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 (12/31/03) AS COMPARED TO THE STANDARD & POOR'S 500 INDEX5
	Annual Average Total Returns1
	(as of 12/31/03)
	Total Return Last 3 Months*	1-year	5-year	Since Inception (11/1/96)
Oakmark Select Fund	11.53%	29.00%	15.43%	22.23%
S&P 500	12.18%	28.68%	-0.57%	8.18%
S&P MidCap 40010	13.19%	35.62%	9.20%	14.18%
Lipper Mid Cap Value Index11	14.77%	39.08%	9.41%	10.17%
The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Past performance 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 increased by 12% last quarter, bringing the calendar year increase to 29%. Normally, we don't get too excited about just matching the return of the S&P 500, but the past four years have hardly been normal! From March 2000 to March 2003, the S&P 500 lost nearly half of its value; yet, the Fund increased in value due to our continual focus on business valuation. From its low in March of 2003, the S&P 500 then increased by over 40% with the most speculative industries increasing the most. Despite minimal exposure to those stocks, we kept pace with a market that achieved its highest annual return since 1997. That's why we're excited! We're also extremely gratified that the fund ended 2003 at a new all-time high NAV⁸. As fiduciaries, shareholders, and professionals who take pride in our work, we are very pleased that as of today, all shareholders have earned a profit on their investment.

Last quarter, every stock in our fund increased in value. Typically, the absence of losers is sufficient for producing superior results. That we only kept pace with the S&P during that quarter shows how strong the market has been and reinforces our desire to dampen expectations for future market returns. Xerox was our best performer for both the quarter and the year, gaining 35% and 71% respectively. CEO Anne Mulcahy deserves a great deal of credit for leading this turnaround. Today's cost structure and balance sheet at Xerox bear little resemblance to the troubled company we invested in just over two years ago. And early signs indicate that Xerox has a significant new product success with its iGen 3 digital press. We have sold some of our Xerox shares to prevent the position size from growing too much. Despite those sales, Xerox remains an above average weighting in the portfolio. Selling at less than a market P/E¹² multiple on expected 2004 earnings and with expectations for above-average earnings growth beyond 2004, Xerox—in our estimation—continues to represent a very attractive investment opportunity.

We neither added any new companies nor eliminated any existing holdings from the portfolio last quarter. The largest change was an increase in the weighting of First Data Corporation. First Data stock under performed the market despite continuing its streak of above-average earnings increases. We believe First Data is a growth company selling at a value price—our favorite combination.

Thank you for your continued support,

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

Schedule of Investments—December 31, 2003 (Unaudited)