Thomas G. Plumb, CFA
Lead Fund Portfolio Manager
President, CEO, Chairman

Well, 2022 is in the record books and what a year it was. The deadliest land war in Europe since World War II, the highest inflation levels in over 40 years, interest rates rising to the highest level in 15 years, and the stock and bond markets worldwide both showing declines for only the fifth time since World War II.

The year began with expectations that inflation would moderate, the economy would remain strong as both consumer and corporate balance sheets were liquid, savings rates were high, and Government stimulus programs were still kicking in. War in Europe, shutdowns in China and stubborn inflation dampened expectations and contributed to two quarters of negative economic growth in the United State and much of the rest of the world.

But as demand stayed strong despite the disruptions in the supply chains for oil, natural gas, wheat, semi-conductor chips and industrial components, the costs of products and services continued to rise. The Federal Reserve Bank thinking evolved, and they concluded that inflation was structural in nature. The Fed Board strengthened their resolve to fight it. As the Fed raised interest rates seven times, they also re-enforced their message that this restrictive policy was not transitory and would continue much longer than markets had anticipated.

These factors contributed to the worst performance of the US Stock market in fifteen years and a decline in the bond market that resulted in a 16% decline for the average bond (and the worst performance since the 1970s). The growth companies which had led the market since the financial crisis of 2007 were hit hard in this environment with the S&P 500 growth index registering a 30% decline. The companies that had provided the disruptive growth in financial technology declined 71%, as measured by the F-Prime Fintech Index, as the growth spike from the pandemic moderated to more sustainable levels.

For 2023, 2/3rds of the economists surveyed predict a recession as restrictive Federal Reserve policies, high interest rates, the drawdown of excess savings funded by the pandemic stimulus programs, the war in Ukraine drags on, and political stalemate in Washington prevents any programs to address it.

But there are counter vailing forces that could provide a better economic and investment climate than these items suggest.

1. Federal stimulus investments from the recently passed reconciliation bill and inflation adjustment to transfer payments like social security will increase domestic investment, defense spending and clean energy projects.
2. China looks committed to
3. A commitment to energy independence coupled with discipline in Energy Company asset allocation increases energy domestic investment.
4. Lower stock markets mean individual stocks are trading at more reasonable prices with P/Es of the S&P 500 at 5, down from 27 two years ago and at the average of the last ten years. In other words, stocks are not trading at “pricey” levels.
5. Higher interest rates are a two-edged sword, putting pressure on borrowers, but the highest interest rates in fifteen years have the potential to reward savers and bond

We have focused for years on buying high quality, profitable, growing, self-funding stocks and short-term investment grade bonds. We believe that 2023 may be rewarding as both our stocks and bonds appear to us to be attractively priced.

Best wishes for a healthy, profitable new year.S&P 500 is an unmanaged index which is widely regarded as the standard for measuring large-cap U.S. stock market performance.

S&P 500 Growth Index is a market capitalization-weighted index, which means that the relative share of the index made up of specific securities is determined based on their share of the total market capitalization of the S&P 500.

The F-Prime Fintech Index is composed of publicly traded companies powering the disruption of financial services.

Price-to-Earnings (P/E) Ratio is the ratio for valuing a company that measures its current share price to its earnings per share.

It is not possible to invest directly in an index.

The Fund’s investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company, and it may be obtained on www.plumbfunds.com or by calling 1- 866-987- 7888. Read it carefully before investing.

Past performance does not guarantee future results.

Opinions expressed are those of the author as of December 31, 2022, and are subject to change, are not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

Earnings growth is the annual rate of growth of earnings from investments.

Mutual fund investing involves risk. Principal loss is possible.

The fund may invest in small and mid-sized companies which involve additional risks such as limited liquidity and greater volatility. The funds invest in foreign securities which involve greater volatility and political, economic and currency risks and differences in accounting methods. Because the funds may invest in ETFs, they are subject to additional risks that do not apply to conventional mutual funds, including the risks that the market price of an ETF’s shares may trade at a discount to its net asset value (“NAV”), an active secondary trading market may not develop or be maintained, or trading may be halted by the exchange in which they trade, which may impact a fund’s ability to sell its shares. The fund may also use options and future contracts, which have the risks of unlimited losses of the underlying holdings due to unanticipated market movements and failure to correctly predict the direction of securities prices, interest rates and currency exchange rates. The investment in options is not suitable for all investors. The Plumb Balanced Fund will invest in debt securities, which typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities.

Fund holdings are subject to change at any time and should not be considered a recommendation to buy or sell any security. For a list of current fund holdings, please refer to the individual fund’s holding page. Plumb Balanced Holdings: plumbfunds.com/funds/plumb-balanced-fund/. Plumb Equity Holdings: plumbfunds.com/fund/plumb- equity-fund/

Diversification does not assure a profit nor protect against loss in a declining market. Dividends are not guaranteed and may fluctuate.

Plumb Funds are distributed by Quasar Distributors, LLC, distributor.

The Federal Reserve Bank is the central bank of the United States. The Fed oversees the largest U.S. banks, implements and adjusts monetary policy, and provides financial services for the U.S. government.