Letter from the Chairman and President...

Dear Fellow Shareholders:
We are pleased to present the Third Quarter Report for The Oakmark Family of Funds. For the quarter, our unwavering confidence in our investment philosophy and process was rewarded with strong absolute and relative returns in our mutual funds. More importantly, all of our mutual fund managers continue to be enthusiastic about the current holdings in their Funds. This confirms our feeling that the value "comeback" may be sustainable. As always, we make every effort to capitalize on investment opportunities. Our investment professionals, both analysts and portfolio managers, have presented compelling evidence of the attractive opportunities available in the value sector. This theme is consistent in both the domestic and international markets. In order to benefit further from these investment opportunities, we are pleased to announce that we are starting a new mutual fund—The Oakmark Global Fund. It will utilize the same disciplined value approach used in all of our mutual funds and will provide a single vehicle for those who want the benefits of our global asset allocation. The fund is designed to capitalize on our value investing philosophy regardless of the location of the underlying corporation. Michael Welsh, co-manager of our international funds, and Greg Jackson, a senior domestic research analyst, will co-manage the fund. They are enthusiastic and experienced, and plan to make substantial personal investments in the Fund. The Global Fund will be more concentrated (40-50 stocks) than most other funds in its category. This will maximize the impact our stock selection ability has on the portfolio without sacrificing the benefit of diversification. Just as companies compete in a global marketplace, investment ideas on a global basis will compete head-to-head to be included in this portfolio. In the near future we will add redemption fees to our specialty funds to severely reduce the negative impact associated with short term traders as shareholders in our funds. The fee will be 2% on redemptions that are made in less than 90 days from the date of purchase. The proceeds of the redemption charge are retained by the Fund for the benefit of the long-term investors. It will be instituted on the following funds: Small Cap, Select, International, International Small Cap and the new Global fund. Please read Bill Nygren’s enclosed report on the Select Fund which describes why this is a positive for our long-term shareholders. In an effort to increase feedback regarding shareholder servicing, we have added a new e-mail address: ServiceComments@oakmark.com. Please use this address to comment on our investor services. Our Y2K preparation continues to be on schedule and we remain confident that we are prepared for this event. This quarter answered some of the skeptics about our value approach. We continue to believe that price and valuation do matter and we are confident that our funds are well positioned to take advantage of the opportunities the market is presenting.
VICTOR MORGENSTERN Chairman   ROBERT M. LEVY President

The Oakmark Family of Funds

Summary Information

Performance for Period Ended June 30, 1999	The Oakmark Fund		The Oakmark Select Fund		The Oakmark Small Cap Fund
3 Months	11.5%		7.5%		13.3%
6 Months	11.0%		19.0%		3.3%
1 Year	7.6%		19.7%		(11.1%)
Average Annual Total Return for: 3 Year	18.3%		N/A		13.4%
5 Year	20.1%		N/A		N/A
Since inception	26.0%		40.0%		17.8%
Value of $10,000 from inception date	$62,332 (8/5/91)		$24,482 (11/1/96)		$18,205 (11/1/95)
Top Five Holdings as of June 30, 1999 Company and % of Total Net Assets	Philip Morris Companies Inc.	7.5%	USG Corporation	10.7%	Symantec Corporation	4.8%
	The Black & Decker Corporation	5.9%	Washington Mutual, Inc.	10.3%	SPX Corporation	3.9%
	Nike, Inc., Class B	5.8%	U.S. Industries, Inc.	8.0%	Department 56, Inc.	3.8%
	Mattel, Inc.	5.6%	First Data Corporation	7.0%	Duff & Phelps Credit Rating Co.	3.8%
	The Boeing Company	5.6%	Thermo Electron Corporation	5.1%	Catellus Development Corporation	3.7%
Top Five Industries as of June 30, 1999 Industries and % of Total Net Assets	Other Consumer Goods & Services	17.8%	Computer Services	19.0%	Other Industrial Goods & Services	12.7%
	Aerospace & Defense	10.1%	Banks & Thrifts	13.1%	Retail	10.9%
	Food & Beverage	9.2%	Building Materials & Construction	10.7%	Banks & Thrifts	9.6%
	Banks & Thrifts	9.1%	Diversified Conglomerates	8.0%	Food & Beverage	7.5%
	Information Services	7.7%	Machinery & Industrial Processing	5.1%	Insurance	7.3%

Performance for Period Ended June 30, 1999	The Oakmark Equity and Income Fund		The Oakmark International Fund		The Oakmark International Small Cap Fund
3 Months	9.9%		21.0%		16.8%
6 Months	9.9%		37.7%		45.5%
1 Year	13.1%		27.0%		54.8%
Average Annual Total Return for: 3 Year	18.7%		11.9%		9.8%
5 Year	N/A		12.4%		N/A
Since inception	18.2%		15.0%		12.3%
Value of $10,000 from inception date	$18,457 (11/1/95)		$25,728 (9/30/92)		$15,317 (11/1/95)
Top Five Holdings as of June 30, 1999 Company and % of Total Net Assets	Imation Corp.	5.4%	Cordiant Communications Group plc	4.8%	Royal Doulton plc	5.4%
	The Reynolds and Reynolds Company, Class A	4.0%	Tomkins plc	4.6%	Carpetright plc	5.3%
	First Data Corporation	3.8%	Citizen Watch Co.	4.2%	JCG Holdings Ltd.	4.5%
	Lear Corporation	3.5%	Giordano International Limited	4.2%	Wassall PLC	4.1%
	Amli Residential Properties Trust	3.5%	Somerfield plc	4.2%	House of Fraser Plc	4.0%
Top Five Industries as of June 30, 1999 Industries and % of Total Net Assets	U.S. Government Bonds	24.7%	Other Industrial Goods & Services	14.4%	Retail	13.3%
	Computer Services	14.1%	Retail	8.4%	Diversified Conglomerates	10.4%
	Real Estate	9.8%	Consumer Non-Durables	7.8%	Production Equipment	8.6%
	Banks & Thrifts	8.9%	Banks	7.8%	Other Financial	7.4%
	Data Storage	5.4%	Marketing Services	6.7%	Other Industrial Goods & Services	6.6%