM ITS INCEPTION (11/1/95) TO PRESENT (6/30/04) AS COMPARED TO THE MSCI WORLD EX U.S. INDEX18
	Annual Average Total Returns
	(as of 06/30/04)
	Total Return Last 3 Months*	1-year	5-year	Since Inception (11/1/95)
Oakmark International Small Cap Fund (Class I)	2.92%	47.41%	11.52%	11.86%
MSCI World ex. U.S.	0.10%	31.95%	0.38%	4.62%
Lipper International Small Cap Average21	0.26%	42.15%	9.20%	11.52%
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. The above performance information for the Fund does not reflect the imposition of a 2% redemption fee on shares held for 90 days or less to deter market timers. If reflected, the fee would reduce the performance quoted. 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 3% for the quarter, outperforming the relevant indices. For the past twelve months, your Fund is up 47%.

For the quarter, we believe strong stock selection in Scandinavia, Italy, and Germany more than offset weakness in the Korean and Mexican equity markets. Interpump Group in Italy contributed most significantly to positive performance. This specialized engineering company dominates niches in industrial pumps, power take-offs for trucks, and equipment for professional cleaners. It also has a growing consumer cleaning business, thanks in part to the success of its high-pressure cleaners sold through Home Depot. The stock price reacted positively as Inter-pump reported very strong 1Q04 earnings and gave bullish indications for the rest of the year. This well-run business also has an exceptionally shareholder-oriented management team. Other strong contributors to performance for the quarter included Gurit-Heberlein in Switzerland, Copenhagen Airports in Denmark, and Deutscher Industrie Services in Germany. The biggest negative contributors for the quarter included Japanese advertising company Asatsu-DK, Mexican airport operator ASUR, and Kook Soon Dang Brewery, a manufacturer of specialty Korean rice wines. Revenues for Kook Soon Dang were hit hard by the abrupt slowdown in alcoholic beverage consumption in Korea (down nearly 20% in the first three months of 2004) and by the increased competition for its most profitable product, Baekseju.

Overall, the fund changed little during the quarter. Geographically, the weightings remain very similar, with Europe and the UK representing 72% of investments, 25% in the Pacific Rim, and 3% in Latin America.

We continue to like the quality and price attractiveness of the portfolio. 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

International Diversification—June 30, 2004 (Unaudited)

Schedule of Investments—June 30, 2004 (Unaudited)