Executive Summary

Opportunity in Quality: As of March 31, 2014, the highest quality companies are now trading two standard deviations below their historic range relative to all companies.

Risk and Return Balance: The length of the bull market, the size of the advance and the price of stocks relative to their likely earnings and interest rates imply that expected returns and risks of most equity strategies are currently balanced.

Our focus remains on finding companies with a sustainable competitive advantage that are trading at reasonable prices.

Our focus on high quality, undervalued companies with improving business prospects continues to yield strong relative performance in our view. The Navigator All Cap strategy gained approximately 2.11% (gross)/1.35% (net) for the first quarter and 27.05% (gross)/23.36% (net) for the 12 months ending March 31, 2014. On a gross basis, performance was in excess of the performance of both the S&P 500 (1.81% and 21.86% respectively) or Russell 3000 (1.97%, 22.61%). Midcap stocks Alliant Techsystems, Mednax and Helmerich & Payne each gained more than 16% for the quarter as gains were concentrated among midcap and value holdings. Phone number portability company, NSR lost about a third of its value as rumors that it may lose its monopoly gathered strength. Navigator All Cap’s portfolio possesses value metrics that we believe approximate that of the S&P 500, and we anticipate that the long term earnings growth rate of this portfolio’s holdings may exceed that of the S&P 500.