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

THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL FUND FROM ITS INCEPTION (9/30/92) 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	1-year	5-year	10-year	Since Inception (9/30/92)
Oakmark International Fund (Class I)	1.82%	31.51%	7.58%	9.95%	11.79%
MSCI World ex. U.S.	0.10%	31.95%	0.38%	4.36%	6.55%
MSCI EAFE19	0.22%	32.37%	0.02%	4.05%	6.35%
Lipper International Fund Index20	-1.08%	29.36%	1.54%	5.73%	7.71%
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 Fund gained 2% for the quarter, slightly better than the relevant indices. For the past twelve months, the Fund is up 32%. We believe strong stock selection in Switzerland and the UK more than compensated for weakness in South Korea. The individual securities that contributed most significantly to performance during the quarter were French tire manufacturer Michelin, Swiss specialty chemicals manufacturer Givaudan S.A., (discussed in Global Fund letter) and UK consumer giant Cadbury Schweppes plc. The most significant detractors from quarterly performance were UK port operator Associated British Ports plc and SK Telecom in Korea.

Shares of Michelin responded positively to management's continuing commitment to cost restructuring and improving the operating performance of the company. We also believe Michelin's commitment to pricing discipline is paying off in the form of a strong premium market position; unlike its competitors, the Company has shown a willingness to walk away from original equipment business with the auto companies when the economics don't make sense. Despite raw material price increases, market conditions going forward seem favorable for this company.

Associated British Ports, the largest port operator in the UK, saw some political setbacks during the year when the UK government rejected its major growth project. However, we feel that the economic implications are much less drastic than the share price reaction. This is an exceptional business: ABP is the strongest player in a moderate growth business, achieves high returns on marginal capital, and has exhibited wise capital allocation decisions.

Shares of SK Telecom were weak during the quarter despite fairly positive news flow. The asymmetric introduction of mobile number portability in Korea at the beginning of 2004 allowed competitors to poach SK Telecom subscribers for six months, with SK Telecom forced to sit on their hands and watch. Yet, SK Telecom lost few subscribers and very little market share. The stock market continues to worry about whether the government will impose further asymmetric regulations on SK Telecom with the hopes of weakening its mobile communication dominance. With a valuation at less than 6 times our estimate of ‘04 operating profit, we think this risk is more than fully reflected in the current share price.

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)