HARRIS ASSOCIATES INVESTMENT TRUST, 485BPOS, 1998-01-23

HARRIS ASSOCIATES INVESTMENT TRUST
485BPOS, 1998-01-23

Previous: CELTRIX PHARMACEUTICALS INC, SC 13D/A, 1998-01-23

Next: AMERICAN CENTURY WORLD MUTUAL FUNDS INC, 24F-2NT, 1998-01-23

<PAGE>

As filed with the Securities and Exchange Commission on January 23, 1998

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. 20 [X]

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 22 [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)
X on January 25, 1998 pursuant to rule 485(b)
------
------ 60 days after filing pursuant to rule 485(a)(1)
------ on _____________ pursuant to rule 485(a)(1) by acceleration
------ 75 days after filing pursuant to rule 485(a)(2)
------ on _____________ pursuant to rule 485(a)(2)

________________________________________________________________________________
<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)
-------------------

<S> <C>
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.

<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.

<PAGE>

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

PROSPECTUS
January 25, 1998

THE OAKMARK
FUND

THE OAKMARK
SELECT FUND

THE OAKMARK
SMALL CAP FUND

THE OAKMARK
EQUITY AND
INCOME FUND
Formerly the Oakmark
Balanced Fund

THE OAKMARK
INTERNATIONAL
FUND

THE OAKMARK
INTERNATIONAL
SMALL CAP FUND

MEMBER OF
100%
NO LOAD
MUTUAL FUND
COUNCIL

Managed by
HARRIS
ASSOCIATES L.P.

OAKMARK

<PAGE>

<TABLE>

The Oakmark Family of Funds
1998 Prospectus
---------------------------------------------------------------------------
<S> <C>
Highlights.............................................. 2
Shareholder Transaction Expenses...................... 3
Annual Fund Operating Expenses........................ 4
Financial Highlights.................................. 5
The Funds............................................... 10
How the Funds Invest.................................. 10
Investment Techniques................................. 14
Risk Factors.......................................... 17
Restrictions on the Funds' Investments................ 20
Purchasing and Redeeming Shares......................... 21
How to Purchase Shares................................ 21
How to Redeem Shares.................................. 23
Shareholder Services.................................. 27
Net Asset Value....................................... 28
Distributions........................................... 28
Taxes................................................... 29
Management of the Funds................................. 29
Trustees and Officers................................... 32
Performance Information................................. 34
Other Information....................................... 35
</TABLE>

[LOGO OF OAKMARK FAMILY OF FUNDS]

For More Information
Access our website at www.oakmark.com or
call 1-800-OAKMARK (1-800-625-6275).

Website and 24-Hour
Net Asset Value Hotline
Access our website at www.oakmark.com to obtain
the current net asset value per share of a Fund,
or call 1-800-GROWOAK (1-800-476-9625).

The Oakmark family of funds

<PAGE>

January 25, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

<C> <S>
Fund/Ticker Symbol Investment Objective
- --------------------------------------------------------------------------------
THE OAKMARK FUND Long-Term Capital Appreciation
OAKMX The Fund invests primarily in
U.S. equity securities.
- --------------------------------------------------------------------------------
THE OAKMARK Long-Term Capital Appreciation
SELECT FUND The Fund invests primarily in a non-diversified
OAKLX portfolio of U.S. equity securities.
- --------------------------------------------------------------------------------
THE OAKMARK Long-Term Capital Appreciation
SMALL CAP FUND The Fund invests primarily in U.S. equity
OAKSX securities of companies with small market
(generally closed to capitalizations.
new investors)
- --------------------------------------------------------------------------------
THE OAKMARK High Current Income and Preservation
EQUITY AND and Growth of Capital. The Fund invests
INCOME FUND primarily in a diversified portfolio of U.S.
(formerly named The Oakmark equity and fixed-income securities.
Balanced Fund)
OAKBX

- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
</TABLE>

NO LOAD, NO SALES CHARGE, NO 12b-1 FEES
Minimum Initial Investment--$1,000, or $500 for Educational IRA
Minimum Subsequent Investments--$100
(see "Purchasing and Redeeming Shares -- How to Purchase Shares")

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 "The Funds -- 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 transfer agent 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 1
<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 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 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 plans
(including tax-qualified retirement plans and Individual Retirement Account
(IRA) plans and Educational IRAs), 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 U.S.
equity securities.

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

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

Equity and Income Fund seeks high current income and preservation and growth of
capital by investing primarily in a diversified portfolio of U.S. 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.
- -----------------
*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 THE OAKMARK FAMILY OF FUNDS

<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 (or $500 in the case of
an Educational IRA); 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

<TABLE>
<CAPTION>
- ------------------------------------------------------------
<S> <C>
Commission to purchase shares (sales load) None
- ------------------------------------------------------------
Commission to reinvest dividends None
- ------------------------------------------------------------
Deferred sales load None
- ------------------------------------------------------------
Redemption fee* None
- ------------------------------------------------------------
Fee to exchange shares None
- ------------------------------------------------------------
</TABLE>

- ------------------
*If you request payment of redemption proceeds by wire transfer, you must pay
the cost of the wire transfer (currently $5).

PROSPECTUS 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.

<TABLE>
<CAPTION>
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 (a) .93% .80% 1.15% .71% .99% 1.23%
- ---------------------------------------------------------------------------------------
12b-1 fees None None None None None None
- ---------------------------------------------------------------------------------------
Other expenses (after
reimbursement of
certain expenses) .15 .32 .22 .79(a) .27 .70
- ---------------------------------------------------------------------------------------
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 .99% 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 The Oakmark Family of Funds
<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 Fund's financial statements
and notes thereto, which may be obtained from the Trust upon request without
charge.

<TABLE>
<CAPTION>
Oakmark Fund
Eleven Months
Ended Year Ended October 31,
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%*
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>

Prospectus 5
<PAGE>

Oakmark Fund con't

Eleven Months
Ended Year Ended October 31,
September 30, ==========================================================================
1997 1996 1995 1994 1993 1992 1991(a)
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
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 assets 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%).

6 THE OAKMARK FAMILY OF FUNDS
<PAGE>

SELECT SMALL CAP EQUITY AND INCOME(a)
======== ====================== ======================
Eleven Eleven Eleven
Months Months Year Months Year
Ended Ended Ended Ended Ended
Sept. 30, Sept. 30, Oct. 31, Sept. 30, Oct. 31,
1997 1997 1996 1997 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 assets 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
- -----------------------------------------------------------------------------------------------------------
- ----------------------------
* Data has been annualized.
</TABLE>

(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.

For the Funds named below, bank borrowing activity for the eleven months ended September 30, 1997 was as follows:
Average Maximum
Debt Amount
Debt Weighted Outstanding Outstanding
Outstanding Average During During
at End Interest Period Period
of Period Rate (in thousands) (in thousands)
========================================================================================================================
<S> <C> <C> <C> <C>
Select Fund $0 6.217% $126 10,000
Small Cap Fund $0 6.318% $198 19,000
Equity and Income Fund $0 6.125% $ 6 1,000
</TABLE>

Prospectus 7
<PAGE>

INTERNATIONAl FUND
<TABLE>
<CAPTION>

Eleven Months
Ended Year Ended October 31,
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 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.

8 THE OAKMARK FAMILY OF FUNDS
<PAGE>

International Small Cap Fund

Eleven
Months Ended Year Ended
September 30, October 31,
1997 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%.

Prospectus 9
<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."

10 The Oakmark Family of Funds
<PAGE>

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.

At December 31, 1997 the median market capitalization of the Fund's portfolio
was $648.8 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.

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. 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
ade-

12 The Oakmark Family of Funds
<PAGE>

quate 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 $145.2 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.

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

Prospectus 13
<PAGE>

market value of its outstanding common stock. The S&P Index is a broad index of
600 small capitalization companies. As of December 31, 1997 the largest market
capitalization of companies included in the S&P Index was $2.93 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 below 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

14 The Oakmark Family of Funds
<PAGE>

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 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

Prospectus 15
<PAGE>

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 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,

16 The Oakmark Family of Funds
<PAGE>

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

Prospectus 17
<PAGE>

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 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.

18 The Oakmark Family of Funds
<PAGE>

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 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

Prospectus 19

<PAGE>

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, including collateral received for loaned securities
(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.

20 The Oakmark Family of Funds
<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
(or $500 in the case of an Educational IRA). 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 New
Account Registration Form 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 the stub from
your Fund account confirmation statement or just send a note indicating the
amount of the purchase, your account number, and the name in which your account
is registered, along with a check. The Trust will not accept cash, drafts,
"starter" checks, third party checks, or checks drawn on money market accounts
or 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 to furnish your social security or other tax
identification number. Neither the Funds nor

Prospectus 21

<PAGE>

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 pay for
subsequent purchases of shares by having the purchase price transferred
electronically from your bank account by calling the Funds' Audio Response
System at 1-800-OAKMARK and choosing menu options 1 then 3 and following the
instructions, or by calling a shareholder service representative at 1-800-
OAKMARK and choosing 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.

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
Registration Form.

By Exchange. You may purchase shares of a Fund by exchange of shares from
another Fund or by exchange of "Oakmark Units." (Oakmark Units are Service Units
of GS Short Duration Tax-Free Fund, a portfolio of Goldman Sachs Trust, or ILA
Service Units of Government Portfolio or Tax-Exempt Portfolio, each a portfolio
of Goldman Sachs-Institutional Liquid Assets). You may initiate a purchase by
exchange either by calling the Funds' Audio Response System at 1-800-OAKMARK and
choosing menu options 1 then 3 and following the instructions, or by calling a
shareholder service representative at 1-800-OAKMARK and choosing menu option 2
(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
four 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 "Purchasing and Redeeming Shares--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 intermediaries
("Intermediaries"). These Intermediaries may charge 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 any charges other than those described
in this prospectus.

22 The Oakmark Family of Funds

<PAGE>

An Intermediary, who accepts orders that are processed at the net asset value
next determined after receipt of the order by the Intermediary, accepts such
orders as agent of the Trust. The Intermediary is required to segregate any
orders received on a business day after the close of regular session trading on
the New York Stock Exchange and transmit those orders separately for execution
at the net asset value next determined after that business day.

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 an Intermediary that is not an authorized 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 Trust's transfer agent.

A purchase of Fund shares through an Intermediary that is an authorized agent of
the Trust for the receipt of orders is made at the net asset value next
determined after the receipt of the order by the Intermediary.

General Purchasing Policies. 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 agent or 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
loss resulting from an unauthorized transaction 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:

(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 registration.

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

Prospectus 23
<PAGE>

. 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 the Funds'
Audio Response System at 1-800-OAKMARK and choosing menu options 1 then 3 and
following the instructions, or by calling a shareholder service representative
at 1-800-OAKMARK and choosing menu option 2. The proceeds may be sent by check
to your registered address or you may request of the shareholder service
representative that payment be made 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 NYSE 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

24 The Oakmark Family of Funds

<PAGE>

to purchase shares of any of the other Funds or Oakmark Units if your signed,
properly completed Registration Form 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 four 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 Mail" by following the 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 Telephone" by
calling the Funds' Audio Response System at 1-800-OAKMARK and choosing menu
options 1 then 3 and following the instructions, or by calling a shareholder
service representative at 1-800-OAKMARK and choosing 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 NYSE 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 four 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 "Purchasing and Redeeming
Shares-How to Redeem Shares-By Exchange."

During periods of volatile economic and market conditions, you may have
difficulty placing your exchange by telephone call to a shareholder service
representative; during such periods, you may wish to consider placing your
exchange by mail or by telephone through the Funds' Audio Response System.

Prospectus 25

<PAGE>

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
Registration Form.

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 a shareholder service representative at
1-800-OAKMARK and choose menu option 2 if you have any questions about
requirements for a redemption before submitting your request. The Trust reserves
the right to require a properly completed Registration Form 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 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

26 THE OAKMARK FAMILY OF FUNDS

<PAGE>

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 loss 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 periodic reports showing
Fund portfolio holdings and will provide you annually with tax information.

IRA Plans. The Trust has a master individual retirement account (IRA) plan that
allows you to invest in either a Regular IRA or a Roth IRA 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 Regular 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 a
Regular IRA with the Fund to which your employer may contribute, subject to
special rules designed to avoid discrimination. The Trust also offers an
Educational IRA. Information on IRAs may be obtained by calling the transfer
agent at 1-800-OAKMARK (choose menu option 3).

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 a shareholder service representative at 1-800-OAKMARK (choose menu option
2) to request the appropriate form. Your call will be recorded.

Audio Response System. To obtain information about your account, such as

PROSPECTUS 27

<PAGE>

account balance, last transaction and distribution information, to purchase,
redeem or exchange shares of a Fund or Oakmark Units, or to order duplicate
statements, call 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 shareholder 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 a shareholder service
representative at 1-800-OAKMARK (choose menu option 2). Your call will be
recorded.

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
"Purchasing and Redeeming Shares--How to Redeem Shares--By Mail" regarding
signature guarantees.

Questions about Your Account. If you have a question about your account, you may
telephone a shareholder service representative 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 may be obtained by accessing the Funds' website at
www.oakmark.com or 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

28 THE OAKMARK FAMILY OF FUNDS

<PAGE>

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.

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 Registration Form 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

PROSPECTUS 29

<PAGE>

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.

For its services, the Adviser receives from each Fund the following advisory
fee, stated as a percentage of average net assets: 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% over $5 billion; International, 1% up to $2.5 billion,
.95% on the next $2.5 billion, and .90% over $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, and .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, and 1% over $2.5 billion; International Small Cap,
1.25%.

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

30 THE OAKMARK FAMILY OF FUNDS

<PAGE>

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).

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.
The Fund is 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.

PROSPECTUS 31

<PAGE>

TRUSTEES AND OFFICERS

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
Trustee and Chairman, 55 President prior thereto; Chairman, Harris
Partners, L.L.C., since September 1995

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

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

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

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

Marv R. Rotter General Manager, Rotter & Associates
Trustee, 51 (financial services)

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

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

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

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

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

32 THE OAKMARK FAMILY OF FUNDS

<PAGE>

Name, Position(s) with Trust
and Age at December 31, 1997 Principal Occupation(s) during Past Five Years
- ------------------------------------------------------------------------------
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,
Vice president and Portfolio HALP
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,
Vice President--Shareholder since 1996; Special Projects Assistant to the
Operations and Assistant General Counsel, HALP, 1995--1996; Deputy
Secretary, 49 Corporation Counsel, City of Chicago,
prior thereto

Donald Terao Secretary, Treasurer and Chief Financial
Vice President-- Officer, HAI, since 1995; Controller, HALP,
Finance, 48 prior thereto

Anita M. Nagler Vice President, HAI, since 1994; General
Secretary, 41 Counsel, HALP, since 1993; Associate Regional
Administrator, Enforcement, Securities and
Exchange Commission, Chicago, prior thereto

Prospectus 33

<PAGE>

Name, Position(s) with Trust
and Age at December 31, 1997 Principal Occupation(s) during Past Five Years#
- --------------------------------------------------------------------------------

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

# 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 "The Funds--How the Funds Invest"
and "The Funds--Restrictions on the Funds' Investments." Performance information
supplied by a Fund may not provide a basis for comparison with other investments
using different reinvestment assumptions or time periods.

34 THE OAKMARK FAMILY OF FUNDS

<PAGE>

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 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 Adviser or Transfer
Agent of the Trust at the address or telephone number shown on the inside back
cover.

PROSPECTUS 35
<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

[LOGO OF OAKMARK FAMILY OF FUNDS]

FOR MORE INFORMATION

Access our website at www.oakmark.com or call
1-800-OAKMARK (1-800-625-6275)

WEBSITE AND 24-HOUR

NET ASSET VALUE HOTLINE

Access our website at www.oakmark.com to obtain
the current net asset value per share of a Fund,
or call 1-800-GROWOAK (1-800-476-9625)

the Oakmark family of funds
<PAGE>

[LOGO OF OAKMARK FAMILY OF FUNDS]

HARRIS ASSOCIATES L.P.
2 NORTH LASALLE STREET
CHICAGO, IL 60602
1-800-OAKMARK

<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

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............................. 16
Additional Tax Information.................................. 18
Taxation of Foreign Shareholders............................ 18
Portfolio Transactions...................................... 19
Declaration of Trust........................................ 21
Custodian................................................... 21
Independent Public Accountants.............................. 22
Financial Statements........................................ 22
Appendix -- Bond Ratings.................................... 23

<PAGE>

THE FUNDS

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

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

Small Cap Fund seeks long-term capital appreciation by investing primarily
in U.S. 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 primarily in a diversified
portfolio of U.S. 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:

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. 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

2
<PAGE>

Fund] lending its portfolio securities [the Fund will not lend securities having
a value in excess of 33% of its assets, including collateral received for loaned
securities (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

- ----------

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.

/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, Select 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 16, 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 13 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................... 37.1% 37.1%
Five years................. 209.6 25.3
Life of Fund*.............. 420.1 30.7

Select Fund
Life of Fund*.............. 63.4 69.2

Small Cap Fund
One year................... 53.5 53.5
Life of Fund*.............. 103.4 44.8

Equity and Income Fund
One year................... 34.0 34.0
Life of Fund*.............. 48.1 22.7

International Fund
One year................... 29.6 29.6
Five years................. 132.8 18.4
Life of Fund*.............. 132.8 18.4

International Small Cap Fund
One year................... 12.1 12.1
Life of Fund*.............. 26.7 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:

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

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:

Dow-Jones Industrial Average*
Standard & Poor's 500 Stock Index*
Standard & Poor's 400 Industrials
Standard & Poor's Small Cap 600*
Standard & Poor's Mid Cap 400*
Russell 2000
Wilshire 5000
New York Stock Exchange Composite Index
American Stock Exchange Composite Index
NASDAQ Composite
NASDAQ Industrials

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; Micropal International Small Company Fund Index; Morgan Stanley Capital
International World ex the U.S. Index*; Morningstar International Stock Average.

___________________________
* with dividends reinvested

11
<PAGE>

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 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.

12
<PAGE>

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.
Basing the fee on net assets at the end of the preceding month has the effect
of (i) delaying the impact of changes in assets on the amount of the fee and
(ii) in the first year of a fund's operation, reducing the amount of the
aggregate fee by providing for no fee in the first month of operation. The
annual rates of fees as a percentage of each Fund's net assets are as follows:

<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.

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.

13
<PAGE>

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.

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.

14
<PAGE>

At December 31, 1997, the trustees and officers as a group owned
beneficially the following percentages of the outstanding shares of the Funds:
Select, 1.7%; Equity and Income, 12.5%; International Small Cap, 15.6%; and less
than 1% in the case of each other Fund.

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:

<TABLE>
<CAPTION>
Aggregate
Compensation
Name of Trustee from the Trust*
- --------------------------------------------------------------------------------
<S> <C>
Christine M. Maki $28,500
Michael J. Friduss 32,000
Thomas H. Hayden 26,000
Allan J. Reich 30,000
Marv R. Rotter 24,000
Burton W. Ruder 26,000
Gary N. Wilner, M.D. 33,000
- --------------------------------------------------------------------------------
</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:

<TABLE>
<CAPTION>
Percentage of
Outstanding
Name and Address Fund Shares Held
- ---------------- ---- -----------

<S> <C> <C>
Charles Schwab & Co. Inc. (1) Oakmark 31.9%
101 Montgomery Street Select 33.0
San Francisco, CA 94104-4122 Small Cap 41.3
Equity and Income 15.1
International 35.4
International Small Cap 31.1

Donaldson Lufkin & Jenrette Securities Select 5.2
Corporation (1)
One Pershing Plaza
Jersey City, NJ 07399-0001
</TABLE>

15
<PAGE>

<TABLE>
<S> <C> <C>
David G. Herro (2) International Small Cap 9.8
Two North LaSalle Street, #500
Chicago, IL 60602

Clyde S. and Joan K. McGregor Equity and Income 9.5
Two North LaSalle Street, #500
Chicago, IL 60602

Morgan Stanley & Co., Inc. (1) Equity and Income 7.9
1 Pierrepont Plaza, 10th Floor
Brooklyn, NY 11201-2776

National Financial Services Corp. (1) Oakmark 8.4
P.O. Box 3908 Select 23.6
Church Street Station Small Cap 10.4
New York, NY 10008-3908 Equity and Income 5.1
</TABLE>
- ----------
(1) Shares are held for accounts of customers.
(2) 605,063 of these shares are included in shares held by
Morgan Stanley & Co., Inc.

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 or under the
direction of 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.

The Funds' net asset values are determined only on days on which the New
York Stock Exchange is open for trading. The NYSE 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

16
<PAGE>

on a Saturday or Sunday, the NYSE 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.

17
<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

18
<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

19
<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.
<TABLE>
<CAPTION>

Eleven Months Ended Year Ended October 31,
September 30, ---------------------------------------
1997 1996 1995
---------- ---- ----
<S> <C> <C> <C> <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%)
</TABLE>

20
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
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 36.5% 47.0% 7.5%
Select 48.0 - -
Small Cap 23.2 40.0 -
Equity and Income 67.0 78.0 -
International 0.4 5.0 1.6
International Small Cap 0.5 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, $506,571; Select, $109,737; Small Cap,
$277,694; Equity and Income, $1,116; International, $5,122,190; International
Small Cap, $315,422.

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 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

21
<PAGE>

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.

22
<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.

23
<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.

24
<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 (exhibit 2 to Post-effective
Amendment no. 19*)

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*)

C-1
<PAGE>

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

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*)

8.6 Form of special custody account agreement (short sales) dated May 21,
1996 for each 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

9 None

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

C-2
<PAGE>

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*)

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 and adoption agreement, effective
January 1, 1998

14.2 Form of individual retirement custodial account application, revised
January 1, 1998

14.3 Form of IRA transfer form, revised January 1, 1998

15 None

16 Schedule for computation of performance quotations

17 Financial data schedule

18 New account registration form, revised January 1998
- --------------------
* Incorporated by reference

C-3
<PAGE>

# 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.

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 December 31, 1997, the respective series of the Trust had the
following numbers of shareholders of record: The Oakmark Fund, 217,678; The
Oakmark Select Fund, 26,454; The Oakmark Small Cap Fund, 40,308; The Oakmark
Equity and Income Fund, 2,767; The Oakmark International Fund, 62,551; The
Oakmark International Small Cap Fund, 5,868.

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.

C-4
<PAGE>

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
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 meets all of
the requirements for effectiveness of this registration statement pursuant to
rule 485(b) under the Securities Act of 1933 and 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 January 21, 1998.

HARRIS ASSOCIATES INVESTMENT TRUST

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

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 )
- --------------------------- )
Victor A. Morgenstern (chief executive officer) )
)
/s/ Allan J. Reich Trustee )
- --------------------------- )
Allan J. Reich )
) January 21, 1998
/s/ Marv R. Rotter Trustee )
- --------------------------- )
Marv R. Rotter )
)
/s/ Burton W. Ruder Trustee )
- --------------------------- )
Burton W. Ruder )
)
- --------------------------- Trustee )
Peter S. Voss )
)
/s/ Gary N. Wilner Trustee )
- --------------------------- )
Gary N. Wilner )
)
/s/ Kristi L. Rowsell )
- --------------------------- Treasurer (principal )
Kristi L. Rowsell accounting officer) )
</TABLE>
<PAGE>

Exhibits Being Filed with This Amendment
----------------------------------------
<TABLE>
<CAPTION>
Exhibit
Number
- -------
<C> <S>
5.4 Amendment dated September 9, 1997 to investment advisory agreement for
The Oakmark Small Cap Fund

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

11 Consent of independent public accountants

14.1 The Oakmark Funds IRA Plan booklet and adoption agreement, effective
January 1, 1998

14.2 Form of individual retirement custodial account application, revised
January 1, 1998

14.3 Form of IRA transfer form, revised January 1, 1998

16 Schedule for computation of performance quotations

17 Financial data schedule

18 New account registration form, revised January 1998
</TABLE>

<PAGE>

Exhibit 5.4

AMENDMENT TO

INVESTMENT ADVISORY AGREEMENT

FOR

THE OAKMARK SMALL CAP FUND

HARRIS ASSOCIATES INVESTMENT TRUST, a Massachusetts business trust
registered under the Investment Company Act of 1940 (the "1940 Act") as an open-
end diversified management investment company (the "Trust"), and HARRIS
ASSOCIATES L.P., a Delaware limited partnership registered under the Investment
Advisers Act of 1940 as an investment adviser (the "Adviser"), agree that
paragraph 6 of the investment advisory agreement between the parties for The
Oakmark Small Cap Fund (the "Fund") dated August 30, 1996 is amended as of the
date of this amendment to read as follows:

6. Compensation of Adviser. For the services to be rendered and the
charges and expenses to be assumed and to be paid by the Adviser hereunder,
the Trust shall pay out of Fund assets to the Adviser a monthly fee, based
on the Fund's net assets as of the last business day of the preceding
month, at the annual rate of 1.25% on the first $1 billion of net assets,
1.15% on the next $500 million of net assets, 1.10% on the next $500
million of net assets, 1.05% on the next $500 million of net assets and
1.00% on net assets in excess of $2.5 billion. The fee for a month shall be
paid as soon as practicable after the last day of that month. The fee
payable hereunder shall be reduced proportionately during any month in
which this agreement is not in effect for the entire month.

Dated: September 9, 1997

HARRIS ASSOCIATES INVESTMENT TRUST

By: /s/ Victor A. Morgenstern

HARRIS ASSOCIATES L.P.
by Harris Associates, Inc.
its General Partner

By: /s/ Robert Levy

<PAGE>

Exhibit 5.8

AMENDMENT TO

INVESTMENT ADVISORY AGREEMENT

FOR

THE OAKMARK SELECT FUND

HARRIS ASSOCIATES INVESTMENT TRUST, a Massachusetts business trust
registered under the Investment Company Act of 1940 (the "1940 Act") as an open-
end diversified management investment company (the "Trust"), and HARRIS
ASSOCIATES L.P., a Delaware limited partnership registered under the Investment
Advisers Act of 1940 as an investment adviser (the "Adviser"), agree that
paragraph 6 of the investment advisory agreement between the parties for The
Oakmark Select Fund (the "Fund") dated October 22, 1996 is amended as of the
date of this amendment to read as follows:

6. Compensation of Adviser. For the services to be rendered and the
charges and expenses to be assumed and to be paid by the Adviser hereunder,
the Trust shall pay out of Fund assets to the Adviser a monthly fee, based
on the Fund's net assets as of the last business day of the preceding
month, at the annual rate of 1.00% on the first $1 billion of net assets,
.95% on the next $500 million of net assets, .90% on the next $500 million
of net assets, .85% on the next $500 million of net assets and .80% on net
assets in excess of $2.5 billion. The fee for a month shall be paid as soon
as practicable after the last day of that month. The fee payable hereunder
shall be reduced proportionately during any month in which this agreement
is not in effect for the entire month.

Dated: September 9, 1997

HARRIS ASSOCIATES INVESTMENT TRUST

By: /s/ Victor A. Morgenstern

HARRIS ASSOCIATES L.P.
by Harris Associates, Inc.
its General Partner

By: /s/ Robert Levy

<PAGE>

Exhibit 8.6

SPECIAL CUSTODY ACCOUNT AGREEMENT
---------------------------------
(Short Sales)

AGREEMENT, dated as of May 21, 1996, by and among State Street Bank and
Trust Company, in its capacity as custodian hereunder ("Bank"), Harris
Associates Investment Trust Series Designated The Oakmark Fund, (the
"Customer"), and Morgan Stanley & Co. Incorporated ("Broker").

WHEREAS, Broker is a securities broker-dealer registered with the
Securities and Exchange Commission and a clearing member of The Options Clearing
Corporation("OCC") and is a member of several national securities exchanges; and

WHEREAS, Customer desires from time to time to sell securities "short"
through Broker, such short sales being permitted by Customer's investment
policies, and for that purpose has opened one or more margin accounts with
Broker (each an "Account") and executed Broker's "Margin Account Agreement" (the
"Customer Agreement"); and

WHEREAS, to facilitate Customer's transactions through Broker, Customer,
Bank and Broker desire to establish procedures for the compliance by Broker with
the provisions of Regulation T of the Board of Governors of the Federal Reserve
System and with the provisions of Rule 431 of the New York Stock Exchange and
other applicable requirements and for compliance by Customer with Regulation X
of the Board of Governors of the Federal Reserve System and other requirements
("Margin Rules"); and

WHEREAS, to assist Broker and Customer in complying with the Margin
Rules, Bank is prepared to act as custodian to hold Collateral as defined below
(in such capacity, Bank is herein called the "Custodian").

NOW, THEREFORE, be it agreed as follows:

1. As used herein, the following terms have the following meanings:

"Adequate Margin" shall mean such Collateral as is adequate in Broker's
judgment under the Margin Rules and the internal policies of Broker. For
purposes hereunder, Collateral shall be valued by Broker at Broker's sole
discretion.

"Advice from Broker" or "Advice" means a written notice sent to Customer
and/or Bank or transmitted by a facsimile sending device, except that for any of
the following purposes it may mean notice by telephone to a person designated by
Customer in writing as authorized to receive such advice or, in the event that
no such person is available, to any officer of Customer and
<PAGE>

confirmed promptly in writing thereafter: (i) for initial or additional
Collateral; (ii) that Customer has defaulted pursuant to paragraph 9(a) hereof;
or (iii) to Advise Customer with respect to Broker's ability to effect a short
sale. With respect to any short sale or covering purchase transaction, the
Advice from Broker shall mean a standard confirmation in use by Broker and sent
or transmitted to Customer and/or Bank. With respect to substitutions or
releases of Collateral, Advice from Broker means a written notice signed by an
authorized person of Broker and sent or transmitted to Customer and/or Bank. An
officer of Broker will certify to Bank and Customer the names and signatures of
those employees who are authorized to Advise by telephone and/or sign Advices
from Broker, which certification may be amended from time to time. When used
herein the term "Advise" means the act of sending an Advice from Broker.

"Closing Transaction" is a transaction in which Customer purchases
securities which have been sold short.

"Collateral" shall mean cash or U.S. Government securities or other
securities acceptable to Broker which are deposited by Customer from time to
time in the Special Custody Account defined below.

"Insolvency" means that (A) an order, judgment or decree has been entered
under the bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law (herein called
the "Bankruptcy Law") of any jurisdiction adjudicating the Customer insolvent;
or (B) the Customer has petitioned or applied to any tribunal for, or consented
to the appointment of, or taking possession by, a trustee, receiver, liquidator
or similar official, of the Customer, or commenced a voluntary case under the
Bankruptcy Law of the United States or any proceedings relating to the Customer
under the Bankruptcy Law of any other jurisdiction, whether now or hereinafter
in effect or (C) any such petition or application has been filed, or any such
proceeding has commenced, against the Customer or the Customer by any act has
indicated its approval thereof, consent thereto or acquiescence therein, or an
order for relief has been entered in an involuntary case under the Bankruptcy
Law of the United States, as now or hereinafter constituted, or an order,
judgment or decree has been entered appointing any such trustee, receiver,
liquidator or similar official, or approving the petition in any such
proceedings, and such order, judgment or decree remains unstayed and in effect
for more than 30 days.

"Instructions from Customer" or "Instructions" means a request, direction
or certification in writing signed by Customer and delivered to Bank and/or
Broker or transmitted by a facsimile sending device and which is reasonably
believed by Bank and/or Broker in good faith to be signed by a person authorized
to give Instructions on behalf of Customer. An authorized agent of Customer will
certify to Bank and Broker the names and signatures of those persons authorized
to Instruct Bank and/or Broker, which certification may be amended from time to
time. When used herein, the term "Instruct" shall mean the act of sending an
Instruction from Customer.

"Receipt of Payment" means receipt by Bank on behalf of Broker, of (1) a
certified or official bank check, (2) a written or telegraphic advice from a
registered clearing agency that

2
<PAGE>

funds have been or will be credited to the account of Bank, or (3) a transfer of
funds from any of Broker's accounts maintained at Bank.

"Receipt of Securities" means receipt by Bank on behalf of Broker, of (1)
securities in proper from for transfer or (2) a written or telegraphic advice
from a registered clearing agency that securities have been credited to the
account of Bank.

2. From time to time, Customer may place orders with Broker for the short
sale of securities. Prior to the acceptance of such short sale orders Broker
will Advise Customer of Broker's ability to borrow such securities or other
properties and acceptance of short sale orders will be contingent upon same.

3. Bank shall open an account on its books entitled "Special Custody
Account for margin and short sales for Morgan Stanley & Co. Incorporated as
pledgee of Harris Associates Investment Trust Series Designated The Oakmark
Fund," (referred to herein as "Special Custody Account"). Collateral shall be
released only in accordance with this Agreement. Bank agrees to release
Collateral to Customer from the pledge hereunder only upon receipt of Advice
from Broker. Customer can substitute or exchange the cash, securities or similar
property in the Special Custody Account only after Customer notifies Broker of
the contemplated substitution or exchange and Broker Advises Bank that such
substitution or exchange is acceptable. Customer hereby grants a continuing
security interest to Broker in the Collateral and the proceeds thereof to secure
its obligations to Broker under the Margin Agreement and this Agreement.

4. Customer agrees to instruct Bank in Instructions from Customer that
cash and securities specified by Customer qualifying as Collateral and at least
equal in value to what Broker shall initially and from time to time advise
Customer in an Advice from Broker is necessary to constitute Adequate Margin are
to be identified on Bank's books and records as pledged to Broker as Collateral.
Such Collateral (i) will be held by Bank in the Special Custody Account for
Broker as agent of Broker, subject to the terms and conditions of this
Agreement; (ii) may be released only in accordance with the terms of this
Agreement; and (iii) except as required to be released hereunder to Broker,
shall not be made available to Broker or to any other person claiming through
Broker, including creditors of Broker. Bank will hold the Collateral in the
Special Custody Account separate and apart from any other property of Customer
which may be held by Bank, subject to the interest therein of Broker as the
pledgee thereof in accordance with the terms of this Agreement. Such security
interest will terminate at such time as Collateral is released as provided
herein.

Any dividends or interest paid with respect to the Collateral held in the
Special Custody Account shall be paid by Bank to Customer when collected unless
Bank has received other instructions from Customer.

Bank will confirm in writing to Broker and Customer all pledges,
deliveries, releases or substitutions of Collateral. Bank will also advise
Broker and Customer upon request, at any time, of the kind and amount of
Collateral pledged to Broker and held in the Special Custody Account. A monthly
statement will be provided to Broker and Customer listing all Collateral held in
the Special Custody Account. Bank will also advise Broker daily by 3:00 p.m.
E.S.T of the amount

3
<PAGE>

of the Collateral pledged to Broker as of the close of business of the prior
business day by facsimile to (718) 754-______ and once a month to the Broker's
address. Upon the request of Customer, Broker shall Advise Bank and Customer of
any excess of Collateral in the Special Custody Account. Upon Customer's
request, broker shall Advise Bank to transfer such excess Collateral out of the
Special Custody Account to an account designated by Customer.

5. Customer represents and warrants to Broker that securities included at
any time in the Collateral shall be in good deliverable form (or Bank shall have
the unrestricted power to put such securities into good deliverable form) in
accordance with the requirements of such exchanges as may be the primary market
or markets for such securities. Securities Collateral may be held at Depository
Trust Company ("DTC") or other book-entry depository system in the account of
Bank, except U.S. Treasury securities may also be held at the Federal Reserve
Bank in the account of Bank. The Bank represents that Collateral will not be
subject to any lien, charge, security interest or other right or claim of the
Bank or any person claiming through the Bank.

6. Bank will maintain accounts and records for the Collateral in the
Special Custody Account separate from the accounts and records for other
property of Customer held by Bank and other property in which Broker has an
interest.

7. Customer agrees to maintain Adequate Margin at all times. Broker shall
initially, and from time to time, advise Customer (in an Advice from Broker) of
the value of Collateral which is necessary to constitute Adequate Margin. Broker
shall, from time to time and on the last business day of each week, compute the
aggregate net credit or debit balance on Customer's open short sales and advise
Customer by 11:00 a.m. New York time of the amount of the net debit or credit,
as the case may be. If a net debit balance exists on such day, Customer will
cause an amount equal to such net debit balance to be deposited as Collateral in
the Special Custody Account by the close of business on such day. If a net
credit balance exists on such day, Broker will pay interest on such credit
balance at the rate listed in Appendix A hereto. Broker will pay interest on
short credit balances at the rates listed in Appendix A hereto. Balances will be
appropriately adjusted to reflect each Closing Transaction. Upon Customer's
request, Broker shall promptly transfer excess Collateral out of Customer's
Account with Broker into an account designated by Customer.

8. It is understood and agreed that Customer, when placing with Broker any
order to sell short for Customer's account, will designate the order as such and
hereby authorizes Broker to mark such order as being "short," and when placing
with Broker any order to sell long for Customer's account, will designate the
order as such and hereby authorizes Broker to mark such order as being "long."
Any sell order which Customer shall designate as being for long account as above
provided is for securities then owned by Customer.

9(a) In the event of default of Customer of any obligation hereunder or
under the Margin Agreement, or in the event of Customer's Insolvency, Broker
may, after transmittal of an Advice from Broker to Customer specifying such
default of Insolvency and of its intention to do so, and only if Customer
continues to be in default or Insolvent, sell and Advise Bank to deliver to
Broker the proceeds of such of the Collateral as in Broker's judgment is
reasonably necessary for

4
<PAGE>

the protection of its interest under this Agreement. Bank will act immediately
upon receipt of such Advice from Broker. Bank will also provide prompt telephone
notice to Customer of any receipt by Bank of such Advice from Broker.

(b) Any sale of Collateral made pursuant to this paragraph 9 must be made
on the exchange or other market where such business is then usually transacted.
Such shall be made in a manner commercially reasonable for such securities.
Customer shall remain liable to Broker for the deficiency. Broker shall notify
Customer of any sale of Collateral and any deficiency remaining in an Advice
from Broker. If the proceeds of any such sale exceed the amount due to Broker
under this paragraph 9, the excess of the amount due to Broker shall remain in
the Special Custody Account as Collateral unless otherwise released or withdrawn
as provided herein.

10. Bank shall be paid as compensation for its services pursuant to this
Agreement such compensation as may from time to time be agreed upon in writing
between Customer and Bank.

11. Bank's duties and responsibilities are as set forth in this Agreement.
With respect to any losses or liabilities, Bank shall not be liable or
responsible for acting or not acting pursuant to any Instructions, Advices or
notices from Customer or Broker believed by Bank in good faith to be genuine and
authorized, except in the case of Bank's bad faith or negligence.

As between Customer and Bank, the terms of the Custodian Agreement shall
apply with respect to any losses or liabilities of such parties arising out of
matters covered by this Agreement.

As between Bank and Broker, Broker shall indemnify and hold Bank harmless
for any losses or liabilities incurred by Bank (including reasonable attorneys
fees) arising out of any act or omission of Bank's in accordance with any Advice
or notice from Broker, except to the extent of Bank's negligence or bad faith in
carrying out such Advice, in the case of such bad faith or negligence, Bank
shall indemnify and hold Broker harmless for any losses or liabilities incurred
by Broker (including reasonable attorneys fees).

12. Neither Broker nor Bank shall be liable for any losses, costs, damages,
liabilities or expenses suffered or incurred by Customer as a result of any
transaction executed hereunder, or any other action taken or not taken by Broker
or Bank hereunder for Customer's account at Customer's direction or otherwise,
except to the extent that such loss, cost, damage, liability or expense is the
result of Broker's own, or Bank's own, as the case may be, negligence or willful
misconduct.

13. No amendment of this Agreement shall be effective unless in writing and
signed by an authorized officer of each of the parties hereto.

14. This Agreement may be executed in one or more counterparts, all of
which together shall constitute but one and the same instrument.

<PAGE>

15. It is agreed that, notwithstanding any language to the contrary in
Bank's form of confirmation, Bank holds the Collateral as agent of Broker as
pledgee and secured party hereunder, not as escrow agent.

16. Customer represents and warrants that the Collateral will not be
subject to any other liens or encumbrances, other than to Broker in accordance
with the Margin Agreement and this Agreement.

17. Any of the parties hereto may terminate this Agreement by notice in
writing to the other parties hereto; provided, however, that the status of any
short sales, and of Collateral held at the time of such notice to margin such
short sales shall not be affected by such termination until the release of such
Collateral pursuant to applicable rules of such national securities exchanges of
which Broker may be a member, as applicable.

18. Written communications hereunder shall be sent by facsimile
transmission or hand delivered as required herein, when another method of
delivery is not specified, may be mailed first class postage prepaid, except
that written notice of termination shall be sent by certified mail, addressed:

(a) If to Bank, to:

(b) If to Customer, to:
Harris Associates Investment Trust Series Designated
The Oakmark Fund
Attention: Molly Head
Phone: (312)621-0555
Fax: (312)621-0372

(c) If to Broker, to:
Morgan Stanley & Co. Incorporated
Correspondent Services
One Pierrepont Plaza
Brooklyn, New York 11202
Attention:
Phone: (718) 754-
Fax: (718) 754-

<PAGE>

19. This Agreement will be governed by the laws of the State of New York
applicable to transactions entered into and to be performed wholly within the
State of New York.

State Street Bank and Trust Company
as Bank

By: /s/ Jeff D. Conway
--------------------------------
Name: Jeff D. Conway
Title: Vice President

HARRIS ASSOCIATES INVESTMENT TRUST
as Customer

By: /s/ Victor A. Morgenstern
--------------------------------
Name: Victor A. Morgenstern
Title: President

Morgan Stanley & Co. Incorporated
as Broker

By: /s/ Frederick B. Krom
--------------------------------
Frederick B. Krom III
Managing Director

<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
January 19, 1998

<PAGE>
Exhibit 14.1

State Street Bank and Trust Company
as Custodian for
The Oakmark Family of Funds
IRA Information Kit
Effective January 1, 1998

Introduction

What's New In The World Of IRAs?

An Individual Retirement Account ("IRA") has always provided an attractive
means to save money for the future on a tax-advantaged basis. Recent changes to
Federal tax law have now made the IRA an even more flexible investment and
savings vehicle. Among the new changes is the creation of the Roth Individual
Retirement Account ("Roth IRA"), which will be available for use after January
1, 1998. Under a Roth IRA, the earnings and interest on an individual's
nondeductible contributions grow without being taxed, and distributions may be
tax-free under certain circumstances. Most taxpayers (except for those with very
high income levels) will be eligible to contribute to a Roth IRA. A Roth IRA can
be used instead of a Regular IRA, to replace an existing Regular IRA, or
complement a Regular IRA you wish to continue maintaining.

Taxpayers with adjusted gross income of up to $100,000 are eligible to
convert existing IRAs into Roth IRAs. The details on conversion are found in the
description of Roth IRAs in this booklet.

Congress has also made significant changes to Regular IRAs. First, Congress
increased the income levels at which IRA holders who participate in employer-
sponsored retirement plans can make deductible Regular IRA contributions. Also
the rules for deductible contributions by an IRA holder whose spouse is a
participant in an employer-sponsored retirement plan have been liberalized.
Second, the 10% penalty tax for premature withdrawals (before age 59 1/2) will
no longer apply in the case of withdrawals to pay certain higher education
expenses or certain first-time homebuyer expenses.

What's in This Kit?

In this Kit you will find detailed information about Roth IRAs and about
the changes that have been made to Regular IRAs. You will also find everything
you need to establish and maintain either a Regular or Roth IRA, or to convert
all or part of an existing Regular IRA to a Roth IRA.

The first section of this Kit contains the instructions and forms you will
need to open a new Regular IRA or Roth IRA, to transfer from another IRA to a
State Street Bank and Trust IRA, or to convert a Regular IRA to a Roth IRA.

The second section of this Kit contains our IRA Disclosure Statement. The
Disclosure Statement is divided into three parts:
<PAGE>

Part One describes the basic rules and benefits which are specifically
applicable to your Regular IRA.

Part Two describes the basic rules and benefits which are specifically
applicable to your Roth IRA.

Part Three describes important rules and information applicable to all
IRAs.

The third section of this Kit contains the IRA Custodial Agreement. The
Custodial Agreement is also divided into three parts:

Part One contains provisions specifically applicable to Regular IRAs.

Part Two contains provisions specifically applicable to Roth IRAs.

Part Three contains provisions applicable to IRAs (Regular and Roth).

This Individual Retirement Custodial Account Kit contains information for
both Regular IRAs and Roth IRAs. However, you may use the Adoption Agreement to
establish only one Regular IRA or one Roth IRA; separate Adoption Agreements
must be completed if you want to establish multiple (Roth or Regular) IRA
accounts.

What's the Difference Between a Regular IRA and a Roth IRA?

With a Regular IRA, an individual may contribute up to $2,000 per year and
may be able to deduct the contribution from taxable income, reducing income
taxes. Taxes on investment growth and dividends are deferred until the money is
withdrawn. Withdrawals are taxed as additional ordinary income when received.
Nondeductible contributions, if any, are withdrawn tax-free. Withdrawals before
age 59 1/2 are assessed a 10% penalty in addition to income tax, unless an
exception applies.

With a Roth IRA, the contribution limits are essentially the same as
Regular IRAs, but there is no tax deduction for contributions. All dividends and
investment growth in the account are tax-free. Most important with a Roth IRA:
there is no income tax on qualified withdrawals from your Roth IRA.
Additionally, unlike a Regular IRA, there is no prohibition on making
contributions to Roth IRAs after turning age 70 1/2, and there's no requirement
that you begin making minimum withdrawals at that age.

The following chart highlights some of the major differences between a
Regular IRA and a Roth IRA:

Characteristics Regular IRA Roth IRA

Eligibility Individuals (and their Individuals (and their
spouses) who receive spouses) who receive
compensation compensation
Individuals age 70 1/2 Individuals age 70 1/2
<PAGE>

and over may not and over may contribute
contribute

Tax Treatment of Subject to No deduction permitted
Contributions limitations, for amounts contributed
contributions are
deductible

Contribution Limits Individuals may Individuals may
contribute up to generally contribute
$2,000 annually (or up to $2,000 (or 100%
100% of compensation, of compensation, if
if less) less)

Deductibility depends Ability to contribute
on income level for phases out at income
individuals who are levels of $95,000 to
active participants in $110,000 (individual
an employer-sponsored taxpayer) and $150,000
retirement plan to $160,000 (married
taxpayers)
Overall limit for
contributions to all
IRAs (Regular and Roth
combined) is $2,000
annually (or 100% of
compensation, if less)

Earnings Earnings and interest Earnings and interest
are not taxed are not taxed

Rollover/Conversions Individual may Rollovers from other
rollover amounts held Roth IRAs or Regular
in employer-sponsored IRAs only
retirement Amounts rolled over
arrangements (401(k), (or converted) from
SEP IRA, etc.) tax another Regular IRA
free to Regular IRA are subject to income
tax in the year rolled
over or converted
Tax on amounts rolled
over or converted in
1998 is spread over
four year period
(1998-2001)

Withdrawals Total (principal + Not taxable as long as
earnings) taxable as a qualified
income in year distribution--generally,
withdrawn (except for account open for 5 years,
any prior and age 59 1/2
non-deductible Minimum withdrawals
contributions) not required after age
Minimum withdrawals 70 1/2
must begin after age
70 1/2

Is a Roth or a Regular IRA Right For Me?

<PAGE>

We cannot act as your legal or tax advisor and so we cannot tell you which
kind of IRA is right for you. The information contained in this Kit is intended
to provide you with the basic information and material you will need if you
decide whether a Regular or Roth IRA is better for you, or if you want to
convert an existing Regular IRA to a Roth IRA. We suggest that you consult with
your accountant, lawyer or other tax advisor, or with a qualified financial
planner, to determine whether you should open a Regular or Roth IRA or convert
any or all of an existing Regular IRA to a Roth IRA. Your tax advisor can also
advise you as to the state tax consequences that may affect whether a Regular or
Roth IRA is right for you.

Other Points to Note.

The Disclosure Statement in this Kit provides you with the basic
information that you should know about State Street Bank and Trust Company
Regular IRAs and Roth IRAs. The Disclosure Statement provides general
information about the governing rules for these IRAs and the benefits and
features offered through each type of IRA. However, the State Street Bank and
Trust Company Adoption Agreement and the Custodial Agreement, are the primary
documents controlling the terms and conditions of your personal State Street
Bank and Trust Company Regular or Roth IRA, and these shall govern in the case
of any difference with the Disclosure Statement.

The Oakmark Family of Funds
State Street Bank and Trust Company
Individual Retirement Custodial Account

Instructions for Opening Your Regular IRA or Roth IRA

1. Read carefully the applicable sections of the IRA Disclosure Statement
contained in this Kit, the Regular or Roth Individual Retirement Account
Custodial Agreement provisions (as applicable), the Application and Adoption
Agreement, and the prospectus. Consult your lawyer or other tax advisor if you
have any questions about how opening a Regular IRA or Roth IRA will affect your
financial and tax situation.

This Individual Retirement Custodial Account Kit contains information and
forms for both Regular IRAs and Roth IRAs. However, you may use the Application
and Adoption Agreement to establish only one Regular IRA or one Roth IRA;
separate Adoption Agreements must be completed if you want to establish multiple
(Roth or Regular) IRA accounts.

2. Complete the Application and Adoption Agreement

. Print the identifying information where requested in Part 1 of the
Adoption Agreement.

. For a Regular IRA, check the box for Part A. Check the other boxes in
Part A to specify the type of Regular IRA you are opening and provide
the requested information.
<PAGE>

If this is an IRA to which you expect to make contributions each year,
check Box 1 and enclose a check in the amount of your first contribution. Be
sure to indicate the tax year of this contribution.

If this is a transfer directly from another IRA custodian or trustee,
check Box 2. Check the appropriate box to indicate whether the funds transferred
were originally from contributions to an employee qualified plan or a 403(b)
arrangement, or whether any of the funds were originally from your annual
contributions to the IRA. Complete and sign the IRA Transfer of Assets Form.

If this is a rollover of amounts distributed to you from another IRA or an
employer qualified plan or a 403(b) arrangement, check Box 3. Check the
appropriate box to indicate whether the transfer is coming from a qualified plan
or 403(b) arrangement, or an IRA that held only funds that were originally from
contributions to a qualified plan or 403(b), or whether any of the funds were
originally from your annual contributions to the IRA. Enclose a check for the
rollover contribution amount.

If this is a direct rollover from a qualified plan or 403(b) arrangement,
check Box 4. Complete and sign the IRA Transfer of Assets Form.

If this is an IRA that will be used to receive employer contributions under
an employer's simplified employee pension ("SEP") plan or under a grandfathered
salary reduction SEP plan ("SARSEP"), check Box 5.

. For a Roth IRA, check the box for Part B. Check the other boxes in
Part B to specify the type of Roth IRA you are opening and provide the
requested information.

If this is a Roth IRA to which you expect to make contributions each year,
enclose a check in the amount of your first contribution. Be sure to indicate
the tax year of this contribution. Only annual contributions may be accepted in
an annual contribution Roth IRA account. NOTE: Roth IRAs are available starting
January 1, 1998, so you cannot make a contribution for 1997.

If you are converting an existing Regular IRA with State Street Bank and
Trust as IRA custodian or trustee, check Box 2. Indicate your current IRA
account number and how much you are converting. Conversion of an existing
Regular IRA will result in inclusion of taxable amounts in the existing Regular
IRA on your income tax return. Note: If a conversion, rollover or transfer from
a Regular IRA to a Roth IRA is being made, only amounts converted, rolled over
or transferred during the same tax year will be accepted in a single Roth IRA. A
separate Roth IRA must be established to hold such amounts from a different tax
year. Annual contributions may never be deposited in a Roth IRA holding such
converted, rolled over or transferred amounts.

If you are making a rollover or a transfer from an existing Regular IRA
with a different custodian or trustee, check Box 3. A rollover or transfer from
an existing Regular IRA means that the taxable amount in the existing Regular
IRA will be treated as additional income on your income tax return.

If you are making a rollover or a transfer from another Roth IRA with a
different trustee or custodian, check Box 4. Put the requested information where
indicated.

. In Part 3, indicate your investment choices.
<PAGE>

. In Part 4, indicate your Primary and Alternate Beneficiaries. (Spousal
waiver must be signed if beneficiary is other than your spouse.) *
See Below

. Sign and date the Adoption Agreement in Part 5.

3. If you are transferring assets from an existing IRA with another
Custodian to this IRA, complete the Transfer of Assets Form.

4. The Custodian fees for maintaining your IRA are listed in the FEES AND
EXPENSES section of Part Three of the Disclosure Statement or in the Adoption
Agreement. If you are paying by check, enclose a check for the correct amount
payable as specified below. If you do not pay by check, the correct amount will
be taken from your account.

5. Check to be sure you have properly completed all necessary forms and
enclosed a check for the Custodian's fees (unless being withdrawn from your
account) and a check for the first contribution to your Regular or Roth IRA (if
applicable). Your Regular IRA or Roth IRA cannot be accepted without the
properly completed documents.

All checks should be payable to "State Street Bank and Trust."

Send the completed forms and checks to:

The Oakmark Funds

P.O. Box 8510

Boston, MA 02266-8510

* Spousal Waiver is only needed if:

1. Individual retirement account owner is married AND

2. Resides in a marital/community property state AND

3. Appoints someone other than a spouse as primary beneficiary.

<PAGE>

The Oakmark Family of Funds
State Street Bank and Trust Company
Individual Retirement Account
Disclosure Statement
Part One: Description of Regular IRAs

SPECIAL NOTE

Part One of the Disclosure Statement describes the rules applicable to
Regular IRAs beginning January 1, 1998. IRAs described in these pages are called
"Regular IRAs" to distinguish them from the new "Roth IRAs" first available
starting in 1998. Roth IRAs are described in Part Two of this Disclosure
Statement.

For Regular IRA contributions for 1997 (including contributions made up to
April 15, 1998 but designated as contributions for 1997), there are different
rules for determining the deductibility of your contribution on your federal tax
return. For contributions for 1997, the "active participant" limits on
deductibility (described below) apply if either spouse is an active participant
in an employer-sponsored plan. Also, the adjusted gross income ("AGI") levels
for partially deductible or nondeductible Regular IRA contributions (described
below) are lower for 1997 ($25,000 for single taxpayers, with no deduction if
your AGI is above $35,000; and $40,000 for married taxpayers filing jointly,
with no deduction if your AGI is above $50,000). Also, the exceptions to the 10%
early withdrawal penalty for withdrawals to pay certain higher education or
first-time homebuyer expenses do not apply to withdrawals in 1997.

Regular IRAs described in this Disclosure Statement may be used as part of
a simplified employee pension (SEP) plan maintained by your employer. Under a
SEP your employer may make contributions to your Regular IRA, and these
contributions may exceed the normal limits on Regular IRA contributions.

YOUR REGULAR IRA

Part One contains information about your Regular Individual Retirement
Custodial Account with State Street Bank and Trust Company as Custodian. A
Regular IRA gives you several tax benefits. Earnings on the assets held in your
Regular IRA are not subject to federal income tax until withdrawn by you. You
may be able to deduct all or part of your Regular IRA contribution on your
federal income tax return. State income tax treatment of your Regular IRA may
differ from federal treatment; ask your state tax department or your personal
tax advisor for details.

Be sure to read Part Three of this Disclosure Statement for important
additional information, including information on how to revoke your Regular IRA,
investments and prohibited transactions, fees and expenses, and certain tax
requirements.

ELIGIBILITY
<PAGE>

What are the eligibility requirements for a Regular IRA?

You are eligible to establish and contribute to a Regular IRA if:

. You received compensation (or earned income if you are self employed)
during the year for personal services you rendered. If you received
taxable alimony, this is treated like compensation for IRA purposes.

. You did not reach age 70 1/2 during the tax filing year.

Can I Contribute to a Regular IRA for my Spouse?

For each year before the year when your spouse attains age 70 1/2, you may
contribute to a separate Regular IRA for your spouse, regardless of whether your
spouse had any compensation or earned income in that year. This is called a
"spousal IRA." To make a contribution to a Regular IRA for your spouse, you must
file a joint tax return for the year with your spouse. For a spousal IRA, your
spouse must set up a different Regular IRA, separate from yours, to which you
contribute.

CONTRIBUTIONS

When Can I Make Contributions to a Regular IRA?

You may make a contribution to your existing Regular IRA or establish a new
Regular IRA for a taxable year by the due date (not including any extensions)
for your federal income tax return for the year. Usually this is April 15 of the
following year.

How Much Can I Contribute to my Regular IRA?

For each year when you are eligible (see above), you can contribute up to
the lesser of $2,000 or 100% of your compensation (or earned income, if you are
self-employed). However, under the tax laws, all or a portion of your
contribution may not be deductible.

If you and your spouse have spousal Regular IRAs, each spouse may
contribute up to $2,000 to his or her IRA for a year as long as the combined
compensation of both spouses for the year (as shown on your joint income tax
return) is at least $4,000. If the combined compensation of both spouses is less
than $4,000, the spouse with the higher amount of compensation may contribute up
to that spouse's compensation amount, or $2,000 if less. The spouse with the
lower compensation amount may contribute any amount up to that spouse's
compensation plus any excess of the other spouse's compensation over the other
spouse's IRA contribution. However, the maximum contribution to either spouse's
Regular IRA is $2,000 for the year.

If you (or your spouse) establish a new Roth IRA and make contributions
<PAGE>

to both your Regular IRA and a Roth IRA, the combined limit on contributions to
both your (or your spouse's) Regular IRA and Roth IRA for a single calendar year
is $2,000.

How Do I Know if my Contribution is Tax Deductible?

The deductibility of your contribution depends upon whether you are an
active participant in any employer-sponsored retirement plan. If you are not an
active participant, the entire contribution to your Regular IRA is deductible.

If you are an active participant in an employer-sponsored plan, your
Regular IRA contribution may still be completely or partly deductible on your
tax return. This depends on the amount of your income (see below).

Similarly, the deductibility of a contribution to a Regular IRA for your
spouse depends upon whether your spouse is an active participant in any
employer-sponsored retirement plan. If your spouse is not an active participant,
the contribution to your spouse's Regular IRA will be deductible. If your spouse
is an active participant, the Regular IRA contribution will be completely,
partly or not deductible depending upon your combined income.

An exception to the preceding rules applies to high-income married
taxpayers, where one spouse is an active participant in an employer-sponsored
retirement plan and the other spouse is not. A contribution to the non-active
participant spouse's Regular IRA will be only partly deductible at an adjusted
gross income level on the joint tax return of $150,000, and the deductibility
will be phased out as described below over the next $10,000 so that there will
be no deduction at all with an adjusted gross income level of $160,000 or
higher.

How do I Determine My or My Spouse's "Active Participant" status?

Your (or your spouse's) Form W-2 should indicate if you (or your spouse)
were an active participant in an employer-sponsored retirement plan for a year.
If you have a question, you should ask your employer or the plan administrator.

In addition, regardless of income level, your spouse's "active participant"
status will not affect the deductibility of your contributions to your Regular
IRA if you and your spouse file separate tax returns for the taxable year and
you lived apart at all times during the taxable year.

What are the Deduction Restrictions for Active Participants?

If you (or your spouse) are an active participant in an employer plan
during a year, the contribution to your Regular IRA (or your spouse's Regular
IRA) may be completely, partly or not deductible depending upon your filing
status and your amount of adjusted gross income ("AGI"). If AGI is any amount up
to the lower limit, the contribution is deductible. If your AGI falls between
the lower limit and the upper limit, the contribution is
<PAGE>

partly deductible. If your AGI falls above the upper limit, the contribution is
not deductible.

FOR ACTIVE PARTICIPANTS 1998
<TABLE>
<CAPTION>
If You Are If You Are Then Your Regular
Single Married Filing IRA Contribution Is
Jointly
<S> <C> <C> <C>
Up to Lower Limit Up to Lower Limit Fully Deductible
($30,000 for 1998) ($50,000 for 1998)

Adjusted More than Lower More than Lower Partly Deductible
Gross Limit Limit
Income but less than Upper but less than Upper
(AGI) Level Limit Limit
($40,000 for 1998) ($60,000 for 1998)

Upper Limit or more Upper Limit or more Not Deductible
</TABLE>

The Lower Limit and the Upper Limit will change for 1999 and later years.
The Lower Limit and Upper Limit for these years are shown in the following
table. Substitute the correct Lower Limit and Upper Limit in the table above to
determine deductibility in any particular year. (Note: if you are married but
filing separate returns, your Lower Limit is always zero and your Upper Limit is
always $10,000).

TABLE OF LOWER AND UPPER LIMITS
<TABLE>
<CAPTION>
Year Single Married
Filing Jointly

Lower Limit Upper Limit Lower Limit Upper Limit
<S> <C> <C> <C> <C>
1999 $31,000 $41,000 $51,000 $61,000
2000 $32,000 $42,000 $52,000 $62,000
2001 $33,000 $43,000 $53,000 $63,000
2002 $34,000 $44,000 $54,000 $64,000
2003 $40,000 $50,000 $60,000 $70,000
2004 $45,000 $55,000 $65,000 $75,000
2005 $50,000 $60,000 $70,000 $80,000
2006 $50,000 $60,000 $75,000 $85,000
2007 and $50,000 $60,000 $80,000 $100,000
later
</TABLE>

How do I Calculate my Deduction if I Fall in the "Partly Deductible" Range?

If your AGI falls in the partly deductible range, you must calculate
<PAGE>

the portion of your contribution that is deductible. To do this, multiply your
contribution by a fraction. The numerator is the amount by which your AGI
exceeds the lower limit (for 1998: $30,000 if single, or $50,000 if married
filing jointly). The denominator is $10,000 (note that the denominator for
married joint filers is $20,000 starting in 2007). Subtract this from your
contribution and then round down to the nearest $10. The deductible amount is
the greater of the amount calculated or $200 (provided you contributed at least
$200). If your contribution was less than $200, then the entire contribution is
deductible.

For example, assume that you make a $2,000 contribution to your Regular IRA
in 1998, a year in which you are an active participant in your employer's
retirement plan. Also assume that your AGI is $57,555 and you are married,
filing jointly. You would calculate the deductible portion of your contribution
this way:

1. The amount by which your AGI exceeds the lower limit of the partly-
deductible range:

($57,555 - $50,000) = $7,555

2. Divide this by $10,000: $ 7,555

_ $10,000

3. Multiply this by your contribution limit:

0.7555 x $2,000 = $1,511

4. Subtract this from your contribution:

($2,000 - $1,551) = $489

5. Round this down to the nearest $10: = $480

6. Your deductible contribution is the greater of this amount or $200.

Even though part or all of your contribution is not deductible, you may still
contribute to your Regular IRA (and your spouse may contribute to your spouse's
Regular IRA) up to the limit on contributions. When you file your tax return for
the year, you must designate the amount of non-deductible contributions to your
Regular IRA for the year. See IRS Form 8606.

How Do I Determine My AGI?

AGI is your gross income minus those deductions which are available to all
taxpayers even if they don't itemize. Instructions to calculate your AGI are
provided with your income tax Form 1040 or 1040A.

What Happens if I Contribute more than Allowed to my Regular IRA?

The maximum contribution you can make to a Regular IRA generally is $2,000
or 100% of compensation or earned income, whichever is less. Any amount
contributed to the IRA above the maximum is considered an "excess contribution."
The excess is calculated using your contribution limit, not the deductible
limit. An excess contribution is subject to excise tax of 6%
<PAGE>

for each year it remains in the IRA.

How can I Correct an Excess Contribution?

Excess contributions may be corrected without paying a 6% penalty. To do
so, you must withdraw the excess and any earnings on the excess before the due
date (including extensions) for filing your federal income tax return for
the year for which you made the excess contribution. A deduction should not be
taken for any excess contribution. Earnings on the amount withdrawn must also be
withdrawn. The earnings must be included in your income for the tax year for
which the contribution was made and may be subject to a 10% premature withdrawal
tax if you have not reached age 59 1/2.

What Happens if I Don't Correct the Excess Contribution by the Tax Filing Due
Date?

Any excess contribution withdrawn after the tax filing due date (including
any extensions) for the year for which the contribution was made will be subject
to the 6% excise tax. There will be an additional 6% excise tax for each year
the excess remains in your account.

Under limited circumstances, you may correct an excess contribution after
tax filing time by withdrawing the excess contribution (leaving the earnings in
the account). This withdrawal will not be includable in income nor will it be
subject to any premature withdrawal penalty if (1) your contributions to all
Regular IRAs do not exceed $2,000 and (2) you did not take a deduction for the
excess amount (or you file an amended return (Form 1040X) which removes the
excess deduction).

How are Excess Contributions Treated if None of the Preceding Rules Apply?

Unless an excess contribution qualifies for the special treatment outlined
above, the excess contribution and any earnings on it withdrawn after tax filing
time will be includable in taxable income and may be subject to a 10% premature
withdrawal penalty. No deduction will be allowed for the excess contribution for
the year in which it is made.

Excess contributions may be corrected in a subsequent year to the extent
that you contribute less than your maximum amount. As the prior excess
contribution is reduced or eliminated, the 6% excise tax will become
correspondingly reduced or eliminated for subsequent tax years. Also, you may be
able to take an income tax deduction for the amount of excess that was reduced
or eliminated, depending on whether you would be able to take a deduction if you
had instead contributed the same amount.

Are the Earnings on My Regular IRA Funds Taxed?

Any dividends on or growth of the investments held in your Regular IRA are
generally exempt from federal income taxes and will not be taxed until withdrawn
by you, unless the tax exempt status of your Regular IRA is
<PAGE>

revoked (this is described in Part Three of this Disclosure Statement).

TRANSFERS/ROLLOVERS

Can I Transfer or Roll Over a Distribution I Receive from my Employer's
Retirement Plan into a Regular IRA?

Almost all distributions from employer plans or 403(b) arrangements (for
employees of tax-exempt employers) are eligible for rollover to a Regular IRA.
The main exceptions are:

. payments over the lifetime or life expectancy of the participant (or
participant and a designated beneficiary),

. installment payments for a period of 10 years or more,

. required distributions (generally the rules require distributions
starting at age 70 1/2 or for certain employees starting at
retirement, if later), and

. payments of employee after-tax contributions.

If you are eligible to receive a distribution from a tax qualified retirement
plan as a result of, for example, termination of employment, plan
discontinuance, or retirement, all or part of the distribution may be
transferred directly into your Regular IRA. This is a called a "Direct
Rollover." Or, you may receive the distribution and make a regular rollover to
your Regular IRA within 60 days. By making a direct rollover or a regular
rollover, you can defer income taxes on the amount rolled over until you
subsequently make withdrawals from your IRA.

The maximum amount you may roll over is the amount of employer
contributions and earnings distributed. You may not roll over any after-tax
employee contributions you made to the employer retirement plan. If you are over
age 70 1/2 and are required to take minimum distributions under the tax laws,
you may not roll over any amount required to be distributed to you under the
minimum distribution rules. Also, if you are receiving periodic payments over
your or your and your designated beneficiary's life expectancy or for a period
of at least 10 years, you may not roll over these payments. A rollover to a
regular IRA must be completed within 60 days after the distribution from the
employer retirement plan to be valid.

NOTE: A qualified plan administrator or 403(b) sponsor MUST WITHHOLD 20% OF
YOUR DISTRIBUTION for federal income taxes UNLESS you elect a direct rollover.
Your plan or 403(b) sponsor is required to provide you with information about
direct and traditional rollovers and withholding taxes before you receive your
distribution and must comply with your directions to make a direct rollover.

The rules governing rollovers are complicated. Be sure to consult your tax
advisor or the IRS if you have a question about rollovers.

Once I Have Rolled Over a Plan Distribution into a Regular IRA, Can I
Subsequently Roll Over into another Employer's Qualified Retirement Plan?
<PAGE>

Yes. Part or all of an eligible distribution received from a qualified plan
may be transferred from the Regular IRA holding it to another qualified plan.
However, the IRA must have no assets other than those which were previously
distributed to you from the qualified plan. Specifically, the IRA cannot contain
any contributions by you (or your spouse). Also, the new qualified plan must
accept rollovers. Similar rules apply to Regular IRAs established with rollovers
from 403(b) arrangements.

Can I Make a Traditional Rollover from my Regular IRA to another Regular IRA?

You may make a rollover from one Regular IRA to another Regular IRA you
have or you establish to receive the rollover. Such a rollover must be completed
within 60 days after the withdrawal from your first Regular IRA. After making a
traditional rollover from one Regular IRA to another, you must wait a full year
(365 days) before you can make another such rollover. (However, you can instruct
a Regular IRA custodian to transfer amounts directly to another Regular IRA
custodian; such a direct transfer does not count as a rollover.)

What Happens If I Combine Rollover Contributions With My Normal Contributions In
One IRA?

If you wish to make both a normal annual contribution and a rollover
contribution, you may wish to open two separate Regular IRAs by completing two
Adoption Agreements and two sets of forms. You should consult a tax advisor
before making your annual contribution to the IRA you established with rollover
contributions (or make a rollover contribution to the IRA to which you make your
annual contributions). This is because combining your annual contributions and
rollover contributions originating from an employer plan distribution would
prohibit the future rollover out of the IRA into another qualified plan. If
despite this, you still wish to combine a rollover contribution and the IRA
holding your annual contributions, you should establish the account as a Regular
IRA on the Adoption Agreement (not a Rollover IRA or Direct Rollover IRA) and
make the contributions to that account.

How Do Rollovers Affect my Contribution or Deduction Limits?

Rollovers, if properly made, do not count toward the maximum contribution.
Also, rollovers are not deductible and they do not affect your deduction limits
as described above.

What About Converting My Regular IRA to a Roth IRA?

The rules for converting a Regular IRA to a new Roth IRA, or making a
rollover from a Regular IRA to a new Roth IRA, are described in Part Two.
<PAGE>

WITHDRAWALS

When can I make withdrawals from my Regular IRA?

You may withdraw from your Regular IRA at any time. However, withdrawals
before age 59 1/2 may be subject to a 10% penalty tax in addition to regular
income taxes (see below).

When must I start making withdrawals?

If you have not withdrawn your entire IRA by the April 1 following the year
in which you reach 70 1/2, you must make minimum withdrawals in order to avoid
penalty taxes. The rule allowing certain employees to postpone distributions
from an employer qualified plan until actual retirement (even if this is after
age 70 1/2) does not apply to Regular IRAs.

The minimum withdrawal amount is determined by dividing the balance in your
Regular IRA (or IRAs) by your life expectancy or the combined life expectancy of
you and your designated beneficiary. The minimum withdrawal rules are complex.
Consult your tax advisor for assistance.

The penalty tax is 50% of the difference between the minimum withdrawal
amount and your actual withdrawals during a year. The IRS may waive or reduce
the penalty tax if you can show that your failure to make the required minimum
withdrawals was due to reasonable cause and you are taking reasonable steps to
remedy the problem.

How Are Withdrawals From My Regular IRA Taxed?

Amounts withdrawn by you are includable in your gross income in the taxable
year that you receive them, and are taxable as ordinary income. Lump sum
withdrawals from a Regular IRA are not eligible for averaging treatment
currently available to certain lump sum distributions from qualified employer
retirement plans.

Since the purpose of a Regular IRA is to accumulate funds for retirement,
your receipt or use of any portion of your Regular IRA before you attain age
59 1/2 generally will be considered as an early withdrawal and subject to a 10%
penalty tax.

The 10% penalty tax for early withdrawal will not apply if:

. The distribution was a result of your death or disability.

. The purpose of the withdrawal is to pay certain higher education
expenses for yourself or your spouse, child, or grandchild. Qualifying
expenses include tuition, fees, books, supplies and equipment required
for attendance at a post-secondary educational institution. Room and
board expenses may qualify if the student is attending at least half-
time.
<PAGE>

. The withdrawal is used to pay eligible first-time homebuyer expenses.
These are the costs of purchasing, building or rebuilding a principal
residence (including customary settlement, financing or closing
costs). The purchaser may be you, your spouse, or a child, grandchild,
parent or grandparent of you or your spouse. An individual is
considered a "first-time homebuyer" if the individual (or the
individual's spouse, if married) did not have an ownership interest in
a principal residence during the two-year period immediately preceding
the acquisition in question. The withdrawal must be used for eligible
expenses within 120 days after the withdrawal. (If there is an
unexpected delay, or cancellation of the home acquisition, a
withdrawal may be redeposited as a rollover).

There is a lifetime limit on eligible first-time homebuyer expenses of
$10,000 per individual.

. The distribution is one of a scheduled series of substantially equal
periodic payments for your life or life expectancy (or the joint lives
or life expectancies of you and your beneficiary).

. If there is an adjustment to the scheduled series of payments, the 10%
penalty tax may apply. The 10% penalty will not apply if you make no
change in the series of payments until the end of five years or until
you reach age 59 1/2, whichever is later. If you make a change before
then, the penalty will apply. For example, if you begin receiving
payments at age 50 under a withdrawal program providing for
substantially equal payments over your life expectancy, and at age 58
you elect to receive the remaining amount in your Regular IRA in a
lump-sum, the 10% penalty tax will apply to the lump sum and to the
amounts previously paid to you before age 59 1/2.

. The distribution does not exceed the amount of your deductible medical
expenses for the year (generally speaking, medical expenses paid
during a year are deductible if they are greater than 7 1/2% of your
adjusted gross income for that year).

. The distribution does not exceed the amount you paid for health
insurance coverage for yourself, your spouse and dependents. This
exception applies only if you have been unemployed and received
federal or state unemployment compensation payments for at least 12
weeks; this exception applies to distributions during the year in
which you received the unemployment compensation and during the
following year, but not to any distributions received after you have
been reemployed for at least 60 days.

How are Nondeductible Contributions Taxed When They are Withdrawn?

A withdrawal of nondeductible contributions (not including earnings) will
be tax-free. However, if you made both deductible and nondeductible
contributions to your Regular IRA, then each distribution will be treated as
partly a return of your nondeductible contributions (not taxable) and partly a
distribution of deductible contributions and earnings (taxable). The nontaxable
amount is the portion of the amount withdrawn which bears the same ratio as your
total nondeductible Regular IRA contributions bear to the total balance of all
your Regular IRAs (including rollover IRAs and SEPs,
<PAGE>

but not including Roth IRAs).

For example, assume that you made the following Regular IRA contributions:

Year Deductible Nondeductible
---- ---------- -------------

1995 $2,000
1996 $2,000
1997 $1,000 $1,000
1998 $1,000
------ ------
$5,000 $2,000

In addition assume that your Regular IRA has total investment earnings
through 1998 of $1,000. During 1998 you withdraw $500. Your total account
balance as of 12-31-98 is $7,500 as shown below.

Deductible Contributions $5,000

Nondeductible Contributions $2,000

Earnings On IRA $1,000

Less 1998 Withdrawal $ 500
------
Total Account Balance as of 12/31/98 $7,500

To determine the nontaxable portion of your 1998 withdrawal, the total 1998
withdrawal ($500) must be multiplied by a fraction. The numerator of the
fraction is the total of all nondeductible contributions remaining in the
account before the 1998 withdrawal ($2,000). The denominator is the total
account balance as of 12-31-98 ($7,500) plus the 1998 withdrawal ($500) or
$8,000. The calculation is:

Total Remaining X $500 =
Nondeductible Contributions $2,000 $125

Total Account Balance $8,000

Thus, $125 of the $500 withdrawal in 1998 will not be included in your
taxable income. The remaining $375 will be taxable for 1998. In addition, for
future calculations the remaining nondeductible contribution total will be
$2,000 minus $125, or $1,875.

A loss in your Regular IRA investment may be deductible. You should consult
your tax advisor for further details on the appropriate calculation for this
deduction if applicable.

Is there a penalty tax on certain large withdrawals or accumulations in my IRA?

Earlier tax laws imposed a "success" penalty equal to 15% of

<PAGE>

withdrawals from all retirement accounts (including IRAs, 401(k) or other
employer retirement plans, 403(b) arrangements and others) in a year exceeding a
specified amount (initially $150,000 per year). Also, there was a 15% estate tax
penalty on excess accumulations remaining in IRAs and other tax-favored
arrangements upon your death. These 15% penalty taxes have been repealed.

Important: Please see Part Three which contains important information
applicable to all State Street Bank and Trust Company IRAs.

Part Two: Description of Roth IRAs

SPECIAL NOTE

Part Two of the Disclosure Statement describes the rules generally
applicable to Roth IRAs beginning January 1, 1998.

Roth IRAs are a new kind of IRA available for the first time in 1998.
Contributions to a Roth IRA for 1997 are not permitted. Contributions to a Roth
IRA are not tax-deductible, but withdrawals that meet certain requirements are
not subject to federal income taxes. This makes the dividends on and growth of
the investments held in your Roth IRA tax-free for federal income tax purposes
if the requirements are met.

Regular IRAs, which have existed since 1975, are still available.
Contributions to a Regular IRA may be tax-deductible. Earnings and gains on
amounts while held in a Regular IRA are tax-deferred. Withdrawals are subject to
federal income tax (except for prior after-tax contributions which may be
recovered without additional federal income tax).

This Part Two does not describe Regular IRAs. If you wish to review
information about Regular IRAs, please see Part One of this Disclosure
Statement.

This Disclosure Statement also does not describe IRAs established in
connection with a SIMPLE IRA program or a Simplified Employee Pension (SEP) plan
maintained by your employer. Roth IRAs may not be used in connection with a
SIMPLE IRA program or a SEP plan.

YOUR ROTH IRA

Your Roth IRA gives you several tax benefits. While contributions to a Roth
IRA are not deductible, dividends on and growth of the assets held in your Roth
IRA are not subject to federal income tax. Withdrawals by you from your Roth IRA
are excluded from your income for federal income tax purposes if certain
requirements are met (see WITHDRAWALS on page 14). State income tax treatment of
your Roth IRA may differ from federal treatment; ask your state tax department
or your personal tax advisor for details.

Be sure to read Part Three of this Disclosure Statement for important
additional information, including information on how to revoke your Roth IRA,
investments and prohibited transactions, fees and expenses and certain tax
requirements.

ELIGIBILITY
<PAGE>

What are the eligibility requirements for a Roth IRA?

Starting with 1998, you are eligible to establish and contribute to a Roth
IRA for a year if you received compensation (or earned income if you are self
employed) during the year for personal services you rendered. If you received
taxable alimony, this is treated like compensation for IRA purposes.

In contrast to a Regular IRA, with a Roth IRA you may continue making
contributions after you reach age 70 1/2.

Can I Contribute to Roth IRA for my Spouse?

Starting with 1998, if you meet the eligibility requirements you can not
only contribute to your own Roth IRA, but also to a separate Roth IRA for your
spouse out of your compensation or earned income, regardless of whether your
spouse had any compensation or earned income in that year. This is called a
"spousal Roth IRA." To make a contribution to a Roth IRA for your spouse, you
must file a joint tax return for the year with your spouse. For a spousal Roth
IRA, your spouse must set up a different Roth IRA, separate from yours, to which
you contribute.

Of course, if your spouse has compensation or earned income, your spouse
can establish his or her own Roth IRA and make contributions to it in accordance
with the rules and limits described in this Part Two of the Disclosure
Statement.

CONTRIBUTIONS

When Can I Make Contributions to a Roth IRA?

You may make a contribution to your Roth IRA or establish a new Roth IRA
for a taxable year by the due date (not including any extensions) for your
federal income tax return for the year. Usually this is April 15 of the
following year. For example, you will have until April 15, 1999 to establish and
make a contribution to a Roth IRA for 1998.

Caution: Since Roth IRAs are available starting January 1, 1998, you may
not make a contribution by April 15, 1998 to a Roth IRA for 1997.

How Much Can I Contribute to my Roth IRA?

For each year when you are eligible (see above), you can contribute up to
the lesser of $2,000 or 100% of your compensation (or earned income, if you are
self-employed).

Annual contributions may be made only to a Roth IRA which does not contain
converted or transferred funds from a Regular IRA.
<PAGE>

Your Roth IRA limit is reduced by any contributions for the same year to a
Regular IRA. For example, assuming you have at least $2,000 in compensation or
earned income, if you contribute $500 to your Regular IRA for 1998, your maximum
Roth IRA contribution for 1998 will be $1,500.

If you and your spouse have spousal Roth IRAs, each spouse may contribute
up to $2,000 to his or her Roth IRA for a year as long as the combined
compensation of both spouses for the year (as shown on your joint income tax
return) is at least $4,000. If the combined compensation of both spouses is less
than $4,000, the spouse with the higher amount of compensation may contribute up
to that spouse's compensation amount, or $2,000 if less. The spouse with the
lower compensation amount may contribute any amount up to that spouse's
compensation plus any excess the other spouse's compensation over the other
spouse's Roth IRA contribution. However, the maximum contribution to either
spouse's Roth IRA is $2,000 for the year.

As noted above, the spousal Roth IRA limits are reduced by any
contributions for the same calendar year to a Regular IRA maintained by you or
your spouse.

For taxpayers with high income levels, the contribution limits may be
reduced (see below).

Are Contributions to a Roth IRA Tax Deductible?

Contributions to a Roth IRA are not deductible. This is a major difference
between Roth IRAs and Regular IRAs. Contributions to a Regular IRA may be
deductible on your federal income tax return depending on whether or not you are
an active participant in an employer-sponsored plan and on your income level.

Are the Earnings on my Roth IRA Funds Taxed?

Any dividends on or growth of investments held in your Roth IRA are
generally exempt from federal income taxes and will not be taxed until withdrawn
by you. If the withdrawal qualifies as a tax-free withdrawal (see below),
amounts reflecting earnings or growth of assets in your Roth IRA will not be
subject to federal income tax.

Which is Better, a Roth IRA or a Regular IRA?

This will depend upon your individual situation. A Roth IRA may be better
if you are an active participant in an employer-sponsored plan and your adjusted
gross income is too high to make a deductible IRA contribution (but not too high
to make a Roth IRA contribution). Also, the benefits of a Roth IRA vs. a Regular
IRA may depend upon a number of other factors including: your current income tax
bracket vs. your expected income tax bracket when you make withdrawals from your
IRA, whether you expect to be able to make nontaxable withdrawals from your Roth
IRA (see below), how long you expect to leave your contributions in the IRA, how
much you expect the IRA to earn in the meantime, and possible future tax law
changes.
<PAGE>

Consult a qualified tax or financial advisor for assistance on this
question.

Are there Any Restrictions on Contributions to my Roth IRA?

Taxpayers with very high income levels may not be able to contribute to a
Roth IRA at all, or their contribution may be limited to an amount less than
$2,000. This depends upon your filing status and the amount of your adjusted
gross income (AGI). The following table shows how the contribution limits are
restricted:

ROTH IRA CONTRIBUTION LIMITS

<S> <C> <C> <C>
If You Are If You Are Then You May Make
Single Taxpayer Married Filing
Jointly

Up to $95,000 Up to $150,000 Full Contribution

Adjusted Reduced Contribution
Gross More than $95,000 More than $150,000
(see explanation
Income but less than but less than below)
(AGI) Level $110,000 $160,000

$110,000 and up $160,000 and up Zero (No Contribution)
</TABLE>

Note: If you are a married taxpayer filing separately, your maximum Roth
IRA contribution limit phases out over the first $150,000 of adjusted gross
income. If your AGI is $150,000 or more you may not contribute to a Roth IRA for
the year. (Note: Pending legislation in Congress may reduce this number from
$150,000 to $100,000. Consult your tax advisor or the IRS for the latest
developments.)

How do I Calculate my Limit if I Fall in the "Reduced Contribution" Range?

If your AGI falls in the reduced contribution range, you must calculate
your contribution limit. To do this, multiply your normal contribution limit
($2,000 or your compensation if less) by a fraction. The numerator is the amount
by which your AGI exceeds the lower limit of the reduced contribution range
($95,000 if single, or $150,000 if married filing jointly). The denominator is
$15,000 (single taxpayers) or $10,000 (married filing jointly). Subtract this
from your normal limit and then round down to the nearest $10. The contribution
limit is the greater of the amount calculated or $200.

For example, assume that your AGI for the year is $157,555 and you are
married, filing jointly. You would calculate your Roth IRA contribution limit
this way:
<PAGE>

1. The amount by which your AGI exceeds the lower limit of the reduced
contribution deductible range:

($157,555 - $150,000) = $7,555

2. Divide this by $10,000: $ 7,555 / $10,000 = 0.7555

3. Multiply this by $2,000 (or your compensation for the year, if less):

0.7555 x $2,000 = $1,511

4. Subtract this from your $2,000 limit:

($2,000 - $1,551) = $489

5. Round this down to the nearest $10 = $480

6. Your contribution limit is the greater of this amount or $200.

Remember, your Roth IRA contribution limit of $2,000 is reduced by any
contributions for the same year to a Regular IRA. If you fall in the reduced
contribution range, the reduction formula applies to the Roth IRA contribution
limit left after subtracting your contribution for the year to a Regular IRA.

How Do I Determine My AGI?

There are two additional rules when calculating AGI for purposes of Roth
IRA contribution limits. First, if you are making a deductible contribution for
the year to a Regular IRA, your AGI is reduced by the amount of the deduction.
Second, if you are converting a Regular IRA to a Roth IRA in a year (see below),
the amount includable in your income as a result of the conversion is not
considered AGI when computing your Roth IRA contribution limit for the year.
(Note: a bill pending in Congress might affect the first rule--consult your tax
advisor or the IRS for the latest developments.)

What Happens if I Contribute more than Allowed to my Roth IRA?

The maximum contribution you can make to a Roth IRA generally is $2,000 or
100% of compensation or earned income, whichever is less. As noted above, your
maximum is reduced by the amount of any contribution to a Regular IRA for the
same year and may be further reduced if you have high AGI. Any amount
contributed to the Roth IRA above the maximum is considered an "excess
contribution."

An excess contribution is subject to excise tax of 6% for each year it
remains in the Roth IRA.
<PAGE>

How can I Correct an Excess Contribution?

Excess contributions may be corrected without paying a 6% penalty. To do
so, you must withdraw the excess and any earnings on the excess before the due
date (including extensions) for filing your federal income tax return for the
year for which you made the excess contribution. Earnings on the amount
withdrawn must also be withdrawn. The earnings must be included in your income
for the tax year for which the contribution was made and may be subject to a 10%
premature withdrawal tax if you have not reached age 59 1/2 (unless an exception
to the 10% penalty tax applies).

What Happens if I Don't Correct the Excess Contribution by the Tax Return Due
Date?

Any excess contribution withdrawn after the tax return due date (including
any extensions) for the year for which the contribution was made will be subject
to the 6% excise tax. There will be an additional 6% excise tax for each year
the excess remains in your account.

You may reduce the excess contributions by making a withdrawal equal to the
excess. Earnings need not be withdrawn. To the extent that no earnings are
withdrawn, the withdrawal will not be subject to income taxes or possible
penalties for premature withdrawals before age 59 1/2. Excess contributions may
also be corrected in a subsequent year to the extent that you contribute less
than your Roth IRA contribution limit for the subsequent year. As the prior
excess contribution is reduced or eliminated, the 6% excise tax will become
correspondingly reduced or eliminated for subsequent tax years.

CONVERSION OF EXISTING REGULAR IRA

Can I convert an Existing Regular IRA into a Roth IRA?

Yes, starting in 1998 you can convert an existing Regular IRA into a Roth
IRA if you meet the adjusted gross income (AGI) limits described below.
Conversion may be accomplished either by establishing a Roth IRA and then
transferring the amount in your Regular IRA you wish to convert to the new Roth
IRA. Or, if you want to convert an existing Regular IRA with State Street Bank
and Trust Company as custodian to a Roth IRA, you may give us directions to
convert.

You are eligible to convert a Regular IRA to a Roth IRA if, for the year of
the conversion, your AGI is $100,000 or less. The same limit applies to married
and single taxpayers, and the limit is not indexed to cost-of-living increases.
Married taxpayers are eligible to convert a Regular IRA to a Roth IRA only if
they file a joint income tax return; married taxpayers filing separately are not
eligible to convert.
<PAGE>

Note: No contributions other than Roth IRA conversion contributions made
during the same tax year may be deposited in a single Roth IRA conversion
account.

Caution: You should be extremely cautious in converting an existing IRA
into a Roth IRA early in a year if there is any possibility that your AGI for
the year will exceed $100,000. Although a bill pending in Congress would permit
you to transfer amounts back to your Regular IRA if your AGI exceeds $100,000,
under the current rules, if you have already converted during a year and you
turn out to have more than $100,000 of AGI, there may be adverse tax results for
you. Consult your tax advisor or the IRS for the latest developments.

What are the Tax Results from Converting?

The taxable amount in your Regular IRA you convert to a Roth IRA will be
considered taxable income on your federal income tax return for the year of the
conversion. All amounts in a Regular IRA are taxable except for your prior non-
deductible contributions to the Regular IRA.

If you make the conversion during 1998, the taxable income is spread over
four years. In other words, you would include one quarter of the taxable amount
on your federal income tax return for 1998, 1999, 2000 and 2001.

Should I convert my Regular IRA to a Roth IRA?

Only you can answer this question, in consultation with your tax or
financial advisors. A number of factors, including the following, may be
relevant. Conversion may be advantageous if you expect to leave the converted
funds on deposit in your Roth IRA for at least five years and to be able to
withdraw the funds under circumstances that will not be taxable (see below). The
benefits of converting will also depend on whether you expect to be in the same
tax bracket when you withdraw from your Roth IRA as you are now. Also,
conversion is based upon an assumption that Congress will not change the tax
rules for withdrawals from Roth IRAs in the future, but this cannot be
guaranteed.

TRANSFERS/ROLLOVERS

Can I Transfer or Roll Over a Distribution I Receive from my Employer's
Retirement Plan into a Roth IRA?

Distributions from qualified employer-sponsored retirement plans or 403(b)
arrangements (for employees of tax-exempt employers) are not eligible for
rollover or direct transfer to a Roth IRA. However, in certain circumstances it
may be possible to make a direct rollover of an eligible distribution to a
Regular IRA and then to convert the Regular IRA to Roth IRA (see above). Consult
your tax or financial advisor for further information on this possibility.
<PAGE>

Can I Make a Rollover from my Roth IRA to another Roth IRA?

You may make a rollover from one Roth IRA to another Roth IRA you have or
you establish to receive the rollover. Such a rollover must be completed within
60 days after the withdrawal from your first Roth IRA. After making a rollover
from one Roth IRA to another, you must wait a full year (365 days) before you
can make another such rollover. (However, you can instruct a Roth IRA custodian
to transfer amounts directly to another Roth IRA custodian; such a direct
transfer does not count as a rollover.)

How Do Rollovers Affect my Roth IRA Contribution Limits?

Rollovers, if properly made, do not count toward the maximum contribution.
Also, you may make a rollover from one Roth IRA to another even during a year
when you are not eligible to contribute to a Roth IRA (for example, because your
AGI for that year is too high).

WITHDRAWALS

When can I make withdrawals from my Roth IRA?

You may withdraw from your Roth IRA at any time. If the withdrawal meets
the requirements discussed below, it is tax-free. This means that you pay no
federal income tax even though the withdrawal includes earnings or gains on your
contributions while they were held in your Roth IRA.

When must I start making withdrawals?

There are no rules on when you must start making withdrawals from your Roth
IRA or on minimum required withdrawal amounts for any particular year during
your lifetime. Unlike Regular IRAs, you are not required to start making
withdrawals from a Roth IRA by the April 1 following the year in which you reach
age 70 1/2.

After your death, there are IRS rules on the timing and amount of
distributions. In general, the amount in your Roth IRA must be distributed by
the end of the fifth year after your death. However, distributions to a
designated beneficiary that begin by the end of the year following the year of
your death and that are paid over the life expectancy of the beneficiary satisfy
the rules. Also, if your surviving spouse is your designated beneficiary, the
spouse may defer the start of distributions until you would have reached age 70
1/2 had you lived.

What are the requirements for a tax-free withdrawal?

To be tax-free, a withdrawal from your Roth IRA must meet two requirements.
First, the Roth IRA must have been open for 5 or more years
<PAGE>

before the withdrawal. Second, at least one of the following conditions must be
satisfied:

. You are age 59 1/2 or older when you make the withdrawal.

. The withdrawal is made by your beneficiary after you die.

. You are disabled (as defined in IRS rules) when you make the
withdrawal.

. You are using the withdrawal to cover eligible first time homebuyer
expenses. These are the costs of purchasing, building or rebuilding a
principal residence (including customary settlement, financing or
closing costs). The purchaser may be you, your spouse or a child,
grandchild, parent or grandparent of you or your spouse. An individual
is considered a "first-time homebuyer" if the individual (or the
individual's spouse, if married) did not have an ownership interest in
a principal residence during the two-year period immediately preceding
the acquisition in question. The withdrawal must be used for eligible
expenses within 120 days after the withdrawal (if there is an
unexpected delay, or cancellation of the home acquisition, a
withdrawal may be redeposited as a rollover).

There is a lifetime limit on eligible first-time homebuyer expenses of
$10,000 per individual.

For a Roth IRA that you set up with amounts rolled over or converted from a
Regular IRA, the 5 year period begins with the year in which the conversion or
rollover was made. (Note: a bill pending in Congress might affect this
rule_consult your tax advisor or the IRS for the latest developments.)

For a Roth IRA that you started with a normal contribution, the 5 year
period starts with the year for which you make the initial normal contribution.

How Are Withdrawals From My Roth IRA Taxed if the Tax-Free Requirements are not
Met?

If the qualified withdrawal requirements are not met, a withdrawal
consisting of your own prior contribution amounts to your Roth IRA will not be
considered taxable income in the year you receive it, nor will the 10% penalty
apply. To the extent that the nonqualified withdrawal consists of dividends or
gains while your contributions were held in your Roth IRA, the withdrawal is
includable in your gross income in the taxable year you receive it, and may be
subject to the 10% withdrawal penalty. All amounts withdrawn from your Roth IRA
are considered withdrawals of your contributions until you have withdrawn the
entire amount you have contributed. After that, all amounts withdrawn are
considered taxable withdrawals of dividends and gains.

Note that, for purposes of determining what portion of any distribution is
includable in income, all of your Roth IRA accounts are considered as one single
account. Amounts withdrawn from any one Roth IRA account are deemed to be
withdrawn from contributions first. Since all your Roth IRAs are considered to
be one account for this purpose, withdrawals from Roth IRA

<PAGE>

accounts are not considered to be from earnings or interest until an amount
equal to all contributions made to all of an individual's Roth IRA accounts is
withdrawn. The following example illustrates this:

A single individual contributes $1,000 a year to his State Street Bank and
Trust Company Roth IRA account and $1,000 a year to the Brand X Roth IRA account
over a period of ten years. At the end of 10 years his account balances are as
follows:

Principal
Contributions Earnings
------------- --------

State Street Bank Roth IRA $10,000 $10,000

Brand X Roth IRA $10,000 $10,000
------- -------
Total $20,000 $20,000

At the end of 10 years, this person has $40,000 in both Roth IRA accounts
combined, of which $20,000 represents his contributions (aggregated) and $20,000
represents his earnings (aggregated). This individual, who is 40, withdraws
$15,000 from his Brand X Roth IRA (not a qualified withdrawal). We look to the
aggregate amount of all principal contributions--in this case $20,000--to
determine if the withdrawal is from contributions, and thus non-taxable. In this
example, there is no ($0) taxable income as a result of this withdrawal because
the $15,000 withdrawal is less than the total amount of aggregated contributions
($20,000). If this individual then withdrew $15,000 from his State Street Bank
Roth IRA, $5,000 would not be taxable (the remaining aggregate contributions)
and $10,000 would be treated as taxable income for the year of the withdrawal,
subject to regular income taxes and the 10% premature withdrawal penalty (unless
an exception applies).

Note: If passed, a bill currently pending in Congress will change the rules
and the results discussed above. Under the proposed legislation, in general,
separate Roth IRAs established for annual contributions and conversions for
separate years are not aggregated as explained above to determine the tax on
withdrawals. See your tax advisor for more information and the latest
developments.

Taxable withdrawals of dividends and gains from a Roth IRA are treated as
ordinary income. Withdrawals of taxable amounts from a Roth IRA are not eligible
for averaging treatment currently available to certain lump sum distributions
from qualified employer-sponsored retirement plans, nor are such withdrawals
eligible for taxable gains tax treatment.

Your receipt of any taxable withdrawal from your Roth IRA before you attain
age 59 1/2 generally will be considered as an early withdrawal and subject to a
10% penalty tax.

The 10% penalty tax for early withdrawal will not apply if any of the
following exceptions applies:

. The withdrawal was a result of your death or disability.

. The withdrawal is one of a scheduled series of substantially equal
periodic payments for your life or life expectancy (or the joint

<PAGE>

lives or life expectancies of you and your beneficiary).

If there is an adjustment to the scheduled series of payments, the 10%
penalty tax will apply. For example, if you begin receiving payments at age
50 under a withdrawal program providing for substantially equal payments
over your life expectancy, and at age 58 you elect to withdraw the
remaining amount in your Roth IRA in a lump-sum, the 10% penalty tax will
apply to the lump sum and to the amounts previously paid to you before age
59 1/2 to the extent they were includable in your taxable income.

. The withdrawal is used to pay eligible higher education expenses.
These are expenses for tuition, fees, books, and supplies required to
attend an institution for post-secondary education. Room and board
expenses are also eligible for a student attending at least half-time.
The student may be you, your spouse, or your child or grandchild.
However, expenses that are paid for with a scholarship or other
educational assistance payment are not eligible expenses.

. The withdrawal is used to cover eligible first time homebuyer expenses
(as described above in the discussion of tax-free withdrawals).

. The withdrawal does not exceed the amount of your deductible medical
expenses for the year (generally speaking, medical expenses paid
during a year are deductible if they are greater than 7 1/2 of your
adjusted gross income for that year).

. The withdrawal does not exceed the amount you paid for health
insurance coverage for yourself, your spouse and dependents. This
exception applies only if you have been unemployed and received
federal or state unemployment compensation payments for at least 12
weeks; this exception applies to distributions during the year in
which you received the unemployment compensation and during the
following year, but not to any distributions received after you have
been reemployed for at least 60 days.

What About the 15 percent Penalty Tax?

The rule imposing a 15% penalty tax on very large withdrawals from tax-
favored arrangements (including IRAs, 403(b) arrangements and qualified
employer-sponsored plans), or on excess amounts remaining in such tax-favored
arrangements at your death, has been repealed. This 15% tax no longer applies.

Important: The discussion of the tax rules for Roth IRAs in this Disclosure
Statement is based upon the best available information. However, Roth IRAs are
new under the tax laws, and the IRS has not issued regulations or rulings on the
operation and tax treatment of Roth IRA accounts. Also, if enacted, legislation
now pending in Congress will change some of the rules. Therefore, you should
consult your tax advisor for the latest developments or for advice about how
maintaining a Roth IRA will affect your personal tax or financial situation.

Also, please see Part Three which contains important information applicable
to all State Street Bank and Trust Company IRAs.

<PAGE>

Part Three: Rules for All IRAs (Regular and Roth)

GENERAL INFORMATION

IRA Requirements

All IRAs must meet certain requirements. Contributions generally must be
made in cash. The IRA trustee or custodian must be a bank or other person who
has been approved by the Secretary of the Treasury. Your contributions may not
be invested in life insurance or collectibles or be commingled with other
property except in a common trust or investment fund. Your interest in the
account must be nonforfeitable at all times. You may obtain further information
on IRAs from any district office of the Internal Revenue Service.

May I Revoke My IRA?

You may revoke a newly established Regular or Roth IRA at any time within
seven days after the date on which you receive this Disclosure Statement. A
Regular or Roth IRA established more than seven days after the date of your
receipt of this Disclosure Statement may not be revoked.

To revoke your Regular or Roth IRA, mail or deliver a written notice of
revocation to the Custodian at the address which appears at the end of this
Disclosure Statement. Mailed notice will be deemed given on the date that it is
postmarked (or, if sent by certified or registered mail, on the date of
certification or registration). If you revoke your Regular or Roth IRA within
the seven-day period, you are entitled to a return of the entire amount you
originally contributed into your Regular or Roth IRA, without adjustment for
such items as sales charges, administrative expenses or fluctuations in market
value.

INVESTMENTS

How Are My IRA Contributions Invested?

You control the investment and reinvestment of contributions to your
Regular or Roth IRA. Investments must be in one or more of the Fund(s) available
from time to time as listed in the Adoption Agreement for your Regular or Roth
IRA or in an investment selection form provided with your Adoption Agreement or
from the Fund Distributor or Service Company. You direct the investment of your
IRA by giving your investment instructions to the Distributor or Service Company
for the Fund(s). Since you control the investment of your Regular or Roth IRA,
you are responsible for any losses; neither the Custodian, the Distributor nor
the Service Company has any responsibility for any loss or diminution in value
occasioned by your exercise of investment control. Transactions for your Regular
or Roth IRA will generally be at the applicable public offering price or net
asset value for shares of the Fund(s) involved next established after the
Distributor or the Service Company (whichever may apply) receives proper
investment instructions from you; consult the current prospectus for the Fund(s)
involved for additional information.

<PAGE>

Before making any investment, read carefully the current prospectus for any
Fund you are considering as an investment for your Regular IRA or Roth IRA. The
prospectus will contain information about the Fund's investment objectives and
policies, as well as any minimum initial investment or minimum balance
requirements and any sales, redemption or other charges.

Because you control the selection of investments for your Regular or Roth
IRA and because mutual fund shares fluctuate in value, the growth in value of
your Regular or Roth IRA cannot be guaranteed or projected.

Are There Any Restrictions on the Use of my IRA Assets?

The tax-exempt status of your Regular or Roth IRA will be revoked if you
engage in any of the prohibited transactions listed in Section 4975 of the tax
code. Upon such revocation, your Regular or Roth IRA is treated as distributing
its assets to you. The taxable portion of the amount in your IRA will be subject
to income tax (unless, in the case of a Roth IRA, the requirements for a tax-
free withdrawal are satisfied). Also, you may be subject to a 10% penalty tax on
the taxable amount as a premature withdrawal if you have not yet reached the age
of 59-1/2.

Any investment in a collectible (for example, rare stamps) by your Regular
or Roth IRA is treated as a withdrawal; the only exception involves certain
types of government-sponsored coins or certain types of precious metal bullion.

What Is A Prohibited Transaction?

Generally, a prohibited transaction is any improper use of the assets in
your Regular or Roth IRA. Some examples of prohibited transactions are:

. Direct or indirect sale or exchange of property between you and your
Regular or Roth IRA.

. Transfer of any property from your Regular or Roth IRA to yourself or
from yourself to your Regular or Roth IRA.

Your Regular or Roth IRA could lose its tax exempt status if you use all
or part of your interest in your Regular or Roth IRA as security for a loan or
borrow any money from your Regular or Roth IRA. Any portion of your Regular or
Roth IRA used as security for a loan will be treated as a distribution in the
year in which the money is borrowed. This amount may be taxable and you may also
be subject to the 10% premature withdrawal penalty on the taxable amount.

FEES AND EXPENSES

Custodian's Fees

The following is a list of the fees charged by the Custodian for
maintaining either a Regular IRA or a Roth IRA.

Account Installation Fee $ 5.00
<PAGE>

Annual Maintenance Fee per mutual fund
(up to a maximum of $20.00) $10.00

Termination, Rollover, or Transfer of Account to
Successor Custodian $10.00

General Fee Policies

Fees may be paid by you directly, or the Custodian may deduct them from
your Regular or Roth IRA.

Fees may be changed upon 30 days written notice to you.

The full annual maintenance fee will be charged for any calendar year
during which you have a Regular or Roth IRA with us. This fee is not prorated
for periods of less than one full year.

If provided for in this Disclosure Statement or the Adoption Agreement,
termination fees are charged when your account is closed whether the funds are
distributed to you or transferred to a successor custodian or trustee.

The Custodian may charge you for its reasonable expenses for services not
covered by its fee schedule.

Other Charges

There may be sales or other charges associated with the purchase or
redemption of shares of a Fund in which your Regular IRA or Roth IRA is
invested. Before investing, be sure to read carefully the current prospectus of
any Fund you are considering as an investment for your Regular IRA or Roth IRA
for a description of applicable charges.

TAX MATTERS

What IRA Reports does the Custodian Issue?

The Custodian will report all withdrawals to the IRS and the recipient on
the appropriate form. For reporting purposes, a direct transfer of assets to a
successor custodian or trustee is not considered a withdrawal.

The Custodian will report to the IRS the year-end value of your account and
the amount of any rollover (including conversions of a Regular IRA to a Roth
IRA) or regular contribution made during a calendar year, as well as the tax
year for which a contribution is made. Unless the Custodian receives an
indication from you to the contrary, it will treat any amount as a contribution
for the tax year in which it is received. It is most important that a
contribution between January 1st and April 15th for the prior year be clearly
designated as such.

What Tax Information Must I Report to the IRS?

You must file Form 5329 with the IRS for each taxable year for which you
made an excess contribution or you take a premature withdrawal that is subject
to the 10% penalty tax, or you withdraw less than the minimum amount required
from your Regular IRA. If your beneficiary fails to make required
<PAGE>

minimum withdrawals from your Regular or Roth IRA after your death, your
beneficiary may be subject to an excise tax and be required to file Form 5329.

For Regular IRAs, you must also report each nondeductible contribution to
the IRS by designating it a nondeductible contribution on your tax return. Use
Form 8606. In addition, for any year in which you make a nondeductible
contribution or take a withdrawal, you must include additional information on
your tax return. The information required includes: (1) the amount of your
nondeductible contributions for that year; (2) the amount of withdrawals from
Regular IRAs in that year; (3) the amount by which your total nondeductible
contributions for all the years exceed the total amount of your distributions
previously excluded from gross income; and (4) the total value of all your
Regular IRAs as of the end of the year. If you fail to report any of this
information, the IRS will assume that all your contributions were deductible.
This will result in the taxation of the portion of your withdrawals that should
be treated as a nontaxable return of your nondeductible contributions.

Which Withdrawals Are Subject to Withholding?

Roth IRA

Federal income tax will be withheld at a flat rate of 10% of any taxable
withdrawal from your Roth IRA, unless you elect not to have tax withheld.
Withdrawals from a Roth IRA are not subject to the mandatory 20% income tax
withholding that applies to most distributions from qualified plans or 403(b)
accounts that are not directly rolled over to another plan or IRA.

Regular IRA

Federal income tax will be withheld at a flat rate of 10% from any
withdrawal from your Regular IRA, unless you elect not to have tax withheld.
Withdrawals from a Regular IRA are not subject to the mandatory 20% income tax
withholding that applies to most distributions from qualified plans or 403(b)
accounts that are not directly rolled over to another plan or IRA.

ACCOUNT TERMINATION

You may terminate your Regular IRA or Roth IRA at any time after its
establishment by sending a completed withdrawal form (or other withdrawal
instructions in a form acceptable to the Custodian), or a transfer authorization
form, to:

STATE STREET BANK AND TRUST COMPANY

P.O. Box 8510

Boston, MA 02266-8510

Your Regular IRA or Roth IRA with State Street Bank and Trust Company will
terminate upon the first to occur of the following:

. The date your properly executed withdrawal form or instructions (as
described above) withdrawing your total Regular IRA or Roth IRA
balance is received and accepted by the Custodian or, if
<PAGE>

later, the termination date specified in the withdrawal form.

. The date the Regular IRA or Roth IRA ceases to qualify under the tax
code. This will be deemed a termination.

. The transfer of the Regular IRA or Roth IRA to another
custodian/trustee.

. The rollover of the amounts in the Regular IRA or Roth IRA to another
custodian/trustee.

Any outstanding fees must be received prior to such a termination of your
account.

The amount you receive from your IRA upon termination of the account will
be treated as a withdrawal, and thus the rules relating to Regular IRA or Roth
IRA withdrawals will apply. For example, if the IRA is terminated before you
reach age 59 1/2, the 10% early withdrawal penalty may apply to the taxable
amount you receive.

IRA DOCUMENTS

Regular IRA

The terms contained in Articles I to VII of Part One of the State Street
Bank and Trust Company Individual Retirement Custodial Account document have
been promulgated by the IRS in Form 5305-A for use in establishing a Regular IRA
Custodial Account that meets the requirements of Code Section 408(a) for a valid
Regular IRA. This IRS approval relates only to the form of Articles I to VII and
is not an approval of the merits of the Regular IRA or of any investment
permitted by the Regular IRA.

Roth IRA

The terms contained in Articles I to VII of Part Two of the State Street
Bank and Trust Company Individual Retirement Account Custodial Agreement have
been promulgated by the IRS in Form 5305-RA for use in establishing a Roth IRA
Custodial Account that meets the requirements of Code Section 408A for a valid
Roth IRA. This IRS approval relates only to the form of Articles I to VII and is
not an approval of the merits of the Roth IRA or of any investment permitted by
the Roth IRA.

Based on our legal advice relating to current tax laws and IRS meetings,
State Street Bank and Trust Company believes that the use of an Individual
Retirement Account Information Kit such as this, containing information and
documents for both a Regular IRA or a Roth IRA, will be acceptable to the IRS.
However, if the IRS makes a ruling, or if Congress enacts legislation, regarding
the use of different documentation, State Street Bank and Trust Company will
forward to you new documentation for your Regular IRA or a Roth IRA (as
appropriate) for you to read and, if necessary, an appropriate new Adoption
Agreement to sign. By adopting a Regular IRA or a Roth IRA using these
materials, you acknowledge this possibility and agree to this procedure if
necessary. In all cases, to the extent permitted State Street Bank and Trust
Company will treat your IRA as being opened on the date your account was opened
using the Adoption Agreement in this Kit.

ADDITIONAL INFORMATION
<PAGE>

For additional information you may call the following telephone number:
1-800-OAKMARK (1-800-625-6275).

State Street Bank and Trust Company
Individual Retirement Account
Custodial Agreement

Part One: Provisions Applicable to Regular IRAs

The following provisions of Articles I to VII are in the form promulgated by the
Internal Revenue Service in Form 5305-A for use in establishing an individual
retirement custodial account.

Article I.

The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993 include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code or an
employer contribution to a simplified employee pension plan as described in
section 408(k).

Article II.

The Depositor's interest in the balance in the custodial account is
nonforfeitable.

Article III.

1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5) of the Code).

2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m) except as otherwise permitted by section 408(m)(3)
which provides an exception for certain gold and silver coins and coins issued
under the laws of any state.

Article IV.

1. Notwithstanding any provisions of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.

2. Unless otherwise elected by the time distributions are required to
begin to the Depositor under paragraph 3, or to the surviving spouse under
<PAGE>

paragraph 4, other than in the case of a life annuity, life expectancies shall
be recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.

3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date, the April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:

(a) A single-sum payment.

(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.

(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last
survivor lives of the Depositor and his or her designated beneficiary.

(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.

(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor
expectancy of the Depositor and his or her designated beneficiary.

4. If the Depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as follows:

(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with
paragraph 3.

(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the
Depositor or, if the Depositor has not so elected, at the election of
the beneficiary or beneficiaries, either

(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or

(ii) Be distributed in equal or substantially equal payments over the
life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following the
year of the Depositor's death. If, however, the beneficiary is
the Depositor's surviving spouse, then this distribution is not
required to begin before December 31 of the year in which the
Depositor would have turned age 70 1/2.

(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on
the Depositor's required beginning date, even though payments
<PAGE>

may actually have been made before that date.

(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse,
no additional cash contributions or rollover contributions may be
accepted in the account.

5. In the case of distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of distributions
under paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designated
beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2.
In the case of a distribution in accordance with paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.

6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.

Article V.

1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under section 408(i)
and Regulations sections 1.408-5 and 1.408-6.

2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor as prescribed by the Internal Revenue Service.

Article VI.

Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and the related
regulations will be invalid.

Article VII.

This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear on the Adoption
Agreement.

Part Two: Provisions Applicable to Roth IRAs

The following provisions of Articles I to VII are in the form promulgated
by the Internal Revenue Service in Form 5305-RA for use in
<PAGE>

establishing a Roth Individual Retirement Custodial Account.

Article I.

1. If this Roth IRA is not designated as a Roth Conversion IRA, then,
except in the case of a rollover contribution described in section 408A(e), the
Custodian will accept only cash contributions and only up to a maximum amount of
$2,000 for any tax year of the Depositor.

2. If this Roth IRA is designated as a Roth Conversion IRA, no
contributions other than IRA Conversion Contributions made during the same tax
year will be accepted.

Article IA.

The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single Depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married Depositor who files jointly, between AGI of $150,000 and $160,000;
and for a married Depositor who files separately, between $0 and $10,000. In
case of a conversion, the Custodian will not accept IRA Conversion Contributions
in a tax year if the Depositor's AGI for that tax year exceeds $100,000 or if
the Depositor is married and files a separate return. Adjusted gross income is
defined in section 408A(c)(3) and does not include IRA Conversion Contributions.

Article II.

The Depositor's interest in the balance in the custodial account is
nonforfeitable.

Article III.

2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.

Article IV.

1. If the Depositor dies before his or her entire interest is distributed
to him or her and the Depositor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the Depositor or, if the
Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:

. Be distributed by December 31 of the year containing the fifth
anniversary of the Depositor's death, or

. Be distributed over the life expectancy of the designated beneficiary
starting no later than December 31 of the year following the year of
the Depositor's death.
<PAGE>

If distributions do not begin by the date described in (b), distribution
method (a) will apply.

2. In the case of distribution method 1(b) above, to determine the
minimum annual payment for each year, divide the Depositor's entire interest in
the trust as of the close of business on December 31 of the preceding year by
the life expectancy of the designated beneficiary using the attained age of the
designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent year.

3. If the Depositor's spouse is the sole beneficiary on the Depositor's
date of death, such spouse will then be treated as the Depositor.

Article V.

1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under sections
408(i) and 408A(d)(3)(E), and Regulations section 1.408-5 and 1.408-6, and under
guidance published by the Internal Revenue Service.

2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor as prescribed by the Internal Revenue Service.

Article VI.

Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.

Article VII.

This agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance. Other
amendments may be made with the consent of the persons whose signatures appear
below.

Part Three: Provisions Applicable to Both
Regular IRAs and Roth IRAs

Article VIII.

1. As used in this Article VIII the following terms have the following
meanings:

"Account" or "Custodial Account" means the individual retirement account
established using the terms of either Part One or Part Two and, in either event,
Part Three of this State Street Bank and Trust Company Individual Retirement
Account Custodial Agreement and the Adoption Agreement signed by the Depositor.
The Account may be a Regular Individual Retirement Account or a Roth Individual
Retirement Account, as specified by the Depositor. See Section 24 below.
<PAGE>

"Custodian" means State Street Bank and Trust Company.

"Fund" means any registered investment company which is advised, sponsored
or distributed by Sponsor; provided, however, that such a mutual fund or
registered investment company must be legally offered for sale in the state of
the Depositor's residence.

"Distributor" means the entity which has a contract with the Fund(s) to
serve as distributor of the shares of such Fund(s).

In any case where there is no Distributor, the duties assigned hereunder to
the Distributor may be performed by the Fund(s) or by an entity that has a
contract to perform management or investment advisory services for the Fund(s).

"Service Company" means any entity employed by the Custodian or the
Distributor, including the transfer agent for the Fund(s), to perform various
administrative duties of either the Custodian or the Distributor.

In any case where there is no Service Company, the duties assigned
hereunder to the Service Company will be performed by the Distributor (if any)
or by an entity specified in the second preceding paragraph.

"Sponsor" means Harris Associates Investment Trust.

2. The Depositor may revoke the Custodial Account established hereunder
by mailing or delivering a written notice of revocation to the Custodian within
seven days after the Depositor receives the Disclosure Statement related to the
Custodial Account. Mailed notice is treated as given to the Custodian on date of
the postmark (or on the date of Post Office certification or registration in the
case of notice sent by certified or registered mail). Upon timely revocation,
the Depositor's initial contribution will be returned, without adjustment for
administrative expenses, commissions or sales charges, fluctuations in market
value or other changes.

The Depositor may certify in the Adoption Agreement that the Depositor
received the Disclosure Statement related to the Custodial Account at least
seven days before the Depositor signed the Adoption Agreement to establish the
Custodial Account, and the Custodian may rely upon such certification.

3. All contributions to the Custodial Account shall be invested and
reinvested in full and fractional shares of one or more Funds. Such investments
shall be made in such proportions and/or in such amounts as Depositor from time
to time in the Adoption Agreement or by other written notice to the Service
Company (in such form as may be acceptable to the Service Company) may direct.

The Service Company shall be responsible for promptly transmitting all
investment directions by the Depositor for the purchase or sale of shares of one
or more Funds hereunder to the Funds' transfer agent for execution. However, if
investment directions with respect to the investment of any contribution
hereunder are not received from the Depositor as required or, if received, are
unclear or incomplete in the opinion of the Service Company, the contribution
will be returned to the Depositor, or will be held uninvested (or invested in a
money market fund if available) pending clarification or completion by the
Depositor, in either case without liability for interest or for loss of income
or appreciation. If any other directions or other orders by the Depositor with
respect to the sale or purchase of shares of one or more Funds for the Custodial
Account are
<PAGE>

unclear or incomplete in the opinion of the Service Company, the Service Company
will refrain from carrying out such investment directions or from executing any
such sale or purchase, without liability for loss of income or for appreciation
or depreciation of any asset, pending receipt of clarification or completion
from the Depositor.

All investment directions by Depositor will be subject to any minimum
initial or additional investment or minimum balance rules applicable to a Fund
as described in its prospectus.

All dividends and capital gains or other distributions received on the
shares of any Fund held in the Depositor's Account shall be (unless received in
additional shares) reinvested in full and fractional shares of such Fund (or of
any other Fund offered by the Sponsor, if so directed).

4. "Subject to the minimum initial or additional investment, minimum
balance and other exchange rules applicable to a Fund, the Depositor may at any
time direct the Service Company to exchange all or a specified portion of the
shares of a Fund in the Depositor's Account for shares and fractional shares of
one or more other Funds. The Depositor shall give such directions by written
notice acceptable to the Service Company, and the Service Company will process
such directions as soon as practicable after receipt thereof (subject to the
second paragraph of Section 3 of this Article VIII).

5. Any purchase or redemption of shares of a Fund for or from the
Depositor's Account will be effected at the public offering price or net asset
value of such Fund (as described in the then effective prospectus for such Fund)
next established after the Service Company has transmitted the Depositor's
investment directions to the transfer agent for the Fund(s).

Any purchase, exchange, transfer or redemption of shares of a Fund for or
from the Depositor's Account will be subject to any applicable sales, redemption
or other charge as described in the then effective prospectus for such Fund.

6. The Service Company shall maintain adequate records of all purchases
or sales of shares of one or more Funds for the Depositor's Custodial Account.
Any account maintained in connection herewith shall be in the name of the
Custodian for the benefit of the Depositor. All assets of the Custodial Account
shall be registered in the name of the Custodian or of a suitable nominee. The
books and records of the Custodian shall show that all such investments are part
of the Custodial Account.

The Custodian shall maintain or cause to be maintained adequate records
reflecting transactions of the Custodial Account. In the discretion of the
Custodian, records maintained by the Service Company with respect to the Account
hereunder will be deemed to satisfy the Custodian's recordkeeping
responsibilities therefor. The Service Company agrees to furnish the Custodian
with any information the Custodian requires to carry out the Custodian's
recordkeeping responsibilities.

7. Neither the Custodian nor any other party providing services to the
Custodial Account will have any responsibility for rendering advice with respect
to the investment and reinvestment of Depositor's Custodial Account, nor shall
such parties be liable for any loss or diminution in value which results from
Depositor's exercise of investment control over his Custodial Account. Depositor
shall have and exercise exclusive responsibility for and control over the
investment of the assets of his Custodial Account, and neither Custodian nor any
other such party shall have any duty to question his directions in that regard
or to advise him regarding the purchase,
<PAGE>

retention or sale of shares of one or more Funds for the Custodial Account.

8. The Depositor may in writing appoint an investment advisor with
respect to the Custodial Account on a form acceptable to the Custodian and the
Service Company. The investment advisor's appointment will be in effect until
written notice to the contrary is received by the Custodian and the Service
Company. While an investment advisor's appointment is in effect, the investment
advisor may issue investment directions or may issue orders for the sale or
purchase of shares of one or more Funds to the Service Company, and the Service
Company will be fully protected in carrying out such investment directions or
orders to the same extent as if they had been given by the Depositor.

The Depositor's appointment of any investment advisor will also be deemed
to be instructions to the Custodian and the Service Company to pay such
investment advisor's fees to the investment advisor from the Custodial Account
hereunder without additional authorization by the Depositor or the Custodian.

9. Distribution of the assets of the Custodial Account shall be made at
such time and in such form as Depositor (or the Beneficiary if Depositor is
deceased) shall elect by written order to the Custodian. Depositor acknowledges
that any distribution of a taxable amount from the Custodial Account (except for
distribution on account of Depositor's disability or death, return of an "excess
contribution" referred to in Code Section 4973, or a "rollover" from this
Custodial Account) made earlier than age 59 1/2 may subject Depositor to an
"additional tax on early distributions" under Code Section 72(t) unless an
exception to such additional tax is applicable. For that purpose, Depositor will
be considered disabled if Depositor can prove, as provided in Code Section
72(m)(7), that Depositor is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or be of long-continued and indefinite duration.
It is the responsibility of the Depositor (or the Beneficiary) by appropriate
distribution instructions to the Custodian to insure that any applicable
distribution requirements of Code Section 401(a)(9) and Article IV above are
met. If the Depositor (or Beneficiary) does not direct the Custodian to make
distributions from the Custodial Account by the time that such distributions are
required to commence in accordance with such distribution requirements, the
Custodian (and Service Company) shall assume that the Depositor (or Beneficiary)
is meeting the minimum distribution requirements from another individual
retirement arrangement maintained by the Depositor (or Beneficiary) and the
Custodian and Service Company shall be fully protected in so doing. The
Depositor (or the Depositor's surviving spouse) may elect to comply with the
distribution requirements in Article IV using the recalculation of life
expectancy method, or may elect that the life expectancy of the Depositor and/or
the Depositor's surviving spouse, as applicable, will not be recalculated; any
such election may be in such form as the Depositor (or surviving spouse)
provides (including the calculation of minimum distribution amounts in
accordance with a method that does not provide for recalculation of the life
expectancy of one or both of the Depositor and surviving spouse and instructions
for withdrawals to the Custodian in accordance with such method).
Notwithstanding paragraph 2 of Article IV, unless an election to have life
expectancies recalculated annually is made by the time distributions are
required to begin, life expectancies shall not be recalculated. Neither the
Custodian nor any other party providing services to the Custodial Account
assumes any responsibility for the tax treatment of any distribution from the
Custodial Account; such responsibility rests solely with the person ordering the
distribution.

<PAGE>

10. The Custodian assumes (and shall have) no responsibility to make
any distribution except upon the written order of Depositor (or Beneficiary if
Depositor is deceased) containing such information as the Custodian may
reasonably request. Also, before making any distribution or honoring any
assignment of the Custodial Account, Custodian shall be furnished with any and
all applications, certificates, tax waivers, signature guarantees and other
documents (including proof of any legal representative's authority) deemed
necessary or advisable by Custodian, but Custodian shall not be responsible for
complying with any order or instruction which appears on its face to be genuine,
or for refusing to comply if not satisfied it is genuine, and Custodian has no
duty of further inquiry. Any distributions from the Account may be mailed,
first-class postage prepaid, to the last known address of the person who is to
receive such distribution, as shown on the Custodian's records, and such
distribution shall to the extent thereof completely discharge the Custodian's
liability for such payment.

11.(a) The term "Beneficiary" means the person or persons designated as
such by the "designating person" (as defined below) on a form
acceptable to the Custodian for use in connection with the
Custodial Account, signed by the designating person, and filed
with the Custodian. The form may name individuals, trusts,
estates, or other entities as either primary or contingent
beneficiaries. However, if the designation does not effectively
dispose of the entire Custodial Account as of the time
distribution is to commence, the term "Beneficiary" shall then
mean the designating person's estate with respect to the assets
of the Custodial Account not disposed of by the designation form.
The form last accepted by the Custodian before such distribution
is to commence, provided it was received by the Custodian (or
deposited in the U.S. Mail or with a reputable delivery service)
during the designating person's lifetime, shall be controlling
and, whether or not fully dispositive of the Custodial Account,
thereupon shall revoke all such forms previously filed by that
person. The term "designating person" means Depositor during
his/her lifetime; after Depositor's death, it also means
Depositor's spouse, but only if the spouse elects to treat the
Custodial Account as the spouse's own Custodial Account in
accordance with applicable provisions of the Code.

(b) When and after distributions from the Custodial Account to
Depositor's Beneficiary commence, all rights and obligations
assigned to Depositor hereunder shall inure to, and be enjoyed
and exercised by, Beneficiary instead of Depositor.

12.(a) The Depositor agrees to provide information to the Custodian at
such time and in such manner as may be necessary for the
Custodian to prepare any reports required under Section 408(i) or
Section 408A(d)(3)(E) of the Code and the regulations thereunder
or otherwise.

(b) The Custodian or the Service Company will submit reports to the
Internal Revenue Service and the Depositor at such time and
manner and containing such information as is prescribed by the
Internal Revenue Service.

(c) The Depositor, Custodian and Service Company shall furnish to
each other such information relevant to the Custodial Account as
may be required under the Code and any regulations issued
<PAGE>

or forms adopted by the Treasury Department thereunder or as may
otherwise be necessary for the administration of the Custodial
Account.

(d) The Depositor shall file any reports to the Internal Revenue
Service which are required of him by law (including Form 5329),
and neither the Custodian nor Service Company shall have any duty
to advise Depositor concerning or monitor Depositor's compliance
with such requirement.

13.(a) Depositor retains the right to amend this Custodial Account
document in any respect at any time, effective on a stated date
which shall be at least 60 days after giving written notice of
the amendment (including its exact terms) to Custodian by
registered or certified mail, unless Custodian waives notice as
to such amendment. If the Custodian does not wish to continue
serving as such under this Custodial Account document as so
amended, it may resign in accordance with Section 17 below.

(b) Depositor delegates to the Custodian the Depositor's right so to
amend, provided (i) the Custodian does not change the investments
available under this Custodial Agreement and (ii) the Custodian
amends in the same manner all agreements comparable to this one,
having the same Custodian, permitting comparable investments, and
under which such power has been delegated to it; this includes
the power to amend retroactively if necessary or appropriate in
the opinion of the Custodian in order to conform this Custodial
Account to pertinent provisions of the Code and other laws or
successor provisions of law, or to obtain a governmental ruling
that such requirements are met, to adopt a prototype or master
form of agreement in substitution for this Agreement, or as
otherwise may be advisable in the opinion of the Custodian. Such
an amendment by the Custodian shall be communicated in writing to
Depositor, and Depositor shall be deemed to have consented
thereto unless, within 30 days after such communication to
Depositor is mailed, Depositor either (i) gives Custodian a
written order for a complete distribution or transfer of the
Custodial Account, or (ii) removes the Custodian and appoints a
successor under Section 17 below.

Pending the adoption of any amendment necessary or desirable to conform this
Custodial Account document to the requirements of any amendment to any
applicable provision of the Internal Revenue Code or regulations or rulings
thereunder, the Custodian and the Service Company may operate the Depositor's
Custodial Account in accordance with such requirements to the extent that the
Custodian and/or the Service Company deem necessary to preserve the tax benefits
of the Account.

(c) Notwithstanding the provisions of subsections (a) and (b) above,
no amendment shall increase the responsibilities or duties of
Custodian without its prior written consent.

(d) This Section 13 shall not be construed to restrict the
Custodian's right to substitute fee schedules in the manner
provided by Section 16 below, and no such substitution shall be
deemed to be an amendment of this Agreement.
<PAGE>

14.(a) Custodian shall terminate the Custodial Account if this Agreement
is terminated or if, within 30 days (or such longer time as
Custodian may agree) after resignation or removal of Custodian
under Section 17, Depositor or Sponsor, as the case may be, has
not appointed a successor which has accepted such appointment.
Termination of the Custodial Account shall be effected by
distributing all assets thereof in a single payment in cash or in
kind to Depositor, subject to Custodian's right to reserve funds
as provided in Section 17.

(b) Upon termination of the Custodial Account, this custodial account
document shall have no further force and effect (except for
Sections 15(f), 17(b) and (c) hereof which shall survive the
termination of the Custodial Account and this document), and
Custodian shall be relieved from all further liability hereunder
or with respect to the Custodial Account and all assets thereof
so distributed.

15.(a) In its discretion, the Custodian may appoint one or more
contractors or service providers to carry out any of its
functions and may compensate them from the Custodial Account for
expenses attendant to those functions. In the event of such
appointment, all rights and privileges of the Custodian under
this Agreement shall pass through to such contractors or service
providers who shall be entitled to enforce them as if a named
party.

(b) The Service Company shall be responsible for receiving all
instructions, notices, forms and remittances from Depositor and
for dealing with or forwarding the same to the transfer agent for
the Fund(s).

(c) The parties do not intend to confer any fiduciary duties on
Custodian or Service Company (or any other party providing
services to the Custodial Account), and none shall be implied.
Neither shall be liable (or assumes any responsibility) for the
collection of contributions, the proper amount, time or tax
treatment of any contribution to the Custodial Account or the
propriety of any contributions under this Agreement, or the
purpose, time, amount (including any minimum distribution
amounts), tax treatment or propriety of any distribution
hereunder, which matters are the sole responsibility of Depositor
and Depositor's Beneficiary.

(d) Not later than 60 days after the close of each calendar year (or
after the Custodian's resignation or removal), the Custodian or
Service Company shall file with Depositor a written report or
reports reflecting the transactions effected by it during such
period and the assets of the Custodial Account at its close. Upon
the expiration of 60 days after such a report is sent to
Depositor (or Beneficiary), the Custodian or Service Company
shall be forever released and discharged from all liability and
accountability to anyone with respect to transactions shown in or
reflected by such report except with respect to any such acts or
transactions as to which Depositor shall have filed written
objections with the Custodian or Service Company within such 60
day period.

(e) The Service Company shall deliver, or cause to be delivered,
<PAGE>

to Depositor all notices, prospectuses, financial statements and
other reports to shareholders, proxies and proxy soliciting
materials relating to the shares of the Funds(s) credited to the
Custodial Account. No shares shall be voted, and no other action
shall be taken pursuant to such documents, except upon receipt of
adequate written instructions from Depositor.

(f) Depositor shall always fully indemnify Service Company,
Distributor, the Fund(s), Sponsor and Custodian and save them
harmless from any and all liability whatsoever which may arise
either (i) in connection with this Agreement and the matters
which it contemplates, except that which arises directly out of
the Service Company's, Distributor's, Fund's, Sponsor's or
Custodian's bad faith, gross negligence or willful misconduct,
(ii) with respect to making or failing to make any distribution,
other than for failure to make distribution in accordance with an
order therefor which is in full compliance with Section 10, or
(iii) actions taken or omitted in good faith by such parties.
Neither Service Company nor Custodian shall be obligated or
expected to commence or defend any legal action or proceeding in
connection with this Agreement or such matters unless agreed upon
by that party and Depositor, and unless fully indemnified for so
doing to that party's satisfaction.

(g) The Custodian and Service Company shall each be responsible
solely for performance of those duties expressly assigned to it
in this Agreement, and neither assumes any responsibility as to
duties assigned to anyone else hereunder or by operation of law.

(h) The Custodian and Service Company may each conclusively rely upon
and shall be protected in acting upon any written order from
Depositor or Beneficiary, or any investment advisor appointed
under Section 8, or any other notice, request, consent,
certificate or other instrument or paper believed by it to be
genuine and to have been properly executed, and so long as it
acts in good faith, in taking or omitting to take any other
action in reliance thereon. In addition, Custodian will carry out
the requirements of any apparently valid court order relating to
the Custodial Account and will incur no liability or
responsibility for so doing.

16.(a) The Custodian, in consideration of its services under this
Agreement, shall receive the fees specified on the applicable fee
schedule. The fee schedule originally applicable shall be the one
specified in the Adoption Agreement or Disclosure Statement, as
applicable. The Custodian may substitute a different fee schedule
at any time upon 30 days' written notice to Depositor. The
Custodian shall also receive reasonable fees for any services not
contemplated by any applicable fee schedule and either deemed by
it to be necessary or desirable or requested by Depositor.

(b) Any income, gift, estate and inheritance taxes and other taxes of
any kind whatsoever, including transfer taxes incurred in
connection with the investment or reinvestment of the assets of
the Custodial Account, that may be levied or assessed in respect
to such assets, and all other

<PAGE>

administrative expenses incurred by the Custodian in the
performance of its duties (including fees for legal services
rendered to it in connection with the Custodial Account) shall be
charged to the Custodial Account. If the Custodian is required to
pay any such amount, the Depositor (or Beneficiary) shall
promptly upon notice thereof reimburse the Custodian.

(c) All such fees and taxes and other administrative expenses charged
to the Custodial Account shall be collected either from the
amount of any contribution or distribution to or from the
Account, or (at the option of the person entitled to collect such
amounts) to the extent possible under the circumstances by the
conversion into cash of sufficient shares of one or more Funds
held in the Custodial Account (without liability for any loss
incurred thereby). Notwithstanding the foregoing, the Custodian
or Service Company may make demand upon the Depositor for payment
of the amount of such fees, taxes and other administrative
expenses. Fees which remain outstanding after 60 days may be
subject to a collection charge.

17.(a) Upon 30 days' prior written notice to the Custodian, Depositor or
Sponsor, as the case may be, may remove it from its office
hereunder. Such notice, to be effective, shall designate a
successor custodian and shall be accompanied by the successor's
written acceptance. The Custodian also may at any time resign
upon 30 days' prior written notice to Sponsor, whereupon the
Sponsor shall notify the Depositor (or Beneficiary) and shall
appoint a successor to the Custodian. In connection with its
resignation hereunder, the Custodian may, but is not required to,
designate a successor custodian by written notice to the Sponsor
or Depositor (or Beneficiary), and the Sponsor or Depositor (or
Beneficiary) will be deemed to have consented to such successor
unless the Sponsor or Depositor (or Beneficiary) designates a
different successor custodian and provides written notice thereof
together with such a different successor's written acceptance by
such date as the Custodian specifies in its original notice to
the Sponsor or Depositor (or Beneficiary) (provided that the
Sponsor or Depositor (or Beneficiary) will have a minimum of 30
days to designate a different successor).

(b) The successor custodian shall be a bank, insured credit union, or
other person satisfactory to the Secretary of the Treasury under
Code Section 408(a)(2). Upon receipt by Custodian of written
acceptance by its successor of such successor's appointment,
Custodian shall transfer and pay over to such successor the
assets of the Custodial Account and all records (or copies
thereof) of Custodian pertaining thereto, provided that the
successor custodian agrees not to dispose of any such records
without the Custodian's consent. Custodian is authorized,
however, to reserve such sum of money or property as it may deem
advisable for payment of all its fees, compensation, costs, and
expenses, or for payment of any other liabilities constituting a
charge on or against the assets of the Custodial Account or on or
against the Custodian, with any balance of such reserve remaining
after the payment of all such items to be paid over to the
successor custodian.

<PAGE>

18. References herein to the "Internal Revenue Code" or "Code" and
sections thereof shall mean the same as amended from time to time, including
successors to such sections.

19. Except where otherwise specifically required in this Agreement, any
notice from Custodian to any person provided for in this Agreement shall be
effective if sent by first-class mail to such person at that person's last
address on the Custodian's records.

20. Depositor or Depositor's Beneficiary shall not have the right or power
to anticipate any part of the Custodial Account or to sell, assign, transfer,
pledge or hypothecate any part thereof. The Custodial Account shall not be
liable for the debts of Depositor or Depositor's Beneficiary or subject to any
seizure, attachment, execution or other legal process in respect thereof except
to the extent required by law. At no time shall it be possible for any part of
the assets of the Custodial Account to be used for or diverted to purposes other
than for the exclusive benefit of the Depositor or his/her Beneficiary except to
the extent required by law.

21. When accepted by the Custodian, this Agreement is accepted in and
shall be construed and administered in accordance with the laws of the state
where the principal offices of the Custodian are located. Any action involving
the Custodian brought by any other party must be brought in a state or federal
court in such state.

If in the Adoption Agreement, Depositor designates that the Custodial
Account is a Regular IRA, this Agreement is intended to qualify under Code
Section 408(a) as an individual retirement Custodial Account and to entitle
Depositor to the retirement savings deduction under Code Section 219 if
available. If in the Adoption Agreement Depositor designates that the Custodial
Account is a Roth IRA, this Agreement is intended to qualify under Code Section
408A as a Roth individual retirement Custodial Account and to entitle Depositor
to the tax-free withdrawal of amounts from the Custodial Account to the extent
permitted in such Code section.

If any provision hereof is subject to more than one interpretation or any
term used herein is subject to more than one construction, such ambiguity shall
be resolved in favor of that interpretation or construction which is consistent
with the intent expressed in whichever of the two preceding sentences is
applicable.

However, the Custodian shall not be responsible for whether or not such
intentions are achieved through use of this Agreement, and Depositor is referred
to Depositor's attorney for any such assurances.

22. Depositor should seek advice from Depositor's attorney regarding the
legal consequences (including but not limited to federal and state tax matters)
of entering into this Agreement, contributing to the Custodial Account, and
ordering Custodian to make distributions from the Account. Depositor
acknowledges that Custodian and Service Company (and any company associated
therewith) are prohibited by law from rendering such advice.

23. If any provision of any document governing the Custodial Account
provides for notice, instructions or other communications from one party to
another in writing, to the extent provided for in the procedures of the
Custodian, Service Company or another party, any such notice, instructions
<PAGE>

or other communications may be given by telephonic, computer, other electronic
or other means, and the requirement for written notice will be deemed satisfied.

24. The legal documents governing the Custodial Account are as follows:

(a) If in the Adoption Agreement the Depositor designated the Custodial
Account as a Regular IRA under Code Section 408(a), the provisions of
Part One and Part Three of this Agreement and the provisions of the
Adoption Agreement are the legal documents governing the Depositor's
Custodial Account.

(b) If in the Adoption Agreement the Depositor designated the Custodial
Account as a Roth IRA under Code Section 408A, the provisions of Part
Two and Part Three of this Agreement and the provisions of the
Adoption Agreement are the legal documents governing the Depositor's
Custodial Account.

(c) In the Adoption Agreement the Depositor must designate the Custodian
Account as either a Roth IRA or a Regular IRA, and a separate account
will be established for such IRA. One Custodial Account may not serve
as a Roth IRA and a Regular IRA (through the use of subaccounts or
otherwise).

25. Articles I through VII of Part One of this Agreement are in the form
promulgated by the Internal Revenue Service as Form 5305-A. It is anticipated
that, if and when the Internal Revenue Service promulgates changes to Form 5305-
A, the Custodian will amend this Agreement correspondingly.

Articles I through VII of Part Two of this Agreement are in the form
promulgated by the Internal Revenue Service as Form 5305-RA. It is anticipated
that, if and when the Internal Revenue Service promulgates changes to Form
5305-RA, the Custodian will amend this Agreement correspondingly.

The Internal Revenue Service has endorsed the use of documentation
permitting a Depositor to establish either a Regular IRA or Roth IRA (but not
both using a single Adoption Agreement), and this Kit complies with the
requirements of the IRS guidance for such use. If the Internal Revenue Service
subsequently determines that such an approach is not permissible, or that the
use of a "combined" Adoption Agreement does not establish a valid Regular IRA or
a Roth IRA (as the case may be), the Custodian will furnish the Depositor with
replacement documents and the Depositor will if necessary sign such replacement
documents. Depositor acknowledge and agrees to such procedures and to cooperate
with Custodian to preserve the intended tax treatment of the Account.

26. If the Depositor maintains an Individual Retirement Account under Code
section 408(a), Depositor may convert or transfer such other IRA to a Roth IRA
under Code section 408A using the terms of this Agreement and the Adoption
Agreement by completing and executing the Adoption Agreement and giving suitable
directions to the Custodian and the custodian or trustee of such other IRA.
Alternatively, the Depositor may convert or transfer such other IRA to a Roth
IRA by use of a reply card or by telephonic, computer or electronic means in
accordance with procedures adopted by the Custodian or Service Company intended
to meet the requirements of Code section 408A, and the Depositor will be deemed
to have executed the Adoption Agreement and adopted the provisions of this
Agreement and the Adoption Agreement in

<PAGE>

accordance with such procedures.

27. The Depositor acknowledges that he or she has received and read the
current prospectus for each Fund in which his or her Account is invested and the
Individual Retirement Account Disclosure Statement related to the Account. The
Depositor represents under penalties of perjury that his or her Social Security
number (or other Taxpayer Identification Number) as stated in the Adoption
Agreement is correct.

<PAGE>
Exhibit 14.2

Application

THE OAKMARK FAMILY OF FUNDS
STATE STREET BANK AND TRUST COMPANY
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
APPLICATION AND ADOPTION AGREEMENT ("ADOPTION AGREEMENT")

I, the person signing this Adoption Agreement (hereinafter called the
"Depositor"), establish an Individual Retirement Account (IRA), which is either
a Regular IRA or a Roth IRA, as indicated below, (the "Account") with State
Street Bank and Trust Company as Custodian ("Bank"). A Regular IRA operates
under Internal Revenue Code Section 408(a). A Roth IRA operates under Internal
Revenue Code Section 408A. I agree to the terms of my Account, which are
contained in the applicable provisions of the document entitled "State Street
Bank and Trust Company Individual Retirement Custodial Account" and this
Adoption Agreement. I certify the accuracy of the information in this Adoption
Agreement. My Account will be effective upon acceptance by Bank.

PART 1. DEPOSITOR INFORMATION
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------
Print Full Name Social Security
Number
- ------------------------------------------------------ -------------------------
Address Date of Birth
( )
- ------------------------------------------------------ -------------------------
City State Zip Daytime Telephone
No.

PART 2. IRA ELECTION

INSTRUCTIONS: To establish a Regular IRA, check Box A and complete Part A. To
establish a Roth IRA, check Box B and complete Part B. (In either case, complete
Part 3 to select your investment choices, and sign at the end of Part 5.)

[ ] A. REGULAR IRA By checking this box, I designate my Account as a Regular
IRA under Code Section 408(a). (Complete 1, 2, 3 or 4 below to indicate the type
of Regular IRA you are opening. Check box 5, if applicable.)

1. [ ] ANNUAL CONTRIBUTIONS
<PAGE>

Current Contribution for the tax year.

Check enclosed for $.

This contribution does not exceed the maximum permitted amount as described
in the Regular IRA Disclosure Statement.

2. [ ] TRANSFER

[ ] Transfer of existing Regular IRA directly from current Custodian or
Trustee. Complete the IRA Transfer of Assets Form.

[ ] The transferring IRA held annual contributions by me (or amounts
transferred or rolled over from another IRA holding annual contributions).

[ ] The transferring IRA held only amounts that were originally contributions
to an employer qualified plan or 403(b) plan.

3. [ ] ROLLOVER

The requirements for a valid rollover are complex. See the Regular IRA
Disclosure Statement for additional information and consult your tax advisor for
help if needed. Check enclosed for $.

[ ] Rollover of a qualifying rollover distribution to Depositor from an
employer plan or 403(b) arrangement, or rollover from another Regular IRA
which held only assets distributed to Depositor from an employer plan or
403(b) arrangement and to which Depositor made no direct contributions.

[ ] Rollover of distribution to Depositor from another Regular IRA that held
amounts that originated from annual contributions by the Depositor.

4. [ ] DIRECT ROLLOVER

[ ] Direct rollover of an eligible distribution from a qualified plan.

[ ] Direct rollover of an eligible distribution from a 403(b) account or
annuity.

Direct rollovers are described in the Regular IRA Disclosure Statement.

5. [ ] SEP PROVISION_ check here if the Depositor intends to use this
Account in connection with a SEP Plan or grandfathered SARSEP Plan
established by the Depositor's employer.

[ ] B. ROTH IRA_ By checking this box, I designate my Account as a Roth IRA
<PAGE>

under Code Section 408A. (Complete 1, 2, 3 or 4 below to indicate the type of
Roth IRA you are opening.)

1. [ ] ANNUAL CONTRIBUTIONS

Current Contribution for the tax year .

Check enclosed for $.

This contribution does not exceed the maximum permitted amount as described
in the Roth IRA Disclosure Statement.

2. [ ] CONVERSION OF AN EXISTING OAKMARK FUNDS REGULAR IRA TO A ROTH IRA.

Current Regular IRA Account No.:

Amount Converted

[ ] All

[ ] Part (specify how much): $

3. [ ] ROLLOVER OR TRANSFER FROM EXISTING REGULAR IRA TO A ROTH IRA*

4. [ ] ROLLOVER OR TRANSFER FROM EXISTING ROTH IRA TO A ROTH IRA*

Date existing Roth IRA was originally opened:

Indicate whether any amount in the existing Roth IRA represents amounts
converted or transferred from a Regular IRA into such other Roth IRA:

[ ] Yes [ ] No

If yes, date of the most recent conversion or transfer into such other
Roth:

* Complete the IRA Transfer of Assets Form if either 3 or 4 is checked
and the transaction is a transfer (as opposed to a rollover).

Note: If a conversion, rollover or transfer from a Regular IRA to a Roth
IRA is being made, only amounts converted, rolled over or transferred
during the same tax year will be accepted in a single Roth IRA. A separate
Roth IRA must be established to hold such amounts from a different tax
year. Annual contributions may not be deposited in a Roth IRA holding such
converted, rolled over or transferred amounts.

PART 3. INVESTMENTS

Invest contributions to my Account as follows:
Minimum investment per fund $1,000.
<PAGE>

Oakmark % or $
Oakmark Select %
Oakmark Equity & Income %
Oakmark International %
Oakmark International %
Small Cap
Must Total 100%
$5 Setup fee [ ] enclosed or
[ ] deduct
$10 Annual fee [ ] enclosed or
[ ] deduct

I acknowledge that I have sole responsibility for my investment choices and
that I have received a current prospectus. Please read the prospectus before
investing.
<PAGE>

PART 4. DESIGNATION OF BENEFICIARY

As Depositor, I hereby make the following designation of beneficiary in
accordance with the State Street Bank and Trust Company Regular Individual
Retirement Custodial Account, or Roth Individual Retirement Custodial Account:

In the event of my death, pay any interest I may have under my Account to
the following Primary Beneficiary or Beneficiaries who survive me. Make payment
in the proportions specified below (or in equal proportions if no different
proportions are specified). If any Primary Beneficiary predeceases me, his share
is to be divided among the Primary Beneficiaries who survive me in the relative
proportions assigned to each such surviving Primary Beneficiary.

PRIMARY BENEFICIARY OR BENEFICIARIES:

<TABLE>
<CAPTION>
Name Relationship Date of Social Security Proportion
Birth Number
<S> <C> <C> <C> <C>
=============== ================ ========= ================ ============

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

- --------------- ---------------- --------- ---------------- ------------
</TABLE>

If none of the Primary Beneficiaries survives me, pay any interest I may
have under my Account to the following Alternate Beneficiary or Beneficiaries
who survive me. Make payment in the proportions specified below (or in equal
proportions if no different proportions are specified). If any Alternate
Beneficiary predeceases me, his share is to be divided among the Alternate
Beneficiaries who survive me in the relative proportions assigned to each such
surviving Alternate Beneficiary.

ALTERNATE BENEFICIARY OR BENEFICIARIES:

<TABLE>
<CAPTION>
Name Relationship Date of Social Security Proportion
Birth Number
<S> <C> <C> <C> <C>
=============== ================ ========= ================ ============

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

- --------------- ---------------- --------- ---------------- ------------
</TABLE>

IMPORTANT: This Designation of Beneficiary may have important tax or estate
planning effects. Also, if you are married and reside in a community property or
marital property state (Arizona, California, Idaho, Louisiana, Nevada, New
Mexico, Texas, Washington or Wisconsin), you may need to obtain your spouse's
consent if you have not designated your spouse as primary beneficiary for at
least half of your Account. See your lawyer or other tax professional for
additional information and advice.

SPOUSAL This section should be reviewed if the accountholder is married
CONSENT and designates a beneficiary other than the
<PAGE>

spouse. It is the accountholder's responsibility to determine if this
section applies. The accountholder may need to consult with legal
counsel. Neither the Custodian nor the Sponsor are liable for any
consequences resulting from a failure of the accountholder to provide
proper spousal consent.
I am the spouse of the above-named accountholder. I
acknowledge that I have received a full and reasonable disclosure of
my spouse's property and financial obligations. Due to any possible
consequences of giving up my community property interest in this IRA,
I have been advised to see a tax professional or legal advisor.
I hereby consent to the beneficiary designation(s)
indicated above. I assume full responsibility for any adverse
consequence that may result. No tax or legal advice was given to me
by the Custodian or Sponsor.

-------------------------------------------- ---------------
Signature of Spouse Date

-------------------------------------------- ---------------
Signature of Witness for Spouse Date

PART 5. CERTIFICATIONS AND SIGNATURES

If the Depositor has indicated a Regular IRA Rollover or Direct Rollover
above, Depositor certifies that the contribution does not include any employee
contributions to any qualified plan (other than accumulated deductible employee
contributions) or 403(b) arrangement; that any assets transferred in kind by
Depositor are the same assets received by the Depositor in the distribution
being rolled over; if the distribution is from another Regular IRA, that
Depositor has not made another rollover within the one-year period immediately
preceding this rollover; that such distribution was received within 60 days of
making the rollover to this Account; and that no portion of the amount rolled
over is a required minimum distribution under the required distribution rules.

If Depositor has indicated a Conversion, Transfer or a Rollover of an
existing Regular IRA to a Roth IRA, Depositor acknowledges that the amount
converted will be treated as taxable income (except for prior nondeductible
contributions) for federal income tax purposes. If Depositor has indicated a
Rollover from another Roth IRA (Item 4 of Part B above), Depositor certifies
that the information given in Item 4 is correct and acknowledges that adverse
tax consequences or penalties could result from giving incorrect information.

Depositor has received and read the applicable sections of the "State
Street Bank and Trust Company Universal Individual Retirement Account Disclosure
Statement" relating to this Account (including the Custodian's fee schedule),
the Custodial Account document, and the "Instructions" pertaining to this
Agreement. Depositor acknowledges receipt of the Universal Individual Retirement
Custodial Account document and Universal IRA Disclosure Statement at least 7
days before the date inscribed below and acknowledges that Depositor has no
further right of revocation.

Depositor acknowledges and understands that the beneficiaries named herein
may be changed or revoked at any time by filing a new designation in writing
with the Custodian. All forms must be acceptable to the Custodian and dated and
signed by the Depositor.
<PAGE>

Under penalty of perjury, I hereby certify that I am NOT currently subject
to IRS backup withholding. (Cross out "NOT" if you are currently subject to
withholding.)

Under penalty of perjury, I hereby certify that the Taxpayer Identification
Number given is correct.

The Internal Revenue Service does not require your consent to any provision
of this document other than the certifications required to avoid backup
withholding.

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

Signature of Depositor

Date

Custodian Acceptance. State Street Bank and Trust Company will accept
appointment as Custodian of the Depositor's Account. However, this Agreement is
not binding upon the Custodian until the Depositor has received a statement of
the transaction. Receipt by the Depositor of a confirmation of the purchase of
the Fund shares indicated above will serve as notification of State Street Bank
and Trust Company's acceptance of appointment as Custodian of the Depositor's
Account.

STATE STREET BANK AND TRUST COMPANY, CUSTODIAN

Date

If the Depositor is a minor under the laws of the Depositor's state of
residence, a parent or guardian must also sign the Agreement here. Until the
Depositor reaches the age of majority, the parent or guardian will exercise the
powers and duties of the Depositor.

================================================================================

Signature of Parent or Guardian

RETAIN A PHOTOCOPY OF THE COMPLETED AGREEMENT FOR YOUR RECORDS

<PAGE>

Exhibit 14.3

Transfer Form

The Oakmark Family of Funds
State Street Bank and Trust Company Individual Retirement Custodial Account
IRA Transfer of Assets Form

================================================================================

1. NAME AND ADDRESS OF DEPOSITOR

---------------------------------------------------------------------------
Name

---------------------------------------------------------------------------
Address

---------------------------------------------------------------------------
Street City State Zip

--------------------------------------------------------------------------
Daytime Telephone No. ( )

---------------------------------------------------------------------------
Social Security No.

================================================================================

1. IDENTIFICATION OF RECEIVING ACCOUNT

This is a transfer to State Street Bank and Trust Company

[ ] Regular IRA* [ ] SEP IRA* [ ] Roth IRA**

* You may not transfer from a Roth IRA to a Regular IRA or a simplified
employee pension (SEP) IRA. Transfer to a Regular IRA or SEP IRA may be made
from another Regular IRA or SEP IRA, qualified employer plan, 403(b)
arrangement, or a Simple IRA (but not until at least 2 years after the first
contribution to your Simple IRA).

** Transfers to a Roth IRA are possible only from another Roth IRA or from a
Regular IRA, not from other types of tax-deferred accounts. A transfer from
a Regular IRA will trigger federal income tax on the taxable amount
transferred from the Regular IRA. Note: If a conversion, rollover or
transfer from a Regular IRA to a Roth IRA is being made, only amounts
converted, rolled over or transferred during the same tax year will be
accepted in a single Roth IRA. A separate Roth IRA must be established to
hold such amounts from a different tax year. Annual contributions may not be
deposited in a Roth IRA holding such converted, rolled over or transferred
amounts.

If you already have a Regular IRA, SEP IRA or Roth IRA, indicate the account
No._____________________.

3. INSTRUCTION TO PRESENT IRA CUSTODIAN OR TRUSTEE (Completed by Depositor)

---------------------------------------------------------------------------
Name of Custodian/Trustee

---------------------------------------------------------------------------
Attn: Mr./Mrs.

---------------------------------------------------------------------------
Address

---------------------------------------------------------------------------
Street City State Zip

<PAGE>

Account number at Present IRA Custodian or Trustee: _____________________

Please transfer assets from the above account to State Street Bank and
Trust Company. Transfer should be in cash according to the following
instructions:

[ ] Transfer the total amount in my Account, or

[ ] Transfer % and retain the balance, or

[ ] Transfer $ and retain the balance

Make check payable to:

State Street Bank and Trust Company

Mail to:

The Oakmark Funds
P. O. Box 8510
Boston, MA 02266-8510

<PAGE>

4. INVESTMENT INSTRUCTIONS TO STATE STREET BANK AND TRUST COMPANY
(Depositor_check one box and complete if necessary)

[_] Invest the transferred amount in accordance with the investment
instructions in the Adoption Agreement for my State Street Bank and Trust
Company Individual Retirement Custodial Account.

[_] Invest the transferred amount as follows:
Oakmark %
Oakmark Select %
Oakmark Equity and %
Income
Oakmark International %
Oakmark International %
Small Cap Fund
Account number (if
existing):

I acknowledge that I have sole responsibility for my investment
choices and that I have received a current prospectus. Please read the
prospectus before investing.

I understand that the requirements for a valid transfer to a Regular
IRA, SEP IRA, or Roth IRA are complex and that I have the
responsibility for complying with all requirements and for the tax
results of any such transfer.

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

SIGNATURE OF DEPOSITOR

The undersigned certifies to the present IRA custodian or trustee that
the undersigned has established a successor Individual Retirement
Custodial Account meeting the requirements of Internal Revenue Code
Section 408(a), 408(p) or 408A (as the case may be) to which assets
will be transferred, and certifies to State Street Bank and Trust
Company that the IRA from which assets are being transferred meets the
requirements of Internal Revenue Code Section 408(a), 408(p) or 408A
(as the case may be).

Date Signature of Depositor

SIGNATURE GUARANTEE (only if required by current Custodian or Trustee)

Signature guaranteed by:
Name of Bank or Dealer Firm
<PAGE>

Signature of Officer and Title

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

5. ACCEPTANCE BY NEW CUSTODIAN (Completed by State Street Bank and Trust
Company)

State Street Bank and Trust Company agrees to accept transfer of the above
amount for deposit to the Depositor's State Street Bank and Trust Company
Individual Retirement Custodial Account, and requests the liquidation and
transfer of assets as indicated above.

By:

<PAGE>

EXHIBIT 16

The Oakmark Fund
Total Return Calculation

Initial Investment: $1,000

Period: From November 1, 1996
to September 30, 1997

Number of Days in Period: 334

Total Return: 39.24%

<TABLE>
<CAPTION>
Dividend Dividend Dividend Total Account
Date NAV Shares Rate Dollars Shares Shares Value
---- --- ------ ---- ------- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
10/31/96 $28.47 35.1247 0.0000 $0.00 0.0000 35.1247 $1,000.00
12/13/95 $29.73 35.1247 1.1200 $39.51 1.3289 36.4536 $1,083.77
10/31/96 $32.39 36.4536 0.0000 $0.00 0.0000 36.4536 $1,180.73
10/31/96 $32.39 30.8737 0.0000 $0.00 0.0000 30.8737 $1,000.00
12/11/96 $32.20 30.8737 2.2107 $68.25 2.1200 32.9937 $1,062.39
9/30/97 $41.21 32.9937 0.0000 $0.00 0.0000 32.9937 $1,359.67
</TABLE>

Annualization
- -------------
$1,359.67 (divided by) 1000 = 35.967% X 12/11 = 39.24%

The Oakmark Select Fund
Total Return Calculation

Initial Investment: $1,000

Period: From November 1, 1996
to September 30, 1997

Number of Days in Period: 334

Total Return: 69.16%

Annualization
- -------------
$1,634.00 (divided by) 1000 = 63.4% X 12/11 = 69.16%
<PAGE>

The Oakmark Equity and Income Fund
Total Return Calculation

Initial Investment: $1,000

Period: From November 1, 1996
to 9-30-97

Number of Days in Period: 334

Total Return: 34.01%

<TABLE>
<CAPTION>
Dividend Dividend Dividend Total Account
Date NAV Shares Rate Dollars Shares Shares Value
---- --- ------- -------- --------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
11/01/95 $10.00 100.0000 0.00 $0.00 0.0000 100.0000 $1,000.00
10/31/96 $11.29 100.0000 0.00 $0.00 0.0000 100.0000 $1,129.00
10/31/96 $11.29 88.574 0 0 0 88.574 $1,000.00
12/11/96 11.37 88.574 .2513 22.26 1.958 90.532 1,029.00
9/30/97 14.49 90.532 0 0 0 90.532 1,311.81
</TABLE>

Annualization
- -------------
$1,311.81 (divided by) 1000 = 31.18% X 12/11 = 34.01%

<PAGE>

The Oakmark Small Cap Fund
Total Return Calculation

Initial Investment: $1,000

Period: From November 1, 1996
to 9-30-97

Number of Days in Period: 334

Total Return: 59.14%

<TABLE>
<CAPTION>
Dividend Dividend Dividend Total Account
Date Nav Shares Rate Dollars Shares Shares Value
---- --- ------ -------- -------- -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
10-31-96 $13.19 75.815 0.00 $0.00 0.0000 75.815 $1,000.00
9/30/97 20.34 100 0 0 0 100 1,542.08
</TABLE>

Annualization
- -------------
1542 (divided by) 1000 = 54.21% x 12/11 = 59.14%

<PAGE>

The Oakmark International Fund
Total Return Calculation

Initial Investment: $1,000

Period: From October 31, 1996
to October 31, 1996

Number of Days in Period: 334

Total Return: 29.63%

<TABLE>
<CAPTION>
Dividend Dividend Dividend Total Account
Date NAV Shares Rate Dollars Shares Shares Value
---- --- ------ ---- ------- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
10/31/96 $14.92 67.024 0 0 0 67.024 $ 1,000
12/11/96 15.00 67.024 .1617 10.84 .723 67.747 1,016.205
9/30/97 18.77 67.747 0 0 0 67.747 1,271.61
</TABLE>

Annualization
- -------------
$1,271.61 (divided by) 1000 = 27.16% X 12 (divided by) 11 = 29.63%

<PAGE>

The Oakmark International Small Cap Fund
Total Return Calculation

Initial Investment: $1,000

Period: From November 1, 1996
to September 30, 1997

Number of Days in Period: 334

Total Return: 12.07%

<TABLE>
<CAPTION>
Dividend Dividend Dividend Total Account
Date NAV Shares Rate Dollars Shares Shares Value
---- --- ------ ---- ------- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
10/31/96 $11.41 87.642 0 0 0 87.64 $1,000
12/11/96 11.27 87.642 .4358 38.19 3.389 91.031 1,025.92
9/30/97 12.20 91.031 0 0 0 91.031 1,110.58
</TABLE>

Annualization
- -------------
$1,110.58 (divided by) 1000 = 11.06% X 12 (divided by) 11 = 12.07%

<PAGE>

Exhibit 18

THE OAKMARK FAMILY OF FUNDS
New Account Registration Form
Please do not use this application to open an IRA
THE FUNDS WILL NOT ACCEPT THIRD PARTY CHECKS
Make checks payable to: State Street Bank & Trust Company
Mail to: The Oakmark Funds
P.O. Box 8510
Boston, MA 02266-8510 1-800-OAKMARK (1-800-625-6275) [LOGO OF OAKMARK]

1. Account Registration

Choose one account type: A, B or C. PRINT CLEARLY.
<S> <C> <C>
A. Individual or Joint
First Name MI Last Name
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
--------------------------- -- -----------------------------------------------------------------------------
Social Security Number Birthdate Citizenship: [ ] U.S. or Resident Alien [ ] Other
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
--------------------------- ------------------------- -----------------------------------------------------
Joint Owner's Name
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
--------------------------- ---- ---------------------------------------------------------------------------
Social Security Number Birthdate Citizenship: [ ] U.S. or Resident Alien [ ] Other
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
--------------------------- -------------------------- -----------------------------------------------------
*If second name is on account, registration will be joint tenancy with rights of survivorship unless otherwise specified.
B. Corporations, Trusts or Other Entities
Name
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-----------------------------------------------------------------------------------------------------------------------
Tax ID Number Trustee(s)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
--------------------------- ---------------------------------------------------------------------------------------
Beneficiary's Name
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
--------------------------- -- -----------------------------------------------------------------------------
Date of Agreement
| | | | | | | | | | | | | |
---------------------------
C. Gift/Transfer to Minor
Custodian's Name
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
--------------------------- -- -----------------------------------------------------------------------------
Minor's Name
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
--------------------------- -- -----------------------------------------------------------------------------
Minor's Social Security Number Minor's Birthdate Minor's State of Residence
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
--------------------------- ------------------------------------- -----
Citizenship: [ ] U.S. or Resident Alien [ ] Other
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
--------------------------------------------------------
2. Mailing Address
Street, Apt.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-----------------------------------------------------------------------------------------------------------------------
City State Zip
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | -- | | | | | |
----------------------------------------------- ----- --------------------------------------------------------
Daytime Phone Evening Phone
| | | | | -- | | | -- | | | | | | | | | | | | | | | | -- | | | -- | | | | | | | | |
---------------------------------------- ---------------------------------------------
Send Duplicate Statements to:
Name
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
--------------------------- -- -----------------------------------------------------------------------------
Company
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-----------------------------------------------------------------------------------------------------------------------
Street
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-----------------------------------------------------------------------------------------------------------------------
City State Zip
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | -- | | | | | |
----------------------------------------------- ----- --------------------------------------------------------
3. Investment
. Initial minimum: $1,000 per Fund account . Minimum Subsequent purchases: $100 per Fund Account

OAKMARK FUNDS INITIAL INVESTMENT DISTRIBUTION OPTIONS*

[ ] Oakmark Fund (110) $ [__________] [ ]
[ ] Oakmark Select Fund (808) $ [__________] [ ]
[ ] Oakmark Equity and Income Fund (810) $ [__________] [ ]
[ ] Oakmark International Fund (109) $ [__________] [ ]
[ ] Oakmark International Small Cap Fund (110) $ [__________] [ ]

OAKMARK UNITS OF

[ ] Government Portfolio (111) $ [__________] [ ]
[ ] Tax-Exempt Diversified Portfolio (60) $ [__________] [ ]
[ ] Short Duration Tax-Free Fund (61) $ [__________] [ ]

Total Investment $ [__________] *Distributions will automatically be
reinvested in additional shares of
your fund(s) unless you check the
box(es) above.
</TABLE>
<PAGE>

4. Automatic Investment Plan

[_] This allows you to purchase shares automatically by electronic transfer
from your checking account. Transactions will occur on the 15th of the
month or the next business day, unless otherwise specified below.

Beginning |_|_|_|_|_|_| invest $ |_|_|_|_|_| [_] Monthly [_] Quarterly

Transactions should occur on the |_|_| of the month.

Fund Name: |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|

Check the box and complete section 7.
--------

5. Telephone Investments

[_] This allows you to purchase shares by telephone by calling our Audio
Response System anytime at 1-800-OAKMARK (1-800-625-6275), press 1, or
press 2 for a customer service representative between 8:00 AM and 4:00
PM EST. You pay for the purchases by electronic transfer from your
checking account. Check the box and complete section 7.
--------
6. Redemption and Exchange Options

A. Telephone Redemptions and Exchanges.

This allows you to use the telephone to redeem or exchange shares, unless you
check the box below. Redemptions will be made payable to the registered
owner(s) and to the address of record. Persons having your account
information may be able to act upon your behalf.

[_] I DO NOT WANT TELEPHONE REDEMPTION.
[_] I DO NOT WANT TELEPHONE EXCHANGE.

B. Special Redemption Option.

[_] This allows you to redeem shares automatically and have the proceeds
sent to your checking account.

Check the box and complete section 7.
--------

C. Systematic Withdrawal Plan.

[_] This allows you to redeem shares automatically and have the proceeds
sent to your address of record. Transactions will occur on the 24th of
the month or the next business day, unless otherwise specified below.

Beginning |_|_|_|_|_|_| invest $ |_|_|_|_|_| [_] Monthly [_] Quarterly

Transactions should occur on the |_|_| of the month.

Fund Name: |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|

7. Bank Information

Complete this section if you have selected the Automatic Investment Plan from
section 4, Telephone Investments from section 5 or the Special Redemption Option
from section 6B. You must use the same checking account for these sections.

Any co-signer of your checking account who is not a joint owner of the funds
must authorize this service by signing below.

A VOIDED CHECK FROM YOUR CHECKING ACCOUNT MUST BE ATTACHED TO THIS FORM.
----

WE DO NOT ACCEPT STARTER CHECKS OR MUTUAL FUND MONEY MARKET CHECKS.

This allows you to use the telephone to redeem or exchange shares, unless you
check the box below. Redemptions will be made payable to the registered owner(s)
and to the address of record. Persons having your account information may be
able to act upon your behalf.

Name of Bank
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|

Street Address
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|

City State Zip
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| |_|_| |_|_|_|_|_|

Name(s) on Checking Account
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|

Checking Account Number
|_|_|_|_|_|_|_|_|_|_|_|_|_|

Bank ABA Number
|_|_|_|_|_|_|_|_|_|_|_|_|_|

Co-Signer Signature Date
_______________________________________ |_|_|_|_|_|_|

8. Signature

By signing this form I certify that:

. I have received the current Fund prospectus and agree to be bound by its
terms as governed by Illinois law. I have full authority and legal capacity
to purchase F shares and establish and use any related privileges.

TELEPHONE PRIVILEGES

. I understand that the Telephone Redemption and Telephone Exchange Privileges
will apply to my account unless I have specifically declined those privileges
in Section 6A of this application.

. I understand that by signing the application, unless the privileges are
declined, I agree that neither the Funds nor their Transfer Agent, their
agents, offices, trustees, directors or employees will be liable for any
loss, liability or expense for acting on instructions given under the
privileges, placing the risk of loss on me. See the discussion of the
Telephone Redemption and Telephone Exchange Privileges in the prospectus.

TAXPAYER IDENTIFICATION NUMBER CERTIFICATION

I certify under penalties of perjury:

. All information and certifications on this application are true and correct,
including the Social Security or other Tax Identification Number (TIN) in
Section 1.

. Check one of the following only if applicable:

[_] If I have not provided a TIN, I have not been issued a number but have
applied (or will apply) for one. I understand that if I do not provide
the Fund(s) a TIN within 60 days, the Fund(s) will withhold 31% from all
my dividend, capital gain and redemption payments until I provide one.

[_] The IRS has informed me I am subject to backup withholding as a result
of a failure to report all interest dividend income.

[_] I am a trust or organization that qualifies for the IRS backup
withholding exemption.

. The Internal Revenue Service does not require your consent to any provision
of this document other than the certifications required to avoid backup
withholding.

Sign below exactly as your name(s) appear in section 1.

Signature Date
__________________________________ |_|_|_|_|_|_|

Title (if owner is an organization)
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|

Signature Date
__________________________________ |_|_|_|_|_|_|

Title (if owner is an organization)
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|

<PAGE>

<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from The
Oakmark Fund 09/30/97 Annual Report and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 01
<NAME> The Oakmark Fund
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 4,613,300
<INVESTMENTS-AT-VALUE> 6,632,986
<RECEIVABLES> 53,178
<ASSETS-OTHER> 25
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,686,189
<PAYABLE-FOR-SECURITIES> 60,337
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,903
<TOTAL-LIABILITIES> 71,240
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,305,753
<SHARES-COMMON-STOCK> 160,525
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 49,695
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 239,815
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,019,686
<NET-ASSETS> 6,614,949
<DIVIDEND-INCOME> 76,669
<INTEREST-INCOME> 29,568
<OTHER-INCOME> 0
<EXPENSES-NET> 50,379
<NET-INVESTMENT-INCOME> 55,858
<REALIZED-GAINS-CURRENT> 239,440
<APPREC-INCREASE-CURRENT> 1,231,139
<NET-CHANGE-FROM-OPS> 1,526,437
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 41,660
<DISTRIBUTIONS-OF-GAINS> 225,987
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 57,226
<NUMBER-OF-SHARES-REDEEMED> 26,115
<SHARES-REINVESTED> 7,962
<NET-CHANGE-IN-ASSETS> 1,422,222
<ACCUMULATED-NII-PRIOR> 35,496
<ACCUMULATED-GAINS-PRIOR> 226,362
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 43,706
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50,393
<AVERAGE-NET-ASSETS> 5,105,372
<PER-SHARE-NAV-BEGIN> 32.39
<PER-SHARE-NII> 0.36
<PER-SHARE-GAIN-APPREC> 10.67
<PER-SHARE-DIVIDEND> 0.34
<PER-SHARE-DISTRIBUTIONS> 1.87
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 41.21
<EXPENSE-RATIO> 1.08
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from The
Oakmark International Select 9/30/97 Annual Report and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 6
<NAME> Oakmark Select Fund
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 436,241
<INVESTMENTS-AT-VALUE> 523,916
<RECEIVABLES> 9,018
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 532,938
<PAYABLE-FOR-SECURITIES> 17,905
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 858
<TOTAL-LIABILITIES> 18,763
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 421,676
<SHARES-COMMON-STOCK> 31,466
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (247)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,070
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 87,676
<NET-ASSETS> 514,175
<DIVIDEND-INCOME> 1,340
<INTEREST-INCOME> 807
<OTHER-INCOME> 25
<EXPENSES-NET> 2,419
<NET-INVESTMENT-INCOME> (247)
<REALIZED-GAINS-CURRENT> 5,070
<APPREC-INCREASE-CURRENT> 87,675
<NET-CHANGE-FROM-OPS> 92,498
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 45,529
<NUMBER-OF-SHARES-REDEEMED> 11,063
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 421,676
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,732
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,421
<AVERAGE-NET-ASSETS> 235,462
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 6.35
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.34
<EXPENSE-RATIO> 1.12
<AVG-DEBT-OUTSTANDING> 126
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<PAGE>

<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from
The 9-30-97 Annual Report and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER> 03
<NAME> Oakmark Small Cap Fund
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 1,203,839
<INVESTMENTS-AT-VALUE> 1,511,801
<RECEIVABLES> 15,247
<ASSETS-OTHER> 9
<OTHER-ITEMS-ASSETS> 125,327
<TOTAL-ASSETS> 1,652,384
<PAYABLE-FOR-SECURITIES> 15,112
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 123,876
<TOTAL-LIABILITIES> 138,988
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,161,136
<SHARES-COMMON-STOCK> 74,418
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (1,961)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 46,259
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 307,962
<NET-ASSETS> 1,513,396
<DIVIDEND-INCOME> 4,339
<INTEREST-INCOME> 3,155
<OTHER-INCOME> 129
<EXPENSES-NET> 9,307
<NET-INVESTMENT-INCOME> (1,684)
<REALIZED-GAINS-CURRENT> 46,502
<APPREC-INCREASE-CURRENT> 287,859
<NET-CHANGE-FROM-OPS> 332,677
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 78,065
<NUMBER-OF-SHARES-REDEEMED> 20,201
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 962,299
<ACCUMULATED-NII-PRIOR> (276)
<ACCUMULATED-GAINS-PRIOR> (246)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,706
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,326
<AVERAGE-NET-ASSETS> 733,290
<PER-SHARE-NAV-BEGIN> 13.19
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 7.16
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.34
<EXPENSE-RATIO> 1.37
<AVG-DEBT-OUTSTANDING> 198
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<PAGE>

<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from
the 9/30/97 Annual Report and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER> 04
<NAME> The Oakmark Equity and Income Fund
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> Sep-30-1997
<PERIOD-START> Nov-01-1996
<PERIOD-END> Sep-30-1997
<INVESTMENTS-AT-COST> 28,399
<INVESTMENTS-AT-VALUE> 33,857
<RECEIVABLES> 449
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 2,836
<TOTAL-ASSETS> 37,147
<PAYABLE-FOR-SECURITIES> 783
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,902
<TOTAL-LIABILITIES> 3,685
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26,651
<SHARES-COMMON-STOCK> 2,309
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 449
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 905
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,458
<NET-ASSETS> 33,463
<DIVIDEND-INCOME> 274
<INTEREST-INCOME> 488
<OTHER-INCOME> 6
<EXPENSES-NET> 296
<NET-INVESTMENT-INCOME> 472
<REALIZED-GAINS-CURRENT> 905
<APPREC-INCREASE-CURRENT> 4,555
<NET-CHANGE-FROM-OPS> 5,932
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 148
<DISTRIBUTIONS-OF-GAINS> 162
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,941
<NUMBER-OF-SHARES-REDEEMED> 880
<SHARES-REINVESTED> 25
<NET-CHANGE-IN-ASSETS> 14,043
<ACCUMULATED-NII-PRIOR> 125
<ACCUMULATED-GAINS-PRIOR> 162
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 141
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 336
<AVERAGE-NET-ASSETS> 21,590
<PER-SHARE-NAV-BEGIN> 11.29
<PER-SHARE-NII> 0.21
<PER-SHARE-GAIN-APPREC> 3.24
<PER-SHARE-DIVIDEND> 0.12
<PER-SHARE-DISTRIBUTIONS> 0.13
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.49
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 6
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from The
Oakmark International Fund 9/30/97 Annual Report and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 02
<NAME> Oakmark International Fund
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 1,480,884
<INVESTMENTS-AT-VALUE> 1,634,931
<RECEIVABLES> 20,160
<ASSETS-OTHER> 212,539
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,867,630
<PAYABLE-FOR-SECURITIES> 5,920
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 214,362
<TOTAL-LIABILITIES> 220,282
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,230,461
<SHARES-COMMON-STOCK> 87,742
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 61,390
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 200,913
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 154,584
<NET-ASSETS> 1,647,348
<DIVIDEND-INCOME> 38,947
<INTEREST-INCOME> 3,977
<OTHER-INCOME> 1,301
<EXPENSES-NET> 16,559
<NET-INVESTMENT-INCOME> 27,666
<REALIZED-GAINS-CURRENT> 234,815
<APPREC-INCREASE-CURRENT> 74,342
<NET-CHANGE-FROM-OPS> 336,823
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12,478
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 41,288
<NUMBER-OF-SHARES-REDEEMED> 32,946
<SHARES-REINVESTED> 793
<NET-CHANGE-IN-ASSETS> 150,236
<ACCUMULATED-NII-PRIOR> 46,201
<ACCUMULATED-GAINS-PRIOR> (33,902)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,041
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16,559
<AVERAGE-NET-ASSETS> 140,822
<PER-SHARE-NAV-BEGIN> 14.92
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> 3.74
<PER-SHARE-DIVIDEND> 0.16
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.77
<EXPENSE-RATIO> 1.26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from the
Oakmark International Small Cap 9/30/97 Annual Report and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 05
<NAME> Oakmark International Small Cap Fund
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 67,461
<INVESTMENTS-AT-VALUE> 66,295
<RECEIVABLES> 1,618
<ASSETS-OTHER> 2,606
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 70,519
<PAYABLE-FOR-SECURITIES> 741
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,805
<TOTAL-LIABILITIES> 4,546
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60,623
<SHARES-COMMON-STOCK> 5,409
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 522
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,992
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,164)
<NET-ASSETS> 65,973
<DIVIDEND-INCOME> 1,474
<INTEREST-INCOME> 162
<OTHER-INCOME> 25
<EXPENSES-NET> 1,015
<NET-INVESTMENT-INCOME> 646
<REALIZED-GAINS-CURRENT> 6,018
<APPREC-INCREASE-CURRENT> (1,459)
<NET-CHANGE-FROM-OPS> 5,205
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 279
<DISTRIBUTIONS-OF-GAINS> 1,285
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,229
<NUMBER-OF-SHARES-REDEEMED> 3,438
<SHARES-REINVESTED> 135
<NET-CHANGE-IN-ASSETS> 22,580
<ACCUMULATED-NII-PRIOR> 155
<ACCUMULATED-GAINS-PRIOR> 1,260
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 648,148
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,016,070
<AVERAGE-NET-ASSETS> 57,374
<PER-SHARE-NAV-BEGIN> 11.41
<PER-SHARE-NII> 0.13
<PER-SHARE-GAIN-APPREC> 1.10
<PER-SHARE-DIVIDEND> 0.08
<PER-SHARE-DISTRIBUTIONS> 0.36
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.20
<EXPENSE-RATIO> 1.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>