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 (9/30/04) AS COMPARED TO THE MSCI WORLD INDEX12
	Annual Average Total Returns
	(as of 09/30/04)
	Total Return Last 3 Months*	1-year	5-year	Since Inception (8/4/99)
Oakmark Global Fund (Class I)	-2.86%	16.54%	17.65%	15.15%3
MSCI World	-1.00%	17.10%	-1.62%	-1.79%
Lipper Global Fund Index13	-1.11%	16.49%	0.79%	0.57%
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 lost 3% for the three-month period ending September 30, 2004, compared with 1% declines for both the MSCI World Index and the Lipper Global Fund Index. More importantly however, since inception the Fund has returned 15% annualized compared to a 2% decline in the MSCI World Index and 1% return in the Lipper Global Fund Index.

Current Environment

In general, the past quarter was a fairly quiet period for share prices around the world, even if it was not so quiet in economic and political news. As mentioned in last quarter's letter, volatility in financial markets remains very low, which seems puzzling given world events and the tremendous amounts of money continuing to pour into hedge funds. One would think that these funds' focus on short-term performance and high portfolio turnover would lead to sharper price swings. Yet, this lack of volatility is a global phenomenon, as highlighted in a recent breakfast we had with the CFO of Euronext, one of the Fund's largest holdings. Euronext's results have been adversely affected by decreased volatility in derivative and equity prices.

Significant Movers

Our underperformance was a result of weakness in a few specific positions, including Synopsys Inc., Cardinal Health, and Nestle S.A. Synopsys, a leading player in the oligopolistic electronic design automation (EDA) industry, shocked investors (ourselves included) with a forecast of significantly lower revenues for the remainder of fiscal 2004 as well as for all of 2005. EDA software moves forward in a step function. Synopsys holds a leading position in ASIC, a design system that was considered state of the art during the past decade. However, ASIC is moving out of favor, as semiconductor manufacturing technology moves to sub-100 nanometer line widths. While Synopsys supplies many products used in the development of the new chips, it is not as competitive in that sector. Perhaps more troubling is the serious demand slowdown occurring throughout the EDA industry. We have maintained that the EDA industry occupies a favored position because its customers will continue to order the industry's offerings despite shrinking end-user demand. The industry's performance this year has cast doubt on this thesis. We will continue to monitor this situation carefully.

Cardinal Health, another U.S. holding, announced a mildly disappointing earnings report and a reduced forecast for its fiscal 2005 (6/30 year). This along with the disclosure of some potential accounting issues caused significant declines in its share price. Cardinal's primary business is the distribution of pharmaceuticals. This business is now evolving rapidly in the U.S. as the pharmaceutical manufacturers transition to a model where they no longer attempt to flood the market shortly before a product goes off patent. Cardinal and other distributors had profited significantly from this sort of activity, but they are now moving to a fee-for-service business model. Clearly this transition has proven problematic for Cardinal, although the company still reported an increase in profit. Subsequent to its earnings report, Cardinal announced the resignation of the company's Chief Financial Officer and his replacement by a former General Motors executive. Our conversations with him suggest that any accounting issues should prove minor and quickly fixed.

Nestle's price decline for the quarter was prompted by the release of first half 2004 sales results, which were hurt by decrease ice cream and beverage demand caused by colder than usual weather in the U.S. and Europe. Despite this one-off effect, organic growth was still strong at almost 5%, outperforming its competitors. We continue to be impressed with management's focus on increasing efficiency and believe that Nestle is an excellent franchise at a very cheap price.

We also had a number of strong positive contributors this quarter, including Burlington Resources and Lab Corp of America in the U.S., Australia's Ansell Ltd., Grupo Televisa in Mexico, and GlaxoSmithKline plc in the UK. Burlington has continued to benefit from strong gas prices and remains very well positioned. Ansell reported excellent results during the quarter, and free cash flow continues to be very strong—so strong in fact that it has prompted management to announce a tender offer for 10% of outstanding shares. This amount is in addition to the 5+% already repurchased in 2004.

Portfolio Changes

We did some buying and selling of positions in the United States during the quarter. We sold our positions in Fannie Mae, Interpublic Group, and Liberty Media International, and we initiated a position in Tribune Company and a small holding in United Stationers.

We sold Fannie Mae because it was a small position and we felt the proceeds could be better deployed in more undervalued opportunities. We sold our holding in Interpublic due to concerns about management's strategy to improve profitability. Liberty Media International was a small spin-off from our existing holding in Liberty Media Corporation, Class A.

We initiated a new position in Tribune Company. Tribune is a large media conglomerate based here in Chicago. Approximately, two-thirds of the company's income derives from newspapers (Los Angeles, Chicago, New York, Florida), and one-third comes from 25 television stations. The stock has fallen substantially because of issues with subscriber accounting and because of a desultory media climate in most of the company's local markets. This decline afforded us an attractive entry point for the stock. Geographic composition remains relatively stable from last quarter, with roughly 35% of the Fund in U.S. stocks, 13% in the UK, 34% in other European stocks, 15% in Pacific Rim, and 3% in Mexico.

Looking Forward

We remain excited about the prospects for equities in the Oakmark Global Fund, and we thank you for your continued confidence.

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

Global Diversification—September 30, 2004

Schedule of Investments—September 30, 2004

See accompanying notes to financial statements.