With a flat market, three month portfolio value charts that would resemble the horizon, and a blank slate for portfolio transactions, you might think we hung out the "gone fishin'" sign for the quarter. The broad market didn't move a whole lot, with the S&P 500 up just under 2% for the second quarter. The Fund's performance barely budged, closing slightly down at quarter-end after having posted an above average return for the first quarter. It was also apparently quiet on the portfolio activity front, as we initiated no new, nor eliminated any existing positions during the second quarter. We will provide additional portfolio detail in our forthcoming Second Quarter 2004 Investment Adviser's Review.

One could be tempted to conclude that not much happened if the portfolio is viewed as names on a page with share amounts multiplied by a new set of closing prices to derive total market values. As the companies participate in the real economy however, insurance polices are offered and collected upon, candy bars and soft drinks are served, carburetors and air filters are sold, customers are entertained, trips are booked, hotel rooms are slept in, gifts are given and celebrations toasted. Considering such outcomes for the underlying businesses we own in the Fund portfolio that pursue these and other real world endeavors is where we spend much of our time. It's why there is always something "going on," even when that activity isn't necessarily readily apparent.

We carefully track business progress over time to shape our evolving view of long-term value, and the sometimes subtle shifts occurring in competitive positions which influences that value. The process of building and maintaining the knowledge required to implement portfolio decisions is dynamic, though it does not necessarily correlate with the research we undertake or with portfolio activity, and certainly not with the calendar or with stock price changes in the short-term. What happens in any particular quarterly (or longer) period with respect to portfolio performance or activity is often dictated by price movements that are largely random in nature. We react to changes - in stock prices or business values or both - based on our insight.

This insight is informed by knowledge we have spent years acquiring and which we endeavor to add to on a continual basis through research about existing and prospective company investments. From a maintenance perspective, we are conscious that stasis is not the nature of capitalism, and that competitive situations shift over time. Whether the change is rapid or gradual, it is clearly part of our job to focus on the evolution of businesses owned in the Fund, carefully considering the implications of both emerging threats and germinating seeds of opportunity.

We also continue to actively evaluate similar considerations for potential new investments, attempting to understand the competitive framework of companies and the industries in which they operate. We consider industry background, reviews of accounting and financial history, the knowledge we gain over time from company visits and conversations with management, and the insight we derive from all of that. Essentially, whether for new or existing allocations of capital, ours is a process of sifting through volumes of data to identify the key, relevant items and turn our collective investigation into information and knowledge we can act on with confidence.

As we have indicated over the past few quarters, and consistent with our relative lack of portfolio actions, current valuations have made finding outlets for that knowledge in the form of an attractive price entry points somewhat challenging of late. We will remain disciplined and patient. Interim market volatility has historically provided attractive price entry points for quality businesses, and we are confident it will do so again over a reasonable time horizon. When it does, it is quite likely that some of the work we've done during this "quiet period" will get put to work building the portfolio positions of tomorrow.

As you know, on average, Berkshire Hathaway is the largest single position in the Fund portfolio. We have therefore published a 2004 summary of our thoughts about the company and the important allocation of capital it represents for Fund shareholders. To obtain a copy, please visit the Fund's website at www.oakvaluefund.com or contact us at 800-680-4199 or info@oakvalue.com. We hope that the Berkshire commentary will offer you a window into the philosophy we apply to investing. The pursuit of businesses that possess similar long-term, defensible competitive advantages remains the goal of our professional trek.

Oak Value Fund Co-Managers,

David R. Carr, Jr.

Larry D. Coats, Jr.

Matthew F. Sauer

Important Information: The information presented above is not to be construed as an offer or solicitation to purchase the Oak Value Fund (the "Fund"), which is offered only by prospectus. 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. Information concerning the performance of the Fund and its investment adviser's recommendations over the last year are available upon request. Past performance is no indication of future performance. You should not assume that future recommendations will be as profitable or will equal the performance of past recommendations. 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 this letter should be construed as a forecast of overall market movements, either in the short or long term.

For more information about the Oak Value Fund, including objectives, strategies, risks, charges and expenses, please obtain a copy of the Fund's prospectus which is available by calling 1-800-622-2474 or at www.oakvaluefund.com. Please read the prospectus carefully before you invest. The Oak Value Fund is distributed by Ultimus Fund Distributors, LLC.