October 20, 2023

Dear Fellow Shareholders:

Despite a weak quarter, fears of a slowing economy, and inflation concerns, the market is having a strong year, with the S&P 500 up 13.07% year-to-date and the Bretton Fund up 12.26%.

Total Returns as of September 30, 2023

3rd Quarter1 Year3 Years5 Years10 YearsSince 9/30/10 Inception
Bretton Fund-1.38%25.27%11.83%9.75%9.87%11.38%
S&P 500 Index-3.27%21.62%10.15%9.92%11.91%12.90%

(A) 1 Year, 3 Years, 5 Years, 10 Years, and Since Inception returns include change in share prices and, in each case, include reinvestment of any dividends and capital gains 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 at 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 measure performance of US stocks. The index does not incur expenses and is not available for investment. The fund’s expense ratio is 1.35%.The fund’s principal underwriter is Arbor Court Capital, LLC.

Contributors to Performance
Alphabet continued its rebound from last year’s mini-panic that new artificial intelligence companies—specifically OpenAI and its wildly popular ChatGPT product—would unwind the Google business model. As outlined in our annual report last year, these AI platforms known as “large language models” are quite incredible, but it’s not totally clear how much commercial risk they pose to Google’s core business of advertising. Google remains the most effective way for advertisers, particularly small businesses, to reach likely customers. It also launched its own version of ChatGPT, known as Bard, which works really well. Investors have become increasingly optimistic on the company’s prospects. The stock added 0.86% to the fund’s performance in the quarter.

Progressive managed to push through price increases to account for the increasing costs of auto accidents, while also managing to add new customers and take market share. It added 0.33%. TJX added 0.29%.

The biggest detractor was American Express, which took 0.72% off performance. The company reported strong revenue growth and earnings, but it seems investors are nervous about the slowing economy and the impact high interest rates may have on its customers’ ability to pay their credit card bills. We think Amex is well reserved for potential increases in delinquencies and will do well even in a downturn and with prolonged higher rates. Many of their cards are paid in full, membership fees are paid in advance, and notably, their customers tend to be wealthier than other card issuers.

S&P Global took off 0.45% and Microsoft 0.43%.

Portfolio as of September 30, 2023

Security% of Net Assets
Alphabet, Inc.10.44%
AutoZone, Inc.7.06%
The Progressive Corporation6.47%
The TJX Companies, Inc.5.80%
NVR, Inc.5.72%
Microsoft Corporation5.62%
Ross Stores, Inc.5.45%
Mastercard, Inc.5.16%
UnitedHealth Group Incorporated5.04%
Visa, Inc.4.89%
S&P Global, Inc.4.72%
JPMorgan Chase & Co.4.64%
American Express Co.4.37%
Union Pacific Corp.4.34%
Bank of America Corp.4.00%
Dream Finders Homes, Inc.3.85%
Berkshire Hathaway, Inc.3.65%
Moody's Corporation3.65%
Revvity, Inc.1.69%
Armanino Foods of Distinction, Inc.1.46%

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

The fund didn’t add or eliminate any investments this quarter, which is often the case. We try to be thoughtful and deliberate in how we turn the portfolio over, which we think is a major differentiator in today’s short-attention-span market. What this inactivity masks is how frequently we look at investment ideas and end up passing. We’ll often spend a fair amount of time on a company, but end up moving on. This can be frustrating, but some of the best investments we’ve made have been in companies that we’ve followed for years and then something changes—it could be valuation, new management, or just a new perspective on old information—which makes the investment newly compelling to us.

The companies that we follow closely, are tempted by, but end up passing tend to fall into two categories:

● Attractive businesses with strong growth prospects and a high degree of defensibility, but those attributes aren’t exactly a secret to investors, who have bid up the share prices to the point where further price appreciation seems limited. An investment in even the greatest company will turn out badly if done at the wrong price.
● Companies with compelling valuations, but we don’t have much confidence in their business prospects. Sometimes we’re fairly confident a business’s prospects are bleak; other times, we just don’t really know how things will turn out and don’t feel like we’re being compensated for that lack of clarity. For what it’s worth, a lot of the companies in the media space fall into this category for us these days. We don’t think anyone quite knows what the economics of streaming video and music will be 10 or 15 years from now.

When we do find great investments, they tend to fall in two categories:

● Excellent businesses with rosy outlooks and somewhat high valuations, but we feel the market hasn’t truly appreciated how great these businesses are. Mastercard, Microsoft, and UnitedHealth fit that bill.
● Good businesses that are facing short-term challenges that we think will work themselves out over time, and the market may be overreacting a bit to those problems. American Express, Progressive, and JPMorgan are in this bucket.

In short, we want companies that are fairly priced for their ability to generate cash and the risk that they don’t achieve their goals. Pretty much every business out there that we don’t own is either too expensive or has too much economic challenges/uncertainty. And we are often going to be wrong about this, because we are unlikely to have picked the exact combination of best performing companies. But for the 20 companies that we own now, we feel quite good about the risk-reward their shares offer.

As always, thank you for investing.

Stephen Dodson            Raphael de Balmann
Portfolio Manager         Portfolio Manager