THE OAKMARK GLOBAL SELECT FUND Report from Bill Nygren and David Herro, Portfolio Managers

The inaugural quarter of The Oakmark Global Select Fund was a profitable one. Your Fund increased in value by 8% as our holdings fully participated in strong global equity markets. The strength in the portfolio was broad-based, with eighteen of our twenty holdings positively affecting NAV.⁷

We expect this Fund's reports to normally be brief, focusing on stocks that most influenced our performance and on changes in the stocks we own. Since our thoughts on international markets are already included in David Herro's commentary, and our thoughts on domestic markets are included in Bill Nygren's, we don't want to be repetitive. However, since this is our first chance to communicate with our shareholders, we wanted to take this opportunity to explain our reasons for creating this Fund.

We are excited by the challenge of managing a global concentrated fund. There are many concentrated mutual funds and many global funds (including our own), but almost no global concentrated funds. We believe that high quality big businesses around the world are priced attractively. As with all Oakmark Funds, we believe that we can add value via our stock selection and therefore believe that we can magnify that value via concentration. We expect the portfolio to generally contain about 20 stocks, and we expect that, over time, about half will be U.S.-based businesses and half will be based outside the U.S. When we find it easier to identify cheap stocks in the U.S., we will invest more heavily there, and we will shift to more international stocks when we believe non-U.S. opportunities are more abundant. As you can see from our roughly even split today, we believe stocks are attractively priced in many markets. All of the stocks now held in Oakmark Global Select are held in either Oakmark Fund or Oakmark International Fund. We expect that will usually be the case.

As we have always warned with The Oakmark Select Fund, a portfolio that is invested in only 20 stocks will have larger day-to-day price changes because each holding accounts for a larger percentage of portfolio assets than it would in a more diversified fund. For that reason, we think most investors should use The Oakmark Global Select Fund as part of a portfolio of mutual funds, or as the active portion of a global portfolio that is primarily indexed. We believe that, for most investors, its high volatility makes the Fund inappropriate as a one-stop-shopping solution.

We are not going to be benchmark sensitive and we will not attempt to minimize tracking error—the amount our performance differs from index performance. To us, that just isn't a useful measure of risk. We will attempt to select securities that provide undervaluation, growing values, and managements that work to maximize business value. We believe those features lessen what we define as risk—which is the chance of losing money. Our goal will be to maximize the long-term, after-tax growth of shareholder capital. And as with all the other Oakmark Funds, "shareholder capital" includes our own. We both have made significant personal investments in Global Select because we believe it is an attractive investment.

In closing, we'd like to give a special thanks to all of our new shareholders for having had the confidence to invest with us without even knowing what the Fund was invested in. When you look at the portfolio holdings, we don't think you'll be surprised. These are all stocks that we have previously spoken highly of, own in our other Funds and continue to believe are attractive investments. Our endeavor is to make our newest family member one its siblings will be proud of.

Global Diversification—December 31, 2006 (Unaudited)

Schedule of Investments—December 31, 2006 (Unaudited)