HARRIS ASSOCIATES INVESTMENT TRUST, 485APOS, 1997-11-26

HARRIS ASSOCIATES INVESTMENT TRUST
485APOS, 1997-11-26

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<PAGE>

As filed with the Securities and Exchange Commission on November 26, 1997

Securities Act registration no. 33-38953
Investment Company Act file no. 811-06279

- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

- --------------------------------------------------------------------------------

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 19 [X]

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 21 [X]

- --------------------------------------------------------------------------------

HARRIS ASSOCIATES INVESTMENT TRUST
(Registrant)

Two North La Salle Street, Suite 500
Chicago, Illinois 60602-3790

Telephone number 312/621-0600

- --------------------------------------------------------------------------------

Victor A. Morgenstern Cameron S. Avery
Harris Associates L.P. Bell, Boyd & Lloyd
Two North La Salle Street, #500 70 West Madison Street, #3300
Chicago, Illinois 60602 Chicago, Illinois 60602

(Agents for service)

- --------------------------------------------------------------------------------

Amending Parts A, B and C and filing Exhibits

- --------------------------------------------------------------------------------

It is proposed that this filing will become effective:

immediately upon filing pursuant to rule 485(b)
-----
on March 1, 1997 pursuant to rule 485(b)
-----
60 days after filing pursuant to rule 485(a)(1)
-----
on May 1, 1996 pursuant to rule 485(a)(1) by acceleration
-----
75 days after filing pursuant to rule 485(a)(2)
-----
X on January 25, 1998 pursuant to rule 485(a)(2)
-----

Registrant has elected to register under the Securities Act of 1933 an
indefinite number of its shares of beneficial interest, without par value, of
the series designated The Oakmark Fund, The Oakmark Select Fund, The Oakmark
Small Cap Fund, The Oakmark Equity and Income Fund (formerly named The Oakmark
Balanced Fund), The Oakmark International Fund and The Oakmark International
Small Cap Fund, pursuant to Rule 24f-2 under the Investment Company Act of 1940.

- --------------------------------------------------------------------------------
<PAGE>

HARRIS ASSOCIATES INVESTMENT TRUST

Cross-reference sheet pursuant to rule 495(a) of Regulation C
<TABLE>
<CAPTION>
Item Location or caption*
- ---- ----------------------------
Part A (Prospectus)
----------------------------
<C> <S>
1 (a) & (b) Front Cover

2 (a) Expenses
(b) & (c) Summary

3 (a) Financial Highlights
(b) Not Applicable
(c) Performance Information
(d) Financial Highlights

4 (a)(i) The Funds; Other Information
(a)(ii)&(b) The Funds
(c) The Funds

5 (a) Management of the Funds
(b) Management of the Funds; Inside Back Cover; Expenses
(c) Management of the Funds
(d) Not applicable
(e) Inside Back Cover
(f) Expenses
(g) Management of the Funds

5 (a) Not applicable (the specified information is
included in registrant's annual reports to shareholders)

6 (a) Other Information
(b) Not Applicable
(c)-(e) Other Information
(f) Distributions
(g) Taxes

7 Purchasing and Redeeming Shares - How to Purchase Shares;
Purchasing and Redeeming Shares - Shareholder Services
(a) Not Applicable
(b) Purchasing and Redeeming Shares - How to Purchase Shares;
Purchasing and Redeeming Shares - Net Asset Value
(c) Not Applicable
(d) Front cover; Purchasing and Redeeming Shares - How to
Purchase Shares
(e) & (f) Not Applicable

8 (a)-(d) Purchasing and Redeeming Shares - How to Redeem Shares

9 Not Applicable
</TABLE>

- --------------------------
* References are to captions within the part of the registration statement to
which the particular item relates except as otherwise indicated.

i
<PAGE>

Item Location or caption*
- ---- -------------------------------------------

Part B (Statement of Additional Information)
-------------------------------------------
<S> <C>
10 (a) & (b) Front Cover
11 Table of Contents
12 Not Applicable
13 (a) The Funds; How the Funds Invest
(c) Investment Restrictions
(d) Not applicable
14 (a) & (b) Part A - Management of the Funds
(c) Not applicable
15 (a) Not Applicable
(b) Principal Shareholders
(c) Trustees and Officers
16 (a) & (b) Part A - Management of the Funds;
Part B - Investment Adviser; Trustees and Officers
(c) Not Applicable
(d) Custodian
(e)-(g) Not Applicable
(h) Custodian; Independent Public Accountants
(i) Not Applicable
17 (a)-(d) Portfolio Transactions
(e) Not Applicable
18 (a) & (b) Not Applicable
19 (a)-(c) Purchasing and Redeeming Shares
20 Additional Tax Information; Taxation of Foreign Shareholders
21 (a)-(c) Not Applicable
22 (a) Not Applicable
(b) Performance Information
23 Financial Statements
</TABLE>

- -------------------------

*
References are to captions within the part of the registration statement to
which the particular item relates except as otherwise indicated.

ii
<PAGE>

<TABLE>
<CAPTION>
Item Location or caption*
- ---- ---------------------------------------------
<C> <S>
Part C (Other Information)
--------------------------

24 Financial statements and exhibits

25 Persons controlled by or under common control with registrant

26 Number of holders of securities

27 Indemnification

28 Business and other connections of investment adviser

29 Principal underwriters

30 Location of accounts and records

31 Management services

32 Undertakings
</TABLE>

- ----------------
*References are to captions within the part of the registration statement to
which the particular item relates except as otherwise indicated.

iii
<PAGE>

<TABLE>
<CAPTION>
January 25, 1998

================================================================================
Fund/Ticker Symbol Investment Objective
- --------------------------------------------------------------------------------
<S> <C>
THE OAKMARK FUND Long-Term Capital Appreciation
OAKMX The Fund invests
primarily in equity securities.
- --------------------------------------------------------------------------------

THE OAKMARK Long-Term Capital Appreciation
SELECT FUND The Fund invests primarily in a
OAKLX non-diversified portfolio of equity securities.
- --------------------------------------------------------------------------------
THE OAKMARK Long-Term Capital Appreciation
SMALL CAP FUND The Fund invests primarily
OAKSX in equity securities of companies with small
(generally closed to new market capitalizations.
investors)
- --------------------------------------------------------------------------------
THE OAKMARK High Current Income and Preservation
EQUITY AND INCOME FUND and Growth of Capital The Fund invests
OAKBX in a diversified portfolio of equity
and fixed-income securities.
- --------------------------------------------------------------------------------
THE OAKMARK Long-Term Capital Appreciation
INTERNATIONAL FUND The Fund invests primarily in equity
OAKIX securities of non-U.S. issuers.
- --------------------------------------------------------------------------------
THE OAKMARK Long-Term Capital Appreciation
INTERNATIONAL The Fund invests primarily in equity
SMALL CAP FUND securities of non-U.S. issuers with small
OAKEX market capitalizations.
- --------------------------------------------------------------------------------

No Load, No Sales Charge, No 12b-1 Fees
Minimum initial purchase - $1,000
Minimum subsequent investments - $100
(see "Purchasing and Redeeming Shares--How to Purchase Shares")
================================================================================
</TABLE>

Each "Fund" is a series of Harris Associates Investment Trust. The Funds may
invest to a limited extent in high-yield, high-risk bonds and in other
securities that entail certain risks. See "Risk Factors."

This prospectus contains information you should know before investing. Please
retain it for future reference. A Statement of Additional Information regarding
the Funds dated the date of this prospectus has been filed with the Securities
and Exchange Commission and (together with any supplement to it) is incorporated
by reference. That Statement may be obtained at no charge by writing or
telephoning the Trust at its address or telephone number shown inside the back
cover. The Statement, material incorporated by reference and other information
regarding registrants that file electronically with the Commission is available
at website http://www.sec.gov.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

PROSPECTUS
<PAGE>

HIGHLIGHTS

Harris Associates Investment Trust (the "Trust") provides investors an
opportunity to pool their money to achieve economies of scale and
diversification, and to take advantage of the professional investment expertise
of Harris Associates L.P. (the "Adviser").

The Trust currently issues shares in six series (collectively, the "Funds" and
generally, a "Fund"). Each series has distinct investment objectives and
policies, and a shareholder's interest is limited to the series in which he or
she owns shares. The six series are: The Oakmark Fund ("Oakmark Fund"), The
Oakmark Select Fund ("Select Fund"), The Oakmark Small Cap Fund ("Small Cap
Fund"), The Oakmark Equity and Income Fund, formerly named the Balanced Fund
("Equity and Income Fund"), The Oakmark International Fund ("International
Fund") and The Oakmark International Small Cap Fund ("International Small Cap
Fund"). Each is a "no-load" fund, and there are no sales or 12b-1 charges.

The Trust is designed for long-term investors, including those who wish to use
shares of one or more series as a funding vehicle for tax-deferred retirement
plans (including tax-qualified retirement plans and Individual Retirement
Account (IRA) plans), and not for investors who intend to liquidate their
investments after a short period of time. Only Equity and Income Fund is
intended to present a balanced investment program between growth and income.

The chief consideration in selecting equity securities for each Fund's portfolio
is the size of the discount of market price relative to the economic value of
the security as determined by the Adviser. The Trust's investment philosophy is
predicated on the belief that over time market price and value converge and that
investment in securities priced significantly below long-term value presents the
best opportunity to achieve long-term capital appreciation.

Oakmark Fund seeks long-term capital appreciation by investing primarily in
equity securities.

Select Fund seeks long-term capital appreciation by investing primarily in
a non-diversified portfolio of equity securities.

Small Cap Fund* seeks long-term capital appreciation by investing primarily
in equity securities of companies with small market capitalizations.

Equity and Income Fund seeks high current income and preservation and
growth of capital by investing in a diversified portfolio of equity and
fixed-income securities.

International Fund seeks long-term capital appreciation by investing
primarily in equity securities of non-U.S. issuers.

- --------------
* The Oakmark Small Cap Fund is closed to new investors except for purchases
by eligible investors as described below under "Purchasing and Redeeming
Shares -- How to Purchase Shares."

2
<PAGE>

Risks

The Funds are intended for long-term investors who can accept fluctuations in
value and other risks associated with seeking the investment objectives of the
respective Funds through investments in the types of securities in which the
Funds may invest. You should understand and consider carefully the risks
involved in a Fund before investing in that Fund. See "Risk Factors" for a more
detailed discussion.

Purchases

The minimum initial investment for each Fund is $1,000; each additional
investment must be at least $100. Shares may be purchased by check, by wire
transfer, by electronic transfer or by exchange. See "Purchasing and Redeeming
Shares--How to Purchase Shares."

Redemptions

For information on redeeming Fund shares, see "Purchasing and Redeeming
Shares--How to Redeem Shares."

Net Asset Value

The purchase and redemption price of a Fund's shares is the net asset value per
share. The net asset value is determined as of the close of regular session
trading on the New York Stock Exchange. See "Net Asset Value."

Adviser

Harris Associates L.P. (the "Adviser") provides management and investment
advisory services to the Funds. See "Management of the Funds."

SHAREHOLDER TRANSACTION EXPENSES

Commission to purchase shares (sales load)..... None

Commission to reinvest dividends............... None

Deferred sales load............................ None

Redemption fee*................................ None

Fee to exchange shares......................... None
___________
* If you request payment of redemption proceeds by wire transfer, you
must pay the cost of the wire transfer (currently $5).

3
<PAGE>

ANNUAL FUND OPERATING EXPENSES (as a percentage of net assets)

The following table is intended to help you understand the costs and expenses
that an investor in the Funds may bear directly or indirectly. For a more
complete explanation of the fees and expenses borne by the Funds, see the
discussions under the prospectus headings "Purchasing and Redeeming Shares--How
to Purchase Shares" and "Management of the Funds", as well as the Statement of
Additional Information incorporated by reference into this prospectus.

Equity and Int'l
Oakmark Select Small Cap Income Int'l Small Cap
Fund Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment management fees 1.00% 1.00% 1.25% .75% 1.00% 1.25%
12b-1 fees None None None None None None

Other expenses (after reimbursement of
certain expenses) .08 .12 .12 .75(a) .26 .68
- ------------------------------------------------------------------------------------------------------------------------------------
Total Fund operating expenses (after
reimbursement of certain expenses) 1.08% 1.12% 1.37% 1.50%(a) 1.26% 1.93%
==== ==== ==== ======== ==== ====
</TABLE>
- -----------------
(a) In the case of Equity and Income Fund, the percentages shown have been
computed giving effect to the Adviser's agreement to limit the Fund's
ordinary operating expenses. See "Management of the Funds." Absent that
limitation, the "Other Expenses" and "Total Fund Operating Expenses" of
Equity and Income Fund would be 1.20% and 1.70%, respectively.

The following example illustrates the expenses that you would pay on a $1,000
investment in each Fund over various time periods assuming (1) a 5% annual rate
of return, (2) the operating expense percentages listed in the table above
remain the same through each of the periods, (3) reinvestment of all dividends
and capital gain distributions, and (4) redemption at the end of each time
period.

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Oakmark Fund $11 $34 $59 $131

Select Fund 11 35 61 135

Small Cap Fund 14 43 75 165

Equity and Income Fund 15 47 82 179

International Fund 13 40 69 152

International Small Cap Fund 20 61 104 225
</TABLE>

This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.

4
<PAGE>

FINANCIAL HIGHLIGHTS

The tables below for Oakmark Fund, Select Fund, Small Cap Fund, Equity and
Income Fund, International Fund and International Small Cap Fund reflect the
results of the operations for a share outstanding throughout the periods shown
and have been audited by Arthur Andersen LLP, independent public accountants,
These tables should be read in conjunction with the Funds' financial statements
and notes thereto, which may be obtained from the Trust upon request without
charge.

<TABLE>
<CAPTION>
Oakmark Fund
-----------------------------------------------------------------------------------------
Year Ended October 31,
Eleven Months Ended ---------------------------------------------------------------------
September 30, 1997 1996 1995 1994 1993 1992 1991(a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 32.39 $ 28.47 $ 25.21 $ 24.18 $ 17.11 $ 12.10 $ 10.00
Income from investment operations:
Net investment income (loss) 0.36 .34 .30 .27 .17 (.03) (.01)
Net gains or losses on securities
(both realized and unrealized) 10.67 4.70 4.66 1.76 7.15 5.04 2.11
-------- -------- -------- -------- -------- ------- -------
Total from investment operations 11.03 5.04 4.96 2.03 7.32 5.01 2.10
Less distributions:
Dividends (from net investment income) (0.34) (.28) (.23) (.23) (.04) --
Distributions (from capital gains) (1.87) (.84) (1.47) (.77) (.21) - -
-------- -------- -------- -------- -------- ------- -------
Total distributions (2.21) (1.12) (1.70) (1.00) (.25) - -
-------- -------- -------- -------- -------- ------- -------
Net asset value, end of period $ 41.21 $ 32.39 $ 28.47 $ 25.21 $ 24.18 $ 17.11 $ 12.10
======== ======== ======== ======== ======== ======= =======
Total return 39.24%* 18.07% 21.55% 8.77% 43.21% 41.40% 87.10%

Ratios/supplemental data:
Net assets, end of period ($ million) $6,614.9 $3,933.9 $2,827.1 $1,677.3 $1,107.0 $ 114.7 $ 4.8
Ratio of expenses to average net asset 1.08%* 1.18% 1.17% 1.22% 1.32% 1.70% 2.50%(b)*
Ratio of net income (loss) to average
net assets 1.19%* 1.13% 1.27% 1.19% .94% (.24)% (.66%)(b)*
Portfolio turnover rate 17% 24% 18% 29% 18% 34% 0%
Average brokerage commission
paid per share $ 0.0537 $ .0530 n/a n/a n/a n/a n/a
</TABLE>

- -----------

* Data has been annualized.
(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, the annualized ratio of expenses to average
net assets would have been 4.92% and the annualized ratio of net income
(loss) to average net assets would have been (3.08%).

5
<PAGE>

<TABLE>
<CAPTION>
SELECT SMALL CAP EQUITY AND INCOME(a)
-------------- -------------------------------- -------------------------------
Eleven Eleven Year Eleven Year
Months Ended Months Ended Ended Months Ended Ended
Sept. 30, 1997 Sept. 30, 1997 Oct. 31, 1996 Sept. 30, 1997 Oct. 31, 1996
-------------- --------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 10.00 $ 13.19 $ 10.00 $ 11.29 $ 10.00
Income from investment operations:
Net investment income (loss) (0.01) (0.01) (0.02) 0.21 0.10
Net gains or losses on securities
(both realized and unrealized) 6.35 7.16 3.21 3.24 1.19
------- -------- ------- ------- -------
Total from investment operations 6.34 7.15 3.19 3.45 1.29
Less distributions:
Dividends (from net investment income) 0.00 0.00 0.00 (0.12) 0.00
Distributions (from capital gains) 0.00 0.00 0.00 (0.13) 0.00
------- -------- ------- ------- -------
Total distributions 0.00 0.00 0.00 (0.25) 0.00
------- -------- ------- ------- -------
Net asset value, end of period $ 16.34 $ 20.34 $ 13.19 $ 14.49 $ 11.29
======= ======== ======= ======= =======
Total return 69.16%* 59.14%* 31.94% 34.01%* 12.91%

Ratios/supplemental data:
Net assets, end of period ($ million) $514.17 $1,513.4 $218.4 $ 33.46 $ 13.8
Ratio of expenses to average net asset 1.12%* 1.37%* 1.61% 1.50%* 2.50%
Ratio of net income (loss) to average
net assets (0.11%)* (0.25%)* (0.29%) 2.38%* 1.21%
Portfolio turnover rate 37% 27% 23% 53% 66%
Average brokerage commission
paid per share $ .0573 $ 0.0482 $0.0520 $0.0554 $0.0581
</TABLE>

* Data has been annualized.

(a) If the Fund had paid all of its expenses and there had been no expense
reimbursement by the investment adviser, for the period ended September 30,
1997 and the year ended October 31, 1996, the ratios of expenses to average
net assets would have been 1.70%* and 2.64% respectively, and the ratios of
net income to average net assets would have been 2.18%* and 1.08%
respectively.

<PAGE>

<TABLE>
<CAPTION>
International Fund
---------------------------------------------------------------------------------
Eleven Year Ended October 31,
Months Ended -----------------------------------------------------------
September 30, 1997 1996 1995 1994 1993 1992(a)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.92 $ 12.97 $ 14.50 $ 14.09 $ 9.80 $ 10.00

Income from investment operations:

Net investment income 0.27 .09 .30 .21 .06 .26

Net gains or losses on securities
(both realized and unrealized) 3.74 2.90 (.77) .43 4.48 (.46)
--------- --------- ------- --------- ------- -------

Total from investment operations 4.01 2.99 (.47) .64 4.54 (.20)

Less distributions:

Dividends (from net investment income) (0.16) .00 - (.08) (.25) -

Distributions (from capital gains) (0.00) (1.04) (1.06) (.15) - -
--------- --------- ------- --------- ------- -------

Total distributions (0.16) (1.04) (1.06) (.23) (.25) -
--------- --------- ------- --------- ------- -------

Net asset value, end of period $ 18.77 $ 14.92 $ 12.97 $ 14.50 $ 14.09 $ 9.80
========= ========= ======= ========= ======= =======

Total return 29.63%* 24.90% (3.06)% 4.62% 47.49% (22.81)%*

Ratios/supplemental data:

Net assets, end of period ($ million) $1,647.3 $1,172.8 $819.7 $1,286.0 $815.4 $ 23.5

Ratio of expenses to average net assets 1.26%* 1.32% 1.40% 1.37% 1.26% 2.04%*

Ratio of net income (loss) to
average net assets 2.09%* 1.45% 1.40% 1.44% 1.55% 37.02%*

Portfolio turnover rate 61% 42% 26% 55% 21% 0%

Average brokerage commission
paid per share $ 0.0052 $ .0158 n/a n/a n/a n/a
</TABLE>

- -----------
* Data has been annualized.
(a) From September 30, 1992, the date on which Fund shares were first offered
for sale to the public.

7
<PAGE>

<TABLE>
<CAPTION>
International Small Cap Fund
-----------------------------------------
Eleven
Months Ended Year ended
September 30, 1997 October 31, 1996
- ------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 11.41 $ 10.00
Income from investment operations:
Net investment income 0.13 .04
Net gains or losses on securities
(both realized and unrealized) 1.10 1.37
Total from Investment Operations 1.23 1.41
Less distributions:
Dividends (from net investment income) (0.08) .00
Distributions (from capital gains) (0.36) .00
Total distributions (0.44) .00
Net asset value, end of period $ 12.20 $ 11.41
Total return 12.07%* 14.15%
Ratios/supplemental data:
Net assets, end of period ($ million) $ 65.97 $ 39.8
Ratio of expenses to average net assets 1.93%* 2.50%(a)
Ratio of net income (loss) to
average net assets 1.23%* .65%(a)
Portfolio turnover rate 63% 27%
Average brokerage commission
paid per share $ 0.0025 $ .0036
- -----------
</TABLE>
* Data has been annualized

(a) If the Fund had paid all of its expenses and there had been no
reimbursement by the investment adviser, the ratio of expenses to average
net assets would have been 2.65% and the ratio of net income to average net
assets would have been .50%.

8
<PAGE>

THE FUNDS

The mutual funds offered by this prospectus are Oakmark Fund, Select Fund, Small
Cap Fund, Equity and Income Fund, International Fund and International Small Cap
Fund. Each of the Funds is a no-load "mutual fund" and, except for Select Fund,
is a diversified Fund. No Fund imposes any commission or charge when shares are
purchased, nor bears any 12b-1 charges.

The Funds are series of Harris Associates Investment Trust (the "Trust"), which
is authorized to issue shares in separate series. Each series is a separate
portfolio of securities and other assets, with its own investment objective and
policies.

Harris Associates L.P. (the "Adviser") provides investment advisory and
administrative services to the Funds.

How the Funds Invest

The chief consideration in the selection of equity securities for each Fund is
the size of the discount of market price relative to the economic value, or
underlying value, of the security as determined by the Adviser. The economic or
underlying value of a security generally represents the per share net present
value of the issuer's estimated long-term cash flows. The Funds may also employ
the techniques described below under "Investment Techniques."

Oakmark Fund seeks long-term capital appreciation by investing primarily in
equity securities. Although income is considered in the selection of securities,
the Fund is not designed for investors whose primary investment objective is
income.

The Fund invests principally in securities of U.S. issuers. However, it may
invest up to 25% of its total assets (valued at the time of investment) in
securities of non-U.S. issuers, including foreign government obligations and
foreign equity and debt securities that are traded over-the-counter or on
foreign exchanges. There are no geographic limits on the Fund's foreign
investments, but the Fund does not expect to invest more than 5% of its assets
in securities of issuers based in emerging markets. See "Risk Factors -
International Investing" below.

Select Fund seeks long-term capital appreciation by investing primarily in a
non-diversified portfolio of equity securities.

As a "non-diversified" fund, the Fund is not limited under the Investment
Company Act of 1940 in the percentage of its assets that it may invest in any
one issuer. See "Risk Factors - Non-diversification of Select Fund."

Small Cap Fund seeks long-term capital appreciation by investing primarily in
equity securities. Under normal market conditions, the Fund invests at least 65%
of its total assets, valued at the time of investment, in "small cap companies,"
as defined below under "How the Funds Invest - Small Cap Companies." Although
income is considered in the selection of securities, the Fund is not designed
for investors whose primary investment objective is income.

9
<PAGE>

At December 31, 1997 the median market capitalization of the Fund's portfolio
was $____ million. See "How the Funds Invest - Median Market Capitalization"
below.

Equity and Income Fund seeks high current income and preservation and growth of
capital by investing in a diversified portfolio of equity and fixed-income
securities. The Fund is intended to present a balanced investment program
between growth and income. It generally invests approximately 50-65% of its
total assets in equity securities, including securities convertible into equity
securities, 25-50% of its assets in U.S. Government securities and debt
securities rated at time of purchase within the two highest grades assigned by
Moody's Investors Service, Inc. ("Moody's") (Aaa or Aa) or by Standard & Poor's
Corporation ("S&P") (AAA or AA), and up to 20% in unrated or lower rated debt
securities (measured at market value at the time of investment).

The Fund invests principally in securities of U.S. issuers. However, it may
invest up to 10% of its total assets (valued at the time of investment) in
securities of non-U.S. issuers, including foreign government obligations and
foreign equity and debt securities that are traded over-the-counter or on
foreign exchanges. The Fund has no geographic limits on its foreign investments,
but the Fund does not expect to invest more than 5% of its assets in securities
of issuers based in emerging markets. See "Risk Factors -International
Investing" below.

International Fund seeks long-term capital appreciation by investing primarily
in equity securities of non-U.S. issuers. Although income is considered in the
selection of securities, the Fund is not designed for investors whose primary
investment objective is income.

The Adviser considers the relative political and economic stability of the
issuer's home country, the ownership structure of the company, and the company's
accounting practices in evaluating the potential rewards and risks of an
investment opportunity. The Fund may invest in securities traded in mature
markets (for example, Japan, Canada and the United Kingdom), in less developed
markets (for example, Mexico and Thailand), and in selected emerging markets
(such as Peru and India). Investments in securities of non-U.S. issuers,
especially those traded in less developed or emerging markets, present
additional risk. There are no limits on the Fund's geographic asset
distribution, but, to provide adequate diversification, the Fund ordinarily
invests in the securities markets of at least five countries outside the United
States. See "Risk Factors - International Investing" below.

Some foreign governments have been engaged in programs of selling part or all of
their stakes in government owned or controlled enterprises ("privatizations").
The Adviser believes that privatizations may offer opportunities for significant
capital appreciation, and intends to invest assets of the Fund in privatizations
in appropriate circumstances. In certain of those markets, the ability of
foreign entities such as the Fund to participate in privatizations may be
limited by local law and/or the terms on which the Fund may be permitted to
participate may be less advantageous than those afforded local investors. There
can be no assurance that governments will continue to sell companies currently
owned or controlled by them or that privatization programs will be successful.

The equity securities in which the Fund may invest include common and preferred
stocks and warrants or other similar rights and convertible securities. The Fund
may purchase securities of non-U.S. issuers directly or in the form of American
Depositary Receipts (ADRs), European Depositary Receipts (EDRs), Global
Depositary Receipts (GDRs), or other securities representing underlying shares
of non-U.S.

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<PAGE>

issuers. Under normal market conditions, the Fund invests at least 65% of its
total assets, valued at the time of investment, in securities of non-U.S.
issuers.

International Small Cap Fund (formerly named The Oakmark International Emerging
Value Fund) seeks long-term capital appreciation by investing primarily in
equity securities of non-U.S. issuers with small market capitalizations. Under
normal market conditions, the Fund invests at least 65% of its total assets,
valued at the time of investment, in "small cap companies," as defined below
under "Small Cap Companies." Although income is considered in the selection of
securities, the Fund is not designed for investors whose primary investment
objective is income.

The Adviser considers the relative political and economic stability of the
issuer's home country, the ownership structure of the company, and the company's
accounting practices in evaluating the potential rewards and risks of an
investment opportunity. The Fund invests in securities traded in both developed
and emerging markets. Investments in securities of non-U.S. issuers, especially
those traded in less developed or emerging markets, present additional risks.
There are no limits on the Fund's geographic asset distribution, but, to provide
adequate diversification, the Fund ordinarily invests in the securities markets
of at least five countries outside the United States. See "Risk Factors -
International Investing" below.

The equity securities in which the Fund may invest include common and preferred
stocks and warrants or other similar rights and convertible securities. The Fund
may purchase securities of non-U.S. issuers directly or in the form of ADRs,
EDRs, GDRs, or other securities representing underlying shares of non-U.S.
issuers.

At December 31, 1997 the median market capitalization of the Fund's portfolio
was $____ million. See "How the Funds Invest - Median Market Capitalization"
below.

------------------

Other Strategies. Under normal market conditions, each Fund expects to be
substantially fully invested in the types of securities described in the
preceding paragraphs. Within the limitations described in this prospectus, the
percentages of Fund assets invested in various types of securities will vary in
accordance with the judgment of the Adviser. To the extent that investments
meeting a Fund's criteria for investment are not available, or when the Adviser
considers a temporary defensive posture advisable, the Fund may invest without
limitation in high-quality corporate debt obligations of U.S. companies or U.S.
government obligations, or may hold cash in domestic or foreign currencies or
invest in domestic or foreign money market securities.

In seeking to achieve its investment objective, each Fund ordinarily invests on
a long-term basis, but on occasion may also invest on a short-term basis (for
example, where short-term perceptions have created a significant gap between
price and value). Occasionally, securities purchased on a long-term basis may be
sold within 12 months after purchase in light of a change in the circumstances
of a particular company or industry or in general market or economic conditions.

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<PAGE>

Small Cap Companies. As used in this prospectus a "small cap company" is one
whose market capitalization is no larger than the largest market capitalization
of the companies included in the S&P Small Cap 600 Index (the "S&P Index") as
most recently reported. The market capitalization of a company is the total
market value of its outstanding common stock. The S&P Index is a broad index of
600 small capitalization companies. As of January 31, 1997 the largest market
capitalization of companies included in the S&P Index was $2.68 billion.

Median Market Capitalization. The "median market capitalization" of the
portfolio of Small Cap Fund or of International Small Cap Fund stated above is a
measure of the size of the companies in which the Fund invests. One-half of the
Fund's equity investments as of the stated date were in securities of companies
with market capitalizations at or above the stated median market capitalization
of the Fund's portfolio.

Investment Techniques

Equity Securities. The equity securities in which each Fund may invest include
common and preferred stocks and warrants or other similar rights and convertible
securities. The chief consideration in the selection of equity securities for
each Fund is the size of the discount of market price relative to the economic
value of the security as determined by the Adviser. The Adviser's investment
philosophy for those investments is predicated on the belief that over time
market price and value converge and that investment in securities priced
significantly below long-term value presents the best opportunity to achieve
long-term capital appreciation.

The Adviser uses several qualitative and quantitative methods in analyzing
economic value, but considers the primary determinant of value to be the
enterprise's long-run ability to generate cash for its owners. Once the Adviser
has determined that a security is undervalued, the Adviser will consider it for
purchase by a Fund, taking into account the quality and motivation of the
management, the firm's market position within its industry and its degree of
pricing power. The Adviser believes that the risks of equity investing are often
reduced if management's interests are strongly aligned with the interests of its
stockholders.

Debt Securities. Each Fund may invest in debt securities of both governmental
and corporate issuers. Each of Oakmark Fund, Select Fund and Small Cap Fund may
invest up to 25% of its assets, Equity and Income Fund may invest up to 20% of
its assets, and International Fund and International Small Cap Fund may invest
up to 10% of its assets (valued at the time of investment), in debt securities
that are rated below investment grade, without a minimum rating requirement.
Lower-grade debt securities (commonly called "junk bonds") are obligations of
issuers rated BB or lower by S&P or Ba or lower by Moody's. Lower-grade debt
securities are considered speculative and may be in poor standing or actually in
default. Medium-grade debt securities are those rated BBB by S&P or Baa by
Moody's. Securities so rated are considered to have speculative characteristics.
See "Risk Factors." A description of the ratings used by S&P and Moody's is
included as an appendix to the Statement of Additional Information.

Short Sales against the Box. Each Fund may sell short securities the Fund owns
or has the right to acquire without further consideration, a technique called
selling short "against the box." Short sales against the box may protect the
Fund against the risk of losses in the value of its portfolio securities because
any unrealized losses with respect to such securities should be wholly or
partially offset by a corresponding gain in the short position. However, any
potential gains in such securities should be wholly or partially offset by a
corresponding loss in the short position. Short sales against the box may be
used to lock in a profit on a security when, for tax reasons or otherwise, the
Adviser does not want to sell the security. The Trust does not currently expect
that more than 20% of any Fund's total assets would be involved in short sales
against the box. For a more complete explanation, please refer to the Statement
of Additional Information.

Currency Exchange Transactions. Each Fund may engage in currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate for purchasing
or selling currency prevailing in the foreign exchange market or through a
forward currency exchange contract ("forward contract"). A forward

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<PAGE>

contract is an agreement to purchase or sell a specified currency at a specified
future date (or within a specified time period) and price set at the time of the
contract. Forward contracts are usually entered into with banks and broker-
dealers, are not exchange-traded and are usually for less than one year, but may
be renewed.

Forward currency transactions may involve currencies of the different countries
in which a Fund may invest, and serve as hedges against possible variations in
the exchange rate between these currencies. The Funds' forward currency
transactions are limited to transaction hedging and portfolio hedging involving
either specific transactions or actual or anticipated portfolio positions.
Transaction hedging is the purchase or sale of a forward contract with respect
to a specific receivable or payable of a Fund accruing in connection with the
purchase or sale of portfolio securities. Portfolio hedging is the use of a
forward contract with respect to an actual or anticipated portfolio security
position denominated or quoted in a particular currency. Each Fund may engage in
portfolio hedging with respect to the currency of a particular country in
amounts approximating actual or anticipated positions in securities denominated
in such currency. When a Fund owns or anticipates owning securities in countries
whose currencies are linked, the Adviser may aggregate such positions as to the
currency hedged. Although forward contracts may be used to protect a Fund from
adverse currency movements, the use of such hedges may reduce or eliminate the
potentially positive effect of currency revaluations on the Fund's total return.

Other Investment Companies. Certain markets are closed in whole or in part to
equity investments by foreigners. A Fund may be able to invest in such markets
solely or primarily through governmentally authorized investment vehicles or
companies. Each Fund generally may invest up to 10% of its assets in the
aggregate in shares of other investment companies and up to 5% of its assets in
any one investment company, as long as no investment represents more than 3% of
the outstanding voting stock of the acquired investment company at the time of
investment.

Investment in another investment company may involve the payment of a premium
above the value of such issuers' portfolio securities, and is subject to market
availability. The Trust does not intend to invest in such vehicles or funds
unless, in the judgment of the Adviser, the potential benefits of the investment
justify the payment of any applicable premium or sales charge. As a shareholder
in an investment company, a Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time the Fund would continue to pay its own management fees and other expenses.

When-Issued and Forward Commitment Securities. Each Fund may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. There is a risk that the securities may not be
delivered or that they may decline in value before the settlement date.

Private Placements. Each Fund may acquire securities in private placements.
Because an active trading market may not exist for such securities, the sale of
such securities may be subject to delay and additional costs. No Fund will
purchase such a security if more than 15% of the value of such Fund's net assets
would be invested in illiquid securities.

Lending of Portfolio Securities. Each Fund except Oakmark Fund may lend its
portfolio securities to broker-dealers and banks to the extent indicated in
restriction 5 under "Restrictions on the Funds' Investment." 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 market value of the
securities loaned by a Fund. 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 collateral. The Fund would have the right to call the
loan and obtain the securities loaned at any time on notice of not more than
five business days. In the event of bankruptcy or other default of the borrower,
the Fund could experience both delays in liquidating the loan collateral or
recovering the loaned securities and losses including (a) possible decline in
the value of the collateral or in

13
<PAGE>

the value of the securities loaned during the period while the Fund seeks to
enforce its rights thereto, (b) possible subnormal levels of income and lack of
access to income during this period, and (c) expenses of enforcing its rights.

Options. Each Fund may purchase both call options and put options on
securities. A call or put option is a contract that gives the Fund, in return
for a premium paid on purchase of the option, the right to buy from, or to sell
to, the seller of the option the security underlying the option at a specified
exercise price during the term of the option.

Cash Reserves. To meet liquidity needs or for temporary defensive purposes,
each Fund may hold cash in domestic and foreign currencies and may invest in
domestic and foreign money market securities.

Risk Factors

General. All investments, including those in mutual funds, have risks, and no
investment is suitable for all investors. Each Fund is intended for long-term
investors. Only Equity and Income Fund is intended to present a balanced
investment program between growth and income.

Small Cap Companies. During some periods, the securities of small cap
companies, as a class, have performed better than the securities of large
companies, and in some periods they have performed worse. Stocks of small cap
companies tend to be more volatile and less liquid than stocks of large
companies. Small cap companies, as compared to larger companies, may have a
shorter history of operations, may not have as great an ability to raise
additional capital, may have a less diversified product line making them
susceptible to market pressure, and may have a smaller public market for their
shares.

International Investing. International Fund and International Small Cap Fund
provide long-term investors with an opportunity to invest a portion of their
assets in a diversified portfolio of securities of non-U.S. issuers. Each of the
other Funds may invest up to 25% (or 10% in the case of Equity and Income Fund)
of its assets in securities of non-U.S. issuers. International investing allows
you to achieve greater diversification and to take advantage of changes in
foreign economies and market conditions. Many foreign economies have, from time
to time, grown faster than the U.S. economy, and the returns on investments in
these countries have exceeded those of similar U.S. investments, although there
can be no assurance that these conditions will continue.

You should understand and consider carefully the greater risks involved in
investing internationally. Investing in securities of non-U.S. issuers,
positions in which are generally denominated in foreign currencies, and
utilization of forward foreign currency exchange contracts involve both
opportunities and risks not typically associated with investing in U.S.
securities. These include: fluctuations in exchange rates of foreign currencies;
possible imposition of exchange control regulation or currency restrictions that
would prevent cash from being brought back to the United States; less public
information with respect to issuers of securities; less governmental supervision
of stock exchanges, securities brokers and issuers of securities; different
accounting, auditing and financial reporting standards; different settlement
periods and trading practices; less liquidity and frequently greater price
volatility in foreign markets than in the United States; imposition of foreign
taxes; and sometimes less advantageous legal, operational and financial
protections applicable to foreign subcustodial arrangements.

Although the Funds try to invest in companies and governments of countries
having stable political environments, there is the possibility of restriction of
foreign investment, expropriation of assets, or confiscatory taxation, seizure
or nationalization of foreign bank deposits or other assets, establishment of
exchange controls, the adoption of foreign government restrictions, or other
adverse political, social or diplomatic developments that could affect
investment in these nations. Economies in individual emerging markets may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross domestic product, rates of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency and balance of payments positions. Many
emerging market countries have experienced high rates of

14
<PAGE>

inflation for many years, which has had and may continue to have very negative
effects on the economies and securities markets of those countries.

The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the U.S. and other major
markets. There also may be a lower level of monitoring and regulation of
emerging markets and the activities of investors in such markets, and
enforcement of existing regulations has been extremely limited.

Any Fund may invest in ADRs, EDRs or GDRs that are not sponsored by the issuer
of the underlying security. To the extent it does so, the Fund would probably
bear its proportionate share of the expenses of the depository and might have
greater difficulty in receiving copies of the issuer's shareholder
communications than would be the case with a sponsored ADR, EDR or GDR.

The cost of investing in securities of non-U.S. issuers is higher than the cost
of investing in U.S. securities. International Fund and International Small Cap
Fund provide an efficient way for an individual to participate in foreign
markets, but their expenses, including advisory and custody fees, are higher
than for a typical domestic equity fund.

Debt Securities. As noted above, each Fund may invest to a limited extent in
debt securities that are rated below investment grade or, if unrated, are
considered by the Fund's investment adviser to be of comparable quality. A
decline in prevailing levels of interest rates generally increases the value of
debt securities in a Fund's portfolio, while an increase in rates usually
reduces the value of those securities. As a result, to the extent that a Fund
invests in debt securities, interest rate fluctuations will affect its net asset
value, but not the income it receives from its debt securities. In addition, if
the debt securities contain call, prepayment or redemption provisions, during a
period of declining interest rates, those securities are likely to be redeemed,
and the Fund would probably be unable to replace them with securities having as
great a yield.

Investment in medium- or lower-grade debt securities involves greater investment
risk, including the possibility of issuer default or bankruptcy. An economic
downturn could severely disrupt this market and adversely affect the value of
outstanding bonds and the ability of the issuers to repay principal and
interest. In addition, lower-quality bonds are less sensitive to interest rate
changes than higher-quality instruments and generally are more sensitive to
adverse economic changes or individual corporate developments. During a period
of adverse economic changes, including a period of rising interest rates,
issuers of such bonds may experience difficulty in servicing their principal and
interest payment obligations.

Furthermore, medium- and lower-grade debt securities tend to be less marketable
than higher-quality debt securities because the market for them is less broad.
The market for unrated debt securities is even narrower. During periods of thin
trading in these markets, the spread between bid and asked prices is likely to
increase significantly, and the Fund may have greater difficulty selling its
portfolio securities. The market value of these securities and their liquidity
may be affected by adverse publicity and investor perceptions.

Non-diversification of Select Fund. As a "non-diversified" fund, Select Fund is
not limited under the Investment Company Act of 1940 in the percentage of its
assets that it may invest in any one issuer. However, the Fund intends to comply
with the diversification standards applicable to regulated investment companies
under the Internal Revenue Code of 1986. In order to meet those standards, among
other requirements, at the close of each quarter of its taxable year (a) at
least 50% of the value of the Fund's total assets must be represented by one or
more of the following: (i) cash and cash items, including receivables; (ii) U.S.
Government securities; (iii) securities of other regulated investment companies;
and (iv) securities (other than those in items (ii) and (iii) above) of any one
or more issuers as to which the Fund's investment in an issuer does not exceed
5% of the value of the Fund's total assets (valued at the

15
<PAGE>

time of investment); and (b) not more than 25% of its total assets (valued at
the time of investment) may be invested in the securities of any one issuer
(other than U.S. Government securities or securities of other regulated
investment companies).

Since Select Fund may invest more than 5% of its assets in a single portfolio
security, the appreciation or depreciation of such a security will have a
greater impact on the net asset value of the Fund, and the net asset value per
share of the Fund can be expected to fluctuate more than would the net asset
value of a comparable "diversified" fund. See Investment Restriction number 1,
below.

Change in Objective. Each Fund's investment objective may be changed by the
board of trustees without shareholder approval. Shareholders would receive at
least 30 days' written notice of any change in a Fund's objective. If there is a
change in investment objective, you should consider whether the Fund remains an
appropriate investment in light of your then current financial position and
needs. There can be no assurance that any Fund will achieve its investment
objective.

Restrictions on the Funds' Investments

No Fund will:

1. [This restriction does not apply to Select Fund] In regard to 75% of
its assets, invest more than 5% of its assets (valued at the time of investment)
in securities of any one issuer, except in U.S. government obligations;

2. Acquire securities of any one issuer which at the time of investment
(a) represent more than 10% of the voting securities of the issuer, or (b) have
a value greater than 10% of the value of the outstanding securities of the
issuer;

3. Borrow money except from banks for temporary or emergency purposes in
amounts not exceeding 10% of the value of the Fund's assets at the time of
borrowing [the Fund will not purchase additional securities when its borrowings,
less receivables from portfolio securities sold, exceed 5% of total assets];

4. Issue any senior security except in connection with permitted
borrowings; or

5. Make loans, except that each Fund may invest in debt obligations and
repurchase agreements,* and each Fund other than Oakmark Fund may lend its
portfolio securities [a Fund will not lend securities having a value in excess
of 33% of its assets (valued at the time of any loan)].

These restrictions, except the bracketed portions and the footnote, are
"fundamental" and cannot be changed as to a Fund without the approval of a
"majority of the outstanding voting securities" of that Fund as defined in the
Investment Company Act of 1940. All of the Funds' investment restrictions,
including additional fundamental restrictions, are set forth in the Statement of
Additional Information.

- ---------------------
* A repurchase agreement involves a sale of securities to a Fund with the
concurrent agreement of the seller (bank or securities dealer) to
repurchase the securities at the same price plus an amount equal to an
agreed-upon interest rate within a specified time. In the event of a
bankruptcy or other default of a seller of a repurchase agreement, the Fund
could experience both delays in liquidating the underlying securities and
losses. No Fund may invest more than 15% of its net assets in repurchase
agreements maturing in more than seven days and other illiquid securities.

16
<PAGE>

PURCHASING AND REDEEMING SHARES

How To Purchase Shares

You may purchase shares of any of the Funds by check, by wire transfer, by
electronic transfer or by exchange. There are no sales commissions or
underwriting discounts. The minimum initial investment for each Fund is $1,000.
Minimum subsequent investments are $100, except for reinvestments of dividends
and capital gain distributions.

Small Cap Fund Accounts. Small Cap Fund is closed to purchases by new investors
except for purchases by eligible investors as described below. Small Cap Fund
has taken this step to facilitate management of the Fund's portfolio. You may
purchase shares of the Fund if:

. You are already a shareholder of the Fund in your own name or
beneficially through an intermediary;

. You purchase shares through an employee benefit plan whose records are
maintained by a trust company or plan administrator and whose
investment alternatives include shares of the Fund; or

. You purchase shares for an annuity account offered by a company that
includes shares of the Fund as an investment alternative for such
account.

In addition, you may exchange shares of another Fund of the Trust or Oakmark
Units for shares of Small Cap Fund as described below under "By Exchange." The
Trust reserves the right to re-open Small Cap Fund to new investors or to modify
the extent to which the sale of shares is limited.

By Check. To make an initial purchase of shares, complete and sign the Share
Purchase Application and mail it to the Trust's transfer agent, State Street
Bank and Trust Company, Attention: Oakmark Funds, P.O. Box 8510, Boston,
Massachusetts 02266-8510, together with a check for the total purchase amount
payable to State Street Bank and Trust Company.

To make subsequent purchases of shares, submit a check along with either the
stub from your Fund account confirmation statement or a note indicating the
amount of the purchase, your account number, and the name in which your account
is registered. The Trust will not accept cash, drafts, third party checks, or
checks drawn on banks outside of the United States. If your order to purchase
shares of a Fund is canceled because your check does not clear, you will be
responsible for any resulting loss incurred by the Fund.

By Wire Transfer. You may also purchase shares by instructing your bank to wire
transfer money to the Trust's custodian bank. Your bank may charge you a fee for
sending the wire transfer. If you are opening a new account by wire transfer,
you must first telephone the transfer agent at 1-800-OAKMARK (choose menu option
2) to request an account number and furnish your social security or other tax
identification number. Neither the Funds nor the Trust will be responsible for
the consequences of delays, including delays in the banking or Federal Reserve
wire transfer systems.

By Telephone Call and Electronic Transfer. If you have an established Fund
account with an established electronic transfer privilege, you may make
subsequent purchases of shares by an electronic transfer of funds from your bank
account by calling 1-800-OAKMARK (choose menu option 2). You may not open a new
account through electronic transfer. If your order to purchase shares of a Fund
is canceled because your electronic transfer does not clear, you will be
responsible for any resulting loss incurred by the Fund.

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<PAGE>

By Automatic Investment. You may authorize the monthly or quarterly purchase of
shares of a Fund for a specified dollar amount to be transferred electronically
from your bank account each month or quarter by so electing on your new account
purchase application.

By Exchange. You may purchase shares of a Fund by exchange of shares from
another Fund or by exchange of Service Units of GS Short Duration Tax-Free Fund,
a portfolio of Goldman Sachs Trust, or of ILA Service Units of Government
Portfolio or Tax-Exempt Portfolio, each a portfolio of Goldman
Sachs Institutional Liquid Assets (such Service Units and ILA Service Units are
referred to as "Oakmark Units"). You may initiate a purchase by exchange either
by phone (if the telephone exchange privilege has been established on the
account from which the exchange is being made) or by mail, or you may authorize
a monthly or quarterly redemption of a specified dollar amount of Oakmark Units
to be used to purchase shares of a Fund. An exchange transaction is a sale and
purchase of shares for federal income tax purposes and may result in capital
gain or loss. Except for automatic exchanges from Oakmark Units, you may not
make more than six exchanges from any Fund in any calendar year, and the Trust
may refuse requests for more frequent exchanges. Restrictions apply; please
review the information under "How to Redeem Shares - By Exchange."

Purchases through Intermediaries. You may purchase or redeem shares of the Funds
through certain investment dealers, banks or other institutions. Any such
purchase or redemption generally will not be effective until the order or
request is received by the Trust's transfer agent; it is the responsibility of
the dealer to transmit your order or request promptly. These institutions may
impose charges for their services. Any such charges could constitute a
substantial portion of a smaller account, and may not be in your best interest.
You may purchase or redeem shares of the Funds directly from or with the Trust
without imposition of any charges other than those described in this prospectus.

Purchase Price and Effective Date. Each purchase of a Fund's shares is made at
that Fund's net asset value (see "Net Asset Value") next determined as follows:

A purchase by check, wire transfer or electronic transfer is made at
the net asset value next determined after receipt by the Trust's transfer
agent of your check or wire transfer or your electronic transfer investment
instruction.

A purchase through a dealer or financial institution that is an agent
of the Trust for the receipt of orders is made at the net asset value next
determined after receipt of your order by the dealer or financial
institution.

General. The Trust cannot accept a purchase order specifying a particular
purchase date or price per share. Each purchase order for a Fund must be
accepted by an authorized officer of the Trust or its transfer agent and is not
binding until accepted and entered on the books of that Fund. Once your purchase
order has been accepted, you may not cancel or revoke it; however, you may
redeem the shares. The Trust reserves the right not to accept any purchase order
that it determines not to be in the best interest of the Trust or of a Fund's
shareholders. The Trust will not be responsible for any losses resulting from
unauthorized transactions initiated by telephone if it or its transfer agent
follows reasonable procedures designed to verify the identity of the caller.
Those procedures may include recording the call, requesting additional
information and sending written confirmation of telephone transactions. You
should verify the accuracy of telephone transactions immediately upon receipt of
your confirmation statement.

How to Redeem Shares

By Mail. You may redeem all or any part of your shares of a Fund upon your
written request delivered to the Trust's transfer agent, State Street Bank and
Trust Company, Attention: Oakmark Funds, P.O. Box 8510, Boston, Massachusetts
02266-8510. Your redemption request must:

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<PAGE>

(1) identify the Fund and give your account number;
(2) specify the number of shares or dollar amount to be redeemed; and
(3) be signed in ink by all account owners exactly as their names appear
on the account.

Your request must also include a signature guarantee if any of the following
situations applies:

. your account registration has been changed within the last 30 days;

. the redemption check is to be mailed to an address different from the
one on your account (record address);

. the redemption check is to be made payable to someone other than the
registered account owner; or

. you are instructing us to transmit the proceeds to a bank account that
you have not previously designated as the recipient of such proceeds.

You should be able to obtain a signature guarantee from a bank, securities
broker-dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency or savings association, but not a notary public.
The signature guarantee must include an ink-stamped guarantee for each signature
on the redemption request and must include the name of the guarantor bank or
firm and an authorized signature.

Special rules apply to redemptions by corporations, trusts and partnerships. In
the case of a corporation, the request must be signed in the name of the
corporation by an officer whose title must be stated, and must be accompanied by
a bylaw provision or resolution of the board of directors, certified within 60
days, authorizing the officer to so act. A redemption request from a partnership
or a trust must be signed in the name of the partnership or trust by a general
partner or a trustee and include a signature guarantee. If the trustee is not
named in the account registration, a redemption request by a trust must also
include evidence of the trustee's appointment as such (e.g., a certified copy of
the relevant portions of the trust instrument). Under certain circumstances,
before the shares can be redeemed, additional documents may be required in order
to verify the authority of the person seeking to redeem.

By Telephone. You may redeem shares from your account by calling 1-800-OAKMARK
(choose menu option 2). The proceeds may be sent by check to your registered
address or you may request payment by wire transfer, or by electronic transfer,
to a checking account previously designated by you at a bank that is a member of
the Automated Clearing House. Redemption proceeds payable by wire transfer or by
electronic transfer will normally be sent on the next business day after receipt
of the redemption request. A redemption request received by telephone after 4
p.m. eastern time (or after the close of regular session trading on the New York
Stock Exchange if the Exchange closes before 4 p.m.) is deemed received on the
next business day. You may not redeem by telephone shares held in an IRA account
or an account for which you have changed the address within the preceding 30
days.

By Exchange. You may redeem all or any portion of your shares of a Fund or of
Oakmark Units and use the proceeds to purchase shares of any of the other Funds
or Oakmark Units if your signed, properly completed Application is on file. An
exchange transaction is a sale and purchase of shares for federal income tax
purposes and may result in capital gain or loss. Except for automatic exchanges
from Oakmark Units, you may not make more than six exchanges from any Fund in
any calendar year, and the Trust may refuse requests for more frequent
exchanges. Before exchanging into Oakmark Units, you should obtain the
prospectus relating to the Oakmark Units from the Adviser and read it carefully.
The exchange privilege is not an offering or recommendation of Oakmark Units.
The registration of the account to which you are making an exchange must be
exactly the same as that of the account from which the exchange is made and the
amount you exchange must meet any applicable minimum investment of the fund
being purchased. An exchange may be made by following the

19
<PAGE>

redemption procedure described above under "By Mail" and indicating the fund to
be purchased, except that a signature guarantee normally is not required.

You may exchange among shares of the Funds and Oakmark Units by calling 1-800-
OAKMARK (choose menu option 2). An exchange request received by telephone after
4 p.m. eastern time (or after the close of regular session trading on the New
York Stock Exchange if the Exchange closes before 4 p.m.) is deemed received on
the next business day. The Trust's general redemption policies apply to
redemptions by Telephone Exchange. See "General Redemption Policies."

The Trust reserves the right at any time without prior notice to suspend or
terminate the use of the telephone exchange privilege by any person or class of
persons. The Trust believes that use of the telephone exchange privilege by
investors utilizing market-timing strategies adversely affects the Funds.
Therefore, the Trust generally will not honor requests for telephone exchanges
by shareholders identified by the Trust as "market-timers." Except for automatic
exchanges from Oakmark Units, you may not make more than six exchanges from any
Fund in any calendar year. Although the Trust will attempt to give prior notice
of a suspension or termination of an exchange privilege when it is reasonably
able to do so, the suspension or termination may be effective immediately,
thereby preventing any uncompleted exchange. See "How to Redeem Shares - By
Exchange."

During periods of volatile economic and market conditions, you may have
difficulty placing your exchange by telephone; you may wish to consider placing
your exchange by mail during such periods.

By Automatic Redemption. You may automatically redeem a fixed dollar amount of
shares each month or quarter and have the proceeds sent by check to you or
deposited by electronic transfer into your bank account by so electing on your
new account purchase application.

General Redemption Policies. You may not cancel or revoke your redemption order
once your instructions have been received and accepted. The Trust cannot accept
a redemption request that specifies a particular date or price for redemption or
any special conditions. Please telephone the transfer agent if you have any
questions about requirements for a redemption before submitting your request.
The Trust reserves the right to require a properly completed Application before
making payment for shares redeemed.

The price at which your redemption order will be executed is the net asset value
next determined after proper redemption instructions are received. See "Net
Asset Value." Because the redemption price you receive depends upon that Fund's
net asset value per share at the time of redemption, it may be more or less than
the price you originally paid for the shares and may result in a realized
capital gain or loss.

The Trust will generally mail redemption proceeds that are payable by check
within seven days after proper instructions are received. If you attempt to
redeem shares within 15 days after they have been purchased by check or
electronic transfer, the Trust may delay payment of the redemption proceeds to
you until it can verify that payment for the purchase of those shares has been
(or will be) collected. To reduce such delays, the Trust recommends that your
purchase be made by wire transfer through your bank.

If you so request, the proceeds of your redemption may be paid by wire transfer
to your bank account, provided the redemption proceeds are at least $250, but
the cost of the wire transfer (currently $5) will be deducted from the
redemption proceeds. A wire transfer will normally result in your bank account
receiving "good funds" on the business day following the date of redemption of
your shares. If the proceeds of your redemption are sent by electronic transfer,
your bank will be notified of the transfer, but your bank account will not
receive "good funds" for at least one week.

Neither the Trust, its transfer agent, nor their respective officers, trustees,
directors, employees, or agents will be responsible for the authenticity of
instructions provided by telephone, nor for any loss, liability, cost

20
<PAGE>

or expense for acting upon instructions furnished thereunder if they reasonably
believe that such instructions are genuine. The Funds employ procedures
reasonably designed to confirm that instructions communicated by telephone are
genuine. Use of any telephone redemption or exchange privilege authorizes the
Funds and their transfer agent to tape-record all instructions to redeem. In
addition, callers are asked to identify the account number and registration, and
may be required to provide other forms of identification. Written confirmations
of transactions are mailed promptly to the registered address; a legend on the
confirmation requests the shareholder to review the transactions and inform the
Fund immediately if there is a problem. If a Fund does not follow reasonable
procedures for protecting shareholders against loss on telephone transactions,
it may be liable for any losses due to unauthorized or fraudulent instructions.

The Trust reserves the right at any time without prior notice to suspend, limit,
modify or terminate any privilege or its use in any manner by any person or
class. The Trust also reserves the right to redeem shares in any account and
send the proceeds to the owner if the shares in the account do not have a value
of at least $1,000. A shareholder would be notified that the account is below
the minimum and allowed 30 days to bring the account value up to the minimum.

Shares in any account you maintain with a Fund may be redeemed to the extent
necessary to reimburse a Fund for any loss it sustains that is caused by you
(such as losses from uncollected checks and electronic transfers or any Fund
liability under the Internal Revenue Code provisions on backup withholding
relating to your account).

Shareholder Services

Reporting to Shareholders. You will receive a confirmation statement reflecting
each of your purchases and redemptions of shares of a Fund, as well as periodic
statements detailing distributions made by that Fund. Shares purchased by
reinvestment of dividends or pursuant to an automatic plan will be confirmed to
you quarterly. In addition, the Trust will send you quarterly and annual reports
showing Fund portfolio holdings and will provide you annually with tax
information.

IRA Plan. The Trust has a master individual retirement account (IRA) plan that
allows you to invest on a tax-sheltered basis in the Funds or Oakmark Units of
the Government Portfolio of Goldman, Sachs Money Market Trust. The plan also
permits you to "roll over" or transfer to your IRA a lump sum distribution from
a qualified pension or profit-sharing plan, thereby postponing federal income
tax on the distribution. If your employer has a Simplified Employee Pension Plan
(SEP), you may establish an IRA with the Fund to which your employer may
contribute, subject to special rules designed to avoid discrimination.

Establishing Privileges. You may establish any of the shareholder privileges
when you complete an application to purchase shares of a Fund. If you have
already established an account and want to add or change a privilege, please
call the transfer agent at 1-800-OAKMARK (choose menu option 2) to request the
appropriate form. Your call will be recorded.

Audio Response System. You may obtain information about your account, such as
account balance and last transaction and distribution information, or you may
order duplicate statements, by calling the Funds' Audio Response System at
1-800-OAKMARK (choose menu option 1). Please note: you must have a personal
identification ("PIN") number to access the Audio Response System. Call 1-800-
OAKMARK (choose menu option 2) and speak with a customer service representative
to obtain your PIN number. Your call will be recorded.

Account Address Change. You may change your address of record for a Fund account
by sending written instructions to the transfer agent at its address shown on
the inside back cover of this prospectus or by telephoning the transfer agent at
1-800-OAKMARK (choose menu option 2). Your call will be recorded.

21
<PAGE>

Account Registration Change. You may change your account registration only by
sending your written instructions with a signature guarantee to the transfer
agent at its address shown on the inside back cover of this prospectus. See "How
to Redeem Shares - By Mail" regarding signature guarantees.

Questions about Your Account. If you have a question about your account, you may
telephone the transfer agent at 1-800-OAKMARK (choose menu option 2).

Net Asset Value

The net asset value of a share of each Fund is determined by the Fund's
custodian, State Street Bank and Trust Company, as of the close of regular
session trading on the New York Stock Exchange (currently 4:00 p.m., Eastern
time) on any day on which that exchange is open for trading by dividing the
market value of that Fund's assets, less its liabilities, by the number of
shares outstanding. Trading in the portfolio securities of International Fund or
International Small Cap Fund (and in any securities of non-U.S. issuers held by
any other Fund) takes place in various markets on days and at times other than
when the New York Stock Exchange is open for trading. Therefore, the calculation
of net asset value does not take place at the same time as the prices of many of
those portfolio securities are determined and the value of the Funds' portfolios
may change on days when the Funds are not open for business and their shares may
not be purchased or redeemed.

Price information can be obtained by calling the 24-Hour Net Asset Value
Hotline, 1-800-GROWOAK (1-800-476-9625).

DISTRIBUTIONS

Each Fund distributes to shareholders at least annually substantially all net
investment income and any net capital gains realized from sales of the Fund's
portfolio securities. All of your income dividends and capital gain
distributions will be reinvested in additional shares unless you elect to have
distributions paid by check. If any check from a Fund mailed to you is returned
as undeliverable or is not presented for payment within six months, the Trust
reserves the right to reinvest the check proceeds and future distributions in
additional Fund shares.

TAXES

Dividends from investment income and net short-term capital gains are taxable as
ordinary income. Distributions of long-term capital gains are taxable as long-
term capital gains regardless of the length of time you have held your Fund
shares. Distributions will be taxable to you whether received in cash or
reinvested in Fund shares.

You will be advised annually as to the source of your distributions for tax
purposes. If you are not subject to income taxation, you will not be required to
pay tax on amounts distributed to you.

If you purchase shares shortly before a record date for a distribution you will,
in effect, receive a return of a portion of your investment, but the
distribution will be taxable to you even if the net asset value of your shares
is reduced below your cost. However, for federal income tax purposes your
original cost would continue as your tax basis. If you redeem shares within six
months, any loss on the sale of those shares would be long-term capital loss to
the extent of any distributions of long-term capital gain that you have received
on those shares.

Investment income received by a Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. If a Fund pays
nonrefundable taxes to foreign governments during the year, the taxes will
reduce that Fund's dividends but will still be included in your taxable income.
However, you may be able to claim an offsetting credit or deduction on your tax
return for your share of foreign taxes paid by the Fund.

22
<PAGE>

If (a) you fail to (i) furnish your properly certified social security or other
tax identification number or (ii) certify that your tax identification number is
correct or that you are not subject to backup withholding due to the
underreporting of certain income, or (b) the Internal Revenue Service informs
the Trust that your tax identification number is incorrect, the Trust may be
required to withhold Federal income tax at a rate of 31% ("backup withholding")
from certain payments (including redemption proceeds) to you. These
certifications are contained in the New Account Purchase Application that you
should complete and return when you open an account. The Fund must promptly pay
to the IRS all amounts withheld. Therefore, it is usually not possible for the
Fund to reimburse you for amounts withheld. You may claim the amount withheld as
a credit on your Federal income tax return.

This discussion of U.S. and foreign taxation applies only to U.S. shareholders
and is not intended to be a full discussion of income tax laws and their effect.
You may wish to consult your own tax adviser.

MANAGEMENT OF THE FUNDS

The board of trustees of the Trust has overall responsibility for the conduct of
the affairs of the Funds and the Trust. The trustees serve indefinite terms of
unlimited duration. The trustees appoint their own successors, provided that at
least two-thirds of the trustees, after such appointment, have been elected by
shareholders. Shareholders may remove a trustee, with or without cause, upon the
declaration in writing or vote of two-thirds of the Trust's outstanding shares.
A trustee may be removed with or without cause upon the written declaration of a
majority of the trustees.

The Funds' investments and business affairs are managed by the Adviser, Harris
Associates L.P. The Adviser also serves as investment adviser to individuals,
trusts, retirement plans, endowments and foundations, and manages numerous
private partnerships.

The Adviser was organized in 1995 to succeed to the business of a previous
limited partnership, also named Harris Associates L.P. (the "Former Adviser"),
that, together with its predecessor, had advised and managed mutual funds since
1970. The Adviser, a limited partnership, is managed by its general partner,
Harris Associates, Inc. ("HAI"), a wholly-owned subsidiary of New England
Investment Companies, L.P. ("NEIC"). NEIC owns all of the limited partnership
interests in the Adviser. NEIC is a publicly traded limited partnership that
owns investment management firms and that is a subsidiary of Metropolitan Life
Insurance Company.

Subject to the overall authority of the board of trustees, the Adviser furnishes
continuous investment supervision and management to the Funds and also furnishes
office space, equipment and management personnel.

The Adviser has voluntarily agreed to reimburse each Fund to the extent that the
Fund's annual ordinary operating expenses exceed the following percent of the
Fund's average net assets through January 31, 1999, subject to earlier
termination by the Adviser on 30 days' notice to the Fund: 1.5% in the case of
Oakmark Fund, Select Fund, Small Cap Fund or Equity and Income Fund and 2% in
the case of International Fund and International Small Cap Fund.

The Trust uses "Harris Associates" in its name and "Oakmark" in the names of the
Funds by license from the Adviser and would be required to stop using those
names if Harris Associates ceased to be the Adviser. The Adviser has the right
to use the names for another enterprise, including another investment company.

The investment objective and policies of Oakmark Fund were developed by the
Adviser and by Robert J. Sanborn, C.F.A., the Fund's portfolio manager. Mr.
Sanborn joined the Adviser as a portfolio manager and analyst in 1988. Prior
thereto, he had been a portfolio manager/analyst with The State Teachers
Retirement System of Ohio. Mr. Sanborn holds an M.B.A. in Finance from the
University of Chicago (1983) and a B.A. in Economics from Dartmouth College
(1980).

23
<PAGE>

The investment objective and policies of Select Fund were developed by the
Adviser and by William C. Nygren, C.F.A., the Fund's portfolio manager. Mr.
Nygren joined the Adviser as an analyst in 1983, and has been the Adviser's
Director of Research since 1990. Prior thereto, he had been an analyst with
Northwestern Mutual Life Insurance Company. Mr. Nygren holds an M.S. in Finance
from the University of Wisconsin (1981) and a B.S. in Accounting from the
University of Minnesota (1980).

The investment objective and policies of Small Cap Fund were developed by the
Adviser and by Steven J. Reid, C.F.A., the Fund's portfolio manager. Mr. Reid
joined the Adviser as an accountant in 1980 and has been an investment analyst
since 1985. He holds a B.A. in Business from Roosevelt University (1979).

The investment objective and policies of Equity and Income Fund were developed
by the Adviser and by Clyde S. McGregor, C.F.A., the Fund's portfolio manager.
Mr. McGregor joined the Adviser as an analyst in 1981 and began managing
portfolios in 1986. He holds an M.B.A. in Finance from the University of
Wisconsin - Madison (1977) and a B.A. in Economics and Religion from Oberlin
College (1974).

The investment objective and policies of International Fund were developed by
the Adviser and by David G. Herro, C.F.A., the Fund's portfolio manager. The
Fund is co-managed by Michael J. Welsh, C.F.A. and C.P.A. Mr. Herro joined the
Adviser in 1992 as a portfolio manager and analyst. Previously, he had been an
international portfolio manager for the State of Wisconsin Investment Board and
The Principal Financial Group. Mr. Herro holds an M.A. in Economics from the
University of Wisconsin - Milwaukee (1985) and a B.S. in Business and Economics
from the University of Wisconsin - Platteville (1983). Mr. Welsh joined the
adviser as an international analyst in 1992. Previously he had been a senior
associate, valuation services, with Coopers & Lybrand. Mr. Welsh holds an M.M.
in Finance from Northwestern University (1993) and a B.S. in Accounting from the
University of Kansas (1985).

The investment objective and policies of International Small Cap Fund were
developed by the Adviser and by David G. Herro, the Fund's portfolio manager,
and co-managed by Michael J. Welsh.

Brokerage transactions for the Funds may be executed through Harris Associates
Securities L.P., a registered broker-dealer and an affiliate of the Adviser.

The trustees and officers of the Trust and their principal business activities
during the past five years are:

<TABLE>
<CAPTION>
Name, Position(s) with Trust
and Age at December 31, 1997 Principal Occupation(s) during Past Five Years#
---------------------------- -----------------------------------------------
<S> <C>
Victor A. Morgenstern* Chairman of the Board, HAI, since 1996 and President prior thereto;
Trustee and Chairman, 55 Chairman, Harris Partners, L.L.C., since September 1995

Michael J. Friduss Principal, MJ Friduss & Associates (telecommunications consultants)
Trustee, 55

Thomas H. Hayden Executive Vice President and director, Bozell Worldwide, Inc.
Trustee, 46 (advertising and public relations)

Christine M. Maki Vice President--Tax, Hyatt Corporation (hotel management) since 1995;
Trustee, 37 Tax Manager, Coopers & Lybrand (independent accountants), prior thereto

Allan J. Reich Senior Partner and Chair of Corporate/Securities Practice Group,
Trustee, 49 D'Ancona & Pflaum (attorneys)
</TABLE>

24
<PAGE>

<TABLE>
<CAPTION>
Name, Position(s) with Trust
and Age at December 31, 1997 Principal Occupation(s) during Past Five Years#
---------------------------- ----------------------------------------------
<S> <C>
Marv R. Rotter General Manager, Rotter & Associates (financial services)
Trustee, 51

Burton W. Ruder President, The Academy Group (venture capital investments and
Trustee, 54 transaction financing)

Peter S. Voss* Chairman and Chief Executive Officer, New England Investment
Trustee, 51 Companies, Inc. and New England Investment Companies, L.P.

Gary N. Wilner, M.D. Senior Attending Physician, Evanston Hospital, and Medical Director -
Trustee, 57 CardioPulmonary Wellness Program, Evanston Hospital Corporation

Robert Levy President and Chief Executive Officer, HAI, since 1997; Portfolio
President, 47 Manager, HALP prior thereto

Robert J. Sanborn Portfolio Manager and Analyst, HALP
Executive Vice President
and Portfolio Manager (Oakmark Fund), 39

David G. Herro Portfolio Manager and Analyst, HALP
Vice President and Portfolio Manager
(International Fund and International
Small Cap Fund), 37

Clyde S. McGregor Portfolio Manager and Analyst, HALP
Vice President and Portfolio Manager
(Equity and Income Fund), 45

William C. Nygren Portfolio Manager and Director of Research, HALP
Vice president and Portfolio
Manager (Select Fund), 39

Steven J. Reid Portfolio Manager and Analyst, HALP
Vice President and Portfolio Manager
(Small Cap Fund), 41

Michael J. Welsh Portfolio Manager and Analyst, HALP
Vice President
and Co-portfolio Manager (International
Fund and International Small Cap Fund), 34

Ann W. Regan Director of Mutual Fund Operations, HALP, since 1996; Special Projects
Vice President-Shareholder Operations and Assistant to the General Counsel, HALP, 1995-1996; Deputy Corporation
Assistant Secretary, 49 Counsel, City of Chicago, prior thereto
</TABLE>

25
<PAGE>

<TABLE>
<CAPTION>
Name, Position(s) with Trust
and Age at December 31, 1997 Principal Occupation(s) during Past Five Years#
---------------------------- ----------------------------------------------
<S> <C>
Donald Terao Secretary, Treasurer and Chief Financial Officer, HAI, since 1995;
Vice President - Finance, 48 Controller, HALP, prior thereto

Anita M. Nagler Vice President, HAI, since 1994; General Counsel, HALP,
Secretary, 41 prior thereto

Kristi L. Rowsell Assistant Treasurer, HALP, since 1996; Tax and Accounting Manager,
Treasurer, 31 HALP, 1995-1996; Vice President and Treasurer, Calamos Asset
Management, Inc., prior thereto
</TABLE>

- ---------------
# As used in this table, from and after September 29, 1995 "HALP" and "HAI"
refer to the Adviser and the general partner of the Adviser, respectively,
and prior to that date those terms refer to the Former Adviser and the
general partner of the Former Adviser, respectively.

* Messrs. Morgenstern and Voss are trustees who are "interested persons" (as
defined in the Investment Company Act) of the Trust by virtue of their
relationships with HAI.

PERFORMANCE INFORMATION

From time to time the Funds may quote total return figures in sales material.
"Total Return" for a period is the percentage change in value during the period
of an investment in Fund shares, including the value of shares acquired through
reinvestment of all dividends and capital gains distributions. "Average Annual
Total Return" is the average annual compound rate of change in value represented
by the Total Return for the period. All of these calculations assume the
reinvestment of dividends and distributions in additional shares of the Fund.
Income taxes are not taken into account.

In advertising and sales literature, a Fund's performance may be compared to
market indexes and to the performance of other mutual funds. A Fund may also
publicize its comparative performance as computed in rankings or ratings
determined by independent services or publications including Lipper Analytical
Services, Inc., Morningstar, Inc. and others.

The performance of a Fund is a function of conditions in the securities markets,
portfolio management and operating expenses, and past results are not
necessarily indicative of future results. See "Investment Objectives" and
"Investment Restrictions." Performance information supplied by a Fund may not
provide a basis for comparison with other investments using different
reinvestment assumptions or time periods.

OTHER INFORMATION

The Funds are series of Harris Associates Investment Trust (the "Trust"), an
open-end management investment company, and each Fund other than Select Fund is
diversified. Prior to July 15, 1997, the name of Equity and Income Fund was the
Oakmark Balanced Fund. The Trust is a Massachusetts business trust organized
under an Agreement and Declaration of Trust ("Declaration of Trust") dated
February 1, 1991, which provides that each shareholder shall be deemed to have
agreed to be bound by the terms thereof. The Declaration of Trust may be
amended by a vote of either the Trust's shareholders or its trustees. The Trust
may issue an unlimited number of shares, in one or more series, each with its
own investment objective, policies and restrictions, as the board of trustees
may authorize. Any such series of shares may be further divided, without
shareholder approval, into two or more classes of shares having such preferences
or special or relative rights or privileges as the trustees may determine. The
Funds' shares are not currently divided into classes. The Funds are the only
series of the Trust currently

<PAGE>

being offered. All shares issued will be fully paid and non-assessable and will
have no preemptive or conversion rights.

Each share of a series is entitled to participate pro rata in any dividends and
other distributions declared by the board of trustees with respect to that
series, and all shares of a series have equal rights in the event of liquidation
of that series.

Each share is entitled to one vote on each matter presented to shareholders. As
a business trust, the Trust is not required to hold annual shareholder meetings.
However, special meetings may be called for purposes such as electing or
removing trustees, changing fundamental policies, or approving an investment
advisory contract. On any matter submitted to a vote of shareholders, shares
are voted in the aggregate and not by individual series except when required by
the Investment Company Act of 1940 or other applicable law, or when the board of
trustees determines that the matter affects only the interests of one or more
series, in which case shareholders of the unaffected series are not entitled to
vote on such matters. All shares of the Trust are voted together in the
election of trustees.

Inquiries regarding the Funds should be directed to the Trust at its address or
telephone number shown on the inside back cover.

27
<PAGE>

THE OAKMARK FAMILY OF FUNDS

1998 PROSPECTUS
---------------

Investment Adviser
Harris Associates L.P.
Two North LaSalle Street
Chicago, Illinois 60602-3790

Transfer Agent, Dividend
Disbursing Agent & Custodian
State Street Bank and Trust Company
Attention: Oakmark Funds
P.O. Box 8510
Boston, Massachusetts 02266-8510

Auditors
Arthur Andersen LLP
Chicago, Illinois

Legal Counsel
Bell, Boyd & Lloyd
Chicago, Illinois

FOR MORE INFORMATION
Please call 1-800-OAKMARK
(1-800-625-6275)

WEBSITE
www.oakmark.com

24-HOUR NET ASSET VALUE HOTLINE
To obtain the current net asset value per share
of a Fund, please call 1-800-GROWOAK
(1-800-476-9625)
<PAGE>

CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Highlights................................................................. 2
Shareholder Transaction Expenses......................................... 3
Annual Fund Operating Expenses........................................... 4
Financial Highlights..................................................... 5
The Funds.................................................................. 9
How the Funds Invest..................................................... 9
Investment Techniques.................................................... 12
Risk Factors............................................................. 14
Restrictions on the Funds' Investments................................... 16
Purchasing and Redeeming Shares............................................ 17
How to Purchase Shares................................................... 17
How to Redeem Shares..................................................... 18
Shareholder Services..................................................... 21
Net Asset Value.......................................................... 22
Distributions.............................................................. 22
Taxes...................................................................... 22
Management of the Funds.................................................... 23
Performance Information.................................................... 26
Other Information.......................................................... 26
</TABLE>

For More Information:
Please call 1-800-OAKMARK (1-800-625-6275)

Website:
www.oakmark.com

24-Hour Net Asset Value Hotline:
To obtain the current net asset value per share of a Fund, please call
1-800-GROWOAK (1-800-476-9625).
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------

January 25, 1998

THE OAKMARK FAMILY OF FUNDS
No-Load Funds

Two North La Salle Street
Chicago, Illinois 60602-3790
Telephone 1-800-OAKMARK
(1-800-625-6275)

This Statement of Additional Information relates to The Oakmark Fund ("Oakmark
Fund"), The Oakmark Select Fund ("Select Fund"), The Oakmark Small Cap Fund
("Small Cap Fund"), The Oakmark Equity and Income Fund, formerly named the
Oakmark Balanced Fund ("Equity and Income Fund"), The Oakmark International Fund
("International Fund") and The Oakmark International Small Cap Fund
("International Small Cap Fund"), each a series of Harris Associates Investment
Trust (the "Trust"). It is not a prospectus but provides information that should
be read in conjunction with the Funds' prospectus dated the same date as this
Statement of Additional Information and any supplement thereto. The prospectus
may be obtained from the Funds at no charge by writing or telephoning the Funds
at their address or telephone number shown above.

Table of Contents
<TABLE>
<CAPTION>
<S> <C>
The Funds........................................... 2
Investment Restrictions............................. 2
How the Funds Invest................................ 4
Performance Information............................. 10
Investment Adviser.................................. 12
Trustees and Officers............................... 14
Principal Shareholders.............................. 15
Purchasing and Redeeming Shares..................... 15
Additional Tax Information.......................... 17
Taxation of Foreign Shareholders.................... 17
Portfolio Transactions.............................. 18
Declaration of Trust................................ 20
Custodian........................................... 21
Independent Public Accountants...................... 21
Financial Statements................................ 21
Appendix -- Bond Ratings............................ 22
</TABLE>

<PAGE>

THE FUNDS

Oakmark Fund seeks long-term capital appreciation by investing primarily in
equity securities.

Select Fund seeks long-term capital appreciation by investing primarily in
a non-diversified portfolio of equity securities.

Small Cap Fund seeks long-term capital appreciation by investing primarily
in equity securities of companies with small market capitalizations.

Equity and Income Fund seeks high current income with regard for both
preservation and growth of capital by investing in a diversified portfolio of
equity and fixed-income securities.

International Fund seeks long-term capital appreciation by investing
primarily in equity securities of non-U.S. issuers.

International Small Cap Fund seeks long-term capital appreciation by
investing primarily in equity securities of non-U.S. issuers with small market
capitalizations.

INVESTMENT RESTRICTIONS

In pursuing their respective investment objectives no Fund will:

2. Acquire securities of any one issuer which at the time of investment
(a) represent more than 10% of the voting securities of the issuer or (b) have a
value greater than 10% of the value of the outstanding securities of the issuer;

3. Invest more than 25% of its assets (valued at the time of investment)
in securities of companies in any one industry, except that this restriction
does not apply to investments in U.S. government obligations;

4. Borrow money except from banks for temporary or emergency purposes in
amounts not exceeding 10% of the value of the Fund's assets at the time of
borrowing [the Fund will not purchase additional securities when its borrowings,
less receivables from portfolio securities sold, exceed 5% of the value of the
Fund's total assets];

5. Issue any senior security except in connection with permitted
borrowings;

6. Underwrite the distribution of securities of other issuers; however the
Fund may acquire "restricted" securities which, in the event of a resale, might
be required to be registered under the Securities Act of 1933 on the ground that
the Fund could be regarded as an underwriter as defined by that act with respect
to such resale;

7. Make loans, but this restriction shall not prevent the Fund from (a)
investing in debt obligations, (b) investing in repurchase agreements,/1/ or
(c) [Funds other than Oakmark

- ---------------------
/1/ A repurchase agreement involves a sale of securities to a Fund with the
concurrent agreement of the seller (bank or securities dealer) to repurchase
the securities at the same price plus an amount equal to an agreed-upon
interest rate within a specified time. In the event of a bankruptcy or other
default of a seller of a repurchase agreement, the Fund could

2
<PAGE>

Fund] lending its portfolio securities [the Fund will not lend securities having
a value in excess of 33-1/3% of its assets (valued at the time of any loan)];

8. Purchase and sell real estate or interests in real estate, although it
may invest in marketable securities of enterprises which invest in real estate
or interests in real estate;

9. Purchase and sell commodities or commodity contracts, except that it
may enter into forward foreign currency contracts;

10. Acquire securities of other investment companies except (a) by
purchase in the open market, where no commission or profit to a sponsor or
dealer results from such purchase other than the customary broker's commission
or (b) where the acquisition results from a dividend or a merger, consolidation
or other reorganization;/2/

11. Make margin purchases or participate in a joint or on a joint or
several basis in any trading account in securities;

12. Invest in companies for the purpose of management or the exercise of
control;

13. Invest more than 15% of its net assets (valued at the time of
investment) in illiquid securities, including repurchase agreements maturing in
more than seven days;

14. Invest in oil, gas or other mineral leases or exploration or
development programs, although it may invest in marketable securities of
enterprises engaged in oil, gas or mineral exploration;

15. [Oakmark Fund, Select Fund, Small Cap Fund and Equity and Income Fund
only] Invest more than 2% of its net assets (valued at the time of investment)
in warrants not listed on the New York or American stock exchanges, valued at
cost, nor more than 5% of its net assets in all warrants, provided that warrants
acquired in units or attached to other securities shall be deemed to be without
value for purposes of this restriction; [International Fund and International
Small Cap Fund only] Invest more than 10% of its net assets (valued at the time
of investment) in warrants valued at the lower of cost or market, provided that
warrants acquired in units or attached to securities shall be deemed to be
without value for purposes of this restriction;

16. [Oakmark Fund, Select Fund and Small Cap Fund only] Invest more than
25% of its total assets (valued at the time of investment) in securities of non-
U.S. issuers (other than securities represented by American Depositary Receipts)
[Equity and Income Fund only] Invest

- --------------------------------------------------------------------------------
experience both delays in liquidating the underlying securities and losses.
No Fund may invest more than 15% of its net assets in repurchase agreements
maturing in more than seven days and other illiquid securities.

/2/ In addition to this investment restriction, the Investment Company Act of
1940 provides that a Fund may neither purchase more than 3% of the voting
securities of any one investment company nor invest more than 10% of the
Fund's assets (valued at the time of investment) in all investment company
securities purchased by the Fund. Investment in the shares of another
investment company would require the Fund to bear a portion of the
management and advisory fees paid by that investment company, which might
duplicate the fees paid by the Fund.

3
<PAGE>

more than 10% of its total assets (valued at the time of investment) in
securities of non-U.S. issuers (other than securities represented by American
Depositary Receipts);/3/

17. Make short sales of securities unless the Fund owns at least an equal
amount of such securities, or owns securities that are convertible or
exchangeable, without payment of further consideration, into at least an equal
amount of such securities;

18. Purchase a call option or a put option if the aggregate premium paid
for all call and put options then held exceed 20% of its net assets (less the
amount by which any such positions are in-the-money);

19. Invest in futures or options on futures, except that it may invest in
forward foreign currency contracts.

The first 10 restrictions listed above, except the bracketed portions, are
fundamental policies and may be changed only with the approval of the holders of
a "majority of the outstanding voting securities" of the respective Fund, which
is defined in the Investment Company Act of 1940 (the "1940 Act") as the lesser
of (i) 67% of the shares of the Fund present at a meeting if more than 50% of
the outstanding shares of the Fund are present in person or represented by proxy
or (ii) more than 50% of the outstanding shares of the Fund. Those restrictions
not designated as "fundamental," and a Fund's investment objective, may be
changed by the board of trustees without shareholder approval. A Fund's
investment objective will not be changed without at least 30 days' notice to
shareholders.

Notwithstanding the foregoing investment restrictions, a Fund may purchase
securities pursuant to the exercise of subscription rights, provided, in the
case of each Fund other than Select Fund, that such purchase will not result in
the Fund's ceasing to be a diversified investment company. Japanese and European
corporations frequently issue additional capital stock by means of subscription
rights offerings to existing shareholders at a price substantially below the
market price of the shares. The failure to exercise such rights would result in
a Fund's interest in the issuing company being diluted. The market for such
rights is not well developed in all cases and, accordingly, a Fund may not
always realize full value on the sale of rights. The exception applies in cases
where the limits set forth in the investment restrictions would otherwise be
exceeded by exercising rights or would have already been exceeded as a result of
fluctuations in the market value of a Fund's portfolio securities with the
result that the Fund would be forced either to sell securities at a time when it
might not otherwise have done so, or to forego exercising the rights.

HOW THE FUNDS INVEST

Securities of Non-U.S. Issuers

International Fund and International Small Cap Fund invest primarily in
securities of non-U.S. issuers, and the other Funds each may invest a minor
portion of their assets (up to 25% for Oakmark Fund and Small Cap Fund and up to
10% for Equity and Income Fund) in securities of non-U.S. issuers. International
investing permits an investor to take advantage of the growth in markets outside
the United States. Investing in securities of non-U.S. issuers may entail a
greater degree of risk (including risks relating to exchange rate fluctuations,
tax provisions, or expropriation of assets) than does investment in securities
of domestic issuers. The Funds may invest in securities of non-U.S. issuers
directly or in the form of American Depositary Receipts

- ----------------------
/3/ Although securities represented by American Depositary Receipts ("ADRs")
are not subject to restriction 19, none of these Funds has any present
intention to invest more than the indicated percentage of its total assets
in ADRs and securities of foreign issuers.

4
<PAGE>

(ADRs), European Depositary Receipts (EDRs), Global Depositary Receipts (GDRs),
or other securities representing underlying shares of foreign issuers. Positions
in these securities are not necessarily denominated in the same currency as the
common stocks into which they may be converted. ADRs are receipts typically
issued by an American bank or trust company and trading in U.S. markets
evidencing ownership of the underlying securities. EDRs are European receipts
evidencing a similar arrangement. Generally ADRs, in registered form, are
designed for use in the U.S. securities markets and EDRs, in bearer form, are
designed for use in European securities markets. GDRs are receipts that may
trade in U.S. or non-U.S. markets. The Funds may invest in both "sponsored" and
"unsponsored" ADRs, EDRs or GDRs. In a sponsored depositary receipt, the issuer
typically pays some or all of the expenses of the depository and agrees to
provide its regular shareholder communications to depositary receipt holders. An
unsponsored depositary receipt is created independently of the issuer of the
underlying security. The depositary receipt holders generally pay the expenses
of the depository and do not have an undertaking from the issuer of the
underlying security to furnish shareholder communications.

With respect to portfolio securities of non-U.S. issuers or denominated in
foreign currencies, a Fund's investment performance is affected by the strength
or weakness of the U.S. dollar against these currencies. For example, if the
dollar falls in value relative to the Japanese yen, the dollar value of a yen-
denominated stock held in the portfolio will rise even though the price of the
stock remains unchanged. Conversely, if the dollar rises in value relative to
the yen, the dollar value of the yen-denominated stock will fall. See discussion
of transaction hedging and portfolio hedging under "Currency Exchange
Transactions."

You should understand and consider carefully the risks involved in
international investing. Investing in securities of non-U.S. issuers, positions
in which are generally denominated in foreign currencies, and utilization of
forward foreign currency exchange contracts involve certain considerations
comprising both risks and opportunities not typically associated with investing
in U.S. securities. These considerations include: fluctuations in exchange rates
of foreign currencies; possible imposition of exchange control regulation or
currency restrictions that would prevent cash from being brought back to the
United States; less public information with respect to issuers of securities;
less governmental supervision of stock exchanges, securities brokers, and
issuers of securities; different accounting, auditing and financial reporting
standards; different settlement periods and trading practices; less liquidity
and frequently greater price volatility in foreign markets than in the United
States; imposition of foreign taxes; and sometimes less advantageous legal,
operational and financial protections applicable to foreign subcustodial
arrangements.

Although the Funds try to invest in companies and governments of countries
having stable political environments, there is the possibility of expropriation
of assets, confiscatory taxation, seizure or nationalization of foreign bank
deposits or other assets, establishment of exchange controls, the adoption of
foreign government restrictions, or other adverse, political, social or
diplomatic developments that could affect investment in these nations.

Privatizations. Some governments have been engaged in programs of selling
part or all of their stakes in government owned or controlled enterprises
("privatizations"). The adviser believes that privatizations may offer
opportunities for significant capital appreciation, and intends to invest assets
of International Fund and International Small Cap Fund in privatizations in
appropriate circumstances. In certain of those markets, the ability of foreign
entities such as International Fund and International Small Cap Fund to
participate in privatizations may be limited by local law, and/or the terms on
which such Funds may be permitted to participate may be less advantageous than
those afforded local investors. There can be no assurance that governments will
continue to sell companies currently owned or controlled by them or that
privatization programs will be successful.

Currency Exchange Transactions. Each Fund may enter into currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate for purchasing
or selling currency

5
<PAGE>

prevailing in the foreign exchange market or through a forward currency exchange
contract ("forward contract"). A forward contract is an agreement to purchase or
sell a specified currency at a specified future date (or within a specified time
period) and price set at the time of the contract. Forward contracts are usually
entered into with banks, foreign exchange dealers or broker-dealers, are not
exchange-traded and are usually for less than one year, but may be renewed.

If a Fund enters into a forward contract hedging an anticipated purchase of
portfolio securities, liquid assets of the Fund, which may include equities,
debt obligations, U.S. government securities or cash, having a value at least as
great as the commitment under the forward contract will be segregated on the
books of the Fund, marked to market daily, and held by the Fund's custodian
while the contract is outstanding.

At the maturity of a forward contract to deliver a particular currency, a
Fund may either sell the portfolio security related to such contract and make
delivery of the currency, or it may retain the security and either acquire the
currency on the spot market or terminate its contractual obligation to deliver
the currency by purchasing an offsetting contract with the same currency trader
obligating it to purchase on the same maturity date the same amount of the
currency.

It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of a forward contract. Accordingly, it
may be necessary for a Fund to purchase additional currency on the spot market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the currency.
Conversely, it may be necessary to sell on the spot market some of the currency
received upon the sale of the portfolio security if its market value exceeds the
amount of currency the Fund is obligated to deliver.

If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. If the Fund engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
currency. Should forward prices decline during the period between the Fund's
entering into a forward contract for the sale of a currency and the date it
enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should forward
prices increase, the Fund will suffer a loss to the extent the price of the
currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. A default on the contract would deprive the Fund of unrealized
profits or force the Fund to cover its commitments for purchase or sale of
currency, if any, at the current market price.

Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for the Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
at a price above the devaluation level it anticipates. The cost to the Fund of
engaging in currency exchange

6
<PAGE>

transactions varies with such factors as the currency involved, the length of
the contract period, and prevailing market conditions. Since currency exchange
transactions are usually conducted on a principal basis, no fees or commissions
are involved.

Debt Securities

Each Fund may invest in debt securities, including lower-rated securities
(i.e., securities rated BB or lower by Standard & Poor's Corporation ("S&P") or
Ba or lower by Moody's Investor Services, Inc. ("Moody's"), commonly called
"junk bonds") and securities that are not rated. There are no restrictions as to
the ratings of debt securities acquired by a Fund or the portion of a Fund's
assets that may be invested in debt securities in a particular ratings category,
except that International Fund and International Small Cap Fund will not invest
more than 10% of their respective total assets in securities rated below
investment grade, Equity and Income Fund will not invest more than 20% of its
total assets in such securities, and each of the other Funds will not invest
more than 25% of its total assets in such securities.

Securities rated BBB or Baa are considered to be medium grade and to have
speculative characteristics. Lower-rated debt securities are predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal. Investment in medium- or lower-quality debt securities involves
greater investment risk, including the possibility of issuer default or
bankruptcy. An economic downturn could severely disrupt the market for such
securities and adversely affect the value of such securities. In addition,
lower-quality bonds are less sensitive to interest rate changes than higher-
quality instruments and generally are more sensitive to adverse economic changes
or individual corporate developments. During a period of adverse economic
changes, including a period of rising interest rates, issuers of such bonds may
experience difficulty in servicing their principal and interest payment
obligations.

Medium- and lower-quality debt securities may be less marketable than
higher-quality debt securities because the market for them is less broad. The
market for unrated debt securities is even narrower. During periods of thin
trading in these markets, the spread between bid and asked prices is likely to
increase significantly, and a Fund may have greater difficulty selling its
portfolio securities. See "Net Asset Value." The market value of these
securities and their liquidity may be affected by adverse publicity and investor
perceptions.

A description of the characteristics of bonds in each ratings category is
included in the appendix to this statement of additional information.

When-Issued and Delayed-Delivery Securities

Each Fund may purchase securities on a when-issued or delayed-delivery
basis. Although the payment and interest terms of these securities are
established at the time a Fund enters into the commitment, the securities may be
delivered and paid for a month or more after the date of purchase, when their
value may have changed. A Fund makes such commitments only with the intention of
actually acquiring the securities, but may sell the securities before settlement
date if the adviser deems it advisable for investment reasons. A Fund may
utilize spot and forward foreign currency exchange transactions to reduce the
risk inherent in fluctuations in the exchange rate between one currency and
another when securities are purchased or sold on a when-issued or delayed-
delivered basis.

At the time a Fund enters into a binding obligation to purchase securities
on a when-issued basis, liquid assets of the Fund having a value at least as
great as the purchase price of the securities to be purchased will be segregated
on the books of the Fund and held by the custodian throughout the period of the
obligation. The use of these investment strategies, as well as any borrowing by
a Fund, may increase net asset value fluctuation.

7
<PAGE>

Illiquid Securities

No Fund may invest in illiquid securities, if as a result such securities
would comprise more than 15% of the value of the Fund's assets.

If through the appreciation of illiquid securities or the depreciation of
liquid securities, the Fund should be in a position where more than 15% of the
value of its net assets are invested in illiquid assets, including restricted
securities, the Fund will take appropriate steps to protect liquidity.

Illiquid securities may include restricted securities, which may be sold
only in privately negotiated transactions or in a public offering with respect
to which a registration statement is in effect under the Securities Act of 1933
(the "1933 Act"). Where a Fund holds restricted securities and registration is
required, the Fund may be obligated to pay all or part of the registration
expenses and a considerable period may elapse between the time of the decision
to sell and the time the Fund may be permitted to sell a security under an
effective registration statement. If, during such a period, adverse market
conditions were to develop, the Fund might obtain a less favorable price than
prevailed when it decided to sell. Restricted securities will be priced at fair
value as determined in good faith by the board of trustees.

Notwithstanding the above, each Fund may purchase securities that, although
privately placed, are eligible for purchase and sale under Rule 144A under the
1933 Act. This rule permits certain qualified institutional buyers, such as the
Funds, to trade in privately placed securities even though such securities are
not registered under the 1933 Act. The adviser, under the supervision of the
board of trustees, may consider whether securities purchased under Rule 144A are
liquid and thus not subject to the Fund's restriction of investing no more than
15% of its assets in illiquid securities. (See restriction 11 under "Investment
Restrictions.") A determination of whether a Rule 144A security is liquid or not
is a question of fact. In making this determination the adviser will consider
the trading markets for the specific security taking into account the
unregistered nature of a Rule 144A security. In addition, the adviser could
consider the (1) frequency of trades and quotes, (2) number of dealers and
potential purchasers, (3) dealer undertakings to make a market, (4) and the
nature of the security and of market place trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
transfer). The liquidity of Rule 144A securities would be monitored and, if as a
result of changed conditions, it is determined that a Rule 144A security is no
longer liquid, the Fund's holdings of illiquid securities would be reviewed to
determine what, if any, steps are required to assure that the Fund does not
invest more than 15% of its assets in illiquid securities. Investing in Rule
144A securities could have the effect of increasing the amount of a Fund's
assets invested in illiquid securities if qualified institutional buyers are
unwilling to purchase such securities.

Short Sales

Each Fund may sell securities short against the box, that is: (1) enter
into short sales of securities that it currently owns or has the right to
acquire through the conversion or exchange of other securities that it owns
without additional consideration; and (2) enter into arrangements with the
broker-dealers through which such securities are sold short to receive income
with respect to the proceeds of short sales during the period the Fund's short
positions remain open. A Fund may make short sales of securities only if at all
times when a short position is open the Fund owns at least an equal amount of
such securities or securities convertible into or exchangeable for, without
payment of any further consideration, securities of the same issue as, and equal
in amount to, the securities sold short.

In a short sale against the box, a Fund does not deliver from its portfolio
the securities sold and does not receive immediately the proceeds from the short
sale. Instead, the Fund borrows the securities sold short from a broker-dealer
through which the short sale is executed, and the broker-dealer delivers such
securities, on behalf of the Fund, to the purchaser of such

8
<PAGE>

securities. Such broker-dealer is entitled to retain the proceeds from the short
sale until the Fund delivers to such broker-dealer the securities sold short. In
addition, the Fund is required to pay to the broker-dealer the amount of any
dividends paid on shares sold short. Finally, to secure its obligation to
deliver to such broker-dealer the securities sold short, the Fund must deposit
and continuously maintain in a separate account with the Fund's custodian an
equivalent amount of the securities sold short or securities convertible into or
exchangeable for such securities without the payment of additional
consideration. A Fund is said to have a short position in the securities sold
until it delivers to the broker-dealer the securities sold, at which time the
Fund receives the proceeds of the sale. A Fund may close out a short position by
purchasing on the open market and delivering to the broker-dealer an equal
amount of the securities sold short, rather than by delivering portfolio
securities.

Short sales may protect a Fund against the risk of losses in the value of
its portfolio securities because any unrealized losses with respect to such
portfolio securities should be wholly or partially offset by a corresponding
gain in the short position. However, any potential gains in such portfolio
securities should be wholly or partially offset by a corresponding loss in the
short position. The extent to which such gains or losses are offset will depend
upon the amount of securities sold short relative to the amount the Fund owns,
either directly or indirectly, and, in the case where the Fund owns convertible
securities, changes in the conversion premium.

Short sale transactions involve certain risks. If the price of the security
sold short increases between the time of the short sale and the time a Fund
replaces the borrowed security, the Fund will incur a loss and if the price
declines during this period, the Fund will realize a short-term capital gain.
Any realized short-term capital gain will be decreased, and any incurred loss
increased, by the amount of transaction costs and any premium, dividend or
interest which the Fund may have to pay in connection with such short sale.
Certain provisions of the Internal Revenue Code may limit the degree to which a
Fund is able to enter into short sales. There is no limitation on the amount of
each Fund's assets that, in the aggregate, may be deposited as collateral for
the obligation to replace securities borrowed to effect short sales and
allocated to segregated accounts in connection with short sales. No Fund
currently expects that more than 20% of its total assets would be involved in
short sales against the box.

Options

Each Fund may purchase both call options and put options on securities. A
call or put option is a contract that gives the Fund, in return for a premium
paid upon purchase of the option, the right during the term of the option to buy
from, or to sell to, the seller of the option the security underlying the option
at a specified exercise price. The option is valued initially at the premium
paid for the option. Thereafter, the value of the option is marked-to-market
daily. It is expected that a Fund will not purchase a call option or a put
option if the aggregate value of all call and put options held by the Fund would
exceed 5% of the Fund's net assets.

Temporary Strategies

Each Fund has the flexibility to respond promptly to changes in market and
economic conditions. In the interest of preserving shareholders' capital, the
adviser may employ a temporary defensive investment strategy if it determines
such a strategy to be warranted. Pursuant to such a defensive strategy, a Fund
temporarily may hold cash (U.S. dollars, foreign currencies, or multinational
currency units) and/or invest up to 100% of its assets in high quality debt
securities or money market instruments of U.S. or foreign issuers, and most or
all of International Fund's investments and International Small Cap Fund's
investments may be made in the United States and denominated in U.S. dollars. It
is impossible to predict whether, when or for how long a Fund will employ
defensive strategies.

In addition, pending investment of proceeds from new sales of Fund shares
or to meet ordinary daily cash needs, each Fund temporarily may hold cash (U.S.
dollars, foreign currencies

9
<PAGE>

or multinational currency units) and may invest any portion of its assets in
money market instruments.

PERFORMANCE INFORMATION

From time to time the Funds may quote total return figures in sales
material. "Total Return" for a period is the percentage change in value during
the period of an investment in Fund shares, including the value of shares
acquired through reinvestment of all dividends and capital gains distributions.
"Average Annual Total Return" is the average annual compounded rate of change in
value represented by the Total Return for the period.

Average Annual Total Return will be computed as follows:

ERV = P(1+T)/n/

Where: P = the amount of an assumed initial investment in Fund shares
T = average annual total return
n = number of years from initial investment to the end of the
period
ERV = ending redeemable value of shares held at the end of the
period

For example, Total Return and Average Annual Total Return on a $1,000
investment in each Fund for the following periods ended September 30, 1997 were:

<TABLE>
<CAPTION>
Total Average Annual
Return Total Return
------ --------------
<S> <C> <C>
Oakmark Fund
One year................... % 39.2%
Five years................. 25.3
Life of Fund*.............. 30.7
Select Fund
Life of Fund*.............. 69.2
Small Cap Fund
One year................... 59.1
Life of Fund*.............. 44.8
Equity and Income Fund
One year................... 34.0
Life of Fund*.............. 22.7
International Fund
One year................... 29.6
Five years................. 18.4
Life of Fund*.............. 18.4
International Small Cap Fund
One year................... 12.1
Life of Fund*.............. 13.1

- --------------
</TABLE>
* Life of Fund commenced with the public offering of its shares as follows:
Oakmark, 8/5/91; Select, 11/1/96; International, 9/30/92; Small Cap,
Equity and Income and International Small Cap, 11/1/95.

Performance figures quoted by the Funds will assume reinvestment of all
dividends and distributions, but will not take into account income taxes payable
by shareholders. The Funds impose no sales charge and pay no distribution
("12b-1") expenses. Each Fund's performance is a function of conditions in the
securities markets, portfolio management, and operating expenses.

10
<PAGE>

Although information such as yield and total return is useful in reviewing a
Fund's performance and in providing some basis for comparison with other
investment alternatives, it should not be used for comparison with other
investments using different reinvestment assumptions or time periods.

In advertising and sales literature, the performance of a Fund may be
compared with that of other mutual funds, indexes or averages of other mutual
funds, indexes of related financial assets or data, and other competing
investment and deposit products available from or through other financial
institutions. The composition of these indexes or averages differs from that of
the Funds. Comparison of a Fund to an alternative investment should consider
differences in features and expected performance.

All of the indexes and averages noted below will be obtained from the
indicated sources or reporting services, which the Funds generally believe to be
accurate. The Funds may also refer to publicity (including performance rankings)
in newspapers, magazines, or other media from time to time. However, the Funds
assume no responsibility for the accuracy of such data. Newspapers and magazines
that might mention the Funds include, but are not limited to, the following:

<TABLE>
<CAPTION>
<S> <C> <C>
Barron's Fortune The New York Times
Business Week Global Finance Pensions and Investments
Changing Times Investor's Daily Personal Investor
Chicago Tribune Kiplinger's Personal Finance Smart Money
Chicago Sun-Times Los Angeles Times Stanger Reports
Crain's Chicago Business Money Time
Consumer Reports Mutual Fund Letter USA Today
Consumer Digest Mutual Funds Magazine U.S. News and World Report
Financial World Morningstar The Wall Street Journal
Forbes Newsweek Worth

</TABLE>

A Fund may compare its performance to the Consumer Price Index (All Urban),
a widely recognized measure of inflation. The performance of a Fund may also be
compared to the Morgan Stanley EAFE (Europe, Australia and Far East) Index, a
generally accepted benchmark for performance of major overseas markets, and to
the following indexes or averages:

<TABLE>
<CAPTION>
<S> <C>
Dow-Jones Industrial Average Wilshire 5000
Standard & Poor's 500 Stock Index New York Stock Exchange Composite Index
Standard & Poor's 400 Industrials American Stock Exchange Composite Index
Standard & Poor's Small Cap 600 NASDAQ Composite
Standard & Poor's Mid Cap 400 NASDAQ Industrials
Russell 2000
</TABLE>

In addition, each of Oakmark Fund, Select Fund, Small Cap Fund and Equity
and Income Fund may compare its performance to the following indexes and
averages: Value Line Index; Lipper Capital Appreciation Fund Average; Lipper
Growth Funds Average; Lipper Small Company Growth Funds Average; Lipper General
Equity Funds Average; Lipper Equity Funds Average; Lipper Small Company Growth
Fund Index; and Lehman Brothers Government/Corporate Bond Index. Each of
International Fund and International Small Cap Fund may compare its performance
to the following indexes and averages: Lipper International & Global Funds
Average; Lipper International Fund Index; Lipper International Equity Funds
Average; Morgan Stanley Capital International World ex the U.S. Index;
Morningstar International Stock Average.

Lipper Indexes and Averages are calculated and published by Lipper
Analytical Services, Inc. ("Lipper"), an independent service that monitors the
performance of more than 1,000 funds. The Funds may also use comparative
performance as computed in a ranking by Lipper or category averages and rankings
provided by another independent service. Should Lipper or

11
<PAGE>

another service reclassify a Fund to a different category or develop (and place
a Fund into) a new category, that Fund may compare its performance or ranking
against other funds in the newly assigned category, as published by the service.
Each Fund may also compare its performance or ranking against all funds tracked
by Lipper or another independent service, including Morningstar, Inc.

The Funds may cite their ratings, recognition, or other mention by
Morningstar or any other entity. Morningstar's rating system is based on risk-
adjusted total return performance and is expressed in a star-rating format. The
risk-adjusted number is computed by subtracting a fund's risk score (which is a
function of the fund's monthly returns less the 3-month T-bill return) from the
fund's load-adjusted total return score. This numerical score is then translated
into rating categories, with the top 10% labeled five star, the next 22.5%
labeled four star, the next 35% labeled three star, the next 22.5% labeled two
star, and the bottom 10% one star. A high rating reflects either above-average
returns or below-average risk or both.

To illustrate the historical returns on various types of financial assets,
the Funds may use historical data provided by Ibbotson Associates, Inc.
("Ibbotson"), a Chicago-based investment firm. Ibbotson constructs (or obtains)
very long-term (since 1926) total return data (including, for example, total
return indexes, total return percentages, average annual total returns and
standard deviations of such returns) for the following asset types: common
stocks; small company stocks; long-term corporate bonds; long-term government
bonds; intermediate-term government bonds; U.S. Treasury bills; and Consumer
Price Index.

INVESTMENT ADVISER

The Funds' investment adviser, Harris Associates L.P. (the "Adviser"),
furnishes continuing investment supervision to the Funds and is responsible for
overall management of the Funds' business affairs pursuant to investment
advisory agreements relating to the respective Funds (the "Agreements"). The
Adviser furnishes office space, equipment and personnel to the Funds, and
assumes the expenses of printing and distributing the Funds' prospectus and
reports to prospective investors.

Each Fund pays the cost of its custodial, stock transfer, dividend
disbursing, bookkeeping, audit and legal services. Each Fund also pays other
expenses such as the cost of proxy solicitations, printing and distributing
notices and copies of the prospectus and shareholder reports furnished to
existing shareholders, taxes, insurance premiums, the expenses of maintaining
the registration of that Fund's shares under federal and state securities laws
and the fees of trustees not affiliated with the Adviser.

The Adviser has voluntarily agreed to reimburse each Fund to the extent
that its annual ordinary operating expenses exceed the following percent of the
Fund's average net assets through January 31, 1999, subject to earlier
termination by the Adviser on 30 days' notice to the Fund: 1.5% in the case of
Oakmark Fund, Select Fund, Small Cap Fund or Equity and Income Fund and 2% in
the case of International Fund and International Small Cap Fund. For the purpose
of determining whether a Fund is entitled to any reduction in advisory fee or
expense reimbursement, that Fund's expenses are calculated daily and any
reduction in fee or reimbursement is made monthly.

For its services as investment adviser, the Adviser receives from each Fund
a monthly fee based on that Fund's net assets at the end of the preceding month.
The annual rates of fees as a percentage of each Fund's net assets are as
follows:

12
<PAGE>

<TABLE>
<CAPTION>
Fund Fee
- ----------------- ----------------------------------------------------------------------
<S> <C>
Equity and Income .75%

Oakmark 1% up to $2.5 billion; .95% on the next $1.25 billion; .90% on the
next $1.25 billion; and .85% on net assets in excess of $5 billion

International 1% up to $2.5 billion; .95% on the next $2.5 billion; and .90% on net
assets in excess of $5 billion

Select 1% up to $1 billion; .95% on the next $500 million; .90% on the next
$500 million; .85% on the next $500 million; .80% over $2.5 billion.

Small Cap 1.25% up to $1 billion; 1.15% on the next $500 million; 1.10% on the
next $500 million; 1.05% on the next $500 million; 1% over $2.5
billion.

International Small Cap 1.25%
</TABLE>

The table below shows gross advisory fees paid by the Funds and any expense
reimbursements by the Adviser to them, which are described in the prospectus.

<TABLE>
<CAPTION>
Eleven Months Year Ended October 31,
Type of Ended September 30, ------------------------
Fund Payment 1997 1996 1995
---- ------------- ------------------- ---- ----
<S> <C> <C> <C> <C>
Oakmark Advisory fee $43,705,462 $36,082,925 $21,215,738

Select Advisory fee 1,731,599 -- --

Small Cap Advisory fee 7,705,828 956,809 --

Equity and Advisory fee 140,973 69,005 --
Income Reimbursement 39,450 14,245 --

International Advisory fee 13,040,702 10,113,272 9,916,904

International Advisory fee 648,148 258,427 --
Small Cap Reimbursement -- 35,441 --
</TABLE>

The Agreement for each Fund was for an initial term expiring September 30,
1997. Each agreement will continue from year to year thereafter so long as such
continuation is approved at least annually by (1) the board of trustees or the
vote of a majority of the outstanding voting securities of the Fund, and (2) a
majority of the trustees who are not interested persons of any party to the
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. Each Agreement may be terminated at any time, without penalty, by
either the Trust or the Adviser upon sixty days' written notice, and is
automatically terminated in the event of its assignment as defined in the 1940
Act.

The Adviser is a limited partnership managed by its general partner, Harris
Associates, inc., whose directors are David G. Herro, Robert M. Levy, Roxanne M.
Martino, Victor A. Morgenstern, Anita M. Nagler, William C. Nygren, Neal Ryland,
Robert J. Sanborn and Peter S. Voss. Mr. Levy is the president and chief
executive officer of Harris Associates, Inc.

13
<PAGE>

TRUSTEES AND OFFICERS

Information on the trustees and officers of the Trust is included in the
Funds' prospectus under "Trustees and Officers." All of that information is
incorporated herein by reference.

The addresses of the trustees are as follows:

Michael J. Friduss c/o MJ Friduss & Associates
1555 Museum Drive
Highland Park, Illinois 60035

Thomas H. Hayden c/o Bozell Worldwide, Inc.
625 North Michigan Avenue
Chicago, Illinois 60611-3110

Christine M. Maki c/o Hyatt Corporation
200 West Madison Street
Chicago, Illinois 60606

Victor A. Morgenstern c/o Harris Associates L.P.
Two North La Salle Street, Suite 500
Chicago, Illinois 60602

Allan J. Reich c/o D'Ancona & Pflaum
30 North La Salle Street, Suite 2900
Chicago, Illinois 60602

Marv R. Rotter c/o Rotter & Associates
5 Revere Drive, Suite 400
Northbrook, Illinois 60062-1571

Burton W. Ruder c/o The Academy Group
707 Skokie Boulevard, Suite 410
Northbrook, Illinois 60062

Peter S. Voss c/o New England Investment Companies, L.P.
399 Boylston Street
Boston, Massachusetts 02116

Gary N. Wilner, M.D. c/o Evanston Hospital
2650 Ridge Avenue
Evanston, Illinois 60201

Messrs. Morgenstern and Voss are trustees who are "interested persons" of
the Trust as defined in the 1940 Act. They and Dr. Wilner are members of the
executive committee, which has authority during intervals between meetings of
the board of trustees to exercise the powers of the board, with certain
exceptions.

At December 31, 1997, the trustees and officers as a group owned
beneficially the following percentages of the outstanding shares of the Funds:
Select, ____%; Small Cap, ____%; Equity and Income, ____%; International Small
Cap, ____%; Oakmark and International, less than 1%.

The following table shows the compensation paid by the Trust for the eleven
months ended September 30, 1997 to each trustee who was not an "interested
person" of the Trust:

14
<PAGE>

<TABLE>
<CAPTION>
Aggregate
Compensation
Name of Trustee from the Trust*
- -------------------------------------------------------------------------------
<S> <C>
Christine M. Maki $
Michael J. Friduss
Thomas H. Hayden
Allan J. Reich
Marv R. Rotter
Burton W. Ruder
Gary N. Wilner, M.D.
- --------------------------------------------------------------------------------
</TABLE>
* The Trust is not part of a fund complex.

Other trustees who are "interested persons" of The Trust, as well as the
officers of the Trust, are compensated by the Adviser and not by The Trust. The
Trust does not provide any pension or retirement benefits to its trustees.

PRINCIPAL SHAREHOLDERS

The only persons known by the Trust to own of record or "beneficially"
(within the meaning of that term as defined in rule 13d-3 under the Securities
Exchange Act of 1934) 5% or more of the outstanding shares of any Fund as of
December 31, 1997 were Clyde and Joan McGregor, who collectively owned
beneficially ____% of the shares of Equity and Income Fund. The address of those
shareholders is Suite 500, Two North La Salle Street, Chicago, Illinois 60602.

PURCHASING AND REDEEMING SHARES

Purchases and redemptions are discussed in the Funds' prospectus under the
headings "Purchasing and Redeeming Shares--How to Purchase Shares," "Purchasing
and Redeeming Shares--How to Redeem Shares," and "Purchasing and Redeeming
Shares--Shareholder Services." All of that information is incorporated herein by
reference.

The net asset value per share of each Fund is determined by the Trust's
custodian, State Street Bank and Trust Company. Securities traded on securities
exchanges, or in the over-the-counter market in which transaction prices are
reported on the NASDAQ National Market System, are valued at the last sales
prices at the time of valuation or, lacking any reported sales on that day, at
the most recent bid quotations. Other securities traded over-the-counter are
also valued at the most recent bid quotations. Money market instruments having a
maturity of 60 days or less from the valuation date are valued on an amortized
cost basis. The values of securities of foreign issuers 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. All assets and liabilities initially expressed in foreign currencies
are converted into U.S. dollars at the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by any major bank or dealer. If such
quotations are not available, the rate of exchange will be determined in
accordance with policies established in good faith by the Board.

15
<PAGE>

The Funds' net asset values are determined only on days on which the New
York Stock Exchange is open for trading. The Exchange is regularly closed on
Saturdays and Sundays and on New Year's Day, the third Monday in January and
February, Good Friday, the last Monday in May, Independence Day, Labor Day,
Thanksgiving and Christmas. If one of these holidays falls on a Saturday or
Sunday, the Exchange will be closed on the preceding Friday or the following
Monday, respectively.

Trading in the portfolio securities of International Fund or International
Small Cap Fund (and of any other Fund, to the extent it invests in securities of
non-U.S. issuers) takes place in various foreign markets on certain days (such
as Saturday) when the Fund is not open for business and does not calculate its
net asset value. In addition, trading in the Fund's portfolio securities may
not occur on days when the Fund is open. Therefore, the calculation of net
asset value does not take place contemporaneously with the determinations of the
prices of many of the Fund's portfolio securities and the value of the Fund's
portfolio may be significantly affected on days when shares of the Fund may not
be purchased or redeemed.

Computation of net asset value (and the sale and redemption of a Fund's
shares) may be suspended or postponed during any period when (a) trading on the
New York Stock Exchange is restricted, as determined by the Securities and
Exchange Commission, or that exchange is closed for other than customary weekend
and holiday closings, (b) the Commission has by order permitted such suspension,
or (c) an emergency, as determined by the Commission, exists making disposal of
portfolio securities or valuation of the net assets of a Fund not reasonably
practicable.

Shares of any of the Funds may be purchased through certain financial
service companies, without incurring any transaction fee. For services provided
by such a company with respect to Fund shares held by that company for its
customers, the company may charge a fee of up to 0.30% of the annual average
value of those accounts. Each Fund may pay a portion of those fees, not to
exceed the estimated fees that the Fund would pay to its own transfer agent if
the shares of the Fund held by such customers of the company were registered
directly in their names on the books of the Fund's transfer agent. The balance
of those fees are paid by the Adviser.

The Trust has elected to be governed by Rule 18f-1 under the 1940 Act
pursuant to which it is obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the net asset value of a Fund during any 90-day
period for any one shareholder. Redemptions in excess of the above amounts will
normally be paid in cash, but may be paid wholly or partly by a distribution in
kind of marketable securities.

Due to the relatively high cost of maintaining small accounts, the Trust
reserves the right to redeem at net asset value the shares of any shareholder
whose account in any Fund has a value of less than the minimum amount specified
by the board of trustees, which currently is $1,000. Before such a redemption,
the shareholder will be notified that the account value is less than the minimum
and will be allowed at least 30 days to bring the value of the account up to the
minimum. The agreement and declaration of trust also authorizes the Trust to
redeem shares under certain other circumstances as may be specified by the board
of trustees.

In connection with the Exchange Plan, the Adviser acts as a Service
Organization for the Government Portfolio and the Tax-Exempt Diversified
Portfolio of Goldman Sachs Money Market Trust and the GS Short Duration Fund
Portfolio of Goldman Sachs Trust. For its services it receives fees at rates of
up to .50% of the average annual net assets of each account in those portfolios
established through the Exchange Plan, pursuant to 12b-1 plans adopted by those
investment companies.

16
<PAGE>

ADDITIONAL TAX INFORMATION

General. Each Fund intends to continue to qualify to be taxed as a
regulated investment company under the Internal Revenue Code of 1986, as
amended, so as to be relieved of federal income tax on its capital gains and net
investment income currently distributed to its shareholders. At the time of
your purchase, a Fund's net asset value may reflect undistributed income,
capital gains or net unrealized appreciation of securities held by that Fund. A
subsequent distribution to you of such amounts, although constituting a return
of your investment, would be taxable either as dividends or capital gain
distributions.

International Fund and International Small Cap Fund. Dividends and
distributions paid by International Fund and International Small Cap Fund are
not eligible for the dividends-received deduction for corporate shareholders, if
as expected, none of such Funds' income consists of dividends paid by United
States corporations. Capital gain distributions paid by the Funds are never
eligible for this deduction.

Certain foreign currency gains and losses, including the portion of gain or
loss on the sale of debt securities attributable to foreign exchange rate
fluctuations are taxable as ordinary income. If the net effect of these
transactions is a gain, the dividend paid by either of these Funds will be
increased; if the result is a loss, the income dividend paid by either of these
Funds will be decreased.

Income received by International Fund or International Small Cap Fund from
sources within various foreign countries will be subject to foreign income taxes
withheld at the source. Under the Code, if more than 50% of the value of the
Fund's total assets at the close of its taxable year comprise securities issued
by foreign corporations, the Fund may file an election with the Internal Revenue
Service to "pass through" to the Fund's shareholders the amount of foreign
income taxes paid by the Fund. Pursuant to this election, shareholders will be
required to: (i) include in gross income, even though not actually received,
their respective pro rata share of foreign taxes paid by the Fund; (ii) treat
their pro rata share of foreign taxes as paid by them; and (iii) either deduct
their pro rata share of foreign taxes in computing their taxable income, or use
it as a foreign tax credit against U.S. income taxes (but not both). No
deduction for foreign taxes may be claimed by a shareholder who does not itemize
deductions.

Both International Fund and International Small Cap Fund intend to meet the
requirements of the Code to "pass through" to its shareholders foreign income
taxes paid, but there can be no assurance that a Fund will be able to do so.
Each shareholder will be notified within 60 days after the close of each taxable
year of a Fund, if the foreign taxes paid by the Fund will "pass through" for
that year, and, if so, the amount of each shareholder's pro rata share (by
country) of (i) the foreign taxes paid, and (ii) the Fund's gross income from
foreign sources. Of course, shareholders who are not liable for federal income
taxes, such as retirement plans qualified under Section 401 of the Code, will
not be affected by any such "pass through" of foreign tax credits.

TAXATION OF FOREIGN SHAREHOLDERS

The Code provides that dividends from net income (which are deemed to
include for this purpose each shareholder's pro rata share of foreign taxes paid
by International Fund and International Small Cap Fund (see discussion of "pass
through" of the foreign tax credit to U.S. shareholders), will be subject to
U.S. tax. For shareholders who are not engaged in a business in the U.S., this
tax would be imposed at the rate of 30% upon the gross amount of the dividend in
the absence of a Tax Treaty providing for a reduced rate or exemption from U.S.
taxation. Distributions of net long-term capital gains realized by these Funds
are not subject to tax unless

17
<PAGE>

the foreign shareholder is a nonresident alien individual who was physically
present in the U.S. during the tax year for more than 182 days.

PORTFOLIO TRANSACTIONS

Portfolio transactions for each Fund are placed with those securities
brokers and dealers that the Adviser believes will provide the best value in
transaction and research services for that Fund, either in a particular
transaction or over a period of time. Subject to that standard, portfolio
transactions for each Fund may be executed through Harris Associates Securities
L.P. ("HASLP"), a registered broker-dealer and an affiliate of the Adviser.

In valuing brokerage services, the Adviser makes a judgment as to which
brokers are capable of providing the most favorable net price (not necessarily
the lowest commission) and the best execution in a particular transaction. Best
execution connotes not only general competence and reliability of a broker, but
specific expertise and effort of a broker in overcoming the anticipated
difficulties in fulfilling the requirements of particular transactions, because
the problems of execution and the required skills and effort vary greatly among
transactions.

Although some transactions involve only brokerage services, many involve
research services as well. In valuing research services, the Adviser makes a
judgment of the usefulness of research and other information provided by a
broker to the Adviser in managing a Fund's investment portfolio. In some cases,
the information, e.g., data or recommendations concerning particular securities,
relates to the specific transaction placed with the broker, but for the greater
part the research consists of a wide variety of information concerning
companies, industries, investment strategy and economic, financial and political
conditions and prospects, useful to the Adviser in advising the Funds.

The Adviser is the principal source of information and advice to the Funds,
and is responsible for making and initiating the execution of the investment
decisions for each Fund. However, the board of trustees recognizes that it is
important for the Adviser, in performing its responsibilities to the Funds, to
continue to receive and evaluate the broad spectrum of economic and financial
information that many securities brokers have customarily furnished in
connection with brokerage transactions, and that in compensating brokers for
their services, it is in the interest of the Funds to take into account the
value of the information received for use in advising the Funds. Consequently,
the commission paid to brokers (other than HASLP) providing research services
may be greater than the amount of commission another broker would charge for the
same transaction. The extent, if any, to which the obtaining of such
information may reduce the expenses of the Adviser in providing management
services to the Funds is not determinable. In addition, it is understood by the
board of trustees that other clients of the Adviser might also benefit from the
information obtained for the Funds, in the same manner that the Funds might also
benefit from information obtained by the Adviser in performing services to
others.

HASLP may act as broker for a Fund in connection with the purchase or sale
of securities by or to the Fund if and to the extent permitted by procedures
adopted from time to time by the board of trustees of the Trust. The board of
trustees, including a majority of the trustees who are not "interested"
trustees, has determined that portfolio transactions for a Fund may be executed
through HASLP if, in the judgment of the Adviser, the use of HASLP is likely to
result in prices and execution at least as favorable to the Fund as those
available from other qualified brokers and if, in such transactions, HASLP
charges the Fund commission rates at least as favorable to the Fund as those
charged by HASLP to comparable unaffiliated customers in similar transactions.
The board of trustees has also adopted procedures that are reasonably designed
to provide that any commissions, fees or other remuneration paid to HASLP are
consistent with the foregoing standard. The Funds will not effect principal
transactions with HASLP. In executing transactions

18
<PAGE>

through HASLP, the Funds will be subject to, and intend to comply with, section
17(e) of the 1940 Act and rules thereunder.

The reasonableness of brokerage commissions paid by the Funds in relation
to transaction and research services received is evaluated by the staff of the
Adviser on an ongoing basis. The general level of brokerage charges and other
aspects of the Funds' portfolio transactions are reviewed periodically by the
board of trustees.

Transactions of the Funds in the over-the-counter market and the third
market are executed with primary market makers acting as principal except where
it is believed that better prices and execution may be obtained otherwise.

Although investment decisions for the Funds are made independently from
those for other investment advisory clients of the Adviser, it may develop that
the same investment decision is made for both a Fund and one or more other
advisory clients. If both a Fund and other clients purchase or sell the same
class of securities on the same day, the transactions will be allocated as to
amount and price in a manner considered equitable to each.

The Funds do not purchase securities with a view to rapid turnover.
However, there are no limitations on the length of time that portfolio
securities must be held. Portfolio turnover can occur for a number of reasons,
including general conditions in the securities market, more favorable investment
opportunities in other securities, or other factors relating to the desirability
of holding or changing a portfolio investment. A high rate of portfolio turnover
would result in increased transaction expense, which must be borne by the Fund.
High portfolio turnover may also result in the realization of capital gains or
losses and, to the extent net short-term capital gains are realized, any
distributions resulting from such gains will be considered ordinary income for
federal income tax purposes. The portfolio turnover rates for the Funds are set
forth in the prospectus under "Financial Highlights."

The following table shows the aggregate brokerage commissions (excluding
the gross underwriting spread on securities purchased in initial public
offerings) paid by each Fund during the periods indicated, as well as the
aggregate commissions paid to affiliated persons of the Trust.

19
<PAGE>

<TABLE>
<CAPTION>
Eleven Months Ended Year Ended October 31,
September 30, ----------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Oakmark Fund
Aggregate commissions............ $3,094,186 (100%) $2,863,961 (100%) $2,100,849 (100%)
Commissions paid to affiliates*.. 997,845 (32.2%) 1,192,641 (41.6%) 389,339 (18.5%)

Select Fund
Aggregate commissions............ 750,698 (100%) -- --
Commissions paid to affiliates*.. 341,805 (45.5%) -- --

Small Cap Fund
Aggregate commissions............ 1,906,488 (100%) 404,602 (100%) --
Commissions paid to affiliates*.. 401,345 (21.0%) 132,729 (32.8%) --

Equity and Income Fund
Aggregate commission............. 24,588 (100%) 19,797 (100%) --
Commissions paid to affiliates*.. 15,611 (63.5%) 14,487 (73.2%) --

International Fund
Aggregate commissions............ 5,319,725 (100%) 2,804,611 (100%) 2,609,780 (100%)
Commissions paid to affiliates*.. 9,732 (0.2%) 82,872 (3.0%) 71,600 (2.7%)

International Small Cap Fund
Aggregate commissions............ 332,214 (100%) 198,847 (100%) --
Commissions paid to affiliates*.. 732 (0.2%) 6,128 (3.1%) --
</TABLE>

- --------------------------

* The percent of the dollar amount of each Fund's aggregate transactions
involving the Fund's payment of brokerage commissions that were executed
through affiliates for each of the periods is shown below.

<TABLE>
<CAPTION>
Year Ended October 31,
Eleven Months Ended ----------------------
Fund September 30, 1997 1996 1995
---- ------------------ ---- ----
<S> <C> <C> <C>
Oakmark % 47.0% 7.5%
Small Cap 40.0 -
Equity and Income 78.0 -
International 5.0 1.6
International Small Cap 0.4 -
</TABLE>

Of the aggregate brokerage commissions paid during the eleven months ended
September 30 1997, the Funds paid the following commissions to brokers who
furnished research services: Oakmark, $_____; Select, $_____; Small Cap, $_____;
Equity and Income, $_____; International, $_____; International Small Cap,
$_____.

DECLARATION OF TRUST

The Agreement and Declaration of Trust under which the Trust has been
organized ("Declaration of Trust") disclaims liability of the shareholders,
trustees and officers of the Trust for acts or obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation,
or contract entered into or executed by the Trust or the board of trustees. The
Declaration of Trust provides for indemnification out of the Trust's assets for
all losses and expenses of any shareholder held personally liable for
obligations of the Trust. Thus, although shareholders of a business trust may,
under certain circumstances, be held personally liable under Massachusetts law
for the obligations of the Trust, the risk of a shareholder incurring financial
loss on account of shareholder liability is believed to be remote because it is
limited to
20
<PAGE>

circumstances in which the disclaimer is inoperative and the Trust itself is
unable to meet its obligations. The risk to any one series of sustaining a loss
on account of liabilities incurred by another series is also believed to be
remote.

CUSTODIAN

State Street Bank and Trust Company, P.O. Box 8510, Boston Massachusetts
02266-8510 is the custodian for the Trust. It is responsible for holding all
securities and cash of each Fund, receiving and paying for securities purchased,
delivering against payment securities sold, receiving and collecting income from
investments, making all payments covering expenses of the Funds, and performing
other administrative duties, all as directed by authorized persons of the Trust.
The custodian also performs certain portfolio accounting services for the Funds,
for which each Fund pays the custodian a monthly fee. The fee paid by Oakmark
Fund is $2,500 per month. The fee paid by Oakmark International is $3,000 per
month. The fee paid by each of Select Fund, Small Cap Fund and Equity and Income
Fund is $2,500 per month and the fee paid by International Small Cap Fund is
$3,000 per month. The custodian does not exercise any supervisory function in
such matters as the purchase and sale of portfolio securities, payment of
dividends, or payment of expenses of a Fund. The Trust has authorized the
custodian to deposit certain portfolio securities of each Fund in central
depository systems as permitted under federal law. The Funds may invest in
obligations of the custodian and may purchase or sell securities from or to the
custodian.

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP, 33 West Monroe Street, Chicago, Illinois 60603, audits
and reports on each Fund's annual financial statements, reviews certain
regulatory reports and the Funds' federal income tax returns, and performs other
professional accounting, auditing, tax and advisory services when engaged to do
so by the Trust.

FINANCIAL STATEMENTS

Copies of the annual reports for each Fund for the eleven months ended
September 30, 1997 accompany this Statement of Additional Information. Those
reports contain financial statements, notes thereto, supplementary information
entitled "Condensed Financial Information" and reports of independent auditors,
all of which (but no other part of the reports), and the notes thereto that also
accompany this Statement of Additional Information, are incorporated herein by
reference.

A copy of the Funds' Prospectus and additional copies of the reports to
shareholders may be obtained from the Trust at no charge by writing to the Trust
at the address shown on the cover page of this statement of additional
information, or by telephoning the number shown on the cover page.

21
<PAGE>

APPENDIX -- BOND RATINGS

A rating by a rating service represents the service's opinion as to the
credit quality of the security being rated. However, the ratings are general and
are not absolute standards of quality or guarantees as to the credit-worthiness
of an issuer. Consequently, the Adviser believes that the quality of debt
securities in which the Fund invests should be continuously reviewed and that
individual analysts give different weightings to the various factors involved in
credit analysis. A rating is not a recommendation to purchase, sell, or hold a
security, because it does not take into account market value or suitability for
a particular investor. When a security has received a rating from more than one
service, each rating should be evaluated independently. Ratings are based on
current information furnished by the issuer or obtained by the rating services
from other sources which they consider reliable. Ratings may be changed,
suspended, or withdrawn as a result of changes in or unavailability of such
information, or for other reasons.

The following is a description of the characteristics of ratings used by
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation
("S&P").

Ratings by Moody's:

Aaa. Bonds rated Aaa are judged to be the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or an exceptionally stable margin and
principal is secure. Although the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such bonds.

Aa. Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in the Aaa bonds, fluctuation of protective elements may
be of greater amplitude, or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa bonds.

A. Bonds rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa. Bonds rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Ba. Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
other good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B. Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa. Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.

22
<PAGE>

Ca. Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.

C. Bonds rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Ratings By Standard & Poor's:

AAA. Debt rated AAA has the highest rating. Capacity to pay interest and
repay principal is extremely strong.

AA. Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.

A. Debt rated A has a very strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.

BBB. Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions, or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than for debt in higher rated categories.

BB-B-CCC-CC. Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. While such
bonds will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.

C. This rating is reserved for income bonds on which no interest is being
paid.

D. Debt rated D is in default, and payment of interest and/or repayment
of principal is in arrears.

NOTE: The ratings from AA to B may be modified by the addition of a plus
(+) or minus (-) sign to show relative standing within the major rating
categories.

23
<PAGE>

PART C OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial statements:

(1) Financial statements included in Part A of this amendment:

Financial Highlights

(2) Financial statements included in Part B of this amendment:

Audited financial statements of The Oakmark Fund, The Oakmark
Select Fund, The Oakmark Small Cap Fund, The Oakmark Equity and
Income Fund#, The Oakmark International Fund and The Oakmark
International Small Cap Fund# (schedules of investments at September
30, 1997, statements of assets and liabilities at September 30,
1997, statements of operations for the eleven months ended September
30, 1997, statements of changes in net assets for the eleven months
ended September 30, 1997 and, for each of such Funds other than The
Oakmark Select Fund for the year ended October 31, 1996 and notes to
financial statements) incorporated by reference to those portions of
Registrant's Annual Report - September 30, 1997.

Schedule I for each Fund has been omitted as the required information
is presented in the schedules of investments at September 30, 1997.
Schedules II, III, IV, V, VI and VII for each Fund are omitted as the
required information is not present.

(b) Exhibits:

Note: As used herein, "Registration Statement" refers to this registration
statement under the Securities Act of 1933, no. 33-38953. "Pre-effective
Amendment" refers to a pre-effective amendment to the Registration
Statement, and "Post-effective Amendment" refers to a post-effective
amendment to the Registration Statement.

1 Agreement and declaration of trust (exhibit 1 to Post-Effective Amendment
no. 18*)

2 Bylaws as amended through September 9, 1997

3 None

4 The registrant does not issue share certificates.

5.1 Investment advisory agreement for The Oakmark Fund dated August 30, 1996
(exhibit 5.1 to Post-effective Amendment no. 17*)

5.2 Investment advisory agreement for The Oakmark International Fund dated
August 30, 1996 (exhibit 5.2 to Post-effective Amendment no. 17*)

5.3 Investment advisory agreement for The Oakmark Small Cap Fund dated August
30, 1996 (exhibit 5.3 to Post-effective Amendment no. 17*)

C-1
<PAGE>

5.4 Amendment dated September 9, 1997 to investment advisory agreement for
The Oakmark Small Cap Fund**

5.5 Investment advisory agreement for The Oakmark Equity and Income Fund#
dated August 30, 1996 (exhibit 5.4 to Post-effective Amendment no. 17*)

5.6 Investment advisory agreement for The Oakmark International Small Cap
Fund# dated August 30, 1996 (exhibit 5.5 to Post-effective Amendment no.
17*)

5.7 Investment advisory agreement for The Oakmark Select Fund dated October
22, 1996 (exhibit 5.6 to Post-effective Amendment no. 17*)

5.8 Amendment dated September 9, 1997 to investment advisory agreement for
The Oakmark Select Fund**

6 None

7 None

8.1 Custody agreement with State Street Bank and Trust Company dated July 10,
1991 (exhibit 8.1 to Post-effective Amendment no. 18*)

8.2 Special custody account agreement (short sales) dated September 24, 1991
(exhibit 8.2 to Post-effective Amendment no. 18*)

8.3 Form of letter agreement dated September 8, 1992 applying custody
agreement (exhibit 8.1) to The Oakmark International Fund (exhibit 8.3 to
Post-effective Amendment no. 18*)

8.4 Form of letter agreement dated September 15, 1995 applying custody
agreement (exhibit 8.1) and transfer agency agreement to The Oakmark
Small Cap Fund, The Oakmark Equity and Income Fund and The Oakmark
International Small Cap Fund# (exhibit 8.4 to Post-effective Amendment
no. 18*)

8.5 Form of letter agreement dated September 30, 1996 applying custody
agreement (exhibit 8.1) to The Oakmark Select Fund (exhibit 8.5 to Post-
effective Amendment no. 17*)

9 None

10.1 Opinion of Ropes & Gray dated July 11, 1991 - The Oakmark Fund (exhibit
10.1 to Post-effective Amendment no. 18*)

10.2 Opinion of Bell, Boyd & Lloyd dated July 23, 1992 - The Oakmark
International Fund (exhibit 10.2 to Post-effective Amendment no. 18*)

10.3 Opinion of Ropes & Gray dated September 20, 1995 - The Oakmark
International Fund, The Oakmark Small Cap Fund, The Oakmark Equity and
Income Fund and The Oakmark International Small Cap Fund# (exhibit 10.3
to Post-effective Amendment no. 18*)

C-2
<PAGE>

10.4 Opinion of Bell, Boyd & Lloyd dated September 20, 1995 - The Oakmark
Small Cap Fund, The Oakmark Equity and Income Fund and The Oakmark
International Small Cap Fund# (exhibit 10.4 to Post-Effective Amendment
no. 18*)

10.5 Opinion of Bell, Boyd & Lloyd dated October 22, 1996 - The Oakmark Select
Fund (exhibit 10.5 to Post-effective Amendment no. 17*)

11 Consent of independent public accountants

12 None

13.1 Organizational expense agreement for The Oakmark Fund dated July 31, 1991
(exhibit 13.1 to Post-effective Amendment no. 18*)

13.2 Organizational expense agreement for The Oakmark International Fund dated
September 15, 1992 (exhibit 13.2 to Post-effective Amendment no. 18*)

13.3 Organizational expense agreement for The Oakmark Small Cap Fund, The
Oakmark Equity and Income Fund and The Oakmark International Small Cap
Fund# dated July 6, 1995 (exhibit 13.3 to Post-effective Amendment no.
18*)

13.4 Organizational expense agreement for The Oakmark Select Fund dated
October 22, 1996 (exhibit 13.4 to Post-effective Amendment no. 17*)

13.5 Form of subscription agreement (exhibit 13.5 to Post-effective Amendment
no. 18*)

14.1 The Oakmark Funds IRA Plan booklet, revised September 30, 1995, as
supplemented January 31, 1997 (exhibit 14.1 to Post-effective Amendment
no. 18*)

14.2 Form of IRA application and adoption agreement, revised November 1, 1996
(exhibit 14.2 to Post-effective Amendment no. 18*)

15 None

16 Schedule for computation of performance quotations**

17 Financial data schedule**

18 Form of new account purchase application, revised November 1, 1996
(exhibit 18 to Post-effective Amendment no. 18*)

- --------------------
* Incorporated by reference
** To be filed by amendment

# The Oakmark Equity and Income Fund and the Oakmark International Small Cap
Fund were formerly named the Oakmark Balanced Fund and the Oakmark
International Emerging Value Fund, respectively.

C-3
<PAGE>

Item 25. Persons Controlled By or Under Common Control with Registrant

The registrant does not consider that there are any persons directly or
indirectly controlling, controlled by, or under common control with, the
registrant within the meaning of this item. The information in the prospectus
under the caption "Management of the Fund" and in the Statement of Additional
Information under the caption "Investment Adviser" and "Trustees and Officers"
is incorporated by reference.

Item 26. Number of Holders of Securities

As of November 24, 1997, the respective series of the Trust had the
following numbers of shareholders of record: The Oakmark Fund, 176,550; The
Oakmark Select Fund, 20,011; The Oakmark Small Cap Fund, 34,090; The Oakmark
Equity and Income Fund, 2,049; The Oakmark International Fund, 48,394; The
Oakmark International Small Cap Fund, 3,708.

Item 27. Indemnification

Article VIII of the agreement and declaration of trust of registrant
(exhibit 1 to this registration statement, which is incorporated herein by
reference) provides that registrant shall provide certain indemnification of its
trustees and officers. In accordance with Section 17(h) of the Investment
Company Act, that provision shall not protect any person against any liability
to the registrant or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, negligence or reckless disregard of
the duties involved in the conduct of his office.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a trustee, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The registrant, its trustees and officers, Harris Associates L.P. ("HALP")
(the investment adviser to registrant) and certain affiliated persons of HALP
and affiliated persons of such persons are insured under a policy of insurance
maintained by registrant and HALP, within the limits and subject to the
limitations of the policy, against certain expenses in connection with the
defense of actions, suits or proceedings, and certain liabilities that might be
imposed as a result of such actions, suits or proceedings, to which they are
parties by reason of being or having been such trustees, directors or officers.
The policy expressly excludes coverage for any trustee or officer whose personal
dishonesty, fraudulent breach of trust, lack of good faith, or intention to
deceive or defraud has been finally adjudicated or may be established or who
willfully fails to act prudently.

Item 28. Business and Other Connections of Investment Adviser

The information in the prospectus under the caption "Management of the
Funds" is incorporated by reference. Neither the Adviser nor its general partner
has at any time during the past two years been engaged in any other business,
profession, vocation or employment of a substantial nature either for its own
account or in the capacity of director, officer, employee, partner or trustee,
except that the Adviser is a registered commodity trading adviser and

C-4
<PAGE>

commodity pool operator and its general partner is also the general partner of a
securities broker-dealer firm.

Item 29. Principal Underwriters
----------------------

Not applicable

Item 30. Location of Accounts and Records
--------------------------------

Mr. Victor A. Morgenstern
Harris Associates L.P.
Two North La Salle Street, Suite 500
Chicago, Illinois 60602

Item 31. Management Services
-------------------

None

Item 32. Undertakings
------------

(a) Not applicable

(b) Not applicable

(c) Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the latest annual report(s) to
shareholders of Registrant upon request and without charge.

(d) Registrant undertakes, if required to do so by the holders of at
least 10% of the Registrant's outstanding shares, to call a
meeting of shareholders for the purpose of voting upon the
question of removal of a director or directors and to assist in
communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.

C-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant certifies that it has duly caused
this amendment to its registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on November 26,
1997.

HARRIS ASSOCIATES INVESTMENT TRUST

By /s/ Victor A. Morgenstern
--------------------------------------
Victor A. Morgenstern, President

Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>

/s/ Michael J. Friduss Trustee )
- --------------------------- )
Michael J. Friduss )
)
/s/ Thomas H. Hayden Trustee )
- --------------------------- )
Thomas H. Hayden )
)
/s/ Christine M. Maki Trustee )
- --------------------------- )
Christine M. Maki )
)
/s/ Victor A. Morgenstern Trustee and Chairman )
- --------------------------- (chief executive officer) )
Victor A. Morgenstern )
)
/s/ Allan J. Reich Trustee )
- --------------------------- )
Allan J. Reich )
) November 26, 1997
/s/ Marv R. Rotter Trustee )
- --------------------------- )
Marv R. Rotter )
)
/s/ Burton W. Ruder Trustee )
- --------------------------- )
Burton W. Ruder )
)
/s/ Peter S. Voss Trustee )
- --------------------------- )
Peter S. Voss )
)
/s/ Gary N. Wilner Trustee )
- --------------------------- )
Gary N. Wilner )
)
/s/ Kristi L. Rowsell Treasurer (principal )
- --------------------------- accounting officer) )
Kristi L. Rowsell )
</TABLE>
<PAGE>

Exhibits Being Filed with This Amendment
----------------------------------------

Exhibit
Number
- -------

2 Bylaws as amended through September 9, 1997

11 Consent of independent public accountants

<PAGE>

Exhibit 2

HARRIS ASSOCIATES INVESTMENT TRUST

BYLAWS
[as amended through September 9, 1997]

Section 1

Agreement and Declaration of Trust and Principal Office

1.1 Agreement and Declaration of Trust. These Bylaws shall be subject to
the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Harris Associates Investment Trust, a Massachusetts
business trust established by the Declaration of Trust (the "Trust").

1.2 Principal Office of the Trust. The principal office of the Trust shall
be located in Chicago, Illinois.

Section 2

Shareholders

2.1 Shareholder Meetings. A meeting of the shareholders of the Trust or of
any one or more series or classes of shares may be called at any time by the
Trustees, by the chairman or, if the shareholders for a period of 30 days after
written application of one or more shareholders who hold at least 10% of all
outstanding shares of the Trust, if shareholders of all series are required
under the Declaration of Trust to vote in the aggregate and not by individual
series at such meeting, or of any series or class, if shareholders of such
series or class are entitled under the Declaration of Trust to vote by
individual series or class at such meeting, then such shareholders may call such
meeting. If the meeting is a meeting of the shareholders of one or more series
or classes of shares, but not a meeting of all shareholders of the Trust, then
only the shareholders of such one or more series or classes shall be entitled to
notice of and to vote at the meeting. Each call of a meeting shall state the
place, date, hour and purposes of the meeting. [amended 9/9/97]

2.2 Place of Meetings. All meetings of the shareholders shall be held at
the principal office of the Trust, or, to the extent permitted by the
Declaration of Trust, at such other place within the United States as shall be
designated by the Trustee or the chairman of the Trust. [amended 9/9/97]

2.3 Notice of Meetings. A written notice of each meeting of shareholders,
stating the place, date and hour and the purposes of the meeting, shall be given
at least seven days before the meeting to each shareholder entitled to vote
thereat by leaving such notice with him or her or at his or her residence or
usual place of business or by mailing it, postage prepaid, and addressed to such
shareholder at his or her address as it appears in the records of the Trust.
Such notice shall be given by the secretary or an assistant secretary or by an
officer designated by the Trustees. No notice of any meeting of shareholders
need be given to a shareholder if a written waiver of notice, executed before or
after the meeting by such
<PAGE>

shareholder or his or her attorney thereunto duly authorized, is filed with the
records of the meeting.

2.4 Ballots. No ballot shall be required for any election unless requested
by a shareholder present or represented at the meeting and entitled to vote in
the election.

2.5 Proxies. Shareholders entitled to vote may vote either in person or by
proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the secretary or other person
responsible to record the proceedings of the meeting before being voted. Unless
otherwise specifically limited by their terms, such proxies shall entitle the
holders thereof to vote at any adjournment of such meeting but shall not be
valid after the final adjournment of such meeting.

Section 3

Trustees

3.1 Committees and Advisory Board. The Trustees may appoint from their
number an executive committee and other committees. Except as the Trustees may
otherwise determine, any such committee may make rules for conduct of its
business. The Trustees may appoint an advisory board to consist of not less than
two nor more than five members. The members of the advisory board shall be
compensated in such manner as the Trustees may determine and shall confer with
and advise the Trustees regarding the investments and other affairs of the
Trust. Each member of the advisory board shall hold office until the first
meeting of the Trustees following the next meeting of the shareholders and until
his or her successor is elected and qualified, or until he or she sooner dies,
resigns, is removed or becomes disqualified, or until the advisory board is
sooner abolished by the Trustees.

3.2 Regular Meetings. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from time to
time determine, provided that notice of the first regular meeting following any
such determination shall be given to absent Trustees.

3.3 Special Meetings. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting, when called by the
chairman or the treasurer or by two or more Trustees, sufficient notice thereof
being given to each Trustee by the secretary or an assistant secretary or by the
officer or one of the Trustees calling the meeting. [amended 9/9/97]

3.4 Notice. It shall be sufficient notice to a Trustee to send notice by
mail at least forty-eight hours or by telegram at least twenty-four hours before
the meeting addressed to the Trustee at his or her usual or last known business
or residence address or to give notice to him or her in person or by telephone
at least twenty-four hours before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him or her
before or after the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of a meeting nor a
waiver of a notice need specify the purposes of the meeting.

2
<PAGE>

3.5 Quorum. At any meeting of the Trustees a majority of the Trustees then
in office shall constitute a quorum; provided, however, a quorum shall not be
less that two. Any meeting may be adjourned from time to time by a majority of
the votes cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice. [amended 9/21/93]

3.6 Eligibility to Serve. No person shall be appointed or elected to serve
as a Trustee after attaining the age of 65 years. Any Trustee shall retire as a
Trustee as of the end of the calendar year in which the Trustee attains the age
of 70 years, except that any Trustee who had attained the age of 70 years as of
June 15, 1993 shall retire as a Trustee as of the end of the calendar year in
which the Trustee attains the age of 72 years. [adopted 6/15/93]

Section 4

Officers and Agents

4.1 Enumeration; Qualification. The officers of the Trust shall be a
chairman, a president, a treasurer, a secretary and such other officers, if any,
as the Trustees from time to time may in their discretion elect or appoint. The
Trust may also have such agents, if any, as the Trustees from time to time may
in their discretion appoint. Any officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person. [amended
9/21/93 and 9/9/97]

4.2 Powers. Subject to the other provisions of these Bylaws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to his or
her office as if the Trust were organized as a Massachusetts business
corporation and such other duties and powers as the Trustees may from time to
time designate, including without limitation the power to make purchases and
sales of portfolio securities of the Trust pursuant to recommendations of the
Trust's investment adviser in accordance with the policies and objectives of the
Trust set forth in its prospectus and with such general or specific instructions
as the Trustees may from time to time have issued.

4.3 Election. The chairman, the president, the treasurer and the secretary
shall be elected annually by the Trustees. Other officers, if any, may be
elected or appointed by the Trustees at any time. [amended 9/21/93 and 9/9/97]

4.4 Tenure. The chairman, the president, the treasurer and the secretary
shall hold office until their respective successors are chosen and qualified, or
in each case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office at the pleasure of the
Trustee. Each agent shall retain his or her authority at the pleasure of the
Trustees. [amended 9/21/93 and 9/9/97]

4.5 Chairman. The chairman (a) shall be the chief executive and chief
operating officer of the Trust; (b) except as may otherwise be provided by the
Board of Trustees, shall preside at all meetings of the Board of Trustees and
shareholders; and (c) shall have general and active management of the business
of the Trust and shall see that all orders and resolutions of the Board of
Trustees are carried into effect. [added 9/21/93 and 9/9/97]

3
<PAGE>

4.6 President. In the absence of the chairman, or in the event of the
chairman's inability or refusal to act, the president shall perform the duties
of the chairman and when so acting shall have all the powers of the chairman.
The president shall also have such other duties and powers as shall be
designated from time to time by the Trustees or the chairman. [amended 9/9/97]

4.7 Vice Presidents. In the absence of the president, or in the event of
the president's inability or refusal to act, the vice president (or if there be
more than one vice president, the vice presidents in the order designated, or in
the absence of any designation, then in the order of their election) shall
perform the duties of the president and when so acting shall have all the powers
of the president. Any vice president shall also have such other duties and
powers as shall be designated from time to time by the Trustees, the chairman or
the president. [amended 9/21/93 and 9/9/97]

4.8 Treasurer and Assistant Treasurer. The treasurer shall be the chief
financial and accounting officer of the Trust, shall be responsible for
preparation of financial statements of the Trust and, subject to any arrangement
made by the Trustees with a bank or trust company or other organization as
custodian or transfer or shareholder services agent, shall be in charge of its
valuable papers and its books of account and accounting records. The treasurer
shall also have such other duties and powers as shall be designated from time to
time by the Trustees, the chairman, the president or the vice president-finance.
In the absence of the treasurer, if there is an assistant treasurer the
assistant treasurer shall perform the duties of the treasurer and when so acting
shall have the powers of the treasurer. The assistant treasurer shall also have
such other duties and powers as shall be designated from time to time by the
Trustees, the chairman, the president, the vice president-finance or the
treasurer. [amended 9/21/93 and 9/9/97]

4.9 Secretary and Assistant Secretary. The secretary shall record all
proceedings of the shareholders and the Trustees in books to be kept therefor,
which books shall be kept at the principal office of the Trust. In the absence
of the secretary from any meeting of shareholders or Trustees, an assistant
secretary, or if there be none or he or she is absent, a temporary clerk chosen
at the meeting, shall record the proceedings thereof in the aforesaid books.
[amended 9/9/97]

Section 5

Resignations and Removals

Any Trustee, officer or advisory board member may resign at any time by
delivering his or her resignation in writing to the chairman, the treasurer or
the secretary or to a meeting of the Trustees. The Trustees may remove any
officer elected by them with or without cause by the vote of a majority of the
Trustees then in office. Except to the extent expressly provided in a written
agreement with the Trust, no Trustee, officer, or advisory board member
resigning, and no officer or advisory board member removed, shall have any right
to any compensation for any period following his or her resignation or removal,
or any right to damages on account of such removal. [amended 9/9/97]

4
<PAGE>

Section 6

Vacancies

A vacancy in any office may be filled at any time. Each successor shall
hold office for the unexpired term, and in the case of the chairman, the
president, the treasurer and the secretary, until his or her successor is chosen
and qualified, or in each case until he or she sooner dies, resigns, is removed
or becomes disqualified. [amended 9/9/97]

Section 7

Shares of Beneficial Interest

7.1 Share Certificates. No certificates certifying the ownership of shares
shall be issued except as the Trustees may otherwise authorize. In the event
that the Trustees authorize the issuance of share certificates, subject to the
provisions of Section 7.3, each shareholder shall be entitled to a certificate
stating the number of shares owned by him or her, in such form as shall be
prescribed from time to time by the Trustees. Such certificate shall be signed
by the chairman, the president or a vice president and by the secretary,
treasurer or an assistant secretary or treasurer. Such signatures may be
facsimiles if the certificate is signed by a transfer agent or by a registrar,
other than a Trustee, officer or employee of the Trust. In case any officer who
has signed or whose facsimile signature has been placed on such certificate
shall have ceased to be such officer before such certificate is issued, it may
be issued by the Trust with the same effect as if he or she were such officer at
the time of its issue. [amended 9/21/93 and 9/9/97]

In lieu of issuing certificates for shares, the Trustees or the transfer
agent may either issue receipts therefor or keep accounts upon the books of the
Trust for the record holders of such shares, who shall in either case be deemed,
for all purposes hereunder, to be the holders of certificates for such shares as
if they had accepted such certificates and shall be held to have expressly
assented and agreed to the terms hereof.

7.2 Loss of Certificates. In the case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees may prescribe.

7.3 Discontinuance of Issuance of Certificates. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
or shares in the Trust.

Section 8

Record Date and Closing Transfer Books

The Trustees may fix in advance a time, which shall not be more than 60
days before the date of any meeting of shareholders or the date for the payment
of any dividend or making of any other distribution to shareholders, as the
record date for determining the shareholders

5
<PAGE>

having the right to notice and to vote at such meeting and any adjournment
thereof or the right to receive such dividend or distribution, and in such case
only shareholders of record on such record date shall have such right,
notwithstanding any transfer of shares on the books of the Trust after the
record date; or without fixing such record date the Trustees may for any of such
purposes close the transfer books for all or any part of such period.

Section 9

Seal

The seal of the Trust shall, subject to alteration by the Trustees, consist
of a flat-faced circular die with the word "Massachusetts," together with the
name of the Trust and the year of its organization, cut or engraved thereon;
but, unless otherwise required by the Trustees, the seal shall not be necessary
to be placed on, and its absence shall not impair the validity of, any document,
instrument or other paper executed and delivered by or on behalf of the Trust.

Section 10

Execution of Papers

Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts and other obligations made, accepted or endorsed by
the Trust shall be signed, and all transfer of securities standing in the name
of the Trust shall be executed, by the chairman, the president, one of the vice
presidents or the treasurer or by whomsoever else shall be designated for that
purpose by the vote of the Trustees and need not bear the seal of the Trust.
[amended 9/9/97]

Section 11

Fiscal Year

Except as from time to time otherwise provided by the Trustees, the fiscal
year of the Trust shall end on September 30. [amended 6/10/97]

Section 12

Amendments

These Bylaws may be amended or repealed, in whole or in part, by a majority
of the Trustees then in office at any meeting of the Trustees, or by one or more
writings signed by such a majority.

<PAGE>

Exhibit 11

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated October 24, 1997, and to all references to our Firm included in or made
part of this Registration Statement on Form N-1A of the Harris Associates
Investment Trust (comprising The Oakmark Fund, The Oakmark Select Fund, The
Oakmark Small Cap Fund, The Oakmark Equity and Income Fund, The Oakmark
International Fund, and The Oakmark International Small Cap Fund).

/s/ Arthur Anderson LLP

Chicago, Illinois
November 24, 1997