Harris Oakmark 9 3 14 Annual Report

Harris Oakmark 9 3 14 Annual Report-Free PDF

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Oakmark Funds,2014 Annual Report,TA B L E O F C O N T E N T S. President s Letter 1 Oakmark International Fund OAKIX. Summary Information 34,Fund Expenses 2,Portfolio Manager Commentary 35. Commentary on Oakmark and Oakmark Select Funds 3 Schedule of Investments 36. Oakmark Fund OAKMX Oakmark International Small Cap Fund OAKEX. Summary Information 6 Summary Information 40, Portfolio Manager Commentary 7 Portfolio Manager Commentary 41. Schedule of Investments 9 Schedule of Investments 42. Oakmark Select Fund OAKLX Financial Statements, Summary Information 12 Statements of Assets and Liabilities 44. Portfolio Manager Commentary 13 Statements of Operations 46. Schedule of Investments 14 Statements of Changes in Net Assets 48. Notes to Financial Statements 55,Oakmark Equity and Income Fund OAKBX.
Financial Highlights 69,Summary Information 16, Portfolio Manager Commentary 17 Report of Independent Registered Public Accounting Firm 76. Schedule of Investments 19,Federal Tax Information 77. Oakmark Global Fund OAKGX,Disclosures and Endnotes 77. Summary Information 24, Portfolio Manager Commentary 25 Trustees and Officers 79. Schedule of Investments 27,Oakmark Global Select Fund OAKWX.
Summary Information 30,Portfolio Manager Commentary 31. Schedule of Investments 32, F O R WA R D L O O K I N G S TAT E M E N T D I S C L O S U R E. One of our most important responsibilities as mutual fund plan and other similar terms We cannot promise future. managers is to communicate with shareholders in an open and returns Our opinions are a reflection of our best judgment at. direct manner Some of our comments in our letters to the time this report is compiled and we disclaim any obligation. shareholders are based on current management expectations to update or alter forward looking statements as a result of new. and are considered forward looking statements Actual future information future events or otherwise. results however may prove to be different from our. expectations You can identify forward looking statements by. words such as estimate may will expect believe,OAKMARK FUNDS. Oakmark Funds September 30 2014,President s Letter. Kristi L Rowsell,President of Oakmark Funds,President of Harris Associates L P.
Dear Fellow Shareholders, World equity markets had mostly negative performance in improving the entire look and feel so that shareholders will. the recent quarter Concerns over global economic growth see a consolidated display of their accounts in a number of. and geopolitical tensions dominated the headlines and selected preferences The transaction capabilities will be. weighed on investor confidence The Oakmark portfolios streamlined and more intuitive more like a dashboard. were not immune to these concerns and performance with enhanced one click navigation New account setup. ranged from modestly positive to negative Specific detail will be more straightforward And the maintenance tasks. on Fund performance is included in the manager shareholders require over time such as tracking cost basis. commentaries and managing bank account information will be available. online We expect to release these changes in stages over. the coming quarters Look for more news on this initiative. Oakmark Global Fund and Oakmark International in future communications. Small Cap Fund Closures, The Oakmark Global and International Small Cap Funds Year End Distributions. are closing to most new investors that purchase shares. through investment intermediaries on October 10 The clo Each year at this time we give shareholders an indication of. sures will only impact new investors existing shareholders the level of income and capital gains that we believe will be. of the Funds may continue to purchase additional shares distributed at the end of the year As you ll recall mutual. The Funds will remain open to all retirement plans certain funds are required to pay income and gains realized. advisory platforms and investors who purchase shares throughout the fiscal year to shareholders All funds real. directly from Oakmark Please see our prospectus supple ized net gains throughout the year as individual securities. ment at oakmark com for more details were sold as they approached our estimate of intrinsic. value As of the date of this letter we expect each of the. Long time shareholders will remember that we have occa Oakmark funds will pay distributions that range from mid. sionally closed Funds when we have felt that doing so was to high single digits when expressed as a percentage of the. in the best interests of our shareholders Our goal is to September 30 2014 net asset value per share except for. retain investment flexibility for our portfolio management Oakmark Select which has an estimated distribution in the. teams so they can effectively execute each Fund s invest low double digits. ment objective In determining whether a Fund should. close we carefully consider the specific objective of the It s important to remember that the time period for deter. Fund the level of cash inflows and the current investment mining distributions runs through the end of the year so. opportunities in the marketplace Today we feel it is in our these estimates could change as the rest of the year unfolds. shareholders best interest to slow the level of inflows for However we like to share this early preview so we can be. these two Funds in order to preserve investment capacity responsive to the tax planning needs of our shareholders. and maximize investment flexibility Updated estimates will be available on oakmark com in. mid November, Shareholder Servicing News Thank you for your continued investment in the Oakmark. Funds As always you can reach us via email at, Our Mutual Fund Services team has been working diligently ContactOakmark oakmark com. with our transfer agent to redesign our shareholder Account. Access website accessed via Oakmark com We are,oakmark com 1.
Fund Expenses Unaudited, A shareholder of each Fund incurs ongoing costs including investment advisory fees transfer agent fees and other fund expenses The. examples below are intended to help shareholders understand the ongoing costs in dollars of investing in each Fund and to compare. these costs with the ongoing costs of investing in other funds. The following table provides information about actual account values and actual fund expenses as well as hypothetical account values. and hypothetical fund expenses for shares of each Fund. ACTUAL EXPENSES, The following table shows the expenses a shareholder would have paid on a 1 000 investment in each Fund from April 1 2014 to. September 30 2014 as well as how much a 1 000 investment would be worth at the close of the period assuming actual fund returns. and expenses A shareholder can estimate expenses incurred for the period by dividing the account value at September 30 2014 by. 1 000 and multiplying the result by the number in the Actual Expenses Paid During Period column shown below. Shares of Oakmark International Small Cap Fund held for 90 days or less may be charged a 2 redemption fee upon redemption. Please consult the Funds prospectus at oakmark com for more information. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES, The following table provides information about hypothetical account values and hypothetical expenses for shares of each Fund based. on actual expense ratios and an assumed rate of return of 5 per year before expenses which are not the Funds actual returns The. hypothetical account values and expenses may not be used to estimate the actual ending account balances or actual expenses. shareholders paid for the period Shareholders may use this information to compare the ongoing costs of investing in a Fund and. other funds To do so compare this 5 hypothetical example with the 5 hypothetical examples that appear in the shareholder. reports of the other funds, Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction. costs Therefore the Hypothetical Expenses Paid During Period column of the table is useful in comparing ongoing costs only and will. not help you determine the relative total costs of owning different funds If transaction costs were included the total costs would have. been higher,HYPOTHETICAL,ACTUAL 5 annual return before expenses.
Beginning Ending Expenses Ending Expenses Annualized. Account Value Account Value Paid During Account Value Paid During Expense. 4 1 14 9 30 14 Period 9 30 14 Period Ratio,Oakmark Fund. Class I 1 000 00 1 051 60 4 37 1 020 81 4 31 0 85, Class II 1 000 00 1 050 10 5 91 1 019 30 5 82 1 15. Oakmark Select Fund,Class I 1 000 00 1 064 50 4 86 1 020 36 4 76 0 94. Class II 1 000 00 1 063 10 6 15 1 019 10 6 02 1 19. Oakmark Equity and Income Fund,Class I 1 000 00 1 012 60 3 68 1 021 41 3 70 0 73. Class II 1 000 00 1 011 20 5 24 1 019 85 5 27 1 04. Oakmark Global Fund,Class I 1 000 00 989 60 5 54 1 019 50 5 62 1 11.
Class II 1 000 00 988 00 7 28 1 017 75 7 39 1 46,Oakmark Global Select Fund. Class I 1 000 00 992 20 5 64 1 019 40 5 72 1 13,Oakmark International Fund. Class I 1 000 00 942 70 4 63 1 020 31 4 81 0 95,Class II 1 000 00 940 70 6 57 1 018 30 6 83 1 35. Oakmark International Small Cap Fund,Class I 1 000 00 927 00 6 33 1 018 50 6 63 1 31. Class II 1 000 00 926 00 7 97 1 016 80 8 34 1 65, Expenses for each share class is equal to the Annualized Expense Ratio multiplied by the average account value over the period multiplied by the number of.
days in the most recent half year divided by 365 to reflect one half year period. 2 OAKMARK FUNDS, Oakmark and Oakmark Select Funds September 30 2014. Portfolio Manager Commentary,William C Nygren CFA,Portfolio Manager. oakmx oakmark com, On the morning of September 15 TRW Automotive Holdings similar fundamental characteristics It is a process we use for all. announced it was going to be acquired by ZF Friedrichshafen companies we purchase and it attempts to get us into the right. for 105 60 per share This was of more than a passing interest ballpark for estimating value It is definitely not an exercise in. to us because at the time TRW was the largest holding in precision when we say we estimate value at 63 it really. Oakmark Select It was also the culmination of a process we means we believe the right range is something like 57 to 70. applauded because TRW stock began 2012 at 33 per share and We would mock any of our analysts who tried to show preci. was only up to 74 at the end of 2013 Over the years takeovers sion to the right of the decimal point we believe that if we are. have contributed significantly to Oakmark and Oakmark within 10 we are doing a good job We simply don t believe. Select s returns In 2014 both Funds benefited when AT T you can get more accurate based on public data But fortu. offered to buy DirecTV and when Actavis purchased Forest nately lack of precision was no problem with TRW because at. Laboratories Additionally Oakmark Fund owned Covidien the time we purchased it the stock traded at 32. which increased from 72 to 92 after announcing its merger. During the ensuing three years TRW earned about 20 per. with Medtronic Obviously we welcome takeover activity in. share cumulatively and used some of that capital to buy back. any of our holdings, undervalued stock Over that time our forecast of future earn. But when TRW announced news of the acquisition at 8 16 a m ings grew By last month our best estimate of value had grown. Chicago time it took less than an hour 9 04 to be exact for to 109 The acquisition price of 105 60 was a little bit below. the first law firm to announce its threat to sue TRW for accept our best guess but well within 10 That left us with two. ing too low a price Within 10 days I had counted at least 27 important questions Was the bidding process open to other. similar press releases from various law firms purporting to rep interested buyers Were the board and management incen. resent shareholders threatening legal action to block the tivized to achieve the maximum price. takeover How do you square the law firms all jumping in to. Let s take the second question first Did the management own. protect the shareholders while as a large shareholder ourselves. enough stock and options that they were beneficiaries of a. we were cheering the news, higher price This is a question that is important to us not just.
Merger objection lawsuits aren t unique to the TRW deal In when a company is getting acquired but throughout our term. fact each of the takeovers we were invested in had multiple law of ownership We believe it is too much to expect that people. firms trying to block the deals alleging that shareholders will act against their own economic interests so we like to see. weren t getting paid a high enough price And it isn t just those management do well when their shareholders also do well. takeovers Within minutes of almost any takeover announce Fortunately their incentives are easily quantifiable because the. ment many law firms race to file press releases Ten years ago information is readily available in the proxy statement and. less than 10 of announced acquisitions of public companies 10K As of year end management and directors owned or held. were followed by merger objection suits Today almost every rights to purchase over 500 million of TRW stock valued at. deal produces multiple suits The overwhelming majority of the acquisition price Each dollar by which they could increase. and maximize investment flexibility Shareholder Servicing News Our Mutual Fund Services team has been working diligently with our transfer agent to redesign our shareholder Account Access website accessed via Oakmark com We are improving the entire look and feel so that shareholders will see a consolidated display of their accounts in a number of

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