Cory Gilchrist, CFA, Tom Marsico and Jim Gendelman, Portfolio Managers
January through March 2008
The Marsico Global Fund, which was launched on June 29, 2007, produced a disappointing total return of -12.15% during the first calendar quarter of 2008. That result trailed the Fund's primary global equity benchmark index, the MSCI All Country World Index ("MSCI ACWI"), which had a total quarterly return of -9.28%.1 Pursuant to a fee waiver agreement with Marsico Capital Management, LLC, the total annual operating expenses for the Global Fund are capped at 0.75%.2 This fee waiver may be terminated at any time after December 31, 2008.
The table below provides the Global Fund's results through March 31, 2008, as compared to the MSCI ACWI:
| Cumulative Returns | |||
| Since Inception (6/29/2007)3 | Total Annual Operating Expenses | ||
| (Gross) | (Net) | ||
| Global Fund | 5.36% | 4.50%2 4 | 0.77%2 4 |
| MSCI All Country World Index | -7.82% | ||
The performance data quoted represent past performance, and past performance is not a guarantee of future results. 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 information quoted above. To obtain performance information current to the most recent month end, please call 888-860-8686 or click here.5
This commentary highlights Fund performance over a single calendar quarter, and the Fund had only nine months of operating history as of March 31, 2008. Shareholders should keep in mind that the Fund is intended for long-term investors who hold their shares for substantially longer periods of time. You should also keep in mind that our views on all securities and investments discussed in this commentary are subject to change at any time. References to specific securities, sectors, and industries discussed in this commentary are not recommendations to buy or sell the securities or investments, and the Fund may not necessarily hold these securities or investments today.6
At the risk of understatement, the first calendar quarter of 2008 was an exceptionally difficult period for equities globally. All ten GICS economic sectors in the Fund's benchmark index were "in the red" during the quarter, with the most precipitous declines occurring in Telecommunication Services (-14%), Information Technology (-14%), and Financials (-12%). Five other sectors had losses ranging from -7% to -9%. The "best-performing" sectors were Materials and Consumer Staples, which posted relatively modest declines of -2% and -3%, respectively.
A good portion of the Fund's lagging quarterly return can be attributed to stock selection in three areas: Information Technology, Financials, and Consumer Discretionary. Some additional "color commentary" for each sector is presented below:
- Information Technology: The Fund's holdings in this sector fell by -18% in aggregate during the first calendar quarter of 2008. There was no shortage of blame to go around; positions in Apple Inc. (-36% prior to being sold), Google Inc. (-36%), Nintendo Co., Ltd. (-28% prior to being sold), and NVIDIA Corp. (-29% prior to being sold) were the major detractors.
- Financials: The Fund's holdings in this globally-besieged sector declined by -21%, collectively, during the first calendar quarter. There were three primary "culprits" underlying that return. One was savings and loan company Washington Mutual Inc., which was down -34% (prior to being sold) due to concerns about the company's balance sheet strength, capital adequacy, and earnings outlook. Another was Bovespa Holding S.A., which declined -29%. Finally, Oaktree Capital Group–an investment management company focused on various "alternative" classes of assets including high yield and distressed debt–slipped -16%.
- Consumer Discretionary: A third "hit" to the Fund's quarterly return can be laid at the feet of its Consumer Discretionary holdings, which fell -18% in aggregate. The Fund's lodging and gaming positions, including Mandarin Oriental International Ltd., Las Vegas Sands Corp., and MGM MIRAGE were weak across-the-board. (MGM MIRAGE was sold prior to March 31, 2008.) lululemon athletica inc., which specializes in athletic apparel, declined -40% during the quarter.
Other individual holdings that materially detracted from the Fund's performance included:
- The Shaw Group Inc. (-17%), a company focused on piping, energy, chemicals, construction, and nuclear power;
- MTN Group Ltd. (-23% prior to being sold), a South Africa-based mobile telecommunications company;
- ABB Ltd. (-23% prior to being sold), a provider of power and automation technologies to utility and industrial companies;
- ALL America Latina Logistica SA (-22%), a railroad operator in Argentina and Brazil; and
- Veolia Environnement (-23%), a France-headquartered water, waste management, energy, and transportation services provider.
The Fund's cash and cash equivalent position averaged nearly 19% during the first calendar quarter of 2008. That cash level was higher than what we would typically expect, and was primarily attributable to the Fund's relatively small size, where cash inflows that are not immediately invested into equities can represent a larger-than-normal portion of total Fund assets. In addition, given the exceedingly high level of market volatility and uncertain macroeconomic conditions, we believed it was appropriate to have some cash in the Fund. The cash position helped to provide some "downside" protection to the Fund during the quarter.
At the close of the first calendar quarter, the Fund's primary economic sector allocations were in Industrials, Financials, and Consumer Discretionary. During the quarter, we moderately increased holdings in Industrials and Financials. Apart from changes associated with market movement, there were relatively few shifts in other sector weightings. Geographically, the Fund had about 58% in US-domiciled securities (including cash equivalents) and 42% in non-US equities at quarter end. In terms of country-level allocations, the Fund's largest positions were in the United States, Switzerland, and Brazil. As a reminder, the Global Fund's country allocations generally will be a residual of its bottom-up stock selection process.
Sincerely,
Corydon J. Gilchrist, CFA, Thomas F. Marsico, and James G. Gendelman
Portfolio Managers
1The MSCI All Country World Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global developed and emerging markets. You cannot invest directly in an index. Foreign investments may present additional risks due to currency fluctuations, economic and political factors, lower liquidity, government regulations, differences in securities regulations and accounting standards, possible changes in taxation, limited public information, and other factors. These risks are magnified in countries with emerging markets, since certain of these countries may have relatively unstable governments and less established markets and economies.
2The written expense limitation agreement relating to the Global Fund limits total expenses of the Fund (excluding interest, taxes, acquired fund fees and expenses, litigation, brokerage and extraordinary expenses) to an annual rate of 0.75% of the Fund's average net assets. Please see the Fund's February 1, 2008 prospectus for more information.
3The Global Fund may invest in initial public offerings ("IPOs") of common stock or other equity or debt securities issued by a corporate issuer. A significant portion of the Fund's "since inception" returns may be attributable to its investments in IPOs. There can be no assurance that similar contributions to the Fund's performance from IPOs will continue in the future.
4The total annual operating expenses are reflective of the information disclosed in the Fund's prospectus dated February 1, 2008. Please see the prospectus for more information.
5Total returns are based on net change in NAV assuming reinvestment of distributions. The performance returns for the Global Fund reflect a fee waiver in effect; in the absence of such a waiver, the returns would be reduced. A redemption fee of 2% may be imposed on redemptions or exchanges of Fund shares owned for 30 days or less. Please see the February 1, 2008 prospectus for more information.
6On March 31, 2008, the following securities comprised these percentages of the net assets of the Marsico Global Fund: Apple Inc. (0.0%); Google Inc. (3.7%); Nintendo Co., Ltd. (0.0%); NVIDIA Corp. (0.0%); Washington Mutual Inc. (0.0%); Bovespa Holding S.A. (2.4%); Oaktree Capital Group (1.1%); Mandarin Oriental International Ltd. (1.5%); Las Vegas Sands Corp. (2.9%); MGM MIRAGE (0.0%); lululemon athletica inc. (0.5%); Schlumberger Ltd. (0.0%); Diamond Offshore Drilling, Inc. (0.0%); Petroleo Brasileiro S.A. (3.4%); The Shaw Group Inc. (2.3%); MTN Group Ltd. (0.0%); ABB Ltd. (0.0%); ALL America Latina Logistica SA (1.9%); Veolia Environnement (0.6%); Lonza Group AG (2.6%); Raytheon Co. (2.9%); Canadian National Railway Co. (2.9%); and MasterCard Inc. (4.3%).
2The written expense limitation agreement relating to the Global Fund limits total expenses of the Fund (excluding interest, taxes, acquired fund fees and expenses, litigation, brokerage and extraordinary expenses) to an annual rate of 0.75% of the Fund's average net assets. Please see the Fund's February 1, 2008 prospectus for more information.
3The Global Fund may invest in initial public offerings ("IPOs") of common stock or other equity or debt securities issued by a corporate issuer. A significant portion of the Fund's "since inception" returns may be attributable to its investments in IPOs. There can be no assurance that similar contributions to the Fund's performance from IPOs will continue in the future.
4The total annual operating expenses are reflective of the information disclosed in the Fund's prospectus dated February 1, 2008. Please see the prospectus for more information.
5Total returns are based on net change in NAV assuming reinvestment of distributions. The performance returns for the Global Fund reflect a fee waiver in effect; in the absence of such a waiver, the returns would be reduced. A redemption fee of 2% may be imposed on redemptions or exchanges of Fund shares owned for 30 days or less. Please see the February 1, 2008 prospectus for more information.
6On March 31, 2008, the following securities comprised these percentages of the net assets of the Marsico Global Fund: Apple Inc. (0.0%); Google Inc. (3.7%); Nintendo Co., Ltd. (0.0%); NVIDIA Corp. (0.0%); Washington Mutual Inc. (0.0%); Bovespa Holding S.A. (2.4%); Oaktree Capital Group (1.1%); Mandarin Oriental International Ltd. (1.5%); Las Vegas Sands Corp. (2.9%); MGM MIRAGE (0.0%); lululemon athletica inc. (0.5%); Schlumberger Ltd. (0.0%); Diamond Offshore Drilling, Inc. (0.0%); Petroleo Brasileiro S.A. (3.4%); The Shaw Group Inc. (2.3%); MTN Group Ltd. (0.0%); ABB Ltd. (0.0%); ALL America Latina Logistica SA (1.9%); Veolia Environnement (0.6%); Lonza Group AG (2.6%); Raytheon Co. (2.9%); Canadian National Railway Co. (2.9%); and MasterCard Inc. (4.3%).
Not authorized for distribution unless preceded or accompanied by a current Marsico Funds prospectus.
The distributor of the Marsico Funds is UMB Distribution Services, LLC.
