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Growth Fund - Commentary

Growth Fund

2Q17 Commentary1


Global financial markets were dominated by rising share prices in the second quarter of 2017. However, economic trends were little changed, inflationary patterns were quite muted, and significant policy shifts remained elusive. During the period, bond yields moved little and the U.S. dollar fell.

In the U.S., real GDP appears to have completely recovered from its soft first quarter performance. With preliminary data in hand, it now appears that second quarter output grew at a 2.5% annualized pace. If accurate, this would imply year-on-year real growth running at a 2.5% pace, still soft but well above rates feared earlier in the year. Job gains, according to the payroll data from the U.S. Bureau of Labor Statistics, rebounded in June, adding 222,000 in the month. The June unemployment rate rose slightly to 4.4% from 4.3% in May. Despite this evidence of a much improved jobs market, so far there have been few signs of an acceleration of any kind for wages and salaries, with hourly wages up 2.5% year-on-year. Likewise, consumer inflation gauges have remained remarkably tame. Year-on-year gains for the core Personal Consumption Expenditures deflator have fallen back to only 1.4%. Steady growth with healthy jobs gains but no inflation seems to be the takeaway.

For the quarter, the S&P 500 Index2 advanced 3.09% and the Nasdaq Composite Index2 rose 4.16%. Equities generally rose in tandem around the globe, with the Nikkei 225 Stock Average Index2 up 6.11% for the quarter. Shares in emerging economy companies also did well, with the MCSI Emerging Markets Index2 up 6.27%. European markets also rose nicely, with the MSCI Europe Index2 returning 7.37% for the quarter. Bond yields were mixed, with the U.S. 10-year Treasury note essentially flat and the German 10-year bund up slightly. The dollar continued to surrender post-U.S. election gains, falling versus the Euro by 7.3% for the quarter, and sliding by 3% versus a broad index of currencies. In the commodity markets, oil prices dropped from $48 to $45 a barrel during the quarter, using West Texas Intermediate (WTI) as a proxy. Gold was flat for the period, and the Goldman Sachs Commodity Index (CME) was down slightly.

In terms of market capitalization, large cap stocks outpaced small cap stocks, as the Russell 10002 and Russell 20002 indexes posted quarterly returns of 3.06% and 2.46%, respectively. As for investment style, growth stocks took the reins in the quarter as the Russell 1000 Growth Index2 and the Russell 1000 Value Index2 posted quarterly returns of 4.67% and 1.34%, respectively.

The Marsico Growth Fund posted a return of 7.02% for the second quarter, outperforming its benchmark, the S&P 500 Index, which returned 3.09%.

Primary Contributors4: Stock selection and an overweight allocation in the Information Technology sector3, one of the strongest-performing sectors of the benchmark index, was one of the largest drivers of performance during the period. The Fund’s lack of exposure to the Energy sector, the weakest-performing sector of the benchmark index, also aided performance. The Fund benefitted from stock selection and an underweight allocation to the Consumer Staples sector, as well as an overweight allocation and stock selection to the Health Care sector.

Primary Detractors4: Stock selection in the Consumer Discretionary sector was a slight detractor from performance. An underweight stance in the Financials sector marginally hindered performance, as the sector’s return outpaced the benchmark return during the period.


For more information, please click here for the Marsico Growth Fund Quarterly Investment Update.

1 Performance data quoted represents past performance. Past performance is no guarantee of future results. A Fund's performance, especially for short time periods, should not be the sole factor in making an investment decision. Please keep in mind that our views on investments discussed herein are subject to change at any time and the holdings represented here do not represent all of the securities purchased, sold, or recommended by Marsico Capital Management, LLC ("MCM"). Certain less-material factors may not be presented.

2 The S&P 500 Index is a registered trademark of S&P and is an unmanaged broadly-based index of the common stock prices of 500 large U.S. companies, and includes the reinvestment of dividends. The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000 Index and includes approximately 1000 of the largest securities based on a combination of their market cap and current index membership, and includes the reinvestment of dividends. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000® Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership, and includes the reinvestment of dividends. The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values, and includes the reinvestment of dividends. The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values, and includes the reinvestment of dividends. The MSCI Emerging Markets Index captures large and mid-cap representation across 23 Emerging Markets (EM) countries. With 835 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. The Nasdaq Composite Index is the market capitalization-weighted index of approximately 3,000 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks, as well as limited partnership interests. The index includes all Nasdaq-listed stocks that are not derivatives, preferred shares, funds, exchange-traded funds (ETFs) or debenture securities. The MSCI Europe Index captures large and mid cap representation across 15 Developed Markets (DM) countries in Europe. With 446 constituents, the index covers approximately 85% of the free float-adjusted market capitalization across the European Developed Markets equity universe. The Nikkei-225 Stock Average Index is a price-weighted average of 225 top-rated Japanese companies listed in the First Section of the Tokyo Stock Exchange, excluding ETFs, REITs, preferred equity contribution securities, and tracking stocks (on subsidiary dividend) etc. other than common stocks. Sources of foreign exchange rates may be different be­tween the Fund and the benchmarks. The indexes mentioned above are unmanaged and not available for direct investment. For comparison purposes, it should be noted that the indexes do not charge fees and have no expenses.

3 Sector and industry weightings are determined using the Global Industry Classification Standard (“GICS”). GICS was developed by and is the exclusive property and service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s (“S&P”), and is licensed for use by MCM. Neither MSCI, S&P, MCM, nor any third party involved in compiling GICS makes any express or implied warranties or representations with respect to such standard or classification (or the results from use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any such standard or classification. MSCI, S&P, and MCM, and any of their affiliates or third parties involved in compiling GICS shall not have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

4Source: UMB Fund Services, Inc., FactSet and Marsico Capital Management, LLC (“MCM”). Data shown such as portfolio holdings, percentages, country, and sector weightings generally applied on the date shown above, and may have changed substantially since then. References to specific securities and sectors are not recommendations to buy or sell such securities or related investments.

Please consider the Fund's investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, which contains this and other information about the Fund, click here or call 888-860-8686. Please read the prospectus carefully before investing.

Investments in mutual funds carry risks and investors may lose principal value. Click here for the principal risks of investing in the Funds. Please read the prospectus carefully before investing as it explains the risks associated with investing in the mutual funds.

The International Opportunities Fund may, at times, experience higher-than-average portfolio turnover which may generate significant taxable gains and increased trading expenses which in turn may lower the Fund’s return.

The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. ©Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Past performance is no guarantee of future results. Recent performance may have been negative.

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