THE OAKMARK GLOBAL FUND Report from Clyde S. McGregor and Robert A. Taylor, Portfolio Managers

THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK GLOBAL FUND FROM ITS INCEPTION (8/4/99) TO PRESENT (6/30/07) AS COMPARED TO THE MSCI WORLD INDEX12
	Average Annual Total Returns (as of 6/30/07)
	Total Return Last 3 Months*	1-year	5-year	Since Inception (8/4/99)
Oakmark Global Fund (Class I)	5.54%	27.73%	20.47%	17.78%
MSCI World	6.51%	23.59%	14.00%	5.09%
Lipper Global Fund Index13	6.87%	23.68%	14.07%	6.98%
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 1.18%. 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

Quarter Review

The June quarter extended The Oakmark Global Fund’s streak of profitable quarters to eleven with a gain of 6%. Though a fine absolute return, the number lagged behind the 7% that the MSCI World Index reported. During the quarter the Fund enjoyed strong results in the U.S. and several European markets. Yet poor relative returns in Japan and the United Kingdom as well as a lack of exposure to resource-based economies produced the shortfall versus the benchmark. The Fund’s country weights remained relatively constant.

The nine months of the Fund’s fiscal year show a return of 21%, compared to 18% for the MSCI World Index. As always, we are most pleased to report that the compound annualized rate of return since the Fund’s inception is 18%.

Since the Fund’s inception, corporate transaction activity has benefited the Fund’s returns, and the pace of that activity has been accelerating. For example, the Fund’s June quarter experienced two deals, Ceridian and eFunds. We do not initiate positions in equities with a specific expectation that a buyout will eventually occur, but a profitable acquisition outcome is the ultimate vindication of analysis for value investors. In the June quarter the financial press turned its focus to private equity firms and their transactions. Usually when the financial press settles on an issue of the day, one can be certain that the issue is soon to fade away. And it does look like the political and interest rate environments are trending less favorably for the private equity buyer. While private equity has played a role in the Fund’s acquisition outcomes, strategic acquisitions (e.g. one company purchasing another to create a stronger entity) have been far more important. Nikko Securities, Burlington Resources, eFunds, and the DaimlerChrysler sale of Chrysler are all recent examples of strategic transactions with large positive outcomes. Should private equity somehow recede back into obscurity, we would still expect deal activity to continue.

June Quarter Stocks of Interest

In the previous quarter’s report we wrote that we had initiated a position in UBS, the Swiss-based financial conglomerate. In June, UBS announced the sale of its 21% stake in Julius Baer, another Global Fund holding. UBS received its Baer shares in 2005 in exchange for three non-UBS branded Swiss domiciled private banks and GAM, an alternative investments firm. This exchange proved very successful for both Baer and UBS. Julius Baer’s management has successfully integrated the various businesses, improved the scale of its private banking business, and strengthened the product offering for its clients. Julius Baer’s share price nearly doubled over UBS’s holding period.

It would be easy to conclude that UBS’s decision to sell its holdings in Baer must be a negative indication for Baer. We disagree with this conclusion. First, Julius Baer is repurchasing almost 6% of the shares, signaling that management feels that the company’s shares are still undervalued. Second, UBS management is using the sale proceeds to repurchase their own shares, again evincing confidence in the UBS share valuation. We also draw comfort from the valuation UBS is obtaining on its Baer shares. If we apply the same multiples to UBS’s private banking and asset management operations, the resulting valuation on the investment banking and Swiss retail banking businesses is quite modest (less than book value).

GlaxoSmithKline (“GSK”), the large UK-based pharmaceutical company, suffered a significant setback in the quarter when the New England Journal of Medicine published a study appearing to indicate increased circulatory system risk to patients using the company’s diabetes drug Avandia. While experts have found the study’s conclusions to be controversial, the negative effect on the sales of Avandia has been incontrovertible. We do not have the ability to predict the future for this drug, but we do believe that the drop in GSK’s stock price fairly reflects the negative case.

As noted above, corporate restructuring and merger activity again proved important to the Fund’s return. eFunds (yes, that is the company’s official name) auctioned itself successfully during the quarter, making the stock the most important contributor to returns in this period. eFunds has been part of the portfolio since late 2001, and we will miss it. The company has generally grown its business value per share, but its stock price has been quite volatile, giving your Fund’s managers periodic opportunities to increase the holding at desirable prices. Ceridian, the payroll processing and stored value card company, also announced a sale agreement in the quarter, and we exited this holding. The Ceridian investment goes back to the earliest days of the Fund. While far from your management team’s finest hour, the Ceridian experience does demonstrate the value of purchasing at a good price. Business value growth per share at Ceridian came in well below our expectations over the entire 7+ year holding period. [Remember Y2K? Ceridian may be the only company in which we invested actually to have suffered a Y2K problem.] Despite the fundamental disappointments, the stock ended up performing adequately, generating a double-digit compound rate of return from inception of the holding.

Other companies’ shares that contributed meaningfully to the Fund’s results include Intel (U.S.), DaimlerChrysler (Germany), Adecco (Switzerland), Discovery Holding (U.S.), XTO Energy (U.S.), and SK Telecom (South Korea). Overall weakness in Japan’s stock market caused our holdings in two Japanese brokerage firms, Daiwa and Nikko Securities, to lose ground in the period. News Corp. shares retreated after the company announced its tender offer for Dow Jones.

Activity

New purchases balanced sales for the quarter, which kept the Fund’s count of holdings flat at 51. As noted above, we eliminated the Ceridian position after the company’s acquisition announcement, and we also sold the holdings of Brunswick (U.S.) and NTT Docomo (Japan) because we found greater opportunities in new purchases of Apache (U.S.), MDS (Canada), and Omron (Japan). Apache is an oil and gas exploration company with a solid track record of growth, returns, cost efficiency, and reserve replacement. Management has made many opportunistic acquisitions and has proven unusually adept at introducing new development approaches on properties that it acquires. In natural gas, Apache’s five-year record for finding costs of $1.54/MCF ranks among the best in the industry, and the company has achieved this record while growing rapidly. Apache has been particularly successful in recent years in Egypt and Australia. The company is the largest oil producer in Egypt and continues to grow production there.

MDS is a life science company operating with three divisions. Its contract research organization provides clinical trials and other services primarily for generic pharmaceutical companies. The Nordion division supplies radioisotopes for nuclear imaging and therapeutic procedures as well as cobalt-60 (used for sterilization). The third division, Sciex, manufactures medical instruments, primarily mass spectrometers, which are used in pharmaceutical, academic, and government research laboratories.

Our third purchase was Omron, a Japanese manufacturer of factory automation products and systems. The end markets for these products are industrial, electronic components, automotive, and healthcare. The most profitable business, industrial automation, has been helped by strong capital expenditures over the past few years. New applications, such as the need for products to be traceable, should help to dampen a cyclical downturn. The management team fits our definition of quality given the capital allocation decisions made over the past few years. Management has been actively divesting underperforming companies and reducing costs. Furthermore, management has repurchased almost 15% of the company’s outstanding shares.

We thank you for being our shareholders and welcome your suggestions and comments.

June 30, 2007

Global Diversification—June 30, 2007 (Unaudited)

Schedule of Investments—June 30, 2007 (Unaudited)