Dear Oakmark Funds’ Shareholders,
It brings me joy to write to you as president of the Oakmark Funds. Although I was appointed as president, principal executive officer and trustee at the beginning of this year, I have been general counsel at Harris Associates and vice president, secretary and chief legal officer of the Oakmark Funds since 2018.
What an extraordinary journey this has been for all of us over the past few years as we have weathered the extreme challenges of the ongoing pandemic and its resulting impact on our families and work environments. After nearly 20 years in the mutual fund industry, I am keenly aware that my tenure at Harris Associates started at a unique point in history. Throughout my time here, I have been consistently impressed by the team’s unwavering commitment to our time-tested value investment philosophy and core values that have guided each of us through the challenges presented. My experience reaffirms why I joined Harris Associates—my principles are aligned with those of my colleagues and they serve our shareholders well. I have watched every member of the team live the firm’s tenets of patient, long-term active management, with high conviction in our process and philosophy that are in complete alignment with our client-first mission. The team’s stability and clarity of focus have provided certainty for our shareholders in an environment of ongoing change and uncertainty.
Oakmark Funds Update
At the onset of the Funds’ fiscal year, value started to outperform growth and we saw an unusually large opportunity for our Funds as valuations remained near historic lows. By the time the first quarter of 2021 ended, six out of seven Oakmark Funds experienced their single best one-year returns of all time. Though the arrival of vaccines produced a sense of hope for a return to normal, the recovery was uneven. The Delta variant led to more uncertainty around economic reopening during the summer, which caused weakness in the prices of many of our economically sensitive businesses. At fiscal year-end, each Oakmark Fund is posting strong absolute returns, outpacing its respective value benchmark and nearly keeping pace with its growth-fueled benchmark. As we now digest the market’s latest topic du jour—inflation—and as valuations remain attractive relative to price, we continue to believe prospects for better than average returns are bright.
This year marked important anniversaries for the Oakmark Fund family: 30 years for the Oakmark Fund, 25 years for the Oakmark Select Fund and 15 years for the Oakmark Global Select Fund. In honoring these achievements, I extend congratulations to the portfolio managers and all employees, past and present, who have supported these Funds and their shareholders throughout the years. These milestone moments are a testament to the firm’s adherence to our longstanding investment philosophy and process that I previously mentioned.
This year we celebrate the one-year anniversary of the Oakmark Bond Fund, our first solely dedicated fixed income product. I am proud to announce that the Oakmark Bond Fund will be offered through Investor Class shares on January 28, 2022.
We also made other changes to our share class structure to better serve the different shareholders who invest in the Oakmark Funds. On December 17, 2021, the Service Class will be terminated and those shares will be converted into the Investor Class. The Service Class shares have lower asset levels and higher expense ratios than the Investor Class, so all current Service Class investors will see expense ratio reductions. We believe that our current share class structure, which includes Investor, Advisor, Institutional and R6, provides a range of access points for our shareholders to receive the share class that best meets their investment and servicing needs.
I am also pleased to announce that we have completed our leadership transition at Harris Associates. As you may recall, Kristi Rowsell retired from her role as president of Harris Associates and the Oakmark Funds earlier this year. Chris Keller serves as president of Harris Associates and vice president of the Oakmark Funds. Kristi now serves as an Oakmark Funds’ trustee and we are grateful for her continued service to our shareholders.
Personal Investment in the Oakmark Funds
Each year, we share our level of personal investments in the Oakmark Funds as a further demonstration of our belief in what we do at Harris Associates. For every holding in our portfolios, we look for management teams that think and act like owners of the business and treat their shareholders like partners. We stand beside you as fellow shareholders. We are indeed proud to report that as of September 30, 2021, the value of Oakmark Funds owned by Harris Associates employees, our families, the Funds’ officers and our trustees was more than $876 million. This level of investment exemplifies our personal conviction in Harris Associates’ investment philosophy and our commitment to managing your Fund with integrity.
I look forward to continuing to serve you as president of the Oakmark Funds. You can be assured that our focus remains squarely on the consistent application of our value investment philosophy with the goal of achieving positive rates of return for our shareholders. We are excited about the opportunities we see in the market and believe our Funds remain attractive investments for the future. We are thankful for the trust you have placed with us as shareholders of the Oakmark Funds and look forward to continuing to add value for you over the long term.
President, Oakmark Funds
Past performance is no guarantee of future results. The performance data quoted represents past performance. Current performance may be lower or higher than the performance data quoted. The investment return and principal value vary so that an investor’s shares when redeemed may be worth more or less than the original cost. To obtain the most recent month-end performance data, view it here.
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