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 (12/31/06) AS COMPARED TO THE MSCI WORLD EX U.S. INDEX13
	Average Annual Total Returns (as of 12/31/06)
	Total Return Last 3 Months*	1-year	5-year	10-year	Since Inception (9/30/92)
Oakmark International Fund (Class I)	9.62%	30.60%	17.53%	12.36%	13.71%
MSCI World ex U.S.	10.12%	25.71%	15.25%	7.96%	9.19%
MSCI EAFE14	10.35%	26.34%	14.98%	7.71%	8.97%
Lipper International Fund Index15	10.56%	25.91%	15.15%	8.78%	10.18%
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 most recent month-end performance data, visit oakmark.com.
* Not annualized

The Oakmark International Fund experienced a strong 2006 in absolute and relative terms returning 31%. This compares with 26% for the MSCI World ex U.S. Index and the Lipper International Index. More importantly, since the Fund's inception in September 1992, it has returned an average 14% per year, again, comparing very well to its peers, the MSCI World ex U.S. Index, which returned 9%, and the Lipper International Index, which returned 10%. Though I do not believe the absolute return we achieved this year is sustainable, I do believe the larger foreign companies continue to represent good value.

Impact Players
Five holdings each contributed around one percentage point of portfolio return in 2006. The top performer was The Bank of Ireland, which contributed around 110 basis points. The stock performed well due to favorable business conditions and due to competitors that are unable to hurt the bank's strong franchise. Diageo, a long-term holding, contributed approximately 100 basis points of return, as the company continues to grow profits by successfully integrating acquired brands and by benefiting from strong demand in emerging markets. Additionally, Diageo consistently manages its capital effectively by using excess cash to buy back its stock. Finally, another long-term holding, SK Telecom, also contributed around 100 basis points to total return. Not only does the company keep growing in a somewhat mature market, but its capital allocation has gradually improved. Credit Suisse and BMW were the other two companies that contributed close to 100 basis points of return to the portfolio.

On the negative side, Trinity Mirror and Johnston Press, two UK newspaper companies, were the worst performers. Both companies operate regional newspaper businesses, and Trinity also manages some national titles. We remain confident that both of these well managed, cash-generative businesses will recover from the current advertising slump and become solid contributors to the portfolio.

In general, we feel strongly that abundant investment opportunities exist in the foreign media sector, which currently appears too consumed with the internet threat. Although little has changed geographically with the Fund over the past year, our historically high weight in Japan (though still under weighted the index) is a function of finding more value in that market. As we've discussed in previous letters, we believe more micro- and macro-economic reform must occur in that market before we become genuinely enthusiastic.

International Diversification—December 31, 2006 (Unaudited)

Schedule of Investments—December 31, 2006 (Unaudited)