Westport Funds’ portfolio manager comments for the fourth quarter 2014.

Westport Funds: Portfolio Review

For 2014 The Westport Fund Class R shares returned 8.62% trailing the Russell Midcap® Index return of 13.22%. Since the initiation of the third round of Quantitative Easingi (“QE”) in September 2012 investors have sought yield from fixed income alternatives including equities that have bond-like characteristics, primarily REITs and utilities, as the returns from fixed income securities declined. Within the Russell Midcap® Index these two industry sectors, which are 15% of the Index, provided the second and third highest returns for 2014 at 27.9% and 26.0%, respectively and contributed approximately 372 basis pointsii of the Index’s return. In contrast, the Westport Fund had effectively no holdings in either industry sector. This absence accounted for 81% of the performance differential. The remaining 88 basis points reflect an underweight in financials in the Westport Fund relative to the Index. The results in 2014 for the other widely used midcap index, the Standard & Poor’siii MidCap®400 Index (S&P MidCap®400) returned 9.77% with approximately 300 basis points from the roughly 14% allocated to REIT’s and Utilities. Excluding these two interest rate sensitive sectors, the Russell Midcap® Index, the Westport Class R shares and the S&P MidCap®400 returned 9.50%, 8.62% and 6.77%, respectively. An investment strategy that allocates as much as 15% of a portfolio to yield surrogateiv sectors (REIT’s and utilities) is either tracking a reference index or betting on the direction of interest rates. Neither strategy is likely to consistently outperform the reference index.

Overall The Westport Fund’s portfolio performed reasonably well given the absence of yield surrogates. Of the 38 portfolio holdings at year end, 33 finished the year with gains and 5 recorded losses. The largest loss for the year was recorded by FMC Corp. at 95 basis points and was the result of lower demand for its crop chemicals due to excellent growing conditions for corn and soybeans in the United States as well as disruptions in South America for crops such as sugar cane. The five negative performers cost The Westport Fund 235 basis points for the year with -53 basis points from Precision Castparts Corp. (a supplier of metal components), -41 basis points from Stone Energy Corp. (an oil and gas exploration company) and -39 basis points from Trimble Navigation Ltd. (productivity enhancing solutions). Positive contributions included Universal Health Services, Inc. (UHS), Class B shares (acute and behavioral hospitals) at 136 basis points helped by the Affordable Care Act; Air Products & Chemicals, Inc. (APD) (industrial gases) at 79 basis points based on the new CEO improving corporate efficiency and financial results; Checkpoint Software Technologies, Ltd. (CKP) (security solutions) at 72 points benefitting from increased security software sales; and CVS Health Corp. (CVS) (integrated pharmacy solutions) at 70 basis points as it becomes a distributor of health services.

Westport Funds: M&A activity in 2014

Two portfolio companies agreed to acquisitions in 2014. International Rectifier Corp. is being acquired by Infineon Technologies AG (XTER:IFX) at $40 per share in cash, a 50% premium to its share price before the transaction was announced. PetSmart, Inc. has received an $83 per share cash bid from BC Partners Holdings, Ltd., a private equity fund for a gain of 39% from its price before it announced it would explore restructuring alternatives. Two new companies were added to the portfolio in 2014, Bed Bath & Beyond, Inc. (BBBY) after it provided a disappointing outlook for its 2014 year and Zebra Technologies Corp. (ZBRA), Class A shares which sold off on the announcement that it would purchase the mobile computing services unit of Motorola Solutions (MSI). Companies removed from the portfolio on a valuation basis include Praxair Inc., State Street Corp., WSFS Financial Corp., Brown & Brown, Inc., American Eagle Outfitters, Inc., Laboratory Corp. of America Holdings, McCormick & Company, Inc. and CA, Inc.

Comparing long term results, the Westport Fund Class R shares average annual return has outperformed that of the Russell Midcap® Index 11.11% to 9.50% over the 17 years since the Fund’s inception. Lipper places the Westport Fund in its multi-cap core category where the average annual return over the 17 year period is 6.55%. The Westport Fund’s investment focus on the long term and on companies with a competitive advantage has been instrumental in producing these results.

Investors should consider the investment objectives, risk, and charges and expenses of The Westport Funds carefully before investing; this and other information about the Funds is in the prospectus, or summary prospectus, which can be obtained by calling 1-888-593-7878 or at our website www.westportfunds.com. Read the prospectus or summary prospectus carefully before you invest.

The views expressed and any forward-looking statements are as of the date of the publication and are those of the portfolio managers and/or the Advisor. Future events or results may vary significantly from those expressed and are subject to change at any time in response to changing circumstances and industry developments.

There are special risks associated with small and mid-capitalization issues such as market illiquidity and greater market volatility than larger capitalization issues.

i Quantitative Easing means the unconventional monetary policy used by the Federal Reserve Bank to stimulate the economy when standard policy has been ineffective.

ii Basis Point is a unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument. iii Standard and Poor’s MidCap®400 Index seeks to track the performance of mid-cap U.S. equities, representing more than 7% of available U.S. market cap.

iv Yield Surrogates are U.S. fixed income securities and other U.S. securities with bond-like characteristics. Portfolio composition is subject to change at any time and should not be considered a recommendation to purchase or sell a particular security. On December 31, 2014, the following securities comprised these respective percentages of the Westport Fund: FMC Corp (3.4%), Precision Castparts Corp (5.0%), Stone Energy Corp (0.4%), Trimble Navigation Ltd. (0.6%), Universal Health Services, Inc., Class B shares (5.5%), Air Products and Chemicals, Inc. (3.5%), Checkpoint Software Technologies, Ltd. (4.4%), CVS Health Corp. (2.9%), International Rectifier Corp. (0.7%), Infineon Technologies AG (0.0%), PetSmart, Inc. (1.5%), BC Partners Holdings, Ltd. (0.0%), Bed Bath and Beyond, Inc. (1.1%), Zebra Technologies Corp., Class A shares (1.1%), Praxair Inc. (0.0%), State Street Corp. (0.0%), WSFS Financial Corp. (0.0%), Brown & Brown, Inc. (0.0%), American Eagle Outfitters, Inc. (0.0%), Laboratory Corp. of America Holdings (0.0%), McCormick & Company, Inc. (0.0%), and CA, Inc. (0.0%)

Westport Funds Q4 2014 Portfolio Manager Comments