N-CSR 1 a19-19775_2ncsr.htm N-CSR

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number

811-06279

 

Harris Associates Investment Trust

(Exact name of Registrant as specified in charter)

 

111 South Wacker Drive, Suite 4600

Chicago, Illinois

60606-4319

(Address of principal executive offices)

(Zip code)

 

 

Kristi L. Rowsell

Harris Associates L.P.

111 South Wacker Drive, Suite 4600

Chicago, Illinois 60606-4319

Ndenisarya M. Bregasi, Esq.

K&L Gates LLP

1601 K Street, N.W.

Washington, D.C. 20006-1600

(Name and address of agents for service)

 

Registrant’s telephone number, including area code:

(312) 646-3600

 

 

Date of fiscal year end:

09/30/19

 

 

Date of reporting period:

09/30/19

 

 

 

Item 1. Reports to Shareholders.

 

OAKMARK FUNDS

ANNUAL REPORT | SEPTEMBER 30, 2019

OAKMARK FUND

OAKMARK SELECT FUND

OAKMARK EQUITY AND INCOME FUND

OAKMARK GLOBAL FUND

OAKMARK GLOBAL SELECT FUND

OAKMARK INTERNATIONAL FUND

OAKMARK INTERNATIONAL SMALL CAP FUND


Oakmark Funds

2019 Annual Report

TABLE OF CONTENTS

President's Letter

    

1

 

Fund Expenses

    

2

    

Commentary on Oakmark and Oakmark Select Funds

    

3

    

Oakmark Fund

  

Summary Information

    

6

    

Portfolio Manager Commentary

    

7

    

Schedule of Investments

    

8

    

Oakmark Select Fund

  

Summary Information

    

12

    

Portfolio Manager Commentary

    

13

    

Schedule of Investments

    

14

    

Oakmark Equity and Income Fund

  

Summary Information

    

16

    

Portfolio Manager Commentary

    

17

    

Schedule of Investments

    

19

    

Oakmark Global Fund

  

Summary Information

    

26

    

Portfolio Manager Commentary

    

27

    

Schedule of Investments

    

29

    

Oakmark Global Select Fund

  

Summary Information

    

32

    

Portfolio Manager Commentary

    

33

    

Schedule of Investments

    

35

    

Oakmark International Fund

  

Summary Information

    

38

    

Portfolio Manager Commentary

    

39

    

Schedule of Investments

    

41

    

Oakmark International Small Cap Fund

  

Summary Information

    

46

    

Portfolio Manager Commentary

    

47

    

Schedule of Investments

    

49

    

Financial Statements

  

Statements of Assets and Liabilities

    

52

    

Statements of Operations

    

54

    

Statements of Changes in Net Assets

    

56

    

Notes to Financial Statements

    

69

    

Financial Highlights

    

78

    

Report of Independent Registered Public Accounting Firm

    

86

    

Federal Tax Information

    

87

    

Disclosures and Endnotes

    

87

    

Trustees and Officers

    

90

    

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Oakmark Funds' annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on Oakmark.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Funds electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you hold your shares directly with the Funds, by calling 1-800-OAKMARK (625-6275) or visiting Oakmark.com.

  

You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you hold your shares directly with the Funds, you can call 1-800-OAKMARK (625-6275) to let the Funds know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all Funds you hold directly or all Funds you hold through your financial intermediary, as applicable.

FORWARD-LOOKING STATEMENT DISCLOSURE

One of our most important responsibilities as mutual fund managers is to communicate with shareholders in an open and direct manner. Some of our comments in our letters to shareholders are based on current management expectations and are considered "forward-looking statements." Actual future 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",

"plan" and other similar terms. We cannot promise future returns. Our opinions are a reflection of our best judgment at the time this report is compiled, and we disclaim any obligation to update or alter forward-looking statements as a result of new information, future events, or otherwise.


President's Letter

Kristi L. Rowsell
President of the Oakmark Funds
President of Harris Associates L.P.

Dear Fellow Shareholders,

We are pleased to present our annual report for the year ended September 30, 2019. The fiscal year was challenging for the Funds, especially due to the market downturn in the fourth quarter of 2018. Since then, however, the absolute returns of the Funds have improved along with, our relative performance versus their benchmarks. We believe, our portfolios are trading at significant discounts to our estimate of intrinsic value and we continue to find this a compelling reason to own each of the Oakmark Funds. In fact, many Harris Associates' employees have added substantially to their Fund holdings.

Each year, we disclose to shareholders the amount of shares in the Oakmark Funds that are owned by personnel at Harris Associates. We believe that investing along with our shareholders underscores our commitment to stewardship and reflects that our interests are aligned with theirs. Our long-term investors know that one of the attributes we look for when evaluating companies in which we invest is managements who personally own a high level of company shares. We believe that this evidences the authenticity of management's belief in the promising future of their companies.

We are pleased to report that the employees of Harris Associates, the Funds' officers, its trustees and their families have invested more than $500 million in shares of the Oakmark Funds as of September 30, 2019. This level of investment exemplifies our personal conviction in Harris' investment philosophy and our commitment to managing your Fund with integrity.

We thank you for your continued support of the Oakmark Funds.

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, 2019 to September 30, 2019, 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, 2019, by $1,000 and multiplying the result by the number in the "Actual—Expenses Paid During Period" column shown below.

Prior to December 3, 2018, shares of Oakmark International Small Cap Fund, invested for 90 days or less, may have been charged a 2% redemption fee upon redemption.

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, such as redemption fees. 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 these transaction costs were included, the total costs would have been higher.

   

 

ACTUAL

   HYPOTHETICAL
(5% annual return
before expenses)		      

  Beginning
Account Value
(04/01/19)		   Ending
Account Value
(09/30/19)		   Expenses
Paid During
Period*		   Ending
Account Value
(09/30/19)		   Expenses
Paid During
Period*		   Annualized
Expense
Ratio		  

Oakmark Fund

  

Investor Class

  

$

1,000.00

    

$

1,010.90

    

$

4.28

    

$

1,020.81

    

$

4.31

      

0.85

%

  

Advisor Class

  

$

1,000.00

    

$

1,011.20

    

$

3.98

    

$

1,021.11

    

$

4.00

      

0.79

%

  

Institutional Class

  

$

1,000.00

    

$

1,011.70

    

$

3.48

    

$

1,021.61

    

$

3.50

      

0.69

%

  

Service Class

  

$

1,000.00

    

$

1,009.60

    

$

5.54

    

$

1,019.55

    

$

5.57

      

1.10

%

  

Oakmark Select Fund

  

Investor Class

  

$

1,000.00

    

$

1,009.50

    

$

4.84

    

$

1,020.26

    

$

4.86

      

0.96

%

  

Advisor Class

  

$

1,000.00

    

$

1,010.00

    

$

4.28

    

$

1,020.81

    

$

4.31

      

0.85

%

  

Institutional Class

  

$

1,000.00

    

$

1,010.30

    

$

4.03

    

$

1,021.06

    

$

4.05

      

0.80

%

  

Service Class

  

$

1,000.00

    

$

1,008.90

    

$

5.54

    

$

1,019.55

    

$

5.57

      

1.10

%

  

Oakmark Equity and Income Fund

  

Investor Class

  

$

1,000.00

    

$

1,036.30

    

$

3.98

    

$

1,021.16

    

$

3.95

      

0.78

%

  

Advisor Class

  

$

1,000.00

    

$

1,036.20

    

$

3.52

    

$

1,021.61

    

$

3.50

      

0.69

%

  

Institutional Class

  

$

1,000.00

    

$

1,036.90

    

$

3.17

    

$

1,021.96

    

$

3.14

      

0.62

%

  

Service Class

  

$

1,000.00

    

$

1,035.10

    

$

5.00

    

$

1,020.16

    

$

4.96

      

0.98

%

  

Oakmark Global Fund

  

Investor Class

  

$

1,000.00

    

$

1,039.30

    

$

5.73

    

$

1,019.45

    

$

5.67

      

1.12

%

  

Advisor Class

  

$

1,000.00

    

$

1,039.70

    

$

5.01

    

$

1,020.16

    

$

4.96

      

0.98

%

  

Institutional Class

  

$

1,000.00

    

$

1,040.00

    

$

4.96

    

$

1,020.21

    

$

4.91

      

0.97

%

  

Service Class

  

$

1,000.00

    

$

1,038.10

    

$

6.80

    

$

1,018.40

    

$

6.73

      

1.33

%

  

Oakmark Global Select Fund

  

Investor Class

  

$

1,000.00

    

$

1,030.70

    

$

5.75

    

$

1,019.40

    

$

5.72

      

1.13

%

  

Advisor Class

  

$

1,000.00

    

$

1,030.70

    

$

5.50

    

$

1,019.65

    

$

5.47

      

1.08

%

  

Institutional Class

  

$

1,000.00

    

$

1,031.30

    

$

5.09

    

$

1,020.05

    

$

5.06

      

1.00

%

  

Oakmark International Fund

  

Investor Class

  

$

1,000.00

    

$

1,025.50

    

$

4.67

    

$

1,020.46

    

$

4.66

      

0.92

%

  

Advisor Class

  

$

1,000.00

    

$

1,025.60

    

$

4.62

    

$

1,020.51

    

$

4.61

      

0.91

%

  

Institutional Class

  

$

1,000.00

    

$

1,026.50

    

$

4.06

    

$

1,021.06

    

$

4.05

      

0.80

%

  

Service Class

  

$

1,000.00

    

$

1,024.00

    

$

5.99

    

$

1,019.15

    

$

5.97

      

1.18

%

  

Oakmark International Small Cap Fund

  

Investor Class

  

$

1,000.00

    

$

1,037.60

    

$

6.33

    

$

1,018.85

    

$

6.28

      

1.24

%

  

Advisor Class

  

$

1,000.00

    

$

1,039.00

    

$

5.52

    

$

1,019.65

    

$

5.47

      

1.08

%

  

Institutional Class

  

$

1,000.00

    

$

1,038.40

    

$

6.13

    

$

1,019.05

    

$

6.07

      

1.20

%

  

Service Class

  

$

1,000.00

    

$

1,036.40

    

$

7.76

    

$

1,017.45

    

$

7.69

      

1.52

%

  

*  Expenses are calculated using the Annualized Expense Ratio, multiplied by the average account value over the period, multiplied by 183 and divided by 365 (to reflect one-half year period)

2 OAKMARK FUNDS


Oakmark and Oakmark Select Funds  September 30, 2019

Portfolio Manager Commentary

William C. Nygren, CFA

Portfolio Manager

oakmx@oakmark.com
oaklx@oakmark.com
oakwx@oakmark.com

At Oakmark, we are long-term investors. We attempt to identify growing businesses that are managed to benefit their shareholders. We will purchase stock in those businesses only when priced substantially below our estimate of intrinsic value. After purchase, we patiently wait for the gap between stock price and intrinsic value to close.

During the quarter, Win Murray (U.S. director of research and Oakmark Select co-manager) and I had the privilege of answering questions submitted by readers of GuruFocus.com. What follows is an excerpt that focuses on investment philosophy and process. The entire Q&A, including our thoughts on specific companies and industries, appears on the GuruFocus website. You can read Part I and Part II here: https://www.oakmark.com/ News/GuruFocus-QA-with-Bill-Nygren-and-Win-Murray.htm.

How do you control your emotions when dealing with a position at a loss, where you know that it is still undervalued?

Bill Nygren: First, you say "where you know that it is still undervalued." I think it's important to state that we never have enough certainty to say we know a stock is undervalued. We may believe it is undervalued, but it is extremely important to keep an open mind to new information that could prove the thesis incorrect. As a value investor, discipline and patience are prerequisites for success. However, taking them too far and becoming stubborn can be a fatal flaw. A great way to prevent becoming stubborn is to always search for non-confirming information.

I think the best way to keep emotions under control is to remain focused on business fundamentals rather than stock price. When we buy a stock, we establish a roadmap for how we expect the business fundamentals to progress. If the fundamentals are meeting our expectations but the stock has declined, we often use that as an opportunity to add to our position. On the other hand, if the fundamentals aren't aligning with our expectations, we will usually consider our thesis broken and move on, regardless of how cheap the stock may look relative to our original expectations.

How do you analyze the management of companies?

Win Murray: Individual investors shouldn't despair that they don't have the opportunity to meet with management teams. Most of our analysis of company managements comes from doing a deep dive into their track records, in both operations (how they have grown sales and controlled costs historically) and capital allocation (how they have spent their discretionary cash flows and what their acquisition/divestiture scorecard looks like). If we see that a company issued relatively cheap stock to make a large, expensive acquisition, we can frequently close the book right there and move on.

We do try to meet with management teams before making investments. We have to be careful, though, because it's easy to be impressed by a CEO. They tend to be charismatic, confident, well-spoken and with such deep knowledge of their companies that they can "wow" you with answers to any fact-based questions you may have.

This is why, when we meet with management teams, we try to ask questions that give us some sense for how the executives would think in different situations rather than discuss what's happening with their business units or the marketplace today. Bad questions would be, "What are you currently seeing in your European end markets?" or "So what do you expect the government to do on tariffs?" Good questions would be, "What part of your current capital spending plan do you believe will lead to the highest returns, and why aren't you spending twice as much on it?" or "What skill sets would you like to see added to your board of directors to help you best run the company?" We want to try to put executives into positions where we can see them thinking about different scenarios rather than giving the same standard answers.

It's also always important to check the proxy statements to see how the executives are being paid. We don't want to see people getting compensated for sales growth or profit growth. We look for metrics with "denominators," like sales per share, earnings per share, return on invested capital, etc. We always want to make sure that the costs of growth are being properly captured.

What's a go-to resource for you for investment ideas and inspiration, beyond typical business publications and websites?

Nygren: Some investors suffer from a "not invented here" syndrome, which can cause them to look negatively at any idea that originated outside their own organization. One of the things I believe we do well at Oakmark is realizing we haven't cornered the market on good investment thinking. We all read about what our competitors are doing with an eye toward using some of their best ideas.

I like reading books about successful investors, especially those who use a different style than we do. I admire Warren Buffett and would say if you are going to read about only one investor, pick him. But rather than reading a seventh book about Buffett and maybe learning something new about his diet, read about great growth investors or commodity traders. The genesis of our work rigorously tracking how company fundamentals have deviated from our expectations came more from commodity traders than from other value investors.

We also read the quarterly reports from other funds that invest similarly to Oakmark. When a firm we respect takes a new position in a stock we don't own, we like to research the idea and at least understand why we don't agree with them. If we can't find a reason to disagree, we are humble enough to admit that other investors can sometimes find good ideas before we do.

See accompanying Disclosures and Endnotes on page 87.

Oakmark.com 3


Oakmark and Oakmark Select Funds  September 30, 2019

Portfolio Manager Commentary (continued)

How do you value businesses? Are asset-based or earnings-based valuations more useful?

Murray: A business is worth the sum of its future cash flows, discounted to today. Mathematically, that's the only truly accurate way to value a company. At Oakmark, we estimate a business's pre-tax, pre-interest cash flows (assuming a normal margin), apply an estimated tax rate, capital required for growth, and a projected capital structure, then estimate an intermediate growth rate. These factors, combined with an appropriate discount rate, tell us what multiple of cash flows the business likely deserves.

You mention two other valuation metrics: earnings based and asset based. Both have utility as shortcuts to a discounted cash flow model, although cash flows ultimately determine value. If the company's earnings are approximately equal to their after-tax cash flows, then an earnings-based valuation model will likely be an accurate tool for determining the business's value. This is not uncommon in a lot of mature industries that aren't too research and development or amortization heavy and, therefore, is pretty widely used by investors.

Asset-based valuations are especially useful in very cyclical industries during time periods when current cash flows are far lower (or higher) than a company's "normal" long-term cash flows. Take, for example, a deep-water drilling company. The company owns dozens of deep-water drillships, each worth hundreds of millions of dollars. When oil was more than $100 a barrel, these ships were contracted at exceptionally high rates, producing amazing cash returns on the original asset prices. However, when the oil price collapsed, many of these ships were left idle, producing no cash flows at all (and, in fact, requiring maintenance cash flows to keep shipshape for the future). A reasonable valuation methodology here would be to determine the replacement value of these assets if someone were to try to build the same fleet (adjusted for deprecation) and use this as a basis for valuing the company long term. You have to be careful when doing this, though, because ultimately all that matters are the cash flows. If, for example, circumstances in the industry have changed such that it would be impossible to get a good long-term return on a newly built drillship, then an asset value model would overstate the company's value.

What do you know about investing now, that you wish you knew when you started?

Murray: When I started in this industry at age 26 after business school (and a full seven years before I joined Oakmark), I was given a sector to analyze (basic materials) and was essentially told to pick stocks that would go up. The idea that Consolidated Papers, for instance, was "worth" twice the current quote to a strategic buyer was irrelevant if the coated paper cycle was turning down because analysts were judged purely on how their stocks performed over short periods of time, typically one year.

I was being trained not how to value businesses, but instead to try to understand what news flow would likely occur over the next few quarters and then figure out what other market participants were thinking to determine whether it was already priced in or not. This is a perfectly interesting job, but it's most definitely not how to make money in this field over many decades. Pretty much every investor you've ever heard of with a 25-plus year track record has made their money the exact same way: buying companies at a big discount to what they're worth (usually when

they're terribly out of favor) and holding them until the cash flows eventually drive the companies' prices to fair value.

Luckily, I was taken under the wing of an old-school value investor who helped show me what investing really is. By the time I joined the Oakmark team, I was well versed in the philosophy. But as director of research, I still see countless candidates who believe that "investing" involves picking stocks that "work," as opposed to buying companies at a big discount to the present value of their future cash flows.

I remember interviewing a very intelligent analyst candidate in late 2012. He worked at a well-known but struggling hedge fund and was in charge of analyzing the transportation sector for them. We were discussing FedEx, a $90 stock at the time, and an Oakmark holding. The analyst had done a lot of work to determine the company was probably worth $160 per share, yet his firm didn't own it. I was surprised he saw that much upside yet held no position. He explained that trans-Pacific trade figures hadn't shown any sign of turning and he couldn't recommend any stock without a catalyst lest he subject himself to significant career risk at his shop. A year later, catalyst-free FedEx was $40 higher and a year after that it had doubled.

As a young investor, I never realized how much of the week-to-week stock market movements come from "investors" who are chasing psychology and news flow. It flies in the face of the efficient market theory, but so many "investment" firms have created incentives for their analysts based on 12-month stock performance that it's believable to see occur. Luckily for us, I don't see this industry model changing anytime soon, so market inefficiencies should continue to exist even in the largest cap companies.

Nygren: I think the most common tendency of young investment professionals is to rely almost entirely on quantitative skills and ignore qualitative positives or negatives of businesses and their managers. I was no exception. It is really just natural because fresh graduates have better quantitative skills than their bosses. And if you've got the biggest hammer, you want everything to look like a nail. But I can't think of one investment we've made at Oakmark where we developed an advantage over other investors by "outmodeling" them.

With experience comes an appreciation for the qualitatives that are hard to incorporate in a model. Our most successful stocks typically include a differentiated point of view on the quality of management or the quality of the business. As a young analyst, I always started by looking for really cheap stocks, and after concluding they were indeed underpriced, I then tried to convince myself that neither the businesses nor managements were bad enough to offset the statistical cheapness. Having completed all the valuation work before even meeting the management, you can guess how strongly biased I was to conclude that they were at least acceptable!

Today, I encourage our analysts to reverse that process: Find businesses and managements they'd be excited to own and then do the work to see if the valuation is attractive. If it isn't attractive now, monitor the stock price so you are prepared to act when it is more attractive. It is really amazing to see over the course of our holding period, typically five to seven years, how much value a great management can add that never was incorporated in our model, and conversely, how much value a bad management can destroy.

See accompanying Disclosures and Endnotes on page 87.

4 OAKMARK FUNDS


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Oakmark.com 5


Oakmark Fund  September 30, 2019

Summary Information

VALUE OF A $10,000 INVESTMENT

Since Inception - 08/05/91 (Unaudited)

PERFORMANCE

      

Average Annual Total Returns (as of 09/30/19)

  

 
(Unaudited)   Total Return
Last 3 Months		  

1-year

  

3-year

  

5-year

  

10-year

   Since
Inception		   Inception
Date		  

Oakmark Fund (Investor Class)

    

-2.06

%

    

-5.68

%

    

9.30

%

    

7.27

%

    

12.08

%

    

12.17

%

  

08/05/91

  

S&P 500 Index

    

1.70

%

    

4.25

%

    

13.39

%

    

10.84

%

    

13.24

%

    

9.76

%

  

 

Dow Jones Industrial Average2

    

1.83

%

    

4.21

%

    

16.44

%

    

12.28

%

    

13.56

%

    

10.72

%

  

 

Lipper Large-Cap Value Fund Index3

    

1.16

%

    

2.39

%

    

10.31

%

    

7.85

%

    

10.84

%

    

8.78

%

  

 

Oakmark Fund (Advisor Class)

    

-2.05

%

    

-5.59

%

    

N/A

      

N/A

      

N/A

      

7.55

%

  

11/30/16

  

Oakmark Fund (Institutional Class)

    

-2.02

%

    

-5.51

%

    

N/A

      

N/A

      

N/A

      

7.60

%

  

11/30/16

  

Oakmark Fund (Service Class)

    

-2.11

%

    

-5.93

%

    

9.00

%

    

6.96

%

    

11.74

%

    

7.77

%

  

04/05/01

  

The graph and table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

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. Total return includes change in share prices and, in each case, includes reinvestment of dividends and capital gain distributions. 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. To obtain the most recent month-end performance, please visit Oakmark.com.

TOP TEN EQUITY HOLDINGS4

   % of Net Assets  

Alphabet, Inc., Class C

    

3.8

    

Citigroup, Inc.

    

3.6

    

Ally Financial, Inc.

    

3.3

    

Bank of America Corp.

    

3.3

    

Capital One Financial Corp.

    

3.2

    

Netflix, Inc.

    

2.7

    

Charter Communications, Inc., Class A

    

2.6

    

TE Connectivity, Ltd.

    

2.6

    

Comcast Corp., Class A

    

2.6

    

American International Group, Inc.

    

2.5

    

FUND STATISTICS

  

Ticker*

  

OAKMX

  

Number of Equity Holdings

  

52

  

Net Assets

   $16.2 billion  

Weighted Average Market Cap

   $138.5 billion  

Median Market Cap

   $41.8 billion  

Gross Expense Ratio - Investor Class (as of 09/30/18)*

   0.89%  

Gross Expense Ratio - Investor Class (as of 09/30/19)*

   0.92%  

Net Expense Ratio - Investor Class (as of 09/30/19)*†

   0.88%  

*  This information is related to the Investor Class. Please visit Oakmark.com for information related to the Advisor, Institutional and Service Classes.

†  The net expense ratio reflects a contractual advisory fee waiver agreement through January 27, 2020.

SECTOR ALLOCATION

   % of Net Assets  

Financials

    

29.2

    

Communication Services

    

13.9

    

Consumer Discretionary

    

13.8

    

Information Technology

    

13.5

    

Industrials

    

10.1

    

Health Care

    

6.8

    

Energy

    

5.7

    

Consumer Staples

    

2.1

    

Short-Term Investments and Other

    

4.9

    

See accompanying Disclosures and Endnotes on page 87.

6 OAKMARK FUNDS


Oakmark Fund  September 30, 2019

Portfolio Manager Commentary

William C. Nygren, CFA

Portfolio Manager

oakmx@oakmark.com

Kevin Grant, CFA

Portfolio Manager

oakmx@oakmark.com

The Oakmark Fund decreased 2.1% during the third quarter, which compares to a 1.7% gain for the S&P 5001. For the fiscal year ending September 30, the Oakmark Fund decreased 5.7%, lagging behind a 4.3% gain for the S&P 500. As large shareholders of the Fund, we are never pleased with short-term underperformance, but because of it, the portfolio is now selling for an atypically large discount to our estimate of intrinsic value. We are confident that our disciplined investment process has allowed us to identify businesses with attractive risk-adjusted return potential and that the gap between stock price and intrinsic value should close over time.

Our highest contributing securities for the fiscal year were Ally Financial and Comcast and our largest individual detractors were DXC Technology and Qurate. For the past quarter, our best individual contributors were Alphabet and CVS Health and our largest detractors were Netflix and DXC Technology. Netflix's share price declined during the quarter on the heels of weaker than expected subscriber growth along with fears that rival streaming services will reduce the company's growth prospects. Our view is that the company's weaker subscriber growth was not that surprising following its largest ever subscription price increase, and we are comforted that the variance in subscriber growth was in line with historical precedents. In addition, the global media market is vast and Netflix only captures ~10% of TV viewership in the U.S. We believe there is plenty of room for Netflix and other streaming services to co-exist.

During the quarter, we initiated a new position in Humana (see below) and we eliminated positions in Baxter International and News Corp Cl A. We first bought Baxter in the fourth quarter of 2016 with the belief that new CEO Joe Almeida could increase the company's margins substantially. Since then, margins have increased from 11% to over 18%, and the share price has doubled. With this strong performance, the stock no longer sells at a meaningful discount to our estimate of intrinsic value, so we sold our holdings. In terms of News Corp, we continue to believe that the company's highly valuable businesses are not being properly recognized by the market, but we have lost confidence in the company's management team and its ability to close the value gap. We also underestimated how challenging the transition from print to digital would be for several of the company's global publications whose value growth has fallen short of our expectations. Therefore, we elected to redeploy our assets to purchase other stocks that we believe are undervalued, run by better management teams and offer stronger growth prospects.

Humana Inc. (HUM-$255.67)

Humana is a leader and near pure-play in the fastest growing sector of managed care, Medicare Advantage. Each year, more seniors choose Medicare Advantage over traditional Medicare due to the compelling combination of lower costs and expanded benefits. Humana's scale advantages and focus on senior care allow the company to make targeted investments in its members' health, resulting in fewer unnecessary hospitalizations and lower chronic care costs. Much of these savings are then reinvested in the health plan, resulting in a continuously improving customer value proposition. The company's brand also resonates well in the marketplace and has helped drive double-digit annual membership growth over the past decade—well above the rest of the industry. Further, we believe Humana has a long runway ahead as it benefits from an aging population and continued conversion of the more than 60% of seniors who are still enrolled in traditional Medicare. Yet Humana's shares are currently trading at a discount to the S&P 500 earnings multiple, which we believe doesn't give the company enough credit for its durable competitive advantages and strong secular growth outlook.

See accompanying Disclosures and Endnotes on page 87.

Oakmark.com 7


Oakmark Fund  September 30, 2019

Schedule of Investments (in thousands)

   

Shares

  

Value

  

COMMON STOCKS - 95.1%

  

FINANCIALS - 29.2%

  

DIVERSIFIED FINANCIALS - 17.7%

  

Ally Financial, Inc.

    

16,305

    

$

540,674

    

Capital One Financial Corp.

    

5,643

      

513,382

    

The Charles Schwab Corp.

    

9,400

      

393,202

    

State Street Corp.

    

6,100

      

361,059

    

The Bank of New York Mellon Corp.

    

6,920

      

312,836

    

Moody's Corp.

    

1,506

      

308,570

    

The Goldman Sachs Group, Inc.

    

1,105

      

228,989

    

S&P Global, Inc.

    

862

      

211,095

    
         

2,869,807

    

BANKS - 9.1%

  

Citigroup, Inc.

    

8,490

      

586,489

    

Bank of America Corp.

    

18,200

      

530,894

    

Wells Fargo & Co.

    

7,110

      

358,629

    
         

1,476,012

    

INSURANCE - 2.4%

  

American International Group, Inc.

    

7,155

      

398,551

    
         

4,744,370

    

COMMUNICATION SERVICES - 13.9%

  

MEDIA & ENTERTAINMENT - 13.9%

  

Alphabet, Inc., Class C (a)

    

507

      

618,345

    

Netflix, Inc. (a) (b)

    

1,624

      

434,615

    

Charter Communications, Inc., Class A (a)

    

1,040

      

428,605

    

Comcast Corp., Class A

    

9,188

      

414,213

    

Facebook, Inc., Class A (a)

    

1,973

      

351,405

    
         

2,247,183

    

CONSUMER DISCRETIONARY - 13.8%

  

AUTOMOBILES & COMPONENTS - 5.9%

  

General Motors Co.

    

9,450

      

354,186

    

Fiat Chrysler Automobiles N.V.

    

27,160

      

351,723

    

Aptiv PLC

    

2,200

      

192,324

    

Delphi Technologies PLC

    

3,733

      

50,026

    
         

948,259

    

RETAILING - 4.7%

  

Booking Holdings, Inc. (a)

    

195

      

382,709

    

eBay, Inc.

    

6,500

      

253,370

    

Qurate Retail, Inc., Class A (a)

    

12,670

      

130,695

    
         

766,774

    

CONSUMER SERVICES - 3.2%

  

MGM Resorts International

    

9,400

      

260,568

    

Hilton Worldwide Holdings, Inc.

    

2,779

      

258,762

    
         

519,330

    
         

2,234,363

    
   

Shares

  

Value

  

INFORMATION TECHNOLOGY - 13.5%

  

SOFTWARE & SERVICES - 5.8%

  

Gartner, Inc. (a)

    

1,800

    

$

257,382

    

Mastercard Inc., Class A

    

760

      

206,393

    

Visa, Inc., Class A

    

1,100

      

189,211

    

Automatic Data Processing, Inc.

    

1,090

      

175,948

    

DXC Technology Co.

    

3,900

      

115,050

    
         

943,984

    

TECHNOLOGY HARDWARE & EQUIPMENT - 4.6%

  

TE Connectivity, Ltd.

    

4,486

      

417,972

    

Apple, Inc.

    

1,437

      

321,845

    
         

739,817

    

SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.1%

  

Intel Corp.

    

6,055

      

312,014

    

Texas Instruments, Inc.

    

1,540

      

199,030

    
         

511,044

    
         

2,194,845

    

INDUSTRIALS - 10.1%

  

CAPITAL GOODS - 7.7%

  

Parker-Hannifin Corp.

    

2,114

      

381,748

    

General Electric Co.

    

41,460

      

370,653

    

Cummins, Inc.

    

1,720

      

279,792

    

Caterpillar, Inc.

    

1,750

      

221,043

    
         

1,253,236

    

TRANSPORTATION - 2.4%

  

American Airlines Group, Inc.

    

8,274

      

223,147

    

FedEx Corp.

    

1,130

      

164,494

    
         

387,641

    
         

1,640,877

    

HEALTH CARE - 6.8%

  

HEALTH CARE EQUIPMENT & SERVICES - 4.5%

  

CVS Health Corp.

    

5,894

      

371,733

    

HCA Healthcare, Inc.

    

1,494

      

179,943

    

Humana, Inc.

    

700

      

178,969

    
         

730,645

    

PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES - 2.3%

  

Regeneron Pharmaceuticals, Inc. (a)

    

1,332

      

369,440

    
         

1,100,085

    

ENERGY - 5.7%

  

Apache Corp.

    

10,640

      

272,379

    

Diamondback Energy, Inc.

    

1,800

      

161,838

    

Concho Resources, Inc.

    

2,290

      

155,491

    

EOG Resources, Inc.

    

2,000

      

148,440

    

Halliburton Co.

    

5,800

      

109,330

    

Chesapeake Energy Corp. (a)

    

59,933

      

84,505

    
         

931,983

    

See accompanying Notes to Financial Statements.

8 OAKMARK FUNDS


Oakmark Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

   

Shares

  

Value

  

COMMON STOCKS - 95.1% (continued)

  

CONSUMER STAPLES - 2.1%

  

FOOD, BEVERAGE & TOBACCO - 2.1%

  

Constellation Brands, Inc., Class A

    

1,650

    

$

342,012

    
TOTAL COMMON STOCKS - 95.1%
(COST $10,299,079)		        

15,435,718

    
   

Par Value

  

Value

  

SHORT-TERM INVESTMENTS - 4.8%

  

GOVERNMENT AND AGENCY SECURITIES - 4.5%

  
Federal National Mortgage Association,
1.71%, due 10/01/19 (c)		  

$

700,000

      

700,000

    
Federal Home Loan Bank,
1.51%, due 10/01/19 (c)		    

30,000

      

30,000

    
Total Government and Agency
Securities - 4.5%
(Cost $730,000)		        

730,000

    

REPURCHASE AGREEMENT - 0.3%

  
Fixed Income Clearing Corp. Repurchase
Agreement, 1.10% dated 09/30/19 due
10/01/19, repurchase price $42,881,
collateralized by a United States
Treasury Note, 2.250% due 03/31/21,
value plus accrued interest of $43,739
(Cost: $42,879)		    

42,879

      

42,879

    
TOTAL SHORT-TERM INVESTMENTS - 4.8%
(COST $772,879)		        

772,879

    
TOTAL INVESTMENTS - 99.9%
(COST $11,071,958)		        

16,208,597

    

Foreign Currencies (Cost $0) - 0.0% (d)

        

0

(e)

  

Other Assets In Excess of Liabilities - 0.1%

        

22,312

    

TOTAL NET ASSETS - 100.0%

      

$

16,230,909

    

(a)  Non-income producing security

(b)  All or a portion of this investment is held in connection with one or more options within the Fund.

(c)  The rate shown represents the annualized yield at the time of purchase; not a coupon rate.

(d)  Amount rounds to less than 0.1%.

(e)  Amount rounds to less than $1,000.

See accompanying Notes to Financial Statements.

Oakmark.com 9


Oakmark Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

WRITTEN OPTIONS

Description

   Exercise
Price		   Expiration
Date		   Number of
Contracts		   Notional
Amount		   Market
Value		   Premiums
(Received)
by Fund		   Unrealized
Gain/(Loss)		  

PUTS

  

Netflix, Inc.

  

$

250.00

    

12/20/19

    

(3,248

)

  

$

(86,923

)

  

$

(4,239

)

  

$

(5,768

)

  

$

1,529

    
               

$

(86,923

)

  

$

(4,239

)

  

$

(5,768

)

  

$

1,529

    

See accompanying Notes to Financial Statements.

10 OAKMARK FUNDS


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Oakmark.com 11


Oakmark Select Fund  September 30, 2019

Summary Information

VALUE OF A $10,000 INVESTMENT

Since Inception - 11/01/96 (Unaudited)

PERFORMANCE

      

Average Annual Total Returns (as of 09/30/2019)

  

 
(Unaudited)   Total Return
Last 3 Months		  

1-year

  

3-year

  

5-year

  

10-year

   Since
Inception		   Inception
Date		  

Oakmark Select Fund (Investor Class)

    

-3.42

%

    

-10.34

%

    

3.18

%

    

2.74

%

    

10.19

%

    

11.17

%

  

11/01/96

  

S&P 500 Index

    

1.70

%

    

4.25

%

    

13.39

%

    

10.84

%

    

13.24

%

    

8.53

%

  

 

Lipper Multi-Cap Value Fund Index5

    

0.37

%

    

-0.42

%

    

7.58

%

    

6.04

%

    

9.86

%

    

7.34

%

  

 

Oakmark Select Fund (Advisor Class)

    

-3.40

%

    

-10.24

%

    

N/A

      

N/A

      

N/A

      

0.92

%

  

11/30/16

  

Oakmark Select Fund (Institutional Class)

    

-3.37

%

    

-10.18

%

    

N/A

      

N/A

      

N/A

      

0.96

%

  

11/30/16

  

Oakmark Select Fund (Service Class)

    

-3.42

%

    

-10.55

%

    

2.93

%

    

2.45

%

    

9.86

%

    

7.97

%

  

12/31/99

  

The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

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. Total return includes change in share prices and, in each case, includes reinvestment of dividends and capital gain distributions. 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. To obtain the most recent month-end performance, please visit Oakmark.com.

TOP TEN EQUITY HOLDINGS4

   % of Net Assets  

Alphabet, Inc., Class C

    

10.7

    

CBRE Group, Inc., Class A

    

8.9

    

Ally Financial, Inc.

    

7.8

    

Citigroup, Inc.

    

7.3

    

Bank of America Corp.

    

5.0

    

American International Group, Inc.

    

5.0

    

Fiat Chrysler Automobiles N.V.

    

4.7

    

Charter Communications, Inc., Class A

    

4.7

    

TE Connectivity, Ltd.

    

4.7

    

Capital One Financial Corp.

    

4.7

    

FUND STATISTICS

  

Ticker*

  

OAKLX

  

Number of Equity Holdings

  

21

  

Net Assets

   $4.5 billion  

Weighted Average Market Cap

   $150.1 billion  

Median Market Cap

   $30.5 billion  

Gross Expense Ratio - Investor Class (as of 09/30/18)*

   1.04%  

Gross Expense Ratio - Investor Class (as of 09/30/19)*

   1.08%  

Net Expense Ratio - Investor Class (as of 09/30/19)*†

   1.00%  

*  This information is related to the Investor Class. Please visit Oakmark.com for information related to the Advisor, Institutional and Service Classes.

†  The net expense ratio reflects a contractual advisory fee waiver agreement through January 27, 2020.

SECTOR ALLOCATION

   % of Net Assets  

Financials

    

29.8

    

Communication Services

    

18.8

    

Consumer Discretionary

    

15.6

    

Real Estate

    

8.9

    

Industrials

    

7.1

    

Information Technology

    

5.7

    

Energy

    

5.6

    

Health Care

    

3.9

    

Short-Term Investments and Other

    

4.6

    

See accompanying Disclosures and Endnotes on page 87.

12 OAKMARK FUNDS


Oakmark Select Fund  September 30, 2019

Portfolio Manager Commentary

William C. Nygren, CFA

Portfolio Manager

oaklx@oakmark.com

Anthony P. Coniaris, CFA

Portfolio Manager

oaklx@oakmark.com

Win Murray

Portfolio Manager

oaklx@oakmark.com

The Oakmark Select Fund was down 3.4% for the quarter, trailing the S&P 500 Index's1 1.7% return. For the fiscal year ending September 30, 2019, the Oakmark Select Fund decreased by 10.3%, compared to a 4.3% gain for the S&P 500 Index. As shareholders of the Fund and as stewards of your capital, we remain frustrated by how much our portfolio and the value style have recently underperformed the S&P. However, we are encouraged that the Fund owns a portfolio of securities that trades at a substantial discount to our estimate of its intrinsic value. We expect that when "value" starts to matter more to market participants, the Oakmark Select Fund should strongly benefit.

We saw evidence that gave us confidence in this belief as a result of the market's performance from August 28 to September 16. During this period, market leadership abruptly shifted from "momentum" to "value." The Russell 1000 Value6 index increased 6.9%, while the S&P 500 index rose by just 4.6% over the same period. The Oakmark Select Fund, meanwhile, rose by 9.5% during those same 14 trading days.

We've written many times over the past few years about how traditional GAAP-based value metrics, such as P/E7 and price-to-book8 ratios, fail to properly capture the underlying value of companies that have substantial R&D budgets, high cash balances, and non-earning assets. Some investors have questioned whether we at Oakmark have fallen prey to "style drift" and have moved away from "classic" value investing. To the contrary, as the Fund's performance during this quarter's brief value renaissance demonstrates, we continue to use the same investment process and philosophy that have generated strong Fund performance over longer time frames. We buy businesses at large discounts to what we believe they are worth, regardless of whether GAAP metrics properly present a company's true value.

The most significant contributors to performance during the quarter were Alphabet (+13%) and Ally Financial (+8%). For the full fiscal year, the most significant performers were Ally (+28%) and CBRE (+20%). The most significant detractors during the quarter were Concho Resources (–31%) and Netflix (–27%). For the full fiscal year, the largest detractors were Weatherford (–98%) and Apache (–52%). With the exception of Weatherford, which was sold out of the portfolio last quarter, all of these companies remain holdings in the Fund, and all continue to sell at a significant discount to our estimates of their intrinsic value.

Thank you, our fellow shareholders, for your continued investment in our Fund.

See accompanying Disclosures and Endnotes on page 87.

Oakmark.com 13


Oakmark Select Fund  September 30, 2019

Schedule of Investments (in thousands)

   

Shares

  

Value

  

COMMON STOCKS - 95.4%

  

FINANCIALS - 29.8%

  

DIVERSIFIED FINANCIALS - 12.5%

  

Ally Financial, Inc.

    

10,530

    

$

349,175

    

Capital One Financial Corp.

    

2,285

      

207,880

    
         

557,055

    

BANKS - 12.3%

  

Citigroup, Inc.

    

4,712

      

325,505

    

Bank of America Corp.

    

7,701

      

224,626

    
         

550,131

    

INSURANCE - 5.0%

  

American International Group, Inc.

    

3,995

      

222,533

    
         

1,329,719

    

COMMUNICATION SERVICES - 18.8%

  

MEDIA & ENTERTAINMENT - 18.8%

  

Alphabet, Inc., Class C (a)

    

391

      

476,202

    

Charter Communications, Inc., Class A (a)

    

509

      

209,769

    

Netflix, Inc. (a) (b)

    

576

      

154,203

    
         

840,174

    

CONSUMER DISCRETIONARY - 15.6%

  

AUTOMOBILES & COMPONENTS - 7.9%

  

Fiat Chrysler Automobiles N.V.

    

16,334

      

211,527

    

Lear Corp.

    

1,200

      

141,480

    
         

353,007

    

CONSUMER SERVICES - 5.7%

  

MGM Resorts International

    

5,147

      

142,675

    

Hilton Worldwide Holdings, Inc.

    

1,166

      

108,610

    
         

251,285

    

RETAILING - 2.0%

  

Qurate Retail, Inc., Class A (a)

    

8,689

      

89,629

    
         

693,921

    

REAL ESTATE - 8.9%

  

CBRE Group, Inc., Class A (a)

    

7,448

      

394,792

    

INDUSTRIALS - 7.1%

  

CAPITAL GOODS - 3.9%

  

General Electric Co.

    

19,640

      

175,581

    

TRANSPORTATION - 3.2%

  

American Airlines Group, Inc.

    

5,239

      

141,304

    
         

316,885

    

INFORMATION TECHNOLOGY - 5.7%

  

TECHNOLOGY HARDWARE & EQUIPMENT - 4.7%

  

TE Connectivity, Ltd.

    

2,248

      

209,463

    

SOFTWARE & SERVICES - 1.0%

  

Mastercard Inc., Class A

    

165

      

44,809

    
         

254,272

    
   

Shares

  

Value

  

ENERGY - 5.6%

  

Apache Corp.

    

5,300

    

$

135,680

    

Concho Resources, Inc.

    

1,710

      

116,109

    
         

251,789

    

HEALTH CARE - 3.9%

  

PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES - 3.9%

  

Regeneron Pharmaceuticals, Inc. (a)

    

620

      

171,988

    
TOTAL COMMON STOCKS - 95.4%
(COST $2,776,715)		        

4,253,540

    
   

Par Value

  

Value

  

SHORT-TERM INVESTMENTS - 4.5%

  

GOVERNMENT AND AGENCY SECURITIES - 3.8%

  
Federal National Mortgage Association,
1.71%, due 10/01/19 (c)
(Cost $170,000)		  

$

170,000

      

170,000

    
Total Government and Agency
Securities (Cost $170,000)		        

170,000

    

REPURCHASE AGREEMENT - 0.7%

  
Fixed Income Clearing Corp. Repurchase
Agreement, 1.10% dated 09/30/19
due 10/01/19, repurchase price $32,534,
collateralized by United States
Treasury Notes, 2.500% - 2.750%
due 03/31/23 - 04/30/23, aggregate
value plus accrued interest of $33,188
(Cost: $32,534)		    

32,534

      

32,534

    
TOTAL SHORT-TERM INVESTMENTS - 4.5%
(COST $202,534)		        

202,534

    
TOTAL INVESTMENTS - 99.9%
(COST $2,979,249)		        

4,456,074

    

Other Assets In Excess of Liabilities - 0.1%

        

4,737

    

TOTAL NET ASSETS - 100.0%

      

$

4,460,811

    

(a)  Non-income producing security

(b)  All or a portion of this investment is held in connection with one or more options within the Fund.

(c)  The rate shown represents the annualized yield at the time of purchase; not a coupon rate.

See accompanying Notes to Financial Statements.

14 OAKMARK FUNDS


Oakmark Select Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

WRITTEN OPTIONS

Description

   Exercise
Price		   Expiration
Date		   Number of
Contracts		   Notional
Amount		   Market
Value		   Premiums
(Received)
by Fund		   Unrealized
Gain/(Loss)		  

PUTS

  

Netflix, Inc.

  

$

250.00

    

12/20/19

    

(1,152

)

  

$

(30,830

)

  

$

(1,503

)

  

$

(2,046

)

  

$

543

    
               

$

(30,830

)

  

$

(1,503

)

  

$

(2,046

)

  

$

543

    

SCHEDULE OF TRANSACTIONS WITH AFFILIATED ISSUERS

Purchase and sale transactions and dividend and interest income earned during the period on these securities are set forth below (in thousands). The industry for the below affiliate can be found in the Schedule of Investments.

Affiliates   Shares
Held		   Purchases
(Cost)		   Sales
(Proceeds)		   Realized
Gain/(Loss)		   Change in
Unrealized		   Dividend
Income		   Value
September 30,
2018		   Value
September 30,
2019		   Percent of
Net Assets		  

Adient PLC (a)

    

0

    

$

0

    

$

92,177

    

$

(140,972

)

  

$

20,875

    

$

1,485

    

$

212,274

    

$

0

      

0

%

  
Weatherford
International PLC (a)		    

0

      

36,850

      

41,183

      

(205,735

)

    

33,809

      

0

      

182,601

      

0

      

0

%

  

TOTAL

    

0

    

$

36,850

    

$

133,360

    

$

(346,707

)

  

$

54,684

    

$

1,485

    

$

394,875

    

$

0

      

0

%

  

(a)  Position in company liquidated during year ended September 30, 2019.

See accompanying Notes to Financial Statements.

Oakmark.com 15


Oakmark Equity and Income Fund  September 30, 2019

Summary Information

VALUE OF A $10,000 INVESTMENT

Since Inception - 11/01/95 (Unaudited)

PERFORMANCE

      

Average Annual Total Returns (as of 09/30/19)

  

 
(Unaudited)   Total Return
Last 3 Months		  

1-year

  

3-year

  

5-year

  

10-year

   Since
Inception		   Inception
Date		  

Oakmark Equity and Income Fund (Investor Class)

    

0.17

%

    

2.29

%

    

7.48

%

    

5.37

%

    

7.65

%

    

9.74

%

  

11/01/95

  

Lipper Balanced Fund Index

    

1.28

%

    

4.94

%

    

7.56

%

    

6.18

%

    

7.97

%

    

6.86

%

      

S&P 500 Index

    

1.70

%

    

4.25

%

    

13.39

%

    

10.84

%

    

13.24

%

    

9.10

%

      

Barclays U.S. Govt./Credit Index

    

2.64

%

    

11.32

%

    

3.16

%

    

3.61

%

    

3.94

%

    

5.24

%

      

Oakmark Equity and Income Fund (Advisor Class)

    

0.17

%

    

2.41

%

    

N/A

      

N/A

      

N/A

      

6.81

%

  

11/30/16

  

Oakmark Equity and Income Fund (Institutional Class)

    

0.20

%

    

2.49

%

    

N/A

      

N/A

      

N/A

      

6.86

%

  

11/30/16

  

Oakmark Equity and Income Fund (Service Class)

    

0.13

%

    

2.05

%

    

7.19

%

    

5.07

%

    

7.32

%

    

8.11

%

  

07/12/00

  

The graph and table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

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. Total return includes change in share prices and, in each case, includes reinvestment of dividends and capital gain distributions. 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. To obtain the most recent month-end performance, please visit Oakmark.com.

TOP TEN EQUITY HOLDINGS4

   % of Net Assets  

Bank of America Corp.

    

5.0

    

General Motors Co.

    

5.0

    

TE Connectivity, Ltd.

    

4.4

    

Mastercard Inc., Class A

    

3.3

    

Nestlé SA

    

2.9

    

Alphabet, Inc., Class C

    

2.8

    

CVS Health Corp.

    

2.6

    

Citigroup, Inc.

    

2.5

    

Philip Morris International, Inc.

    

2.3

    

Charter Communications, Inc., Class A

    

2.0

    

FUND STATISTICS

  

Ticker*

  

OAKBX

  

Number of Equity Holdings

  

43

  

Net Assets

   $11.8 billion  

Weighted Average Market Cap

   $138.0 billion  

Median Market Cap

   $29.0 billion  

Gross Expense Ratio - Investor Class (as of 09/30/18)*

   0.88%  

Gross Expense Ratio - Investor Class (as of 09/30/19)*

   0.91%  

Net Expense Ratio - Investor Class (as of 09/30/19)*†

   0.81%  

*  This information is related to the Investor Class. Please visit Oakmark.com for information related to the Advisor, Institutional and Service Classes.

†  The net expense ratio reflects a contractual advisory fee waiver agreement through January 27, 2020.

SECTOR ALLOCATION

  

% of Net Assets

  

Equity Investments

  

Financials

    

11.6

    

Consumer Discretionary

    

11.2

    

Information Technology

    

9.3

    

Consumer Staples

    

7.4

    

Health Care

    

6.4

    

Communication Services

    

5.6

    

Industrials

    

4.3

    

Energy

    

2.2

    

Real Estate

    

1.4

    

Materials

    

0.9

    

Total Equity Investments

    

60.3

    

Preferred Stocks

    

0.1

    

Fixed Income Investments

  

Corporate Bonds

    

18.9

    

Government and Agency Securities

    

12.1

    

Convertible Bonds

    

0.1

    

Total Fixed Income Investments

    

31.1

    

Short-Term Investments and Other

    

8.5

    

See accompanying Disclosures and Endnotes on page 87.

16 OAKMARK FUNDS


Oakmark Equity and Income Fund  September 30, 2019

Portfolio Manager Commentary

Clyde S. McGregor, CFA

Portfolio Manager

oakbx@oakmark.com

M. Colin Hudson, CFA

Portfolio Manager

oakbx@oakmark.com

Edward J. Wojciechowski, CFA

Portfolio Manager

oakbx@oakmark.com

Plumbing Problems?

As part of our management process, we maintain a certain level of short-term reserves—or what we call "frictional cash"—to handle security purchases and/or investor redemptions. On each business day, our fund accounting group informs our team of fixed income traders how much frictional cash is available for very short-term investments. Our traders scan the short-term investment market to identify attractive opportunities and then transact to ensure that all of the Fund's cash is working. We typically use this frictional cash to invest in top-rated commercial paper issuers, overnight discount notes with federal agencies and repurchase agreements with our custodial banks.

These overnight repurchase agreements—referred to as the "repo" market for short—are central to the financial industry's daily cash management. Banks, hedge funds and other institutions that carry inventories of fixed income investments often fund their business activities via short-term loans, and they use their inventory as collateral. Money market funds are major investors in these short-term loans and other long-only investors, like the Equity and Income Fund, participate as well.

Usually, the rate of interest paid for repurchase agreement loans is similar to the target rate that the Federal Reserve sets for federal funds. On the morning of September 16, however, the repo market interest rate suddenly surged higher to more than twice the level of the previous day. Although the number of trades transacted at abnormal levels was not large, the occurrence unnerved some investors because the last time this happened was in 2007 before the global financial crisis became evident. As Bloomberg financial columnist John Authers wrote, "It's a rule of thumb that if you're even talking about such geeky fare as...overnight repurchase agreements, then something has already gone wrong...It doesn't necessarily follow, however, that we're doomed to stage a full-volume repeat of the financial disasters of 2007-2008. The causes are different."11

We agree that this year's disturbance was more technical than it was a harbinger of serious market distress. In 2007, the problem with the repo market occurred because financial institutions began to distrust the safety of the collateral being offered. Much of that collateral was in the form of mortgage-backed securities that were ostensibly AAA but, in fact, did not deserve that rating. In 2019, we are unaware of collateral safety issues. As well, the banking industry itself has significantly increased its capital ratios over the past 12 years. Instead, the problem seems to have arisen due to a confluence of normal market events that, when taken together, removed reserves from the market. These include massive quarterly corporate tax payments, settlement of the sale of a large new issue Treasury note and the Fed's gradual reduction in the size of its own balance sheet. As these factors

persisted, the Fed Funds rate itself hit—and then even exceeded—the Fed's target rate. That definitely caught the Fed's attention because it did not want to be seen to be losing control of short-term rates. The Fed subsequently responded by injecting reserves into the market. Although this response might have been a little late, it was effective in bringing short-term interest rates back into the desired range.

The repo market is sometimes referred to as part of the plumbing inside the financial system. In 2007, the fact that the entire system had become clogged with bad securities became evident in that market first. Although we believe today's conditions are very different (and better), we remain vigilant. All three of your Fund's managers have mine experience—in fact, one of us is a degreed geologist—and we know why miners used to keep canaries in coal mines.

Quarter and Fiscal Year Review

The Equity and Income Fund returned 0.2% in the quarter, which compares to 1.3% for the Lipper Balanced Fund Index9, the Fund's performance benchmark. For the nine months of the calendar year, the Fund returned 12.7%, compared to 13.6% for the Lipper. And, for the 12 months ended September 30 (the Fund's fiscal year), Equity and Income earned 2.3%, which compares to 4.9% for the Lipper Balanced Fund Index. The annualized compound rate of return since inception in 1995 is 9.7%, while the corresponding return to the Lipper Index is 6.9%.

CVS Health, Alphabet, Nestlé, Ally Financial and Mastercard provided the largest contribution to portfolio return in the quarter. The most significant detractors were Lear, BorgWarner, UnitedHealth Group, American Airlines and Diamondback Energy. Lear and BorgWarner are both automobile parts suppliers. Although the U.S. auto market remains solid, in our opinion, China has experienced declining sales and tariffs, threats of more tariffs, and recession angst have depressed automotive equities. Contributors for the calendar year to date were Mastercard, Nestlé, Bank of America, TE Connectivity and General Motors. Foot Locker, Regeneron, National Oilwell Varco, UnitedHealth Group and Glencore were the leading detractors for the nine months. Finally, for the Fund's fiscal year, the largest contributors were Nestlé, General Motors, Mastercard, Ally Financial and Charter Communications. The stocks that detracted most were National Oilwell Varco, CVS Health, UnitedHealth Group, Glencore and Regeneron. The appearance of health care names on the various detractor lists is somewhat unusual and most likely reflects the political environment.

We maintained a steady asset allocation for the Fund. During the quarter, interest rates suddenly began to move higher, which gave us hope for better opportunities in fixed income, but this

See accompanying Disclosures and Endnotes on page 87.

Oakmark.com 17


Oakmark Equity and Income Fund  September 30, 2019

Portfolio Manager Commentary (continued)

proved to be short lived. Since rates have returned to unattractive levels, we have allowed the fixed income duration to attrite. We recognize that with negative interest rates in much of the developed world, it is difficult for U.S. rates to increase meaningfully, but just because U.S. bonds are priced better than foreign bonds does not make them intrinsically attractive. We will continue to maintain a defensive fixed income posture until bonds become more competitive with equities for portfolio space.

Transactions

During the quarter, the Fund added two new positions, Agilent Technologies and Southwest Airlines. Agilent Technologies sells analytical instruments that are primarily used by research scientists and quality control labs. Agilent's portfolio has transformed dramatically since being spun off from Hewlett Packard in 1999 as the company pared back cyclical business lines in semiconductors, electronic measurement and communications. Today, we are left with a pure-play that is focused on life science and diagnostics. The majority of sales now come from recurring sources, such as consumables, software and service, which are more profitable and less volatile than capital equipment orders. Since slimming down, Agilent's management has delivered consistent share gains, robust organic growth and solid margin expansion. We believe the market doesn't fully appreciate the portfolio transformation that has taken place and still perceives the business as cyclical. Agilent trades at a significant discount to its closest peers and historical private market transactions. When fears about slowing industrial production and exposure to China drove Agilent's stock price down significantly, we were able to invest in this above-average business at a reasonable price.

Southwest is the largest and most profitable airline in the U.S. A member of Fortune's list of the "World's Most Admired Companies" every year for a quarter of a century, Southwest has 23% domestic market share and a track record of profitability that spans 46 consecutive years. The company generates above-average operating profit margins, enabled by its low-cost model compared to the network carriers. And its superior brand loyalty among customers stems from its reputation for good service, efficient operations and no nickel-and-diming on fees. The company maintains a strong balance sheet and returns its free cash flow to shareholders through significant share repurchases and dividends. We believe that the consolidation of the airline industry over the past two decades should lead to meaningfully better returns for the industry. The recent turbulence caused by the grounding of the Boeing 737 MAX aircraft, among other short-term issues, enabled us to buy Southwest shares at only a mid-single-digit multiple of normal operating income and at a large discount to our estimate of intrinsic value.

The Fund did not exit any holdings during the quarter.

We thank our shareholders for entrusting their assets to the Fund. We welcome your questions and comments.

See accompanying Disclosures and Endnotes on page 87.

18 OAKMARK FUNDS


Oakmark Equity and Income Fund  September 30, 2019

Schedule of Investments (in thousands)

   

Shares

  

Value

  

COMMON STOCKS - 60.3%

  

FINANCIALS - 11.6%

  

BANKS - 7.5%

  

Bank of America Corp.

    

20,209

    

$

589,482

    

Citigroup, Inc.

    

4,360

      

301,168

    
         

890,650

    

DIVERSIFIED FINANCIALS - 3.1%

  

Ally Financial, Inc.

    

7,050

      

233,781

    

State Street Corp.

    

1,388

      

82,150

    

TD Ameritrade Holding Corp.

    

1,201

      

56,082

    
         

372,013

    

INSURANCE - 1.0%

  

American International Group, Inc.

    

2,077

      

115,670

    
         

1,378,333

    

CONSUMER DISCRETIONARY - 11.2%

  

AUTOMOBILES & COMPONENTS - 8.1%

  

General Motors Co.

    

15,637

      

586,090

    

BorgWarner, Inc.

    

5,652

      

207,301

    

Lear Corp.

    

1,433

      

168,896

    
         

962,287

    

RETAILING - 2.0%

  

Foot Locker, Inc.

    

3,520

      

151,906

    

Booking Holdings, Inc. (a)

    

41

      

79,564

    
         

231,470

    

CONSUMER SERVICES - 0.6%

  

MGM Resorts International

    

2,351

      

65,176

    

CONSUMER DURABLES & APPAREL - 0.5%

  

Carter's, Inc.

    

664

      

60,591

    
         

1,319,524

    

INFORMATION TECHNOLOGY - 9.3%

  

SOFTWARE & SERVICES - 4.9%

  

Mastercard Inc., Class A

    

1,455

      

395,243

    

Oracle Corp.

    

2,236

      

123,025

    

CoreLogic, Inc. (a)

    

1,293

      

59,827

    
         

578,095

    

TECHNOLOGY HARDWARE & EQUIPMENT - 4.4%

  

TE Connectivity, Ltd.

    

5,618

      

523,485

    
         

1,101,580

    

CONSUMER STAPLES - 7.4%

  

FOOD, BEVERAGE & TOBACCO - 7.4%

  

Nestlé SA (b)

    

3,187

      

345,481

    

Philip Morris International, Inc.

    

3,642

      

276,560

    

Diageo PLC (b)

    

1,319

      

215,683

    

Constellation Brands, Inc., Class A

    

174

      

35,984

    
         

873,708

    
   

Shares

  

Value

  

HEALTH CARE - 6.4%

  

HEALTH CARE EQUIPMENT & SERVICES - 5.2%

  

CVS Health Corp.

    

4,911

    

$

309,759

    

UnitedHealth Group, Inc.

    

736

      

159,847

    

HCA Healthcare, Inc.

    

736

      

88,605

    

LivaNova PLC (a)

    

757

      

55,895

    
         

614,106

    

PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES - 1.2%

  

Agilent Technologies, Inc.

    

998

      

76,454

    

Regeneron Pharmaceuticals, Inc. (a)

    

219

      

60,750

    
         

137,204

    
         

751,310

    

COMMUNICATION SERVICES - 5.6%

  

MEDIA & ENTERTAINMENT - 5.6%

  

Alphabet, Inc., Class C (a)

    

275

      

334,615

    

Charter Communications, Inc., Class A (a)

    

577

      

237,670

    

Comcast Corp., Class A

    

2,120

      

95,570

    
         

667,855

    

INDUSTRIALS - 4.3%

  

CAPITAL GOODS - 3.4%

  

Arconic, Inc.

    

5,364

      

139,470

    

Johnson Controls International plc

    

2,519

      

110,537

    

Carlisle Cos., Inc.

    

718

      

104,527

    

WESCO International, Inc. (a)

    

890

      

42,497

    
         

397,031

    

TRANSPORTATION - 0.9%

  

American Airlines Group, Inc.

    

2,977

      

80,295

    

Southwest Airlines Co.

    

548

      

29,587

    
         

109,882

    
         

506,913

    

ENERGY - 2.2%

  

Diamondback Energy, Inc.

    

1,092

      

98,200

    

National Oilwell Varco, Inc.

    

3,125

      

66,247

    

Apergy Corp. (a)

    

2,398

      

64,862

    

PDC Energy, Inc. (a)

    

1,082

      

30,028

    
         

259,337

    

REAL ESTATE - 1.4%

  

The Howard Hughes Corp. (a)

    

735

      

95,275

    

Gaming and Leisure Properties, Inc. REIT

    

1,833

      

70,079

    
         

165,354

    

MATERIALS - 0.9%

  

Glencore PLC

    

35,440

      

106,651

    
TOTAL COMMON STOCKS - 60.3%
(COST $4,172,467)		        

7,130,565

    

See accompanying Notes to Financial Statements.

Oakmark.com 19


Oakmark Equity and Income Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

   

Shares

  

Value

  

PREFERRED STOCKS - 0.1%

  

FINANCIALS - 0.1%

  
GMAC Capital Trust I (c), 7.94%
(3 mo. USD LIBOR + 5.785%)		    

498

    

$

13,039

    
TOTAL PREFERRED STOCKS - 0.1%
(COST $13,007)		        

13,039

    
   

Par Value

  

Value

  

FIXED INCOME - 31.1%

  

CORPORATE BONDS - 18.9%

  

FINANCIALS - 4.7%

  
Ally Financial, Inc.
3.75%, due 11/18/19		  

$

23,340

      

23,361

    

3.875%, due 05/21/24

    

7,950

      

8,227

    
American Express Credit Corp.
2.60%, due 09/14/20		    

2,945

      

2,960

    
American International Group, Inc.
3.30%, due 03/01/21		    

14,665

      

14,891

    
Aon Corp.
5.00%, due 09/30/20		    

14,745

      

15,162

    
Bank of America Corp.
2.151%, due 11/09/20		    

6,970

      

6,971

    

4.45%, due 03/03/26

    

5,000

      

5,449

    
BNP Paribas SA, 144A
7.625% (USD 5 Year Swap
rate + 6.314%) (c) (d) (e)		    

5,000

      

5,269

    
Citigroup, Inc.
3.352%(3 mo. USD LIBOR + 0.897%),
due 04/24/25 (c)		    

22,860

      

23,685

    

3.40%, due 05/01/26

    

15,000

      

15,668

    

4.05%, due 07/30/22

    

13,338

      

13,969

    
CNO Financial Group, Inc.
5.25%, due 05/30/25		    

5,895

      

6,336

    
Credit Suisse Group AG, 144A
7.50% (USD 5 Year Swap
rate + 4.598%) (c) (d) (e)		    

30,000

      

33,150

    
6.25% (USD 5 Year Swap
rate + 3.455%) (c) (d) (e)		    

7,000

      

7,402

    
Credit Suisse Group Funding Guernsey, Ltd.
3.125%, due 12/10/20		    

25,000

      

25,234

    

3.80%, due 06/09/23

    

14,750

      

15,405

    
E*TRADE Financial Corp.
2.95%, due 08/24/22		    

11,965

      

12,157

    

3.80%, due 08/24/27

    

4,975

      

5,190

    
JPMorgan Chase & Co.
2.972%, due 01/15/23		    

29,765

      

30,303

    
3.514%(3 mo. USD LIBOR + 0.610%),
due 06/18/22 (c)		    

24,870

      

25,431

    
3.513%(3 mo. USD LIBOR + 1.230%),
due 10/24/23 (c)		    

19,910

      

20,226

    
Moody's Corp.
4.50%, due 09/01/22		    

13,040

      

13,845

    

2.625%, due 01/15/23

    

12,201

      

12,348

    

5.50%, due 09/01/20

    

3,780

      

3,891

    
   

Par Value

  

Value

  
MSCI, Inc., 144A
5.25%, due 11/15/24 (d)		  

$

24,830

    

$

25,637

    

5.375%, due 05/15/27 (d)

    

6,965

      

7,435

    

4.75%, due 08/01/26 (d)

    

5,925

      

6,206

    

5.75%, due 08/15/25 (d)

    

2,950

      

3,094

    
Principal Life Global Funding II, 144A
2.15%, due 01/10/20 (d)		    

19,910

      

19,910

    

2.375%, due 11/21/21 (d)

    

6,970

      

6,991

    
Reinsurance Group of America, Inc.
3.95%, due 09/15/26		    

4,905

      

5,209

    
S&P Global, Inc.
4.00%, due 06/15/25		    

17,150

      

18,687

    

2.95%, due 01/22/27

    

9,810

      

10,222

    

4.40%, due 02/15/26

    

1,970

      

2,200

    

3.30%, due 08/14/20

    

1,970

      

1,989

    
The Charles Schwab Corp.
3.25%, due 05/21/21		    

19,895

      

20,305

    
The Goldman Sachs Group, Inc.
2.35%, due 11/15/21		    

14,616

      

14,631

    

3.20%, due 02/23/23

    

7,000

      

7,187

    

2.30%, due 12/13/19

    

6,970

      

6,971

    
4.006%(3 mo. USD LIBOR + 1.750%),
due 10/28/27 (c)		    

2,975

      

3,067

    

2.625%, due 04/25/21

    

2,000

      

2,012

    

2.875%, due 02/25/21

    

1,000

      

1,009

    

2.55%, due 10/23/19

    

980

      

980

    
Wells Fargo & Co.
3.069%, due 01/24/23		    

14,930

      

15,204

    
3.486%(3 mo. USD LIBOR + 1.230%),
due 10/31/23 (c)		    

8,603

      

8,733

    
Wells Fargo Bank NA
3.625%, due 10/22/21		    

10,000

      

10,290

    

2.15%, due 12/06/19

    

9,900

      

9,899

    
         

554,398

    

CONSUMER DISCRETIONARY - 4.0%

  
Adient US LLC, 144A
7.00%, due 05/15/26 (d)		    

15,965

      

16,683

    
Amazon.com, Inc.
3.15%, due 08/22/27		    

9,950

      

10,570

    
Booking Holdings, Inc.
3.60%, due 06/01/26		    

14,730

      

15,749

    

3.55%, due 03/15/28

    

9,950

      

10,666

    

2.75%, due 03/15/23

    

6,965

      

7,130

    
BorgWarner, Inc.
4.625%, due 09/15/20		    

10,810

      

11,063

    
Boyd Gaming Corp.
6.00%, due 08/15/26		    

4,975

      

5,248

    
Caesars Resort Collection LLC / CRC
Finco, Inc., 144A
5.25%, due 10/15/25 (d)		    

25,870

      

26,449

    
CCO Holdings LLC / CCO Holdings
Capital Corp., 144A
5.125%, due 05/01/27 (d)		    

250

      

261

    
Charter Communications Operating
LLC / Charter Communications
Operating Capital
3.579%, due 07/23/20		    

29,148

      

29,409

    

4.20%, due 03/15/28

    

9,950

      

10,464

    

4.50%, due 02/01/24

    

2,985

      

3,207

    

See accompanying Notes to Financial Statements.

20 OAKMARK FUNDS


Oakmark Equity and Income Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

   

Par Value

  

Value

  

FIXED INCOME - 31.1% (continued)

  

CORPORATE BONDS - 18.9% (continued)

  
Delphi Technologies PLC, 144A
5.00%, due 10/01/25 (d)		  

$

20,826

    

$

18,431

    
Dollar Tree, Inc.
3.003% (3 mo. USD LIBOR + 0.700%),
due 04/17/20 (c)		    

6,965

      

6,966

    
Expedia Group, Inc.
5.00%, due 02/15/26		    

28,360

      

31,859

    
Expedia Group, Inc., 144A
3.25%, due 02/15/30 (d)		    

6,955

      

6,935

    
Foot Locker, Inc.
8.50%, due 01/15/22		    

4,340

      

4,774

    
General Motors Co.
4.875%, due 10/02/23		    

41,400

      

44,410

    
Hyatt Hotels Corp.
4.375%, due 09/15/28		    

2,460

      

2,684

    
International Game Technology PLC, 144A
6.50%, due 02/15/25 (d)		    

19,600

      

21,757

    

6.25%, due 02/15/22 (d)

    

14,800

      

15,618

    

6.25%, due 01/15/27 (d)

    

200

      

222

    
KFC Holding Co/Pizza Hut Holdings
LLC/Taco Bell of America LLC, 144A
5.25%, due 06/01/26 (d)		    

1,000

      

1,059

    

5.00%, due 06/01/24 (d)

    

1,000

      

1,038

    
Lear Corp.
5.25%, due 01/15/25		    

11,060

      

11,424

    

4.25%, due 05/15/29

    

7,955

      

8,170

    
Lithia Motors, Inc., 144A
5.25%, due 08/01/25 (d)		    

1,990

      

2,075

    
Marriott International, Inc.
4.00%, due 04/15/28		    

9,761

      

10,444

    

3.60%, due 04/15/24

    

6,960

      

7,303

    
Penn National Gaming, Inc., 144A
5.625%, due 01/15/27 (d)		    

9,950

      

10,248

    
Penske Automotive Group, Inc.
5.50%, due 05/15/26		    

11,343

      

11,863

    

5.375%, due 12/01/24

    

3,580

      

3,683

    
Sands China, Ltd.
5.40%, due 08/08/28		    

5,000

      

5,631

    

5.125%, due 08/08/25

    

3,000

      

3,294

    

4.60%, due 08/08/23

    

2,000

      

2,117

    
Scientific Games International, Inc., 144A
5.00%, due 10/15/25 (d)		    

19,910

      

20,543

    
Starbucks Corp.
3.80%, due 08/15/25		    

9,950

      

10,767

    

4.00%, due 11/15/28

    

2,985

      

3,321

    
Station Casinos LLC, 144A
5.00%, due 10/01/25 (d)		    

1,990

      

2,019

    
Tapestry, Inc.
3.00%, due 07/15/22		    

12,145

      

12,258

    

4.125%, due 07/15/27

    

4,975

      

5,073

    
Tempur Sealy International, Inc.
5.50%, due 06/15/26		    

3,125

      

3,258

    
The Gap, Inc.
5.95%, due 04/12/21		    

1,965

      

2,038

    
The William Carter Co., 144A
5.625%, due 03/15/27 (d)		    

1,750

      

1,873

    
Under Armour, Inc.
3.25%, due 06/15/26		    

12,565

      

12,118

    
   

Par Value

  

Value

  
Wolverine World Wide, Inc., 144A
5.00%, due 09/01/26 (d)		  

$

12,140

    

$

12,201

    
Yum! Brands, Inc.
3.875%, due 11/01/23		    

6,329

      

6,566

    
         

470,939

    

COMMUNICATION SERVICES - 2.1%

  
Comcast Corp.
3.45%, due 10/01/21		    

9,950

      

10,247

    

3.30%, due 10/01/20

    

9,950

      

10,085

    

3.95%, due 10/15/25

    

4,975

      

5,415

    
Discovery Communications LLC
2.80%, due 06/15/20		    

3,930

      

3,943

    
DISH DBS Corp.
5.00%, due 03/15/23		    

20,375

      

20,585

    
Electronic Arts, Inc.
4.80%, due 03/01/26		    

19,655

      

22,238

    

3.70%, due 03/01/21

    

14,740

      

15,030

    
Intelsat Jackson Holdings SA, 144A
8.00%, due 02/15/24 (d)		    

26,069

      

27,079

    
Live Nation Entertainment, Inc., 144A
4.875%, due 11/01/24 (d)		    

14,935

      

15,473

    

5.375%, due 06/15/22 (d)

    

6,975

      

7,062

    

5.625%, due 03/15/26 (d)

    

4,975

      

5,292

    
Netflix, Inc.
4.875%, due 04/15/28		    

31,840

      

32,396

    

5.875%, due 02/15/25

    

11,940

      

13,112

    

5.875%, due 11/15/28

    

6,965

      

7,566

    

5.375%, due 02/01/21

    

1,990

      

2,050

    
Netflix, Inc., 144A
5.375%, due 11/15/29 (d)		    

4,970

      

5,181

    

6.375%, due 05/15/29 (d)

    

2,985

      

3,306

    
Omnicom Group, Inc. / Omnicom Capital, Inc.
3.625%, due 05/01/22		    

30,425

      

31,523

    
Zayo Group LLC / Zayo Capital, Inc.
6.00%, due 04/01/23		    

14,745

      

15,132

    
         

252,715

    

HEALTH CARE - 2.1%

  
Abbott Laboratories
2.90%, due 11/30/21		    

16,625

      

16,926

    
AbbVie, Inc.
3.75%, due 11/14/23		    

6,965

      

7,325

    
Becton Dickinson and Co.
3.30%, due 03/01/23		    

11,204

      

11,415

    
2.979%(3 mo. USD LIBOR + 0.875%),
due 12/29/20 (c)		    

7,463

      

7,466

    

2.675%, due 12/15/19

    

6,068

      

6,069

    

3.363%, due 06/06/24

    

2,985

      

3,114

    

2.894%, due 06/06/22

    

2,985

      

3,030

    
Centene Corp.
4.75%, due 05/15/22		    

20,084

      

20,490

    
CVS Health Corp.
4.00%, due 12/05/23		    

18,198

      

19,229

    

5.00%, due 12/01/24

    

6,880

      

7,585

    

4.75%, due 12/01/22

    

6,880

      

7,338

    
Edwards Lifesciences Corp.
4.30%, due 06/15/28		    

6,965

      

7,846

    
Express Scripts Holding Co.
3.30%, due 02/25/21		    

4,915

      

4,980

    

See accompanying Notes to Financial Statements.

Oakmark.com 21


Oakmark Equity and Income Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

   

Par Value

  

Value

  

FIXED INCOME - 31.1% (continued)

  

CORPORATE BONDS - 18.9% (continued)

  
HCA, Inc.
5.00%, due 03/15/24		  

$

7,465

    

$

8,151

    

5.625%, due 09/01/28

    

2,985

      

3,326

    

5.375%, due 09/01/26

    

500

      

549

    
IQVIA, Inc., 144A
5.00%, due 10/15/26 (d)		    

7,800

      

8,171

    
Johnson & Johnson
2.90%, due 01/15/28		    

9,955

      

10,470

    
McKesson Corp.
3.65%, due 11/30/20		    

19,890

      

20,214

    

3.95%, due 02/16/28

    

2,985

      

3,132

    
Quest Diagnostics, Inc.
4.70%, due 04/01/21		    

5,128

      

5,312

    
Universal Health Services, Inc., 144A
4.75%, due 08/01/22 (d)		    

32,695

      

32,940

    

5.00%, due 06/01/26 (d)

    

12,805

      

13,381

    
Zimmer Biomet Holdings, Inc.
4.625%, due 11/30/19		    

10,345

      

10,382

    
2.914%(3 mo. USD LIBOR + 0.750%),
due 03/19/21 (c)		    

4,975

      

4,975

    

3.15%, due 04/01/22

    

3,810

      

3,884

    

3.70%, due 03/19/23

    

2,985

      

3,110

    
         

250,810

    

INDUSTRIALS - 1.8%

  
Bacardi, Ltd., 144A
4.45%, due 05/15/25 (d)		    

14,900

      

15,935

    
BAT Capital Corp.
3.557%, due 08/15/27		    

6,965

      

7,016

    
Delta Air Lines, Inc.
3.40%, due 04/19/21		    

11,590

      

11,752

    

3.80%, due 04/19/23

    

9,425

      

9,774

    
Fortune Brands Home & Security, Inc.
4.00%, due 06/15/25		    

13,430

      

14,197

    

4.00%, due 09/21/23

    

9,945

      

10,511

    
Hilton Domestic Operating Co., Inc.
5.125%, due 05/01/26		    

16,915

      

17,761

    
Southwest Airlines Co.
2.65%, due 11/05/20		    

12,148

      

12,214

    
Stanley Black & Decker, Inc.
4.25%, due 11/15/28		    

6,965

      

7,925

    
The Boeing Co.
2.70%, due 02/01/27		    

19,880

      

20,216

    
Uber Technologies, Inc., 144A
8.00%, due 11/01/26 (d)		    

21,430

      

21,698

    

7.50%, due 09/15/27 (d)

    

4,470

      

4,459

    
Union Pacific Corp.
3.75%, due 07/15/25		    

9,950

      

10,716

    

3.50%, due 06/08/23

    

6,965

      

7,293

    

3.20%, due 06/08/21

    

6,965

      

7,086

    
United Technologies Corp.
3.65%, due 08/16/23		    

4,975

      

5,265

    

3.95%, due 08/16/25

    

1,990

      

2,180

    

3.35%, due 08/16/21

    

1,990

      

2,041

    
Wabtec Corp.
3.419% (3 mo. USD LIBOR + 1.300%),
due 09/15/21 (c)		    

4,975

      

4,975

    
   

Par Value

  

Value

  
Welbilt, Inc.
9.50%, due 02/15/24		  

$

4,915

    

$

5,259

    
WESCO Distribution, Inc.
5.375%, due 06/15/24		    

13,675

      

14,119

    

5.375%, due 12/15/21

    

5,305

      

5,338

    
         

217,730

    

INFORMATION TECHNOLOGY - 1.7%

  
Avnet, Inc.
4.875%, due 12/01/22		    

8,275

      

8,807

    

3.75%, due 12/01/21

    

4,710

      

4,807

    
Broadcom Corp. / Broadcom
Cayman Finance, Ltd.
3.00%, due 01/15/22		    

14,930

      

15,074

    

3.625%, due 01/15/24

    

9,955

      

10,180

    

2.375%, due 01/15/20

    

9,955

      

9,954

    

3.50%, due 01/15/28

    

4,975

      

4,849

    
CDW LLC / CDW Finance Corp.
5.00%, due 09/01/23		    

19,243

      

19,732

    

5.00%, due 09/01/25

    

9,955

      

10,341

    
CommScope, Inc., 144A
5.50%, due 06/15/24 (d)		    

23,854

      

22,415

    

6.00%, due 03/01/26 (d)

    

3,480

      

3,601

    

5.50%, due 03/01/24 (d)

    

3,480

      

3,580

    

5.00%, due 06/15/21 (d)

    

689

      

689

    
Dell International LLC / EMC Corp., 144A
5.45%, due 06/15/23 (d)		    

14,725

      

16,025

    

4.42%, due 06/15/21 (d)

    

2,940

      

3,031

    
Itron, Inc., 144A
5.00%, due 01/15/26 (d)		    

11,035

      

11,369

    
Lam Research Corp.
2.75%, due 03/15/20		    

19,660

      

19,690

    

2.80%, due 06/15/21

    

4,910

      

4,969

    
Motorola Solutions, Inc.
3.75%, due 05/15/22		    

5,592

      

5,801

    

4.60%, due 02/23/28

    

2,985

      

3,223

    
Qorvo, Inc.
5.50%, due 07/15/26		    

4,975

      

5,255

    
Symantec Corp., 144A
5.00%, due 04/15/25 (d)		    

1,000

      

1,011

    
Tyco Electronics Group SA
3.70%, due 02/15/26		    

9,830

      

10,384

    
         

194,787

    

REAL ESTATE - 1.1%

  
CBRE Services, Inc.
5.25%, due 03/15/25		    

24,930

      

27,914

    

4.875%, due 03/01/26

    

19,665

      

21,836

    
GLP Capital, LP / GLP Financing II, Inc. REIT
5.375%, due 11/01/23		    

12,000

      

12,981

    

5.75%, due 06/01/28

    

4,975

      

5,659

    

5.25%, due 06/01/25

    

4,975

      

5,480

    

5.375%, due 04/15/26

    

3,925

      

4,317

    

4.375%, due 04/15/21

    

1,965

      

2,008

    
MGM Growth Properties Operating
Partnership, LP / MGP
Finance Co-Issuer, Inc. REIT
5.625%, due 05/01/24		    

2,945

      

3,229

    
Omega Healthcare Investors, Inc. REIT
5.25%, due 01/15/26		    

14,942

      

16,374

    

4.375%, due 08/01/23

    

15,046

      

15,857

    

See accompanying Notes to Financial Statements.

22 OAKMARK FUNDS


Oakmark Equity and Income Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

   

Par Value

  

Value

  

FIXED INCOME - 31.1% (continued)

  

CORPORATE BONDS - 18.9% (continued)

  
The Howard Hughes Corp., 144A
5.375%, due 03/15/25 (d)		  

$

12,440

    

$

12,938

    
Ventas Realty, LP REIT
3.125%, due 06/15/23		    

2,490

      

2,558

    

3.50%, due 02/01/25

    

900

      

942

    
         

132,093

    

CONSUMER STAPLES - 0.8%

  
Constellation Brands, Inc.
3.15%, due 08/01/29		    

25,995

      

26,488

    
Diageo Capital PLC
3.00%, due 05/18/20		    

5,000

      

5,029

    
Kraft Heinz Foods Co., 144A
4.875%, due 02/15/25 (d)		    

4,276

      

4,402

    
Mead Johnson Nutrition Co.
4.125%, due 11/15/25		    

13,955

      

15,270

    

3.00%, due 11/15/20

    

6,885

      

6,945

    
Mondelez International Holdings
Netherlands BV, 144A
2.00%, due 10/28/21 (d)		    

8,585

      

8,566

    

1.625%, due 10/28/19 (d)

    

7,764

      

7,761

    
Post Holdings, Inc., 144A
5.00%, due 08/15/26 (d)		    

2,000

      

2,074

    

5.75%, due 03/01/27 (d)

    

500

      

530

    

5.50%, due 03/01/25 (d)

    

500

      

524

    
Smithfield Foods, Inc., 144A
2.70%, due 01/31/20 (d)		    

6,420

      

6,416

    

3.35%, due 02/01/22 (d)

    

4,975

      

4,990

    

2.65%, due 10/03/21 (d)

    

3,980

      

3,942

    

4.25%, due 02/01/27 (d)

    

995

      

1,031

    
         

93,968

    

ENERGY - 0.4%

  
Apergy Corp.
6.375%, due 05/01/26		    

16,119

      

15,998

    
Cenovus Energy, Inc.
5.70%, due 10/15/19		    

3,642

      

3,646

    
Occidental Petroleum Corp.
3.637% (3 mo. USD LIBOR + 1.450%),
due 08/15/22 (c)		    

9,940

      

10,005

    
Oceaneering International, Inc.
4.65%, due 11/15/24		    

8,485

      

7,976

    
Schlumberger Holdings Corp., 144A
4.00%, due 12/21/25 (d)		    

9,830

      

10,494

    
Weatherford International LLC
9.875%, due 03/01/25 (a) (j)		    

9,950

      

3,433

    
         

51,552

    

MATERIALS - 0.2%

  
Glencore Funding LLC, 144A
3.875%, due 10/27/27 (d)		    

9,950

      

10,130

    

3.00%, due 10/27/22 (d)

    

9,950

      

10,025

    
         

20,155

    
Total Corporate Bonds
(Cost $2,161,909)		        

2,239,147

    
   

Par Value

  

Value

  

GOVERNMENT AND AGENCY SECURITIES - 12.1%

  

U.S. GOVERNMENT NOTES - 12.0%

  
United States Treasury Bonds (TIPS)
1.25%, due 07/15/20 (f)		  

$

493,863

    

$

495,856

    
United States Treasury Notes
1.75%, due 10/31/20		    

223,550

      

223,402

    

2.375%, due 12/31/20

    

198,945

      

200,352

    

1.375%, due 12/15/19

    

99,500

      

99,395

    

1.625%, due 07/31/20

    

99,485

      

99,295

    

2.00%, due 11/30/22

    

74,625

      

75,564

    

1.75%, due 03/31/22

    

74,645

      

74,931

    

2.125%, due 12/31/22

    

49,745

      

50,594

    

1.875%, due 11/30/21

    

49,785

      

50,047

    

1.50%, due 11/30/19

    

24,875

      

24,852

    

2.125%, due 01/31/21

    

24,570

      

24,682

    
         

1,418,970

    

U.S. GOVERNMENT AGENCIES - 0.1%

  
Federal Farm Credit Bank,
1.68%, due 08/16/21		    

17,165

      

17,098

    
Total Government and Agency Securities
(Cost $1,426,686)		        

1,436,068

    

CONVERTIBLE BOND - 0.1%

  
Chesapeake Energy Corp.,
5.50%, due 09/15/26
(Cost $14,542)		    

14,915

      

8,912

    
TOTAL FIXED INCOME - 31.1%
(COST $3,603,137)		        

3,684,127

    

SHORT-TERM INVESTMENTS - 8.8%

  

COMMERCIAL PAPER - 4.6%

  
General Mills, Inc., 144A,
2.18% - 2.31%,
due 10/02/19 - 10/15/19 (d) (g)		    

99,728

      

99,678

    
Campbell Soup Co., 144A,
2.21% - 2.5%,
due 10/07/19 - 11/08/19 (d) (g)		    

98,600

      

98,464

    
Anthem, Inc., 144A,
2.11% - 2.22%,
due 10/03/19 - 10/04/19 (d) (g)		    

74,250

      

74,234

    
MetLife Short Term Funding LLC, 144A,
1.96%, due 10/11/19 - 10/17/19 (d) (g)		    

73,681

      

73,620

    
BMW US Capital LLC, 144A,
1.94% - 1.95%,
due 10/01/19 - 10/07/19 (d) (g)		    

65,000

      

64,987

    
Walgreens Boots,
2.27% - 2.32%,
due 10/18/19 - 11/19/19 (g)		    

54,750

      

54,623

    
Kellogg Co., 144A,
2.11%, due 10/01/19 - 10/04/19 (d) (g)		    

49,500

      

49,492

    
Schlumberger Holdings Corp., 144A,
2.18% - 2.41%,
due 10/16/19 - 10/17/19 (d) (g)		    

26,750

      

26,721

    
Total Commercial Paper
(Cost $541,861)		        

541,819

    

See accompanying Notes to Financial Statements.

Oakmark.com 23


Oakmark Equity and Income Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

   

Par Value

  

Value

  

SHORT-TERM INVESTMENTS - 8.8% (continued)

  

GOVERNMENT AND AGENCY SECURITIES - 3.5%

  
Federal National Mortgage Association,
1.71%, due 10/01/19 (g)
(Cost $415,000)		  

$

415,000

    

$

415,000

    

REPURCHASE AGREEMENT - 0.6%

  
Fixed Income Clearing Corp. Repurchase
Agreement, 1.10% dated 09/30/19
due 10/01/19, repurchase price $71,022,
collateralized by a United States Treasury
Note, 2.500% due 03/31/23, value plus
accrued interest of $72,442 (Cost: $71,020)		    

71,020

      

71,020

    

CORPORATE BONDS - 0.1%

  

FINANCIALS - 0.1%

  
Ally Financial, Inc.,
4.13%, due 03/30/20		    

4,970

      

5,001

    
Reinsurance Group of America, Inc.,
6.45%, due 11/15/19		    

10,257

      

10,302

    
         

15,303

    

Total Corporate Bonds (Cost $15,284)

        

15,303

    
TOTAL SHORT-TERM INVESTMENTS - 8.8%
(COST $1,043,165)		        

1,043,142

    
TOTAL INVESTMENTS - 100.3%
(COST $8,831,776)		        

11,870,873

    

Foreign Currencies - 0.0% (h)

        

0

(i)

  

Liabilities In Excess of Other Assets - (0.3)%

        

(34,516

)

  

NET ASSETS - 100.0%

      

$

11,836,357

    

(a)  Non-income producing security

(b)  Sponsored American Depositary Receipt

(c)  Floating Rate Note. Rate shown is as of September 30, 2019.

(d)  Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold, normally only to qualified institutional buyers.

(e)  Security is perpetual and has no stated maturity date.

(f)  Interest rate for this security is a stated rate. Interest payments are determined based on an inflation-adjusted principal amount.

(g)  The rate shown represents the annualized yield at the time of purchase; not a coupon rate.

(h)  Amount rounds to less than 0.1%.

(i)  Amount rounds to less than $1,000.

(j)  Security is in default as of September 30, 2019.

Abbreviations:

  REIT: Real Estate Investment Trust

See accompanying Notes to Financial Statements.

24 OAKMARK FUNDS


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Oakmark.com 25


Oakmark Global Fund  September 30, 2019

Summary Information

VALUE OF A $10,000 INVESTMENT

Since Inception - 08/04/99 (Unaudited)

PERFORMANCE

      

Average Annual Total Returns (as of 09/30/19)

  

 
(Unaudited)   Total Return
Last 3 Months		  

1-year

  

3-year

  

5-year

  

10-year

   Since
Inception		   Inception
Date		  

Oakmark Global Fund (Investor Class)

    

-0.36

%

    

-2.48

%

    

9.05

%

    

4.44

%

    

7.89

%

    

9.51

%

  

08/04/99

  

MSCI World Index

    

0.53

%

    

1.83

%

    

10.21

%

    

7.18

%

    

9.01

%

    

4.84

%

  

 

Lipper Global Fund Index13

    

-0.43

%

    

-0.46

%

    

8.56

%

    

6.12

%

    

7.97

%

    

5.26

%

  

 

Oakmark Global Fund (Advisor Class)

    

-0.33

%

    

-2.35

%

    

N/A

      

N/A

      

N/A

      

8.08

%

  

11/30/16

  

Oakmark Global Fund (Institutional Class)

    

-0.33

%

    

-2.30

%

    

N/A

      

N/A

      

N/A

      

8.15

%

  

11/30/16

  

Oakmark Global Fund (Service Class)

    

-0.37

%

    

-2.71

%

    

8.76

%

    

4.11

%

    

7.53

%

    

9.50

%

  

10/10/01

  

The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

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. Total return includes change in share prices and, in each case, includes reinvestment of dividends and capital gain distributions. 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. To obtain the most recent month-end performance, please visit Oakmark.com.

TOP TEN EQUITY HOLDINGS4

   % of Net Assets  

Mastercard Inc., Class A

    

5.2

    

Bank of America Corp.

    

4.5

    

Lloyds Banking Group PLC

    

4.4

    

TE Connectivity, Ltd.

    

4.4

    

Alphabet, Inc., Class C

    

4.3

    

CNH Industrial N.V.

    

4.2

    

General Motors Co.

    

4.2

    

Credit Suisse Group AG

    

3.9

    

Julius Baer Group, Ltd.

    

3.6

    

Citigroup, Inc.

    

3.5

    

FUND STATISTICS

  

Ticker*

  

OAKGX

  

Number of Equity Holdings

  

44

  

Net Assets

   $1.7 billion  

Weighted Average Market Cap

   $111.4 billion  

Median Market Cap

   $31.3 billion  

Gross Expense Ratio - Investor Class (as of 09/30/18)*

   1.21%  

Gross Expense Ratio - Investor Class (as of 09/30/19)*

   1.23%  

Net Expense Ratio - Investor Class (as of 09/30/19)*†

   1.17%  

*  This information is related to the Investor Class. Please visit Oakmark.com for information related to the Advisor, Institutional and Service Classes.

†  The net expense ratio reflects a contractual advisory fee waiver agreement through January 27, 2020.

SECTOR ALLOCATION

   % of Net Assets  

Financials

    

22.7

    

Consumer Discretionary

    

17.9

    

Information Technology

    

17.2

    

Industrials

    

14.4

    

Communication Services

    

14.0

    

Health Care

    

4.9

    

Materials

    

3.5

    

Energy

    

1.4

    

Consumer Staples

    

0.9

    

Short-Term Investments and Other

    

3.1

    

GEOGRAPHIC ALLOCATION

  

 

% of Equity

  

North America

    

47.1

    

United States

    

47.1

    

Europe

    

40.9

    

United Kingdom

    

14.6

    

Germany*

    

12.1

    

Switzerland

    

10.2

    

Ireland*

    

2.9

    

Netherlands*

    

1.1

    

Asia

    

6.0

    

Japan

    

2.8

    

 

% of Equity

  

Asia (cont'd)

    

6.0

    

South Korea

    

1.6

    

Taiwan

    

1.2

    

India

    

0.4

    

Australasia

    

2.3

    

Australia

    

2.3

    

Africa

    

2.2

    

South Africa

    

2.2

    

Latin America

    

1.5

    

Mexico

    

1.5

    

*  Euro currency countries comprise 16.1% of equity investments.

See accompanying Disclosures and Endnotes on page 87.

26 OAKMARK FUNDS


Oakmark Global Fund  September 30, 2019

Portfolio Manager Commentary

David G. Herro, CFA

Portfolio Manager

oakgx@oakmark.com

Clyde S. McGregor, CFA

Portfolio Manager

oakgx@oakmark.com

Anthony P. Coniaris, CFA

Portfolio Manager

oakgx@oakmark.com

Jason E. Long, CFA

Portfolio Manager

oakgx@oakmark.com

Stakeholder Primacy

In August, the Business Roundtable, a group composed of chief executives of 181 of the U.S.'s largest corporations, released a statement that outlined a "modern standard for corporate responsibility." All 181 CEOs signed the statement, vowing to "commit to lead their companies for the benefit of all stakeholders—customers, employees, suppliers, communities and shareholders." Previous Roundtable statements "endorsed principles of shareholder primacy—that corporations exist principally to serve shareholders," but shareholders were listed last in the updated list. Befitting our current political climate, this new statement was greeted with acclaim in some quarters, suspicion in others and skepticism elsewhere. Some saw this statement as long overdue.

The previous doctrine of shareholder primacy is often said to have begun with a 1970 New York Times magazine article by economist Milton Friedman, titled "The Social Responsibility of Business Is to Increase Its Profits."14 In this article, Friedman distinguishes between corporations and actual persons, examines the issue of agency (the corporate executive being the agent of the actual owners), and excoriates executives whose speeches on social responsibility "strengthen the already too prevalent view that the pursuit of profits is wicked and immoral and must be curbed and controlled by external forces." (Some things never change.) But note that Friedman also writes that it can be in a corporation's long-term best interests to make community investments or to contribute charitably.

At Harris Associates, we understand well that our clients' interests come first and that if clients are well-served, our business will likely prosper. We endeavor to make our workplace attractive for our employees and we support community projects and encourage volunteer efforts. The key is to manage the business for its long-term success—and this is also what we seek in evaluating managements of the companies we consider for investment.

After the Business Roundtable published its statement, Jonathan Ford of the Financial Times15 argued that stakeholder/shareholder primacy is less important than the inefficiencies deriving from the intermediary system of investment. What we think he meant is that the largest owners of corporations (pension funds, endowments, etc.) too often delegate the investing function to intermediaries and then evaluate those intermediaries in the short term, typically quarterly. This perspective encourages those intermediaries to "follow short-term trends and bubbles rather than finding the most profitable outlets for the money trusted to them."

We often refer to our time-horizon advantage—that we are looking to understand the value of a business five to seven years into the future, while many react to short-term data. To invest in a company, we demand that the management teams act in the company's long-term interests because we know that this grows the business value over time and that, in turn, will serve the interests of our Fund's shareholders. Although the timing is always uncertain, we know—and history demonstrates—that price and value will come together and, therefore, generate successful investing outcomes.

Quarter Review

During the quarter, most economic and geopolitical trends continued, but with the important addition in September of the initiation of a formal impeachment inquiry concerning the U.S. president. The U.S. economy continues to grow at a consistent, if gradual, pace, while Europe and China appear to be weakening. With a few exceptions, most countries are experiencing little price inflation and interest rates remain at historically low levels. The list of challenges affecting the worldwide political environment is long, including tariff battles, Hong Kong demonstrations, Brexit uncertainty and Middle East conflicts.

Oakmark Global lost 0.4% in the quarter, which compares to a gain of 0.5% for the MSCI World Index12 and a loss of 0.4% for the Lipper Global Fund Index13. For the calendar nine months, the Fund returned 17.0%, compared to 17.6% for the MSCI World Index and 14.5% for the Lipper Global Fund Index. Finally, for the Fund's fiscal year ended September 30, the Fund lost 2.5% and the MSCI World Index gained 1.8%, while the Lipper Global Fund Index lost 0.5%. From inception, the Fund's compound annualized return rate is 9.5%

For the quarter, the countries that contributed most to return were the U.S., Japan and Taiwan, while Germany, the U.K. and South Africa detracted from return. Alphabet (U.S.), Mastercard (U.S.), Toyota Motor (Japan), Taiwan Semiconductor (Taiwan) and Grupo Televisa (Mexico) were the largest contributors to return, while Daimler (Germany), Continental (Germany), Under Armour (U.S.), Liberty Global (U.K.) and Naspers (South Africa) detracted most.

Over the calendar nine months, holdings in the U.S., the U.K. and Switzerland contributed most to return, while holdings in Mexico, Ireland and the Netherlands detracted most. The companies whose stocks contributed most were Mastercard, Citigroup (U.S.), TE Connectivity (U.S.), Julius Baer Group (Switzerland) and Arconic (U.S.). The largest detractors from return were Grupo Televisa, National Oilwell Varco (U.S.),

See accompanying Disclosures and Endnotes on page 87.

Oakmark.com 27


Oakmark Global Fund  September 30, 2019

Portfolio Manager Commentary (continued)

Ryanair Holdings (Ireland), Prosus (Netherlands) and Continental.

For the Fund's fiscal year, holdings in the U.S., South Africa and Japan contributed most to return, while holdings in Germany, Mexico and Ireland were the largest detractors. Mastercard was the largest contributor, followed by General Motors (U.S.), Travis Perkins (U.K.), Arconic and Liberty Broadband (U.S.). National Oilwell Varco, Grupo Televisa, Daimler, Ryanair Holdings and Credit Suisse (Switzerland) detracted most from return for the 12 months.

We chose not to make fundamental or strategic changes to the portfolio in the quarter. We executed certain trades to improve portfolio tax efficiency and to take advantage of tactical opportunities in existing holdings. We maintained the same allocation split between U.S. and international holdings.

The one new name to appear in the portfolio is Prosus, a Dutch holding company that was carved out of Fund holding Naspers during the third quarter (though Naspers retained a 74% stake in the company). Prosus owns stakes in multiple leading internet businesses, such as Tencent (leading social network in China), Delivery Hero (leading food delivery company in Germany), Mail.ru (largest social network in Russia) and Ctrip (largest online travel agent in China). In addition, the company has a valuable online classifieds business, OLX, and maintains controlling stakes in several other private companies. Similar to our investment thesis with Naspers, we are attracted to Prosus due to its valuable internet holdings, management's strong capital allocation track record and the stock's attractive valuation.

Currency Hedges

We defensively hedge a portion of the Fund's exposure to currencies that we believe are overvalued versus the U.S. dollar. As of quarter end, we found the Swiss franc to be overvalued and have hedged approximately 12% of the Fund's franc exposure.

As always, we thank you for being our partners in the Oakmark Global Fund. We invite you to send us your comments or questions.

See accompanying Disclosures and Endnotes on page 87.

28 OAKMARK FUNDS


Oakmark Global Fund  September 30, 2019

Schedule of Investments (in thousands)

   

Shares

  

Value

  

COMMON STOCKS - 96.9%

  

FINANCIALS - 22.7%

  

BANKS - 12.8%

  

Bank of America Corp. (United States)

    

2,569

    

$

74,932

    

Lloyds Banking Group PLC (United Kingdom)

    

109,347

      

72,763

    

Citigroup, Inc. (United States)

    

851

      

58,808

    

Axis Bank, Ltd. (India)

    

631

      

6,103

    
         

212,606

    

DIVERSIFIED FINANCIALS - 7.4%

  

Credit Suisse Group AG (Switzerland)

    

5,263

      

64,521

    

Julius Baer Group, Ltd. (Switzerland) (a)

    

1,346

      

59,623

    
         

124,144

    

INSURANCE - 2.5%

  

Allianz SE (Germany)

    

175

      

40,842

    
         

377,592

    

CONSUMER DISCRETIONARY - 17.9%

  

AUTOMOBILES & COMPONENTS - 11.8%

  

General Motors Co. (United States)

    

1,849

      

69,316

    

Daimler AG (Germany)

    

1,179

      

58,629

    

Continental AG (Germany)

    

306

      

39,243

    

Toyota Motor Corp. (Japan)

    

439

      

29,284

    
         

196,472

    

RETAILING - 4.1%

  

Naspers, Ltd. (South Africa)

    

235

      

35,679

    

Prosus N.V. (Netherlands) (a)

    

247

      

18,128

    

Booking Holdings, Inc. (United States) (a)

    

7

      

14,670

    
         

68,477

    

CONSUMER DURABLES & APPAREL - 2.0%

  

Cie Financiere Richemont SA (Switzerland)

    

254

      

18,657

    

Under Armour, Inc., Class C (United States) (a)

    

779

      

14,130

    
         

32,787

    
         

297,736

    

INFORMATION TECHNOLOGY - 17.2%

  

SOFTWARE & SERVICES - 9.2%

  

Mastercard Inc., Class A (United States)

    

318

      

86,414

    

Oracle Corp. (United States)

    

866

      

47,645

    

CoreLogic, Inc. (United States) (a)

    

411

      

19,035

    
         

153,094

    

TECHNOLOGY HARDWARE & EQUIPMENT - 6.8%

  

TE Connectivity, Ltd. (United States)

    

779

      

72,550

    

Samsung Electronics Co., Ltd. (South Korea)

    

626

      

25,670

    

Hirose Electric Co., Ltd. (Japan)

    

134

      

16,360

    
         

114,580

    

SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.2%

  
Taiwan Semiconductor
Manufacturing Co., Ltd. (Taiwan)		    

2,215

      

19,673

    
         

287,347

    
   

Shares

  

Value

  

INDUSTRIALS - 14.4%

  

CAPITAL GOODS - 10.1%

  

CNH Industrial N.V. (United Kingdom)

    

6,950

    

$

70,748

    

Arconic, Inc. (United States)

    

1,552

      

40,357

    

Travis Perkins PLC (United Kingdom)

    

2,280

      

36,184

    
Johnson Controls International plc
(United States)		    

464

      

20,369

    
         

167,658

    

TRANSPORTATION - 4.3%

  

Ryanair Holdings PLC (Ireland) (a) (b)

    

710

      

47,130

    

Southwest Airlines Co. (United States)

    

463

      

25,017

    
         

72,147

    
         

239,805

    

COMMUNICATION SERVICES - 14.0%

  

MEDIA & ENTERTAINMENT - 14.0%

  

Alphabet, Inc., Class C (United States) (a)

    

59

      

72,267

    
The Interpublic Group of Cos., Inc.
(United States)		    

1,574

      

33,933

    
Liberty Global PLC, Class A
(United Kingdom) (a)		    

1,229

      

30,425

    
Liberty Broadband Corp., Class C
(United States) (a)		    

272

      

28,428

    

Grupo Televisa SAB (Mexico) (b)

    

2,437

      

23,838

    
Live Nation Entertainment, Inc.
(United States) (a)		    

337

      

22,372

    
Charter Communications, Inc., Class A
(United States) (a)		    

31

      

12,652

    
Liberty Global PLC, Class C
(United Kingdom) (a)		    

386

      

9,181

    
         

233,096

    

HEALTH CARE - 4.9%

  

PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES - 3.4%

  

Bayer AG (Germany)

    

804

      

56,667

    

HEALTH CARE EQUIPMENT & SERVICES - 1.5%

  

Tenet Healthcare Corp. (United States) (a)

    

1,111

      

24,565

    
         

81,232

    

MATERIALS - 3.5%

  

Incitec Pivot, Ltd. (Australia)

    

16,149

      

36,950

    

LafargeHolcim, Ltd. (Switzerland)

    

448

      

22,054

    
         

59,004

    

ENERGY - 1.4%

  

National Oilwell Varco, Inc. (United States)

    

1,129

      

23,937

    

See accompanying Notes to Financial Statements.

Oakmark.com 29


Oakmark Global Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

   

Shares

  

Value

  

COMMON STOCKS - 96.9% (continued)

  

CONSUMER STAPLES - 0.9%

  

HOUSEHOLD & PERSONAL PRODUCTS - 0.8%

  

Reckitt Benckiser Group PLC (United Kingdom)

    

174

    

$

13,549

    

FOOD, BEVERAGE & TOBACCO - 0.1%

  

Diageo PLC (United Kingdom)

    

42

      

1,734

    
         

15,283

    
TOTAL COMMON STOCKS - 96.9%
(COST $1,302,729)		        

1,615,032

    
   

Par Value

  

Value

  

SHORT-TERM INVESTMENTS - 2.9%

  

GOVERNMENT AND AGENCY SECURITIES - 1.5%

  
Federal National Mortgage Association,
1.71%, due 10/01/19 (c)
(Cost $25,000)		  

$

25,000

      

25,000

    

REPURCHASE AGREEMENT - 1.4%

  
Fixed Income Clearing Corp. Repurchase
Agreement, 1.10% dated 09/30/19 due
10/01/19, repurchase price $23,145,
collateralized by a United States
Treasury Note, 2.750% due 04/30/23,
value plus accrued interest of $23,607
(Cost: $23,144)		    

23,144

      

23,144

    
TOTAL SHORT-TERM INVESTMENTS - 2.9%
(COST $48,144)		        

48,144

    
TOTAL INVESTMENTS - 99.8%
(COST $1,350,873)		        

1,663,176

    

Foreign Currencies (Cost $0) - 0.0% (d)

        

0

(e)

  

Other Assets In Excess of Liabilities - 0.2%

        

3,194

    

TOTAL NET ASSETS - 100.0%

      

$

1,666,370

    

One security, Taiwan Semiconductor Manufacturing Co. Ltd., with aggregate value of $19,673, was valued at a fair value in accordance with procedures established by the Board of Trustees (in thousands).

(a)  Non-income producing security

(b)  Sponsored American Depositary Receipt

(c)  The rate shown represents the annualized yield at the time of purchase; not a coupon rate.

(d)  Amount rounds to less than 0.1%.

(e)  Amount rounds to less than $1,000.

See accompanying Notes to Financial Statements.

30 OAKMARK FUNDS


Oakmark Global Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

FORWARD FOREIGN CURRENCY CONTRACT (in thousands)

    Local
Contract
Amount		   Base
Contract
Amount		   Settlement
Date		   Valuation at
09/30/19		   Unrealized
Appreciation/
(Depreciation)		  

Foreign Currency Sold:

  

Swiss Franc

    

19,820

    

$

20,262

    

12/18/19

  

$

20,002

    

$

260

    
               

$

20,002

    

$

260

    

See accompanying Notes to Financial Statements.

Oakmark.com 31


Oakmark Global Select Fund  September 30, 2019

Summary Information

VALUE OF A $10,000 INVESTMENT

Since Inception - 10/02/06 (Unaudited)

PERFORMANCE

      

Average Annual Total Returns (as of 09/30/19)

  

 
(Unaudited)   Total Return
Last 3 Months		  

1-year

  

3-year

  

5-year

  

10-year

   Since
Inception		   Inception
Date		  

Oakmark Global Select Fund (Investor Class)

    

-0.77

%

    

-4.90

%

    

6.02

%

    

4.81

%

    

8.79

%

    

7.12

%

  

10/02/06

  

MSCI World Index

    

0.53

%

    

1.83

%

    

10.21

%

    

7.18

%

    

9.01

%

    

5.76

%

      

Lipper Global Fund Index13

    

-0.43

%

    

-0.46

%

    

8.56

%

    

6.12

%

    

7.97

%

    

5.32

%

      

Oakmark Global Select Fund (Advisor Class)

    

-0.71

%

    

-4.85

%

    

N/A

      

N/A

      

N/A

      

4.78

%

  

11/30/16

  

Oakmark Global Select Fund (Institutional Class)

    

-0.71

%

    

-4.79

%

    

N/A

      

N/A

      

N/A

      

4.83

%

  

11/30/16

  

The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

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. Total return includes change in share prices and, in each case, includes reinvestment of dividends and capital gain distributions. 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. To obtain the most recent month-end performance, please visit Oakmark.com.

TOP TEN EQUITY HOLDINGS4

  

% of Net Assets

  

Alphabet, Inc., Class C

    

8.4

    

CNH Industrial N.V.

    

7.1

    

Bank of America Corp.

    

6.7

    

Daimler AG

    

6.7

    

Credit Suisse Group AG

    

6.5

    

Lloyds Banking Group PLC

    

5.9

    

Charter Communications, Inc., Class A

    

5.6

    

TE Connectivity, Ltd.

    

5.6

    

Citigroup, Inc.

    

5.5

    

Bayer AG

    

4.7

    

FUND STATISTICS

  

Ticker*

  

OAKWX

  

Number of Equity Holdings

  

21

  

Net Assets

   $1.8 billion  

Weighted Average Market Cap

   $148.0 billion  

Median Market Cap

   $48.5 billion  

Gross Expense Ratio - Investor Class (as of 09/30/18)*

   1.19%  

Gross Expense Ratio - Investor Class (as of 09/30/19)*

   1.25%  

Net Expense Ratio - Investor Class (as of 09/30/19)*†

   1.18%  

*  This information is related to the Investor Class. Please visit Oakmark.com for information related to the Advisor, Institutional and Service Classes.

†  The net expense ratio reflects a contractual advisory fee waiver agreement through January 27, 2020.

SECTOR ALLOCATION

  

% of Net Assets

  

Financials

    

29.0

    

Consumer Discretionary

    

16.2

    

Communication Services

    

14.1

    

Information Technology

    

11.1

    

Industrials

    

9.4

    

Health Care

    

7.5

    

Materials

    

3.3

    

Consumer Staples

    

2.8

    

Energy

    

2.4

    

Short-Term Investments and Other

    

4.2

    

GEOGRAPHIC ALLOCATION

  

 

% of Equity

  

Europe

    

50.9

    

United Kingdom

    

21.3

    

Switzerland

    

16.0

    

Germany*

    

11.9

    

Netherlands*

    

1.7

    

 

% of Equity

  

North America

    

43.3

    

United States

    

43.3

    

Asia

    

5.8

    

South Korea

    

3.6

    

Taiwan

    

2.2

    

*  Euro currency countries comprise 13.6% of equity investments.

See accompanying Disclosures and Endnotes on page 87.

32 OAKMARK FUNDS


Oakmark Global Select Fund  September 30, 2019

Portfolio Manager Commentary

William C. Nygren, CFA

Portfolio Manager

oakwx@oakmark.com

David G. Herro, CFA

Portfolio Manager

oakwx@oakmark.com

Anthony P. Coniaris, CFA

Portfolio Manager

oakwx@oakmark.com

Eric Liu, CFA

Portfolio Manager

oakwx@oakmark.com

The Oakmark Global Select Fund declined 4.9% for the fiscal year ended September 30, 2019, underperforming the MSCI World Index12, which returned 1.8%. For the most recent quarter, the Fund declined 0.8% compared to the benchmark's return of 0.5%. More importantly, the Fund has returned an average of 7.1% per year since its inception in October 2006, outperforming the MSCI World Index's annualized gain of 5.8% over the same period.

Alphabet, the parent company of Google, headquartered in the U.S., was the largest contributor for the quarter. Alphabet delivered second-quarter earnings results that exceeded market expectations. Total revenues grew 22% in constant currency and advertising revenues accelerated from the pace in the first quarter. In addition, the company's operating margin of 24% exceeded consensus expectations of 22.5%. Alphabet also disclosed that its cloud business now exceeds an $8 billion run-rate. Finally, management also announced a new $25 billion share repurchase plan. This authorization is larger than the company's previous repurchase plans and suggests that management believes the shares are undervalued.

Charter Communications, a U.S. communications and entertainment solutions provider, was the Fund's largest contributor for the fiscal year. The share price climbed early in the year after the release of fourth-quarter earnings that exceeded analysts' expectations. Investors reacted positively to first-quarter and second-quarter results as well, which provided further evidence of the company's increasing profitability, declining capital intensity and improved free cash flow generation, primarily due to the continued growth of the company's broadband business. In addition, the company continues to repurchase shares, and we remain confident that it can reward shareholders over the long term.

Daimler, a global automotive and truck manufacturer based in Germany, was the largest detractor for the quarter. The company's share price suffered due to a profit warning in early July where Daimler took provisions totaling EUR3.1 billion for diesel-related investigations, Takata airbags and halted development projects. We believe this is an example of the new management team trying to clear the decks as it moves forward with a new strategy to be laid out at the company's Capital Markets Day in November. The company's most recent earnings results, released in July, were mixed. Total revenue growth from industrial operations fell short of our estimates due to weakness at Mercedes-Benz cars, while revenue growth in the company's

trucks, vans and buses segments all exceeded our forecasts. Free cash flow generation was weak as expected due in part to a significant inventory build. One major cause of this build was production issues at the company's plant in Tuscaloosa, Alabama. However, in the third quarter, sales trends of the affected models indicated that momentum is improving and that the production issues have largely been resolved. This should lead to better financial results in the second half of the year. Longer term, we believe Daimler will improve profitability and cash flow generation under its new leadership team. The stock also remains exceptionally cheap, in our opinion. Figuratively, one can buy the company's shares today and get its largest business—Mercedes-Benz cars—for free.

Apache, a U.S.-based oil and gas exploration company, was the largest detractor for the Fund's fiscal year. Apache's results have been pressured by falling oil, NGL and natural gas prices in the U.S. over the past year, particularly in the Permian Basin where natural gas prices have fallen to negative levels at various times. Economics at Apache's Alpine High have been particularly pressured as this asset is highly dependent on Permian NGL and natural gas prices. As a result, the company has recently shut-in Alpine High production and pulled back on drilling activity, leading to weaker than expected financial results. Apache should recoup this shut-in production once Permian gas prices recover. In the meantime, the company is directing more capital toward oil wells in the Permian Basin, which should deliver solid returns.

During the quarter, we sold our investments in Diageo (U.K.) and Willis Towers Watson (U.K.) and purchased Bayer, a German-based company with sizable global businesses in pharmaceuticals, agricultural productivity and consumer health products. We also purchased shares in Prosus, a Dutch holding company that was carved out of Naspers during the third quarter (though Naspers retains a 74% stake in the company). Prosus owns stakes in multiple leading internet businesses, such as Tencent (leading social network in China), Delivery Hero (one of the leading food delivery companies), Mail.ru (largest social network in Russia) and Ctrip (largest OTA in China). In addition, the company has a valuable online classifieds business, called OLX, and controls stakes in several other private companies. We are attracted to Prosus due to its valuable internet holdings, management's strong capital allocation track record and its attractive valuation.

See accompanying Disclosures and Endnotes on page 87.

Oakmark.com 33


Oakmark Global Select Fund  September 30, 2019

Portfolio Manager Commentary (continued)

Geographically, 51% of the Fund's holdings were allocated to equities in Europe and the U.K., while approximately 43% were invested in U.S. companies and 6% in Asian equities.

We continue to believe the Swiss franc is overvalued versus the U.S. dollar. As a result, we defensively hedged a portion of the Fund's exposure. Approximately 14% of the Swiss franc exposure was hedged at quarter end.

We thank you for your continued support.

See accompanying Disclosures and Endnotes on page 87.

34 OAKMARK FUNDS


Oakmark Global Select Fund  September 30, 2019

Schedule of Investments (in thousands)

   

Shares

  

Value

  

COMMON STOCKS - 95.8%

  

FINANCIALS - 29.0%

  

BANKS - 18.1%

  

Bank of America Corp. (United States)

    

4,114

    

$

119,993

    

Lloyds Banking Group PLC (United Kingdom)

    

158,491

      

105,465

    

Citigroup, Inc. (United States)

    

1,421

      

98,156

    
         

323,614

    

DIVERSIFIED FINANCIALS - 6.5%

  

Credit Suisse Group AG (Switzerland)

    

9,423

      

115,515

    

INSURANCE - 4.4%

  
American International Group, Inc.
(United States)		    

1,408

      

78,448

    
         

517,577

    

CONSUMER DISCRETIONARY - 16.2%

  

AUTOMOBILES & COMPONENTS - 11.2%

  

Daimler AG (Germany)

    

2,402

      

119,416

    
Fiat Chrysler Automobiles N.V.
(United Kingdom)		    

6,293

      

81,492

    
         

200,908

    

CONSUMER DURABLES & APPAREL - 3.3%

  

Cie Financiere Richemont SA (Switzerland)

    

805

      

59,037

    

RETAILING - 1.7%

  

Prosus N.V. (Netherlands) (a)

    

401

      

29,466

    
         

289,411

    

COMMUNICATION SERVICES - 14.1%

  

MEDIA & ENTERTAINMENT - 14.1%

  

Alphabet, Inc., Class C (United States) (a)

    

124

      

150,601

    
Charter Communications, Inc., Class A
(United States) (a)		    

245

      

100,805

    
         

251,406

    

INFORMATION TECHNOLOGY - 11.1%

  

TECHNOLOGY HARDWARE & EQUIPMENT - 9.0%

  

TE Connectivity, Ltd. (United States)

    

1,071

      

99,833

    

Samsung Electronics Co., Ltd. (South Korea)

    

1,493

      

61,239

    
         

161,072

    

SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.1%

  
Taiwan Semiconductor Manufacturing
Co., Ltd. (Taiwan)		    

4,314

      

38,315

    
         

199,387

    

INDUSTRIALS - 9.4%

  

CAPITAL GOODS - 7.1%

  

CNH Industrial N.V. (United Kingdom)

    

12,401

      

126,243

    

TRANSPORTATION - 2.3%

  

Kuehne + Nagel International AG (Switzerland)

    

279

      

41,079

    
         

167,322

    
   

Shares

  

Value

  

HEALTH CARE - 7.5%

  

PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES - 7.5%

  

Bayer AG (Germany)

    

1,199

    

$

84,519

    
Regeneron Pharmaceuticals, Inc.
(United States) (a)		    

179

      

49,543

    
         

134,062

    

MATERIALS - 3.3%

  

LafargeHolcim, Ltd. (Switzerland)

    

1,194

      

58,747

    

CONSUMER STAPLES - 2.8%

  

HOUSEHOLD & PERSONAL PRODUCTS - 2.8%

  

Reckitt Benckiser Group PLC (United Kingdom)

    

647

      

50,499

    

ENERGY - 2.4%

  

Apache Corp. (United States)

    

1,675

      

42,888

    
TOTAL COMMON STOCKS - 95.8%
(COST $1,548,820)		        

1,711,299

    
   

Par Value

  

Value

  

SHORT-TERM INVESTMENTS - 4.7%

  

REPURCHASE AGREEMENT - 2.5%

  
Fixed Income Clearing Corp. Repurchase
Agreement, 1.10% dated 09/30/19 due
10/01/19, repurchase price $44,483,
collateralized by a United States
Treasury Note, 2.500% due 03/21/23,
value plus accrued interest of $45,375
(Cost: $44,481)		  

$

44,481

      

44,481

    

GOVERNMENT AND AGENCY SECURITIES - 2.2%

  
Federal National Mortgage Association,
1.71%, due 10/01/19 (b)
(Cost $40,000)		    

40,000

      

40,000

    
TOTAL SHORT-TERM INVESTMENTS - 4.7%
(COST $84,481)		        

84,481

    
TOTAL INVESTMENTS - 100.5%
(COST $1,633,301)		        

1,795,780

    

Foreign Currencies (Cost $-8,985) - (0.5)%

        

(8,984

)

  

Liabilities In Excess of Other Assets - 0.0% (a)

        

(494

)

  

TOTAL NET ASSETS - 100.0%

      

$

1,786,302

    

One security, Taiwan Semiconductor Manufacturing Co. Ltd., with aggregate value of $38,315, was valued at a fair value in accordance with procedures established by the Board of Trustees (in thousands).

(a)  Non-income producing security

(b)  The rate shown represents the annualized yield at the time of purchase; not a coupon rate.

See accompanying Notes to Financial Statements.

Oakmark.com 35


Oakmark Global Select Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

FORWARD FOREIGN CURRENCY CONTRACT (in thousands)

    Local
Contract
Amount		   Base
Contract
Amount		   Settlement
Date		   Valuation at
09/30/19		   Unrealized
Appreciation/
(Depreciation)		  

Foreign Currency Sold:

  

Swiss Franc

    

38,413

    

$

39,269

    

12/18/19

  

$

38,765

    

$

504

    
               

$

38,765

    

$

504

    

See accompanying Notes to Financial Statements.

36 OAKMARK FUNDS


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Oakmark.com 37


Oakmark International Fund  September 30, 2019

Summary Information

VALUE OF A $10,000 INVESTMENT

Since Inception - 09/30/92 (Unaudited)

PERFORMANCE

      

Average Annual Total Returns (as of 09/30/19)

  

 
(Unaudited)   Total Return
Last 3 Months		  

1-year

  

3-year

  

5-year

  

10-year

   Since
Inception		   Inception
Date		  

Oakmark International Fund (Investor Class)

    

-0.78

%

    

-6.41

%

    

5.74

%

    

2.80

%

    

6.63

%

    

9.06

%

  

09/30/92

  

MSCI World ex U.S. Index

    

-0.93

%

    

-0.95

%

    

6.49

%

    

3.06

%

    

4.78

%

    

5.83

%

  

 

MSCI EAFE Index17

    

-1.07

%

    

-1.34

%

    

6.48

%

    

3.27

%

    

4.90

%

    

5.69

%

  

 

Lipper International Fund Index18

    

-1.28

%

    

-1.80

%

    

6.05

%

    

3.53

%

    

5.17

%

    

6.59

%

  

 

Oakmark International Fund (Advisor Class)

    

-0.78

%

    

-6.34

%

    

N/A

      

N/A

      

N/A

      

5.13

%

  

11/30/16

  

Oakmark International Fund (Institutional Class)

    

-0.78

%

    

-6.27

%

    

N/A

      

N/A

      

N/A

      

5.20

%

  

11/30/16

  

Oakmark International Fund (Service Class)

    

-0.86

%

    

-6.70

%

    

5.44

%

    

2.48

%

    

6.27

%

    

7.17

%

  

11/04/99

  

The graph and table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

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. Total return includes change in share prices and, in each case, includes reinvestment of dividends and capital gain distributions. 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. To obtain the most recent month-end performance, please visit Oakmark.com.

TOP TEN EQUITY HOLDINGS4

   % of Net Assets  

Glencore PLC

    

4.0

    

BNP Paribas SA

    

4.0

    

Intesa Sanpaolo SpA

    

3.9

    

Daimler AG

    

3.4

    

Credit Suisse Group AG

    

3.4

    

Continental AG

    

3.4

    

CNH Industrial N.V.

    

3.3

    

Lloyds Banking Group PLC

    

3.3

    

Bayerische Motoren Werke AG

    

3.1

    

Bayer AG

    

2.8

    

FUND STATISTICS

  

Ticker*

  

OAKIX

  

Number of Equity Holdings

  

65

  

Net Assets

   $30.9 billion  

Weighted Average Market Cap

   $40.6 billion  

Median Market Cap

   $21.6 billion  

Gross Expense Ratio - Investor Class (as of 09/30/18)*

   1.01%  

Gross Expense Ratio - Investor Class (as of 09/30/19)*

   1.04%  

Net Expense Ratio - Investor Class (as of 09/30/19)*†

   0.98%  

*  This information is related to the Investor Class. Please visit Oakmark.com for information related to the Advisor, Institutional and Service Classes.

†  The net expense ratio reflects a contractual advisory fee waiver agreement through January 27, 2020.

SECTOR ALLOCATION

   % of Net Assets  

Financials

    

24.2

    

Consumer Discretionary

    

22.4

    

Industrials

    

20.1

    

Communication Services

    

9.7

    

Materials

    

9.5

    

Information Technology

    

4.0

    

Health Care

    

3.5

    

Energy

    

1.4

    

Consumer Staples

    

1.3

    

Short-Term Investments and Other

    

3.9

    

GEOGRAPHIC ALLOCATION

  

 

% of Equity

  

Europe

    

81.4

    

United Kingdom

    

22.2

    

Germany*

    

17.6

    

Switzerland

    

12.2

    

France*

    

12.0

    

Sweden

    

5.8

    

Netherlands*

    

4.1

    

Italy*

    

4.0

    

Ireland*

    

2.7

    

Finland*

    

0.8

    

Asia

    

12.0

    

Japan

    

4.7

    

South Korea

    

3.7

    

China

    

1.3

    

 

% of Equity

  

Asia (cont'd)

    

12.0

    

Taiwan

    

1.1

    

Indonesia

    

0.7

    

India

    

0.5

    

Australasia

    

2.2

    

Australia

    

2.2

    

North America

    

2.1

    

Canada

    

1.9

    

United States

    

0.2

    

Africa

    

1.4

    

South Africa

    

1.4

    

Latin America

    

0.9

    

Mexico

    

0.9

    

*  Euro currency countries comprise 41.2% of equity investments.

See accompanying Disclosures and Endnotes on page 87.

38 OAKMARK FUNDS


Oakmark International Fund  September 30, 2019

Portfolio Manager Commentary

David G. Herro, CFA

Portfolio Manager

oakix@oakmark.com

Michael L. Manelli, CFA

Portfolio Manager

oakix@oakmark.com

The Oakmark International Fund declined 6.4% for the fiscal year ended September 30, 2019, underperforming the MSCI World ex U.S. Index16, which declined 1.0% over the same period. For the most recent quarter, the Fund declined 0.8%, compared to the benchmark's decline of 0.9%. However, the Fund has returned an average of 9.1% per year since its inception in September 1992, outperforming the MSCI World ex U.S. Index, which has averaged 5.8% per year over the same period.

NAVER, an internet company based in South Korea, was the largest contributor for both the fiscal year and most recent quarter. The company's most recent financial results showed accelerated growth in its core search and e-commerce businesses, driven by steady growth in user traffic and improved advertising products. We continue to believe NAVER's core business will grow at a healthy rate as there remains ample room to partner with advertisers and improve the advertiser's ROI. In addition to the strong results from its core business, NAVER announced that it will spin out NAVER Financial, its financial technology business. NAVER Financial is the leading digital payments company in South Korea and has significant scope for growth and monetization. Finally, after several years of investment, NAVER's other platforms, such as Webtoons (one of the largest online comics platforms globally) and V-Live (a live streaming platform for music artists), have begun to monetize and should contribute to strong growth in the future. With accelerating growth, improving profitability and strong market positions across most of its businesses, we continue to believe NAVER is attractively valued.

Continental, a German-based company that is one of Europe's largest manufacturers of tires, automotive parts and industrial products, was the largest detractor for the quarter, declining 12%. In late July, the company issued preliminary second-quarter earnings results and a second-half profit warning. Although the warning itself was somewhat expected, analysts were surprised by the magnitude of the shortfall. In early August, Continental's official second-quarter results showed weaker sales and earnings from the year-ago period, largely driven by the automotive division. At the end of the quarter, the company announced a large restructuring program that impacted 15,000 jobs and targeted 500 million euros of cost savings. We believe that this is a good and necessary decision by management and that more restructuring and portfolio actions will follow. Continental's tire business operates a network of large, modern factories in low-cost countries, which gives the company a benefit over other global tire manufacturers that are burdened with onerous legacy cost structures in smaller, less-automated plants. In its automotive business, Continental has the leading market share in concentrated segments of the automotive supply chain where it derives a good

amount of revenue from high value-added components. Further, we believe that secular trends that are affecting the automotive industry, such as connectivity, electrification and autonomous driving, will provide significant growth opportunities in the coming years. Thus, while the company is currently challenged by short-term cyclical issues, we believe it is an attractive long-term investment.

Glencore, based in Switzerland and one of the world's largest mining firms, was the largest detractor for the fiscal year, declining 26%. Weak commodity prices have hurt the company's earnings and share price. Although commodity prices are out of the company's control, management has done an excellent job of maintaining margins across most of its business while working to optimize and ramp production at three sites that have pressured margins and near-term profits. We expect this pressure to ease as production improves at these sites. Shares also retreated on news that the U.S. Commodity Futures Trading Commission (CFTC) was conducting an investigation to determine whether the company's subsidiaries violated certain Commodity Exchange Act provisions or CFTC regulations. Management has pledged to cooperate with the CFTC and assigned the company's investigations committee to manage its response. We do not believe this represents a material risk to Glencore's business. Despite the company's lower earnings, we were pleased that Glencore generated a healthy amount of free cash flow, reaching $3.1 billion at the end of the most recent reporting period, which was ahead of our estimates. Lastly, the company has repurchased $1.3 billion of the current $2 billion share buyback plan and has intentions to complete the program by the end of 2019. Our investment thesis for Glencore remains intact.

During the quarter, we sold our holdings of Alimentation Couche-Tard (Canada) and Danone (France) as they approached our estimates of intrinsic value. We initiated a position in Henkel (Germany), a manufacturer of adhesive solutions and home and beauty care products; OpenText (Canada), an enterprise information management software and solution provider; and UPM-Kymmene (Finland), a manufacturer and distributor of pulp, graphic paper and pressure-sensitive label materials. We also received shares of Prosus (Netherlands) as part of a corporate action related to our holding of Naspers (South Africa). Prosus is a Dutch holding company that was carved out of Naspers during the third quarter, though Naspers retained a 74% stake in the company. Prosus owns stakes in multiple leading internet businesses, such as Tencent (leading social network in China), Delivery Hero (one of the leading food delivery companies), Mail.ru (largest social network in Russia) and Ctrip (largest OTA in China). In addition, the company has a valuable online classifieds business, called OLX, and also controls stakes

See accompanying Disclosures and Endnotes on page 87.

Oakmark.com 39


Oakmark International Fund  September 30, 2019

Portfolio Manager Commentary (continued)

in several other private companies. Similar to our investment thesis with Naspers, we are attracted to Prosus due to its valuable internet holdings, management's strong capital allocation track record and its attractive valuation.

We continue to believe the Swiss franc is overvalued versus the U.S. dollar. As a result, we defensively hedged a portion of the Fund's exposure. Approximately 14% of the Swiss franc exposure was hedged at quarter end.

Geographically, we ended the quarter with approximately 81.4% of our holdings in Europe and the U.K., 12.0% in Asia and 2.2% in Australasia. The remaining positions are 1.4% in South Africa, 2.0% in North America (Canada and the U.S.) and 0.9% in Latin America (Mexico).

We thank you for your continued support.

See accompanying Disclosures and Endnotes on page 87.

40 OAKMARK FUNDS


Oakmark International Fund  September 30, 2019

Schedule of Investments (in thousands)

   

Shares

  

Value

  

COMMON STOCKS - 95.9%

  

FINANCIALS - 24.2%

  

BANKS - 14.2%

  

BNP Paribas SA (France)

    

25,352

    

$

1,234,346

    

Intesa Sanpaolo SpA (Italy)

    

504,873

      

1,197,148

    
Lloyds Banking Group PLC
(United Kingdom)		    

1,515,803

      

1,008,664

    
Royal Bank of Scotland Group PLC
(United Kingdom)		    

230,766

      

589,040

    

Bank Mandiri Persero Tbk PT (Indonesia)

    

449,311

      

220,778

    

Axis Bank, Ltd. (India)

    

15,357

      

148,433

    
         

4,398,409

    

DIVERSIFIED FINANCIALS - 7.6%

  

Credit Suisse Group AG (Switzerland)

    

85,239

      

1,044,935

    

EXOR N.V. (Netherlands) (a)

    

9,880

      

662,053

    

Schroders PLC (United Kingdom)

    

11,283

      

426,580

    

AMP, Ltd. (Australia) (a)

    

162,022

      

199,576

    
Schroders PLC, Non-Voting
(United Kingdom)		    

31

      

935

    
         

2,334,079

    

INSURANCE - 2.4%

  

Allianz SE (Germany)

    

2,868

      

668,396

    

Willis Towers Watson PLC (United States)

    

331

      

63,814

    
         

732,210

    
         

7,464,698

    

CONSUMER DISCRETIONARY - 22.4%

  

AUTOMOBILES & COMPONENTS - 13.4%

  

Daimler AG (Germany)

    

21,036

      

1,045,982

    

Continental AG (Germany)

    

8,084

      

1,037,088

    

Bayerische Motoren Werke AG (Germany)

    

13,772

      

969,534

    

Valeo SA (France) (a)

    

18,749

      

607,947

    

Toyota Motor Corp. (Japan)

    

7,459

      

497,811

    
         

4,158,362

    

RETAILING - 4.5%

  
Hennes & Mauritz AB (H&M) - Class B
(Sweden)		    

37,463

      

726,274

    

Naspers, Ltd. (South Africa)

    

2,810

      

425,826

    

Prosus N.V. (Netherlands) (b)

    

3,174

      

232,977

    
         

1,385,077

    

CONSUMER DURABLES & APPAREL - 2.6%

  

Cie Financiere Richemont SA (Switzerland)

    

4,844

      

355,350

    
The Swatch Group AG, Bearer Shares
(Switzerland)		    

907

      

240,736

    

EssilorLuxottica SA (France)

    

1,493

      

215,220

    
         

811,306

    

CONSUMER SERVICES - 1.9%

  

Accor SA (France) (a)

    

13,900

      

579,492

    
         

6,934,237

    
   

Shares

  

Value

  

INDUSTRIALS - 20.1%

  

CAPITAL GOODS - 14.5%

  

CNH Industrial N.V. (United Kingdom) (a)

    

99,146

    

$

1,009,317

    

Rolls-Royce Holdings PLC (United Kingdom) (b)

    

67,941

      

661,948

    

Ashtead Group PLC (United Kingdom) (a)

    

20,813

      

579,383

    

Komatsu, Ltd. (Japan)

    

25,118

      

574,946

    

Volvo AB, Class B (Sweden)

    

37,718

      

529,718

    

SKF AB, Class B (Sweden) (a)

    

28,076

      

464,037

    

Ferguson PLC (United Kingdom)

    

4,933

      

360,523

    

Smiths Group PLC (United Kingdom)

    

13,430

      

259,244

    

Meggitt PLC (United Kingdom)

    

5,184

      

40,478

    
         

4,479,594

    

TRANSPORTATION - 3.4%

  

Ryanair Holdings PLC (Ireland) (a) (b) (c)

    

12,343

      

819,332

    

Kuehne + Nagel International AG (Switzerland)

    

1,666

      

245,395

    
         

1,064,727

    

COMMERCIAL & PROFESSIONAL SERVICES - 2.2%

  

Bureau Veritas SA (France)

    

11,572

      

278,751

    

G4S PLC (United Kingdom) (a)

    

106,181

      

247,009

    

Brambles, Ltd. (Australia)

    

18,741

      

144,200

    
         

669,960

    
         

6,214,281

    

COMMUNICATION SERVICES - 9.7%

  

MEDIA & ENTERTAINMENT - 9.7%

  

NAVER Corp. (South Korea)

    

5,075

      

666,129

    

Publicis Groupe SA (France) (a)

    

13,067

      

642,598

    

WPP PLC (United Kingdom)

    

42,842

      

536,241

    

Baidu, Inc. (China) (b) (c)

    

3,762

      

386,564

    
Liberty Global PLC, Class A
(United Kingdom) (b)		    

13,531

      

334,901

    

Grupo Televisa SAB (Mexico) (c)

    

27,065

      

264,698

    
Liberty Global PLC, Class C
(United Kingdom) (b)		    

7,282

      

173,232

    
         

3,004,363

    

MATERIALS - 9.5%

  

Glencore PLC (Switzerland)

    

411,384

      

1,237,987

    

thyssenkrupp AG (Germany) (a)

    

45,209

      

626,046

    

LafargeHolcim, Ltd. (Switzerland)

    

9,678

      

476,292

    

Orica, Ltd. (Australia) (a)

    

21,095

      

320,927

    

UPM-Kymmene OYJ (Finland)

    

7,864

      

232,450

    

Akzo Nobel N.V. (Netherlands)

    

346

      

30,811

    
         

2,924,513

    

See accompanying Notes to Financial Statements.

Oakmark.com 41


Oakmark International Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

   

Shares

  

Value

  

COMMON STOCKS - 95.9% (continued)

  

INFORMATION TECHNOLOGY - 4.0%

  

SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.0%

  
Taiwan Semiconductor Manufacturing Co.,
Ltd. (Taiwan)		    

36,909

    

$

327,809

    

ASML Holding N.V. (Netherlands)

    

1,142

      

282,877

    
         

610,686

    

TECHNOLOGY HARDWARE & EQUIPMENT - 1.6%

  

Samsung Electronics Co., Ltd. (South Korea)

    

10,543

      

432,334

    

Omron Corp. (Japan)

    

1,347

      

73,620

    
         

505,954

    

SOFTWARE & SERVICES - 0.4%

  

Open Text Corp. (Canada)

    

2,746

      

112,024

    
         

1,228,664

    

HEALTH CARE - 3.5%

  

PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES - 2.8%

  

Bayer AG (Germany)

    

12,181

      

858,896

    

HEALTH CARE EQUIPMENT & SERVICES - 0.7%

  

Olympus Corp. (Japan)

    

17,425

      

234,644

    
         

1,093,540

    

ENERGY - 1.4%

  

Cenovus Energy, Inc. (Canada)

    

45,853

      

430,198

    

CONSUMER STAPLES - 1.1%

  

HOUSEHOLD & PERSONAL PRODUCTS - 0.9%

  
Reckitt Benckiser Group PLC
(United Kingdom)		    

3,448

      

268,943

    

Henkel AG & Co. KGaA (Germany)

    

212

      

19,419

    
         

288,362

    

FOOD, BEVERAGE & TOBACCO - 0.2%

  

Nestlé SA (Switzerland)

    

295

      

31,977

    

Diageo PLC (United Kingdom)

    

386

      

15,838

    
         

47,815

    
         

336,177

    
TOTAL COMMON STOCKS - 95.9%
(COST $32,396,120)		        

29,630,671

    

PREFERRED STOCKS - 0.2%

  

CONSUMER STAPLES - 0.2%

  

HOUSEHOLD & PERSONAL PRODUCTS - 0.2%

  

Henkel AG & Co. KGaA (Germany)

    

776

      

76,749

    
TOTAL PREFERRED STOCKS - 0.2%
(COST $78,845)		        

76,749

    
   

Par Value

  

Value

  

SHORT-TERM INVESTMENTS - 3.3%

  

GOVERNMENT AND AGENCY SECURITIES - 2.1%

  
Federal National Mortgage Association,
1.71%, due 10/01/19 (d)		  

$

625,000

    

$

625,000

    
Federal Home Loan Bank,
1.51%, due 10/01/19 (d)		    

25,000

      

25,000

    
Total Government and Agency
Securities - 2.1%
(Cost $650,000)		        

650,000

    

COMMERCIAL PAPER - 1.0%

  
MetLife Short Term Funding LLC, 144A,
1.96%, due 10/11/19 - 10/17/19 (d) (e)		    

100,000

      

99,912

    
General Mills, Inc., 144A,
2.18% - 2.31%,
due 10/03/19 - 10/10/19 (d) (e)		    

53,879

      

53,856

    
Anthem, Inc., 144A,
2.08% - 2.22%,
due 10/03/19 - 10/04/19 (d) (e)		    

50,000

      

49,989

    
Walgreens Boots,
2.27% - 2.32%,
due 10/18/19 - 11/19/19 (d)		    

44,775

      

44,688

    
BMW US Capital LLC, 144A,
1.94%, due 10/01/19 (d) (e)		    

25,000

      

24,999

    
Schlumberger Holdings Corp., 144A,
2.18%, due 10/17/19 (d) (e)		    

15,000

      

14,983

    
Campbell Soup Co., 144A,
2.35%, due 11/25/19 (d) (e)		    

10,000

      

9,965

    
Total Commercial Paper - 1.0%
(Cost $298,419)		        

298,392

    

REPURCHASE AGREEMENT - 0.2%

  
Fixed Income Clearing Corp. Repurchase
Agreement, 1.10% dated 09/30/19 due
10/01/19, repurchase price $78,262,
collateralized by a United States Treasury
Note, 2.500% due 03/31/23, value plus
accrued interest of $79,829
(Cost: $78,260)		    

78,260

      

78,260

    
TOTAL SHORT-TERM INVESTMENTS - 3.3%
(COST $1,026,679)		        

1,026,652

    
TOTAL INVESTMENTS - 99.4%
(COST $33,501,644)		        

30,734,072

    

Foreign Currencies (Cost $-3,928) - 0.0% (f)

        

(4,034

)

  

Other Assets In Excess of Liabilities - 0.6%

        

181,698

    

TOTAL NET ASSETS - 100.0%

      

$

30,911,736

    

See accompanying Notes to Financial Statements.

42 OAKMARK FUNDS


Oakmark International Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

One security, Taiwan Semiconductor Manufacturing Co. Ltd., with aggregate value of $327,809, was valued at a fair value in accordance with procedures established by the Board of Trustees (in thousands).

(a)  See Note 5 in the Notes to Financial Statements regarding investments in affiliated issuers.

(b)  Non-income producing security

(c)  Sponsored American Depositary Receipt

(d)  The rate shown represents the annualized yield at the time of purchase; not a coupon rate.

(e)  Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold, normally only to qualified institutional buyers.

(f)  Amount rounds to less than 0.1%.

See accompanying Notes to Financial Statements.

Oakmark.com 43


Oakmark International Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

FORWARD FOREIGN CURRENCY CONTRACT (in thousands)

    Local
Contract
Amount		   Base
Contract
Amount		   Settlement
Date		   Valuation at
09/30/19		   Unrealized
Appreciation/
(Depreciation)		  

Foreign Currency Sold:

  

Swiss Franc

    

327,871

    

$

335,181

    

12/18/19

  

$

330,876

    

$

4,305

    
               

$

330,876

    

$

4,305

    

SCHEDULE OF TRANSACTIONS WITH AFFILIATED ISSUERS

Purchase and sale transactions and dividend and interest income earned during the period on these securities are set forth below (in thousands). The industry, country or geographic region for each of the below affiliates can be found in the Schedule of Investments.

Affiliates

   Shares
Held		   Purchases
(Cost)		   Sales
(Proceeds)		   Realized
Gain/(Loss)		   Change in
Unrealized		   Dividend
Income		   Value
September 30,
2018		   Value
September 30,
2019		   Percent of
Net Assets		  

Accor SA

    

13,900

    

$

306,975

    

$

109,909

    

$

(21,995

)

  

$

(73,795

)

  

$

18,571

    

$

478,216

    

$

579,492

      

1.9

%

  

AMP, Ltd. (a)

    

162,022

      

27,013

      

16,822

      

(17,079

)

    

(138,967

)

    

4,280

      

345,431

      

199,576

      

0.6

%

  
Ashtead
Group PLC (a)		    

20,813

      

260,318

      

225,578

      

13,159

      

(52,648

)

    

11,062

      

584,132

      

579,383

      

1.9

%

  

CNH Industrial N.V.

    

99,146

      

10,149

      

150,525

      

(30,168

)

    

(172,464

)

    

20,415

      

1,352,325

      

1,009,317

      

3.3

%

  

EXOR N.V. (a)

    

9,880

      

16,556

      

276,150

      

38,005

      

(49,751

)

    

5,457

      

933,393

      

662,053

      

2.1

%

  

G4S PLC

    

106,181

      

42,431

      

34,042

      

(15,599

)

    

(73,244

)

    

12,043

      

327,463

      

247,009

      

0.8

%

  

Orica, Ltd.

    

21,095

      

480

      

230,650

      

(129,120

)

    

213,397

      

13,239

      

466,819

      

320,927

      

1.0

%

  

Publicis Groupe SA

    

13,067

      

267,994

      

384,821

      

(68,887

)

    

(45,631

)

    

26,613

      

873,943

      

642,598

      

2.1

%

  

Ryanair Holdings PLC

    

12,343

      

394,316

      

0

      

0

      

(257,573

)

    

0

      

682,589

      

819,332

      

2.7

%

  
SKF AB, Class B    

28,076

      

31,367

      

34,028

      

(11,188

)

    

(78,030

)

    

16,920

      

555,916

      

464,037

      

1.5

%

  

thyssenkrupp AG

    

45,209

      

662,224

      

0

      

0

      

(276,558

)

    

5,881

      

240,380

      

626,046

      

2.0

%

  

Valeo SA

    

18,749

      

114,220

      

0

      

0

      

(167,212

)

    

26,049

      

660,938

      

607,947

      

2.0

%

  

TOTAL

    

550,481

    

$

2,134,043

    

$

1,462,525

    

$

(242,872

)

  

$

(1,172,476

)

  

$

160,530

    

$

7,501,545

    

$

6,757,717

      

21.9

%

  

(a)  Due to transactions during the year ended September 30, 2019, the company is no longer an affiliate

See accompanying Notes to Financial Statements.

44 OAKMARK FUNDS


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Oakmark.com 45


Oakmark International Small Cap Fund  September 30, 2019

Summary Information

VALUE OF A $10,000 INVESTMENT

Since 09/30/09 (Unaudited)

PERFORMANCE

       

Average Annual Total Returns (as of 09/30/19)

      
(Unaudited)   Total Return
Last 3 Months		  

1-year

  

3-year

  

5-year

  

10-year

   Since
Inception		   Inception
Date		  

Oakmark International Small Cap Fund (Investor Class)

    

-0.81

%

    

-2.91

%

    

4.60

%

    

3.29

%

    

6.01

%

    

8.64

%

  

11/01/95

  

MSCI World ex U.S. Small Cap Index

    

-0.27

%

    

-5.62

%

    

5.54

%

    

5.14

%

    

6.93

%

    

N/A

        

MSCI World ex U.S. Index16

    

-0.93

%

    

-0.95

%

    

6.49

%

    

3.06

%

    

4.78

%

    

5.07

%

      

Lipper International Small Cap Fund Index20

    

-1.94

%

    

-6.19

%

    

5.01

%

    

4.56

%

    

7.40

%

    

N/A

        

Oakmark International Small Cap Fund (Advisor Class)

    

-0.68

%

    

-2.72

%

    

N/A

      

N/A

      

N/A

      

5.59

%

  

11/30/16

  

Oakmark International Small Cap Fund (Institutional Class)

    

-0.75

%

    

-2.75

%

    

N/A

      

N/A

      

N/A

      

5.66

%

  

11/30/16

  

Oakmark International Small Cap Fund (Service Class)

    

-0.82

%

    

-3.11

%

    

4.30

%

    

2.99

%

    

5.69

%

    

8.51

%

  

01/08/01

  

The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

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. Total return includes change in share prices and, in each case, includes reinvestment of dividends and capital gain distributions. 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 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, please visit Oakmark.com.

TOP TEN EQUITY HOLDINGS4

   % of Net Assets  

Konecranes OYJ

    

3.8

    

Julius Baer Group, Ltd.

    

3.7

    

Duerr AG

    

3.5

    

BNK Financial Group, Inc.

    

3.3

    

Atea ASA

    

2.8

    

Incitec Pivot, Ltd.

    

2.7

    

ISS A/S

    

2.7

    

Pirelli & C SpA

    

2.6

    

Azimut Holding SpA

    

2.6

    

Controladora Vuela Cia de Aviacion SAB de CV

    

2.6

    

FUND STATISTICS

  

Ticker*

  

OAKEX

  

Number of Equity Holdings

  

60

  

Net Assets

   $1.4 billion  

Weighted Average Market Cap

   $3.5 billion  

Median Market Cap

   $2.5 billion  

Gross Expense Ratio - Investor Class (as of 09/30/18)*

   1.36%  

Gross Expense Ratio - Investor Class (as of 09/30/19)*

   1.38%  

Net Expense Ratio - Investor Class (as of 09/30/19)*

   1.38%  

*  This information is related to the Investor Class. Please visit Oakmark.com for information related to the Advisor, Institutional and Service Classes.

SECTOR ALLOCATION

   % of Net Assets  

Industrials

    

41.2

    

Financials

    

17.4

    

Communication Services

    

10.0

    

Consumer Discretionary

    

7.4

    

Health Care

    

5.5

    

Materials

    

5.1

    

Consumer Staples

    

4.5

    

Information Technology

    

3.6

    

Real Estate

    

1.2

    

Short Term Investments and Other

    

4.1

    

GEOGRAPHIC ALLOCATION

  

 

% of Equity

  

Europe

    

70.2

    

United Kingdom

    

23.5

    

Switzerland

    

10.0

    

Finland*

    

6.8

    

Italy*

    

6.7

    

Sweden

    

4.4

    

Denmark

    

3.7

    

Germany*

    

3.7

    

Norway

    

2.9

    

Spain*

    

2.1

    

Belgium*

    

1.9

    

Netherlands*

    

1.9

    

France*

    

1.8

    

Portugal*

    

0.8

    

 

% of Equity

  

Asia

    

13.6

    

South Korea

    

5.3

    

Japan

    

4.5

    

Indonesia

    

3.1

    

India

    

0.4

    

Hong Kong

    

0.3

    

Australasia

    

8.3

    

Australia

    

7.1

    

New Zealand

    

1.2

    

Latin America

    

5.0

    

Mexico

    

5.0

    

North America

    

2.9

    

Canada

    

2.9

    

*  Euro currency countries comprise 25.7% of equity investments

See accompanying Disclosures and Endnotes on page 87.

46 OAKMARK FUNDS


Oakmark International Small Cap Fund  September 30, 2019

Portfolio Manager Commentary

David G. Herro, CFA

Portfolio Manager

oakex@oakmark.com

Michael L. Manelli, CFA

Portfolio Manager

oakex@oakmark.com

Justin D. Hance, CFA

Portfolio Manager

oakex@oakmark.com

The Oakmark International Small Cap Fund returned –2.9% for the fiscal year that ended September 30, compared to its benchmark, the MSCI World ex U.S. Small Cap Index19, which returned –5.6% for the same period. The Fund slightly underperformed the benchmark for the recent quarter end, returning –0.8%, compared to the MSCI World ex U.S. Small Cap Index return of –0.3% for the period. Since the Fund's inception in November 1995, it has returned an average of 8.6% per year.

The top contributing stock for the quarter was Tower Bersama Infrastructure, an Indonesia-based provider of telecommunications infrastructure support and one of the largest independent tower operators in the country. During the quarter, investors responded favorably to Tower Bersama's first-half earnings report. The company's full-year expectations call for a business mix shift toward the more lucrative co-locations model (in which telecommunications companies lease tower space on a tower that is already constructed). What we value about the co-location model is that once a tower is built, additional tenants come with high incremental returns on capital employed and the Indonesia telco networks will require more of these co-locations over the medium to long term. Overall, we appreciate that management seems to be returns focused, operationally disciplined, financially sophisticated and is invested alongside its shareholders, adding to our confidence in the investment.

For the fiscal one-year period, the top contributing stock to performance was Element Fleet Management, a Canada-based firm, offering acquisition, servicing and financing for vehicles, spanning from cars and trucks to municipal and industrial fleets. The stock's strong performance was driven by significant fundamental improvement and de-leveraging, both of which were initiated by the new CEO Jay Forbes who joined Element in June 2018. Forbes put in place a two-year transformation plan with the goal to leverage Element's leading scale in the North American marketplace, and the initial signs have been quite positive. To date, customer churn has significantly declined, following the completion of a new IT system, and organizational complexity has been significantly reduced. The company's cash flow generation has also improved, enabling Element to reduce its debt and strengthen its balance sheet. The company's recent adoption of a new syndication structure will further reduce balance sheet leverage as the company will be able to sell originated assets to third parties rather than keeping those assets on the balance sheet. This syndication structure will also enable Element to grow more rapidly and further widen its unit cost competitive advantage versus peers. This should lead to an additional increase in return on invested capital and earnings per share.

The past two years have been a period of elevated volatility in equity markets. As we've discussed in the past, we believe the market often overreacts to near-term news flow, which can present opportunity for investors with longer term time horizons.

When looking at our top 10 contributors to fiscal-year 2019 performance, half were among the 10 largest detractors of the fiscal-year 2018 performance. In addition to Element Financial (discussed above), Travis Perkins (U.K.), Azimut Holding (Italy), Sarana Menara Nusantara (Indonesia) and IWG (Switzerland) went from top 10 detractors a year ago to top 10 contributors this year. Volatile markets can be exaggerated, particularly in the small-cap space. We make our investment decisions based on our view of intrinsic value and the discount a company is trading at versus our estimate of fair value, not based on short-term share movements. As the past 12 months have shown, yesterday's losers can quickly become today's winners.

The largest detractor to the Fund's performance for both the quarter and the one-year period was Germany-based Duerr, a global mechanical and plant engineering firm for the automotive industry. Duerr operates in five segments: automotive paint and assembly systems; paint, sealants and adhesives application technology; measuring and process systems; exhaust-air purification and clean technology systems; and woodworking machinery and systems. Late in July, the company pre-released its first-half earnings results and also issued a profit warning for full year 2019, driven by weakness in the HOMAG (maker of wood processing machines) and in the measuring and process systems businesses. In HOMAG, sales in China were cut in half and margins fell short of expectations. In addition, sales weakness plagued the measuring and process systems segment. Slower and lower prepayments for paint shops are also negatively impacting working capital, and Duerr now expects free cash flow to be lower year-over-year. Although the current environment is more challenging than anticipated, we recently met with Duerr's management, and the company is very focused on taking action to improve its financial results. Duerr has a market-leading position in nearly everything it does, and management has a strong track record of value creation and operational improvement. We believe it remains a very attractive investment.

We initiated one new holding in the Fund this quarter: oOh!media, an Australia-based, out-of-home advertising operator with operations focused in Australia and New Zealand. The company provides physical and digital advertising in places, such as airports, restaurants, shopping centers, office buildings and gyms, as well as along the roadside. We eliminated positions in dormakaba Holding (Switzerland) and Ingenico Group (France). Also during the quarter, Panalpina Welttransport (Switzerland) exited the Fund as the company was acquired by portfolio holding DSV (Denmark). In addition, GrandVision (Netherlands) will soon be acquired by EssilorLuxottica (France), and with its stock trading within 5% of its offer price, we exited our position in GrandVision during the quarter.

Geographically, we ended the quarter with approximately 67% of our holdings in Europe and the U.K., 13% in Asia and 8% in

See accompanying Disclosures and Endnotes on page 87.

Oakmark.com 47


Oakmark International Small Cap Fund  September 30, 2019

Portfolio Manager Commentary (continued)

Australasia. The remaining positions are in the Americas with 5% in Latin America (Mexico) and 3% in North America (Canada).

We continue to believe both the Swiss franc and Norwegian krone are overvalued versus the U.S. dollar, so the Fund remains hedged against these currencies. As a result, we ended September with hedges on 12% of the Fund's franc exposure and 17% of the krone exposure.

During this volatile year, we thank you, our shareholders, for your continued confidence and support. We remain committed to finding attractive, undervalued foreign companies with management teams that are dedicated to building shareholder value.

See accompanying Disclosures and Endnotes on page 87.

48 OAKMARK FUNDS


Oakmark International Small Cap Fund  September 30, 2019

Schedule of Investments (in thousands)

   

Shares

  

Value

  

COMMON STOCKS - 95.9%

  

INDUSTRIALS - 41.2%

  

CAPITAL GOODS - 19.1%

  

Konecranes OYJ (Finland)

    

1,689

    

$

54,164

    

Duerr AG (Germany)

    

1,937

      

50,256

    

Travis Perkins PLC (United Kingdom)

    

2,259

      

35,850

    

Sulzer AG (Switzerland)

    

252

      

24,769

    
Morgan Advanced Materials PLC
(United Kingdom)		    

6,751

      

21,615

    

Metso OYJ (Finland)

    

578

      

21,575

    
Howden Joinery Group PLC
(United Kingdom)		    

2,804

      

19,320

    

Outotec OYJ (Finland) (a)

    

3,028

      

17,755

    

Bucher Industries AG (Switzerland)

    

46

      

14,371

    

Fluidra SA (Spain) (a)

    

776

      

9,203

    

Wajax Corp. (Canada)

    

357

      

4,346

    
         

273,224

    

COMMERCIAL & PROFESSIONAL SERVICES - 17.5%

  

ISS A/S (Denmark)

    

1,540

      

38,097

    
Babcock International Group PLC
(United Kingdom)		    

4,638

      

31,817

    

Pagegroup PLC (United Kingdom)

    

5,528

      

29,850

    

Mitie Group PLC (United Kingdom) (b)

    

15,783

      

28,411

    

Hays PLC (United Kingdom)

    

14,254

      

26,429

    

Randstad N.V. (Netherlands)

    

517

      

25,408

    

Applus Services SA (Spain)

    

1,466

      

19,020

    

Loomis AB, Class B (Sweden)

    

502

      

17,627

    

IWG PLC (Switzerland)

    

3,391

      

17,051

    

SThree PLC (United Kingdom)

    

4,227

      

15,748

    
         

249,458

    

TRANSPORTATION - 4.6%

  
Controladora Vuela Cia de Aviacion SAB de CV
(Mexico) (a) (c)		    

3,638

      

36,418

    

DSV AS (Denmark)

    

137

      

13,053

    

BBA Aviation PLC (United Kingdom)

    

2,190

      

8,407

    

Freightways, Ltd. (New Zealand)

    

1,471

      

7,479

    
         

65,357

    
         

588,039

    

FINANCIALS - 17.4%

  

DIVERSIFIED FINANCIALS - 12.3%

  

Julius Baer Group, Ltd. (Switzerland) (a)

    

1,204

      

53,341

    

Azimut Holding SpA (Italy)

    

1,962

      

36,816

    

Element Fleet Management Corp. (Canada)

    

4,382

      

35,058

    

EFG International AG (Switzerland)

    

4,287

      

26,591

    

Standard Life Aberdeen PLC (United Kingdom)

    

6,877

      

24,168

    
         

175,974

    

BANKS - 5.1%

  

BNK Financial Group, Inc. (South Korea)

    

7,751

      

46,589

    

DGB Financial Group, Inc. (South Korea)

    

4,109

      

25,594

    
         

72,183

    
         

248,157

    
   

Shares

  

Value

  

COMMUNICATION SERVICES - 10.0%

  

MEDIA & ENTERTAINMENT - 6.4%

  

Criteo SA (France) (a) (c)

    

1,326

    

$

24,789

    

Megacable Holdings SAB de CV (Mexico)

    

5,117

      

20,607

    

Hakuhodo DY Holdings, Inc. (Japan)

    

1,006

      

14,529

    

oOh!media, Ltd. (Australia)

    

6,413

      

12,379

    

NOS SGPS SA (Portugal)

    

1,907

      

10,411

    

SKY Network Television, Ltd. (New Zealand)

    

12,123

      

8,502

    
         

91,217

    

TELECOMMUNICATION SERVICES - 3.6%

  
Tower Bersama Infrastructure Tbk PT
(Indonesia)		    

57,541

      

24,828

    
Sarana Menara Nusantara Tbk PT
(Indonesia)		    

391,216

      

18,052

    

Bharti Infratel, Ltd. (India)

    

1,493

      

5,419

    

HKBN, Ltd. (Hong Kong)

    

1,959

      

3,609

    
         

51,908

    
         

143,125

    

CONSUMER DISCRETIONARY - 7.4%

  

AUTOMOBILES & COMPONENTS - 5.7%

  

Pirelli & C SpA (Italy)

    

6,381

      

37,750

    

Autoliv, Inc. (Sweden)

    

348

      

27,434

    

Dometic Group AB (Sweden)

    

1,934

      

15,170

    
         

80,354

    

CONSUMER SERVICES - 1.7%

  

Autogrill SpA (Italy)

    

1,835

      

17,768

    

Dignity PLC (United Kingdom)

    

1,099

      

6,890

    
         

24,658

    
         

105,012

    

HEALTH CARE - 5.5%

  

HEALTH CARE EQUIPMENT & SERVICES - 5.5%

  

Healius, Ltd. (Australia)

    

15,662

      

34,039

    

ConvaTec Group PLC (United Kingdom)

    

14,641

      

31,539

    

Ansell, Ltd. (Australia)

    

700

      

12,949

    
         

78,527

    

MATERIALS - 5.1%

  

Incitec Pivot, Ltd. (Australia)

    

16,923

      

38,722

    

DS Smith PLC (United Kingdom)

    

5,594

      

24,789

    

Titan Cement International SA (Belgium) (a)

    

420

      

8,691

    
         

72,202

    

CONSUMER STAPLES - 4.5%

  

FOOD & STAPLES RETAILING - 2.5%

  

Sugi Holdings Co., Ltd. (Japan)

    

661

      

35,736

    

HOUSEHOLD & PERSONAL PRODUCTS - 2.0%

  

Ontex Group N.V. (Belgium)

    

982

      

17,678

    
Kimberly-Clark de Mexico SAB de CV,
Class A (Mexico)		    

5,644

      

11,334

    
         

29,012

    
         

64,748

    

See accompanying Notes to Financial Statements.

Oakmark.com 49


Oakmark International Small Cap Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

   

Shares

  

Value

  

COMMON STOCKS - 95.9% (continued)

  

INFORMATION TECHNOLOGY - 3.6%

  

SOFTWARE & SERVICES - 2.8%

  

Atea ASA (Norway)

    

3,100

    

$

39,871

    

TECHNOLOGY HARDWARE & EQUIPMENT - 0.8%

  

Hirose Electric Co., Ltd. (Japan)

    

94

      

11,570

    
         

51,441

    

REAL ESTATE - 1.2%

  
LSL Property Services PLC
(United Kingdom) (b)		    

5,853

      

15,473

    

Countrywide PLC (United Kingdom) (a)

    

24,069

      

1,176

    
         

16,649

    
TOTAL COMMON STOCKS - 95.9%
(COST $1,425,135)		        

1,367,900

    
   

Par Value

  

Value

  

SHORT-TERM INVESTMENTS - 3.7%

  

REPURCHASE AGREEMENT - 1.9%

  
Fixed Income Clearing Corp. Repurchase
Agreement, 1.10% dated 09/30/2019
due 10/01/2019, repurchase price $27,056,
collateralized by a United States Treasury
Note, 2.500% due 03/31/23, value plus
accrued interest of $27,598
(Cost: $27,055)		  

$

27,055

      

27,055

    

GOVERNMENT AND AGENCY SECURITIES - 1.8%

  
Federal National Mortgage Association,
1.71%, due 10/01/19 (d)
(Cost $25,000)		    

25,000

      

25,000

    
TOTAL SHORT-TERM INVESTMENTS - 3.7%
(COST $52,055)		        

52,055

    
TOTAL INVESTMENTS - 99.6%
(COST $1,477,190)		        

1,419,955

    

Foreign Currencies (Cost $368) - 0.0% (e)

        

365

    

Other Assets In Excess of Liabilities - 0.4%

        

5,428

    

TOTAL NET ASSETS - 100.0%

      

$

1,425,748

    

(a)  Non-income producing security

(b)  See Note 5 in the Notes to Financial Statements regarding investments in affiliated issuers.

(c)  Sponsored American Depositary Receipt

(d)  The rate shown represents the annualized yield at the time of purchase; not a coupon rate.

(e)  Amount rounds to less than 0.1%.

See accompanying Notes to Financial Statements.

50 OAKMARK FUNDS


Oakmark International Small Cap Fund  September 30, 2019

Schedule of Investments (in thousands) (continued)

FORWARD FOREIGN CURRENCY CONTRACTS (in thousands)

    Local
Contract
Amount		   Base
Contract
Amount		   Settlement
Date		   Valuation at
09/30/19		   Unrealized
Appreciation/
(Depreciation)		  

Foreign Currency Sold:

  

Norwegian Krona

    

62,157

    

$

7,209

    

03/18/20

  

$

6,845

    

$

363

    

Swiss Franc

    

14,433

      

14,755

    

12/18/19

    

14,565

      

190

    
               

$

21,410

    

$

553

    

SCHEDULE OF TRANSACTIONS WITH AFFILIATED ISSUERS

Purchase and sale transactions and dividend and interest income earned during the period on these securities are set forth below (in thousands). The industry, country or geographic region for each of the below affiliates can be found in the Schedule of Investments.

Affiliates

   Shares
Held		   Purchases
(Cost)		   Sales
(Proceeds)		   Realized
Gain/(Loss)		   Change in
Unrealized		   Dividend
Income		   Value
September 30,
2018		   Value
September 30,
2019		   Percent of
Net Assets		  
LSL Property
Services PLC		    

5,853

    

$

0

    

$

8,408

      

(8,296

)

  

$

2,831

    

$

848

    

$

29,346

    

$

15,473

      

1.1

%

  

Mitie Group PLC (a)

    

15,783

      

1,463

      

20,354

      

(18,051

)

    

16,150

      

1,008

      

49,203

      

28,411

      

2.0

%

  

TOTAL

    

21,636

    

$

1,463

    

$

28,762

    

$

(26,347

)

  

$

18,981

    

$

1,856

    

$

78,549

    

$

43,884

      

3.1

%

  

(a)  Due to transactions during the year ended September 30, 2019, the company is no longer an affiliate

See accompanying Notes to Financial Statements.

Oakmark.com 51


Oakmark Funds

Statements of Assets and Liabilities—September 30, 2019

(in thousands except per share amounts)

    Oakmark
Fund		   Oakmark
Select
Fund		   Oakmark
Equity and
Income Fund		   Oakmark
Global
Fund		  

Assets

  

Investments in unaffiliated securities, at value (a)

  

$

16,208,597

    

$

4,456,074

    

$

11,870,873

    

$

1,663,176

    

Investments in affiliated securities, at value (b)

    

0

      

0

      

0

      

0

    

Cash

    

2

      

0

(c)

    

103

      

0

    

Foreign currency, at value (d)

    

0

(c)

    

0

      

0

(c)

    

0

(c)

  

Receivable for:

  

Securities sold

    

33,928

      

0

      

29,582

      

303

    

Fund shares sold

    

8,247

      

11,216

      

3,959

      

245

    

Dividends and interest from unaffiliated securities (Net of foreign tax withheld)

    

5,691

      

197

      

44,076

      

910

    

Dividends and interest from affiliated securities (Net of foreign tax withheld)

    

0

      

0

      

0

      

0

    

Forward foreign currency contracts

    

0

      

0

      

0

      

260

    

Tax reclaim from unaffiliated securities

    

338

      

28

      

381

      

3,294

    

Total receivables

    

48,204

      

11,441

      

77,998

      

5,012

    

Other assets

    

1

      

1

      

1

      

1

    

Total assets

  

$

16,256,804

    

$

4,467,516

    

$

11,948,975

    

$

1,668,189

    

Liabilities and net assets

  

Payable for:

  

Due to custodian

  

$

0

    

$

0

    

$

0

    

$

0

    

Securities purchased

    

0

      

0

      

11,739

      

0

    

Fund shares redeemed

    

15,341

      

3,092

      

95,744

      

769

    

Options written, at value

    

4,239

(e)

    

1,503

(e)

    

0

      

0

    

Investment advisory fee

    

1,885

      

591

      

1,218

      

252

    

Other shareholder servicing fees

    

2,519

      

743

      

2,172

      

211

    

Transfer and dividend disbursing agent fees

    

159

      

90

      

103

      

42

    

Trustee fees

    

3

      

7

      

4

      

2

    

Deferred trustee compensation

    

1,021

      

416

      

1,029

      

236

    

Other

    

728

      

263

      

609

      

307

    

Total liabilities

    

25,895

      

6,705

      

112,618

      

1,819

    

Net assets applicable to Fund shares outstanding

  

$

16,230,909

    

$

4,460,811

    

$

11,836,357

    

$

1,666,370

    

Analysis of net assets

  

Paid in capital

  

$

9,828,605

    

$

3,057,767

    

$

7,841,525

    

$

1,312,618

    

Distributable Earnings

    

6,402,304

      

1,403,044

      

3,994,832

      

353,752

    

Net assets applicable to Fund shares outstanding

  

$

16,230,909

    

$

4,460,811

    

$

11,836,357

    

$

1,666,370

    

Price of shares

  

Net asset value, offering and redemption price per share: Investor Class

  

$

77.89

    

$

39.20

    

$

30.30

    

$

27.52

    

Investor Class—Net assets

  

$

9,044,565

    

$

3,154,933

    

$

9,006,697

    

$

1,077,263

    

Investor Class—Shares outstanding (Unlimited shares authorized)

    

116,121

      

80,493

      

297,294

      

39,147

    

Net asset value, offering and redemption price per share: Advisor Class

  

$

77.88

    

$

39.21

    

$

30.31

    

$

27.53

    

Advisor Class—Net assets

  

$

4,786,428

    

$

638,489

    

$

1,347,630

    

$

262,978

    

Advisor Class—Shares outstanding (Unlimited shares authorized)

    

61,457

      

16,283

      

44,460

      

9,551

    

Net asset value, offering and redemption price per share: Institutional Class

  

$

77.95

    

$

39.23

    

$

30.33

    

$

27.54

    

Institutional Class—Net assets

  

$

2,302,304

    

$

660,326

    

$

1,188,886

    

$

313,779

    

Institutional Class—Shares outstanding (Unlimited shares authorized)

    

29,536

      

16,834

      

39,204

      

11,394

    

Net asset value, offering and redemption price per share: Service Class (f)

  

$

77.55

(f)

  

$

38.63

(f)

  

$

30.11

    

$

26.68

(f)

  

Service Class—Net assets

  

$

97,612

    

$

7,063

    

$

293,144

    

$

12,350

    

Service Class—Shares outstanding (Unlimited shares authorized)

    

1,259

      

183

      

9,736

      

463

    
(a) Identified cost of investments in unaffiliated securities.  

$

11,071,958

    

$

2,979,249

    

$

8,831,776

    

$

1,350,873

    
(b) Identified cost of investments in affiliated securities.    

0

      

0

      

0

      

0

    
(c) Amount rounds to less than $1,000.                                  
(d) Identified cost of foreign currency.    

0

      

0

      

0

      

0

    
(e) Written options premiums received of $5,768 and $2,046 (in thousands) for the Oakmark Fund and the Oakmark Select Fund, respectively.                                  
(f) Net assets have been rounded for presentation purposes. The net asset value per share shown is as reported on September 30, 2019.                                  

See accompanying Notes to Financial Statements.

52 OAKMARK FUNDS


    Oakmark
Global Select
Fund		   Oakmark
International
Fund		   Oakmark
International
Small Cap Fund		  

Assets

  

Investments in unaffiliated securities, at value (a)

  

$

1,795,780

    

$

25,417,367

    

$

1,404,482

    

Investments in affiliated securities, at value (b)

    

0

      

5,316,705

      

15,473

    

Cash

    

0

      

0

      

0

    

Foreign currency, at value (d)

    

0

      

0

      

365

    

Receivable for:

  

Securities sold

    

8,893

      

82,483

      

1,741

    

Fund shares sold

    

655

      

33,040

      

2,161

    

Dividends and interest from unaffiliated securities (Net of foreign tax withheld)

    

990

      

66,830

      

2,863

    

Dividends and interest from affiliated securities (Net of foreign tax withheld)

    

0

      

4,628

      

0

    

Forward foreign currency contracts

    

504

      

4,305

      

553

    

Tax reclaim from unaffiliated securities

    

4,102

      

86,429

      

3,636

    

Total receivables

    

15,144

      

277,715

      

10,954

    

Other assets

    

1

      

2

      

1

    

Total assets

  

$

1,810,925

    

$

31,011,789

    

$

1,431,275

    

Liabilities and net assets

  

Payable for:

  

Due to custodian

  

$

8,984

    

$

4,034

    

$

0

    

Securities purchased

    

13,693

      

32,252

      

3,339

    

Fund shares redeemed

    

1,085

      

49,042

      

1,360

    

Options written, at value

    

0

      

0

      

0

    

Investment advisory fee

    

273

      

3,862

      

265

    

Other shareholder servicing fees

    

216

      

4,504

      

123

    

Transfer and dividend disbursing agent fees

    

16

      

102

      

17

    

Trustee fees

    

1

      

4

      

2

    

Deferred trustee compensation

    

171

      

1,527

      

222

    

Other

    

184

      

4,726

      

199

    

Total liabilities

    

24,623

      

100,053

      

5,527

    

Net assets applicable to Fund shares outstanding

  

$

1,786,302

    

$

30,911,736

    

$

1,425,748

    

Analysis of net assets

  

Paid in capital

  

$

1,633,304

    

$

34,516,948

    

$

1,630,172

    

Distributable Earnings

    

152,998

      

(3,605,212

)

    

(204,424

)

  

Net assets applicable to Fund shares outstanding

  

$

1,786,302

    

$

30,911,736

    

$

1,425,748

    

Price of shares

  

Net asset value, offering and redemption price per share: Investor Class

  

$

16.81

    

$

22.88

    

$

14.61

    

Investor Class—Net assets

  

$

798,435

    

$

14,446,486

    

$

546,439

    

Investor Class—Shares outstanding (Unlimited shares authorized)

    

47,497

      

631,532

      

37,390

    

Net asset value, offering and redemption price per share: Advisor Class

  

$

16.80

    

$

22.86

    

$

14.64

    

Advisor Class—Net assets

  

$

449,030

    

$

6,701,351

    

$

142,482

    

Advisor Class—Shares outstanding (Unlimited shares authorized)

    

26,724

      

293,172

      

9,735

    

Net asset value, offering and redemption price per share: Institutional Class

  

$

16.81

    

$

22.89

    

$

14.59

    

Institutional Class—Net assets

  

$

538,837

    

$

9,457,275

    

$

735,795

    

Institutional Class—Shares outstanding (Unlimited shares authorized)

    

32,049

      

413,199

      

50,425

    

Net asset value, offering and redemption price per share: Service Class (f)

  

$

0

    

$

23.00

    

$

14.51

(f)

  

Service Class—Net assets

  

$

0

    

$

306,624

    

$

1,032

    

Service Class—Shares outstanding (Unlimited shares authorized)

    

0

      

13,329

      

71

    
(a) Identified cost of investments in unaffiliated securities.  

$

1,633,301

    

$

26,655,111

    

$

1,460,689

    
(b) Identified cost of investments in affiliated securities.    

0

      

6,846,533

      

16,501

    
(c) Amount rounds to less than $1,000.                          
(d) Identified cost of foreign currency.    

0

      

0

      

368

    
(e) Written options premiums received of $5,768 and $2,046 (in thousands) for the Oakmark Fund and the Oakmark Select Fund, respectively.                          
(f) Net assets have been rounded for presentation purposes. The net asset value per share shown is as reported on September 30, 2019.                          

Oakmark.com 53


Oakmark Funds

Statements of Operations—For the Year Ended September 30, 2019

(in thousands)

    Oakmark
Fund		   Oakmark
Select
Fund		   Oakmark
Equity and
Income Fund		   Oakmark
Global
Fund		  

Investment Income:

  

Dividends from unaffiliated securities

  

$

325,063

    

$

86,618

    

$

171,551

    

$

39,814

    

Dividends from affiliated securities

    

0

      

1,485

      

0

      

0

    

Non-cash dividends from unaffiliated securities

    

9,093

      

8,762

      

0

      

16,145

    

Non-cash dividends from affiliated securities

    

0

      

0

      

0

      

0

    

Interest income from unaffiliated securities

    

26,175

      

6,296

      

160,751

      

870

    

Security lending income

    

0

      

0

      

0

      

0

    

Other income

    

0

      

0

      

7

      

0

    

Foreign taxes withheld

    

98

      

0

      

(1,871

)

    

(2,216

)

  

Total investment income

    

360,429

      

103,161

      

330,438

      

54,613

    

Expenses:

  

Investment advisory fee

    

131,570

      

42,258

      

91,857

      

18,483

    

Transfer and dividend disbursing agent fees

    

931

      

492

      

642

      

240

    

Other shareholder servicing fees—Investor Class

    

17,193

      

5,644

      

17,991

      

1,873

    

Other shareholder servicing fees—Advisor Class

    

3,620

      

217

      

738

      

158

    

Other shareholder servicing fees—Service Class

    

227

      

18

      

671

      

25

    

Service fee—Service Class

    

280

      

20

      

803

      

29

    

Reports to shareholders (benefit)

    

769

      

217

      

368

      

28

    

Custody and accounting fees

    

567

      

261

      

465

      

325

    

Registration and blue sky expenses

    

210

      

170

      

136

      

103

    

Trustees fees (benefit)

    

253

      

(378

)

    

360

      

(66

)

  

Legal fees

    

293

      

158

      

243

      

129

    

Audit and tax services fees

    

66

      

27

      

37

      

17

    

Other

    

478

      

299

      

404

      

239

    

Total expenses

    

156,457

      

49,403

      

114,715

      

21,583

    

Advisory fee waiver

    

(7,732

)

    

(3,546

)

    

(12,844

)

    

(1,078

)

  

Net expenses

    

148,725

      

45,857

      

101,871

      

20,505

    

Net investment income

  

$

211,704

    

$

57,304

    

$

228,567

    

$

34,108

    

Net realized and unrealized gain (loss):

  

Net realized gain (loss) on:

  

Unaffiliated investments

    

1,409,849

      

194,031

      

1,035,773

      

59,026

(a)

  

Affiliated investments

    

0

      

(346,707

)

    

0

      

0

    

Forward foreign currency contracts

    

0

      

0

      

0

      

1,988

    

Foreign currency transactions

    

0

      

0

      

22

      

(188

)

  

Purchased options

    

(19,135

)

    

25,725

      

0

      

0

    

Written options

    

87,126

      

20,508

      

0

      

0

    

Net realized gain (loss)

    

1,477,840

      

(106,443

)

    

1,035,795

      

60,826

    

Net change in unrealized appreciation (depreciation) on:

  

Unaffiliated investments

    

(2,949,064

)

    

(653,907

)

    

(1,099,399

)

    

(173,619

)(b)

  

Affiliated investments

    

0

      

54,684

      

0

      

0

    

Forward foreign currency contracts

    

0

      

0

      

0

      

(263

)

  

Foreign currency translation

    

0

      

0

      

0

      

(155

)

  

Written options

    

2,097

      

543

      

0

      

0

    

Net change in unrealized appreciation (depreciation)

    

(2,946,967

)

    

(598,680

)

    

(1,099,399

)

    

(174,037

)

  

Net realized and unrealized loss

    

(1,469,127

)

    

(705,123

)

    

(63,604

)

    

(113,211

)

  

Net increase (decrease) in net assets resulting from operations

  

$

(1,257,423

)

  

$

(647,819

)

  

$

164,963

    

$

(79,103

)

  

(a)  Net of capital gain withholding taxes of $313 and $5,492 (in thousands) for the Oakmark Global Fund and the Oakmark International Fund, respectively.

(b)  Includes net change in capital gain withholding taxes of $(140) and $(3,874) (in thousands) for the Oakmark Global Fund and the Oakmark International Fund, respectively.

See accompanying Notes to Financial Statements.

54 OAKMARK FUNDS


    Oakmark
Global Select
Fund		   Oakmark
International
Fund		   Oakmark
International
Small Cap Fund		  

Investment Income:

  

Dividends from unaffiliated securities

  

$

59,364

    

$

1,034,931

    

$

47,923

    

Dividends from affiliated securities

    

0

      

130,180

      

1,856

    

Non-cash dividends from unaffiliated securities

    

4,516

      

249,181

      

1,203

    

Non-cash dividends from affiliated securities

    

0

      

30,350

      

0

    

Interest income from unaffiliated securities

    

1,175

      

24,727

      

922

    

Security lending income

    

0

      

6,141

      

119

    

Other income

    

0

      

10

      

0

    

Foreign taxes withheld

    

(2,562

)

    

(125,871

)

    

(1,960

)

  

Total investment income

    

62,493

      

1,349,649

      

50,063

    

Expenses:

  

Investment advisory fee

    

20,136

      

283,461

      

17,889

    

Transfer and dividend disbursing agent fees

    

87

      

573

      

97

    

Other shareholder servicing fees—Investor Class

    

1,623

      

28,913

      

922

    

Other shareholder servicing fees—Advisor Class

    

286

      

5,849

      

92

    

Other shareholder servicing fees—Service Class

    

0

      

701

      

2

    

Service fee—Service Class

    

0

      

832

      

1

    

Reports to shareholders (benefit)

    

65

      

1,960

      

(66

)

  

Custody and accounting fees

    

293

      

4,468

      

526

    

Registration and blue sky expenses

    

108

      

400

      

95

    

Trustees fees (benefit)

    

307

      

1,304

      

(79

)

  

Legal fees

    

130

      

507

      

125

    

Audit and tax services fees

    

19

      

178

      

14

    

Other

    

248

      

741

      

251

    

Total expenses

    

23,302

      

329,887

      

19,869

    

Advisory fee waiver

    

(1,312

)

    

(17,719

)

    

0

    

Net expenses

    

21,990

      

312,168

      

19,869

    

Net investment income

  

$

40,503

    

$

1,037,481

    

$

30,194

    

Net realized and unrealized gain (loss):

  

Net realized gain (loss) on:

  

Unaffiliated investments

    

(21,088

)

    

(858,237

)(a)

    

(106,354

)

  

Affiliated investments

    

0

      

(242,872

)

    

(26,347

)

  

Forward foreign currency contracts

    

3,537

      

37,022

      

1,994

    

Foreign currency transactions

    

(561

)

    

(3,084

)

    

(319

)

  

Purchased options

    

0

      

0

      

0

    

Written options

    

0

      

0

      

0

    

Net realized gain (loss)

    

(18,112

)

    

(1,067,171

)

    

(131,026

)

  

Net change in unrealized appreciation (depreciation) on:

  

Unaffiliated investments

    

(205,129

)

    

(1,948,953

)(b)

    

(41,707

)

  

Affiliated investments

    

0

      

(1,172,476

)

    

18,981

    

Forward foreign currency contracts

    

(483

)

    

(5,272

)

    

395

    

Foreign currency translation

    

(120

)

    

(3,691

)

    

(169

)

  

Written options

    

0

      

0

      

0

    

Net change in unrealized appreciation (depreciation)

    

(205,732

)

    

(3,130,392

)

    

(22,500

)

  

Net realized and unrealized loss

    

(223,844

)

    

(4,197,563

)

    

(153,526

)

  

Net increase (decrease) in net assets resulting from operations

  

$

(183,341

)

  

$

(3,160,082

)

  

$

(123,332

)

  

Oakmark.com 55


Oakmark Funds

Statements of Changes in Net Assets

(in thousands)

   

Oakmark Fund

  
    Year Ended
September 30, 2019		   Year Ended
September 30, 2018		  

From Operations:

  

Net investment income

  

$

211,704

    

$

144,411

    

Net realized gain (loss)

    

1,477,840

      

1,313,051

    

Net change in unrealized appreciation (depreciation)

    

(2,946,967

)

    

773,609

    

Net increase (decrease) in net assets from operations

    

(1,257,423

)

    

2,231,071

    

Distributions to shareholders from:

  

Distributions to shareholders—Investor Class

    

(704,953

)

    

(550,522

)

  

Distributions to shareholders—Advisor Class

    

(375,860

)

    

(100,133

)

  

Distributions to shareholders—Institutional Class

    

(184,715

)

    

(120,086

)

  

Distributions to shareholders—Service Class

    

(8,162

)

    

(6,230

)

  

Total distributions to shareholders

    

(1,273,690

)

    

(776,971

)

  

From Fund share transactions:

  

Proceeds from shares sold—Investor Class

    

1,400,721

      

2,261,721

    

Proceeds from shares sold—Advisor Class

    

1,614,415

      

3,722,462

    

Proceeds from shares sold—Institutional Class

    

703,662

      

1,165,291

    

Proceeds from shares sold—Service Class

    

16,608

      

27,447

    

Reinvestment of distributions—Investor Class

    

669,456

      

509,060

    

Reinvestment of distributions—Advisor Class

    

338,369

      

96,927

    

Reinvestment of distributions—Institutional Class

    

170,705

      

114,291

    

Reinvestment of distributions—Service Class

    

5,800

      

4,007

    

Payment for shares redeemed—Investor Class

    

(4,128,928

)

    

(5,282,088

)

  

Payment for shares redeemed—Advisor Class

    

(1,943,286

)

    

(547,951

)

  

Payment for shares redeemed—Institutional Class

    

(1,535,491

)

    

(733,978

)

  

Payment for shares redeemed—Service Class

    

(50,775

)

    

(68,095

)

  

Net increase (decrease) in net assets from Fund share transactions

    

(2,738,744

)

    

1,269,094

    

Total increase (decrease) in net assets

    

(5,269,857

)

    

2,723,194

    

Net assets:

  

Beginning of year

    

21,500,766

      

18,777,572

    

End of year

  

$

16,230,909

    

$

21,500,766

    

See accompanying Notes to Financial Statements.

56 OAKMARK FUNDS


Oakmark Funds

Statements of Changes in Net Assets (continued)

(in thousands)

   

Oakmark Fund (continued)

  
    Year Ended
September 30, 2019		   Year Ended
September 30, 2018		  

Fund share transactions—Investor Class:

  

Shares sold

    

18,386

      

26,267

    

Shares issued in reinvestment of dividends

    

9,363

      

6,131

    

Less shares redeemed

    

(53,506

)

    

(61,908

)

  

Net decrease in shares outstanding

    

(25,757

)

    

(29,510

)

  

Fund share transactions—Advisor Class:

  

Shares sold

    

21,287

      

43,620

    

Shares issued in reinvestment of dividends

    

4,737

      

1,167

    

Less shares redeemed

    

(25,199

)

    

(6,330

)

  

Net increase in shares outstanding

    

825

      

38,457

    

Fund share transactions—Institutional Class:

  

Shares sold

    

9,169

      

13,562

    

Shares issued in reinvestment of dividends

    

2,389

      

1,377

    

Less shares redeemed

    

(19,406

)

    

(8,520

)

  

Net increase (decrease) in shares outstanding

    

(7,848

)

    

6,419

    

Fund share transactions—Service Class:

  

Shares sold

    

221

      

321

    

Shares issued in reinvestment of dividends

    

81

      

49

    

Less shares redeemed

    

(663

)

    

(791

)

  

Net decrease in shares outstanding

    

(361

)

    

(421

)

  

See accompanying Notes to Financial Statements.

Oakmark.com 57


Oakmark Funds

Statements of Changes in Net Assets (continued)

(in thousands)

   

Oakmark Select Fund

  
    Year Ended
September 30, 2019		   Year Ended
September 30, 2018		  

From Operations:

  

Net investment income

  

$

57,304

    

$

14,624

    

Net realized gain (loss)

    

(106,443

)

    

230,349

    

Net change in unrealized appreciation (depreciation)

    

(598,680

)

    

(245,831

)

  

Net decrease in net assets from operations

    

(647,819

)

    

(858

)

  

Distributions to shareholders from:

  

Distributions to shareholders—Investor Class

    

(151,365

)

    

(196,568

)

  

Distributions to shareholders—Advisor Class

    

(30,451

)

    

(28,500

)

  

Distributions to shareholders—Institutional Class

    

(31,261

)

    

(33,290

)

  

Distributions to shareholders—Service Class

    

(474

)

    

(947

)

  

Total distributions to shareholders

    

(213,551

)

    

(259,305

)

  

From Fund share transactions:

  

Proceeds from shares sold—Investor Class

    

593,984

      

846,315

    

Proceeds from shares sold—Advisor Class

    

187,105

      

249,464

    

Proceeds from shares sold—Institutional Class

    

184,202

      

233,379

    

Proceeds from shares sold—Service Class

    

1,219

      

2,244

    

Reinvestment of distributions—Investor Class

    

141,312

      

174,064

    

Reinvestment of distributions—Advisor Class

    

26,475

      

27,196

    

Reinvestment of distributions—Institutional Class

    

30,237

      

32,196

    

Reinvestment of distributions—Service Class

    

343

      

692

    

Payment for shares redeemed—Investor Class

    

(1,321,468

)

    

(1,301,272

)

  

Payment for shares redeemed—Advisor Class

    

(183,611

)

    

(107,731

)

  

Payment for shares redeemed—Institutional Class

    

(284,940

)

    

(149,287

)

  

Payment for shares redeemed—Service Class

    

(6,552

)

    

(16,160

)

  

Net decrease in net assets from Fund share transactions

    

(631,694

)

    

(8,900

)

  

Total decrease in net assets

    

(1,493,064

)

    

(269,063

)

  

Net assets:

  

Beginning of year

    

5,953,875

      

6,222,938

    

End of year

  

$

4,460,811

    

$

5,953,875

    

See accompanying Notes to Financial Statements.

58 OAKMARK FUNDS


Oakmark Funds

Statements of Changes in Net Assets (continued)

(in thousands)

   

Oakmark Select Fund (continued)

  
    Year Ended
September 30, 2019		   Year Ended
September 30, 2018		  

Fund share transactions—Investor Class:

  

Shares sold

    

15,176

      

17,795

    

Shares issued in reinvestment of dividends

    

3,968

      

3,719

    

Less shares redeemed

    

(34,122

)

    

(27,522

)

  

Net decrease in shares outstanding

    

(14,978

)

    

(6,008

)

  

Fund share transactions—Advisor Class:

  

Shares sold

    

4,844

      

5,277

    

Shares issued in reinvestment of dividends

    

744

      

581

    

Less shares redeemed

    

(4,806

)

    

(2,284

)

  

Net increase in shares outstanding

    

782

      

3,574

    

Fund share transactions—Institutional Class:

  

Shares sold

    

4,806

      

4,918

    

Shares issued in reinvestment of dividends

    

850

      

688

    

Less shares redeemed

    

(7,381

)

    

(3,096

)

  

Net increase (decrease) in shares outstanding

    

(1,725

)

    

2,510

    

Fund share transactions—Service Class:

  

Shares sold

    

32

      

47

    

Shares issued in reinvestment of dividends

    

10

      

15

    

Less shares redeemed

    

(170

)

    

(343

)

  

Net decrease in shares outstanding

    

(128

)

    

(281

)

  

See accompanying Notes to Financial Statements.

Oakmark.com 59


Oakmark Funds

Statements of Changes in Net Assets (continued)

(in thousands)

   

Oakmark Equity and Income Fund

  
    Year Ended
September 30, 2019		   Year Ended
September 30, 2018		  

From Operations:

  

Net investment income

  

$

228,567

    

$

246,520

    

Net realized gain (loss)

    

1,035,795

      

1,135,028

    

Net change in unrealized appreciation (depreciation)

    

(1,099,399

)

    

(544,315

)

  

Net increase in net assets from operations

    

164,963

      

837,233

    

Distributions to shareholders from:

  

Distributions to shareholders—Investor Class

    

(941,614

)

    

(1,028,274

)

  

Distributions to shareholders—Advisor Class

    

(129,602

)

    

(117,247

)

  

Distributions to shareholders—Institutional Class

    

(86,752

)

    

(52,083

)

  

Distributions to shareholders—Service Class

    

(33,587

)

    

(45,277

)

  

Total distributions to shareholders

    

(1,191,555

)

    

(1,242,881

)

  

From Fund share transactions:

  

Proceeds from shares sold—Investor Class

    

614,595

      

1,076,379

    

Proceeds from shares sold—Advisor Class

    

445,311

      

1,156,367

    

Proceeds from shares sold—Institutional Class

    

560,880

      

600,636

    

Proceeds from shares sold—Service Class

    

54,765

      

65,361

    

Reinvestment of distributions—Investor Class

    

898,151

      

964,309

    

Reinvestment of distributions—Advisor Class

    

104,433

      

114,065

    

Reinvestment of distributions—Institutional Class

    

77,505

      

49,867

    

Reinvestment of distributions—Service Class

    

30,244

      

40,453

    

Payment for shares redeemed—Investor Class

    

(3,842,359

)

    

(3,797,581

)

  

Payment for shares redeemed—Advisor Class

    

(816,923

)

    

(234,941

)

  

Payment for shares redeemed—Institutional Class

    

(422,080

)

    

(134,560

)

  

Payment for shares redeemed—Service Class

    

(204,168

)

    

(264,351

)

  

Net decrease in net assets from Fund share transactions

    

(2,499,646

)

    

(363,996

)

  

Total decrease in net assets

    

(3,526,238

)

    

(769,644

)

  

Net assets:

  

Beginning of year

    

15,362,595

      

16,132,239

    

End of year

  

$

11,836,357

    

$

15,362,595

    

See accompanying Notes to Financial Statements.

60 OAKMARK FUNDS


Oakmark Funds

Statements of Changes in Net Assets (continued)

(in thousands)

   

Oakmark Equity and Income Fund (continued)

  
    Year Ended
September 30, 2019		   Year Ended
September 30, 2018		  

Fund share transactions—Investor Class:

  

Shares sold

    

20,829

      

32,946

    

Shares issued in reinvestment of dividends

    

32,506

      

30,257

    

Less shares redeemed

    

(129,988

)

    

(115,720

)

  

Net decrease in shares outstanding

    

(76,653

)

    

(52,517

)

  

Fund share transactions—Advisor Class:

  

Shares sold

    

14,836

      

34,825

    

Shares issued in reinvestment of dividends

    

3,781

      

3,579

    

Less shares redeemed

    

(27,015

)

    

(7,206

)

  

Net increase (decrease) in shares outstanding

    

(8,398

)

    

31,198

    

Fund share transactions—Institutional Class:

  

Shares sold

    

18,962

      

18,327

    

Shares issued in reinvestment of dividends

    

2,805

      

1,565

    

Less shares redeemed

    

(14,348

)

    

(4,132

)

  

Net increase in shares outstanding

    

7,419

      

15,760

    

Fund share transactions—Service Class:

  

Shares sold

    

1,871

      

2,013

    

Shares issued in reinvestment of dividends

    

1,099

      

1,275

    

Less shares redeemed

    

(7,091

)

    

(8,172

)

  

Net decrease in shares outstanding

    

(4,121

)

    

(4,884

)

  

See accompanying Notes to Financial Statements.

Oakmark.com 61


Oakmark Funds

Statements of Changes in Net Assets (continued)

(in thousands)

   

Oakmark Global Fund

  
    Year Ended
September 30, 2019		   Year Ended
September 30, 2018		  

From Operations:

  

Net investment income

  

$

34,108

    

$

19,629

    

Net realized gain (loss)

    

60,826

      

252,613

    

Net change in unrealized appreciation (depreciation)

    

(174,037

)

    

(237,104

)

  

Net increase (decrease) in net assets from operations

    

(79,103

)

    

35,138

    

Distributions to shareholders from:

  

Distributions to shareholders—Investor Class

    

(149,145

)

    

(127,621

)

  

Distributions to shareholders—Advisor Class

    

(48,794

)

    

(39,730

)

  

Distributions to shareholders—Institutional Class

    

(35,358

)

    

(25,397

)

  

Distributions to shareholders—Service Class

    

(1,591

)

    

(1,620

)

  

Total distributions to shareholders

    

(234,888

)

    

(194,368

)

  

From Fund share transactions:

  

Proceeds from shares sold—Investor Class

    

108,062

      

164,664

    

Proceeds from shares sold—Advisor Class

    

132,079

      

167,263

    

Proceeds from shares sold—Institutional Class

    

75,110

      

109,691

    

Proceeds from shares sold—Service Class

    

2,371

      

3,827

    

Reinvestment of distributions—Investor Class

    

146,749

      

120,084

    

Reinvestment of distributions—Advisor Class

    

41,642

      

38,466

    

Reinvestment of distributions—Institutional Class

    

34,773

      

25,034

    

Reinvestment of distributions—Service Class

    

1,323

      

1,382

    

Payment for shares redeemed—Investor Class

    

(461,815

)

    

(501,876

)

  

Payment for shares redeemed—Advisor Class

    

(294,484

)

    

(231,717

)

  

Payment for shares redeemed—Institutional Class

    

(82,656

)

    

(88,710

)

  

Payment for shares redeemed—Service Class

    

(5,722

)

    

(9,759

)

  

Net decrease in net assets from Fund share transactions

    

(302,568

)

    

(201,651

)

  

Total decrease in net assets

    

(616,559

)

    

(360,881

)

  

Net assets:

  

Beginning of year

    

2,282,929

      

2,643,810

    

End of year

  

$

1,666,370

    

$

2,282,929

    

See accompanying Notes to Financial Statements.

62 OAKMARK FUNDS


Oakmark Funds

Statements of Changes in Net Assets (continued)

(in thousands)

   

Oakmark Global Fund (continued)

  
    Year Ended
September 30, 2019		   Year Ended
September 30, 2018		  

Fund share transactions—Investor Class:

  

Shares sold

    

4,086

      

4,864

    

Shares issued in reinvestment of dividends

    

5,961

      

3,688

    

Less shares redeemed

    

(17,248

)

    

(14,992

)

  

Net decrease in shares outstanding

    

(7,201

)

    

(6,440

)

  

Fund share transactions—Advisor Class:

  

Shares sold

    

5,048

      

4,941

    

Shares issued in reinvestment of dividends

    

1,692

      

1,182

    

Less shares redeemed

    

(10,850

)

    

(7,011

)

  

Net decrease in shares outstanding

    

(4,110

)

    

(888

)

  

Fund share transactions—Institutional Class:

  

Shares sold

    

2,816

      

3,231

    

Shares issued in reinvestment of dividends

    

1,413

      

769

    

Less shares redeemed

    

(3,176

)

    

(2,663

)

  

Net increase in shares outstanding

    

1,053

      

1,337

    

Fund share transactions—Service Class:

  

Shares sold

    

91

      

117

    

Shares issued in reinvestment of dividends

    

55

      

44

    

Less shares redeemed

    

(213

)

    

(304

)

  

Net decrease in shares outstanding

    

(67

)

    

(143

)

  

See accompanying Notes to Financial Statements.

Oakmark.com 63


Oakmark Funds

Statements of Changes in Net Assets (continued)

(in thousands)

   

Oakmark Global Select Fund

  
    Year Ended
September 30, 2019		   Year Ended
September 30, 2018		  

From Operations:

  

Net investment income

  

$

40,503

    

$

35,000

    

Net realized gain (loss)

    

(18,112

)

    

90,070

    

Net change in unrealized appreciation (depreciation)

    

(205,732

)

    

(150,120

)

  

Net decrease in net assets from operations

    

(183,341

)

    

(25,050

)

  

Distributions to shareholders from:

  

Distributions to shareholders—Investor Class

    

(48,631

)

    

(100,367

)

  

Distributions to shareholders—Advisor Class

    

(22,415

)

    

(13,449

)

  

Distributions to shareholders—Institutional Class

    

(29,377

)

    

(37,975

)

  

Total distributions to shareholders

    

(100,423

)

    

(151,791

)

  

From Fund share transactions:

  

Proceeds from shares sold—Investor Class

    

147,783

      

312,981

    

Proceeds from shares sold—Advisor Class

    

258,878

      

406,970

    

Proceeds from shares sold—Institutional Class

    

129,406

      

316,755

    

Reinvestment of distributions—Investor Class

    

46,962

      

90,867

    

Reinvestment of distributions—Advisor Class

    

17,974

      

13,241

    

Reinvestment of distributions—Institutional Class

    

26,197

      

34,448

    

Payment for shares redeemed—Investor Class

    

(646,986

)

    

(923,672

)

  

Payment for shares redeemed—Advisor Class

    

(246,044

)

    

(92,436

)

  

Payment for shares redeemed—Institutional Class

    

(307,247

)

    

(130,821

)

  

Net increase (decrease) in net assets from Fund share transactions

    

(573,077

)

    

28,333

    

Total decrease in net assets

    

(856,841

)

    

(148,508

)

  

Net assets:

  

Beginning of year

    

2,643,143

      

2,791,651

    

End of year

  

$

1,786,302

    

$

2,643,143

    

Fund share transactions—Investor Class:

  

Shares sold

    

8,939

      

16,114

    

Shares issued in reinvestment of dividends

    

3,140

      

4,762

    

Less shares redeemed

    

(40,169

)

    

(48,164

)

  

Net decrease in shares outstanding

    

(28,090

)

    

(27,288

)

  

Fund share transactions—Advisor Class:

  

Shares sold

    

16,263

      

21,245

    

Shares issued in reinvestment of dividends

    

1,203

      

694

    

Less shares redeemed

    

(15,344

)

    

(4,826

)

  

Net increase in shares outstanding

    

2,122

      

17,113

    

Fund share transactions—Institutional Class:

  

Shares sold

    

8,038

      

16,338

    

Shares issued in reinvestment of dividends

    

1,753

      

1,805

    

Less shares redeemed

    

(19,704

)

    

(6,865

)

  

Net increase (decrease) in shares outstanding

    

(9,913

)

    

11,278

    

See accompanying Notes to Financial Statements.

64 OAKMARK FUNDS


Oakmark Funds

Statements of Changes in Net Assets (continued)

(in thousands)

   

Oakmark International Fund

  
    Year Ended
September 30, 2019		   Year Ended
September 30, 2018		  

From Operations:

  

Net investment income

  

$

1,037,481

    

$

892,273

    

Net realized gain (loss)

    

(1,067,171

)

    

2,422,631

    

Net change in unrealized appreciation (depreciation)

    

(3,130,392

)

    

(6,533,163

)

  

Net decrease in net assets from operations

    

(3,160,082

)

    

(3,218,259

)

  

Distributions to shareholders from:

  

Distributions to shareholders—Investor Class

    

(1,081,892

)

    

(919,542

)

  

Distributions to shareholders—Advisor Class

    

(482,915

)

    

(60,615

)

  

Distributions to shareholders—Institutional Class

    

(657,692

)

    

(290,720

)

  

Distributions to shareholders—Service Class

    

(21,994

)

    

(15,478

)

  

Total distributions to shareholders

    

(2,244,493

)

    

(1,286,355

)

  

From Fund share transactions:

  

Proceeds from shares sold—Investor Class

    

3,564,054

      

9,695,235

    

Proceeds from shares sold—Advisor Class

    

6,114,124

      

6,180,935

    

Proceeds from shares sold—Institutional Class

    

3,869,391

(a)

    

7,718,127

    

Proceeds from shares sold—Service Class

    

96,529

      

151,888

    

Reinvestment of distributions—Investor Class

    

1,028,969

      

784,197

    

Reinvestment of distributions—Advisor Class

    

299,593

      

59,372

    

Reinvestment of distributions—Institutional Class

    

573,447

      

253,244

    

Reinvestment of distributions—Service Class

    

13,691

      

10,046

    

Payment for shares redeemed—Investor Class

    

(11,805,570

)

    

(13,901,741

)

  

Payment for shares redeemed—Advisor Class

    

(4,873,953

)

    

(923,852

)

  

Payment for shares redeemed—Institutional Class

    

(5,611,910

)

    

(2,240,981

)

  

Payment for shares redeemed—Service Class

    

(192,851

)

    

(252,017

)

  

Net increase (decrease) in net assets from Fund share transactions

    

(6,924,486

)

    

7,534,453

    

Total increase (decrease) in net assets

    

(12,329,061

)

    

3,029,839

    

Net assets:

  

Beginning of year

    

43,240,797

      

40,210,958

    

End of year

  

$

30,911,736

    

$

43,240,797

    

See accompanying Notes to Financial Statements.

Oakmark.com 65


Oakmark Funds

Statements of Changes in Net Assets (continued)

(in thousands)

   

Oakmark International Fund (continued)

  
    Year Ended
September 30, 2019		   Year Ended
September 30, 2018		  

Fund share transactions—Investor Class:

  

Shares sold

    

159,024

      

340,458

    

Shares issued in reinvestment of dividends

    

48,720

      

27,887

    

Less shares redeemed

    

(527,404

)

    

(496,528

)

  

Net decrease in shares outstanding

    

(319,660

)

    

(128,183

)

  

Fund share transactions—Advisor Class:

  

Shares sold

    

276,812

      

220,376

    

Shares issued in reinvestment of dividends

    

14,199

      

2,111

    

Less shares redeemed

    

(217,814

)

    

(34,239

)

  

Net increase in shares outstanding

    

73,197

      

188,248

    

Fund share transactions—Institutional Class:

  

Shares sold

    

171,599

(b)

    

271,962

    

Shares issued in reinvestment of dividends

    

27,165

      

9,003

    

Less shares redeemed

    

(250,411

)

    

(81,821

)

  

Net increase (decrease) in shares outstanding

    

(51,647

)

    

199,144

    

Fund share transactions—Service Class:

  

Shares sold

    

4,286

      

5,373

    

Shares issued in reinvestment of dividends

    

643

      

355

    

Less shares redeemed

    

(8,467

)

    

(8,923

)

  

Net decrease in shares outstanding

    

(3,538

)

    

(3,195

)

  

(a)  $32,161 were purchased through in-kind transactions.

(b)  1,424 shares were purchased through in-kind transactions.

See accompanying Notes to Financial Statements.

66 OAKMARK FUNDS


Oakmark Funds

Statements of Changes in Net Assets (continued)

(in thousands)

   

Oakmark International Small Cap Fund

  
    Year Ended
September 30, 2019		   Year Ended
September 30, 2018		  

From Operations:

  

Net investment income

  

$

30,194

    

$

39,430

    

Net realized gain (loss)

    

(131,026

)

    

154,983

    

Net change in unrealized appreciation (depreciation)

    

(22,500

)

    

(357,628

)

  

Net decrease in net assets from operations

    

(123,332

)

    

(163,215

)

  

Distributions to shareholders from:

  

Distributions to shareholders—Investor Class

    

(54,731

)

    

(60,954

)

  

Distributions to shareholders—Advisor Class

    

(10,864

)

    

(16,063

)

  

Distributions to shareholders—Institutional Class

    

(55,242

)

    

(34,570

)

  

Distributions to shareholders—Service Class

    

(94

)

    

(65

)

  

Total distributions to shareholders

    

(120,931

)

    

(111,652

)

  

From Fund share transactions:

  

Proceeds from shares sold—Investor Class

    

110,434

      

320,386

    

Proceeds from shares sold—Advisor Class

    

95,839

      

163,934

    

Proceeds from shares sold—Institutional Class

    

370,102

      

320,908

    

Proceeds from shares sold—Service Class

    

224

      

272

    

Reinvestment of distributions—Investor Class

    

53,553

      

57,643

    

Reinvestment of distributions—Advisor Class

    

8,540

      

15,895

    

Reinvestment of distributions—Institutional Class

    

45,336

      

28,214

    

Reinvestment of distributions—Service Class

    

59

      

45

    

Payment for shares redeemed—Investor Class

    

(517,718

)

    

(1,056,113

)

  

Payment for shares redeemed—Advisor Class

    

(278,268

)

    

(181,976

)

  

Payment for shares redeemed—Institutional Class

    

(442,563

)

    

(234,128

)

  

Payment for shares redeemed—Service Class

    

(639

)

    

(645

)

  

Redemption fees—Investor Class

    

61

      

199

    

Redemption fees—Advisor Class

    

3

      

34

    

Redemption fees—Institutional Class

    

47

      

28

    

Redemption fees—Service Class

    

0

      

0

(a)

  

Net decrease in net assets from Fund share transactions

    

(554,990

)

    

(565,304

)

  

Total decrease in net assets

    

(799,253

)

    

(840,171

)

  

Net assets:

  

Beginning of year

    

2,225,001

      

3,065,172

    

End of year

  

$

1,425,748

    

$

2,225,001

    

See accompanying Notes to Financial Statements.

Oakmark.com 67


Oakmark Funds

Statements of Changes in Net Assets (continued)

(in thousands)

   

Oakmark International Small Cap Fund (continued)

  
    Year Ended
September 30, 2019		   Year Ended
September 30, 2018		  

Fund share transactions—Investor Class:

  

Shares sold

    

7,877

      

18,197

    

Shares issued in reinvestment of dividends

    

4,135

      

3,361

    

Less shares redeemed

    

(36,659

)

    

(60,845

)

  

Net decrease in shares outstanding

    

(24,647

)

    

(39,287

)

  

Fund share transactions—Advisor Class:

  

Shares sold

    

6,828

      

9,396

    

Shares issued in reinvestment of dividends

    

659

      

927

    

Less shares redeemed

    

(18,974

)

    

(10,514

)

  

Net decrease in shares outstanding

    

(11,487

)

    

(191

)

  

Fund share transactions—Institutional Class:

  

Shares sold

    

26,098

      

18,288

    

Shares issued in reinvestment of dividends

    

3,509

      

1,646

    

Less shares redeemed

    

(31,950

)

    

(13,396

)

  

Net increase (decrease) in shares outstanding

    

(2,343

)

    

6,538

    

Fund share transactions—Service Class:

  

Shares sold

    

16

      

16

    

Shares issued in reinvestment of dividends

    

5

      

2

    

Less shares redeemed

    

(45

)

    

(38

)

  

Net decrease in shares outstanding

    

(24

)

    

(20

)

  

(a)  Amount rounds to less than $1,000.

See accompanying Notes to Financial Statements.

68 OAKMARK FUNDS


Oakmark Funds

Notes to Financial Statements

1.  SIGNIFICANT ACCOUNTING POLICIES

Organization

The following are the significant accounting policies of Oakmark Fund ("Oakmark"), Oakmark Select Fund ("Select"), Oakmark Equity and Income Fund ("Equity and Income"), Oakmark Global Fund ("Global"), Oakmark Global Select Fund ("Global Select"), Oakmark International Fund ("International"), and Oakmark International Small Cap Fund ("Int'l Small Cap"), collectively referred to as the "Funds," each a series of Harris Associates Investment Trust (the "Trust"), a Massachusetts business trust, organized on February 1, 1991, which is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act") and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 946 Financial Services—Investment Companies. Each Fund, other than Select and Global Select, is diversified in accordance with the 1940 Act. The following policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The presentation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.

Class disclosure

Each Fund offers four classes of shares: Investor Class Shares, Advisor Class Shares, Institutional Class Shares and Service Class Shares. Investor Class, Advisor Class and Institutional Class Shares are offered for purchase directly from the Funds and through certain intermediaries who have entered into an agreement with the Funds' distributor and/or Harris Associates L.P., investment adviser to the Funds (the "Adviser"). Service Class Shares are offered to certain retirement plans, such as 401(k) and profit sharing plans. Service Class Shares pay a service fee at the annual rate of up to 0.25% of the average net assets of Service Class Shares of the Funds. This service fee is paid to intermediaries for performing the services associated with the administration of such retirement plans. Global Select had no outstanding Service Class Shares during the year ended September 30, 2019.

Income, realized and unrealized capital gains and losses, and expenses of the Funds not directly attributable to a specific class of shares are allocated to each class pro rata based on the relative net assets of each class. Transfer and divided disbursing agent fees, other shareholder servicing fees, and reports to shareholders expenses are specific to each class.

Redemption fees

Effective December 3, 2018, Int'l Small Cap no longer imposes a short-term trading fee on redemptions. As of September 30, 2019, none of the Funds impose a short-term trading fee on redemptions.

Prior to December 3, 2018, Int'l Small Cap imposed a short-term trading fee on redemptions of shares held for 90 days or less to deter abusive trading activities and to help offset two types of costs to the Fund caused by abusive trading: portfolio transaction and market impact costs associated with erratic redemption activity and administrative costs associated with processing redemptions. The fee was paid to the Fund and was 2% of the redemption value and was deducted from either the redemption proceeds or from the balance in the account. The "first-in, first-out" ("FIFO") method was used to determine the holding period. Redemption fees collected by the Fund, if any, are included in the Statements of Changes in Net Assets.

Security valuation

The Funds' share prices or net asset values ("NAVs") are calculated as of the close of regular session trading (usually 4:00 p.m. Eastern time) on the New York Stock Exchange ("NYSE") on any day on which the NYSE is open for trading. Equity securities principally traded on securities exchanges in the United States and over-the-counter securities are valued at the last sales price or the official closing price on the day of valuation, or lacking any reported sales that day, at the most recent bid quotation. Securities traded on the NASDAQ National Market System are valued at the NASDAQ Official Closing Price ("NOCP"), or lacking an NOCP, at the most recent bid quotation on the NASDAQ National Market System. Equity securities principally traded on securities exchanges outside the United States are valued, depending on local convention or regulation, at the last sales price, the last bid or asked price, the mean between the last bid and asked prices, or the official closing price, or are based on a pricing composite as of the close of the regular trading hours on the appropriate exchange or other designated time. Each long-term debt instrument is valued at the latest bid quotation or an evaluated price provided by an independent pricing service. The pricing service may use standard inputs, such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data, including market research publications. For certain security types, additional inputs may be used or some of the standard inputs may not be applicable. Additionally, the pricing service monitors market indicators and industry and economic events, which may serve as a trigger to gather and possibly use additional market data. Each short-term debt instrument (i.e., debt instruments whose maturities or expiration dates at the time of acquisition are one year or less) or money market instrument maturing in 61 days or more from the date of valuation is valued at the latest bid quotation or an evaluated price provided by an independent pricing service. Effective July 25, 2019, each short-term debt instrument (i.e., debt instruments whose maturities or expiration dates at the time of acquisition are one year or less) and money market instrument is valued at the latest bid quotation or an evaluated price from a pricing vendor. If a bid quotation or evaluated price from a pricing vendor is not available for a short-term debt instrument or money market instrument maturing in 60 days or less from date of valuation, such instrument shall be valued at amortized cost. Prior to July 25, 2019, each short-term instrument maturing in 60 days or less from the date of valuation was valued at amortized cost, which approximated market value. Options are valued at the mean of the most recent bid and asked quotations. In the event an option is out-of-the money and no bid is available, a zero value may be assumed as the bid for purposes of calculating the mean of the most recent bid and ask quotations.

Oakmark.com 69


Oakmark Funds

Notes to Financial Statements (continued)

Securities for which quotations are not readily available or securities that may have been affected by a significant event occurring between the close of a foreign market and the close of the NYSE are valued at fair value, determined by or under the direction of the pricing committee authorized by the Board of Trustees. A significant event may include the performance of U.S. markets since the close of foreign markets. The Funds may use a systematic fair valuation model provided by an independent pricing service to value foreign securities in order to adjust local closing prices for information or events that may occur between the close of certain foreign exchanges and the close of the NYSE.

Fair value measurement

Various inputs are used in determining the value of each Fund's investments. These inputs are prioritized into three broad levels as follows:

Level 1—quoted prices in active markets for identical securities

Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk and others)

Level 3—significant unobservable inputs (including the assumptions of Harris Associates L.P. (the "Adviser") in determining the fair value of investments)

Observable inputs are those based on market data obtained from independent sources and unobservable inputs reflect the Adviser's own assumptions based on the best information available. The input levels are not necessarily an indication of risk or liquidity associated with investing in those securities.

The following is a summary of the inputs used as of September 30, 2019, in valuing each Fund's assets and liabilities. Except for the industries or investment types separately stated below, the total amounts for common stocks, fixed income and short-term investments in the table below are presented by industry or investment type in each Fund's Schedule of Investments. Information on forward foreign currency contracts is presented in each Fund's Schedule of Investments.

(in thousands)

   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		   Other
Significant
Observable
Inputs
(Level 2)		   Significant
Unobservable
Inputs
(Level 3)		  

Oakmark

                          

Common Stocks

  

$

15,435,718

    

$

0

    

$

0

    

Short-Term Investments

    

0

      

772,879

      

0

    

Put Options Written

    

(4,239

)

    

0

      

0

    

Total

  

$

15,431,479

    

$

772,879

    

$

0

    

Select

                          

Common Stocks

  

$

4,253,540

    

$

0

    

$

0

    

Short-Term Investments

    

0

      

202,534

      

0

    

Put Options Written

    

(1,503

)

    

0

      

0

    

Total

  

$

4,252,037

    

$

202,534

    

$

0

    

Equity and Income

                          

Common Stocks

  

$

7,130,565

    

$

0

    

$

0

    

Preferred Stocks

    

13,039

      

0

      

0

    

Corporate Bonds

    

0

      

2,239,147

      

0

    

Government and Agency Securities

    

0

      

1,436,068

      

0

    

Convertible Bonds

    

0

      

8,912

      

0

    

Short-Term Investments

    

0

      

1,043,142

      

0

    

Total

  

$

7,143,604

    

$

4,727,269

    

$

0

    

Global

                          

Common Stocks

  

$

1,595,359

    

$

19,673

    

$

0

    

Short-Term Investments

    

0

      

48,144

      

0

    

Forward Foreign Currency Contracts - Assets

    

0

      

260

      

0

    

Total

  

$

1,595,359

    

$

68,077

    

$

0

    

70 OAKMARK FUNDS


Oakmark Funds

Notes to Financial Statements (continued)

(in thousands)

   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		   Other
Significant
Observable
Inputs
(Level 2)		   Significant
Unobservable
Inputs
(Level 3)		  

Global Select

                          

Common Stocks

  

$

1,672,984

    

$

38,315

    

$

0

    

Short-Term Investments

    

0

      

84,481

      

0

    

Forward Foreign Currency Contracts - Assets

    

0

      

504

      

0

    

Total

  

$

1,672,984

    

$

123,300

    

$

0

    

International

                          

Common Stocks

  

$

29,302,862

    

$

327,809

    

$

0

    

Preferred Stocks

    

76,749

      

0

      

0

    

Short-Term Investments

    

0

      

1,026,652

      

0

    

Forward Foreign Currency Contracts - Assets

    

0

      

4,305

      

0

    

Total

  

$

29,379,611

    

$

1,358,766

    

$

0

    

Int'l Small Cap

                          

Common Stocks

  

$

1,367,900

    

$

0

    

$

0

    

Short-Term Investments

    

0

      

52,055

      

0

    

Forward Foreign Currency Contracts - Assets

    

0

      

553

      

0

    

Total

  

$

1,367,900

    

$

52,608

    

$

0

    

Offsetting assets and liabilities

ASC 210 requires entities to disclose gross and net information about instruments and transactions eligible for offset on the Statement of Assets and Liabilities and disclose instruments and transactions subject to master netting or similar agreements. This disclosure is limited to derivative instruments, repurchase and reverse repurchase agreements, and securities borrowing and lending transactions.

At September 30, 2019, certain Funds held open forward foreign currency contracts that were subject to a foreign exchange settlement and netting agreement with the same counterparty. The agreement includes provisions for general obligations, representations, and certain events of default or termination. The agreement includes provisions for netting arrangements that may reduce credit risk and counterparty risk associated with relevant transactions in the event counterparty fails to meet its obligations. The net recognized assets or liabilities related to open forward foreign currency contracts are presented in the Statements of Assets and Liabilities. The gross recognized assets (appreciation) and liabilities (depreciation) by contract are presented in the forward foreign currency contract table included in the Fund's Schedule of Investments.

At September 30, 2019, each Fund held investments in repurchase agreements. The gross value of these investments and the value of the related collateral are presented in each Fund's Schedule of Investments. The value of the related collateral for each Fund exceeded the value of the repurchase agreements held at period end.

The value of the securities on loan and the value of the related collateral as of period end, if any, are included in the Securities lending section of Note 1 to Financial Statements.

Foreign currency translations

Certain Funds invest in foreign securities, which may involve a number of risk factors and special considerations not present with investments in securities of U.S. corporations. Values of investments and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at current exchange rates obtained by a recognized bank, dealer or independent pricing service on the day of valuation. Purchases and sales of investments and dividend and interest income are converted at the prevailing rate of exchange on the respective dates of such transactions.

The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included in net realized gain (loss) on investments and net change in unrealized appreciation (depreciation) on investments in the Statements of Operations. Net realized gains and losses on foreign currency transactions arising from the sale of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and tax reclaims recorded and the U.S. dollar equivalent of the amounts actually received or paid are included in net realized gain (loss) on foreign currency transactions in the Statements of Operations. Unrealized gains and losses arising from changes in the fair value of assets and liabilities, other than investments in securities, resulting from changes in exchange rates are included in net change in unrealized appreciation (depreciation) on foreign currency translation in the Statements of Operations.

Oakmark.com 71


Oakmark Funds

Notes to Financial Statements (continued)

Forward foreign currency contracts

Forward foreign currency contracts are agreements to exchange one currency for another at a future date and at a specified price. The Funds' transactions in forward foreign currency contracts are limited to transaction and portfolio hedging. The contractual amounts of forward foreign currency contracts do not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered and could exceed the net unrealized value shown in the tables below. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movements in currency values. Forward foreign currency contracts are valued at the current day's interpolated foreign exchange rates. Unrealized gain or loss on the contracts, as measured by the difference between the forward foreign exchange rates at the dates of entry into the contracts and the forward rates at the end of the period, is included in the Statements of Assets and Liabilities. Realized gains and losses and the net change in unrealized appreciation (depreciation) on forward foreign currency contracts for the period are included in the Statements of Operations.

At September 30, 2019, Global, Global Select, International and Int'l Small Cap held non-collateralized, forward foreign currency contracts, which are considered derivative instruments, each of whose counterparty is State Street Bank and Trust Company ("State Street") and are listed in the Fund's Schedule of Investments.

For the year ended September 30, 2019, the notional value of forward foreign currency contracts opened and the notional value of settled contracts is listed by Fund in the table below (in thousands):

Fund

   Currency
Contracts Opened		   Currency
Contracts Settled		  

Global

  

$

20,062

    

$

42,713

    

Global Select

    

39,269

      

80,847

    

International

    

412,060

      

858,535

    

Int'l Small Cap

    

25,570

      

43,728

    

Security transactions and investment income

Security transactions are accounted for on the trade date (date the order to buy or sell is executed) and dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as the information becomes available after the ex-dividend date. Interest income and expenses are recorded on an accrual basis. Discount is accreted on long-term fixed income securities using the yield-to-maturity method. Premium is amortized on long-term fixed income securities using the yield-to-earliest call method. Withholding taxes and tax reclaims on foreign dividends have been provided for in accordance with the Funds' understanding of the applicable country's tax rules and rates. Net realized gains and losses on investments are determined by the specific identification method.

Short sales

Each Fund may sell a security it does not own in anticipation of a decline in the fair value of that security. When a Fund sells a security short, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale. A gain, limited to the price at which the Fund sold the security short, or loss, unlimited in size, will be recognized upon the termination of the short sale. Each Fund may sell shares of when-issued securities. Typically, a Fund sells when-issued securities when a company announces a spin-off or re-organization, and the post-spin-off or post-re-organization shares begin trading on a when-issued basis prior to the effective date of the corporate action. A sale of a when-issued security is treated as a short sale for accounting purposes. After the effective date, when shares of the new company are received, any shares sold on a when-issued basis will be delivered to the counterparty. At September 30, 2019, none of the Funds had short sales.

When-issued or delayed-delivery securities

Each Fund may purchase securities on a when-issued or delayed-delivery basis. Although the payment and interest terms of these securities are established at the time a Fund enters into the commitment, the securities may be delivered and paid for a month or more after the date of purchase when their value may have changed. A Fund makes such commitments only with the intention of actually acquiring the securities, but may sell the securities before the settlement date if the Adviser deems it advisable for investment reasons. At September 30, 2019, none of the Funds held when-issued securities.

Accounting for options

When a Fund writes an option, the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire are recorded by the Fund on the expiration date as realized gains from option transactions. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security or currency in determining whether the Fund has realized a gain or a loss. If a put option is exercised, the premium reduces the cost basis of the security or currency purchased by the Fund. In writing an option, the Fund bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. As the writer of a covered call option on a security, a Fund foregoes, during the option's life, the opportunity to profit from increases in the market value of the security covering the call option above the sum of the premium and the exercise price of the call. Exercise of an option written by the Fund could result in the Fund selling or buying a security or currency at a price different

72 OAKMARK FUNDS


Oakmark Funds

Notes to Financial Statements (continued)

from the current fair value. Options written by the Fund do not give rise to counterparty credit risk, as they obligate the Fund, not its counterparties, to perform.

When a Fund purchases an option, the premium paid by the Fund is recorded as an asset and is subsequently adjusted to the current fair value of the option purchased. Purchasing call options tends to increase the Fund's exposure to the underlying instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying instrument. Premiums paid for purchasing options that expire are treated as realized losses. Premiums paid for purchasing options that are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying security to determine the realized gain or loss. The risks associated with purchasing put and call options are potential loss of the premium paid and, in the instances of OTC derivatives, the failure of the counterparty to honor its obligation under the contract.

Oakmark and Select used purchased options for tax management purposes during the year ended September 30, 2019. Oakmark and Select had (in thousands) net realized gains (loss) on purchased options of $(19,135) and $25,725, respectively. There were no outstanding purchased options as of September 30, 2019.

Oakmark and Select used written options for tax management purposes during the year ended September 30, 2019. Oakmark and Select had (in thousands) net realized gains on options written of $87,126 and $20,508, respectively. Written options outstanding, if any, are listed on each Fund's Schedule of Investments.

Credit facility

The Trust has a $200 million committed unsecured line of credit and a $300 million uncommitted unsecured discretionary demand line of credit (the "Facility") with State Street. Borrowings under the Facility bear interest at 1.25% above the greater of the Federal Funds Effective Rate or LIBOR, as defined in the credit agreement. To maintain the Facility, an annualized commitment fee of 0.20% on the unused committed portion is charged to the Trust. Fees and interest expense, if any, related to the Facility are included in other expenses in the Statements of Operations. There were no borrowings under the Facility during the year ended September 30, 2019.

Expense offset arrangement

State Street serves as custodian of the Funds. State Street's fee may be reduced by credits that are an earnings allowance calculated on the average daily cash balances each Fund maintains with State Street. Credit balances used to reduce the Funds' custodian fees, if any, are reported as a reduction of total expenses in the Statements of Operations. During the year ended September 30, 2019, none of the Funds received an expense offset credit.

Repurchase agreements

Each Fund may invest in repurchase agreements, which are short-term investments whereby the Fund acquires ownership of a debt security and the seller agrees to repurchase the security at a future date at a specified price.

The Funds' custodian receives delivery of the underlying securities collateralizing repurchase agreements. It is the Funds' policy that the value of the collateral be at least equal to 102% of the repurchase price, including interest. The Adviser is responsible for determining that the value of the collateral is at all times at least equal to 102% of the repurchase price, including interest. Repurchase agreements could involve certain risks in the event of default or insolvency of the counterparty, including possible delays or restrictions upon a Fund's ability to dispose of the underlying securities. At September 30, 2019, all of the Funds held repurchase agreements.

Security lending

Each Fund may lend its portfolio securities to broker-dealers and banks. Any such loan must be continuously secured by collateral in cash, cash equivalents or U.S. Treasury or agency securities maintained on a current basis in an amount at least equal to the fair value of the securities loaned by a Fund. The Fund would continue to receive the equivalent of the interest or dividends paid by the issuer on the securities loaned and would also receive an additional return that may be in the form of a fixed fee or a percentage of the earnings on the collateral. The Fund has the right to call the loan and attempt to obtain the securities loaned at any time on notice of not more than five business days. In the event of bankruptcy or other default of the borrower, the Fund could experience delays in liquidating the loan collateral or recovering the loaned securities and incur expenses related to enforcing its rights. There could also be a decline in the value of the collateral or in the fair value of the securities loaned while the Fund seeks to enforce its rights thereto and the Fund could experience subnormal levels of income or lack of access to income during that period. A Fund may not exercise proxy voting rights for a security that is on loan if it is unable to recall the security prior to the record date. The Trust, on behalf of the Funds, has entered into an agreement with State Street to serve as its agent for the purpose of lending securities and maintaining the collateral account. Security lending income, if any, net of any fees retained by the securities lending agent, is included in the Statements of Operations.

At September 30, 2019, none of the Funds had securities on loan.

Interfund lending

Pursuant to an exemptive order issued by the SEC, the Funds may participate in an interfund lending program. This program provides an alternative credit facility that allows the Funds to lend money to, and borrow money from, each other for temporary purposes (an "Interfund Loan"). All Interfund Loans are subject to conditions pursuant to the SEC exemptive order designed to ensure fair and equitable treatment of participating Funds. Any Interfund Loan would consist only of uninvested cash reserves that the lending Fund otherwise would invest in short-term repurchase agreements or other short-term instruments.

Oakmark.com 73


Oakmark Funds

Notes to Financial Statements (continued)

During the year ended September 30, 2019, Int'l Small Cap borrowed money from Equity and Income. The loan in the amount of $30 million was initiated on December 13, 2018, and $8 million was repaid on December 14, 2018, and $22 million on December 17, 2018. The interest rate on the borrowing was 2.495%. The total interest paid by Int'l Small Cap to Equity and Income was $6,654.

Global borrowed money from International. The loan in the amount of $46 million was initiated on April 25, 2019, and $16 million was repaid on April 26, 2019, and $30 million on April 29, 2019. The interest rate on the borrowing was 2.617%. The total interest paid by Global to International was $9,885.

2.  TRANSACTIONS WITH AFFILIATES

Each Fund has an investment advisory agreement with the Adviser. For management services and facilities furnished, the Adviser receives from each Fund a monthly fee based on that Fund's net assets at the end of the preceding month. Annual fee rates are as follows:

Fund

  

Advisory Fees

  
Oakmark
  
  
  
  
  
  
  
  		   1.00% up to $2 billion;
0.90% on the next $1 billion;
0.80% on the next $2 billion;
0.75% on the next $2.5 billion;
0.675% on the next $2.5 billion;
0.625% on the next $2.5 billion;
0.620% on the next $12.5 billion;
0.615% on the next $10 billion; and
0.610% over $35 billion		  
Select
  
  
  
  
  
  		   1.00% up to $1 billion;
0.95% on the next $500 million;
0.90% on the next $500 million;
0.85% on the next $500 million;
0.80% on the next $2.5 billion;
0.75% on the next $5 billion; and
0.725% over $10 billion		  
Equity and Income
  
  
  
  
  
  
  		   0.75% up to $5 billion;
0.70% on the next $2.5 billion;
0.675% on the next $2.5 billion;
0.65% on the next $2.5 billion;
0.60% on the next $3.5 billion;
0.585% on the next $5 billion;
0.5775% on the next $7 billion; and
0.5725% over $28 billion		  

Fund

  

Advisory Fees

  
Global
  
  
  		   1.00% up to $2 billion;
0.95% on the next $2 billion;
0.90% on the next $4 billion; and
0.875% over $8 billion		  
Global Select
  
  
  		   1.00% up to $2 billion;
0.95% on the next $1 billion;
0.875% on the next $4 billion; and
0.85% over $7 billion		  
International
  
  
  
  
  
  
  
  
  
  
  		   1.00% up to $2 billion;
0.95% on the next $1 billion;
0.85% on the next $2 billion;
0.825% on the next $2.5 billion;
0.815% on the next $3.5 billion;
0.805% on the next $5.5 billion;
0.80% on the next $6.5 billion;
0.795% on the next $7 billion;
0.790% on the next $5 billion;
0.785% on the next $10 billion;
0.775% on the next $5 billion; and
0.770% over $50 billion		  
Int'l Small Cap
  
  
  
  		   1.25% up to $500 million;
1.10% on the next $1 billion;
1.05% on the next $2 billion;
1.025% on the next $1.5 billion; and
1.00% over $5 billion		  

The Adviser has contractually agreed, through January 27, 2020, to waive the advisory fee otherwise payable to it by the following percentages with respect to each Fund: 0.043% for Oakmark; 0.074% for Select; 0.099% for Equity and Income; 0.059% for Global; 0.066% for Global Select; and 0.052% for International. When determining whether a Fund's total expenses exceed the additional contractual expense cap described below, a Fund's net advisory fee, reflecting application of the advisory fee waiver, will be used to calculate a Fund's total expenses. The Adviser is not entitled to collect on or make a claim for waived fees that are the subject of this undertaking at any time in the future. This arrangement may only be modified or amended with approval from a Fund and the Adviser. The advisory fees waived for each Fund are included in the Statements of Operations.

The Adviser has contractually agreed, through January 27, 2020, to reimburse each Fund Class to the extent, but only to the extent that the annualized expenses (excluding taxes, interest, all commissions and other normal charges incident to the purchase and sale of portfolio securities, and extraordinary charges such as litigation costs, but including fees paid to the Adviser) exceed the percent set forth below of average daily net assets of each Fund Class.

Fund

   Investor
Class		   Advisor
Class		   Institutional
Class		   Service
Class		  

Oakmark

    

1.50

%

    

1.40

%

    

1.30

%

    

1.75

%

  

Select

    

1.50

      

1.40

      

1.30

      

1.75

    

Equity and Income

    

1.00

      

0.90

      

0.80

      

1.25

    

Global

    

1.75

      

1.65

      

1.55

      

2.00

    

Global Select

    

1.75

      

1.65

      

1.55

      

2.00

    

International

    

2.00

      

1.90

      

1.80

      

2.25

    

Int'l Small Cap

    

2.00

      

1.90

      

1.80

      

2.25

    

74 OAKMARK FUNDS


Oakmark Funds

Notes to Financial Statements (continued)

The Adviser is entitled to recoup from assets attributable to any Fund Class amounts reimbursed to that Fund Class, except to the extent that the Fund Class already has paid such recoupment to the Adviser or such recoupment would cause that Class' total operating expenses to exceed the expense limitation or to exceed any lower limit in effect at the time of recoupment. Any such repayment must be made within three fiscal years after the year in which the reimbursement occurred. As of September 30, 2019, there were no amounts subject to recoupment.

The Adviser has voluntarily reimbursed certain of the Funds for a portion of Transfer Agency costs. For the year ended September 30, 2019, the Adviser reimbursed $304 and $9,924 to Oakmark and International for transfer agency expenses related to Institutional Class Shares. These amounts are not subject to recovery under the contractual expense reimbursement agreement described above.

The Adviser and/or the Funds have entered into agreements with financial intermediaries to provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries and have agreed to compensate the intermediaries for providing those services. Certain of those services would be provided by the Funds if the shares of those customers were registered directly with the Funds' transfer agent. Accordingly, the Funds pay a portion of the intermediary fees pursuant to an agreement with the Adviser and the Adviser pays the remainder of the fees. The fees incurred by the Funds are reflected as other shareholder servicing fees in the Statements of Operations.

The Independent Trustees of the Trust may participate in the Trust's Deferred Compensation Plan for Independent Trustees. Participants in the plan may elect to defer all or a portion of their compensation. Amounts deferred are retained by the Trust and represent an unfunded obligation of the Trust. The value of a participant's deferral account is determined by reference to the change in value of Institutional Class shares of one or more of the Funds or a money market fund as specified by the participant. Benefits would be payable after a stated number of years or retirement from the Board of Trustees. The accrued obligations of the Funds under the plan are reflected as deferred Trustee compensation in the Statements of Assets and Liabilities. The change in the accrued obligations for the period is included in Trustees' fees in the Statements of Operations. The Trust pays the compensation of the Trustees other than those affiliated with the Adviser and all expenses incurred in connection with their services to the Trust. The Trust does not provide any pension or retirement benefits to its Trustees.

The Funds reimburse the Adviser for a portion of the compensation paid to the Funds' Chief Compliance Officer ("CCO"). The CCO expenses incurred by the Funds are included in other expenses in the Statements of Operations.

3.  FEDERAL INCOME TAXES

It is each Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its net taxable income, including any net realized gains on investments, to its shareholders. Therefore, no federal income tax provision is required. The Adviser has determined that no income tax provision for uncertain tax positions is required in the Funds' financial statements. Generally, each of the tax years in the four-year period ended September 30, 2019, remains subject to examination by taxing authorities.

At September 30, 2019, the cost of investments for federal income tax purposes and related composition of unrealized gains and losses for each Fund were as follows (in thousands):

Fund

   Cost of Investments
for Federal Income
Tax Purposes		   Gross Unrealized
Appreciation		   Gross Unrealized
(Depreciation)		   Net Unrealized
Appreciation
(Depreciation)		  

Oakmark

  

$

11,130,007

    

$

5,311,204

    

$

(236,852

)

  

$

5,074,352

    

Select

    

2,987,035

      

1,520,896

      

(53,361

)

    

1,467,535

    

Equity and Income

    

8,830,606

      

3,139,314

      

(99,047

)

    

3,040,267

    

Global

    

1,359,371

      

402,607

      

(98,542

)

    

304,065

    

Global Select

    

1,648,253

      

331,725

      

(183,694

)

    

148,031

    

International

    

33,966,264

      

2,053,509

      

(5,281,392

)

    

(3,227,883

)

  

Int'l Small Cap

    

1,498,265

      

147,736

      

(225,493

)

    

(77,757

)

  

As of September 30, 2019, the short and long-term capital losses available to offset future capital gains were as follows (in thousands):

   

Short-Term

  

Long-Term

  

Total

  

Select

  

$

98,731

    

$

—

    

$

98,731

    

Global Select

    

19,456

      

—

      

19,456

    

International

    

935,272

      

54,756

      

990,028

    

Int'l Small Cap

    

90,339

      

40,596

      

130,935

    

Oakmark.com 75


Oakmark Funds

Notes to Financial Statements (continued)

At September 30, 2019, the components of distributable earnings on a tax basis (excluding unrealized appreciation (depreciation)) were as follows (in thousands):

    Undistributed
Ordinary Income		   Undistributed Long-
Term Gain		   Total Distributable
Earnings		  

Oakmark

  

$

129,713

    

$

1,199,242

    

$

1,328,955

    

Select

    

34,618

      

0

      

34,618

    

Equity and Income

    

150,946

      

804,595

      

955,541

    

Global

    

14,482

      

35,717

      

50,199

    

Global Select

    

24,757

      

0

      

24,757

    

International

    

621,102

      

0

      

621,102

    

Int'l Small Cap

    

4,613

      

0

      

4,613

    

During the year ended September 30, 2019, and the year ended September 30, 2018, the tax character of distributions paid was as follows (in thousands):

    Year Ended
September 30, 2019		   Year Ended
September 30, 2018		  

Fund

   Distributions Paid
from Ordinary
Income		   Distributions Paid
from Long-Term
Capital Gain		   Distributions Paid
from Ordinary
Income		   Distributions Paid
from Long-Term
Capital Gain		  

Oakmark

  

$

127,332

    

$

1,146,358

    

$

97,783

    

$

679,188

    

Select

    

10,491

      

203,060

      

19,611

      

239,694

    

Equity and Income

    

225,245

      

966,310

      

216,186

      

1,026,695

    

Global

    

20,657

      

214,231

      

36,069

      

158,299

    

Global Select

    

30,476

      

69,947

      

26,254

      

125,537

    

International

    

703,498

      

1,540,995

      

580,203

      

706,152

    

Int'l Small Cap

    

23,599

      

97,332

      

37,632

      

74,020

    

On September 30, 2019, the Funds had temporary book/tax differences in undistributed earnings that were primarily attributable to trustee-deferred compensation expenses, passive foreign investment companies, foreign currency contracts and deferrals of capital losses on wash sales. Temporary differences will reverse over time. The Funds have permanent differences in book/tax undistributed earnings primarily attributable to equalization debits and distribution re-designations. Permanent differences are recorded in their respective component of the Analysis of Net Assets for the year ended September 30, 2019.

During the year ended September 30, 2019, the following amounts were classified due to permanent differences between book and tax accounting (in thousands):

Fund

  

Paid in Capital

   Distributable
Earnings		  

Oakmark

  

$

544,996

    

$

(544,996

)

  

Select

    

45,264

      

(45,264

)

  

Equity and Income

    

367,526

      

(367,526

)

  

Global

    

59,584

      

(59,584

)

  

Global Select

    

38,638

      

(38,638

)

  

International

    

889,040

      

(889,040

)

  

Int'l Small Cap

    

66,952

      

(66,952

)

  

4.  INVESTMENT TRANSACTIONS

For the year ended September 30, 2019, transactions in investment securities (excluding short-term, in-kind transactions and U.S. government securities) were as follows (in thousands):

   

Oakmark

  

Select

   Equity &
Income		  

Global

   Global
Select		  

International

   Int'l
Small Cap		  

Purchases

  

$

8,654,626

    

$

2,036,748

    

$

1,244,670

    

$

348,625

    

$

403,754

    

$

11,550,571

    

$

580,081

    

Proceeds from sales

    

12,144,462

      

2,792,534

      

3,336,833

      

832,754

      

1,038,206

      

19,033,933

      

1,195,835

    

76 OAKMARK FUNDS


Oakmark Funds

Notes to Financial Statements (continued)

Purchases at cost and proceeds from sales (in thousands) of long-term U.S. government securities for the year ended September 30, 2019, were $9,807 and $516,753, respectively, for Equity and Income.

During the year ended September 30, 2019, Oakmark, Select and Global Select engaged in purchase transactions (in thousands) totaling $96,893, $40,682 and $15,758, respectively, with funds that have a common investment advisor. Oakmark, Select, Global, Global Select, International and Int'l Small Cap engaged in sale transactions (in thousands) totaling $40,682, $81,761, $3,187, $12,561, $12,571 and $547, respectively, with funds that have a common investment advisor. These transactions complied with Rule 17a-7 under the 1940 act.

During the year ended September 30, 2019, International had an in-kind purchase transaction of $32,161.

5.  INVESTMENTS IN AFFILIATED ISSUERS

A company was considered to be an affiliate of a Fund because that Fund owned 5% or more of the company's voting securities during all or part of the year ended September 30, 2019. Purchase and sale transactions and dividend and interest income earned during the period on these securities are listed after the applicable Fund's Schedule of Investments.

6.  SUBSEQUENT EVENTS

The Adviser has evaluated the possibility of subsequent events existing in the Funds' financial statements. The Adviser has determined that there are no material events that would require adjustment or disclosure in the Funds' financial statements through the date of the publication of this report.

Oakmark.com 77


Oakmark Funds

Financial Highlights

For a share outstanding throughout each period

       

Income from Investment Operations:

  

Less Distributions:

  
   

Net Asset
Value,
Beginning of
Period

  

Net
Investment
Income

  

Net Gain
(Loss) on
Investments
(Both
Realized and
Unrealized)

  

Total from
Investment
Operations

  

Distributions
from Net
Investment
Income

  

Distributions
from
Capital
Gains

  

Total
Distributions

  

Redemption
Fees

  

Oakmark Fund

  

Investor Class

  

9/30/19

  

$

88.99

      

0.88

(a)

    

(6.43

)

    

(5.55

)

    

(0.50

)

    

(5.05

)

    

(5.55

)

    

0.00

    

9/30/18

  

$

82.85

      

0.58

(a)

    

8.99

      

9.57

      

(0.40

)

    

(3.03

)

    

(3.43

)

    

0.00

    

9/30/17

  

$

68.70

      

0.76

      

15.26

      

16.02

      

(0.77

)

    

(1.10

)

    

(1.87

)

    

0.00

    

9/30/16

  

$

60.93

      

0.82

      

7.85

      

8.67

      

(0.60

)

    

(0.30

)

    

(0.90

)

    

0.00

    

9/30/15

  

$

68.46

      

0.59

      

(3.57

)

    

(2.98

)

    

(0.42

)

    

(4.13

)

    

(4.55

)

    

0.00

    

Advisor Class

  

9/30/19

  

$

89.07

      

0.96

(a)

    

(6.46

)

    

(5.50

)

    

(0.64

)

    

(5.05

)

    

(5.69

)

    

0.00

    

9/30/18

  

$

82.97

      

0.68

(a)

    

8.99

      

9.67

      

(0.54

)

    

(3.03

)

    

(3.57

)

    

0.00

    

9/30/17(c)

  

$

71.35

      

0.66

(a)

    

10.96

      

11.62

      

0.00

      

0.00

      

0.00

      

0.00

    

Institutional Class

  

9/30/19

  

$

89.09

      

1.01

(a)

    

(6.44

)

    

(5.43

)

    

(0.66

)

    

(5.05

)

    

(5.71

)

    

0.00

    

9/30/18

  

$

82.97

      

0.72

(a)

    

8.99

      

9.71

      

(0.56

)

    

(3.03

)

    

(3.59

)

    

0.00

    

9/30/17(c)

  

$

71.35

      

0.67

(a)

    

10.95

      

11.62

      

0.00

      

0.00

      

0.00

      

0.00

    

Service Class

  

9/30/19

  

$

88.54

      

0.66

(a)

    

(6.37

)

    

(5.71

)

    

(0.23

)

    

(5.05

)

    

(5.28

)

    

0.00

    

9/30/18

  

$

82.48

      

0.33

(a)

    

8.95

      

9.28

      

(0.19

)

    

(3.03

)

    

(3.22

)

    

0.00

    

9/30/17

  

$

68.34

      

0.47

(a)

    

15.28

      

15.75

      

(0.51

)

    

(1.10

)

    

(1.61

)

    

0.00

    

9/30/16

  

$

60.59

      

0.59

      

7.83

      

8.42

      

(0.37

)

    

(0.30

)

    

(0.67

)

    

0.00

    

9/30/15

  

$

68.18

      

0.38

(a)

    

(3.56

)

    

(3.18

)

    

(0.28

)

    

(4.13

)

    

(4.41

)

    

0.00

    
  †  Data has been annualized.  
  (a)   Computed using average shares outstanding throughout the period.  
  (b)   Includes interest expense that amounts to less than 0.01%.  
  (c)   Commenced on 11/30/2016.  

Oakmark Select Fund

  

Investor Class

  

9/30/19

  

$

45.84

      

0.45

(a)

    

(5.37

)

    

(4.92

)

    

(0.06

)

    

(1.66

)

    

(1.72

)

    

0.00

    

9/30/18

  

$

47.84

      

0.09

(a)

    

(0.08

)

    

0.01

      

(0.14

)

    

(1.87

)

    

(2.01

)

    

0.00

    

9/30/17

  

$

40.99

      

0.17

      

8.78

      

8.95

      

(0.40

)

    

(1.70

)

    

(2.10

)

    

0.00

    

9/30/16

  

$

36.79

      

0.39

      

3.93

      

4.32

      

(0.12

)

    

0.00

      

(0.12

)

    

0.00

    

9/30/15

  

$

44.71

      

0.08

(a)

    

(2.60

)

    

(2.52

)

    

0.00

      

(5.40

)

    

(5.40

)

    

0.00

    

Advisor Class

  

9/30/19

  

$

45.90

      

0.52

(a)

    

(5.41

)

    

(4.89

)

    

(0.14

)

    

(1.66

)

    

(1.80

)

    

0.00

    

9/30/18

  

$

47.90

      

0.16

(a)

    

(0.08

)

    

0.08

      

(0.21

)

    

(1.87

)

    

(2.08

)

    

0.00

    

9/30/17(b)

  

$

41.93

      

0.20

(a)

    

5.77

      

5.97

      

0.00

      

0.00

      

0.00

      

0.00

    

Institutional Class

  

9/30/19

  

$

45.91

      

0.54

(a)

    

(5.40

)

    

(4.86

)

    

(0.16

)

    

(1.66

)

    

(1.82

)

    

0.00

    

9/30/18

  

$

47.91

      

0.17

(a)

    

(0.08

)

    

0.09

      

(0.22

)

    

(1.87

)

    

(2.09

)

    

0.00

    

9/30/17(b)

  

$

41.93

      

0.22

(a)

    

5.76

      

5.98

      

0.00

      

0.00

      

0.00

      

0.00

    

Service Class

  

9/30/19

  

$

45.23

      

0.35

(a)

    

(5.29

)

    

(4.94

)

    

0.00

      

(1.66

)

    

(1.66

)

    

0.00

    

9/30/18

  

$

47.21

      

(0.03

)(a)

    

(0.08

)

    

(0.11

)

    

0.00

      

(1.87

)

    

(1.87

)

    

0.00

    

9/30/17

  

$

40.44

      

0.05

(a)

    

8.68

      

8.73

      

(0.26

)

    

(1.70

)

    

(1.96

)

    

0.00

    

9/30/16

  

$

36.31

      

0.23

(a)

    

3.90

      

4.13

      

0.00

      

0.00

      

0.00

      

0.00

    

9/30/15

  

$

44.32

      

(0.05

)(a)

    

(2.56

)

    

(2.61

)

    

0.00

      

(5.40

)

    

(5.40

)

    

0.00

    
  †  Data has been annualized.  
  (a)   Computed using average shares outstanding throughout the period.  
  (b)   Commenced on 11/30/2016.  

78 OAKMARK FUNDS


           

Ratios/Supplemental Data:

      
   

Net Asset
Value,
End of
Period

  

Total
Return

  

Net Assets,
End of
Period
($million)

  

Ratio of
Net
Expenses
to Average
Net Assets

  

Ratio of
Net
Investment
Income to
Average
Net Assets

  

Ratio of
Gross
Expenses to
Average Net
Assets

  

Portfolio
Turnover
Rate

  

Oakmark Fund

  

Investor Class

  

9/30/19

  

$

77.89

      

-5.68

%

  

$

9,044.6

      

0.88

%

    

1.13

%

    

0.92

%

    

51

%

  

9/30/18

  

$

88.99

      

11.84

%

  

$

12,626.2

      

0.85

%

    

0.68

%

    

0.89

%

    

29

%

  

9/30/17

  

$

82.85

      

23.79

%

  

$

14,200.2

      

0.86

%

    

0.91

%

    

0.90

%

    

19

%

  

9/30/16

  

$

68.70

      

14.36

%

  

$

14,636.0

      

0.89

%

    

1.14

%

    

0.89

%

    

20

%

  

9/30/15

  

$

60.93

      

-4.87

%

  

$

16,445.0

      

0.85

%(b)

    

0.92

%

    

0.85

%(b)

    

33

%

  

Advisor Class

  

9/30/19

  

$

77.88

      

-5.59

%

  

$

4,786.4

      

0.78

%

    

1.23

%

    

0.82

%

    

51

%

  

9/30/18

  

$

89.07

      

11.96

%

  

$

5,400.6

      

0.73

%

    

0.79

%

    

0.77

%

    

29

%

  

9/30/17(c)

  

$

82.97

      

16.29

%

  

$

1,839.8

      

0.72

%†

    

1.01

%†

    

0.76

%†

    

19

%

  

Institutional Class

  

9/30/19

  

$

77.95

      

-5.51

%

  

$

2,302.3

      

0.70

%

    

1.29

%

    

0.75

%

    

51

%

  

9/30/18

  

$

89.09

      

12.01

%

  

$

3,330.6

      

0.70

%

    

0.83

%

    

0.74

%

    

29

%

  

9/30/17(c)

  

$

82.97

      

16.29

%

  

$

2,569.2

      

0.68

%†

    

1.02

%†

    

0.73

%†

    

19

%

  

Service Class

  

9/30/19

  

$

77.55

      

-5.93

%

  

$

97.6

      

1.15

%

    

0.86

%

    

1.19

%

    

51

%

  

9/30/18

  

$

88.54

      

11.51

%

  

$

143.4

      

1.13

%

    

0.39

%

    

1.17

%

    

29

%

  

9/30/17

  

$

82.48

      

23.45

%

  

$

168.4

      

1.14

%

    

0.63

%

    

1.18

%

    

19

%

  

9/30/16

  

$

68.34

      

14.00

%

  

$

177.2

      

1.21

%

    

0.86

%

    

1.21

%

    

20

%

  

9/30/15

  

$

60.59

      

-5.19

%

  

$

194.4

      

1.19

%(b)

    

0.57

%

    

1.19

%(b)

    

33

%

  
  †  Data has been annualized.  
  (a)   Computed using average shares outstanding throughout the period.  
  (b)   Includes interest expense that amounts to less than 0.01%.  
  (c)   Commenced on 11/30/2016.  

Oakmark Select Fund

  

Investor Class

  

9/30/19

  

$

39.20

      

-10.34

%

  

$

3,154.9

      

1.00

%

    

1.14

%

    

1.08

%

    

45

%

  

9/30/18

  

$

45.84

      

-0.08

%

  

$

4,376.3

      

0.97

%

    

0.20

%

    

1.04

%

    

41

%

  

9/30/17

  

$

47.84

      

22.61

%

  

$

4,854.7

      

0.96

%

    

0.39

%

    

1.03

%

    

22

%

  

9/30/16

  

$

40.99

      

11.76

%

  

$

4,962.7

      

0.98

%

    

0.92

%

    

0.98

%

    

38

%

  

9/30/15

  

$

36.79

      

-6.75

%

  

$

5,499.3

      

0.95

%

    

0.20

%

    

0.95

%

    

46

%

  

Advisor Class

  

9/30/19

  

$

39.21

      

-10.24

%

  

$

638.5

      

0.86

%

    

1.31

%

    

0.94

%

    

45

%

  

9/30/18

  

$

45.90

      

0.08

%

  

$

711.4

      

0.82

%

    

0.34

%

    

0.89

%

    

41

%

  

9/30/17(b)

  

$

47.90

      

14.24

%

  

$

571.3

      

0.81

%†

    

0.54

%†

    

0.89

%†

    

22

%

  

Institutional Class

  

9/30/19

  

$

39.23

      

-10.18

%

  

$

660.3

      

0.82

%

    

1.36

%

    

0.90

%

    

45

%

  

9/30/18

  

$

45.91

      

0.10

%

  

$

852.0

      

0.79

%

    

0.37

%

    

0.86

%

    

41

%

  

9/30/17(b)

  

$

47.91

      

14.26

%

  

$

768.9

      

0.79

%†

    

0.58

%†

    

0.87

%†

    

22

%

  

Service Class

  

9/30/19

  

$

38.63

      

-10.55

%

  

$

7.1

      

1.24

%

    

0.89

%

    

1.31

%

    

45

%

  

9/30/18

  

$

45.23

      

-0.32

%

  

$

14.1

      

1.23

%

    

(0.06

)%

    

1.30

%

    

41

%

  

9/30/17

  

$

47.21

      

22.29

%

  

$

27.9

      

1.24

%

    

0.11

%

    

1.31

%

    

22

%

  

9/30/16

  

$

40.44

      

11.37

%

  

$

34.6

      

1.32

%

    

0.62

%

    

1.32

%

    

38

%

  

9/30/15

  

$

36.31

      

-7.04

%

  

$

36.8

      

1.27

%

    

(0.12

)%

    

1.27

%

    

46

%

  
  †  Data has been annualized.  
  (a)   Computed using average shares outstanding throughout the period.  
  (b)   Commenced on 11/30/2016.  

Oakmark.com 79


Oakmark Funds

Financial Highlights

For a share outstanding throughout each period

       

Income from Investment Operations:

  

Less Distributions:

  
   

Net Asset
Value,
Beginning of
Period

  

Net
Investment
Income

  

Net Gain
(Loss) on
Investments
(Both
Realized and
Unrealized)

  

Total from
Investment
Operations

  

Distributions
from Net
Investment
Income

  

Distributions
from
Capital
Gains

  

Total
Distributions

  

Redemption
Fees

  

Oakmark Equity and Income Fund

  

Investor Class

  

9/30/19

  

$

32.52

      

0.52

(a)

    

(0.04

)

    

0.48

      

(0.50

)

    

(2.20

)

    

(2.70

)

    

0.00

    

9/30/18

  

$

33.41

      

0.49

(a)

    

1.22

      

1.71

      

(0.43

)

    

(2.17

)

    

(2.60

)

    

0.00

    

9/30/17

  

$

30.20

      

0.58

      

3.89

      

4.47

      

(0.47

)

    

(0.79

)

    

(1.26

)

    

0.00

    

9/30/16

  

$

29.98

      

0.36

(a)

    

1.73

      

2.09

      

(0.34

)

    

(1.53

)

    

(1.87

)

    

0.00

    

9/30/15

  

$

33.65

      

0.36

      

(1.04

)

    

(0.68

)

    

(0.27

)

    

(2.72

)

    

(2.99

)

    

0.00

    

Advisor Class

  

9/30/19

  

$

32.55

      

0.55

(a)

    

(0.03

)

    

0.52

      

(0.56

)

    

(2.20

)

    

(2.76

)

    

0.00

    

9/30/18

  

$

33.46

      

0.56

(a)

    

1.20

      

1.76

      

(0.50

)

    

(2.17

)

    

(2.67

)

    

0.00

    

9/30/17(b)

  

$

29.97

      

0.55

(a)

    

2.94

      

3.49

      

0.00

      

0.00

      

0.00

      

0.00

    

Institutional Class

  

9/30/19

  

$

32.56

      

0.59

(a)

    

(0.05

)

    

0.54

      

(0.57

)

    

(2.20

)

    

(2.77

)

    

0.00

    

9/30/18

  

$

33.46

      

0.58

(a)

    

1.19

      

1.77

      

(0.50

)

    

(2.17

)

    

(2.67

)

    

0.00

    

9/30/17(b)

  

$

29.97

      

0.59

(a)

    

2.90

      

3.49

      

0.00

      

0.00

      

0.00

      

0.00

    

Service Class

  

9/30/19

  

$

32.29

      

0.44

(a)

    

(0.02

)

    

0.42

      

(0.40

)

    

(2.20

)

    

(2.60

)

    

0.00

    

9/30/18

  

$

33.19

      

0.40

(a)

    

1.21

      

1.61

      

(0.34

)

    

(2.17

)

    

(2.51

)

    

0.00

    

9/30/17

  

$

30.00

      

0.45

      

3.90

      

4.35

      

(0.37

)

    

(0.79

)

    

(1.16

)

    

0.00

    

9/30/16

  

$

29.75

      

0.26

(a)

    

1.73

      

1.99

      

(0.21

)

    

(1.53

)

    

(1.74

)

    

0.00

    

9/30/15

  

$

33.41

      

0.25

      

(1.03

)

    

(0.78

)

    

(0.16

)

    

(2.72

)

    

(2.88

)

    

0.00

    
  †  Data has been annualized.  
  (a)   Computed using average shares outstanding throughout the period.  
  (b)   Commenced on 11/30/2016.  

Oakmark Global Fund

  

Investor Class

  

9/30/19

  

$

32.21

      

0.50

(a)

    

(1.71

)

    

(1.21

)

    

(0.29

)

    

(3.19

)

    

(3.48

)

    

0.00

    

9/30/18

  

$

34.32

      

0.25

      

0.12

      

0.37

      

(0.30

)

    

(2.18

)

    

(2.48

)

    

0.00

    

9/30/17

  

$

26.36

      

0.29

(a)

    

7.97

      

8.26

      

(0.30

)

    

0.00

      

(0.30

)

    

0.00

    

9/30/16

  

$

26.34

      

0.32

      

0.48

      

0.80

      

(0.31

)

    

(0.47

)

    

(0.78

)

    

0.00

    

9/30/15

  

$

30.34

      

0.25

(a)

    

(2.16

)

    

(1.91

)

    

(0.35

)

    

(1.74

)

    

(2.09

)

    

0.00

    

Advisor Class

  

9/30/19

  

$

32.22

      

0.49

(a)

    

(1.66

)

    

(1.17

)

    

(0.33

)

    

(3.19

)

    

(3.52

)

    

0.00

    

9/30/18

  

$

34.36

      

0.30

      

0.10

      

0.40

      

(0.36

)

    

(2.18

)

    

(2.54

)

    

0.00

    

9/30/17(b)

  

$

27.22

      

0.24

(a)

    

6.90

      

7.14

      

0.00

      

0.00

      

0.00

      

0.00

    

Institutional Class

  

9/30/19

  

$

32.25

      

0.59

(a)

    

(1.75

)

    

(1.16

)

    

(0.36

)

    

(3.19

)

    

(3.55

)

    

0.00

    

9/30/18

  

$

34.38

      

0.31

      

0.12

      

0.43

      

(0.38

)

    

(2.18

)

    

(2.56

)

    

0.00

    

9/30/17(b)

  

$

27.22

      

0.26

      

6.90

      

7.16

      

0.00

      

0.00

      

0.00

      

0.00

    

Service Class

  

9/30/19

  

$

31.27

      

0.44

(a)

    

(1.68

)

    

(1.24

)

    

(0.16

)

    

(3.19

)

    

(3.35

)

    

0.00

    

9/30/18

  

$

33.40

      

0.14

      

0.13

      

0.27

      

(0.22

)

    

(2.18

)

    

(2.40

)

    

0.00

    

9/30/17

  

$

25.65

      

(0.14

)

    

8.11

      

7.97

      

(0.22

)

    

0.00

      

(0.22

)

    

0.00

    

9/30/16

  

$

25.62

      

0.21

(a)

    

0.47

      

0.68

      

(0.18

)

    

(0.47

)

    

(0.65

)

    

0.00

    

9/30/15

  

$

29.57

      

0.13

(a)

    

(2.10

)

    

(1.97

)

    

(0.24

)

    

(1.74

)

    

(1.98

)

    

0.00

    
  †  Data has been annualized.  
  (a)   Computed using average shares outstanding throughout the period.  
  (b)   Commenced on 11/30/2016.  

80 OAKMARK FUNDS


           

Ratios/Supplemental Data:

      
   

Net Asset
Value,
End of
Period

  

Total
Return

  

Net Assets,
End of
Period
($million)

  

Ratio of
Net
Expenses
to Average
Net Assets

  

Ratio of
Net
Investment
Income to
Average
Net Assets

  

Ratio of
Gross
Expenses
to Average
Net Assets

  

Portfolio
Turnover
Rate

  

Oakmark Equity and Income Fund

  

Investor Class

  

9/30/19

  

$

30.30

      

2.29

%

  

$

9,006.7

      

0.81

%

    

1.74

%

    

0.91

%

    

11

%

  

9/30/18

  

$

32.52

      

5.29

%

  

$

12,159.5

      

0.78

%

    

1.51

%

    

0.88

%

    

23

%

  

9/30/17

  

$

33.41

      

15.30

%

  

$

14,249.1

      

0.78

%

    

1.71

%

    

0.87

%

    

18

%

  

9/30/16

  

$

30.20

      

7.34

%

  

$

15,367.7

      

0.79

%

    

1.22

%

    

0.79

%

    

18

%

  

9/30/15

  

$

29.98

      

-2.53

%

  

$

17,285.5

      

0.75

%

    

1.06

%

    

0.75

%

    

25

%

  

Advisor Class

  

9/30/19

  

$

30.31

      

2.41

%

  

$

1,347.6

      

0.68

%

    

1.86

%

    

0.78

%

    

11

%

  

9/30/18

  

$

32.55

      

5.42

%

  

$

1,720.5

      

0.64

%

    

1.72

%

    

0.74

%

    

23

%

  

9/30/17(b)

  

$

33.46

      

11.64

%

  

$

724.7

      

0.61

%†

    

2.07

%†

    

0.71

%†

    

18

%

  

Institutional Class

  

9/30/19

  

$

30.33

      

2.49

%

  

$

1,188.9

      

0.63

%

    

1.96

%

    

0.72

%

    

11

%

  

9/30/18

  

$

32.56

      

5.47

%

  

$

1,035.0

      

0.59

%

    

1.77

%

    

0.69

%

    

23

%

  

9/30/17(b)

  

$

33.46

      

11.64

%

  

$

536.3

      

0.59

%†

    

2.19

%†

    

0.69

%†

    

18

%

  

Service Class

  

9/30/19

  

$

30.11

      

2.05

%

  

$

293.1

      

1.05

%

    

1.48

%

    

1.15

%

    

11

%

  

9/30/18

  

$

32.29

      

4.99

%

  

$

447.5

      

1.05

%

    

1.23

%

    

1.15

%

    

23

%

  

9/30/17

  

$

33.19

      

14.95

%

  

$

622.1

      

1.05

%

    

1.44

%

    

1.14

%

    

18

%

  

9/30/16

  

$

30.00

      

7.02

%

  

$

744.2

      

1.10

%

    

0.90

%

    

1.10

%

    

18

%

  

9/30/15

  

$

29.75

      

-2.84

%

  

$

900.7

      

1.09

%

    

0.71

%

    

1.09

%

    

25

%

  
  †  Data has been annualized.  
  (a)   Computed using average shares outstanding throughout the period.  
  (b)   Commenced on 11/30/2016.  

Oakmark Global Fund

  

Investor Class

  

9/30/19

  

$

27.52

      

-2.48

%

  

$

1,077.3

      

1.17

%

    

1.82

%

    

1.23

%

    

20

%

  

9/30/18

  

$

32.21

      

1.02

%

  

$

1,492.7

      

1.15

%

    

0.68

%

    

1.21

%

    

25

%

  

9/30/17

  

$

34.32

      

31.64

%

  

$

1,811.8

      

1.15

%

    

0.96

%

    

1.21

%

    

32

%

  

9/30/16

  

$

26.36

      

2.93

%

  

$

2,328.9

      

1.17

%

    

1.14

%

    

1.17

%

    

32

%

  

9/30/15

  

$

26.34

      

-6.92

%

  

$

2,950.8

      

1.12

%

    

0.86

%

    

1.12

%

    

36

%

  

Advisor Class

  

9/30/19

  

$

27.53

      

-2.35

%

  

$

263.0

      

1.05

%

    

1.79

%

    

1.10

%

    

20

%

  

9/30/18

  

$

32.22

      

1.10

%

  

$

440.2

      

1.06

%

    

0.89

%

    

1.12

%

    

25

%

  

9/30/17(b)

  

$

34.36

      

26.23

%

  

$

499.9

      

1.01

%†

    

0.89

%†

    

1.07

%†

    

32

%

  

Institutional Class

  

9/30/19

  

$

27.54

      

-2.30

%

  

$

313.8

      

1.00

%

    

2.17

%

    

1.06

%

    

20

%

  

9/30/18

  

$

32.25

      

1.18

%

  

$

333.5

      

0.98

%

    

0.93

%

    

1.04

%

    

25

%

  

9/30/17(b)

  

$

34.38

      

26.30

%

  

$

309.6

      

0.96

%†

    

1.55

%†

    

1.02

%†

    

32

%

  

Service Class

  

9/30/19

  

$

26.68

      

-2.71

%

  

$

12.3

      

1.41

%

    

1.66

%

    

1.47

%

    

20

%

  

9/30/18

  

$

31.27

      

0.73

%

  

$

16.6

      

1.44

%

    

0.43

%

    

1.50

%

    

25

%

  

9/30/17

  

$

33.40

      

31.27

%

  

$

22.5

      

1.42

%

    

0.63

%

    

1.48

%

    

32

%

  

9/30/16

  

$

25.65

      

2.60

%

  

$

25.6

      

1.50

%

    

0.82

%

    

1.50

%

    

32

%

  

9/30/15

  

$

25.62

      

-7.33

%

  

$

32.3

      

1.52

%

    

0.46

%

    

1.52

%

    

36

%

  
  †  Data has been annualized.  
  (a)   Computed using average shares outstanding throughout the period.  
  (b)   Commenced on 11/30/2016.  

Oakmark.com 81


Oakmark Funds

Financial Highlights

For a share outstanding throughout each period

       

Income from Investment Operations:

  

Less Distributions:

  
   

Net Asset
Value,
Beginning of
Period

  

Net
Investment
Income

  

Net Gain
(Loss) on
Investments
(Both
Realized and
Unrealized)

  

Total from
Investment
Operations

  

Distributions
from Net
Investment
Income

  

Distributions
from
Capital
Gains

  

Total
Distributions

  

Redemption
Fees

  

Oakmark Global Select Fund

  

Investor Class

  

9/30/19

  

$

18.58

      

0.31

(a)

    

(1.31

)

    

(1.00

)

    

(0.22

)

    

(0.55

)

    

(0.77

)

    

0.00

    

9/30/18

  

$

19.78

      

0.22

(a)

    

(0.36

)

    

(0.14

)

    

(0.17

)

    

(0.89

)

    

(1.06

)

    

0.00

    

9/30/17

  

$

15.81

      

0.26

      

3.88

      

4.14

      

(0.17

)

    

0.00

      

(0.17

)

    

0.00

    

9/30/16

  

$

15.19

      

0.18

      

1.31

      

1.49

      

(0.13

)

    

(0.74

)

    

(0.87

)

    

0.00

    

9/30/15

  

$

16.63

      

0.12

      

(0.65

)

    

(0.53

)

    

(0.14

)

    

(0.77

)

    

(0.91

)

    

0.00

    

Advisor Class

  

9/30/19

  

$

18.60

      

0.37

(a)

    

(1.37

)

    

(1.00

)

    

(0.25

)

    

(0.55

)

    

(0.80

)

    

0.00

    

9/30/18

  

$

19.81

      

0.25

(a)

    

(0.37

)

    

(0.12

)

    

(0.20

)

    

(0.89

)

    

(1.09

)

    

0.00

    

9/30/17(b)

  

$

16.39

      

0.25

(a)

    

3.17

      

3.42

      

0.00

      

0.00

      

0.00

      

0.00

    

Institutional Class

  

9/30/19

  

$

18.61

      

0.35

(a)

    

(1.34

)

    

(0.99

)

    

(0.26

)

    

(0.55

)

    

(0.81

)

    

0.00

    

9/30/18

  

$

19.81

      

0.27

(a)

    

(0.37

)

    

(0.10

)

    

(0.21

)

    

(0.89

)

    

(1.10

)

    

0.00

    

9/30/17(b)

  

$

16.39

      

0.23

(a)

    

3.19

      

3.42

      

0.00

      

0.00

      

0.00

      

0.00

    
  †  Data has been annualized.  
  (a)   Computed using average shares outstanding throughout the period.  
  (b)   Commenced on 11/30/2016.  

Oakmark International Fund

  

Investor Class

  

9/30/19

  

$

26.14

      

0.64

(a)

    

(2.43

)

    

(1.79

)

    

(0.44

)

    

(1.03

)

    

(1.47

)

    

0.00

    

9/30/18

  

$

28.77

      

0.60

      

(2.36

)

    

(1.76

)

    

(0.39

)

    

(0.48

)

    

(0.87

)

    

0.00

    

9/30/17

  

$

21.66

      

0.44

      

7.01

      

7.45

      

(0.34

)

    

0.00

      

(0.34

)

    

0.00

    

9/30/16

  

$

21.34

      

0.36

(a)

    

1.04

      

1.40

      

(0.50

)

    

(0.58

)

    

(1.08

)

    

0.00

    

9/30/15

  

$

25.01

      

0.46

      

(2.55

)

    

(2.09

)

    

(0.51

)

    

(1.07

)

    

(1.58

)

    

0.00

    

Advisor Class

  

9/30/19

  

$

26.17

      

0.76

(a)

    

(2.54

)

    

(1.78

)

    

(0.50

)

    

(1.03

)

    

(1.53

)

    

0.00

    

9/30/18

  

$

28.82

      

0.70

(a)

    

(2.44

)

    

(1.74

)

    

(0.43

)

    

(0.48

)

    

(0.91

)

    

0.00

    

9/30/17(b)

  

$

21.96

      

0.53

(a)

    

6.33

      

6.86

      

0.00

      

0.00

      

0.00

      

0.00

    

Institutional Class

  

9/30/19

  

$

26.19

      

0.73

(a)

    

(2.50

)

    

(1.77

)

    

(0.50

)

    

(1.03

)

    

(1.53

)

    

0.00

    

9/30/18

  

$

28.82

      

0.63

(a)

    

(2.35

)

    

(1.72

)

    

(0.43

)

    

(0.48

)

    

(0.91

)

    

0.00

    

9/30/17(b)

  

$

21.96

      

0.46

(a)

    

6.40

      

6.86

      

0.00

      

0.00

      

0.00

      

0.00

    

Service Class

  

9/30/19

  

$

26.26

      

0.61

(a)

    

(2.48

)

    

(1.87

)

    

(0.36

)

    

(1.03

)

    

(1.39

)

    

0.00

    

9/30/18

  

$

28.90

      

0.57

      

(2.42

)

    

(1.85

)

    

(0.31

)

    

(0.48

)

    

(0.79

)

    

0.00

    

9/30/17

  

$

21.74

      

0.46

      

6.96

      

7.42

      

(0.26

)

    

0.00

      

(0.26

)

    

0.00

    

9/30/16

  

$

21.40

      

0.29

(a)

    

1.04

      

1.33

      

(0.41

)

    

(0.58

)

    

(0.99

)

    

0.00

    

9/30/15

  

$

25.07

      

0.36

(a)

    

(2.55

)

    

(2.19

)

    

(0.41

)

    

(1.07

)

    

(1.48

)

    

0.00

    
  †  Data has been annualized.  
  (a)   Computed using average shares outstanding throughout the period.  
  (b)   Commenced on 11/30/2016.  

82 OAKMARK FUNDS


           

Ratios/Supplemental Data:

      
   

Net Asset
Value,
End of
Period

  

Total
Return

  

Net Assets,
End of
Period
($million)

  

Ratio of
Net
Expenses
to Average
Net Assets

  

Ratio of
Net
Investment
Income to
Average
Net Assets

  

Ratio of
Gross
Expenses
to Average
Net Assets

  

Portfolio
Turnover
Rate

  

Oakmark Global Select Fund

  

Investor Class

  

9/30/19

  

$

16.81

      

-4.90

%

  

$

798.4

      

1.18

%

    

1.88

%

    

1.25

%

    

21

%

  

9/30/18

  

$

18.58

      

-0.86

%

  

$

1,404.8

      

1.12

%

    

1.15

%

    

1.19

%

    

26

%

  

9/30/17

  

$

19.78

      

26.41

%

  

$

2,035.3

      

1.12

%

    

1.25

%

    

1.18

%

    

39

%

  

9/30/16

  

$

15.81

      

9.92

%

  

$

2,037.1

      

1.15

%

    

1.12

%

    

1.15

%

    

17

%

  

9/30/15

  

$

15.19

      

-3.44

%

  

$

2,033.4

      

1.13

%

    

0.70

%

    

1.13

%

    

48

%

  

Advisor Class

  

9/30/19

  

$

16.80

      

-4.85

%

  

$

449.0

      

1.07

%

    

2.25

%

    

1.14

%

    

21

%

  

9/30/18

  

$

18.60

      

-0.75

%

  

$

457.6

      

1.02

%

    

1.32

%

    

1.09

%

    

26

%

  

9/30/17(b)

  

$

19.81

      

20.87

%

  

$

148.4

      

1.00

%†

    

1.58

%†

    

1.07

%†

    

39

%

  

Institutional Class

  

9/30/19

  

$

16.81

      

-4.79

%

  

$

538.8

      

1.01

%

    

2.15

%

    

1.07

%

    

21

%

  

9/30/18

  

$

18.61

      

-0.66

%

  

$

780.8

      

0.96

%

    

1.39

%

    

1.03

%

    

26

%

  

9/30/17(b)

  

$

19.81

      

20.87

%

  

$

608.0

      

0.94

%†

    

1.46

%†

    

1.00

%†

    

39

%

  
  †  Data has been annualized.  
  (a)   Computed using average shares outstanding throughout the period.  
  (b)   Commenced on 11/30/2016.  

Oakmark International Fund

  

Investor Class

  

9/30/19

  

$

22.88

      

-6.41

%

  

$

14,446.5

      

0.98

%

    

2.84

%

    

1.04

%

    

35

%

  

9/30/18

  

$

26.14

      

-6.33

%

  

$

24,866.2

      

0.96

%

    

1.84

%

    

1.01

%

    

36

%

  

9/30/17

  

$

28.77

      

34.88

%

  

$

31,058.2

      

0.95

%

    

1.72

%

    

1.00

%

    

41

%

  

9/30/16

  

$

21.66

      

6.66

%

  

$

23,277.7

      

1.00

%

    

1.72

%

    

1.00

%

    

44

%

  

9/30/15

  

$

21.34

      

-8.98

%

  

$

25,915.2

      

0.95

%

    

1.81

%

    

0.95

%

    

48

%

  

Advisor Class

  

9/30/19

  

$

22.86

      

-6.34

%

  

$

6,701.4

      

0.90

%

    

3.35

%

    

0.95

%

    

35

%

  

9/30/18

  

$

26.17

      

-6.25

%

  

$

5,757.4

      

0.83

%

    

2.53

%

    

0.88

%

    

36

%

  

9/30/17(b)

  

$

28.82

      

31.24

%

  

$

914.3

      

0.81

%†

    

2.42

%†

    

0.86

%†

    

41

%

  

Institutional Class

  

9/30/19

  

$

22.89

      

-6.27

%

  

$

9,457.3

      

0.81

%

    

3.20

%

    

0.86

%

    

35

%

  

9/30/18

  

$

26.19

      

-6.16

%

  

$

12,174.4

      

0.79

%

    

2.25

%

    

0.84

%

    

36

%

  

9/30/17(b)

  

$

28.82

      

31.24

%

  

$

7,658.7

      

0.77

%†

    

2.06

%†

    

0.83

%†

    

41

%

  

Service Class

  

9/30/19

  

$

23.00

      

-6.70

%

  

$

306.6

      

1.24

%

    

2.68

%

    

1.29

%

    

35

%

  

9/30/18

  

$

26.26

      

-6.59

%

  

$

442.9

      

1.24

%

    

1.53

%

    

1.29

%

    

36

%

  

9/30/17

  

$

28.90

      

34.51

%

  

$

579.7

      

1.22

%

    

1.38

%

    

1.27

%

    

41

%

  

9/30/16

  

$

21.74

      

6.32

%

  

$

532.3

      

1.34

%

    

1.38

%

    

1.34

%

    

44

%

  

9/30/15

  

$

21.40

      

-9.31

%

  

$

559.1

      

1.33

%

    

1.48

%

    

1.33

%

    

48

%

  
  †  Data has been annualized.  
  (a)   Computed using average shares outstanding throughout the period.  
  (b)   Commenced on 11/30/2016.  

Oakmark.com 83


Oakmark Funds

Financial Highlights

For a share outstanding throughout each period

       

Income from Investment Operations:

  

Less Distributions:

  
   

Net Asset
Value,
Beginning of
Period

  

Net
Investment
Income

  

Net Gain
(Loss) on
Investments
(Both
Realized and
Unrealized)

  

Total from
Investment
Operations

  

Distributions
from Net
Investment
Income

  

Distributions
from
Capital
Gains

  

Total
Distributions

  

Redemption
Fees

  

Oakmark International Small Cap Fund

  

Investor Class

  

9/30/19

  

$

16.34

      

0.27

(a)

    

(0.89

)

    

(0.62

)

    

(0.20

)

    

(0.91

)

    

(1.11

)

    

0.00

(b)

  

9/30/18

  

$

18.12

      

0.23

(a)

    

(1.37

)

    

(1.14

)

    

(0.14

)

    

(0.50

)

    

(0.64

)

    

0.00

(b)

  

9/30/17

  

$

14.84

      

0.23

(a)

    

3.50

      

3.73

      

(0.36

)

    

(0.09

)

    

(0.45

)

    

0.00

(b)

  

9/30/16

  

$

14.63

      

0.42

(a)

    

0.51

      

0.93

      

(0.36

)

    

(0.36

)

    

(0.72

)

    

0.00

(b)

  

9/30/15

  

$

16.38

      

0.19

(a)

    

(0.78

)

    

(0.59

)

    

(0.26

)

    

(0.90

)

    

(1.16

)

    

0.00

(b)

  

Advisor Class

  

9/30/19

  

$

16.33

      

0.31

(a)

    

(0.90

)

    

(0.59

)

    

(0.19

)

    

(0.91

)

    

(1.10

)

    

0.00

(b)

  

9/30/18

  

$

18.14

      

0.25

      

(1.38

)

    

(1.13

)

    

(0.18

)

    

(0.50

)

    

(0.68

)

    

0.00

(b)

  

9/30/17(c)

  

$

14.16

      

0.19

(a)

    

3.79

      

3.98

      

0.00

      

0.00

      

0.00

      

0.00

(b)

  

Institutional Class

  

9/30/19

  

$

16.36

      

0.29

(a)

    

(0.90

)

    

(0.61

)

    

(0.25

)

    

(0.91

)

    

(1.16

)

    

0.00

(b)

  

9/30/18

  

$

18.15

      

0.26

      

(1.36

)

    

(1.10

)

    

(0.19

)

    

(0.50

)

    

(0.69

)

    

0.00

(b)

  

9/30/17(c)

  

$

14.16

      

0.21

(a)

    

3.78

      

3.99

      

0.00

      

0.00

      

0.00

      

0.00

(b)

  

Service Class

  

9/30/19

  

$

16.21

      

0.24

(a)

    

(0.88

)

    

(0.64

)

    

(0.15

)

    

(0.91

)

    

(1.06

)

    

0.00

    

9/30/18

  

$

18.00

      

0.16

(a)

    

(1.34

)

    

(1.18

)

    

(0.11

)

    

(0.50

)

    

(0.61

)

    

0.00

(b)

  

9/30/17

  

$

14.75

      

0.17

(a)

    

3.49

      

3.66

      

(0.32

)

    

(0.09

)

    

(0.41

)

    

0.00

(b)

  

9/30/16

  

$

14.53

      

0.38

(a)

    

0.51

      

0.89

      

(0.31

)

    

(0.36

)

    

(0.67

)

    

0.00

(b)

  

9/30/15

  

$

16.26

      

0.13

(a)

    

(0.77

)

    

(0.64

)

    

(0.19

)

    

(0.90

)

    

(1.09

)

    

0.00

(b)

  
  †  Data has been annualized.  
  (a)   Computed using average shares outstanding throughout the period.  
  (b)   Amount rounds to less than $0.01 per share.  
  (c)   Commenced on 11/30/2016.  

84 OAKMARK FUNDS


           

Ratios/Supplemental Data:

      
   

Net Asset
Value,
End of
Period

  

Total
Return

  

Net Assets,
End of
Period
($million)

  

Ratio of
Net
Expenses
to Average
Net Assets

  

Ratio of
Net
Investment
Income to
Average
Net Assets

  

Ratio of
Gross
Expenses
to Average
Net Assets

  

Portfolio
Turnover
Rate

  

Oakmark International Small Cap Fund

  

Investor Class

  

9/30/19

  

$

14.61

      

-2.91

%

  

$

546.4

      

1.38

%

    

1.88

%

    

1.38

%

    

39

%

  

9/30/18

  

$

16.34

      

-6.43

%

  

$

1,013.6

      

1.36

%

    

1.32

%

    

1.36

%

    

45

%

  

9/30/17

  

$

18.12

      

25.98

%

  

$

1,835.5

      

1.36

%

    

1.40

%

    

1.36

%

    

34

%

  

9/30/16

  

$

14.84

      

6.66

%

  

$

2,365.1

      

1.38

%

    

2.97

%

    

1.38

%

    

38

%

  

9/30/15

  

$

14.63

      

-3.70

%

  

$

2,852.0

      

1.35

%

    

1.18

%

    

1.35

%

    

46

%

  

Advisor Class

  

9/30/19

  

$

14.64

      

-2.72

%

  

$

142.5

      

1.26

%

    

2.13

%

    

1.26

%

    

39

%

  

9/30/18

  

$

16.33

      

-6.39

%

  

$

346.6

      

1.32

%

    

1.41

%

    

1.32

%

    

45

%

  

9/30/17(c)

  

$

18.14

      

28.11

%

  

$

388.5

      

1.21

%†

    

1.29

%†

    

1.21

%†

    

34

%

  

Institutional Class

  

9/30/19

  

$

14.59

      

-2.75

%

  

$

735.8

      

1.23

%

    

2.03

%

    

1.23

%

    

39

%

  

9/30/18

  

$

16.36

      

-6.23

%

  

$

863.3

      

1.17

%

    

1.49

%

    

1.17

%

    

45

%

  

9/30/17(c)

  

$

18.15

      

28.18

%

  

$

839.1

      

1.14

%†

    

1.47

%†

    

1.14

%†

    

34

%

  

Service Class

  

9/30/19

  

$

14.51

      

-3.11

%

  

$

1.0

      

1.58

%

    

1.70

%

    

1.58

%

    

39

%

  

9/30/18

  

$

16.21

      

-6.73

%

  

$

1.5

      

1.71

%

    

0.93

%

    

1.71

%

    

45

%

  

9/30/17

  

$

18.00

      

25.56

%

  

$

2.1

      

1.66

%

    

1.04

%

    

1.66

%

    

34

%

  

9/30/16

  

$

14.75

      

6.39

%

  

$

1.5

      

1.69

%

    

2.69

%

    

1.69

%

    

38

%

  

9/30/15

  

$

14.53

      

-4.00

%

  

$

1.9

      

1.62

%

    

0.85

%

    

1.62

%

    

46

%

  
  †  Data has been annualized.  
  (a)   Computed using average shares outstanding throughout the period.  
  (b)   Amount rounds to less than $0.01 per share.  
  (c)   Commenced on 11/30/2016.  

Oakmark.com 85


Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of
Harris Associates Investment Trust

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statements of assets and liabilities of Harris Associates Investment Trust comprising the Oakmark Fund, Oakmark Select Fund, Oakmark Equity and Income Fund, Oakmark Global Fund, Oakmark Global Select Fund, Oakmark International Fund, and Oakmark International Small Cap Fund, (collectively the "Funds"), including the schedules of investments as of September 30, 2019, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the Funds constituting the Harris Associates Investment Trust as of September 30, 2019, and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on the Funds' financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2019, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

Chicago, Illinois
November 25, 2019

We have served as the auditor of one or more Harris Associates Investment Trust investment companies since 2002.

86 OAKMARK FUNDS


Federal Tax Information

(Unaudited)

The below information is reported in regards to distributions paid by the Funds during the fiscal year ended September 30, 2019. Note that these amounts have been previously reported to shareholders on the 2018 Form 1099-DIV.

The following percentages of income dividend paid by the Funds qualify for the dividend received deduction available to corporations and are hereby designated as qualified dividend income:

Fund   Qualified Dividend
Income		   Dividend
Received
Deduction		  

Oakmark

    

100.00

%

    

100.00

%

  

Select

    

100.00

%

    

100.00

%

  

Equity & Income

    

84.46

%

    

64.53

%

  

Global

    

73.33

%

    

54.35

%

  

Global Select

    

100.00

%

    

43.34

%

  

International

    

100.00

%

    

0.00

%

  

Int'l Small Cap

    

100.00

%

    

0.00

%

  

The following Funds met the requirements of Section 853 of the Code and elected to pass through to its shareholders credit for foreign taxes paid. The percentage of income distributed by the Funds from sources within foreign countries and possessions of the United States and the amounts of taxes paid to such countries was as follows:

Fund   Foreign Source
Income		   Foreign Taxes
Paid		  

Global

    

73.23

%

  

$

2,520,489

    

Global Select

    

74.85

%

    

2,812,752

    

International

    

84.56

%

    

117,202,233

    

Int'l Small Cap

    

89.16

%

    

6,137,854

    

Disclosures and Endnotes

Reporting to Shareholders. The Funds reduce the number of duplicate prospectuses, annual and semi-annual reports your household receives by sending only one copy of each to those addresses shared by two or more accounts. Call the Funds at 1-800-OAKMARK (625-6275) to request individual copies of these documents. The Funds will begin sending individual copies 30 days after receiving your request.

Before investing in any Oakmark Fund, you should carefully consider the Fund's investment objectives, risks, management fees and other expenses. This and other important information is contained in the Funds' prospectus and a Fund's summary prospectus. Please read the prospectus and summary prospectus carefully before investing. For more information, please visit Oakmark.com or call 1-800-OAKMARK (625-6275).

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 report, and are subject to change without notice.

All Oakmark Funds: Investing in value stocks presents the risk that value stocks may fall out of favor with investors and underperform growth stocks during given periods.

Oakmark, Oakmark Equity and Income, Oakmark Global, Oakmark International, and Oakmark International Small Cap Funds: The Funds' portfolios tend to be invested in a relatively small number of stocks. As a result, the appreciation or depreciation of any one security held will have a greater impact on the Funds' net asset value than it would if the Funds invest in a larger number of securities. Although that strategy has the potential to generate attractive returns over time, it also increases the Funds' volatility.

Oakmark Select and Oakmark Equity and Income Funds: The stocks of medium-sized companies tend to be more volatile than those of large companies and have underperformed the stocks of small and large companies during some periods.

Because the Oakmark Select and Oakmark Global Select Funds are non-diversified, the performance of each holding will have a greater impact on the Funds' total return and may make the Funds' returns more volatile than a more diversified fund.

Oakmark Global, Oakmark Global Select, Oakmark International and Oakmark International Small Cap Funds: Investing in foreign securities presents risks which in some ways may be greater than 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 percentages of hedge exposure for each foreign currency are calculated by dividing the market value of all same-currency forward contracts by the market value of the underlying equity exposure to that currency.

The Oakmark Equity and Income Fund invests in medium- and lower quality debt securities that have higher yield potential but present greater investment and credit risk than higher quality securities. These risks may result in greater share price volatility.

Oakmark International Small Cap Fund: The stocks of smaller companies often involve more risk than the stocks of larger companies. Stocks of small companies tend to be more volatile and have a smaller public market than stocks of larger companies. Small companies may have a shorter history of operations than

Oakmark.com 87


Disclosures and Endnotes (continued)

larger companies, may not have as great an ability to raise additional capital and may have a less diversified product line, making them more susceptible to market pressure.

Endnotes:

1.  The S&P 500 Total Return Index is a float-adjusted, capitalization-weighted index of 500 U.S. large-capitalization stocks representing all major industries. It is a widely recognized index of broad U.S. equity market performance. Returns reflect the reinvestment of dividends. This index is unmanaged and investors cannot invest directly in this index.

2.  The Dow Jones Industrial Average is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities. This index is unmanaged and investors cannot invest directly in this index.

3.  The Lipper Large-Cap Value Fund Index measures the equal-weighted performance of the 30 largest U.S. large-cap value funds as defined by Lipper. This index is unmanaged and investors cannot invest directly in this index.

4.  Portfolio holdings are subject to change without notice and are not intended as recommendations of individual stocks.

5.  The Lipper Multi-Cap Value Fund Index measures the equal-weighted performance of the 30 largest U.S. multi-cap value funds as defined by Lipper. This index is unmanaged and investors cannot invest directly in this index.

6.  The Russell 1000® Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000® companies with lower price-to-book ratios and lower expected growth values. This index is unmanaged and investors cannot invest directly in this index.

7.  The Price-Earnings Ratio ("P/E") is the most common measure of the expensiveness of a stock.

8.  The Price to Book Ratio is a stock's capitalization divided by its book value.

9.  The Lipper Balanced Fund Index measures the equal-weighted performance of the 30 largest U.S. balanced funds, as defined by Lipper. This index is unmanaged and investors cannot invest directly in this index.

10.  The Barclays U.S. Government/Credit Index measures the non-securitized component of the U.S. Aggregate Index. It includes investment grade, U.S. dollar-denominated, fixed-rate Treasuries, government-related and corporate securities. This index is unmanaged and investors cannot invest directly in this index.

11.  Authers, John. "Markets Are Starting to Play a Haunting Tune," Bloomberg, September 17, 2019 https://www.bloomberg.com/ news/newsletters/2019-09-18/repo-market-spike-carries-echoes-of-2007-2008-crisis.

12.  The MSCI World Index (Net) is a free float-adjusted, market capitalization-weighted index that is designed to measure the global equity market performance of developed markets. The index covers approximately 85% of the free float-adjusted market capitalization in each country. This benchmark calculates reinvested dividends net of withholding taxes. This index is unmanaged and investors cannot invest directly in this index.

13.  The Lipper Global Fund Index measures the equal-weighted performance of the 30 largest global equity funds, as defined by Lipper. This index is unmanaged and investors cannot invest directly in this index.

14.  Friedman, Milton. "The Social Responsibility of Business is to Increase its Profits." The New York Times Magazine, September 12, 1970.

15.  Jonathan. "Business Roundtable's Makeover Does Not Go Far Enough." Financial Times, September 22, 2019.

16.  The MSCI World ex U.S. Index (Net) is a free float-adjusted, market capitalization-weighted index that is designed to measure international developed market equity performance, excluding the U.S. The index covers approximately 85% of the free float-adjusted market capitalization in each country. This benchmark calculates reinvested dividends net of withholding taxes. This index is unmanaged and investors cannot invest directly in this index.

17.  The MSCI EAFE Index (Net) is designed to represent the performance of large- and mid-cap securities across 21 developed markets, including countries in Europe, Australasia and the Far East, excluding the U.S. and Canada. The index covers approximately 85% of the free float-adjusted market capitalization in each of the 21 countries. This benchmark calculates reinvested dividends net of withholding taxes. This index is unmanaged and investors cannot invest directly in this index.

18.  The Lipper International Fund Index measures the equal-weighted performance of the 30 largest international equity funds, as defined by Lipper. This index is unmanaged and investors cannot invest directly in this index.

19.  The MSCI World ex U.S. Small Cap Index (Net) is designed to measure performance of small-cap stocks across 22 of 23 developed markets (excluding the U.S.). The index covers approximately 14% of the free float-adjusted market capitalization in each country. This benchmark calculates reinvested dividends net of withholding taxes. This index is unmanaged and investors cannot invest directly in this index.

20.  The Lipper International Small-Cap Fund Index measures the equal-weighted performance of the 30 largest international small-cap equity funds, as defined by Lipper. This index is unmanaged and investors cannot invest directly in this index.

88 OAKMARK FUNDS


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Oakmark.com 89


Trustees and Officers

The board of trustees has overall responsibility for the operations of Harris Associates Investment Trust ("Trust") and its series. Each trustee serves until the election and qualification of his or her successor or until he or she sooner retires, dies, or is removed or disqualified. The retirement age for trustees is 72.

The president, any vice president, treasurer and secretary serve until the election and qualification of his or her successor or until he or she dies, resigns, or is removed or disqualified. Each other officer shall serve at the pleasure of the board of trustees.

The names and ages of the trustees and officers, the position each holds with the Trust, the date each was first elected to office, their principal business occupations during the last five years, and other directorships held by the trustees are shown below.

Trustees Who Are Interested Persons of the Trust

Name, Address†
and Age at
September 30,
2019		   Position(s)
with Trust		   Year First
Elected or
Appointed to
Current
Position		   Principal Occupation(s)
Held During Past Five Years		   Other
Directorships
Held by Trustee		  
Kristi L. Rowsell,
53*		  

Trustee, Principal Executive Officer and President

  

2010

  

Director, Harris Associates, Inc. ("HAI") and President, HAI, Harris Associates L.P. ("HALP") and Harris Associates Securities L.P. ("HASLP").

  

Member, Board of Governors, Investment Company Institute

  

Trustees Who Are Not Interested Persons of the Trust

Name and Age†

   Position(s)
with Trust		   Year First
Elected or
Appointed to
Current
Position		   Principal Occupation(s)
Held During Past Five Years		   Other
Directorships
Held by Trustee		  
Thomas H. Hayden,
68		  

Trustee

  

1995

  

Lecturer, Master of Science in Integrated Marketing Communications Program, the Medill School, Northwestern University, and Master of Science in Law Program, Northwestern University School of Law.

  

None

  
Hugh T. Hurley, III,
55		  

Trustee

  

2018

  

Managing Director and Global Head of Product Strategy, BlackRock, Inc. from 2006 to 2017.

  

None

  
Patricia Louie,
64		  

Trustee

  

2018

  

Retired; Managing Director and Associate General Counsel, AXA Equitable Life Insurance Company from 2014 to October 2018; Executive Vice President and General Counsel, AXA Equitable Funds Management Group, LLC from 2011 to October 2018; Senior Vice President and Associate General Counsel, AXA Equitable from 2009-2014.

  

None

  
Christine M. Maki,
58		  

Trustee

  

1995

  

Senior Vice President—Tax and Treasurer, RR Donnelley & Sons Company (global provider of integrated communication services).

  

None

  
Laurence C. Morse, Ph.D.,
68		  

Trustee

  

2013

  

Managing Partner, Fairview Capital Partners, Inc. (private equity investment management firm).

  

Director, Webster Bank (bank and financial institution); Director, Webster Financial Corporation (bank holding company)

  
Mindy M. Posoff,
63		  

Trustee

  

2016

  

Managing Director, Golden Seeds (angel investment group); Traversent Capital Partners, Founding Partner and President (consulting firm providing strategic solutions for hedge funds and asset managers); Chair, Board of Directors, AboutOne (start-up technology company providing tools to manage home and family life) from 2011 to 2017; Trustee of the HighMark Mutual Funds from 2010 to 2014.

  

Director, 100 Women in Finance

  
Allan J. Reich,
71		  

Trustee and Chair of the Board

  

1993

  

Senior Partner, Seyfarth Shaw LLP (law firm).

  

Director, Mutual Fund Directors Forum

  

90 OAKMARK FUNDS


Trustees and Officers (continued)

Name and Age†

   Position(s)
with Trust		   Year First
Elected or
Appointed to
Current
Position		   Principal Occupation(s)
Held During Past Five Years		   Other
Directorships
Held by Trustee		  
Steven S. Rogers,
62		  

Trustee

  

2006

  

MBA Class of 1957 Senior Lecturer of Business Administration, Harvard Business School; Entrepreneur-in-Residence, Ewing Marion Kauffman Foundation; Clinical Professor of Finance & Management, Kellogg Graduate School of Management, Northwestern University from 1995 to 2012.

  

None

  

Other Officers of the Trust

Name, Address†
and Age at
September 30,
2019		  

Position(s) with Trust

   Year First
Elected or
Appointed to
Current
Position		   Principal Occupation(s)
Held During Past Five Years#		  
Joseph J. Allessie,
54**		  

Vice President

  

2019

  

Deputy General Counsel, HALP since 2019; Senior Vice President and Managing Counsel, OppenheimerFunds from 2018 to 2019; Managing Director, Head of Americas Compliance and Operational Risk Control, UBS Global Asset Management, prior thereto

  
Megan J. Claucherty,
37		  

Vice President

  

2016

  

Assistant General Counsel, HALP since 2018; Senior Attorney, HALP from 2015 to 2018; Associate Attorney, Vedder Price P.C., prior thereto

  
Anthony P. Coniaris,
42		  

Executive Vice President and Portfolio Manager (Oakmark Select Fund, Oakmark Global Fund and Oakmark Global Select Fund)

  

2013

  

Co-Chairman, HAI and HALP; Portfolio Manager and Analyst, HALP

  
Rick J. Dercks,
33**		  

Vice President

  

2019

  

Director of Tax & Fund Administration, HALP since 2019; Tax Senior Manager, Ernst & Young, prior thereto

  
Kevin G. Grant,
55		  

Executive Vice President and Portfolio Manager (Oakmark Fund)

  

2000

  

Co-Chairman, HAI and HALP; Portfolio Manager and Analyst, HALP

  
Justin D. Hance,
35		  

Vice President and Portfolio Manager (Oakmark International Small Cap Fund)

  

2016

  

Vice President, HAI and HALP; Director of International Research, HALP since 2016; Assistant Director of International Research and Analyst, HALP, prior thereto

  
David G. Herro,
58		  

Vice President and Portfolio Manager (Oakmark Global Fund, Oakmark Global Select Fund, Oakmark International Fund and Oakmark International Small Cap Fund)

  

1992

  

Director, HAI; Deputy Chairman and Chief Investment Officer, International Equities, HAI and HALP; Portfolio Manager and Analyst, HALP

  
M. Colin Hudson,
49		  

Vice President and Portfolio Manager (Oakmark Equity and Income Fund)

  

2013

  

Vice President, HAI and HALP; Portfolio Manager and Analyst, HALP

  
John J. Kane,
48		  

Vice President

  

2012

  

Director, Operations, HALP since 2017; Director, Global Investment Services, HALP, prior thereto; Principal Financial Officer, HAIT, from 2016 to 2018; Treasurer, HAIT, from 2005 to 2018

  
Christopher W. Keller,
52		  

Vice President

  

2015

  

Chief Operating Officer, HALP since 2015; Vice President and Managing Director, Goldman Sachs Asset Management, prior thereto

  
Eric Liu,
40		  

Vice President and Portfolio Manager (Oakmark Global Select Fund)

  

2016

  

Portfolio Manager and Analyst, HALP

  
Jason E. Long,
43		  

Vice President and Portfolio Manager (Oakmark Global Fund)

  

2016

  

Vice President, HAI and HALP; Portfolio Manager and Analyst, HALP since 2016; Analyst, HALP, prior thereto

  

Oakmark.com 91


Trustees and Officers (continued)

Name, Address†
and Age at
September 30,
2019		  

Position(s) with Trust

   Year First
Elected or
Appointed to
Current
Position		   Principal Occupation(s)
Held During Past Five Years#		  
Michael L. Manelli,
39		  

Vice President and Portfolio Manager (Oakmark International Fund and Oakmark International Small Cap Fund)

  

2011

  

Vice President, HAI and HALP; Portfolio Manager and Analyst, HALP

  
Colin P. McFarland,
56**		  

Vice President, Chief Compliance Officer, Assistant Secretary and Anti-Money Laundering Officer

  

2019

  

Chief Compliance Officer, HALP

  
Clyde S. McGregor,
66		  

Vice President and Portfolio Manager (Oakmark Equity and Income Fund and Oakmark Global Fund)

  

1995

  

Vice President, HAI and HALP; Portfolio Manager, HALP

  
Thomas W. Murray,
49		  

Vice President and Portfolio Manager (Oakmark Select Fund)

  

2013

  

Vice President and Director of U.S. Research, HAI and HALP; Portfolio Manager and Analyst, HALP

  
Michael J. Neary,
51		  

Vice President

  

2009

  

Managing Director, Client Portfolio Manager, HALP

  
Michael A. Nicolas,
39**		  

Vice President

  

2019

  

Analyst, HALP since 2013; Managing Director, Lakeview Investment Group, prior thereto

  
William C. Nygren,
61		  

Vice President and Portfolio Manager (Oakmark Fund, Oakmark Select Fund and Oakmark Global Select Fund)

  

1996

  

Vice President, HAI and HALP; Portfolio Manager and Analyst, HALP

  
Vineeta D. Raketich,
48		  

Vice President

  

2003

  

Managing Director, Global Operations and Client Relations, HALP

  
Howard M. Reich,
36**		  

Vice President

  

2019

  

Assistant Controller, Fund Administration, HALP since 2018; Supervisor, Global Investment Services, HALP from 2015 to 2018; Manager, Investment Operations, CNA, prior thereto

  
Zachary D. Weber,
45		  

Vice President, Principal Financial Officer and Treasurer

  

2016

  

Chief Financial Officer and Treasurer, HAI and HALP since 2016; Senior Vice President and Vice President, GCM Grosvenor, prior thereto

  
Edward J. Wojciechowski,
46		  

Vice President and Portfolio Manager (Oakmark Equity and Income Fund)

  

2013

  

Portfolio Manager and Analyst, HALP

  
Rana J. Wright,
41		  

Vice President, Secretary and Chief Legal Officer

  

2018

  

General Counsel, HAI and HALP since 2018; Managing Director and Associate General Counsel, Bank of America Corporation from 2014 to 2018; Partner, Reed Smith LLP, prior thereto

  

†  Unless otherwise noted, the business address of each trustee and officer listed in the tables is 111 South Wacker Drive, Suite 4600, Chicago, Illinois 60606-4319.

*  Ms. Rowsell is a trustee who is an "interested person" of the Trust as defined in the 1940 Act because she is an officer of the Adviser and a director of HAI.

**  Mr. Nicolas assumed the position of Vice President effective January 23, 2019. Messrs. Allessie and Dercks each assumed the position of Vice President effective April 24, 2019. Mr. Reich assumed the position of Vice President effective October 23, 2019. Mr. McFarland assumed his positions effective November 15, 2019.

#  As used in this table, "HALP," "HAI" and "HASLP" refer to the Adviser, the general partner of the Adviser and the Funds' distributor, respectively.

The Statement of Additional Information (SAI) contains further information about the trustees and is available without charge upon your request by calling 1-800-625-6275.

92 OAKMARK FUNDS


To obtain a prospectus, an application or periodic reports, access our website at Oakmark.com or call 1-800-OAKMARK (625-6275) or 617-483-8327.

Each Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission ("SEC") for the first and third quarters of each fiscal year on Form N-PORT (Form N-Q for filings prior to March 31, 2019). The Funds' Form N-PORTs (Form N-Qs) are available on the SEC's website at www.sec.gov.

A description of the policies and procedures the Funds use to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling toll-free 1-800-625-6275; on the Funds' website at Oakmark.com; and on the SEC's website at www.sec.gov.

No later than August 31 of each year, information regarding how the Adviser, on behalf of the Funds, voted proxies relating to the Funds' portfolio securities for the 12 months ended the preceding June 30 will be available through a link on the Funds' website at Oakmark.com and on the SEC's website at www.sec.gov.

This report is submitted for the general information of the shareholders of the Funds. The report is not authorized for distribution to prospective investors in the Funds unless it is accompanied or preceded by a currently effective prospectus of the Funds.

No sales charge to the shareholder or to the new investor is made in offering the shares of the Funds.

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ANN (11/19)


 

Item 2. Code of Ethics.

 

(a)                                 Registrant has adopted a code of ethics (the “Code”) that applies to its Principal Executive Officer, Principal Financial Officer and Treasurer.

 

(b)                                 No disclosures are required by Item 2(b).

 

(c)                                  During the period covered by the report, the Code was amended to modify the process for internal reporting of violations to the Code.

 

(d)                                 During the period covered by the report, Registrant did not grant any waivers, including implicit waivers, from the provisions of the Code.

 

(e)                                  Not applicable.

 

(f)                                   A copy of the Code is filed as Exhibit (a)(1) to this Form N-CSR. Copies of the Code will also be made available free of charge upon request, by writing or calling The Oakmark Funds, P.O. Box 8510, Boston, MA  02266-8510, 1-800-OAKMARK (1-800-625-6275).

 

Item 3. Audit Committee Financial Expert.

 

Registrant’s board of trustees has determined that each of the following members of the Registrant’s audit committee qualifies as an “audit committee financial expert,” as such term is defined in Item 3(b) of Form N-CSR:  Thomas H. Hayden, Christine M. Maki, and Allan J. Reich.  Each of those members of Registrant’s audit committee is “independent” as such term is defined in paragraph (a)(2) of Item 3 of Form N-CSR.

 

Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert.  The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liability that are greater than the duties, obligations, and liability imposed on such person as a member of the audit committee and board of trustees in the absence of such designation or identification.  The designation or identification of a person as an audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of trustees.

 

Item 4. Principal Accountant Fees and Services.

 

Aggregate fees billed to the Registrant for professional services rendered by the Registrant’s principal accountant were as follows:

 

 

 

 

Fiscal Year
Ended
September 30,
2019

 

Fiscal Year
Ended
September 30,
2018

 

Audit Fees(1)

 

$

258,000

 

$

264,550

 

Audit-Related Fees(2)

 

$

0

 

$

0

 

Tax Fees(3)

 

$

39,700

 

$

39,700

 

All Other Fees(4)

 

$

69,457

 

$

256,944

 

 

During its regularly scheduled periodic meetings, the Registrant’s audit committee will pre-approve all audit, audit-related, tax and other services to be provided by the principal accountants of the Registrant.  The audit committee has authorized its chair to exercise that authority in the intervals between meetings; and the chair presents any such pre-approvals to the audit committee at its next regularly scheduled meeting.  Under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, pre-approval of non-audit services may be waived provided that: 1) the aggregate amount for all such services provided constitutes no more than five percent of the total amount of revenues paid by the Registrant to its principal accountant during the fiscal year in which such services are provided; 2) such services were not recognized by management at the time of engagement as non-audit services; and 3) such services are promptly brought to the attention of the Registrant’s audit committee by management and approved prior to the completion of the audit by the audit committee or by one or more members of the audit committee who are members of the board of trustees to whom authority to grant such approvals has been delegated by the audit committee.

 

No audit-related, tax or non-audit services were approved by waiver pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

 

Less than 50 percent of the hours expended on the principal accountant’s engagement to audit the Registrant’s financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees.

 

The aggregate non-audit fees billed for the fiscal years ended September 30, 2019 and September 30, 2018 by the Registrant’s principal accountant for services rendered to the Registrant, its investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant were $$69,457 and $256,944, respectively. These non-audit services provided to the Registrant by the principal accountant related to clerical and ministerial tasks for the filing of tax reclaims in certain European Union countries.

 

(1)                                 “Audit Fees” include amounts for professional services rendered by the principal accountant for the audit of the Registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.

 

(2)                                 “Audit-Related Fees” include amounts for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant’s financial statements.

 

(3)                                 “Tax Fees” include amounts for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning, specifically distribution consultation.

 

(4)                                 “All Other Fees” include amounts for products and services provided by the principal accountant.

 

 

The audit committee of Registrant’s board of trustees has considered whether the provision of non-audit services that were rendered by Registrant’s principal accountant to Registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

 

Item 5. Audit Committee of Listed Registrants.

 

Not applicable.

 

Item 6. Investments.

 

(a)                                 The Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the annual report to shareholders filed under Item 1 of this Form.

 

(b)                                 Not applicable.

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

 

Not applicable.

 

Item 8.  Portfolio Managers of Closed-End Management Investment Companies.

 

Not applicable.

 

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

 

Not applicable.

 

Item 10. Submission of Matters to a Vote of Security Holders.

 

During the period covered by this report, no material changes were made to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees.

 

Item 11. Controls and Procedures.

 

(a)                                 Based on an evaluation of the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, the “Disclosure Controls”), the Disclosure Controls are effectively designed to ensure that information required to be disclosed by the Registrant in this report is recorded, processed, summarized, and reported within 90 days prior to the filing of this report, including ensuring that information required to be disclosed in this report is accumulated and communicated to the Registrant’s management, including the Registrant’s principal executive officer and

 

 

principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

(b)                                 There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s most recent fiscal half-year period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

 

Not applicable.

 

Item 13. Exhibits.

 

(a)(1)

 

Code of Ethics for Principal Executive Officer, Principal Financial Officer and Treasurer (as referenced in Item 2 above), attached hereto as Exhibit (a)(1).

 

 

 

(2)

 

Certifications of Kristi L. Rowsell, Principal Executive Officer, and Zachary D. Weber, Principal Financial Officer and Treasurer, pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2), attached hereto as Exhibits (a)(2)(i) and (a)(2)(ii), respectively.

 

 

 

(3)

 

Not applicable.

 

 

 

(4)

 

Not applicable.

 

 

 

(b)

 

Certification of Kristi L. Rowsell, Principal Executive Officer, and Zachary D. Weber, Principal Financial Officer and Treasurer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, attached hereto as Exhibit (b).

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Harris Associates Investment Trust

 

By:

/s/Kristi L. Rowsell

 

 

Kristi L. Rowsell

 

 

Principal Executive Officer

 

 

 

 

Date:

November 25, 2019

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

By:

/s/Kristi L. Rowsell

 

 

Kristi L. Rowsell

 

 

Principal Executive Officer

 

 

 

 

Date:

November 25, 2019

 

 

 

 

 

 

 

By:

/s/Zachary D. Weber

 

 

Zachary D. Weber

 

 

Principal Financial Officer and Treasurer

 

 

 

 

Date:

November 25, 2019