2017 Manager Discussion & Analysis

Management Discussion and Analysis for Oak Associates Funds
for Fiscal Year Ended October 31, 2017

 

White Oak | Pin Oak | Rock Oak | River Oak | Red Oak | Black Oak | Live Oak

 

White Oak Select Growth Fund

Jim Oelschlager, Chief Investment Officer & Portfolio Manager
Mark W. Oelschlager, CFA, Portfolio Manager
Robert Stimpson, CFA, Portfolio Manager

White Oak Select Growth Fund (the “Fund”) gained 23.36% for the fiscal year ended October 31, 2017, while the S&P 500® Total Return Index returned 23.63% and the Lipper Large-Cap Growth Funds Average returned 27.29%. For the last ten years, the Fund’s cumulative return was 117.10%, versus 106.38% for the S&P 500® and 111.79% for the Lipper.

Near the start of the fiscal year the Federal Reserve followed through with its multi-year admonitions that short-term interest rates would rise with signs of economic stability in the U.S. With the S&P 500® charging to new all-time highs, unemployment at a 10-year low, and high levels of both profits and margins, it was no surprise that the Fed raised rates. The hikes started in December of 2016 with a 25 basis points increase, followed by several additional quarter point rate hikes until the target rate reached 1.25%. Despite the start of the normalization in rates, U.S. stocks climbed strongly over the year.

One segment that enjoyed the prospects of higher short-term interest rates and the prospects of a slower economic expansion was large-cap growth stocks. Companies that can demonstrate sales or earnings growth as economic conditions tighten are often assigned higher valuations. Higher rates also hampered higher yielding equity-based investment strategies, with utilities, dividend payers and REITS among the largest underperformers in the year. As a result, financials, a large weighting for the Fund, continued to perform well as higher rates boost net interest margins and earnings power. Technology stocks, another large weighting in the Fund, are also characterized for their growth qualities.

Within the Fund, the best-performing holding was KLA-Tencor. The company, which makes process control equipment for semiconductor manufacturing, rose 48% as strength within the technology sector and emerging markets boosted sales. JP Morgan was the second best-performing holding, also gaining 48%, on broad strength across its businesses, improved credit quality and on the prospects of a more favorable regulatory environment.

Teva Pharmaceuticals was the worst-performing stock in the Fund. Health care, in general, struggled, due to uncertainty over the current administration’s attempts to repeal and replace Obamacare, as well as vilification of drug companies over pricing. Poor results over the year prompted Teva to cut its dividend, an event that is rarely received well.

Looking into 2018, we believe the potential for tax relief and a lower regulatory burden all bode well for corporate profits going forward. President Trump’s proclivity for more protectionist trade policies remains an issue to monitor. Overall, interest rates remain low and corporations continue to demonstrate fiscal restraint that tends to benefit shareholders.

Thank you for your investment with Oak Associates Funds.

Mutual fund investing involves risk, including the possible loss of principal. The value of the Fund’s investments will vary from day to day in response to the activities of individual companies and general market and economic conditions. Due to the limited number of underlying investments, the Fund is more susceptible to the price movements of any one holding and thus may be more volatile than a more broadly diversified portfolio.

 

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Pin Oak Equity Fund

Mark W. Oelschlager, CFA
Co-Chief Investment Officer & Portfolio Manager

 Pin Oak Equity Fund (the “Fund”) gained 21.86% for the fiscal year ended October 31, 2017, while the Russell 3000® Total Return Index returned 23.98% and the Lipper Multi-Cap Core Funds Average returned 21.97%. For the last ten years, a period that includes one of the worst financial crises in U.S. history, the Fund’s cumulative return was 152.96%, versus 108.16% for the Russell and 84.06% for the Lipper. This was the ninth consecutive fiscal year of positive returns for the Fund, a streak sure to end at some point.

When Donald Trump was elected President of the United States in November 2016, it accelerated the upward move in interest rates as well as the rise in financial stocks, both of which were already underway before the election. This also continued the trend in the outperformance of the “value” stocks, or those considered inexpensive on various metrics. All of this helped the Fund outperform in late 2016. But 2017 has been a different story as more growth-oriented factors drew the attention of investors, propelling shares of “growth” companies higher. Pin Oak has some exposure to some of these companies, such as Alphabet (Google) and Amazon, but in general our investing style avoids the faster growers because of their higher embedded expectations and below-average return history. The unfavorable style bias offset the Fund’s strong sector positioning for the year. Our two largest sector weightings, by far, were financials and technology, which also happened to be the two best-performing sectors in the market for the past twelve months.

As risks in the market have grown, our positioning has become incrementally more defensive, meaning recent purchases have been in areas with more stability. We have had a large exposure to the financial sector for years, and still do, but as the bank stocks have gone from extremely attractive to just attractive, we have trimmed the exposure there. We believe this is prudent risk management.

Leaders during the year included Internet conglomerate IAC/Interactive, whose shares doubled on strong results from online dating business Match and home services operation HomeAdvisor; financial services company Charles Schwab, which benefitted from rising interest rates; and multinational industrial giant Parker Hannifin, who reported accelerating sales growth and rising profit margins.

Laggards included land drilling contractor Nabors, who saw demand for its services slow; advertising company Interpublic Group, whose customers are increasingly turning to alternative channels; and pharmaceutical behemoth GlaxoSmithKline, which faced increasing competition in its respiratory franchise.

Thank you for your investment with Oak Associates Funds.

Mutual fund investing involves risk, including the possible loss of principal. The value of the Fund’s investments will vary from day to day in response to the activities of individual companies and general market and economic conditions.

The following has been provided to you for informational purposes only, and should not be considered tax advice. Please consult your tax advisor for further assistance.

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Rock Oak Core Growth Fund

Robert Stimpson, CFA
Portfolio Manager

Rock Oak Core Growth Fund (the “Fund”) gained 27.02% for the fiscal year ended October 31, 2017, while the S&P 500® Total Return Index returned 23.63% and the Lipper Multi-Cap Growth Funds Average returned 27.44%. Over the last five years, the Fund has gained 13.70% per year on average.

The fiscal year 2017 saw U.S. stocks climb higher on optimism over less regulation, tax reform and continued economic expansion. Despite President Trump’s inability to repeal and replace Obamacare as of this writing, optimism is high that Congress can implement tax reform. While the benefits to the economy or consumers are still uncertain, lower corporate tax rates and the repatriation of overseas capital could reward equity shareholders.

The Federal Reserve had been prepping the investor community regarding its intentions to raise the Fed Funds rate for a very long time. Therefore, the December 2016 liftoff surprised no one and failed to thwart U.S. stocks’ advance. However, the likelihood of a higher interest rate environment and slower economic expansion did disproportionately benefit the large-cap growth segment of the market. Companies that demonstrate the ability to grow sales or earnings in a slowing economy often obtain a premium valuation as economic prospects narrow. This cycle was no exception.

The Fund’s best-performing stock was Wyndham Worldwide, which rose 66%. The global hotel company has benefited from strength not only in the U.S. market, but also from the international market. Western Digital was the Fund’s second best performer. The hard disk drive maker climbed 56%.

The Fund’s largest laggard was media company Discovery Communications, which fell 27%. The outlook for the media industry remains clouded by new online competitors, changing demographics, and internet-based distribution models.

Going forward, Rock Oak remains focused on companies with strong earnings prospects that have also demonstrated a commitment to creating shareholder value. The outlook for U.S. stocks remains attractive in our view due to the low inflation, a stable growth environment and prudent financial management which supports company fundamentals.

Thank you for your investment with Oak Associates Funds.

Mutual fund investing involves risk, including the possible loss of principal. The value of the Fund’s investments will vary from day to day in response to the activities of individual companies and general market and economic conditions.

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River Oak Discovery Fund

Robert Stimpson, CFA
Portfolio Manager

River Oak Discovery Fund (the “Fund”) gained 22.59% for the fiscal year ended October 31, 2017, while the Russell 2000® Growth Total Return Index returned 31.00% and the Lipper Small-Cap Growth Funds Average returned 29.16%. Over the last five years, the Fund has gained 12.31% per year on average.

U.S. stocks rallied strongly in the first part of the fiscal year following the election of President Trump. Prospects for lower regulation and tax relief underscored the initial reaction by U.S. equities. Following the “Trump bump,” small-cap stocks traded sideways for much of 2017, then rallied in the beginning of the fourth quarter. The real beneficiaries within the U.S. market were large-cap stocks, particularly those characterized as growth companies. With the Federal Reserve finally following through on its rhetoric to raise interest rates, the likelihood of a slower economic expansion has caused companies that can demonstrate sales or earnings growth in a tighter monetary environment to receive a premium valuation from investors.

A combination of low inflation and stable growth has also created an environment favorable to equity investments. Yet, for well over a year now, the Federal Reserve has been preparing investors for higher interest rates and finally began raising rates in December of 2016. Three additional interest rate hikes followed, but failed to thwart U.S. equities. Given the improvements in the stock market and low unemployment rate, which has fallen to a 10-year low of 4.1% as of October 2017, additional rate increases are likely as the Fed seeks to normalize rates and rearm its tool kit.

The Fund’s strongest performer this fiscal year was Kadant Inc., gaining 122%. The recycled paper and fluid management company beat earnings estimates several times during the year. Mercer International, a pulp and paper making company, was the Fund’s second best-performing holding, rising 93%. Both companies began the fiscal year at attractive valuations and may have benefited from the possibility of favorable protectionist policies under the new administration.

The Fund’s worst-performing stock was Endo International, a specialty pharmaceutical company, which lost 66%. Despite its inexpensive valuation, the company is challenged by falling sales, pricing uncertainty and high levels of debts. The position was sold due to its deteriorating financial solvency.

Looking into 2018, investors continue to show a preference for large-cap and growth stocks. We believe this is a distraction, however, which makes what we see as opportunities easier to identify among interesting small-cap stocks. A strong stock market helps boost investor sentiment and generally reduces risk aversion that typically hurts the appetite for the segment. The Fund is committed to seeking out niche companies with a strong commitment to creation of shareholder value.

Thank you for your investment with Oak Associates Funds.



Mutual fund investing involves risk, including the possible loss of principal. Funds that emphasize investments in smaller companies generally will experience greater price volatility.
 

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Red Oak Technology Select Fund

Mark W. Oelschlager, CFA
Co-Chief Investment Officer & Portfolio Manager

Red Oak Technology Select Fund (the “Fund”) gained 35.76% for the fiscal year ended October 31, 2017, while the S&P 500 Equal Weight Information Technology Index returned 37.82% and the Lipper Science & Technology Funds Average returned 37.47%. For the last ten years, the Fund’s cumulative return was 217.39%, versus 193.04% for the Index and 148.95% for the Lipper.

The 10-year returns demonstrate a wide performance gap between the Fund and its peers. We attribute this to our focus on valuation and earnings sustainability, two factors that are sometimes overlooked in tech investing. The value of a company is the sum of its future profits. Therefore it is important to gauge how durable a company’s business is, especially in a sector like technology where things change so often. This is why we feel it is dangerous to base investment decisions on hot stories, one-year growth rates, and the like.

Technology was the best-performing sector for the fiscal year, after being second in the previous year and second the year before that. There are 11 market sectors, so this performance by tech stocks the last three years is remarkable. Whether one is talking about the sector, the Fund, or tech fund averages, we believe these returns are unlikely to be duplicated in the coming years.

We have talked for years about how technology companies have been prime beneficiaries of the outsourcing trend, as many have moved to an “asset-light” business model by paying foreign entities to do what the companies can’t do as efficiently. This has driven profit margins and returns on capital higher. For years the market was reluctant to give them credit for this, meaning it was pricing the stocks as if the higher profitability would eventually reverse or be competed away. The reversal hasn’t come, and investors have gradually bought into the idea that the elevated profitability might be somewhat sustainable and pushed valuations higher. The stocks have also been aided recently by hopes for tax reform in the U.S.

The portfolio’s hit rate was high this past year, as more than ¾ of all positions held for the full twelve months returned more than 25%, including mega-caps Amazon, Alphabet (Google), Facebook, Apple, and Intel. Two stocks whose returns exceeded 100% were semiconductor company NVIDIA, which rose almost 200% on accelerating revenue growth, and Internet conglomerate IAC/ Interactive, which saw strength in its online dating segment and home service operation.

Laggards included Qualcomm, which is involved in legal disputes with various entities over the pricing of its CDMA licensing; Juniper Networks, due to struggles in the competitive market for networking equipment; and IT services company IBM, who is trying to manage a transition to cloudbased services.

Thank you for your investment with Oak Associates Funds.

 

Mutual fund investing involves risk, including the possible loss of principal. Funds that emphasize investments in technology generally will experience greater price volatility. There are additional risks associated with investing in a single-sector fund, including greater sensitivity to economic, political, or regulatory developments impacting the sector.

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Black Oak Emerging Technology Fund 

Robert Stimpson, CFA
Portfolio Manager

Black Oak Emerging Technology Fund (the “Fund”) gained 21.16% during the fiscal year ended October 31, 2017, while the S&P 500® Equal Weight Information Technology Index returned 37.82% and the Lipper Science & Technology Funds Average returned 37.47%. Over the last five years, the Fund has gained 16.20% per year on average.

Technology stocks had a very strong 2017. Driven by strong corporate profits and optimism over a reduced regulatory environment under the new administration, U.S. stocks rose to new all-time highs. The gains were most pronounced in the large-cap stocks, particularly in the growth space. As the economic expansion has progressed, and with the Federal Reserve on course to continue to raise interest rates, companies characterized by the ability to grow when the economy is slowing have found favor with investors. These large-cap, blue chip tech growth stocks also dominate most market indexes, skewing the performance of the indexes relative to the broader market and their small-cap peers.

In general, stocks have enjoyed the low-inflation, slow growth environment and thrived despite the prospects of higher short-term interest rates. The path to normalized rates is still uncertain, but given the longstanding promotion from the Fed, the stock market has demonstrated a level of comfort with the plan and continues rallying higher despite the 1% increase in the Fed Funds rate to 1.25%.

The domestic U.S. economy also continues to charge forward. Nationwide the unemployment rate has recently fallen to 4.1% as of October 2017, a 10-year low. Congress is set to embark on tax reform and despite their failure to successfully repeal and replace Obamacare, prospects are high that some simplification to the tax code is likely. President Trump’s protectionist position on trade remains a concern and will be something to monitor going forward.

The Fund’s top-performing stock for the year was IXYS Corporation, which rose 133%. The company develops power semiconductor chips and was acquired by electronic component company Littelfuse in March 2017. Semiconductor processing equipment maker Lam Research was the Fund’s second best–performing holding, gaining 118% over the fiscal year.

The Fund’s worst-performing stock was Xperi, an audio technology company, which lost 35%. The company was sold during the year after net income turned negative due to higher operating expenses.

Going forward, the Fund will continue to seek opportunities within technology companies exposed to emerging niches, with solid earnings prospects, which are trading at favorable valuations.

Thank you for your investment with Oak Associates Funds.

 

Mutual fund investing involves risk, including the possible loss of principal. Funds that emphasize investments in technology generally will experience greater price volatility. There are additional risks associated with investing in a single-sector fund with a limited number of holdings versus a more broadly diversified portfolio, including greater sensitivity to economic, political, or regulatory developments impacting the sector. Funds that emphasize investments in smaller or mid-sized companies may experience greater price volatility.

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Live Oak Health Sciences Fund

Mark W. Oelschlager, CFA
Co-Chief Investment Officer & Portfolio Manager

Live Oak Health Sciences Fund (the “Fund”) gained 13.78% for the fiscal year ended October 31, 2017, while the S&P 500® Health Care Index returned 22.61% and the Lipper Health & Biotechnology Funds Average returned 26.42%. For the last ten years the Fund’s cumulative return was 170.24%, versus 172.80% for the Index and 212.76% for the Lipper.

With a Republican-controlled federal government in place for the last twelve months there has been a lot of talk of repealing, or at least revising, the Affordable Care Act. These efforts have stalled, but the stock market appears to have shrugged off the news.

The Department of Justice blocked two large managed care mergers: Anthem-Cigna and Aetna-Humana. Despite this, the stocks have done very well, with Anthem, Cigna, and Aetna returning 74%, 66%, and 60% respectively during the fiscal year. All three were held in the Fund for the full year. The only large insurer that wasn’t involved in the consolidation drama was longtime holding UnitedHealth, which gained 51%. Incredibly, despite the rapid appreciation in the stock prices, these companies still offer investors above-average free cash flow yields.

While managed care, medical device stocks and several of our other holdings had a strong year, this was a difficult period for the Fund on a relative basis, as in general the winners kept on winning and the losers kept on losing, creating a difficult environment for our style of trying to find overlooked opportunities. Pharmaceutical distributors (e.g. Cardinal Health -8%), pharmacy benefit managers (Express Scripts –9%), and generic pharmaceuticals (Teva Pharmaceutical -67%) held in the portfolio all weighed on returns. These stocks are being affected by concerns about pricing power and in some cases regulatory fears. In our opinion these worries are overblown and the market is pricing in an overly pessimistic scenario. The price-to-earnings (“P/E”) multiples on the distributors and pharmacy benefit manager stocks range from 8 to 12, while the generics are priced even lower. At a time when most companies are trading at a price-to-earnings ratio P/E in the high teens or low 20s, we believe these represent attractive entry points for long-term investors.

Thank you for your investment with Oak Associates Funds.

 

Mutual fund investing involves risk, including the possible loss of principal. Funds that emphasize investments in health care generally will experience greater price volatility. There are additional risks associated with investing in a single-sector fund versus a more broadly diversified portfolio, including greater sensitivity to economic, political, or regulatory developments impacting the sector.

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To determine if this fund is an appropriate investment for you, carefully consider the fund’s investment objectives, risk factors, charges and expenses before investing. This and other information can be found in the fund’s prospectus, which may be obtained by calling 1-888-462-5386 or visiting our website at www.oakfunds.com. Please read it carefully before investing.

Mutual fund investing involves risk, including the possible loss of principal. The value of the fund’s investments will vary from day to day in response to the activities of individual companies and general market and economic conditions. Because the fund may invest a significant portion of its assets in particular industry sectors which it believes hold the most potential for favorable returns, poor performance or adverse economic events affecting one or more of these over-weighted sectors could have a greater impact on the fund than it would on another mutual fund with a broader range of investments. Funds that emphasize investments in smaller or mid-sized companies may experience greater price volatility. There are additional risks associated with investing in a single-sector fund versus a more broadly diversified portfolio, including greater sensitivity to economic, political, or regulatory developments impacting the sector. Please see the prospectus for additional risk information.

Oak Associates Funds are distributed by Ultimus Fund Distributors, LLC. Ultimus Fund Distributors, LLC and Oak Associates Funds are separate and unaffiliated.

  Oak Associates Funds Total Returns as of December 31, 2017
Fund Name
(Inception Date)
Quarter
12/31/2017
1 Year 3 Year 5 Year 10 Year Since Inception
White Oak Select Growth Fund (8/31/1992) 7.13% 19.76% 13.17% 15.48% 9.25% 9.13%
S&P 500 Total Return Index 6.64% 21.83% 11.41% 15.79% 8.50% 9.69%
Pin Oak Equity Fund (8/3/1992) 6.76% 15.16% 12.81% 16.40% 11.27% 8.30%
Russell 3000® Index TR 6.34% 21.13% 11.12% 15.58% 8.60% 9.81%
Rock Oak Core Growth Fund (12/31/2004) 5.76% 22.69% 8.53% 13.42% 6.21% 7.01%
S&P 500 Total Return Index 6.64% 21.83% 11.41% 15.79% 8.50% 8.53%
River Oak Discovery Fund (6/30/2005) 4.33% 11.30% 7.07% 12.01% 6.04% 7.76%
Russell 2000® Growth Index TR 4.59% 22.17% 10.28% 15.21% 9.19% 9.63%
Red Oak Technology Select Fund (12/31/1998) 7.83% 31.09% 18.20% 22.15% 13.46% 5.62%
S&P 500 Equal Weight IT Index 6.28% 33.64% 18.20% 22.73% 12.52% 8.01%
Black Oak Emerging Technology Fund (12/29/2000) 5.82% 19.02% 9.82% 15.95% 7.60% -3.13%
S&P 500 Equal Weight IT Index 6.28% 33.64% 18.20% 22.73% 12.52% 6.52%
Live Oak Health Sciences Fund (6/29/2001) 1.94% 13.41% 6.83% 15.22% 11.23% 7.83%
S&P 500 Healthcare Index 1.47% 22.08% 8.29% 17.62% 11.02% 7.80%

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an Investor’s shares, when redeemed, may not be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. For performance data current to the most recent month end, please call 1-888-462-5386 or click here.

Holdings are subject to change. Current and future holdings are subject to risk. Click on the Fund name for complete holdings through last complete quarter. White Oak | Pin Oak | Rock Oak | River Oak | Red Oak | Black Oak | Live Oak

 

Oak Associates Funds Total Annual Fund Operating Expenses

Oak Associates Funds Gross Expenses Net Expenses*
White Oak Select Growth 1.06% 1.06%
Pin Oak Equity 1.08% 1.08%
Rock Oak Core Growth 1.65% 1.25%
River Oak Discovery 1.51% 1.35%
Red Oak Technology Select 1.09% 1.09%
Black Oak Emerging Technology 1.28% 1.28%
Live Oak Health Sciences 1.11% 1.11%

* The Adviser has contractually agreed for a period of one year from the most recent prospectus to waive all or a portion of its fee for the Funds (and to reimburse expenses to the extent necessary) in order to limit Fund total operating expenses. This contractual fee waiver may only be terminated by the Board of Trustees.

All indices are unmanaged and index performance figures include reinvestment of dividends but do not reflect any fees, expenses or taxes. Investors cannot invest directly in an index.

Lipper, a Thomson Reuters Company, is the source and owner of the Lipper Classification data contained in this material and all trademarks and copyrights related thereto. Any further dissemination or redistribution is strictly prohibited. Lipper Inc. is not responsible for the formatting or configuration of this material or for any inaccuracy in Oak Associates Funds’ presentation thereof.

Lipper Health & Biotechnology Funds – Funds that invest primarily in the equity securities of domestic companies engaged in health care, medicine, and biotechnology.

Lipper Large-Cap Growth Funds – Funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) above Lipper’s USDE large-cap floor. Large-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P 500® Index.

Lipper Multi-Cap Core Funds – Funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Multi-cap core funds typically have average characteristics compared to the S&P SuperComposite 1500 Index.

Lipper Multi-Cap Growth Funds – Funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Multi-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales per-share growth value, compared to the S&P SuperComposite 1500 Index.

Lipper Science & Technology Funds – Funds that invest primarily in the equity securities of domestic companies engaged in science and technology.

Lipper Small-Cap Growth Funds – Funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) below Lipper’s USDE small-cap ceiling. Small-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P Small-Cap 600 Index.

Russell Investments is the source and owner of the Russell Index data contained in this material and all trademarks and copyrights related thereto. Any further dissemination or redistribution is strictly prohibited. Russell Investments is not responsible for the formatting or configuration of this material or for any inaccuracy in Oak Associates Funds’ presentation thereof.

Russell 2000® Growth Total Return Index – The Russell 2000® Growth Total Return Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.

Russell 3000® Total Return Index – The Russell 3000® Total Return Index measures the performance of 3,000 publicly held US companies based on total market capitalization, which represents approximately 98% of the investable US equity market.

Standard & Poor’s is the source and owner of the S&P Index data contained in this material and all trademarks and copyrights related thereto. Any further dissemination or redistribution is strictly prohibited. Standard & Poor’s is not responsible for the formatting or configuration of this material or for any inaccuracy in Oak Associates Funds’ presentation thereof.

S&P 500® Index – is a commonly-recognized, market capitalization weighted index of 500 widely held equity securities, designed to measure broad U.S. equity performance.

S&P 500® Equal Weight Information Technology Index – The S&P 500® Equal Weight Information Technology Index is an unmanaged equal weighted version of the S&P 500® Information Technology Index that consists of the common stocks of the following industries: internet equipment, computers and peripherals, electronic equipment, office electronics and instruments, semiconductor equipment and products, diversified telecommunication services, and wireless telecommunication services that comprise the Information Technology sector of the S&P 500® Index.

S&P 500® Health Care Index – The S&P 500® Health Care Index is a capitalization-weighted index that encompasses two main industry groups. The first includes companies who manufacture health care equipment and supplies or provide health care related services, including distributors of health care products, providers of basic health care services, and owners and operators of health care facilities and organizations. The second group consists of companies primarily involved in the research, development, production and marketing of pharmaceuticals and biotechnology products.

S&P 500® Total Return Index – The S&P 500® Total Return Index is a commonly recognized, market capitalization weighted index of 500 widely held equity securities, designed to measure broad U.S. equity performance.

Investment Definitions

The P/E is the ratio for valuing a company that measures its current share price relative to its per-share earnings. The price-earnings ratio can be calculated as market value per share divided by earnings per share.

Book value of an asset is the value at which the asset is carried on a balance sheet and calculated by taking the cost of an asset minus the accumulated depreciation. Book value is also the net asset value of a company, calculated as total assets minus intangible assets and liabilities.

Free cash flow yield is an overall return evaluation ratio of a stock, which standardizes the free cash flow per share a company is expected to earn against its market price per share. The ratio is calculated by taking the free cash flow per share divided by the share price.

 

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