LETTER TO SHAREHOLDERS January 30, 1996
The Oak Value Fund ended the first six months of its fiscal year on a very
strong note. The Fund outperformed the Lipper Growth Fund Index and the S&P
500 for the six month period. The calendar year 1995 was a very good year
for the Oak Value Fund and for the market. The Fund returned 28.84% and
assets in the Fund grew to almost $14 million. We are very pleased with the
performance of the portfolio considering our lack of exposure to the
technology sector.
<TABLE>
<CAPTION>
Period Ending
December 31, 1995
Six Months One Year
<S> <C> <C>
Oak Value Fund 16.15% 28.84%
Lipper Growth Fund Index 11.28% 31.48%
S&P 500 (w/dv) 14.45% 37.58%
</TABLE>
We continue to have numerous undervalued opportunities in the market and in
our portfolio, but our preference is for companies that can grow and
compound their intrinsic value, thereby increasing our shareholder value
over time. The Fund's portfolio is increasingly composed of such companies
which we refer to as "core holdings". Core holdings are companies we
believe exhibit such superior economic characteristics and managements,
that we hope to hold them for many years. We strive to build the portfolio
with companies whose products or services we understand, whose market
positions are defensible and whose management we respect. These holdings
are the ones against which we measure all other potential investments. This
is important because it means that our hurdle for new investments is
continually increasing.
Some of our core holdings include Berkshire Hathaway, AFLAC, Coca-Cola,
Gillette, Disney and Markel. We expect this portion of our portfolio to
grow in number and percentage over time. Our challenge is to first identify
these truly unique companies and then acquire them at a price which gives
us a sufficient margin of safety.
Our niche insurance holdings, which include AFLAC, Markel, Acceptance,
GEICO and Berkshire, all have unique market positions which enable them to
profit in an otherwise very competitive industry. Although these companies
are all in the insurance business, their individual focus reflects our
preference for the specialty insurance providers rather than the broad
multi-line insurance companies. AFLAC is one of the Fund's largest core
holdings and represents a significant portion of the Fund's insurance
exposure. It is a life and health insurance company with additional
interests in broadcasting. The company's primary product is supplemental
cancer insurance in Japan. AFLAC has 90% of the Japanese cancer insurance
market. In Japan and in the U.S., AFLAC benefits from relatively high
barriers to entry due to their highly efficient cost structure. Premium
payments are frequently made through payroll deduction plans.
<PAGE>
AFLAC is also experiencing substantial growth in other supplemental
insurance products both in Japan and the U.S. This Columbus, Georgia based
management team, led by Dan Amos, is among the best in the industry. In
addition to strong historical operating performance, the company benefits
from savvy financial management. The company has a strong balance sheet and
the demonstrated ability to repurchase significant amounts of their own
stock. AFLAC has financed its stock repurchases from cash flow and long term
Japanese Yen denominated debt which carries an after tax interest rate of
less than two percent. AFLAC has the wonderful combination of the
characteristics of a growth company and at less than 11 times this year's
earnings, the price of a value company.
Two mistakes during 1995 made our performance less than it otherwise would
have been. Our investment in Coastal Physician Group and Ideon (formerly
Safecard Services) are ones that we would have been better off without. Our
primary mistake with Coastal was investing in an industry that is
undergoing rapid change. We lulled ourselves into believing that the
predictability and cash flow of their basic business would allow them to
develop new lines of equally profitable and predictable business. We were
wrong. Upon realization of our error, we quickly disposed of our entire
position at prices a good bit higher than today's.
Ideon Group was an example of why sometimes old line value situations may
have more risk than great businesses at reasonable prices. Ideon was in a
business that we understood, credit card registration, at a price that we
felt did not represent its true worth. We bought Ideon when it had a
considerable amount of cash on the balance sheet and a predictable, stable
business earning healthy returns on capital. In a relatively short period
of time, management spent most of the cash on ill fated new business
ventures and damaged their core business. The intrinsic value of Ideon has
diminished considerably under this management. We sold our position when
the main person in management in whom we had faith was fired. Our increased
research effort is evidence of our attempts to be more vigilant in our
analysis of industries, companies and management.
Our ability to find and invest in companies that meet our requirements and
have the potential to become core holdings is based on our research effort.
Our base of research knowledge comes from many diverse sources such as
trade journals and industry conferences, as well as the customers,
suppliers and competitors of companies we currently own or are thinking of
owning.
The most important research we do is visit with management. Last year we
made over 100 company visits. Many of our research visits are with
companies that we realize are not suitable for inclusion in our portfolio.
We visit these companies because we feel we must develop a thorough
knowledge of the industries in which we invest so as to understand the long
term risks and rewards. We spend a considerable amount of time, effort and
money on our research effort. We believe that it is the source of our
future investment success. As you have heard before, we do not define
research as reading brokerage reports to learn the pontifications of Wall
Street analysts. Wall Street research is of limited use to us. Major
brokerage firms that have opinions on the future performance of a
particular company often have more than one reason for being optimistic. A
significant portion of their time is devoted to corporate finance endeavors
(mergers, acquisitions and the raising of equity capital) instead of true
research. The amount of work and research required for us to make an
investment is often significantly above the threshold for an analyst's
recommendation. After all, his or her recommendation is not necessarily an
indication of what he or she would do with their money - ours is!
<PAGE>
We enjoyed having two of our holdings bought out this year significantly
above our cost: Maybelline and GEICO (Government Employees Insurance
Company). We purchased Maybelline in 1994 after its quarterly earnings came
in below analysts' expectations. (The rest of Wall Street apparently
focuses on analysts' forecasts.) With typical Wall Street myopia, the stock
plunged to $17 from a high above $30 only to be acquired by L'Oreal at $44
early in 1996. Our private market value analysis indicated a value well over
twice the then current $17 price. We built our position in the midst of the
turmoil at a time when not a single brokerage firm was positive on the company.
We visited with management during January of 1995 and continued to build our
position while the stock traded in the low twenties. We began to sell our
position in late 1995 as the stock approached what we believe to be a fair
valuation. We had sold most of our position before the deal was announced.
We visited GEICO in March 1995. The primary purpose of our visit was to
learn more about this provider of preferred auto insurance which was 50%
owned by Berkshire. We did not own the stock directly prior to our visit
nor did we anticipate buying the stock after our visit. This visit was
intended to be a Berkshire related research trip. We met with three people
in top management and realized substantial changes had occurred in the
company. We realized that newly available electronic information on
motorists would make GEICO's franchise more valuable because they could
quote and write business on risks they had previously turned down. The
ability to overlay additional business on an existing distribution system
was a great opportunity. Evidently Warren Buffett agreed because Berkshire
has announced that they will buy the remaining public half of the company.
It was with muted glee that we tendered our stock to Berkshire. We thought
that we had found a core holding, albeit long after Buffett found it. The
quick thirty percent that we made on GEICO means not only do we have to
look for a similar quality replacement, but we will not get to participate
directly in their success. The good news is that GEICO will continue to
thrive within Berkshire and we will participate indirectly through our
holding in Berkshire.
We continue to be quite optimistic about the year ahead. While we do not
have an opinion about the general direction of the market, we feel our
portfolio is well positioned and poised for growth. Despite the strong
performance we experienced in the second half of 1995, several of our
largest positions remain at compelling valuations. We anticipate an active
research effort again in 1996 as we endeavor to allocate the Fund's capital
to only the most attractive investments. Patience, discipline and diligence
are the key components of any successful investment program. We will strive
to keep them foremost in ours. We welcome your comments.
Sincerely,
/s/ David R. Carr, Jr.
David R. Carr, Jr.
President and Chief Investment Officer
<PAGE>
OAK VALUE FUND
PERFORMANCE INFORMATION
A representation of the graphic material in the Oak Value Fund's Performance
Information is set forth below:
Comparison of Change in Value of $10,000 Invested in the Oak Value Fund,
Lipper Growth Fund Index and Standard & Poor's 500 Index
<TABLE>
<CAPTION>
STANDARD & POOR'S 500 INDEX: OAK VALUE FUND:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
<S> <C> <C> <C> <C> <C>
01/18/93 10,000 01/18/93 10,000
03/31/93 3.93% 10,393 03/31/93 3.53% 10,353
06/30/93 0.49% 10,443 06/30/93 0.04% 10,357
09/30/93 2.56% 10,711 09/30/93 10.48% 11,442
12/31/93 2.32% 10,960 12/31/93 6.66% 12,204
03/31/94 -3.79% 10,544 03/31/94 -4.86% 11,611
06/30/94 0.42% 10,588 06/30/94 1.79% 11,818
09/30/94 4.89% 11,106 09/30/94 5.53% 12,472
12/31/94 -0.02% 11,104 12/31/94 -3.66% 12,015
03/31/95 9.74% 12,186 03/31/95 9.50% 13,157
06/30/95 9.55% 13,350 06/30/95 1.34% 13,334
09/30/95 7.95% 14,411 09/30/95 10.34% 14,712
12/31/95 6.02% 15,291 12/31/95 5.27% 15,487
<CAPTION>
LIPPER GROWTH INDEX:
QTRLY
DATE RETURN BALANCE
<S> <C> <C>
01/18/93 10,000
03/31/93 1.27% 10,127
06/30/93 1.47% 10,272
09/30/93 4.80% 10,765
12/31/93 2.26% 11,008
03/31/94 -2.99% 10,679
06/30/94 -2.20% 10,444
09/30/94 4.91% 10,957
12/31/94 -1.12% 10,834
03/31/95 7.23% 11,618
06/30/95 10.70% 12,861
09/30/95 9.08% 14,028
12/31/95 1.54% 14,252
<FN>
Past performance is not predictive of future performance.
Oak Value Fund Average Annual Total Returns as of December 31, 1995
1 Year 28.84%
Since inception* 15.98%
* Inception date of the Oak Value Fund was January 18, 1993.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NON-STANDARDIZED TOTAL RETURNS
SINCE
INCEPTION*
1993* 1994 1995 (AS OF 12/31/95)
<S> <C> <C> <C> <C>
Oak Value Fund 22.05% -1.51% 28.84% 54.87%
Lipper Growth Fund Index 10.13% -1.57% 31.48% 42.52%
S&P 500 Index 9.70% 1.32% 37.58% 52.91%
<FN>
*Inception date of the Oak Value Fund was January 18, 1993.
</TABLE>
<PAGE>
<TABLE>
OAK VALUE FUND
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995 (UNAUDITED)
<S> <C>
ASSETS
Investments in securities:
At acquisition cost $ 9,436,141
============
At value (Note 1) $ 11,770,624
Investments in repurchase agreements (Note 1) 1,418,000
Cash 706
Receivable for capital shares sold 65,502
Dividends receivable 9,450
Interest receivable 627
Organization expenses, net (Note 1) 9,749
Other assets 20,370
------------
TOTAL ASSETS 13,295,028
------------
LIABILITIES
Distributions payable 2,664
Payable to affiliates (Note 3) 11,775
Other accrued expenses 3,705
------------
TOTAL LIABILITIES 18,144
------------
NET ASSETS $ 13,276,884
============
Net assets consist of:
Capital shares $ 10,949,500
Accumulated net investment loss ( 27,955)
Accumulated net realized gains from security transactions 20,856
Net unrealized appreciation on investments 2,334,483
Net assets $ 13,276,884
============
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) 944,299
============
Net asset value, offering price and redemption price per
share (Note 1) $ 14.06
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
OAK VALUE FUND
STATEMENT OF OPERATIONS
<CAPTION>
SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
<S> <C>
INVESTMENT INCOME
Dividends $ 58,495
Interest 23,598
------------
TOTAL INVESTMENT INCOME 82,093
------------
EXPENSES
Investment advisory fees (Note 3) 52,128
Registration fees 18,498
Professional fees 17,271
Accounting services fees (Note 3) 12,000
Administrative services fees (Note 3) 11,494
Trustees' fees and expenses 7,465
Postage and supplies 6,502
Shareholder services and transfer agent fees (Note 3) 6,000
Insurance expense 4,938
Custodian fees 3,690
Printing of shareholder reports 2,033
Amortization of organization expenses (Note 1) 2,000
Other expenses 901
------------
TOTAL EXPENSES 144,920
Fees waived by the Adviser (Note 3) ( 34,872)
------------
NET EXPENSES 110,048
------------
NET INVESTMENT LOSS ( 27,955)
------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions 113,611
Net change in unrealized appreciation/depreciation
on investments 1,619,362
------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 1,732,973
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 1,705,018
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
OAK VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 1995 AND JUNE 30, 1995
<CAPTION>
SIX MONTHS
ENDED TEN MONTHS
DECEMBER 31, ENDED
1995 JUNE 30,
(UNAUDITED) 1995(b)
<S> <C> <C>
FROM OPERATIONS:
Net investment loss $ ( 27,955) $ ( 39,220)
Net realized gains from security transactions 113,611 247,324
Net change in unrealized appreciation/depreciation on investments 1,619,362 272,160
----------- -----------
Net increase in net assets from operations 1,705,018 480,264
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net realized gains from security transactions ( 92,392) ( 515,382)
----------- ----------
FROM CAPITAL SHARE TRANSACTIONS(a):
Proceeds from shares sold 1,959,735 3,131,449
Net asset value of shares issued in reinvestment
of distributions to shareholders 89,729 503,235
Payments for shares redeemed ( 635,274) ( 2,118,927)
----------- ----------
Net increase in net assets from capital share transactions 1,414,190 1,515,757
----------- ----------
TOTAL INCREASE IN NET ASSETS 3,026,816 1,480,639
NET ASSETS:
Beginning of period 10,250,068 8,769,429
----------- ----------
End of period $ 13,276,884 $ 10,250,068
=========== ===========
<FN>
(a)Summary of capital share activity:
Shares sold 145,993 270,560
Shares issued in reinvestment of distributions to shareholders 6,382 46,309
Shares redeemed ( 48,722) ( 177,823)
----------- ----------
Net increase in shares outstanding 103,653 139,046
Shares outstanding, beginning of period 840,646 701,600
----------- ----------
Shares outstanding, end of period 944,299 840,646
=========== ===========
(b)Effective May 19, 1995, the Fund was reorganized and changed its fiscal
year-end to June 30 (Note 4).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
OAK VALUE FUND
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED TEN MONTHS YEAR JANUARY 18,
DECEMBER 31, ENDED ENDED 1993(b) TO
1995 JUNE 30, AUGUST 31, AUGUST 31,
(UNAUDITED) 1995(a) 1994 1993
<S> <C> <C> <C> <C>
Net asset value at beginning of period $ 12.19 $ 12.50 $ 10.96 $ 10.00
------------ ------------ ------------- ------------
Income from investment operations:
Net investment loss ( 0.03) ( 0.05) ( 0.02) ( 0.03)
Net realized and unrealized gains on investments 2.00 0.55 1.78 0.99
------------- ------------ ------------- ------------
Total from investment operations 1.97 0.50 1.76 0.96
------------- ------------- -------------- ------------
Less distributions:
From net realized gains ( 0.10) ( 0.81) ( 0.22) --
-------------- ------------- -------------- -----------
Net asset value at end of period $ 14.06 $ 12.19 $ 12.50 $ 10.96
========= ========= ========= =========
Total return 32.13%(d) 5.78%(d) 16.07% 16.11%(d)
========= ========= ========= ===========
Net assets at end of period (000's) $ 13,277 $ 10,250 $ 8,769 $ 1,890
========= ========= ========= =========
Ratio of expenses to average net assets(c) 1.90%(d) 1.89%(d) 1.89% 2.19%(d)
Ratio of net investment loss to average net assets (0.48%)(d) (0.53%)(d) (0.58%) (0.81%)(d)
Portfolio turnover rate (annualized) 70%(d) 103%(d) 91% 43%(d)
<FN>
(a)Effective May 19, 1995, the Fund was reorganized and changed its fiscal
year-end to June 30 (Note 4).
(b)Commencement of operations.
(c)Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 2.51%(c), 2.38%(c), 2.80%,
and 6.29%(c) for the periods ended December 31, 1995, June 30, 1995, August
31, 1994 and August 31, 1993, respectively (Note 3).
(d)Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
OAK VALUE FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED)
<CAPTION>
MARKET
SHARES COMMON STOCKS -- 88.6% VALUE
<S> <C> <C>
ADVERTISING -- 5.1%
15,450 Interpublic Group Companies, Inc. $ 670,144
---------
BEVERAGES -- 4.7%
8,400 Coca-Cola Company 623,700
---------
BROADCASTING -- 7.4%
4,600 Capital Cities/ABC, Inc. 567,525
10,450 E. W. Scripps Company 411,469
---------
978,994
---------
CONGLOMERATE -- 1.7%
7 Berkshire Hathaway, Inc.(a) 224,735
---------
CONSUMER PRODUCTS -- 8.4%
8,100 Avon Products, Inc. 610,538
10,000 Premark International, Inc. 506,250
---------
1,116,788
---------
CONSUMER SERVICES -- 4.9%
18,875 CUC International, Inc.(a) 644,109
---------
ENTERTAINMENT -- 1.8%
4,000 The Walt Disney Company 236,000
---------
FINANCIAL INSTITUTIONS -- 4.4%
14,050 American Express Company 581,319
---------
HEALTHCARE/PHARMACEUTICAL -- 6.3%
17,050 R. P. Scherer Corporation(a) 837,581
---------
INSURANCE - ACCIDENT & HEALTH -- 5.8%
17,950 AFLAC, Inc. 778,581
---------
INSURANCE - PROPERTY & CASUALTY -- 10.0%
41,525 Acceptance Insurance Companies, Inc.(a) 617,684
9,500 Markel Corporation(a) 717,250
---------
1,334,934
---------
MANUFACTURED HOUSING -- 5.5%
19,200 Oakwood Homes Corporation 736,800
---------
MEDIA -- 0.6%
3,700 Grupo Televisa S.A., ADR 83,250
---------
MORTGAGE BANKING -- 4.3%
6,900 Federal Home Loan Mortgage Corporation 576,150
---------
<PAGE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARKET
SHARES COMMON STOCKS -- 88.6% VALUE
<S> <C> <C>
PACKAGING -- 6.6%
4,400 Avery-Dennison Corporation $ 220,550
15,800 Crown Cork & Seal Company, Inc.(a) 659,650
-----------
880,200
-----------
PERSONAL CARE/COSMETICS -- 8.4%
8,200 Colgate-Palmolive Company 576,050
5,700 Gillette Company 297,112
6,575 Maybelline, Inc. 238,344
-----------
1,111,506
-----------
PUBLISHING -- 2.7%
21,100 Torstar Corporation 355,833
-----------
TOTAL COMMON STOCKS (COST $9,436,141) $11,770,624
-----------
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS (b) -- 10.7% VALUE
<S> <C> <C>
$ 1,418,000 Star Bank, 5.30%, dated 12/29/95, due 01/02/96,
===============
repurchase proceeds $1,418,835 (Cost $1,418,000) $ 1,418,000
-----------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE-- 99.3% $13,188,624
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.7% 88,260
-----------
NET ASSETS -- 100.0% $13,276,884
===========
<FN>
(a)Non-income producing security.
(b)Repurchase agreement is fully collateralized by $1,495,000 Government
National Mortgage Association adjustable rate mortgage pool maturing 05/20/22.
The market value of the collateral at December 31, 1995 was $1,539,694.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
OAK VALUE FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Oak Value Fund (the Fund) is a diversified series of shares of The
Tuscarora Investment Trust (the Trust). The Trust, registered as an open-end
management investment company under the Investment Company Act of 1940, as
amended, was organized as a Massachusetts business trust on March 3, 1995.
The Fund itself began operations on January 18, 1993 as a series of the
Albemarle Investment Trust (Note 4).
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 New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise,
at the last quoted bid price. Securities traded on a national stock exchange
are valued based upon the closing price on the principal exchange where the
security is traded.
Repurchase agreements -- Repurchase agreements, which are collateralized by
U.S. Government obligations, are valued at cost which, together with accrued
interest, approximates market. At the time the Fund enters into a repurchase
agreement, the seller agrees that the value of the underlying securities,
including accrued interest, will at all times be equal to or exceed the face
amount of the repurchase agreement. In addition, the Fund actively monitors
and seeks additional collateral, as needed.
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 are equal to the net asset value per share.
Investment income and distributions to shareholders -- Interest income is
accrued as earned. Dividend income is recorded on the ex-dividend date.
Dividends arising from net investment income, if any, are declared and paid
annually. 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. Income distributions and capital gain
distributions are determined in accordance with income tax regulations, which
may differ from generally accepted accounting principles.
Organization expenses -- Expenses of organization, net of certain expenses
paid by the Adviser, have been capitalized and are being amortized on a
straight-line basis over five years.
Security transactions -- Security transactions are accounted for on trade
date. Securities sold are valued on a specific identification basis.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a 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.
<PAGE>
<TABLE>
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 based upon the federal income tax cost of
portfolio investments (excluding repurchase agreements) of $9,436,141 as of
December 31, 1995:
<CAPTION>
<S> <C>
Gross unrealized appreciation $2,372,292
Gross unrealized depreciation (37,809)
----------
Net unrealized appreciation $2,334,483
==========
</TABLE>
2. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investment securities,
other than short-term investments, amounted to $3,792,088 and $3,763,642,
respectively, for the six months ended December 31, 1995.
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENT
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 .90% of the
Fund's average daily net assets.
The Adviser currently intends to waive its investment advisory fees to the
extent necessary to limit the total operating expenses of the Fund to 1.90% of
the Fund's average daily net assets. In accordance with the above limitation,
the Adviser voluntarily waived $34,872 of its investment advisory fees for the
six months ended December 31, 1995.
Certain trustees and officers of the Trust are also officers of the Adviser.
ADMINISTRATION AGREEMENT
Under the terms of the Administration Agreement between the Trust and MGF
Service Corp. (MGF), MGF supplies non-investment related statistical and
research data, internal regulatory compliance services and executive and
administrative services for the Fund. MGF supervises the preparation of tax
returns, reports to shareholders of the Fund, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees. For the performance of these
administrative services, MGF receives a monthly fee based on the Fund's
average daily net assets.
<PAGE>
TRANSFER AGENT AND SHAREHOLDER SERVICE AGREEMENT
Under the terms of the Transfer, Dividend Disbursing, Shareholder Service and
Plan Agency Agreement between the Trust and MGF, MGF 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. For these services, MGF receives a monthly fee based on
the number of shareholder accounts in the Fund. In addition, the Fund pays
out-of-pocket expenses including, but not limited to, postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of the Accounting Services Agreement between the Trust and
MGF, MGF calculates the daily net asset value per share and maintains the
financial books and records of the Fund. For these services, MGF receives a
monthly fee from the Fund. In addition, the Fund pays certain out-of-pocket
expenses incurred by MGF in obtaining valuations for the Fund's portfolio
securities.
Certain officers of the Trust are also officers of MGF.
4. REORGANIZATION OF THE OAK VALUE FUND
The Oak Value Fund was originally organized as a series of the Albemarle
Investment Trust, a Massachusetts business trust. On May 19, 1995, pursuant
to an Agreement and Plan of Reorganization, all assets and liabilities of this
series (the Predecessor Fund), which had substantially identical investment
objectives and policies as the Fund, were transferred in exchange for all
capital shares of the Fund. The Predecessor Fund then distributed to its
shareholders as a liquidating dividend all capital shares of the Fund in
exchange for and in cancellation of its capital shares.
For federal income tax purposes, the reorganization qualified as a tax-free
reorganization with no tax consequences to the Predecessor Fund, the Fund or
the shareholders.
In connection with the reorganization, the Fund changed its fiscal year-end
from August 31 to June 30.
<PAGE>
OAK VALUE FUND
INVESTMENT ADVISOR
Oak Value Capital Management, Inc.
3100 Tower Boulevard, Suite 800
Durham, North Carolina 27707
1-800-680-4199
ADMINISTRATOR
MGF Service Corp.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-622-2474
INDEPENDENT AUDITORS
Arthur Andersen LLP
425 Walnut Street
Cincinnati, OH 45202
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
BOARD OF TRUSTEES
George W. Brumley III
C. Russell Bryan
David R. Carr, Jr.
John M. Day
Joseph T. Jordan, Jr.
OFFICERS
George W. Brumley III, President
David R. Carr, Jr., Vice President and Treasurer
John F. Splain, Secretary
SEMI-ANNUAL REPORT
DECEMBER 31, 1995
(UNAUDITED)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>
<NAME> TUSCARORA INVESTMENT TRUST - OAK VALUE
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 10,854,141
<INVESTMENTS-AT-VALUE> 13,188,624
<RECEIVABLES> 75,579
<ASSETS-OTHER> 30,119
<OTHER-ITEMS-ASSETS> 706
<TOTAL-ASSETS> 13,295,028
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18,144
<TOTAL-LIABILITIES> 18,144
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,949,500
<SHARES-COMMON-STOCK> 944,299
<SHARES-COMMON-PRIOR> 840,646
<ACCUMULATED-NII-CURRENT> (27,955)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 20,856
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,334,483
<NET-ASSETS> 13,276,884
<DIVIDEND-INCOME> 58,495
<INTEREST-INCOME> 23,598
<OTHER-INCOME> 0
<EXPENSES-NET> 110,048
<NET-INVESTMENT-INCOME> (27,955)
<REALIZED-GAINS-CURRENT> 113,611
<APPREC-INCREASE-CURRENT> 1,619,362
<NET-CHANGE-FROM-OPS> 1,705,018
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 92,392
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 145,993
<NUMBER-OF-SHARES-REDEEMED> 48,722
<SHARES-REINVESTED> 6,382
<NET-CHANGE-IN-ASSETS> 3,026,816
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (363)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 52,128
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 144,920
<AVERAGE-NET-ASSETS> 11,506,069
<PER-SHARE-NAV-BEGIN> 12.19
<PER-SHARE-NII> (.03)
<PER-SHARE-GAIN-APPREC> 2.00
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .10
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.06
<EXPENSE-RATIO> 1.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
