It was a difficult quarter for The Oakmark Global Select Fund, which returned -8% for the quarter ended December 31, 2007. This compares unfavorably to the MSCI World Index return of -2%.

Impact Players

Two of the top positive contributors were domestic holdings Viacom Inc. and McDonald’s Corp., returning 12.7% and 10.1% respectively. Viacom is one of the largest cable network providers in the world and owns many of the top cable brands, including Nickelodeon, MTV, Comedy Central and BET. Viacom stock had been stagnant for a couple of years because investors feared consumers would abandon TV for new forms of entertainment, including the Internet and iPods. However, Viacom’s cash flow is now 25% higher than it was two years ago and investors appear to be taking notice. Viacom continues to trade at a multiple consistent with most other businesses, which we believe gives no credit for the company’s positives, such as higher than average growth and free cash flow conversion. The other top contributor in the third quarter, McDonald’s Corp., has maintained strong operating results. McDonald’s continues to grow same-store sales in the U.S. and has achieved strong growth outside the U.S., partially assisted by higher foreign currency values.

The largest detractors from the Fund included Washington Mutual (WaMU), Sprint Corp., and Citigroup. The ongoing weakness in the credit and housing markets significantly affected WaMu and Citigroup, which returned -61% and -28% respectively. Citigroup was removed from the Fund during the quarter to capture tax losses and was replaced by a company with similar dynamics. WaMu has been hurt by the unprecedented decline in home values. Additionally, it now seems that a higher number of mortgages were affected than was originally projected. We remain positive about WaMu because it has a strong deposit franchise, and we believe that the potential loan losses are not likely to overwhelm the company’s franchise value. Sprint was down approximately 28% during the quarter while the company focused on fixing core operating issues. Even optimistically, this turnaround will take several quarters and will require margin-depressing investments. Due to these issues, we exited our position in Sprint during the quarter.

Adecco S.A., a Swiss-based personnel and temporary employment company, was the worst performing foreign name in the Fund returning -8% for the quarter. The U.S. market remains soft with revenue down 8% during the third quarter while operating income increased 2%. The U.K. market has performed worse than expected, with operating income off 14% through the third quarter. Adecco’s U.K. management team has been replaced, and the division is currently undergoing a restructuring that focuses on improving margins in 2008 and revenue growth in 2009. Adecco continues to grow inside Japan, achieving margins nearly double those of domestic players. Management is looking to expand Adecco’s presence in Japan as they view it as one of the most attractive markets globally. Short-term turnarounds in the temporary employment market are unlikely given current global economic concerns; however, given Adecco’s current restructuring plan in addition to the positive results inside Japan, we remain positive about the stock’s long-term outlook.

Portfolio Composition

There were many changes to the portfolio in the quarter. Citigroup, Sprint, Daimler AG and UBS AG were all sold from the Fund. We added four new holdings: Best Buy Inc., a U.S. based electronics retailer; Capital One Financial, a U.S. consumer financial company; Comcast Corp., a U.S. cable-network provider; and Credit Suisse Group, a Swiss-based private, retail, and investment bank.

We like to remind our shareholders during these volatile times that we are long-term investors who remain committed to our investment philosophy. While our performance may lag in the short term, we continue to focus on providing positive, long-term results for our shareholders. We thank you for your support.

Global Diversification—December 31, 2007 (Unaudited)

Schedule of Investments—December 31, 2007 (Unaudited)