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May 2018

Market Update

(all values as of 04.30.2025)

Stock Indices:

Dow Jones	40,669
S&P 500	5,569
Nasdaq	17,446

Bond Sector Yields:

2 Yr Treasury	3.60%
10 Yr Treasury	4.17%
10 Yr Municipal	3.36%
High Yield	7.69%

YTD Market Returns:

Dow Jones	-4.41%
S&P 500	-5.31%
Nasdaq	-9.65%
MSCI-EAFE	12.00%
MSCI-Europe	15.70%
MSCI-Pacific	5.80%
MSCI-Emg Mkt	4.40%

US Agg Bond	3.18%
US Corp Bond	2.27%
US Gov’t Bond	3.13%

Commodity Prices:

Gold	3,298
Silver	32.78
Oil (WTI)	58.22

Currencies:

Dollar / Euro	1.13
Dollar / Pound	1.34
Yen / Dollar	142.35
Canadian /Dollar	0.72

Fund Overview

Equities gained ground in May, but the distribution was uneven—about 1% for the Dow, 2% for the S&P 500, and 5% for the NASDAQ Composite. The Ocean Park funds outperformed all the major indices for the month, and continue to outperform for the year to date. Semiconductor stocks surged again, with Micron in particular generating outsized returns. Health care and consumer stocks also rallied strongly. Our results continue to compare favorably to the HFRI Equity Hedge (Total) Index, which was up 1.62% for the month and 2.35% for the year to date.

During May, we added to positions in the health care sector, and reduced positions in the producer durables and consumer discretionary and service sectors. We finished the month at about 90% net long, down from about 91% at the end of April.

A schedule showing the performance of the Investors Fund is included below, along with our Asset Allocation Chart. Daily updates on our activity are available on our Results Line, at
310-281-8577, and current information is also maintained on our website at www.oceanparkcapital.com. To gain access to the site enter password opcap.

*These results are pro forma. Actual results for most investors will vary. See additional disclosures on page 4. Past performance does not guarantee future results.

Equity Overview - May 2018

Equity Overview

Continuing the trend, small cap stocks outperformed large cap stocks in May, and growth outperformed value. Technology was strong and financials and utilities were weak. Notwithstanding the headlines on tariffs and trade wars, volatility declined significantly.

First quarter earnings continued to beat expectations at a torrid pace. With 93% of S&P 500 companies reporting, the blended growth rate was 24.5%, much higher than the 11.3% projected at the start of the quarter and even higher than the extraordinary rate of 23.2% at the end of April. As we suggested last month, it now appears that the first quarter of 2018 will generate the highest growth rate since Factset began tracking this statistic in 2008. In addition, 78% of companies beat consensus earnings expectations and 77% beat consensus revenue expectations, both numbers higher than the 1-year and 5-year averages.

Macro Overview - May 2018

Macro Overview

The trade war became real in May as the U.S. implemented a 25% tariff at month’s end on steel products and a 10% tariff on aluminum products. Canada responded immediately with countervailing tariffs on U.S. steel and aluminum. Tit-for tat tariffs between the U.S. and China are pending. Analysts are in agreement that a full-scale international trade war would significantly impact economic growth. But markets have not yet accepted that outcome as inevitable, reflecting the hope that the conflict will ultimately be resolved before too much damage accrues.

Other economic news in May was mostly positive. Unemployment fell to 3.8%, the lowest rate in 18 years, and hourly wages rose. Consumer spending and consumer confidence were strong. Manufacturing continued to expand. The Fed left short-term interest rates unchanged. Housing, however, was weak, as mortgage rates remained at their highest levels in recent years.

Additional Disclosures - May 2018

Additional Disclosures

Performance data for OPI reflect the reinvestment of dividends and other earnings on the fund’s assets. Performance data for the major indices reflect only changes in the value of those indices, and would be higher if dividends were included. However, the index data do not reflect fees that would be paid to index fund managers and transaction costs that would be incurred when their component stocks are bought or sold, while OPI’s data do reflect quarterly fees and expenses incurred by the fund. The information provided is believed to be reliable, but its accuracy or completeness is not warranted. This material is not intended as an offer or solicitation for the purchase or sale of any stock, bond, mutual fund, or any other financial instrument. The views and strategies discussed herein may not be appropriate and/or suitable for all investors. This material is meant solely for informational purposes, and is not intended to suffice as any type of accounting, legal, tax, or estate planning advice. Any and all forecasts mentioned are for illustrative purposes only and should not be interpreted as investment recommendations.