4Q15 AS OF DECEMBER 31, 2015 CORE EQUITY COMMENTARY

In the 4 th quarter our Core composite had a preliminary gross return of 7.18% (net of fees: 7.06%) compared to 7.04% for the S&P 500 Index. Below you will find the portfolio’s best and worst performing stocks in the quarter.

AVERAGE CONTRIBUTION* TO BEST PERFORMING SECURITIES WEIGHT PORTFOLIO RETURN

NVIDIA Corporation 2.17% 0.47%

CSRA, Inc. 0.29% 0.23%

Apple, Inc. 1.91% 0.19%

Amgen Inc. 2.37% 0.17%

Visteon Corporation 2.49% 0.15%

AVERAGE CONTRIBUTION* TO WORST PERFORMING SECURITIES WEIGHT PORTFOLIO RETURN

Freeport -McMoRan, Inc. 0.80% -0.26%

Devon Energy Corporation 1.30% -0.21%

QUALCOMM Incorporated 1.93% -0.19%

Aetna Inc. 2.39% -0.18%

Marvell Technology Group Ltd 1.72% -0.15%

*Contribution calculation methodology is available upon request

After a dramatic third quarter decline, capital markets saw a rebound in the fourth quarter, particularly in the Materials [+10.18%], Health Care [+9.4%], and Information Technology [+9.14%] sectors. This market momentum helped to drive the S&P 500 into positive territory for the year, ending at +1.43% including dividends. On the heels of the Federal Reserve’s (Fed) decision to raise short-term interest rates, it seemed that investors got some confirmation that the economy was stable enough to handle a real interest rate above zero. Amidst uncertain international growth prospects and depressed commodity prices, the Fed has telegraphed some confidence in the U.S. economy.

Following the same trend as the third quarter, NVIDIA (NVDA) was a top performing company and Marvell was in the bottom performing group. NVIDIA had a strong quarterly report in November and continues to ride high on the prospect of supplying necessary components for next generation vehicles. At the end of the year, the company highlighted the DRIVE PX2 supercomputing platform for vehicles and is capturing mind share in this market segment.

On the other end of the performance spectrum was Marvell (MRVL), a semiconductor manufacturer that produces components for networking, storage, and wireless uses. After Marvell failed to file its third quarter financials on time, lower than expected revenue projections played up fears that component demand is deteriorating, creating more downward pressure for the stock. Despite these headwinds, we continue to remain invested in Marvell and remain positive about the company’s ability to overcome these short-term issues.

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A new company in the top performing group is CSRA (CSRA), which is a spin-off from CSC’s North American Public Sector business in combination with SRA International. CSRA specifically serves the United States government and public sector clients with a variety of information technology services and has projected revenue over $5.5 billion annually. Upon separation from CSC, the CSRA Board authorized a three year share repurchase plan up to $400 million, and a quarterly dividend policy that amounts to a 1.4% yield (as of 12/31/2015). CSRA continues to win new service contracts and will likely benefit from increased spending on information technology and security in the future.

The worst relative performing sector in the Core Equity composite was the Healthcare sector due to the strong quarterly returns of the index. While the Core Equity portfolio returned [+5.78%] in the sector, the S&P 500 Heath Care sector returned [+9.40%]. Despite this relative underperformance in the quarter, the Core Equity strategy returned [+9.83%] in the same sector for the entire year compared to the S&P 500 sector which returned [+6.91%]. Two contrasting quarterly performers were Amgen (AMGN) and Aetna (AET) as shareholders responded contrarily to M&A news for each company. For Amgen, rumors that the company was “hunting” for a deal amidst other positive news flow pushed the stock up almost 18% in the quarter. In the case of Aetna, one of the portfolio’s highest returning stocks for the year, shareholders reacted negatively to final shareholder approval for its acquisition of Humana, another health care benefits provider that is more leveraged to commercial business.

Investments in Freeport-McMoRan (FCX) detracted from relative performance in the Materials sector. The international copper miner with interests in oil and gas has been plagued by falling commodity prices over the year. Recently, activist investor Carl Icahn took an 8.8% ownership interest in the company and placed two representatives on the Board of Directors. At the end of the year, the company’s co-founder James “Jim-Bob” Moffett resigned his Chairman position, eliciting a new series of investor concerns about the direction of the firm and the cost of change.

CONCLUSION As we start a new year, we continue to focus on stocks that are considered cheap relative to peers yet generate free cash flow, have stable or improving financial metrics, and are good allocators of capital. As we consider the market dynamics moving forward, the Core portfolio is overweight in Information Technology, Health Care, Financials, and Energy; the portfolio is underweight in Consumer Discretionary, Industrials, Consumer Staples, Utilities, and Materials.

We thank you for your ongoing support and look forward to our continued service to you in the future.

Sector characteristics and security performance reflect information for a representative account from the Core composite over the time period. Results for accounts in the composite may vary over time, due to timing, cash flows, among others things. The information provided should not be considered a specific recommendation to purchase or sell any securities and is subject to change. Gross composite performance figures shown are based on time- weighted rates of return, and are net of transaction costs. The net composite performance figures shown reflect gross performance less investment management fees, net of transactions costs. Our advisory fees are disclosed in Form ADV, Part 2 A. All returns reflect the reinvestment of investment income (dividends and/or interest) and capital gains. At the time of publication, the highlighted holdings are ”current” holdings of the composite. The holdings identified do not represent all securities purchased or sold for advisory clients during the relevant time periods. We make no representations that securities purchased, sold, or held in the composite or client accounts will be profitable or will equal the performance of the securities in this commentary. The securities mentioned are selected solely as the largest contributors and detractors to performance of the composite. A complete list of holdings for the preceding 12-month period is available upon request. Estimates and certain information contained in this commentary are based upon proprietary research and should not be considered as investment advice. The S & P 500 Index is a widely recognized capitalization weighted index that measures the performance of the large-capitalization sector of the U.S. stock market. Index performance information was furnished by sources deemed reliable and is believed to be accurate but not guaranteed and the information is subject to correction. Past performance does not guarantee future results.

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