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 (12/31/06) AS COMPARED TO THE STANDARD & POOR'S 500 INDEX4
		Average Annual Total Returns (as of 12/31/06)
	Total Return Last 3 Months*	1-year	5-year	10-year	Since Inception (8/5/91)
Oakmark Fund (Class I)	8.30%	18.26%	6.94%	8.58%	15.57%
S&P 500	6.70%	15.80%	6.19%	8.42%	11.02%
Dow Jones Average5	7.39%	19.04%	6.81%	8.93%	12.20%
Lipper Large Cap Value Index6	7.02%	18.30%	7.67%	8.54%	10.97%
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

The Oakmark Fund had a very strong fourth quarter and year, up 8% and 18% respectively. Both numbers are in excess of the gains achieved by the S&P 500. The fourth quarter advance was very broad based, as evidenced by only three of our fifty-four stocks having negative returns: Texas Instruments, Wal-Mart, and Intel. We remain confident about the fundamental outlook for all three companies.

At the top of the list of our strong performers were several of our media investments. We have consistently believed that traditional media companies would be positively affected by new technology. To us, advancements such as the ability to watch television programming on a portable DVR make both content and the delivery of that content more valuable. Time Warner, up 20% for the quarter, had the biggest positive effect on our NAV.⁷ DirecTV, up 27%, achieved our largest increase, but had a somewhat smaller effect on NAV due to it being a smaller position size. Last quarter News Corp. effectively repurchased a large block of their own stock from Liberty Media Capital by transferring their ownership of DirecTV to Liberty. We believe that Liberty Capital is selling at a large discount to its asset value, and now its primary asset is DirecTV. So we sold the majority of our DirecTV shares and increased our position in Liberty Capital. We believe that Liberty Capital deserves to sell at a smaller discount to value, and further, if DirecTV goes up more, so does Liberty's value. The quarter's only new purchase was Medtronic.

Medtronic, Inc (MDT - $53)

Medtronic is the world's largest manufacturer of implantable biomedical devices. In their largest business, cardiac rhythm management (pacemakers and implantable defibrillators), Medtronic has higher sales than all its competitors combined. Both investors and acquirers typically pay very high prices for businesses with dominant share that sell proprietary products into growing markets. In fact, back in 2000, Medtronic traded at $62 per share, over 50 times projected earnings. As expected, earnings have more than doubled since 2000, but despite that, the stock price has declined. Medtronic stock now trades at less than 20 times projected earnings, only a small premium to inferior businesses. Like many of our more recent purchases, we believe Medtronic will continue to achieve superior growth and expect it to again be accorded a superior multiple.

Schedule of Investments—December 31, 2006 (Unaudited)