2022 Sector Performance

Consumer Staples (6.68%)

The Bowden Investment Fund has allocated 4.08%oftheportfoliotoTheCoca-ColaCompany (KO), and the remaining sector holdings are comprised of ETFs including iShares Core S&P 500 (IVV), iShares Russell 2000 (IWM), and Dimensional US Targeted Value (DFAT). The consumer staples sector has demonstrated remarkable stability throughout history, making itareliablesourceofconsistentreturnsduringall economic conditions. In this industry, pro it margins and price elasticity win. During uncertaintimesit’sbesttoreweightaportfolioto companies that have pricing power, as they are abletopassonin lationarycoststoconsumers.A perfect example is aluminum prices rising to record highs, and despite rising input costs beverage companies continue to show strong performancewithhighermargins. Ourdefensive investment in KO has provided stability, along withdividendsandshareappreciationinthepast year. Staples inished 2022 especially well and outperformed the broader market during the year. Going forward, companies with a solid dividendandgrowingmarketsharewillcontinue to do well; be wary of companies that are purely low-cost and struggle to raise prices with in lation. Based on the stability and pro itability of the consumer staples sector, and the pricing power, an overweight recommendation is warrantedforthissectorgivencurrenteconomic uncertainty.

Healthcare (7.87%)

Overthecourseof2022, theBowdenInvestment Fund held two healthcare sector companies: Stryker Corporation (SYK) and CVS Health Corporation (CVS). Stryker manufactures and sells a large variety of medical devices. Stryker was sold in the spring of 2022, because of its exceptional performance and price appreciation, which bolstered the Bowden Investment Fund signi icantly. CVS Health is a healthcare solutions company featuring brick-and-mortar stores with walk-inpharmacies,“MinuteClinics,”healthplans for purchase, and general merchandise. CVS is currently held in the portfolio. While CVS’ share pricehasnotre lectedit,membersoftheBowden Investment Group believe in the health Care sector, as a methodical, long-term play with a high probability of notable capital appreciation. In particular, the United States (and global) population is growing older, with greater life expectancies,andwithanolderpopulation,there is a higher prevalence of chronic disease and the needforhealthcare.Thehealthcaresectorisvast. Thelargestmarketsarehealthcareprovidersand services, pharmaceuticals, and health care equipment and supplies. Based on the growing global population, increasing life expectancies, and higher prevalence of chronic diseases, an overweight recommendationiswarranted.

Materials (7.25%)

While materials are usually a safe bet, rising interest rates are curtailing home buying, and thus also affecting home building. At the commercial level, investment decreases as the cost of capital increases. Not to mention, many rawmaterials,duetoexternalfactors,arealready at record high numbers. Yet, federal spending may balance out the negative effects. A key to noteisthatinanextendedtimeframe,weexpect materialstodowell.However,thatcouldbemore extended than worthwhile. The BIF currently holds Martin Marietta Materials, Inc, (MLM), a domesticconcreteandaggregatesproducer.Steel Dynamicswasalsoheld,andsubsequentlysoldin 2022. It was the portfolio’s single top performer. Steel Dynamics is a domestic steel producer and metal recycler founded in 1993 in Indiana. Going forward, regardless of economic outcome, the industry analysts rate Materials as a hold to sell, as there are limited excess growth opportunities. We provide an underweight recommendation for the Materials industry based on the potential negative impact of rising rates, along with high numbers of raw materials and limited growth opportunities.

Utilities (0.74%)

Similar to materials, with volatile electricity and natural gas prices, there is uncertainty in the industry. In Europe, electricity prices are at all time highs, diminishing demand, especially heading into the summer months. However, in America, demand for power is expected to continue rising, while natural gas prices are falling,whichbene itsutilitycompanies.Also,less federal regulation could pose bene icial to the industry. Utilities are recommended in 2023 due to the softened volatility, strong dividends, and quality growth opportunities present. An overweight recommendation is justi ied consideringtheanticipatedincreaseinU.S.power demand, the potential advantages resulting from reduced federal regulation, and the sector’s strong dividends and quality growth opportunities.

Energy (8.07%)

Some key drivers for this industry are the world price of crude oil, and consumer demand for fuel at gas stations. During the pandemic, as oil demand dropped, the industry fell. Yet, at this point, the industry has largely recovered and is expected to continue to recover, as fuel prices stay high. However, as far as service stations go, the rise ofEV’sisa threat tokeep an eye on.The BIF hasheldRoyalDutchShell(SHEL)foralmost a year, and has enjoyed the returns energy has provided in the past months. We give an overweight recommendation to the energy industry as the price of crude oil and consumer demand for fuel at gas stations is continuing to increase.

Industrials (10.55%)

Withthepandemicandthedollarbeingsostrong, exports have been hurt substantially. Domestically, demand for industrials is driven primarily by manufacturing activity. With manufacturing expected to increase going forward, there could be an opportunity for this industry. Yet, with the industry primarily driven by irst-use-steel, it is certainly volatile, as irstuse-steel consumption is not in extremely high demand. In 2022, we exited our position in Lockheed Martin following substantive share appreciation stemming partially from rising tensions leading up to the Russia-Ukraine war. Now, the portfolio features AGCO, an industrial farmsupplymanufacturerwhodirectlycompetes withJohnDeere.Ithasbeenatopperformerover

2022. Furthermore, the BIF holds DFAT, an ETF by Dimensional Fund Advisors that focuses heavily on industrials. We give an overweight allocation to the industrial sector to balance the potentialrisksandrewardsinthissector.

Information Technology (24.29%)

Thetechnologysectorfacedchallengesin2022in parallelwiththebroadermarket,ashighin lation and rising interest rates impacted the sector. However, despite growing recession risk, the need for companies to use technology to reach their customers, innovate quickly, and operate ef iciently remains constant, driving demand for constant innovation. We maintain ourcon idence in the robustness of Apple (AAPL), Visa (V), and Microsoft (MSFT), which have demonstrated resilience within the sector throughout the year, and remain strong companies held in the BIF portfolio. We give an underweight recommendation to the information technology industry with the possibility of higher interest ratesaffectingtheirbusinessoperations.

Communication Services (5.52%)

Investors in the communication services sector faced concerns that caused market volatility in 2022. The communications industry has seen increasedcompetitiononpriceduetoamultitude of similar products and high ixed costs, leading to harmful price wars. However, low threat of entry, given the economies of scale that the largest companies have achieved, and recent mergers and acquisitions are indicative of a maturingindustry,strengtheningthecompetitive position of the major players. The COVID-19 pandemic placed unprecedented demand on communication networks, with network operators and governments working to ensure reliable service. Operators have responded by offering free data and additional spectrum resources. All major US carriers are focused on expandingtheir5Gnetworksin2022,withAT&T planningtocoverover275millionpeopleandset up mid-band 5G spectrum for over 200 million people by the end of 2023. As the industry continues to evolve and adapt to changing circumstances,itisclearthatthecommunications services sector will play an essential role in supporting the needs of individuals, businesses, and communities. Within the communications sector, BIF holds Alphabet (GOOGL), a player in the communications sector because it offers various communication services and its search engine is targeted for communication and marketing. Our recommendation for the communication services sector is to maintain an underweight position, considering the potential threat of economic uncertainty driven by factors such as high in lation, rising interest rates, and geopoliticaltensions.

Consumer Discretionary (12.86%)

In2022,consumerdiscretionarycompanieswere confronted with the impact of high in lation, resulting in escalated expenses related to producing,shipping,andsellingtheirproducts.In 2023, it is expected that macroeconomic factors will continue to play a signi icant role in the performance of the sector. The conclusion of the Fed's rate-hike cycle and a moderation in in lation may elicit a favorable response from investors, whereas the opposite outcome could prolonguncertainty.Nevertheless,higher-income consumers may continue to maintain strong discretionary spending, as they may not feel as inancially constrained by the effects of rising costs. Our current holdings in the BIF portfolio includeAmazon(AMZN)andDollarGeneral(DG), which we believe are well-positioned within the consumer discretionary sector. Dollar General, with its defensive capabilities against rising in lation, stands out as a strong company. Amazon is a strong contender in the consumer discretionary sector due to its dominant position as an e-commerce leader. Our recommendation forthesectorisunderweightifwebelieveweare in the late business cycle and overweight if we are in recessionary territory based on the expectationthatconsumerspendingwillcontinue to remain strong and companies with robust and loyalcustomerbasesarelikelytooutperform.

Financials (12.68%)

This sector tends to bene it from rising interest rates as it widens the gap between what they earn from loans and what they pay for deposits, which improves bank pro itability. Banks with strong deposit bases and conservative credit pro iles are better equipped to weather macroeconomic turbulence. Such banks can also bene it from fee income, which is recurring and can provide stability for earnings during an economic downturn. Despite a potential dampening effect on overall loan growth or an increase in defaults or delinquent loans, banks that continue to maintain credit standards on loanscouldstillthrive,aslongastheycanborrow from their own deposits, which is cheaper than borrowing from other banks. The BIF portfolio holds BlackRock Financial (BLK), the largest assetmanagergloballywithjustunder10trillion totalassetsundermanagement,aswebelieveitis a strong investment in the inancial sector. We give an underweight recommendation to the inancial sector given the potential dampening effect on overall loan growth or an increase in defaultsordelinquentloans,despitetheirbene it from rising interest rates as it widens the gap between what they earn from loans and what they pay for deposits, improving bank pro itability. However, we need to watch this sectorcloselyinthemonthsahead.

Real Estate (0.97%)

In the year 2022, the performance of REITs was heavily impacted by a notable surge in interest rates. This resulted in increased expenses for REITs seeking to acquire new debt or re inance existing debt obligations and when making potential portfolio acquisitions. The rise in inancing costs led to lower REIT valuations, subsequently resulting in further increases in inancing costs. As mortgage rates continued to riseandhomepricesremainedhigh,theoptionof renting became more affordable for many individuals and families. We give an underweight recommendation to the REITs sectorduetothenotablesurgeininterestratesin 2022, which heavily impacted its performance. Whiletherisein inancingcostsledtolowerREIT valuations, we believe that the Federal Reserve will continue raising rates, therefore putting continuous strain on the real estate market in 2023.