The Oakmark Global Select Fund's Investor Share Class experienced a demanding second quarter in 2025, falling short of its benchmark, the MSCI World Index, both during the quarter and since its establishment. This period saw mixed results across sectors, with financials and industrials demonstrating strength, while healthcare and energy faced headwinds. Geographically, the fund maintains a significant concentration in the U.S., complemented by substantial allocations in Europe and the U.K. Amidst market fluctuations influenced by external factors, the fund strategically adjusted its holdings, introducing new positions in key companies across diverse industries. This tactical recalibration reflects a commitment to enhancing long-term value despite immediate market challenges, underscoring a dynamic investment approach.

This quarter's activity was notably higher than usual, spurred by significant market volatility. The fund's management capitalized on these shifts by reducing exposure to strong performers and increasing investments in companies where market perception had created substantial discounts relative to their intrinsic value. This proactive portfolio management led to the acquisition of four new companies and the divestment of three existing holdings, aiming to position the fund for optimal future returns. These adjustments highlight the fund's adaptable strategy, focusing on intrinsic value and long-term growth opportunities, even in an unpredictable economic climate.

Navigating Market Dynamics and Strategic Adjustments

In the second quarter of 2025, the Oakmark Global Select Fund, specifically its Investor Share Class, faced an uphill battle, trailing behind the MSCI World Index for both the recent quarter and its entire operational history. Sector-wise, the fund saw its fortunes buoyed by robust performances in the financial and industrial sectors. Conversely, the healthcare and energy segments acted as performance inhibitors, contributing negatively to the overall results. From a geographical standpoint, the fund's portfolio is predominantly invested in the United States, accounting for over 60% of its assets. A quarter of its investments are in Europe, excluding the U.K., with a smaller portion allocated to the U.K. itself. During this period, certain European markets like France, the Netherlands, and Germany emerged as strong relative performers, contrasting with the underperformance observed in the U.S., China, and the U.K.

The quarter was marked by an elevated level of portfolio activity, largely attributed to the pronounced market volatility following significant global announcements. This environment presented unique opportunities for the fund to realign its holdings. The investment team made calculated decisions to trim or divest positions in companies that had performed strongly, concurrently acquiring shares in businesses whose valuations had become particularly attractive due to perceived impacts from external policies. These strategic maneuvers led to the addition of four new companies to the fund's diverse portfolio: Becton, Dickinson and Company; BMW; BNP Paribas; and DSV. These new acquisitions replaced three previously held positions, reflecting a dynamic and forward-looking approach to optimizing long-term returns amidst fluctuating market conditions.

Key New Investments and Core Holdings' Performance

Among the top performers for the quarter, Bayer stood out as a significant contributor, thanks to its robust first-quarter results that surpassed expectations, especially in its pharmaceutical division. This positive momentum was further bolstered by the anticipation of a favorable Supreme Court decision regarding the company's litigation, signaling potential relief from legal uncertainties. In contrast, IQVIA Holdings emerged as a primary detractor, with its stock price facing downward pressure from concerns over potential drug price controls, tariffs, and government budget cuts. Despite these challenges, IQVIA's contract research organization segment demonstrated resilience, and its technology and analytics solutions performed commendably, underscoring the company's underlying strength and long-term viability, especially given its attractive valuation and management's increased share repurchases.

The fund's strategic new investments are poised to capitalize on various industry trends and undervalued assets. Becton, Dickinson and Company, a global leader in medical technology, was added due to its strong market position, innovation, and attractive valuation, despite temporary headwinds in the healthcare sector. BMW, a premium automotive manufacturer, represents a bet on strong brand equity, strategic management, and a favorable position in the growing electric vehicle market, offering long-term potential amidst trade policy concerns. BNP Paribas, one of the world's largest banks, was included for its diversified operations, solid deposit franchise, and potential for profitable growth, particularly benefiting from a falling interest rate environment. Lastly, DSV, a logistics powerhouse, was chosen for its exceptional management, industry-leading profit margins, and the strategic advantages gained from its recent acquisition, promising continued shareholder value creation through disciplined acquisitions and integration.