Kristi Rowsell - June 30, 2014
Dear Fellow Shareholders,
Markets remained relatively calm through the second quarter of the year, posting solid positive returns. The U.S. stock market gained steadily, even though economic data reflected a significant, but hopefully temporary, drag from the severe winter that affected most of the country. International market gains were more modest, but resilient nonetheless, given the backdrop of challenging geopolitical developments.
Our Fund managers discuss their portfolio positions in their letters this quarter, and they explain some of their thoughts about current market valuations. Our letters occasionally provide counterpoints to the observations reported by others within the financial media. We provide historical perspective to help our shareholders distinguish what we believe constitutes fairly valued from overvalued market levels. We present theories about why some investors may feel negative sentiments toward the market, which may be keeping them on the sidelines, reluctant to invest in equities. And, fitting within this valuation context, we describe positions that we sold during the quarter because they met our sell targets, as well as new companies that we purchased. Overall, we believe equities remain attractive as an asset class, especially in comparison to other alternatives.
During the last week of June, Harris Associates relocated our offices within Chicago. We were approaching 28 years in our previous location and found it was time to seriously review the marketplace for a brighter, more open and contemporary office space. Moving a firm like ours, with long-term employees who love what they do and have made our workplace their second home, was a daunting task. But it was so gratifying to see the Harris employees and contractors embrace this challenge, working together to execute our relocation with great success. We modernized the environment, creating more opportunities for collaboration, while maintaining the same academic atmosphere revered by our culture. We quickly felt at home again, continuing to focus on our research, disciplined stock selection and exemplary client service. The teams involved in this seamless transition feel a strong sense of accomplishment.
Thank you for your continued investment and confidence in the Oakmark Funds. We welcome your comments and suggestions. You may reach us via email at ContactOakmark@oakmark.com.
President of The Oakmark Funds
President of Harris Associates L.P.
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. The performance of the Oakmark International Small Cap Fund does not reflect the 2% redemption fee imposed on shares redeemed within 90 days of purchase. To obtain the most recent month-end performance data, view it here.
The above information should not be considered tax advice. Please consult your tax advisor for detailed information applicable to your unique situation.
The discussion of the Funds’ investments and investment strategy (including current investment themes, the portfolio managers' research and investment process, and portfolio characteristics) represents the Funds’ investments and the views of the portfolio managers and Harris Associates L.P., the Funds' investment adviser, at the time of this letter, and are subject to change without notice.