<PAGE>
[LOGO OF THE OAKMARK FUND]
The Oakmark Family of Funds
The
Oakmark
Fund
ANNUAL
REPORT
----------------------
October 31, 1995
----------------------
The
Oakmark
International
Fund
MEMBER OF
================
NO LOAD
100% MUTUAL FUND
COUNCIL
================
No-Load Funds Managed by
Harris Associates L.P.
<PAGE>
[OAKMARK LOGO]
The Oakmark Family of Funds
<TABLE>
<CAPTION>
1995 Annual Report
Table of Contents
<S> <C>
Letter from the President..................... 1
The Oakmark Funds Summary..................... 2
The Oakmark Fund
Performance Chart.......................... 3
Letter from the Fund Manager............... 3
Financial Statements....................... 8
The Oakmark International Fund
Performance Chart.......................... 18
Letter from the Fund Manager............... 18
Financial Statements....................... 22
Report of Independent Public Accountants...... 36
Trustees and Officers......................... 37
Other Important Information................... 37
</TABLE>
Questions About Your Account?
Call 1-800-626-9392
<PAGE>
Fellow Shareholders:
We are pleased to present the combined annual reports for the Oakmark Family
of Funds. The current report contains the fiscal 1995 information for the
Oakmark and Oakmark International Funds. Subsequent annual reports will
include the newly launched Oakmark Small Cap, Balanced and International
Emerging Value Funds. These new Funds were available November 1, 1995.
For the fourth quarter ended October 31, 1995 and the year as a whole, the
U.S. stock market was the place to be. Oakmark Fund's returns continued to be
robust, up 4.9%* in the quarter, even without participation in the technology
sector. In contrast, the money flows out of foreign stocks created a
challenging environment in which the Oakmark International Fund lost (5.5)%*.
This decline has created some of the most compelling values we have witnessed
and the performance of Oakmark International in the month following the
quarter-end has us cautiously optimistic (up 3.2% from 10/31/95 to 11/29/95).
'Tis the season for holiday cheer and investment decisions! For those of you
thinking about your 1995 IRA contributions, remember these contributions can
be made until April 15, 1996.
From all of us at The Oakmark Family of Funds, we wish you a happy, healthy
and prosperous new year!
Sincerely,
LOGO
VICTOR A. MORGENSTERN
President
*The Oakmark Fund's average annual total return for the twelve months ended
September 30, 1995 and for the period August 5, 1991 (inception) through
September 30, 1995 was 23.2% and 33.1% respectively. The Oakmark
International Fund's average annual total return for the twelve months ended
September 30, 1995 and for the period September 30, 1992 (inception) through
September 30, 1995 was 1.5% and 15.8% respectively. The Funds' past
performance is no guarantee of future results. Share prices and investment
returns will vary, so you may have a gain or loss when you sell shares.
<PAGE>
THE OAKMARK FUNDS SUMMARY
ANNUALIZED PERFORMANCE FOR PERIOD ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
Since
3 mo. 6 mo. 1 Year 3 Years Inception
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The Oakmark Fund 4.9 % 12.3% 21.55 % 23.70% 32.00%(1)
The Oakmark International Fund (5.5)% 1.8% (3.06)% 14.40% 13.20%(2)
</TABLE>
(1) Inception Date was August 5, 1991
(2) Inception Date was September 30, 1992
TOP FIVE HOLDINGS AND TOP FIVE INDUSTRIES AS OF OCTOBER 31, 1995
THE OAKMARK FUND
<TABLE>
<CAPTION>
Company % of Total Net Assets
- ------------------------------------------------------
<S> <C>
Phillip Morris Companies, Inc. 6.30%
Mellon Bank Corporation 6.04%
Lockheed Martin Corporation 5.67%
First USA, Inc. 4.30%
Anheuser-Busch Companies, Inc. 3.90%
<CAPTION>
Industry % of Fund
- ------------------------------------------------------
<S> <C>
Food & Beverage 16.10%
Other Consumer Goods & Services 11.30%
Broadcasting & Publishing 9.40%
Other Financial 8.80%
Aerospace & Defense 8.20%
</TABLE>
THE OAKMARK INTERNATIONAL FUND
<TABLE>
<CAPTION>
Company % of Total Net Assets
- --------------------------------------------------------
<S> <C>
Lion Nathan Limited (New Zealand) 5.00%
Kvaerner (Norway) 4.62%
AB Volvo (Sweden) 4.24%
YPF Sociedad Anonima (Argentina) 3.61%
Cordiant PLC (Great Britain) 3.59%
<CAPTION>
Industry % of Fund
- --------------------------------------------------------
<S> <C>
Banks 13.70%
Other Industrial Goods & Services 9.40%
Food 7.50%
Aerospace 7.40%
Transportation 5.80%
</TABLE>
Past performance is no guarantee of future performance.
2
<PAGE>
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK FUND FROM ITS INCEPTION
(8/5/91) TO PRESENT (10/31/95) AS COMPARED TO THE STANDARD & POOR'S 500 INDEX.
<TABLE>
[GRAPH APPEARS HERE]
<CAPTION>
Measurement Period
(Fiscal Year Covered) OAKMARK FUND S&P 500
- ---------------=----- ------------ -------
<S> <C> <C>
Measurement Pt-
08/05/91 $10,000 $10,000
10/31/91 $12,100 $10,201
$13,910 $10,719
$14,660 $10,946
$15,910 $11,279
10/31/92 $17,110 $11,216
$19,913 $11,857
$20,136 $11,957
$22,052 $12,276
10/31/93 $24,504 $12,892
$25,648 $13,372
$24,855 $12,593
$25,321 $12,896
10/31/94 $26,653 $13,401
$26,480 $13,444
$28,869 $14,803
$30,883 $16,263
10/31/95 $32,397 $16,931
</TABLE>
10/31/95 NAV $28.47
<TABLE>
<CAPTION>
Average Annual Total Return*
Through 10/31/95
---------------------------------
Total Return* Total Return* From Fund Inception
Last 3 mos. Last 6 mos. From 10/31/94 8/5/91
------------- ------------- ------------- -------------------
<S> <C> <C> <C> <C>
THE OAKMARK FUND 4.9% 12.3% 21.6% 32.0%
Standard & Poor's 500
Stock Index* 4.1% 14.4% 26.3% 13.2%
Dow-Jones Industrial
Average* 1.6% 11.4% 24.8% 14.4%
Value Line Composite
Index* (1.8)% 6.6% 10.1% 6.6%
</TABLE>
REPORT FROM ROBERT J. SANBORN, PORTFOLIO MANAGER
Dear Fellow Shareholders:
The Oakmark Fund's fiscal year ended October 31, 1995 was a good one. The
most significant macroeconomic factor in the strong performance of equities was
the dramatic decline in long-term interest rates, driven by continued low
levels of inflation. This is confirmed by the price action of the planet's two
most important commodities--gold and oil--both of which declined in price over
the year.
While our Fund generated large absolute returns, its performance lagged
behind that of the Standard and Poor's 500. (As Dickens wrote,
*Total return includes change in share prices and in each case included
reinvestment of any dividends and capital gain distributions. Each of the three
indexes or averages is an unmanaged group of stocks whose composition is
different from the Fund. The S&P 500 is a broad market-weighted average
dominated by blue-chip stocks. The Dow-Jones Average includes only 30 big
companies. The Value Line index is an unweighted average of more than 1,000
stocks. Past performance is no guarantee of future performance.
LOGO
3
<PAGE>
"It was the best of times, it was the worst of times.") This relative
underperformance is due to our Fund's lack of high technology holdings. These
sectors were among the best-performing in the market during the past year;
software, semiconductor, and biotechnology stocks were up an average of fifty-
five (!) percent in the past twelve months. As I indicated in my letter last
quarter, these stocks do not meet our investment criteria.
The companies in our portfolio generally experienced very good business
results in the past year. Of our top twenty holdings of a year ago, only one
had results that were significantly less than our expectations. Despite the
strong performance of our Fund, lower interest rates and the growth in
underlying value of our holdings lead me to conclude that the value in our
Fund is as good today as it was a year ago. As I have written before, we spend
our time monitoring and analyzing the businesses of which all of us are part
owners, not in trying to anticipate stock price changes.
Two large sectors--consumer brands and financial services-- constitute
almost half of our Fund's value. Our larger consumer brand stocks--Philip
Morris, Knight Ridder, Anheuser-Busch, Black & Decker, American Brands,
Heinz--are all very high-quality, high-return, high-barrier-to-entry
businesses with dominant market positions, very loyal end-users, and (to
varying degrees) tremendous international opportunities. These companies are
prime beneficiaries of the unfolding globalization of the economy. Yet, the
market continues to place valuations on them that do not sufficiently
differentiate them from more average companies in more competitive businesses.
Our large financial services holdings--First USA, Mellon, Torchmark, and
AMBAC--have strong niche businesses and benefit from the ongoing consolidation
of the financial services industry. We believe that this consolidation is a
win/win proposition for the buyers and sellers (a dynamic we have experienced
in our defense industry investments). Yet, they each sell at modest valuations
at steep discounts to their underlying value.
We continue to frame, and will always frame, the investment process as
buying an ownership piece of a business for the long term, not as buying
merely a piece of paper for the short term. We sold only one of our ten
largest holdings of a year ago. Eli Lilly reached our estimate of value and we
sold the stock. Trading is expensive--there are commissions, price impacts,
and capital gains taxes--and we attempt to minimize our trading activity. Our
Fund's turnover is one-seventh that of the typical equity fund. I believe that
the largest edge we have is our long-term investment time-frame.
4
<PAGE>
What's ahead for 1996? While we do not base any of our investment decisions
on predicting macroeconomic variables, let me cite two that are positive for
the equity market. The first is the all-time high level of merger and
acquisition activity. Many public companies continue to be acquired at
substantial premium to public market prices. The globalization of the economy
and the efficacy of technology within companies will continue to drive this
process. The second factor is the political revolution that is in its early
stages in the USA. There is broad consensus that our federal government is too
big, too inefficient, and too expensive. The inevitable downsizing of the
government--more than 40 percent of our GDP is spent by local, state, and
federal governments!-- should result in lower interest rates in the medium
term (which will have a positive impact on equity valuations). In the long
term, a rationalization of our tax system, perhaps in the form of a flat tax
regime, will unleash the tremendous potential of our economy. This process
will have a very significant impact on all aspects of our economy.
I believe that we at Harris Associates have a time-tested investment
philosophy, great people, and a nonbureaucratic culture. These attributes
should allow us to continue to add value. We remain focused on generating
results that will continue to allow you (and us!!) to realize your financial
goals.
On a personal note, I cannot believe we are in our fifth year. On behalf of
everyone at Harris Associates, I thank you for your support. Managing your
hard-earned money remains a great challenge and a great honor.
A PRIMER ON GOODWILL
As I write this, we are in the midst of the season of goodwill to all
people. Yet, in the financial world, goodwill has a far different meaning.
Goodwill usually results when a company acquires another company at a price
greater than the acquiree's book value. Book value is a balance sheet item
that represents the retained book earnings of a company. It has little
relation to the true economic value of a company and, therefore is a number we
ignore.
Goodwill affects the income statement through the accounting process of
amortization. Amortization refers to the gradual write-downs of the goodwill,
generally over forty years. The word amortization itself is derived from the
Latin word for death, and means to "kill off the goodwill." This amortization
reduces reported earnings for the entire time
5
<PAGE>
period. However, it is important to recognize that it is a non-cash reduction
in earnings that has no effect on the intrinsic value of a company.
Let me give an example from one of our holdings, Philip Morris (MO). As of
12/30/94, MO had goodwill totalling $19.7 billion, which represented over 37
percent of its total book assets. Most of this was incurred through its
purchase of Kraft in 1988. This goodwill resulted in the amortization of $600
million in the year 1994, which reduced reported earnings per share (EPS) by
$0.58 (compared to total net EPS of $5.45). Yet, MO can use this $600 million
to make an acquisition, repurchase its own shares, or do any number of things
to grow shareholder value.
A patient shareholder is probably by now muttering. "What's with this
goodwill, why is he boring me with this stuff?" Well, seven of our ten largest
holdings have meaningful amounts of goodwill that reduce reported EPS. In our
view, the market tends to ignore the economic value of the goodwill. For
instance, a leading Wall Street brokerage firm recently issued a report on MO
that concludes that MO should sell at its historical relative P/E ratio of 75
percent of the market. This, of course, ignores the fact that MO's earnings
are artificially reduced by the amortization charge.
We evaluate our investments, and all potential investments, as if we were
buying the entire business. Thus, we tend to regard some financial parameters
(i.e., cash flow) more highly than others regarded more highly by the
investment community (i.e., reported EPS). Since we firmly believe that market
price and value ultimately converge, our approach is intellectually coherent
and, we believe, gives us an edge.
BILLY JOHNSON UPDATE
An E-mailing shareholder from California writes, "Who the heck is Billy
"White Shoes" Johnson?" Well, he was a wide receiver for the Houston Oilers
and was an early pioneer of in-your-face touchdown celebrations. Some of you
may remember my allusion to Johnson in last quarter's letter. I wrote that,
when my prediction on the likely under-performance of high technology stocks
comes to fruition, I will do some similar in-your-face crowing.
Well, as I write this on November 28, Netscape (NSCP) is trading at $138, up
more than 75 percent from just last quarter. So, Billy is bruised, but he
knows that we are early in the first quarter, and all that matters is who wins
the game.
6
<PAGE>
I had the pleasure of making a presentation recently with a very nice guy
who manages a pure technology hedge fund. His fund was up over 80 percent this
year. He gave very compelling background on the growth of the Internet and how
useful technology is, and so forth. Then, some curmudgeon in the crowd,
(perhaps a shareholder of The Oakmark Fund), broke the balloon, and asked
about the "ridiculous" valuations of these stocks. The manager's sole
justification was that technology currently represents "only" thirteen percent
of the value of the Standard & Poor's 500, and he saw no reason why it could
not get as high as thirty percent. After all, the energy sector got that high
in 1980.
Shareholders, that is not an intellectually coherent investment approach. If
that is the best reason to own technology stocks, Billy will be celebrating
soon.
OAK LEAF CLUSTER
We award the Oak Leaf Cluster to that individual whose input into our Fund
had the greatest positive impact on performance. This year the coveted honor
goes to our very own John Raitt for his work on the defense stocks. Since
these stocks go back to the early days of the Fund, it represents sort of a
Lifetime Achievement Award. Lockheed Martin has more than doubled from our
cost and McDonnell Douglas has appreciated more than 67 percent.
Congratulations, John! On behalf of all shareholders, we like you, we like
you!
ROBERT J. SANBORN
Portfolio Manager
harjs @aol.com
November 28, 1995
7
<PAGE>
THE OAKMARK FUND
SCHEDULE OF INVESTMENTS--OCTOBER 31, 1995
<TABLE>
<CAPTION>
Shares Held Common Stocks Market Value
- -------------------------------------------------------------------
COMMON STOCKS--93.1%
FOOD & BEVERAGE--16.1%
<C> <S> <C>
2,106,500 Philip Morris Companies Inc. $ 177,999,250
1,669,100 Anheuser-Busch Companies, Inc. 110,160,600
1,619,100 H.J. Heinz Company 75,288,150
1,420,800 Nabisco Holdings Corp. 38,184,000
1,571,900 Interstate Bakeries 33,599,362
430,000 The Quaker Oats Company 14,673,750
200,000 International Dairy Queen, Inc. (a) 4,250,000
--------------
454,155,112
APPAREL--.3%
388,500 K-Swiss Inc. 4,419,188
620,600 J. Baker Inc. 3,568,450
--------------
7,987,638
RETAIL--4.4%
2,920,000 Federated Department Stores, Inc. (a) 74,095,000
1,600,000 Zale Corporation (a) 23,600,000
1,000,000 Carson Pirie Scott & Co. (a) 16,875,000
600,000 Cole National Corporation (a) 7,350,000
777,500 Best Products Co., Inc. (a) 3,838,906
53,800 Rex Stores Corporation (a) 914,600
--------------
126,673,506
OTHER CONSUMER GOODS & SERVICES--11.3%
1,982,800 American Brands, Inc. 85,012,550
2,437,900 The Black & Decker Corporation 82,583,861
477,700 The Clorox Company 34,274,975
957,500 Whitman Corporation 20,346,875
440,200 First Brands Corporation 20,139,150
583,800 GC Companies, Inc. (a) 18,827,550
400,000 Stanhome Inc. 12,200,000
750,000 Arctco Inc. 8,437,500
575,000 JUNO Lighting Inc. 8,337,500
601,500 Justin Industries, Inc. 6,015,000
281,500 Rollins, Inc. 5,911,500
395,000 Mikasa, Inc. (a) 5,135,000
257,600 Paragon Trade Brands, Inc. (a) 4,089,400
100,000 Alberto-Culver Company 2,700,000
225,525 Rauch Industries, Inc. 2,227,059
51,500 Polaroid 2,201,625
107,000 Armor All 1,765,500
304,000 Drypers Corporation (a) 798,000
--------------
321,003,045
OIL--.4%
270,000 Murphy Oil Corporation 10,226,250
BANKS--6.1%
3,406,550 Mellon Bank Corporation 170,753,319
340,000 River Bank America (a) 2,465,000
--------------
173,218,319
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
THE OAKMARK FUND
SCHEDULE OF INVESTMENTS--OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Shares Held Common Stocks Market Value
- --------------------------------------------------------------------------
INSURANCE--6.5%
<C> <S> <C>
2,496,400 Torchmark Corporation $ 103,600,600
984,700 American Financial Group, Inc. 27,571,600
928,200 Old Republic International 26,569,725
501,300 Acordia, Inc. 13,785,750
331,930 MAIC Holdings, Inc. (a) 10,123,865
85,000 Meridian Insurance Group 1,168,750
--------------
182,820,290
OTHER FINANCIAL--8.8%
2,640,500 First USA, Inc. 121,463,000
2,194,900 AMBAC Inc. 92,460,163
620,000 Capital One Financial Corporation 15,190,000
204,400 Fund American Enterprises Holdings, Inc. (a) 14,103,600
330,000 Duff & Phelps Corporation 3,588,750
102,200 White River Corporation (a) 3,551,450
--------------
250,356,963
BROADCASTING & PUBLISHING--9.4%
6,329,179 Tele-Communications, Inc. Class A (a) 107,596,043
1,715,400 Knight-Ridder, Inc. 95,204,700
1,432,294 TCI Communications, Inc. (a) 35,270,240
400,000 Gannett 21,750,000
500,000 Adelphia Communications Corp. (a) 4,375,000
200,000 Jones Intercable, Inc. (a) 2,500,000
--------------
266,695,983
COMPUTER SYSTEMS--.5%
1,014,000 Control Data Systems, Inc. (a) 13,435,500
210,000 InaCom Corporation (a) 2,100,000
--------------
15,535,500
PHARMACEUTICAL--3.1%
975,000 American Home Products Corporation 86,409,375
MANAGED CARE SERVICES--3.4%
1,740,000 Foundation Health Corporation (a) 73,732,500
420,000 Physicians Health Services, Inc. (a) 13,965,000
500,000 Laboratory Corporation of America Holdings 4,250,000
270,000 Right CHOICE Managed Care, Inc. (a) 3,442,500
--------------
95,390,000
MEDICAL PRODUCTS--2.4%
648,900 Sybron Corporation (a) 27,578,250
502,000 St. Jude Medical, Inc. (a) 26,731,500
550,000 Spacelabs Medical, Inc. (a) 14,162,500
--------------
68,472,250
AEROSPACE & DEFENSE--8.2%
2,351,750 Lockheed Martin Corporation 160,212,969
610,000 McDonnell Douglas Corporation 49,867,500
779,600 Logicon, Inc. 17,833,350
54,200 Alliant Techsystems, Inc. (a) 2,520,300
--------------
230,434,119
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
THE OAKMARK FUND
SCHEDULE OF INVESTMENTS--OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Shares Held Common Stocks Market Value
- -----------------------------------------------------------------------
FURNITURE & TEXTILES--0%
<C> <S> <C>
363,000 Forstmann & Company, Inc. (a) $ 113,438
MACHINERY AND METAL PROCESSING--.1%
237,500 Encore Wire Corporation (a) 2,493,750
OTHER INDUSTRIAL GOODS & SERVICES--4.6%
1,699,700 The Geon Company 42,280,038
508,000 Great Lakes Chemical Corporation 34,099,500
550,000 OM Group, Inc. 15,950,000
191,200 Bandag, Incorporated Class A 9,536,100
554,200 SPX Corporation 8,590,100
190,000 USG Corp. (a) 5,533,750
170,000 UCAR International Inc. (a) 4,845,000
175,000 American Home Star Corporation (a) 2,800,000
182,600 Amtrol Inc. 2,784,650
60,200 Exide 2,641,275
50,000 Griffon Corporation (a) 418,750
71,300 Detrex Corporation (a) 409,975
-------------
129,889,138
COMMERCIAL REAL ESTATE--1.0%
1,957,200 Host Marriott Corporation (a) 24,220,350
585,700 Catellus Development Corporation (a) 3,221,350
-------------
27,441,700
FOREIGN SECURITIES--6.5%
2,650,000 DeBeers Consolidated Mines Limited ADR (b) 72,875,000
3,276,500 YPF Sociedad Anonima (b) 56,110,062
888,200 Telefonos de Mexico, S.A. de C.V. (b) 24,425,500
547,700 EVC International NV 17,182,881
697,500 Scitex Corporation Limited 12,119,063
-------------
182,712,506
TOTAL COMMON STOCKS (COST: $2,133,912,975) 2,632,028,882
</TABLE>
COMMERCIAL PAPER--7.1%
<TABLE>
<S> <C>
American Express Credit Corp., 5.70% due 11/22/95 6,000,000
American Express Credit Corp., 5.70% due 11/24/95 5,000,000
American Express Credit Corp., 5.70% due 11/30/95 8,000,000
American Express Credit Corp., 5.70% due 12/13/95 5,000,000
Ford Motor Credit Corp., 5.70% due 11/01/95 5,000,000
Ford Motor Credit Corp., 5.71% due 11/01/95 4,000,000
Ford Motor Credit Corp., 5.76% due 11/02/95 6,000,000
Ford Motor Credit Corp., 5.70% due 11/03/95 8,000,000
Ford Motor Credit Corp., 5.69% due 11/13/95 9,000,000
Ford Motor Credit Corp., 5.70% due 11/17/95 5,000,000
Ford Motor Credit Corp., 5.70% due 11/20/95 6,000,000
Ford Motor Credit Corp., 5.69% due 11/21/95 2,000,000
Ford Motor Credit Corp., 5.70% due 11/27/95 10,000,000
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
THE OAKMARK FUND
SCHEDULE OF INVESTMENTS--OCTOBER 31, 1995 (CONTINUED)
COMMERCIAL PAPER--7.1% (CONT.)
<TABLE>
<S> <C> <C>
Ford Motor Credit Corp., 5.70% due 11/28/95 $ 4,000,000
Ford Motor Credit Corp., 5.70% due 11/29/95 4,000,000
Ford Motor Credit Corp., 5.70% due 12/01/95 7,000,000
Ford Motor Credit Corp., 5.70% due 12/04/95 7,000,000
Ford Motor Credit Corp., 5.70% due 12/05/95 10,000,000
Ford Motor Credit Corp., 5.70% due 12/06/95 3,000,000
Ford Motor Credit Corp., 5.70% due 12/07/95 6,000,000
Ford Motor Credit Corp., 5.70% due 12/08/95 6,000,000
Ford Motor Credit Corp., 5.70% due 12/11/95 6,000,000
Ford Motor Credit Corp., 5.71% due 12/12/95 4,000,000
General Electric Capital Corp., 5.68% due 11/02/95 7,000,000
General Electric Capital Corp., 5.65% due 11/06/95 5,000,000
General Electric Capital Corp., 5.67% due 11/07/95 7,000,000
General Electric Capital Corp., 5.67% due 11/08/95 9,000,000
General Electric Capital Corp., 5.67% due 11/09/95 6,000,000
General Electric Capital Corp., 5.67% due 11/10/95 10,000,000
General Electric Capital Corp., 5.70% due 11/14/95 7,000,000
General Electric Capital Corp., 5.70% due 11/15/95 6,000,000
General Electric Capital Corp., 5.71% due 11/16/95 4,000,000
General Electric Capital Corp., 5.70% due 12/13/95 4,000,000
--------------
TOTAL COMMERCIAL PAPER (Cost: $201,000,000) 201,000,000
--------------
Total Investments--100.2% (Cost: $2,334,912,975) 2,833,028,882
Other liabilities, less other assets (.2)% (5,959,863)
--------------
TOTAL NET ASSETS--100% $2,827,069,019
==============
</TABLE>
- -----------
Notes:
(a) Non-income producing security.
(b) Represents an American Depositary Receipt.
(c) At October 31, 1995, net unrealized appreciation of $498,115,907 for
federal income tax purposes consisted of gross unrealized appreciation of
$553,289,304 and gross unrealized depreciation of $55,173,397. Cost for
federal income tax purposes was $2,334,912,975.
See accompanying notes to financial statements.
11
<PAGE>
THE OAKMARK FUND
STATEMENT OF ASSETS AND LIABILITIES--OCTOBER 31, 1995
<TABLE>
<S> <C> <C>
ASSETS
Investments, at value (cost: $2,334,912,975) $2,833,028,882
Cash 545,778
Receivable for:
Securities Sold 4,853,140
Fund Shares Sold 5,749,257
Dividends and Interest 4,713,433 15,315,830
----------
Other Assets 28,583
--------------
2,848,919,073
LIABILITIES AND NET ASSETS
Payable for:
Securities Purchased 18,076,273
Fund shares redeemed 900,361
Due to Adviser 2,377,099
Other 496,321
----------
Total liabilities 21,850,054
--------------
Net assets applicable to Fund shares outstanding $2,827,069,019
==============
Fund Shares Outstanding 99,284,171
==============
PRICING OF SHARES
Net asset value per share $28.47
==============
ANALYSIS OF NET ASSETS
Paid in Capital $2,218,201,560
Accumulated undistributed net realized gain on sale
of investments and foreign currency transactions 87,367,855
Net unrealized appreciation of investments 498,115,907
Accumulated undistributed net investment income 23,383,697
--------------
Net assets applicable to Fund shares outstanding $2,827,069,019
==============
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
THE OAKMARK FUND
STATEMENT OF OPERATIONS--OCTOBER 31, 1995
<TABLE>
<CAPTION>
Year Ended
October 31, 1995
----------------
<S> <C>
Investment Income:
Dividends (net of withholding of $354,146) $ 42,140,243
Interest 10,886,088
------------
Total investment income 53,026,331
------------
Expenses:
Investment advisory fee 21,215,738
Transfer and dividend disbursing agent fees and expenses 3,144,790
Custodian and accounting fees and expenses 268,307
Legal fees and expenses 70,564
Audit fees and expenses 27,850
Trustees fees and expenses 29,837
Registration and blue sky expenses 165,178
Reports to shareholders 334,371
Amortization of organization cost 34,675
Other--net 162,098
------------
Total expenses 25,453,408
------------
Net investment income 27,572,923
Net realized and unrealized gain on investments
Net realized gain on sale of investments 87,157,237
Net realized gain (loss) on foreign currency transactions (37,102)
Net change in unrealized appreciation 320,305,458
------------
Net realized and unrealized gain on investments 407,425,593
------------
Net increase in net assets resulting from operations $434,998,516
============
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
THE OAKMARK FUND
STATEMENT OF CHANGES IN NET ASSETS--OCTOBER 31, 1995
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1995 October 31, 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
From Operations:
Net investment income $ 27,572,923 $ 16,288,352
Net realized gain on sale of investments 87,157,237 96,029,651
Net realized gain (loss) on foreign cur-
rency transactions (37,102) --
Net change in unrealized appreciation 320,305,458 386,607
-------------- --------------
Net increase in net assets from operations 434,998,516 112,704,610
Distributions to shareholders from:
Net investment income (per share $.231 in
Fiscal Year 1995 and $.23 in Fiscal Year
1994) (15,107,181) (10,879,838)
Net realized short-term gain (per share
$.7277 in Fiscal Year 1995 and $.41 in
Fiscal Year 1994) (47,575,398) (19,428,508)
Net realized long-term gain (per share
$.7411 in Fiscal Year 1995 and $.36 in
Fiscal Year 1994) (48,452,482) (17,059,178)
-------------- --------------
(111,135,061) (47,367,524)
From Fund share transactions:
Reinvestment of dividends and capital gains
distributions 106,504,973 45,046,719
Proceeds from shares sold 1,384,343,262 1,168,751,822
Payments for shares redeemed (664,894,744) (708,888,845)
-------------- --------------
Net increase in net assets from Fund share
transactions 825,953,491 504,909,696
-------------- --------------
Total increase in net assets 1,149,816,946 570,246,782
Net assets:
Beginning of period 1,677,252,073 1,107,005,291
-------------- --------------
End of period (including undistributed net
investment income of $23,383,697 and
$10,917,955, respectively) $2,827,069,019 $1,677,252,073
============== ==============
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
HARRIS ASSOCIATES INVESTMENT TRUST
THE OAKMARK FUND
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The following are the significant accounting policies of The Oakmark Fund
("the Fund"), a series of the Harris Associates Investment Trust (a
Massachusetts business trust).
Security valuation--
Investments are stated at current value. Securities traded on securities
exchanges and securities traded on the NASDAQ National Market are valued at
the last sales price on the day of valuation, or if lacking any reported sales
that day, at the most recent bid quotation. Over-the-counter securities not so
traded are valued at the most recent bid quotation. Money market instruments
having a maturity of 60 days or less from the date of valuation are valued on
an amortized cost basis which approximates market value. Securities for which
quotations are not readily available are valued at a fair value as determined
by the Trustees.
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 the accrual basis.
Fund shares are sold and redeemed on a continuing basis at net asset value.
Net asset value per share is determined daily as of the closing of regular
trading on the New York Stock Exchange on each day the Exchange is open for
trading by dividing the total value of the Fund's investments and other
assets, less liabilities, by the number of Fund shares outstanding.
Federal income taxes, dividends and distributions to shareholders--
No provision is made for Federal income taxes since the Fund elects to be
taxed as a "regulated investment company" and make such distributions to its
shareholders as to be relieved of all Federal income taxes under provisions of
current Federal tax law.
2. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Harris Associates L.P.
(Adviser). For management services and facilities furnished, the Fund pays the
Adviser monthly fees at the annual rate of 1% of the first $2.5 billion of net
assets, .95% on the next $2.5 billion of
15
<PAGE>
net assets and .90% of the net assets of the fund in excess of $5 billion as
determined at the end of each preceding calendar month. The investment
advisory agreement of the Fund provides that the Adviser will reimburse the
Fund to the extent that its annual expenses, excluding certain expenses,
exceed the applicable limits prescribed by any state in which the Fund's
shares are offered for sale.
In connection with the organization of the Fund, expenses of approximately
$146,500 were advanced to the Fund by the Adviser. These expenses are being
reimbursed to the Adviser and amortized by the Fund on a straight line basis
through July, 1996.
The Fund's initial shareholder has agreed that, if any of the initial shares
are redeemed during the first 60 months of the Fund's operations, the proceeds
of redemption will be reduced by the pro rata share of the unamortized
expenses as of the date of redemption, to the extent the Fund is obligated to
reimburse such expenses to the Adviser. The pro rata share by which the
redemption proceeds shall be reduced shall be derived by dividing the number
of original shares redeemed by the total number of original shares outstanding
at the time of redemption.
Certain officers and trustees of the Fund are also executives and employees
of the Adviser. The Fund makes no direct payments to its officers who are
affiliated with the Adviser. The Fund paid trustees fees of $29,837 in 1995
and $16,000 in 1994 to trustees of the Fund not affiliated with the Adviser.
During the periods ended October 31, 1995 and October 31, 1994 the Fund
incurred brokerage commissions of $2,100,849 and $2,286,161, respectively, of
which $389,339 and $244,055 were paid to an affiliate of the Adviser.
3. FUND SHARE TRANSACTIONS
Proceeds and payments on Fund shares as shown in the statement of changes in
net assets are in respect of the following number of shares (in thousands):
<TABLE>
<CAPTION>
Year ended Year ended
October 31, 1995 October 31, 1994
- ----------------------------------------------------------------------------
<S> <C> <C>
Shares issued in reinvestment of dividend
and capital gain distributions 4,782 1,948
Shares sold 54,044 48,461
Less shares redeemed (26,065) (29,668)
------- -------
Net increase in shares outstanding 32,761 20,741
======= =======
</TABLE>
4. INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
Year ended Year ended
October 31, 1995 October 31, 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
Investment securities (excluding short term
securities) in thousands:
Purchases $1,085,381 $733,331
Proceeds from sales 359,990 366,527
</TABLE>
16
<PAGE>
THE OAKMARK FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Year ended October 31, Period ended
1995 1994 1993 1992 Oct. 31, 1991(a)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 25.21 $ 24.18 $ 17.11 $ 12.10 $10.00
Income From Investment
Operations:
Net Investment Income
(Loss) 0.30 0.27 0.17 (0.03)(d) (0.01)
Net Gains or Losses on
Securities (both
realized and
unrealized) 4.66 1.76 7.15 5.04 2.11
-------- -------- -------- ------- -------
Total From Investment
Operations 4.96 2.03 7.32 5.01 2.10
Less Distributions:
Dividends (from net
investment income) (0.23) (0.23) (0.04) -- --
Distributions (from
capital gains) (1.47) (0.77) (0.21) -- --
-------- -------- -------- ------- -------
Total Distributions (1.70) (1.00) (0.25) -- --
Net Asset Value, End of
Period $ 28.47 $ 25.21 $ 24.18 $ 17.11 $12.10
======== ======== ======== ======= =======
Total Return 21.55% 8.77% 43.21% 41.40% 87.10%*
Ratios/Supplemental
Data:
Net Assets, End of
Period ($ million) $2,827.1 $1,677.3 $1,107.0 $ 114.7 $ 4.8
Ratio of Expenses to
Average Net Assets 1.17% 1.22% 1.32% 1.70% 2.50%(b)*
Ratio of Net Income
(Loss) to Average Net
Assets 1.27% 1.19% 0.94% (0.24)% (0.66)%(c)*
Portfolio Turnover Rate 18% 29% 18% 34% 0%
</TABLE>
- -----------
*Ratios for the period have been determined on an annualized basis.
(a) From August 5, 1991, the date on which Fund shares were first offered for
sale to the public.
(b) If the Fund had paid all of its expenses and there had been no
reimbursement by the Adviser, this annualized ratio would have been 4.92%
for the period.
(c) Computed giving effect to the Adviser's expense limitation undertaking.
(d) Based on average month-end shares outstanding.
17
<PAGE>
THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL FUND FROM ITS
INCEPTION (9/30/92) TO PRESENT (10/31/95)
AS COMPARED TO THE MORGAN STANLEY WORLD EX U.S. INDEX.
<TABLE>
[GRAPH APPEARS HERE]
<CAPTION>
Measurement Period THE OAKMARK M.S. WORLD
(Fiscal Year Covered) INTERNATIONAL EX U.S. INDEX
- ------------------- ------------- ---------
<S> <C> <C>
Measurement Pt-
09/30/92 $10,000 $10,000
10/31/92 $ 9,800 $ 9,505
$10,833 $ 9,621
$12,105 $11,764
$12,607 $12,233
10/31/93 $14,454 $12,981
$16,487 $13,786
$15,382 $13,664
$15,194 $13,899
10/31/94 $15,121 $14,265
$13,698 $13,124
$14,399 $14,437
$15,506 $14,911
10/31/95 $14,659 $14,248
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return*
Through 10/31/95
----------------------------
Total Return* Total Return* From Inception
Last 3 mos. Last 6 mos. From 10/31/94 9/30/92
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
OAKMARK INTERNATIONAL (5.5)% 1.8% (3.1)% 13.2%
Morgan Stanley World ex
U.S.* (4.5)% (1.3)% (0.1)% 12.2%
Morgan Stanley EAFE* (4.6)% (1.6)% (0.4)% 12.3%
Lipper Analytical
International
Fund Average* (2.1)% 4.7% (0.6)% 12.6%
</TABLE>
10/31/95 NAV $12.97
REPORT FROM DAVID G. HERRO, PORTFOLIO MANAGER
Dear Fellow Shareholders:
A large ship that carries cargo across the ocean will no doubt encounter many
types of conditions on its journey; anything from clear skies and still water
to the occasional storm at sea. But to an experienced crew with a good ship,
the weather really doesn't make much difference. They've made the trip many
times before and always deliver the goods to port.
*Total return includes change in share prices and in each case included
reinvestment of any dividends and capital gain distributions. Each of the three
indexes or averages is an unmanaged group of stocks whose composition is
different from the Fund. The Morgan Stanley World ex U.S. Index includes 19
country sub-indexes. The Morgan Stanley EAFE Free Index refers to Europe, Asia
and the Far East and includes 18 country sub-indexes. The Lipper International
Fund Average includes 106 mutual funds that invest in securities whose primary
markets are outside the United States. Past performance is no guarantee of
future performance.
LOGO
18
<PAGE>
In many ways the Oakmark International Fund is experiencing this type of
journey. The past year has been turbulent, to say the least. Most foreign
markets have been weak since the peso crisis of last year, and our Fund has
not escaped the consequences. On a relative basis it's been particularly
difficult to compete against the booming U.S. market. But our results are
positive, and as I write this (December 1, 1995) our Fund is now up 7.25%*
since January 1, 1995.
THE GLOBAL PICTURE
The Fund's performance in recent months can be traced to three factors:
geographic exposure, industry focus and global money flows. First, the Fund's
Latin American investments (particularly Mexico) have significantly
underperformed. These markets continue to be buffeted by currency and
political speculation. Second, investors concerned with the declining rate of
worldwide industrial growth, have avoided many of the cyclical companies we
find extremely undervalued. Lastly, the flow of investment funds is running
against us. We have heard from the large global brokerage firms that there
continues to be strong flows of money into the U.S. market and out of foreign
markets, generally causing downturns and price volatility in the foreign
markets.
So, like our ocean freighter analogy, while we have hit some rough water and
our speed has slowed, we continue to proceed toward our destination. The most
recent weeks indicate we may see smoother water ahead.
I remain extremely optimistic about the prospects for both the Fund and
foreign makets. The companies we own are strong and diverse, and most
importantly, they are selling at bargain basement prices. Consider the
following:
TELEMEX (4% OF THE PORTFOLIO)
CURRENT SITUATION: Down 13.5% in the four weeks through October 31, 1995 yet
up 21.5% for the month of November.
REASON FOR OPTIMISM: Telemex will generate more than $1 billion (U.S.
dollars) a year in free cash with just a trace of debt. The company has been
actively buying back stock and has proposed buying even more. All of this has
occurred during a harsh recession in Mexico. The stock sells at a price less
than 10 times earnings and long-term prospects are bright.
19
<PAGE>
VOLVO (4% OF THE PORTFOLIO)
CURRENT SITUATION: Down 12% in the four weeks through October 31, 1995, and
down 9% for the month of November.
REASON FOR OPTIMISM: The company has recognized its problems, replaced
management and is attacking costs. With planned asset sales, by 1997 half of
the current share price will be in cash on the balance sheet. Management has
pledged to use this cash to bolster shareholder value. On an adjusted basis,
the stock sells at just 3 times earnings.
ASIA PULP AND PAPER (3% OF THE PORTFOLIO)
CURRENT SITUATION: Down 15.4% in the four weeks through October 31, 1995,
yet up 1.2% for the month of November. The stock was down due to fears of
weaker pulp prices. The fears are overdone! There is little new pulp capacity
on the horizon, and thus prices will soon stabilize. The company is one of the
world's lowest cost producers and is located in the world's fastest growing
region.
REASON FOR OPTIMISM: It's clear that fears of paper and pulp prices
collapsing have been overdone. These prices are supply driven and there is
little new capacity coming on stream. The company sells at 4 times normal
earnings and below book value.
These are just few examples in overseas markets where current share prices
do not come close to reflecting true value. This is the nature of equity
market investment; over short periods of time price and value seldom match. We
believe patient investors will be rewarded, because over the longer term share
prices tend to reflect value. Just as storms at sea eventually subside, value
and price converge.
TRAVELLER'S LOG...AUSTRALASIA
In my last quarterly letter I briefly mentioned the differences between the
Australian and New Zealand economies. They can be as opposite as night and
day, yet they share some similarities as well. For example, both countries
seem to be keenly aware of good corporate governance and have responsible,
owner-oriented managements. However, the macroeconomic environment of the two
countries are quite distinctive.
NEW ZEALAND
MACRO: During the past 10 years New Zealand has completely deregulated and
embraced just about every free market reform imaginable. The results are
stunning: huge budget surpluses, surging productivity, very low unemployment,
strong economic growth and low inflation.
20
<PAGE>
MICRO: We have been able to find a number of examples of strong, competitive
companies, though most have proven to be too small for the Fund. Our lone New
Zealand position is LION NATHAN, which brews Steinlager and other drinks
brands. Lion has close to 50% of the Australasian beer market and is a
franchisee for both Pepsi and Gatorade. In addition, the company has opened up
brewing operations in China that already are profitable. Lion has wisely used
its free cash flow to pay down debt, increase dividends and make intelligent
investments.
AUSTRALIA
MACRO: The country has archaic collective bargaining agreements and is not
as open as it should be. As one might predict, Australia has lagged behind New
Zealand in productivity and employment growth while suffering a higher rate of
inflation. They are still running huge "normalized" budget deficits as well.
MICRO: Despite the macro picture, we have found good values in Australia.
PIONEER INTERNATIONAL is an excellent example of an extremely well-run, global
company. Pioneer has global building materials businesses (concrete,
aggregates, cement, etc.) that are well positioned for the continuing boom in
global infrastructure development. On top of this, they have prudently used
cash to pay down debt and expand their global franchises to the fast growing
regions of the world.
Ideally, over time Australia will adopt policies similar to New Zealand,
adding a positive new element to the Australasian economic environment!
DAVID G. HERRO
Portfolio Manager
OAKIX @aol.com
72242. [email protected]
December 1, 1995
21
<PAGE>
THE OAKMARK INTERNATIONAL FUND
SCHEDULE OF INVESTMENTS--OCTOBER 31, 1995
<TABLE>
<CAPTION>
Shares Held Description Market Value
- -------------------------------------------------------------------------------
COMMON STOCKS--94.5%
CONSUMER NON-DURABLES--4.4%
<C> <S> <C> <C>
90,210,000 Yue Yuen Industrial
(Holdings) Limited (Hong Athletic Footwear
Kong) Manufacturing $ 23,626,790
61,533 Chargeurs S.A. (France) Entertainment & Wool
Production Holding
Company 12,658,676
------------
36,285,466
FOOD--7.5%
18,069,300 Lion Nathan Limited (New
Zealand) New Zealand Brewer 41,031,350
4,939,000 Leong Hup Holdings Berhad
(Malaysia) Major Poultry Operation
in Malaysia and KFC
Operator 7,463,896
3,300,265 Burns, Philp & Company
Limited (Australia) Yeast and Spices 7,390,904
36,970 Lotte Chilsung Beverage
(Korea) Manufacturer of Soft
Drinks, Juices, & Sport
Drinks 5,314,906
------------
61,201,056
HOUSEHOLD PRODUCTS--3.5%
2,017,853 Reckitt & Colman PLC
(Great Britain) Household Cleaners and
Air Fresheners 21,470,594
3,430,600 London International Group
PLC (Great Britain) Latex Products 7,105,274
------------
28,575,868
RETAIL--4.9%
24,995,000 Giordano Holdings Limited
(Hong Kong) East Asian Clothing
Retailer & Manufacturer 20,689,887
462,900 Macintosh (Netherlands) Non-Food Specialty
Retailer 13,495,627
16,702,189 Alparagatas Sociedad
Anonima Industrial Y
Comercial (Argentina) Textiles 5,928,684
------------
40,114,198
TELECOMMUNICATIONS--5.4%
1,049,700 Telefonos de Mexico, S.A.
de C.V. Telephone Company in
(Mexico) (b) Mexico 28,866,750
935,500 Call Net Enterprises, Inc.
Common (Canada) (a) Telecommunications 7,855,184
944,300 Call Net Enterprises, Inc.
Class B (Canada) (a) Telecommunications 7,752,872
------------
44,474,806
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
THE OAKMARK INTERNATIONAL FUND
SCHEDULE OF INVESTMENTS--OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Shares Held Description Market Value
- -------------------------------------------------------------------------------
TRANSPORTATION--5.8%
<C> <S> <C> <C>
1,544,000 AB Volvo (Sweden) Automobiles $ 34,760,112
3,548,033 CIADEA S.A.
(Argentina) (a) Assembler and
Distributor of
Automobiles 12,949,026
-------------
47,709,138
OIL AND NATURAL GAS--4.0%
1,730,500 YPF Sociedad Anonima
(Argentina) (b) Oil Exploration,
Production and
Marketing 29,634,813
55,609 Total S.A. (France) Oil Production and
Refining 3,436,543
-------------
33,071,356
ELECTRIC--2.7%
4,760,230 Union Electrica Fenosa
S.A. (Spain) Spanish Electric Utility 22,152,396
BANKS--13.7%
1,512,850 Svenska Handelsbanken
(Sweden) Large Swedish Bank 26,540,828
5,209,175 Banco de Galicia Y Buenos
Aires (Argentina) Argentinian Bank 24,584,848
145,100 Banco Popular Espanol
(Spain) Large Spanish Bank 23,050,993
1,455,400 Banco Espirito Santo E
Comercial de Lisboa,
S.A. (Portugal) Portuguese Bank 21,381,306
34,885,000 Grupo Financiero
Bancomer, S.A. De C.V. Large Mexican Financial
(GFB)--B (Mexico) (a) Group 9,008,898
326,080 Banco Espirito Santo E
Comercial de Lisboa,
S.A. Rights (Portugal) Portuguese Bank 4,790,447
6,129,630 Grupo Financiero
Bancomer, S.A. De C.V. Large Mexican Financial
(GFB)--L (Mexico) (a) Group 1,419,493
185,715 Banco Frances del Rio de
la Plata S.A.
(Argentina) Argentinian Bank 1,350,014
-------------
112,126,827
INVESTMENT COMPANIES--0.5%
6,000,000 The Central European
Growth Fund PLC (Great
Britain) Diversified, Closed-End
Fund Investing in
Central Europe 3,747,036
COMPUTER SYSTEMS--3.0%
1,414,500 Scitex Corporation
Limited (Israel) (b) Color Pre-Press Systems 24,576,938
</TABLE>
See accompanying notes to financial statements.
23
<PAGE>
THE OAKMARK INTERNATIONAL FUND
SCHEDULE OF INVESTMENTS--OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Shares Held Description Market Value
- -------------------------------------------------------------------------------
MARKETING SERVICES--3.6%
<C> <S> <C> <C>
21,654,328 Cordiant PLC (Great
Britain) (a) Advertising Agency
Holding Company $ 29,443,039
AEROSPACE--7.4%
2,344,666 British Aerospace Public
Limited Company Defense and Civil
(Great Britain) Aviation 26,282,501
7,548,737 Rolls-Royce Public Limited
Company (Great
Britain) Jet Engines 18,379,534
6,248,000 Hong Kong Aircraft
Engineering Company
Limited (Hong Kong) Commercial Aircraft
Overhaul and
Maintenance 16,081,224
------------
60,743,259
COMPONENTS--1.7%
6,685,000 Varitronix International
Holdings Limited
(Hong Kong) Liquid Crystal Displays 12,753,178
1,840,000 Chen Hsong Holdings
Limited (Hong Kong) Plastic Injection
Moulding Machines 1,070,916
------------
13,824,094
FORESTRY PRODUCTS--5.2%
2,355,000 Asia Pulp & Paper Company
Ltd (a) (Indonesia)
Paper & Packaging
Products in Asia 24,138,750
360,700 Mo och Domsjo AB (Sweden) Paper, Pulp & Timber 18,359,275
144,000 Empaques Ponderosa, S.A.
(Mexico) (a) Boxboard 303,158
------------
42,801,183
MACHINERY AND METAL PROCESSING--1.9%
115,849 Strafor Facom (France) Metal Processing, Office
Equipment, Mining Tools 13,977,405
6,180,000 Lochpe-Maxion (Brazil) Agricultural Machinery &
Automotive Parts 1,927,572
------------
15,904,977
MINING AND BUILDING MATERIALS--3.0%
9,854,423 Pioneer International Concrete Products,
(Australia) Aggregates 24,170,660
</TABLE>
See accompanying notes to financial statements.
24
<PAGE>
THE OAKMARK INTERNATIONAL FUND
SCHEDULE OF INVESTMENTS--OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Shares Held Description Market Value
- --------------------------------------------------------------------------------
OTHER INDUSTRIAL GOODS AND SERVICES--9.4%
<C> <S> <C> <C>
21,596,600,000 Usiminas (Brazil) Steel Production $ 20,208,921
643,200 EVC International NV
(Netherlands) Western European PVC
Manufacturer 20,178,984
1,466,000 Avesta Sheffield
(Sweden) Stainless Steel 14,459,989
65,400 ECCO Travail Temporaire
(France) European Temporary
Employment Services 10,137,461
700,966 Tung-Ho Steel Enterprise
Corp. (Taiwan) (a)
Taiwanese Manufacturer
of Steel Bars and H-
Beams 7,184,902
14,040,000 Lamex Holdings Limited
(Hong Kong)
Hong Kong's Largest
Office Furniture
Supplier 3,141,508
60,000 Groupe Legris Industries
(France) Europe's Leading Crane
Manufacturer 1,742,295
------------
77,054,060
SHIPBUILDING--4.6%
951,610 Kvaerner (Norway) Shipbuilding and 37,899,354
Engineering
REAL ESTATE AND CONSTRUCTION--2.3%
127,332 Hollandsche Beton Groep
nv (Netherlands) Construction 19,207,134
------------
TOTAL COMMON STOCKS (COST: $868,131,191) 775,082,845
COMMERCIAL PAPER--3.0%
Ford Motor Credit Corp., 5.72% due 11/02/95 1,500,000
Ford Motor Credit Corp., 5.73% due 11/02/95 5,000,000
Ford Motor Credit Corp., 5.75% due 11/02/95 5,000,000
Ford Motor Credit Corp., 5.76% due 11/02/95 3,000,000
General Electric Capital Credit Corp., 5.69% due 11/01/95 8,000,000
General Electric Capital Credit Corp., 5.73% due 11/03/95 2,000,000
------------
TOTAL COMMERCIAL PAPER (COST: $24,500,000) 24,500,000
------------
Total Investments--97.5% (Cost: $892,631,191) 799,582,845
Foreign currencies--0.0% (Cost: $322,067) 321,211
Other assets, less other liabilities--2.5% (c) 19,827,486
------------
TOTAL NET ASSETS --100% $819,731,542
============
</TABLE>
- -----------
Notes:
(a) Non-income producing security.
(b) Represents an American Depositary Receipt.
(c) Includes portfolio and transaction hedges.
(d) At October 31, 1995, net unrealized depreciation of $93,049,202 for
federal income tax purposes consisted of gross unrealized appreciation of
$69,234,440 and gross unrealized depreciation of $162,283,642. Cost for
federal income tax purposes was $892,953,258.
See accompanying notes to financial statements.
25
<PAGE>
THE OAKMARK INTERNATIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
COUNTRY DIVERSIFICATION--OCTOBER 31, 1995
<TABLE>
<CAPTION>
% of Fund
Net
Country Assets
- ---------------------------------------------------------------
<S> <C>
ARGENTINA 9.1%
Alparagatas Sociedad Anonima Industrial Y Comercial
Banco de Galicia y Buenos Aires
Banco Frances del Rio de la Plata S.A.
CIADEA S.A.
YPF Sociedad Anonima
AUSTRALIA 3.9%
Burns, Philp & Company Limited
Pioneer International
BRAZIL 2.7%
lochpe-Maxion
Usiminas
CANADA 1.9%
Call Net Enterprises Inc. Class B
Call Net Enterprises Inc. Common
CENTRAL EUROPE 0.5%
The Central European Growth Fund PLC
FRANCE 5.1%
Chargeurs S.A.
Ecco S.A
Groupe Legris Industries
Strafor Facom
Total S.A.
GREAT BRITAIN 12.5%
British Aerospace Public Limited Company
Cordiant PLC
London International Group PLC
Reckitt & Colman PLC
Rolls Royce Public Limited Company
HONG KONG 9.4%
Chen Hsong Holdings Limited
Giordan Holdings Limited
Hong Kong Aircraft Engineering Company Limited
Lamex Holdings Limited
Varitronix International Holdings Limited
Yue Yuen Industrial (Holdings) Limited
INDONESIA 2.9%
Asia Pulp & Paper Company Ltd
ISRAEL 3.0%
Scitex Corporation Limited
KOREA 0.6%
Lotte Chilsung Beverage
</TABLE>
See accompanying notes to financial statements.
26
<PAGE>
THE OAKMARK INTERNATIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
COUNTRY DIVERSIFICATION--OCTOBER 31, 1995
<TABLE>
<CAPTION>
% of Fund
Net
Country Assets
- -------------------------------------------------------------
<S> <C>
MALAYSIA 0.9%
Leong Hup Holdings Berhad
MEXICO 4.8%
Empaques Ponderosa, S.A.
Grupo Financiero Bancomer, S.A. De C.V. (GFB)-B
Grupo Financiero Bancomer, S.A. De C.V. (GFB)-L
Telefonos de Mexico, S.A. de C.V.
NETHERLANDS 6.5%
EVC International NV
Hollandsche Beton Groep nv
Macintosh
NEW ZEALAND 5.0%
Lion Nathan Limited
NORWAY 4.6%
Kvaerner
PORTUGAL 3.2%
Banco Espirito Santo E. Comercial de Lisboa, S.A.
SPAIN 5.5%
Banco Popular Espanol
Union Electrica Fenosa S.A.
SWEDEN 11.5%
Avesta Sheffield
Mo och Domsjo AB
Svenska Handelsbanken
Volvo AB
TAIWAN 0.9%
Tung-Ho Steel Enterprise Corp.
</TABLE>
See accompanying notes to financial statements.
27
<PAGE>
THE OAKMARK INTERNATIONAL FUND
STATEMENT OF ASSETS AND LIABILITIES--OCTOBER 31, 1995
<TABLE>
<S> <C> <C>
ASSETS
Investments, at value (cost: $892,631,191) $799,582,845
Cash 399,986
Foreign currency, at value (cost: $322,067) 321,211
Receivable for:
Forward foreign currency contracts $ 969,909
Securities sold 29,020,934
Fund shares sold 662,786
Dividends and interest 3,379,012
-----------
Total receivables 34,032,641
Other assets 21,533
------------
Total assets $834,358,216
LIABILITIES AND NET ASSETS
Payable for:
Securities purchased $ 2,374,806
Fund shares redeemed 1,884,706
Forward foreign currency contracts 9,103,567
Due to adviser 769,279
Other 494,316
-----------
Total liabilities 14,626,674
------------
Net assets applicable to Fund shares outstanding $819,731,542
============
Fund shares outstanding 63,224,193
============
PRICING OF SHARES
Net asset value per share $12.97
============
ANALYSIS OF NET ASSETS
Paid in Capital $862,870,293
Accumulated undistributed net realized gain on sale
of investments, forward contracts and foreign cur-
rency transactions 26,425,139
Net unrealized depreciation of investments and for-
eign currencies (93,049,202)
Net unrealized depreciation of foreign currency
portfolio hedges (8,062,429)
Net unrealized appreciation--other 169,294
Accumulated undistributed net investment income 31,378,447
------------
Net assets applicable to Fund shares outstanding $819,731,542
============
</TABLE>
See accompanying notes to financial statements.
28
<PAGE>
THE OAKMARK INTERNATIONAL FUND
STATEMENT OF OPERATIONS--OCTOBER 31, 1995
<TABLE>
<CAPTION>
Year Ended
October 31, 1995
----------------
<S> <C>
Investment Income:
Dividends $ 28,937,627
Interest 2,162,084
Foreign taxes withheld (3,686,997)
-------------
Total investment income 27,412,714
Expenses:
Investment advisory fee 9,916,904
Transfer and dividend disbursing agent fees and expenses 1,455,154
Custodian and accounting fees and expenses 1,273,334
Legal fees and expenses 48,041
Audit fees and expenses 37,848
Trustees fees and expenses 18,580
Registration and blue sky expenses 136,505
Reports to shareholders 311,789
Amortization of organization cost 9,490
Other--net 461,762
-------------
Total expenses 13,669,407
-------------
Net investment income 13,743,307
Net realized and unrealized gain (loss) on investments
Net realized gain on sale of investments 62,822,164
Net realized loss on foreign currency transactions (26,735,730)
Net change in unrealized appreciation (depreciation) of:
Investments and foreign currency transactions (120,637,092)
Forward foreign currency contracts 17,767,564
Other foreign currency transactions (20,391)
-------------
Net realized and unrealized gain (loss) on investments,
forward contracts and foreign currency transactions (66,803,485)
-------------
Net decrease in net assets resulting from operations $ (53,060,178)
=============
</TABLE>
See accompanying notes to financial statements.
29
<PAGE>
THE OAKMARK INTERNATIONAL FUND
STATEMENT OF CHANGES IN NET ASSETS--OCTOBER 31, 1995
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1995 October 31, 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
From Operations:
Net investment income $ 13,743,307 $ 18,774,576
Net realized gain on sale of investments 62,822,164 117,306,013
Net realized gain (loss) on foreign cur-
rency trasactions (26,735,730) (39,262,860)
Net change in unrealized appreciation (de-
preciation) of investments and foreign
currencies (120,637,092) (58,275,156)
Net change in unrealized appreciation (de-
preciation) of forward foreign currency
contracts 17,767,564 (27,201,474)
Net change in unrealized appreciation (de-
preciation) - other (20,391) 145,115
-------------- ---------------
Net increase in net assets from operations (53,060,178) 11,486,214
Distributions to shareholders from:
Net investment income (per share $.08 in
fiscal 1994) 0 (5,086,447)
Net realized short-term gain (per share
$.6863 in fiscal year 1995 and $.15 in
fiscal year 1994) (56,722,392) (10,445,839)
Net realized long-term gain (per share
$.3725 in fiscal year 1995) (30,791,949) 0
-------------- ---------------
(87,514,341) (15,532,286)
From Fund share transactions:
Reinvestment of dividends and capital gains
distributions 81,810,540 15,134,825
Proceeds from shares sold 312,101,705 1,562,821,681
Payments for shares redeemed (719,598,750) (1,103,291,079)
-------------- ---------------
Net increase (decrease) in net assets from
Fund share transactions (325,686,505) 474,665,427
-------------- ---------------
Total increase in net assets (466,261,024) 470,619,355
Net assets:
Beginning of period 1,285,992,566 815,373,211
-------------- ---------------
End of period (including undistributed net
investment income of $31,378,447 and
$17,635,140, respectively) $ 819,731,542 $ 1,285,992,566
============== ===============
</TABLE>
See accompanying notes to financial statements.
30
<PAGE>
HARRIS ASSOCIATES INVESTMENT TRUST
THE OAKMARK INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The following are the significant accounting policies of The Oakmark
International Fund ("the Fund"), a series of the Harris Associates Investment
Trust (a Massachusetts business trust).
Security valuation--
Investments are stated at current market value. The values of portfolio
securities are generally based upon market quotations which, depending upon
local convention or regulation, may be last sale price, last bid or asked
price, or the mean between last bid and asked prices as of, in each case, the
close of the appropriate exchange or other designated time. Securities for
which quotations are not available and any other assets are valued at a fair
value as determined in good faith by the Board of Trustees. If such quotations
are not available, the rate of exchange will be determined in accordance with
policies established in good faith by the Board. Money market instruments
having a maturity of 60 days or less from the date of valuation are valued on
an amortized cost basis which approximates market.
Foreign currency translations--
Values of investments and other assets and liabilities denominated in
foreign currencies are translated into U.S. dollars using the mean of the bid
and offer prices of such currencies at the time 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.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized gain or loss from investments.
Net realized gain on foreign currency transactions arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books, and the U.S. dollar equivalent of the amounts actually received
or paid, and the realized gains or losses resulting from the portfolio and
transaction hedges.
31
<PAGE>
Net unrealized appreciation--other includes the following components:
<TABLE>
<S> <C>
Unrealized appreciation on open securities purchases $ 517
Unrealized appreciation on open securities sales 38,079
Unrealized depreciation on transaction hedge purchases (2,445)
Unrealized depreciation on transaction hedge sales (68,784)
Unrealized appreciation on dividends and dividend reclaim
receivable 202,332
Other--net (405)
--------
$169,294
========
</TABLE>
Security transactions and investment income--
Security transactions are accounted for on the trade date (date the order to
buy or sell is executed) and dividend income is recorded on the ex-dividend
date. Interest income and expenses are recorded on the accrual basis.
Fund shares are sold and redeemed on a continuing basis at net asset value.
Net asset value per share is determined on each day the New York Stock
Exchange is open for trading by dividing the total value of the Fund's
investments and other assets, less liabilities, by the number of Fund shares
outstanding.
Forward foreign currency contracts--
At October 31, 1995, the Fund had entered into forward foreign currency
contracts under which it is obligated to exchange currencies at specified
future dates. The Fund's currency transactions are limited to transaction
hedging and portfolio hedging involving either specific transactions or
portfolio positions.
The contractual amounts of forward foreign exchange contracts do not
necessarily represent the amounts potentially subject to risk. The measurement
of the risks associated with these instruments is meaningful only when all
related and offsetting transactions are considered. Risks arise from the
possible inability of counterparties to meet the terms of their contracts and
from movements in currency values. The Fund had the following outstanding
contracts at October 31, 1995:
32
<PAGE>
Portfolio Hedges:
<TABLE>
<CAPTION>
Unrealized
U.S. Appreciation
Dollar Settlement (Depreciation)
Foreign Currency Proceeds Date at October 31, 1995
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
1,000,000,000 Spanish Pesetas 8,063,216 December 1995 $ (89,487)
1,000,000,000 Spanish Pesetas 8,165,932 January 1996 31,264
2,153,250,000 Spanish Pesetas 17,733,899 February 1996 265,712
1,191,800,000 Spanish Pesetas 9,541,270 February 1996 (116,501)
45,000,000 French Francs 9,410,682 February 1996 224,305
40,534,000 French Francs 8,210,249 February 1996 (63,100)
49,760,000 French Francs 10,000,000 March 1996 (150,518)
18,794,637 Pounds Sterling 29,883,473 January 1996 220,735
12,738,854 Pounds Sterling 19,899,364 March 1996 (177,727)
9,458,000 Netherlands Guilders 5,939,462 February 1996 (89,230)
47,574,000 Netherlands Guilders 30,000,000 March 1996 (380,552)
15,152,000 Netherlands Guilders 9,589,873 April 1996 (97,772)
108,870,000 Norwegian Kroner 17,693,808 November 1995 207,151
156,370,000 Swedish Krona 21,279,173 November 1995 (2,252,006)
78,810,000 Swedish Krona 10,691,901 December 1995 (1,142,003)
198,987,500 Swedish Krona 26,992,336 December 1995 (2,858,049)
113,595,000 Swedish Krona 15,421,531 January 1996 (1,594,651)
-----------
Net unrealized depreciation $(8,062,429)
===========
</TABLE>
Transaction Hedges:
Purchases:
<TABLE>
<CAPTION>
Unrealized
Appreciation
U.S. Foreign Currency Settlement (Depreciation)
Dollar Proceeds Date at October 31, 1995
- -------------------------------------------------------------------
<S> <C> <C> <C>
$801,711 5,307,605 Swedish Krona November 1995 $(2,445)
-------
Net unrealized depreciation $(2,445)
=======
</TABLE>
Sales:
<TABLE>
<CAPTION>
Unrealized
U.S. Appreciation
Dollar Settlement (Depreciation)
Foreign Currency Proceeds Date at October 31, 1995
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
10,117,320 Australian Dollars $7,642,577 November 1995 $(64,096)
299,023 Brazilian Real 310,835 November 1995 (64)
760,805,389 Spanish Pesetas 6,243,277 November 1995 9,978
9,936,431 French Francs 2,027,222 November 1995 (4,726)
4,664,594 Pounds Sterling 7,358,753 November 1995 (16,100)
521,523 Netherlands Guilders 331,990 November 1995 1,452
2,802,469 New Zealand Dollar 1,845,397 November 1995 (4,540)
149,849,449 Portuguese Escudo 1,014,923 November 1995 5,088
16,494,258 Swedish Krona 2,488,075 November 1995 4,224
--------
Net unrealized depreciation $(68,784)
========
</TABLE>
At October 31, 1995, the Fund had sufficient cash and/or securities to cover
any commitments under these contracts.
Federal income taxes, dividends and distributions to shareholders--
No provision is made for federal income taxes since the Fund elected to be
taxed as a "regulated investment company" and makes
33
<PAGE>
such distributions to its shareholders as to be relieved of all federal income
taxes under provisions of current federal tax law.
2. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Harris Associates L.P.
(Adviser). For management services and facilities furnished, the Fund pays the
Adviser monthly fees at the annual rate of 1% of the first $2.5 billion of net
assets, .95% on the next $2.5 billion of net assets and .90% of the net assets
of the Fund in excess of $5 billion as determined at the end of each preceding
calendar month. The investment advisory agreement of the Fund provides that
the Adviser will reimburse the Fund to the extent that its annual expenses,
excluding certain expenses, exceed the applicable limits prescribed by any
state in which the Fund's shares are offered for sale.
In connection with the organization of the Fund, expenses of approximately
$47,000 have been advanced to the Fund by the Adviser. These expenses are
being reimbursed to the Adviser by the Fund on a straight line basis through
September, 1997.
Certain officers and trustees of the Fund are also executives and employees
of the Adviser. The Fund makes no direct payments to its officers who are
affiliated with the Adviser. The Fund paid trustees fees of $18,580 in 1995
and $15,000 in 1994 to trustees not affiliated with the Adviser.
During the period ended October 31, 1995, the Fund incurred broker
commissions of $2,609,780, of which $71,600 were paid to an affiliate of the
Adviser.
3. FUND SHARE TRANSACTIONS
Proceeds and payments on Fund shares as shown in the statement of changes in
net assets are in respect of the following number of shares (in thousands):
<TABLE>
<CAPTION>
Year ended Year ended
October 31, 1995 October 31, 1994
- ----------------------------------------------------------
<S> <C> <C>
Shares sold 24,062 104,988
Shares issued in rein-
vestment of dividends 6,472 1,091
Less shares redeemed (56,012) (75,240)
------- -------
Net (decrease) increase
in shares outstanding (25,478) 30,839
======= =======
</TABLE>
4. INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
Year ended Year ended
October 31, 1995 October 31, 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
Investment securities (excluding short term
securities) in thousands:
Purchases $251,353 $1,121,268
Proceeds from sales 671,180 682,450
======== ==========
</TABLE>
34
<PAGE>
THE OAKMARK INTERNATIONAL FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Year ended October 31, Period ended
1995 1994 1993 Oct. 31, 1992(a)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PE-
RIOD $14.50 $14.09 $ 9.80 $10.00
Income From Investment Operations:
Net Investment Income (Loss) 0.30 0.21 0.06 0.26
Net Gains or Losses on Securities
(both realized and unrealized) (0.77) 0.43 4.48 (0.46)
------ -------- ------ ------
Total From Investment Operations (0.47) 0.64 4.54 (0.20)
Less Distributions
Dividends (from net investment
income) -- (0.08) (0.25) --
Distributions (from capital
gains) (1.06) (0.15) -- --
------ -------- ------ ------
Total Distributions (1.06) (0.23) (0.25) --
------ -------- ------ ------
Net Asset Value, End of Period $12.97 $14.50 $14.09 $ 9.80
====== ======== ====== ======
Total Return (3.06)% 4.62% 47.49% (22.81)%*
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($mil-
lion) $819.7 $1,286.0 $815.4 $23.5
Ratio of Expenses to Average Net
Assets 1.40% 1.37% 1.26% 2.04%*
Ratio of Net Income (Loss) to Av-
erage Net Assets 1.40% 1.44% 1.55% 37.02%*
Portfolio Turnover Rate 27% 55% 21% 0%
</TABLE>
- -----------
*Ratios for the period have been determined on an annualized basis.
(a) From September 30, 1992, the date on which Fund shares were first offered
for sale to the public.
35
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of Harris Associates Investment
Trust:
We have audited the accompanying statements of assets and liabilities of The
Oakmark Fund and Oakmark International Fund (each a series of Harris
Associates Investment Trust), including the schedules of investments, as of
October 31, 1995, and the related statements of operations, statements of
changes in net assets and the financial highlights for the periods indicated
thereon. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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. An audit 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 October 31, 1995, by correspondence with the custodian and
brokers. As to securities purchased but not received, we requested
confirmation from brokers, and when replies were not received, we carried out
alternative 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 positions of
The Oakmark Fund and Oakmark International Fund of the Harris Associates
Investment Trust as of October 31, 1995, the results of their operations, the
changes in their net assets and the financial highlights for the periods
indicated thereon in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Chicago, Illinois
December 5, 1995
36
<PAGE>
THE OAKMARK FUNDS' ANNUAL REPORT
OCTOBER 31, 1995
TRUSTEES AND OFFICERS
TRUSTEES
Christine M. Bucher Allan J. Reich
James W. Ford Burton W. Ruder
Michael J. Friduss Peter S. Voss
Thomas H. Hayden Gary Wilner, M.D.
OFFICERS
Victor A. Morgenstern--President
Robert J. Sanborn--Executive Vice President
David G. Herro--Vice President
Clyde S. McGregor--Vice President
Steven J. Reid--Vice President
Adam Schor--Assistant Vice President
Michael J. Welsh--Assistant Vice President
Donald Terao--Treasurer
Anita M. Nagler--Secretary
Lauren B. Pitalis--Vice President--Shareholder Operations and Assistant
Secretary
Kristi L. Rowsell--Assistant Treasurer
OTHER INFORMATION
TRANSFER AGENT
State Street Bank and Trust Company
Attention: The Oakmark Family of Funds
P.O. Box 8510
Boston, Massachusetts 02266-8510
1-800-626-9392
INVESTMENT ADVISER
Harris Associates L.P.
LEGAL COUNSEL
Bell, Boyd & Lloyd
Chicago, Illinois
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen & Co.
Chicago, Illinois
ADDRESS OF FUND AND ADVISER
Two North LaSalle Street, Suite 500
Chicago, Illinois 60602
1-800-OAKMARK (1-800-625-6275)
24-HOUR NAV INFORMATION
1-800-GROWOAK (1-800-476-9625)
This report, including the audited financial statements contained herein, 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.
37
<PAGE>
[LOGO OF THE OAKMARK FUND]
Harris Associates L.P.
2 North LaSalle Street
Chicago, IL 60602
1-800-OAKMARK
