This material must be preceded or accompanied by a prospectus. To order a prospectus, which explains management fees and expenses and the special risks of investing in the Funds, visit www.oakmark.com or call 1-800-OAKMARK. Please read the prospectus carefully before investing.

The discussion of investments and investment strategy of the Funds (including current investment themes, the portfolio managers’ research and investment process, and portfolio characteristics) represents the investments of the Funds and the views of the portfolio managers and Harris Associates L.P., the Funds’ investment adviser, at the time of this report, and are subject to change without notice.

The performance data quoted represents past performance. The above performance 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 most recent month-end performance data visit www.oakmark.com.

The performance information for Class I shares of The Oakmark Fund, The Oakmark Select Fund, The Oakmark Equity & Income Fund, The Oakmark Global Fund, The Oakmark International Fund and The Oakmark International Small Cap Fund does not reflect the imposition of a 2% redemption fee on shares held by an investor for 90 days or less. The purpose of this redemption fee is to deter market timers.

Investing in value stocks presents the risk that value stocks may fall out of favor with investors and underperform growth stocks during given periods.

Because The Oakmark Select Fund is non-diversified, the performance of each holding will have a greater impact on the Fund’s total return, and may make the Fund’s returns more volatile than a more diversified fund.

The Oakmark Equity and Income Fund closed to certain new investors as of 5/7/04.

Equity and Income invests in medium- and lower-quality debt securities that have higher yield potential but present greater investment and credit risk than higher-quality securities, which may result in greater share price volatility. An economic downturn could severely disrupt the market in medium or lower grade debt securities and adversely affect the value of outstanding bonds and the ability of the issuers to repay principal and interest.

The Oakmark Global Fund and The Oakmark International Fund closed to certain new investors as of 12/15/03.

The Oakmark International Small Cap Fund closed to new investors as of 5/10/02.

Investing in foreign securities represents risks which in some way may be greater than in U.S. investments. Those risks include: currency fluctuation; different regulation, accounting standards, trading practices and levels of available information; generally higher transaction costs; and political risks.

The stocks of smaller companies often involve more risk than the stocks of larger companies. Stocks of small companies tend to be more volatile and have a smaller public market than stocks of larger companies. Small companies may have a shorter history of operations than larger companies, may not have as great an ability to raise additional capital and may have a less diversified product line, making them more susceptible to market pressure.

DISCLOSURE REGARDING THE BOARD OF TRUSTEES’ APPROVAL OF THE INVESTMENT ADVISORY CONTRACT FOR EACH OF THE OAKMARK FUNDS

Each year, the Board of Trustees of the Oakmark Funds (the “Board”), including a majority of the independent Trustees, is required to determine whether to continue each Fund’s investment advisory agreement (the “Agreements”). The Investment Company Act of 1940, as amended (the “1940 Act”), requires that the Board request and evaluate, and that the Funds’ adviser (the “Adviser”) provide, such information as may be reasonably necessary to evaluate the terms of the Agreements. The Board requests and receives a broad range of materials and information throughout the year and in connection with its annual review of the Agreements relating to the nature, extent and quality of the services provided by the Adviser to the Funds including investment performance, portfolio trading practices and shareholder services. In addition, the Board retains an independent consultant to prepare performance and expense reports for each Fund and comparable funds.

The Board’s committee on management contracts (the “Committee”) leads the Board in its evaluation of the Agreements. The Committee is comprised entirely of trustees who are not “interested persons” of the Funds as defined in the 1940 Act (“Independent Trustees”), and over seventy-five percent of the Board is comprised of Independent Trustees. During the last year, the Committee and the Board met numerous times to consider the Agreements. At each of those meetings, the Committee and the Board were advised by, and met in executive session with, experienced independent legal counsel.

Matters considered by the Committee and the Board in connection with their consideration of the Agreements included, among other things, the following: (i) the nature, quality and extent of the Adviser’s services, (ii) the investment performance of each Fund as well as comparative performance information, (iii) the fees and other expenses paid by each Fund as well as comparative expense information, (iv) the profitability of the Adviser from its relationship with each Fund, (v) whether economies of scale may be realized as each Fund grows and whether fee levels share with Fund investors economies of scale, and (vi) other benefits to the Adviser from its relationship with the Funds.

At a meeting held on October 26, 2005, the Board, including a majority of the Independent Trustees, upon recommendation of the Committee, determined that the continuation of each Agreement was in the best interest of each Fund and its shareholders, and approved the continuation of the Agreements through October 31, 2006. Outlined below is a summary of the principal information considered by the Board as well as the Board’s conclusions. In their deliberations, the Independent Trustees did not identify any single factor that was paramount or dispositive, and each Independent Trustee may have weighed the information differently.

1. Nature, Extent and Quality of Services

The Board’s analysis of the nature, extent and quality of the Adviser’s services to the Funds took into account the knowledge gained from the Board’s meetings with the Adviser throughout the prior year. In addition, the Board considered the Adviser’s long-term history of care and conscientiousness in the management of the Funds; consistency in investment approach; the background and experience of the Adviser’s investment personnel responsible for managing the Funds; the Adviser’s performance as administrator of the Funds, including, among other things, in the areas of brokerage selection, trade execution, compliance and shareholder communications; and frequent favorable recognition of the Adviser and the Funds in the media and in industry publications. The Board also reviewed the Adviser’s resources and key personnel involved in providing investment management services to the Funds, including the time that investment personnel devote to each Fund and the investment results produced by the Adviser’s in-house research. The Board also acknowledged the Adviser’s decision to partially close a number of its investment strategies and the Board’s actions, at the recommendation of the Adviser, to close or partially close a majority of the Funds to help control the pace of growth. The Board also noted the significant personal investments that the Adviser’s personnel have made in the Funds, which further aligns the interests of the Adviser and its personnel with those of the Funds’ shareholders. The Board concluded that the nature, extent and quality of the services provided by the Adviser to each Fund were appropriate and that each Fund was likely to continue to benefit from services provided under its Agreement with the Adviser.

2. Investment Performance of the Funds

The Board considered the investment performance of each Fund over various periods of time, including comparative information provided by its consultant, Lipper Inc. (“Lipper”), an independent data service provider. Lipper was retained by the Board to prepare a study comparing each Fund’s performance and expenses with those of comparable funds selected by Lipper (the “Performance Universe”).

In addition to comparing each Fund’s performance to that of its Performance Universe, the Board also considered the performance of the Funds versus that of their respective benchmarks and other comparative data provided by Lipper, including each Fund’s total return and performance relative to risk. After considering all of the information, the Board concluded that the Adviser was delivering favorable performance for the Funds’ investors consistent with the long-term investment strategies being pursued by the Funds and that the Funds and their shareholders were benefiting from the Adviser’s investment management of each Fund.

3. Costs of Services Provided and Profits Realized by the Adviser

Using information provided by Lipper, the Board evaluated each Fund’s advisory fee compared to the advisory fee for other mutual funds similar in size, character and investment strategy (“Expense Group”), and each fund’s expense ratio after waivers compared to the expense ratio of the Expense Group.

The Board also reviewed the Adviser’s advisory fees for its institutional separate accounts and for its subadvised funds (for which the Adviser provides portfolio management services only). The Board noted that, although in most instances, the fees paid by those clients generally were lower than the rates of fees paid by the Funds, the differences reflected the Adviser’s significantly greater level of responsibilities and broader scope of services regarding the Funds, and the more extensive regulatory obligations and risks associated with managing the Funds.

The Board also considered the Adviser’s costs in serving as the Fund’s investment adviser and manager, including costs associated with technology, infrastructure and compliance necessary to manage the Funds. The Board reviewed the Adviser’s methodology for allocating costs among the Adviser’s lines of business. The Board noted that the magnitude of costs and risks borne by the Adviser in rendering services to the Funds is increasing. The Board also considered information regarding the structure of the Adviser’s compensation program for portfolio managers, analysts and certain other employees and the relationship of such compensation to the attraction and retention of quality personnel. The Board noted that the Adviser has voluntarily limited the growth of assets to protect investment performance by partially closing a majority of the Funds as well as a number of its institutional investment strategies. Finally, the Board considered the Adviser’s profitability analysis as well as an Investment Management Profitability Analysis prepared by Lipper. The Board noted the pre-tax profits realized by the Adviser and its affiliates from their relationship with each Fund, as well as the financial condition of the Adviser.

The Board concluded that the management fees paid by each Fund to the Adviser were reasonable in light of the services provided and that the total expenses of each Fund, including the management fees, as a percent of net assets were lower than or near the median of those of comparable funds. The Board also concluded that the profitability of the Adviser’s relationship with the Funds appeared to be reasonable in relation to the services performed.

4. Economies of Scale and Fee Levels Reflecting Those Economies

The Board considered the extent to which each Fund’s management fee reflected economies of scale for the benefit of Fund shareholders. The Board reviewed each Fund’s Agreement, which includes breakpoints that decrease the management fee rate as a Fund’s assets increase. The Board also considered that in 2003 and 2004, the Board and the Adviser negotiated additional breakpoints in the Agreement for each of the Funds. The Board concluded that each Fund’s Agreement allows shareholders to benefit from growth in Fund assets.

5. Other Benefits Derived from the Relationship with the Funds

The Board also considered other benefits that accrue to the Adviser and its affiliates from their relationship with the Funds. The Board noted that, prior to October 1, 2005, an affiliate of the Adviser had served the Funds as transfer agent and received compensation from the Funds for its services. In addition, the Board noted that another affiliate of the Funds serves as the Funds’ distributor, without compensation from the Funds. The Board considered that those services have been provided to the Funds pursuant to written agreements with the affiliates and that the Board evaluated and approved each agreement annually.

The Board also noted that in June 2005 Harris Associates Securities L.P., the Adviser’s affiliated broker-dealer, ceased executing brokerage transactions for the Funds. Prior to that time, the Adviser’s affiliated broker-dealer had executed a portion of the portfolio brokerage transactions for the Funds and other clients of the Adviser, for which the broker received commissions. The Board concluded, based on its quarterly review of affiliated brokerage and on additional information it received from the Adviser, that the Adviser’s use of an affiliated broker to execute portfolio transactions for the Funds was appropriate and consistent with the procedures for affiliated brokerage adopted by the Board and with regulatory requirements.

The Board also considered the Adviser’s use of a portion of the commissions paid by the Funds on their portfolio brokerage transactions to obtain research products and services benefiting the Funds and/or other clients of the Adviser and concluded that the Adviser’s use of “soft” commission dollars to obtain research products and services was consistent with regulatory requirements. The Board also noted that the Adviser’s use of “soft” commission dollars was relatively low compared to many others in the industry and that the Adviser no longer obtains third-party research products or services through the use of “soft” commission dollars.

After full consideration of all material factors including those listed above, the Board, including a majority of the Independent Trustees, concluded that approval of each Fund’s Agreement was in the best interests of the Fund and its shareholders.