2023

Dear Shareholders,

The largest stock positions in the Vltava Fund portfolio at the beginning of 2023 were Berkshire Hathaway, BMW, Alimentation Couche-Tard, JPMorgan Chase, and Asbury Auto. Our portfolio is concentrated into investments we believe offer the best combination of expected return and risk. Sufficiently attractive investment opportunities are relatively rare, and therefore we strive to use them to our maximum advantage. Throughout the past year we made the following changes to the portfolio: We sold shares of Magna, Alphabet, and Willis Towers. Conversely, we added to the portfolio shares of Jungfraubahn, Stellantis, and Elevance Health. At the end of the year, the entire portfolio held 24 stock positions. The ten largest of these comprise approximately 73% of our portfolio.

As 2024 began, the market was valuing the Fund’s portfolio at just over nine times the trailing 12 months’ earnings. This means that the net earnings of our companies over the past year have been about 11% of their combined market capitalisation (that is the earnings yield, which is the inverse of the P/E). In our view, this is a very attractive valuation given the quality and growth prospects of these companies, even in comparison to the higher interest rates. Measured against the companies’ current profitability, our portfolio is cheaper today than it was at the start of 2023.

Our estimate as to the current fundamental value of Vltava Fund’s portfolio at the end of 2023 is approximately 40% greater than the Fund’s present NAV.

There are essentially three things that affect development of the portfolio’s fundamental value: First, our estimate as to the fundamental values of the individual companies. Second, the passage of time itself, because the fundamental value of a company evolves over time and has a strong tendency to grow in the long term as more and more capital is reinvested. Third, our stock selection and our transactions, whereby we swap companies in the portfolio with lower potential for companies with higher potential. We cannot influence the prices of individual stocks, but we can determine their selection, and that is our focus. Long-term growth in the fundamental value of well-selected stocks will gradually pull their prices upwards. This is one of the few things upon which we can rely.

Over the past 15 years, which means since the Great Financial Crisis and the change of our investment strategy for the one we still follow today, Vltava Fund’s NAV has increased by 472.9%. World stock markets have grown by 269.5% over the same period.

In the next section of the annual report, you will find, as you do every year, the quarterly letters to shareholders from the past year (together these present a picture of our investments and views over the past year) and more detailed data, including full historical results and audited accounts.

We thank you for your support and patronage through the past years, and we look forward to co-operating with you in the years to come.

Daniel Gladiš, February 2024

For more information

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