THE OAKMARK SELECT FUND Report from Bill Nygren and Henry Berghoef, Portfolio Managers

THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK SELECT FUND FROM ITS INCEPTION (11/1/96) TO PRESENT (12/31/02) AS COMPARED TO THE STANDARD & POOR'S 500 INDEX2
	Average Annual Total Returns5
	(as of 12/31/02)
	Total Return Last 3 Months*	1-year	5-year	Since Inception (11/1/96)
Oakmark Select Fund	10.02%	-12.47%	13.05%	21.17%
Return after taxes on distributions11		-12.50%	11.59%	19.83%
Return after taxes on distributions and sale of Fund shares		-7.66%	10.44%	17.80%
S&P 500	8.44%	-22.10%	-0.59%	5.18%
S&P MidCap 40012	5.83%	-14.51%	6.41%	11.04%
Lipper Mid Cap Value Index13	6.59%	-14.66%	2.07%	6.09%
The graph does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Past performance, before and after taxes, is no guarantee of future results. Investment return and principal value vary, and you may have a gain or loss when you sell shares. Average annual total return measures annualized change, while total return measures aggregate change.
* Not annualized

The Oakmark Select Fund gained 10% in the quarter reducing the calendar year loss to 12%. The S&P 500 lost 22% for the year, making 2002 the worst year for the stock market since 1974. In 2000 and 2001, despite the market declining a total of 20%, we were able to grow our value by 59%. In those two years, the large capitalization stocks and technology stocks that dominated the market averages declined sharply in price. However, the rest of the market, which is what most of our portfolio was selected from, generally increased in value. But in 2002, nearly three-quarters of the stocks in the S&P 500 declined. It was nearly impossible to overcome the market decline with good stock selection. Fortunately, we enter 2003 with lower valuation levels which we feel increases the probability of good returns ahead.

We neither added nor eliminated any stocks during the quarter. The changes were limited to position size changes. As previously discussed, we took advantage of negative mis-information about H&R Block to increase our position at favorable prices. On the flip side, we sold almost a quarter of our Sprint position, because of the eighty percent increase off its October low.

The Sprint sale is an instructive example of how we manage the portfolio for both pre-tax and after-tax returns. When Sprint stock fell from April through October, we felt it was becoming more attractive so we added several million shares to our position. As the stock rallied this quarter, its relative attractiveness decreased, and we sold several million shares. These incremental purchases and sales were nicely additive to our pretax returns. Even better, from a tax perspective, instead of selling the shares we bought in the summer, we sold shares we bought in the prior year and realized a taxable loss on the sale. Because of transactions like the Sprint example, The Oakmark Select Fund has a realized loss carry-forward that will be used to reduce or eliminate future taxable distributions.

Best wishes,

William C. Nygren, CFA Portfolio Manager bnygren@oakmark.com	Henry R. Berghoef, CFA Portfolio Manager berghoef@oakmark.com

January 6, 2003

Schedule of Investments—December 31, 2002 (Unaudited)