THE OAKMARK INTERNATIONAL FUND Report from David G. Herro

THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL FUND FROM ITS INCEPTION (9/30/92) TO PRESENT (12/31/05) AS COMPARED TO THE MSCI WORLD EX U.S. INDEX17
		Average Annual Total Returns (as of12/31/05)
	Total Return Last 3 Months*	1-year	5-year	10-year	Since Inception (9/30/92)
Oakmark International Fund (Class I)	2.52%	14.12%	10.25%	12.14%	12.53%
MSCI World ex U.S.	3.94%	14.47%	4.92%	6.22%	8.04%
MSCI EAFE15	4.08%	13.54%	4.55%	5.84%	7.77%
Lipper International Fund Index18	4.75%	15.67%	5.33%	7.74%	9.08%
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, visit www.oakmark.com.
* Not annualized

The Oakmark International Fund returned 3% for the quarter versus the MSCI World ex U.S. Index's 4% and the Lipper International Fund Index's 5%. For the year, the International Fund returned 14%, matching the MSCI World ex U.S. Index's 14% and falling just short of the Lipper International Fund Index's 16%. More importantly, since inception, the Fund has returned 13% versus 8% for the MSCI World ex U.S. Index and 9% for the Lipper International Fund Index.

Impact Players

As mentioned in the lead letter, the Fund's relative returns were negatively affected by its underweighting in Japan and natural resource stocks; however many positives still occurred. For example, Daiwa Securities, Japan's second largest brokerage firm, performed strongly and was the fourth largest contributor for the year. Our results in South Korea were mixed. Kookmin Bank strongly outperformed a robust local market, but long-term holding SK Telecom continued to lag. The two largest contributors for the year were the European exchange operators Euronext and Deutsche Boerse. These stocks were the subject of earlier letters, and we continue to hold both companies but at somewhat smaller position sizes as the shares have approached our targets.

Negatives for the year include a number of media/telecom-oriented companies such as UK companies Vodafone and BSkyB. Vodafone was hurt by its weak Japanese subsidiary, and BSkyB, a satellite broadcasting company, suffered from competition fears. We continue to believe both offer exceptional long-term value. Another long-term holding, Chargeurs, a France-based company involved in textiles and thin films, had a weak year of operating performance and was the biggest negative source for 2005.

The Year was Quiet

In terms of portfolio activity, it was a subdued year. Though there were a number of new names added, portfolio turnover was relatively low at 17%. The fact that we eliminated few positions in the portfolio reflects our belief that there is still an abundance of value in the international markets, especially in large cap companies. Since the beginning of the year, we added several names from Japan, including Kao, Rohm, Unicharm, Honda, and NTT Docomo. The only geographic area in which we noticeably cut back our holdings was in Latin America. Strong share prices in Mexico have meant less value in the region. In particular, while Televisa has been a good stock pick and performed well over the years, we reduced most of our position as it approached its sell price.

Thanks again to all shareholders for your continued support. We remain optimistic about the future.

David G. Herro, CFA Portfolio Manager dherro@oakmark.com

International Diversification—December 31, 2005 (Unaudited)

Schedule of Investments—December 31, 2005 (Unaudited)