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 (3/31/07) AS COMPARED TO THE MSCI WORLD EX U.S. INDEX13
	Average Annual Total Returns (as of 3/31/07)
	Total Return Last 3 Months*	1-year	5-year	10-year	Since Inception (11/1/95)
Oakmark International Small Cap Fund (Class I)	5.81%	27.60%	23.98%	16.11%	15.89%
MSCI World ex U.S.	4.01%	19.60%	16.03%	8.56%	8.56%
MSCI World ex U.S. Small Cap16	7.27%	15.70%	23.94%	N/A	N/A
Lipper International Small Cap Index17	6.77%	20.64%	24.61%	13.98%	N/A
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.
Expense Ratio as of 9/30/06 was 1.37%. 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 Small Cap Fund gained 6% for the quarter ending March 31, 2007, compared to the MSCI World ex U.S. Index that returned 4% and the MSCI World ex U.S. Small Cap Index that returned 7%. More importantly, however, for the past twelve months and since inception, your Fund is up 28% and 16% respectively, outpacing the MSCI World ex U.S. Index, which returned 20% and 9%.

Impact Players

MLP, one of Germany’s largest independent financial advisors (IFAs), was the Fund’s largest contributor as the stock price rose 26% in the quarter. Germany is an attractive market as there is a shift from long-term government savings programs to individuals and corporate retirement plans. IFA growth in Germany is industry wide. There is a new head of sales at MLP who should help drive growth. He compliments the CEO and CFO, who have been very proactive in selling off non-core businesses and returning excess funds to shareholders. We anticipate another share repurchase this year after an 8% buyback in 2006. Veda Advantage, the biggest credit-checking company in Australia and New Zealand rose 29% in the quarter. Shares were up as talks of a buyout continued. Julius Baer, Switzerland’s largest independent money manger, was another large contributor for the quarter as the share price rose 24% fueled by a strong Swiss market. Expansion in Asia and sizeable asset growth in the secondhalf of 2006 helped increase profits by 44%.

South Korean Daekyo Co., a study guide provider for elementary and pre-schools, was the largest detractor to performance in the quarter. Daekyo raised prices on its educational materials at the beginning of the year, which caused subscriptions to decline. Nevertheless, non-core operations continue to improve from losses and Daekyo’s large holding in Shinhan Financial Group has increased in value by 15% in the quarter. Daekyo remains a very cheap stock trading at a midsingle- digit EBIT multiple after adjusting for its financial investments.

Portfolio Composition

The Fund exited many positions that had reached their fair values in the quarter, including Alsea, Tandberg, Britvic, and Robert Walters. New ideas generated in the quarter include Titan Cement, a Greek cement company, Pasona, a Japanese temporary agency, USS Co., which manages used car auction facilities throughout Japan, Observer, a Swedish communication company, and Enodis, a UK holding company whose subsidiaries sell commercial food equipment.

Geographically, our portfolio weightings remain similar to last quarter. Europe and the UK represent approximately 60% of investments, and the majority of the balance excluding cash is invested in the Pacific Rim. With the addition of the two new Japanese names our weighting increased to 13% still well below the MSCI World ex U.S. Index weighting of 21%.

We continue to own names that we believe have demonstrated a consistent ability to grow value per share over time. We thank you for your continued support.

International Diversification—March 31, 2007 (Unaudited)

Schedule of Investments—March 31, 2007 (Unaudited)