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 (12/31/04) AS COMPARED TO THE MSCI WORLD EX U.S. INDEX14
	Annual Average Total Returns (as of 12/31/04)
	Total Return Last 3 Months*	1-year	5-year	10-year	Since Inception (9/30/92)
Oakmark International Fund (Class I)	13.07%	19.09%	9.93%	11.54%	12.39%
MSCI World ex. U.S.	15.15%	20.38%	-0.76%	5.93%	7.52%
MSCI EAFE16	15.32%	20.25%	-1.13%	5.61%	7.30%
Lipper International Fund Index17	14.39%	18.59%	-0.89%	7.20%	8.55%
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 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 13% for the quarter, compared to the MSCI World ex U.S. Index, which gained 15%. For the twelve months ended December 31, 2004, the Fund gained 19%, compared to the 20% return of the MSCI World ex U.S. Index.

Big Contributors 2004
At the end of every year, we like to discuss those stocks that had the most significant impact on your Fund's NAV⁴ over the past twelve months. We like to point out the good and the bad. However for the second year in a row, nearly all returns were positive, and none of the Fund's positions had a significant negative contribution. This makes us feel both good and uneasy!

The share price of Grupo Televisa has had a terrific run over the past two years, and for the calendar year ended December 31, 2004, it generated the most significant positive contribution to the NAV. Higher than expected profit growth this year, coupled with the market's continued recognition of the company's improved shareholder orientation, helped drive share price performance.

Bank of Ireland was another strong contributor to NAV growth. The Bank displayed its resilience and the quality of its franchise in 2004, facing down the challenges of increased competition, a slowing Irish economy, and a change in CEO.

Lotte Chilsung Beverage is a stock we have owned since 1995. Adding to a long history of positive surprises, Lotte Chilsung's results in 2004 have held up well despite an awful consumer environment in Korea. A peerless distribution system and robust new product development continue to be the company's major strengths.

A couple of our holdings in the pharmaceutical industry provided significant positive contributions over the past twelve months. Takeda Pharmaceutical, Japan's largest pharma company, continues to be a quality franchise at a very attractive price, despite the gap between price and value closing a bit this year. The share price of Aventis soared last January as Sanofi-Synthelabo launched a takeover bid.

The share price of Cadbury Schweppes plc performed well as the market rewarded the new management team for its success in integrating the recent Adams acquisition as well as for instituting a broad-reaching restructuring plan, which should substantially increase efficiency and profitability.

Other significant winners for the Fund in calendar 2004 included European equity and derivatives exchange Euronext N.V., media and telecom company Vivendi Universal (France), and the flavors and fragrances producer Givaudan S.A. (Switzerland). The stocks with modest declines include Orbotech Ltd. and J. Sainsbury PLC.

Looking Forward
It was a good year of performance, but we still see interesting opportunities. Given the quality of the holdings and the attractive valuation of the portfolio, we remain optimistic about potential price appreciation. 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—December 31, 2004 (Unaudited)

Schedule of Investments—December 31, 2004 (Unaudited)