Letter from the Chairman and President...

Fellow Shareholders:

We are pleased to present the Semi-Annual Report for The Oakmark Family of Funds. With all of our funds increasing in value, our long-term goal of providing attractive returns continues to be achieved. More important, we remain convinced that our funds singularly and collectively continue to be well-positioned to help our shareholders meet their financial goals.

As investors, we feel strongly that our shareholders will be best served by long-term commitments to our funds. We believe that the keys to maintaining your trust and investment in our funds are: investment philosophy, attractive long-term returns and investor service. Through the years, we are confident that our shareholders have benefited from our disciplined investment philosophy and the returns that have been generated. In the investor service area, while our shareholders seem to be pleased, we think it is a good idea to explore some potential changes.

Our focus on this area is not new. In the last year we have strengthened our website, enhanced our automated phone system and streamlined our mailings. Included in this package are two items which may be of interest to you. First, we are introducing "Payroll Deduction" which enables you to invest in The Oakmark Funds directly through your employer. This option allows you to deduct your investment directly from your paycheck. A Payroll Deduction Form is enclosed. The second item enclosed is a brochure for our newly-named automated phone system, "Oak Link." This brochure provides shortcuts through the system for faster, more efficient service.

Our progress has been noteworthy, but we are not done. To this end, over the next several months we will be asking a number of you for suggestions about broadening our service. We intend to focus on reporting practices and information flows but we will be open to other ideas. We have a strong service orientation and when the project is completed, it will be even better.

As always, we remain committed to helping you meet your long-term goals. Thanks for your support and confidence in us.

Very truly yours,

VICTOR MORGENSTERN
Chairman

 

ROBERT M. LEVY
President

The Oakmark Family of Funds

Summary Information

Performance for Period Ended
March 31, 1998
The Oakmark
Fund
The Oakmark Select
Fund
The Oakmark
Small Cap
Fund
3 Months
10.0%
13.4%
7.1%
6 Months
14.4%
22.9%
6.8%
1 Year
40.2%
65.4%
42.8%
Average Annual Total Return for:
3 Year
27.7%
N/A
N/A
5 Year
23.2%
N/A
N/A
Since inception
30.7%
63.7%
37.9%
Value of $10,000
from inception date
$59,517
(8/5/91)
$20,078
(11/1/96)
$21,732
(11/1/95)
Top Five Holdings
as of March 31, 1998

Company and % of Total Net Assets

 Phillip Morris Companies, Inc. 6.7% U.S. Industries, Inc. 12.6% People’s Bank of Bridgeport, CT 8.0%
Banc One Corporation 6.5% Cablevision Systems Corporation 9.8% Cablevision Systems Corporation 7.7%
Mattel, Inc. 5.6% USG Corporation 9.3% U.S. Industries, Inc. 7.4%
Nike, Inc. 5.4% Tele-Communications Liberty Media, Class A 8.8% RenaissanceRe Holdings Ltd 5.3%
The Black & Decker Corporation 4.9% PartnerRe Ltd. 7.8% Catellus Development Corporation 5.2%
Top Five Industries
as of March 31, 1998

Industries and % of Total Net Assets

 Food & Beverage 16.9% Diversified Conglomerates 12.6% Other Industrial Goods & Services 15.0%
Other Consumer Goods & Services 16.1% Building Materials & Construction 11.6% Insurance 12.7%
Banks 9.7% Broadcasting & Cable TV 9.8% Banks 10.6%
Publishing 8.1% Other Consumer Goods & Services 9.0% Broadcasting & Cable TV 9.8%
Other Financial 8.1% TV Programming 8.8% Other Consumer Goods & Services 9.6%


Performance for Period Ended
March 31, 1998
The Oakmark
Equity and
Income Fund
The Oakmark
International
Fund
The Oakmark
International
Small Cap Fund
3 Months
8.7%
14.4%
18.5%
6 Months
9.6%
-1.2%
-9.8%
1 Year
33.6%
9.7%
-5.4%
Average Annual Total Return for:
3 Year
N/A
19.2%
N/A
5 Year
N/A
14.1%
N/A
Since inception
22.2%
16.3%
5.7%
Value of $10,000
from inception date
$16,233
(11/1/95)
$22,994
(9/30/92)
$11,429
(11/1/95)
Top Five Holdings
as of March 31, 1998

Company and % of Total Net Assets

 U.S. Industries, Inc. 4.7% Tomkins plc 5.5% Elevadores Atlas, SA 4.7%
Catellus Development Corporation 4.6% Sedgwick Group plc 4.4% JCG Holdings Ltd. 4.4%
Chrysler Corporation 4.4% Quilmes Industrial SA 4.1% Lambert Fenchurch Group plc 4.4%
Electronic Data Systems Corp. 3.4% USIMINAS 4.0% Cewe Color Holdings AG 4.3%
Tele-Communications, Liberty Media Class A 3.4% Lion Nathan Limited 3.9% Cordiant Communications Group plc 4.3%
Top Five Industries
as of March 31, 1998

Industries and % of Total Net Assets

 U.S. Government Bonds 25.1% Food & Beverage 18.4% Other Industrial Goods & Services 10.7%
Banks 9.3% Other Industrial Goods & Services 10.3% Other Financial 10.4%
Automotive 7.7% Banks 7.7% Other Consumer Goods & Services 8.0%
Insurance 5.7% Marketing Services 7.0% Marketing Services 7.4%
Publishing 5.0% Consumer Non-Durables 5.5% Food & Beverage 7.1%