THE OAKMARK INTERNATIONAL SMALL CAP FUND Report from David G. Herro and Chad M. Clark, Portfolio Managers

THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL SMALL CAP FUND FROM ITS INCEPTION (11/1/95) TO PRESENT (3/31/05) AS COMPARED TO THE MSCI WORLD EX U.S. INDEX15
	Average Annual Total Returns (as of 3/31/05)
	Total Return Last 3 Months*	1-year	5-year	Since Inception (11/1/95)
Oakmark International Small Cap Fund (Class I)	5.44%	27.62%	16.32%	13.43%
MSCI World ex U.S.	0.07%	15.56%	-0.86%	5.85%
Lipper International Small Cap Average18	2.99%	18.24%	7.17%	11.45%
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 Small Cap Fund gained 5% for the quarter, outperforming our benchmark indices. More importantly, however, for the past twelve months and past three years your Fund is up 28% and 21% respectively, soundly outpacing the relevant benchmarks.

Strong performers for the quarter were our Turkish holding company, Dogan Holding, and our financial services companies, Julius Baer and Ichiyoshi Securities. In addition to solid operating performance within its media arm, Dogan Yayin, Dogan Holding benefited from increased merger and acquisition (M&A) activity in the Turkish banking sector (as it owns 62% of one of the medium-sized banks in Turkey) and general market optimism following the European Union's positive recommendation on Turkish membership. With increased scrutiny on corporate governance issues, we were quite happy to see Julius Baer adjust its shareholding structure during the quarter, lowering the family's voting interest to a level on par with its equity stake. We believe this positive move in governance, coupled with strong operating performance, propelled the stock in the quarter. Ichiyoshi, like many in our portfolio, continues to churn out outstanding operating performance with a management dedicated to building per share value over time.

The most significant detractor from quarterly performance was British carpet retailer Carpetright plc. The UK housing market has slowed dramatically following five interest rate increases since late 2003. As a result, Carpetright reported subdued demand during its most recent quarter. We remain convinced that despite some potential cyclicality, this company will continue to deliver high returns and free cash flow, with a management team wholly focused on deploying that free cash flow in a value-accretive manner. We added to our position during the past quarter.

Portfolio Composition

We had a very robust quarter of new idea generation, adding seven names to our approved list. Meaningful positions were established in UK retailers JJB Sports and Matalan; Wincor Nixdorf, a German-based banking hardware and software provider; and Mabuchi Motors, a Japanese manufacturer of small electric motors. Your Fund continued to add to positions in securities whose prices declined in the quarter, including Lotte Confectionery, Interpump, and Carpetright.

Following the flurry of bid activity we reported in last quarter's commentary, M&A interest was more muted in the small cap arena in the quarter. As always, we believe your Fund invests in high quality companies with shareholder-oriented management teams that trade at a large discount to intrinsic value. We are indifferent as to whether value realization is achieved via a buyout offer or whether it comes from the market recognizing a business' inherent value.

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	Chad M. Clark, CFA Portfolio Manager cclark@oakmark.com

International Diversification—March 31, 2005 (Unaudited)

Schedule of Investments—March 31, 2005 (Unaudited)