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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 811-09000
---------------------------------------------
Oak Value Trust
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
3100 Tower Boulevard, Suite 700 Durham, North Carolina 27707
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Larry D. Coats, Jr.
Oak Value Capital Management, Inc. 3100 Tower Blvd., Suite 700 Durham, NC 27707
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (919) 419-1900
----------------------------
Date of fiscal year end: June 30, 2004
-----------------------------
Date of reporting period: June 30, 2004
-----------------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL REPORT
JUNE 30, 2004
[GRAPHIC OMITTED]
OAK VALUE FUND
WWW.OAKVALUEFUND.COM
LETTER TO SHAREHOLDERS August 2004
================================================================================
Dear Fellow Oak Value Fund
Shareholders:
================================================================================
AVERAGE ANNUAL
RETURNS FOR PERIODS ENDED 6/30/04
OAK VALUE S&P 500
FUND INDEX
- --------------------------------------------------------------------------------
One Year + 13.5% + 19.1%
Three Years - 1.1% - 0.7%
Five Years + 1.9% - 2.2%
Ten Years + 12.4% + 11.8%
Inception (1/18/93) + 12.4% + 10.8%
Average annualized return shown for all periods longer than one year. Returns do
not reflect the deduction of taxes that a taxable shareholder would pay on Fund
distributions or the sale of Fund shares.
================================================================================
The operating information and results for the Oak Value Fund (the "Fund") for
its fiscal year ended June 30, 2004 are presented in the pages that follow. Over
the shorter time frames, the Fund has recently trailed its performance
benchmark, while maintaining a lead for periods longer than five years. During
the most recent fiscal year, the Fund achieved a solid gain in its net asset
value per share in the absolute, though as indicated the percentage increase
trailed that of the S&P 500 Index over the same time period.
We remind shareholders that we attribute no particular significance to any
particular twelve month period, a horizon that is decidedly shorter than the
multi-year framework in which we evaluate existing and potential investments.
Nonetheless, in the MANAGEMENT DISCUSSION AND ANALYSIS that follows this letter,
we provide a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its latest fiscal year.
Whatever is happening - good or bad - to reported performance, driven by changes
in stock prices, we remain focused on making our best evaluation of the
intrinsic value of the underlying businesses of portfolio companies. It is based
on this assessment that we make portfolio judgments in order to best shepherd
the capital entrusted to us by Fund shareholders.
The stock market began its most recent rebound and posted its strongest three
months of 2003 during the second calendar quarter of last year, just before the
start of the Fund's fiscal year covered in this report. Since that time,
persistently high broad market valuations, in general, have made finding
actionable new ideas more challenging. In fact, the sell activity for the past
year largely reflects the fact that a few Fund portfolio positions have reached
our price targets. At the same time, we have added three companies to the Fund
portfolio. Notably, overall portfolio turnover remains well below industry
norms.
It remains our view that the broad market continues to provide both its share of
challenges and a reasonable helping of opportunities. Several sizable Fund
portfolio commitments (such as cable, media, beverages, and insurance) have in
our view yet to see the intrinsic values inherent in their underlying businesses
accurately reflected in their stock prices. Therefore, we remain optimistic
about prospective long term results, if stock prices broadly track portfolio
companies' business progress over time. We of course provide no guarantees with
respect to prospective returns.
1
We continue to advise Fund shareholders to maintain both modest return
expectations and cautious optimism about the Fund's investment portfolio.
Particularly over shorter time horizons, we often note that "whatever can
happen, will happen." Fund and equity market returns will remain volatile,
likely including periods of negative performance. On average and over the long
term, we expect a commitment to proven investment principles to continue to
yield capital appreciation.
We would like to take this opportunity to thank you for your continued interest
and Fund share ownership, and welcome your questions and comments. Please feel
free to write us at 3100 Tower Boulevard, Suite 700, Durham, NC 27707, or email
to info@oakvalue.com. We encourage shareholders to visit the Fund's website at
www.oakvaluefund.com for various periodic commentaries that we make available,
such as the Investment Adviser's Review and our most recently published comments
on Berkshire Hathaway, "CASH HAPPENS: THE EMERGENCE OF `MEGAREALBUCK$' AT
BERKSHIRE HATHAWAY."
We are appreciative of the commitment from our long term shareholders and hope
to reward that patience over time with returns that are both respectable in the
absolute and competitive with alternatives.
Oak Value Fund Co-Managers,
/s/ David R. Carr, Jr. /s/ Larry D. Coats, Jr. /s/ Matthew F. Sauer
David R. Carr, Jr. Larry D. Coats, Jr. Matthew F. Sauer
Co-Manager Co-Manager Co-Manager
NOTE: Please see the IMPORTANT INFORMATION section of this report below for
disclosure that applies to both this letter and the Management Discussion and
Analysis that follows.
2
IMPORTANT INFORMATION
THIS MANAGEMENT DISCUSSION AND ANALYSIS SEEKS TO DESCRIBE SOME OF THE OAK VALUE
FUND (THE "FUND") MANAGERS' CURRENT VIEWS OF THE MARKET THAT SHAREHOLDERS MAY
FIND RELEVANT AND TO PROVIDE A DISCUSSION OF THE MARKET CONDITIONS AND
INVESTMENT STRATEGIES THAT SIGNIFICANTLY AFFECTED THE FUND'S PERFORMANCE DURING
ITS LATEST FISCAL YEAR.
ANY LISTING OR DISCUSSION OF SPECIFIC SECURITIES IS INTENDED TO HELP
SHAREHOLDERS UNDERSTAND THE FUND'S INVESTMENT STRATEGIES AND/OR FACTORS THAT
INFLUENCED THE FUND'S INVESTMENT PERFORMANCE, AND SHOULD NOT BE REGARDED AS A
RECOMMENDATION OF ANY SECURITY. WE BELIEVE WE HAVE A REASONABLE BASIS FOR ANY
OPINIONS EXPRESSED, THOUGH ACTUAL RESULTS MAY DIFFER, SOMETIMES SIGNIFICANTLY
SO, FROM THOSE WE EXPECT AND EXPRESS. STATEMENTS REFERRING TO FUTURE ACTIONS OR
EVENTS, SUCH AS THE FUTURE FINANCIAL PERFORMANCE OR ONGOING BUSINESS STRATEGIES
OF THE COMPANIES IN WHICH THE FUND INVESTS, ARE BASED ON THE CURRENT
EXPECTATIONS AND PROJECTIONS ABOUT FUTURE EVENTS PROVIDED BY VARIOUS SOURCES,
INCLUDING COMPANY MANAGEMENT. THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE, AND ACTUAL EVENTS AND RESULTS MAY DIFFER MATERIALLY FROM THOSE
DISCUSSED HEREIN.
ANY OPINIONS AND VIEWS EXPRESSED RELATED TO THE PROSPECTS OF ANY INDIVIDUAL FUND
PORTFOLIO HOLDINGS OR GROUPING THEREOF OR OF THE FUND ITSELF ARE "FORWARD
LOOKING STATEMENTS" WHICH MAY OR MAY NOT PROVE TO BE ACCURATE OVER THE LONG TERM
WHEN VIEWED FROM THE PERSPECTIVE OF HINDSIGHT. FORWARD LOOKING STATEMENTS CAN BE
IDENTIFIED BY WORDS, PHRASES, AND EXPRESSIONS SUCH AS "BELIEVE," "EXPECT,"
"ANTICIPATE," "IN OUR VIEW," "IN OUR OPINION," OR SIMILAR TERMINOLOGY WHEN
DISCUSSING PROSPECTS FOR PARTICULAR FUND PORTFOLIO COMPANIES OR GROUPINGS OF
COMPANIES, AND/OR OF THE FUND ITSELF. WE CANNOT ASSURE FUTURE RESULTS OR
PERFORMANCE. YOU SHOULD NOT PLACE UNDUE RELIANCE ON FORWARD LOOKING STATEMENTS,
WHICH ARE EFFECTIVE ONLY AS OF THE DATE OF THIS REPORT. WE RECOGNIZE NO
OBLIGATION TO UPDATE OR ALTER SUCH FORWARD LOOKING STATEMENTS, WHETHER AS A
RESULT OF CHANGES IN OUR OPINION OR ANALYSIS, SUBSEQUENT INFORMATION, FUTURE
EVENTS, OR OTHER CIRCUMSTANCES.
ANY DISPLAYS DETAILING A SUMMARY OF HOLDINGS (E.G., TOP HOLDINGS, PURCHASES AND
SALES, BUSINESS CATEGORY DISTRIBUTION, ETC.) ARE BASED ON THE FUND'S HOLDINGS ON
JUNE 30, 2004 OR HELD DURING THE FISCAL YEAR ENDED JUNE 30, 2004. REFERENCES TO
SECURITIES PURCHASED OR HELD ARE ONLY AS OF THE DATE OF THIS COMMUNICATION TO
SHAREHOLDERS. ALTHOUGH THE FUND'S INVESTMENT ADVISER FOCUSES ON LONG-TERM
INVESTMENTS, HOLDINGS ARE SUBJECT TO CHANGE.
THIS LETTER TO SHAREHOLDERS AND MANAGEMENT DISCUSSION AND ANALYSIS MAY INCLUDE
STATISTICAL AND OTHER FACTUAL INFORMATION OBTAINED FROM THIRD-PARTY SOURCES. WE
BELIEVE THOSE SOURCES TO BE ACCURATE AND RELIABLE; HOWEVER, WE ARE NOT
RESPONSIBLE FOR ERRORS BY THEM ON WHICH WE REASONABLY RELY. IN ADDITION, OUR
COMMENTS ARE INFLUENCED BY OUR ANALYSIS OF INFORMATION FROM A WIDE VARIETY OF
SOURCES AND MAY CONTAIN SYNTHESES, SYNOPSES, OR EXCERPTS OF IDEAS FROM WRITTEN
OR ORAL VIEWPOINTS PROVIDED TO US BY INVESTMENT, INDUSTRY, PRESS AND OTHER
PUBLIC SOURCES ABOUT VARIOUS ECONOMIC, POLITICAL, CENTRAL BANK, AND OTHER
SUSPECTED INFLUENCES ON INVESTMENT MARKETS.
3
ALTHOUGH OUR COMMENTS FOCUS ON THE MOST RECENT FISCAL YEAR, WE USE THIS
PERSPECTIVE ONLY BECAUSE IT REFLECTS INDUSTRY CONVENTION AND REGULATORY
EXPECTATIONS AND REQUIREMENTS. THE FUND AND ITS INVESTMENT ADVISER DO NOT
SUBSCRIBE TO THE NOTION THAT TWELVE-MONTH PERIODS OR OTHER SHORT-TERM PERIODS
ARE EITHER APPROPRIATE FOR MAKING JUDGMENTS OR USEFUL IN SETTING LONG-TERM
EXPECTATIONS FOR RETURNS FROM OUR, OR ANY OTHER, INVESTMENT STRATEGY. THE FUND
AND ITS INVESTMENT ADVISER DO NOT SUBSCRIBE TO ANY PARTICULAR VIEWPOINT ABOUT
CAUSES AND EFFECTS OF EVENTS IN THE BROAD CAPITAL MARKETS, OTHER THAN THAT THEY
ARE NOT PREDICTABLE IN ADVANCE. SPECIFICALLY, NOTHING CONTAINED IN THE LETTER TO
SHAREHOLDERS OR MANAGEMENT DISCUSSION AND ANALYSIS SHOULD BE CONSTRUED AS A
FORECAST OF OVERALL MARKET MOVEMENTS, EITHER IN THE SHORT OR LONG TERM.
ANY HEADINGS, TITLES, SECTION DIVIDERS, QUOTATIONS, OR OTHER DEVICES USED HEREIN
ARE PROVIDED FOR THE CONVENIENCE OF THE READER AND PURPOSES OF STYLE. THEY ARE
NOT REQUIRED ELEMENTS OF THE PRESENTATION AND MAY OR MAY NOT BE APPLIED
IDENTICALLY IN SIMILAR PUBLICATIONS OVER TIME. ANY REFERENCES AND/OR HYPERLINKS
TO OTHER SOURCE MATERIAL OR WEB SITES CONTAINED IN THIS MATERIAL ARE PROVIDED
FOR YOUR CONVENIENCE AND INFORMATION. WE DO NOT ASSUME ANY RESPONSIBILITY OR
LIABILITY FOR ANY INFORMATION ACCESSED VIA LINKS TO OR REFERENCED IN THIRD PARTY
LOCATIONS OR WEB SITES. THE EXISTENCE OF THESE LINKS AND REFERENCES IS NOT AN
ENDORSEMENT, APPROVAL OR VERIFICATION BY US OF ANY CONTENT AVAILABLE ON ANY
THIRD PARTY SITE. IN PROVIDING ACCESS TO OTHER WEB SITES, WE ARE NOT
RECOMMENDING THE PURCHASE OR SALE OF THE STOCK ISSUED BY ANY COMPANY, NOR ARE WE
ENDORSING PRODUCTS OR SERVICES MADE AVAILABLE BY THE SPONSOR OF ANY THIRD PARTY
WEB SITE.
WE DO NOT ATTEMPT TO ADDRESS SPECIFICALLY HOW INDIVIDUAL SHAREHOLDERS HAVE
FARED, SINCE SHAREHOLDERS ALSO RECEIVE ACCOUNT STATEMENTS SHOWING THEIR HOLDINGS
AND TRANSACTIONS. INFORMATION CONCERNING THE PERFORMANCE OF THE FUND AND OUR
RECOMMENDATIONS OVER THE LAST YEAR ARE AVAILABLE UPON REQUEST. YOU SHOULD NOT
ASSUME THAT FUTURE RECOMMENDATIONS WILL BE AS PROFITABLE OR WILL EQUAL THE
PERFORMANCE OF PAST RECOMMENDATIONS.
PAST PERFORMANCE IS NO INDICATION OF FUTURE PERFORMANCE. ANY PERFORMANCE DATA
QUOTED REPRESENTS PAST PERFORMANCE AND THE INVESTMENT RETURN AND PRINCIPAL VALUE
OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE HIGHER OR LOWER THAN PERFORMANCE QUOTED ABOVE. PERFORMANCE
DATA IS UPDATED MONTHLY AND IS AVAILABLE ON THE FUND'S WEBSITE AT
WWW.OAKVALUEFUND.COM.
AN INVESTOR SHOULD CONSIDER THE INVESTMENT OBJECTIVES, STRATEGIES, RISKS,
CHARGES AND EXPENSES OF THE FUND BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS
AND OTHER IMPORTANT INFORMATION ABOUT THE FUND. TO OBTAIN A COPY OF THE OAK
VALUE FUND'S PROSPECTUS PLEASE CALL 1-800-622-2474 OR DOWNLOAD A COPY AT
WWW.OAKVALUEFUND.COM. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
OAK VALUE FUND IS DISTRIBUTED BY ULTIMUS FUND DISTRIBUTORS, LLC.
4
MANAGEMENT DISCUSSION AND ANALYSIS
================================================================================
The Fund trailed its performance benchmark, the S&P 500 Index, by over 5% for
the fiscal year ended June 30. Though they earned positive absolute results in
their respective groupings, several of the Fund's individual holdings in the
Consumer Discretionary and Financials sectors were the primary source of
performance shortfall relative to the benchmark for the fiscal year. The Fund's
zero exposure in the Energy and Materials sectors, which performed positively
for the S&P 500 Index, also held relative performance back.
Though such matters are always subject to some level of interpretation, we
believe the primary factors impacting market conditions during the Fund's most
recent fiscal year were a handful of somewhat related items.
o Steady demand for, and concerns about supplies of, energy contributed to
rising oil prices;
o while signs of global economic growth and associated price increases in
other commodities also began to take center stage;
o and the combination of these two factors brought inflation back into focus
as a concern of investors and policy makers.
The United States Federal Reserve brought these items into bold relief,
indicating in late calendar 2003 that it would shift monetary policy toward a
disposition to higher interest rates to check inflation. Its rhetorical signals
having been anticipated for months by the markets, the Fed did finally in fact
increase its target Fed Funds rate by 0.25% on June 30, the final day of the
Fund's fiscal year. Interestingly, both the Fund and the overall stock market
not only withstood but posted respectable results despite this climate of
concern about rising inflation and interest rates, items that have not
historically been good news for owners of financial assets.
A meaningful portion of the Fund's fiscal year performance shortfall relative to
the benchmark is related to the Fund's absence of representation in the Energy
and Materials sectors (and to a smaller degree Utilities). Simply earning
benchmark performance in these areas would have moved the Fund's performance
closer to that of the overall market. Given the inflation backdrop over the past
year, particularly in oil prices, positive results in these market sectors are
unsurprising. There will be various interim periods when these or other market
sectors perform well, a fact which neither distresses us nor distracts us from
our long term approach. Though lack of investment in these areas were a
predictable short term drag on performance for the fiscal year, we believe long
term returns will be superior in businesses that maintain more proprietary
defensible competitive advantages.
Those businesses which are subject to the vagaries of the price of
widely-available commodities they do not control, or are otherwise negatively
impacted by competition are not, in our view, appropriate for allocations
5
of the Fund shareholders' capital. In the same way, an under-representation in
the Information Technology sector was a performance drag during the fiscal year.
Ample returns were available from the tech sector, which we generally believe in
aggregate is less predictable in terms of generating long term returns for
shareholders. Our viewpoint that competitive advantage is the best predictor of
long term results clearly cost the Fund some level of relative return in
comparison to the market during the fiscal year. It nonetheless remains our
================================================================================
PURCHASE/SALE ACTIVITY - TWELVE MONTHS ENDED JUNE 30, 2004
================================================================================
POSITION
(ADDED/ELIMINATED) PRIMARY BUSINESS S&P SECTOR
- --------------------------------------------------------------------------------
PURCHASED
- --------------------------------------------------------------------------------
AutoZone Retail Automobile Parts Consumer
(2/04) and Accessories Discretionary
- --------------------------------------------------------------------------------
Cadbury Schweppes
(11/03) Soft Drinks, Candy & Gum Consumer Staples
- --------------------------------------------------------------------------------
Cox Communications Cable TV and Consumer
(9/03) Communication Service Discretionary
- --------------------------------------------------------------------------------
SOLD
- --------------------------------------------------------------------------------
Charter Communications Entertainment & Consumer
(2/04) Information Services Discretionary
- --------------------------------------------------------------------------------
Diebold Electronic Transaction Information
(9/03) Machinery Technology
- --------------------------------------------------------------------------------
Interpublic Group Advertising and Consumer
(1/04) Marketing Services Discretionary
- --------------------------------------------------------------------------------
Medco Health Systems Pharmacy Benefits
(8/03) Management Heath Care
- --------------------------------------------------------------------------------
Walt Disney Entertainment & Information Consumer
(2/04) /Media Discretionary
- --------------------------------------------------------------------------------
Waters Analytical Consumer
(11/03) Instruments Discretionary
- --------------------------------------------------------------------------------
view that it is the best course for us to navigate to achieve above average
results over time.
While persistently high valuations in the overall market represent a challenge
to the value-conscious investor, we believe we have found several high quality
companies as replacement opportunities for the few portfolio sales we
implemented during the fiscal year. Overall, the Fund's level of portfolio
turnover has remained well below industry norms for many years (see the last
entry on the Table on Page 12 for details).
The Fund's portfolio holdings are generally concentrated in the Consumer
Discretionary and Financials sectors, with thirteen of twenty-two positions held
at June 30, 2004 classified in those broad categories. These can be further
broken down into various specific industries and sub-industries within these
larger general groupings, including cable television, property/ casualty
insurance, publishing, entertainment, financial guarantee insurance, and
specialty retailers serving divergent consumer groups in selected product
categories.
6
Viewed in this framework, we note various Fund investments in cable television,
media & entertainment companies, and one new retailer (all
=======================================================================================
TOP TEN HOLDINGS AS OF JUNE 30, 2004
=======================================================================================
COMPANY PRIMARY BUSINESS S&P SECTOR
=======================================================================================
Ambac Financial Group Financial Guarantee Insurance Financials
- ---------------------------------------------------------------------------------------
Berkshire Hathaway Reinsurance & Capital Allocation Financials
- ---------------------------------------------------------------------------------------
Cadbury Schweppes Beverages & Confectionery Distribution Consumer Discretionary
- ---------------------------------------------------------------------------------------
Cendant Travel, Hospitality & Mortgage Finance Industrials
- ---------------------------------------------------------------------------------------
Comcast Entertainment & Information Services Consumer Discretionary
- ---------------------------------------------------------------------------------------
Constellation Brands Wine, Beer & Spirits Consumer Staples
- ---------------------------------------------------------------------------------------
E.W. Scripps Entertainment & Information/Media Consumer Discretionary
- ---------------------------------------------------------------------------------------
Time Warner Entertainment & Information/Media Consumer Discretionary
- ---------------------------------------------------------------------------------------
XL Capital Property & Casualty Insurance Financials
- ---------------------------------------------------------------------------------------
Zale Fine Jewelry Retailing Consumer Discretionary
- ---------------------------------------------------------------------------------------
grouped in the Consumer Discretionary sector relative to the S&P 500) also
combined to account for a sizable percentage of the most recent fiscal year's
shortfall compared to that benchmark. In the cable area, there has been a lot of
news/noise in the marketplace with respect to market share, product pricing, and
features in the consumer communications and entertainment market. Largely as a
result of this market uncertainty, we have yet to be rewarded in any meaningful
way for this portfolio commitment.
In a broad sense, we remain conscious of the risk that rising interest rates
represent to common stock owners, and we allow for it in our analyses and
valuation calculations. At the decision making level however, portfolio actions
(buys and sells and the resulting portfolio construction) remain grounded in our
independent evaluation of individual companies rather than based on a top-down
"view" of the portfolio or the market as a whole. We have learned through
experience that patience is often required for investment success to follow suit
even when business progress is evident, as the two only occasionally move in
lockstep.
We remain confident that the long term competitive positioning of the cable
operators, retailers, and other businesses we have selected for the Fund
portfolio remains solid, and we believe that their operational and financial
success in the marketplace will ultimately follow. Whatever the short-term
performance outcome, we also believe that our concentration on competitive
analysis for portfolio companies remains the appropriate focus to guide long
term allocation of capital in the Fund.
7
OAK VALUE FUND
PERFORMANCE INFORMATION (UNAUDITED)
=======================================================================================
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT
IN THE OAK VALUE FUND AND STANDARD & POOR'S 500 INDEX
[GRAPHIC OMITTED]
S&P 500 INDEX: OAK VALUE FUND:
--------------- ---------------
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
---- ------ ------- ---- ------ -------
06/30/94 $ 10,000 06/30/94 $ 10,000
12/31/94 4.09% 10,409 12/31/94 2.07% 10,207
06/30/95 20.21% 12,513 06/30/95 10.92% 11,321
12/31/95 14.45% 14,321 12/31/95 16.15% 13,150
06/30/96 10.10% 15,766 06/30/96 11.10% 14,609
12/31/96 11.68% 17,609 12/31/96 16.10% 16,961
06/30/97 20.61% 21,237 06/30/97 20.24% 20,394
12/31/97 10.58% 23,483 12/31/97 14.52% 23,356
06/30/98 17.71% 27,643 06/30/98 17.49% 27,441
12/31/98 9.23% 30,195 12/31/98 1.22% 27,776
06/30/99 12.38% 33,933 06/30/99 5.51% 29,307
12/31/99 7.71% 36,548 12/31/99 -8.18% 26,908
06/30/00 -0.42% 36,393 06/30/00 0.30% 26,989
12/31/00 -8.72% 33,221 12/31/00 17.82% 31,797
06/30/01 -6.70% 30,996 06/30/01 4.67% 33,284
12/31/01 -5.56% 29,272 12/31/01 -4.92% 31,648
06/30/02 -13.16% 25,420 06/30/02 -12.51% 27,689
12/31/02 -10.30% 22,803 12/31/02 -13.52% 23,945
06/30/03 11.76% 25,484 06/30/03 18.70% 28,422
12/31/03 15.14% 29,344 12/31/03 11.30% 31,633
06/30/04 3.44% 30,354 06/30/04 1.93% 32,245
Past performance is not predictive of future performance.
- -----------------------------------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS(A)
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE SINCE
CALENDAR CALENDAR CALENDAR CALENDAR CALENDAR CALENDAR CALENDAR CALENDAR CALENDAR CALENDAR 2004 INCEPTION*
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 (as of 6/30/04)(as of 6/30/04)
- -----------------------------------------------------------------------------------------------------------------------------------
Oak Value Fund -1.54% 28.89% 28.99% 37.70% 18.93% -3.12% 18.17% -0.47% -24.34% 32.11% 1.93%(B) 279.76%(B)
S&P 500 Index 1.32% 37.58% 22.96% 33.36% 28.58% 21.04% -9.12% -11.90% -22.10% 28.69% 3.44%(B) 224.11%(B)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(A)
- -----------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIODS ENDED JUNE 30, 2004
SINCE
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS INCEPTION*
- -----------------------------------------------------------------------------------------------------------------------------------
Oak Value Fund ............................... 13.45% -1.05% 1.93% 12.38% 12.36%
S&P 500 Index ................................ 19.11% -0.69% -2.20% 11.83% 10.81%
- -----------------------------------------------------------------------------------------------------------------------------------
* Inception date of the Oak Value Fund was January 18, 1993.
(A) The returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption
of Fund shares.
(B) Not annualized.
8
OAK VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004
================================================================================
ASSETS
Investments in securities:
At cost .................................................... $ 191,057,241
==============
At market value (Note 1) ................................... $ 261,544,835
Receivable for capital shares sold ............................ 652,212
Dividends receivable .......................................... 173,665
Other assets .................................................. 36,021
--------------
TOTAL ASSETS ............................................... 262,406,733
--------------
LIABILITIES
Payable for securities purchased .............................. 2,594,060
Payable for capital shares redeemed ........................... 36,022
Accrued investment advisory fees (Note 3) ..................... 191,998
Payable to affiliate .......................................... 27,200
Other accrued expenses ........................................ 69,905
--------------
TOTAL LIABILITIES .......................................... 2,919,185
--------------
NET ASSETS .................................................... $ 259,487,548
==============
Net assets consist of:
Paid-in capital ............................................... $ 203,802,512
Accumulated net realized losses
from security transactions ................................. (14,802,558)
Net unrealized appreciation on investments .................... 70,487,594
--------------
Net assets .................................................... $ 259,487,548
==============
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) ........................ 8,940,899
==============
Net asset value, offering price and redemption price per
share (Note 1) ............................................. $ 29.02
==============
See accompanying notes to financial statements.
9
OAK VALUE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2004
================================================================================
INVESTMENT INCOME
Dividends ..................................................... $ 1,857,037
Interest ...................................................... 49,304
------------
TOTAL INVESTMENT INCOME .................................... 1,906,341
------------
EXPENSES
Investment advisory fees (Note 3) ............................. 2,346,203
Transfer agent and shareholder
services fees (Note 3) ..................................... 230,146
Administration fees (Note 3) .................................. 194,038
Trustees' fees and expenses ................................... 95,744
Postage and supplies .......................................... 92,215
Professional fees ............................................. 85,802
Fund accounting fees (Note 3) ................................. 50,161
Custodian fees ................................................ 28,190
Insurance expense ............................................. 21,013
Printing fees ................................................. 15,798
Registration fees ............................................. 13,953
Other expenses ................................................ 77,407
------------
TOTAL EXPENSES ............................................. 3,250,670
------------
NET INVESTMENT LOSS ........................................... (1,344,329)
------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions ................ (5,192,944)
Net change in unrealized appreciation/depreciation
on investments ............................................. 38,503,080
------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS .............. 33,310,136
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS .................... $ 31,965,807
============
See accompanying notes to financial statements.
10
OAK VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
YEAR YEAR
ENDED ENDED
JUNE 30, JUNE 30,
2004 2003
- --------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment loss .............................. $ (1,344,329) $ (762,312)
Net realized losses from security transactions ... (5,192,944) (8,599,400)
Net change in unrealized appreciation/depreciation
on investments ................................ 38,503,080 12,178,162
------------ ------------
Net increase in net assets from operations ....... 31,965,807 2,816,450
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ........................ 86,650,844 101,301,189
Proceeds from redemption fees collected
(Note 1) ...................................... 1,864 --
Cost of shares redeemed .......................... (131,712,530) (111,271,746)
------------ ------------
Net decrease in net assets from capital
share transactions ............................ (45,059,822) (9,970,557)
------------ ------------
NET DECREASE IN NET ASSETS ....................... (13,094,015) (7,154,107)
NET ASSETS:
Beginning of year ................................ 272,581,563 279,735,670
------------ ------------
End of year ...................................... $259,487,548 $272,581,563
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY:
Shares sold ...................................... 3,151,677 4,427,573
Shares redeemed .................................. (4,865,362) (5,000,009)
------------ ------------
Net decrease in shares outstanding ............... (1,713,685) (572,436)
Shares outstanding, beginning of year ............ 10,654,584 11,227,020
------------ ------------
Shares outstanding, end of year .................. 8,940,899 10,654,584
============ ============
See accompanying notes to financial statements.
11
OAK VALUE FUND
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
=====================================================================================================
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2004 2003 2002 2001 2000
- -----------------------------------------------------------------------------------------------------
Net asset value beginning of year ........ $ 25.58 $ 24.92 $ 30.74 $ 25.13 $ 27.96
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss) ............. (0.15) (0.07) (0.10) (0.03) 0.11
Net realized and unrealized gains
(losses) on investments ............ 3.59 0.73 (5.05) 5.88 (1.48)
-------- -------- -------- -------- --------
Total from investment operations ......... 3.44 0.66 (5.15) 5.85 (1.37)
-------- -------- -------- -------- --------
Less distributions:
From net investment income ............... -- -- -- -- (0.11)
From net realized gains from
security transactions ................. -- -- (0.67) (0.24) (1.30)
In excess of net realized gains .......... -- -- -- -- (0.05)
-------- -------- -------- -------- --------
Total distributions ...................... -- -- (0.67) (0.24) (1.46)
-------- -------- -------- -------- --------
Proceeds from redemption
fees collected ........................ 0.00(B) -- -- -- --
-------- -------- -------- -------- --------
Net asset value at end of year ........... $ 29.02 $ 25.58 $ 24.92 $ 30.74 $ 25.13
========= ========= ========= ========= =========
Total return ............................. 13.45% 2.65% (16.81%) 23.32% (7.91%)
========= ========= ========= ========= =========
Net assets at end of year (000's) ........ $ 259,488 272,582 279,736 $ 346,405 $ 280,833
========= ========= ========= ========= =========
Ratio of expenses to
average net assets (A) ................ 1.25% 1.36% 1.23% 1.22% 1.13%
Ratio of net investment income
(loss) to average net assets .......... (0.52%) (0.33%) (0.36%) (0.12%) 0.28%
Portfolio turnover rate .................. 24% 28% 63% 52% 22%
(A) Absent the use of earnings credits on cash balances, the ratios of expenses
to average net assets would have been 1.24%, 1.23% and 1.14% for the years
ended June 30, 2002, June 30, 2001, and June 30, 2000, respectively.
(B) Amount rounds to less than $0.01 per share.
See accompanying notes to financial statements.
12
OAK VALUE FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2004
================================================================================
SHARES COMMON STOCKS -- 99.3% VALUE
- --------------------------------------------------------------------------------
CONSUMER RELATED -- 25.9%
154,100 AutoZone, Inc. (a) ................................ $ 12,343,410
373,850 Cadbury Schweppes PLC - ADR ....................... 13,114,658
499,000 Constellation Brands, Inc. ........................
- Class A (A) ..................................... 18,527,870
243,150 Ross Stores, Inc. ................................. 6,506,694
613,750 Zale Corp. (a) .................................... 16,730,825
-------------
67,223,457
-------------
DIVERSIFIED -- 15.7%
115 Berkshire Hathaway, Inc. - Class A (A) ............ 10,229,250
5,413 Berkshire Hathaway, Inc. - Class B (A) ............ 15,995,415
595,150 Cendant Corp. ..................................... 14,569,272
-------------
40,793,937
-------------
FINANCE RELATED -- 12.1%
172,725 Ambac Financial Group, Inc. ....................... 12,684,924
189,600 Certegy, Inc. ..................................... 7,356,480
456,175 Equifax, Inc. ..................................... 11,290,331
-------------
31,331,735
-------------
HEALTHCARE -- 2.9%
158,605 Merck & Co., Inc. ................................. 7,533,738
-------------
INSURANCE -- 12.6%
202,975 AFLAC, Inc. ....................................... 8,283,410
200,000 PartnerRe, Ltd. ................................... 11,346,000
172,325 XL Capital Ltd. - Class A ......................... 13,003,644
-------------
32,633,054
-------------
MEDIA -- 14.9%
239,125 Dow Jones & Co., Inc. ............................. 10,784,538
128,985 E.W. Scripps Co. (The) - Class A .................. 13,543,425
812,425 Time Warner, Inc. (A) ............................. 14,282,431
-------------
38,610,394
TECHNOLOGY -- 5.9%
308,075 Hewlett-Packard Co. ............................... 6,500,383
375,700 IMS Health, Inc. .................................. 8,806,408
-------------
15,306,791
-------------
TELECOMMUNICATIONS -- 9.3%
551,975 Comcast Corp. - Class A Special (A) ............... 15,240,030
319,175 Cox Communications, Inc. - Class A (A) ............ 8,869,873
-------------
24,109,903
-------------
TOTAL COMMON STOCKS (Cost $187,055,415) $ 257,543,009
-------------
13
OAK VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
SHARES CASH EQUIVALENTS -- 1.5% VALUE
- --------------------------------------------------------------------------------
4,001,826 First American Government Obligations Fund - Class A
(Cost $4,001,826) ................................. $ 4,001,826
-------------
TOTAL INVESTMENTS AT VALUE -- 100.8%
(Cost $191,057,241) ............................... $ 261,544,835
LIABILITIES IN EXCESS OF OTHER ASSETS--(0.8)%...... ( 2,057,287)
-------------
NET ASSETS-- 100.0% ............................... $ 259,487,548
=============
(a) Non-income producing security.
See accompanying notes to financial statements.
14
OAK VALUE FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2004
================================================================================
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Oak Value Fund (the "Fund") is a diversified series of shares of Oak Value
Trust (the "Trust"). The Trust, registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
was organized as a Massachusetts business trust on March 3, 1995. The Fund began
operations on January 18, 1993 as a series of the Albemarle Investment Trust.
The Fund's investment objective is to seek capital appreciation primarily
through investments in equity securities, consisting of common and preferred
stocks and securities convertible into common stocks traded in domestic and
foreign markets.
The following is a summary of the Fund's significant accounting policies:
SECURITIES VALUATION -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the principal exchange where the
security is traded. Securities which are traded over-the-counter are valued at
the last sales price, if available, otherwise, at the last quoted bid price.
Securities traded on a national stock exchange are valued based upon the closing
price on the principal exchange where the security is traded. In the event that
market quotations are not readily available, securities are valued at fair value
as determined in accordance with procedures adopted in good faith by the Board
of Trustees. The fair value of securities with remaining maturities of 60 days
or less has been determined in good faith by the Board of Trustees to be
represented by amortized cost value, absent unusual circumstances.
SHARE VALUATION -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
of the Fund is equal to the net asset value per share, except that shares of the
Fund are subject to a redemption fee of 2.00% if redeemed within 90 days of the
date of purchase. For the period ended June 30, 2004, proceeds from redemption
fees totaled $1,864.
REPURCHASE AGREEMENTS -- The Fund may enter into repurchase agreements from
financial institutions such as banks and broker-dealers that the Trust's
investment adviser deems creditworthy under the guidelines approved by the Board
of Trustees, subject to the seller's agreement to repurchase such securities at
a mutually agreed-upon date and price. The repurchase price generally equals the
price paid by the Fund plus interest negotiated on the basis of current
short-term rates, which may be more or less than the rate on the underlying
portfolio securities. The seller, under a repurchase agreement, is required to
maintain the value of collateral held pursuant to the agreement at not less than
the repurchase price (including accrued interest).
INVESTMENT INCOME -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date.
DISTRIBUTIONS TO SHAREHOLDERS -- Dividends arising from net investment income,
if any, are declared and paid semi-annually to shareholders of the Fund. Net
realized short-term capital gains, if any, may be distributed throughout the
year and net realized long-term capital gains, if any, are distributed at least
once each year. The amount of distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations which may differ from accounting principles generally accepted in
the United States (GAAP). These "book/tax" differences are either temporary or
permanent in nature and are primarily due to losses deferred due to wash sales.
There were no distributions during the years ended June 30, 2004 and June 30,
2003.
15
SECURITY TRANSACTIONS -- Security transactions are accounted for on trade date.
Cost of securities sold is determined on a specific identification basis.
ESTIMATES -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States 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 income and expenses during the reporting period. Actual results could
differ from those estimates.
FEDERAL INCOME TAX -- It is the Fund's policy to comply with the special
provisions of Subchapter M of the Internal Revenue Code applicable to regulated
investment companies. As provided therein, in any fiscal year in which the Fund
so qualifies and distributes at least 90% of its taxable net income, the Fund
(but not the shareholders) will be relieved of federal income tax on the income
distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is computed on a tax basis for each item as of June
30, 2004:
- --------------------------------------------------------------------------------
Cost of portfolio investments ........................... $ 191,067,277
=============
Gross unrealized appreciation ........................... $ 75,344,282
Gross unrealized depreciation ........................... (4,866,724)
-------------
Net unrealized appreciation ............................. $ 70,477,558
-------------
Capital loss carryforwards .............................. (14,792,522)
-------------
Total distributable earnings ............................ $ 55,685,036
=============
- --------------------------------------------------------------------------------
As of June 30, 2004, the Fund had a capital loss carryforward of $14,792,522, of
which $1,025,305 expires June 30, 2011 and $13,767,217 expires June 30, 2012.
The capital loss carryforward may be utilized in future years to offset net
realized capital gains, if any, prior to distributing such gains to
shareholders.
RECLASSIFICATION OF CAPITAL ACCOUNTS - For the year ended June 30, 2004, the
Fund reclassified its net investment loss of $1,344,329 against paid-in-capital
on the Statement of Assets and Liabilities. This reclassification, the result of
permanent differences between the financial statement and income tax reporting
requirements, has no effect on the Fund's net asset value per share.
2. INVESTMENT TRANSACTIONS
During the year ended June 30, 2004, cost of purchases and proceeds from sales
and maturities of investment securities, excluding short-term investments,
amounted to $60,393,520 and $88,028,899, respectively.
3. TRANSACTIONS WITH AFFILIATES
The Fund's investments are managed by Oak Value Capital Management, Inc. (the
"Adviser") under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, the Fund pays the Adviser a fee, which is
computed and accrued daily and paid monthly, at an annual rate of 0.90% of the
Fund's average daily net assets. Certain trustees and officers of the Trust are
also officers of the Adviser or of Ultimus Fund Solutions, LLC ("Ultimus"), the
Fund's administrator, transfer agent and fund accounting services agent. Such
trustees and officers receive no direct payments or fees from the Trust for
serving as officers.
Under the terms of the Administration Agreement with the Trust, Ultimus provides
non-investment related statistical and research data, internal regulatory
compliance services and executive and administrative
16
services. Ultimus supervises the preparation of tax returns, reports to
shareholders of the Fund, reports to and filings with the Securities and
Exchange Commission and state securities commissions, and materials for meetings
of the Board of Trustees. For the performance of these services, the Fund pays
Ultimus a fee at the annual rate of .10% of the average value of its daily net
assets up to $50 million, .075% of such assets from $50 million to $200 million
and .05% of such assets in excess of $200 million, provided, however, that the
minimum fee is $2,000 per month.
Under the terms of the Transfer Agency Agreement with the Trust, Ultimus
maintains the records of each shareholder's account, answers shareholders'
inquiries concerning their accounts, processes purchases and redemptions of the
Fund's shares, acts as dividend and distribution disbursing agent and performs
other shareholder service functions. Ultimus receives from the Fund for its
services as transfer agent a fee payable monthly at an annual rate of $16 per
account, provided, however, that the minimum fee is $2,000 per month. In
addition, the Fund pays out-of-pocket expenses, including but not limited to,
postage and supplies. Accordingly, during the year ended June 30, 2004, Ultimus
was paid $77,024 for transfer agent fees. The Fund has entered into agreements
with service providers to provide record keeping, processing, shareholder
communications and other services to the Fund. These services would be provided
by the Fund if the shares were held in accounts registered directly with the
Fund's transfer agent. Accordingly, the Fund pays a fee to such service
providers in an amount equivalent to or less than the per account fee paid to
the transfer agent. During the year ended June 30, 2004, the Fund paid $153,122
for such services. These fees are reflected as "Transfer agent and shareholder
servicing fees" on the Statement of Operations.
Under the terms of the Fund Accounting Agreement with the Trust, Ultimus
calculates the daily net asset value per share and maintains such books and
records as are necessary to enable the Administrator to perform its duties. For
these services, the Fund pays Ultimus a base fee of $2,000 per month, plus an
asset-based fee at the annual rate of .01% of the average value of its daily net
assets up to $500 million and .005% of such assets in excess of $500 million. In
addition, the Fund pays all costs of external pricing services.
4. BANK LINE OF CREDIT
The Fund has an unsecured $25,000,000 bank line of credit. Borrowings under this
arrangement bear interest at a rate determined by the bank at the time of
borrowing. As of June 30, 2004, the Fund had no outstanding borrowings under the
line of credit.
5. CONTINGENCIES AND COMMITMENTS
The Fund indemnifies the Trust's officers and trustees for certain liabilities
that might arise from their performance of their duties to the Fund.
Additionally, in the normal course of business the Fund enters into contracts
that contain a variety of representations and warranties and which provide
general indemnifications. The Fund's maximum exposure under these arrangements
is unknown, as this would involve future claims that may be made against the
Fund that have not yet occurred. However, based on experience, the Fund expects
the risk of loss to be remote.
17
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
================================================================================
To the Shareholders and Board of Trustees
of the Oak Value Fund of the Oak Value Trust:
We have audited the accompanying statement of assets and liabilities of the Oak
Value Fund, (the "Fund"), a series of the Oak Value Trust, including the
schedule of investments, as of June 30, 2004, and the related statement 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, and the financial highlights for
each of the three years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the
periods ended June 30, 2001 and June 30, 2000 were audited by other auditors
whose report, dated August 3, 2001, expressed an unqualified opinion on those
financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 2004, by correspondence with the custodian and
broker. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Oak Value Fund as of June 30, 2004, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the three years in
the period then ended, in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
Cincinnati, Ohio
August 13, 2004
18
TRUSTEES AND OFFICERS
======================================================================================================================
OFFICERS AND INTERESTED TRUSTEES. The table below sets forth certain information about each of the Trust's Interested
Trustees, as well as its executive officers.
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS OTHER
POSITION(S) OFFICE; TERM IN FUND DIRECTORSHIPS1
HELD WITH SERVED IN PRINCIPAL OCCUPATION(S) COMPLEX HELD BY
NAME, ADDRESS, AND AGE TRUST OFFICE DURING PAST 5 YEARS OVERSEEN TRUSTEE
- ----------------------------------------------------------------------------------------------------------------------
Larry D. Coats, Jr.* Trustee and Indefinite; President, Chief Executive 1 None
3100 Tower Blvd. President Since: Officer and Portfolio Manager
Suite. 700 July 2003 with Oak Value Capital
Durham, NC 27707 Management, Inc; Prior to
Age: 44 July 2003 Executive Vice
President and Portfolio
Manager with Oak Value
Capital Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Matthew F. Sauer* Trustee and Indefinite; For more than the past five 1 None
3100 Tower Blvd. Vice President Since: years, Mr. Sauer has been
Suite 700 February 2002 Senior Vice President, Director
Durham, NC 27707 of Research and Portfolio
Age: 42 Manager with Oak Value
Capital Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Robert G. Dorsey Vice President Indefinite; For more than the past five 1 None
135 Merchant Street Since: years, Mr. Dorsey has been a
Suite 230 July 2003 Managing Director of Ultimus
Cincinnati, OH 45246 Fund Solutions, LLC and
Age: 47 Ultimus Fund Distributors,
LLC; the Fund's principal
underwriter.
- ----------------------------------------------------------------------------------------------------------------------
Mark J. Seger Treasurer Indefinite; For more than the past five 1 None
135 Merchant Street Since: years, Mr. Seger has been a
Suite 230 July 2003 Managing Director of Ultimus
Cincinnati, OH 45246 Fund Solutions, LLC and
Age: 42 Ultimus Fund Distributors, LLC.
- ----------------------------------------------------------------------------------------------------------------------
John F. Splain Secretary Indefinite; For more than the past five 1 None
135 Merchant Street Since: years, Mr. Splain has been a
Suite 230 July 2003 Managing Director of Ultimus
Cincinnati, OH 45246 Fund Solutions, LLC and
Age: 47 Ultimus Fund Distributors, LLC.
- ----------------------------------------------------------------------------------------------------------------------
* Messrs. Coats and Sauer may each be deemed to be an "interested person," as defined by the 1940 Act,
because of their employment with Oak Value Capital Management, Inc., the investment adviser to the Trust.
1 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company
with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") or (3) any company subject to the requirements of Section 15(d) of the
Exchange Act.
19
INDEPENDENT TRUSTEES. The following table sets forth certain information about the Trust's Independent Trustees.
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS OTHER
POSITION(S) OFFICE; TERM IN FUND DIRECTORSHIPS1
HELD WITH SERVED IN PRINCIPAL OCCUPATION(S) COMPLEX HELD BY
NAME, ADDRESS, AND AGE TRUST OFFICE DURING PAST 5 YEARS OVERSEEN TRUSTEE
- ----------------------------------------------------------------------------------------------------------------------
C. Russell Bryan Trustee Indefinite; For more than the past five 1 None
112 Tryon Plaza Since: years, Mr. Bryan has been a
Suite 1500 May 1995 Managing Director of
Charlotte, NC 28284 Brookwood Associates, L.L.C.
Age: 44 (an investment banking firm).
- ----------------------------------------------------------------------------------------------------------------------
John M. Day Trustee Indefinite; For more than the past five 1 None
5151 Glenwood Ave. Since: years, Mr. Day has been
Raleigh, NC 27612 May 1995 Managing Partner, Maynard
Age: 50 Capital Partners (an
investment firm).
- ----------------------------------------------------------------------------------------------------------------------
Joseph T. Jordan, Jr. Trustee Indefinite; For more than the past five 1 Director of
1816 Front Street Since: years, Mr. Jordan has served Cardinal
Suite 320 May 1995 as the President of Practice State Bank
Durham, NC 27705 Management Services, Inc. (a
Age: 58 medical practice management
firm).
- ----------------------------------------------------------------------------------------------------------------------
Charles T. Manatt, Esq. Trustee Indefinite; Founder, Manatt, Phelps & 1 None
700 12th Street, N.W. Since: Phillips, L.L.P. (a law firm);
Suite 1100 February 2002 from 1999-2001, served as
Washington, DC 20005 U.S. Ambassador to the
Age: 68 Dominican Republic.
- ----------------------------------------------------------------------------------------------------------------------
1 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with
a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.
The Statement of Additional Information ("SAI") includes additional information about the Trust's Trustees and
officers. To obtain a copy of the SAI, without charge, call (800) 622-2474.
20
This page intentionally left blank.
OAK VALUE FUND
INVESTMENT ADVISER
Oak Value Capital Management, Inc.
3100 Tower Boulevard, Suite 700
Durham, North Carolina 27707
1-800-680-4199
www.oakvaluefund.com
ADMINISTRATOR
Ultimus Fund Solutions, LLC
135 Merchant Street, Suite 230
Cincinnati, Ohio 45246
INDEPENDENT AUDITORS
Deloitte & Touche LLP
250 East Fifth Street
Suite 1900
Cincinnati, Ohio 45202
CUSTODIAN
US Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
BOARD OF TRUSTEES
C. Russell Bryan
Larry D. Coats, Jr.
John M. Day
Joseph T. Jordan, Jr.
Charles T. Manatt
Matthew F. Sauer
OFFICERS
Larry D. Coats, Jr., President
Matthew F. Sauer, Vice President
Robert G. Dorsey, Vice President
Mark J. Seger, Treasurer
John F. Splain, Secretary
This report is for the information of the shareholders of the Oak
Value Fund. It may not be distributed to prospective investors unless
it is preceded or accompanied by the current fund prospectus.
A description of the policies and procedures that the Fund uses to
vote proxies relating to portfolio securities is available without
charge upon request by calling toll-free 1-800-622-2474, or on the
Securities and Exchange Commission's website at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is
available without charge upon request by calling toll-free
1-800-622-2474, or on the Securities and Exchange Commission's website
at http://www.sec.gov.
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions, regardless of whether these individuals
are employed by the registrant or a third party. Pursuant to Item 10(a)(1), a
copy of registrant's code of ethics is filed as an exhibit to this Form N-CSR.
During the period covered by this report, the code of ethics has not been
amended. The registrant has not granted any waivers, including implicit waivers,
from the provisions of the code of ethics.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's board of trustees has determined that the registrant has at
least one audit committee financial expert serving on its audit committee. The
name of the audit committee financial expert is Joseph T. Jordan, Jr. Mr. Jordan
is "independent" for purposes of this Item.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES. The aggregate fees billed for professional services
rendered by the principal accountant for the audit of the registrant's
annual financial statements or for services that are normally provided
by the accountant in connection with statutory and regulatory filings
or engagements were $21,000 with respect to the registrant's fiscal
year ended June 30, 2004. The aggregate fees billed for professional
services rendered by the principal accountant for the audit of the
registrant's annual financial statements or for services that are
normally provided by the accountant in connection with the statutory
and regulatory filings or engagements were $14,900 with respect to the
registrant's fiscal year ended June 30, 2003.
(b) AUDIT-RELATED FEES. No fees were billed in either of the last two
fiscal years 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 and are not reported under
paragraph (a) of this Item.
(c) TAX FEES. The aggregate fees billed for professional services rendered
by the principal accountant for tax compliance, tax advice, and tax
planning were $1,500 and $1,500 with respect to the registrant's
fiscal years ended June 30, 2004 and 2003, respectively. The services
comprising these fees are the preparation of the registrant's federal
income and excise tax returns.
(d) ALL OTHER FEES. No fees were billed in either of the last two fiscal
years for products and services provided by the principal accountant,
other than the services reported in paragraphs (a) through (c) of this
Item.
(e)(1) The audit committee has not adopted pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of Regulation
S-X.
(e)(2) None of the services described in paragraph (b) through (d) of this
Item were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Less than 50% of 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.
(g) No non-audit fees were billed in either of the last two fiscal years
by the registrant's accountant for services rendered to the
registrant, and rendered to the registrant's investment adviser (not
including any sub-adviser whose role is primarily portfolio management
and is subcontracted with or overseen by another investment adviser),
and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant.
(h) The principal accountant has not provided any non-audit services to
the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant has not adopted procedures by which shareholders may recommend
nominees to the registrant's board of trustees.
ITEM 10. CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
1940) as of a date within 90 days of the filing date of this report, the
registrant's principal executive officer and principal financial officer have
concluded that such disclosure controls and procedures are reasonably designed
and are operating effectively to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to them
by others within those entities, particularly during the period in which this
report is being prepared, and that the information required in filings on Form
N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b) There were no changes in the registrant's internal control 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 (the
registrant's second fiscal half-year in the case of an annual report) that have
materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 11. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Attached hereto
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Act (17 CFR 270.30a-2(a)): Attached hereto
(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)): Attached hereto
Exhibit 99.CODE ETH Code of Ethics
Exhibit 99.CERT Certifications pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
Exhibit 99.906CERT Certifications pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
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.
(Registrant) Oak Value Trust
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By (Signature and Title)* /s/ Larry D. Coats, Jr.
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Larry D. Coats, Jr., President
Date August 20, 2004
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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 (Signature and Title)* /s/ Larry D. Coats, Jr.
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Larry D. Coats, Jr., President
Date August 20, 2004
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By (Signature and Title)* /s/ Mark J. Seger
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Mark J. Seger, Treasurer
Date August 20, 2004
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* Print the name and title of each signing officer under his or her signature.