Oak Associates Funds
Filed: 21 Dec 04, 7:00pm
Morgan, Lewis & Bockius LLP 1111 Pennsylvania Avenue, NW Washington, DC 20004 December 22, 2004 VIA EDGAR correspondence US Securities and Exchange Commission 450 Fifth Street, NW Judiciary Plaza Washington, DC 20549 Re: Oak Associates Funds (File Nos. 333-42115 and 811-08549) Dear Ms. Browning: Attached please find a draft of the Oak Associates Funds (the "Trust") response to your comments on the Rock Oak Core Growth Fund's 485(a) filing (PEA No. 13). I have also attached the Schedule to the Trust's Investment Advisory Agreement reflecting the addition of the Rock Oak Core Growth Fund and the Contractual Fee Waiver Agreement between the Fund's investment adviser and the Trust. Due to our client's printing schedule, we would appreciate it if you could provide us with any feedback on the comment letter ASAP. Our client's ultimate goal is to resolve any outstanding issues by Thursday December 23, 2004, so that they can begin printing the prospectus over the weekend. Please let me know if you would like to discuss these matters further. Best regards /s/ Sean Graber Sean Graber
Morgan, Lewis & Bockius LLP 1701 Market Street Philadelphia, PA 19103-2921 December 22, 2004 VIA EDGAR CORRESPONDENCE Ms. Kimberly Browning U.S. Securities and Exchange Commission 450 Fifth Street,N.W. Washington, D.C. 20549-0506 Re: Oak Associates Funds - Rock Oak Core Growth Fund (File Nos. 33-42115 and 811-8549) Post-Effective Amendment No. 13 Dear Ms. Browning: Set forth below are your comments, which you provided by telephone on December 14 - 15, 2004, and our responses to your comments, on Post-Effective Amendment No. 13 filed under the Securities Act of 1933 and the Investment Company Act of 1940 of Oak Associates Funds which was filed for the purpose of adding the Rock Oak Core Growth Fund (the "Fund"). Both the comments and responses are based on the Prospectus and Statement of Additional Information ("SAI"), which were filed with the Securities and Exchange Commission ("SEC") on October 15, 2004. COMMENTS ON THE PROSPECTUS 1. Comment: Amend the heading "Investment Strategy of the Rock Oak Core Growth Fund" to state "Principal Investment Strategy of the Rock Core Growth Fund." Response: We have complied with this comment. 2. Comment: In the "Investment Strategy" section include a definition of "large capitalization companies." Response: We have complied with this comment by adding the following parenthetical after "large capitalization companies" in the prospectus: "(equity market capitalization more than $5 billion)." 3. Comment: The Fund's investment strategy states that the Fund will invest "in equity securities." To the extent that the Fund invests in equity securities other than common stocks as a principal investment strategy, please include a discussion of these equity securities and describe the principal risks associated with each. In addition, with respect to investments in common stocks, please include a reference in the applicable risk disclosure section to the fact that the interests of common stock owners are subordinate to the interest of debtholders in the event of a liquidation. Response: We have complied with this comment. 4. Comment: In the Investment Strategy section, include a definition of the terms "strong and ethical management" and "apparent commitment to shareholder interests." Response: In its determination of whether a particular company is suitable for investment, the Fund's investment adviser reviews various attributes of a company, including the factors noted above. We believe the disclosure as stated is consistent with the principles of plain English disclosure promulgated under Rule 421(c) of the Securities Act of 1933, as amended, and General Instruction C of Form N-1A. Accordingly, we do not believe that a further explanation of these terms is necessary. 5. Comment: If the Fund will engage in active and frequent trading of its securities as a principal investment strategy, please disclose that strategy in the "Investment Strategy" section and discuss the requisite risks of this strategy. In particular, if applicable, disclose that the Fund's expected portfolio turnover rate will be 100% or more. Response: The investment adviser of the Fund has no current intention to engage in active and frequent trading of the Fund's portfolio securities. 6. Comment: The second sentence of the second paragraph in the "Principal Risks" section states, in relevant part, "the Adviser's investment strategy often involves overweighting the Fund's position in the industry sectors which it believes hold the most growth potential." Please include disclosure of this strategy in the "Investment Strategy" section of the prospectus. Response: We have complied with this comment. 7. Comment: Please confirm supplementally that investing in emerging markets issuers is not a principal investment strategy of the Fund. Response: The investment adviser of the Fund has confirmed that, currently, investing in emerging markets issuers is not a principal investment strategy of the Fund. 8. Comment: Please explain supplementally the estimated amount of "Other Expenses" that is included in the Fund's Expense Table. Response: The Fund's administrator calculated the estimated amount of "Other Expenses" as used in the Fund's Expense Table based on the estimated amount of the Fund's fees and expenses and expected level of assets of the Fund at the end of its first fiscal year. With respect to the various components of "Other Expenses," such as transfer agency, custody, administration, blue sky, audit and legal fees, the administrator uses actual costs as set forth in the Fund's various service provider agreements or estimates based on amounts paid by the other series of the Trust. 9. Comment: As disclosed in the Fund's Expense Table, the Fund's investment adviser has contractually agreed to waive fees and to reimburse expenses in order to keep the Fund's "Net Expenses" from exceeding a certain threshold. Please state in the footnote to the Expense Table or in the section relating to the investment adviser that only the Board may terminate the contractual fee waiver agreement during the first year. In addition, please confirm supplementally that there are no reimbursement arrangements or offsetting arrangements regarding the waived fees. If such arrangements do exist, provide appropriate disclosure within the Prospectus. Please also include a copy of the applicable fee waiver agreement as an exhibit to the Trust's registration statement. Response: A copy of the fee waiver agreement between the investment adviser and the Trust will be filed as an exhibit to the Trust's registration statement. While not an express term of the agreement, only the Board may terminate this agreement during the first year and disclosure to this effect has been added to the Prospectus. The contractual waiver agreement does not provide for the Adviser to recoup any waived fees or reimbursed expenses in later periods. 10. Comment: Please revise the "More Information About Risk" and "More Information About Fund Investments" sections of the Prospectus to distinguish between discussions of principal investment strategies/risks and discussions of non-principal investment strategies/risks. Response: Based upon our review of Form N-1A and the disclosure contained in the "More Information About Risk" section, we believe the disclosure, as currently stated, satisfies the requirements of Item 4(c) of Form N-1A, which requires mutual funds to disclose the principal risks of investing in the Fund. This section of the Prospectus does not include a discussion of the non-principal risks of investing in the Fund, therefore we believe it is unnecessary to distinguish principal risks from non-principal risks. With respect to the "More Information About Fund Investments" section, in light of your comments, we reorganized the two paragraphs of this section in a manner that we believe better facilitates shareholders' understanding of the information that is presented. We have moved the paragraph discussing the Fund's ability to take temporary defensive positions so that this information is presented first. We have also included the word "non-principal" as indicated in bold in the language below. Please also see our response to comment 11 below. MORE INFORMATION ABOUT FUND INVESTMENTS The investments and strategies described in this prospectus are those that the Fund uses under normal conditions. During unusual economic or market conditions, or for temporary defensive or liquidity purposes, the Fund may invest up to 100% of its assets in money market instruments that would not ordinarily be consistent with the Fund's objectives. If the Fund invests in this manner, it may not achieve its investment objective. The Fund will only make temporary defensive investments if the Adviser believes that the risk of loss outweighs the opportunity for capital gains. This prospectus describes the Fund's principal investments and strategies, and the Fund will normally invest in the types of securities described in this prospectus. However, in addition to the investments and strategies described in this prospectus, the Fund also may invest in other securities, use other strategies and engage in other investment practices that are not part of its principal investment strategy. These non-principal investments and strategies, as well as those described in this prospectus, are described in detail in our Statement of Additional Information (for information on how to obtain the Fund's Statement of Additional Information see the back cover of this prospectus). Of course, we cannot guarantee that the Fund will achieve its investment goal. 11. Comment: In the first sentence of the "More Information About Fund Investments" section, please change the word "primary" to "principal." Response: We have complied with this comment. 12. Comment: Clarify in the Fund's prospectus whether shareholders can purchase/redeem/exchange Fund shares by transacting directly with the Fund's transfer agent. Response: Shareholders transacting directly with the Fund are doing so through the Fund's transfer agent. We have added language designed to clarify this. 13. Comment: If a fee is charged to shareholders when transacting with the Fund via a wire, disclose the amount of the fee in a footnote to the Fund's expense table. Response: We have added the following footnote to the Fund's expense table: "The Fund's transfer agent charges a $10 fee for each wire redemption." 14. Comment: In the "How to Purchase Fund Shares" and "How to Sell Your Fund Shares" sections, please identify whether any of the "authorized institutions" besides the Fund's transfer agent are authorized to receive purchase orders on the Fund's behalf. If so, disclose that all orders received in good order by such institutions by the Fund's closing time will receive that day's NAV. Response: All orders received by the Fund's transfer agent or other designated Fund agent prior to 4:00 p.m. on a Business Day are priced at that day's net asset value. If a customer places an order through a designated agent of the Fund and the designated agent fails to transmit the order in a timely manner, the customer would not bear the risk of loss. In light of your comments, we have added new disclosure to the Fund's prospectus (see below). This disclosure is intended to inform readers that if an order is placed through a financial institution that is not such an agent of the Fund, this financial institution may impose earlier cut-off times than 4:00 p.m. for its own operational purposes (it may not, however, accept orders after 4:00 p.m. for that day's NAV). Because the Fund is not in a position to know whether a financial institution has imposed earlier cut-off times, readers are asked to contact their financial institution directly for more information. BUYING OR SELLING SHARES THROUGH A FINANCIAL INTERMEDIARY You may buy or sell shares of the Fund through accounts with brokers and other institutions that are authorized to place trades in Fund shares for their customers ("authorized institutions"). When you purchase or sell Fund shares through certain authorized institutions (rather than directly from the Fund), you may have to transmit your purchase and sale requests to these authorized institutions at an earlier time for your transaction to become effective that day. This allows these authorized institutions time to process your requests and transmit them to the Fund. Your authorized institution is responsible for transmitting all purchase and redemption requests, investment information, documentation and money to the Fund on time. Certain financial intermediaries, including certain broker-dealers and shareholder organizations, are authorized to accept purchase and redemption requests for Fund shares. These requests are executed at the net asset value per share (NAV) next determined after the intermediary receives the request if transmitted to the Fund in accordance with the Fund's procedures and applicable law. These authorized intermediaries are responsible for transmitting requests and delivering funds on a timely basis. If your financial intermediary fails to do so, it may be responsible for any resulting fees or losses. If you deal directly with a financial intermediary or an authorized institution, you will have to follow their procedures for transacting with the Fund. For more information about how to purchase or sell Fund shares through a financial intermediary or an authorized institution, you should contact them directly. Investors may be charged a fee for purchase and/or redemption transactions effectuated through certain financial intermediaries and authorized institutions. 15. Comment: The Prospectus states that shareholder orders must be received by the Fund "in proper form." The term "proper form" is also used in the "Customer Identification and Verification" section. Please define this term. Response: We have complied with this comment by revising the disclosure in the Fund's prospectus to include the following definition of "proper form": "Proper Form" means that the Fund was provided a complete and signed account application, including the investor's social security number, tax identification number, and other identification required by law or regulation. 16. Comment: In the "General Information" section, please revise the disclosure to indicate the Fund's policy with regard to rejecting exchange orders. Response: We have complied with this comment. We have revised the disclosure as follows: The Fund reserves the right to reject any specific purchase order or request to exchange Fund shares. In such cases where the Fund rejects an exchange request, such request will be processed by the Fund as a redemption request. 17. Comment: The following statement is included in the "General Information" section: "If the NYSE closes early - such as on days in advance of certain holidays - the Fund reserves the right to calculate NAV as of the earlier closing time." Please revise this sentence to clarify when the Fund will calculate NAV as of the earlier closing time in response to an early closing by the NYSE. Response: There may be occasions when the Fund determines that calculating the Fund's net asset value and discontinuing accepting orders at the earlier closing time is unnecessary and, therefore, the Fund has reserved the right to continue to accept orders up until its 4:00 p.m. close. 18. Comment: The last sentence in the "Redemptions in Kind" section states that "[i]t is highly unlikely that your shares would ever be redeemed in kind, but if they were you would probably have to pay transaction costs to sell the securities distributed to you, as well as taxes on any capital gains from the sale as with any redemption. Please remove the word "probably" from this sentence and include disclosure in this sentence reflecting that shareholders will bear market risks until the redemption of the securities. Response: We have complied with this comment. 19. Comment: The second sentence in the "Involuntary Redemption of Your Shares" section states "[t]he Fund will generally provide you at least 60 days' written notice to allow you sufficient time to add to your account and avoid the involuntary redemption of your shares." Please revise this sentence by removing the term "generally" or include a discussion of the circumstances when the Fund will not provide shareholders 60 days' written notice. Response: In response to your comment, we have amended this sentence to read as follows: The Fund will provide you at least 30 days' written notice to allow you sufficient time to add to your account and avoid the involuntary redemption of your shares. We believe this approach is consistent with the staff's no-action guidance contained in the DFA U.S. Large Cap Portfolio Inc. no-action letter dated September 7, 1990. 20. Comment: Please confirm supplementally that the Fund's Board of Trustees has considered the imposition of redemption fees. Response: The Board has considered implementing mandatory redemption fees for the Fund and the other series of the Trust, and at the time determined that redemption fees were not in shareholders best interests. 21. Comment: In the last paragraph of the "Customer Identification and Verification" Section, please provide more detail on the length of time established by the Fund when closing a shareholder's account due to its inability to verify the shareholder's identity. Also, please explain how long the Fund may hold a shareholder's proceeds when waiting for the shareholder's check to clear. Response: We have complied with this comment. The revised disclosure is included below for your reference: However, the Fund reserves the right to close or liquidate your account at the then-current day's price and remit proceeds to you via check if it is unable to verify your identity. Attempts to verify your identity will be performed within a reasonable timeframe established in the sole discretion of the Fund (generally, 3 business days). Further, the Fund reserves the right to hold your proceeds until your original check clears the bank, which may take up to 15 days from the date of purchase. In such an instance, you may be subject to a gain or loss on Fund shares and will be subject to corresponding tax implications. COMMENTS ON THE STATEMENT OF ADDITIONAL INFORMATION 1. Comment: Please remove the sentence "Capitalized terms not defined herein are defined in the prospectus." Response: We have complied with this comment. 2. Comment: Please revise the disclosure in the "Additional Information About Investment Objectives and Policies" and "Description of Permitted Investments" Sections to distinguish principal investment strategies and risks from those that are non-principal. Response: We have complied with this comment. 3. Comment: Please change "secondary" to "non-principal" in the sentence "[a]s secondary investment strategies . . .." Response: We have complied with this comment. 4. Comment: Please state supplementally the extent to which the Fund will invest in small and medium capitalization issuers. Response: The extent to which the Fund will invest in these securities will vary depending upon the investment environment, therefore no precise limitation on the Fund's investments in these securities has been established. However, it is currently expected that the Fund's investments in these securities will not constitute a principal investment strategy of the Fund. Accordingly, the Fund's investments in these securities is not included in the Fund's prospectus. The Fund and its investment adviser are aware of their obligations under Form N-1A and will disclose the Fund's investments in these securities if these investments become a principal investment strategy of the Fund. 5. Comment: Please state supplementally the extent to which the Fund will invest in futures and options on futures. Response: The Fund is permitted, but has no current intention, to invest in futures and options on futures. The extent to which the Fund will invest in these securities, if at all, will vary depending upon the investment environment, and is in the sole discretion of the Fund's adviser. Investments in these securities do not currently constitute a principal investment strategy of the Fund. Accordingly, strategy and risk disclosure regarding Fund investments in these securities is not included in the Fund's prospectus. The Fund and its investment adviser are aware of their obligations under Form N-1A and will disclose the Fund's investments in these securities if these investments become a principal investment strategy of the Fund. 6. Comment: Please state supplementally the purpose of the Fund's use of futures and options on futures. If applicable, if the Fund plans on using futures and options on futures for speculation this strategy needs to be disclosed along with requisite risk disclosure. Response: The Fund may invest in futures and options on futures for the purposes set forth in the SAI. The Fund has no current intention to use futures and options on futures for speculation. 7. Comment: Please revise the "Money Market Securities" Section of the SAI to make it clear that the securities listed in the "U.S. Government Securities," "Commercial Paper," "Obligations of Domestic Banks, Foreign Banks and Foreign Branches of U.S. Banks" and "Repurchase Agreements" Sections are being considered as "money market securities" for purposes of the Fund's investment policies. Response: We have complied with this comment. 8. Comment: Please explain supplementally the purpose of the Fund's use of "Repurchase Agreements." Response: The Fund will invest in repurchase agreements for liquidity and cash management purposes. 9. Comment: Please explain why the Fund, which seeks capital appreciation, lends its securities in order to generate additional income. Response: Securities lending is not a primary investment strategy for the Fund, nor is the Fund currently expected to engage in securities lending. In the event the Fund engages in securities lending in the future, any income the Fund receives in connection with securities lending would be expected to be incidental. We are not aware of any restrictions that would limit the ability of a Fund that seeks "capital appreciation" from lending its portfolio securities to earn income. 10. Comment: The investment limitations for fundamental policy numbers 2, 3, 4, 5 and 6 refer to the limitations imposed by the Investment Company Act of 1940, as amended, and the rules and regulations thereunder. At an appropriate location, please include a narrative that states what is currently permitted under the 1940 Act and the current rules or regulations with respect to each of these fundamental policies. Response: We have complied with this comment. We have added the following narratives to the Fund's SAI. Diversification. Under the 1940 Act, a diversified investment management company, as to 75% of its total assets, may not purchase securities of any issuer (other than securities issued or guaranteed by the U.S. Government, its agents or instrumentalities or securities of other investment companies) if, as a result, more than 5% of its total assets would be invested in the securities of such issuer, or more than 10% of the issuer's outstanding voting securities would be held by the fund. Concentration. The SEC has presently defined concentration as investing 25% or more of an investment company's net assets in an industry or group of industries, with certain exceptions. Borrowing. The 1940 Act presently allows a fund to borrow from any bank (including pledging, mortgaging or hypothecating assets) in an amount up to 33 1/3% of its total assets (not including temporary borrowings not in excess of 5% of its total assets). Senior Securities. Senior securities may include any obligation or instrument issued by a fund evidencing indebtedness. The 1940 Act generally prohibits funds from issuing senior securities, although it does not treat certain transactions as senior securities, such as certain borrowings, short sales, reverse repurchase agreements, firm commitment agreements and standby commitments, with appropriate earmarking or segregation of assets to cover such obligation. Lending. Under the 1940 Act, a fund may only make loans if expressly permitted by its investment policies. The Fund's current investment policy on lending is as follows: the Fund may not make loans if, as a result, more than 33 1/3% of its total assets would be lent to other parties, except that the Fund may: (i) purchase or hold debt instruments in accordance with its investment objective and policies; (ii) enter into repurchase agreements; and (iii) engage in securities lending as described in its Statement of Additional Information. Underwriting. Under the 1940 Act, underwriting securities involves a fund purchasing securities directly from an issuer for the purpose of selling (distributing) them or participating in any such activity either directly or indirectly. Under the 1940 Act, a diversified fund may not make any commitment as underwriter, if immediately thereafter the amount of its outstanding underwriting commitments, plus the value of its investments in securities of issuers (other than investment companies) of which it owns more than 10% of the outstanding voting securities, exceeds 25% of the value of its total assets. Real Estate. The 1940 Act does not directly restrict an investment company's ability to invest in real estate, but does require that every investment company have a fundamental investment policy governing such investments. The Fund has adopted a fundamental policy that would permit direct investment in real estate. However, the Fund's current investment policy is as follows: the Fund will not purchase or sell real estate, physical commodities, or commodities contracts, except that the Fund may purchase: (i) marketable securities issued by companies which own or invest in real estate (including REITs), commodities, or commodities contracts; and (ii) commodities contracts relating to financial instruments, such as financial futures contracts and options on such contracts. 11. Comment: The Fund should adopt a non-fundamental policy that prohibits the Fund from investing in companies for the purpose of exercising control. Response: After review of the applicable provisions of the 1940 Act and Form N-1A, we do not believe the Fund is required to adopt the non-fundamental policy stated above. We note that former Guide 16 and 17 to Form N-1A were rescinded as part of the Securities and Exchange Commission's general overhaul of Form N-1A in 1998. 12. Comment: The Fund should adopt a non-fundamental policy stating that the Fund may not purchase securities when outstanding borrowings exceed 5% of the Fund's total assets, or disclosure with respect to leverage should be added to the SAI. Response: After review of the applicable provisions of the 1940 Act and Form N-1A, we do not believe the Fund is required to adopt the non-fundamental policy stated above. In addition, the Fund's investment adviser has no current intention to leverage the Fund's portfolio and, therefore, we have not included disclosure regarding leverage in the Fund's SAI. We believe this approach is consistent with guidance under Form N-1A, which does not require disclosure of "negative" investment strategies. 13. Comment: The Fund should adopt a policy that prohibits the Fund from pledging its assets except to secure permitted borrowings. Response: After review of the applicable provisions of the 1940 Act and Form N-1A, we do not believe the Fund is currently required to adopt the non-fundamental policy stated above. We note that the investment policy stated above was previously imposed on mutual funds by the administrators of securities laws in various states. However, the National Securities Markets Improvement Act of 1996 preempted substantive state regulation of mutual funds and the sale of their shares. 14. Comment: With respect to the information furnished in response to Item 12(a)(1) of Form N-1A (the management information), please provide this information in chart format rather than in paragraph form. Response: We have reviewed the requirements of Form N-1A and believe that our presentation of the management information required by Item 12(a)(1) is consistent with its requirements. 15. Comment: Please revise the discussion in the SAI regarding the Board's consideration in approving the advisory agreement to clarify which portions of the discussion specifically relate to the Board's consideration of the advisory agreement between the investment adviser and the Trust with respect to the Fund as compared to the Board's consideration of the annual approval of the advisory agreement which took place in February 2004. Response: In response to your comments, we have revised this disclosure. 16. Comment: In the charts relating to "Board Compensation" and "Fund Shares Owned by Board Members," please distinguish the independent trustees from the interested trustees. Response: We have revised each chart so that information relating to independent trustees and interested trustees appears in separate sections. 17. Comment: The following sentences are included in the second paragraph of the "Brokerage Selection" Section of the SAI: "In addition to agency transactions, the Adviser may receive brokerage and research services in connection with certain riskless principal transactions, in accordance with applicable SEC guidance. Brokerage and research services include . . . (3) effecting securities transactions and performing functions incidental thereto (e.g., clearance, settlement, and custody)." Please explain how part (3) of the sentence above is consistent with new Rule 12b-1(h) of the 1940 Act. Response: Part (3) of the sentence you referenced is taken directly from Section 28(e)(3)(C) of the Securities Exchange Act of 1934, as amended, which defines "brokerage and research services." Rule 12b-1(h)(1) prohibits mutual funds from compensating a broker-dealer for promoting or selling fund shares by directing brokerage transactions to that broker. The Fund's adviser has represented that it does not allocate Fund brokerage transactions to broker-dealers that sell Fund shares. 18. Comment: Under what authority has the Fund included its investment adviser's proxy voting policy as an Appendix to the SAI? Item 12(f) of Form N-1A requires the adviser's proxy voting policy to be part of the SAI, therefore, please include the policy in the SAI. Response: The appendix is part of the SAI. We note that, for ease of reference, the location of the adviser's proxy voting policy is included in the SAI's table of contents. PART C 1. Comment: We note that several of the exhibits listed in Part C were not filed with the Rule 485(a) filing, in particular, the Item 22(i) legal opinion, the amended schedule to the Trust's advisory agreement reflecting the addition of the Fund, the contractual fee waiver agreement entered into between the adviser and the Trust with respect to the Fund and, if applicable, other documents that were amended due to the creation of the Fund. Response: As discussed with the staff, the Fund will file a Rule 485(b) post-effective amendment to its registration statement for the purpose of filing these documents as exhibits to its registration statement. I hereby acknowledge on behalf of the Trust that: (i) the Trust is responsible for the adequacy and accuracy of the disclosure in its registration statement; (ii) SEC staff comments or changes to disclosure in response to staff comments in the registration statement reviewed by the staff do not foreclose the SEC from taking any action with respect to the registration statement; and (iii) the Trust may not assert SEC staff comments as a defense in any proceeding initiated by the SEC or any person under the federal securities laws of the United States. Please do not hesitate to call the undersigned at 215.963.5598 with any questions or comments. Very truly yours, /s/ Sean Graber Sean Graber AMENDED SCHEDULE A DATED NOVEMBER 3, 2004 TO THE INVESTMENT ADVISORY AGREEMENT DATED FEBRUARY 27, 1998 BETWEEN OAK ASSOCIATES FUNDS AND OAK ASSOCIATES, LTD. Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual rate as follows: Portfolio Fee (in basis points) - --------- --------------------- White Oak Growth Stock Fund .74 Pin Oak Aggressive Stock Fund .74 Red Oak Select Technology Fund .74 Black Oak Emerging Technology Fund .74 Live Oak Health Sciences Fund .74 Rock Oak Core Growth Fund .74 CONTRACTUAL FEE WAIVER AGREEMENT AGREEMENT made this 31st day of December, 2004, by and between Oak Associates Funds, a Massachusetts business trust (the "Trust"), and Oak Associates, ltd. (the "Adviser") (together, the "Parties"). The Adviser hereby agrees to waive its fee and/or reimburse expenses to the extent necessary to limit the total operating expenses at the following level for a period of one year from the date of this Agreement for the following fund: Fund Total Operating Expenses - ---- ------------------------ Rock Oak Core Growth Fund 1.15% This agreement embodies the entire agreement of the Parties relating to the subject matter hereof. This Agreement supercedes all prior agreements and understandings, and all rights and obligations thereunder are hereby canceled and terminated. No amendment or modification of this Agreement will be valid or binding unless it is in writing and signed by the Parties. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the day and year first written above. Oak Associates Funds Oak Associates, ltd. By: /s/ William White By: /s/ James D. Oelschlager - ---------------------- ---------------------------- Title President Title: Chairman and CIO - ---------------------- ---------------------------- Oak Associates, ltd.