<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
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(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
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(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 621-0600
----------------------------
Date of fiscal year end: 09/30/05
--------------------------
Date of reporting period: 09/30/05
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ITEM 1. REPORTS TO SHAREHOLDERS.
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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
ANNUAL REPORT
SEPTEMBER 30, 2005
[OAKMARK LOGO]
ADVISED BY HARRIS ASSOCIATES L.P.
<Page>
THE OAKMARK FUNDS
2005 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 8
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 43
Schedule of Investments 44
FINANCIAL STATEMENTS
Statements of Assets and Liabilities 50
Statements of Operations 52
Statements of Changes in Net Assets 54
Notes to Financial Statements 60
TRUSTEES AND OFFICERS 79
OAKMARK PHILOSOPHY AND PROCESS 82
THE OAKMARK GLOSSARY 83
</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.
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PRESIDENT'S LETTER
[PHOTO OF JOHN R. RAITT]
DEAR FELLOW SHAREHOLDERS,
The third quarter of 2005 was certainly newsworthy. Hurricanes, refinery
outages, surging energy prices, continued tightening at the Federal Reserve, and
an expanding budget deficit all captured attention and headlines. These events
led to increased market volatility and significant shifts in stock market sector
valuations. Even after such a volatile and emotional period, we remain focused
on our primary task: generating investment returns that help our shareholders
meet their long-term investment goals.
While world stock markets advanced in the third quarter, performance was uneven
across our Funds and the stock market. Importantly, however, our Funds all
posted gains for the fiscal year, which ended this quarter.
PATIENCE AND DISCIPLINE
A theme that we often repeat in these letters is that the consistent application
of our value investing philosophy and a healthy measure of patience are
important keys to our long-term investment success. Our process focuses on
understanding intrinsic business value and finding growing companies with
management intent on increasing shareholder value. We will only purchase these
stocks when the business is priced at a substantial discount to value. This
discipline limits the influence of emotion on our process and places current
events like hurricanes and refinery outages in the proper context of their
impact on long-term business value.
However, just being smart and getting great ideas into portfolios is not enough.
There is an old Dutch proverb: "A handful of patience is worth a bushel of
brains." Our process also requires that once stocks are in portfolios, we must
wait patiently for the gap between the stock price and value to converge.
During the bull market of the late 1990s, traditional ("old-economy") companies
frequently sold at very large discounts to value, as investors chased large-cap
growth and internet stocks that attracted remarkably rich valuations. The
valuation disparity between "hot" and "not-so-hot" stocks continued for a
considerable period and even widened over time. The persistence of this
disparity somehow gave it credibility with many investors. Its longevity also
wore down many other investors whose impatience led them to abandon their
discipline and "go with a strategy that is working." Eventually, the bubble
burst, and disciplined, patient investors, including Oakmark shareholders, were
rewarded.
More recently, and as Bill Nygren discusses in his commentary this quarter, we
have noted compression in valuations between lower and higher quality companies
over the past couple of years. We have purchased the shares of many high quality
growth companies at average market valuation levels--bargain prices compared to
our estimates of value. We believe that the gap between low and high quality
companies will once again widen, and the stock prices of our better quality
businesses will go up. The valuation compression has lasted longer than our
logic would suggest it should. Rest assured however, we won't lose our patience.
MAINTAINING A DISCIPLINED INVESTMENT PLAN
We counsel our Fund investors that they should always make their investment
decisions in the context of a realistic long-term plan. Developing a solid plan
and sticking to it--even during difficult times--requires discipline and
patience, and it is just as important for individual investors as it is for
professionals. When dramatic changes such as those of the past few months occur,
investors often react rashly and emotionally. However, these are the times when
discipline and patience are needed the most.
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
FUND--CLASS I SELECT FUND--CLASS I FUND--CLASS I
(OAKMX) (OAKLX) (OAKBX)
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PERFORMANCE FOR PERIOD
ENDED SEPTEMBER 30, 2005(1)
3 MONTHS* -0.46% 0.42% 5.83%
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1 YEAR 5.79% 7.98% 13.65%
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AVERAGE ANNUAL TOTAL
RETURN FOR:
3 YEAR 13.65% 16.00% 15.97%
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5 YEAR 9.30% 11.08% 12.17%
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10 YEAR 8.99% N/A N/A
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SINCE INCEPTION 15.58% 18.78% 14.06%
(8/5/91) (11/1/96) (11/1/95)
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TOP FIVE EQUITY Washington Washington Burlington
HOLDINGS AS OF Mutual, Inc. 2.9% Mutual, Inc. 14.5% Resources Inc. 5.9%
SEPTEMBER 30, 2005(2) McDonald's Yum! Brands, Inc. 7.4% XTO Energy, Inc. 4.9%
Corporation 2.7% H&R Block, Inc. 6.6% Nestle SA 2.9%
Yum! Brands, Inc. 2.5% First Data Caremark Rx, Inc. 2.7%
COMPANY AND % OF TOTAL Viacom Inc., Corporation 5.2% General Dynamics
NET ASSETS Class B 2.4% Time Warner Inc. 4.9% Corporation 2.5%
Time Warner Inc. 2.4%
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SECTOR Consumer Consumer U.S. Government
ALLOCATION AS OF Discretionary 44.4% Discretionary 47.8% Securities 31.2%
SEPTEMBER 30, 2005 Financials 14.2% Financials 25.1% Energy 14.8%
Consumer Staples 12.3% Information Consumer
Information Technology 9.8% Discretionary 11.0%
SECTOR AND % Technology 10.8% Health Care 7.9% Consumer Staples 10.6%
OF MARKET VALUE Industrials 8.7% Energy 4.7% Industrials 9.5%
Health Care 6.1% Industrials 4.7% Health Care 7.3%
Energy 3.5% Financials 7.0%
Foreign Government
Securities 5.9%
Information
Technology 2.3%
Materials 0.4%
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</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 or visit www.oakmark.com.
* Not annualized
2
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<Table>
<Caption>
THE OAKMARK THE OAKMARK
THE OAKMARK INTERNATIONAL INTERNATIONAL
GLOBAL FUND--CLASS I FUND--CLASS I SMALL CAP FUND--CLASS I
(OAKGX) (OAKIX) (OAKEX)
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PERFORMANCE FOR PERIOD
ENDED SEPTEMBER 30, 2005(1)
3 MONTHS* 8.29% 9.04% 10.85%
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1 YEAR 23.88% 25.85% 29.04%
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AVERAGE ANNUAL TOTAL
RETURN FOR:
3 YEAR 29.42% 25.85% 34.14%
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5 YEAR 18.62% 11.27% 18.85%
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10 YEAR N/A 11.62% N/A
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SINCE INCEPTION 16.53% 12.56% 13.58%
(8/4/99) (9/30/92) (11/1/95)
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TOP FIVE EQUITY Burlington GlaxoSmithKline plc 3.6% Benfield Group Plc 3.6%
HOLDINGS AS OF Resources Inc. 5.4% Bayerische Motoren Carpetright plc 3.2%
SEPTEMBER 30, 2005(2) Nestle SA 4.3% Werke (BMW) AG 3.3% Interpump
Euronext NV 4.2% SK Telecom Co., Ltd. 3.2% Group S.p.A. 3.1%
Diageo plc 4.2% Euronext NV 3.1% Gurit-Heberlein AG 3.1%
COMPANY AND % OF TOTAL Takeda Diageo plc 2.9% JJB Sports plc 2.7%
NET ASSETS Pharmaceutical
Company Limited 4.0%
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SECTOR Consumer Financials 25.6% Industrials 25.0%
ALLOCATION AS OF Discretionary 19.0% Consumer Consumer
SEPTEMBER 30, 2005 Financials 15.2% Discretionary 20.2% Discretionary 20.7%
Health Care 15.0% Consumer Staples 17.6% Information
Consumer Staples 14.0% Health Care 10.5% Technology 18.3%
SECTOR AND % Information Telecommunication Financials 16.7%
OF MARKET VALUE Technology 10.4% Services 8.0% Materials 7.2%
Industrials 10.2% Materials 7.8% Health Care 5.3%
Telecommunication Industrials 6.8% Consumer Staples 5.1%
Services 5.7% Energy 1.9% Telecommunication
Energy 5.6% Information Services 1.7%
Materials 4.9% Technology 1.6%
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</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 April 1,
2005, to September 30, 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 September 30, 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 $ 997.60 $ 1,001.50 $ 1,088.20 $ 1,089.80 $ 1,089.90 $ 1,079.10
EXPENSES PAID
DURING PERIOD* $ 5.21 $ 5.02 $ 4.61 $ 6.18 $ 5.71 $ 7.19
Annualized
Expense Ratio 1.04% 1.00% 0.88% 1.18% 1.09% 1.38%
</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 based on actual expense ratios
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, the
total 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 $ 1,019.90 $ 1,020.05 $ 1,020.66 $ 1,019.15 $ 1,019.60 $ 1,018.15
EXPENSES PAID
DURING PERIOD* $ 5.27 $ 5.06 $ 4.46 $ 5.97 $ 5.52 $ 6.98
ANNUALIZED
EXPENSE RATIO 1.04% 1.00% 0.88% 1.18% 1.09% 1.38%
</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]
"An optimist stays up until midnight to see the new year in. A pessimist stays
up to make sure the old year leaves."
Bill Vaughan
We've often said that Oakmark tends to be early. That observation even extends
to our New Year's celebration. By having our fiscal year end on September 30
rather than December 31, we beat the rush for audits and save our shareholders a
few dollars on fees. We also beat the rush for reflecting on the past year and
thinking about how to approach the new one.
We look back on fiscal 2005 with mixed feelings. Our primary goal is, over time,
to increase the wealth of our shareholders. Measured against that goal, any
return that starts with a plus sign can be viewed as a success. We're pleased
that both Funds achieved new all-time high prices last quarter. With the S&P
500(3) still priced about 20% below its 2000 peak, most competing funds cannot
make that statement, which is an important reason to view our year as a success.
Switching to the negatives, a couple of issues will cause us to "stay up to make
sure the old year leaves." The S&P 500 increased more than either Fund did, not
just in fiscal 2005 but also for the trailing three years. Further, the Funds
have also lagged behind their value peers. Why did that happen?
We construct our portfolios based on each stock's merits, but two themes
affected many of our decisions and hurt our returns. First, a year ago many
commodity companies, including energy companies, were trading at low P/E(4)
ratios and therefore looked cheap. We rejected most of those stocks because that
cheapness vanished after adjusting earnings for our belief that the commodity
prices necessary to balance long-term supply with demand were substantially
below then-current commodity prices. Using oil as an example, a year ago the
price was $50 per barrel, up from under $20 at the beginning of 2002. Typically,
an extreme price spike sows the seeds for its own reversal. Consequently, we
believed that energy producers and consumers would alter their behavior,
eventually resulting in higher supply, lower demand, and a price significantly
below $50 per barrel. Based on that assumption, which was reflected in the
futures market, we felt that most energy stocks, as well as the stocks of most
commodity producers were not selling at large discounts to their values. So we
held few of those stocks. Instead of the price of oil declining, consistent with
our long-term expectation, the price increased by another third last year, and
energy stocks were large gainers. Because we invest based on long-term
fundamentals, we continue to focus on the market clearing price, which we
believe is significantly below $50 per barrel and we have decreased our holdings
of the few energy stocks we own.
The second theme that hurt results was our belief that higher quality businesses
deserve to sell at meaningfully higher multiples of earnings than lower quality
businesses. Back in 1999 many stocks sold at low P/Es despite the overvalued
market. In a quarterly letter a little over a year ago, I noted that in mid-1999
nearly 100 stocks in the S&P 500 were priced at less than half the S&P 500 P/E
multiple, but in mid-2004 that number had fallen to just 20. In 1999, we
believed that the market had generally overpriced high quality businesses. A
year ago, we believed that the market had over-reacted by so tightly compressing
the P/E dispersion. We found that large growth businesses, finally available at
average prices, were the best new opportunities for investment. We anticipated
that high quality names would eventually return to significant premiums and low
quality names would return to significant discounts, creating a more normal P/E
distribution. Instead, over the past year, multiples have compressed further.
Now only 13 stocks in the S&P 500 sell at less than half the market multiple.
One could argue that identifying superior businesses has become very difficult
and, therefore, most stocks should sell at the same multiple. But we believe
that some businesses still possess significant competitive advantages and
deserve to sell at premiums. We also believe that momentum investors who
previously bid up the price of large growth companies and technology stocks have
now switched over to the below-average businesses that value investors used to
own.
In investing, the line between "early" and "wrong" can be very fuzzy. I believe
we are just early, but only time will tell on which side of that line we fall.
As we begin fiscal 2006, we are clearly optimists excited by our expectations
for the New Year. Though neither we nor any other mutual fund can make promises
about future investment performance, there are four important promises we can
make:
1. WE WILL CONTINUE TO APPLY A HIGH LEVEL OF EFFORT AND TALENT. In many
endeavors consistent effort produces consistent results. So, naturally,
when returns aren't stellar, investors tend to assume that we need to try
harder. One e-mailer even suggested that I need to spend less time on the
golf course and more time in the office! (I don't golf.) But in investing,
there is no short-term correlation between effort and returns. This
6
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isn't to say that long-term investment success is uncorrelated with
effort--far from it. We just don't know in what year we will harvest the
seeds we plant today. Our Research Department is larger and more
experienced than it was five or ten years ago, and its compensation
structure continues to provide incentives for finding undervalued stocks.
Further, our analysts are best described as "stock nuts"--meaning that the
thrill they get from discovering great investment ideas is as important to
them as their compensation is. As with our analysts, my passion for
investing extends beyond normal office hours. My kids know that on
weekends, if I'm at their sporting events or watching the Bears or Badgers
football games on TV, I'm usually also reading VALUE LINE, BARRON'S, and
now, the new weekend edition of THE WALL STREET JOURNAL.
2. WE WILL CONTINUE TO USE THE SAME INVESTMENT PHILOSOPHY. We invest in
companies that we believe will grow and that are managed to maximize
long-term per-share business value. We only buy stocks that are selling at
large discounts to our estimates of value. Then we patiently wait for the
gap between price and value to close. There are two ways this approach can
fail. First, we can misjudge business fundamentals. Second, we can lose the
patience our approach requires. Our lawyers may balk when I use the word
"guarantee," but I can guarantee that we will make our share of mistakes
analyzing individual companies. Our successful long-term track record
includes more mistakes than I care to remember. Only by acknowledging our
failings, eliminating them from our portfolios, and learning from our
mistakes, can we limit the damage they cause. And what about the risk that
we might lose patience and change investment philosophies? Surely that's a
risk worth assessing. Many investment firms have changed their approach at
just the wrong time resulting in substantial losses and missed opportunity.
Instead of taking my word that we won't change, look at our history. The
first Oakmark Fund report to shareholders in 1991 outlined our investment
philosophy. Point number one was "Invest in securities selling
significantly below their long-term underlying value." And prior to
Oakmark, our company Harris Associates L.P., which will celebrate its 30th
Anniversary next year, used that same philosophy for managing each of its
accounts. Our insistence on investing based on long-term fundamental value
may at times frustrate some shareholders, but wondering whether or not
we'll stick to our knitting need not be a concern.
3. WE WILL CONTINUE TO COMMUNICATE CANDIDLY WITH YOU. Whether our results are
good, bad, or in between, we'll always explain what happened and why we own
the stocks we own. When we invest in companies we expect understandable,
honest, and timely communication from them. You should expect the same from
us. Much has been written about mutual fund investors actually achieving
returns far below average because of their tendency to time purchases and
sales poorly. We believe that investors who read our commentary will better
understand our approach to investing, will have more rational expectations,
and therefore will be less likely to have inopportune timing of their
sales.
4. WE WILL CONTINUE TO INVEST OUR OWN MONEY SIDE-BY-SIDE WITH YOURS. One of
the primary reasons we started The Oakmark Fund fourteen years ago was that
we wanted to invest our own money in the same stocks that we were buying
for our clients. Since then, every Fund launched by Oakmark was created
because our investment professionals believed that potential returns were
attractive for their own capital. In John Raitt's President's letter, once
a year you will find an update of our total personal Oakmark holdings. You
can observe that the dollar amount is both significant and growing. I have
also disclosed that my personal investments in The Oakmark Fund and The
Oakmark Select Fund account for the majority of my liquid net worth.
We're excited about the outlook for the market. We are highly motivated. Our
investment philosophy is unchanged, and our economic incentives are aligned with
yours. We believe our portfolios are well positioned to capitalize on today's
opportunities and to continue growing your capital.
And in the Oakmark tradition of being early, please allow me to be the first to
wish you a Happy New Year!
Best wishes,
/s/ Bill Nygren
WILLIAM C. NYGREN, CFA
PORTFOLIO MANAGER
bnygren@oakmark.com
7
<Page>
THE OAKMARK FUND
REPORT FROM BILL NYGREN AND KEVIN GRANT, PORTFOLIO MANAGERS
[PHOTO OF WILLIAM C. 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 (9/30/05) AS COMPARED TO THE STANDARD & POOR'S 500 INDEX(3)
<Table>
<Caption>
THE OAKMARK FUND (CLASS I) S & P 500
8/5/91 $ 10,000 $ 10,000
9/30/91 $ 11,050 $ 10,066
12/31/91 $ 13,020 $ 10,909
3/31/92 $ 14,690 $ 10,634
6/30/92 $ 15,230 $ 10,836
9/30/92 $ 16,800 $ 11,178
12/31/92 $ 19,386 $ 11,741
3/31/93 $ 20,927 $ 12,253
6/30/93 $ 21,494 $ 12,313
9/30/93 $ 23,095 $ 12,631
12/31/93 $ 25,300 $ 12,924
3/31/94 $ 24,242 $ 12,434
6/30/94 $ 24,951 $ 12,486
9/30/94 $ 26,663 $ 13,097
12/31/94 $ 26,138 $ 13,095
3/31/95 $ 28,539 $ 14,370
6/30/95 $ 30,303 $ 15,741
9/30/95 $ 32,841 $ 16,992
12/31/95 $ 35,134 $ 18,015
3/31/96 $ 36,386 $ 18,982
6/30/96 $ 37,661 $ 19,834
9/30/96 $ 37,945 $ 20,447
12/31/96 $ 40,828 $ 22,152
3/31/97 $ 42,456 $ 22,746
6/30/97 $ 48,917 $ 26,716
9/30/97 $ 52,009 $ 28,717
12/31/97 $ 54,132 $ 29,542
3/31/98 $ 59,517 $ 33,663
6/30/98 $ 57,909 $ 34,775
9/30/98 $ 49,899 $ 31,316
12/31/98 $ 56,155 $ 37,985
3/31/99 $ 55,888 $ 39,877
6/30/99 $ 62,332 $ 42,688
9/30/99 $ 53,882 $ 40,023
12/31/99 $ 50,277 $ 45,977
3/31/00 $ 45,767 $ 47,032
6/30/00 $ 46,950 $ 45,783
9/30/00 $ 49,815 $ 45,339
12/31/00 $ 56,201 $ 41,791
3/31/01 $ 60,342 $ 36,837
6/30/01 $ 65,927 $ 38,993
9/30/01 $ 59,986 $ 33,269
12/31/01 $ 66,479 $ 36,824
3/31/02 $ 69,250 $ 36,926
6/30/02 $ 63,463 $ 31,979
9/30/02 $ 52,927 $ 26,454
12/31/02 $ 56,902 $ 28,686
3/31/03 $ 54,576 $ 27,783
6/30/03 $ 63,826 $ 32,059
9/30/03 $ 64,034 $ 32,907
12/31/03 $ 71,301 $ 36,914
3/31/04 $ 72,327 $ 37,539
6/30/04 $ 73,941 $ 38,186
9/30/04 $ 73,467 $ 37,473
12/31/04 $ 79,667 $ 40,931
3/31/05 $ 77,913 $ 40,052
6/30/05 $ 78,084 $ 40,600
9/30/05 $ 77,722 $ 42,064
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
(AS OF 09/30/05)
SINCE
TOTAL RETURN INCEPTION
LAST 3 MONTHS* 1-YEAR 5-YEAR 10-YEAR (8/5/91)
- ----------------------------------------------------------------------------------------------
OAKMARK FUND (CLASS I) -0.46% 5.79% 9.30% 8.99% 15.58%
S&P 500 3.60% 12.25% -1.49% 9.48% 10.67%
Dow Jones Average(5) 3.46% 7.49% 1.98% 10.39% 11.70%
Lipper Large Cap
Value Index(6) 3.80% 13.50% 1.96% 9.14% 10.52%
</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 Fund had a disappointing quarter, basically unchanged while the S&P
500 gained 4%. Our underweighting in the very strong energy sector continues to
penalize our results. We didn't suffer from big fundamental disappointments. In
fact, five of our stocks were up by more than 20% (Burlington Resources,
McDonalds, ConocoPhillips, Hewlett Packard and Texas Instruments), and none were
down by that much. Most of our holdings, however, suffered very small price
declines. As mentioned earlier, our portfolio continues to be under-represented
in commodities, including energy, and it is heavily populated with high-quality
businesses, especially for a value fund. We have positioned the portfolio so
that we will do best when, as we expect, energy prices eventually decline and
quality spreads return to normal.
During the quarter we sold our shares of ACCO Brands (spun-off from Fortune
Brands) and eliminated Kraft Foods and Fannie Mae. Fortunately, Fannie was sold
early enough in the quarter to avoid the late September decline, but it was
still a significant loser for our fiscal year. We continue to believe mortgage
guaranty is a very good business for Fannie, but we are no longer comfortable
projecting that their biggest profit contributor, their mortgage portfolio, will
retain its advantaged regulatory position. New names in the quarter included
Discovery Holding, which spun-off from another holding, Liberty Media. Though
Discovery is a smaller business than The Oakmark Fund generally buys, we judged
that the current price made it too cheap to sell. New purchases included Tyco,
InBev, and Intel. Our comments on Tyco and InBev are available on our website,
www.oakmark.com.
INTEL CORP (INTC--$24)
Intel is the world's largest semiconductor chipmaker and one of the only
chipmakers that has established consumer brand identity with its campaign,
"Intel Inside." In the peak of the technology-driven market, Intel sold at $76,
which was 65 times trailing earnings. We admired Intel, but couldn't justify
owning the stock at that valuation. Now at one-third of the price, Intel sells
at less than 16 times expected forward earnings. Intel's products are purchased
primarily by the computing, communications and digital content
industries--industries we believe will experience above-average growth. Like
many of our recent purchases, we believe Intel is a superior business, deserving
a superior P/E(4), but is now priced as if it were merely average.
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--SEPTEMBER 30, 2005
<Table>
<Caption>
NAME SHARES HELD MARKET VALUE
- ------------------------------------------------------------------------------------------------
COMMON STOCKS--93.4%
APPAREL RETAIL--3.8%
The Gap, Inc. 7,066,700 $ 123,172,581
Limited Brands 5,728,047 117,024,000
---------------
240,196,581
BROADCASTING & CABLE TV--7.9%
Liberty Media Corporation, Class A (a) 16,199,400 $ 130,405,170
The DIRECTV Group, Inc. (a) 8,600,000 128,828,000
Comcast Corporation, Special Class A (a) 4,325,000 124,473,500
EchoStar Communications Corporation, Class A 3,275,000 96,841,750
Discovery Holding Company, Class A (a) 1,569,940 22,669,933
---------------
503,218,353
DEPARTMENT STORES--2.0%
Kohl's Corporation (a) 2,500,000 $ 125,450,000
HOME IMPROVEMENT RETAIL--2.1%
The Home Depot, Inc. 3,581,500 $ 136,598,410
HOMEBUILDING--2.0%
Pulte Homes, Inc. 2,900,000 $ 124,468,000
HOUSEHOLD APPLIANCES--1.9%
The Black & Decker Corporation 1,500,000 $ 123,135,000
HOUSEWARES & SPECIALTIES--2.0%
Fortune Brands, Inc. 1,600,000 $ 130,128,000
LEISURE PRODUCTS--1.0%
Mattel, Inc. 3,874,300 $ 64,623,324
MOTORCYCLE MANUFACTURERS--2.0%
Harley-Davidson, Inc. 2,600,000 $ 125,944,000
MOVIES & ENTERTAINMENT--6.9%
Viacom, Inc., Class B 4,579,490 $ 151,168,965
Time Warner, Inc. 8,297,700 150,271,347
The Walt Disney Company 5,750,000 138,747,500
---------------
440,187,812
PUBLISHING--2.5%
Gannett Co., Inc. 1,534,500 $ 105,619,635
Knight-Ridder, Inc. 916,000 53,750,880
---------------
159,370,515
RESTAURANTS--5.2%
McDonald's Corporation 5,200,000 $ 174,148,000
Yum! Brands, Inc. 3,274,000 158,494,340
---------------
332,642,340
</Table>
9
<Page>
<Table>
<Caption>
NAME SHARES HELD MARKET VALUE
- ------------------------------------------------------------------------------------------------
COMMON STOCKS--93.4% (CONT.)
SPECIALIZED CONSUMER SERVICES--2.2%
H&R Block, Inc. 5,958,600 $ 142,887,228
BREWERS--3.3%
Anheuser-Busch Companies, Inc. 3,100,000 $ 133,424,000
InBev NV (b) 2,000,000 79,122,222
---------------
212,546,222
DISTILLERS & VINTNERS--1.9%
Diageo plc (c) 2,121,000 $ 123,039,210
HYPERMARKETS & SUPER CENTERS--2.0%
Wal-Mart Stores, Inc. 2,900,000 $ 127,078,000
PACKAGED FOODS & MEATS--3.1%
General Mills, Inc. 2,406,000 $ 115,969,200
H.J. Heinz Company 2,310,000 84,407,400
---------------
200,376,600
SOFT DRINKS--1.1%
Coca-Cola Enterprises, Inc. 3,500,000 $ 68,250,000
INTEGRATED OIL & GAS--1.8%
ConocoPhillips 1,670,670 $ 116,796,540
OIL & GAS EXPLORATION & PRODUCTION--1.5%
Burlington Resources, Inc. 1,156,200 $ 94,022,184
ASSET MANAGEMENT & CUSTODY BANKS--1.2%
The Bank of New York Company, Inc. 2,500,000 $ 73,525,000
DIVERSIFIED BANKS--1.9%
U.S. Bancorp 4,200,000 $ 117,936,000
LIFE & HEALTH INSURANCE--1.8%
AFLAC Incorporated 2,567,000 $ 116,285,100
OTHER DIVERSIFIED FINANCIAL SERVICES--4.0%
Citigroup, Inc. 2,900,000 $ 132,008,000
JP Morgan Chase & Co. 3,600,000 122,148,000
---------------
254,156,000
THRIFTS & MORTGAGE FINANCE--4.5%
Washington Mutual, Inc. 4,737,300 $ 185,796,906
MGIC Investment Corporation 1,590,600 102,116,520
---------------
287,913,426
HEALTH CARE EQUIPMENT--2.0%
Baxter International, Inc. 3,200,000 $ 127,584,000
</Table>
10
<Page>
<Table>
<Caption>
SHARES HELD/
NAME PAR VALUE MARKET VALUE
- ------------------------------------------------------------------------------------------------
COMMON STOCKS--93.4% (CONT.)
PHARMACEUTICALS--3.7%
Abbott Laboratories 2,787,300 $ 118,181,520
Bristol-Myers Squibb Company 4,850,000 116,691,000
---------------
234,872,520
AEROSPACE & DEFENSE--3.4%
Raytheon Company 3,000,000 $ 114,060,000
Honeywell International, Inc. 2,650,000 99,375,000
---------------
213,435,000
BUILDING PRODUCTS--2.1%
Masco Corporation 4,433,600 $ 136,022,848
ENVIRONMENTAL & FACILITIES SERVICES--1.5%
Waste Management, Inc. 3,374,300 $ 96,538,723
INDUSTRIAL CONGLOMERATES--1.1%
Tyco International Ltd. 2,558,000 $ 71,240,300
COMPUTER HARDWARE--3.2%
Hewlett-Packard Company 3,875,000 $ 113,150,000
Sun Microsystems, Inc. (a) 23,870,000 93,570,400
---------------
206,720,400
DATA PROCESSING & OUTSOURCED SERVICES--3.3%
First Data Corporation 3,350,000 $ 134,000,000
Automatic Data Processing, Inc. 1,800,000 77,472,000
---------------
211,472,000
OFFICE ELECTRONICS--1.3%
Xerox Corporation (a) 5,972,400 $ 81,523,260
SEMICONDUCTORS--2.2%
Intel Corp. 3,000,000 $ 73,950,000
Texas Instruments Incorporated 2,000,000 67,800,000
---------------
141,750,000
TOTAL COMMON STOCKS (COST: $4,691,869,175) 5,961,932,896
SHORT TERM INVESTMENTS--4.5%
U.S. GOVERNMENT AGENCIES--1.6%
Federal Home Loan Bank, 3.50% - 3.529%
due 10/27/2005 - 11/10/2005 $ 100,000,000 $ 99,678,113
TOTAL U.S. GOVERNMENT AGENCIES (COST: $99,678,113) 99,678,113
</Table>
11
<Page>
<Table>
<Caption>
NAME PAR VALUE MARKET VALUE
- ------------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS--4.5% (CONT.)
U.S. GOVERNMENT BILLS--1.6%
United States Treasury Bills, 3.125% - 3.22%
due 10/6/2005 - 10/20/2005 $ 100,000,000 $ 99,892,078
TOTAL U.S. GOVERNMENT BILLS (COST: $99,893,327) 99,892,078
REPURCHASE AGREEMENTS--1.3%
IBT Repurchase Agreement, 3.51% dated 9/30/2005 due
10/3/2005, repurchase price $83,524,424, collateralized by
Small Business Administration Bonds, with rates of 5.625%
- 6.30%, with maturities from 11/25/2015 - 8/25/2030, and
with an aggregate market value plus accrued interest of
$87,675,000 $ 83,500,000 $ 83,500,000
IBT Repurchase Agreement, 2.75% dated 9/30/2005 due
10/3/2005, repurchase price $2,763,755, collateralized by
a Small Business Administration Bond, with a rate of
6.875%, with a maturity date of 5/25/2023, and with a
market value plus accrued interest of $2,901,278 2,763,122 2,763,122
---------------
TOTAL REPURCHASE AGREEMENTS (COST: $86,263,122) 86,263,122
TOTAL SHORT TERM INVESTMENTS (COST: $285,834,562) 285,833,313
Total Investments (Cost $4,977,703,737)--97.9% $ 6,247,766,209
Other Assets In Excess Of Other Liabilities--2.1% 136,312,315
---------------
TOTAL NET ASSETS--100% $ 6,384,078,524
===============
</Table>
(a) Non-income producing security.
(b) Represents a foreign domiciled corporation.
(c) Represents an American Depository Receipt.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12
<Page>
THE OAKMARK SELECT FUND
REPORT FROM BILL NYGREN AND HENRY BERGHOEF, PORTFOLIO MANAGERS
[PHOTO OF WILLIAM C. NYGREN]
[PHOTO OF HENRY R. BERGHOEF]
[CHART]
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK SELECT FUND FROM ITS INCEPTION
(11/1/96) TO PRESENT (9/30/05) AS COMPARED TO THE STANDARD & POOR'S 500 INDEX(3)
<Table>
<Caption>
THE OAKMARK
SELECT FUND
(CLASS I) S & P 500
11/1/96 $ 10,000 $ 10,000
12/31/96 $ 11,420 $ 10,543
3/31/97 $ 12,140 $ 10,826
6/30/97 $ 14,180 $ 12,715
9/30/97 $ 16,340 $ 13,668
12/31/97 $ 17,704 $ 14,060
3/31/98 $ 20,078 $ 16,021
6/30/98 $ 20,462 $ 16,551
9/30/98 $ 16,936 $ 14,904
12/31/98 $ 20,575 $ 18,078
3/31/99 $ 22,766 $ 18,979
6/30/99 $ 24,482 $ 20,317
9/30/99 $ 22,028 $ 19,048
12/31/99 $ 23,557 $ 21,882
3/31/00 $ 25,667 $ 22,384
6/30/00 $ 24,324 $ 21,790
9/30/00 $ 27,432 $ 21,578
12/31/00 $ 29,637 $ 19,890
3/31/01 $ 32,826 $ 17,532
6/30/01 $ 35,865 $ 18,558
9/30/01 $ 34,496 $ 15,834
12/31/01 $ 37,359 $ 17,526
3/31/02 $ 38,306 $ 17,574
6/30/02 $ 35,206 $ 15,220
9/30/02 $ 29,720 $ 12,590
12/31/02 $ 32,699 $ 13,653
3/31/03 $ 32,535 $ 13,223
6/30/03 $ 37,806 $ 15,258
9/3/03 $ 37,820 $ 15,662
12/31/03 $ 42,181 $ 17,569
3/31/04 $ 43,214 $ 17,866
6/30/04 $ 42,553 $ 18,174
9/30/04 $ 42,980 $ 17,835
12/31/04 $ 46,286 $ 19,481
3/31/05 $ 46,342 $ 19,062
6/30/05 $ 46,217 $ 19,323
9/30/05 $ 46,411 $ 20,020
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
(AS OF 09/30/05)
SINCE
TOTAL RETURN INCEPTION
LAST 3 MONTHS* 1-YEAR 5-YEAR (11/1/96)
- ----------------------------------------------------------------------------------
OAKMARK SELECT FUND (CLASS I) 0.42% 7.98% 11.08% 18.78%
S&P 500 3.60% 12.25% -1.49% 8.09%
S&P MidCap 400(7) 4.88% 22.16% 7.04% 14.26%
Lipper Mid Cap Value Index(8) 4.25% 19.33% 10.53% 11.09%
</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 up fractionally in the quarter compared to a 4% gain
in the S&P 500. Our only portfolio addition was Discovery Holdings, which we
received as a spin-off from Liberty Media. We did not eliminate any holdings.
Last quarter we wrote about our biggest gainer, H&R Block. This quarter H&R
Block was our biggest loser, giving back the prior quarter's gains. Neither of
those price moves appeared to be a response to H&R Block's satisfactory
long-term business results. Such short-term moves seem random, and that is one
of many reasons why we focus on long-term fundamental value instead.
Burlington Resources, our best performer, increased by over 40% during the past
quarter. For the full fiscal year, Burlington increased by more than 100%,
making it also our top performer for the fiscal year. We bought Burlington four
years ago because we thought the market was undervaluing Burlington's long-lived
natural gas reserves and was not giving enough credit to a management team that
we felt was intelligently investing its cash flow. Had we anticipated natural
gas prices quadrupling we'd have owned a lot more! But, we are now unwilling to
rely on the sustainability of current gas prices for our long-term Burlington
valuation, so we have reduced our position, preventing Burlington from becoming
oversized.
Our portfolio has recently lagged behind both the market and the funds we
compete with, in our view, due to underweighting of cyclical businesses,
including energy. We believe that higher quality businesses, which are priced
similarly to cyclical businesses, present more opportunity. Typically when our
performance lags, it is because we made several large fundamental errors. But,
last year we had only one stock that declined by more than 10% (Chiron, which
has been sold). We continue to anticipate that above-average growth for cyclical
and commodity businesses will come to an end, and when that happens, appropriate
quality spreads will be restored. We believe the portfolio is well-positioned
for that environment.
Best wishes,
/s/ Bill C. 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--SEPTEMBER 30, 2005
<Table>
<Caption>
NAME SHARES HELD MARKET VALUE
- ------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--92.3%
APPAREL RETAIL--6.2%
Limited Brands 9,580,981 $ 195,739,442
The Gap, Inc. 10,060,000 175,345,800
---------------
371,085,242
BROADCASTING & CABLE TV--5.0%
Liberty Media Corporation, Class A (a) 28,000,000 $ 225,400,000
Discovery Holding Company, Class A (a) 5,300,000 76,532,000
---------------
301,932,000
LEISURE PRODUCTS--2.7%
Mattel, Inc. 9,670,900 $ 161,310,612
MOVIES & ENTERTAINMENT--9.0%
Time Warner, Inc. 16,240,000 $ 294,106,400
Viacom, Inc., Class B 7,350,000 242,623,500
---------------
536,729,900
PUBLISHING--2.6%
Knight-Ridder, Inc. 2,606,500 $ 152,949,420
RESTAURANTS--12.1%
Yum! Brands, Inc. 9,207,000 $ 445,710,870
McDonald's Corporation 8,300,000 277,967,000
---------------
723,677,870
SPECIALIZED CONSUMER SERVICES--6.6%
H&R Block, Inc. (b) 16,519,600 $ 396,140,008
OIL & GAS EXPLORATION & PRODUCTION--4.4%
Burlington Resources, Inc. 3,232,100 $ 262,834,372
OTHER DIVERSIFIED FINANCIAL SERVICES--3.8%
JP Morgan Chase & Co. 6,750,000 $ 229,027,500
SPECIALIZED FINANCE--4.8%
Moody's Corporation 5,647,200 $ 288,458,976
THRIFTS & MORTGAGE FINANCE--14.5%
Washington Mutual, Inc. 22,217,400 $ 871,366,428
HEALTH CARE SERVICES--3.5%
IMS Health Incorporated 8,303,441 $ 208,997,610
PHARMACEUTICALS--3.8%
Bristol-Myers Squibb Company 9,490,200 $ 228,334,212
DIVERSIFIED COMMERCIAL AND PROFESSIONAL SERVICES--4.3%
The Dun & Bradstreet Corporation (a)(b) 3,934,900 $ 259,191,863
</Table>
14
<Page>
<Table>
<Caption>
SHARES HELD/
NAME PAR VALUE MARKET VALUE
- ------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--92.3% (CONT.)
DATA PROCESSING & OUTSOURCED SERVICES--5.2%
First Data Corporation 7,815,400 $ 312,616,000
OFFICE ELECTRONICS--3.8%
Xerox Corporation (a) 16,746,400 $ 228,588,360
TOTAL COMMON STOCKS (COST: $3,765,847,641) 5,533,240,373
SHORT TERM INVESTMENTS--7.9%
U.S. GOVERNMENT AGENCIES--1.7%
Federal Home Loan Bank, 3.50% - 3.63%
due 10/27/2005 - 11/10/2005 $ 100,000,000 $ 99,674,472
TOTAL U.S. GOVERNMENT AGENCIES (COST: $99,674,472) 99,674,472
U.S. GOVERNMENT BILLS--5.0%
United States Treasury Bills, 3.125% - 3.45%
due 10/6/2005 - 12/8/2005 $ 300,000,000 $ 299,017,150
TOTAL U.S. GOVERNMENT BILLS (COST: $298,901,750) 299,017,150
REPURCHASE AGREEMENTS--1.2%
IBT Repurchase Agreement, 3.51% dated 9/30/2005 due 10/3/2005, repurchase
price $73,521,499, collateralized by Small Business Administration Bonds,
with rates of 6.00% - 6.74%, with maturities from 3/25/2018 - 4/25/2030,
and with an aggregate market value plus accrued interest of $77,175,000 $ 73,500,000 $ 73,500,000
IBT Repurchase Agreement, 2.75% dated 9/30/2005 due 10/3/2005, repurchase
price $1,536,213, collateralized by a Small Business Administration Bond,
with a rate of 6.125%, with a maturity date of 1/25/2027, and with a
market value plus accrued interest of $1,612,654 1,535,861 1,535,861
---------------
TOTAL REPURCHASE AGREEMENTS (COST: $75,035,861) 75,035,861
TOTAL SHORT TERM INVESTMENTS (COST: $473,612,083) 473,727,483
Total Investments (Cost $4,239,459,724)--100.2% $ 6,006,967,856
Other Liabilities In Excess Of Other Assets--(0.2)% (13,794,402)
---------------
TOTAL NET ASSETS--100% $ 5,993,173,454
===============
</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 (9/30/05) AS COMPARED TO THE LIPPER BALANCED FUND
INDEX(9)
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
(AS OF 09/30/05)
SINCE
TOTAL RETURN INCEPTION
LAST 3 MONTHS* 1-YEAR 5-YEAR (11/1/95)
- ------------------------------------------------------------------------------------
OAKMARK EQUITY & INCOME
FUND (CLASS I) 5.83% 13.65% 12.17% 14.06%
Lipper Balanced Fund Index 2.92% 10.05% 2.89% 7.95%
S&P 500(3) 3.60% 12.25% -1.49% 9.60%
Lehman Govt./Corp. Bond(10) -0.96% 2.58% 6.89% 6.49%
</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
RETROSPECTIVE
The Oakmark Equity and Income Fund recorded a return of 6% for the quarter ended
September 30. This contrasts with the 3% result for the Lipper Balanced Fund
Index, our primary standard of comparison. Positive rates of return always
please us, as we know that many of our shareholders depend on earnings from the
Fund to sustain their lifestyles. We are especially happy to earn positive
returns in the summer quarter, however, as the securities markets have often
found this particular period to be challenging. (More than half of the quarters
in which the Fund has lost money have been summer quarters.) September 30 also
ends the Fund's fiscal year. For the fiscal twelve months the Fund earned
approximately 14% while the comparable Lipper Balanced Fund figure increased
10%.
Our firm's investment research department has adopted the practice of including
a brief retrospective on our investment history with a stock when they review
one of their stocks for our investment committee. Since we have found these
reports to be a valuable investment tool, we thought that we should do the same
for the Equity and Income Fund at the fiscal year-end. And, while the official
tenth birthday for the Fund will not occur until the beginning of November, the
September quarter was the 40th quarter in the Fund's history, so we will call
this a ten-year retrospective. Through September 30, our annualized rate of
return since inception has been 14%. Nine of ten fiscal years have produced
positive returns, and the only negative outcome (the year ended 9/30/02) was a
relatively small loss of 0.5%. This first decade has met our goal of providing
equity-like returns (I.E. greater than 10%/year) while experiencing less
volatility than an all-equity portfolio.
Though the past ten years have been replete with challenges, they have generally
been a wonderful time to be a value investor. Your portfolio managers often
whine and moan about the prevailing investment environment, but we know that we
are blessed to do what we do and to do it at Harris Associates L.P., your Fund's
adviser. We truly are honored to have you, the Fund shareholders, invest
alongside us in The Oakmark Equity and Income Fund. We hope that we have the
privilege of working together with you for many years into the future.
IT'S AN ILL WIND....
No doubt many writers have borrowed from Shakespeare's THE TEMPEST to begin an
article that references the recent hurricanes in the Gulf of Mexico. Let us say
at the outset that we deeply regret the terrible impact these storms have had on
millions of lives. Nevertheless, an unusual aspect of investing is that tragic
events do affect investment
16
<Page>
returns. These particular storms have enhanced the current value of several of
the Fund's holdings.
As value investors, we try to create portfolios with favorable risk/reward
characteristics. We attempt to purchase securities at a price that already fully
discounts negative possibilities. This means that when unexpected favorable
events occur, holdings have considerable upside potential. Our five holdings
that are North American exploration and production companies (Burlington
Resources, XTO Energy, St. Mary Land & Exploration, Encana, and Cabot Oil & Gas)
experienced a price increase as a result of the recent hurricanes. The five
companies have limited operations in the Gulf of Mexico; in fact, Encana sold
its Gulf properties only six months ago. The disruption and destruction of Gulf
production facilities and pipelines helped to drive the price of natural gas up
80% in the summer quarter, and while the five companies had pre-sold some of
their next few years' production at lower prices, much of their gas will sell at
the current high price level. Our holding in ConocoPhillips has also benefited,
but for a different reason. ConocoPhillips is a major refiner of oil and, with
many refineries off-line after the storms, unaffected facilities have become
more valuable.
Over the four years that we have owned stocks of companies in this sector,
clients have occasionally asked if we based our ownership on a forecast of
rising commodity prices. In fact, our process asks the market to estimate the
outlook for commodity prices. We assume that the futures markets for commodities
provide a viable basis from which to establish valuations for resource company
assets. When we initiated positions in Burlington Resources and XTO Energy in
2001, we used prevailing futures prices to determine that both companies traded
at a discount to our estimate of liquidation value of their energy reserves.
And, we were paying NOTHING for the operating companies, I.E. the talent and
infrastructure that had discovered the gas and oil. Opportunities to obtain
something for free always attract us. In this case we also obtained a favorably
weighted distribution of surprise outcomes because the prices for gas and oil
were low relative to production costs.
The situation is obviously different today. The near-term price for natural gas
far exceeds the level needed to justify new investment intended to increase
supply. The futures market understands this and has priced delivery of natural
gas in 2009 at half the price that it assigns to current delivery. The next two
winters could be difficult, however. While natural gas is abundant in many parts
of the world, the ability to deliver this gas to North America is limited. Many
liquefied natural gas (LNG) terminals have been proposed, but few are under
construction. And while Canada has plentiful untapped supplies in the McKenzie
Delta, the pipelines to deliver this gas have yet to complete the permitting
process, and construction is not likely to be finished for several years. As a
result, we currently base our valuations of U.S. natural gas producers on a
forecast of high profitability for the next two years with a significant
drop-off in 2008.
We have often written in these letters that we go wherever our understanding of
value takes us. The recent hurricanes may have accelerated the process by which
price and value come together for our exploration and production company
holdings. The hurricanes may also provide new value opportunities for us as we
expect many companies to report disappointing earnings in the second half of the
year.
/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--SEPTEMBER 30, 2005
<Table>
<Caption>
NAME SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------
EQUITY AND EQUIVALENTS--61.1%
COMMON STOCKS--61.1%
APPAREL RETAIL--1.5%
The TJX Companies, Inc. 7,240,000 $ 148,275,200
BROADCASTING & CABLE TV--5.5%
EchoStar Communications Corporation, Class A 8,218,420 $ 243,018,679
The E.W. Scripps Company, Class A 2,500,000 124,925,000
The DIRECTV Group, Inc. (a) 8,026,722 120,240,296
Clear Channel Communications, Inc. 1,500,000 49,335,000
---------------
537,518,975
HOMEBUILDING--0.1%
Pulte Homes, Inc. 200,000 $ 8,584,000
LEISURE PRODUCTS--0.4%
Brunswick Corp. 1,000,000 $ 37,730,000
MOVIES & ENTERTAINMENT--1.3%
Viacom, Inc., Class B 3,817,300 $ 126,009,073
PUBLISHING--0.8%
The Washington Post Company, Class B 100,300 $ 80,490,750
RESTAURANTS--1.0%
McDonald's Corporation 3,000,000 $ 100,470,000
BREWERS--0.4%
InBev NV 1,000,000 $ 39,561,111
DISTILLERS & VINTNERS--2.4%
Diageo plc (b) 4,100,000 $ 237,841,000
HYPERMARKETS & SUPER CENTERS--1.4%
Costco Wholesale Corporation 3,200,000 $ 137,888,000
PACKAGED FOODS & MEATS--4.0%
Nestle SA (b) 3,900,000 $ 285,511,200
Dean Foods Company (a) 1,950,000 75,777,000
Sanderson Farms, Inc. 550,000 20,438,000
TreeHouse Foods, Inc. (a) 325,000 8,736,000
---------------
390,462,200
PERSONAL PRODUCTS--0.8%
Avon Products, Inc. 3,000,000 $ 81,000,000
</Table>
18
<Page>
<Table>
<Caption>
NAME SHARES HELD MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------
EQUITY AND EQUIVALENTS--61.1% (CONT.)
TOBACCO--1.3%
UST, Inc. 3,000,000 $ 125,580,000
INTEGRATED OIL & GAS--1.4%
ConocoPhillips 2,000,000 $ 139,820,000
OIL & GAS EXPLORATION & PRODUCTION--13.1%
Burlington Resources, Inc. 7,056,000 $ 573,793,920
XTO Energy, Inc. 10,561,338 478,639,838
EnCana Corp. (c) 2,000,000 116,620,000
St. Mary Land & Exploration Company (d) 2,900,000 106,140,000
Cabot Oil & Gas Corporation 125,000 6,313,750
---------------
1,281,507,508
INVESTMENT BANKING & BROKERAGE--1.8%
Morgan Stanley 3,200,000 $ 172,608,000
PROPERTY & CASUALTY INSURANCE--4.4%
SAFECO Corporation 4,000,000 $ 213,520,000
MBIA, Inc. 1,850,000 112,147,000
The Progressive Corporation 1,050,000 110,008,500
---------------
435,675,500
REAL ESTATE INVESTMENT TRUSTS--0.7%
Plum Creek Timber Company, Inc. 1,701,444 $ 64,501,742
BIOTECHNOLOGY--2.2%
MedImmune, Inc. (a) 6,000,000 $ 201,900,000
Techne Corporation (a) 176,471 10,055,318
---------------
211,955,318
HEALTH CARE EQUIPMENT--2.3%
Hospira, Inc. (a) 3,750,000 $ 153,637,500
Varian, Inc. (a)(d) 1,649,400 56,607,408
CONMED Corporation (a) 570,100 15,894,388
---------------
226,139,296
HEALTH CARE SERVICES--2.7%
Caremark Rx, Inc. (a) 5,301,300 $ 264,693,909
AEROSPACE & DEFENSE--6.7%
General Dynamics Corporation 2,060,300 $ 246,308,865
Raytheon Company 3,599,700 136,860,594
Rockwell Collins, Inc. 2,105,700 101,747,424
Alliant Techsystems, Inc. (a) 1,325,000 98,911,250
Honeywell International, Inc. 1,889,500 70,856,250
---------------
654,684,383
</Table>
19
<Page>
<Table>
<Caption>
SHARES HELD/
NAME PAR VALUE MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------
EQUITY AND EQUIVALENTS--61.1% (CONT.)
COMMERCIAL PRINTING--1.8%
R.R. Donnelley & Sons Company 4,909,500 $ 181,995,165
HUMAN RESOURCE & EMPLOYMENT SERVICES--0.3%
Watson Wyatt & Company Holdings 1,236,100 $ 33,312,895
INDUSTRIAL CONGLOMERATES--0.4%
Tyco International Ltd. 1,500,000 $ 41,775,000
APPLICATION SOFTWARE--0.5%
Mentor Graphics Corporation (a)(d) 3,640,000 $ 31,304,000
The Reynolds and Reynolds Company, Class A 614,000 16,829,740
---------------
48,133,740
COMPUTER STORAGE & PERIPHERALS--0.5%
Imation Corp. 1,215,000 $ 52,087,050
DATA PROCESSING & OUTSOURCED SERVICES--1.0%
Ceridian Corporation (a) 4,800,000 $ 99,600,000
INTERNET SOFTWARE & SERVICES--0.2%
Jupiter Telecommunications Co., Ltd. (a)(c) 21,300 $ 18,412,389
PAPER PRODUCTS--0.2%
Schweitzer-Mauduit International, Inc. 700,000 $ 15,624,000
TOTAL COMMON STOCKS (COST: $4,272,578,368) 5,993,936,204
TOTAL EQUITY AND EQUIVALENTS (COST: $4,272,578,368) 5,993,936,204
FIXED INCOME--36.6%
CORPORATE BONDS--0.3%
PUBLISHING--0.1%
PRIMEDIA, Inc., 8.00% due 5/15/2013 $ 10,000,000 $ 10,075,000
PAPER PACKAGING--0.2%
Sealed Air Corporation, 144A, 5.625% due 7/15/2013 (e) $ 20,000,000 $ 20,054,940
TOTAL CORPORATE BONDS (COST: $30,250,100) 30,129,940
GOVERNMENT AND AGENCY SECURITIES--36.3%
CANADIAN GOVERNMENT BONDS--5.6%
Canada Government, 3.25% due 12/1/2006 CAD 250,000,000 $ 215,075,712
Canada Government, 3.00% due 6/1/2007 CAD 250,000,000 214,038,975
Canada Government, 3.00% due 12/1/2005 CAD 125,000,000 107,566,893
Province of Alberta, 7.25% due 10/28/2005 CAD 10,000,000 8,625,217
---------------
545,306,797
</Table>
20
<Page>
<Table>
<Caption>
NAME PAR VALUE MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------
FIXED INCOME--36.6% (CONT.)
GOVERNMENT AND AGENCY SECURITIES--36.3% (CONT.)
NORWEGIAN GOVERNMENT BONDS--0.2%
Norway Government, 6.75% due 1/15/2007 NOK 100,000,000 $ 16,042,316
SWEDISH GOVERNMENT BONDS--0.1%
Kingdom of Sweden, 3.50% due 4/20/2006 SEK 50,000,000 $ 6,514,587
U.S. GOVERNMENT NOTES--22.7%
United States Treasury Notes, 4.125% due 8/15/2010 $ 500,000,000 $ 497,754,000
United States Treasury Notes, 4.00% due 4/15/2010 500,000,000 495,449,000
United States Treasury Notes, 3.375% due 1/15/2007,
Inflation Indexed 262,654,560 271,632,093
United States Treasury Notes, 6.00% due 8/15/2009 250,000,000 265,869,250
United States Treasury Notes, 4.125% due 8/15/2008 250,000,000 249,629,000
United States Treasury Notes, 4.00% due 6/15/2009 250,000,000 248,281,250
United States Treasury Notes, 4.25% due 8/15/2015 200,000,000 198,750,000
---------------
2,227,364,593
U.S. GOVERNMENT AGENCIES--7.7%
Fannie Mae, 5.25% due 4/15/2007 $ 50,000,000 $ 50,629,500
Federal Home Loan Mortgage Corporation,
4.00% due 8/17/2007 50,000,000 49,697,800
Federal Home Loan Bank, 4.125% due 4/18/2008 50,000,000 49,693,250
Federal Home Loan Mortgage Corporation,
3.75% due 11/15/2006 50,000,000 49,648,600
Fannie Mae, 3.875% due 5/15/2007 50,000,000 49,598,600
Federal Home Loan Bank, 3.625% due 6/20/2007 50,000,000 49,420,700
Federal Home Loan Bank, 3.875% due 8/22/2008 50,000,000 49,233,100
Federal Home Loan Bank, 5.00% due 12/20/2011 34,555,000 34,363,565
Fannie Mae, 4.25% due 7/15/2007 25,000,000 24,936,725
Fannie Mae, 4.25% due 5/15/2009 25,000,000 24,798,675
Federal Home Loan Mortgage Corporation,
3.75% due 4/15/2007 25,000,000 24,776,700
Federal Home Loan Bank, 2.875% due 9/15/2006 25,000,000 24,657,800
Federal Home Loan Bank, 2.625% due 10/16/2006 25,000,000 24,562,075
Federal Home Loan Bank, 2.75% due 12/15/2006 25,000,000 24,528,225
Fannie Mae, 3.25% due 11/15/2007 25,000,000 24,421,725
Fannie Mae, 3.625% due 12/28/2009 24,435,000 24,144,468
Federal Home Loan Mortgage Corporation,
3.625% due 3/24/2008 20,000,000 19,926,000
Federal Home Loan Bank, 2.50% due 4/20/2009 20,000,000 19,817,100
Fannie Mae, 2.60% due 4/28/2009 18,800,000 18,626,138
Fannie Mae, 3.50% due 2/8/2010 15,315,000 15,265,150
Fannie Mae, 4.25% due 2/19/2010 12,888,000 12,666,687
</Table>
21
<Page>
<Table>
<Caption>
NAME PAR VALUE MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------
FIXED INCOME--36.6% (CONT.)
GOVERNMENT AND AGENCY SECURITIES--36.3% (CONT.)
U.S. GOVERNMENT AGENCIES--7.7% (CONT.)
Fannie Mae, 3.125% due 11/30/2009 $ 12,697,000 $ 12,605,886
Federal Home Loan Mortgage Corporation,
3.00% due 11/17/2006 10,000,000 9,851,520
Fannie Mae, 3.00% due 10/6/2009 10,000,000 9,849,340
Fannie Mae, 3.375% due 3/3/2008 9,300,000 9,247,994
Fannie Mae, 3.50% due 10/14/2010 7,550,000 7,477,301
Federal Home Loan Bank, 4.00% due 8/17/2007 7,500,000 7,447,665
Federal Home Loan Bank, 3.00% due 12/30/2009 5,000,000 5,019,260
Federal Home Loan Bank, 4.30% due 8/16/2010 5,000,000 4,993,515
Fannie Mae, 4.00% due 4/13/2009 5,000,000 4,988,660
Federal Home Loan Bank, 4.52% due 8/26/2009 4,825,000 4,792,031
Fannie Mae, 5.125% due 5/4/2012 4,013,000 4,009,071
Federal Home Loan Bank, 3.50% due 2/22/2007 4,000,000 3,976,552
Federal Home Loan Bank, 3.00% due 2/24/2010 3,000,000 2,985,885
Fannie Mae, 3.75% due 6/23/2009 2,820,000 2,801,645
Federal Home Loan Mortgage Corporation,
3.125% due 9/15/2010 2,500,000 2,487,475
Federal Home Loan Bank, 2.40% due 3/9/2009 2,000,000 1,984,048
Federal Home Loan Mortgage Corporation,
3.00% due 1/13/2009 1,000,000 996,776
---------------
760,927,207
TOTAL GOVERNMENT AND AGENCY SECURITIES (COST: $3,536,689,929) 3,556,155,500
TOTAL FIXED INCOME (COST: $3,566,940,029) 3,586,285,440
</Table>
22
<Page>
<Table>
<Caption>
NAME PAR VALUE MARKET VALUE
- ---------------------------------------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS--1.9%
REPURCHASE AGREEMENTS--1.9%
IBT Repurchase Agreement, 3.51% dated 9/30/2005
due 10/3/2005, repurchase price $181,052,943, collateralized by Small
Business Administration Bonds, with rates of 6.066% - 7.085%, with
maturities from 2/25/2015 - 3/25/2030, and with an aggregate market value
plus accrued interest of $190,050,000 $ 181,000,000 $ 181,000,000
IBT Repurchase Agreement, 2.75% dated 9/30/2005 due 10/3/2005, repurchase
price $2,367,289, collateralized by a Small Business Administration Bond,
with a rate of 6.875%, with a maturity date of 5/25/2016, and with a
market value plus accrued interest of $2,485,084 2,366,746 2,366,746
---------------
TOTAL REPURCHASE AGREEMENTS (COST: $183,366,746) 183,366,746
TOTAL SHORT TERM INVESTMENTS (COST: $183,366,746) 183,366,746
Total Investments (Cost $8,022,885,143)--99.6% $ 9,763,588,390
Other Assets In Excess Of Other Liabilities--0.4% 41,631,433
---------------
TOTAL NET ASSETS--100% $ 9,805,219,823
===============
</Table>
(a) Non-income producing security.
(b) Represents an American Depository Receipt.
(c) Represents a foreign domiciled corporation.
(d) See footnote number five in the Notes to the Financial Statements regarding
investments in affiliated issuers.
(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
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 (9/30/05) AS COMPARED TO THE MSCI WORLD INDEX(11)
<Table>
<Caption>
THE OAKMARK
GLOBAL FUND MSCI WORLD
(CLASS I) INDEX
8/4/99 $ 10,000 $ 10,000
9/30/99 $ 9,180 $ 9,883
12/31/99 $ 9,981 $ 11,550
3/31/00 $ 10,061 $ 11,668
6/30/00 $ 10,381 $ 11,255
9/30/00 $ 10,922 $ 10,689
12/31/00 $ 11,562 $ 10,028
3/31/01 $ 11,480 $ 8,739
6/30/01 $ 13,289 $ 8,959
9/30/01 $ 11,071 $ 7,676
12/31/01 $ 13,880 $ 8,335
3/31/02 $ 15,387 $ 8,364
6/30/02 $ 14,372 $ 7,601
9/30/02 $ 11,828 $ 6,204
12/31/02 $ 13,587 $ 6,678
3/31/03 $ 12,153 $ 6,340
6/30/03 $ 16,225 $ 7,420
9/30/03 $ 17,774 $ 7,779
12/31/03 $ 20,242 $ 8,889
3/31/04 $ 21,029 $ 9,121
6/30/04 $ 21,323 $ 9,201
9/30/04 $ 20,714 $ 9,109
12/31/04 $ 23,407 $ 10,197
3/31/05 $ 23,546 $ 10,084
6/30/05 $ 23,696 $ 10,126
9/30/05 $ 25,660 $ 10,833
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
(AS OF 09/30/05)
SINCE
TOTAL RETURN INCEPTION
LAST 3 MONTHS* 1-YEAR 5-YEAR (8/4/99)
- ----------------------------------------------------------------------------------
OAKMARK GLOBAL FUND (CLASS I) 8.29% 23.88% 18.62% 16.53%
MSCI World 6.98% 18.93% 0.27% 1.30%
Lipper Global Fund Index(12) 8.04% 20.60% 1.03% 3.58%
</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 Global Fund appreciated 8% for the quarter, outperforming the MSCI
World Index, which was up 7%. More importantly, over the past five years, The
Oakmark Global Fund has returned 19% annualized, compared to an unchanged MSCI
World Index and a 1% return for the Lipper Global Fund Index.
CHANGE IN CO-PORTFOLIO MANAGER
On October 1, 2005, Robert Taylor was named co-portfolio manager of The Oakmark
Global Fund, replacing Michael Welsh. Michael is retiring from Harris Associates
L.P., the Fund's adviser, in January 2006. We wish to extend our heartfelt
thanks to Michael for his tremendous contribution to the Fund's success. We will
miss him as a colleague, and we wish him and his family the best success in all
future endeavors.
All of us at Harris Associates are very excited to have Rob join the Fund. With
the firm since 1994, Rob has managed other global accounts since 2002, and
serves as the Director of International Research. Rob received his BBA from the
University of Wisconsin-Madison (1994) and is a CFA charterholder(R).
We will continue to manage The Oakmark Global Fund using the same value
philosophy employed since its inception. 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 as owners. We base our investment decisions on our own
intensive, fundamental research. Finally, the Fund is constructed stock-by-stock
from the bottom-up, meaning industry and geographic weightings are simply a fall
out of our stock selection.
PORTFOLIO COMPOSITION
We added Tyco International Ltd. to the portfolio this quarter. Tyco, with more
than a $50 billion market capitalization, is a conglomerate with four major
divisions: fire and security, electronics, healthcare, and engineered products.
The company may be best known for the corporate governance problems of its
previous management team, which left the company in 2002. Over the past three
years, the new management team has improved operations, reduced debt, sold some
non-core businesses, and made the company's accounting practices conservative
and transparent. Many of Tyco's subsidiary
24
<Page>
companies have market-share-leading positions in growing industries. Our
opportunity to purchase the stock developed when management reduced earnings
guidance for the second half of 2005. Tyco generates more than $4 billion of
free cash flow per year, affording management considerable operating
flexibility. We would not be surprised to see management restructure the company
over time, because of the minimal synergies between the four major divisions.
BMW, which manufactures and sells luxury cars and motorcycles worldwide, was
also added to the Fund this quarter. Because of its premium brand and product
innovation, the company's growth, operating margins, and returns have been some
of the best in the industry. Unlike its U.S. competitors, BMW does not face
excessive pension obligations and has a very healthy balance sheet. Given the
strength of the brand, management does not have to rely on excessive price
discounts to move volume. Through the first half of the year, deliveries were up
almost 10%. Operational management has been strong, but now even capital
management is improving, as evidenced by a recent 3% share repurchase that is
authorized to extend to 10%. Today BMW sells for 10x earnings and less than 6x
operating profit. The stock yields 2% and is trading at a significant discount
to our estimate of intrinsic value.
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]
GLOBAL DIVERSIFICATION--SEPTEMBER 30, 2005
<Table>
<Caption>
% OF FUND
EQUITY MARKET VALUE
-----------------------------------------------------------------------------
- - EUROPE 43.3%
Switzerland 12.8%
Great Britain 10.5%
* Netherlands 6.8%
* France 5.2%
* Ireland 3.5%
* Germany 3.2%
* Italy 1.3%
- - UNITED STATES 35.2%
- - PACIFIC RIM 18.9%
Japan 11.5%
Korea 4.1%
Australia 3.3%
- - OTHER 1.5%
Bermuda 1.5%
- - LATIN AMERICA 1.1%
Mexico 1.1%
</Table>
* Euro currency countries comprise 20.0% of the Fund.
26
<Page>
THE OAKMARK GLOBAL FUND
SCHEDULE OF INVESTMENTS--SEPTEMBER 30, 2005
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--95.7%
APPAREL RETAIL--2.0%
The TJX Companies, Inc.
(United States) Discount Apparel & Home
Fashion Retailer 1,861,000 $ 38,113,280
APPAREL, ACCESSORIES & LUXURY GOODS--0.4%
Bulgari S.p.A. (Italy) Jewelry Manufacturer & Retailer 740,000 $ 8,314,661
AUTOMOBILE MANUFACTURERS--0.3%
Bayerische Motoren
Werke (BMW)
AG (Germany) Luxury Automobile Manufacturer 107,500 $ 5,047,558
BROADCASTING & CABLE TV--2.2%
Grupo Televisa S.A.
(Mexico) (b) Television Production &
Broadcasting 278,700 $ 19,985,577
Liberty Media
Corporation,
Class A
(United States) (a) Broadcast Services & Programming 2,356,000 18,965,800
Discovery Holding
Company, Class A
(United States) (a) Media Management &
Network Services 235,600 3,402,064
-----------------
42,353,441
HOUSEHOLD APPLIANCES--2.7%
Snap-on Incorporated
(United States) Tool & Equipment Manufacturer 1,431,000 $ 51,687,720
MOTORCYCLE MANUFACTURERS--2.5%
Harley-Davidson, Inc.
(United States) Motorcycle Manufacturer 987,000 $ 47,810,280
MOVIES & ENTERTAINMENT--6.3%
Viacom, Inc., Class B
(United States) Worldwide Entertainment &
Publishing Company 1,595,000 $ 52,650,950
Vivendi Universal SA
(France) Music, Games, Television,
Film, & Telecommunications 1,430,500 46,704,446
Time Warner, Inc.
(United States) Filmed Entertainment &
Television Networks 1,041,000 18,852,510
-----------------
118,207,906
</Table>
27
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--95.7% (CONT.)
PUBLISHING--1.8%
Tribune Company
(United States) Publishing & Broadcast Services 1,003,000 $ 33,991,670
DISTILLERS & VINTNERS--4.2%
Diageo plc (Great Britain) Beverages, Wines, &
Spirits Manufacturer 5,517,500 $ 79,340,878
HOUSEHOLD PRODUCTS--2.8%
Henkel KGaA (Germany) Consumer Chemical Products
Manufacturer 632,000 $ 53,955,826
PACKAGED FOODS & MEATS--5.6%
Nestle SA (Switzerland) Food & Beverage Manufacturer 281,000 $ 82,286,266
Cadbury Schweppes plc
(Great Britain) Beverage & Confectionary
Manufacturer 2,423,000 24,453,808
-----------------
106,740,074
SOFT DRINKS--0.8%
Lotte Chilsung Beverage
Co., Ltd. (Korea) Soft Drinks, Juices & Sports
Drinks Manufacturer 15,120 $ 14,373,780
OIL & GAS EXPLORATION & PRODUCTION--5.4%
Burlington Resources,
Inc. (United States) Oil & Natural Gas
Exploration & Production 1,260,000 $ 102,463,200
ASSET MANAGEMENT & CUSTODY BANKS--2.7%
Julius Baer Holding
AG-B (Switzerland) Asset Management 646,500 $ 50,601,082
DIVERSIFIED BANKS--6.3%
Bank of Ireland (Ireland) Commercial Bank 4,029,000 $ 63,688,881
Australia and New Zealand
Banking Group
Limited (Australia) Commercial Bank 2,260,000 41,368,848
Banco Popolare di
Verona e Novara
Scrl (Italy) Commercial Bank 863,600 16,250,943
-----------------
121,308,672
DIVERSIFIED CAPITAL MARKETS--0.4%
Credit Suisse Group
(Switzerland) Investment Services & Insurance 190,700 $ 8,442,812
</Table>
28
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--95.7% (CONT.)
INVESTMENT BANKING & BROKERAGE--0.8%
Daiwa Securities
Group, Inc. (Japan) Stock Broker 2,062,000 $ 16,116,615
SPECIALIZED FINANCE--4.2%
Euronext NV (Netherlands) Stock Exchange 1,814,000 $ 79,853,916
HEALTH CARE SERVICES--2.4%
Laboratory Corporation of
America Holdings
(United States) (a) Medical Laboratory &
Testing Services 920,000 $ 44,813,200
HEALTH CARE SUPPLIES--1.0%
Ansell Limited (Australia) Protective Rubber &
Plastics Products 2,265,966 $ 19,494,686
PHARMACEUTICALS--11.0%
Takeda Pharmaceutical
Company Limited
(Japan) Pharmaceuticals &
Food Supplements 1,281,000 $ 76,305,767
GlaxoSmithKline plc
(Great Britain) Pharmaceuticals 2,614,200 66,512,170
Novartis AG (Switzerland) Pharmaceuticals 899,600 45,631,632
Santen Pharmaceutical
Co., Ltd. (Japan) Pharmaceuticals 781,000 20,232,982
-----------------
208,682,551
AEROSPACE & DEFENSE--0.9%
Alliant Techsystems, Inc.
(United States) (a) Propulsion Systems & Munitions 239,087 $ 17,847,845
DIVERSIFIED COMMERCIAL AND PROFESSIONAL
SERVICES--3.8%
Equifax Inc. (United States) Credit Reporting & Collection 1,367,000 $ 47,762,980
Meitec Corporation (Japan) Software Engineering Services 760,000 24,309,821
-----------------
72,072,801
ENVIRONMENTAL & FACILITIES SERVICES--2.1%
Waste Management, Inc.
(United States) Waste Management Services 1,425,000 $ 40,769,250
HUMAN RESOURCE & EMPLOYMENT SERVICES--1.1%
Michael Page International
plc (Great Britain) Recruitment Consultancy Services 4,815,400 $ 20,900,878
</Table>
29
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--95.7% (CONT.)
INDUSTRIAL CONGLOMERATES--1.4%
Tyco International Ltd.
(Bermuda) Diversified Manufacturing & Services 975,000 $ 27,153,750
OFFICE SERVICES & SUPPLIES--0.4%
United Stationers, Inc.
(United States) (a) Business Products Distributor 150,000 $ 7,179,000
DATA PROCESSING & OUTSOURCED SERVICES--6.0%
eFunds Corporation
(United States) (a) Electronic Debit Payment Services 2,237,100 $ 42,124,593
First Data Corporation
(United States) Data Processing & Management 1,004,750 40,190,000
Ceridian Corporation
(United States) (a) Data Management Services 1,538,000 31,913,500
-----------------
114,228,093
OFFICE ELECTRONICS--2.5%
Neopost SA (France) Mailroom Equipment Supplier 494,750 $ 47,965,698
SEMICONDUCTORS--1.5%
Rohm Company
Limited (Japan) Integrated Circuits &
Semi-Conductor Devices
Manufacturer 321,000 $ 27,861,391
DIVERSIFIED CHEMICALS--2.3%
Akzo Nobel N.V.
(Netherlands) Chemical Producer 992,300 $ 43,264,446
SPECIALTY CHEMICALS--2.4%
Lonza Group AG,
Registered Shares
(Switzerland) Industrial Organic Chemicals 408,400 $ 24,107,985
Givaudan (Switzerland) Fragrance & Flavor Compound
Manufacturer 32,800 21,009,233
-----------------
45,117,218
WIRELESS TELECOMMUNICATION SERVICES--5.5%
SK Telecom Co.,
Ltd. (Korea) Mobile Telecommunications 300,000 $ 58,217,537
NTT DoCoMo, Inc.
(Japan) Mobile Telecommunications 24,600 43,787,285
SK Telecom Co., Ltd.
(Korea) (b) Mobile Telecommunications 55,000 1,201,200
-----------------
103,206,022
TOTAL COMMON STOCKS (COST: $1,358,187,848) 1,819,280,200
</Table>
30
<Page>
<Table>
<Caption>
NAME PAR VALUE MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS--3.4%
U.S. GOVERNMENT AGENCIES--1.0%
Federal Home Loan Mortgage Corp., 3.64% due 10/18/2005 $ 10,000,000 $ 10,009,100
Federal Home Loan Bank, 3.55% due 10/7/2005 10,000,000 9,994,084
TOTAL U.S. GOVERNMENT AGENCIES (COST: $20,003,184) 20,003,184
REPURCHASE AGREEMENTS--2.4%
IBT Repurchase Agreement, 3.51% dated 9/30/2005 due 10/3/2005, repurchase
price $44,012,870, collateralized by Small Business Administration Bonds,
with rates of 5.875% - 6.375%, with maturities from 12/25/2015 -
11/15/2030, and with an aggregate market value plus accrued interest of
$46,200,000 $ 44,000,000 $ 44,000,000
IBT Repurchase Agreement, 2.75% dated 9/30/2005 due 10/3/2005, repurchase
price $1,471,493, collateralized by a Small Business Administration Bond,
with a rate of 7.375%, with a maturity date of 4/25/2026, and with a
market value plus accrued interest of $1,544,713 1,471,155 1,471,155
-----------------
TOTAL REPURCHASE AGREEMENTS (COST: $45,471,155) 45,471,155
TOTAL SHORT TERM INVESTMENTS (COST: $65,474,339) 65,474,339
Total Investments (Cost $1,423,662,187)--99.1% $ 1,884,754,539
Other Assets In Excess Of Other Liabilities--0.9% 16,750,531
-----------------
TOTAL NET ASSETS--100% $ 1,901,505,070
=================
</Table>
(a) Non-income producing security.
(b) Represents an American Depository Receipt.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31
<Page>
THE OAKMARK INTERNATIONAL AND OAKMARK INTERNATIONAL SMALL CAP FUNDS
[PHOTO OF DAVID G. HERRO]
FELLOW SHAREHOLDERS,
The Oakmark International and Oakmark International Small Cap Funds had an
acceptable fourth quarter with returns of 9% and 11% respectively. For the
fiscal year, The Oakmark International Fund returned 26% and The Oakmark
International Small Cap Fund returned 29%. This compares to the MSCI World ex
U.S. Index(13) return of 27%. Most importantly, since the Funds' inceptions,
they have posted annualized returns of 13% and 14% respectively. This compares
very well to the MSCI World ex U.S. Index, which returned 8% relative to the
International Fund and 7% relative to the International Small Cap Fund.
EUROPE, JAPAN AND THE BIG PICTURE
Last quarter we wrote about Europe's failure to embrace real economic reform. We
argued that no country or region could afford to be complacent about
competitiveness, especially in a challenging global economy. In September, an
important election in Germany pitted a reform candidate against the relatively
stale Gerhard Schroeder. Sadly, the results demonstrated that the electorate of
Europe's largest economy isn't quite convinced that the status quo is all that
bad. It was finally decided that Angela Merkel will be the new German
chancellor, but with heavy involvement by outgoing chancellor, Gerhard
Schroeder's opposition party. A few weeks after the German elections, Poland
held its election with opposite results: it threw out the old communists for a
free market government. Is there something Old Europe can learn from New?
More damning for Old Europe is that Japan recently faced the same choice, but,
with a different result. Prime Minister Koizumi called a snap election because
there was opposition to his plan to liberalize the Postal Savings Banks. Though
it was quite a gamble, Koizumi and reform won big. Is Japan finally on the brink
of fundamental change? This is certainly a possibility. But of course, economic
reform is one issue; far more important are the events within corporate Japan
itself. Unfortunately, the vast majority of corporate Japan still appears locked
into a culture that places shareholder value behind numerous other objectives.
The good news is that a select number of Japanese companies are changing. As a
result of these changes and low valuations, we have been able to significantly
increase our weightings in Japan, though we still remain underweighted there
relative to the MSCI World ex U.S. Index.
MIKE WELSH
Before I end this report, I would like to wish my longtime partner, Mike Welsh,
a fond farewell. Mike has chosen to retire from Harris Associates L.P. effective
January 2006. Mike was the first person I hired back in September 1992 when The
Oakmark International Fund started, and he was made a co-manager a few years
later. He has been a solid contributor to the success of the Funds, most notably
for his savvy stock recommendations in South Korea during the second half of the
1990s. We wish him well in the next chapter of his life.
/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 (9/30/05) AS COMPARED TO THE MSCI WORLD EX U.S.
INDEX(13)
<Table>
<Caption>
THE OAKMARK
INTERNATIONAL MSCI WORLD EX
FUND (CLASS I) U.S. INDEX
9/30/92 $ 10,000 $ 10,000
12/31/92 $ 10,043 $ 9,628
3/31/93 $ 11,890 $ 10,766
6/30/93 $ 12,300 $ 11,834
9/30/93 $ 13,387 $ 12,562
12/31/93 $ 15,424 $ 12,729
3/31/94 $ 15,257 $ 13,133
6/30/94 $ 14,350 $ 13,748
9/30/94 $ 15,278 $ 13,830
12/31/94 $ 14,026 $ 13,664
3/31/95 $ 13,563 $ 13,924
6/30/95 $ 14,749 $ 14,060
9/30/95 $ 15,507 $ 14,631
12/31/95 $ 15,193 $ 15,222
3/31/96 $ 17,021 $ 15,681
6/30/96 $ 18,383 $ 15,937
9/30/96 $ 18,347 $ 15,950
12/31/96 $ 19,450 $ 16,268
3/31/97 $ 20,963 $ 16,016
6/30/97 $ 22,700 $ 18,094
9/30/97 $ 23,283 $ 18,027
12/31/97 $ 20,097 $ 16,637
3/31/98 $ 22,994 $ 19,083
6/30/98 $ 20,253 $ 19,233
9/30/98 $ 16,322 $ 16,404
12/31/98 $ 18,688 $ 19,759
3/31/99 $ 21,258 $ 20,070
6/30/99 $ 25,728 $ 20,650
9/30/99 $ 23,896 $ 21,535
12/31/99 $ 26,065 $ 25,277
3/31/00 $ 26,012 $ 25,416
6/30/00 $ 27,856 $ 24,530
9/30/00 $ 27,306 $ 22,663
12/31/00 $ 29,324 $ 21,897
3/31/01 $ 26,763 $ 18,825
6/30/01 $ 29,437 $ 18,629
9/30/01 $ 23,728 $ 16,062
12/31/01 $ 27,819 $ 17,212
3/31/02 $ 31,006 $ 17,310
6/30/02 $ 30,315 $ 16,923
9/30/02 $ 23,365 $ 13,603
12/31/02 $ 25,465 $ 14,492
3/31/03 $ 22,481 $ 13,402
6/30/03 $ 28,198 $ 15,978
9/30/03 $ 30,368 $ 17,269
12/31/03 $ 35,152 $ 20,206
3/31/04 $ 36,419 $ 21,063
6/30/04 $ 37,083 $ 21,084
9/30/04 $ 37,024 $ 21,124
12/31/04 $ 41,862 $ 24,324
3/31/05 $ 42,753 $ 24,341
6/30/05 $ 42,733 $ 24,152
9/30/05 $ 46,597 $ 26,789
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
(AS OF 09/30/05)
SINCE
TOTAL RETURN INCEPTION
LAST 3 MONTHS* 1-YEAR 5-YEAR 10-YEAR (9/30/92)
- --------------------------------------------------------------------------------------------
OAKMARK INTERNATIONAL
FUND (CLASS I) 9.04% 25.85% 11.27% 11.62% 12.56%
MSCI World ex U.S. 10.92% 26.82% 3.37% 6.23% 7.87%
MSCI EAFE(14) 10.38% 25.79% 3.12% 5.83% 7.58%
Lipper International
Fund Index(15) 11.15% 26.32% 3.51% 7.43% 8.87%
</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 performed satisfactorily over the past twelve
months, returning 26%. This compares with 27% for the MSCI World ex U.S. Index
and 26% for the Lipper International Fund Index. Most importantly, since
inception, The Oakmark International Fund has returned annually 13%, as compared
to the MSCI World ex U.S. Index, which returned 8%, and the Lipper International
Fund Index, which returned 9%.
IMPACT PLAYERS
European exchange operator Euronext was not only the top contributing stock of
the quarter, but also year to date. As you may recall, both Euronext and another
holding, Deutsche Boerse, expressed interest in bidding for The London Stock
Exchange. When shareholders prevented Deutsche Boerse from bidding, it ended the
possibility of a value-destructive bidding war, and shares of Euronext and
Deutsche Boerse rose strongly.
Corporate activity also propelled the share price of long-term holding Aegis
Plc. Aegis is the world's last large, independent media-buying company, and it
has been the interest of French businessman Vincent Bollore who, as of this
writing, has amassed an 11% stake. One of our Fund's holdings, Publicis, has
also expressed interest in the company.
On the negative side, UK-based jewelry retailer Signet Plc has been the worst
contributing stock of the quarter and second worst year to date. As a result of
the extremely weak UK retail environment, the stock is down just under 8% in
sterling terms for the year. We remain extremely confident that Signet will
continue to build shareholder value over time in both sales and profitability,
particularly because it continues to outperform its peers in the U.S. market,
which provides two-thirds of its total sales. We have been adding to our holding
as a result of the recent price weakness.
NEW ADDITIONS
During the quarter, we added three new names: global brewer InBev, and media
stocks TF1 (Societe Television Francaise 1), a French television station
operator, and Johnston Press, a Scottish based owner of regional newspapers. In
addition to--and even in spite of--the Fund's relatively healthy annual return,
we have been able to identify good new ideas and havE plenty of prospects on our
research list. As long-term international equity investors, we are still finding
acceptable investment opportunities, and we remain enthused about future
prospects.
/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
[CHART]
INTERNATIONAL DIVERSIFICATION--SEPTEMBER 30, 2005
<Table>
<Caption>
% OF FUND
EQUITY MARKET VALUE
----------------------------------------------------------------
- - EUROPE 72.1%
Great Britain 25.2%
Switzerland 15.1%
* France 9.3%
* Germany 8.2%
* Netherlands 8.2%
* Italy 3.1%
* Ireland 2.9%
* Belgium 0.1%
- - PACIFIC RIM 26.4%
Japan 14.0%
Korea 8.0%
Australia 2.4%
Singapore 1.3%
Hong Kong 0.7%
- - LATIN AMERICA 1.0%
Mexico 1.0%
- - OTHER 0.5%
Israel 0.5%
</Table>
* Euro currency countries comprise 31.8% of the Fund.
34
<Page>
THE OAKMARK INTERNATIONAL FUND
SCHEDULE OF INVESTMENTS--SEPTEMBER 30, 2005
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--94.5%
ADVERTISING--3.9%
Publicis Groupe (France) Advertising & Media Services 3,965,400 $ 126,225,058
Aegis Group plc
(Great Britain) Media Services 44,006,600 108,703,343
-----------------
234,928,401
APPAREL RETAIL--0.7%
Giordano International
Limited (Hong Kong) Pacific Rim Clothing Retailer &
Manufacturer 61,424,300 $ 42,362,405
APPAREL, ACCESSORIES & LUXURY GOODS--1.9%
Swatch Group AG, Bearer
Shares (Switzerland) Watch Manufacturer 823,000 $ 113,379,100
Swatch Group AG,
Registered Shares
(Switzerland) Watch Manufacturer 24,700 698,489
-----------------
114,077,589
AUTOMOBILE MANUFACTURERS--5.2%
Bayerische Motoren Werke
(BMW) AG (Germany) Luxury Automobile Manufacturer 4,220,700 $ 198,178,858
Honda Motor Co.,
Ltd. (Japan) Automobile & Motorcycle
Manufacturer 2,025,000 114,556,990
-----------------
312,735,848
BROADCASTING & CABLE TV--2.4%
British Sky Broadcasting
Group plc (Great Britain) Television Production &
Broadcasting 8,813,000 $ 87,155,829
Grupo Televisa S.A.
(Mexico) (b) Television Production &
Broadcasting 763,000 54,714,730
Societe Television
Francaise 1 (France) Television Production &
Broadcasting 282,600 7,497,476
-----------------
149,368,035
CONSUMER ELECTRONICS--0.8%
Koninklijke (Royal) Philips
Electronics N.V.
(Netherlands) Electronics Manufacturer 1,787,000 $ 47,495,656
MOVIES & ENTERTAINMENT--1.5%
Vivendi Universal
SA (France) Music, Games, Television,
Film, & Telecommunications 2,789,300 $ 91,067,956
</Table>
35
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--94.5% (CONT.)
PUBLISHING--0.3%
Johnston Press plc
(Great Britain) Newspaper Publisher 1,805,000 $ 15,828,168
SPECIALTY STORES--1.9%
Signet Group plc
(Great Britain) Jewelry Retailer 63,619,000 $ 115,055,598
TEXTILES--0.3%
Chargeurs SA (France) (c) Wool, Textile Production & Trading 790,182 $ 20,802,323
BREWERS--1.7%
Heineken Holding NV
(Netherlands) Brewer 2,594,600 $ 76,508,301
Heineken NV (Netherlands) Brewer 497,500 15,973,775
InBev NV (Belgium) Brewer 132,000 5,222,067
-----------------
97,704,143
DISTILLERS & VINTNERS--3.4%
Diageo plc (Great Britain) Beverages, Wines, & Spirits
Manufacturer 12,023,000 $ 172,889,057
Pernod-Ricard SA (France) Wines, Spirits, & Fruit Juice
Manufacturer 157,000 27,724,393
-----------------
200,613,450
HOUSEHOLD PRODUCTS--3.0%
Henkel KGaA (Germany) Consumer Chemical Products
Manufacturer 1,228,200 $ 104,855,293
Uni-Charm Corporation
(Japan) Toiletry Product Manufacturer 1,550,000 66,925,144
KAO Corp. (Japan) Household & Chemical Products
Manufacturer 575,000 14,161,563
-----------------
185,942,000
PACKAGED FOODS & MEATS--4.9%
Nestle SA (Switzerland) Food & Beverage Manufacturer 575,100 $ 168,408,654
Cadbury Schweppes plc
(Great Britain) Beverage & Confectionary
Manufacturer 12,390,400 125,048,476
-----------------
293,457,130
PERSONAL PRODUCTS--1.4%
L'Oreal SA (France) Health & Beauty Aid Manufacturer 1,077,000 $ 83,440,947
</Table>
36
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--94.5% (CONT.)
SOFT DRINKS--1.3%
Lotte Chilsung Beverage
Co., Ltd. (Korea) (c) Soft Drinks, Juices & Sports
Drinks Manufacturer 84,327 $ 80,165,198
TOBACCO--0.9%
KT&G Corporation (Korea) Tobacco Products Manufacturer 1,242,600 $ 53,824,169
INTEGRATED OIL & GAS--1.8%
BP p.l.c. (Great Britain) Oil & Natural Gas Exploration &
Production 6,294,100 $ 74,794,263
Total SA (France) Oil & Natural Gas Exploration &
Production 126,000 34,397,611
-----------------
109,191,874
DIVERSIFIED BANKS--14.6%
Bank of Ireland (Ireland) Commercial Bank 10,462,900 $ 165,393,495
Australia and New Zealand
Banking Group
Limited (Australia) Commercial Bank 7,348,800 134,518,314
Kookmin Bank (Korea) Commercial Banking 2,159,700 127,284,667
Lloyds TSB Group plc
(Great Britain) Commercial Bank 12,952,600 106,726,160
BNP Paribas SA (France) Commercial Banking 1,156,000 87,893,946
UniCredito Italiano
S.p.A. (Italy) Banking Services 13,556,700 76,349,145
United Overseas Bank
Limited, Foreign
Shares (Singapore) Commercial Banking 8,395,368 69,957,265
Banco Popolare di
Verona e Novara
Scrl (Italy) Commercial Bank 2,938,400 55,293,852
Sanpaolo IMI S.p.A. (Italy) Banking Services 2,947,000 45,805,672
-----------------
869,222,516
DIVERSIFIED CAPITAL MARKETS--1.9%
Credit Suisse Group
(Switzerland) Investment Services & Insurance 2,609,000 $ 115,507,591
INVESTMENT BANKING & BROKERAGE--2.0%
Daiwa Securities
Group, Inc. (Japan) Stock Broker 15,043,000 $ 117,576,252
REAL ESTATE MANAGEMENT & DEVELOPMENT--0.0%
United Overseas Land
Limited (Singapore) Real Estate Investor 839,536 $ 1,160,992
</Table>
37
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--94.5% (CONT.)
REINSURANCE--0.4%
Hannover Rueckversicherung
AG (Germany) Reinsurance 626,400 $ 21,686,269
SPECIALIZED FINANCE--5.5%
Euronext NV (Netherlands) Stock Exchange 4,167,000 $ 183,435,099
Deutsche Boerse
AG (Germany) Electronic Trading Systems 1,485,900 142,002,931
-----------------
325,438,030
PHARMACEUTICALS--9.9%
GlaxoSmithKline plc
(Great Britain) Pharmaceuticals 8,470,000 $ 215,499,229
Takeda Pharmaceutical
Company
Limited (Japan) Pharmaceuticals &
Food Supplements 2,876,800 171,363,334
Novartis AG (Switzerland) Pharmaceuticals 3,089,000 156,687,541
Sanofi-Aventis (France) Pharmaceuticals 588,508 48,636,876
-----------------
592,186,980
DIVERSIFIED COMMERCIAL AND PROFESSIONAL
SERVICES--1.3%
Meitec Corporation
(Japan) (c) Software Engineering Services 2,483,800 $ 79,448,332
ENVIRONMENTAL & FACILITIES SERVICES--0.2%
Rentokil Initial plc
(Great Britain) Global Business Services 3,400,000 $ 9,913,281
HUMAN RESOURCE & EMPLOYMENT SERVICES--1.7%
Michael Page International
plc (Great Britain) (c) Recruitment Consultancy Services 24,271,000 $ 105,346,431
INDUSTRIAL MACHINERY--1.3%
Enodis plc
(Great Britain) (a)(c) Food Processing Equipment 33,585,320 $ 76,146,451
MARINE PORTS & SERVICES--1.9%
Associated British Ports
Holdings plc
(Great Britain) Port Operator 12,131,399 $ 112,427,874
ELECTRONIC EQUIPMENT MANUFACTURERS--0.5%
Orbotech, Ltd. (Israel) (a) Optical Inspection Systems 1,237,700 $ 30,967,254
SEMICONDUCTORS--1.0%
Rohm Company Limited
(Japan) Integrated Circuits & Semi-
Conductor Devices Manufacturer 705,000 $ 61,190,906
</Table>
38
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--94.5% (CONT.)
DIVERSIFIED CHEMICALS--2.3%
Akzo Nobel N.V.
(Netherlands) Chemical Producer 3,182,200 $ 138,744,451
FERTILIZERS & AGRICULTURAL CHEMICALS--1.6%
Syngenta AG
(Switzerland) (a) Crop Protection Products 932,400 $ 97,616,535
SPECIALTY CHEMICALS--3.4%
Lonza Group AG,
Registered Shares
(Switzerland) Industrial Organic Chemicals 1,797,700 $ 106,118,818
Givaudan (Switzerland) Fragrance & Flavor
Compound Manufacturer 151,100 96,783,388
-----------------
202,902,206
WIRELESS TELECOMMUNICATION SERVICES--7.7%
SK Telecom Co., Ltd. (Korea) Mobile Telecommunications 981,700 $ 190,507,187
NTT DoCoMo, Inc. (Japan) Mobile Telecommunications 93,050 165,626,294
Vodafone Group Plc
(Great Britain) Mobile Telecommunications 32,142,800 83,651,316
Vodafone Group Plc
(Great Britain) (b) Mobile Telecommunications 606,000 15,737,820
SK Telecom Co., Ltd.
(Korea) (b) Mobile Telecommunications 43,500 950,040
-----------------
456,472,657
TOTAL COMMON STOCKS (COST: $4,141,768,525) 5,662,015,898
</Table>
39
<Page>
<Table>
<Caption>
NAME PAR VALUE MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS--4.0%
U.S. GOVERNMENT AGENCIES--0.9%
Federal Home Loan Bank, 3.55% - 3.62%
due 10/7/2005 - 11/2/2005 $ 40,000,000 $ 39,923,811
Federal Home Loan Mortgage Corp., 3.64% due 10/18/2005 20,000,000 19,965,622
-----------------
TOTAL U.S. GOVERNMENT AGENCIES (COST: $59,889,433) 59,889,433
REPURCHASE AGREEMENTS--3.1%
IBT Repurchase Agreement, 3.51% dated 9/30/2005 due 10/3/2005, repurchase
price $176,551,626, collateralized by Small Business Administration Bonds,
with rates of 5.875% - 7.125%, with maturities from 9/25/2015 - 9/25/2030,
and with an aggregate market value plus accrued interest of $185,325,000 $ 176,500,000 $ 176,500,000
IBT Repurchase Agreement, 2.75% dated 9/30/2005 due 10/3/2005, repurchase
price $2,791,391, collateralized by a Small Business Administration Bond,
with a rate of 6.645%, with a maturity date of 6/25/2024, and with a
market value plus accrued interest of $2,930,289 2,790,752 2,790,752
-----------------
TOTAL REPURCHASE AGREEMENTS (COST: $179,290,752) 179,290,752
TOTAL SHORT TERM INVESTMENTS (COST: $239,180,185) 239,180,185
Total Investments (Cost $4,380,948,710)--98.5% $ 5,901,196,083
Foreign Currencies (Cost $521,777)--0.0% $ 522,325
Other Assets In Excess Of Other Liabilities--1.5% 88,531,106
-----------------
TOTAL NET ASSETS--100% $ 5,990,249,514
=================
</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 (9/30/05) AS COMPARED TO THE MSCI WORLD
EX U.S. INDEX(13)
<Table>
<Caption>
THE OAKMARK
INTERNATIONAL
SMALL CAP MSCI WORLD EX
FUND (CLASS I) U.S. INDEX
11/1/95 $ 10,000 $ 10,000
12/31/95 $ 9,630 $ 10,684
3/31/96 $ 10,970 $ 11,006
6/30/96 $ 11,570 $ 11,186
9/30/96 $ 11,590 $ 11,195
12/31/96 $ 12,038 $ 11,418
3/31/97 $ 12,080 $ 11,241
6/30/97 $ 13,181 $ 12,699
9/30/97 $ 12,672 $ 12,652
12/31/97 $ 9,642 $ 11,677
3/31/98 $ 11,429 $ 13,394
6/30/98 $ 9,892 $ 13,499
9/30/98 $ 8,211 $ 11,513
12/31/98 $ 10,529 $ 13,868
3/31/99 $ 13,118 $ 14,086
6/30/99 $ 15,317 $ 14,493
9/30/99 $ 15,439 $ 15,114
12/31/99 $ 16,190 $ 17,741
3/31/00 $ 15,387 $ 17,839
6/30/00 $ 15,529 $ 17,217
9/30/00 $ 14,908 $ 15,906
12/31/00 $ 14,756 $ 15,369
3/31/01 $ 15,232 $ 13,213
6/30/01 $ 15,777 $ 13,075
9/30/01 $ 13,987 $ 11,273
12/31/01 $ 16,671 $ 12,080
3/31/02 $ 18,370 $ 12,149
6/30/02 $ 18,831 $ 11,877
9/30/02 $ 14,641 $ 9,547
12/31/02 $ 15,818 $ 10,172
3/31/03 $ 13,882 $ 9,406
6/30/03 $ 17,933 $ 11,215
9/30/03 $ 20,465 $ 12,121
12/31/03 $ 24,109 $ 14,182
3/31/04 $ 25,685 $ 14,783
6/30/04 $ 26,436 $ 14,798
9/30/04 $ 27,411 $ 14,826
12/31/04 $ 31,087 $ 17,072
3/31/05 $ 32,779 $ 17,084
6/30/05 $ 31,910 $ 16,951
9/30/05 $ 35,371 $ 18,803
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
(AS OF 09/30/05)
SINCE
TOTAL RETURN INCEPTION
LAST 3 MONTHS* 1-YEAR 5-YEAR (11/1/95)
- -----------------------------------------------------------------------------------
OAKMARK INTERNATIONAL
SMALL CAP FUND (CLASS I) 10.85% 29.04% 18.85% 13.58%
MSCI World ex U.S. 10.92% 26.82% 3.37% 6.57%
Lipper International
Small Cap Average(16) 10.12% 29.20% 11.39% 13.42%
</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 11% for the quarter, performing
in line with the benchmark indices. More importantly, however, for the past
twelve months and since inception your Fund is up 29% and 14% respectively,
outpacing the MSCI World ex U.S. Index with returns of 27% and 7%.
Performance in the quarter was broadly based, with approximately 9 of every 10
positions moving higher. Gurit-Heberlein, a Swiss mini-conglomerate, was the
largest contributor. On August 30, the group announced it would split and
separately list its healthcare activities, which include a dental supplies
operation and a small medical equipment business. We had always employed a
blended valuation on this company, incorporating the relative attractiveness of
the group's healthcare activities versus its industrial operations. The break-up
will help crystallize the value of each division, with the market preemptively
driving up the stock in anticipation of the event.
Julius Baer was not only the second largest contributor to performance in the
quarter, but it was the leading contributor to the Fund for the calendar year.
You may recall the March 2005 shareholder letter, which discussed how Baer had
adjusted its shareholding structure so that the family and minority shareholders
would have equal voting rights. This change, coupled with strong operating
performance, propelled the stock in the first half of the year. Recently, Baer
announced a transformational acquisition, almost doubling the group's assets
under management and fully utilizing all its excess capital. The acquisition
price, post-synergies, looks very compelling, and after meeting the new
management in Boston in September, we're very comfortable with the strategic
direction and leadership of the newly formed group.
As at the tail end of 2004, bid activity in our small-cap universe has
increased. Allco Equity Partners purchased 17% of Baycorp in July and tendered
for 50% of the shares at A$3.50. (The stock had been trading below A$3.00 at the
time.) After speaking with the key investment professionals at Allco, we became
increasingly concerned that they were not committed to long-term value creation
but were more interested in a quick return following some financial
re-engineering. Though their approach was unsuccessful, Allco's interest has led
41
<Page>
Baycorp to become more active in managing its balance sheet. As such, Baycorp
announced, along with its first-half results, a large special dividend and share
repurchase. The market reacted strongly to these moves, driving the shares some
10% above Allco's bid. Matichon, a Thai newspaper group and long-time Fund
holding, also received an acquisition offer in the quarter.
Our hedges had a small impact in the quarter, with the U.S. dollar gaining a bit
more ground after staging a strong recovery last quarter. As a result of the
dollar's recent overall strength and its return to a more normal purchasing
power level, we have lowered our British Pound and Swiss Franc hedges to
approximately 30% of the underlying position.
PORTFOLIO COMPOSITION
We sold the last shares of Mexican airport operator Grupo Aeroportuario del
Sureste S.A. de C.V. (Asur) during September. Asur appreciated approximately
170% (an annualized return of almost 23%) since we bought the position in
September 2000. As you recall, we began buying Asur because of its attractive
valuation, under-exploited retail opportunities, and strong management group
(led by one of our other positions at the time Copenhagen Airports). When the
events of September 11, 2001 caused airline volumes and Asur's share price to
plummet, we aggressively built Asur to one of the Fund's largest positions. As
the industry and passenger volumes normalized over the past three years,
operating profits have more than doubled, and management returned over $3/share
in dividends (close to 10% of our sell price) to shareholders. The Asur example
epitomizes our investment philosophy. Our disciplined, long-term investment
approach allowed us to look beyond the temporary dislocations caused by the
tragic events of 9/11, and our fundamental, bottom-up analysis of Asur's
competitive position and its management team gave us confidence that the group
could effectively navigate the industry's difficult circumstances. Our patience
and conviction were handsomely rewarded. As always, we will continue to look for
more of these situations for our shareholders.
In addition to Asur and Matichon, we divested three other stocks in the quarter,
Sopra, DIS and Ducati. We established meaningful positions in Spanish pay-TV
provider Sogecable, UK real estate services firm Countrywide, and UK bank-note
printer De La Rue.
Geographically, our portfolio weightings remain very similar to last quarter
with Europe and the UK representing over 70% of investments and the majority of
the balance, excluding cash, in the Pacific Rim.
Despite the performance of the portfolio over the past three years, there is no
dearth of small cap ideas. We remain excited about the opportunities we're
finding outside the portfolio, and we continue to like the portfolio's quality
and price attractiveness. 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
42
<Page>
THE OAKMARK INTERNATIONAL SMALL CAP FUND
[CHART]
INTERNATIONAL DIVERSIFICATION--SEPTEMBER 30, 2005
<Table>
<Caption>
% OF FUND
EQUITY MARKET VALUE
----------------------------------------------
- - EUROPE 70.7%
Great Britain 24.1%
Switzerland 14.9%
* Germany 7.5%
* France 6.7%
* Spain 5.3%
* Italy 4.3%
Sweden 2.5%
* Finland 2.0%
Turkey 1.8%
Denmark 1.3%
* Greece 0.3%
- - PACIFIC RIM 27.9%
Japan 11.9%
Korea 6.7%
Australia 4.2%
New Zealand 1.9%
Hong Kong 1.7%
Malaysia 1.0%
Philippines 0.4%
Singapore 0.1%
- - OTHER 1.4%
Israel 1.4%
</Table>
* Euro currency countries comprise 26.1% of the Fund.
43
<Page>
THE OAKMARK INTERNATIONAL SMALL CAP FUND
SCHEDULE OF INVESTMENTS--SEPTEMBER 30, 2005
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--93.9%
ADVERTISING--1.9%
Asatsu-DK, Inc. (Japan) Advertising Services Provider 459,700 $ 14,339,675
G2R, Inc. (Korea) Advertising & Marketing Services 281,770 4,590,407
-----------------
18,930,082
APPAREL RETAIL--5.3%
JJB Sports plc
(Great Britain) Sportswear & Sports Equipment Retailer 9,170,000 $ 27,383,885
Matalan plc
(Great Britain) Clothing Retailer 8,545,000 26,158,245
-----------------
53,542,130
APPAREL, ACCESSORIES & LUXURY GOODS--0.9%
Bulgari S.p.A. (Italy) Jewelry Manufacturer & Retailer 784,900 $ 8,819,159
BROADCASTING & CABLE TV--3.7%
Sogecable SA (Spain) (a) Cable Television Services 529,500 $ 20,673,908
Media Prima Berhad
(Malaysia) (a) Film Producer & Sports Promoter 21,748,000 9,232,369
M6 Metropole
Television (France) Television Entertainment Channel Owner
& Operator 297,700 7,518,747
-----------------
37,425,024
HOME IMPROVEMENT RETAIL--3.2%
Carpetright plc
(Great Britain) Carpet Retailer 2,054,000 $ 31,891,883
PHOTOGRAPHIC PRODUCTS--1.5%
Vitec Group plc
(Great Britain) (b) Photo Equipment & Supplies 2,383,907 $ 14,931,888
PUBLISHING--3.0%
Daekyo Co., Ltd. (Korea) Educational Information Service Provider 219,500 $ 16,617,633
Tamedia AG (Switzerland) TV Broadcasting & Publishing 143,661 13,331,030
-----------------
29,948,663
BREWERS--0.9%
Kook Soon Dang
Brewery Co., Ltd.
(Korea) Wine & Spirits Manufacturer 578,641 $ 8,844,585
DISTILLERS & VINTNERS--1.5%
Baron De Ley,
S.A. (Spain) (a) Beverages, Wines, & Spirits Manufacturer 305,637 $ 15,026,915
</Table>
44
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--93.9% (CONT.)
PACKAGED FOODS & MEATS--2.5%
Lotte Confectionery
Co., Ltd. (Korea) Candy & Snacks Manufacturer 15,334 $ 15,723,412
Robert Wiseman
Dairies plc
(Great Britain) Milk Processor & Distributor 959,000 4,809,679
Alaska Milk Corporation
(Philippines) (b) Milk Producer 56,360,000 3,518,102
-----------------
24,051,193
ASSET MANAGEMENT & CUSTODY BANKS--4.4%
Julius Baer Holding
AG-B (Switzerland) Asset Management 338,000 $ 26,455,013
MLP AG (Germany) Asset Management 869,500 18,176,479
-----------------
44,631,492
INSURANCE BROKERS--3.5%
Benfield Group Ltd.
(Great Britain) Reinsurance Service Provider 6,507,000 $ 35,763,162
MULTI-SECTOR HOLDINGS--2.4%
Pargesa Holding AG,
Class B (Switzerland) Diversified Operations 290,900 $ 24,589,113
OTHER DIVERSIFIED FINANCIAL SERVICES--2.3%
Ichiyoshi Securities
Co., Ltd. (Japan) Stock Broker 2,079,700 $ 23,566,940
REAL ESTATE MANAGEMENT & DEVELOPMENT--1.1%
Countrywide PLC
(Great Britain) Real Estate Service Provider 1,626,000 $ 11,167,249
REGIONAL BANKS--1.6%
Pusan Bank (Korea) Commercial Banking 1,033,500 $ 11,241,231
Daegu Bank (Korea) Commercial Banking 386,400 4,702,712
-----------------
15,943,943
SPECIALIZED FINANCE--0.3%
Athens Stock
Exchange S.A. (Greece) Exchange Services 293,000 $ 2,712,058
HEALTH CARE SUPPLIES--2.7%
Ansell Limited (Australia) Protective Rubber & Plastics Products 1,733,684 $ 14,915,327
Coloplast A/S, Class B
(Denmark) Healthcare Products & Services Provider 203,000 12,361,000
-----------------
27,276,327
</Table>
45
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--93.9% (CONT.)
PHARMACEUTICALS--2.3%
Santen Pharmaceutical
Co., Ltd. (Japan) Pharmaceuticals 896,000 $ 23,212,231
AIR FREIGHT & LOGISTICS--1.8%
Mainfreight Limited
(New Zealand) (b) Logistics Services 7,475,285 $ 18,141,769
COMMERCIAL PRINTING--1.1%
De La Rue Plc
(Great Britain) Commercial Printing 1,566,190 $ 10,611,401
CONSTRUCTION & ENGINEERING--0.2%
Tae Young Corp. (Korea) Heavy Construction 58,620 $ 2,134,701
CONSTRUCTION & FARM MACHINERY &
HEAVY TRUCKS--0.2%
Vossloh AG (Germany) Railroad Equipment Manufacturer 29,000 $ 1,525,513
DIVERSIFIED COMMERCIAL AND PROFESSIONAL
SERVICES--2.3%
Prosegur, Compania de
Seguridad SA (Spain) Security & Transportation Services 552,800 $ 14,353,651
Intrum Justitia AB
(Sweden) (a) Diversified Financial Services 1,039,243 9,352,825
-----------------
23,706,476
ELECTRICAL COMPONENTS & EQUIPMENT--2.1%
Pfeiffer Vacuum
Technology AG
(Germany) Vacuum Pump Manufacturer 321,640 $ 16,041,836
Carbone Lorraine SA
(France) Electrical Systems Manufacturer 106,245 4,923,495
-----------------
20,965,331
INDUSTRIAL CONGLOMERATES--3.0%
Dogan Sirketler
Grubu Holdings A.S
(Turkey) (a) Diversified Holding Company 6,258,511 $ 17,476,421
Rheinmetall AG (Germany) Automotive Pump Manufacturer 185,600 12,271,037
Haw Par Corporation
Limited (Singapore) Diversified Operations 285,687 877,946
-----------------
30,625,404
</Table>
46
<Page>
<Table>
<Caption>
NAME DESCRIPTION SHARES HELD MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--93.9% (CONT.)
INDUSTRIAL MACHINERY--12.5%
Interpump Group
S.p.A. (Italy) (b) Pump & Piston Manufacturer 4,709,000 $ 31,648,912
Halma plc (Great Britain) Electronic Instrument Producer 9,965,000 25,933,813
Schindler Holding AG
(Switzerland) Elevator & Escalator Manufacturer 64,200 25,546,069
Saurer AG (Switzerland) (a) Textile Equipment Manufacturer 298,853 20,204,472
Alfa Laval AB (Sweden) Filtration & Separation Equipment 695,500 12,653,123
LISI (France) Industrial Fastener Manufacturer 127,600 8,467,015
Munters AB (Sweden) Cooling & Moisture Control Systems 77,400 1,827,568
-----------------
126,280,972
OFFICE SERVICES & SUPPLIES--0.2%
Domino Printing Sciences
plc (Great Britain) Printing Equipment 500,000 $ 2,401,790
COMPUTER HARDWARE--2.2%
Wincor Nixdorf AG
(Germany) Banking Machine Manufacturer 234,800 $ 22,580,246
COMPUTER STORAGE & PERIPHERALS--1.1%
Lectra (France) (b) Manufacturing Process Systems 2,186,404 $ 11,065,043
DATA PROCESSING & OUTSOURCED SERVICES--2.5%
Baycorp Advantage
Limited (Australia) Credit Reference Services 9,412,800 $ 24,911,625
ELECTRONIC EQUIPMENT MANUFACTURERS--5.1%
Mabuchi Motor
Co., Ltd. (Japan) Digital Camera Motors Manufacturer 406,000 $ 20,034,366
Vaisala Oyj, Class A
(Finland) Atmospheric Observation Equipment 627,000 18,541,431
Orbotech, Ltd. (Israel) (a) Optical Inspection Systems 536,500 13,423,230
-----------------
51,999,027
HOME ENTERTAINMENT SOFTWARE--1.2%
Square Enix Co.,
Ltd. (Japan) Entertainment Software 447,900 $ 12,392,880
IT CONSULTING & OTHER SERVICES--2.9%
Morse plc (Great Britain) (b) Business & Technology Solutions 12,474,000 $ 18,927,848
Alten (France) (a) Systems Consulting & Engineering 319,619 10,327,672
-----------------
29,255,520
OFFICE ELECTRONICS--2.1%
Neopost SA (France) Mailroom Equipment Supplier 220,700 $ 21,396,725
INDUSTRIAL GASES--1.9%
Taiyo Ink Mfg. Co.,
Ltd. (Japan) Manufacturer of Resist Inks 533,700 $ 19,375,636
</Table>
47
<Page>
<Table>
<Caption>
SHARES HELD/
NAME DESCRIPTION PAR VALUE MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--93.9% (CONT.)
SPECIALTY CHEMICALS--4.9%
Gurit-Heberlein AG
(Switzerland) (b) Chemical Producer 32,875 $ 31,115,994
Croda International plc
(Great Britain) Chemical Producer 2,359,600 17,839,647
-----------------
48,955,641
ALTERNATIVE CARRIERS--1.6%
Asia Satellite
Telecommunications
Holdings Limited
(Hong Kong) Satellite Operator 8,460,000 $ 16,031,505
TOTAL COMMON STOCKS (COST: $718,742,935) 946,631,242
SHORT TERM INVESTMENTS--4.1%
U.S. GOVERNMENT AGENCIES--2.0%
Federal Home Loan Bank, 3.55% due 10/7/2005 $ 10,000,000 $ 10,021,801
Federal Home Loan Mortgage Corp., 3.64% due 10/18/2005 10,000,000 9,982,811
TOTAL U.S. GOVERNMENT AGENCIES (COST: $20,004,612) 20,004,612
REPURCHASE AGREEMENTS--2.1%
IBT Repurchase Agreement, 3.51% dated 9/30/2005
due 10/3/2005, repurchase price $19,005,558, collateralized by Small
Business Administration Bonds, with rates of 5.875% - 7.125%, with
maturities from 2/25/2016 - 3/25/2029, and with an aggregate market
value plus accrued interest of $19,950,000 $ 19,000,000 $ 19,000,000
IBT Repurchase Agreement, 2.75% dated 9/30/2005
due 10/3/2005, repurchase price $1,765,982, collateralized by a Small
Business Administration Bond, with a rate of 6.375%, with a maturity date
of 7/25/2027, and with a market value plus accrued interest of $1,853,856 1,765,577 1,765,577
-----------------
TOTAL REPURCHASE AGREEMENTS (COST: $20,765,577) 20,765,577
TOTAL SHORT TERM INVESTMENTS (COST: $40,770,189) 40,770,189
Total Investments (Cost $759,513,124)--98.0% $ 987,401,431
Foreign Currencies (Cost $887,565)--0.1% $ 888,059
Other Assets In Excess Of Other Liabilities--1.9% 19,521,947
-----------------
TOTAL NET ASSETS--100% $ 1,007,811,437
=================
</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.
48
<Page>
[OAKMARK LOGO]
(This page has been intentionally left blank.)
49
<Page>
THE OAKMARK FUNDS
STATEMENTS OF ASSETS AND LIABILITIES--SEPTEMBER 30, 2005
<Table>
<Caption>
THE OAKMARK
THE OAKMARK SELECT
FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in unaffiliated securities, at value (a) $ 6,247,766,209 $ 5,351,635,985
Investments in affiliated securities, at value (b) 0 655,331,871
Cash 0 0
Foreign currency, at value (c) 0 0
Receivable for:
Securities sold 130,769,653 13,964,665
Fund shares sold 5,808,374 5,257,798
Dividends and interest 9,598,608 3,506,017
Forward foreign currency contracts 0 0
Tax reclaim 0 0
------------------- -------------------
Total receivables 146,176,635 22,728,480
Other assets 566 502
------------------- -------------------
Total assets $ 6,393,943,410 $ 6,029,696,838
LIABILITIES AND NET ASSETS
Payable for:
Securities purchased 0 29,307,691
Fund shares redeemed 7,274,535 5,126,995
Due to Adviser 168,077 171,286
Due to transfer agent 281,133 156,149
Trustee fees 27,792 25,730
Deferred trustee compensation 875,039 780,752
Other 1,238,310 954,781
------------------- -------------------
Total liabilities 9,864,886 36,523,384
------------------- -------------------
Net assets applicable to fund shares outstanding $ 6,384,078,524 $ 5,993,173,454
=================== ===================
ANALYSIS OF NET ASSETS
Paid in capital $ 5,108,749,649 $ 3,854,993,030
Accumulated undistributed net realized gain (loss) of investments, forward
contracts, options, short sales and foreign currency transactions (45,540,989) 342,905,352
Net unrealized appreciation (depreciation) of investments and foreign currencies 1,270,062,472 1,767,508,132
Net unrealized appreciation (depreciation)--other 0 0
Accumulated undistributed net investment income 50,807,392 27,766,940
------------------- -------------------
Net assets applicable to Fund shares outstanding $ 6,384,078,524 $ 5,993,173,454
=================== ===================
PRICE OF SHARES
Net asset value per share: Class I $ 40.75 $ 33.44
=================== ===================
Class I--Net assets $ 6,340,390,696 $ 5,907,957,469
Class I--Shares outstanding (Unlimited shares authorized) 155,573,344 176,694,912
Net asset value per share: Class II $ 40.51 $ 33.24
=================== ===================
Class II--Net assets $ 43,687,828 $ 85,215,985
Class II--Shares outstanding (Unlimited shares authorized) 1,078,382 2,563,740
(a) Identified cost of investments in unaffiliated securities $ 4,977,703,737 $ 4,008,679,541
(b) Identified cost of investments in affiliated securities 0 230,780,183
(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) $ 9,569,536,982 $ 1,884,754,539
Investments in affiliated securities, at value (b) 194,051,408 0
Cash 29,514 0
Foreign currency, at value (c) 0 0
Receivable for:
Securities sold 302,392,708 7,035,389
Fund shares sold 18,440,025 3,801,357
Dividends and interest 48,224,601 4,681,370
Forward foreign currency contracts 0 6,067,634
Tax reclaim 15,000 1,346,065
------------------- -------------------
Total receivables 369,072,334 22,931,815
Other assets 113,222 301
------------------- -------------------
Total assets $ 10,132,803,460 $ 1,907,686,655
LIABILITIES AND NET ASSETS
Payable for:
Securities purchased 320,800,035 5,012,915
Fund shares redeemed 3,670,174 297,149
Due to Adviser 188,830 47,072
Due to transfer agent 184,831 55,616
Trustee fees 32,990 15,654
Deferred trustee compensation 537,845 325,407
Other 2,168,932 427,772
------------------- -------------------
Total liabilities 327,583,637 6,181,585
------------------- -------------------
Net assets applicable to fund shares outstanding $ 9,805,219,823 $ 1,901,505,070
=================== ===================
ANALYSIS OF NET ASSETS
Paid in capital $ 7,870,951,599 $ 1,367,028,529
Accumulated undistributed net realized gain (loss) of investments, forward
contracts, options, short sales and foreign currency transactions 88,295,438 53,550,204
Net unrealized appreciation (depreciation) of investments and foreign currencies 1,740,760,163 467,157,902
Net unrealized appreciation (depreciation)--other 229,644 (123,769)
Accumulated undistributed net investment income 104,982,979 13,892,204
------------------- -------------------
Net assets applicable to Fund shares outstanding $ 9,805,219,823 $ 1,901,505,070
=================== ===================
PRICE OF SHARES
Net asset value per share: Class I $ 25.41 $ 23.91
=================== ===================
Class I--Net assets $ 9,223,210,742 $ 1,842,901,079
Class I--Shares outstanding (Unlimited shares authorized) 362,970,816 77,063,096
Net asset value per share: Class II $ 25.29 $ 23.63
=================== ===================
Class II--Net assets $ 582,009,081 $ 58,603,991
Class II--Shares outstanding (Unlimited shares authorized) 23,013,007 2,479,837
(a) Identified cost of investments in unaffiliated securities $ 7,889,653,765 $ 1,423,662,187
(b) Identified cost of investments in affiliated securities 133,231,378 0
(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) $ 5,539,287,348 $ 858,051,875
Investments in affiliated securities, at value (b) 361,908,735 129,349,556
Cash 0 0
Foreign currency, at value (c) 522,325 888,059
Receivable for:
Securities sold 3,791,538 6,505,953
Fund shares sold 12,223,607 1,564,098
Dividends and interest 14,022,703 1,162,423
Forward foreign currency contracts 81,438,357 14,340,909
Tax reclaim 4,505,938 750,033
------------------- -------------------
Total receivables 115,982,143 24,323,416
Other assets 462 268
------------------- -------------------
Total assets $ 6,017,701,013 $ 1,012,613,174
LIABILITIES AND NET ASSETS
Payable for:
Securities purchased 22,917,739 3,831,665
Fund shares redeemed 2,273,904 361,220
Due to Adviser 146,172 31,096
Due to transfer agent 111,757 21,719
Trustee fees 24,174 13,784
Deferred trustee compensation 544,119 325,672
Other 1,433,634 216,581
------------------- -------------------
Total liabilities 27,451,499 4,801,737
------------------- -------------------
Net assets applicable to fund shares outstanding $ 5,990,249,514 $ 1,007,811,437
=================== ===================
ANALYSIS OF NET ASSETS
Paid in capital $ 4,092,102,121 $ 606,405,040
Accumulated undistributed net realized gain (loss) of investments, forward
contracts, options, short sales and foreign currency transactions 225,733,166 153,280,590
Net unrealized appreciation (depreciation) of investments and foreign currencies 1,601,657,107 242,240,875
Net unrealized appreciation (depreciation)--other (375,389) (48,701)
Accumulated undistributed net investment income 71,132,509 5,933,633
------------------- -------------------
Net assets applicable to Fund shares outstanding $ 5,990,249,514 $ 1,007,811,437
=================== ===================
PRICE OF SHARES
Net asset value per share: Class I $ 23.52 $ 22.79
=================== ===================
Class I--Net assets $ 5,627,391,248 $ 1,007,212,401
Class I--Shares outstanding (Unlimited shares authorized) 239,302,658 44,187,473
Net asset value per share: Class II $ 23.36 $ 22.77
=================== ===================
Class II--Net assets $ 362,858,266 $ 599,036
Class II--Shares outstanding (Unlimited shares authorized) 15,535,254 26,310
(a) Identified cost of investments in unaffiliated securities $ 4,172,204,723 $ 657,325,484
(b) Identified cost of investments in affiliated securities 208,743,987 102,187,640
(c) Identified cost of foreign currency 521,777 887,565
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
51
<Page>
THE OAKMARK FUNDS
STATEMENTS OF OPERATIONS--YEAR ENDED SEPTEMBER 30, 2005
<Table>
<Caption>
THE OAKMARK
THE OAKMARK SELECT
FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends from unaffiliated securities $ 114,096,122 $ 89,979,644
Dividends from affiliated securities 0 7,546,558
Interest income 11,842,334 12,361,275
Securities lending income 0 0
Other income 117,458 26,808
Foreign taxes withheld (36,654) 0
------------------- -------------------
Total investment income 126,019,260 109,914,285
EXPENSES:
Investment advisory fee 59,184,688 49,906,327
Transfer and dividend disbursing agent fees 3,095,228 1,672,303
Other shareholder servicing fees 5,941,799 4,695,005
Service Fee--Class II 133,501 223,839
Reports to shareholders 1,601,023 1,034,680
Custody and accounting fees 729,901 605,255
Registration and blue sky expenses 100,813 84,239
Trustee fees 160,528 146,012
Deferred trustee compensation 100,899 91,365
Legal fees 142,629 127,106
Audit fees 63,161 55,458
Other 350,399 304,249
------------------- -------------------
Total expenses 71,604,569 58,945,838
Expense offset arrangements (681) 0
------------------- -------------------
Net expenses 71,603,888 58,945,838
NET INVESTMENT INCOME: 54,415,372 50,968,447
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on unaffiliated securities 215,570,116 235,198,898
Net realized gain on affiliated securities (a) 0 129,874,069
Net realized gain on options written 0 0
Net realized gain on short sales 7,071,050 0
Net realized gain (loss) on foreign currency transactions (8,888) 0
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 106,334,519 19,063,862
Net change in appreciation (depreciation)--other 0 0
Net realized and unrealized gain on
investments and foreign currency transactions: 328,966,797 384,136,829
------------------- -------------------
Net increase in net assets resulting from operations $ 383,382,169 $ 435,105,276
=================== ===================
(a) Foreign tax expense -- --
</Table>
52
<Page>
<Table>
<Caption>
THE OAKMARK THE OAKMARK
EQUITY AND GLOBAL
INCOME FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends from unaffiliated securities $ 71,460,737 $ 34,014,927
Dividends from affiliated securities 217,500 0
Interest income 128,114,707 1,311,539
Securities lending income 113,954 202,031
Other income 37,196 255
Foreign taxes withheld (127,981) (2,591,116)
------------------- -------------------
Total investment income 199,816,113 32,937,636
EXPENSES:
Investment advisory fee 63,670,347 16,115,537
Transfer and dividend disbursing agent fees 2,041,484 570,770
Other shareholder servicing fees 9,586,150 1,309,694
Service Fee--Class II 1,430,331 99,174
Reports to shareholders 1,556,305 303,556
Custody and accounting fees 1,032,660 879,136
Registration and blue sky expenses 138,694 86,412
Trustee fees 185,937 88,237
Deferred trustee compensation 115,753 54,695
Legal fees 164,973 77,301
Audit fees 71,513 34,240
Other 412,720 148,511
------------------- -------------------
Total expenses 80,406,867 19,767,263
Expense offset arrangements (44) (7)
------------------- -------------------
Net expenses 80,406,823 19,767,256
NET INVESTMENT INCOME: 119,409,290 13,170,380
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on unaffiliated securities 113,073,114 55,983,090
Net realized gain on affiliated securities (a) 0 0
Net realized gain on options written 521,987 0
Net realized gain on short sales 0 0
Net realized gain (loss) on foreign currency transactions 349,069 2,655,497
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 912,480,570 268,798,583
Net change in appreciation (depreciation)--other 102,972 (200,695)
Net realized and unrealized gain on
investments and foreign currency transactions: 1,026,527,712 327,236,475
------------------- -------------------
Net increase in net assets resulting from operations $ 1,145,937,002 $ 340,406,855
=================== ===================
(a) Foreign tax expense -- --
<Caption>
THE OAKMARK THE OAKMARK
INTERNATIONAL INTERNATIONAL
FUND SMALL CAP FUND
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends from unaffiliated securities $ 125,912,254 $ 17,997,137
Dividends from affiliated securities 5,027,752 4,059,494
Interest income 5,308,890 1,070,264
Securities lending income 1,884,644 0
Other income 0 370
Foreign taxes withheld (11,731,519) (2,018,294)
------------------- -------------------
Total investment income 126,402,021 21,108,971
EXPENSES:
Investment advisory fee 47,254,405 10,432,050
Transfer and dividend disbursing agent fees 1,196,349 237,242
Other shareholder servicing fees 4,197,105 572,875
Service Fee--Class II 788,882 670
Reports to shareholders 763,144 130,580
Custody and accounting fees 3,682,854 770,638
Registration and blue sky expenses 109,735 53,573
Trustee fees 135,739 78,309
Deferred trustee compensation 83,799 48,576
Legal fees 118,981 68,867
Audit fees 53,240 30,314
Other 276,505 122,870
------------------- -------------------
Total expenses 58,660,738 12,546,564
Expense offset arrangements (26) (32)
------------------- -------------------
Net expenses 58,660,712 12,546,532
NET INVESTMENT INCOME: 67,741,309 8,562,439
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on unaffiliated securities 229,716,380 162,137,095
Net realized gain on affiliated securities (a) 2,232,733 1,484,033
Net realized gain on options written 0 0
Net realized gain on short sales 0 0
Net realized gain (loss) on foreign currency transactions 12,385,971 362,424
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 848,532,506 47,885,993
Net change in appreciation (depreciation)--other (671,292) (85,458)
Net realized and unrealized gain on
investments and foreign currency transactions: 1,092,196,298 211,784,087
------------------- -------------------
Net increase in net assets resulting from operations $ 1,159,937,607 $ 220,346,526
=================== ===================
(a) Foreign tax expense -- 436,314
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
53
<Page>
THE OAKMARK FUNDS
STATEMENTS OF CHANGES IN NET ASSETS--SEPTEMBER 30, 2005
<Table>
<Caption>
THE OAKMARK FUND
- ------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
- ------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 54,415,372 $ 27,165,278
Net realized gain on investments 222,641,166 64,812,715
Net realized gain (loss) on foreign currency transactions (8,888) 0
Net change in unrealized appreciation (depreciation) of
investments 106,334,519 636,919,637
------------------ ------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 383,382,169 728,897,630
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class I (29,018,121) (20,505,874)
Net investment income--Class II (112,443) (37,100)
------------------ ------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (29,130,564) (20,542,974)
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold--Class I 1,362,078,314 1,919,971,722
Proceeds from shares sold--Class II 24,293,697 36,194,109
Reinvestment of distributions--Class I 26,428,576 18,843,547
Reinvestment of distributions--Class II 63,924 8,676
Payments for shares redeemed, net of fees--Class I (1,874,276,130) (939,233,385)
Payments for shares redeemed, net of fees--Class II (34,990,942) (9,099,878)
Redemption fees--Class I 334,756 340,142
------------------ ------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND
SHARE TRANSACTIONS (496,067,805) 1,027,024,933
------------------ ------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (141,816,200) 1,735,379,589
NET ASSETS:
Beginning of period 6,525,894,724 4,790,515,135
------------------ ------------------
End of period $ 6,384,078,524 $ 6,525,894,724
================== ==================
Undistributed net investment income $ 50,807,392 $ 25,531,472
================== ==================
FUND SHARE TRANSACTIONS--CLASS I:
Shares sold 33,399,717 50,926,355
Shares issued in reinvestment of dividends 648,872 534,720
Less shares redeemed (45,831,912) (24,984,586)
------------------ ------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (11,783,323) 26,476,489
================== ==================
FUND SHARE TRANSACTIONS--CLASS II:
Shares sold 602,472 968,163
Shares issued in reinvestment of dividends 1,576 247
Less shares redeemed (874,201) (247,309)
------------------ ------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (270,153) 721,101
================== ==================
</Table>
54
<Page>
<Table>
<Caption>
THE OAKMARK SELECT FUND
- ------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
- ------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 50,968,447 $ 28,041,071
Net realized gain on investments 365,072,967 156,155,071
Net change in unrealized appreciation (depreciation) of
investments 19,063,862 511,522,774
------------------ ------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 435,105,276 695,718,916
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class I (41,681,659) (18,710,631)
Net investment income--Class II (456,984) (118,882)
------------------ ------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (42,138,643) (18,829,513)
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold--Class I 1,213,430,549 807,786,818
Proceeds from shares sold--Class II 25,716,965 33,570,613
Reinvestment of distributions--Class I 39,145,855 17,456,336
Reinvestment of distributions--Class II 205,309 58,212
Payments for shares redeemed, net of fees--Class I (1,193,862,714) (1,019,983,750)
Payments for shares redeemed, net of fees--Class II (45,645,335) (40,937,360)
Redemption fees--Class I 183,103 105,547
------------------ ------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND
SHARE TRANSACTIONS 39,173,732 (201,943,584)
------------------ ------------------
TOTAL INCREASE IN NET ASSETS 432,140,365 474,945,819
NET ASSETS:
Beginning of period 5,561,033,089 5,086,087,270
------------------ ------------------
End of period $ 5,993,173,454 $ 5,561,033,089
================== ==================
Undistributed net investment income $ 27,766,940 $ 18,937,136
================== ==================
FUND SHARE TRANSACTIONS--CLASS I:
Shares sold 36,498,372 26,433,387
Shares issued in reinvestment of dividends 1,205,230 595,510
Less shares redeemed (36,106,003) (33,158,816)
------------------ ------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,597,599 (6,129,919)
================== ==================
FUND SHARE TRANSACTIONS--CLASS II:
Shares sold 781,192 1,102,241
Shares issued in reinvestment of dividends 6,346 1,944
Less shares redeemed (1,385,275) (1,342,449)
------------------ ------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (597,737) (238,264)
================== ==================
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
55
<Page>
THE OAKMARK FUNDS
STATEMENTS OF CHANGES IN NET ASSETS--SEPTEMBER 30, 2005
<Table>
<Caption>
THE OAKMARK
EQUITY AND INCOME FUND
- ------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
- ------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 119,409,290 $ 50,126,070
Net realized gain on investments 113,595,101 269,099,021
Net realized gain (loss) on foreign currency transactions 349,069 227,056
Net change in unrealized appreciation (depreciation) of
investments 912,480,570 416,194,976
Net change in unrealized appreciation
(depreciation)--other 102,972 39,804
------------------ ------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 1,145,937,002 735,686,927
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class I (67,147,479) (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 (280,937,801) (31,939,932)
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold--Class I 1,820,363,521 3,583,813,621
Proceeds from shares sold--Class II 312,413,005 277,231,468
Reinvestment of distributions--Class I 254,487,605 29,355,530
Reinvestment of distributions--Class II 7,740,318 514,106
Payments for shares redeemed, net of fees--Class I (1,238,425,257) (836,471,290)
Payments for shares redeemed, net of fees--Class II (273,110,583) (86,816,396)
Redemption fees--Class I 194,331 534,637
------------------ ------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND
SHARE TRANSACTIONS 883,662,940 2,968,161,676
------------------ ------------------
TOTAL INCREASE IN NET ASSETS 1,748,662,141 3,671,908,671
NET ASSETS:
Beginning of period 8,056,557,682 4,384,649,011
------------------ ------------------
End of period $ 9,805,219,823 $ 8,056,557,682
================== ==================
Undistributed net investment income $ 104,982,979 $ 47,199,612
================== ==================
FUND SHARE TRANSACTIONS--CLASS I:
Shares sold 76,592,615 159,855,520
Shares issued in reinvestment of dividends 10,997,735 1,399,884
Less shares redeemed (52,314,769) (37,388,817)
------------------ ------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 35,275,581 123,866,587
================== ==================
FUND SHARE TRANSACTIONS--CLASS II:
Shares sold 13,294,303 12,464,461
Shares issued in reinvestment of dividends 335,369 24,563
Less shares redeemed (11,403,546) (3,887,834)
------------------ ------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 2,226,126 8,601,190
================== ==================
</Table>
56
<Page>
<Table>
<Caption>
THE OAKMARK
GLOBAL FUND
- ------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
- ------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 13,170,380 $ 5,884,687
Net realized gain on investments 55,983,090 23,552,579
Net realized gain (loss) on foreign currency transactions 2,655,497 (199,643)
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 268,798,583 116,594,459
Net change in unrealized appreciation
(depreciation)--other (200,695) 102,037
------------------ ------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 340,406,855 145,934,119
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class I (7,092,334) (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 (32,935,662) (2,931,749)
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold--Class I 414,769,896 782,660,249
Proceeds from shares sold--Class II 29,165,244 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 (238,881,611) (296,067,961)
Payments for shares redeemed, net of fees--Class II (3,289,295) (4,061,520)
Redemption fees--Class I 81,661 314,014
------------------ ------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND
SHARE TRANSACTIONS 233,012,237 507,421,835
------------------ ------------------
TOTAL INCREASE IN NET ASSETS 540,483,430 650,424,205
NET ASSETS:
Beginning of period 1,361,021,640 710,597,435
------------------ ------------------
End of period $ 1,901,505,070 $ 1,361,021,640
================== ==================
Undistributed net investment income $ 13,892,204 $ 5,262,319
================== ==================
FUND SHARE TRANSACTIONS--CLASS I:
Shares sold 18,829,404 41,298,499
Shares issued in reinvestment of dividends 1,443,149 155,616
Less shares redeemed (10,924,262) (15,250,479)
------------------ ------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 9,348,291 26,203,636
================== ==================
FUND SHARE TRANSACTIONS--CLASS II:
Shares sold 1,339,114 1,131,427
Shares issued in reinvestment of dividends 26,519 1,160
Less shares redeemed (151,324) (211,953)
------------------ ------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,214,309 920,634
================== ==================
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
57
<Page>
<Table>
<Caption>
THE OAKMARK
INTERNATIONAL FUND
- ------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
- ------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 67,741,309 $ 53,715,892
Net realized gain on investments 231,949,113 217,536,088
Net realized gain (loss) on foreign currency transactions 12,385,971 (603,088)
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 848,532,506 401,911,292
Net change in unrealized appreciation
(depreciation)--other (671,292) 168,158
------------------ ------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 1,159,937,607 672,728,342
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class I (57,688,379) (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 (73,410,343) (20,655,598)
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold--Class I 1,220,262,175 1,465,810,386
Proceeds from shares sold--Class II 191,988,151 183,258,922
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 (713,216,070) (744,490,290)
Payments for shares redeemed, net of fees--Class II (156,918,221) (79,196,627)
Redemption fees--Class I 261,391 367,912
------------------ ------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND
SHARE TRANSACTIONS 607,611,952 844,192,418
------------------ ------------------
TOTAL INCREASE IN NET ASSETS 1,694,139,216 1,496,265,162
NET ASSETS:
Beginning of period 4,296,110,298 2,799,845,136
------------------ ------------------
End of period $ 5,990,249,514 $ 4,296,110,298
================== ==================
Undistributed net investment income $ 71,132,509 $ 51,739,373
================== ==================
FUND SHARE TRANSACTIONS--CLASS I:
Shares sold 56,890,583 81,784,418
Shares issued in reinvestment of dividends 3,074,952 1,091,501
Less shares redeemed (33,360,212) (40,952,323)
------------------ ------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 26,605,323 41,923,596
================== ==================
FUND SHARE TRANSACTIONS--CLASS II:
Shares sold 8,978,667 10,166,362
Shares issued in reinvestment of dividends 107,693 16,860
Less shares redeemed (7,296,822) (4,345,978)
------------------ ------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,789,538 5,837,244
================== ==================
</Table>
58
<Page>
<Table>
<Caption>
THE OAKMARK INTERNATIONAL
SMALL CAP FUND
- ------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
- ------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 8,562,439 $ 4,554,775
Net realized gain on investments 163,621,128 43,497,450
Net realized gain (loss) on foreign currency transactions 362,424 (41,546)
Net change in unrealized appreciation (depreciation) of
investments and foreign currencies 47,885,993 124,228,709
Net change in unrealized appreciation
(depreciation)--other (85,458) (23,302)
------------------ ------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 220,346,526 172,216,086
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class I (11,222,305) (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 (26,778,304) (4,212,177)
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold--Class I 180,090,052 188,831,597
Proceeds from shares sold--Class II 112,795 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 (125,328,062) (104,507,785)
Payments for shares redeemed, net of fees--Class II (110,335) (171,984)
Redemption fees--Class I 38,178 263,993
------------------ ------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND
SHARE TRANSACTIONS 79,659,390 88,335,487
------------------ ------------------
TOTAL INCREASE IN NET ASSETS 273,227,612 256,339,396
NET ASSETS:
Beginning of period 734,583,825 478,244,429
------------------ ------------------
End of period $ 1,007,811,437 $ 734,583,825
================== ==================
Undistributed net investment income $ 3,732,145 $ 3,819,316
================== ==================
FUND SHARE TRANSACTIONS--CLASS I:
Shares sold 8,779,360 11,434,258
Shares issued in reinvestment of dividends 1,298,823 260,200
Less shares redeemed (6,084,980) (6,274,556)
------------------ ------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 3,993,203 5,419,902
================== ==================
FUND SHARE TRANSACTIONS--CLASS II:
Shares sold 5,611 3,350
Shares issued in reinvestment of dividends 537 102
Less shares redeemed (5,127) (10,276)
------------------ ------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,021 (6,824)
================== ==================
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
59
<Page>
THE OAKMARK FUNDS
NOTES TO FINANCIAL STATEMENTS
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, organized on February 1, 1991, 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.
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 Class I shareholders of the Fund.
The "first-in, first-out" (FIFO) method is used to determine the holding period.
SECURITY VALUATION--
The Funds' share prices or net asset values ("NAV") are calculated as of the
close of regular session trading (usually 4:00 pm Eastern time) on the New York
Stock Exchange ("NYSE") on any day on which the NYSE is open for trading.
Domestic equity 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. Foreign equity securities traded on
securities exchanges shall be valued at, depending on local convention or
regulation, the last sales price, last bid or asked price, the mean between the
last bid and asked prices, an official closing price, or shall be based on a
pricing composite as of the close of the regular trading hours on the
appropriate exchange or other designated time. 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 sales price on the day of valuation, or lacking any reported sales
that day, at the mean of the most recent bid and asked quotations, or if the
mean is not available, at the most recent bid quotation.
Securities for which quotations are not readily available or securities that may
have been affected by a significant event occurring between the close of a
foreign market and the close of the NYSE are valued at fair values, determined
by or under the direction of the pricing committee established by the Board of
Trustees. A significant event may include the performance of U.S. markets since
the close of foreign markets. The pricing committee 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 September 30, 2005, the Funds held no securities for which
quotations were not readily available, and no securities that were believed to
be affected by a significant event prior to the computation of the NAV.
FOREIGN CURRENCY TRANSLATIONS--
Values of investments and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars at current exchange rates obtained
by a recognized bank, dealer, or independent pricing service on the day of
valuation. 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. Forward foreign currency contracts are valued at the current day's
interpolated foreign exchange rates.
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 and unrealized gains and losses from securities.
Net realized gains and 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
60
<Page>
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 fiscal year end resulting from changes in exchange rates.
At September 30, 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 dividends and dividend reclaims
receivable $ 285,396 $ (139,609) $ (431,911) $ (41,660)
Unrealized appreciation (depreciation)
on open securities purchases and
sales (55,752) 15,840 56,522 (7,041)
------------- ------------- ------------- -------------
Net Unrealized appreciation
(depreciation) - Other $ 229,644 $ (123,769) $ (375,389) $ (48,701)
============= ============= ============= =============
</Table>
FORWARD FOREIGN CURRENCY CONTRACTS--
The Funds' currency transactions are limited to transaction hedging and
portfolio hedging. 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 counterparties to meet the terms of their contracts
and from movements in currency values. At September 30, 2005, Global,
International and Int'l Small Cap held the following outstanding forward foreign
currency contracts:
THE OAKMARK GLOBAL FUND
<Table>
<Caption>
NET
UNREALIZED
CONTRACT SETTLEMENT VALUATION APPRECIATION
AMOUNT DATE AT 9/30/2005 (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------------------
FOREIGN CURRENCY SOLD:
British Pound
Sterling 20,800,000 4/18/06 $ 36,663,793 $ (280,433)
Swiss Franc 73,000,000 11/16/05 $ 56,615,535 $ 6,348,067
-------------- ----------------
Total $ 93,279,328 $ 6,067,634
============== ================
</Table>
THE OAKMARK INTERNATIONAL FUND
<Table>
<Caption>
NET
UNREALIZED
CONTRACT SETTLEMENT VALUATION AT APPRECIATION
AMOUNT DATE 9/30/2005 (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------------------
FOREIGN CURRENCY BOUGHT:
Swiss Franc 302,000,000 11/16/05 $ 234,217,691 $ (2,747,275)
Swiss Franc 91,000,000 11/17/05 70,581,921 (827,032)
---------------- ----------------
$ 304,799,612 $ (3,574,307)
================ ================
FOREIGN CURRENCY SOLD:
British Pound
Sterling 65,000,000 11/28/05 $ 114,588,786 $ 5,323,214
British Pound
Sterling 64,500,000 12/7/05 113,696,644 8,879,156
British Pound
Sterling 42,600,000 12/9/05 75,091,758 6,282,762
Swiss Franc 302,000,000 11/16/05 234,217,691 26,261,868
Swiss Franc 174,000,000 11/17/05 134,958,839 15,495,117
Swiss Franc 129,400,000 11/22/05 100,411,412 12,532,640
Swiss Franc 88,700,000 12/7/05 68,923,182 10,237,907
---------------- ----------------
$ 841,888,312 $ 85,012,664
================ ================
Total $ 1,146,687,924 $ 81,438,357
================ ================
</Table>
THE OAKMARK INTERNATIONAL SMALL CAP FUND
<Table>
<Caption>
NET
UNREALIZED
CONTRACT SETTLEMENT VALUATION AT APPRECIATION
AMOUNT DATE 9/30/2005 (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------------------
FOREIGN CURRENCY BOUGHT:
Swiss Franc 53,500,000 11/16/05 $ 41,492,207 $ (486,686)
Swiss Franc 17,700,000 11/17/05 $ 13,728,572 (160,862)
---------------- ----------------
$ 55,220,779 $ (647,548)
================ ================
FOREIGN CURRENCY SOLD:
British Pound
Sterling 4,700,000 11/28/05 $ 8,285,651 $ 384,909
British Pound
Sterling 4,600,000 12/7/05 $ 8,108,598 633,242
British Pound
Sterling 1,100,000 12/9/05 $ 1,938,989 162,231
British Pound
Sterling 13,600,000 1/18/06 $ 23,969,333 1,353,867
British Pound
Sterling 11,000,000 5/17/06 $ 19,393,433 824,567
Swiss Franc 53,500,000 11/16/05 $ 41,492,207 4,652,351
Swiss Franc 30,800,000 11/17/05 $ 23,889,266 2,742,814
Swiss Franc 23,700,000 11/22/05 $ 18,390,653 2,295,391
Swiss Franc 16,800,000 12/7/05 $ 13,054,222 1,939,085
---------------- ----------------
$ 158,522,352 $ 14,988,457
================ ================
Total $ 213,743,131 $ 14,340,909
================ ================
</Table>
61
<Page>
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. 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
certain losses and character of capital loss carryforwards.
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. At September 30, 2005, the Funds had no short sales
outstanding.
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
obligation under the contract.
At September 30, 2005, the Funds had no outstanding options.
COMMITTED LINE OF CREDIT--
The Trust has 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 year ended September 30, 2005.
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.
REPURCHASE AGREEMENTS--
Each Fund may invest in repurchase agreements, which are short-term investments
whereby the Fund acquires ownership of a debt security and the seller agrees to
repurchase the security in the future at a specified price.
Each Fund, through IBT, 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. Harris Associates L.P. ("the 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.
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
62
<Page>
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 September 30, 2005, the Funds had no securities on loan.
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 the debt obligations and money market instruments (as stated in
the Security valuation section) since their acquisition dates. These securities
are priced using market quotations and there are no unrestricted securities with
the same maturity dates and yields for the issuer.
At September 30, 2005, the Oakmark Equity & Income Fund held the following
restricted securities:
<Table>
<Caption>
SECURITY ACQUISITION CARRYING MARKET PERCENTAGE OF
QUANTITY NAME DATE VALUE COST VALUE NET ASSETS
------------------------------------------------------------------------------------------------------
$ 3,000,000 Sealed Air Corporation,
144A, 5.625% due
7/15/2013 6/27/2003 100.2747 100.68 3,008,241 0.03%
5,000,000 Sealed Air Corporation,
144A, 5.625% due
7/15/2013 8/20/2003 100.2747 96.41 5,013,735 0.05%
300,000 Sealed Air Corporation,
144A, 5.625% due
7/15/2013 8/21/2003 100.2747 96.79 300,824 0.00%
11,700,000 Sealed Air Corporation,
144A 5.625% due
7/15/2013 4/6/2004 100.2747 103.31 11,732,140 0.12%
--------------------------
20,054,940 0.20%
</Table>
2. TRANSACTIONS WITH AFFILIATES
Each Fund has an investment advisory agreement with 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
</Table>
63
<Page>
<Table>
<Caption>
FUND ADVISORY FEES FUND ADVISORY FEES
---------------------------------------------------------------------------------------------------------------
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>
The Adviser is contractually obligated 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 year ended September 30, 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 $ 2,551,688 $ 144,892
Select 3,713,661 59,518
Equity and Income 4,903,984 41,253
Global 1,102,771 1,251
International 4,543,752 0
Int'l Small Cap 1,861,293 0
</Table>
On June 10, 2005, Harris Associates Securities L.P., an affiliate of the
Adviser, exited the broker-dealer business. Therefore, the Funds have conducted
no further trading with an affiliated broker-dealer since that date.
IXIS Asset Management Services Co., an affiliate of the Adviser, provided
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 year ended
September 30, 2005, the Funds incurred the following transfer and dividend
disbursing agent expenses:
<Table>
<Caption>
TRANSFER AND DIVIDEND
FUND DISBURSING AGENT FEES
----------------------------------------------------------------------------------------------------------
Oakmark $ 3,095,228
Select 1,672,303
Equity and Income 2,041,484
Global 570,770
International 1,196,349
Int'l Small Cap 237,242
</Table>
64
<Page>
Effective October 1, 2005, IXIS Asset Management Services Co. exited the
transfer agent business, and the Funds have retained Boston Financial Data
Services to serve in that capacity.
The Adviser has entered into agreements with 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. The agreement with the Adviser calls for the Funds to pay a portion of
the intermediary fees (which generally are a percentage of total net assets) to
represent that portion the Funds would have paid the transfer agent had those
shares been registered directly with the transfer agent instead of registered
with the intermediary accounts. The Adviser pays the remainder of the charges,
representing the portion that is attributed to shareholder servicing and
distribution. The fees incurred by the Funds 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. The fees
incurred by the Funds are reflected as deferred trustee compensation in the
Statement of Operations.
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
substantially 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 $ 4,983,940,183 $ 1,339,316,873 $ (75,490,847) $ 1,263,826,026
Select 4,248,694,655 1,831,570,164 (73,296,963) 1,758,273,201
Equity and Income 8,021,768,906 1,836,557,867 (94,738,383) 1,741,819,484
Global 1,423,828,007 476,015,241 (15,088,709) 460,926,532
International 4,386,853,120 1,522,244,755 (7,901,792) 1,514,342,963
Int'l Small Cap 769,442,408 247,054,073 (29,095,050) 217,959,023
</Table>
As of September 30, 2005, Oakmark had a net capital loss carryover of
$39,304,543 available to offset future realized gains and thereby potentially
reduce future taxable gains distributions. This capital loss carryover will
expire in 2012 if not utilized. For the year ended September 30, 2005, Oakmark
has elected to defer to October 1, 2005, post October 2004 currency losses of
$8,888.
For the year ended September 30, 2005, the components of distributable earnings
on a tax basis (excluding unrealized appreciation (depreciation) disclosed below
were as follows:
<Table>
<Caption>
UNDISTRIBUTED UNDISTRIBUTED LONG- TOTAL DISTRIBUTABLE
FUND ORDINARY INCOME TERM GAIN EARNINGS
--------------------------------------------------------------------------------------------------
Oakmark $ 51,676,253 $ 0 $ 51,676,253
Select 28,490,162 352,140,283 380,630,445
Equity and Income 104,391,437 88,295,438 192,686,875
Global 26,698,746 47,269,213 73,967,959
International 159,141,708 225,560,651 384,702,359
Int'l Small Cap 40,336,370 143,444,028 183,780,398
</Table>
65
<Page>
During the years ended September 30, 2005, and September 30, 2004, the tax
character of distributions paid was as follows:
<Table>
<Caption>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
-----------------------------------------------------------------------------------------
DISTRIBUTIONS PAID DISTRIBUTIONS PAID DISTRIBUTIONS PAID DISTRIBUTIONS PAID
FROM ORDINARY FROM LONG-TERM FROM ORDINARY FROM LONG-TERM
FUND INCOME CAPITAL GAIN INCOME CAPITAL GAIN
-------------------------------------------------------------------------------------------------------------------------
Oakmark $ 29,130,564 $ 0 $ 20,542,974 $ 0
Select 42,138,643 0 18,829,513 0
Equity and Income 70,711,007 210,226,794 31,939,932 0
Global 7,195,992 25,739,670 54,303 2,877,446
International 60,834,949 12,575,394 20,655,598 0
Int'l Small Cap 11,229,304 15,549,000 4,212,177 0
</Table>
4. INVESTMENT TRANSACTIONS
For the year ended September 30, 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 $ 986,049 $ 1,170,876 $ 2,929,493 $ 434,854 $ 1,265,359 $ 443,143
Proceeds from sales 1,391,645 1,131,707 2,086,234 262,870 709,336 394,594
</Table>
Purchases at cost and proceeds from sales of long-term U.S. Government
securities for the year ended September 30, 2005 were $7,348,222 and $7,260,102
respectively for Equity and Income.
Transactions in written options during the year ended September 30, 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 September 30, 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 a Fund's holdings of an issuer represents 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 year ended September 30,
2005, is set forth below:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
THE OAKMARK SELECT FUND
<Table>
<Caption>
SHARES HELD MARKET VALUE
SEPTEMBER 30, PURCHASES PROCEEDS DIVIDEND SEPTEMBER 30,
AFFILIATES 2005 (COST) SALES INCOME 2005
----------------------------------------------------------------------------------------------------
H&R Block, Inc. 16,519,600 $ 0 $ 9,870,356 $ 7,546,558 $ 396,140,008
The Dun & Bradstreet
Corporation + 3,934,900 0 0 0 259,191,863
Toys 'R' Us*+ 0 0 275,921,973 0 0
--------- -------------- -------------- --------------
TOTALS $ 0 $ 285,792,329 $ 7,546,558 $ 655,331,871
</Table>
66
<Page>
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
THE OAKMARK EQUITY AND INCOME FUND
<Table>
<Caption>
SHARES HELD MARKET VALUE
SEPTEMBER 30, PURCHASES SALES INCOME SEPTEMBER 30,
AFFILIATES 2005 (COST) PROCEEDS DIVIDEND 2005
-------------------------------------------------------------------------------------------------------
Mentor Graphics
Corporation + 3,640,000 $ 0 $ 0 $ 0 $ 31,304,000
St. Mary Land &
Exploration Company** 2,900,000 0 0 217,500 106,140,000
Varian, Inc. + 1,649,400 0 0 0 56,607,408
------------ -------------- -------------- --------------
TOTALS $ 0 $ 0 $ 217,500 $ 194,051,408
</Table>
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
THE OAKMARK INTERNATIONAL FUND
<Table>
<Caption>
SHARES HELD MARKET VALUE
SEPTEMBER 30, PURCHASES SALES DIVIDEND SEPTEMBER 30,
AFFILIATES 2005 (COST) PROCEEDS INCOME 2005
-------------------------------------------------------------------------------------------------------
Chargeurs SA 790,182 $ 0 $ 0 $ 1,161,190 $ 20,802,323
Enodis plc + 33,585,320 0 0 0 76,146,451
Lotte Chilsung Beverage
Co., Ltd. 84,327 864,017 0 160,154 80,165,198
Meitec Corporation 2,483,800 14,989,812 0 1,699,742 79,448,332
Michael Page International
plc 24,271,000 8,603,467 7,975,624 2,006,666 105,346,431
------------ -------------- -------------- --------------
TOTALS $ 24,457,296 $ 7,975,624 $ 5,027,752 $ 361,908,735
</Table>
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
THE OAKMARK INT'L SMALL CAP FUND
<Table>
<Caption>
SHARES HELD MARKET VALUE
SEPTEMBER 30, PURCHASES SALES DIVIDEND SEPTEMBER 30,
AFFILIATES 2005 (COST) PROCEEDS INCOME 2005
-------------------------------------------------------------------------------------------------------
Alaska Milk Corporation 56,360,000 $ 363,857 $ 0 $ 295,773 $ 3,518,102
Gurit-Heberlein AG 32,875 0 2,865,773 704,160 31,115,994
Interpump Group S.p.A. 4,709,000 8,215,796 4,022,707 833,650 31,648,912
Lectra 2,186,404 3,134,871 0 303,491 11,065,043
Mainfreight Limited 7,475,285 0 2,647,090 432,893 18,141,769
Matichon Public Company
Limited, Foreign Shares* 0 0 5,534,397 154,488 0
Morse plc 12,474,000 5,570,686 0 695,343 18,927,848
Royal Doulton plc * + 0 0 5,020,783 0 0
Vitec Group plc 2,383,907 2,686,298 0 639,696 14,931,888
------------ -------------- -------------- --------------
TOTALS $ 19,971,508 $ 20,090,750 $ 4,059,494 $ 129,349,556
</Table>
* Position in issuer liquidated during the 12 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>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 38.68 $ 33.85 $ 28.08 $ 32.01 $ 26.95
Income From Investment Operations:
Net Investment Income 0.34 0.16 0.13 0.12 0.07
Net Gains or Losses on Investments
(both realized and unrealized) 1.90 4.81 5.75 (3.85) 5.38
------------- ------------- ------------- ------------- -------------
Total From Investment Operations: 2.24 4.97 5.88 (3.73) 5.45
Less Distributions:
Dividends (from net investment income) (0.17) (0.14) (0.11) (0.20) (0.39)
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.00
------------- ------------- ------------- ------------- -------------
Total Distributions (0.17) (0.14) (0.11) (0.20) (0.39)
------------- ------------- ------------- ------------- -------------
Redemption Fee Per Share 0.00(a) 0.00(a) -- -- --
Net Asset Value, End of Period $ 40.75 $ 38.68 $ 33.85 $ 28.08 $ 32.01
============= ============= ============= ============= =============
Total Return 5.79% 14.73% 20.99% (11.77)% 20.42%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 6,340.4 $ 6,474.0 $ 4,769.4 $ 3,300.9 $ 3,109.1
Ratio of Expenses to Average Net Assets 1.03%* 1.05% 1.14% 1.17% 1.15%
Ratio of Net Investment Income to
Average Net Assets 0.79% 0.47% 0.48% 0.38% 0.73%
Portfolio Turnover Rate 16% 19% 21% 44% 57%
</Table>
FINANCIAL HIGHLIGHTS-CLASS II
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
APRIL 5, 2001
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2003 2002 2001 (b)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 38.45 $ 33.68 $ 28.04 $ 31.97 $ 32.09
Income From Investment Operations:
Net Investment Income 0.26 0.04(c) 0.05 0.16 0.05
Net Gains or Losses on Investments
(both realized and unrealized) 1.87 4.78 5.69 (3.92) (0.17)
------------- ------------- ------------- ------------- -------------
Total From Investment Operations: 2.13 4.82 5.74 (3.76) (0.12)
Less Distributions:
Dividends (from net investment income) (0.07) (0.05) (0.10) (0.17) 0.00
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.00
------------- ------------- ------------- ------------- -------------
Total Distributions (0.07) (0.05) (0.10) (0.17) 0.00
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Period $ 40.51 $ 38.45 $ 33.68 $ 28.04 $ 31.97
============= ============= ============= ============= =============
Total Return 5.55% 14.32% 20.52% (11.85)% (0.37)%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 43.7 $ 51.9 $ 21.1 $ 7.7 $ 0.1
Ratio of Expenses to Average Net Assets 1.26%* 1.40% 1.53% 1.44% 1.32%**
Ratio of Net Investment Income to
Average Net Assets 0.58% 0.11% 0.06% 0.35% 0.46%**
Portfolio Turnover Rate 16% 19% 21% 44% 57%
</Table>
* The ratio excludes expense offset arrangement.
** Data has been annualized.
(a) Amounts round to less than $0.01 per share.
(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>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 31.20 $ 27.55 $ 21.67 $ 25.20 $ 21.45
Income From Investment Operations:
Net Investment Income 0.29 0.15(a) 0.05 0.02 0.03
Net Gains or Losses on Investments
(both realized and unrealized) 2.19 3.60 5.85 (3.50) 5.17
------------- ------------- ------------- ------------- -------------
Total From Investment Operations: 2.48 3.75 5.90 (3.48) 5.20
Less Distributions:
Dividends (from net investment income) (0.24) (0.10) (0.02) (0.05) (0.09)
Distributions (from capital gains) 0.00 0.00 0.00 0.00 (1.36)
------------- ------------- ------------- ------------- -------------
Total Distributions (0.24) (0.10) (0.02) (0.05) (1.45)
------------- ------------- ------------- ------------- -------------
Redemption Fee Per Share 0.00(b) 0.00(b) -- -- --
Net Asset Value, End of Period $ 33.44 $ 31.20 $ 27.55 $ 21.67 $ 25.20
============= ============= ============= ============= =============
Total Return 7.98% 13.64% 27.25% (13.85)% 25.75%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 5,908.0 $ 5,463.0 $ 4,993.0 $ 3,717.6 $ 4,161.4
Ratio of Expenses to Average Net Assets 1.00% 1.00% 1.02% 1.07% 1.08%
Ratio of Net Investment Income to
Average Net Assets 0.87% 0.50% 0.23% 0.09% 0.26%
Portfolio Turnover Rate 21% 14% 20% 32% 21%
</Table>
FINANCIAL HIGHLIGHTS-CLASS II
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2003 2002 2001
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 31.00 $ 27.37 $ 21.56 $ 25.10 $ 21.40
Income From Investment Operations:
Net Investment Income (Loss) 0.21 0.09(a) 0.00(b) (0.04) 0.00(b)
Net Gains or Losses on Investments
(both realized and unrealized) 2.18 3.58 5.81 (3.50) 5.10
------------- ------------- ------------- ------------- -------------
Total From Investment Operations: 2.39 3.67 5.81 (3.54) 5.10
Less Distributions:
Dividends (from net investment income) (0.15) (0.04) 0.00 0.00 (0.06)
Distributions (from capital gains) 0.00 0.00 0.00 0.00 (1.34)
------------- ------------- ------------- ------------- -------------
Total Distributions (0.15) (0.04) 0.00 0.00 (1.40)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Period $ 33.24 $ 31.00 $ 27.37 $ 21.56 $ 25.10
============= ============= ============= ============= =============
Total Return 7.72% 13.40% 26.95% (14.10)% 25.28%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 85.2 $ 98.0 $ 93.1 $ 64.4 $ 35.4
Ratio of Expenses to Average Net Assets 1.25% 1.21% 1.29% 1.36% 1.40%
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.65% 0.29% (0.04)% (0.19)% (0.08)%
Portfolio Turnover Rate 21% 14% 20% 32% 21%
</Table>
(a) Computed using average shares outstanding throughout the period.
(b) Amounts round to less than $0.01 per share.
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>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 23.12 $ 20.30 $ 17.18 $ 17.45 $ 16.50
Income From Investment Operations:
Net Investment Income 0.31 0.15 0.17 0.33(a) 0.08
Net Gains or Losses on Securities
(both realized and unrealized) 2.77 2.81 3.19 (0.40) 2.11
------------- ------------- ------------- ------------- -------------
Total From Investment Operations: 3.08 2.96 3.36 (0.07) 2.19
Less Distributions:
Dividends (from net investment income) (0.20) (0.14) (0.24) (0.16) (0.24)
Distributions (from capital gains) (0.59) 0.00 0.00 (0.04) (1.00)
------------- ------------- ------------- ------------- -------------
Total Distributions (0.79) (0.14) (0.24) (0.20) (1.24)
------------- ------------- ------------- ------------- -------------
Redemption fee per share 0.00(b) 0.00(b) -- -- --
Net Asset Value, End of Period $ 25.41 $ 23.12 $ 20.30 $ 17.18 $ 17.45
============= ============= ============= ============= =============
Total Return 13.65% 14.64% 19.75% (0.47)% 14.40%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 9,223.2 $ 7,577.9 $ 4,138.0 $ 2,241.9 $ 620.1
Ratio of Expenses to Average Net Assets 0.89%* 0.92% 0.93% 0.96% 0.98%
Ratio of Net Investment Income to
Average Net Assets 1.36% 0.78% 1.07% 1.71% 2.07%
Portfolio Turnover Rate 112% 72% 48% 73% 124%
</Table>
FINANCIAL HIGHLIGHTS-CLASS II
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 23.03 $ 20.24 $ 17.15 $ 17.40 $ 16.49
Income From Investment Operations:
Net Investment Income 0.28 0.11 0.16 0.30(a) 0.07
Net Gains or Losses on Securities
(both realized and unrealized) 2.72 2.79 3.15 (0.40) 2.08
------------- ------------- ------------- ------------- -------------
Total From Investment Operations: 3.00 2.90 3.31 (0.10) 2.15
Less Distributions:
Dividends (from net investment income) (0.15) (0.11) (0.22) (0.11) (0.24)
Distributions (from capital gains) (0.59) 0.00 0.00 (0.04) (1.00)
------------- ------------- ------------- ------------- -------------
Total Distributions (0.74) (0.11) (0.22) (0.15) (1.24)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Period $ 25.29 $ 23.03 $ 20.24 $ 17.15 $ 17.40
============= ============= ============= ============= =============
Total Return 13.34% 14.36% 19.46% (0.60)% 14.07%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 582.0 $ 478.7 $ 246.6 $ 118.7 $ 3.3
Ratio of Expenses to Average Net Assets 1.14%* 1.17% 1.17% 1.20% 1.23%
Ratio of Net Investment Income
to Average Net Assets 1.11% 0.53% 0.84% 1.50% 1.95%
Portfolio Turnover Rate 112% 72% 48% 73% 124%
</Table>
* The ratio excludes expense offset arrangement.
(a) Computed using average shares outstanding throughout the period.
(b) Amounts round to less than $0.01 per share.
70
<Page>
THE OAKMARK GLOBAL FUND
FINANCIAL HIGHLIGHTS-CLASS I
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2003 2002 2001
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 19.73 $ 16.98 $ 11.30 $ 10.83 $ 10.91
Income From Investment Operations:
Net Investment Income 0.17 0.09 0.01 0.00(a)(b) 0.03
Net Gains or Losses on Investments
(both realized and unrealized) 4.48 2.71 5.67 0.76(c) 0.12
------------- ------------- ------------- ------------- -------------
Total From Investment Operations: 4.65 2.80 5.68 0.76 0.15
Less Distributions:
Dividends (from net investment income) (0.10) 0.00(a) 0.00 0.00 (0.17)
Distributions (from capital gains) (0.37) (0.05) 0.00 (0.29) (0.06)
------------- ------------- ------------- ------------- -------------
Total Distributions (0.47) (0.05) 0.00 (0.29) (0.23)
------------- ------------- ------------- ------------- -------------
Redemption Fee Per Share 0.00(a) 0.00(a) -- -- --
Net Asset Value, End of Period $ 23.91 $ 19.73 $ 16.98 $ 11.30 $ 10.83
============= ============= ============= ============= =============
Total Return 23.88% 16.54% 50.27% 6.84% 1.37%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 1,842.9 $ 1,336.3 $ 704.8 $ 175.6 $ 48.2
Ratio of Expenses to Average Net Assets 1.20%* 1.26% 1.28% 1.55% 1.75%(e)
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.81% 0.47% 0.00%(d) (0.01)% 0.00(e)
Portfolio Turnover Rate 17% 16% 42% 86% 114%
</Table>
* The ratio excludes expense offset arrangement.
(a) Amounts round 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 Adviser, ratios would have been as follows:
<Table>
<Caption>
SEPTEMBER 30,
2001
- ------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 1.80%
Ratio of Net Income (Loss) to Average Net Assets (0.05)%
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
71
<Page>
FINANCIAL HIGHLIGHTS-CLASS II
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
OCTOBER 10, 2001
YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 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) 0.11 0.05 0.02 (0.03)
Net Gains or Losses on Investments
(both realized and unrealized) 4.43 2.69 5.58 0.31(b)
------------- ------------- ------------- ----------------
Total From Investment Operations: 4.54 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 $ 23.63 $ 19.53 $ 16.84 $ 11.24
============= ============= ============= ================
Total Return 23.53% 16.32% 49.82% 2.31%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 58.6 $ 24.7 $ 5.8 $ 0.6
Ratio of Expenses to Average Net Assets 1.45%* 1.50% 1.46% 1.86%**
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.63% 0.37% (0.01)% (0.26)%**
Portfolio Turnover Rate 17% 16% 42% 86%
</Table>
* The ratio excludes expense offset arrangement.
** 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>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 18.98 $ 15.67 $ 12.17 $ 12.51 $ 15.40
Income From Investment Operations:
Net Investment Income 0.27 0.24 0.11 0.14 0.20
Net Gains or Losses on Investments
(both realized and unrealized) 4.59 3.18 3.52 (0.31) (2.07)
------------- ------------- ------------- ------------- -------------
Total From Investment Operations: 4.86 3.42 3.63 (0.17) (1.87)
Less Distributions:
Dividends (from net investment income) (0.27) (0.11) (0.13) (0.17) (0.51)
Distributions (from capital gains) (0.05) 0.00 0.00 0.00 (0.51)
------------- ------------- ------------- ------------- -------------
Total Distributions (0.32) (0.11) (0.13) (0.17) (1.02)
------------- ------------- ------------- ------------- -------------
Redemption Fee Per Share 0.00(a) 0.00(a) -- -- --
Net Asset Value, End of Period $ 23.52 $ 18.98 $ 15.67 $ 12.17 $ 12.51
============= ============= ============= ============= =============
Total Return 25.85% 21.92% 29.97% (1.53)% (13.10)%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 5,627.4 $ 4,036.9 $ 2,676.6 $ 1,393.8 $ 738.5
Ratio of Expenses to Average Net Assets 1.11%* 1.20% 1.25% 1.31% 1.30%
Ratio of Net Investment Income
to Average Net Assets 1.32% 1.40% 1.03% 1.34% 1.40%
Portfolio Turnover Rate 14% 21% 34% 24% 58%
</Table>
FINANCIAL HIGHLIGHTS-CLASS II
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 18.86 $ 15.58 $ 12.13 $ 12.47 $ 15.37
Income From Investment Operations:
Net Investment Income 0.22 0.18 0.08 0.15 0.17
Net Gains or Losses on Investments
(both realized and unrealized) 4.55 3.16 3.48 (0.37) (2.10)
------------- ------------- ------------- ------------- -------------
Total From Investment Operations: 4.77 3.34 3.56 (0.22) (1.93)
Less Distributions:
Dividends (from net investment income) (0.22) (0.06) (0.11) (0.12) (0.49)
Distributions (from capital gains) (0.05) 0.00 0.00 0.00 (0.48)
------------- ------------- ------------- ------------- -------------
Total Distributions (0.27) (0.06) (0.11) (0.12) (0.97)
Net Asset Value, End of Period $ 23.36 $ 18.86 $ 15.58 $ 12.13 $ 12.47
============= ============= ============= ============= =============
Total Return 25.50% 21.52% 29.52% (1.76)% (13.44)%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 362.9 $ 259.2 $ 123.2 $ 48.5 $ 1.9
Ratio of Expenses to Average Net Assets 1.38%* 1.53% 1.67% 1.58% 1.64%
Ratio of Net Investment Income
to Average Net Assets 1.08% 1.18% 0.69% 1.33% 0.62%
Portfolio Turnover Rate 14% 21% 34% 24% 58%
</Table>
* The ratio excludes expense offset arrangement.
(a) Amounts round to less than $0.01 per share.
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>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 18.26 $ 13.74 $ 10.17 $ 10.00 $ 11.51
Income From Investment Operations:
Net Investment Income 0.20 0.11 0.11 0.11 0.13
Net Gains or Losses on Securities
(both realized and unrealized) 4.98 4.52 3.82 0.36(a) (0.81)
------------- ------------- ------------- ------------- -------------
Total From Investment Operations: 5.18 4.63 3.93 0.47 (0.68)
Less Distributions:
Dividends (from net investment income) (0.27) (0.12) (0.09) (0.16) (0.34)
Distributions (from capital gains) (0.38) 0.00 (0.27) (0.14) (0.49)
------------- ------------- ------------- ------------- -------------
Total Distributions (0.65) (0.12) (0.36) (0.30) (0.83)
------------- ------------- ------------- ------------- -------------
Redemption fee per share 0.00(d) 0.01 -- -- --
Net Asset Value, End of Period $ 22.79 $ 18.26 $ 13.74 $ 10.17 $ 10.00
============= ============= ============= ============= =============
Total Return 29.04% 33.94% 39.78% 4.68% (6.18)%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 1,007.2 $ 734.1 $ 477.8 $ 357.7 $ 118.9
Ratio of Expenses to Average Net Assets 1.41%* 1.49% 1.57% 1.64% 1.74%
Ratio of Net Investment Income
to Average Net Assets 0.96% 0.72% 0.99% 1.28% 1.83%
Portfolio Turnover Rate 47% 29% 30% 42% 49%
</Table>
FINANCIAL HIGHLIGHTS-CLASS II
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<Table>
<Caption>
JANUARY 8, 2001
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2003 2002 2001 (b)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 18.25 $ 13.69 $ 10.14 $ 9.97 $ 10.73
Income From Investment Operations:
Net Investment Income 0.18 0.13 0.08 0.13(c) 0.15
Net Gains or Losses on Securities
(both realized and unrealized) 4.98 4.52 3.81 0.30(a) (0.91)
------------- ------------- ------------- ------------- --------------
Total From Investment Operations: 5.16 4.65 3.89 0.43 (0.76)
Less Distributions:
Dividends (from net investment income) (0.26) (0.09) (0.07) (0.12) 0.00
Distributions (from capital gains) (0.38) 0.00 (0.27) (0.14) 0.00
------------- ------------- ------------- ------------- --------------
Total Distributions (0.64) (0.09) (0.34) (0.26) 0.00
Net Asset Value, End of Period $ 22.77 $ 18.25 $ 13.69 $ 10.14 $ 9.97
============= ============= ============= ============= ==============
Total Return 28.94% 34.11% 39.39% 4.25% (7.08)%
Ratios/Supplemental Data:
Net Assets, End of Period ($million) $ 0.6 $ 0.5 $ 0.4 $ 0.3 $ 0.0
Ratio of Expenses to Average Net Assets 1.49%* 1.39% 1.81% 1.87% 1.97%**
Ratio of Net Investment Income
to Average Net Assets 0.87% 0.75% 0.72% 1.06% 1.76%**
Portfolio Turnover Rate 47% 29% 30% 42% 49%
</Table>
* The ratio excludes expense offset arrangement.
** 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 per share.
74
<Page>
THE OAKMARK FUNDS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF HARRIS ASSOCIATES INVESTMENT TRUST:
WE HAVE AUDITED THE ACCOMPANYING STATEMENTS OF ASSETS AND LIABILITIES,
INCLUDING THE SCHEDULES OF INVESTMENTS, OF HARRIS ASSOCIATES INVESTMENT TRUST
COMPRISING THE OAKMARK FUND, THE OAKMARK SELECT FUND, THE OAKMARK EQUITY AND
INCOME FUND, THE OAKMARK GLOBAL FUND, THE OAKMARK INTERNATIONAL FUND, AND THE
OAKMARK INTERNATIONAL SMALL CAP FUND (COLLECTIVELY, THE "FUNDS"), AS OF
SEPTEMBER 30, 2005, THE RELATED STATEMENTS OF OPERATIONS FOR THE YEAR THEN
ENDED, THE STATEMENTS OF CHANGES IN NET ASSETS FOR EACH OF THE TWO YEARS IN THE
PERIOD THEN ENDED, AND THE FINANCIAL HIGHLIGHTS FOR EACH OF THE FOUR YEARS IN
THE PERIOD THEN ENDED. THESE FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS ARE
THE RESPONSIBILITY OF THE FUNDS' MANAGEMENT. OUR RESPONSIBILITY IS TO EXPRESS AN
OPINION ON THESE FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS BASED ON OUR
AUDITS. THE FUNDS' FINANCIAL HIGHLIGHTS FOR THE PERIODS ENDED PRIOR TO SEPTEMBER
30, 2002 WERE AUDITED BY OTHER AUDITORS WHO HAVE CEASED OPERATIONS. THOSE
AUDITORS EXPRESSED AN UNQUALIFIED OPINION ON THOSE FINANCIAL HIGHLIGHTS IN THEIR
REPORT DATED OCTOBER 26, 2001.
WE CONDUCTED OUR AUDITS IN ACCORDANCE WITH STANDARDS OF THE PUBLIC COMPANY
ACCOUNTING OVERSIGHT BOARD (UNITED STATES). THOSE STANDARDS REQUIRE THAT WE PLAN
AND PERFORM THE AUDITS TO OBTAIN REASONABLE ASSURANCE ABOUT WHETHER THE
FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS ARE FREE OF MATERIAL MISSTATEMENT.
THE FUNDS ARE NOT REQUIRED TO HAVE, NOR WERE WE ENGAGED TO PERFORM, AN AUDIT OF
THEIR INTERNAL CONTROL OVER FINANCIAL REPORTING. OUR AUDITS INCLUDED
CONSIDERATION OF INTERNAL CONTROL OVER FINANCIAL REPORTING AS A BASIS FOR
DESIGNING AUDIT PROCEDURES THAT ARE APPROPRIATE IN THE CIRCUMSTANCES, BUT NOT
FOR THE PURPOSE OF EXPRESSING AN OPINION ON THE EFFECTIVENESS OF THE FUND'S
INTERNAL CONTROL OVER FINANCIAL REPORTING. ACCORDINGLY, WE EXPRESS NO SUCH
OPINION. AN AUDIT ALSO INCLUDES EXAMINING, ON A TEST BASIS, EVIDENCE SUPPORTING
THE AMOUNTS AND DISCLOSURES IN THE FINANCIAL STATEMENTS. OUR PROCEDURES INCLUDED
CONFIRMATION OF SECURITIES OWNED AS OF SEPTEMBER 30, 2005, BY CORRESPONDENCE
WITH THE FUNDS' CUSTODIAN AND BROKERS; WHERE REPLIES WERE NOT RECEIVED FROM
BROKERS, WE PERFORMED OTHER AUDITING PROCEDURES. AN AUDIT ALSO INCLUDES
ASSESSING THE ACCOUNTING PRINCIPLES USED AND SIGNIFICANT ESTIMATES MADE BY
MANAGEMENT, AS WELL AS EVALUATING THE OVERALL FINANCIAL STATEMENT PRESENTATION.
WE BELIEVE THAT OUR AUDITS PROVIDE A REASONABLE BASIS FOR OUR OPINION.
IN OUR OPINION, THE FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS REFERRED
TO ABOVE PRESENT FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL POSITION OF
EACH OF THE FUNDS AS OF SEPTEMBER 30, 2005, THE RESULTS OF THEIR OPERATIONS FOR
THE YEAR THEN ENDED, THE CHANGES IN THEIR NET ASSETS FOR EACH OF THE TWO YEARS
IN THE PERIOD THEN ENDED AND THEIR FINANCIAL HIGHLIGHTS FOR EACH OF THE FOUR
YEARS IN THE PERIOD THEN ENDED, IN CONFORMITY WITH ACCOUNTING PRINCIPLES
GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA.
/s/ Deloitte & Touche LLP
Chicago, Illinois
October 28, 2005
75
<Page>
FEDERAL TAX INFORMATION (UNAUDITED)
Global, International and Int'l Small Cap paid qualifying foreign taxes of
$2,209,871, $9,401,715 and $1,636,023 and earned $29,252,069, $130,940,006 and
$22,056,631 foreign source income during the year ended September 30, 2005,
respectively. Pursuant to Section 853 of the Internal Revenue Code, Global,
International and Int'l Small Cap designated $0.03, $0.04 and $0.04 per share as
foreign taxes paid and $0.37, $0.51 and $0.50 per share as income earned from
foreign sources for the year ended September 30, 2005, respectively.
Qualified dividend income ("QDI") received by the Funds through September 30,
2005, that qualified for a reduced tax rate pursuant to the Internal Revenue
Code Section 1(h)(11) are as follows:
<Table>
<Caption>
FUND QDI
---------------------------------------------------------------------
Oakmark $ 113,800,323
Select 97,526,202
Equity and Income 71,293,556
Global 31,065,999
International 102,838,696
Int'l Small Cap 21,728,618
</Table>
For corporate shareholders, a portion of the ordinary dividends paid during the
Funds' year ended September 30, 2005, qualified for the dividends received
deduction, as follows:
<Table>
<Caption>
FUND
---------------------------------------------------------------------
Oakmark 100%
Select 100%
Equity and Income 54%
Global 34%
</Table>
76
<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 (including
current investment themes, the portfolio managers' research and investment
process, and portfolio characteristics) represents the investments of the Funds
and the views of the portfolio managers and Harris Associates L.P., the Funds'
investment adviser, at the time of this report, 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.
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.
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.
77
<Page>
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. 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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 U.S. & 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.
15. 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.
16. 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.
78
<Page>
THE OAKMARK FUNDS
TRUSTEES AND OFFICERS
The board of trustees has overall responsibility for the conduct of the affairs
of Harris Associates Investment Trust ("Trust"), and its six series, The Oakmark
Funds. Each trustee serves until the next annual meeting of shareholders and
until the election and qualification of his or her successor, or until he or she
dies, resigns or is removed. Each trustee must retire at the end of the calendar
year in which the trustee attains the age of 72. The board of trustees may fill
any vacancy on the board provided that after such appointment, at least
two-thirds of the trustees have been elected by the shareholders. No person
shall be appointed or elected to serve as a trustee after attaining the age of
65. The shareholders may remove a trustee by a vote of two-thirds of the
outstanding shares of the Trust at any meeting of shareholders called for the
purpose of removing such trustee.
The board of trustees elects or appoints the officers of the Trust. The
president, any vice president, treasurer and secretary serves until the election
and qualification of his or her successor, or until he or she dies, resigns, or
is removed or disqualified. Each other officer shall serve at the pleasure of
the board of trustees. The board of trustees may remove any officer at any time,
with or without cause, by the vote of a majority of the trustees then in office.
The names and ages of the trustees and officers, the position each holds with
the Trust, the date each was first elected to office, their principal business
occupations during the last five years and other directorships held are shown
below.
NAME AND AGE AT SEPTEMBER 30, 2005, POSITIONS HELD WITH THE TRUST, DATE FIRST
ELECTED OR APPOINTED TO OFFICE, PRINCIPAL OCCUPATIONS DURING THE PAST 5
YEARS. OTHER DIRECTORSHIPS HELD.
TRUSTEES WHO ARE "INTERESTED PERSONS"*
Peter S. Voss, 58, Trustee, 1995
Chairman and Chief Executive Officer, IXIS Asset Management Group;
President and Chief Executive Officer, IXIS Asset Management North America,
L.P., formerly named CDC IXIS Asset Management North America, L.P.
(investment management); Chairman of the Management Board, IXIS Asset
Management; Director, Harris Associates, Inc. ("HAI"). Chairman, AEW Real
Estate Income Fund (closed-end investment company); Chairman and Chief
Executive Officer, CDC Nvest Funds (open-end investment company--14
portfolios).
John R. Raitt, 50, Trustee and President, 2003
President and Chief Executive Officer, HAI, Harris Associates L.P. ("HALP")
and Harris Associates Securities L.P. ("HASLP") since 2003; Chief Operating
Officer, HALP 2001-2002; Director of Research, HALP, prior thereto. None.
TRUSTEES WHO ARE NOT "INTERESTED PERSONS"
Gary N. Wilner, M.D., 64, Trustee and Chairman of the Board of Trustees, 1993
Retired, since 2004; Senior Attending Physician, Evanston Hospital; Medical
Director--Cardiopulmonary Wellness Program, Evanston Hospital Corporation,
prior thereto. Director, North American Scientific, Inc. (developer of
radioisotopic products for the treatment and diagnosis of disease).
Michael J. Friduss, 63, Trustee, 1995
Principal, MJ Friduss & Associates, Inc. (telecommunications consultants).
None.
79
<Page>
Thomas H. Hayden, 54, Trustee, 1995
President, Greenhouse Communications (advertising agency), since 2004;
Executive Vice President, Campbell Mithun, (advertising and marketing
communication agency), prior thereto. None.
Christine M. Maki, 44, Trustee, 1995
Vice President--Tax, Hyatt Corporation (hotel management). None.
Allan J. Reich, 57, Trustee, 1993
Partner, Seyfarth Shaw LLP (law firm), since 2003; Vice Chairman of the law
firm D'Ancona & Pflaum LLC, prior thereto. None.
Marv R. Rotter, 59, Trustee, 1995
Retired since 2004; Senior Advisor to Chief Executive Officer, AXA
Advisors, LLC (formerly named Rotter & Associates) prior thereto. None.
Burton W. Ruder, 61, Trustee, 1995
President, The Academy Financial Group (venture capital investment and
transaction financing firm); Manager, Cedar Green Associates (real estate
management firm). None.
OFFICERS OF THE TRUST
Henry R. Berghoef, 56, Vice President and Portfolio Manager (The Oakmark Select
Fund), 2000
Director of Domestic Research, HALP, since 2003; Associate Director of
Research, 2001-2002; Portfolio Manager and Analyst, HALP. None.
Chad M. Clark, 33, Vice President and Portfolio Manager (The Oakmark
International Small Cap Fund), 2005
Portfolio Manager, HALP, since 2001; International Analyst, HALP. None.
Kevin G. Grant, 41, Vice President and Portfolio Manager (The Oakmark Fund),
2000
Portfolio Manager and Analyst, HALP. None.
David G. Herro, 44, Vice President and Portfolio Manager (The Oakmark
International Fund and The Oakmark International Small Cap Fund), 1992
Chief Investment Officer of International Equity, since 2003; Portfolio
Manager and Analyst, HALP. None.
John J. Kane, 34, Treasurer, 2005
Assistant Treasurer, 1999-2005; Manager--Mutual Fund and Institutional
Services, HALP. None.
Robert M. Levy, 55, Executive Vice President, 2004
Chairman, HAI; Chief Investment Officer, HALP, since 2001; President and
Chief Executive Officer, HAI, HALP and HASLP, 1997-2002; Portfolio Manager,
HALP. None.
Clyde S. McGregor, 52, Vice President and Portfolio Manager (The Oakmark Equity
and Income Fund and The Oakmark Global Fund), 1995
Portfolio Manager, HALP. None.
William C. Nygren, 46, Vice President and Portfolio Manager (The Oakmark Fund
and The Oakmark Select Fund), 1996
Portfolio Manager and Analyst, HALP. None.
80
<Page>
Vineeta D. Raketich, 34, Vice President, 2003
Manager, International Operations and Client Relations, HALP, since 2003;
Supervisor, Mutual Fund and Institutional Services, HALP, prior thereto.
None.
Janet L. Reali, 54, Vice President and Secretary, 2001
Vice President, General Counsel and Secretary, HAI, HALP and HASLP, since
2001; Senior Executive Vice President, General Counsel and Secretary,
Everen Capital Corp. and Everen Securities, Inc. (broker/dealer),
1995-1999. None.
Ann W. Regan, 57, Vice President and Assistant Secretary, 1996, Chief Compliance
Officer of the Trust and Director of Mutual Fund Compliance, HALP,
since 2004
Director of Mutual Fund Operations, HALP, prior thereto. None.
Kristi L. Rowsell, 39, Vice President, 2005
Treasurer, 1997-2005; Director, Chief Financial Officer and Treasurer, HAI;
Chief Financial Officer, HALP and HASLP, since 1999. None.
Edward A. Studzinski, 56, Vice President and Portfolio Manager (The Oakmark
Equity and Income Fund), 2000 Portfolio Manager and Analyst, HALP. None.
Michael J. Welsh, 42, Vice President and Portfolio Manager (The Oakmark Global
Fund and The Oakmark International Fund), 1997
Director of International Research, since 2003; Portfolio Manager and
Analyst, HALP. None.
Christopher P. Wright, 31, Vice President, 2005
Director of Mutual Fund Operations, HALP, since 2004; Assistant Director of
Mutual Fund Operations, HALP, prior thereto. None.
* Mr. Voss is a trustee who is an "interested person" of the Funds as defined
in the Investment Company of 1940, because he is a director of HAI, the
general partner and manager of HALP, the investment adviser to the Funds.
Mr. Voss is also the Chairman, President and Chief Executive Officer of
IXIS Asset Management North America, L.P., formerly CDC IXIS Asset
Management North America, L.P., the parent company of HALP. Mr. Raitt is a
trustee who is an "interested person" of the Funds because he is the
President and Chief Executive Officer of HAI, HASLP and HALP.
The business address of the officers and trustees is Two North LaSalle Street,
#500, Chicago, Illinois 60602.
The Statement of Additional Information (SAI) contains further information about
the trustees and is available without charge upon your request by calling
1-800-625-6275.
81
<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.
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.
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
82
<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.
83
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[GRAPHIC]
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84
<Page>
THE OAKMARK FUNDS
OTHER INFORMATION
INVESTMENT ADVISER
Harris Associates L.P.
Two North LaSalle Street
Chicago, Illinois 60602-3790
TRANSFER AGENT
Boston Financial Data Services, Inc.
Quincy, 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 617-483-3250
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) 483-3250.
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 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 The Oakmark Funds are distributed by Harris
www.oakmark.com Associates Securities L.P., member NASD. Date
of first use: November 2005.
<Page>
THE OAKMARK FUND CLASS II
[CHART]
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK FUND FROM ITS INCEPTION
(4/5/01) TO PRESENT (9/30/05) AS COMPARED TO THE STANDARD & POOR'S 500 INDEX
<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
6/30/2005 $ 12,837 $ 11,104
9/30/2005 $ 12,771 $ 11,505
</Table>
AVERAGE ANNUAL TOTAL RETURNS
(as of 9/30/05)
<Table>
<Caption>
SINCE
INCEPTION
1-YEAR (4/5/01)
---------------------------------------------------------------------------------
OAKMARK FUND (CLASS II) 5.55% 5.60%
S&P 500 12.25% 3.17%
</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, November 2005
<Page>
THE OAKMARK SELECT FUND CLASS II
[CHART]
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK SELECT FUND FROM ITS INCEPTION
(12/31/99) TO PRESENT (9/30/05) AS COMPARED TO THE STANDARD & POOR'S 500 INDEX
<Table>
<Caption>
THE OAKMARK SELECT FUND (CLASS II) S & P 500
12/31/99 $ 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
6/30/2005 $ 19,315 $ 8,830
9/30/2005 $ 19,385 $ 9,149
</Table>
AVERAGE ANNUAL TOTAL RETURNS
(as of 9/30/05)
<Table>
<Caption>
SINCE
INCEPTION
1-YEAR 5-YEAR (12/31/99)
-----------------------------------------------------------------------------
OAKMARK SELECT FUND (CLASS II) 7.72% 10.78% 12.19%
S&P 500 12.25% -1.49% -1.53%
</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, November 2005
<Page>
THE OAKMARK EQUITY AND INCOME FUND CLASS II
[CHART]
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK EQUITY AND INCOME FUND FROM ITS
INCEPTION (7/13/00) TO PRESENT (9/30/05) AS COMPARED TO THE LIPPER BALANCED FUND
INDEX
<Table>
<Caption>
THE OAKMARK EQUITY AND INCOME FUND (CLASS II) LIPPER BALANCED 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
6/30/2005 $ 17,646 $ 11,181
9/30/2005 $ 18,665 $ 11,508
</Table>
AVERAGE ANNUAL TOTAL RETURNS
(as of 9/30/05)
<Table>
<Caption>
SINCE
INCEPTION
1-YEAR 5-YEAR (7/13/00)
-------------------------------------------------------------------------
OAKMARK EQUITY & INCOME FUND (CLASS II) 13.34% 11.91% 12.70%
Lipper Balanced Fund Index 10.05% 2.89% 2.73%
</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, November 2005
<Page>
THE OAKMARK GLOBAL FUND CLASS II
[CHART]
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK GLOBAL FUND FROM ITS INCEPTION
(10/10/01) TO PRESENT (9/30/05) AS COMPARED TO THE MSCI WORLD INDEX
<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
6/30/2005 $ 20,355 $ 12,757
9/30/2005 $ 22,024 $ 13,648
</Table>
AVERAGE ANNUAL TOTAL RETURNS
(as of 9/30/05)
<Table>
<Caption>
SINCE
INCEPTION
1-YEAR (10/10/01)
-----------------------------------------------------------------
OAKMARK GLOBAL FUND (CLASS II) 23.53% 21.97%
MSCI World 18.93% 8.14%
</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, November 2005
<Page>
THE OAKMARK INTERNATIONAL FUND CLASS II
[CHART]
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL FUND FROM ITS
INCEPTION (11/4/99) TO PRESENT (9/30/05) AS COMPARED TO THE MSCI WORLD EX U.S.
INDEX
<Table>
<Caption>
THE OAKMARK INTERNATIONAL FUND (CLASS II) MSCI WORLD EX U.S. INDEX
11/4/99 $ 10,000 $ 10,000
12/31/99 $ 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
6/30/2005 $ 17,065 $ 10,680
9/30/2005 $ 18,593 $ 11,847
</Table>
AVERAGE ANNUAL TOTAL RETURNS
(as of 9/30/05)
<Table>
<Caption>
SINCE
INCEPTION
1-YEAR 5-YEAR (11/4/99)
-------------------------------------------------------------------------------
OAKMARK INTERNATIONAL FUND (CLASS II) 25.50% 10.90% 11.07%
MSCI World ex U.S. Index 26.82% 3.37% 2.91%
</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, November 2005
<Page>
THE OAKMARK INTERNATIONAL
SMALL CAP FUND CLASS II
[CHART]
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL SMALL CAP FUND
FROM ITS INCEPTION (1/8/01) TO PRESENT (9/30/05) AS COMPARED TO THE MSCI WORLD
EX U.S. INDEX
<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
6/30/2005 $ 21,061 $ 11,079
9/30/2005 $ 23,348 $ 12,289
</Table>
AVERAGE ANNUAL TOTAL RETURNS
(as of 9/30/05)
<Table>
<Caption>
SINCE
INCEPTION
1-YEAR (1/8/01)
---------------------------------------------------------------------------
OAKMARK INTERNATIONAL SMALL CAP FUND (CLASS II) 28.94% 19.64%
MSCI World ex U.S. Index 26.82% 4.45%
</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. 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, November 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 April 1,
2005, to September 30, 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 September 30, 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 $ 996.60 $ 1,000.30 $ 1,086.80 $ 1088.40 $ 1,088.00 $ 1,079.10
Expenses Paid During
Period* $ 6.31 $ 6.17 $ 5.91 $ 7.59 $ 7.22 $ 7.66
Annualized Expense Ratio 1.26% 1.23% 1.13% 1.45% 1.38% 1.47%
</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 based on actual expense ratios
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, the
total 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 $ 1,018.75 $ 1,018.90 $ 1,019.40 $ 1,017.80 $ 1,018.15 $ 1,017.70
Expenses Paid During
Period* $ 6.38 $ 6.23 $ 5.72 $ 7.33 $ 6.98 $ 7.44
Annualized Expense Ratio 1.26% 1.23% 1.13% 1.45% 1.38% 1.47%
</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.
(a) Registrant has adopted a code of ethics (the "Code") that applies to its
Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer.
(b) No disclosures are required by this Item 2(b).
(c) During the period covered by the report, no amendments were made to the
provisions of the Code.
(d) During the period covered by the report, Registrant did not grant any
waivers, including implicit waivers, from the provisions of the Code.
(e) Not applicable.
(f) A copy of the Code is filed as Exhibit (a)(1) to this Form N-CSR. Copies of
the Code will also be made available free of charge upon request, by writing or
calling The Oakmark Funds, P.O. Box 8510, Boston, MA 02266-8510, 1-800-OAKMARK,
(1-800-625-6275).
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Registrant's board of trustees has determined that each of the following five
members of the Registrant's audit committee qualifies as an "audit committee
financial expert," as such term is defined in Instruction 2(b) to Item 3 of Form
N-CSR: Michael J. Friduss, Thomas H. Hayden, Christine M. Maki, Allan J. Reich
and Gary N. Wilner, M.D. Each of those members of Registrant's audit committee
is "independent" as such term is defined in paragraph (a)(2) of Item 3 of Form
N-CSR.
Under applicable securities laws, a person who is determined to be an audit
committee financial expert will not be deemed an "expert" for any purpose,
including without limitation for the purposes of Section 11 of the Securities
Act of 1933, as a result of being designated or identified as an audit committee
financial expert. The designation or identification of a person as an audit
committee financial expert does not impose on such person any duties,
obligations, or liabilities that are greater than the duties, obligations, and
liabilities imposed on such person as a member of the audit committee and board
of directors in the absence of such designation or identification.
<Page>
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Aggregate fees billed to the Registrant for professional services rendered by
the Registrant's accountant were as follows:
<Table>
<Caption>
FISCAL YEAR FISCAL YEAR
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2005 2004
----------------------------------------------------------
Audit Fees(1) $ 170,900 $ 178,550
Audit-Related Fees(2) $ 48,600 $ 49,000
Tax Fees(3) $ 20,700 $ 22,600
All Other Fees(4) $ 0 $ 0
</Table>
During its regularly scheduled periodic meetings, the Registrant's audit
committee will pre-approve all audit, audit-related, tax and other services to
be provided by the principal accountants of the Registrant. The audit committee
has authorized its chairman to exercise that authority in the intervals between
meetings; and the chairman presents any such pre-approvals to the audit
committee at its next regularly scheduled meeting. Under paragraph (c)(7)(i)(C)
of Rule 2-01 of Regulation S-X, pre-approval of non-audit services may be waived
provided that: 1) the aggregate amount of fees for all such services provided
constitutes no more than five percent of the total amount of fees paid by the
Registrant to its principal accountant during the fiscal year in which such
services are provided 2) such services were not recognized by management at the
time of engagement as non-audit services and 3) such services are promptly
brought to the attention of the Registrant's audit committee by management and
approved prior to the completion of the audit.
- ----------
1 "Audit Fees" include amounts for professional services rendered by the
principal accountant for the audit of the Registrant's annual financial
statements and services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements.
2 "Audit-Related Fees" include amounts for assurance and related services by
the principal accountant that are reasonably related to the performance of
the audit of the Registrant's financial statements, specifically the
semi-annual reviews of the Funds in fiscal year 2005.
3 "Tax Fees" include amounts for professional services rendered by the
principal accountant for tax compliance, tax advice and tax planning. In
the fiscal year 2004, the tax fees attributable to liquidation of The
Oakmark Small Cap Fund were $5,350 and were borne by the investment
adviser, Harris Associates L.P. (and are not included in this chart).
4 "All Other Fees" include amounts for products and services provided by the
principal accountant. No such products and services were provided.
<Page>
No audit-related, tax or non-audit services were approved by waiver pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
Less than 50 percent of the hours expended on the principal accountant's
engagement to audit the Registrant's financial statements for the most recent
fiscal year were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees.
The aggregate fees billed for the fiscal years ended September 30, 2005 and
September 30, 2004 by the Registrant's principal accountant for non-audit
services rendered to the Registrant, its investment adviser and any entity
controlling, controlled by or under common control with the investment adviser
that provides ongoing services to the Registrant were $26,287 and $0,
respectively.
The audit committee of Registrant's board of trustees has considered whether the
provision of non-audit services that were rendered by Registrant's principal
accountant to Registrant's investment adviser, and any entity controlling,
controlled by or under common control with the investment adviser that provides
ongoing services to the Registrant that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal account's independence. No such services were
rendered.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
The Schedule of Investments in securities of unaffiliated issuers is included as
part of the annual report to shareholders filed under Item 1 of this Form.
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.
<Page>
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the period covered by this report, no amendments were made to the
procedures that were adopted in fiscal year 2005.
ITEM 11. CONTROLS AND PROCEDURES.
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 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.
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 most recent fiscal half-year that has
materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics for Principal Executive Officer and Senior Financial
Officers (as referenced in Item 2 above), attached hereto as Exhibit
(a)(1).
(2) Certifications of John R. Raitt, Principal Executive Officer, and Kristi
L. Rowsell, Principal Financial Officer, pursuant to Rule 30a-2 under the
Investment Company Act of 1940 (17 CFR 270.30a-2), attached hereto as
Exhibits (a)(2)(i) and (a)(2)(ii).
(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
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John R. Raitt
Principal Executive Officer
Date: November 17, 2005
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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: November 17, 2005
------------------------------------
By: /s/ Kristi L. Rowsell
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Kristi L. Rowsell
Principal Financial Officer
Date: November 17, 2005
------------------------------------