THE OAKMARK GLOBAL FUND Report from Clyde S. McGregor and Michael J. Welsh, Portfolio Managers

THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK GLOBAL FUND FROM ITS INCEPTION (8/4/99) TO PRESENT (6/30/04) AS COMPARED TO THE MSCI WORLD INDEX15
	Annual Average Total Returns
	(as of 06/30/04)
	Total Return Last 3 Months*	1-year	3-year	Since Inception (8/4/99)
Oakmark Global Fund (Class I)	1.40%	31.42%	17.05%	16.68%3
MSCI World	0.87%	24.00%	0.87%	-1.68%
Lipper Global Fund Index16	-0.61%	24.14%	1.03%	0.83%
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

Fellow Shareholders,

The Oakmark Global Fund gained 1% for the three-month period ending June 30, 2004, compared with the 1% increase for the MSCI World Index and the 1% decline for the Lipper Global Fund Index.

Over the past twelve months, The Oakmark Global Fund has returned 31%, compared to gains of 24% for both the MSCI World Index and the Lipper Global Fund Index. Most importantly, since inception, the Fund has returned 17% annualized compared to a 2% decline in the MSCI World Index and 1% gain in the Lipper Global Fund Index.

Current Environment

Economically, we believe the world is in a good state. Strong growth in the U.S., parts of Europe, China, and much of the Pacific Rim has been driving economic growth. Interest rates remain low, and throughout the world we continue to see microeconomic reform—companies restructuring to better and more profitably compete in a global economy.

Equity markets, aside from some emerging markets, have been relatively placid, especially in the U.S. For example, the VIX¹⁷, a measure of volatility for the S&P 500 Index⁴, is at an eight-year low. As we've written in the past, some volatility in equity prices is actually good for bottom-up value investors, as it often results in greater gaps between current share prices and intrinsic value—or, more bluntly, opportunity. As the saying goes however, "Be careful what you wish for… it may happen!"

There are plenty of potential sparks. The situation in Iraq, the approaching U.S. presidential election, the forced slowing of the Chinese economy, further spikes in oil prices or interest rates, and the specter of protectionism are some of them.

Portfolio Composition

We made few changes during the quarter. We sold the remainder of our Novell position for a healthy profit, and we added two new positions: U.S. based Fair Isaac Corporation and Givaudan, the Swiss flavors and fragrances manufacturer.

Fair Isaac (FIC) provides software and analytics used for predictive modeling of credit risk. These products are primarily sold to financial institutions. FIC is best known for its FICO score used to judge retail customers' creditworthiness. We believe the business is excellent, as evidenced by its 80% recurring revenues, 30+% operating margins, high barriers to entry, and low capital requirements. Furthermore, FIC dominates the markets it targets, usually controlling 75-90% of them. Despite the quality of the business and further growth prospects, FIC trades at only 8.5x next year's operating profit.

FIC is also expanding their franchise geographically. The CFO of a large European financial institution, unprompted, recently talked to us about how valuable FIC's consumer behavior models are to their credit analysis function.

We also repurchased Givuadan during the quarter. This is the company's second appearance in The Oakmark Global Fund after a successful purchase and sale in 2002. Givaudan is a worldwide leader of flavors and fragrances. The company's products have a significant impact on the taste and uniqueness of consumer goods, yet represent a small fraction of the total sales price. Given the importance of taste, texture, and smell to the success of a product, branded consumer companies are very reluctant to change their suppliers of flavors and fragrances. This creates a nice, defendable moat around the business. Givaudan generates strong free cash flow, and it has shown the willingness to return that cash to shareholders in the form of dividends and share buybacks.

Currently your portfolio is composed of roughly 35% U.S. listed companies, 35% in Europe ex UK, 13% in the United Kingdom, 14% in the Pacific Rim, and 3% in Latin America. Apart from the United States and the United Kingdom, our largest single country weightings are Switzerland, Japan, and France.

Looking Forward

We remain excited about the value and quality of the names in the Fund, and thank you for your continued confidence and support.

Clyde S. McGregor, CFA Portfolio Manager mcgregor@oakmark.com	Michael J. Welsh, CFA, CPA Portfolio Manager mwelsh@oakmark.com

Global Diversification—June 30, 2004 (Unaudited)

Schedule of Investments—June 30, 2004 (Unaudited)