I am pleased to present the first quarter report for The Oakmark Family of Funds for the fiscal period ending January 31, 1997. In what was an exceptionally robust quarter, the Standard & Poor’s 500 Index was up over 12%. Each of our funds also enjoyed strong increases in net asset value wherein each surpassed its relevant benchmark. We are particularly pleased to see our newest fund, The Oakmark Select Fund, off to such a fine start by appreciating 25% since its launch on November 1, 1996.
This report is accompanied by our new prospectus dated March 1, 1997. The prospectus contains a number of changes designed to improve the Fund Family and make the Funds more attractive to you as shareholders. The changes are summarized as follows:
1) We have changed the name of The Oakmark International Emerging Value Fund to The Oakmark International Small Cap Fund. The new name clarifies our intention and practice, since inception, to invest the substantial majority of the Fund’s assets in smaller companies. We have also redefined the universe of small cap investments to coincide with the size of companies comprising the Standard &Poor’s Small Cap 600 Index.
2) In order to be consistent across the entire Fund Family, we have lowered the minimum investment for each Fund to $1,000 and eliminated the 2% redemption fees for The Oakmark Small Cap Fund and The Oakmark International Small Cap Fund.
3) Harris Associates, the Fund’s advisor, has voluntarily improved the expense reimbursement agreement so as to lower the expense cap from 2.5% to 1.5% on the domestic funds and 2.0% on the international funds. This is particularly important to the smaller funds which do not enjoy the economies of scale of The Oakmark Fund, which already has an expense ratio below 1.2%; and,
4) Harris Associates has also agreed to cap the IRA maintenance fees for multifund IRA investments. The maximum maintenance fee charged will be $20 regardless of the number of funds chosen. We hope you will consider The Oakmark Family for your 1996 IRA contributions which are due by April 15, 1997.
Thanks for your support and confidence in us.
Very Truly Yours,
VICTOR A. MORGENSTERN
President
|
Performance for Period Ended January 31, 1997 |
The Oakmark Fund | The
Oakmark Select Fund |
The Oakmark Small Cap Fund | The
Oakmark Balanced Fund |
The
Oakmark International Fund |
The Oakmark Int’l Small Cap Fund |
| 3 Months 6 Months Performance for 1 Year 3 Years 5 Years Since Inception Value of $10,000 from inception date |
12.7%
21.2% 19.5% 18.9%** 25.4%** 30.5%** $43,112 |
25.0% N/A N/A N/A N/A 25.0% $12,500 |
15.1%
28.3% 49.1% N/A N/A 39.5%** $15,180 |
8.6%
15.0% 19.1% N/A N/A 17.6%** $12,255 |
8.7% 12.9% 22.5% $19,908 |
6.4%
10.0% 15.3% $12,142 |
| Top
Five Holdings as of January 31, 1997 Company and % of Total Net Assets |
First
USA, Inc. 8.1%
Philip Morris Co. 7.1% Mellon Bank Corp. 6.0% Black & Decker Corp. 4.5% USWest Media Group 4.2% |
First
USA, Inc. 16.9%
Tele- Communications, Liberty Media Class A 15.5% McDonnell Douglas 7.9% US Industries, Inc. 6.3% Dun & Bradstreet Corp. 4.5% |
Catellus
Dev. Corp. 6.3%
US Industries, Inc. 5.8% SPX Corp. 5.6% Ralcorp Holdings, Inc. 4.8% Highlands Insurance Group, Inc. 4.5% |
US Industries,
Inc. 4.8%
First USA, Inc. 4.4% McDonnell Douglas 3.2% Juno Lighting, Inc. 3.1% Premark Intl, Inc. 3.1% |
ABVolvo
4.7%
Cordiant PLC 4.4% Telefonos de Mexico, S.A. 4.4% Guinness PLC 3.9% National Australia Bank 3.7% |
Sanford
Limited 4.2%
Solution 6 Holdings, Ltd. 3.8% Cordiant PLC 3.1% Steady Safe 3.0% Danieli & Company 2.9% |
| Top
Five Industries as of January 31, 1997 Industries and % of Total Net Assets |
Food
&Beverage 17.7%
Other Consumer Goods & Services 13.4% Other Financial 13.1% Broadcasting & Publishing 13.1% Foreign Securities 6.2% |
Other
Financial 16.9%
TV Programming 15.5% Broadcasting & Cable TV 11.4% Publishing 8.5% Other Consumer Goods & Services 8.2% |
Other
Industrial Goods & Services 14.3%
Insurance 13.1% Machinery & Metal Processing 10.0% Broadcasting & Publishing 9.4% Commercial Real Estate 9.2% |
Government
& Agency Securities 26.9%
Other Consumer Goods &Services 20.7% Other Industrial Goods & Services 10.9% Other Financial 7.2% Broadcasting &•Publishing 6.9% |
Food
14.1%
Tele- communications 12.1% Banks 11.8% Steel 7.2% Transportation 6.1% |
Other
Industrial Goods &Services 15.0%
Other Consumer Goods &Services 10.2% Mining &Building Materials 7.7% Food 6.9% Components 6.6% |
*The Oakmark Fund’s average annual total returns for the twelve months ended December 31, 1996 and for the period August 5, 1991 (inception) through December 31, 1996 were 16.2% and 29.7%, respectively. The Oakmark Select Fund’s total return for November 1, 1996 (inception) through December 31, 1996 was 14.2%. The Oakmark Small Cap Fund’s average annual total returns for the twelve months ended December 31, 1996 and for the period November 1, 1995 (inception) through December 31, 1996 were 39.8% and 36.9%, respectively. The Oakmark Balanced Fund’s average annual total returns for the twelve months ended December 31, 1996 and for the period November 1, 1995 (inception) through December 31, 1996 were 15.3% and 15.2%, respectively.
The Oakmark International Fund’s average annual total returns for the twelve months ended December 31, 1996 and for the period September 30, 1992 (inception) through December 31, 1996 were 28.0% and 16.9%, respectively. The Oakmark International Small Cap Fund’s average annual total returns for the twelve months ended December 31, 1996 and for the period November 1, 1995 (inception) through December 31, 1996 were 25.0% and 17.4%, respectively. The Funds’ past performances are no guarantee of future results. Share prices and investment returns will vary, so you may have a gain or loss when you sell shares.
**Annualized.