THE OAKMARK FUND Report from Bill Nygren and Kevin Grant, Portfolio Managers

THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK FUND FROM ITS INCEPTION (8/5/91) TO PRESENT (9/30/06) AS COMPARED TO THE STANDARD & POOR'S 500 INDEX2 (UNAUDITED)
	Average Annual Total Returns (as of 9/30/06)
(Unaudited)	Total Return Last 3 Months*	1-year	5-year	10-year	Since Inception (8/5/91)
Oakmark Fund (Class I)	5.56%	10.46%	7.43%	8.51%	15.25%
S&P 500	5.67%	10.79%	6.97%	8.59%	10.74%
Dow Jones Average5	5.35%	13.14%	8.06%	9.21%	11.89%
Lipper Large Cap Value Index6	5.81%	12.59%	8.01%	8.60%	10.66%
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 most recent month-end performance data, visit oakmark.com.
* Not annualized

For the quarter ended September 30, both The Oakmark Fund and the S&P 500 increased by 6%. Though we are never fully satisfied with market-matching returns, an absolute return of 6% in a quarter is always pleasing. And unlike the S&P 500, The Oakmark Fund did again achieve a new all-time-high during the quarter, extending our new-high streak to three consecutive quarters. For the fiscal year, the story was similar. We trailed the S&P 500 by a fraction of a percentage point, but still achieved a double-digit return of just over 10%.

During the quarter nearly one-third of our stocks (17 of 52) achieved gains above 10%, and none suffered declines of that magnitude. Our best performer was Baxter International, up 24%. We added Baxter to our portfolio in the first quarter of 2003. At the time, the stock had lost more than half its value due to short-term concerns about their products and longer-term concerns about their management. Baxter's Earnings Per Share bottomed in 2003 while new management was working toward increasing sales and improving operating margins. Our earnings forecast for next year is 65% higher than that 2003 trough. Now selling at 18x projected earnings, Baxter is no longer the bargain it was in 2003, but it is still priced at a more modest premium than we believe is deserved.

During the quarter we did not add or eliminate any positions. That's the first time that's happened since we assumed management of the Fund over six years ago. The lack of activity is neither good nor bad. Turnover creates transaction costs, and those costs reduce investment returns. In that sense, it is good that we tend to have low turnover. On the other hand, no turnover also means that none of our holdings increased enough in price so that other stocks appeared to offer better return potential. We continue to believe that our current portfolio, with more large cap and higher quality businesses than we typically own, is appropriate for a market that is showing little price differentiation between low and high quality businesses.

Best wishes,

Schedule of Investments—September 30, 2006