Letter from the Chairman and President...

Dear Fellow Shareholders:

In my new role as Chairman, I am pleased to share the authorship of this letter with Bob Levy, the recently elected president of The Oakmark Funds. Bob is also the president and CEO of Harris Associates, the investment adviser and management of The Oakmark Family of Funds.

We are pleased to present the annual report for The Oakmark Family of Funds for our new fiscal year-end, September 30, 1997. Our fiscal year-to-date numbers reflect our shortened (11 month) year which resulted from the alignment of our fiscal quarters with the calendar quarters upon which most other funds report.

For the 3-month period ended September 30, 1997, our four domestic funds, Oakmark, Equity and Income, Small Cap and Select, enjoyed especially strong returns. During the same period, our two international funds lagged somewhat with a strong divergence in the performance of the Oakmark International large cap holdings (+2.6%) versus the performance of the smaller companies in Oakmark International Small Cap (-3.9%). We suspect that just as the domestic small cap stocks have gained attention when their relative values became compelling, so too will their international counterparts. As long-term value investors, we have learned the advantage of being contrarian at times. We buy value when we identify it, as opposed to when others write about it.

The Oakmark International Fund has just celebrated its fifth birthday and we are pleased and gratified that it has joined its sibling Oakmark Fund in earning a 5-Star (*****) rating by Morningstar.

For those of you looking ahead to IRA contributions, it is our intention to offer prototype Roth and Educational IRA accounts under the new 1997 Tax Act.

We appreciate your confidence in investing with us.

Very truly yours,

VICTOR MORGENSTERN
CHAIRMAN

ROBERT M. LEVY
PRESIDENT




The Oakmark Family of Funds

Summary Information

Performance for Period Ended
September 30, 1997		 The Oakmark
Fund		 The Oakmark
Select
Fund		 The Oakmark
Small Cap
Fund
3 Months 6.3% 15.2% 15.2%
6 Months 22.5% 34.6% 33.6%
11 Months (fiscal year) 36.0% 63.4% 54.2%
1 Year 37.1% N/A 53.5%
Average Annual Total Return for:
3 Year 24.9% N/A N/A
5 Year 25.3% N/A N/A
Since inception 30.7% 63.4%* 44.8%
Value of $10,000
from inception date		 $52,009
(8/5/91)		 $16,340
(11/1/96)		 $20,340
(11/1/95)
Top Five Holdings
as of September 30, 1997		 Banc One Corporation 7.0% Tele-Communications, Liberty Media Class A 14.7% U.S. Industries, Inc. 6.6%
Philip Morris Companies, Inc. 6.5% U. S. Industries, Inc. 14.4% People's Bank of Bridgeport, CT 6.0%
Mellon Bank Corporation 6.0% USG Corporation 8.2% Catellus Development Corporation 4.6%
Company and % of Total Net Assets Tele-Communications, Inc., Class A 4.2% PartnerRe Ltd. 7.2% RenaissanceRe Holdings Ltd 4.1%
Columbia/HCA Healthcare Corp. 4.0% Cablevision Systems Corporation 4.5% Ralcorp Holdings, Inc. 3.7%
Top Five Industries
as of September 30, 1997		 Other Consumer Goods & Services 17.8% TV Programming 14.7% Insurance 13.2%
Food & Beverage 16.6% Diversified Conglomerates 14.4% Other Industrial Goods & Services 12.7%
Industries and % of Total Net Assets Broadcasting & Publishing 14.5% Other Consumer Goods & Services 11.6% Other Consumer Goods & Services 8.5%
Banks 13.0% Broadcasting & Cable TV 8.9% Banks 8.3%
Foreign Securities 5.2% Building Materials & Construction 8.2% Broadcasting & Publishing 7.4%




Performance for Period Ended
September 30, 1997		 The Oakmark
Equity and
Income Fund		 The Oakmark
International
Fund		 The Oakmark
International
Small Cap Fund
3 Months 10.3% 2.6% -3.9%
6 Months 21.9% 11.1% 4.9%
11 Months (fiscal year) 31.2% 27.2% 11.1%
1 Year 33.3% 26.9% 9.3%
Average Annual Total Return for:
3 Year N/A 15.1% N/A
5 Year N/A 18.4% N/A
Since inception 22.7% 18.4% 13.1%
Value of $10,000
from inception date		 $14,810
(11/1/95)		 $23,283
(9/30/92)		 $12,672
(11/1/95)
Top Five Holdings
as of September 30, 1997		 Chrysler Corporation 3.3% Tomkins plc 4.9% Lambert Fenchurch Group plc 5.6%
PartnerRe Ltd. 3.2% Quilmes Industrial SA 4.9% Recordati 4.7%
U.S. Industries, Inc. 3.2% Cordiant plc 4.6% Vardon plc 4.2%
Company and % of Total Net Assets Tele-Communications, Liberty Media Class A 3.2% Sedgwick Group plc 4.0% JCG Holdings Ltd. 3.9%
Juno Lighting, Inc. 3.1% AB Volvo 3.8% Daimon 3.9%
Top Five Industries
as of September 30, 1997		 U.S. Government Bonds 25.4% Food & Beverage 21.0% Other Industrial Goods & Services 13.4%
Other Consumer Goods & Services 10.4% Telecommunications 9.6% Household Products 10.0%
Industries and % of Total Net Assets Broadcasting & Publishing 9.0% Consumer Non-Durables 8.0% Other Financial 9.5%
Banks 8.0% Banks 7.0% Other Consumer Goods & Services 9.4%
Automotive 8.0% Other Industrial Goods & Services 7.0% Food & Beverage 8.2%

* Not Annualized