President's Letter 2012
Kristi Rowsell - December 31, 2012
Dear Fellow Shareholders,
Markets were mostly positive during the fourth calendar quarter for The Oakmark Funds. International markets posted strong gains, as did our international and global Funds. While U.S. markets overall were weak, the returns on our U.S.-focused Funds matched or beat their benchmarks.
The Equity and Income Fund slightly outperformed its benchmark during the quarter, but it continues to lag for the one- and three-year annualized periods. Our portfolio managers discuss their thoughts on the quarter and the opportunities ahead in their shareholder letters.
Reviewing our performance reminds us of the importance of sticking with a long-term asset allocation decision. Investors who maintained or increased their allocations to equities in 2012 were rewarded, while those who abandoned equity strategies have experienced the opportunity cost of missing these rising markets. At Oakmark, our philosophy focuses on investing for the long term. It takes discipline and, at times, fortitude to consistently follow this course, but doing so has rewarded our shareholders for more than two decades. We encourage you to stay on course as you look forward to 2013.
Oakmark Chairman Wilner Retires
Dr. Gary Wilner retired as Chairman of The Oakmark Funds effective December 31, 2012. During his 19 years as a Trustee, including eight as Chairman, Dr. Wilner provided thoughtful guidance and demonstrated excellent stewardship of shareholder assets through eventful times. All of the trustees and officers that serve The Oakmark Funds appreciate his counsel. He has exemplified the level of dedication required to uphold the trust and expectations of those who follow and invest in our esteemed fund family. He was succeeded on January 1 by Allan Reich, who enjoys a similar length of tenure and experience as an Oakmark Trustee, and who has earned the great respect of his peers. We thank Gary for his excellent service over these years, and look forward to working with Allan in his new capacity.
A New Oakmark.com
We have rebuilt our Oakmark.com website to provide easier access to information about your Funds. We plan to release this new site at the end of January, and we look forward to your feedback on how well it works for you. We have updated the design to place content at your fingertips, both in summary fashion and with deeper drills into portfolio details and our investment philosophy. The website should be a more effective venue for valuable communications about your funds and Harris Associates. Further, it simplifies navigation among the myriad literature and forms that assist in the management of your accounts. While we have made significant changes in the new Oakmark.com, your account access will remain in its customary location on the home page and the secure login process will not change.
Welcome to new Co-Managers
Harris Associates has announced that Tony Coniaris and Win Murray will join Bill Nygren as co-managers of the Oakmark Select Fund at the end of January. Both are proven research analysts with many years of experience at Harris, and have worked closely with Bill supporting the portfolio management function for some time now.
Clyde McGregor will continue to work with his internal advisory groups for the present time. They have made significant contributions to his evaluation of both the fixed-income and equity segments of the portfolio.
Personal Investments in the Funds
At Oakmark, we have found that significant management share ownership is an important attribute of successful companies. When a management team has a meaningful stake invested along with their company shareholders, the foundation for good, long-term stewardship is reinforced. We believe this is true for the companies that we invest in, as well as for the mutual funds that we manage. Significant ownership of Fund shares by all levels of employees at Harris Associates demonstrates our confidence in our investment process and our commitment to managing your funds with integrity.
We are proud to report that, as of December 31, 2012, the value of Oakmark Funds owned by the employees of Harris Associates, our families, the Funds’ officers and our trustees was more than $335 million. Sharing this information with you annually attests to our conviction, both professionally and personally, that our Funds remain attractive investments for the future.
Thank you for your continued investment and confidence in the Oakmark Funds. We welcome your comments and questions.
President of The Oakmark Funds
President of Harris Associates L.P.
Investing in foreign securities presents risks that in some ways may be greater than in U.S. investments. Those risks include: currency fluctuation; different regulation, accounting standards, trading practices and levels of available information; generally higher transaction costs; and political risks.
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.