We believe that delivering successful investment results for our shareholders requires a consistent investment philosophy, a commitment to superior research, and a long-term investment horizon. We seek high-quality, well-managed businesses that are priced significantly below our estimate of their true worth and then patiently wait for price and value to converge. A strict adherence to our investment philosophy is just one way we strive to serve our shareholders. We believe we have an obligation to provide fair, honest, and ethical treatment to all shareholders. We’re committed to earning your trust.
Oakmark’s Shareholder Policies:
Market Timing Policies
Market timers are unwelcome in our Funds and are not provided any special breaks. Neither the Funds nor the Funds' adviser, Harris Associates L.P., nor any of our employees has permitted any investor in the Funds to engage in market-timing activity. In August 1999, we imposed a 2% redemption fee (payable to the Funds) on shares held for 90 days or less for each of the Funds, with the exception of The Oakmark Fund and The Oakmark Equity and Income Fund, which we believed were less susceptible to successful market timing. At the end of January 2004, we instituted the 2% redemption fee on The Oakmark Fund and The Oakmark Equity and Income Fund as well. This fee is designed to discourage market-timers, and to offset any costs to the Funds associated with short-term trading in our Class I shares. As of October 29, 2007, there will no longer be a 2% redemption fee for The Oakmark Equity and Income Fund (See the Funds' prospectus, pages 44-45.)
In addition to imposing redemption fees, the Funds further discourage market-timing activity by monitoring certain purchase and redemption activity in order to identify market-timers. If market timing is identified, the Funds take steps to eliminate the activity. (See the Funds' prospectus, pages 43-44.)
We apply these same policies to all employees of Harris Associates. Purchases and sales of Fund shares by employees are subject to the same redemption fees as those imposed on any other investor.
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Late Trading/"After-Hours" Trading
Our position is straightforward: we believe it is unacceptable, period . The share price or NAV of a share of each of The Oakmark Funds is determined as of the close of regular session trading on the New York Stock Exchange (NYSE), usually 4 PM Eastern Time on any day the NYSE is open for trading. Investors' orders to purchase or redeem shares of an Oakmark Fund must be received by the Funds or an authorized agent of the Funds before 4 PM Eastern Time in order to receive that day's price. Investors' orders received after 4 PM ET receive the next day's price. (See the Funds' prospectus, pages 41-42.) Authorized agents of the Funds are obligated to comply with the Funds' prospectus and applicable federal and state laws, rules and regulations regarding the timely processing of purchase and redemption orders received by them.
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Fee Information
Fund Fees, as outlined in our Prospectus:
Annual Fund Operating Expenses (Expenses that are deducted from Fund assets.)
Fund |
Management
Fees |
Distribution
(12b-1) Fees |
Other Expenses
(incl. service fees) |
Total Annual
Fund Operating
Expenses as of 9/30/08 |
Oakmark |
0.93% |
None |
0.17% |
1.10% |
Oakmark Select |
0.93% |
None |
0.15% |
1.08% |
Oakmark Equity
and Income |
0.69% |
None |
0.12% |
0.81% |
Oakmark
Global |
1.01% |
None |
0.15% |
1.16% |
Oakmark
Global Select |
1.02% |
None |
0.33% |
1.35% |
Oakmark
International |
0.94% |
None |
0.16% |
1.10% |
Oakmark
Intl Small Cap |
1.22% |
None |
0.19% |
1.41% |
Fee information is for Class I shares as of September 2008.
Shareholder Fees (Fees that are paid directly from your investment.)
- Maximum sales charge (front-end load) imposed on purchases: None
- Maximum deferred sales charge (back-end load): None
- Redemption fee: 2% of redemption proceeds on shares held for 90 days or less. (The fee is paid to the Fund).
- Exchange fee: 2% of redemption proceeds on shares redeemed within 90 days. (An exchange transaction is a redemption of shares in one Fund and a simultaneous purchase of shares in a different Fund.)
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Fair Value Pricing
The Funds take very seriously their obligation to sell and redeem shares at an accurate NAV per share, and consider each day whether closing market prices for portfolio securities represent reliable market quotations. The Funds have a pricing committee, which monitors closing prices of portfolio holdings. If the committee concludes that reliable market quotations are not available, the committee may value a security at a fair value, determined in good faith. The Funds also use fair value pricing if the value of a security held, in the opinion of the Funds' pricing committee, has been materially affected by events occurring between the close of the primary market or exchange on which the security is traded and the time for computing the Funds' NAV's.
Certain events (i.e. political coup, hurricane, tidal wave) in overseas markets may significantly affect the value of certain securities held in global or international mutual fund portfolios. By using fair value pricing, a mutual fund can look beyond foreign closing prices to factor in more up-to-date information when calculating its NAV. Through this pricing committee, Oakmark has used fair value pricing in the past. We also employ an outside service to apply fair value pricing for our mutual fund portfolios, when necessary. More information about the use of fair value pricing is found in the Funds' Statement of Additional Information (SAI), page 28:
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"…A Fund may value a security at a fair value if it appears that the valuation of the security has been materially affected by events occurring after the close of the primary market or exchange on which the security is traded but before the time as of which the net asset value is calculated. The Trust has retained a third party service provider to assist in determining estimates of fair values for foreign securities. That service utilizes statistical data based on historical performance of securities, markets and other data in developing factors used to estimate a fair value. When fair value pricing is employed, the value of a portfolio security used by a Fund to calculate its NAV may differ from quoted or published prices for the same security. Estimates of fair value utilized by the Funds as described above may differ from the value realized on the sale of those securities and the differences may be material to the net asset value of the applicable Fund." |
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Portfolio Disclosure/Manager Commentary
Oakmark portfolios are disclosed at least quarterly. All of our managers also prepare quarterly commentary, sharing candid insights about the market, the portfolio, and our investment approach. Quarterly manager commentary is one of the best ways an investor can learn about how The Oakmark Funds are managed.
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Personal Investment in the Funds
One of the key components of the Oakmark investment process is to invest in companies where managements’ interests are closely aligned with shareholders’. We believe that this alignment is most frequently and effectively created by significant management stock ownership. When management has a meaningful sum invested alongside other shareholders, the focus on performance and shareholder value is intensified. Mutual fund investors can also wisely apply this same philosophy. Significant ownership of Fund shares -- not just by portfolio managers, but also by all levels of employees at the Fund and its adviser (including analysts, senior management, trustees and others) -- reinforces a higher standard of integrity, focus, and commitment. As of December 31, 2009, the employees of the Funds' adviser, Harris Associates L.P., the Funds' officers and trustees and their families have over $220 million invested in The Oakmark Funds. Although the difficult markets of the last 18 months may have raised doubts among many of our investors about staying the investment course, you can be assured that we have maintained a high level of Fund ownership throughout this period, remaining constant in our financial commitment and discipline. We hope that our continuing financial commitment also signals to shareholders our strong belief that the Funds remain attractive investments for the future.
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Proxy Voting Policy
As shareholders in public corporations, it is our responsibility to voice our opinions on corporate governance matters through a process called "proxy voting." This process allows shareholders to vote on various issues ranging from the election of a company's board of directors to management compensation plans. We approach the voting process with the sole goal of determining whether we believe the resolutions proposed will maximize long-term, per-share value. You can read more about our proxy voting policy and access Oakmark’s proxy voting information.
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Harris Associates L.P. Code of Ethics -- General Statement
Our Code of Ethics focuses on our clients and our responsibility toward managing the assets entrusted to us. Below is the opening statement in our firm's Code of Ethics, our General Statement:
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"Harris Associates, Adviser to The Oakmark Funds, seeks to foster a reputation for integrity and professionalism. That reputation is a vital business asset. The confidence and trust placed in us by investors in mutual funds and clients with accounts advised by the Firm is something that is highly valued and must be protected. As a result, any activity which creates even the suspicion of misuse of material non-public information by the Firm or any of its Employees, which gives rise to or appears to give rise to any breach of fiduciary duty owed to any Client, or which creates any actual or potential conflict of interest between any Client and the Firm or any of its Employees or even the appearance of any conflict of interest must be avoided and is prohibited." |
Please note : Harris Associates' Code of Ethics has been filed with the SEC as an exhibit to the Funds' Form N-1A, and can be viewed at www.sec.gov.
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Definitions
Front-end load : A sales fee charged at the time of purchase by some mutual funds. This fee is assessed and deducted from the investment amount whenever shares are purchased. In effect, it lowers an investor's return by reducing the amount initially invested.
Contingent and/or Back-end load : A sales fee or commission paid annually or when an individual sells an investment, such as a mutual fund.
12b-1 fee : An extra fee charged by some mutual funds to cover promotion, distribution, marketing expenses, and sometimes commissions to brokers. It is included in the stated expense ratio. A true no-load fund does not have 12b-1 fees.
NAV : stands for Net Asset Value. NAV is the dollar value of a single mutual fund share, based on the value of the underlying assets of the fund minus its liabilities divided by the number of shares outstanding.
Redemption fee: A fee assessed on shares held 90 days or less. The purpose of this fee is to deter short-term traders, or market timers.
