Summary

-The Navigator Fund invests in the Navigator trading program (Navigator Program), a systematic managed futures trading program managed directly by James River. The Navigator Program consists of independent trading strategies that are evaluated individually as well as within the entire portfolio. All strategies trade diverse currency, commodity and financial futures markets worldwide. James River utilizes technical analysis of price action and market volatility as a means of predicting market opportunity and discovering any repeating patterns in past historical prices. James River emphasizes risk-control and money management principles in an attempt to conserve capital during unfavorable, trendless periods in the markets so as to maintain an equity base sufficient to generate substantial overall capital appreciation when markets are trending higher or lower. • Each strategy manages its own risk relative to its allocation of capital based on systematic stops. • Each trade is allocated a small percentage of risk capital with positions sized such that each position within any strategy risks the same percentage of portfolio capital as any other position within that strategy?s portfolio. • Trades are balanced to have equal risk among sectors. • Positions are sized within the long-term and medium-term strategies so as to have approximately equal volatility between the two strategies. • Position size limits are placed on individual trades to keep the fund from overtrading in times of abnormally low volatility. • Each strategy is specifically selected for its own discrete method of entering and exiting trades. This independent approach minimizes concentration risk when markets are in crisis and become highly correlated. • The combination of both different time frames and different trading approaches are intended to produce a smoother return profile than single strategy funds or than multiple strategy funds that only differ by their timeframe. • If the total portfolio earns excessive gains, the Navigator Program will systematically take profits by reducing all positions across both strategies. We believe that when a majority of markets become overextended, a reversal will soon follow. After that reversal, the Navigator Program will reinitiate its position sizes. We have found that this overlay significantly reduces volatility and drawdowns and sacrifices very little return. • If the volatility of an individual market becomes excessive relative to the volatility of the individual market when the trade was initiated and its price is overextended, then the system stop is dramatically accelerated and profits can be realized with a relatively small retracement in price. If a trade is then re-entered, such trade will be entered at a size consistent with the current level of market volatility.