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 (12/31/07) AS COMPARED TO THE MSCI WORLD EX U.S. INDEX14 (UNAUDITED)         Average Annual Total Returns (as of 12/31/07) (Unaudited) Total Return Last 3 Months* 1-year 5-year 10-year Since Inception (9/30/92)             Oakmark International Fund (Class I) -4.78% -0.51% 19.51% 11.94% 12.72% MSCI World ex U.S. -1.62% 12.44% 22.12% 8.99% 9.40% MSCI EAFE15 -1.75% 11.18% 21.59% 8.66% 9.12% Lipper International           Fund Index16 -0.99% 14.24% 21.83% 9.46% 10.45% 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 9/30/07 was 1.05%. 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 returned -5% for the quarter ended December 31, 2007, lagging behind the MSCI World ex U.S. Index return of -2%. More importantly, however, since the Fund’s inception in September 1992, it is up 13% per annum, which compares favorably with the MSCI World ex U.S. Index’s return of 9% over the same period.

Impact Players

SK Telecom Co., a South Korean telecommunication service provider, was the Fund’s largest contributor this quarter, returning 26%. The market reacted favorably to SK Telecom’s purchase of 39% of Hanaro Telecom Inc., South Korea’s second largest high-speed Internet service provider. This transaction will provide SK Telecom access to25% of the nation’s Internet users in a market where 9 out of 10 homes have broadband. We sold our position in SK Telecom during the quarter as it approached fair value and used the proceeds to purchase names which provided more upside. Another top contributor was U.K.-based security service provider G4S plc, which returned 19.6% for the quarter. The end of quarter announcement that the company acquired GSL helped boost G4S’s stock price. A majority of the GSL business is in U.K. public sector contracts, an area G4S knows well. Management has identified this area as a focus for acquisitions and has indicated that similar transactions are in the pipeline, which should further benefit performance. Vivendi, a French media conglomerate, returned 9% for the quarter and rounded out the Fund’s top three performers. There are no extraordinary reasons for Vivendi’s positive performance other than it is not economically exposed to cyclical downdrafts.

Lotte Chilsung Beverage Co. (“Lotte”), a South Korean beverage manufacturer, experienced a 26.5% price decrease making it the Fund’s worst performer this quarter. Lotte’s price soared during the second quarter due to expectations that the company would be able to re-zone and develop its Kangnam land bank. Unfortunately, shares performed poorly in the fourth quarter as the prospects for re-zoning began to dim. Additionally, the company’s core beverage business continues to suffer from strong competition, increasing raw materials cost, and lack of a new hit product. Another detractor during the quarter was U.K.-based credit and market service provider Experian Group, which declined 25%. Due to the credit and housing market downturn, banks have scaled back their lending practices which have negatively impacted Experian’s business. We were aware of this potential impact to Experian and were able to purchase the valuable business at an attractive price. Signet Group, a U.K.-based jewelry retailer that operates the Kay Jewelers and Jared’s chains in the U.S., also detracted from the Fund, declining 18.6% for the quarter. Signet management indicated poor results for the fourth quarter with November’s like-for-like sales off 7%, the worst like-for-like performance in recent history. With consumers becoming increasingly concerned about the credit crisis and the housing downturn, they are less likely to spend on luxury items such as jewelry. While we do not expect results for Signet to turn around in the near term, we believe the market has over-reacted creating an opportunity to purchase additional shares of a quality business at a discounted value. We maintain our positive long-term outlook for this stock.

Portfolio Composition

In order to take advantage of extreme market volatility during the past quarter, our activity was greater than normal. We sold our positions in Henkel, SK Telecom, Nikko Cordial Corp., Takeda Pharmaceutical Co., Givaudan, and Nestle SA because they reached fair value or because better investment opportunities materialized. Four new names were added to the portfolio: Luxottica Group, the leading global manufacturer and retailer of prescription eyeglasses and sunglasses; Nomura Holdings, a Japan-based financial service provider; Canadian National Railway, a Canadian-based railway operator; and Geberit AG, Europe’s largest manufacturer of sanitary systems and piping products.

As mentioned in the International and International Small Cap Funds letter we were underweight sectors that performed favorably in the quarter and overweight those that underperformed, including financials, consumer discretionary, and information technology, which together detracted approximately 4.8% from Fund performance. The Fund also lacked any exposure to energy; one of the quarter’s best performing sectors.

In closing, we would like to thank our shareholders for continuing to support us and our value investing philosophy. Short-term market fluctuations give us the opportunity to invest in quality companies trading at low prices. We are long-term value investors and focus on finding attractive, under-valued foreign companies.

International Diversification—December 31, 2007 (Unaudited)

Schedule of Investments—December 31, 2007 (Unaudited)