<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-06279
Harris Associates Investment Trust
(Exact name of Registrant as specified in charter)
Two North La Salle Street, Suite 500
Chicago, Illinois 60602-3790
(Address of principal executive offices) (Zip Code)
John R. Raitt Cameron S. Avery
Harris Associates L.P. Bell, Boyd & Lloyd LLC
Two North La Salle Street, #500 Three First National Plaza, #3100
Chicago, Illinois 60602 Chicago, Illinois 60602
(Name and address of agents for service)
Registrant's telephone number, including area code: (312) 621-0600
Date of fiscal year end: 9/30/05
Date of reporting period: 3/31/05
<Page>
ITEM 1. REPORTS TO SHAREHOLDERS.
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[GRAPHIC]
THE OAKMARK FUND
THE OAKMARK SELECT FUND
THE OAKMARK EQUITY AND INCOME FUND
THE OAKMARK GLOBAL FUND
THE OAKMARK INTERNATIONAL FUND
THE OAKMARK INTERNATIONAL SMALL CAP FUND
SEMI-ANNUAL REPORT
MARCH 31, 2005
[OAKMARK LOGO]
ADVISED BY HARRIS ASSOCIATES L.P.
<Page>
THE OAKMARK FUNDS
2005 SEMI-ANNUAL REPORT
<Table>
PRESIDENT'S LETTER 1
SUMMARY INFORMATION 2
FUND EXPENSES 4
COMMENTARY ON THE OAKMARK AND OAKMARK SELECT FUNDS 6
THE OAKMARK FUND
Letter from the Portfolio Managers 7
Schedule of Investments 9
THE OAKMARK SELECT FUND
Letter from the Portfolio Managers 13
Schedule of Investments 14
THE OAKMARK EQUITY AND INCOME FUND
Letter from the Portfolio Managers 16
Schedule of Investments 18
THE OAKMARK GLOBAL FUND
Letter from the Portfolio Managers 24
Global Diversification Chart 26
Schedule of Investments 27
COMMENTARY ON THE INTERNATIONAL AND INTERNATIONAL SMALL CAP FUNDS 32
THE OAKMARK INTERNATIONAL FUND
Letter from the Portfolio Managers 33
International Diversification Chart 34
Schedule of Investments 35
THE OAKMARK INTERNATIONAL SMALL CAP FUND
Letter from the Portfolio Managers 41
International Diversification Chart 42
Schedule of Investments 43
FINANCIAL STATEMENTS
Statements of Assets and Liabilities 50
Statements of Operations 52
Statements of Changes in Net Assets 54
Notes to Financial Statements 60
DISCLOSURE REGARDING INVESTMENT ADVISORY CONTRACT APPROVAL 77
OAKMARK PHILOSOPHY AND PROCESS 79
THE OAKMARK GLOSSARY 80
TRUSTEES AND OFFICERS 81
</Table>
FORWARD-LOOKING STATEMENT DISCLOSURE
One of our most important responsibilities as mutual fund managers is to
communicate with shareholders in an open and direct manner. Some of our comments
in our letters to shareholders are based on current management expectations and
are considered "forward-looking statements". Actual future results, however, may
prove to be different from our expectations. You can identify forward-looking
statements by words such as "estimate", "may", "will", "expect", "believe",
"plan" and other similar terms. We cannot promise future returns. Our opinions
are a reflection of our best judgment at the time this report is compiled, and
we disclaim any obligation to update or alter forward-looking statements as a
result of new information, future events, or otherwise.
<Page>
PRESIDENT'S LETTER
[PHOTO OF JOHN R. RAITT]
DEAR FELLOW SHAREHOLDERS,
World stock markets produced mixed results in the first quarter, with most of
the broad market indexes showing small single-digit declines. Our Funds also
produced mixed returns for the quarter, with some gains and some losses. At the
same time, however, every one of our Funds performed in line with or better than
their benchmark indexes.
As several of our Fund managers highlight in their letters this quarter,
worldwide corporate profit growth continues at a robust pace, extending the
multi-year world economic expansion. While market levels are higher over the
past two years, we believe that economic growth has kept valuations at
reasonable levels for disciplined long-term investors.
TRADING AND SOFT DOLLAR PRACTICES
At The Oakmark Funds, we have always been mindful of how to best serve our
shareholders--and how to do so fairly. We have recently given a significant
amount of thought and attention to our trading practices, as the equity trading
and execution landscape has changed tremendously over the past few years. The
traditional institutional stock brokerage arrangement--where trade execution is
bundled with research and other services into one commission charge--is
beginning to unravel under the pressure of market forces. These trends have
caused us to reassess our approach to the use of "soft dollar" commissions to
pay for third-party research and services.
Our soft dollar practices have always been well within the scope of
SEC-sanctioned practices, which explicitly permit the use of brokerage
commissions to pay for such services. We believe that we have been small users
of third-party research and services compared to most mutual fund managers, and
we don't believe that our use of soft dollars has increased trading costs.
However, as the brokerage industry moves toward unbundling trading from research
and other services, we are less confident that this will be true in the future.
For this reason, we have discontinued the use of soft dollars to pay for
third-party research and services, effective April 1. In the future, the cost of
these services will be paid entirely by the Funds' adviser, Harris Associates
L.P. Our primary trading focus, as always, will be to obtain best execution for
our shareholders and you can be assured that we will continue to monitor
industry developments.
PERSONAL INVESTMENT IN THE FUNDS
One of the key components of our investment process at The Oakmark Funds has
been to invest in companies where management interests are closely aligned with
ours. We find that this alignment is most frequently and most effectively
created by significant management stock ownership. When management has a
meaningful sum invested alongside other shareholders, the focus on performance
and shareholder value is intensified.
We believe that this same approach is also wise for mutual fund investors.
Significant ownership of fund shares--not just by portfolio managers, but by all
levels of employees at the fund and its adviser (including analysts, senior
management, trustees and others)--reinforces a higher standard of integrity,
focus, and commitment to maximizing long-term returns.
At The Oakmark Funds, a commitment to the share ownership is an integral part of
our business philosophy. We encourage employee ownership of the Funds and are
committed to reporting on our ownership on a regular basis. IN THIS REGARD, WE
ARE PLEASED TO ANNOUNCE THAT AS OF DECEMBER 31, 2004, THE EMPLOYEES OF THE
FUNDS' ADVISER, HARRIS ASSOCIATES L.P., AND THE FUNDS' OFFICERS AND TRUSTEES
HAVE OVER $180 MILLION INVESTED IN THE OAKMARK FUNDS. THIS COMPARES TO AN
INVESTMENT OF $145 MILLION IN DECEMBER 2003, WHEN WE LAST REPORTED HOLDINGS.
This increase represents a combination of price appreciation and additional
purchases.
Thank you for your continued investment and confidence in The Oakmark Funds. We
welcome your comments and questions. You can reach us via e-mail at
ContactOakmark@oakmark.com.
/s/ John R. Raitt
JOHN R. RAITT
PRESIDENT OF THE OAKMARK FUNDS
PRESIDENT AND CEO OF HARRIS ASSOCIATES L.P.
1
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THE OAKMARK FUNDS
SUMMARY INFORMATION
<Table>
<Caption>
THE OAKMARK
THE OAKMARK THE OAKMARK EQUITY AND INCOME
PERFORMANCE FOR PERIOD FUND--CLASS I SELECT FUND--CLASS I FUND--CLASS I
ENDED MARCH 31, 2005(1) (OAKMX) (OAKLX) (OAKBX)
- ----------------------------------------------------------------------------------------------------------------------
3 MONTHS* -2.20% 0.12% -0.64%
1 YEAR 7.72% 7.24% 5.26%
AVERAGE ANNUAL TOTAL
RETURN FOR:
3 YEAR 4.00% 6.55% 8.26%
5 YEAR 11.22% 12.54% 12.35%
10 YEAR 10.56% N/A N/A
SINCE INCEPTION 16.21% 19.98% 13.83%
(8/5/91) (11/1/96) (11/1/95)
TOP FIVE EQUITY Washington Washington Burlington
HOLDINGS AS OF Mutual, Inc. 2.8% Mutual, Inc. 14.6% Resources Inc. 4.1%
MARCH 31, 2005(2) McDonald's Yum! Brands, Inc. 8.0% XTO Energy, Inc. 3.8%
Corporation 2.6% H&R Block, Inc. 7.0% Nestle SA 2.8%
Yum! Brands, Inc. 2.5% First Data Diageo plc 2.7%
COMPANY AND % OF TOTAL The Walt Disney Corporation 5.2% EchoStar
NET ASSETS Company 2.5% Time Warner Inc. 4.8% Communications
Viacom Inc., Class B 2.4% Corporation, Class A 2.6%
SECTOR Consumer Consumer U.S. Government
ALLOCATION AS OF Discretionary 43.9% Discretionary 41.4% Securities 31.2%
MARCH 31, 2005 Financials 15.4% Financials 24.1% Consumer
Consumer Staples 12.3% Industrials 12.2% Discretionary 13.2%
Industrials 10.0% Information Energy 12.3%
SECTOR AND % Health Care 7.7% Technology 10.3% Industrials 10.6%
OF MARKET VALUE Information Health Care 7.3% Consumer Staples 10.0%
Technology 6.5% Energy 4.7% Health Care 7.6%
Energy 4.2% Financials 7.0%
Foreign Government
Securities 5.0%
Information
Technology 2.6%
Materials 0.5%
</Table>
The performance data quoted represents past performance. The above performance
information for the Funds 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 current month end performance data
call 1-800-OAKMARK.
* Not annualized
2
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<Table>
<Caption>
THE OAKMARK THE OAKMARK
THE OAKMARK INTERNATIONAL INTERNATIONAL
PERFORMANCE FOR PERIOD GLOBAL FUND--CLASS I FUND--CLASS I SMALL CAP FUND--CLASS I
ENDED MARCH 31, 2005(1) (OAKGX) (OAKIX) (OAKEX)
- -----------------------------------------------------------------------------------------------------------------------------------
3 MONTHS* 0.60% 2.13% 5.44%
1 YEAR 11.97% 17.39% 27.62%
AVERAGE ANNUAL TOTAL
RETURN FOR:
3 YEAR 15.22% 11.29% 21.27%
5 YEAR 18.53% 10.44% 16.32%
10 YEAR N/A 12.16% N/A
SINCE INCEPTION 16.33% 12.32% 13.43%
(8/4/99) (9/30/92) (11/1/95)
TOP FIVE EQUITY Diageo plc 4.7% GlaxoSmithKline plc 3.5% Saurer AG 3.6%
HOLDINGS AS OF Nestle SA 4.0% Bayerische Motoren Neopost SA 3.3%
MARCH 31, 2005(2) Euronext NV 3.9% Werke (BMW) AG 3.4% Julius Baer
Bank of Ireland 3.9% Euronext NV 3.4% Holding Ltd. 3.1%
Burlington Diageo plc 3.2% Interpump
COMPANY AND % OF TOTAL Resources Inc. 3.8% Bank of Ireland 3.1% Group S.p.A 3.1%
NET ASSETS Carpetright plc 2.9%
SECTOR Consumer Financials 26.3% Industrials 29.6%
ALLOCATION AS OF Discretionary 18.7% Consumer Information
MARCH 31, 2005 Health Care 17.3% Discretionary 18.8% Technology 19.9%
Financials 16.4% Consumer Staples 17.8% Consumer
Consumer Staples 15.6% Health Care 11.5% Discretionary 15.7%
SECTOR AND % Information Materials 8.9% Financials 11.2%
OF MARKET VALUE Technology 10.2% Industrials 8.8% Consumer Staples 9.2%
Industrials 9.5% Telecommunication Materials 7.5%
Materials 6.5% Services 4.5% Health Care 5.3%
Energy 3.9% Energy 2.0% Telecommunication
Telecommunication Information Services 1.6%
Services 1.9% Technology 1.4%
</Table>
3
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FUND EXPENSES
A shareholder of each Fund incurs two types of costs: (1) transaction costs,
such as redemption fees, and (2) ongoing costs, including investment advisory
fees, transfer agent fees, and other fund expenses. The examples below are
intended to help shareholders understand the ongoing cost (in dollars) of
investing in each Fund and to compare these costs with the ongoing costs of
investing in other funds.
ACTUAL EXPENSES
The following table provides information about actual account values and actual
fund expenses for Class I of each Fund. The table shows the expenses a Class I
shareholder would have paid on a $1,000 investment in each Fund from October 1,
2004 to March 31, 2005 as well as how much a $1,000 investment would be worth at
the close of the period, assuming actual fund returns and expenses. A Class I
shareholder can estimate expenses incurred for the period by dividing the
account value at March 31, 2005 by $1,000 and multiplying the result by the
number in the Expenses Paid During Period row as shown below.
Certain accounts invested for 90 days or less may be charged a 2% redemption
fee. Please consult the Funds' prospectus at www.oakmark.com for more
information.
<Table>
<Caption>
THE
THE THE OAKMARK
THE THE OAKMARK THE OAKMARK INTERNATIONAL
OAKMARK OAKMARK EQUITY AND OAKMARK INTERNATIONAL SMALL CAP
FUND SELECT FUND INCOME FUND GLOBAL FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------------------
BEGINNING
ACCOUNT VALUE $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00
ENDING
ACCOUNT VALUE $ 1,060.50 $ 1,078.20 $ 1,044.40 $ 1,136.70 $ 1,154.70 $ 1,195.80
EXPENSES PAID
DURING PERIOD* $ 5.29 $ 5.18 $ 4.64 $ 6.50 $ 6.12 $ 7.83
Annualized
Expense Ratio 1.03% 1.00% 0.91% 1.22% 1.14% 1.43%
</Table>
* Expenses are equal to each Fund's annualized expense ratio for Class I,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent fiscal half-year divided by 365 (to reflect
the one-half year period).
4
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HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The following table provides information about hypothetical account values and
hypothetical expenses for Class I of each Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which are not the Funds'
actual returns. The hypothetical account values and expenses may not be used to
estimate the actual ending account balances or expenses shareholders paid for
the period. Shareholders may use this information to compare the ongoing costs
of investing in a Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as redemption
fees. Therefore, the third line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transaction costs were included, your
costs would have been higher.
<Table>
<Caption>
THE
THE THE OAKMARK
THE THE OAKMARK THE OAKMARK INTERNATIONAL
OAKMARK OAKMARK EQUITY AND OAKMARK INTERNATIONAL SMALL CAP
FUND SELECT FUND INCOME FUND GLOBAL FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------------------
BEGINNING
ACCOUNT VALUE $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00
ENDING
ACCOUNT VALUE $ 1,019.80 $ 1,019.95 $ 1,020.39 $ 1,018.85 $ 1,019.25 $ 1,017.80
EXPENSES PAID
DURING PERIOD* $ 5.19 $ 5.04 $ 4.58 $ 6.14 $ 5.74 $ 7.19
ANNUALIZED
EXPENSE RATIO 1.03% 1.00% 0.91% 1.22% 1.14% 1.43%
</Table>
* Expenses are equal to each Fund's annualized expense ratio for Class I,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent fiscal half-year divided by 365 (to reflect
the one-half year period).
5
<Page>
THE OAKMARK AND OAKMARK SELECT FUNDS
At Oakmark, we are long-term investors. We attempt to identify growing
businesses that are managed to benefit their shareholders. We will purchase
stock in those businesses only when priced substantially below our estimate of
intrinsic value. After purchase, we patiently wait for the gap between stock
price and intrinsic value to close.
[PHOTO OF WILLIAM C. NYGREN]
Since March marked Kevin's and my five-year anniversary for managing The Oakmark
Fund, I'm shortening this report so that we can dedicate more space to a
five-year review of that Fund. We will return to our usual format next quarter.
A number of shareholders have recently asked for an explanation of why our
recent performance has lagged behind other value funds. From the market bottom
over two years ago, both The Oakmark Fund and The Oakmark Select Fund have
increased in line with the S&P 500(3). Since both Funds showed solid gains from
2000 to 2003 while the S&P 500 dropped sharply, we were quite pleased that we
fully participated in the gains when the market recovered. But other funds
increased more. I think our biggest mistake was underestimating the magnitude of
the recovery in corporate profits. This can be seen using The Oakmark Fund's
purchase of Anheuser-Busch as an example. Two years ago, Kevin and I wrote, "We
own this great company--now selling below seventeen times next year's
earnings--at about a market multiple." Since then, Anheuser-Busch stock is down
slightly. Earnings have grown almost as much as we expected, and it now sells at
fifteen times next year's earnings. The problem is that because the S&P earnings
growth has matched its 50% increase in price, the market P/E(4) ratio has not
gone up. So, despite significantly underperforming the market, Anheuser-Busch
still sells at about a market multiple. Had we correctly anticipated the
magnitude of the corporate profits rebound, we would have realized that the
price we paid for Anheuser-Busch was really a significant P/E premium. In
hindsight, we actually bought Anheuser-Busch at fifteen times expected 2006
earnings when the S&P was trading at eleven times now expected 2006 earnings.
Value managers that bought the lowest P/E stocks in 2003 benefited from having
much more exposure to the economic recovery than we did. So, what does that mean
for today? If corporate profits continue growing at far above average rates,
other funds probably will go up more than we will. We primarily own businesses,
such as Anheuser-Busch, that we believe are superior, yet are priced as if they
were average. If, as we expect, corporate earnings growth slows to the 5-6% per
year we feel is sustainable, then not only should our companies' earnings growth
start looking better in comparison, but we would expect to see their P/E
multiples expand to beyond the market average.
The story last quarter about my son's stock picking contest generated more
shareholder e-mail than anything we've ever written! As a recap, despite lengthy
discussions of the virtues of value investing, he constructed a highly
concentrated phantom portfolio that was heavy in TASER International, a momentum
investor favorite that had more than quadrupled in 2004. I commented that I
wasn't sure if I hoped he'd win the contest or learn a lesson. Well, he learned
a few things! TASER was the focus of several negative news stories, and the
stock lost 43% of its value during January. My favorite comment was "Dad, you
know what the problem is with buying a stock just because it's been going up?
After it falls, you don't really have a reason to keep holding it." Hopefully,
that's something he never forgets. As for the contest winner--a future Warren
Buffett? Unlikely. Turns out some computer whizzes figured out how to trick the
website into accepting additional capital and treating it as investment gains.
Another reminder that when the numbers look too good to be true, they probably
are!
Best wishes,
/s/ Bill Nygren
WILLIAM C. NYGREN, CFA
PORTFOLIO MANAGER
bnygren@oakmark.com
6
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THE OAKMARK FUND
REPORT FROM BILL NYGREN AND KEVIN GRANT, PORTFOLIO MANAGERS
[PHOTO OF BILL NYGREN]
[PHOTO OF KEVIN GRANT]
[CHART]
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK FUND FROM ITS INCEPTION
(8/5/91) TO PRESENT (3/31/05) AS COMPARED TO THE STANDARD & POOR'S 500 INDEX(3)
<Table>
<Caption>
THE OAKMARK
FUND (CLASS I) S & P 500
-------------- -----------
8/5/1991 $ 10,000 $ 10,000
9/30/1991 $ 11,050 $ 10,066
12/31/1991 $ 13,020 $ 10,909
3/31/1992 $ 14,690 $ 10,634
6/30/1992 $ 15,230 $ 10,836
9/30/1992 $ 16,800 $ 11,178
12/31/1992 $ 19,386 $ 11,741
3/31/1993 $ 20,927 $ 12,253
6/30/1993 $ 21,494 $ 12,313
9/30/1993 $ 23,095 $ 12,631
12/31/1993 $ 25,300 $ 12,924
3/31/1994 $ 24,242 $ 12,434
6/30/1994 $ 24,951 $ 12,486
9/30/1994 $ 26,663 $ 13,097
12/31/1994 $ 26,138 $ 13,095
3/31/1995 $ 28,539 $ 14,370
6/30/1995 $ 30,303 $ 15,741
9/30/1995 $ 32,841 $ 16,992
12/31/1995 $ 35,134 $ 18,015
3/31/1996 $ 36,386 $ 18,982
6/30/1996 $ 37,661 $ 19,834
9/30/1996 $ 37,945 $ 20,447
12/31/1996 $ 40,828 $ 22,152
3/31/1997 $ 42,456 $ 22,746
6/30/1997 $ 48,917 $ 26,716
9/30/1997 $ 52,009 $ 28,717
12/31/1997 $ 54,132 $ 29,542
3/31/1998 $ 59,517 $ 33,663
6/30/1998 $ 57,909 $ 34,775
9/30/1998 $ 49,899 $ 31,316
12/31/1998 $ 56,155 $ 37,985
3/31/1999 $ 55,888 $ 39,877
6/30/1999 $ 62,332 $ 42,688
9/30/1999 $ 53,882 $ 40,023
12/31/1999 $ 50,277 $ 45,977
3/31/2000 $ 45,767 $ 47,032
6/30/2000 $ 46,950 $ 45,783
9/30/2000 $ 49,815 $ 45,339
12/31/2000 $ 56,201 $ 41,791
3/31/2001 $ 60,342 $ 36,837
6/30/2001 $ 65,927 $ 38,993
9/30/2001 $ 59,986 $ 33,269
12/31/2001 $ 66,479 $ 36,824
3/31/2002 $ 69,250 $ 36,926
6/30/2002 $ 63,463 $ 31,979
9/30/2002 $ 52,927 $ 26,454
12/31/2002 $ 56,902 $ 28,686
3/31/2003 $ 54,576 $ 27,783
6/30/2003 $ 63,826 $ 32,059
9/30/2003 $ 64,034 $ 32,907
12/31/2003 $ 71,301 $ 36,914
3/31/2004 $ 72,327 $ 37,539
6/30/2004 $ 73,941 $ 38,186
9/30/2004 $ 73,467 $ 37,473
12/31/2004 $ 79,667 $ 40,931
3/31/2005 $ 77,913 $ 40,052
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
(AS OF 3/31/05)
SINCE
TOTAL RETURN INCEPTION
LAST 3 MONTHS* 1-YEAR 5-YEAR 10-YEAR (8/5/91)
- --------------------------------------------------------------------------------------------------------------
OAKMARK FUND (CLASS I) -2.20% 7.72% 11.22% 10.56% 16.21%
S&P 500 -2.15% 6.69% -3.16% 10.79% 10.69%
Dow Jones Average(5) -1.59% 4.05% 1.31% 11.92% 12.03%
Lipper Large Cap
Value Index(6) -0.83% 8.45% 1.23% 10.33% 10.51%
</Table>
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 current month end performance data,
call 1-800-OAKMARK or visit www.oakmark.com.
* Not annualized
In a weak, but relatively uneventful quarter, The Oakmark Fund matched the S&P
500 loss of 2%. On the negative side, Sun Microsystems lost a quarter of its
value. We continue to believe that Sun's strong cash position and active R&D
program make owning the stock worthwhile. On the plus side, two holdings
announced they were being acquired--Toys R Us and Sungard Data Systems. We
believe the increase in merger and acquisition activity is a positive statement
about our portfolio and the market's attractiveness.
It's hard to believe that five years have already passed since March of 2000
when we wrote our first letter as managers of The Oakmark Fund. In 1991 when The
Oakmark Fund was created, the goal was to have the Oakmark name become
synonymous with value investing. By March of 2000 that goal had largely been
met. But, be careful what you wish for! We were presented the challenge of
taking over a fund whose name implied value investing just when the financial
media was proclaiming that value investing was dead! Our assets had fallen
sharply not due to investment results, but because most of our shareholders had
redeemed. They wanted to increase their investment in those same technology
stocks that Oakmark stubbornly termed grossly overvalued.
Friends questioned our sanity by asking why in the world we would accept this
responsibility. Our answer--that we so strongly believed we inherited an
outstanding portfolio of stocks that we were both significantly increasing our
personal investment in the Fund--confirmed how out-of-sync we were with the new
paradigm. Instead of writing the letter people wanted to see--highlighting
everything we expected to change--we wrote a letter extolling the virtues of our
five largest holdings, all of which we inherited--Fortune Brands, Washington
Mutual, Dun and Bradstreet, Brunswick Corporation, and AC Nielson. (That
shareholder letter, along with all the others since 1997, is available on our
website by clicking on "literature" then "fund reports.") Anyone who hoped the
new managers would shift to an investment approach more in step with the times
was quickly disappointed. The Fund's long-term approach was intact, in fact, two
of those top five names are still in the portfolio today--Washington Mutual and
Fortune Brands. We have written frequently about how well Washington Mutual has
performed as a stock, and just as importantly, as a business, so we will use
this as an opportunity to highlight Fortune Brands.
In March of 2000, Fortune Brands was Oakmark's largest holding, accounting for
over 4% of our portfolio. Fortune is a diversified manufacturer of branded
products sold primarily to consumers.
7
<Page>
Familiar brands include Moen faucets, Jim Beam spirits, and Titleist golf balls.
Fortune is an example of the kind of stock that missed out on the "irrationally
exuberant" market of the late 1990's. At that time, the market (as measured by
the S&P 500) sold at twenty-six times expected earnings and had a dividend yield
of about 1%. At $25 per share, Fortune commanded a price of only nine times
earnings and had a dividend yield of nearly 4%. Over the next five years,
Fortune's EPS(7) grew at nearly a 14% compound annual rate. We believe this
resulted from good organic growth as well as from intelligent use of the large
amount of cash generated by these businesses. That cash was used to repurchase
over 10% of the outstanding shares and to make acquisitions that strengthened
Fortune's home products division. Further, Fortune management engineered an
amazing turnaround of their underperforming office products division. Management
explored selling that division, but decided to keep it when purchase offers were
judged to be inadequate. Analysts uniformly chastised management for their
refusal to sell. In the ensuing four years, about $500 million was extracted
from the office products division (which may have equaled the rejected offers),
and it was used for acquisitions and share repurchase. Further, better expense
management led to operating margins more than doubling. In March of this year,
Fortune announced a plan to merge their office products division with General
Binding to create the largest branded office products supplier. Management's
decision to fix rather than sell that division added about $8 of value per
Fortune share. Fortune stock now sells at $81 and at sixteen times our estimated
earnings. It has more than tripled in price in a five-year period when the
market declined. Though we can't claim Fortune is still as cheap as it was,
since business value has also sharply increased, we continue to believe Fortune
is undervalued. Most interesting, you probably haven't read much about Norm
Wesley. Norm is Fortune's CEO. Somehow when the financial media names top CEOs,
they never find Norm. The media may not have noticed the job he has done, but
his shareholders sure have. Thanks, Norm!
We wish we could tell you that our portfolio today is still populated with
Fortunes--grossly undervalued companies that have failed to attract investor
attention. Most stocks that were priced like Fortune have increased
significantly over the past five years while the stocks that were overvalued
have significantly declined. In 2000, many large cap growth stocks sold at fifty
times earnings while many typical companies sold at single digit P/Es(4). In
2000 our portfolio, with an average P/E of eleven, was well positioned for a
narrowing of the range of P/E multiples. We are most pleased that our
shareholders who believed in us in 2000 have enjoyed the returns from that
strategy.
Today, most stocks are priced at P/E multiples close to the S&P 500 multiple of
seventeen times expected earnings. In fact, the range of P/E's has narrowed so
much that we believe the better values today are generally the superior
businesses where the market isn't demanding significant P/E premiums. The
opportunity in 2000 was to identify the best prices; today, we think more of the
opportunities are in identifying the best businesses. On the plus side, compared
to our first day on the job five years ago, we think the market is now much more
reasonably priced, its P/E is about two-thirds of its 2000 level. Offsetting
that, valuations across industries and market capitalizations appear much more
rational, meaning it will be harder for stock pickers to add as much value over
the next five years. We believe that an appropriately valued market, a portfolio
of companies that are expected to grow faster than average, and a return to
historically typical quality spreads are likely to produce long-term returns
that are at least satisfactory.
Best wishes,
/s/ Bill Nygren /s/ Kevin G. Grant
WILLIAM C. NYGREN, CFA KEVIN G. GRANT, CFA
Portfolio Manager Portfolio Manager
bnygren@oakmark.com kgrant@oakmark.com
8
<Page>
THE OAKMARK FUND
SCHEDULE OF INVESTMENTS--MARCH 31, 2005 (UNAUDITED)
<Table>
<Caption>
NAME SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--91.5%
APPAREL RETAIL--4.3%
The Gap, Inc. 7,066,700 $ 154,336,728
Limited Brands 6,000,047 145,801,142
---------------
300,137,870
BROADCASTING & CABLE TV--8.2%
Liberty Media Corporation, Class A (a) 16,199,400 $ 167,987,778
Comcast Corporation, Special Class A (a) 4,725,000 157,815,000
The DIRECTV Group, Inc. (a) 9,700,000 139,874,000
EchoStar Communications Corporation, Class A 3,675,000 107,493,750
---------------
573,170,528
DEPARTMENT STORES--2.0%
Kohl's Corporation (a) 2,650,500 $ 136,845,315
HOME IMPROVEMENT RETAIL--2.1%
The Home Depot, Inc. 3,781,500 $ 144,604,560
HOMEBUILDING--1.6%
Pulte Homes, Inc. 1,500,000 $ 110,445,000
HOUSEHOLD APPLIANCES--1.9%
The Black & Decker Corporation 1,722,200 $ 136,036,578
HOUSEWARES & SPECIALTIES--2.0%
Fortune Brands, Inc. 1,745,600 $ 140,747,728
LEISURE PRODUCTS--1.2%
Mattel, Inc. 3,874,300 $ 82,716,305
MOTORCYCLE MANUFACTURERS--1.9%
Harley-Davidson, Inc. 2,262,500 $ 130,682,000
MOVIES & ENTERTAINMENT--7.2%
The Walt Disney Company 5,950,000 $ 170,943,500
Viacom Inc., Class B 4,879,490 169,952,637
Time Warner Inc. (a) 8,997,700 157,909,635
---------------
498,805,772
PUBLISHING--2.8%
Gannett Co., Inc. 1,684,500 $ 133,210,260
Knight-Ridder, Inc. 916,000 61,601,000
---------------
194,811,260
RESTAURANTS--5.1%
McDonald's Corporation 5,700,000 $ 177,498,000
Yum! Brands, Inc. 3,374,000 174,806,940
---------------
352,304,940
</Table>
9
<Page>
<Table>
<Caption>
NAME SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--91.5% (CONT.)
BREWERS--2.1%
Anheuser-Busch Companies, Inc. 3,050,000 $ 144,539,500
DISTILLERS & VINTNERS--1.8%
Diageo plc (b) 2,221,000 $ 126,374,900
HYPERMARKETS & SUPER CENTERS--2.1%
Wal-Mart Stores, Inc. 2,900,000 $ 145,319,000
PACKAGED FOODS & MEATS--4.2%
General Mills, Inc. 2,506,000 $ 123,169,900
Kraft Foods Inc., Class A 2,645,000 87,417,250
H.J. Heinz Company 2,310,000 85,100,400
---------------
295,687,550
SOFT DRINKS--1.0%
Coca-Cola Enterprises, Inc. 3,500,000 $ 71,820,000
INTEGRATED OIL & GAS--2.1%
ConocoPhillips 1,335,335 $ 144,002,526
OIL & GAS EXPLORATION & PRODUCTION--1.8%
Burlington Resources Inc. 2,442,200 $ 122,280,954
ASSET MANAGEMENT & CUSTODY BANKS--1.1%
The Bank of New York Company, Inc. 2,700,000 $ 78,435,000
DIVERSIFIED BANKS--1.8%
U.S. Bancorp 4,400,000 $ 126,808,000
LIFE & HEALTH INSURANCE--1.5%
AFLAC Incorporated 2,767,000 $ 103,098,420
OTHER DIVERSIFIED FINANCIAL SERVICES--3.8%
Citigroup Inc. 3,200,000 $ 143,808,000
JP Morgan Chase & Co. 3,600,000 124,560,000
---------------
268,368,000
THRIFTS & MORTGAGE FINANCE--5.9%
Washington Mutual, Inc. 4,887,300 $ 193,048,350
Fannie Mae 2,095,000 114,072,750
MGIC Investment Corporation 1,640,600 101,175,802
---------------
408,296,902
HEALTH CARE DISTRIBUTORS--1.0%
AmerisourceBergen Corp 1,200,000 $ 68,748,000
HEALTH CARE EQUIPMENT--2.1%
Baxter International Inc. 4,300,000 $ 146,114,000
</Table>
10
<Page>
<Table>
<Caption>
SHARES HELD/
NAME PAR VALUE MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--91.5% (CONT.)
PHARMACEUTICALS--3.9%
Abbott Laboratories 3,087,300 $ 143,929,926
Bristol-Myers Squibb Company 5,150,000 131,119,000
---------------
275,048,926
AEROSPACE & DEFENSE--3.3%
Raytheon Company 3,000,000 $ 116,100,000
Honeywell International, Inc. 3,050,000 113,490,500
---------------
229,590,500
BUILDING PRODUCTS--2.2%
Masco Corporation 4,433,600 $ 153,712,912
DIVERSIFIED COMMERCIAL SERVICES--2.2%
H&R Block, Inc. (c) 3,029,300 $ 153,221,994
ENVIRONMENTAL SERVICES--1.4%
Waste Management, Inc. 3,474,300 $ 100,233,555
COMPUTER HARDWARE--1.4%
Sun Microsystems, Inc. (a) 24,370,000 $ 98,454,800
DATA PROCESSING & OUTSOURCED SERVICES--3.2%
First Data Corporation 3,615,000 $ 142,105,650
Automatic Data Processing, Inc. 1,800,000 80,910,000
---------------
223,015,650
OFFICE ELECTRONICS--1.3%
Xerox Corporation (a) 5,972,400 $ 90,481,860
TOTAL COMMON STOCKS (COST: $4,982,389,142) 6,374,960,805
SHORT TERM INVESTMENTS--7.0%
U.S. GOVERNMENT BILLS--5.5%
United States Treasury Bills, 2.215% - 2.73%
due 4/7/2005 - 6/30/2005 $ 385,000,000 $ 383,559,814
TOTAL U.S. GOVERNMENT BILLS (COST: $383,571,153) 383,559,814
REPURCHASE AGREEMENTS--1.5%
IBT Repurchase Agreement, 2.50% dated 3/31/2005 due 4/1/2005, repurchase
price $103,507,188 collateralized by U.S. Government Agency Securities
with an aggregate market value plus accrued interest of $108,675,000 $ 103,500,000 $ 103,500,000
</Table>
11
<Page>
<Table>
<Caption>
NAME PAR VALUE MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS--7.0% (CONT.)
REPURCHASE AGREEMENTS--1.5% (CONT.)
IBT Repurchase Agreement, 2.02% dated 3/31/2005 due 4/1/2005, repurchase
price $2,230,293 collateralized by a U.S. Government Agency Security with
a market value plus accrued interest of $2,341,676 $ 2,230,168 $ 2,230,168
---------------
TOTAL REPURCHASE AGREEMENTS (COST: $105,730,168) 105,730,168
TOTAL SHORT TERM INVESTMENTS (COST: $489,301,321) 489,289,982
Total Investments (Cost $5,471,690,463)--98.5% $ 6,864,250,787
Other Assets In Excess Of Other Liabilities--1.5% 106,544,085
---------------
TOTAL NET ASSETS--100% $ 6,970,794,872
===============
</Table>
(a) Non-income producing security.
(b) Represents an American Depository Receipt.
(c) See footnote number five in the Notes to the Financial Statements regarding
investments in affiliated issuers.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12
<Page>
THE OAKMARK SELECT FUND
REPORT FROM BILL NYGREN AND HENRY BERGHOEF, PORTFOLIO MANAGERS
[PHOTO OF BILL NYGREN]
[PHOTO OF HENRY BERGHOEF]
[CHART]
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK SELECT FUND FROM ITS INCEPTION
(11/1/96) TO PRESENT (3/31/05) AS COMPARED TO THE STANDARD & POOR'S 500 INDEX(3)
<Table>
<Caption>
THE OAKMARK
SELECT FUND
(CLASS I) S & P 500
----------- -----------
11/1/1996 $ 10,000 $ 10,000
12/31/1996 $ 11,420 $ 10,543
3/31/1997 $ 12,140 $ 10,826
6/30/1997 $ 14,180 $ 12,715
9/30/1997 $ 16,340 $ 13,668
12/31/1997 $ 17,704 $ 14,060
3/31/1998 $ 20,078 $ 16,021
6/30/1998 $ 20,462 $ 16,551
9/30/1998 $ 16,936 $ 14,904
12/31/1998 $ 20,575 $ 18,078
3/31/1999 $ 22,766 $ 18,979
6/30/1999 $ 24,482 $ 20,317
9/30/1999 $ 22,028 $ 19,048
12/31/1999 $ 23,557 $ 21,882
3/31/2000 $ 25,667 $ 22,384
6/30/2000 $ 24,324 $ 21,790
9/30/2000 $ 27,432 $ 21,578
12/31/2000 $ 29,637 $ 19,890
3/31/2001 $ 32,826 $ 17,532
6/30/2001 $ 35,865 $ 18,558
9/30/2001 $ 34,496 $ 15,834
12/31/2001 $ 37,359 $ 17,526
3/31/2002 $ 38,306 $ 17,574
6/30/2002 $ 35,206 $ 15,220
9/30/2002 $ 29,720 $ 12,590
12/31/2002 $ 32,699 $ 13,653
3/31/2003 $ 32,535 $ 13,223
6/30/2003 $ 37,806 $ 15,258
9/3/2003 $ 37,820 $ 15,662
12/31/2003 $ 42,181 $ 17,569
3/31/2004 $ 43,214 $ 17,866
6/30/2004 $ 42,553 $ 18,174
9/30/2004 $ 42,980 $ 17,835
12/31/2004 $ 46,286 $ 19,481
3/31/2005 $ 46,342 $ 19,062
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
(AS OF 3/31/05)
SINCE
TOTAL RETURN INCEPTION
LAST 3 MONTHS* 1-YEAR 5-YEAR (11/1/96)
- --------------------------------------------------------------------------------------------------
OAKMARK SELECT FUND (CLASS I) 0.12% 7.24% 12.54% 19.98%
S&P 500 -2.15% 6.69% -3.16% 7.96%
S&P MidCap 400(8) -0.40% 10.43% 6.87% 13.95%
Lipper Mid Cap Value Index(9) -0.22% 12.96% 9.92% 10.90%
</Table>
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 current month end performance data,
call 1-800-OAKMARK or visit www.oakmark.com.
* Not annualized
The Oakmark Select Fund was flat for the quarter. This compared favorably to the
2% loss for the S&P 500. Strong performance by YUM Brands, Toys R Us, Burlington
Resources, and Office Depot, each of which increased by over 10%, was the
primary reason our return exceeded the market return. YUM Brands (Taco Bell,
Pizza Hut, KFC), our second largest holding, is benefiting from KFC's dominant
position in China. Last year, 15% of YUM's income came from China. Since 1998,
China income has been growing at over 30% per year compounded. Looking forward,
the percentage of YUM income earned in China should continue to increase.
Despite the strong performance of YUM stock, we don't believe it has yet become
fully valued.
During the quarter, we purchased shares in JP Morgan and Viacom. Viacom is a
leading provider of cable television programming (MTV, Nickelodeon, Comedy
Central, VH1, BET, Showtime, Movie Channel). In addition, Viacom owns Paramount,
the CBS network, and the Infinity radio network. Viacom stock has performed
poorly for several years as investors have focused on disappointing radio
results. We believe most of the value is in the cable television networks, and
they have been performing very well. We sold our positions in Office Depot and
Toys R Us. Five years ago, we started buying Toys R Us at just over $10 per
share. We thought new management would succeed at turning around the toy stores.
We were wrong. Fortunately, the value of real estate under the toy stores,
combined with the value of their highly successful Babies R Us stores, was
enough to justify the acquisition of the company for nearly $27 per share. The
success of our investment in Toys R Us, despite our inaccurate assessment of
their primary business, demonstrates the importance of our focus on risk. When
we first bought Toys R Us we said that even if the turnaround failed, the value
of the assets should significantly exceed our entry price. Had the turnaround
succeeded, we would have made more money, but we only wish that all our
"mistakes" had such a profitable outcome.
Best wishes,
/s/ Bill Nygren /s/ Henry R. Berghoef
WILLIAM C. NYGREN, CFA HENRY R. BERGHOEF, CFA
Portfolio Manager Portfolio Manager
bnygren@oakmark.com berghoef@oakmark.com
13
<Page>
THE OAKMARK SELECT FUND
SCHEDULE OF INVESTMENTS--MARCH 31, 2005 (UNAUDITED)
<Table>
<Caption>
NAME SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--90.8%
APPAREL RETAIL--7.5%
Limited Brands 9,480,981 $ 230,387,838
The Gap, Inc. 10,060,000 219,710,400
---------------
450,098,238
BROADCASTING & CABLE TV--3.7%
Liberty Media Corporation, Class A (a) 21,000,000 $ 217,770,000
LEISURE PRODUCTS--3.5%
Mattel, Inc. 9,670,900 $ 206,473,715
MOVIES & ENTERTAINMENT--8.7%
Time Warner Inc. (a) 16,240,000 $ 285,012,000
Viacom Inc., Class B 6,650,000 231,619,500
---------------
516,631,500
PUBLISHING--2.9%
Knight-Ridder, Inc. 2,606,500 $ 175,287,125
RESTAURANTS--11.4%
Yum! Brands, Inc. 9,207,000 $ 477,014,670
McDonald's Corporation 6,500,000 202,410,000
---------------
679,424,670
OIL & GAS EXPLORATION & PRODUCTION--4.3%
Burlington Resources Inc. 5,103,600 $ 255,537,252
ASSET MANAGEMENT & CUSTODY BANKS--1.1%
Janus Capital Group, Inc. 4,823,300 $ 67,285,035
OTHER DIVERSIFIED FINANCIAL SERVICES--2.3%
JP Morgan Chase & Co. 4,000,000 $ 138,400,000
SPECIALIZED FINANCE--3.8%
Moody's Corporation 2,823,600 $ 228,316,296
THRIFTS & MORTGAGE FINANCE--14.6%
Washington Mutual, Inc. 22,117,400 $ 873,637,300
HEALTH CARE SERVICES--3.4%
IMS Health Incorporated 8,303,441 $ 202,520,926
PHARMACEUTICALS--3.2%
Bristol-Myers Squibb Company 7,490,200 $ 190,700,492
DIVERSIFIED COMMERCIAL SERVICES--11.0%
H&R Block, Inc. (b) 8,259,800 $ 417,780,684
The Dun & Bradstreet Corporation (a)(b) 3,934,900 241,799,605
---------------
659,580,289
</Table>
14
<Page>
<Table>
<Caption>
SHARES HELD/
NAME PAR VALUE MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--90.8% (CONT.)
DATA PROCESSING & OUTSOURCED SERVICES--5.1%
First Data Corporation 7,815,400 $ 307,223,374
OFFICE ELECTRONICS--4.3%
Xerox Corporation (a) 16,746,400 $ 253,707,960
TOTAL COMMON STOCKS (COST: $3,550,762,422) 5,422,594,172
SHORT TERM INVESTMENTS--9.1%
U.S. GOVERNMENT BILLS--6.7%
United States Treasury Bills, 2.295% - 2.755%
due 4/7/2005 - 6/16/2005 $ 400,000,000 $ 398,863,160
TOTAL U.S. GOVERNMENT BILLS (COST: $398,881,719) 398,863,160
REPURCHASE AGREEMENTS--2.4%
IBT Repurchase Agreement, 2.50% dated 3/31/2005 due 4/1/2005, repurchase
price $141,509,826 collateralized by U.S. Government Agency Securities
with an aggregate market value plus accrued interest of $148,575,000 $ 141,500,000 $ 141,500,000
IBT Repurchase Agreement, 2.02% dated 3/31/2005 due 4/1/2005, repurchase
price $2,162,042 collateralized by a U.S. Government Agency Security with
a market value plus accrued interest of $2,270,017 2,161,921 2,161,921
---------------
TOTAL REPURCHASE AGREEMENTS (COST: $143,661,921) 143,661,921
TOTAL SHORT TERM INVESTMENTS (COST: $542,543,640) 542,525,081
Total Investments (Cost $4,093,306,062)--99.9% $ 5,965,119,253
Other Assets In Excess Of Other Liabilities--0.1% 5,559,498
---------------
TOTAL NET ASSETS--100% $ 5,970,678,751
===============
</Table>
(a) Non-income producing security.
(b) See footnote number five in the Notes to the Financial Statements regarding
investments in affiliated issuers.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15
<Page>
THE OAKMARK EQUITY AND INCOME FUND
REPORT FROM CLYDE S. MCGREGOR AND EDWARD A. STUDZINSKI, PORTFOLIO MANAGERS
[PHOTO OF CLYDE S. MCGREGOR]
[PHOTO OF EDWARD A. STUDZINSKI]
[CHART]
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK EQUITY AND INCOME FUND FROM ITS
INCEPTION (11/1/95) TO PRESENT (3/31/05) AS COMPARED TO THE LIPPER BALANCED FUND
INDEX(10)
<Table>
<Caption>
THE OAKMARK
EQUITY AND LIPPER
INCOME FUND BALANCED
(CLASS I) FUND INDEX
----------- ----------
11/1/1995 $ 10,000 $ 10,000
12/31/1995 $ 10,240 $ 10,473
3/31/1996 $ 10,500 $ 10,707
6/30/1996 $ 11,040 $ 10,925
9/30/1996 $ 11,110 $ 11,213
12/31/1996 $ 11,805 $ 11,840
3/31/1997 $ 12,153 $ 11,895
6/30/1997 $ 13,430 $ 13,178
9/30/1997 $ 14,810 $ 14,024
12/31/1997 $ 14,941 $ 14,243
3/31/1998 $ 16,233 $ 15,370
6/30/1998 $ 16,320 $ 15,599
9/30/1998 $ 15,191 $ 14,701
12/31/1998 $ 16,792 $ 16,392
3/31/1999 $ 16,792 $ 16,655
6/30/1999 $ 18,457 $ 17,402
9/30/1999 $ 17,518 $ 16,682
12/31/1999 $ 18,119 $ 17,863
3/31/2000 $ 18,924 $ 18,396
6/30/2000 $ 18,886 $ 18,174
9/30/2000 $ 20,761 $ 18,535
12/31/2000 $ 21,723 $ 18,290
3/31/2001 $ 22,621 $ 17,374
6/30/2001 $ 24,445 $ 17,984
9/30/2001 $ 23,751 $ 16,621
12/31/2001 $ 25,635 $ 17,698
3/31/2002 $ 26,708 $ 17,805
6/30/2002 $ 25,855 $ 16,628
9/30/2002 $ 23,640 $ 14,986
12/31/2002 $ 25,087 $ 15,807
3/31/2003 $ 24,515 $ 15,516
6/30/2003 $ 27,750 $ 17,209
9/30/2003 $ 28,308 $ 17,562
12/31/2003 $ 30,908 $ 18,958
3/31/2004 $ 32,200 $ 19,410
6/30/2004 $ 32,803 $ 19,384
9/30/2004 $ 32,452 $ 19,420
12/31/2004 $ 34,110 $ 20,661
3/31/2005 $ 33,892 $ 20,399
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
(AS OF 3/31/05)
SINCE
TOTAL RETURN INCEPTION
LAST 3 MONTHS* 1-YEAR 5-YEAR (11/1/95)
- --------------------------------------------------------------------------------------------------
OAKMARK EQUITY & INCOME
FUND (CLASS I) -0.64% 5.26% 12.35% 13.83%
Lipper Balanced Fund Index -1.27% 5.10% 2.09% 7.86%
S&P 500(3) -2.15% 6.69% -3.16% 9.57%
Lehman Govt./Corp. Bond(11) -0.67% 0.40% 7.28% 6.57%
</Table>
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 current month end performance data,
call 1-800-OAKMARK or visit www.oakmark.com.
* Not annualized
RESULTS
Positive returns were hard to generate in the latest quarter, and your Fund,
regrettably, proved no exception in this regard. Oakmark Equity and Income lost
0.6% in the quarter, modestly besting the 1.3% decline that the Fund's standard
of comparison, the Lipper Balanced Fund Index, registered. This is the Fund's
ninth loss quarter in its 37-quarter history, and every one of them, regardless
of the market conditions or the size of the loss, has disappointed your
management team. We are not naive enough to expect that the Fund's path will
always be upward. Nor do we believe that a calendar quarter is a particularly
meaningful measurement period. Nonetheless, we know that beating the comparable
indices is at best an entertaining abstraction while earning positive returns
can improve our shareholders' lives.
The Fund's record over longer time periods is more satisfactory. March saw the
five-year anniversary of the all-time highs in stock market indices, such as the
S&P 500 and the NASDAQ composite(12). Owning either index for the past five
years would have been a painful experience. While the recent quarter for the
Fund was not inspiring, we are pleased to be able to report that your Fund has
returned 87% (13% annualized) since the peak of the NASDAQ on March 10, 2000.
In the late 1990s we often wrote about the extreme valuation divergences that
were then manifest. Since that time, markets have worked toward convergence, and
we now perceive valuations to be relatively homogenized, which--for value
investors like us--makes the current market somewhat less hospitable.
Nevertheless, we continue to find interesting opportunities across most
industries and capitalization ranges. Given the Fund's current conservative
asset allocation, we have the wherewithal to take advantage of the opportunities
that the market will present to us.
AN ACTIVE QUARTER
Securities markets were generally dull and dreary locales in the quarter with
index prices confined to fairly tight ranges. Inside the stock market, however,
the component parts were far more interesting. High prices for fuels benefited
our six holdings in the energy sector. Media stocks languished despite an
improving advertising marketplace, and our two satellite television companies
(Echostar and DIRECTV) experienced meaningful declines in price. Rising interest
rates and increasing regulatory activity placed downward pressure on the prices
of our financial industry holdings.
Our trading activity was unusually high in the quarter and focused on the
portfolio's fixed income side. As fixed income investors, we face two risks:
credit (default) risk and interest rate risk. Over the past six months we have
concluded that bond prices did not fairly compensate investors for either risk,
and we have worked to limit the
16
<Page>
Fund's exposures. Our first step was to reduce credit risk. We accomplished this
with the elimination of seven of the Fund's high yield debt positions. We next
addressed interest rate risk by slashing portfolio duration from 4.1 years to
2.4 years. Our only aggressive action was to rebuild the allocation to sovereign
(foreign government issued) debt. Many assume that our occasional forays into
the sovereign debt markets are based on a forecast for the trading value of the
dollar, but we do not make such a forecast. Rather, we use sovereign debt to
diversify the portfolio and enhance income at times when the relative valuations
across the international debt markets seem attractive.
Turning to the equity market we initiated three positions and divested six. One
purchase, Jupiter Telecommunications, is quite unusual for the Fund--a foreign
initial public offering. Jupiter is a 10-year-old Japanese cable television
operator that was founded as a joint venture between Sumitomo and Liberty Media.
We perceive an opportunity for cable penetration of Japanese households to
increase from levels well below that found in other developed nations.
Unfortunately, it would seem that other investors share this thesis, and heavy
demand for the IPO shares limited our ability to establish a position in the
Fund. We also initiated holdings in Encana, a Canadian exploration and
production company, and Scripps, a diversified media company.
Our six divestitures included three successful holdings (First Data, Fox
Entertainment Group, and Stanley Works), two disappointments (CoolBrands and
Delphi) and one neutral outcome (RenaissanceRe Holdings). Fox, a relatively
recent purchase, received a takeover offer from parent company News Corp. Having
only built a modest position in the company, we elected to sell. Neither
CoolBrands nor RenaissanceRe materially affected Fund results. Delphi, however,
was the biggest detractor from the Fund's return in the quarter.
Spun off from General Motors in 1999, Delphi is the world's largest auto parts
company. We based our investing thesis for the company's shares on technology,
labor, management, and dividend yield. We also believed that GM, Delphi's
largest customer, would experience improving sales as it introduced many new or
updated models. Instead, GM's market share declined precipitously. At the same
time Delphi also reported problems with its accounting for rebates in 1999 and
2000, resulting in the resignation of its chief financial officer. The CEO
expressed his intention to retire. The Board cut the dividend. History teaches
us that we should sell whenever our conceptual foundation for an investment idea
erodes meaningfully. Having lost management and dividend yield as reasons to own
Delphi, we exited the position.
Choicepoint is another holding that has generated considerable feedback from
Fund shareholders during the quarter. Choicepoint is a multi-faceted database
company, but its primary business is providing data and analysis to insurance
companies to help in their underwriting and pricing of policies. A relatively
unimportant unit of the company maintained a public records database, which, as
the name suggests, gathered, organized, and resold data derived from filings
individuals make with government agencies. In February management announced that
a crime ring posing as a legitimate business had purchased data from
Choicepoint's public records database for the purpose of engaging in identity
theft. Management has subsequently curtailed this division's activities. The
stock has reacted negatively to this news but, as of this writing, still trades
above our purchase price. We will be monitoring this situation carefully.
As the quarter ended we learned of yet another accounting investigation of one
of our holdings, financial guaranty insurer MBIA. The company's basic business
is to use its AAA-rated balance sheet to support the debt of lower-rated
municipalities as well as certain asset-backed issues. Given recent developments
in the insurance industry, it is not surprising that regulators would seek more
information from MBIA. So, why would we continue to hold our position given an
accounting investigation? The key reasons are valuation and management followed
by our belief that this is a business that needs to exist. Again, this is a
situation that bears careful monitoring.
DISTINGUISHING CHARACTERISTICS
The bulk of this letter has been quite tactical and focused on individual
portfolio decisions. We will close with a brief review of the characteristics
that we think differentiate Oakmark Equity and Income from other balanced funds.
The first point of differentiation for any of our Funds derives from our firm's
value investing philosophy. While our value orientation both informs and
circumscribes our activities, we reject other types of limitations, and it is
this rejection that gives the Fund its idiosyncratic nature. We will consider
stocks of widely varying market capitalizations and bonds of any quality. We own
international securities, both debt and equity. While we like dividends, we do
not limit the Fund to dividend payers. We are not averse to concentration. And,
as is true for all of The Oakmark Funds, we invest a large portion of our own
net worth in the Fund.
As always, we welcome your e-mailed questions and comments.
/s/ Clyde S. McGregor /s/ Edward A. Studzinski
CLYDE S. MCGREGOR, CFA EDWARD A. STUDZINSKI, CFA
Portfolio Manager Portfolio Manager
mcgregor@oakmark.com estudzinski@oakmark.com
17
<Page>
THE OAKMARK EQUITY AND INCOME FUND
SCHEDULE OF INVESTMENTS--MARCH 31, 2005 (UNAUDITED)
<Table>
<Caption>
NAME SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------
EQUITY AND EQUIVALENTS--57.3%
COMMON STOCKS--57.3%
APPAREL RETAIL--2.0%
The TJX Companies, Inc. 7,240,000 $ 178,321,200
BROADCASTING & CABLE TV--4.1%
EchoStar Communications Corporation, Class A 7,800,000 $ 228,150,000
The DIRECTV Group, Inc. (a) 8,026,722 115,745,331
The E.W. Scripps Company, Class A 300,000 14,625,000
---------------
358,520,331
MOVIES & ENTERTAINMENT--2.6%
Viacom Inc., Class B 6,500,000 $ 226,395,000
PUBLISHING--0.5%
Tribune Company 1,000,000 $ 39,870,000
RESTAURANTS--2.0%
Darden Restaurants, Inc. 2,850,000 $ 87,438,000
McDonald's Corporation 2,750,000 85,635,000
---------------
173,073,000
SPECIALTY STORES--0.0%
Office Depot, Inc. (a) 185,000 $ 4,103,300
DISTILLERS & VINTNERS--2.6%
Diageo plc (b) 4,100,000 $ 233,290,000
HYPERMARKETS & SUPER CENTERS--1.6%
Costco Wholesale Corporation 3,200,000 $ 141,376,000
PACKAGED FOODS & MEATS--3.8%
Nestle SA (b) 3,600,000 $ 246,218,400
Dean Foods Company (a) 2,500,000 85,750,000
---------------
331,968,400
TOBACCO--1.2%
UST Inc. 2,000,000 $ 103,400,000
INTEGRATED OIL & GAS--1.2%
ConocoPhillips 1,000,000 $ 107,840,000
OIL & GAS EXPLORATION & PRODUCTION--10.1%
Burlington Resources Inc. 7,150,000 $ 358,000,500
XTO Energy, Inc. 10,265,888 337,131,762
St. Mary Land & Exploration Company (c) 1,450,000 72,572,500
EnCana Corp. (d) 1,000,000 70,420,000
Cabot Oil & Gas Corporation 950,000 52,392,500
---------------
890,517,262
</Table>
18
<Page>
<Table>
<Caption>
NAME SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------
EQUITY AND EQUIVALENTS--57.3% (CONT.)
OTHER DIVERSIFIED FINANCIAL SERVICES--1.7%
Citigroup Inc. 3,400,000 $ 152,796,000
PROPERTY & CASUALTY INSURANCE--3.6%
SAFECO Corporation 4,000,000 $ 194,840,000
MBIA Inc. 1,500,000 78,420,000
The Progressive Corporation 500,000 45,880,000
---------------
319,140,000
REAL ESTATE INVESTMENT TRUSTS--1.1%
Plum Creek Timber Company, Inc. 2,657,044 $ 94,856,471
BIOTECHNOLOGY--2.0%
MedImmune, Inc. (a) 6,000,000 $ 142,860,000
Techne Corporation (a) 750,000 30,135,000
---------------
172,995,000
HEALTH CARE EQUIPMENT--2.3%
Hospira, Inc. (a) 3,750,000 $ 121,012,500
Varian Inc. (a) 1,649,400 62,495,766
CONMED Corporation (a) 570,100 17,171,412
---------------
200,679,678
HEALTH CARE SERVICES--2.4%
Caremark Rx, Inc. (a) 5,250,000 $ 208,845,000
PHARMACEUTICALS--0.1%
Abbott Laboratories 250,000 $ 11,655,000
AEROSPACE & DEFENSE--7.1%
General Dynamics Corporation 2,060,300 $ 220,555,115
Raytheon Company 3,599,700 139,308,390
Rockwell Collins, Inc. 2,632,000 125,256,880
Alliant Techsystems, Inc. (a) 1,000,000 71,450,000
Honeywell International, Inc. 1,889,500 70,308,295
---------------
626,878,680
COMMERCIAL PRINTING--1.8%
R.R. Donnelley & Sons Company 4,909,500 $ 155,238,390
DIVERSIFIED COMMERCIAL SERVICES--0.9%
ChoicePoint Inc. (a) 1,500,000 $ 60,165,000
Watson Wyatt & Company Holdings 600,000 16,320,000
---------------
76,485,000
APPLICATION SOFTWARE--1.0%
Mentor Graphics Corporation (a)(c) 3,640,000 $ 49,868,000
The Reynolds and Reynolds Company, Class A 1,482,100 40,105,626
---------------
89,973,626
</Table>
19
<Page>
<Table>
<Caption>
SHARES HELD/
NAME PAR VALUE MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------
EQUITY AND EQUIVALENTS--57.3% (CONT.)
COMPUTER STORAGE & PERIPHERALS--0.5%
Imation Corp. 1,215,000 $ 42,221,250
DATA PROCESSING & OUTSOURCED SERVICES--0.9%
Ceridian Corporation (a) 4,800,000 $ 81,840,000
INTERNET SOFTWARE & SERVICES--0.0%
Jupiter Telecommunications Co., Ltd. (a)(d) 1,300 $ 1,036,992
PAPER PRODUCTS--0.2%
Schweitzer-Mauduit International, Inc. 650,400 $ 21,820,920
TOTAL COMMON STOCKS (COST: $3,940,814,162) 5,045,136,500
TOTAL EQUITY AND EQUIVALENTS (COST: $3,940,814,162) 5,045,136,500
FIXED INCOME--34.9%
CORPORATE BONDS--1.5%
BROADCASTING & CABLE TV--0.4%
Cablevision Systems New York Group, 144A,
8.00% due 4/15/2012 (e) $ 20,000,000 $ 20,550,000
Liberty Media Corporation, 8.25% due 2/1/2030,
Debenture 12,900,000 13,081,000
---------------
33,631,000
MOVIES & ENTERTAINMENT--0.6%
Time Warner Inc., 5.625% due 5/1/2005 $ 50,000,000 $ 50,076,500
PUBLISHING--0.1%
PRIMEDIA Inc., 8.00% due 5/15/2013 $ 10,000,000 $ 10,200,000
HEALTH CARE DISTRIBUTORS--0.2%
Omnicare, Inc., 6.125% due 6/1/2013 $ 20,000,000 $ 19,450,000
PAPER PACKAGING--0.2%
Sealed Air Corporation, 144A, 5.625% due 7/15/2013 (e) $ 20,000,000 $ 20,228,840
MULTI-UTILITIES & UNREGULATED POWER--0.0%
Midland Funding Corporation, 11.75% due 7/23/2005 $ 172,075 $ 175,509
TOTAL CORPORATE BONDS (COST: $132,916,288) 133,761,849
GOVERNMENT AND AGENCY SECURITIES--33.4%
CANADIAN GOVERNMENT BONDS--4.1%
Canada Government, 3.25% due 12/1/2006 CAD 250,000,000 $ 207,078,768
Canada Government, 3.00% due 12/1/2005 CAD 125,000,000 103,499,070
</Table>
20
<Page>
<Table>
<Caption>
NAME PAR VALUE MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------
FIXED INCOME--34.9% (CONT.)
GOVERNMENT AND AGENCY SECURITIES--33.4% (CONT.)
CANADIAN GOVERNMENT BONDS--4.1% (CONT.)
Canada Government, 3.00% due 6/1/2007 CAD 50,000,000 $ 41,108,125
Province of Alberta, 7.25% due 10/28/2005 CAD 10,000,000 8,463,527
---------------
360,149,490
DANISH GOVERNMENT BONDS--0.2%
Kingdom of Denmark, 3.00% due 11/15/2006 DKK 100,000,000 $ 17,544,864
NORWEGIAN GOVERNMENT BONDS--0.2%
Norway Government, 6.75% due 1/15/2007 NOK 100,000,000 $ 16,895,628
SWEDISH GOVERNMENT BONDS--0.1%
Kingdom of Sweden, 3.50% due 4/20/2006 SEK 100,000,000 $ 14,333,993
U.S. GOVERNMENT NOTES--25.4%
United States Treasury Notes, 3.375% due 2/28/2007 $ 500,000,000 $ 496,347,500
United States Treasury Notes, 3.00% due 12/31/2006 500,000,000 493,652,500
United States Treasury Notes, 3.00% due 11/15/2007 500,000,000 489,140,500
United States Treasury Notes, 3.375% due 11/15/2008 500,000,000 488,789,000
United States Treasury Notes, 3.375% due 1/15/2007,
Inflation Indexed 256,358,280 269,126,460
---------------
2,237,055,960
U.S. GOVERNMENT AGENCIES--3.4%
Federal Home Loan Bank, 5.00% due 12/20/2011 $ 34,555,000 $ 34,403,822
Federal Home Loan Mortgage Corporation,
2.75% due 9/8/2009 32,490,000 32,369,397
Fannie Mae, 3.125% due 9/21/2007 29,560,000 29,515,453
Fannie Mae, 3.625% due 12/28/2009 24,435,000 24,124,602
Federal Home Loan Bank, 2.50% due 4/20/2009 20,000,000 19,842,620
Fannie Mae, 2.60% due 4/28/2009 15,000,000 14,882,025
Fannie Mae, 4.25% due 2/19/2010 12,888,000 12,664,896
Fannie Mae, 3.125% due 11/30/2009 12,697,000 12,592,669
Fannie Mae, 3.50% due 2/8/2010 10,315,000 10,274,524
Federal Home Loan Mortgage Corporation,
3.625% due 3/24/2008 10,000,000 9,993,630
Federal Home Loan Mortgage Corporation,
2.00% due 4/27/2007 10,000,000 9,991,490
Federal Home Loan Mortgage Corporation,
3.00% due 8/17/2009 10,000,000 9,986,110
Federal Home Loan Mortgage Corporation,
2.375% due 9/27/2007 10,000,000 9,924,850
Federal Home Loan Mortgage Corporation,
3.00% due 11/17/2006 10,000,000 9,859,260
Fannie Mae, 3.00% due 10/6/2009 10,000,000 9,822,530
</Table>
21
<Page>
<Table>
<Caption>
NAME PAR VALUE MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------
FIXED INCOME--34.9% (CONT.)
GOVERNMENT AND AGENCY SECURITIES--33.4% (CONT.)
U.S. GOVERNMENT AGENCIES--3.4% (CONT.)
Fannie Mae, 3.375% due 3/3/2008 $ 9,300,000 $ 9,244,907
Fannie Mae, 3.50% due 10/14/2010 7,550,000 7,457,558
Federal Home Loan Bank, 3.00% due 8/17/2007 7,500,000 7,452,607
Federal Home Loan Bank, 3.00% due 12/30/2009 5,000,000 5,049,590
Federal Home Loan Bank, 4.52% due 8/26/2009 4,825,000 4,808,455
Fannie Mae, 5.125% due 5/4/2012 4,013,000 4,005,544
Federal Home Loan Bank, 2.25% due 2/22/2007 4,000,000 3,980,668
Fannie Mae, 3.75% due 6/23/2009 2,820,000 2,805,748
Federal Home Loan Bank, 2.40% due 3/9/2009 2,000,000 1,977,680
---------------
297,030,635
TOTAL GOVERNMENT AND AGENCY SECURITIES (COST: $2,945,918,975) 2,943,010,570
TOTAL FIXED INCOME (COST: $3,078,835,263) 3,076,772,419
SHORT TERM INVESTMENTS--7.2%
U.S. GOVERNMENT BILLS--4.0%
United States Treasury Bills, 2.52% - 2.72% $ 350,000,000 $ 348,960,363
due 4/14/2005 - 6/9/2005
TOTAL U.S. GOVERNMENT BILLS (COST: $348,941,889) 348,960,363
REPURCHASE AGREEMENTS--3.2%
IBT Repurchase Agreement, 2.50% dated 3/31/2005 due 4/1/2005, repurchase
price $280,019,444 collateralized by U.S. Government Agency Securities
with an aggregate market value plus accrued interest of $294,000,000 $ 280,000,000 $ 280,000,000
IBT Repurchase Agreement, 2.02% dated 3/31/2005 due 4/1/2005, repurchase
price $562,768 collateralized by a U.S. Government Agency
Security with a market value plus accrued interest of $590,874 562,736 562,736
---------------
TOTAL REPURCHASE AGREEMENTS (COST: $280,562,736) 280,562,736
TOTAL SHORT TERM INVESTMENTS (COST: $629,504,625) 629,523,099
Total Investments (Cost $7,649,154,050)--99.4% $ 8,751,432,018
Other Assets In Excess Of Other Liabilities--0.6% 56,183,222
---------------
TOTAL NET ASSETS--100% $ 8,807,615,240
===============
</Table>
(a) Non-income producing security.
(b) Represents an American Depository Receipt.
22
<Page>
(c) See footnote number five in the Notes to the Financial Statements regarding
investments in affiliated issuers.
(d) Represents a foreign domiciled corporation.
(e) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
Key to abbreviations:
CAD: Canadian Dollar
DKK: Danish Krone
NOK: Norwegian Krone
SEK: Swedish Krona
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
<Page>
THE OAKMARK GLOBAL FUND
REPORT FROM CLYDE S. MCGREGOR AND MICHAEL J. WELSH, PORTFOLIO MANAGERS
[PHOTO OF CLYDE S. MCGREGOR]
[PHOTO OF MICHAEL J. WELSH]
[CHART]
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK GLOBAL FUND FROM ITS INCEPTION
(8/4/99) TO PRESENT (3/31/05) AS COMPARED TO THE MSCI WORLD INDEX(13)
<Table>
<Caption>
THE OAKMARK
GLOBAL FUND MSCI WORLD
(CLASS I) INDEX
----------- ----------
8/4/1999 $ 10,000 $ 10,000
9/30/1999 $ 9,180 $ 9,883
12/31/1999 $ 9,981 $ 11,550
3/31/2000 $ 10,061 $ 11,668
6/30/2000 $ 10,381 $ 11,255
9/30/2000 $ 10,922 $ 10,689
12/31/2000 $ 11,562 $ 10,028
3/31/2001 $ 11,480 $ 8,739
6/30/2001 $ 13,289 $ 8,959
9/30/2001 $ 11,071 $ 7,676
12/31/2001 $ 13,880 $ 8,335
3/31/2002 $ 15,387 $ 8,364
6/30/2002 $ 14,372 $ 7,601
9/30/2002 $ 11,828 $ 6,204
12/31/2002 $ 13,587 $ 6,678
3/31/2003 $ 12,153 $ 6,340
6/30/2003 $ 16,225 $ 7,420
9/30/2003 $ 17,774 $ 7,779
12/31/2003 $ 20,242 $ 8,889
3/31/2004 $ 21,029 $ 9,121
6/30/2004 $ 21,323 $ 9,201
9/30/2004 $ 20,714 $ 9,109
12/31/2004 $ 23,407 $ 10,197
3/31/2005 $ 23,546 $ 10,084
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
(AS OF 3/31/05)
SINCE
TOTAL RETURN INCEPTION
LAST 3 MONTHS* 1-YEAR 5-YEAR (8/4/99)
- --------------------------------------------------------------------------------
OAKMARK GLOBAL FUND (CLASS I) 0.60% 11.97% 18.53% 16.33%
MSCI World -1.10% 10.56% -2.86% 0.15%
Lipper Global Fund Index(14) -0.88% 9.19% -2.15% 2.40%
</Table>
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 current month end performance data,
call 1-800-OAKMARK or visit www.oakmark.com.
* Not annualized
FELLOW SHAREHOLDERS,
The Oakmark Global Fund gained 1% for the three-month period ending March 31,
2005, compared with the 1% declines for the MSCI World Index and the Lipper
Global Fund Index.
Over the past five years, The Oakmark Global Fund has returned 19% annualized,
compared to a 3% loss for the MSCI World Index and a 2% decline for the Lipper
Global Fund Index.
PORTFOLIO CHANGES
The only significant new investment for the Fund during the quarter was Viacom,
the U.S. media content giant with leading assets in each of its sectors. Viacom
has seen its stock price erode over the past few years despite the company's
strong cash flow and improving capital allocation. We believe cable networks
(MTV, Nickelodeon, etc.) are the company's most valuable asset, while television
(CBS, UPN) and entertainment (Paramount) appear to be on an upswing. It is the
difficult operating conditions in the Infinity radio unit that has most
concerned the market. While it may be generating the majority of the negative
headlines and contributing to the share price decline it's important to note
that we think Infinity accounts for less than 20% of Viacom's overall enterprise
value. Given the overall quality of Viacom's assets combined with a management
team--and ownership base--that is actively trying to boost the share price, we
believe that Viacom's long-term investors will be rewarded.
The market's general pessimism toward media stocks has given us the opportunity
over the past few quarters to continue to add to existing positions at
attractive prices. Media companies now comprise roughly 12% of our portfolio.
Along with Viacom, the Fund also owns stakes in Grupo Televisa (dominates
Mexican media and Spanish-language programming), Vivendi Universal (ownership in
NBC-Universal; Universal Music is #1 worldwide), Liberty Media (Discovery
Channel, QVC, and Starz cable networks), Time Warner (HBO, Time, CNN, Turner
Broadcasting), and Tribune Corp (Chicago Tribune and LA Times newspapers, WGN
Television and the Chicago Cubs--oops, never mind the last one!).
Clearly, we believe that at current share prices media is one sector where we
can find great value opportunities worldwide.
24
<Page>
BOTTOM-UP INVESTING
We often say The Oakmark Global Fund is built stock-by-stock from the bottom-up.
What does this mean? It means we focus on individual investment opportunities
and don't make top-down, macroeconomic decisions in investing your money. We
don't make "calls" on markets--for example, bearish on Japan and bullish on the
U.S. or bearish on technology and bullish on steel. We make investment decisions
based on the merits of individual businesses and do so only after thorough,
independent due diligence. We want to remain agnostic regarding the size or
location of a company and focus solely on constructing a portfolio of the most
attractive risk-return opportunities. Geographic or industry weightings in the
Fund are strictly a fall-out of stock selection.
When it comes to broad macroeconomic issues, we've often found that consensus
views on particular countries or industries--bullish or bearish--lead to share
price imperfections. For example, if everybody loves China, one may do well to
tread with extra care: what is one actually buying, and at what price?
Similarly, if everybody is bearish on European economies, as they are today,
then investors may be ignoring some interesting opportunities.
We certainly believe that last statement to be true. Companies like Nestle and
Diageo--both big positions in the Fund--are trading at significant discounts to
similar companies elsewhere. This is due in part to investors' pessimism about
the economic outlook for their home markets, discounting the fact that these are
global businesses with profit centers all over the world. In addition the strong
Euro and British Pound are also masking the true earnings power of these
companies.
We understand that Europe still has some problems; high unemployment, barriers
to business efficiency, and aging population are all matters of concern. We see
some positive signs of reform, such as recent labor concessions in France and
Germany, as well as talk of corporate tax cuts. But most importantly one factor
that is often lost in all this bearishness is PRICE. In the cases of Nestle and
Diageo, we think these negatives are more than fully reflected in their current
share prices.
In constructing The Oakmark Global Fund we search for companies that are priced
at a substantial discount to their true business value and are run by managers
who think and act like owners. As long as we remain focused on the long-term
worth of a business--and maintain a disciplined approach to the price we are
willing to pay--we believe we can find attractive opportunities despite a
negative operating environment.
LOOKING FORWARD
We will continue to manage the portfolio using the same value discipline
described above. We remain excited about the value and quality of the names in
the Fund. Thank you for your continued confidence and support.
/s/ Clyde S. McGregor /s/ Michael J. Welsh
CLYDE S. McGREGOR, CFA MICHAEL J. WELSH, CFA, CPA
Portfolio Manager Portfolio Manager
mcgregor@oakmark.com mwelsh@oakmark.com
25
<Page>
THE OAKMARK GLOBAL FUND
[CHART]
<Table>
<Caption>
% OF FUND
EQUITY MARKET VALUE
------------------------------------------------
- - EUROPE 48.3%
Switzerland 13.0%
Great Britain 12.4%
* Netherlands 6.8%
* France 6.4%
* Ireland 4.0%
* Germany 3.1%
* Italy 2.6%
- - UNITED STATES 35.6%
- - PACIFIC RIM 13.3%
Japan 7.3%
Australia 3.3%
Korea 2.7%
- - LATIN AMERICA 2.2%
Mexico 2.2%
- - OTHER 0.6%
Israel 0.6%
</Table>
* Euro currency countries comprise 22.9% of the Fund.
26
<Page>
THE OAKMARK GLOBAL FUND
SCHEDULE OF INVESTMENTS--MARCH 31, 2005 (UNAUDITED)
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--97.3%
APPAREL RETAIL--2.2%
The TJX Companies, Inc.
(United States) Discount Apparel & Home
Fashion Retailer 1,501,000 $ 36,969,630
APPAREL, ACCESSORIES & LUXURY GOODS--1.4%
Bulgari S.p.A. (Italy) Jewelry Manufacturer & Retailer 1,947,600 $ 23,143,532
BROADCASTING & CABLE TV--2.8%
Liberty Media Corporation,
Class A (United States) (a) Broadcast Services & Programming 2,356,000 $ 24,431,720
Grupo Televisa S.A.
(Mexico) (b) Television Production &
Broadcasting 378,000 22,226,400
---------------
46,658,120
HOUSEHOLD APPLIANCES--2.8%
Snap-on Incorporated
(United States) Tool & Equipment Manufacturer 1,431,000 $ 45,491,490
MOTORCYCLE MANUFACTURERS--0.2%
Ducati Motor Holding
S.p.A. (Italy) (a) Motorcycle Manufacturer 1,790,000 $ 2,489,476
MOVIES & ENTERTAINMENT--6.4%
Viacom Inc., Class B
(United States) Worldwide Entertainment &
Publishing Company 1,380,000 $ 48,065,400
Vivendi Universal SA
(France) (a) Music, Games, Television, Film, &
Telecommunications 1,430,500 43,813,389
Time Warner Inc.
(United States) (a) Filmed Entertainment &
Television Networks 833,000 14,619,150
---------------
106,497,939
PUBLISHING--2.4%
Tribune Company
(United States) Publishing & Broadcast Services 1,003,000 $ 39,989,610
DISTILLERS & VINTNERS--4.7%
Diageo plc (Great Britain) Beverages, Wines, & Spirits
Manufacturer 5,517,500 $ 77,779,033
</Table>
27
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--97.3% (CONT.)
HOUSEHOLD PRODUCTS--3.0%
Henkel KGaA (Germany) Consumer Chemical Products
Manufacturer 593,000 $ 50,267,549
PACKAGED FOODS & MEATS--6.6%
Nestle SA (Switzerland) Food & Beverage Manufacturer 238,500 $ 65,247,555
Cadbury Schweppes plc
(Great Britain) Beverage & Confectionary
Manufacturer 4,383,000 43,937,792
---------------
109,185,347
SOFT DRINKS--0.8%
Lotte Chilsung Beverage
Co., Ltd. (Korea) (c) Soft Drinks, Juices & Sports
Drinks Manufacturer 13,430 $ 13,278,211
OIL & GAS EXPLORATION & PRODUCTION--3.8%
Burlington Resources Inc.
(United States) Oil & Natural Gas Exploration &
Production 1,260,000 $ 63,088,200
ASSET MANAGEMENT & CUSTODY BANKS--2.7%
Julius Baer Holding Ltd.
(Switzerland) Asset Management 129,300 $ 44,831,278
DIVERSIFIED BANKS--7.1%
Bank of Ireland (Ireland) Commercial Bank 4,029,000 $ 63,658,476
Australia and New Zealand
Banking Group Limited
(Australia) Commercial Bank 2,260,000 35,994,767
Banco Popolare di
Verona e Novara Scrl
(Italy) Commercial Bank 863,600 16,132,146
---------------
115,785,389
DIVERSIFIED CAPITAL MARKETS--0.5%
Credit Suisse Group
(Switzerland) Investment Services & Insurance 190,700 $ 8,186,294
INVESTMENT BANKING & BROKERAGE--0.8%
Daiwa Securities Group Inc.
(Japan) Stock Broker 2,062,000 $ 13,581,863
SPECIALIZED FINANCE--3.9%
Euronext NV
(Netherlands) (c) Stock Exchange 1,814,000 $ 64,540,882
</Table>
28
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--97.3% (CONT.)
THRIFTS & MORTGAGE FINANCE--1.0%
Washington Mutual, Inc.
(United States) Thrift 415,000 $ 16,392,500
HEALTH CARE DISTRIBUTORS--2.1%
Cardinal Health, Inc.
(United States) Wholesale Drug Distributor 607,500 $ 33,898,500
HEALTH CARE SERVICES--2.6%
Laboratory Corporation
of America Holdings
(United States) (a) Medical Laboratory &
Testing Services 892,000 $ 42,994,400
HEALTH CARE SUPPLIES--1.0%
Ansell Limited (Australia) Protective Rubber &
Plastics Products 2,265,966 $ 17,222,284
PHARMACEUTICALS--11.2%
Takeda Pharmaceutical
Company Limited
(Japan) Pharmaceuticals & Food
Supplements 1,281,000 $ 61,071,139
GlaxoSmithKline plc
(Great Britain) Pharmaceuticals 2,614,200 59,921,266
Novartis AG (Switzerland) Pharmaceuticals 670,000 31,253,971
Santen Pharmaceutical
Co., Ltd. (Japan) Pharmaceuticals 781,000 16,758,875
Sanofi-Aventis (France) Pharmaceuticals 187,185 15,782,420
---------------
184,787,671
AEROSPACE & DEFENSE--0.8%
Alliant Techsystems, Inc.
(United States) (a) Propulsion Systems & Munitions 179,087 $ 12,795,766
AIRPORT SERVICES--0.8%
Grupo Aeroportuario del
Sureste S.A. de C.V
(Mexico) (b)(c) Airport Operator 463,000 $ 12,987,150
DIVERSIFIED COMMERCIAL SERVICES--4.1%
Equifax Inc. (United States) Credit Reporting & Collection 1,367,000 $ 41,953,230
Meitec Corporation
(Japan) (c) Software Engineering Services 760,000 26,518,636
---------------
68,471,866
</Table>
29
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--97.3% (CONT.)
EMPLOYMENT SERVICES--1.1%
Michael Page
International plc
(Great Britain) (c) Recruitment Consultancy Services 4,815,400 $ 17,652,876
ENVIRONMENTAL SERVICES--2.1%
Waste Management, Inc.
(United States) Waste Management Services 1,175,000 $ 33,898,750
OFFICE SERVICES & SUPPLIES--0.4%
United Stationers Inc.
(United States) (a) Business Products Distributor 150,000 $ 6,787,500
DATA PROCESSING & OUTSOURCED SERVICES--6.8%
eFunds Corporation
(United States) (a) Electronic Debit Payment Services 2,237,100 $ 49,932,072
First Data Corporation
(United States) Data Processing & Management 1,004,750 39,496,723
Ceridian Corporation
(United States) (a) Data Management Services 1,348,000 22,983,400
---------------
112,412,195
ELECTRONIC EQUIPMENT MANUFACTURERS--0.5%
Orbotech, Ltd. (Israel) (a)(c) Optical Inspection Systems 412,700 $ 9,038,130
OFFICE ELECTRONICS--2.6%
Neopost SA (France) Mailroom Equipment Supplier 494,750 $ 42,836,850
DIVERSIFIED CHEMICALS--2.7%
Akzo Nobel N.V
(Netherlands) Chemical Producer 992,300 $ 45,298,895
SPECIALTY CHEMICALS--3.6%
Lonza Group AG,
Registered Shares
(Switzerland) (c) Industrial Organic Chemicals 710,400 $ 43,472,062
Givaudan (Switzerland) Fragrance & Flavor Compound
Manufacturer 25,300 16,243,438
---------------
59,715,500
WIRELESS TELECOMMUNICATION SERVICES--1.8%
SK Telecom Co., Ltd.
(Korea) Mobile Telecommunications 181,000 $ 30,418,673
TOTAL COMMON STOCKS (COST: $1,238,542,076) 1,609,373,349
</Table>
30
<Page>
<Table>
<Caption>
NAME DESCRIPTION PAR VALUE MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS--2.5%
REPURCHASE AGREEMENTS--2.5%
IBT Repurchase Agreement, 2.50% dated 3/31/2005 due 4/1/2005, repurchase
price $39,002,708 collateralized by U.S. Government Agency Securities with
an aggregate market value plus accrued interest of $40,950,000 $ 39,000,000 $ 39,000,000
IBT Repurchase Agreement, 2.02% dated 3/31/2005 due 4/1/2005, repurchase
price $1,662,028 collateralized by a U.S. Government Agency Security with
a market value plus accrued interest of $1,745,032 1,661,935 1,661,935
---------------
TOTAL REPURCHASE AGREEMENTS (COST: $40,661,935) 40,661,935
TOTAL SHORT TERM INVESTMENTS (COST: $40,661,935) 40,661,935
Total Investments (Cost $1,279,204,011)--99.8% $ 1,650,035,284
Other Assets In Excess Of Other Liabilities--0.2% 3,267,760
---------------
TOTAL NET ASSETS--100% $ 1,653,303,044
===============
</Table>
(a) Non-income producing security.
(b) Represents an American Depository Receipt.
(c) See footnote number five in the Notes to the Financial Statements regarding
investments in affiliated issuers.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31
<Page>
THE OAKMARK INTERNATIONAL AND OAKMARK INTERNATIONAL SMALL CAP FUNDS
[PHOTO OF DAVID G. HERRO]
FELLOW SHAREHOLDERS,
Your Funds have achieved a satisfactory performance for the quarter ending March
31st with The Oakmark International Fund achieving a return of 2% and The
Oakmark International Small Cap Fund returning 5%. This compares favorably with
the MSCI World ex U.S. Index(15). More importantly, since the Funds' inception,
they have strongly outperformed the MSCI World ex U.S. Index.
With little imbalance in the global macroeconomic system and subsiding political
fears, foreign equity markets, in local market terms, started the year
positively. Additionally, a strong global economy and good profitability also
helped create an attractive equity environment. We continue to believe that the
international equity markets represent good value, as signified by
acceptable--and rising--profitability levels and attractive valuations.
LOOK OUT BELOW!
One potential problem may be a deflation of the commodity bubble. Whether it is
metals or energy, prices have risen to record levels. Due to the forces of
supply and demand, producers are willing to take advantage of this by looking to
increase output. Meanwhile, panicked Chinese industrial companies from steel to
shipping are also aggressively adding "supply" by ramping up capacity. Though I
am optimistic about the Chinese economy, in the short to medium term some
companies in these industries likely will be clobbered by falling prices just as
their new capacity comes on stream. Though this would be damaging for steel and
other commodity producers, in all likelihood, it would be good for the consumers
of these products.
CORPORATE GOVERNANCE, CONT'D
Lately a couple of our holdings have attracted attention in the media because of
corporate governance issues. First, Deutsche Boerse (DB), the German based owner
of the German stock exchange, and Euronext, its counterpart in other major
European exchanges, have expressed interest in acquiring The London Stock
Exchange (LSE). Both deals would represent major transactions for either
purchaser. This quarter, DB made a bid for the LSE. However, DB management
announced that they would not seek shareholder approval for the purchase, as no
formal rule required them to do so. This upset a number of major shareholders,
including ourselves, forcing DB to table its bid. I believe, in most cases, that
the owners of corporations should have to approve major business-changing deals,
and we will continue to watch closely the LSE situation. In the case of
Euronext, the other potential bidder, they must, by law, receive approval from
their owners.
Another company, Nestle, has attracted global attention, as their Board of
Directors desires to combine the CEO role with that of Chairman. Though we are
extremely pleased with the improving operational management at Nestle, this
governance move flies against commonly accepted international corporate
governance principles that call for a separation of these two positions.
Geneva-based Ethos Foundation and ISS have come out forcefully against this move
and I have publicly supported that position. I feel strongly that in order to
protect owners' interests, strong, independent corporate boards need to be led
by strong, independent chairmen. Though we do not feel it is our role to meddle
in the details of how companies are managed, it is our role to help ensure that
the board members (who are elected by shareholders) act in the best interests of
the shareholders. We are pleased that Nestle's management has recognized the
importance of "separation" and has agreed to make this departure from principle
temporary.
A very important part of our investment philosophy is to invest with management
teams that "think, and (more importantly) act, like owners". We will continue to
monitor the corporate governance practices of our holdings as well as those of
potential investments.
/s/ David G. Herro
DAVID G. HERRO, CFA
PORTFOLIO MANAGER
dherro@oakmark.com
32
<Page>
THE OAKMARK INTERNATIONAL FUND
REPORT FROM DAVID G. HERRO AND MICHAEL J. WELSH, PORTFOLIO MANAGERS
[PHOTO OF DAVID G. HERRO]
[PHOTO OF MICHAEL J. WELSH]
[CHART]
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL FUND FROM ITS
INCEPTION (9/30/92) TO PRESENT (3/31/05) AS COMPARED TO THE MSCI WORLD EX U.S.
INDEX(15)
<Table>
<Caption>
THE OAKMARK
INTERNATIONAL FUND MSCI WORLD EX
(CLASS I) U.S. INDEX
------------------ -------------
9/30/1992 $ 10,000 $ 10,000
12/31/1992 $ 10,043 $ 9,628
3/31/1993 $ 11,890 $ 10,766
6/30/1993 $ 12,300 $ 11,834
9/30/1993 $ 13,387 $ 12,562
12/31/1993 $ 15,424 $ 12,729
3/31/1994 $ 15,257 $ 13,133
6/30/1994 $ 14,350 $ 13,748
9/30/1994 $ 15,278 $ 13,830
12/31/1994 $ 14,026 $ 13,664
3/31/1995 $ 13,563 $ 13,924
6/30/1995 $ 14,749 $ 14,060
9/30/1995 $ 15,507 $ 14,631
12/31/1995 $ 15,193 $ 15,222
3/31/1996 $ 17,021 $ 15,681
6/30/1996 $ 18,383 $ 15,937
9/30/1996 $ 18,347 $ 15,950
12/31/1996 $ 19,450 $ 16,268
3/31/1997 $ 20,963 $ 16,016
6/30/1997 $ 22,700 $ 18,094
9/30/1997 $ 23,283 $ 18,027
12/31/1997 $ 20,097 $ 16,637
3/31/1998 $ 22,994 $ 19,083
6/30/1998 $ 20,253 $ 19,233
9/30/1998 $ 16,322 $ 16,404
12/31/1998 $ 18,688 $ 19,759
3/31/1999 $ 21,258 $ 20,070
6/30/1999 $ 25,728 $ 20,650
9/30/1999 $ 23,896 $ 21,535
12/31/1999 $ 26,065 $ 25,277
3/31/2000 $ 26,012 $ 25,416
6/30/2000 $ 27,856 $ 24,530
9/30/2000 $ 27,306 $ 22,663
12/31/2000 $ 29,324 $ 21,897
3/31/2001 $ 26,763 $ 18,825
6/30/2001 $ 29,437 $ 18,629
9/30/2001 $ 23,728 $ 16,062
12/31/2001 $ 27,819 $ 17,212
3/31/2002 $ 31,006 $ 17,310
6/30/2002 $ 30,315 $ 16,923
9/30/2002 $ 23,365 $ 13,603
12/31/2002 $ 25,465 $ 14,492
3/31/2003 $ 22,481 $ 13,402
6/30/2003 $ 28,198 $ 15,978
9/30/2003 $ 30,368 $ 17,269
12/31/2003 $ 35,152 $ 20,206
3/31/2004 $ 36,419 $ 21,063
6/30/2004 $ 37,083 $ 21,084
9/30/2004 $ 37,024 $ 21,124
12/31/2004 $ 41,862 $ 24,324
3/31/2005 $ 42,753 $ 24,341
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
(AS OF 3/31/05)
SINCE
TOTAL RETURN INCEPTION
LAST 3 MONTHS* 1-YEAR 5-YEAR 10-YEAR (9/30/92)
- --------------------------------------------------------------------------------
OAKMARK INTERNATIONAL
FUND (CLASS I) 2.13% 17.39% 10.44% 12.16% 12.32%
MSCI World ex U.S. 0.07% 15.56% -0.86% 5.74% 7.37%
MSCI EAFE(16) -0.17% 15.06% -1.15% 5.40% 7.14%
Lipper International
Fund Index(17) -0.05% 12.90% -1.02% 7.46% 8.37%
</Table>
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 current month end performance data,
call 1-800-OAKMARK or visit www.oakmark.com.
* Not annualized
The Oakmark International Fund gained 2% for the quarter, compared to the MSCI
World ex U.S. Index, which was basically unchanged. Over the past five years,
your Fund has gained 10% annualized relative to the 1% annualized decline of the
MSCI World ex U.S. Index.
PORTFOLIO COMPOSITION
During the quarter we sold our position in John Fairfax Holdings in Australia as
it hit its sell price, and we added three significant new positions, all in
Japan. Historically, it has been very difficult for us to find many companies in
Japan that meet our investment criteria. But that has not deterred us from
continuing to aggressively search. Remember that for a business to be
interesting to us it needs to be both undervalued and managed in a
shareholder-oriented way. We believe we have found both criteria in these three
new positions.
Honda Motor Corporation is familiar to most of you, with quality-for-money
models like the Accord, Civic, and the Odyssey. We believe it to be one of the
best managed companies in the automotive industry, producing more than three
million cars and ten million motorcycles annually with excellent (and
consistent) profitability. As well as being strong operationally, Honda's
management team has also distinguished itself as sound capital allocators,
expanding capacity with discipline and regularly returning excess cash to
shareholders. Dividends and share repurchases have steadily increased in recent
years, and management has committed to a significant annual payout ratio.
Rohm Corp is a company we've monitored for a number of years, and we have
admired its market position and economic performance. It is a global leader in
integrated chips and electronic components with a terrific record of
profitability and return on capital. With the share price down we finally have
an opportunity to buy Rohm at a significant discount to our estimate of
intrinsic value.
Another new position for the Fund is consumer products company Uni-Charm, the
Japanese leader in baby diapers and hygiene products. Management has
consistently improved profit margins and returns in the business, while
maintaining strong market shares for its products. Management has behaved in a
very shareholder-oriented way, buying back over 10% of shares outstanding and
maintaining a high dividend payout ratio.
LOOKING FORWARD
Honda, Rohm, and Uni-Charm are representative of the opportunities we are
currently finding. We remain optimistic about potential price appreciation,
given the quality of the holdings and the attractive valuation of the portfolio.
Thank you for your continued confidence.
/s/ David G. Herro /s/ Michael J. Welsh
DAVID G. HERRO, CFA MICHAEL J. WELSH, CFA, CPA
Portfolio Manager Portfolio Manager
dherro@oakmark.com mwelsh@oakmark.com
33
<Page>
THE OAKMARK INTERNATIONAL FUND
INTERNATIONAL DIVERSIFICATION--MARCH 31, 2005 (UNAUDITED)
[CHART]
<Table>
<Caption>
% OF FUND
EQUITY MARKET VALUE
------------------------------------------
- - EUROPE 77.7%
Great Britain 25.5%
Switzerland 15.6%
* France 10.8%
* Germany 9.0%
* Netherlands 8.2%
* Italy 3.8%
* Ireland 3.3%
* Finland 1.5%
- - PACIFIC RIM 20.3%
Japan 9.8%
Korea 6.0%
Australia 2.3%
Singapore 1.4%
Hong Kong 0.8%
- - LATIN AMERICA 1.4%
Mexico 1.4%
- - OTHER 0.5%
Israel 0.5%
- - NORTH AMERICA 0.1%
Canada 0.1%
</Table>
* Euro currency countries comprise 36.6% of the Fund.
34
<Page>
THE OAKMARK INTERNATIONAL FUND
SCHEDULE OF INVESTMENTS--MARCH 31, 2005 (UNAUDITED)
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--95.9%
ADVERTISING--3.8%
Publicis Groupe (France) Advertising & Media Services 3,746,200 $ 114,981,487
Aegis Group plc
(Great Britain) Media Services 43,844,900 84,508,546
---------------
199,490,033
APPAREL RETAIL--0.8%
Giordano International
Limited (Hong Kong) Pacific Rim Clothing Retailer &
Manufacturer 61,424,300 $ 41,739,968
APPAREL, ACCESSORIES & LUXURY GOODS--1.7%
Swatch Group AG, Bearer
Shares (Switzerland) Watch Manufacturer 660,100 $ 90,720,983
Swatch Group AG,
Registered Shares
(Switzerland) Watch Manufacturer 24,700 687,602
---------------
91,408,585
AUTOMOBILE MANUFACTURERS--5.0%
Bayerische Motoren
Werke (BMW) AG
(Germany) Luxury Automobile Manufacturer 3,985,500 $ 181,061,494
Honda Motor Co., Ltd.
(Japan) Automobile & Motorcycle
Manufacturer 1,705,400 85,441,041
---------------
266,502,535
BROADCASTING & CABLE TV--2.0%
Grupo Televisa S.A.
(Mexico) (b) Television Production &
Broadcasting 1,171,200 $ 68,866,559
British Sky Broadcasting
Group plc (Great Britain) Television Production &
Broadcasting 3,497,700 38,367,734
---------------
107,234,293
MOVIES & ENTERTAINMENT--1.6%
Vivendi Universal SA
(France) (a) Music, Games, Television, Film, &
Telecommunications 2,789,300 $ 85,430,749
SPECIALTY STORES--2.1%
Signet Group plc
(Great Britain) Jewelry Retailer 54,248,500 $ 110,198,979
</Table>
35
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--95.9% (CONT.)
TEXTILES--0.6%
Chargeurs SA (France) (c) Wool, Textile Production & Trading 790,182 $ 33,900,835
TIRES & RUBBER--0.2%
Compagnie Generale des
Etablissements Michelin
(France) Tire Manufacturer 186,876 $ 12,280,520
BREWERS--1.8%
Heineken Holding NV,
Class A (Netherlands) Brewer 2,525,000 $ 77,990,318
Heineken NV
(Netherlands) Brewer 497,500 17,236,430
---------------
95,226,748
DISTILLERS & VINTNERS--4.0%
Diageo plc (Great Britain) Beverages, Wines, & Spirits
Manufacturer 12,023,000 $ 169,485,694
Pernod-Ricard SA (France) Manufactures Wines, Spirits, &
Fruit Juices 299,000 41,739,011
---------------
211,224,705
HOUSEHOLD PRODUCTS--2.5%
Henkel KGaA (Germany) Consumer Chemical Products
Manufacturer 1,228,200 $ 104,112,316
Uni-Charm Corporation
(Japan) Toiletry Product Manufacturer 581,000 26,072,771
---------------
130,185,087
PACKAGED FOODS & MEATS--5.7%
Nestle SA (Switzerland) Food & Beverage Manufacturer 575,100 $ 157,332,783
Cadbury Schweppes plc
(Great Britain) Beverage & Confectionary
Manufacturer 14,165,200 142,000,368
---------------
299,333,151
PERSONAL PRODUCTS--1.5%
L'Oreal SA (France) Health & Beauty Aid Manufacturer 1,008,800 $ 80,741,590
SOFT DRINKS--1.6%
Lotte Chilsung Beverage
Co., Ltd. (Korea) (c) Soft Drinks, Juices & Sports
Drinks Manufacturer 83,400 $ 82,457,396
INTEGRATED OIL & GAS--1.8%
BP p.l.c. (Great Britain) Oil & Natural Gas Exploration &
Production 6,294,100 $ 65,236,649
</Table>
36
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--95.9% (CONT.)
INTEGRATED OIL & GAS--1.8% (CONT.)
Total SA (France) Oil & Natural Gas Exploration &
Production 126,000 $ 29,478,339
---------------
94,714,988
OIL & GAS EXPLORATION & PRODUCTION--0.1%
EnCana Corp. (Canada) Oil & Natural Gas Exploration &
Production 54,400 $ 3,843,202
DIVERSIFIED BANKS--15.7%
Bank of Ireland (Ireland) Commercial Bank 10,462,900 $ 165,314,537
Australia and New Zealand
Banking Group Limited
(Australia) Commercial Bank 7,348,800 117,043,515
Lloyds TSB Group plc
(Great Britain) Commercial Bank 12,347,600 111,530,030
Kookmin Bank (Korea) Commercial Banking 1,955,068 87,137,429
BNP Paribas SA (France) Commercial Banking 1,156,000 81,884,795
UniCredito Italiano S.p.A
(Italy) Banking Services 12,956,700 75,975,272
United Overseas Bank
Limited, Foreign Shares
(Singapore) Commercial Banking 8,395,368 73,215,419
Sanpaolo IMI S.p.A. (Italy) Banking Services 3,933,600 61,585,212
Banco Popolare di Verona e
Novara Scrl (Italy) Commercial Bank 2,938,400 54,889,646
---------------
828,575,855
DIVERSIFIED CAPITAL MARKETS--2.0%
Credit Suisse Group
(Switzerland) Investment Services & Insurance 2,408,600 $ 103,395,427
INVESTMENT BANKING & BROKERAGE--0.9%
Daiwa Securities
Group Inc. (Japan) Stock Broker 7,549,000 $ 49,723,320
REINSURANCE--0.3%
Hannover
Rueckversicherung AG
(Germany) Reinsurance 390,800 $ 15,454,396
SPECIALIZED FINANCE--6.3%
Euronext NV
(Netherlands) (c) Stock Exchange 5,012,500 $ 178,341,329
Deutsche Boerse AG
(Germany) Electronic Trading Systems 2,030,500 152,646,289
---------------
330,987,618
</Table>
37
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--95.9% (CONT.)
HEALTH CARE EQUIPMENT--1.3%
Olympus Corporation
(Japan) Optical Equipment Manufacturer 2,824,000 $ 65,867,425
PHARMACEUTICALS--9.8%
GlaxoSmithKline plc
(Great Britain) Pharmaceuticals 8,029,300 $ 184,043,235
Takeda Pharmaceutical
Company Limited
(Japan) Pharmaceuticals & Food
Supplements 2,816,200 134,261,156
Novartis AG (Switzerland) Pharmaceuticals 2,758,000 128,654,406
Sanofi-Aventis (France) Pharmaceuticals 788,508 66,482,703
---------------
513,441,500
DIVERSIFIED COMMERCIAL SERVICES--1.9%
Meitec Corporation
(Japan) (c) Software Engineering Services 2,483,800 $ 86,667,090
Rentokil Initial plc
(Great Britain) Global Business Services 3,400,000 10,408,192
---------------
97,075,282
EMPLOYMENT SERVICES--1.8%
Michael Page
International plc
(Great Britain) (c) Recruitment Consultancy Services 25,698,900 $ 94,210,137
INDUSTRIAL CONGLOMERATES--0.0%
Haw Par Corporation
Limited (Singapore) Healthcare & Leisure Products 58,338 $ 185,486
INDUSTRIAL MACHINERY--2.8%
Metso Corporation
(Finland) Paper & Pulp Machinery 4,147,200 $ 74,287,935
Enodis plc
(Great Britain) (a)(c) Food Processing Equipment 33,585,320 71,080,240
---------------
145,368,175
MARINE PORTS & SERVICES--2.1%
Associated British Ports
Holdings plc
(Great Britain) Port Operator 12,131,399 $ 110,150,292
ELECTRONIC EQUIPMENT MANUFACTURERS--0.5%
Orbotech, Ltd. (Israel) (a)(c) Optical Inspection Systems 1,237,700 $ 27,105,630
</Table>
38
<Page>
<Table>
<Caption>
SHARES HELD/
NAME DESCRIPTION PAR VALUE MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--95.9% (CONT.)
SEMICONDUCTORS--0.9%
Rohm Company Limited
(Japan) Integrated Circuits &
Semi-Conductor Devices
Manufacturer 464,200 $ 44,824,089
DIVERSIFIED CHEMICALS--2.7%
Akzo Nobel N.V.
(Netherlands) Chemical Producer 3,107,200 $ 141,844,932
FERTILIZERS & AGRICULTURAL CHEMICALS--1.6%
Syngenta AG
(Switzerland) (a) Crop Protection Products 805,100 $ 84,063,693
SPECIALTY CHEMICALS--4.2%
Lonza Group AG,
Registered Shares
(Switzerland) (c) Industrial Organic Chemicals 2,057,300 $ 125,893,964
Givaudan (Switzerland) Fragrance & Flavor Compound
Manufacturer 151,100 97,011,202
---------------
222,905,166
WIRELESS TELECOMMUNICATION SERVICES--4.3%
SK Telecom Co., Ltd.
(Korea) Mobile Telecommunications 787,400 $ 132,329,631
Vodafone Group Plc
(Great Britain) Mobile Telecommunications 30,110,800 79,942,917
Vodafone Group Plc
(Great Britain) (b) Mobile Telecommunications 606,000 16,095,360
---------------
228,367,908
TOTAL COMMON STOCKS (COST: $3,729,447,362) 5,049,459,695
SHORT TERM INVESTMENTS--4.1%
U.S. GOVERNMENT BILLS--0.9%
United States Treasury Bills, 2.52% - 2.655%
due 4/14/2005 - 4/21/2005 $ 45,000,000 $ 44,944,925
TOTAL U.S. GOVERNMENT BILLS (COST: $44,944,925) 44,944,925
</Table>
39
<Page>
<Table>
<Caption>
NAME DESCRIPTION PAR VALUE MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS--4.1% (CONT.)
REPURCHASE AGREEMENTS--3.2%
IBT Repurchase Agreement, 2.50% dated 3/31/2005 due 4/1/2005, repurchase
price $171,011,875 collateralized by U.S. Government Agency Securities
with an aggregate market value plus accrued interest of $179,550,000 $ 171,000,000 $ 171,000,000
IBT Repurchase Agreement, 2.02% dated 3/31/2005 due 4/1/2005, repurchase
price $364,814 collateralized by a U.S. Government Agency Security with a
market value plus accrued interest of $383,033 364,793 364,793
---------------
TOTAL REPURCHASE AGREEMENTS (COST: $171,364,793) 171,364,793
TOTAL SHORT TERM INVESTMENTS (COST: $216,309,718) 216,309,718
Total Investments (Cost $3,945,757,080)--100.0% $ 5,265,769,413
Foreign Currencies (Cost $203,741)--0.0% $ 204,352
Other Liabilities In Excess Of Other Assets--0.0% (505,264)
---------------
TOTAL NET ASSETS--100% $ 5,265,468,501
===============
</Table>
(a) Non-income producing security.
(b) Represents an American Depository Receipt.
(c) See footnote number five in the Notes to the Financial Statements regarding
investments in affiliated issuers.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40
<Page>
THE OAKMARK INTERNATIONAL
SMALL CAP FUND
REPORT FROM DAVID G. HERRO AND CHAD M. CLARK, PORTFOLIO MANAGERS
[PHOTO OF DAVID G. HERRO]
[PHOTO OF CHAD M. CLARK]
[CHART]
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL SMALL CAP FUND
FROM ITS INCEPTION (11/1/95) TO PRESENT (3/31/05) AS COMPARED TO THE MSCI WORLD
EX U.S. INDEX(15)
<Table>
<Caption>
THE OAKMARK
INTERNATIONAL
SMALL CAP MSCI WORLD EX
FUND (CLASS I) U.S. INDEX
-------------- -------------
11/1/1995 $ 10,000 $ 10,000
12/31/1995 $ 9,630 $ 10,684
3/31/1996 $ 10,970 $ 11,006
6/30/1996 $ 11,570 $ 11,186
9/30/1996 $ 11,590 $ 11,195
12/31/1996 $ 12,038 $ 11,418
3/31/97 $ 12,080 $ 11,241
6/30/1997 $ 13,181 $ 12,699
9/30/1997 $ 12,672 $ 12,652
12/31/1997 $ 9,642 $ 11,677
3/31/1998 $ 11,429 $ 13,394
6/30/1998 $ 9,892 $ 13,499
9/30/1998 $ 8,211 $ 11,513
12/31/1998 $ 10,529 $ 13,868
3/31/1999 $ 13,118 $ 14,086
6/30/1999 $ 15,317 $ 14,493
9/30/1999 $ 15,439 $ 15,114
12/31/1999 $ 16,190 $ 17,741
3/31/2000 $ 15,387 $ 17,839
6/30/2000 $ 15,529 $ 17,217
9/30/2000 $ 14,908 $ 15,906
12/31/2000 $ 14,756 $ 15,369
3/31/2001 $ 15,232 $ 13,213
6/30/2001 $ 15,777 $ 13,075
9/30/2001 $ 13,987 $ 11,273
12/31/2001 $ 16,671 $ 12,080
3/31/2002 $ 18,370 $ 12,149
6/30/2002 $ 18,831 $ 11,877
9/30/2002 $ 14,641 $ 9,547
12/31/2002 $ 15,818 $ 10,172
3/31/2003 $ 13,882 $ 9,406
6/30/2003 $ 17,933 $ 11,215
9/30/2003 $ 20,465 $ 12,121
12/31/2003 $ 24,109 $ 14,182
3/31/2004 $ 25,685 $ 14,783
6/30/2004 $ 26,436 $ 14,798
9/30/2004 $ 27,411 $ 14,826
12/31/2004 $ 31,087 $ 17,072
3/31/2005 $ 32,779 $ 17,084
</Table>
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
(AS OF 3/31/05)
SINCE
TOTAL RETURN INCEPTION
LAST 3 MONTHS* 1-YEAR 5-YEAR (11/1/95)
- -------------------------------------------------------------------------------
OAKMARK INTERNATIONAL
SMALL CAP FUND (CLASS I) 5.44% 27.62% 16.32% 13.43%
MSCI World ex U.S. 0.07% 15.56% -0.86% 5.85%
Lipper International
Small Cap Average(18) 2.99% 18.24% 7.17% 11.45%
</Table>
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 current month end performance data,
call 1-800-OAKMARK or visit www.oakmark.com.
* Not annualized
The Oakmark International Small Cap Fund gained 5% for the quarter,
outperforming our benchmark indices. More importantly, however, for the past
twelve months and past three years your Fund is up 28% and 21% respectively,
soundly outpacing the relevant benchmarks.
Strong performers for the quarter were our Turkish holding company, Dogan
Holding, and our financial services companies, Julius Baer and Ichiyoshi
Securities. In addition to solid operating performance within its media arm,
Dogan Yayin, Dogan Holding benefited from increased merger and acquisition (M&A)
activity in the Turkish banking sector (as it owns 62% of one of the
medium-sized banks in Turkey) and general market optimism following the European
Union's positive recommendation on Turkish membership. With increased scrutiny
on corporate governance issues, we were quite happy to see Julius Baer adjust
its shareholding structure during the quarter, lowering the family's voting
interest to a level on par with its equity stake. We believe this positive move
in governance, coupled with strong operating performance, propelled the stock in
the quarter. Ichiyoshi, like many in our portfolio, continues to churn out
outstanding operating performance with a management dedicated to building per
share value over time.
The most significant detractor from quarterly performance was British carpet
retailer Carpetright plc. The UK housing market has slowed dramatically
following five interest rate increases since late 2003. As a result, Carpetright
reported subdued demand during its most recent quarter. We remain convinced that
despite some potential cyclicality, this company will continue to deliver high
returns and free cash flow, with a management team wholly focused on deploying
that free cash flow in a value-accretive manner. We added to our position during
the past quarter.
PORTFOLIO COMPOSITION
We had a very robust quarter of new idea generation, adding seven names to our
approved list. Meaningful positions were established in UK retailers JJB Sports
and Matalan; Wincor Nixdorf, a German-based banking hardware and software
provider; and Mabuchi Motors, a Japanese manufacturer of small electric motors.
Your Fund continued to add to positions in securities whose prices declined in
the quarter, including Lotte Confectionery, Interpump, and Carpetright.
Following the flurry of bid activity we reported in last quarter's commentary,
M&A interest was more muted in the small cap arena in the quarter. As always, we
believe your Fund invests in high quality companies with shareholder-oriented
management teams that trade at a large discount to intrinsic value. We are
indifferent as to whether value realization is achieved via a buyout offer or
whether it comes from the market recognizing a business' inherent value.
We continue to like the quality and price attractiveness of the portfolio. Thank
you for your continued confidence.
/s/ David G. Herro /s/ Chad M. Clark
DAVID G. HERRO, CFA CHAD M. CLARK, CFA
Portfolio Manager Portfolio Manager
dherro@oakmark.com cclark@oakmark.com
41
<Page>
THE OAKMARK INTERNATIONAL SMALL CAP FUND
INTERNATIONAL DIVERSIFICATION--MARCH 31, 2005 (UNAUDITED)
[CHART]
<Table>
<Caption>
% OF FUND
EQUITY MARKET VALUE
------------------------------------------
- - EUROPE 72.9%
Switzerland 16.8%
Great Britain 16.1%
* France 10.3%
* Italy 8.0%
* Germany 6.4%
* Spain 4.4%
Denmark 4.1%
* Finland 2.8%
Turkey 1.9%
Sweden 1.7%
* Greece 0.4%
- - PACIFIC RIM 24.9%
Japan 11.2%
Korea 5.6%
Australia 4.0%
New Zealand 1.7%
Hong Kong 1.6%
Philippines 0.4%
Thailand 0.4%
- - LATIN AMERICA 1.0%
Mexico 1.0%
- - OTHER 1.2%
Israel 1.2%
</Table>
* Euro currency countries comprise 32.3% of the Fund.
42
<Page>
THE OAKMARK INTERNATIONAL SMALL CAP FUND
SCHEDULE OF INVESTMENTS--MARCH 31, 2005 (UNAUDITED)
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--94.0%
ADVERTISING--2.5%
Asatsu-DK, Inc. (Japan) Advertising Services Provider 459,700 $ 14,710,743
G2R Inc. (Korea) Advertising & Marketing Services 415,440 8,063,823
---------------
22,774,566
APPAREL RETAIL--3.8%
JJB Sports plc
(Great Britain) Sportswear & Sports
Equipment Retailer 4,850,400 $ 19,247,673
Matalan plc
(Great Britain) Clothing Retailer 3,596,200 16,020,531
---------------
35,268,204
APPAREL, ACCESSORIES & LUXURY GOODS--2.0%
Bulgari S.p.A. (Italy) Jewelry Manufacturer & Retailer 1,536,400 $ 18,257,200
BROADCASTING & CABLE TV--0.0%
Media Prima Berhad
(Malaysia) (a) Film Producer & Sports Promoter 984,000 $ 375,474
HOME IMPROVEMENT RETAIL--2.9%
Carpetright plc
(Great Britain) Carpet Retailer 1,439,800 $ 26,989,523
MOTORCYCLE MANUFACTURERS--0.5%
Ducati Motor
Holding S.p.A. (Italy) (a) Motorcycle Manufacturer 3,015,650 $ 4,194,072
PHOTOGRAPHIC PRODUCTS--1.4%
Vitec Group plc
(Great Britain) Photo Equipment & Supplies 2,008,907 $ 12,849,904
PUBLISHING--1.9%
Tamedia AG
(Switzerland) (a) TV Broadcasting & Publishing 143,661 $ 14,171,542
Matichon Public
Company Limited,
Foreign Shares
(Thailand) (b) Newspaper Publisher 2,039,500 3,545,143
---------------
17,716,685
AGRICULTURAL PRODUCTS--2.1%
Geest plc (Great Britain) Fresh Produce Distributor 1,562,400 $ 19,367,673
</Table>
43
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--94.0% (CONT.)
BREWERS--3.5%
Davide Campari - Milano
S.p.A. (Italy) Soft Drinks, Wines, &
Spirits Producer 284,900 $ 19,745,035
Kook Soon Dang Brewery
Co., Ltd. (Korea) Wine & Spirits Manufacturer 843,176 13,217,353
---------------
32,962,388
DISTILLERS & VINTNERS--1.8%
Baron de Ley, S.A.
(Spain) (a) Wines & Spirits Manufacturer 337,037 $ 16,574,108
PACKAGED FOODS & MEATS--1.3%
Robert Wiseman Dairies plc
(Great Britain) Milk Processor & Distributor 944,000 $ 4,807,421
Alaska Milk Corporation
(Philippines) (b) Milk Producer 56,360,000 3,805,329
Lotte Confectionery
Co., Ltd. (Korea) Candy & Snacks Manufacturer 4,884 3,316,800
---------------
11,929,550
ASSET MANAGEMENT & CUSTODY BANKS--3.1%
Julius Baer Holding Ltd.
(Switzerland) Asset Management 83,800 $ 29,055,384
DIVERSIFIED BANKS--1.8%
Jyske Bank-Registered
(Denmark) (a) Commercial Banking 444,800 $ 16,618,238
MULTI-SECTOR HOLDINGS--2.2%
Pargesa Holding AG
(Switzerland) Diversified Operations 5,254 $ 19,984,702
OTHER DIVERSIFIED FINANCIAL SERVICES--1.7%
Ichiyoshi Securities
Co., Ltd. (Japan) Stock Broker 1,495,700 $ 15,740,538
REGIONAL BANKS--1.5%
Pusan Bank (Korea) Commercial Banking 1,033,500 $ 8,166,427
Daegu Bank (Korea) Commercial Banking 739,400 5,442,856
---------------
13,609,283
SPECIALIZED FINANCE--0.3%
Athens Stock Exchange S.A.
(Greece) (a) Exchange Services 293,000 $ 3,235,657
</Table>
44
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--94.0% (CONT.)
HEALTH CARE SUPPLIES--2.5%
Ansell Limited (Australia) Protective Rubber &
Plastics Products 1,733,684 $ 13,176,720
Coloplast A/S, Class B
(Denmark) Healthcare Products &
Services Provider 203,000 10,559,765
---------------
23,736,485
PHARMACEUTICALS--2.5%
Santen Pharmaceutical
Co., Ltd. (Japan) Pharmaceuticals 1,077,000 $ 23,110,510
AIR FREIGHT & LOGISTICS--1.6%
Mainfreight Limited
(New Zealand) (b) Logistics Services 7,816,058 $ 14,738,018
AIRPORT SERVICES--2.0%
Kobenhavns Lufthavne A/S
(Copenhagen
Airports A/S - CPH)
(Denmark) Airport Management & Operations 38,300 $ 9,135,309
Grupo Aeroportuario del
Sureste S.A. de C.V.
(Mexico) (b)(c) Airport Operator 315,000 8,835,750
---------------
17,971,059
CONSTRUCTION & ENGINEERING--1.2%
Tae Young Corp. (Korea) Heavy Construction 284,070 $ 11,446,555
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS--0.2%
Vossloh AG (Germany) Railroad Equipment Manufacturer 29,000 $ 1,478,726
DIVERSIFIED COMMERCIAL SERVICES--2.7%
Prosegur, Compania de
Seguridad SA (Spain) Security & Transportation Services 1,052,300 $ 22,504,988
Konami Sports
Corporation (Japan) Fitness Centers 149,400 2,667,832
---------------
25,172,820
ELECTRICAL COMPONENTS & EQUIPMENT--3.0%
Pfeiffer Vacuum
Technology AG
(Germany) Vacuum Pump Manufacturer 423,840 $ 21,479,984
Carbone Lorraine SA
(France) (a) Electrical Systems Manufacturer 120,545 6,812,256
---------------
28,292,240
</Table>
45
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--94.0% (CONT.)
EMPLOYMENT SERVICES--0.8%
DIS Deutscher Industrie
Service AG (Germany) Recruitment Consultancy Services 173,800 $ 7,377,621
INDUSTRIAL CONGLOMERATES--1.8%
Dogan Sirketler Grubu
Holdings A.S.
(Turkey) (a) Diversified Holding Company 6,258,511 $ 16,288,324
INDUSTRIAL MACHINERY--13.2%
Saurer AG (Switzerland) (a) Textile Equipment Manufacturer 502,653 $ 32,986,340
Interpump Group S.p.A.
(Italy) (b) Pump & Piston Manufacturer 5,326,600 28,299,794
Schindler Holding AG
(Switzerland) Elevator & Escalator Manufacturer 64,200 24,419,829
Alfa Laval AB (Sweden) Filtration & Separation Equipment 807,500 13,245,192
LISI (France) Industrial Fastener Manufacturer 148,244 10,731,380
Kone Oyj, Class B
(Finland) (a) Elevators 113,100 8,791,276
Halma plc (Great Britain) Electronic Instrument Producer 719,700 2,189,570
Munters AB (Sweden) Cooling & Moisture Control Systems 77,400 2,079,468
NSC Groupe (France) Textile Equipment Manufacturer 12,316 1,095,886
---------------
123,838,735
OFFICE SERVICES & SUPPLIES--0.6%
Societe BIC SA (France) Consumer & Office Supplies 101,800 $ 5,775,367
Domino Printing
Sciences plc
(Great Britain) Printing Equipment 70,000 341,932
---------------
6,117,299
COMPUTER STORAGE & PERIPHERALS--1.3%
Lectra (France) Manufacturing Process Systems 1,813,100 $ 11,773,748
DATA PROCESSING & OUTSOURCED SERVICES--2.3%
Baycorp Advantage
Limited (Australia) Credit Reference Services 9,342,300 $ 21,647,978
ELECTRONIC EQUIPMENT MANUFACTURERS--6.2%
Wincor Nixdorf AG
(Germany) (a) Banking Machine Manufacturer 222,300 $ 17,720,250
Vaisala Oyj, Class A
(Finland) Atmospheric Observation
Equipment 627,000 15,847,378
</Table>
46
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--94.0% (CONT.)
ELECTRONIC EQUIPMENT MANUFACTURERS--6.2% (CONT.)
Mabuchi Motor Co., Ltd.
(Japan) Digital Camera Motors
Manufacturer 221,000 $ 13,278,351
Orbotech, Ltd. (Israel) (a)(b) Optical Inspection Systems 499,300 10,934,670
---------------
57,780,649
HOME ENTERTAINMENT SOFTWARE--1.7%
Square Enix Co., Ltd.
(Japan) Entertainment Software 508,100 $ 15,595,923
IT CONSULTING & OTHER SERVICES--4.2%
Morse plc (Great Britain) (b) Business & Technology Solutions 10,548,500 $ 21,427,946
Alten (France) (a) Systems Consulting & Engineering 443,281 10,916,615
Sopra Group (France) Computer Engineering 111,930 6,202,087
---------------
38,546,648
OFFICE ELECTRONICS--3.3%
Neopost SA (France) Mailroom Equipment Supplier 349,174 $ 30,232,470
INDUSTRIAL GASES--1.4%
Taiyo Ink Mfg. Co., Ltd.
(Japan) Manufacturer of Resist Inks 348,100 $ 13,347,866
SPECIALTY CHEMICALS--5.7%
Gurit-Heberlein AG
(Switzerland) (b) Chemical Producer 36,075 $ 26,916,015
Croda International plc
(Great Britain) Chemical Producer 2,573,600 18,127,590
Financiere Marc de
Lacharriere SA (Fimalac)
(France) Chemical Storage & Diversified
Operations 150,232 7,047,033
Financiere Marc de
Lacharriere SA (Fimalac),
Warrants (France) (a) Chemical Storage & Diversified
Operations 31,866 177,603
---------------
52,268,241
ALTERNATIVE CARRIERS--1.5%
Asia Satellite
Telecommunications
Holdings Limited
(Hong Kong) Satellite Operator 7,305,000 $ 13,955,407
TOTAL COMMON STOCKS (COST: $602,359,514) 872,220,471
</Table>
47
<Page>
<Table>
<Caption>
NAME DESCRIPTION PAR VALUE MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
FIXED INCOME--0.8%
PREFERRED STOCKS--0.8%
INDUSTRIAL CONGLOMERATES--0.8%
Rheinmetall AG,
Preferred, 0.00% Automotive Pump Manufacturer 146,600 $ 7,790,639
TOTAL PREFERRED STOCKS (COST: $8,200,975) 7,790,639
TOTAL FIXED INCOME (COST: $8,200,975) 7,790,639
SHORT TERM INVESTMENTS--4.3%
U.S. GOVERNMENT BILLS--2.2%
United States Treasury Bills, 2.635% - 2.64%
due 4/14/2005 - 4/28/2005 $ 20,000,000 $ 19,970,684
TOTAL U.S. GOVERNMENT BILLS (COST: $19,970,684) 19,970,684
REPURCHASE AGREEMENTS--2.1%
IBT Repurchase Agreement, 2.50% dated 3/31/2005
due 4/1/2005, repurchase price $18,001,250 collateralized
by a U.S. Government Agency Security with a
market value plus accrued interest of $18,900,000 $ 18,000,000 $ 18,000,000
IBT Repurchase Agreement, 2.02% dated 3/31/2005
due 4/1/2005, repurchase price $1,583,870 collateralized
by a U.S. Government Agency Security with a
market value plus accrued interest of $1,662,970 1,583,781 1,583,781
---------------
TOTAL REPURCHASE AGREEMENTS (COST: $19,583,781) 19,583,781
TOTAL SHORT TERM INVESTMENTS (COST: $39,554,465) 39,554,465
Total Investments (Cost $650,114,954)--99.1% $ 919,565,575
Foreign Currencies (Cost $101,721)--0.0% $ 101,726
Other Assets In Excess Of Other Liabilities--0.9% 8,571,321
---------------
TOTAL NET ASSETS--100% $ 928,238,622
===============
</Table>
(a) Non-income producing security.
(b) See footnote number five in the Notes to the Financial Statements regarding
investments in affiliated issuers.
(c) Represents an American Depository Receipt.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
48
<Page>
[OAKMARK LOGO]
(This page has been intentionally left blank.)
49
<Page>
THE OAKMARK FUNDS
STATEMENTS OF ASSETS AND LIABILITIES--MARCH 31, 2005 (UNAUDITED)
<Table>
<Caption>
THE OAKMARK
THE OAKMARK SELECT
FUND FUND
- ---------------------------------------------------------------------------------------------------------------
ASSETS
Investments in unaffiliated securities, at value (a) $ 6,711,028,793 $ 5,305,538,964
Investments in affiliated securities, at value (b) 153,221,994 659,580,289
Cash 0 0
Foreign currency, at value (c) 0 0
Receivable for:
Securities sold 113,828,102 0
Fund shares sold 10,630,428 14,377,320
Dividends and interest 9,246,482 4,993,159
Forward foreign currency contracts 0 0
Tax reclaim 0 0
----------------- -----------------
Total receivables 133,705,012 19,370,479
Other assets 103,296 90,971
----------------- -----------------
Total assets $ 6,998,059,095 $ 5,984,580,703
LIABILITIES AND NET ASSETS
Payable for:
Securities purchased $ 18,961,200 $ 5,121,639
Fund shares redeemed 5,204,320 6,405,768
Due to Adviser 169,831 151,270
Due to transfer agent 227,820 103,497
Trustees fees 28,910 25,459
Deferred trustee compensation 846,776 754,393
Forward currency exchange contracts 0 0
Foreign tax expense 0 0
Other 1,825,366 1,339,926
----------------- -----------------
Total liabilities 27,264,223 13,901,952
----------------- -----------------
Net assets applicable to fund shares outstanding $ 6,970,794,872 $ 5,970,678,751
================= =================
ANALYSIS OF NET ASSETS
Paid in capital $ 5,683,001,286 $ 3,840,870,253
Accumulated undistributed net realized gain (loss) of
investments, forward contracts, options, short sales and
foreign currency exchange transactions (136,360,093) 250,018,114
Net unrealized appreciation (depreciation) of investments
and foreign currencies 1,392,560,324 1,871,813,191
Net unrealized appreciation (depreciation)--other 0 0
Accumulated undistributed net investment income (loss) 31,593,355 7,977,193
----------------- -----------------
Net assets applicable to Fund shares outstanding $ 6,970,794,872 $ 5,970,678,751
================= =================
PRICE OF SHARES
Net asset value per share: Class I $ 40.85 $ 33.39
================= =================
Class I--Net assets $ 6,904,921,300 $ 5,874,392,572
Class I--Shares outstanding (Unlimited shares authorized) 169,043,919 175,952,739
Net asset value per share: Class II $ 40.65 $ 33.23
================= =================
Class II--Net assets $ 65,873,572 $ 96,286,179
Class II--Shares outstanding (Unlimited shares authorized) 1,620,496 2,897,691
(a) Identified cost of investments in unaffiliated securities $ 5,393,003,291 $ 3,862,525,879
(b) Identified cost of investments in affiliated securities 78,687,172 230,780,183
(c) Identified cost of foreign currency 0 0
</Table>
50
<Page>
<Table>
<Caption>
THE OAKMARK THE OAKMARK
EQUITY AND GLOBAL
INCOME FUND FUND
- --------------------------------------------------------------------------------------------------------------
ASSETS
Investments in unaffiliated securities, at value (a) $ 8,678,859,518 $ 1,475,534,487
Investments in affiliated securities, at value (b) 72,572,500 174,500,797
Cash 0 0
Foreign currency, at value (c) 0 0
Receivable for:
Securities sold 46,705,188 0
Fund shares sold 12,725,885 3,928,435
Dividends and interest 36,800,035 4,175,538
Forward foreign currency contracts 0 0
Tax reclaim 10,000 713,836
----------------- ----------------
Total receivables 96,241,108 8,817,809
Other assets 116,328 63,019
----------------- ----------------
Total assets $ 8,847,789,454 $ 1,658,916,112
LIABILITIES AND NET ASSETS
Payable for:
Securities purchased $ 29,498,061 $ 1,804,154
Fund shares redeemed 6,929,367 383,501
Due to Adviser 173,367 42,990
Due to transfer agent 155,329 37,344
Trustees fees 32,682 15,474
Deferred trustee compensation 504,183 309,324
Forward currency exchange contracts 0 2,474,939
Foreign tax expense 0 0
Other 2,881,225 545,342
----------------- ----------------
Total liabilities 40,174,214 5,613,068
----------------- ----------------
Net assets applicable to fund shares outstanding $ 8,807,615,240 $ 1,653,303,044
================= =================
ANALYSIS OF NET ASSETS
Paid in capital $ 7,656,702,318 $ 1,272,447,756
Accumulated undistributed net realized gain (loss) of
investments, forward contracts, options, short sales and
foreign currency exchange transactions 21,118,225 12,582,922
Net unrealized appreciation (depreciation) of investments
and foreign currencies 1,102,277,968 368,357,068
Net unrealized appreciation (depreciation)--other 129,165 36,111
Accumulated undistributed net investment income (loss) 27,387,564 (120,813)
----------------- ----------------
Net assets applicable to Fund shares outstanding $ 8,807,615,240 $ 1,653,303,044
================= =================
PRICE OF SHARES
Net asset value per share: Class I $ 23.35 $ 21.94
================= =================
Class I--Net assets $ 8,187,947,315 $ 1,612,808,759
Class I--Shares outstanding (Unlimited shares authorized) 350,598,213 73,505,816
Net asset value per share: Class II $ 23.27 $ 21.71
================= =================
Class II--Net assets $ 619,667,925 $ 40,494,285
Class II--Shares outstanding (Unlimited shares authorized) 26,625,343 1,865,052
(a) Identified cost of investments in unaffiliated securities $ 7,566,754,908 $ 1,143,023,346
(b) Identified cost of investments in affiliated securities 82,399,142 136,180,665
(c) Identified cost of foreign currency 0 0
<Caption>
THE OAKMARK THE OAKMARK
INTERNATIONAL INTERNATIONAL
FUND SMALL CAP FUND
- --------------------------------------------------------------------------------------------------------------
ASSETS
Investments in unaffiliated securities, at value (a) $ 4,566,112,792 $ 809,898,660
Investments in affiliated securities, at value (b) 699,656,621 109,666,915
Cash 97 0
Foreign currency, at value (c) 204,352 101,726
Receivable for:
Securities sold 756,348 6,635,694
Fund shares sold 11,637,610 1,710,686
Dividends and interest 19,687,183 2,862,958
Forward foreign currency contracts 0 710,521
Tax reclaim 2,671,285 709,059
----------------- ----------------
Total receivables 34,752,426 12,628,918
Other assets 144,979 48,896
----------------- ----------------
Total assets $ 5,300,871,267 $ 932,345,115
LIABILITIES AND NET ASSETS
Payable for:
Securities purchased $ 18,097,089 $ 3,020,427
Fund shares redeemed 8,321,338 288,281
Due to Adviser 131,125 29,190
Due to transfer agent 88,817 18,855
Trustees fees 23,781 13,819
Deferred trustee compensation 519,172 311,495
Forward currency exchange contracts 6,399,028 0
Foreign tax expense 0 121,001
Other 1,822,416 303,425
----------------- ----------------
Total liabilities 35,402,766 4,106,493
----------------- ----------------
Net assets applicable to fund shares outstanding $ 5,265,468,501 $ 928,238,622
================= =================
ANALYSIS OF NET ASSETS
Paid in capital $ 3,851,862,360 $ 600,401,572
Accumulated undistributed net realized gain (loss) of
investments, forward contracts, options, short sales and
foreign currency exchange transactions 99,846,455 57,889,450
Net unrealized appreciation (depreciation) of investments and
foreign currencies 1,313,652,488 270,049,228
Net unrealized appreciation (depreciation)--other 10,723 37,431
Accumulated undistributed net investment income (loss) 96,475 (139,059)
----------------- ----------------
Net assets applicable to Fund shares outstanding $ 5,265,468,501 $ 928,238,622
================= =================
PRICE OF SHARES
Net asset value per share: Class I $ 21.58 $ 21.12
================= =================
Class I--Net assets $ 4,919,886,277 $ 927,626,247
Class I--Shares outstanding (Unlimited shares authorized) 227,972,703 43,931,937
Net asset value per share: Class II $ 21.47 $ 21.10
================= =================
Class II--Net assets $ 345,582,224 $ 612,375
Class II--Shares outstanding (Unlimited shares authorized) 16,098,905 29,022
(a) Identified cost of investments in unaffiliated securities $ 3,496,998,430 $ 550,703,171
(b) Identified cost of investments in affiliated securities 448,758,650 99,411,783
(c) Identified cost of foreign currency 203,741 101,721
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
51
<Page>
THE OAKMARK FUNDS
STATEMENTS OF OPERATIONS--PERIOD ENDED MARCH 31, 2005 (UNAUDITED)
<Table>
<Caption>
THE OAKMARK
THE OAKMARK SELECT
FUND FUND
- --------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends from unaffiliated securities $ 63,861,643 $ 51,484,168
Dividends from affiliated securities 1,332,892 3,664,452
Interest Income 6,321,936 4,759,108
Securities lending income 0 0
Other income 42,113 26,809
Foreign taxes withheld (248,907) 0
----------------- ----------------
Total investment income 71,309,677 59,934,537
EXPENSES:
Investment advisory fee 29,813,473 24,389,760
Transfer and dividend disbursing agent fees 1,537,622 771,131
Other shareholder servicing fees 2,887,149 2,192,109
Service Fee--Class II 77,468 125,185
Reports to shareholders 908,740 594,819
Custody and accounting fees 369,385 294,850
Registration and blue sky expenses 59,927 0
Trustee fees 93,053 82,441
Deferred trustee compensation 72,636 65,007
Legal fees 74,671 65,858
Audit fees 32,089 28,153
Other 191,305 146,742
----------------- ----------------
Total expenses 36,117,518 28,756,055
Expense offset arrangements 0 0
----------------- ----------------
Net expenses 36,117,518 28,756,055
NET INVESTMENT INCOME: 35,192,159 31,178,482
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain on unaffiliated securities 101,069,170 142,311,659
Net realized gain on affiliated securities 30,752,892 129,874,070
Net realized gain on options written 0 0
Net realized gain (loss) on foreign currency transactions 0 0
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 228,832,371 123,368,921
Net change in appreciation (depreciation)--other 0 0
Net change in deferred foreign taxes 0 0
Net realized and unrealized gain on
investments and foreign currency transactions: 360,654,433 395,554,650
----------------- ----------------
Net increase in net assets resulting from operations $ 395,846,592 $ 426,733,132
================= =================
</Table>
52
<Page>
<Table>
<Caption>
THE OAKMARK THE OAKMARK
EQUITY AND GLOBAL
INCOME FUND FUND
- --------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends from unaffiliated securities $ 34,341,914 $ 9,554,679
Dividends from affiliated securities 72,500 262,693
Interest Income 56,332,659 390,234
Securities lending income 0 10,365
Other income 23,581 255
Foreign taxes withheld (474,804) (458,577)
----------------- ----------------
Total investment income 90,295,850 9,759,649
EXPENSES:
Investment advisory fee 30,908,138 7,538,210
Transfer and dividend disbursing agent fees 1,020,885 256,847
Other shareholder servicing fees 4,807,665 663,273
Service Fee--Class II 697,613 39,199
Reports to shareholders 875,557 165,681
Custody and accounting fees 492,732 421,102
Registration and blue sky expenses 63,581 36,993
Trustee fees 104,925 49,573
Deferred trustee compensation 82,092 38,612
Legal fees 85,601 39,500
Audit fees 36,390 17,160
Other 221,717 76,510
----------------- ----------------
Total expenses 39,396,896 9,342,660
Expense offset arrangements (44) 0
----------------- ----------------
Net expenses 39,396,852 9,342,660
NET INVESTMENT INCOME: 50,898,998 416,989
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain on unaffiliated securities 36,779,736 16,133,897
Net realized gain on affiliated securities 0 0
Net realized gain on options written 521,987 0
Net realized gain (loss) on foreign currency transactions 380,150 277,783
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 273,998,375 169,997,749
Net change in appreciation (depreciation)other 2,493 (40,815)
Net change in deferred foreign taxes 0 0
Net realized and unrealized gain on
investments and foreign currency transactions: 311,682,741 186,368,614
----------------- =----------------
Net increase in net assets resulting from operations $ 362,581,739 $ 186,785,603
================= =================
<Caption>
THE OAKMARK THE OAKMARK
INTERNATIONAL INTERNATIONAL
FUND SMALL CAP FUND
- --------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends from unaffiliated securities $ 36,050,654 $ 5,953,867
Dividends from affiliated securities 928,566 992,904
Interest Income 1,901,848 412,004
Securities lending income 74,850 0
Other income 0 0
Foreign taxes withheld (1,770,157) (663,287)
----------------- ----------------
Total investment income 37,185,761 6,695,488
EXPENSES:
Investment advisory fee 22,328,496 4,955,885
Transfer and dividend disbursing agent fees 580,755 121,674
Other shareholder servicing fees 2,090,511 306,484
Service Fee--Class II 377,823 330
Reports to shareholders 430,652 69,302
Custody and accounting fees 1,774,900 378,674
Registration and blue sky expenses 42,563 23,382
Trustee fees 75,729 44,322
Deferred trustee compensation 58,852 34,399
Legal fees 60,477 35,165
Audit fees 26,902 15,145
Other 145,907 62,365
----------------- ----------------
Total expenses 27,993,567 6,047,127
Expense offset arrangements 0 (32)
----------------- ----------------
Net expenses 27,993,567 6,047,095
NET INVESTMENT INCOME: 9,192,194 648,393
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain on unaffiliated securities 103,399,641 60,718,801
Net realized gain on affiliated securities 3,144,562 9,939,868
Net realized gain on options written 0 0
Net realized gain (loss) on foreign currency transactions (582,606) (224,902)
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 560,527,887 75,575,974
Net change in appreciation (depreciation)other (285,180) 674
Net change in deferred foreign taxes 0 118,372
Net realized and unrealized gain on
investments and foreign currency transactions: 666,204,304 146,128,787
----------------- ----------------
Net increase in net assets resulting from operations $ 675,396,498 $ 146,777,180
================= =================
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
53
<Page>
<Table>
<Caption>
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
THE OAKMARK FUND
- --------------------------------------------------------------------------------------------------------------
PERIOD ENDED YEAR ENDED
MARCH 31, 2005 SEPTEMBER 30, 2004
- --------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 35,192,159 $ 27,165,278
Net realized gain on investments 131,822,062 64,812,715
Net change in unrealized appreciation (depreciation) of investments 228,832,371 636,919,637
----------------- -----------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 395,846,592 728,897,630
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class I (29,017,833) (20,505,874)
Net investment income--Class II (112,443) (37,100)
----------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (29,130,276) (20,542,974)
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold--Class I 824,079,800 1,919,971,722
Proceeds from shares sold--Class II 18,718,634 36,194,109
Reinvestment of distributions--Class I 26,428,707 18,843,547
Reinvestment of distributions--Class II 63,924 8,676
Payments for shares redeemed, net of fees--Class I (783,387,446) (939,233,385)
Payments for shares redeemed, net of fees--Class II (7,901,058) (9,099,878)
Redemption fees--Class I 181,271 340,142
----------------- -----------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 78,183,832 1,027,024,933
----------------- -----------------
TOTAL INCREASE IN NET ASSETS 444,900,148 1,735,379,589
NET ASSETS:
Beginning of period 6,525,894,724 4,790,515,135
----------------- -----------------
End of period $ 6,970,794,872 $ 6,525,894,724
================= =================
Undistributed net investment income $ 31,593,355 $ 25,531,472
================= =================
FUND SHARE TRANSACTIONS--CLASS I:
Shares sold 20,284,940 50,926,355
Shares issued in reinvestment of dividends 648,876 534,720
Less shares redeemed (19,246,564) (24,984,586)
----------------- -----------------
NET INCREASE IN SHARES OUTSTANDING 1,687,252 26,476,489
================= =================
FUND SHARE TRANSACTIONS--CLASS II:
Shares sold 465,734 968,163
Shares issued in reinvestment of dividends 1,576 247
Less shares redeemed (195,349) (247,309)
----------------- -----------------
NET INCREASE IN SHARES OUTSTANDING 271,961 721,101
================= =================
</Table>
54
<Page>
<Table>
<Caption>
THE OAKMARK SELECT FUND
- --------------------------------------------------------------------------------------------------------------
PERIOD ENDED YEAR ENDED
MARCH 31, 2005 SEPTEMBER 30, 2004
- --------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 31,178,482 $ 28,041,071
Net realized gain on investments 272,185,729 156,155,071
Net change in unrealized appreciation (depreciation)
of investments 123,368,921 511,522,774
----------------- -----------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 426,733,132 695,718,916
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class I (41,681,441) (18,710,631)
Net investment income--Class II (456,984) (118,882)
----------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (42,138,425) (18,829,513)
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold--Class I 555,038,286 807,786,818
Proceeds from shares sold--Class II 13,368,800 33,570,613
Reinvestment of distributions--Class I 39,145,869 17,456,336
Reinvestment of distributions--Class II 205,309 58,212
Payments for shares redeemed, net of fees--Class I (560,635,094) (1,019,983,750)
Payments for shares redeemed, net of fees--Class II (22,121,245) (40,937,360)
Redemption fees--Class I 49,030 105,547
----------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND SHARE TRANSACTIONS 25,050,955 (201,943,584)
----------------- -----------------
TOTAL INCREASE IN NET ASSETS 409,645,662 474,945,819
NET ASSETS:
Beginning of period 5,561,033,089 5,086,087,270
----------------- -----------------
End of period $ 5,970,678,751 $ 5,561,033,089
================= =================
Undistributed net investment income $ 7,977,193 $ 18,937,136
================= =================
FUND SHARE TRANSACTIONS--CLASS I:
Shares sold 16,855,171 26,433,387
Shares issued in reinvestment of dividends 1,205,230 595,510
Less shares redeemed (17,204,975) (33,158,816)
----------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 855,426 (6,129,919)
================= =================
FUND SHARE TRANSACTIONS--CLASS II:
Shares sold 410,524 1,102,241
Shares issued in reinvestment of dividends 6,346 1,944
Less shares redeemed (680,656) (1,342,449)
----------------- -----------------
NET DECREASE IN SHARES OUTSTANDING (263,786) (238,264)
================= =================
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
55
<Page>
<Table>
<Caption>
THE OAKMARK
EQUITY AND INCOME FUND
- --------------------------------------------------------------------------------------------------------------
PERIOD ENDED YEAR ENDED
MARCH 31, 2005 SEPTEMBER 30, 2004
- --------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 50,898,998 $ 50,126,070
Net realized gain on investments 37,301,723 269,099,021
Net realized gain on foreign currency transactions 380,150 227,056
Net change in unrealized appreciation (depreciation) of investments 273,998,375 416,194,976
Net change in unrealized appreciation (depreciation)--other 2,493 39,804
----------------- -----------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 362,581,739 735,686,927
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class I (67,147,518) (30,409,117)
Net investment income--Class II (3,563,528) (1,530,815)
Net realized gain--Class I (196,511,764) 0
Net realized gain--Class II (13,715,030) 0
----------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (280,937,840) (31,939,932)
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold--Class I 957,091,284 3,583,813,621
Proceeds from shares sold--Class II 192,981,547 277,231,468
Reinvestment of distributions--Class I 254,487,513 29,355,530
Reinvestment of distributions--Class II 7,740,318 514,106
Payments for shares redeemed, net of fees--Class I (677,964,087) (836,471,290)
Payments for shares redeemed, net of fees--Class II (65,023,751) (86,816,396)
Redemption fees--Class I 100,835 534,637
----------------- -----------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 669,413,659 2,968,161,676
----------------- -----------------
TOTAL INCREASE IN NET ASSETS 751,057,558 3,671,908,671
NET ASSETS:
Beginning of period 8,056,557,682 4,384,649,011
----------------- -----------------
End of period $ 8,807,615,240 $ 8,056,557,682
================= =================
Undistributed net investment income $ 27,387,564 $ 47,199,612
================= =================
FUND SHARE TRANSACTIONS--CLASS I:
Shares sold 40,880,970 159,855,520
Shares issued in reinvestment of dividends 10,997,731 1,399,884
Less shares redeemed (28,975,723) (37,388,817)
----------------- -----------------
NET INCREASE IN SHARES OUTSTANDING 22,902,978 123,866,587
================= =================
FUND SHARE TRANSACTIONS--CLASS II:
Shares sold 8,293,857 12,464,461
Shares issued in reinvestment of dividends 335,369 24,563
Less shares redeemed (2,790,764) (3,887,834)
----------------- -----------------
NET INCREASE IN SHARES OUTSTANDING 5,838,462 8,601,190
================= =================
</Table>
56
<Page>
<Table>
<Caption>
THE OAKMARK
GLOBAL FUND
- --------------------------------------------------------------------------------------------------------------
PERIOD ENDED YEAR ENDED
MARCH 31, 2005 SEPTEMBER 30, 2004
- --------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 416,989 $ 5,884,687
Net realized gain on investments 16,133,897 23,552,579
Net realized gain (loss) on foreign currency transactions 277,783 (199,643)
Net change in unrealized appreciation (depreciation)
of investments and foreign currencies 169,997,749 116,594,459
Net change in unrealized appreciation (depreciation)--other (40,815) 102,037
----------------- -----------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 186,785,603 145,934,119
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class I (7,092,335) (54,303)
Net investment income--Class II (103,658) 0
Net realized gain--Class I (25,218,974) (2,851,872)
Net realized gain--Class II (520,696) (25,574)
----------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (32,935,663) (2,931,749)
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold--Class I 214,988,192 782,660,249
Proceeds from shares sold--Class II 14,218,092 21,752,122
Reinvestment of distributions--Class I 30,609,171 2,804,200
Reinvestment of distributions--Class II 557,171 20,731
Payments for shares redeemed, net of fees--Class I (119,943,833) (296,067,961)
Payments for shares redeemed, net of fees--Class II (2,033,031) (4,061,520)
Redemption fees--Class I 35,702 314,014
----------------- -----------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 138,431,464 507,421,835
----------------- -----------------
TOTAL INCREASE IN NET ASSETS 292,281,404 650,424,205
NET ASSETS:
Beginning of period 1,361,021,640 710,597,435
----------------- -----------------
End of period $ 1,653,303,044 $ 1,361,021,640
================= =================
Undistributed net investment income (loss) $ (1,516,685) $ 5,262,319
================= =================
FUND SHARE TRANSACTIONS--CLASS I:
Shares sold 9,976,807 41,298,499
Shares issued in reinvestment of dividends 1,443,149 155,616
Less shares redeemed (5,628,945) (15,250,479)
----------------- -----------------
NET INCREASE IN SHARES OUTSTANDING 5,791,011 26,203,636
================= =================
FUND SHARE TRANSACTIONS--CLASS II:
Shares sold 668,325 1,131,427
Shares issued in reinvestment of dividends 26,519 1,160
Less shares redeemed (95,320) (211,953)
----------------- -----------------
NET INCREASE IN SHARES OUTSTANDING 599,524 920,634
================= =================
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
57
<Page>
<Table>
<Caption>
THE OAKMARK
INTERNATIONAL FUND
- --------------------------------------------------------------------------------------------------------------
PERIOD ENDED YEAR ENDED
MARCH 31, 2005 SEPTEMBER 30, 2004
- --------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 9,192,194 $ 53,715,892
Net realized gain on investments 106,544,203 217,536,088
Net realized loss on foreign currency transactions (582,606) (603,088)
Net change in unrealized appreciation (depreciation)
of investments and foreign currencies 560,527,887 401,911,292
Net change in unrealized appreciation
(depreciation)--other (285,180) 168,158
----------------- -----------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 675,396,498 672,728,342
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class I (57,688,522) (20,084,750)
Net investment income--Class II (3,146,570) (570,848)
Net realized gain--Class I (11,785,113) 0
Net realized gain--Class II (790,281) 0
----------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (73,410,486) (20,655,598)
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold--Class I 633,583,884 1,465,810,386
Proceeds from shares sold--Class II 93,801,017 183,258,922
Reinvestment of distributions--Class I 63,036,515 18,162,578
Reinvestment of distributions--Class II 2,198,011 279,537
Payments for shares redeemed, net of fees--Class I (378,117,072) (744,490,290)
Payments for shares redeemed, net of fees--Class II (47,319,848) (79,196,627)
Redemption fees--Class I 189,684 367,912
----------------- -----------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 367,372,191 844,192,418
----------------- -----------------
TOTAL INCREASE IN NET ASSETS 969,358,203 1,496,265,162
NET ASSETS:
Beginning of period 4,296,110,298 2,799,845,136
----------------- -----------------
End of period $ 5,265,468,501 $ 4,296,110,298
================= =================
Undistributed net investment income $ 96,475 $ 51,739,373
================= =================
FUND SHARE TRANSACTIONS--CLASS I:
Shares sold 30,377,910 81,784,418
Shares issued in reinvestment of dividends 3,074,952 1,091,501
Less shares redeemed (18,177,494) (40,952,323)
----------------- -----------------
NET INCREASE IN SHARES OUTSTANDING 15,275,368 41,923,596
================= =================
FUND SHARE TRANSACTIONS--CLASS II:
Shares sold 4,498,321 10,166,362
Shares issued in reinvestment of dividends 107,693 16,860
Less shares redeemed (2,252,825) (4,345,978)
----------------- -----------------
NET INCREASE IN SHARES OUTSTANDING 2,353,189 5,837,244
================= =================
</Table>
58
<Page>
<Table>
<Caption>
THE OAKMARK INTERNATIONAL
SMALL CAP FUND
- --------------------------------------------------------------------------------------------------------------
PERIOD ENDED YEAR ENDED
MARCH 31, 2005 SEPTEMBER 30, 2004
- --------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 648,393 $ 4,554,775
Net realized gain on investments 70,658,669 43,497,450
Net realized loss on foreign currency transactions (224,902) (41,546)
Net change in unrealized appreciation (depreciation)
of investments and foreign currencies 75,575,974 124,228,709
Net change in unrealized appreciation
(depreciation)--other 674 (23,302)
Net change in deferred foreign taxes 118,372 0
----------------- -----------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 146,777,180 172,216,086
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class I (11,222,306) (4,209,195)
Net investment income--Class II (6,999) (2,982)
Net realized gain--Class I (15,538,999) 0
Net realized gain--Class II (10,001) 0
----------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (26,778,305) (4,212,177)
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold--Class I 113,706,918 188,831,597
Proceeds from shares sold--Class II 87,470 54,188
Reinvestment of distributions--Class I 24,846,478 3,863,970
Reinvestment of distributions--Class II 10,284 1,508
Payments for shares redeemed, net of fees--Class I (64,988,413) (104,507,785)
Payments for shares redeemed, net of fees--Class II (26,244) (171,984)
Redemption fees--Class I 19,429 263,993
----------------- -----------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 73,655,922 88,335,487
----------------- -----------------
TOTAL INCREASE IN NET ASSETS 193,654,797 256,339,396
NET ASSETS:
Beginning of period 734,583,825 478,244,429
----------------- -----------------
End of period $ 928,238,622 $ 734,583,825
================= =================
Undistributed net investment income (loss) $ (6,761,596) $ 3,819,316
================= =================
FUND SHARE TRANSACTIONS--CLASS I:
Shares sold 5,657,445 11,434,258
Shares issued in reinvestment of dividends 1,298,823 260,200
Less shares redeemed (3,218,601) (6,274,556)
----------------- -----------------
NET INCREASE IN SHARES OUTSTANDING 3,737,667 5,419,902
================= =================
FUND SHARE TRANSACTIONS--CLASS II:
Shares sold 4,448 3,350
Shares issued in reinvestment of dividends 537 102
Less shares redeemed (1,252) (10,276)
----------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 3,733 (6,824)
================= =================
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
59
<Page>
THE OAKMARK FUNDS
NOTES TO FINANCIAL STATEMENTS--(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The following are the significant accounting policies of The Oakmark Fund
("Oakmark"), The Oakmark Select Fund ("Select"), The Oakmark Equity and Income
Fund ("Equity and Income"), The Oakmark Global Fund ("Global"), The Oakmark
International Fund ("International"), and The Oakmark International Small Cap
Fund ("Int'l Small Cap") collectively referred to as "the Funds", each a series
of Harris Associates Investment Trust (the "Trust"), a Massachusetts business
trust, which is registered as an investment company under the Investment Company
Act of 1940. These policies are in conformity with accounting principles
generally accepted in the United States of America ("GAAP"). The presentation of
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates and assumptions. These unaudited financial statements
reflect all adjustments, which are, in the opinion of management, necessary to a
fair statement of the results for the interim period presented. All such
adjustments are of a normal, recurring nature.
CLASS DISCLOSURE--
Each Fund offers two classes of shares: Class I Shares and Class II Shares.
Class I Shares are offered to the general public. Class II Shares are offered to
certain retirement plans such as 401(k) and profit sharing plans. Class II
Shares pay a service fee at the annual rate of 0.25% of average net assets of
Class II Shares of the Funds. This service fee is paid to an administrator for
performing the services associated with the administration of such retirement
plans.
Income, realized and unrealized capital gains and losses and expenses of the
Funds that are not directly attributable to a specific class of shares are
prorated among the classes based on the relative net assets of each class.
Expenses directly attributable to a class of shares are recorded to the specific
class.
REDEMPTION FEES--
Each Fund imposes a short-term trading fee on redemptions of Class I Shares held
for 90 days or less to offset two types of costs to the Fund caused by
short-term trading: portfolio transaction and market impact costs associated
with erratic redemption activity and administrative costs associated with
processing redemptions. The fee is 2% of the redemption value and is deducted
from the redemption proceeds and retained by the Fund. The "first-in, first-out"
(FIFO) method is used to determine the holding period.
SECURITY VALUATION--
Securities traded on securities exchanges and over-the-counter securities are
valued at the last sales price on the day of valuation, or lacking any reported
sales that day, at the most recent bid quotation. Securities traded on the
NASDAQ National Market are valued at the NASDAQ Official Closing Price ("NOCP"),
or lacking an NOCP, at the most recent bid quotation on the NASDAQ National
Market. Debt obligations and money market instruments maturing in more than 60
days from the date of purchase are valued at the latest bid quotation. Debt
obligations and money market instruments maturing in less than 61 days from the
date of purchase are valued on an amortized cost basis which approximates market
value. Options are valued at the last reported sale price on the day of
valuation, or lacking any reported sales that day, at the mean of the most
recent bid and ask quotations. Securities traded in foreign markets are valued
using prices reported by local foreign markets. Securities for which quotations
are not readily available, or securities which may have been affected by a
significant event after the price was determined, and other assets are valued at
a fair value as determined by or under the direction of pricing committees
established by the Board of Trustees. The Funds' net asset values are determined
at the time of the close of the New York Stock Exchange. The pricing committees
will evaluate movements in the U.S. markets after the close of foreign markets
and may adjust security prices to reflect changes in reaction to U.S. markets as
determined by a third party model. At March 31, 2005, the Funds held no
securities for which quotations were not readily available, and no securities
which may have been affected by a significant event prior to the computation of
NAV.
FOREIGN CURRENCY TRANSLATIONS--
Values of investments and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars using the mean of the bid and offer
prices of such currencies at the time net asset value is determined. Purchases
and sales of investments and dividend and interest income are converted at the
prevailing rate of exchange on the respective dates of such transactions.
The Funds do not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized gain and net realized loss from securities.
Net realized gains or losses on foreign currency transactions arise from sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the amounts
of dividends, interest, and foreign withholding taxes recorded and the U.S.
dollar equivalent of the amounts actually received or paid, and the realized
gains or losses resulting from portfolio and transaction hedges. Net unrealized
foreign exchange gains and losses arise from changes in the fair value of assets
and liabilities, other than investments in securities at the period ending March
31, 2005, resulting from changes in exchange rates.
60
<Page>
For the period ended March 31, 2005, net unrealized appreciation
(depreciation)--other included the following components:
<Table>
<Caption>
EQUITY AND INT'L
INCOME GLOBAL INTERNATIONAL SMALL CAP
- ------------------------------------------------------------------------------------------------
Unrealized appreciation
(depreciation) on interest,
dividends and dividend
reclaims receivable $ 129,165 $ 39,621 $ 94,648 $ 41,566
Unrealized appreciation
(depreciation) on open
securities purchases and
sales 0 (3,510) (83,925) (4,135)
------------- ------------- ------------- -------------
Net Unrealized
appreciation
(depreciation)--Other $ 129,165 $ 36,111 $ 10,723 $ 37,431
============= ============= ============= =============
</Table>
FORWARD FOREIGN CURRENCY CONTRACTS--
The Funds' currency transactions are limited to transaction hedging and
portfolio hedging involving either specific transactions or portfolio positions.
The contractual amounts of forward foreign exchange contracts do not necessarily
represent the amounts potentially subject to risk. The measurement of the risks
associated with these instruments is meaningful only when all related and
offsetting transactions are considered. Risks arise from the possible inability
of counter parties to meet the terms of their contracts and from movements in
currency values. At March 31, 2005, Global, International and Int'l Small Cap
held the following outstanding forward foreign currency contracts:
THE OAKMARK GLOBAL FUND
<Table>
<Caption>
UNREALIZED
CONTRACT SETTLEMENT VALUATION APPRECIATION/
AMOUNT DATE AT 03/31/05 DEPRECIATION
- ------------------------------------------------------------------------------------------------
FOREIGN CURRENCY SOLD:
British Pound Sterling 47,900,000 July 2005 $ 90,078,193 $ (3,393,563)
Swiss Franc 73,000,000 November 2005 62,044,978 918,624
------------- -------------
$ 152,123,171 $ (2,474,939)
============= =============
</Table>
THE OAKMARK INTERNATIONAL FUND
<Table>
<Caption>
UNREALIZED
CONTRACT SETTLEMENT VALUATION APPRECIATION/
AMOUNT DATE AT 03/31/05 DEPRECIATION
- --------------------------------------------------------------------------------------------------
FOREIGN CURRENCY SOLD:
British Pound Sterling 142,000,000 July 2005 $ 267,056,999 $ (11,045,199)
British Pound Sterling 140,000,000 July 2005 263,276,556 (9,918,556)
British Pound Sterling 65,000,000 November 2005 121,707,235 (1,795,235)
British Pound Sterling 64,500,000 December 2005 120,744,206 1,831,594
British Pound Sterling 42,600,000 December 2005 79,743,400 1,631,120
Swiss Franc 302,000,000 November 2005 256,679,225 3,800,334
Swiss Franc 174,000,000 November 2005 147,900,642 2,553,314
Swiss Franc 129,400,000 November 2005 110,037,398 2,906,654
Swiss Franc 88,700,000 December 2005 75,524,143 3,636,946
---------------- -------------
$ 1,442,669,804 $ (6,399,028)
================ =============
</Table>
THE OAKMARK INTERNATIONAL SMALL CAP FUND
<Table>
<Caption>
UNREALIZED
CONTRACT SETTLEMENT VALUATION APPRECIATION/
AMOUNT DATE AT 03/31/05 DEPRECIATION
- --------------------------------------------------------------------------------------------------
FOREIGN CURRENCY SOLD:
British Pound Sterling 11,200,000 July 2005 $ 21,063,651 $ (871,172)
British Pound Sterling 11,400,000 July 2005 21,438,234 (807,654)
British Pound Sterling 4,700,000 November 2005 8,800,369 (129,809)
British Pound Sterling 4,600,000 December 2005 8,611,215 130,625
British Pound Sterling 1,100,000 December 2005 2,059,102 42,118
Swiss Franc 53,500,000 November 2005 45,471,320 673,238
Swiss Franc 30,800,000 November 2005 26,180,114 451,966
Swiss Franc 23,700,000 November 2005 20,153,681 532,362
Swiss Franc 16,800,000 December 2005 14,304,460 688,847
---------------- -------------
$ 168,082,146 $ 710,521
================ =============
</Table>
SECURITY TRANSACTIONS AND INVESTMENT INCOME--
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend date.
Interest income and expenses are recorded on an accrual basis. Bond discount is
accreted and premium is amortized over the expected life of each applicable
security. Withholding taxes on foreign dividends have been provided for in
accordance with the Funds' understanding of the applicable country's tax rules
and rates. Corporate gains taxes on the appreciation of certain foreign
securities have been accrued
61
<Page>
for in accordance with the Funds' understanding of the applicable country's tax
rules and rates, and are recorded as Deferred Foreign Tax Expense on the
Statements of Operations. Net realized gains and losses on investments are
determined by the specific identification method.
DISTRIBUTIONS TO SHAREHOLDERS--
Income, dividends and capital gains distributions are determined in accordance
with federal income tax regulations, which may differ from GAAP. Tax and book
differences are primarily related to foreign currency transactions, deferral of
losses on wash sales, and character of capital loss carryforwards. The Funds
also utilize, when appropriate, earnings and profits distributed to shareholders
on redemption of shares as a part of the dividends paid deduction for income tax
purposes.
SHORT SALES--
Each Fund may sell a security it does not own in anticipation of a decline in
the fair value of that security. When the Fund sells a security short, it must
borrow the security sold short and deliver it to the broker-dealer through which
it made the short sale. A gain, limited to the price at which the Fund sold the
security short, or loss, unlimited in size, will be recognized upon the
termination of a short sale. For the period ending March 31, 2005, the Funds had
no short sales.
ACCOUNTING FOR OPTIONS--
When a Fund writes an option, the premium received by the Fund is recorded as a
liability and is subsequently adjusted to the current market value of the option
written. Premiums received from writing options that expire are recorded by the
Fund on the expiration date as realized gains from option transactions. The
difference between the premium and the amount paid on effecting a closing
purchase transaction, including brokerage commissions, is also treated as a
realized gain, or if the premium is less than the amount paid for the closing
purchase transaction, as a realized loss. If a call option is exercised, the
premium is added to the proceeds from the sale of the underlying security or
currency in determining whether the Fund has realized a gain or a loss. If a put
option is exercised, the premium reduces the cost basis of the security or
currency purchased by the Fund. In writing an option, the Fund bears the market
risk of an unfavorable change in the price of the security or currency
underlying the written option. Exercise of an option written by the Fund could
result in the Fund selling or buying a security or currency at a price different
from the current market value. Options written by the Funds do not give rise to
counterparty credit risk, as they obligate the Funds, not their counterparties,
to perform.
When a Fund purchases an option, the premium paid by the Fund is recorded as an
asset and is subsequently adjusted to the current market value of the option
purchased. Purchasing call options tends to increase the Fund's exposure to the
underlying instrument. Purchasing put options tends to decrease the Fund's
exposure to the underlying instrument. Premiums paid for purchasing options
which expire are treated as realized losses. Premiums paid for purchasing
options which are exercised or closed are added to the amounts paid or offset
against the proceeds on the underlying security to determine the realized gain
or loss. The risks associated with purchasing put and call options are potential
loss of the premium paid and the failure of the counterparty to honor their
portion of the contract.
At March 31, 2005, the Funds had no outstanding options.
COMMITTED LINE OF CREDIT--
The Funds have an unsecured committed line of credit with Investors Bank & Trust
Company ("IBT") in the amount of $450 million. Borrowings under that arrangement
bear interest at 0.45% above the Federal Funds Effective Rate. There were no
borrowings during the period ended March 31, 2005.
REPURCHASE AGREEMENTS--
Each Fund, through its custodian, receives delivery of the underlying securities
collateralizing repurchase agreements. It is each Fund's policy that the market
value of the collateral be at least equal to 105% of the repurchase price,
including interest. The Fund's adviser is responsible for determining that the
value of the collateral is at all times at least equal to 105% of the repurchase
price, including interest. Repurchase agreements could involve certain risks in
the event of default or insolvency of the counterparty including possible delays
or restrictions upon a Fund's ability to dispose of the underlying securities.
EXPENSE OFFSET ARRANGEMENT--
IBT serves as custodian of the Funds. IBT's fee may be reduced by credits which
are an earnings allowance calculated on the average daily cash balances each
Fund maintains with IBT. Credit balances used to reduce the Funds' custodian
fees, if any, are reported as a reduction of total expenses in the Statements of
Operations.
SECURITY LENDING--
Each Fund except Oakmark Fund may lend its portfolio securities to
broker-dealers and banks. Any such loan must be continuously secured by
collateral in cash or cash equivalents maintained on a current basis in an
amount at least equal to the fair value of the securities loaned by the Fund.
Collateral is marked to market and monitored daily. The Fund would continue to
receive the equivalent of the interest or dividends paid by the issuer on the
securities loaned, and would also receive an additional return that may be in
the form of a fixed fee or a percentage of the earnings on the collateral. The
Fund would have the right to call the loan and obtain the securities loaned at
any time, and the counterparty shall return the securities within five business
days or less. In the event of bankruptcy or other default of the borrower, the
Fund could experience delays in liquidating the loan collateral or recovering
the loaned securities and incur expenses related to enforcing its rights. In
addition, there could be a decline in the value of the collateral or in the fair
value of the securities loaned while the Fund seeks to enforce its rights
thereto and the Fund could experience subnormal levels of income or lack of
access to income during that period.
At March 31, 2005, the Fund had no securities on loan.
62
<Page>
RESTRICTED SECURITIES--
The following investments, the sales of which are restricted to qualified
institutional buyers, have been valued according to the security valuation
procedures for debt obligations and money market instruments (as stated in the
Security valuation section) since their acquisition dates. There are no
unrestricted securities with the same maturity dates and yields for these
issuers. These securities are priced using market quotations and are not
expressed as a discount to the carrying value of a comparable unrestricted
security.
<Table>
<Caption>
ACQUISITION CARRYING MARKET PERCENTAGE
QUANTITY SECURITY NAME DATE VALUE COST VALUE OF TNA
-----------------------------------------------------------------------------------------------------------------------------
10,000,000 Cablevision Systems New York Group, 144A, 8.00%
due 4/15/2012 3/31/2004 102.75 100.25 $ 10,275,000 0.12%
10,000,000 Cablevision Systems New York Group, 144A, 8.00%
due 4/15/2012 4/1/2004 102.75 100.25 10,275,000 0.12%
--------------------------
20,550,000 0.24%
3,000,000 Sealed Air Corporation, 144A, 5.625%
due 7/15/2023 6/27/2003 101.1442 100.68 3,034,326 0.03%
5,000,000 Sealed Air Corporation, 144A, 5.625%
due 7/15/2023 8/20/2003 101.1442 96.41 5,057,210 0.06%
300,000 Sealed Air Corporation, 144A, 5.625%
due 7/15/2023 8/21/2003 101.1442 96.79 303,433 0.00%
11,700,000 Sealed Air Corporation, 144A, 5.625%
due 7/15/2023 4/6/2004 101.1442 103.31 11,833,871 0.13%
--------------------------
20,228,840 0.22%
Aggregate Totals: $ 40,778,840 0.46%
</Table>
2. TRANSACTIONS WITH AFFILIATES
Each Fund has an investment advisory agreement with Harris Associates L.P. ("the
Adviser"). For management services and facilities furnished, the Funds pay the
Adviser monthly fees. Each fee is calculated on the total net assets as
determined at the end of each preceding calendar month. Annual fee rates are as
follows:
<Table>
<Caption>
FUND ADVISORY FEES FUND ADVISORY FEES
---------------------------------------------------------------------------------------------------------
Oakmark 1.00% up to $2 billion; Equity and Income 0.75% up to $5 billion;
0.90% on the next $1 billion; 0.70% on the next $2.5 billion;
0.80% on the next $2 billion; 0.675% on the next $2.5 billion;
0.75% on the next $2.5 billion; 0.65% on the next $2.5 billion; and
0.70% on the next $2.5 billion; and 0.60% over $12.5 billion
0.65% over 10 billion
Select 1.00% up to $1 billion; Global 1.00% up to $2 billion;
0.95% on the next $500 million; 0.95% on the next $2 billion; and
0.90% on the next $500 million; 0.90% over $4 billion
0.85% on the next $500 million;
0.80% on the next $2.5 billion; International 1.00% up to $2 billion;
0.75% on the next $5 billion; and 0.95% on the next $1 billion;
0.725% over 10 billion 0.85% on the next $2 billion;
0.825% on the next $2.5 billion; and
0.815% over $7.5 billion;
Int'l Small Cap 1.25% up to $500 million;
1.10% on the next $1 billion; and
1.05% over $1.5 billion;
</Table>
63
<Page>
The Adviser undertakes to reimburse each Fund Class to the extent, but only to
the extent, that its annualized expenses (excluding taxes, interest, all
commissions and other normal charges incident to the purchase and sale of
portfolio securities, and extraordinary charges such as litigation costs, but
including fees paid to the Adviser) exceed the percent set forth below of
average daily net assets of the Fund Class through January 31, 2006.
<Table>
<Caption>
FUND CLASS I CLASS II
---------------------------------------------------------------------------
Oakmark 1.50% 1.75%
Select 1.50 1.75
Equity & Income 1.00 1.25
Global 1.75 2.00
International 2.00 2.25
Int'l Small Cap 2.00 2.25
</Table>
For the period ended March 31, 2005, the Funds incurred brokerage commissions,
including commissions paid to an affiliate of the Adviser, as follows:
<Table>
<Caption>
FUND TOTAL COMMISSIONS COMMISSIONS PAID TO AFFILIATES
--------------------------------------------------------------------------------------------------
Oakmark $ 1,260,862 $ 144,892
Select 2,997,048 59,518
Equity and Income 3,529,889 38,562
Global 453,496 0
International 2,267,961 0
Int'l Small Cap 760,654 0
</Table>
IXIS Asset Management Services Co., an affiliate of the Adviser, provides
transfer agent services to the Funds. The fees are based on the number of open
accounts and the reimbursement of out-of-pocket expenses. For the period ended
March 31, 2005, the Funds incurred the following transfer agent expenses:
<Table>
<Caption>
FUND TRANSFER AGENT FEES
------------------------------------------------------------------------
Oakmark $ 1,537,622
Select 771,131
Equity and Income 1,020,885
Global 256,847
International 580,755
Int'l Small Cap 121,674
</Table>
The Adviser has entered into agreements financial intermediaries to provide
recordkeeping, processing, shareholder communications and other services to the
Funds. These services would be provided by the Funds if the shares were held in
accounts registered directly with the Funds' transfer agent. Accordingly, the
Funds pay a portion of these fees pursuant to a separate agreement with the
Adviser. These fees are reflected as other shareholder servicing fees in the
Statements of Operations.
The non-interested Trustees of the Trust may participate in the Trust's Deferred
Compensation Plan for Independent Trustees. Participants in the plan may elect
to defer all or a portion of their compensation. Amounts deferred are retained
by the Trust and represent an unfunded obligation of the Trust. The value of
amounts deferred for a participant is determined by reference to the change in
value of Class I shares of one or more of the Funds or a money market fund as
specified by the participant. Benefits under the plan are payable upon
retirement. The interested trustees are not compensated by the Funds.
64
<Page>
3. FEDERAL INCOME TAXES
It is the policy of each Fund to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its net taxable income, including any net realized gains on investments, to
its shareholders. Therefore, no federal income tax provision is required.
<Table>
<Caption>
COST OF INVESTMENTS NET UNREALIZED
FOR FEDERAL INCOME GROSS UNREALIZED GROSS UNREALIZED APPRECIATION
FUND TAX PURPOSES APPRECIATION (DEPRECIATION) (DEPRECIATION)
-------------------------------------------------------------------------------------------------
Oakmark $ 5,477,926,909 $ 1,457,373,014 $ (71,049,136) $ 1,386,323,878
Select 4,102,540,994 1,877,653,477 (15,075,218) 1,862,578,259
Equity and Income 7,647,420,627 1,183,059,146 (79,047,755) 1,104,011,391
Global 1,281,533,680 375,427,425 (6,925,821) 368,501,604
International 3,951,769,244 1,319,250,039 (5,249,870) 1,314,000,169
Int'l Small Cap 660,478,538 264,167,520 (5,080,483) 259,087,037
</Table>
As of March 31, 2005, the net capital loss carryovers noted below are available
to offset future realized capital gains and thereby reduce future taxable gains
distributions.
<Table>
<Caption>
FUND 2009 2010 2011 2012 TOTAL
------------------------------------------------------------------------------------------
Oakmark $ 31,111,848 $ 2,634,325 $ 27,893,934 $ 68,483,540 $ 130,123,647
</Table>
For the period ended March 31, 2005, estimates of the components of
distributable earnings on a tax basis are disclosed below. Interim tax
calculations performed before the end of the fiscal year are not necessarily
indicative of the year-end tax position of a Fund, nor are they indicative of
distribution requirements. Undistributed income, gains, and losses can increase
or decrease as each Fund conducts its operations.
<Table>
<Caption>
UNDISTRIBUTED UNDISTRIBUTED LONG- TOTAL DISTRIBUTABLE
FUND ORDINARY INCOME TERM GAIN EARNINGS
-----------------------------------------------------------------------------------
Oakmark $ 32,425,065 $ 0 $ 32,425,065
Select 8,674,057 259,253,045 267,927,102
Equity and Income 38,762,611 8,687,115 47,449,726
Global 0 16,929,922 16,929,922
International 630,472 106,333,471 106,963,943
Int'l Small Cap 5,413,799 62,759,705 68,173,504
</Table>
During the period ended March 31, 2005, the tax character of distributions paid
was as follows:
<Table>
<Caption>
DISTRIBUTIONS PAID DISTRIBUTIONS PAID
FROM ORDINARY FROM LONG-TERM
FUND INCOME CAPITAL GAIN
-------------------------------------------------------------
Oakmark $ 29,130,276 $ 0
Select 42,138,425 0
Equity and Income 70,711,046 210,226,794
Global 7,195,993 25,739,670
International 60,835,092 12,575,394
Int'l Small Cap 11,229,305 15,549,000
</Table>
65
<Page>
4. INVESTMENT TRANSACTIONS
For the period ended March 31, 2005, transactions in investment securities
(excluding short term and U.S. Government securities) were as follows (in
thousands):
<Table>
<Caption>
EQUITY & INT'L
OAKMARK SELECT INCOME GLOBAL INTERNATIONAL SMALL CAP
-------------------------------------------------------------------------------------------------------------------
Purchases $ 568,648 $ 838,184 $ 1,980,228 $ 198,382 $ 616,871 $ 189,237
Proceeds from sales 592,904 921,213 1,789,007 106,195 347,764 156,233
</Table>
Purchases at cost and proceeds from sales of long-term U.S. Government
securities for the period ended March 31, 2005 were $3,473,744 and $3,463,176
respectively for Equity and Income.
Transactions in written options during the period ended March 31, 2005, were as
follows:
<Table>
<Caption>
EQUITY AND INCOME
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------------------------------------------------------------------
Options outstanding at September 30, 2004 13,000 $ 948,977
Options expired (6,500) (521,987)
Options exercised (6,500) (426,990)
---------- ----------
Options outstanding at March 31, 2005 0 $ 0
</Table>
5. INVESTMENTS IN AFFILIATED ISSUERS
An affiliated issuer, as defined under the Investment Company Act of 1940, is
one in which the Trust's holdings of an issuer represent 5% or more of the
outstanding voting securities of the issuer. A summary of each Fund's
investments in securities of these issuers for the period ended March 31, 2005,
is set forth below:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
THE OAKMARK FUND
<Table>
<Caption>
MARKET VALUE
PURCHASES SALES DIVIDEND MARCH 31,
AFFILIATES SHARES (COST) PROCEEDS INCOME 2005
--------------------------------------------------------------------------------------------------------------
H&R Block, Inc. 3,029,300 $ 0 $ 0 $ 1,332,892 $ 153,221,994
Toys 'R' Us, Inc.**+ 0 0 74,230,258 0 0
------------- ------------- ------------- -------------
TOTALS $ 0 $ 74,230,258 $ 1,332,892 $ 153,221,994
============= ============= ============= =============
</Table>
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
THE OAKMARK SELECT FUND
<Table>
<Caption>
MARKET VALUE
PURCHASES SALES DIVIDEND MARCH 31,
AFFILIATES SHARES (COST) PROCEEDS INCOME 2005
--------------------------------------------------------------------------------------------------------------
H&R Block, Inc. 8,259,800 $ 0 $ 9,870,355 $ 3,664,452 $ 417,780,684
The Dun & Bradstreet
Corporation+ 3,934,900 0 0 0 241,799,605
Toys 'R' Us, Inc.**+ 0 0 275,921,973 0 0
------------- ------------- ------------- -------------
TOTALS $ 0 $ 285,792,328 $ 3,664,452 $ 659,580,289
============= ============= ============= =============
</Table>
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
THE OAKMARK EQUITY AND INCOME FUND
<Table>
<Caption>
MARKET VALUE
PURCHASES SALES DIVIDEND MARCH 31,
AFFILIATES SHARES (COST) PROCEEDS INCOME 2005
--------------------------------------------------------------------------------------------------------------
Mentor Graphics Corporation+ * $ 0 $ 0 $ 0 $ *
St. Mary Land & Exploration
Company*** 1,450,000 0 0 72,500 72,572,500
------------- ------------- ------------- -------------
TOTALS $ 0 $ 0 $ 72,500 $ 72,572,500
============= ============= ============= =============
</Table>
66
<Page>
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
THE OAKMARK GLOBAL FUND
<Table>
<Caption>
MARKET VALUE
PURCHASES SALES DIVIDEND MARCH 31,
AFFILIATES SHARES (COST) PROCEEDS INCOME 2005
-----------------------------------------------------------------------------------------------------------------
Euronext NV 1,814,000 $ 0 $ 0 $ 0 $ 64,540,882
Grupo Aeroportuario del
Sureste S.A. de C.V. * 0 0 0 *
Lonza Group AG, Registered Shares 710,400 0 0 0 43,472,062
Lotte Chilsung Beverage Co., Ltd. 13,430 0 0 25,790 13,278,211
Meitec Corporation 760,000 0 0 236,903 26,518,636
Michael Page International plc 4,815,400 0 0 0 17,652,876
Orbotech, Ltd.+ 412,700 0 0 0 9,038,130
------------- ------------- ------------- -------------
TOTALS $ 0 $ 0 $ 262,693 $ 174,500,797
============= ============= ============= =============
</Table>
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
THE OAKMARK INTERNATIONAL FUND
<Table>
<Caption>
MARKET VALUE
PURCHASES SALES DIVIDEND MARCH 31,
AFFILIATES SHARES (COST) PROCEEDS INCOME 2005
-----------------------------------------------------------------------------------------------------------------
Chargeurs SA 790,182 $ 0 $ 0 $ 0 $ 33,900,835
Enodis plc + 33,585,320 0 0 0 71,080,240
Euronext NV 5,012,500 2,015,107 0 0 178,341,329
Grupo Aeroportuario del
Sureste S.A. de C.V.** 0 0 6,338,193 0 0
Lonza Group AG,
Registered Shares 2,057,300 0 12,853,083 0 125,893,964
Lotte Chilsung Beverage Co., Ltd. 83,400 0 0 160,154 82,457,396
Meitec Corporation 2,483,800 14,989,812 0 768,412 86,667,090
Michael Page International plc 25,698,900 6,582,097 0 0 94,210,137
Orbotech, Ltd.+ 1,237,700 0 0 0 27,105,630
------------- ------------- ------------- -------------
TOTALS $ 23,587,016 $ 19,191,276 $ 928,566 $ 699,656,621
============= ============= ============= =============
</Table>
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
THE OAKMARK INT'L SMALL CAP FUND
<Table>
<Caption>
MARKET VALUE
PURCHASES SALES DIVIDEND MARCH 31,
AFFILIATES SHARES (COST) PROCEEDS INCOME 2005
-----------------------------------------------------------------------------------------------------------------
Alaska Milk Corporation 56,360,000 $ 363,857 $ 0 $ 143,138 $ 3,805,329
Grupo Aeroportuario del
Sureste S.A. de C.V. * 0 27,035,150 0 *
Gurit-Heberlein AG 36,075 0 0 0 26,916,015
Interpump Group S.p.A. 5,326,600 8,215,797 0 0 28,299,794
Mainfreight Limited 7,816,058 0 2,011,738 223,957 14,738,018
Matichon Public Company
Limited, Foreign Shares 2,039,500 0 0 0 3,545,143
Morse 10,548,500 2,144,859 0 625,809 21,427,946
Orbotech, Ltd.+ 499,300 10,371,360 0 0 10,934,670
Royal Doulton plc** 0 0 5,020,783 0 0
------------- ------------- ------------- -------------
TOTALS $ 21,095,873 $ 34,067,671 $ 992,904 $ 109,666,915
============= ============= ============= =============
</Table>
* Due to transactions during the period, the company is no longer an
affiliated security.
** Position in issuer liquidated during the 6 months.
*** Due to a decrease in shares outstanding, the company became an affiliated
issuer.
+ Non-income producing security.
67
<Page>
THE OAKMARK FUND
FINANCIAL HIGHLIGHTS-CLASS I
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
PERIOD ENDED
MARCH 31, YEAR ENDED YEAR ENDED
2005 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 2004 2003
- ----------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 38.68 $ 33.85 $ 28.08
Income From Investment Operations:
Net Investment Income 0.20 0.16 0.13
Net Gains (Losses) on Investments
(both realized and unrealized) 2.14 4.81 5.75
------------- ------------- -------------
Total From Investment Operations: 2.34 4.97 5.88
Less Distributions:
Dividends (from net investment income) (0.17) (0.14) (0.11)
Distributions (from capital gains) 0.00 0.00 0.00
------------- ------------- -------------
Total Distributions (0.17) (0.14) (0.11)
------------- ------------- -------------
Redemption Fee Per Share 0.00(a) 0.00(a) --
Net Asset Value, End of Period $ 40.85 $ 38.68 $ 33.85
============= ============= =============
Total Return 6.05% 14.73% 20.99%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 6,904.9 $ 6,474.0 $ 4,769.4
Ratio of Expenses to Average Net Assets 1.03%* 1.05% 1.14%
Ratio of Net Investment Income to Average Net Assets 1.01%* 0.47% 0.48%
Portfolio Turnover Rate 9% 19% 21%
<Caption>
YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2000
- ------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 32.01 $ 26.95 $ 34.37
Income From Investment Operations:
Net Investment Income 0.12 0.07 0.49
Net Gains (Losses) on Investments
(both realized and unrealized) (3.85) 5.38 (2.91)
------------- ------------- -------------
Total From Investment Operations: (3.73) 5.45 (2.42)
Less Distributions:
Dividends (from net investment income) (0.20) (0.39) (0.26)
Distributions (from capital gains) 0.00 0.00 (4.74)
------------- ------------- -------------
Total Distributions (0.20) (0.39) (5.00)
------------- ------------- -------------
Redemption Fee Per Share -- -- --
Net Asset Value, End of Period $ 28.08 $ 32.01 $ 26.95
============= ============= =============
Total Return (11.77)% 20.42% (7.55)%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 3,300.9 $ 3,109.1 $ 2,038.7
Ratio of Expenses to Average Net Assets 1.17% 1.15% 1.21%
Ratio of Net Investment Income to Average Net Assets 0.38% 0.73% 1.42%
Portfolio Turnover Rate 44% 57% 50%
</Table>
FINANCIAL HIGHLIGHTS-CLASS II
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
PERIOD ENDED
MARCH 31, YEAR ENDED YEAR ENDED
2005 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 2004 2003
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 38.45 $ 33.68 $ 28.04
Income From Investment Operations:
Net Investment Income 0.15 0.04(c) 0.05
Net Gains (Losses) on Investments
(both realized and unrealized) 2.12 4.78 5.69
------------- ------------- -------------
Total From Investment Operations: 2.27 4.82 5.74
Less Distributions:
Dividends (from net investment income) (0.07) (0.05) (0.10)
Distributions (from capital gains) 0.00 0.00 0.00
------------- ------------- -------------
Total Distributions (0.07) (0.05) (0.10)
Net Asset Value, End of Period $ 40.65 $ 38.45 $ 33.68
============= ============= =============
Total Return 5.91% 14.32% 20.52%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 65.9 $ 51.9 $ 21.1
Ratio of Expenses to Average Net Assets 1.26%* 1.40% 1.53%
Ratio of Net Investment Income to Average Net Assets 0.79%* 0.11% 0.06%
Portfolio Turnover Rate 9% 19% 21%
<Caption>
APRIL 5, 2001
YEAR ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30,
2002 2001 (b)
- -----------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 31.97 $ 32.09
Income From Investment Operations:
Net Investment Income 0.16 0.05
Net Gains (Losses) on Investments
(both realized and unrealized) (3.92) (0.17)
------------- -------------
Total From Investment Operations: (3.76) (0.12)
Less Distributions:
Dividends (from net investment income) (0.17) 0.00
Distributions (from capital gains) 0.00 0.00
------------- -------------
Total Distributions (0.17) 0.00
Net Asset Value, End of Period $ 28.04 $ 31.97
============= =============
Total Return (11.85)% (0.37)%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 7.7 $ 0.1
Ratio of Expenses to Average Net Assets 1.44% 1.32%*
Ratio of Net Investment Income to Average Net Assets 0.35% 0.46%*
Portfolio Turnover Rate 44% 57%
</Table>
* Data has been annualized.
(a) Amount rounds to less than $0.01
(b) The date on which Class II shares were first sold to the public was
April 5, 2001.
(c) Computed using average shares outstanding throughout the period.
68
<Page>
THE OAKMARK SELECT FUND
FINANCIAL HIGHLIGHTS-CLASS I
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
PERIOD ENDED
MARCH 31, YEAR ENDED YEAR ENDED
2005 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 2004 2003
- ----------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 31.20 $ 27.55 $ 21.67
Income From Investment Operations:
Net Investment Income 0.18 0.15(a) 0.05
Net Gains (Losses) on Investments
(both realized and unrealized) 2.25 3.60 5.85
------------- ------------- -------------
Total From Investment Operations: 2.43 3.75 5.90
Less Distributions:
Dividends (from net investment income) (0.24) (0.10) (0.02)
Distributions (from capital gains) 0.00 0.00 0.00
------------- ------------- -------------
Total Distributions (0.24) (0.10) (0.02)
------------- ------------- -------------
Redemption Fee Per Share 0.00(b) 0.00(b) --
Net Asset Value, End of Period $ 33.39 $ 31.20 $ 27.55
============= ============= =============
Total Return 7.82% 13.64% 27.25%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 5,874.4 $ 5,463.0 $ 4,993.0
Ratio of Expenses to Average Net Assets 1.00%* 1.00% 1.02%
Ratio of Net Investment Income to Average Net Assets 1.10%* 0.50% 0.23%
Portfolio Turnover Rate 16% 14% 20%
<Caption>
YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2000
- ------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 25.20 $ 21.45 $ 20.92
Income From Investment Operations:
Net Investment Income 0.02 0.03 0.13
Net Gains (Losses) on Investments
(both realized and unrealized) (3.50) 5.17 4.32
------------- ------------- -------------
Total From Investment Operations: (3.48) 5.20 4.45
Less Distributions:
Dividends (from net investment income) (0.05) (0.09) (0.20)
Distributions (from capital gains) 0.00 (1.36) (3.72)
------------- ------------- -------------
Total Distributions (0.05) (1.45) (3.92)
------------- ------------- -------------
Redemption Fee Per Share -- -- --
Net Asset Value, End of Period $ 21.67 $ 25.20 $ 21.45
============= ============= =============
Total Return (13.85)% 25.75% 24.53%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 3,717.6 $ 4,161.4 $ 1,772.0
Ratio of Expenses to Average Net Assets 1.07% 1.08% 1.17%
Ratio of Net Investment Income to Average Net Assets 0.09% 0.26% 0.76%
Portfolio Turnover Rate 32% 21% 69%
</Table>
FINANCIAL HIGHLIGHTS-CLASS II
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
PERIOD ENDED
MARCH 31, YEAR ENDED YEAR ENDED
2005 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 2004 2003
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 31.00 $ 27.37 $ 21.56
Income From Investment Operations:
Net Investment Income (Loss) 0.14 0.09(a) 0.00(b)
Net Gains (Losses) on Investments
(both realized and unrealized) 2.24 3.58 5.81
------------- ------------- -------------
Total From Investment Operations: 2.38 3.67 5.81
Less Distributions:
Dividends (from net investment income) (0.15) (0.04) 0.00
Distributions (from capital gains) 0.00 0.00 0.00
------------- ------------- -------------
Total Distributions (0.15) (0.04) 0.00
Net Asset Value, End of Period $ 33.23 $ 31.00 $ 27.37
============= ============= =============
Total Return 7.68% 13.40% 26.95%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 96.3 $ 98.0 $ 93.1
Ratio of Expenses to Average Net Assets 1.26%* 1.21% 1.29%
Ratio of Net Investment Income (Loss) to Average Net Assets 0.85%* 0.29% (0.04)%
Portfolio Turnover Rate 16% 14% 20%
<Caption>
DECEMBER 31, 1999
YEAR ENDED YEAR ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2000 (c)
- --------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 25.10 $ 21.40 $ 18.42
Income From Investment Operations:
Net Investment Income (Loss) (0.04) 0.00(b) 0.10
Net Gains (Losses) on Investments
(both realized and unrealized) (3.50) 5.10 2.88
------------- ------------- -----------------
Total From Investment Operations: (3.54) 5.10 2.98
Less Distributions:
Dividends (from net investment income) 0.00 (0.06) 0.00
------------- (1.34) 0.00
Distributions (from capital gains) 0.00 ------------- -----------------
Total Distributions 0.00 (1.40) 0.00
Net Asset Value, End of Period $ 21.56 $ 25.10 $ 21.40
============= ============= =================
Total Return (14.10)% 25.28% 16.18%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 64.4 $ 35.4 $ 6.8
Ratio of Expenses to Average Net Assets 1.36% 1.40% 1.41%*
Ratio of Net Investment Income (Loss) to Average Net Assets 0.29% (0.08)% 0.59%*
Portfolio Turnover Rate 32% 21% 69%
</Table>
* Data has been annualized.
(a) Computed using average shares outstanding throughout the period.
(b) Amount rounds to less than $0.01 per share.
(c) The date on which Class II shares were first sold to the public was
December 31, 1999.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
69
<Page>
THE OAKMARK EQUITY AND INCOME FUND
FINANCIAL HIGHLIGHTS-CLASS I
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
PERIOD ENDED
MARCH 31, YEAR ENDED YEAR ENDED
2005 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 2004 2003
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 23.12 $ 20.30 $ 17.18
Income From Investment Operations:
Net Investment Income 0.14 0.15 0.17
Net Gains (Losses) on Investments
(both realized and unrealized) 0.88 2.81 3.19
------------- ------------- -------------
Total From Investment Operations: 1.02 2.96 3.36
Less Distributions:
Dividends (from net investment income) (0.20) (0.14) (0.24)
Distributions (from capital gains) (0.59) 0.00 0.00
------------- ------------- -------------
Total Distributions (0.79) (0.14) (0.24)
------------- ------------- -------------
Redemption Fee Per Share 0.00(b) 0.00(b) --
Net Asset Value, End of Period $ 23.35 $ 23.12 $ 20.30
============= ============= =============
Total Return 4.44% 14.64% 19.75%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 8,187.9 $ 7,577.9 $ 4,138.0
Ratio of Expenses to Average Net Assets 0.91%* 0.92% 0.93%
Ratio of Net Investment Income to Average Net Assets 1.21%* 0.78% 1.07%
Portfolio Turnover Rate 66% 72% 48%
<Caption>
YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2000
- -------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 17.45 $ 16.50 $ 15.68
Income From Investment Operations:
Net Investment Income 0.33(a) 0.08 0.35
Net Gains (Losses) on Investments
(both realized and unrealized) (0.40) 2.11 2.28
------------- ------------- -------------
Total From Investment Operations: (0.07) 2.19 2.63
Less Distributions:
Dividends (from net investment income) (0.16) (0.24) (0.45)
Distributions (from capital gains) (0.04) (1.00) (1.36)
------------- ------------- -------------
Total Distributions (0.20) (1.24) (1.81)
------------- ------------- -------------
Redemption Fee Per Share -- -- --
Net Asset Value, End of Period $ 17.18 $ 17.45 $ 16.50
============= ============= =============
Total Return (0.47)% 14.40% 18.51%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 2,241.9 $ 620.1 $ 54.5
Ratio of Expenses to Average Net Assets 0.96% 0.98% 1.24%
Ratio of Net Investment Income to Average Net Assets 1.71% 2.07% 3.04%
Portfolio Turnover Rate 73% 124% 87%
</Table>
FINANCIAL HIGHLIGHTS-CLASS II
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
PERIOD ENDED
MARCH 31, YEAR ENDED YEAR ENDED
2005 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 2004 2003
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 23.03 $ 20.24 $ 17.15
Income From Investment Operations:
Net Investment Income 0.10 0.11 0.16
Net Gains (Losses) on Investments
(both realized and unrealized) 0.88 2.79 3.15
------------- ------------- -------------
Total From Investment Operations: 0.98 2.90 3.31
Less Distributions:
Dividends (from net investment income) (0.15) (0.11) (0.22)
Distributions (from capital gains) (0.59) 0.00 0.00
------------- ------------- -------------
Total Distributions (0.74) (0.11) (0.22)
Net Asset Value, End of Period $ 23.27 $ 23.03 $ 20.24
============= ============= =============
Total Return 4.28% 14.36% 19.46%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 619.7 $ 478.7 $ 246.6
Ratio of Expenses to Average Net Assets 1.15%* 1.17% 1.17%
Ratio of Net Investment Income to Average Net Assets 0.96%* 0.53% 0.84%
Portfolio Turnover Rate 66% 72% 48%
<Caption>
JULY 13, 2000
YEAR ENDED YEAR ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2000 (c)
- -------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 17.40 $ 16.49 $ 15.51
Income From Investment Operations:
Net Investment Income 0.30(a) 0.07 0.30
Net Gains (Losses) on Investments
(both realized and unrealized) (0.40) 2.08 0.68
------------- ------------- -------------
Total From Investment Operations: (0.10) 2.15 0.98
Less Distributions:
Dividends (from net investment income) (0.11) (0.24) 0.00
Distributions (from capital gains) (0.04) (1.00) 0.00
------------- ------------- -------------
Total Distributions (0.15) (1.24) 0.00
Net Asset Value, End of Period $ 17.15 $ 17.40 $ 16.49
============= ============= =============
Total Return (0.60)% 14.07% 6.32%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 118.7 $ 3.3 $ 0.4
Ratio of Expenses to Average Net Assets 1.20% 1.23% 1.32%*
Ratio of Net Investment Income to Average Net Assets 1.50% 1.95% 2.59%*
Portfolio Turnover Rate 73% 124% 87%
</Table>
* Data has been annualized.
(a) Computed using average shares outstanding throughout the period.
(b) Amount rounds to less than $0.01 per share.
(c) The date on which Class II shares were first sold to the the public was
July 13, 2000.
70
<Page>
THE OAKMARK GLOBAL FUND
FINANCIAL HIGHLIGHTS-CLASS I
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
PERIOD ENDED
MARCH 31, YEAR ENDED YEAR ENDED
2005 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 2004 2003
- --------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 19.73 $ 16.98 $ 11.30
Income From Investment Operations:
Net Investment Income 0.00(a) 0.09 0.01
Net Gains (Losses) on Investments
(both realized and unrealized) 2.68 2.71 5.67
------------- ------------- -------------
Total From Investment Operations: 2.68 2.80 5.68
Less Distributions:
Dividends (from net investment income) (0.10) 0.00(a) 0.00
Distributions (from capital gains) (0.37) (0.05) 0.00
------------- ------------- -------------
Total Distributions (0.47) (0.05) 0.00
------------- ------------- -------------
Redemption Fee Per Share 0.00(a) 0.00(a) --
Net Asset Value, End of Period $ 21.94 $ 19.73 $ 16.98
============= ============= =============
Total Return 13.67% 16.54% 50.27%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 1,612.8 $ 1,336.3 $ 704.8
Ratio of Expenses to Average Net Assets 1.22%* 1.26% 1.28%
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.06%* 0.47% 0.00%(d)
Portfolio Turnover Rate 7% 16% 42%
<Caption>
YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2000
- ------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 10.83 $ 10.91 $ 9.18
Income From Investment Operations:
Net Investment Income 0.00(a)(b) 0.03 0.11
Net Gains (Losses) on Investments
(both realized and unrealized) 0.76(c) 0.12 1.63
------------- ------------- -------------
Total From Investment Operations: 0.76 0.15 1.74
Less Distributions:
Dividends (from net investment income) 0.00 (0.17) (0.01)
Distributions (from capital gains) (0.29) (0.06) 0.00
------------- ------------- -------------
Total Distributions (0.29) (0.23) (0.01)
------------- ------------- -------------
Redemption Fee Per Share -- -- --
Net Asset Value, End of Period $ 11.30 $ 10.83 $ 10.91
============= ============= =============
Total Return 6.84% 1.37% 18.97%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 175.6 $ 48.2 $ 27.2
Ratio of Expenses to Average Net Assets 1.55% 1.75%(e) 1.75%(e)
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.01)% 0.00(e) 0.54%(e)
Portfolio Turnover Rate 86% 114% 147%
</Table>
* Data has been annualized.
(a) Amount rounds to less than $0.01 per share.
(b) Computed using average shares outstanding throughout the period.
(c) The amount shown for a share outstanding does not correspond with the
aggregate net realized and unrealized gain/loss for the period due to the
timing of purchases and redemptions of Fund shares in relation to the
fluctuating net asset value per share of the class.
(d) Amount rounds to less than 0.01%.
(e) If the Fund had paid all of its expenses and there had been no expense
reimbursement by the Advisers, ratios would have been as follows:
<Table>
<Caption>
SEPTEMBER 30, SEPTEMBER 30,
2001 2000
- --------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 1.80% 1.96%
Ratio of Net Income (Loss) to Average Net Assets (0.05)% 0.34%
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
71
<Page>
FINANCIAL HIGHLIGHTS-CLASS II
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
PERIOD ENDED OCTOBER 10, 2001
MARCH 31, YEAR ENDED YEAR ENDED THROUGH
2005 SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 2004 2003 2002 (a)
- --------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 19.53 $ 16.84 $ 11.24 $ 11.25
Income From Investment Operations:
Net Investment Income (Loss) (0.01) 0.05 0.02 (0.03)
Net Gains (Losses) on Investments
(both realized and unrealized) 2.63 2.69 5.58 0.31(b)
------------- ------------- ------------- ----------------
Total From Investment Operations: 2.62 2.74 5.60 0.28
Less Distributions:
Dividends (from net investment income) (0.07) 0.00 0.00 0.00
Distributions (from capital gains) (0.37) (0.05) 0.00 (0.29)
------------- ------------- ------------- ----------------
Total Distributions (0.44) (0.05) 0.00 (0.29)
Net Asset Value, End of Period $ 21.71 $ 19.53 $ 16.84 $ 11.24
============= ============= ============= ================
Total Return 13.50% 16.32% 49.82% 2.31%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 40.5 $ 24.7 $ 5.8 $ 0.6
Ratio of Expenses to Average Net Assets 1.46%* 1.50% 1.46% 1.86%*
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.15)%* 0.37% (0.01)% (0.26)%*
Portfolio Turnover Rate 7% 16% 42% 86%
</Table>
* Data has been annualized.
(a) The date on which Class II shares were first offered for sale to the public
was October 10, 2001.
(b) The amount shown for a share outstanding does not correspond with the
aggregate net realized and unrealized gain/loss for the period due to the
timing of purchases and redemptions of Fund shares in relation to the
fluctuating net asset value per share of the class.
72
<Page>
THE OAKMARK INTERNATIONAL FUND
FINANCIAL HIGHLIGHTS-CLASS I
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
PERIOD ENDED
MARCH 31, YEAR ENDED YEAR ENDED
2005 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 2004 2003
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 18.98 $ 15.67 $ 12.17
Income From Investment Operations:
Net Investment Income 0.04 0.24 0.11
Net Gains (Losses) on Investments
(both realized and unrealized) 2.88 3.18 3.52
------------- ------------- -------------
Total From Investment Operations: 2.92 3.42 3.63
Less Distributions:
Dividends (from net investment income) (0.27) (0.11) (0.13)
Distributions (from capital gains) (0.05) 0.00 0.00
------------- ------------- -------------
Total Distributions (0.32) (0.11) (0.13)
------------- ------------- -------------
Redemption Fee Per Share 0.00(a) 0.00(a) --
Net Asset Value, End of Period $ 21.58 $ 18.98 $ 15.67
============= ============= =============
Total Return 15.47% 21.92% 29.97%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 4,919.9 $ 4,036.9 $ 2,676.6
Ratio of Expenses to Average Net Assets 1.14%* 1.20% 1.25%
Ratio of Net Investment Income to Average Net Assets 0.39%* 1.40% 1.03%
Portfolio Turnover Rate 7% 21% 34%
<Caption>
YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2000
- -----------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 12.51 $ 15.40 $ 13.95
Income From Investment Operations:
Net Investment Income 0.14 0.20 1.02
Net Gains (Losses) on Investments
(both realized and unrealized) (0.31) (2.07) 0.92
------------- ------------- -------------
Total From Investment Operations: (0.17) (1.87) 1.94
Less Distributions:
Dividends (from net investment income) (0.17) (0.51) (0.49)
Distributions (from capital gains) 0.00 (0.51) 0.00
------------- ------------- -------------
Total Distributions (0.17) (1.02) (0.49)
------------- ------------- -------------
Redemption Fee Per Share -- -- --
Net Asset Value, End of Period $ 12.17 $ 12.51 $ 15.40
============= ============= =============
Total Return (1.53)% (13.10)% 14.27%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 1,393.8 $ 738.5 $ 782.4
Ratio of Expenses to Average Net Assets 1.31% 1.30% 1.30%
Ratio of Net Investment Income to Average Net Assets 1.34% 1.40% 1.87%
Portfolio Turnover Rate 24% 58% 64%
</Table>
FINANCIAL HIGHLIGHTS-CLASS II
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
PERIOD ENDED
MARCH 31, YEAR ENDED YEAR ENDED
2005 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 2004 2003
- ------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 18.86 $ 15.58 $ 12.13
Income From Investment Operations:
Net Investment Income 0.02 0.18 0.08
Net Gains (Losses) on Investments
(both realized and unrealized) 2.86 3.16 3.48
------------- ------------- -------------
Total From Investment Operations: 2.88 3.34 3.56
Less Distributions:
Dividends (from net investment income) (0.22) (0.06) (0.11)
Distributions (from capital gains) (0.05) 0.00 0.00
------------- ------------- -------------
Total Distributions (0.27) (0.06) (0.11)
Net Asset Value, End of Period $ 21.47 $ 18.86 $ 15.58
============= ============= =============
Total Return 15.35% 21.52% 29.52%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 345.6 $ 259.2 $ 123.2
Ratio of Expenses to Average Net Assets 1.39%* 1.53% 1.67%
Ratio of Net Investment Income to Average Net Assets 0.16%* 1.18% 0.69%
Portfolio Turnover Rate 7% 21% 34%
<Caption>
NOVEMBER 4, 1999
YEAR ENDED YEAR ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2000 (b)
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 12.47 $ 15.37 $ 14.36
Income From Investment Operations:
Net Investment Income 0.15 0.17 0.96
Net Gains (Losses) on Investments
(both realized and unrealized) (0.37) (2.10) 0.54
------------- ------------- ----------------
Total From Investment Operations: (0.22) (1.93) 1.50
Less Distributions:
Dividends (from net investment income) (0.12) (0.49) (0.49)
Distributions (from capital gains) 0.00 (0.48) 0.00
------------- ------------- ----------------
Total Distributions (0.12) (0.97) (0.49)
Net Asset Value, End of Period $ 12.13 $ 12.47 $ 15.37
============= ============= ================
Total Return (1.76)% (13.44)% 10.79%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 48.5 $ 1.9 $ 0.1
Ratio of Expenses to Average Net Assets 1.58% 1.64% 1.50%*
Ratio of Net Investment Income to Average Net Assets 1.33% 0.62% 1.98%*
Portfolio Turnover Rate 24% 58% 64%
</Table>
* Data has been annualized.
(a) Amount rounds to less than $0.01 per share.
(b) The date on which Class II shares were first sold to the public was
November 4, 1999.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
73
<Page>
THE OAKMARK INTERNATIONAL SMALL CAP FUND
FINANCIAL HIGHLIGHTS-CLASS I
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
PERIOD ENDED
MARCH 31, YEAR ENDED YEAR ENDED
2005 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 2004 2003
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 18.26 $ 13.74 $ 10.17
Income From Investment Operations:
Net Investment Income 0.02 0.11 0.11
Net Gains (Losses) on Investments
(both realized and unrealized) 3.49 4.52 3.82
------------- ------------- ---------------
Total From Investment Operations: 3.51 4.63 3.93
Less Distributions:
Dividends (from net investment income) (0.27) (0.12) (0.09)
Distributions (from capital gains) (0.38) 0.00 (0.27)
------------- ------------- ---------------
Total Distributions (0.65) (0.12) (0.36)
------------- ------------- ---------------
Redemption Fee Per Share 0.00(d) 0.01 --
Net Asset Value, End of Period $ 21.12 $ 18.26 $ 13.74
============= ============= ===============
Total Return 19.58% 33.94% 39.78%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 927.6 $ 734.1 $ 477.8
Ratio of Expenses to Average Net Assets 1.43%* 1.49% 1.57%
Ratio of Net Investment Income to Average Net Assets 0.15%* 0.72% 0.99%
Portfolio Turnover Rate 19% 29% 30%
<Caption>
YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2000
- -------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 10.00 $ 11.51 $ 12.64
Income From Investment Operations:
Net Investment Income 0.11 0.13 0.23
Net Gains (Losses) on Investments
(both realized and unrealized) 0.36(a) (0.81) (0.66)
------------- ------------- -------------
Total From Investment Operations: 0.47 (0.68) (0.43)
Less Distributions:
Dividends (from net investment income) (0.16) (0.34) (0.11)
Distributions (from capital gains) (0.14) (0.49) (0.59)
------------- ------------- -------------
Total Distributions (0.30) (0.83) (0.70)
------------- ------------- -------------
Redemption Fee Per Share -- -- --
Net Asset Value, End of Period $ 10.17 $ 10.00 $ 11.51
============= ============= =============
Total Return 4.68% (6.18)% (3.44)%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 357.7 $ 118.9 $ 90.3
Ratio of Expenses to Average Net Assets 1.64% 1.74% 1.77%
Ratio of Net Investment Income to Average Net Assets 1.28% 1.83% 1.99%
Portfolio Turnover Rate 42% 49% 40%
</Table>
FINANCIAL HIGHLIGHTS-CLASS II
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
PERIOD ENDED
MARCH 31, YEAR ENDED YEAR ENDED
2005 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 2004 2003
- -------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 18.25 $ 13.69 $ 10.14
Income From Investment Operations:
Net Investment Income 0.01 0.13 0.08
Net Gains (Losses) on Investments
(both realized and unrealized) 3.48 4.52 3.81
------------- ------------- --------------
Total From Investment Operations: 3.49 4.65 3.89
Less Distributions:
Dividends (from net investment income) (0.26) (0.09) (0.07)
Distributions (from capital gains) (0.38) 0.00 (0.27)
------------- ------------- --------------
Total Distributions (0.64) (0.09) (0.34)
Net Asset Value, End of Period $ 21.10 $ 18.25 $ 13.69
============= ============= ==============
Total Return 19.49% 34.11% 39.39%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 0.6 $ 0.5 $ 0.4
Ratio of Expenses to Average Net Assets 1.51%* 1.39% 1.81%
Ratio of Net Investment Income to Average Net Assets 0.09%* 0.75% 0.72%
Portfolio Turnover Rate 19% 29% 30%
<Caption>
JANUARY 8, 2001
YEAR ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30,
2002 2001 (b)
- ---------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 9.97 $ 10.73
Income From Investment Operations:
Net Investment Income 0.13(c) 0.15
Net Gains (Losses) on Investments
(both realized and unrealized) 0.30(a) (0.91)
------------- ---------------
Total From Investment Operations: 0.43 (0.76)
Less Distributions:
Dividends (from net investment income) (0.12) 0.00
Distributions (from capital gains) (0.14) 0.00
------------- ---------------
Total Distributions (0.26) 0.00
Net Asset Value, End of Period $ 10.14 $ 9.97
============= ===============
Total Return 4.25% (7.08)%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 0.3 $ 0.0
Ratio of Expenses to Average Net Assets 1.87% 1.97%*
Ratio of Net Investment Income to Average Net Assets 1.06% 1.76%*
Portfolio Turnover Rate 42% 49%
</Table>
* Data has been annualized.
(a) The amount shown for a share outstanding does not correspond with the
aggregate net realized and unrealized gain/loss for the period due to the
timing of purchases and redemption of Fund shares in relation to the
fluctuating net asset value per share of the class.
(b) The date on which Class II shares were first sold to the public was
January 8, 2001.
(c) Computed using average shares outstanding throughout the period.
(d) Amount rounds to less than $0.01.
74
<Page>
This material must be preceded or accompanied by a prospectus. To order a
prospectus, which explains management fees and expenses and the special risks of
investing in the funds, visit www.oakmark.com or call 1-800-OAKMARK. Please read
the prospectus carefully before investing.
The discussion of investments and investment strategy of the funds represents
the investments of the funds and the views of fund managers and Harris
Associates L.P., the funds' investment adviser, at the time of this article, and
are subject to change without notice.
The performance data quoted represents past performance. The above performance
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 current month end performance data
call 1-800-OAKMARK.
The performance information for Class I shares of The Oakmark Fund, The Oakmark
Select Fund, The Oakmark Equity & Income Fund, The Oakmark Global Fund, The
Oakmark International Fund and The Oakmark International Small Cap Fund does not
reflect the imposition of a 2% redemption fee on shares held by an investor for
90 days or less. The purpose of this redemption fee is to deter market timers.
INVESTING IN VALUE STOCKS PRESENTS THE RISK THAT VALUE STOCKS MAY FALL OUT OF
FAVOR WITH INVESTORS AND UNDERPERFORM GROWTH STOCKS DURING GIVEN PERIODS.
THE OAKMARK SELECT FUND IS OPEN TO EXISTING SHAREHOLDERS AND INVESTORS WHO
PURCHASE DIRECTLY FROM OAKMARK.
BECAUSE THE OAKMARK SELECT FUND IS NON-DIVERSIFIED, THE PERFORMANCE OF EACH
HOLDING WILL HAVE A GREATER IMPACT ON THE FUND'S TOTAL RETURN, AND MAY MAKE THE
FUND'S RETURNS MORE VOLATILE THAN A MORE DIVERSIFIED FUND.
THE OAKMARK EQUITY AND INCOME FUND CLOSED TO CERTAIN NEW INVESTORS AS OF 5/7/04.
EQUITY AND INCOME INVESTS IN MEDIUM- AND LOWER-QUALITY DEBT SECURITIES THAT HAVE
HIGHER YIELD POTENTIAL BUT PRESENT GREATER INVESTMENT AND CREDIT RISK THAN
HIGHER-QUALITY SECURITIES, WHICH MAY RESULT IN GREATER SHARE PRICE VOLATILITY.
AN ECONOMIC DOWNTURN COULD SEVERELY DISRUPT THE MARKET IN MEDIUM OR LOWER GRADE
DEBT SECURITIES AND ADVERSELY AFFECT THE VALUE OF OUTSTANDING BONDS AND THE
ABILITY OF THE ISSUERS TO REPAY PRINCIPAL AND INTEREST.
THE OAKMARK GLOBAL FUND AND THE OAKMARK INTERNATIONAL FUND CLOSED TO CERTAIN NEW
INVESTORS AS OF 12/15/03.
THE OAKMARK INTERNATIONAL SMALL CAP FUND CLOSED TO NEW INVESTORS AS OF 5/10/02.
INVESTING IN FOREIGN SECURITIES REPRESENTS RISKS WHICH IN SOME WAY MAY BE
GREATER THAN IN U.S. INVESTMENTS. THOSE RISKS INCLUDE: CURRENCY FLUCTUATION;
DIFFERENT REGULATION, ACCOUNTING STANDARDS, TRADING PRACTICES AND LEVELS OF
AVAILABLE INFORMATION; GENERALLY HIGHER TRANSACTION COSTS; AND POLITICAL RISKS.
THE STOCKS OF SMALLER COMPANIES OFTEN INVOLVE MORE RISK THAN THE STOCKS OF
LARGER COMPANIES. STOCKS OF SMALL COMPANIES TEND TO BE MORE VOLATILE AND HAVE A
SMALLER PUBLIC MARKET THAN STOCKS OF LARGER COMPANIES. SMALL COMPANIES MAY HAVE
A SHORTER HISTORY OF OPERATIONS THAN LARGER COMPANIES, MAY NOT HAVE AS GREAT AN
ABILITY TO RAISE ADDITIONAL CAPITAL AND MAY HAVE A LESS DIVERSIFIED PRODUCT
LINE, MAKING THEM MORE SUSCEPTIBLE TO MARKET PRESSURE.
1. Total return includes change in share prices and in each case includes
reinvestment of any dividends and capital gain distributions.
2. Portfolio holdings are subject to change without notice and are not
intended as recommendations of individual stocks.
75
<Page>
3. The S&P 500 Index is a broad market-weighted average of U.S. blue-chip
companies. This index is unmanaged and investors cannot actually make
investments in this index.
4. The Price-Earnings Ratio ("P/E") is the most common measure of the
expensiveness of a stock.
5. The Dow Jones Industrial Average is an unmanaged index that includes only
30 big companies. This index is unmanaged and investors cannot actually
make investments in this index.
6. The Lipper Large Cap Value Fund Index is an equally weighted index of the
largest 30 funds within the large cap value funds investment objective as
defined by Lipper Inc. The index is adjusted for the reinvestment of
capital gains and income dividends. This index is unmanaged and investors
cannot actually make investments in this index.
7. EPS refers to Earnings Per Share and is calculated by dividing total
earnings by the number of shares outstanding.
8. The S&P MidCap 400 is an unmanaged broad market-weighted index of 400
stocks that are in the next tier down from the S&P 500 and that are chosen
for market size, liquidity, and industry group representation. This index
is unmanaged and investors cannot actually make investments in this index.
9. The Lipper Mid Cap Value Fund Index measures the performance of the 30
largest U.S. mid-cap value funds tracked by Lipper. This index is
unmanaged and investors cannot actually make investments in this index.
10. The Lipper Balanced Fund Index measures the performance of the 30 largest
U.S. balanced funds tracked by Lipper. This index is unmanaged and
investors cannot actually make investments in this index.
11. Lehman Brothers Government/Corporate Bond Index is a benchmark index made
up of the Lehman Brothers Government and Corporate Bond indexes, including
U.S. government Treasury and agency securities as well as corporate and
Yankee bonds. This index is unmanaged and investors cannot actually make
investments in this index.
12. The NASDAQ Composite Index is a market value weighted index of all common
stocks listed on NASDAQ. This index is unmanaged and investors cannot
actually make investments in this index.
13. The MSCI World Index is a free float-adjusted market capitalization index
that is designed to measure global developed market equity performance. As
of December 2003 the MSCI World Index consisted of the following 23
developed market country indices: Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy,
Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain,
Sweden, Switzerland, the United Kingdom and the United States. This index
is unmanaged and investors cannot actually make investments in this index.
14. The Lipper Global Fund Index measures the performance of the 30 largest
mutual funds that invest in securities throughout the world. This index is
unmanaged and investors cannot actually make investments in this index.
15. The MSCI World Index ex U.S. is a free float-adjusted market
capitalization index that is designed to measure global developed market
equity performance. As of April 2002 the MSCI World Index consisted of the
following 22 developed market country indices: Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong,
Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal,
Singapore, Spain, Sweden, Switzerland, and the United Kingdom. This index
is unmanaged and investors cannot actually make investments in this index.
16. The MSCI EAFE Index (Europe, Australasia, Far East) is a free
float-adjusted market capitalization index that is designed to measure
developed market equity performance, excluding the US & Canada. As of
December 2003 the MSCI EAFE Index consisted of the following 21 developed
market country indices: Australia, Austria, Belgium, Denmark, Finland,
France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland and the United Kingdom. This index is unmanaged and investors
cannot actually make investments in this index.
17. The Lipper International Fund Index reflects the net asset value weighted
total return of the 30 largest international equity funds. This index is
unmanaged and investors cannot actually make investments in this index.
18. The Lipper International Small Cap Average includes 100 mutual funds that
invest in securities whose primary markets are outside of the U.S. This
index is unmanaged and investors cannot actually make investments in this
index.
76
<Page>
DISCLOSURE REGARDING THE BOARD OF TRUSTEES' APPROVAL OF THE INVESTMENT ADVISORY
CONTRACT FOR EACH OF THE OAKMARK FUNDS
Members of the board of trustees of The Oakmark Funds (the "Board"), over
seventy-five percent of whom are not affiliated with the Funds' adviser
("Independent Trustees"), and the Board's committee on management contracts (the
"Committee"), which is comprised solely of Independent Trustees, met numerous
times over the course of nine months to consider each Fund's investment advisory
contract. At each of those meetings, the Committee was advised by, and met in
executive session with, independent legal counsel. The Committee and the other
Independent Trustees received and reviewed a substantial amount of information
provided by the Funds' adviser (the "Adviser") and third parties in response to
the Committee's requests. Based on its evaluation of that information and other
information, the Board, including a majority of the Independent Trustees, at a
meeting held on October 28, 2004, approved continuation of the investment
advisory agreement for each Fund for a period through October 31, 2005.
In considering the contracts and reaching its conclusions, the Board reviewed
and analyzed various factors that it determined were relevant, including each of
the factors described below.
1. NATURE, EXTENT AND QUALITY OF SERVICES
The Board's analysis of the nature, extent and quality of the Adviser's services
to the Funds took into account the knowledge gained from the Board's regular
meetings with management throughout the prior year. In addition, the Board
reviewed the Adviser's resources and key personnel involved in providing
investment management services to the Funds, including the time that investment
personnel devote to each Fund and the breadth and quality of their in-house
research. The Board also considered the Adviser's performance of other services
for each Fund, such as selecting broker-dealers for executing portfolio
transactions, serving as the Fund's administrator, monitoring adherence to the
Fund's investment restrictions, producing shareholder reports, providing support
services for the Board and Board committees and overseeing the activities of
other service providers, including monitoring compliance with various Fund
policies and procedures and with applicable securities laws and regulations. The
Board concluded that the nature, extent and quality of the services provided by
the Adviser to each Fund were appropriate and that each Fund was likely to
continue to benefit from services provided under its contract with the Adviser.
2. INVESTMENT PERFORMANCE OF THE ADVISER AND THE FUND
In considering the performance of each Fund and the Adviser, the Board reviewed
information provided by Lipper Inc. ("Lipper"), an independent data service
provider. Lipper was commissioned by the Board to prepare a study comparing each
Fund's performance and expenses with those of the Fund's peers and of the Lipper
universe of similar funds. A representative from Lipper attended a meeting of
the Committee to present the information and respond to questions from the
Committee members. Regarding Fund performance, Lipper ranked four of the six
Oakmark Funds in the top quintile versus their respective peers for total return
for the one-, three- and five-year periods ended March 31, 2004, as applicable.
Of the two remaining Funds, the Select Fund was in the top quintile for each of
the periods except the one-year period, and the Oakmark Fund was at or above the
middle quintile for each period except the one-year period. The Board considered
the Adviser's representation that the relative performance of those two Funds
reflected the Adviser's strict "value" investment philosophy, which also was
responsible for the Funds' stronger relative long-term performance. In addition
to comparing each Fund's performance to that of its peers, the Board also
considered the performance of other funds advised or sub-advised by the Adviser.
After considering all of the information, the Board concluded that, although
past performance cannot be a guarantee of future performance, the Funds and
their shareholders were benefiting from the Adviser's investment management of
each Fund.
3. COSTS OF SERVICES PROVIDED AND PROFITS REALIZED BY THE ADVISER
The Board examined the fee and expense information for each Fund as compared to
that of other comparable funds and noted that the information provided by Lipper
indicated that the Adviser's management fees, as a percentage of average net
assets, varied from the second to the fifth quintile of management fees (the
first quintile reflecting the lowest fees) within a group of mutual funds of
similar size, character and investment strategy. The Board also evaluated the
expense ratios for comparable funds and determined that five of the six Funds'
expense ratios were at or near the median and the Oakmark Fund was in the fifth
quintile of
77
<Page>
expense ratios. Although the management fees and expense ratio of the Oakmark
Fund were somewhat higher than the median figures for its peer group, the Board
noted that the Fund's management fee as a percentage of average net assets and
its total expense ratio were at their lowest points since the inception of the
Fund in 1991.
The Board also reviewed the Adviser's management fees for its institutional
separate accounts and for its subadvised funds (funds for which the Adviser
provides portfolio management services only). In most instances sub-advisory and
institutional separate account fees are lower than each Fund's management fee.
However, the Board noted that the Adviser performs significant additional
services for the Funds that it does not provide to those other clients,
including administrative services, oversight of the Funds' other service
providers, trustee support, risk management, regulatory compliance and numerous
other services. In addition, the Board reviewed Lipper's report on the mutual
fund industry's subadvisory arrangements. That report compared the fees paid for
subadvisory portfolio management services to the total management fees paid by
mutual fund shareholders to an adviser.
The Board also considered the Adviser's costs in serving as the Fund's
investment adviser and manager, including costs associated with the personnel
and systems necessary to manage the Funds. Finally, the Board considered the
pre-tax profits realized by the Adviser and its affiliates from their
relationship with each Fund, as well as the financial condition of the Adviser.
The Board concluded that the management fee, as well as the total expenses paid
by each Fund to the Adviser and its affiliates, were reasonable in light of the
services provided and the performance of each Fund achieved by the Adviser over
various time periods, and that the other expenses of each Fund were also
reasonable.
4. ECONOMIES OF SCALE AND FEE LEVELS REFLECTING THOSE ECONOMIES
The Board considered the extent to which each Fund's management fee reflected
economies of scale for the benefit of Fund shareholders. The Board reviewed each
Fund's advisory arrangement, which includes breakpoints that decrease the
management fee rate as the Fund's assets increase. In October 2003, in view of
the increasing assets of Equity and Income Fund and Global Fund and the
resulting economies of scale, the Board negotiated breakpoints to the advisory
contracts for those Funds. In 2004, the Independent Trustees negotiated
additional breakpoints to the advisory contracts for Oakmark Fund, Select Fund,
Equity and Income Fund, International Fund and International Small Cap Fund.
Based on its review and negotiations, the Board concluded that each Fund's
management fee structure allowed shareholders to benefit from economies of scale
as Fund assets increase.
5. BENEFITS DERIVED FROM THE RELATIONSHIP WITH THE FUNDS
The Board also considered benefits that accrue to the Adviser and its affiliates
from their relationship with the Funds. The Board recognized that two affiliates
of the Adviser serve the Funds as transfer agent and distributor and that the
transfer agent receives compensation from the Funds for its services to the
Funds. The Board considered that those services have been provided to the Funds
pursuant to written agreements with the affiliates and that the Board evaluated
and approved each agreement annually or biennially. The Board also considered
the Adviser's use of commissions paid by the Funds on their portfolio brokerage
transactions to obtain research products and services benefiting the Funds
and/or other clients of the Adviser. The Board concluded that the Adviser's use
of "soft" commission dollars to obtain research products and services were
consistent with regulatory requirements and benefited the Funds.
The Board also considered the brokerage commissions paid by the Funds to Harris
Associates Securities L.P., the Adviser's affiliated broker-dealer. The Board
concluded, based on its quarterly review of affiliated brokerage and on
additional information it received from the Adviser, that the Adviser's use of
an affiliated broker to execute portfolio transactions for the Funds was
appropriate and consistent with the procedures for affiliated brokerage adopted
by the Board and consistent with regulatory requirements.
After full consideration of the above factors as well as other factors, the
Board, including a majority of the Independent Trustees, concluded that approval
of each Fund's agreement was in the best interest of the Fund and its
shareholders.
78
<Page>
THE OAKMARK FUNDS
INVESTMENT PHILOSOPHY
All Oakmark managers follow a consistent investment philosophy--to invest in
companies they believe are trading at a substantial discount to underlying
business value. Critical to this philosophy is to invest with management teams
who are committed to maximizing the company's business value.
THREE KEY TENETS OF OUR INVESTMENT PHILOSOPHY:
1 Buy businesses trading at a significant discount to our estimate of true
business value.
2 Invest in companies expected to grow shareholder value over time.
3 Invest with management teams who think and act as owners.
INVESTMENT PROCESS
We seek to identify undervalued companies through an intensive, in-house
research process. This process is not based on macro-economic factors, such as
the performance of the economy or the direction of interest rates. Nor is it
based on technical factors, such as the performance of the stock market itself.
And, while some value managers might use only one summary statistic--such as
price-earnings ratio--our investment professionals take a more in-depth approach
using a range of valuation measures appropriate for a specific company or
industry.
From the universe of thousands of equity securities, our team generates
investment ideas through a variety of methods. If a security appears attractive,
detailed quantitative and qualitative research follows. This careful process of
identifying undervalued stocks results in an "approved list."
THE RESULT: a unified effort aimed at identifying the best values in the
marketplace. From the list of approved stocks, each fund manager constructs a
relatively focused portfolio, built on a stock-by-stock basis from the bottom
up.
[CHART]
INVEST
Managers select stocks from the approved list for their specific funds
APPROVED LIST
Securities available for investment
QUANTITATIVE AND QUALITATIVE RESEARCH
Rigorous analysis is performed to ensure that the stock meets our strict value
standards
CRITERIA SCREENS
Managers and research team screen for stocks that are worth further
consideration
UNIVERSE OF THOUSANDS OF EQUITY SECURITIES
All stocks available for investment
BOTTOM-UP INVESTMENT PROCESS
[SIDENOTE]
WHO SHOULD INVEST
Any investor who is seeking a disciplined value manager for the purposes of
growing and diversifying a portfolio should consider one of The Oakmark Funds,
keeping in mind that all equity investments should be considered long-term
investments. As value investors, we recognize that patience is a virtue and
believe that, over the long term, investors are rewarded for their patience. We
generally hold the companies in which we invest for three to five years, a time
horizon that we encourage our shareholders to consider as well.
HOW TO USE VALUE FUNDS IN AN OVERALL PORTFOLIO
Investment styles tend to move in cycles. One style may be in favor for a few
years while the other is out of favor, and vice versa. Diversifying the stock
portion of your portfolio may help reduce overall volatility--and potentially
provide more consistent returns over time.
79
<Page>
THE OAKMARK GLOSSARY
BOOK VALUE - A company's common stock equity as it appears on a balance sheet,
equal to total assets minus liabilities, preferred stock, and intangible assets
such as goodwill. A company's book value often differs substantially from
economic value, especially in industries such as media.
BUSINESS VALUE/INTRINSIC VALUE - The perceived or estimated actual value of a
security, as opposed to its current market price or book value. Business value
can be evaluated based on what a knowledgeable buyer would pay for a business if
the company were sold in its entirety.
GROWTH INVESTING - Investors who look for companies based on whether the stock
of a company is growing earnings and/or revenue faster than the industry as a
whole or the overall market. Growth investors generally expect high rates of
growth to persist, and the stock, in turn, to deliver returns exceeding the
market's. A growth mutual fund is generally one that emphasizes stocks believed
to offer above-average growth prospects, with little to no emphasis on the
stock's current price.
M & A (MERGERS & ACQUISITIONS) - Merger: the combining of two or more entities
into one, through a purchase acquisition or a pooling of interests. Acquisition:
can also be called a takeover, and is defined as acquiring control of a
corporation, called a target, by stock purchase or exchange, either hostile or
friendly.
MARKET CAPITALIZATION (MARKET CAP OR CAP) - The market price of an entire
company on any given day, calculated by multiplying the number of shares
outstanding by the price per share.
MOMENTUM INVESTING - Approach to investing based on the belief that stock price
trends are likely to continue. Momentum investors tend to buy stocks that have
been outperforming the market and to sell those stocks when their relative
performance deteriorates. Momentum investors do not consider a company's
underlying value or fundamentals in their investment decisions.
MULTIPLE - A ratio used to measure a stock's valuation, usually greater than 1.
Sometimes used to mean price/earnings ratio.
P/B OR PRICE-TO-BOOK RATIO - A stock's capitalization divided by its book value.
The value is the same whether the calculation is done for the whole company or
on a per-share basis.
P/E OR PRICE-TO-EARNINGS RATIO - The most common measure of a stock's valuation.
It is equal to a stock's capitalization divided by its after-tax earnings over a
12-month period. The value is the same whether the calculation is done for the
whole company or on a per-share basis. Equivalently, the cost an investor in a
given stock must pay per dollar of current annual earnings. Also called earnings
multiple.
SHARE REPURCHASE - Program through which a corporation buys back its own shares
in the open market, typically an indication that the corporation's management
believes the stock price is undervalued.
VALUE INVESTING - Investors who utilize valuation measures such as business
value (including growth rate), price/earnings ratio, price/book ratio, and yield
to gauge the attractiveness of a company. Managers who employ a value investment
style believe that the true, underlying value of a company is not reflected in
its current share price, and, over time, the price has potential to increase as
the market recognizes the overall value of the business. Value stocks sell at
relatively low prices in relation to their underlying business value, earnings,
or book value.
Stocks become undervalued for a variety of reasons, including an overall
market decline, or when a specific industry falls into disfavor and investors
view all companies in that industry in the same light. Consequently, an
individual company's stock price may fall, even though it may be only
temporarily affected by the industry's problems and its underlying value has
remained unchanged.
"X TIMES EARNINGS" ("12 TIMES EARNINGS") - Another way to express a stock's
price-to-earnings (P/E) ratio. A stock with a P/E ratio of 12 sells at 12 times
earnings.
80
<Page>
THE OAKMARK FUNDS
TRUSTEES AND OFFICERS
TRUSTEES
Gary N. Wilner, M.D.--CHAIRMAN
Michael J. Friduss
Thomas H. Hayden
Christine M. Maki
John R. Raitt
Allan J. Reich
Marv R. Rotter
Burton W. Ruder
Peter S. Voss
OFFICERS
John R. Raitt--PRESIDENT
Robert M. Levy--EXECUTIVE VICE PRESIDENT
Henry R. Berghoef--VICE PRESIDENT
Kevin G. Grant--VICE PRESIDENT
David G. Herro--VICE PRESIDENT
Clyde S. McGregor--VICE PRESIDENT
William C. Nygren--VICE PRESIDENT
Vineeta D. Raketich--VICE PRESIDENT
Janet L. Reali--VICE PRESIDENT AND SECRETARY
Ann W. Regan--VICE PRESIDENT AND ASSISTANT SECRETARY
Edward A. Studzinski--VICE PRESIDENT
Michael J. Welsh--VICE PRESIDENT
Kristi L. Rowsell--TREASURER
John J. Kane--ASSISTANT TREASURER
OTHER INFORMATION
INVESTMENT ADVISER
Harris Associates L.P.
Two North LaSalle Street
Chicago, Illinois 60602-3790
TRANSFER AGENT
IXIS Asset Management Services, Inc.
Boston, Massachusetts
LEGAL COUNSEL
Bell, Boyd & Lloyd LLC
Chicago, Illinois
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Deloitte & Touche LLP
Chicago, Illinois
FOR MORE INFORMATION
Please call 1-800-OAKMARK
(1-800-625-6275)
or 617-449-6274
WEBSITE
www.oakmark.com
TO OBTAIN A PROSPECTUS, AN APPLICATION OR PERIODIC REPORTS, ACCESS OUR WEB SITE
AT www.oakmark.com, OR CALL 1-800-OAKMARK (1-800-625-6275) OR (617) 449-6274.
The Funds will file its complete schedule of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third quarters of
each fiscal year on Form N-Q. The Funds' Forms N-Q's are available on the SEC's
website at www.sec.gov. The Funds' Forms N-Q may be reviewed and copied at the
SEC's Public Reference Room in Washington, DC, and that information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
A description of the policies and procedures the Funds use to determine how to
vote proxies relating to portfolio securities is available without charge, upon
request, by calling toll-free 1-800-625-6275; on the Funds' website at
www.oakmark.com; and on the Securities and Exchange Commission's website at
www.sec.gov.
This report is submitted for the general information of the shareholders of the
Funds. The report is not authorized for distribution to prospective investors in
the Funds unless it is accompanied or preceded by a currently effective
prospectus of the Funds.
No sales charge to the shareholder or to the new investor is made in offering
the shares of the Funds, however, a shareholder may incur a 2% redemption fee on
an exchange or redemption of Class I shares held for 90 days or less from any
Fund.
<Page>
[OAKMARK LOGO]
1-800-OAKMARK
www.oakmark.com
The Oakmark Funds are distributed by Harris Associates Securities L.P., member
NASD. Date of first use: May 2005.
<Page>
THE OAKMARK FUND CLASS II
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK FUND FROM ITS INCEPTION
(4/5/01) TO PRESENT (3/31/05) AS COMPARED TO THE STANDARD & POOR'S 500 INDEX
[CHART]
<Table>
<Caption>
THE OAKMARK FUND CLASS II S & P 500
4/5/2001 $ 10,000 $ 10,000
6/30/2001 $ 10,954 $ 10,665
9/30/2001 $ 9,963 $ 9,099
12/31/2001 $ 11,040 $ 10,072
3/31/2002 $ 11,497 $ 10,099
6/30/2002 $ 10,533 $ 8,746
9/30/2002 $ 8,782 $ 7,235
12/31/2002 $ 9,434 $ 7,846
3/31/2003 $ 9,041 $ 7,599
6/30/2003 $ 10,562 $ 8,768
9/30/2003 $ 10,584 $ 9,000
12/31/2003 $ 11,773 $ 10,096
3/31/2004 $ 11,933 $ 10,267
6/30/2004 $ 12,188 $ 10,444
9/30/2004 $ 12,100 $ 10,249
12/31/2004 $ 13,115 $ 11,195
3/31/2005 $ 12,815 $ 10,954
</Table>
AVERAGE ANNUAL TOTAL RETURNS
(as of 3/31/05)
<Table>
<Caption>
SINCE
INCEPTION
1-YEAR (4/5/01)
------------------------------------------------------------
OAKMARK FUND (CLASS II) 7.39% 6.42%
S&P 500 6.69% 2.31%
</Table>
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. 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 current month end
performance data, call 1-800-OAKMARK or visit www.oakmark.com.
Harris Associates Securities L.P., member NASD, May 2005
<Page>
THE OAKMARK SELECT FUND CLASS II
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK SELECT FUND FROM ITS INCEPTION
(12/31/99) TO PRESENT (3/31/05) AS COMPARED TO THE STANDARD & POOR'S 500 INDEX
[CHART]
<Table>
<Caption>
THE OAKMARK SELECT FUND CLASS II S & P 500
12/31/1999 $ 10,000 $ 10,000
3/31/2000 $ 10,885 $ 10,229
6/30/2000 $ 10,309 $ 9,958
9/30/2000 $ 11,618 $ 9,861
12/31/2000 $ 12,542 $ 9,090
3/31/2001 $ 13,876 $ 8,012
6/30/2001 $ 15,146 $ 8,481
9/30/2001 $ 14,554 $ 7,236
12/31/2001 $ 15,755 $ 8,009
3/31/2002 $ 16,137 $ 8,031
6/30/2002 $ 14,821 $ 6,955
9/30/2002 $ 12,502 $ 5,754
12/31/2002 $ 13,748 $ 6,239
3/31/2003 $ 13,673 $ 6,043
6/30/2003 $ 15,871 $ 6,973
9/30/2003 $ 15,871 $ 7,157
12/31/2003 $ 17,689 $ 8,029
3/31/2004 $ 18,113 $ 8,165
6/30/2004 $ 17,822 $ 8,305
9/30/2004 $ 17,996 $ 8,150
12/31/2004 $ 19,368 $ 8,902
3/31/2005 $ 19,379 $ 8,711
</Table>
AVERAGE ANNUAL TOTAL RETURNS
(as of 3/31/05)
<Table>
<Caption>
SINCE
INCEPTION
1-YEAR 5-YEAR (12/31/99)
-----------------------------------------------------------------------
OAKMARK SELECT FUND (CLASS II) 6.99% 12.22% 13.43%
S&P 500 6.69% -3.16% -2.59%
</Table>
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. 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 current month end
performance data, call 1-800-OAKMARK or visit www.oakmark.com.
Harris Associates Securities L.P., member NASD, May 2005
<Page>
THE OAKMARK EQUITY AND INCOME FUND CLASS II
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK EQUITY AND INCOME FUND FROM ITS
INCEPTION (7/13/00) TO PRESENT (3/31/05) AS COMPARED TO THE LIPPER BALANCED FUND
INDEX
[CHART]
<Table>
<Caption>
THE OAKMARK EQUITY AND LIPPER BALANCED
INCOME FUND CLASS II FUND INDEX
7/13/2000 $ 10,000 $ 10,000
9/30/2000 $ 10,632 $ 9,980
12/31/2000 $ 11,117 $ 9,848
3/31/2001 $ 11,563 $ 9,355
6/30/2001 $ 12,497 $ 9,684
9/30/2001 $ 12,128 $ 8,949
12/31/2001 $ 13,089 $ 9,530
3/31/2002 $ 13,637 $ 9,587
6/30/2002 $ 13,187 $ 8,954
9/30/2002 $ 12,056 $ 8,070
12/31/2002 $ 12,786 $ 8,511
3/31/2003 $ 12,487 $ 8,355
6/30/2003 $ 14,123 $ 9,266
9/30/2003 $ 14,401 $ 9,456
12/31/2003 $ 15,710 $ 10,208
3/31/2004 $ 16,354 $ 10,451
6/30/2004 $ 16,654 $ 10,438
9/30/2004 $ 16,468 $ 10,457
12/31/2004 $ 17,292 $ 11,125
3/31/2005 $ 17,174 $ 10,984
</Table>
AVERAGE ANNUAL TOTAL RETURNS
(as of 3/31/05)
<Table>
<Caption>
SINCE
INCEPTION
1-YEAR (7/13/00)
----------------------------------------------------------------------
OAKMARK EQUITY & INCOME FUND (CLASS II) 5.01% 12.15%
Lipper Balanced Fund Index 5.10% 2.01%
</Table>
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. 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 current month end
performance data, call 1-800-OAKMARK or visit www.oakmark.com.
Harris Associates Securities L.P., member NASD, May 2005
<Page>
THE OAKMARK GLOBAL FUND CLASS II
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK GLOBAL FUND
FROM ITS INCEPTION (10/10/01) TO PRESENT (3/31/05) AS COMPARED TO THE
MSCI WORLD INDEX
[CHART]
<Table>
<Caption>
THE OAKMARK GLOBAL FUND CLASS II MSCI WORLD INDEX
10/10/2001 $ 10,000 $ 10,000
12/31/2001 $ 12,060 $ 10,501
3/31/2002 $ 13,362 $ 10,537
6/30/2002 $ 12,451 $ 9,576
9/30/2002 $ 10,231 $ 7,816
12/31/2002 $ 11,760 $ 8,413
3/31/2003 $ 10,494 $ 7,988
6/30/2003 $ 14,008 $ 9,348
9/30/2003 $ 15,328 $ 9,801
12/31/2003 $ 17,454 $ 11,198
3/31/2004 $ 18,111 $ 11,492
6/30/2004 $ 18,358 $ 11,592
9/30/2004 $ 17,828 $ 11,476
12/31/2004 $ 20,132 $ 12,847
3/31/2005 $ 20,234 $ 12,705
</Table>
AVERAGE ANNUAL TOTAL RETURNS
(as of 3/31/05)
<Table>
<Caption>
SINCE
INCEPTION
1-YEAR (10/10/01)
---------------------------------------------------------------------
OAKMARK GLOBAL FUND (CLASS II) 11.72% 22.49%
MSCI World 10.56% 7.13%
</Table>
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. 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 current month end
performance data, call 1-800-OAKMARK or visit www.oakmark.com.
Harris Associates Securities L.P., member NASD, May 2005
<Page>
THE OAKMARK INTERNATIONAL FUND CLASS II
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL FUND FROM ITS
INCEPTION (11/4/99) TO PRESENT (3/31/05) AS COMPARED TO THE MSCI WORLD EX U.S.
INDEX
[CHART]
<Table>
<Caption>
THE OAKMARK INTERNATIONAL MSCI WORLD
FUND CLASS II EX U.S. INDEX
11/4/1999 $ 10,000 $ 10,000
12/31/1999 $ 10,596 $ 11,178
3/31/2000 $ 10,567 $ 11,239
6/30/2000 $ 11,303 $ 10,866
9/30/2000 $ 11,079 $ 10,037
12/31/2000 $ 11,890 $ 9,683
3/31/2001 $ 10,836 $ 8,327
6/30/2001 $ 11,905 $ 8,262
9/30/2001 $ 9,590 $ 7,103
12/31/2001 $ 11,245 $ 7,611
3/31/2002 $ 12,525 $ 7,655
6/30/2002 $ 12,230 $ 7,483
9/30/2002 $ 9,413 $ 6,015
12/31/2002 $ 10,259 $ 6,409
3/31/2003 $ 9,046 $ 5,927
6/30/2003 $ 11,331 $ 7,066
9/30/2003 $ 12,192 $ 7,637
12/31/2003 $ 14,093 $ 8,935
3/31/2004 $ 14,595 $ 9,314
6/30/2004 $ 14,854 $ 9,323
9/30/2004 $ 14,815 $ 9,341
12/31/2004 $ 16,739 $ 10,756
3/31/2005 $ 17,089 $ 10,764
</Table>
AVERAGE ANNUAL TOTAL RETURNS
(as of 3/31/05)
<Table>
<Caption>
SINCE
INCEPTION
1-YEAR 5-YEAR (11/4/99)
-------------------------------------------------------------------
OAKMARK INTERNATIONAL FUND (CLASS II) 17.09% 10.08% 10.42%
MSCI World ex U.S. 15.56% -0.86% 1.37%
</Table>
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. 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 current month end
performance data, call 1-800-OAKMARK or visit www.oakmark.com.
Harris Associates Securities L.P., member NASD, May 2005
<Page>
THE OAKMARK INTERNATIONAL
SMALL CAP FUND CLASS II
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL SMALL CAP FUND
FROM ITS INCEPTION (1/8/01) TO PRESENT (3/31/05) AS COMPARED TO THE MSCI WORLD
EX U.S. INDEX
[CHART]
<Table>
<Caption>
THE OAKMARK INTERNATIONAL MSCI WORLD
SMALL CAP FUND CLASS II EX U.S. INDEX
1/8/2001 $ 10,000 $ 10,000
3/31/2001 $ 10,140 $ 8,638
6/30/2001 $ 10,494 $ 8,570
9/30/2001 $ 9,292 $ 7,368
12/31/2001 $ 11,062 $ 7,895
3/31/2002 $ 12,180 $ 7,940
6/30/2002 $ 12,466 $ 7,763
9/30/2002 $ 9,686 $ 6,240
12/31/2002 $ 10,454 $ 6,648
3/31/2003 $ 9,172 $ 6,148
6/30/2003 $ 11,845 $ 7,329
9/30/2003 $ 13,501 $ 7,922
12/31/2003 $ 15,915 $ 9,269
3/31/2004 $ 16,946 $ 9,662
6/30/2004 $ 17,433 $ 9,671
9/30/2004 $ 18,107 $ 9,690
12/31/2004 $ 20,528 $ 11,158
3/31/2005 $ 21,636 $ 11,165
</Table>
AVERAGE ANNUAL TOTAL RETURNS
(as of 3/31/05)
<Table>
<Caption>
SINCE
INCEPTION
1-YEAR (1/8/01)
----------------------------------------------------------------------------
OAKMARK INTERNATIONAL SMALL CAP FUND (CLASS II) 27.67% 20.03%
MSCI World ex U.S. 15.56% 2.64%
</Table>
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. 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 current month end
performance data, call 1-800-OAKMARK or visit www.oakmark.com.
Harris Associates Securities L.P., member NASD, May 2005
<Page>
FUND EXPENSES
A shareholder of each Fund incurs two types of costs: (1) transaction costs,
such as redemption fees, and (2) ongoing costs, including investment advisory
fees, transfer agent fees, and other fund expenses. The examples below are
intended to help shareholders understand the ongoing cost (in dollars) of
investing in each Fund and to compare these costs with the ongoing costs of
investing in other funds.
ACTUAL EXPENSES
The following table provides information about actual account values and actual
fund expenses for Class II of each Fund. The table shows the expenses a Class II
shareholder would have paid on a $1,000 investment in each Fund from October 1,
2004 to March 31, 2005 as well as how much a $1,000 investment would be worth at
the close of the period, assuming actual fund returns and expenses. A Class II
shareholder can estimate expenses incurred for the period by dividing the
account value at March 31, 2005 by $1,000 and multiplying the result by the
number in the Expenses Paid During the Period row as shown below.
<Table>
<Caption>
THE OAKMARK
THE OAKMARK THE OAKMARK INTERNATIONAL
THE OAKMARK THE OAKMARK EQUITY AND THE OAKMARK INTERNATIONAL SMALL CAP
FUND SELECT FUND INCOME FUND GLOBAL FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------------------
Beginning Account Value $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00
Ending Account Value $ 1,059.10 $ 1,076.80 $ 1,042.80 $ 1,135.00 $ 1,153.50 $ 1,194.90
Expenses Paid During Period* $ 6.47 $ 6.52 $ 5.86 $ 7.77 $ 7.46 $ 8.26
Annualized Expense Ratio 1.26% 1.26% 1.15% 1.46% 1.39% 1.51%
</Table>
* Expenses are equal to each Fund's annualized expense ratio for Class II,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent fiscal half-year divided by 365 (to reflect
the one-half year period).
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The following table provides information about hypothetical account values and
hypothetical expenses for Class II of each Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which are not the Funds'
actual returns. The hypothetical account values and expenses may not be used to
estimate the actual ending account balances or expenses shareholders paid for
the period. Shareholders may use this information to compare the ongoing costs
of investing in a Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as redemption
fees. Therefore, the third line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transaction costs were included, your
costs would have been higher.
<Table>
<Caption>
THE OAKMARK
THE OAKMARK THE OAKMARK INTERNATIONAL
THE OAKMARK THE OAKMARK EQUITY AND THE OAKMARK INTERNATIONAL SMALL CAP
FUND SELECT FUND INCOME FUND GLOBAL FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------------------
Beginning Account Value $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00
Ending Account Value $ 1,018.65 $ 1,018.65 $ 1,019.20 $ 1,017.65 $ 1,018.00 $ 1,017.40
Expenses Paid During Period* $ 6.34 $ 6.34 $ 5.79 $ 7.34 $ 6.99 $ 7.59
Annualized Expense Ratio 1.26% 1.26% 1.15% 1.46% 1.39% 1.51%
</Table>
* Expenses are equal to each Fund's annualized expense ratio for Class II,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent fiscal half-year divided by 365 (to reflect
the one-half year period).
<Page>
ITEM 2. CODE OF ETHICS.
Not required in this filing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not required in this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not required in this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not required in this filing.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based on an evaluation of the disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act of 1940, the "Disclosure
Controls"), the
<Page>
Disclosure Controls are effectively designed to ensure that information required
to be disclosed by the Registrant in this report is recorded, processed,
summarized and reported within 90 days prior to the filing of this report,
including ensuring that information required to be disclosed in this report is
accumulated and communicated to the Registrant's management, including the
Registrant's principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes in the Registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)
that occurred during the Registrant's second fiscal quarter of the time period
covered by this report that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) (1) Not required in this filing
(2) Certifications of John R. Raitt, Principal Executive Officer, and Kristi
L. Rowsell, Principal Financial Officer, pursuant to Rule 30a-2(a) under
the Investment Company Act of 1940 (17 CFR 270.30a-2(a)), attached
hereto as Exhibits (a)(2)(i) and (a)(2)(ii)
(3) Not applicable
(b) Certification of John R. Raitt, Principal Executive Officer and Kristi
L. Rowsell, Principal Financial Officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, attached hereto as Exhibit (b)
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Harris Associates Investment Trust
By: /s/ John R. Raitt
-------------------------------------------
John R. Raitt
Principal Executive Officer
Date: May 18, 2005
-------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /s/ John R. Raitt
-------------------------------------------
John R. Raitt
Principal Executive Officer
Date: May 18, 2005
-------------------------------------------
By: /s/ Kristi L. Rowsell
-------------------------------------------
Kristi L. Rowsell
Principal Financial Officer
Date: May 18, 2005
-------------------------------------------