The Oakmark Fund Semi-Annual Report

THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK FUND FROM ITS INCEPTION (8/5/91) TO PRESENT (3/31/00) AS COMPARED TO THE STANDARD & POOR'S 500 INDEX

3/31/00 NAV $24.76	Total Return Last 3 mos.	Average Annual Total Return* Through 3/31/00 From Fund Inception 8/5/91

The Oakmark Fund	–9.0%	19.2%
Standard & Poor's 500 Stock Index w/inc**	2.3%	19.6%
Dow Jones Industrial Average w/inc**	–4.7%	18.7%
Value Line Composite Index**	–0.6%	6.8%
Total return includes change in share prices and in each case includes reinvestment of any dividends and capital gain distributions. *Each of the three indexes or averages is an unmanaged group of stocks whose composition is different from the Fund. The S&P 500 is a broad market-weighted average dominated by blue-chip stocks. The Dow Jones Average includes only 30 big companies. The Value Line Index is an unweighted average of more than 1,000 stocks. Past performance is no guarantee of future results.

This is a very exciting time at The Oakmark Fund. Your new portfolio managers have been on the job for two weeks. We have completed the portfolio restructuring we felt was appropriate and are very confident about how the fund is positioned. The focus of this report will be on our management approach and our very attractive portfolio. But first, we'd like to comment that under Robert Sanborn's leadership, The Oakmark Fund's return placed it in the top 10% of value mutual funds for the period from inception (8/91) to the end of this March according to Lipper. We look forward to extending that exceptional track record.

It is important to us that our investors understand that we will continue to employ the same value philosophy that has been responsible for these results. We will only buy a stock when it is selling below 60% of what we believe the business is worth today. We will sell it when it is priced at more than 90% of estimated value, or when we believe we have made a mistake analyzing the company. In addition, we will seek to identify companies where value grows as time passes and where managements have economic interests that are well aligned with their shareholders. When we identify these stocks, we will buy them in meaningful size. While most mutual funds own over 100 different stocks, we expect to usually have only 40-50 stocks. We are confident that this approach will continue to deliver excellent long-term returns, and we have both made substantial personal investments in The Oakmark Fund since being named the new managers.

We are well aware that recent results have been disappointing, and the quarter just ended was no exception. But in our search for light at the end of the tunnel, it is interesting to note that the fund has already increased 15% from its March 8 low. We are seeing an increased level of acquisition activity that we believe will benefit the Fund. Additionally, our companies continue to repurchase large quantities of their own stocks, which we believe adds significant value to the remaining shares. Our portfolio is extremely undervalued based on our forecasts for the stocks we own. The price-to-earnings ratio of The Oakmark Fund stands at 11.5 (using estimated 2000 eps) compared to 26 for the S&P 500. That means that each share of The Oakmark Fund that you purchase for $24.76 represents $2.16 of current earnings. If you invested enough money in the S&P 500 to create that same $2.16 of earnings, it would cost $57 or 130% more than in The Oakmark Fund. And what's even more exciting is that when you look at the stocks we own, you don't find structurally disadvantaged companies. Instead, you find industry leaders whose businesses should be worth more as each year passes.

Hopefully, the excitement we feel about the portfolio can be captured in a few words about our top five positions:

The Fund's largest position was highlighted in the last quarterly report. Fortune is a diversified consumer products company selling brands such as Jim Beam, Titleist, and Moen faucets. After adding back goodwill amortization, Fortune sells at less than 9 times this year's earnings estimate.

The largest savings and loan in the country, Washington Mutual, is expected to grow earnings at a double-digit rate due to both growth in customers and share repurchase. In addition, Washington Mutual has a dividend yield of over 4% and has raised that dividend every quarter for the last four years. Washington Mutual sells at a P/E of just over 7 times estimated 2000 earnings.

Dun & Bradstreet sells at a high P/E for us, 17 times, but we believe a higher multiple is warranted for this terrific franchise. The company is in the process of splitting into two pieces, separating its highly regarded Moody's bond rating business (17% compounded earnings growth for the last decade) from the more stagnant Dun & Bradstreet credit report business. We believe new management on the credit side will improve profitability and restore growth to that business. We are also pleased that Warren Buffett has recently purchased 15% of Dun & Bradstreet's shares.

Brunswick sells at 7 times estimated earnings. With its Sea Ray line of luxury boats, Brunswick continues to be the industry leader. Brunswick also gets nearly a third of its income from less cyclical consumer recreation products (Life Fitness exercise equipment, Igloo coolers, Mongoose bicycles, Brunswick bowling and billiards), so earnings should be less sensitive to an economic downturn than one would expect for a boat company.

Nielsen is the global leader in market research for consumer product companies. Outside the US, Nielsen is also a leader in measuring television audiences. In mid-1999, Nielsen bought 6% of NetRatings, a business that measures Internet site usage in North America, and also started eratings.com that will measure Internet audiences and advertising outside North America. Were these investments valued similarly to pure-play Internet stocks, it is conceivable they would sell for more than the entire market value of Nielsen. Adding back the Internet startup losses as well as expenses to restructure operations (especially in Europe), Nielsen sells at 10 times our estimate of next year's earnings, and that assigns zero value to the Internet investments.

In addition to having a portfolio full of great values, we inherit a very favorable tax position. It is unlikely that we will have to make any capital gains distributions for at least a couple of years. We will only pay capital gains taxes after the portfolio appreciates substantially from current levels and that will be welcomed by all of us!

In closing, we'd like to thank you, our shareholders, for your patience. We are not satisfied with recent performance and are energized by the challenge of restoring The Oakmark Fund to the position of the premier diversified value fund. We believe the road ahead will be an exciting and profitable one. We encourage you to join us for that journey.

	Shares Held	Market Value

Common Stocks—90.7%
Food & Beverage—7.6%
Nabisco Holdings Corporation, Class A	2,072,100	$66,695,719
Philip Morris Companies Inc.	2,610,700	55,151,037
H.J. Heinz Company	1,325,000	46,209,375

		168,056,131
Apparel—3.0%
Nike, Inc., Class B	1,539,300	$60,994,763
Jones Apparel Group, Inc. (a)	157,000	5,004,375

		65,999,138
Retail—5.4%
The Kroger Company	2,200,000	$38,637,500
Tricon Global Restaurants, Inc. (a)	1,200,000	37,275,000
Toys "R" Us, Inc. (a)	2,263,400	33,526,612
GC Companies, Inc. (a)	266,200	9,250,450

		118,689,562
Household Products—2.9%
Fort James Corporation	1,400,000	$30,800,000
The Dial Corporation	2,052,900	28,227,375
The Clorox Company	192,300	6,249,750

		65,277,125
Household Appliances—1.9%
Maytag Corporation	1,260,400	$41,750,750
Hardware—5.2%
The Black & Decker Corporation	1,872,200	$70,324,512
The Stanley Works	1,724,900	45,494,238

		115,818,750
Other Consumer Goods & Services—19.5%
Fortune Brands, Inc.	4,261,100	$106,527,500
Brunswick Corporation	4,475,800	84,760,462
Mattel, Inc.	6,964,400	72,690,925
H&R Block, Inc.	1,330,500	59,539,875
Galileo International, Inc.	2,358,600	56,753,813
Ralston Purina Group	1,011,000	27,676,125
American Greetings Corporation, Class A	1,308,300	23,876,475

		431,825,175
Banks & Thrifts—7.0%
Washington Mutual, Inc.	3,430,000	$90,895,000
Bank One Corporation	1,850,548	63,612,587

		154,507,587
Insurance—3.4%
Old Republic International Corporation	3,896,330	$53,574,538
MGIC Investment Corporation	475,000	20,721,875

		74,296,413
Other Financial—1.2%
SLM Holding Corporation	800,000	$26,650,000


Information Services—8.1%
The Dun & Bradstreet Corporation	2,957,500	$84,658,437
ACNielsen Corporation (a) (c)	3,714,000	83,565,000
Equifax Inc.	443,500	11,198,375

		179,421,812
Computer Services—2.2%
First Data Corporation	1,100,000	$48,675,000
Publishing—3.0%
Knight Ridder, Inc.	1,315,300	$66,998,094
Medical Products—3.0%
Sybron International Corporation (a)	2,295,600	$66,572,400
Automobiles—2.1%
DaimlerChrysler AG (b)	700,000	$45,806,250
Aerospace & Defense—3.7%
Lockheed Martin Corporation	3,150,000	$64,378,125
The Boeing Company	474,400	17,997,550

		82,375,675
Machinery & Industrial Processing—6.5%
Cooper Industries, Inc.	2,123,400	$74,319,000
Eaton Corporation	743,600	58,000,800
Crane Co.	500,000	11,781,250

		144,101,050
Building Materials & Construction—1.1%
Masco Corporation	1,183,000	$24,251,500
Chemicals—0.9%
The Geon Company	956,600	$20,566,900
Utilities—2.2%
Texas Utilities Company	900,000	$26,718,750
Citizens Utilities Company, Class B	1,393,700	22,821,838

		49,540,588
Oil & Natural Gas—0.8%
Union Pacific Resources Group Inc.	1,299,000	$18,835,500
Total Common Stocks (Cost: $2,097,226,948)		2,010,015,400

	Par Value	Market Value

Short Term Investments—8.9%
U.S. Government Bills—2.3%
United States Treasury Bills, 4.91%–5.31% due 4/6/2000–5/25/2000	50,000,000	$49,783,826
Total U.S. Government Bills (Cost: $49,783,827)		49,783,826
Commercial Paper—3.8%
Ford Motor Credit Corp., 5.90%–6.07% due 4/3/2000–4/5/2000	55,000,000	$55,000,000
General Electric Capital Corporation, 6.18% due 4/3/2000	30,000,000	30,000,000

Total Commercial Paper (Cost: $85,000,000)		85,000,000
Repurchase Agreements—2.8%
State Street Repurchase Agreement, 6.03% due 4/3/2000	61,914,000	$61,914,000
Total Repurchase Agreements (Cost: $61,914,000)		61,914,000

Total Short Term Investments (Cost: $196,697,827)		196,697,826

Total Investments (Cost $2,293,924,775)—99.6% (c)		$2,206,713,226
Other Assets In Excess Of Other Liabilities—0.4%		9,149,227
Total Net Assets—100%		$2,215,862,453

(b) See footnote number five in the Notes to Financial Statements regarding transactions in affiliated issuers.

(c) At March 31, 2000, net unrealized depreciation of $87,211,548, for federal income tax purposes, consisted of gross unrealized appreciation of $240,278,410 and gross unrealized depreciation of $327,489,958.

THE OAKMARK FUND

Report from Bill Nygren and Kevin Grant, Portfolio Managers