-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DETIlurvG8FRUwSdbYied7I9XnHYBq0ZnQUZgkZeOm4w2lwzwJ5/mtWJcVtU5iay pH23ZT/L/DwaP42nMgWu8Q== 0001111830-06-000647.txt : 20060906 0001111830-06-000647.hdr.sgml : 20060906 20060906153402 ACCESSION NUMBER: 0001111830-06-000647 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060630 FILED AS OF DATE: 20060906 DATE AS OF CHANGE: 20060906 EFFECTIVENESS DATE: 20060906 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OAK VALUE TRUST CENTRAL INDEX KEY: 0000941722 IRS NUMBER: 311435225 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-09000 FILM NUMBER: 061076591 BUSINESS ADDRESS: STREET 1: 3100 TOWER BLVD STREET 2: STE 700 CITY: DURHAM STATE: NC ZIP: 27707 BUSINESS PHONE: 513-587-3400 MAIL ADDRESS: STREET 1: 225 PICTORIA DRIVE, SUITE 450 CITY: CINCINNATI STATE: OH ZIP: 45246 FORMER COMPANY: FORMER CONFORMED NAME: TUSCARORA INVESTMENT TRUST DATE OF NAME CHANGE: 19950316 0000941722 S000001546 Oak Value Fund C000004200 Oak Value Fund OAKVX N-CSR 1 ncsr-0606.txt OAK VALUE TRUST - N-CSR ----------------------------- OMB APPROVAL ----------------------------- OMB Number: 3235-0570 Expires: September 30, 2007 Estimated average burden hours per response: 19.4 ----------------------------- 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, 2006 --------------------------------------------- Date of reporting period: June 30, 2006 --------------------------------------------- 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, 2006 [GRAPHIC OMITTED] OAK VALUE FUND -------------- WWW.OAKVALUEFUND.COM LETTER TO SHAREHOLDERS August, 2006 ================================================================================ Dear Fellow Shareholders, The operating results and related information for the Oak Value Fund's (the "Fund") fiscal year ended June 30, 2006 are presented in the pages that follow. During the period, the Fund's performance lagged that of the benchmark S&P 500 Index and posted a net negative return (see page 8 for performance table). This outcome - on a relative and absolute basis - is attributable to a combination of factors ranging from adverse results for select securities to the Fund's ongoing lack of exposure to energy-related businesses. Additional discussion of these and other factors is provided in the MANAGEMENT DISCUSSION AND ANALYSIS section of this report. From a timing standpoint, these results were most severely impacted by the early quarters of the period. Though the Fund's performance improved notably during the fourth fiscal quarter of the year, the extent of this improvement was insufficient to compensate for the drag created in earlier periods (see Table A on page 4). In investments, it is important to remember that activity is not necessarily related to nor a predictor of results. We have now been at this task for nearly twenty years and have, from a market perspective, experienced many "seasons" while remaining steadfast from a philosophical standpoint. Periods of opportunity are seldom aligned with periods of great results. Furthermore, the basic characteristics of the Fund portfolio are seldom aligned with broader "benchmarks." Such periods of misalignment have often provided opportunity for investors. In our opinion, this is one of those periods. We remain committed to the disciplined pursuit of a proven investment philosophy. Our execution has not been and will not be perfect. Even in the midst of this current "season" in which we have found little favor in terms of portfolio performance, we are confident that our execution has continued to improve. We have allocated significant effort to the historical analysis of our actions in the belief that all of these experiences can and should be instructive. Where appropriate, we have continued to fine tune the analytical process to support our goal of ever improving decision-making. We believe the net effect of this effort will be more successes and fewer misteps. The late year recovery in portfolio performance is encouraging in this regard as the quality and value of portfolio businesses, in our view, was demonstrated. As we previously reported to you in May of this year, Matthew F. Sauer has left Oak Value Capital Management, Inc. to pursue other professional opportunities. We wish him well in his future endeavors. We have communicated on various occasions over the last couple of years that we were working diligently to position our investment team for the most productive and effective long term results. This transition took significant time and investment on our part and has now largely been completed. Our team is more focused, more experienced and more engaged than at any point in the firm's history. 1 In closing, we thank you, our fellow shareholders for your interest in the Oak Value Fund and the confidence you have placed in us and our organization. We welcome your questions/comments and encourage you to visit the Fund's website at www.oakvaluefund.com for various periodic commentaries that we make available. Our primary responsibility is that of making good investment decisions on behalf of Fund shareholders. To that task, we remain fully committed. Oak Value Fund Co-Managers, /s/ David R. Carr, Jr. /s/ Larry D. Coats, Jr. David R. Carr, Jr. Larry D. Coats, Jr. Note: Please see the Important Information section of this report for disclosure that applies to both this letter and the Management Discussion and Analysis that follows. 2 MANAGEMENT DISCUSSION AND ANALYSIS ================================================================================ The Fund's absolute and relative results for the fiscal year ended June 30, 2006 can be most notably attributed to the following factors: o Negative returns from two specific holdings - Cendant and Zale Corp. Both of these holdings were multi-year positions of the Fund and had been noted at various time-periods among significant contributors to the Fund's performance throughout the years. Operating challenges and management issues experienced at these companies led to the decision to sell the positions during the period. Though these holdings negatively impacted returns during the period, the sales contributed to the realized capital gain generated by the Fund's operations. As the two most significant individual detractors from performance, they cost the Fund almost 3% of absolute returns during the period. o Continued over-weighting and underperformance (relative to the S&P 500 Index) in media-related businesses. The single most significant contributor to this underperformance during the period was E. W. Scripps, one of the Fund's longest and largest holdings. Other media related businesses which contributed to the underperformance were Entercom Communications, Comcast and Viacom/CBS. Time Warner contributed positively to performance during the period. In aggregate, the Fund's exposure to media-related businesses (and the underperformance thereof) was the most significant detractor from performance during the fiscal year. o Lack of exposure to energy-related businesses. Energy and commodity-related sectors led the returns of the overall market during the fiscal year as energy stocks advanced nearly one quarter, in aggregate. The Fund's lack of exposure to such businesses is one of the primary contributors to lagging results in recent years. o Selective positions in healthcare (IMS Health) and information technology (Oracle) contributed positively to Fund results during the period as these two S&P sectors were among the worst performers for the overall market. The two most significant positive contributors to the Fund's performance during the period were United Technologies and Berkshire Hathaway. We find this combination interesting as United Technologies is one of the Fund's more recent additions, having been added during the prior fiscal year, and Berkshire Hathaway is one of the Fund's longest held positions. The balance of the most significant individual contributors and detractors from performance during the period are provided in Table B below. Portfolio activity for the year is summarized in Table C below. Seven new holdings were initiated during the period representing a diverse collection of businesses across multiple industries and market sectors. Our analysis of these businesses suggests that they qualify decidedly, as "GOOD BUSINESSES WITH GOOD 3 MANAGEMENT PURCHASED AT ATTRACTIVE PRICES." In terms of sale activity, we eliminated seven holdings during the period. The reasons for their sale varied on a case by case basis. The Fund's portfolio composition is well within the range of its historical experience, ending the year with the top ten holdings representing more than 50 percent of the portfolio and the total number of holdings at 21 companies. Additionally, the Fund portfolio is predominately populated with mid-to-large-cap businesses. On average, the portfolio consists of a collection of businesses which we estimate to produce returns on equity and operating margins in excess of 20 percent while maintaining relatively un-leveraged balance sheets. Our assessment of their future prospects suggests that these businesses' revenues and earnings should grow at above average rates over a three-to-five year time horizon. Though the Fund portfolio consists primarily of US based companies, a significant portion of them have substantial international operations and should be viewed, in our opinion, as global businesses. Much of the growth in the world's economy will continue to take place outside the United States. This attraction to businesses that operate on a more global platform is longstanding and we believe has served Fund shareholders well.
- ------------------------------------------------------------------------------------------- TABLE A - ------------------------------------------------------------------------------------------- QUARTERLY PERFORMANCE - FISCAL YEAR 2006 - ------------------------------------------------------------------------------------------- 2ND QUARTER 2006 1ST QUARTER 2006 4TH QUARTER 2005 3RD QUARTER 2005 - ------------------------------------------------------------------------------------------- Oak Value Fund 0.49% -0.53% -0.75% -0.88% - ------------------------------------------------------------------------------------------- S&P 500 -1.44% 4.21% 2.09% 3.60% - ------------------------------------------------------------------------------------------- THE PERFORMANCE INFORMATION QUOTED ABOVE REPRESENTS PAST PERFORMANCE AND PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. PERFORMANCE DATA, CURRENT TO THE MOST RECENT MONTH END, MAY BE FOUND AT THE OAK VALUE FUND WEBSITE WWW.OAKVALUEFUND.COM. AN INVESTOR SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS THIS AND OTHER IMPORTANT INFORMATION. The Fund imposes a 2% redemption fee on shares redeemed within 90 days of their purchase date. See the Fund's current prospectus for more information on the Fund's redemption fee. Please keep in mind the performance information above does not reflect the imposition of a 2% redemption fee. You may obtain a copy of the Fund's prospectus at www.oakvaluefund.com or by calling 1-800-622-2474. Please read the prospectus carefully before you invest or send money. - --------------------------------------------------------------------------------
4
- ------------------------------------------------------------------------------------------------ TABLE B - ------------------------------------------------------------------------------------------------ LARGEST NET CONTRIBUTORS TO INVESTMENT RESULTS YEAR ENDED JUNE 30, 2006 - ------------------------------------------------------------------------------------------------ 6/30/06 % OF 6/30/06 % OF POSITIVE CONTRIBUTORS NET ASSETS NEGATIVE CONTRIBUTORS NET ASSETS - ------------------------------------------------------------------------------------------------ AFLAC, Inc. 5.61% Cendant Corp. Sold - ------------------------------------------------------------------------------------------------ Berkshire Hathaway, Inc.1 10.41% Constellation Brands, Inc. 6.55% - ------------------------------------------------------------------------------------------------ Diageo PLC - ADR 5.76% E. W. Scripps Co. (The) 6.72% - ------------------------------------------------------------------------------------------------ IMS Health, Inc. 5.42% Entercom Communications Corp. 1.93% - ------------------------------------------------------------------------------------------------ United Technologies Corp. 5.81% Zale Corp. Sold - ------------------------------------------------------------------------------------------------ 1 Class A and B Shares combined. - ------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------- TABLE C - ---------------------------------------------------------------------------------------------------------- PURCHASE AND SALE ACTIVITY - TWELVE MONTHS ENDED JUNE 30, 2006 - ---------------------------------------------------------------------------------------------------------- POSITION PRIMARY BUSINESS S&P SECTOR - ---------------------------------------------------------------------------------------------------------- PURCHASED - ---------------------------------------------------------------------------------------------------------- E.I. du Pont de Nemours & Co. Diversified Chemicals Basic Materials - ---------------------------------------------------------------------------------------------------------- Estee Lauder Cos. (The) Skin Care/Cosmetics Consumer Staples - ---------------------------------------------------------------------------------------------------------- Harley-Davidson, Inc. Motorcycles Consumer Discretionary - ---------------------------------------------------------------------------------------------------------- Johnson & Johnson Healthcare Products Health Care - ---------------------------------------------------------------------------------------------------------- Masco Corp. Home Improvement & Building Products Industrials - ---------------------------------------------------------------------------------------------------------- Oracle Corp. Application Software Information Technology - ---------------------------------------------------------------------------------------------------------- Praxair, Inc. Industrial Use Atmospheric and Process Gases Basic Materials - ---------------------------------------------------------------------------------------------------------- SOLD - ---------------------------------------------------------------------------------------------------------- Ambac Financial Group, Inc. Financial Guarantee Insurance Financials - ---------------------------------------------------------------------------------------------------------- Boston Scientific Corp. Medical Devices Health Care - ---------------------------------------------------------------------------------------------------------- CBS Corp. Media Broadcasting Consumer Discretionary - ---------------------------------------------------------------------------------------------------------- Cendant Corp. Travel, Hospitality, & Mortgage Finance Industrials - ---------------------------------------------------------------------------------------------------------- Fidelity National Information Services, Inc. Financial Transaction Processing Services Information Technology - ---------------------------------------------------------------------------------------------------------- Comcast Corp. Entertainment & Information Services Consumer Discretionary - ---------------------------------------------------------------------------------------------------------- Zale Corp. Fine Jewelry Retailing Consumer Discretionary - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- TABLE D - ---------------------------------------------------------------------------------------------------------- TOP TEN HOLDINGS AS OF JUNE 30, 2006 - ---------------------------------------------------------------------------------------------------------- COMPANY PRIMARY BUSINESS S&P SECTOR - ---------------------------------------------------------------------------------------------------------- AFLAC, Inc. Supplemental Heath & Life Insurance Financials - ---------------------------------------------------------------------------------------------------------- Berkshire Hathaway, Inc. Insurance, Reinsurance & Capital Allocation Financials - ---------------------------------------------------------------------------------------------------------- Cadbury Schweppes PLC - ADR Int'l Confectionery & Beverages Manufacturer / Licensor Consumer Staples - ---------------------------------------------------------------------------------------------------------- Constellation Brands, Inc. Wine, Beer & Spirits Production / Distribution Consumer Staples - ---------------------------------------------------------------------------------------------------------- Diageo PLC - ADR Global Premium Alcohol Business Consumer Staples - ---------------------------------------------------------------------------------------------------------- E.W. Scripps Co. (The) Entertainment & Information / Media Consumer Discretionary - ---------------------------------------------------------------------------------------------------------- IMS Health, Inc. Information Solutions to Pharmaceutical/ Healthcare Industry Health Care - ---------------------------------------------------------------------------------------------------------- Praxair, Inc. Industrial Use Atmospheric and Process Gases Basic Materials - ---------------------------------------------------------------------------------------------------------- Time Warner, Inc. Entertainment & Information / Media Consumer Discretionary - ---------------------------------------------------------------------------------------------------------- United Technologies Corp. Diversified Manufacturing and Service Industrials - ----------------------------------------------------------------------------------------------------------
5 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 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, largest net contributors, etc.) are based on the Fund's holdings on June 30, 2006 or held during the fiscal year ended June 30, 2006. 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 6 sources about various economic, political, central bank, and other suspected influences on investment markets. 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 as 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. 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. FOR A PROSPECTUS, PLEASE CALL 1 (800) 622-2474 OR VISIT THE FUND'S WEBSITE AT WWW.OAKVALUEFUND.COM. READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST. OAK VALUE FUND IS DISTRIBUTED BY ULTIMUS FUND DISTRIBUTORS, LLC. 7 OAK VALUE FUND PERFORMANCE INFORMATION (UNAUDITED) ================================================================================ COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE OAK VALUE FUND AND THE S&P 500 INDEX [GRAPHIC OMITTED] OAK VALUE FUND S&P 500 INDEX -------------- -------------- DATE BALANCE DATE BALANCE ---- ------- ---- ------- 06/30/96 $ 10,000 06/30/96 $ 10,000 12/31/96 11,610 12/31/96 11,168 06/30/97 13,960 06/30/97 13,470 12/31/97 15,988 12/31/97 14,895 06/30/98 18,784 06/30/98 17,533 12/31/98 19,013 12/31/98 19,151 06/30/99 20,061 06/30/99 21,522 12/31/99 18,419 12/31/99 23,181 06/30/00 18,475 06/30/00 23,083 12/31/00 21,766 12/31/00 21,070 06/30/01 22,784 06/30/01 19,659 12/31/01 21,664 12/31/01 18,566 06/30/02 18,954 06/30/02 16,123 12/31/02 16,391 12/31/02 14,463 06/30/03 19,456 06/30/03 16,164 12/31/03 21,654 12/31/03 18,611 06/30/04 22,072 06/30/04 19,252 12/31/04 23,381 12/31/04 20,637 06/30/05 23,441 06/30/05 20,470 12/31/05 23,061 12/31/05 21,650 06/30/06 23,051 06/30/06 22,236 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. - -------------------------------------------------------------------------------- TOTAL RETURNS(A) - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ YEAR-TO-DATE SINCE CALENDAR CALENDAR CALENDAR CALENDAR CALENDAR CALENDAR CALENDAR CALENDAR CALENDAR CALENDAR 2006 INCEPTION* 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 (AS OF 6/30/06)(AS OF 6/30/06) - ------------------------------------------------------------------------------------------------------------------------------------ Oak Value Fund 28.99% 37.70% 18.93% -3.12% 18.17% -0.47% -24.34% 32.11% 7.97% -1.37% -0.04%(B) 296.60%(B) S&P 500 Index 22.96% 33.36% 28.58% 21.04% -9.12% -11.90% -22.10% 28.68% 10.88% 4.91% 2.71%(B) 274.34%(B) - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS(A) - ------------------------------------------------------------------------------------------- FOR THE PERIODS ENDED JUNE 30, 2006 - ------------------------------------------------------------------------------------------- SINCE ONE YEAR THREE YEARS FIVE YEARS TEN YEARS INCEPTION* - ------------------------------------------------------------------------------------------- Oak Value Fund.............. -1.66% 5.82% 0.23% 8.71% 10.79% S&P 500 Index............... 8.63% 11.22% 2.49% 8.32% 10.31% - -------------------------------------------------------------------------------------------
* 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 PORTFOLIO INFORMATION JUNE 30, 2006 (UNAUDITED) ================================================================================ DISTRIBUTION BY BUSINESS CATEGORY Basic Materials - 7.9% Consumer Related - 29.9% Diversified - 19.9% [GRAPHIC OMITTED] Finance Related - 9.0% Healthcare - 2.2% Insurance - 5.6% Media - 16.0% Technology - 8.8% Cash Equivalents - 0.7% TEN LARGEST HOLDINGS % OF COMPANY NET ASSETS ------------------------------------------------------- Berkshire Hathaway, Inc.1 10.41% Cadbury Schweppes PLC - ADR 7.22% E.W. Scripps Co. (The) - Class A 6.72% Constellation Brands, Inc. - Class A 6.55% United Technologies Corp. 5.81% Diageo PLC - ADR 5.76% AFLAC, Inc. 5.61% IMS Health, Inc. 5.42% Praxair, Inc. 5.29% Time Warner, Inc. 5.23% 1 Class A and Class B shares combined. 9 OAK VALUE FUND STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2006 ================================================================================ ASSETS Investments in securities: At cost ..................................................... $151,302,248 ============ At market value (Note 1) .................................... $203,116,039 Receivable for capital shares sold ............................ 47,497 Dividends receivable .......................................... 102,948 Other assets .................................................. 80,085 ------------ TOTAL ASSETS ................................................ 203,346,569 ------------ LIABILITIES Dividends payable ............................................. 50,067 Capital gains payable ......................................... 1,142,018 Payable for capital shares redeemed ........................... 922,418 Accrued investment advisory fees (Note 3) ..................... 152,056 Payable to affiliate (Note 3) ................................. 26,700 Other accrued expenses and liabilities ........................ 29,679 ------------ TOTAL LIABILITIES ........................................... 2,322,938 ------------ NET ASSETS .................................................... $201,023,631 ============ Net assets consist of: Paid-in capital ............................................... $149,209,373 Undistributed net investment income ........................... 446 Undistributed net realized gains from security transactions ................................................ 21 Net unrealized appreciation on investments .................... 51,813,791 ------------ Net assets .................................................... $201,023,631 ============ Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) ....... 7,179,588 ============ Net asset value, offering price and redemption price per share(A)................................................. $ 28.00 ============ (A) Redemption price may differ from the net asset value per share depending upon the length of time the shares are held (Note 1). See accompanying notes to financial statements. 10 OAK VALUE FUND STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2006 ================================================================================ INVESTMENT INCOME Dividends ..................................................... $ 3,571,137 ------------ EXPENSES Investment advisory fees (Note 3) ............................. 2,101,022 Transfer agent and shareholder services fees (Note 3) ......... 236,621 Administration fees (Note 3) .................................. 179,187 Trustees' fees and expenses ................................... 133,312 Postage and supplies .......................................... 73,473 Insurance expense ............................................. 54,250 Professional fees ............................................. 54,245 Fund accounting fees (Note 3) ................................. 47,297 Registration fees ............................................. 36,479 Compliance service fees (Note 3) .............................. 31,347 Custodian fees ................................................ 23,537 Other expenses ................................................ 33,879 ------------ TOTAL EXPENSES .............................................. 3,004,649 ------------ NET INVESTMENT INCOME ......................................... 566,488 ------------ REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Net realized gains from security transactions ................. 15,683,448 Net change in unrealized appreciation/depreciation on investments ................................................. (20,219,133) ------------ NET REALIZED AND UNREALIZED LOSSES ON INVESTMENTS ............. (4,535,685) ------------ NET DECREASE IN NET ASSETS FROM OPERATIONS .................... $ (3,969,197) ============ See accompanying notes to financial statements. 11
OAK VALUE FUND STATEMENTS OF CHANGES IN NET ASSETS ======================================================================================= YEAR YEAR ENDED ENDED JUNE 30, JUNE 30, 2006 2005 - --------------------------------------------------------------------------------------- FROM OPERATIONS Net investment income (loss) ................... $ 566,488 $ (973,073) Net realized gains from security transactions .. 15,683,448 14,409,303 Net change in unrealized appreciation/ depreciation on investments .................. (20,219,133) 1,545,330 -------------- -------------- Net increase (decrease) in net assets from operations ..................................... (3,969,197) 14,981,560 -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income ..................... (566,042) -- From net realized gains from security transactions ................................. (15,290,172) -- -------------- -------------- Net decrease in net assets from distributions to shareholders ................................ (15,856,214) -- -------------- -------------- FROM CAPITAL SHARE TRANSACTIONS Proceeds from shares sold ...................... 37,744,165 45,708,435 Reinvestment of distributions to shareholders .. 14,515,519 -- Proceeds from redemption fees collected (Note 1) 11,580 38,230 Payments for shares redeemed ................... (80,204,484) (71,433,511) -------------- -------------- Net decrease in net assets from capital share transactions ............................. (27,933,220) (25,686,846) -------------- -------------- NET DECREASE IN NET ASSETS ....................... (47,758,631) (10,705,286) NET ASSETS Beginning of year .............................. 248,782,262 259,487,548 -------------- -------------- End of year .................................... $ 201,023,631 $ 248,782,262 ============== ============== UNDISTRIBUTED NET INVESTMENT INCOME .............. $ 446 $ -- ============== ============== SUMMARY OF CAPITAL SHARE ACTIVITY Shares sold .................................... 1,242,359 1,535,973 Shares reinvested .............................. 514,088 -- Shares redeemed ................................ (2,647,888) (2,405,843) -------------- -------------- Net decrease in shares outstanding ............. (891,441) (869,870) Shares outstanding, beginning of year .......... 8,071,029 8,940,899 -------------- -------------- Shares outstanding, end of year ................ 7,179,588 8,071,029 ============== ==============
See accompanying notes to financial statements. 12
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, 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of year $ 30.82 $ 29.02 $ 25.58 $ 24.92 $ 30.74 ---------- ---------- ---------- ---------- ---------- Income (loss) from investment operations: Net investment income (loss) ..... 0.08 (0.12) (0.15) (0.07) (0.10) Net realized and unrealized gains (losses) on investments ........ (0.60) 1.92 3.59 0.73 (5.05) ---------- ---------- ---------- ---------- ---------- Total from investment operations ... (0.52) 1.80 3.44 0.66 (5.15) ---------- ---------- ---------- ---------- ---------- Less distributions: From net investment income ....... (0.08) -- -- -- -- From net realized gains from security transactions .......... (2.22) -- -- -- (0.67) ---------- ---------- ---------- ---------- ---------- Total distributions ................ (2.30) -- -- -- (0.67) ---------- ---------- ---------- ---------- ---------- Proceeds from redemption fees collected (Note 1) .......... 0.00(A) 0.00(A) 0.00(A) -- -- ---------- ---------- ---------- ---------- ---------- Net asset value at end of year ..... $ 28.00 $ 30.82 $ 29.02 $ 25.58 $ 24.92 ========== ========== ========== ========== ========== Total return(B) .................... (1.66%) 6.20% 13.45% 2.65% (16.81%) ========== ========== ========== ========== ========== Net assets at end of period (000's) $ 201,024 $ 248,782 $ 259,488 $ 272,582 $ 279,736 ========== ========== ========== ========== ========== Ratio of expenses to average net assets ............... 1.29% 1.25% 1.25% 1.36% 1.23%(C) Ratio of net investment income (loss) to average net assets ..... 0.24% (0.39%) (0.52%) (0.33%) (0.36%) Portfolio turnover rate ............ 29% 29% 24% 28% 63%
(A) Amount rounds to less than $0.01 per share. (B) Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. (C) Absent the use of earnings credits on cash balances, the ratio of expenses to average net assets would have been 1.24% for the year ended June 30, 2002. See accompanying notes to financial statements. 13 OAK VALUE FUND SCHEDULE OF INVESTMENTS JUNE 30, 2006 ================================================================================ SHARES COMMON STOCKS -- 99.3% VALUE - -------------------------------------------------------------------------------- BASIC MATERIALS -- 7.9% 124,325 E.I. du Pont de Nemours and Co. ................. $ 5,171,920 196,775 Praxair, Inc. ................................... 10,625,850 ------------- 15,797,770 ------------- CONSUMER RELATED -- 29.9% 373,850 Cadbury Schweppes PLC - ADR ..................... 14,512,857 526,500 Constellation Brands, Inc. - Class A(a) ......... 13,162,500 171,350 Diageo PLC - ADR ................................ 11,574,693 108,750 Estee Lauder Cos. (The) - Class A ............... 4,205,362 158,475 Harley-Davidson, Inc. ........................... 8,698,693 266,250 Masco Corp. ..................................... 7,891,650 ------------- 60,045,755 ------------- DIVERSIFIED -- 19.9% 115 Berkshire Hathaway, Inc. - Class A(a) ........... 10,540,785 3,413 Berkshire Hathaway, Inc. - Class B(a) ........... 10,385,759 267,050 Tyco International Ltd. ......................... 7,343,875 184,100 United Technologies Corp. ....................... 11,675,622 ------------- 39,946,041 ------------- FINANCE RELATED -- 9.0% 260,450 Equifax, Inc. ................................... 8,943,853 284,175 Willis Group Holdings Ltd. ...................... 9,122,017 ------------- 18,065,870 ------------- HEALTHCARE -- 2.2% 74,100 Johnson & Johnson ............................... 4,440,072 ------------- INSURANCE -- 5.6% 243,125 AFLAC, Inc. ..................................... 11,268,844 ------------- MEDIA -- 16.0% 148,150 Entercom Communications Corp. ................... 3,875,604 313,020 E.W. Scripps Co. (The) - Class A ................ 13,503,683 607,400 Time Warner, Inc. ............................... 10,508,020 122,487 Viacom, Inc. - Class B(a) ....................... 4,389,934 ------------- 32,277,241 ------------- TECHNOLOGY -- 8.8% 405,625 IMS Health, Inc. ................................ 10,891,031 474,425 Oracle Corp.(a) ................................. 6,874,418 ------------- 17,765,449 ------------- TOTAL COMMON STOCKS (Cost $147,793,251) ......... $ 199,607,042 ------------- 14 OAK VALUE FUND SCHEDULE OF INVESTMENTS (CONTINUED) ================================================================================ SHARES CASH EQUIVALENTS -- 1.7% VALUE - -------------------------------------------------------------------------------- 3,508,997 First American Government Obligations Fund - Class Y (Cost $3,508,997) ....................... $ 3,508,997 ------------- TOTAL INVESTMENTS AT VALUE -- 101.0% (Cost $151,302,248) ............................. $ 203,116,039 LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.0)% (2,092,408) ------------- NET ASSETS -- 100.0% ............................ $ 201,023,631 ============= (a) Non-income producing security. ADR - American Depositary Receipt See accompanying notes to financial statements. 15 OAK VALUE FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 ================================================================================ 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 traded on a national stock exchange are valued based upon the closing price on the principal exchange where the security is traded. Securities which are quoted by NASDAQ are valued at the NASDAQ Official Closing Price. Securities which are traded over-the-counter are valued at the last sales price, if available, otherwise, at the last quoted bid price. 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. Such methods of fair valuation may include, but are not limited to: multiple of earnings, discount from market of a similar freely traded security, or a combination of these or other methods. 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 years ended June 30, 2006 and 2005, proceeds from redemption fees totaled $11,580 and $38,230, respectively. 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 of America ("GAAP"). These "book/tax" differences are either temporary or permanent in nature and are primarily due to losses deferred due to wash sales. The tax character of distributions paid during the year ended June 30, 2006 was $566,042 of net investment income and $15,290,172 of long-term capital gains. There were no distributions during the year ended June 30, 2005. 16 OAK VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ SECURITY TRANSACTIONS -- Security transactions are accounted for on trade date. Gains and losses on securities sold are determined on a specific identification basis. ESTIMATES -- The preparation of financial statements in conformity with GAAP 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, 2006: - -------------------------------------------------------------------------------- Cost of portfolio investments ................................. $ 151,302,248 ============= Gross unrealized appreciation ................................. $ 54,900,020 Gross unrealized depreciation ................................. (3,086,229) ------------- Net unrealized appreciation ................................... $ 51,813,791 Undistributed net investment income ........................... 50,513 Undistributed long-term gains ................................. 1,142,039 Other temporary differences due to timing of cash distributions .......................................... (1,192,085) ------------- Total distributable earnings .................................. $ 51,814,258 ============= - -------------------------------------------------------------------------------- During the year ended June 30, 2006, the Fund utilized $392,952 of capital loss carryforwards to offset current year realized gains. 2. INVESTMENT TRANSACTIONS During the year ended June 30, 2006, cost of purchases and proceeds from sales and maturities of investment securities, excluding short-term investments, amounted to $63,971,874 and $96,203,295, 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 an Administration Agreement with the Trust, Ultimus provides non-investment related statistical and research data, internal regulatory compliance services and executive and administrative 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 17 OAK VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ 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. For the year ended June 30, 2006, Ultimus was paid $179,187 for administration fees. Under the terms of a Transfer Agent and Shareholder Services 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, 2006, Ultimus was paid $85,069 for transfer agent and shareholder services fees. The Fund has entered into agreements with certain financial intermediaries 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, 2006, the Fund paid $151,552 for such services. These fees are included as "Transfer agent and shareholder services fees" on the Statement of Operations. Under the terms of a 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 Ultimus 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. During the year ended June 30, 2006, the Fund paid Ultimus $47,297 in fund accounting fees. In addition, the Fund pays all costs of external pricing services. Under the terms of a Compliance Consulting Agreement with the Trust, Ultimus provides an individual with the requisite background and familiarity with the Federal Securities Laws to serve as the Chief Compliance Officer and to administer the Trust's compliance policies and procedures. For these services, the Fund pays Ultimus a base fee of $1,500 per month, plus an asset-based fee at the annual rate of .01% of the average value of its daily net assets from $100 million to $500 million, .005% of such assets from $500 million to $1 billion and .0025% of such assets in excess of $1 billion. During the year ended June 30, 2006, Ultimus was paid $31,347 for such services. In addition, the Fund reimburses Ultimus for its reasonable out-of-pocket expenses relating to these compliance 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 per annum equal to Prime Rate minus 0.50%. During the year ended June 30, 2006, 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. 18 OAK VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ 6. ACCOUNTING PRONOUNCEMENTS On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 (FIN 48) "Accounting for Uncertainty in Income Taxes". FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be booked as a tax expense in the current year and recognized as: a liability for unrecognized tax benefits; a reduction of an income tax refund receivable; a reduction of deferred tax asset; an increase in deferred tax liability; or a combination thereof. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined. 19 OAK VALUE FUND 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, 2006, 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 five 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. 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. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of June 30, 2006, by correspondence with the custodian and brokers. 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, 2006, 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 five 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 11, 2006 20 OAK VALUE FUND ABOUT YOUR FUND'S EXPENSES (UNAUDITED) ================================================================================ We believe it is important for you to understand the impact of costs on your investment. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees; and (2) ongoing costs, including management fees and other Fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. A fund's expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The expenses in the table below are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period. The table below illustrates the Fund's costs in two ways: ACTUAL FUND RETURN - This section helps you to estimate the actual expenses that you paid over the period. The "Ending Account Value" shown is derived from the Fund's actual return, and the third column shows the dollar amount of operating expenses that would have been paid by an investor who started with $1,000 in the Fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for the Fund under the heading "Expenses Paid During Period." HYPOTHETICAL 5% RETURN - This section is intended to help you compare the Fund's costs with those of other mutual funds. It assumes that the Fund had an annual return of 5% before expenses during the period shown, but that the expense ratio is unchanged. In this case, because the return used is not the Fund's actual returns, the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess the Fund's costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. Note that expenses shown in the table are meant to highlight and help you compare ongoing costs only. The Fund does not impose any sales charges. However, a redemption fee of 2% is applied on the sale of shares sold within 90 days of the date of purchase. The redemption fee does not apply to the redemption of shares acquired through reinvestment of dividends and other distributions. The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions. More information about the Fund's expenses, including annual expense ratios for the prior five fiscal years, can be found in this report. For additional information on operating expenses and other shareholder costs, please refer to the Fund's prospectus.
- -------------------------------------------------------------------------------------- Beginning Ending Account Value Account Value Expenses Paid January 1, 2006 June 30, 2006 During Period* - -------------------------------------------------------------------------------------- Based on Actual Fund Return $1,000.00 $999.60 $6.49 Based on Hypothetical 5% Return (before expenses) $1,000.00 $1,018.30 $6.56 - --------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 1.31% for the period, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 21 OAK VALUE FUND TRUSTEES AND OFFICERS (UNAUDITED) ================================================================================ 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 Senior Portfolio Suite 700 July 2003 Manager with Oak Value Durham, NC 27707 Capital Management, Inc; Age: 46 Prior to July 2003 Executive Vice President and Portfolio Manager with Oak Value Capital Management, Inc. - ---------------------------------------------------------------------------------------------------------------------- Robert G. Dorsey Vice President Indefinite; For more than the past five 1 None 225 Pictoria Drive Since: years, Mr. Dorsey has been a Suite 450 June 2003 Managing Director of Ultimus Cincinnati, OH 45246 Fund Solutions, LLC and Age: 49 Ultimus Fund Distributors, LLC, the Fund's principal underwriter. - ---------------------------------------------------------------------------------------------------------------------- Mark J. Seger Treasurer, Indefinite; For more than the past five 1 None 225 Pictoria Drive Chief Since: years, Mr. Seger has been a Suite 450 Compliance June 2003 Managing Director of Ultimus Cincinnati, OH 45246 Officer Fund Solutions, LLC and Age: 44 Ultimus Fund Distributors, LLC. - ---------------------------------------------------------------------------------------------------------------------- John F. Splain Secretary Indefinite; For more than the past five 1 None 225 Pictoria Drive Since: years, Mr. Splain has been a Suite 450 June 2003 Managing Director of Ultimus Cincinnati, OH 45246 Fund Solutions, LLC and Age: 49 Ultimus Fund Distributors, LLC. - ----------------------------------------------------------------------------------------------------------------------
* Mr. Coats is an "interested person," as defined by the 1940 Act, because of his 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. 22 OAK VALUE FUND TRUSTEES AND OFFICERS (CONTINUED) (UNAUDITED) ================================================================================ 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 - ---------------------------------------------------------------------------------------------------------------------- Joseph T. Jordan, Jr. Chairman and Indefinite; For more than the past five 1 Director of 1816 Front Street Trustee Since: years, Mr. Jordan has served Cardinal Suite 320 May 1995 as the President of Practice State Bank Durham, NC 27705 Management Services, Inc. Age: 60 (a medical practice management firm). - ---------------------------------------------------------------------------------------------------------------------- C. Russell Bryan Trustee; Indefinite; For more than the past five 1 None 121 W. Trade Street Chairman of Since: years, Mr. Bryan has been a Suite 3000 Governance, May 1995 Managing Director of Charlotte, NC 28202 Nomination and Brookwood Associates, L.L.C. Age: 46 Compensation (an investment banking firm). Committee - ---------------------------------------------------------------------------------------------------------------------- John M. Day Trustee; Indefinite; For more than the past five 1 None 5151 Glenwood Ave. Chairman of Since: years, Mr. Day has been Raleigh, NC 27612 Audit May 1995 Managing Partner, Maynard Age: 52 Committee Capital Partners (an investment firm). - ---------------------------------------------------------------------------------------------------------------------- Charles T. Manatt, Esq. Trustee Indefinite; Founder, Manatt, Phelps & 1 Director of 700 12th Street, N.W. Since: Phillips, L.L.P. (a law firm); FedEx Suite 1100 February 2002 from 1999-2001, served as Corporation Washington, DC 20005 U.S. Ambassador to the Age: 70 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. OTHER INFORMATION (UNAUDITED) ================================================================================ A description of the policies and procedures the Fund uses to determine how 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 ("SEC") 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 also available without charge upon request by calling toll-free 1-800-622-2474, or on the SEC's website http://www.sec.gov. The Trust files a complete listing of portfolio holdings for the Fund with the SEC as of the first and third quarters of each fiscal year on Form N-Q. The filings are available upon request, by calling 1-800-622-2474. Furthermore, you will be able to obtain a copy of the filing on the SEC's website at http://www.sec.gov. The Trust's Forms N-Q may also be reviewed and copied at the SEC's Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 23 This page intentionally left blank. 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 225 Pictoria Drive, Suite 450 Cincinnati, Ohio 45246 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 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 Joseph T. Jordan, Jr., Chairman C. Russell Bryan Larry D. Coats, Jr. John M. Day Charles T. Manatt OFFICERS Larry D. Coats, Jr., 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. 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 12(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 was amended to subject all officers of the registrant (not just the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions) to the provisions of the code of ethics. 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 $21,500 and $19,400 with respect to the registrant's fiscal years ended June 30, 2006 and 2005, respectively. (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 $2,200 and $2,100 with respect to the registrant's fiscal years ended June 30, 2006 and 2005, 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) During the fiscal years ended June 30, 2006 and 2005, aggregate non-audit fees of $2,200 and $2,100, respectively, were billed by the registrant's accountant for services rendered to the registrant. 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'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 [schedule filed with Item 1] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The registrant's governance, nomination and compensation committee will consider shareholder recommendations to fill vacancies on the registrant's board of trustees if such recommendations are submitted in writing and addressed to the committee at the registrant's offices. The committee may adopt, by resolution, a policy regarding its procedures for considering candidates for the board of trustees, including any recommended by shareholders. ITEM 11. 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 second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. 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 (a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons: Not applicable (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 required by Rule 30a-2(a) under the Act Exhibit 99.906CERT Certifications required by Rule 30a-2(b) under the Act 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 ------------------------------------------------------------------- By (Signature and Title)* /s/ Larry D. Coats, Jr. ----------------------------------------------------- Larry D. Coats, Jr., President Date August 30, 2006 ------------------------------------------ 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. --------------------------------------------------- Larry D. Coats, Jr., President Date August 30, 2006 ------------------------------------------ By (Signature and Title)* /s/ Mark J. Seger --------------------------------------------------- Mark J. Seger, Treasurer Date August 30, 2006 ------------------------------------------ * Print the name and title of each signing officer under his or her signature. EX-99.CODE ETH 2 ex99codeeth.txt CODE OF ETHICS OAK VALUE TRUST CODE OF ETHICS FOR OFFICERS PURPOSES OF THE CODE - -------------------- The reputation and integrity of the Oak Value Trust (the "Fund") are valuable assets that are vital to the Fund's success. Each officer of the Fund (set forth in Exhibit A) is responsible for conducting the Fund's business in a manner that demonstrates a commitment to the highest standards of integrity. The Fund has adopted a Code of Ethics under Rule 17j-1 under the Investment Company Act of 1940. The Fund's Rule 17j-1 Code is designed to prevent certain conflicts of interest that may arise when officers, employees, or directors know about present or future Fund transactions, have the power to influence those transactions; and engage in securities transactions in their personal account(s). The Fund has chosen to adopt this Code of Ethics for Officers to encourage its officers to act ethically and to question potentially unethical or illegal practices, and to strive to ensure that the Fund's financial disclosures are complete, accurate, and understandable. This Code of Ethics for Officers should be read in conjunction with the Fund's other policy statements, including its Rule 17j-1 Code and its Disclosure Controls and Procedures. PRINCIPLES FOR THE HANDLING OF FINANCIAL INFORMATION - ---------------------------------------------------- The Fund has adopted the following principles to govern the manner in which officers perform their duties. Persons subject to these guidelines include any Fund officer or employee who performs a similar function or who participates in the preparation of any part of the Fund's financial statements. Specifically, persons subject to this Code shall: o Act with honesty and integrity o Avoid actual or apparent conflicts of interest with the Fund in personal and professional relationships o Provide information to the Fund's employees and service providers (adviser, administrator, outside auditor, outside counsel, custodian, etc.) that is accurate, complete, objective, relevant, timely, and understandable o Endeavor to ensure full, fair, timely, accurate, and understandable disclosure in the Fund's periodic reports o Comply with the federal securities laws and other applicable laws and rules, such as the Internal Revenue Code o Act in good faith, responsibly, and with due care, competence and diligence, without misrepresenting material facts or subordinating independent judgment to another end o Respect the confidentiality of information acquired in the course of their work, except where disclosure is expressly permitted or is otherwise legally mandated o Record (or participate in the recording of) entries in the Fund's books and records that are accurate o Refrain from using confidential information for personal advantage VIOLATIONS OF THE CODE - ---------------------- Any action that directly or indirectly contravenes one or more of the Principles outlined above shall be treated as a violation of this Code unless good cause for such apparent contravention is found to exist. Dishonest or unethical conduct or conduct that is illegal will constitute a per se violation of this Code, regardless of whether this Code refers to that particular conduct. A violation of this Code may result in disciplinary action, up to and including termination of employment. The Fund must and will report all suspected criminal violations to the appropriate authorities for possible prosecution, and will investigate, address and report as appropriate, non-criminal violations. ENFORCEMENT OF THE CODE - ----------------------- VIOLATIONS All persons subject to this Code who observe, learn of, or, in good faith, suspect a current or threatened violation of the Code must immediately report the violation in writing to the Compliance Officer, another member of the Fund's senior management, or to the Audit Committee of the Board. An example of a possible Code violation is the preparation and filing of financial disclosure that omits material facts, or that is accurate but is written in a way that obscures its meaning. DISCLOSURES All persons subject to this Code shall file a letter (a "Disclosure Letter") regarding any transaction or relationship that reasonably appears to involve an actual or apparent conflict of interest with the Fund within ten days of becoming aware of such transaction or relationship. A Disclosure Letter should be prepared regarding these transactions or relationships whether you are involved or have only observed the transaction or relationship. All Disclosure Letters shall be submitted to the Compliance Officer, or if it is not possible to disclose the matter to the Compliance Officer, then the Disclosure Letter shall be submitted to another member of the Fund's senior management or to the Audit Committee of the Board. An executive officer of the Fund or the Audit Committee will review all Disclosure Letters and determine whether further action is warranted. All determinations will be documented in writing and will be maintained by the Compliance Officer or other appropriate officers of the Fund. OUTSIDE SERVICE PROVIDERS Because service providers to the Fund, such as the Administrator, Sub-Administrator, outside accounting firm, and custodian, provide much of the work relating to the Fund's financial statements, you should be alert for actions by service providers that may be illegal, or that could be viewed as dishonest or unethical conduct. You should report these actions to the Compliance Officer even if you know, or think, that the service provider has its own code of ethics covering persons who are Fund officers or employees. NON-RETALIATION POLICY Officers and employees who report violations or suspected violations in good faith will not be subject to retaliation of any kind. Reported violations will be investigated and addressed promptly and will be treated confidentially to the extent possible. ANNUAL CERTIFICATION - -------------------- Officers will receive training on the contents and importance of this Code and related policies and the manner in which violations must be reported and how Disclosure Letters must be submitted. Each Officer will be asked to certify on an annual basis that he/she is in full compliance with the Code and any related policy statements. QUESTIONS ABOUT THE CODE - ------------------------ The Fund's Board of Trustees has designated Mark J. Seger to be the Compliance Officer for purposes of implementing and administering this Code. Any questions about this Code should be directed to the Compliance Officer. Adopted: November 8, 2005 EXHIBIT A Persons Covered by this Code of Ethics -------------------------------------- Larry D. Coats, Jr. Robert G. Dorsey Mark J. Seger John F. Splain Margaret C. Landis Bonnie P. Stephens Theresa M. Bridge Wade R. Bridge Craig J. Hunt EX-99.CERT 3 ex99cert.txt CERTIFICATIONS REQUIRED BY RULE 30A-2(A) EX-99.CERT CERTIFICATIONS -------------- I, Larry D. Coats, Jr., certify that: 1. I have reviewed this report on Form N-CSR of Oak Value Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 30, 2006 /s/ Larry D. Coats, Jr. ------------------------------------------------ Larry D. Coats, Jr., President CERTIFICATIONS -------------- I, Mark J. Seger, certify that: 1. I have reviewed this report on Form N-CSR of Oak Value Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 30, 2006 /s/ Mark J. Seger ------------------------------------------------ Mark J. Seger, Treasurer EX-99.906 CERT 4 ex99906cert.txt CERTIFICATIONS REQUIRED BY RULE 30A-2(B) EX-99.906CERT CERTIFICATIONS -------------- Larry D. Coats, Jr., Chief Executive Officer, and Mark J. Seger, Chief Financial Officer, of Oak Value Trust (the "Registrant"), each certify to the best of his knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended June 30, 2006 (the "Form N-CSR") fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER Oak Value Trust Oak Value Trust /s/ Larry D. Coats, Jr. /s/ Mark J. Seger - ----------------------------------- ------------------------------------ Larry D. Coats, Jr., President Mark J. Seger, Treasurer Date: August 30, 2006 Date: August 30, 2006 A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, OR OTHER DOCUMENT AUTHENTICATING, ACKNOWLEDGING OR OTHERWISE ADOPTING THE SIGNATURE THAT APPEARS IN TYPED FORM WITHIN THE ELECTRONIC VERSION OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, HAS BEEN PROVIDED TO OAK VALUE TRUST AND WILL BE RETAINED BY OAK VALUE TRUST AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. 1350 and is not being filed as part of the Form N-CSR filed with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----