This shareholder letter is part of the Bretton Fund 2018 Semiannual Report (pdf).

August 17, 2018

Dear Fellow Shareholders:

The Bretton Fund’s net asset value per share (NAV) as of June 30, 2018, was $32.04. The performance for the first half of the year was 3.79% and 4.81% for the second quarter.

Total Returns as of June 30, 2018 (A)

2nd QuarterFirst Half 20181 YearAnnualized 3 YearsAnnualized 5 YearsAnnualized Since Inception
Bretton Fund4.81%3.79%21.36%8.09%8.63%11.56%
S&P 500 Index (B)3.43%2.65%14.37%11.93%13.42%14.23%

(A) All returns include change in share prices and, in each case, include reinvestment of any dividends and capital gain distributions. The inception date of the Bretton Fund was September 30, 2010.

(B) The S&P 500® Index is a broad-based stock market index based on the market capitalizations of 500 leading companies publicly traded in the US stock market, as determined by Standard & Poor’s, and captures approximately 80% coverage of available market capitalization.

Performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. You may obtain performance data current to the most recent month-end here or by calling 800.231.2901.

All returns include change in share prices, reinvestment of any dividends, and capital gains distributions. The index shown is a broad-based, unmanaged index commonly used to mea- sure performance of US stocks. The index does not incur expenses and is not available for investment. The fund’s expense ratio is 1.50%. The fund’s principal underwriter is Rafferty Capital Markets, LLC.

Contributors to Performance

Alphabet was the largest contributor to performance during the second quarter, adding 0.8% to the fund. TJX, announcing healthy first-quarter earnings, also contributed 0.8%, and Mastercard added 0.7%.

After a long run of great price performance, the stocks of Bank of America and JPMorgan Chase took a bit of breather this quarter, easing 0.4% and 0.3% off the fund, respectively. Berkshire Hathaway, which also owns a substantial amount of bank stocks, took 0.3% off the fund’s performance.


Security% of Net Assets
Alphabet, Inc.10.9%
Union Pacific Corp.7.5%
Bank of America Corp.6.6%
Mastercard, Inc.6.3%
Ross Stores, Inc.6.3%
AutoZone, Inc.5.8%
Wells Fargo & Company5.7%
American Express Co.5.6%
The TJX Companies, Inc.5.5%
JPMorgan Chase & Co.5.5%
Continental Building Products, Inc.5.4%
Visa, Inc.5.3%
Carter’s, Inc.5.2%
Berkshire Hathaway, Inc.4.8%
Canadian Pacific Railway Limited4.6%
Discovery, Inc.3.2%
HD Supply Holdings, Inc.2.9%
Armanino Foods of Distinction, Inc.2.2%

*Cash represents cash and cash equivalents less liabilities in excess of other assets.

We exited a handful of investments this quarter. Our saga with MEDNAX came to close, resulting in an overall 31.1% loss. The doctor staffing company had a great multi-decade run buying up private doctor practices, but the twin pressures of weak reimbursement rates and high salaries in recent years killed margins. We had a much better experience with Verisk, which holds a near-monopolistic position on data and software for the property insurance industry. Despite paying a relatively high initial price, we saw a 14.9% annualized return over the past three years as its core business thrived and it made good acquisitions. We also sold off paint company PPG, giving us a 9.5% annualized return over the past two years, which we believe represents a solid—though not spectacular—return. Growth was underwhelming, and we found better uses for our capital.

The fund didn’t make any new investments in the quarter, but added to positions in AutoZone, Berkshire Hathaway, and Wells Fargo.

As we mentioned last quarter, the corporate tax cut has increased earnings for our companies—and most US companies—raising their underlying values. While the market isn’t cheap, we are finding a number of attractive situations and have essentially been fully invested most of this year.

As always, thank you for investing.

Stephen Dodson            Raphael de Balmann
Portfolio Manager         Portfolio Manager