THE OAKMARK FUND Semi-Annual Report

	Average Annual Total Returns (as of 3/31/05)
	Total Return Last 3 Months*	1-year	5-year	10-year	Since Inception (8/5/91)

Oakmark Fund (Class I)	-2.20%	7.72%	11.22%	10.56%	16.21%
S&P 500	-2.15%	6.69%	-3.16%	10.79%	10.69%
Dow Jones Average⁵	-1.59%	4.05%	1.31%	11.92%	12.03%
Lipper Large Cap Value Index⁶	-0.83%	8.45%	1.23%	10.33%	10.51%

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.
The performance data quoted represents past performance. The above performance information for the Fund does not reflect the imposition of a 2% redemption fee on shares held for 90 days or less to deter market timers. If reflected, the fee would reduce the performance quoted. Past performance does not guarantee future results. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Average annual total return measures annualized change, while total return measures aggregate change. To obtain current month end performance data, call 1-800-OAKMARK or visit www.oakmark.com.
* Not annualized

In a weak, but relatively uneventful quarter, The Oakmark Fund matched the S&P 500 loss of 2%. On the negative side, Sun Microsystems lost a quarter of its value. We continue to believe that Sun's strong cash position and active R&D program make owning the stock worthwhile. On the plus side, two holdings announced they were being acquired—Toys R Us and Sungard Data Systems. We believe the increase in merger and acquisition activity is a positive statement about our portfolio and the market's attractiveness.

It's hard to believe that five years have already passed since March of 2000 when we wrote our first letter as managers of The Oakmark Fund. In 1991 when The Oakmark Fund was created, the goal was to have the Oakmark name become synonymous with value investing. By March of 2000 that goal had largely been met. But, be careful what you wish for! We were presented the challenge of taking over a fund whose name implied value investing just when the financial media was proclaiming that value investing was dead! Our assets had fallen sharply not due to investment results, but because most of our shareholders had redeemed. They wanted to increase their investment in those same technology stocks that Oakmark stubbornly termed grossly overvalued.

Friends questioned our sanity by asking why in the world we would accept this responsibility. Our answer—that we so strongly believed we inherited an outstanding portfolio of stocks that we were both significantly increasing our personal investment in the Fund—confirmed how out-of-sync we were with the new paradigm. Instead of writing the letter people wanted to see—highlighting everything we expected to change—we wrote a letter extolling the virtues of our five largest holdings, all of which we inherited—Fortune Brands, Washington Mutual, Dun and Brad-street, Brunswick Corporation, and AC Nielson. (That shareholder letter, along with all the others since 1997, is available on our website by clicking on "literature" then "fund reports.") Anyone who hoped the new managers would shift to an investment approach more in step with the times was quickly disappointed. The Fund's long-term approach was intact, in fact, two of those top five names are still in the portfolio today—Washington Mutual and Fortune Brands. We have written frequently about how well Washington Mutual has performed as a stock, and just as importantly, as a business, so we will use this as an opportunity to highlight Fortune Brands.

In March of 2000, Fortune Brands was Oakmark's largest holding, accounting for over 4% of our portfolio. Fortune is a diversified manufacturer of branded products sold primarily to consumers. Familiar brands include Moen faucets, Jim Beam spirits, and Titleist golf balls. Fortune is an example of the kind of stock that missed out on the "irrationally exuberant" market of the late 1990's. At that time, the market (as measured by the S&P 500) sold at twenty-six times expected earnings and had a dividend yield of about 1%. At $25 per share, Fortune commanded a price of only nine times earnings and had a dividend yield of nearly 4%. Over the next five years, Fortune's EPS⁷ grew at nearly a 14% compound annual rate. We believe this resulted from good organic growth as well as from intelligent use of the large amount of cash generated by these businesses. That cash was used to repurchase over 10% of the outstanding shares and to make acquisitions that strengthened Fortune's home products division. Further, Fortune management engineered an amazing turnaround of their underperforming office products division. Management explored selling that division, but decided to keep it when purchase offers were judged to be inadequate. Analysts uniformly chastised management for their refusal to sell. In the ensuing four years, about $500 million was extracted from the office products division (which may have equaled the rejected offers), and it was used for acquisitions and share repurchase. Further, better expense management led to operating margins more than doubling. In March of this year, Fortune announced a plan to merge their office products division with General Binding to create the largest branded office products supplier. Management's decision to fix rather than sell that division added about $8 of value per Fortune share. Fortune stock now sells at $81 and at sixteen times our estimated earnings. It has more than tripled in price in a five-year period when the market declined. Though we can't claim Fortune is still as cheap as it was, since business value has also sharply increased, we continue to believe Fortune is undervalued. Most interesting, you probably haven't read much about Norm Wesley. Norm is Fortune's CEO. Somehow when the financial media names top CEOs, they never find Norm. The media may not have noticed the job he has done, but his shareholders sure have. Thanks, Norm!

We wish we could tell you that our portfolio today is still populated with Fortunes—grossly undervalued companies that have failed to attract investor attention. Most stocks that were priced like Fortune have increased significantly over the past five years while the stocks that were overvalued have significantly declined. In 2000, many large cap growth stocks sold at fifty times earnings while many typical companies sold at single digit P/Es⁴. In 2000 our portfolio, with an average P/E of eleven, was well positioned for a narrowing of the range of P/E multiples. We are most pleased that our shareholders who believed in us in 2000 have enjoyed the returns from that strategy.

Today, most stocks are priced at P/E multiples close to the S&P 500 multiple of seventeen times expected earnings. In fact, the range of P/E's has narrowed so much that we believe the better values today are generally the superior businesses where the market isn't demanding significant P/E premiums. The opportunity in 2000 was to identify the best prices; today, we think more of the opportunities are in identifying the best businesses. On the plus side, compared to our first day on the job five years ago, we think the market is now much more reasonably priced, its P/E is about two-thirds of its 2000 level. Offsetting that, valuations across industries and market capitalizations appear much more rational, meaning it will be harder for stock pickers to add as much value over the next five years. We believe that an appropriately valued market, a portfolio of companies that are expected to grow faster than average, and a return to historically typical quality spreads are likely to produce long-term returns that are at least satisfactory.

Name	Shares Held	Market Value

Common Stocks—91.5%
Apparel Retail—4.3%
The Gap, Inc.	7,066,700	$154,336,728
Limited Brands	6,000,047	145,801,142

		300,137,870
Broadcasting & Cable TV—8.2%
Liberty Media Corporation, Class A (a)	16,199,400	$167,987,778
Comcast Corporation, Special Class A (a)	4,725,000	157,815,000
The DIRECTV Group, Inc. (a)	9,700,000	139,874,000
Echo Star Communications Corporation, Class A	3,675,000	107,493,750

		573,170,528
Department Stores—2.0%
Kohl's Corporation (a)	2,650,500	$136,845,315

Home Improvement Retail—2.1%
The Home Depot, Inc.	3,781,500	$144,604,560

Homebuilding—1.6%
Pulte Homes, Inc.	1,500,000	$110,445,000

Household Appliances—1.9%
The Black & Decker Corporation	1,722,200	$136,036,578

Housewares & Specialties—2.0%
Fortune Brands, Inc.	1,745,600	$140,747,728

Leisure Products—1.2%
Mattel, Inc.	3,874,300	$82,716,305

Motorcycle Manufacturers—1.9%
Harley-Davidson, Inc.	2,262,500	$130,682,000

Movies & Entertainment—7.2%
The Walt Disney Company	5,950,000	$170,943,500
Viacom Inc., Class B	4,879,490	169,952,637
Time Warner Inc. (a)	8,997,700	157,909,635

		498,805,772
Publishing—2.8%
Gannett Co., Inc.	1,684,500	$133,210,260
Knight-Ridder, Inc.	916,000	61,601,000

		194,811,260
Restaurants—5.1%
McDonald's Corporation	5,700,000	$177,498,000
Yum! Brands, Inc.	3,374,000	174,806,940

		352,304,940
Brewers—2.1%
Anheuser-Busch Companies, Inc.	3,050,000	$144,539,500

Distillers & Vintners—1.8%
Diageo plc (b)	2,221,000	$126,374,900

Hypermarkets & Super Centers—2.1%
Wal-Mart Stores, Inc.	2,900,000	$145,319,000

Packaged Foods & Meats—4.2%
General Mills, Inc.	2,506,000	$123,169,900
Kraft Foods Inc., Class A	2,645,000	87,417,250
H.J. Heinz Company	2,310,000	85,100,400

		295,687,550
Soft Drinks—1.0%
Coca-Cola Enterprises, Inc.	3,500,000	$71,820,000

Integrated Oil & Gas—2.1%
ConocoPhillips	1,335,335	$144,002,526

Oil & Gas Exploration & Production—1.8%
Burlington Resources Inc.	2,442,200	$122,280,954

Asset Management & Custody Banks—1.1%
The Bank of New York Company, Inc.	2,700,000	$78,435,000

Diversified Banks—1.8%
U.S. Bancorp	4,400,000	$126,808,000

Life & Health Insurance—1.5%
AFLAC Incorporated	2,767,000	$103,098,420

Other Diversified Financial Services—3.8%
Citigroup Inc.	3,200,000	$143,808,000
JP Morgan Chase & Co.	3,600,000	124,560,000

		268,368,000
Thrifts & Mortgage Finance—5.9%
Washington Mutual, Inc.	4,887,300	$193,048,350
Fannie Mae	2,095,000	114,072,750
MGIC Investment Corporation	1,640,600	101,175,802

		408,296,902
Health Care Distributors—1.0%
AmerisourceBergen Corp	1,200,000	$68,748,000

Health Care Equipment—2.1%
Baxter International Inc.	4,300,000	$146,114,000

Name	Shares Held/ Par Value	Market Value

Pharmaceuticals—3.9%
Abbott Laboratories	3,087,300	$143,929,926
Bristol-Myers Squibb Company	5,150,000	131,119,000

		275,048,926
Aerospace & Defense—3.3%
Raytheon Company	3,000,000	$116,100,000
Honeywell International, Inc.	3,050,000	113,490,500

		229,590,500
Building Products—2.2%
Masco Corporation	4,433,600	$153,712,912

Diversified Commercial Services—2.2%
H & R Block, Inc. (c)	3,029,300	$153,221,994

Environmental Services—1.4%
Waste Management, Inc.	3,474,300	$100,233,555

Computer Hardware—1.4%
Sun Microsystems, Inc. (a)	24,370,000	$98,454,800

Data Processing & Outsourced Services—3.2%
First Data Corporation	3,615,000	$142,105,650
Automatic Data Processing, Inc.	1,800,000	80,910,000

		223,015,650
Office Electronics—1.3%
Xerox Corporation (a)	5,972,400	$90,481,860
Total Common Stocks (Cost: $4,982,389,142)		6,374,960,805

Short Term Investments—7.0%
U.S. Government Bills—5.5%
United States Treasury Bills, 2.215% -2.73% due 4/7/2005 - 6/30/2005	$385,000,000	$383,559,814
Total U.S. Government Bills (Cost: $383,571,153)		383,559,814

Repurchase Agreements—1.5%
IBT Repurchase Agreement, 2.50% dated 3/31/2005 due 4/1/2005, repurchase price $103,507,188 collateralized by U.S. Government Agency Securities with an aggregate market value plus accrued interest of $108,675,000	$103,500,000	$103,500,000

Name	Par Value	Market Value

IBT Repurchase Agreement, 2.02% dated 3/31/2005 due 4/1/2005, repurchase price $2,230,293 collateralized by a U.S. Government Agency Security with a market value plus accrued interest of $2,341,676	$2,230,168	$2,230,168

Total Repurchase Agreements (Cost: $105,730,168)		105,730,168

Total Short Term Investments (Cost: $489,301,321)		489,289,982

Total Investments (Cost $5,471,690,463)—98.5%		$6,864,250,787
Other Assets In Excess Of Other Liabilities—1.5%		106,544,085

Total Net Assets—100%		$6,970,794,872


William C. Nygren, CFA Portfolio Manager bnygren@oakmark.com	Kevin G. Grant, CFA Portfolio Manager kgrant@oakmark.com

(a)	Non-income producing security.
(b)	Represents an American Depository Receipt.
(c)	See footnote number five in the Notes to the Financial Statements regarding investments in affiliated issuers.

THE OAKMARK FUND

Report from Bill Nygren and Kevin Grant, Portfolio Managers